State review recommends California Coastal Commission tighten management and billing practices

A state review of the California Coastal Commission recommended late last week that the powerful planning agency improve some of its management practices and billing procedures to avoid future budget shortfalls.

The California Department of Finance began its inquiry in June after the commission required a $1.45-million bridge loan from the state to pay its bill during a cash flow problem. The loan — a not uncommon practice in state government — was paid back before its October deadline.

Commission officials said at the time that the agency fell behind in receiving grant payments and reimbursements from local, state and federal sources due to personnel issues, the illness of a staff member and complexities of the billing process.

 In what they called a non-audit review, finance officials evaluated the commission’s fiscal management and internal controls for the period of July 1, 2015, to June 30, 2016.

Released on Friday, the inquiry found that the agency’s billing system resulted in invoices staying open for more than 121 days and that a $79,998 payment did not reach its accounting unit until four months after it was sent to the commission.

About $2.7 million of the commission’s $22.8-million budget last year came from grant payments and reimbursements for work done for other governmental agencies, such as Caltrans.

Among other things, the finance department recommended that the commission centralize its billing practices, develop written procedures, develop an invoice schedule and increase the frequency of its billings to speed up the collection of money due the agency.

“Because of the varying processes and various staff performing them, no unit is fully accountable for coordinating and ensuring timely billing and collections,” the 31-page review stated.

In a written response to the findings, commission officials said they agree with the recommendations and have implemented some of them already.  the agency might not have enough staff to fulfill the recommendations.

“It is likely that some cash flow problems will continue to be an issue every June (when the state fiscal year ends),” the commission stated. “We recommend the Department of Finance consider an ongoing year end cash flow loan” to give the agency time to collect payments.

The review further recommended that the commission develop other budgeting approaches to raise funding rather than rely on payments from utilities and private companies in return for expedited work related to their projects.

Finance officials stated that the payments give the appearance of a conflict of interest and raise the question of favoritism on the part of the commission. The agency received $375,000 in such payments for fiscal year 2015-16.

The commission issued a sharp rebuke to the recommendation, stating that the finance department and the state Legislative Analysts Office encouraged the agency to take that approach to diversify its revenue sources. Agency officials added that there were no actual conflicts of interest.

In addition, the review urged the commission to consistently issue written performance evaluations of staff members annually, increase collaboration between commissioners and the agency’s executive director to clarify their roles, ensure that institutional knowledge is not lost due to retirement of veteran staff and reduce the amount of employees who have more than 640 hours of leave on the books.

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