INTRODUCTION
This report presents our financial audit
of the whole Department for the year ended June 30, 2004 and compliance
examination of the Department’s General Office operations for the two years
ended June 30, 2004. During the two
years ended June 30, 2004 the Department administered 35 correctional
centers, which were comprised of 27 adult centers and 8 juvenile
centers. In addition, the Department
had 8 adult transition centers.
FINDINGS,
CONCLUSIONS, AND RECOMMENDATIONS
PAYMENTS WERE MADE
FOR Efficiency Initiative
BILLINGS FROM IMPROPER LINE ITEM APPROPRIATIONS
The
Department made payments for efficiency initiative billings from improper
line item appropriations. Public Act
93-0025, in part, outlines a program for efficiency initiatives to
reorganize, restructure and reengineer the business process of the
State. The State Finance Act details
that the amount designated as savings from efficiency initiatives implemented
by the Department of Central Management Services (CMS) shall be paid into the
Efficiency Initiatives Revolving Fund.
The Act further requires State agencies to pay these amounts from line
item appropriations where the cost savings are anticipated to occur.
The Department did not receive guidance
or documentation with the billings from CMS detailing from which line item
appropriations savings were anticipated to occur. According to Department staff, the Department was not provided
any documentation or information from CMS detailing the nature and/or type of
savings anticipated by CMS. The only
guidance received was the amount of payments to be taken from the General
Revenue Fund (GRF) and Other Funds (OF) for the September 2003 billings. The guidance with respect to funds was
apparently inaccurate. Correspondence
from the Governor’s Office of Management and Budget (GOMB) to the Department
stated that they “realize that the procurement number is not broken out
correctly between GRF and OF. All we
care about is that the total procurement savings equals $11,693,900.”
During FY04, the Department received four billings and made
payments totaling $16,015,921 to CMS for savings from efficiency
initiatives. Based on our review, we
question whether the appropriate appropriations, as required by the State
Finance Act, were used to pay for the anticipated savings.
We found the Department made payments
for these billings not from line item appropriations where the cost savings
were anticipated to have occurred but from line items that simply had known
available funds. The Department paid
the largest amounts for the billings from contractual services, commodities
and equipment appropriations. These
monies were applied to the Procurement Efficiency, Information Technology and
Vehicle Fleet Management initiatives.
We recommended the Department only make payments for
efficiency initiative billings from line item appropriations where savings
would be anticipated to occur.
Further, the Department should seek an explanation from CMS as to how
savings levels were calculated, or otherwise arrived at, and how savings
achieved or anticipated impact the Department’s budget. (Finding 1, pages 12-14)
Department management accepted our recommendation and stated
the Department will work with CMS on any future initiative billings to
determine appropriate expenditure information and benefits to be derived from
the payments.
STATE HOUSING BENEFITS NOT PROPRELY REPORTED AS INCOME
The
Department has approximately 259 employees living in State-owned dormitory
rooms and 23 employees living in houses located on Department property. The Department charges up to $120 per
month for employee houses and $27 per month for guard dormitory rooms and
pays all utility costs.
The
Department could not provide a current estimate of the fair market value for
this housing. During the examination
period, the Department requested assistance from the Department of Central
Management Services Property Management Unit to obtain current appraisal
values for the properties. As of the
end of examination fieldwork the Department had not received any assistance
from the Department of Central Management Services Property Management
Unit.
Although the practice of renting
housing to employees below market value appears proper, the Department failed
to report the value of the housing that was not paid for by the employee as
income to those employees, as required by Internal Revenue Service
regulations. As a result the
Department may be in violation of Internal Revenue Regulations.
The Department has prepared a draft Administrative Directive,
which addresses the State housing benefits to its employees. The rental value
for houses was determined by using 1990 appraisals and current monthly
utility costs. Department employees were notified of the new rates and reporting
of those benefits as taxable income in October 2004 to be effective December
1, 2004.
Department personnel stated
that the revisions in their State housing policy were started well before the
end of the fiscal year. However, due
to the impact on a large number of employees, proper notification of the
increase in rates was needed. (Finding 2, pages
15-17) This finding was first reported in 1999.
We recommended the Department implement policies and procedures
on housing for State employees and ensure consistency with the State Employee
Housing Act. We further recommended the
Department continue efforts to determine the fair market value of the housing
benefits through a current appraisal.
Department officials responded by indicating
the finding recommendations were fully implemented in December 2004.
Employees living in state owned housing are charged a rate in compliance with
the State Employee Housing Act and the Internal Revenue Regulations. Policies
and procedures have been documented to include the requirements per the
Statutes. (For the
previous Department response, see Digest footnote #1.)
Inadequate Procedures Regarding State Vehicles
In performing our testing
of the Department, we identified several weaknesses regarding the reporting
of vehicle accidents, vehicle maintenance records, and reporting the value of
the “personal use” of State vehicles.
·
During our review of 25 reported accidents involving
State owned vehicles, we noted 13 instances in which accidents had not been
reported to the Vehicle Accident Coordinator on a timely basis. We also noted 13 instances in which
accidents had not been reported to the Department of Central Management
Services on a timely basis.
·
During fiscal year 2004, we examined maintenance
records for 25 vehicles and noted that 5 had not received oil changes within
7,500 miles of the last oil change.
The number of miles that oil changes were overdue ranged from 1,227
miles to 7,514 miles.
·
During our testing of employees who were allowed the
“personal use” of a State vehicle, we noted:
(1) In 4 out of 19 employees tested, we were unable to determine the
value of “personal use” of a State vehicle as a fringe benefit. The required Department form (Form) was
not on file; (2) In 3 out of 19
employees tested, the fringe benefit received on the payroll voucher did not
trace to the value as reported on the Form;
(3) In 4 out of 19 employees tested, the Form was not on file with the
Department for the correct calendar year; and (4) In 6 out of 19 employees
tested, the Form was not filed timely.
Department personnel
stated all employees who travel are required to follow the Department’s
Administrative Directive regarding vehicle accidents. Employees are encouraged to submit vehicle
accident reports in a timely manner.
The maintenance of personally assigned State vehicles is the
responsibility of the employee to whom the vehicle is assigned. Department personnel further stated the
oil changes are being performed; however the paperwork is not reaching the
responsible input operator. Department personnel also stated the issues
relating to reporting the “personal use” of State vehicles was due to human
error, oversight and the large number of staff that left the Department due to
the Early Retirement Incentive in FY2003.
(Finding
3, pages 18-20) This finding was first reported in 2000.
We recommended the Department send a
formal notice to those employees whose jobs involve travel to remind them of
the requirement and importance of filing accident reports in a timely
manner. In addition, we recommended
the Department enforce vehicle maintenance schedules to reduce future year
expenditures for repairs and to extend the useful lives of vehicles. We
further recommended the Department establish controls to ensure compliance
with the Treasury Rule regarding the “personal use” of a State vehicle and
ensure proper records for the reporting of the fringe benefit are
maintained.
Department
officials accepted our recommendation and responded that the Department will
make every effort to enforce procedures and requirements for the maintenance
of State vehicles. The Department will remind staff of the importance of
accurate and timely submission of information regarding the use of State
vehicles and any accidents. Communication will be distributed to all staff
utilizing State vehicles to remind them of the policies and procedures
regarding the operation and maintenance of the automobiles. (For the previous Department response, see Digest
footnote #2.)
Inadequate Documentation of Employee Training and
No Designated Training Coordinators
During our review of Department training records, the
Department was unable to document that 14 of the 35 employees tested had met the
minimum training hour requirement.
Five employees were from the General Office, six were from the School
District and three were from Field Services.
There were no designated Training Coordinators for the General Office,
School District or Field Services.
According to the Department’s Administrative Directive,
Clerical and Support staff (primarily those who have little or no inmate
contact) are required to complete a minimum of 16 hours of training each year
after their first year on the job. All
other employees are required to complete a minimum of 40 hours each
year. To ensure all employees receive
training, the Directive further instructs that Training Coordinators shall be
designated.
Department personnel indicated lack of
training documentation was a result of untimely review and monitoring. (Finding 6, page 27)
This finding has been repeated
since 2000.
We recommended the Department adhere to
their Administrative Directive and ensure employees receive the required
training to enable them to perform their specific job duties.
Department officials accepted our recommendation and stated they
will make every effort to ensure employee training is documented. Training
Coordinators will be named for the General Office, School District and Field
Services areas. (For the previous
Department response, see Digest footnote #3.)
PAYROLL TIMEKEEPING SYSTEM NOT AUTOMATED
The Department-wide
payroll timekeeping system is not automated.
Each of the correctional centers employs several hundred employees,
and the related timekeeping system is maintained manually. Facility employees sign in and out, and
the sign-in sheets are sent to the timekeeping clerk. Other information, including notification
of absence and call-in reports, is also forwarded to the timekeepers. No automation is involved except for the
processing of payroll warrants.
From employees paid from the General
Office appropriation we noted:
·
1 of 25 employees’ vacation time was not properly
calculated by 22.5 hours.
·
1 of 75 employees’ lump sum amount was not properly
calculated by 26 days, resulting in approximately $6 thousand of an
underpayment to the employee.
Officials indicate there are
insufficient funds available to develop a Department-wide system to replace
the outdated manual system used for over 14,000 employees. The Department requested funding for an
automated timekeeping system and that funding was included in the FY05
Capital Budget. In addition, the
Department is working with Department of Human Services (DHS) to investigate
the possible use of the DHS timekeeping system.
Prudent business practices suggest that controls available
through an automated timekeeping system can provide greater efficiency and
reduce the potential for costly errors or employee abuse. (Finding 7,
page 28) This
finding has been repeated since 1998.
We recommended the Department implement an automated
timekeeping system and correct any prior underpayments or overpayments.
The Department accepted our recommendation
and noted they are currently pursuing several options for the
automation of the timekeeping system. One avenue under investigation is the
modification and utilization of the Department of Human Services’ system. All
system options are being carefully weighed to ensure the advantages are
greater than the limited resources expended. (For the previous Department response, see Digest
footnote #5.)
FAILURE TO PROVIDE
NOTIFICATION OF RELEASE FROM THE DEPARTMENT’S JUVENILE DIVISION
The Department did not provide written notification of the
release of persons from the Department’s Juvenile Division as required by the
Unified Code of Corrections.
During our testing of individuals released from the Juvenile
Division we noted:
·
The Department did not notify the State’s Attorney of
the county from which the offender was convicted for 15 out of 35 individuals
tested.
·
The Department did not notify the Sheriff of the
county from which the offender was convicted for 15 out of 35 individuals tested.
·
The Department did not notify the State’s Attorney of
the county into which the individual was to be paroled or released for 14 out
of 35 individuals tested.
·
The Department did not notify the Sheriff of the
county into which the individual was to be paroled or released for 14 out of
35 individuals tested.
·
The Department did not notify the municipal law
enforcement agency where the individual’s arrest occurred, individual had
resided or commission of offense took place for 16 out of 35 individuals tested.
The Unified Code of Corrections requires the Department to
establish procedures to provide written notification of the release and/or
escape of any person from the Juvenile Division to certain individuals. Department personnel indicated the notifications
were not sent due to an oversight.
(Finding 9, pages 30-31) This finding has been repeated since 2002.
We recommended the Department follow the mandated reporting
requirements and provide written notification of the release of any person
from the Juvenile Division to persons and agencies specified by the Unified
Code of Corrections.
The Department accepted our recommendation and noted written
direction was given to the Juvenile Facilities regarding the procedures for
notification of release of any person from the Juvenile division. Wardens at
the juvenile facilities were given direct instruction to ensure their
compliance with this mandate. (For
the previous Department response, see Digest footnote #5.)
Failure to Provide Written Notification of the
Placement of Persons into Half-way Houses
The Department did not provide the required written
notification of the placement of persons into half-way houses (Transition
Centers) as required by the Unified Code of Corrections.
During the examination period the Department placed 2,273
individuals into Transition Centers.
In 25 out of 50 files tested, the Department did not send the required
written notification of a person’s placement in a Transition Center to the
required individuals 15 days prior to the person’s placement.
The Unified Code of Corrections requires the Department to
give written notice of the identity of the person to be placed in a
Transition Center 15 days prior to the placement to the State’s Attorney, and
the Sheriff of the county and also to the proper law enforcement agency of
the municipality in which the Transition Center is located.
Department personnel indicated the
failure to provide written notification in all instances was due to an
oversight. (Finding 13, page
38)
We recommended the Department provide the written
notification to all entities required within 15 days of the release of any
person to a Transition Center as required by State statute.
Department
officials responded they have implemented the recommendation and noted
that written direction was given to all facilities regarding the notification
requirements for placements of persons into transition centers (half-way
houses). Automatic reports are generated by the tracking system. The reports
will be distributed to the appropriate parties as notification of the
placement in a half-way house (transition center).
Procedures Regarding Post Release Treatment
Programs for Juvenile Offenders Not Followed
The Department did not follow its own established procedures regarding
background investigations and on-site inspections for post release treatment
programs for juvenile offenders.
We selected 8 post release treatment
programs to test if the Department’s guidelines were being followed. We noted in all 8 post release treatment
programs the Department did not perform employee background investigations of
facility employees. In addition, we
also noted the Department did not do on-site inspections of any of the 8
programs tested.
Department personnel indicated that
while they do not do an on-site inspection of the facility, the Department
does reviews of the youth that are in the program. (Finding 14, pages 39-40)
We recommended the Department follow established procedures
to ensure the security of Residential Youth Care Facilities.
The Department accepted our recommendation and noted they
will make every effort to comply with the policies and procedures. The post
release placements are made to contractual entities throughout the State of
Illinois. There is a stringent process prior to being certified as a vendor
for juvenile placements. Vendors must submit documentation of suitability for
the placement, references and must follow the contract specifications.
Department Appropriation Used to Pay AN Expenditure of anOther State
Agency
During our testing, we noted the
Department paid an invoice from its appropriation for $14,530 to buy file
folders, which were shipped directly to the Illinois Prisoner Review
Board. Department officials stated
the expenditures were for inmates parole case files.
The paying of an expenditure for
another State agency distorts the Department’s operating statistics and
circumvents the appropriation control of the Legislature. The State Finance Act’s voucher
certification clause, which is signed by the agency head, states, “I certify
that the goods or services specified on this voucher were for the use of this
agency…” (Finding 20, page 51)
We recommended the
Department utilize its appropriations for goods and services specific to the
Department of Corrections as set forth in the appropriation bill. Furthermore, we recommend that the
Department comply with the State Finance Act.
Department
officials responded they have implemented the recommendation and noted
they will ensure compliance with the State Finance Act and the appropriations
bill in regards to this finding. This one expenditure was a one-time event
made for the purchase of folders for files of DOC inmates in order to
properly prepare for parole hearings by the Prisoner Review Board.
OTHER
FINDINGS
The
remaining findings are reportedly being given attention by the
Department. We will review the
Department’s progress toward the implementation of our recommendations in our
next audit.
Mary Ann
Bohlen, Accounting Manager, Division of Finance and Administration of the
Department of Corrections, provided the agency’s responses.
FACILITY OPENED AND FACILITIES CONSTRUCTED BUT NOT
OPEN
The Sheridan
Correctional Center, a medium security men’s facility, was closed in August
2002 and then reopened in January 2004.
This facility is now dedicated to provide drug treatment and community
crime reduction programs to inmates.
During fiscal year 2002 the Department took possession of
the newly constructed 1,800-bed maximum-security prison at Thomson. This $140 million facility incorporated
new security technology and new building designs not found in any of the
other Department’s facilities. The
Department has not housed any inmates at this facility since it was
completed. The Department expended
$669,200 in fiscal year 2003 and $1,831,563 in fiscal year 2004 to maintain
the facility.
Construction of the Illinois Youth Center (IYC) – Rushville
was completed during the summer of 2003.
This facility cost approximately $30 million and was designed as a
close custody intensive treatment facility to house as many as 288 juveniles
in a high-security setting. The Department has not housed any juveniles at
this facility since it was completed.
The Department expended $20,300 in fiscal year 2003 and $342,400 in
fiscal year 2004 to maintain the facility.
AUDITORS’ OPINION
Our
auditors stated the Department’s financial statements as of and for the year
ended June 30, 2004 were fairly presented in all material respects.
_____________________________________
WILLIAM G. HOLLAND,
Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
PTW &
Co. were our special assistant auditors for this engagement.
DIGEST FOOTNOTES
#1 STATE HOUSING BENEFITS
NOT PROPERLY REPORTED AS INCOME–
Previous Department Response
2003: Recommendation accepted: The Department
is reviewing revisions to the agency’s state housing directive that will be
consistent with Internal Revenue Regulations.
#2 Inadequate
Procedures Regarding State Vehicles–
Previous Department Response
2003: Recommendation accepted: In July 2001,
the Department implemented a new automotive database, RTA Fleet Management
System, this system tracks preventative maintenance and will enable
management and staff to review maintenance history. We have been keeping up with oil changes, and have posted
appropriate data into RTA for fiscal year 2002. In July 2002 a memo was sent
to all employees with personally assigned vehicles reminding them that they
must comply with Administrative Directive 01.02.106, duties include
completing proper certification forms, preparing monthly mileage report,
fueling at approved fueling sites, maintenance of vehicles and documenting
such on the monthly mileage reports, and reporting accidents
immediately. As of December 2002, the
Department implemented Central Management Services’ automated accident repot
filing system, which has greatly enhanced the timeliness of accident
reporting.
#3 Inadequate Documentation of Employee Training and No
Designated Training Coordinators –Previous
Department Response
2003: Recommendation accepted: General Office
and Field Services – Training Coordinators will be designated and their names
submitted to the Office of Staff Development & Training, and trained in
accordance with Administrative Directive 03.03.102. It will be their responsibility to ensure compliance with
training requirements
School
District – The School district has re-implemented a system to maintain an
“Employee Training Record” for all Central office employees to document the
training hours received by each employee.
Training Records for School District staff working within an
instruction will continue to be maintained at each institution.
#4 PAYROLL
TIMEKEEPING SYSTEM NOT AUTOMATED –Previous Department Response
2003: Recommendation accepted: The Request for
Proposal was completed during fiscal year 2002 and submitted to Central
Management Services (CMS) for a comprehensive accounting system, which
includes an automated payroll and timekeeping system. This Request for Proposal is on hold due
to the budget crisis. In the
meantime, the Department is in discussion with CMS to allow Corrections to
use the Department of Human Services (DHS) timekeeping system with
modifications to fit Corrections timekeeping needs. The Department is currently utilizing the DHS payroll system.
#5 FAILURE TO PROVIDE NOTIFICATION OF RELEASE
FROM THE DEPARTMENT’S JUVENILE DIVISION –Previous Department Response
2003: Recommendation accepted: The Department
of Corrections, Juvenile Division, has revised the “Notice of
Release/Discharge from Juvenile Facilities” form to include juvenile
delinquent paroles, juvenile felon mandatory releases, escapes and
runaways. The required notification
list, pursuant to 730 ILCS 5/3-14-1, has been added at the bottom of the
form. The Administrative Directive
01.07.211 A-J (Notification of Releases – Adult and Juvenile) and
Administrative Directive 05.01.130 (Escape Plans) shall both reflect the
procedures for using the revised form.
The Department of Corrections, Juvenile Division, shall ensure
compliance with the required notifications as mandated in the Statute.
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