MINUTES OF MEETING OF THE
AUDIT SUBCOMMITTEE OF THE LEGISLATIVE COMMISSION
Legislative Building
401 S. Carson Street, Room 4100
April 23, 1998
A meeting of the Audit Subcommittee of the Legislative Commission (NRS 218.6823) was called to order by Chairman Joseph E. Dini, Jr., at 9:40 a.m., Thursday, April 23, 1998, in room 4100 of the Legislative Building, Carson City, Nevada.
AUDIT SUBCOMMITTEE MEMBERS PRESENT:
Assemblyman Joseph E. Dini, Jr., Chairman
Assemblyman Morse Arberry, Jr., Vice Chairman
Assemblyman John W. Marvel
Senator Lawrence E. Jacobsen
Senator Raymond D. Rawson
AUDIT SUBCOMMITTEE MEMBERS ABSENT:
Senator Joseph M. Neal, Jr.
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Gary Crews, Legislative Auditor
Stephen Wood, Chief Deputy Legislative Auditor
Marie Cavin, Audit Secretary
Jane Bailey, Deputy Legislative Auditor
Timothy Brown, Audit Supervisor
Rocky Cooper, Audit Supervisor
Darin Conforti, Deputy Legislative Auditor
Stephany Gibbs, Deputy Legislative Auditor
Lee Hanson, Data Processing Audit Manager
Douglas Peterson, Deputy Legislative Auditor
Lee Pierson, Deputy Legislative Auditor
Mike Spell, Audit Supervisor
Paul Townsend, Audit Supervisor
Item 1--Approval of the minutes of the meeting held on January 15, 1998.
ASSEMBLYMAN ARBERRY MOVED TO APPROVE THE AUDIT SUB-
COMMITTEE’S MINUTES OF JANUARY 15, 1998. THE MOTION WAS
SECONDED BY ASSEMBLYMAN MARVEL AND PASSED UNANIMOUSLY.
Item 2--Follow-up on Department of Administration, Risk Management Division Audit Recommendations.
Gary Crews introduced Lee Pierson to present the audit.
Mr. Pierson explained in December 1997, the Legislative Auditor completed an audit of the Risk Management Division. That report contained 10 recommendations addressing weaknesses in the Division’s administration of the state’s group insurance program. At that time, the Division indicated that 8 of the 10 recommendations had been implemented.
On January 15, 1998, the auditors presented the Risk Management audit to the Audit Subcommittee. The Audit Subcommittee directed the auditors to determine if the Division had taken action on the 10 recommendations, and if those actions were sufficient to address the problems identified in the audit report. Mr. Pierson found the Division has taken some action to implement each of the 10 recommendations; however, the actions taken on 9 of the recommendations were not sufficient to fully address the problems identified in the audit report.
In the Division’s response in December, it indicated two recommendations were in the process of being implemented and, of the eight remaining recommendations, only one was not fully implemented. Mr. Pierson briefly discussed the analysis of the recommen-dations not fully implemented.
In response to Assemblyman Dini’s question, Mr. Pierson feels the Risk Management Division is working towards its goal. Mr. Crews added that at the last meeting the Division indicated the recommendations were implemented. At the direction of the subcommittee, the auditors followed-up on the Division and found this was not necessarily the case. Since then, effort has been put forward to implement some of those recommendations. It appears it is working on those issues now.
Randy Waterman, Acting Risk Manager, feels the Risk Management Division has made significant progress on most of the recommendations. Recommendations 5 and 6 dealing with reconciliations continue to be a problem. The Division employees are working closely with Department of Information Technology. The other eight recommendations have virtually been completed, with the exception of finalizing all of the written procedures relating to them. Time and resources are the biggest hold up.
Assemblyman Marvel asked when the written documentation will be finished and Mr. Waterman felt some should be done by the end of May, and others are more complicated and should be completed by the end of the year.
Senator Jacobsen inquired if Mr. Waterman sat down with all of the employees to discuss the audit and the problems found. Mr. Waterman replied that he did. Everyone in the office is fully involved in the process of implementing the recommendations.
ASSEMBLYMAN MARVEL MOVED TO APPROVED THE REPORT
ON THE RISK MANAGEMENT DIVISION, AUDIT RECOMMENDATION
FOLLOW-UP. SECONDED BY SENATOR JACOBSEN AND PASSED UNANIMOUSLY.
Item 3--Presentation of audit reports.
A. Department of Prison, Inmate Classification
Gary Crews introduced Darin Conforti, Deputy Legislative Auditor to present the report.
Mr. Conforti explained inmate classification is a major part of the criminal justice and prison system in the State. Chapter 209 of NRS authorizes the Director of the Department of Prisons to establish a classification process. Once criminal offenders are sent to prison, inmate classification is the process by which the Department assigns offenders to a custody and an institution or facility. The difference between an institution and a facility is an institution is a secure prison of medium security design or higher, and a facility is a conservation camp or a restitution center with minimum security or lower. The Department of Prisons has 20 institutions and facilities that house inmates.
Over the past 10 years the inmate population has significantly increased. By fiscal year 1997, the population had increased 74% to 7,792 and is projected to increase an additional 16% to 9,282 by fiscal year 1999. An influential factor in population growth is the incarceration and sentencing practices of the State. Based on the most current national data, Nevada incarcerates more criminals and sentences a greater percentage of its criminals to longer periods of time than other states. At the same time, Nevada has one of the least expensive prison systems in the country. On average, it costs Nevada $39.87 a day to incarcerate an inmate compared to the national average of $54.25 per day.
Mr. Conforti continued with the scope and objective of the audit. Specifically, the classification audit evaluated the process used by the Department of Prisons (DOP) to classify inmates. The scope of the audit included the current classification of all inmates under the jurisdiction of the Department as of April 19, 1997. The objective was to determine if the inmates were classified appropriately according to Department policies and procedures.
Mr. Conforti explained appropriate inmate classification is essential to running a safe and economical prison system. Accordingly, the Department of Prisons’ inmate classification process is designed to place inmates in a custody that ensures safety while economically using state funds. Although the classification process is well designed, even minimal classification errors can jeopardize public safety and result in the State spending thousands of dollars more than necessary to incarcerate criminals.
Some inmates were identified as not being classified to the lowest appropriate custody and some inmates were in a custody for which they were not eligible. The auditors believe the DOP can improve the classification process and ensure appropriate classification by expanding its use of the computer system, improving certain classification functions, and strengthening certain management controls.
The DOP’s goal is to classify each inmate to the lowest custody level necessary to ensure the protection of the community, staff, and other inmates. This is done through the classification process where each inmate’s behavior is assessed to determine how much supervision is needed for the inmate to be safely and economically incarcerated. Based on the assessment, the inmate is classified to a custody level and sent to an institution or facility that has the level of security necessary to manage the risk posed by the inmate.
An inmate will be placed at one of the four security levels; maximum/close, medium, minimum, or community trustee. The higher the level of security, the greater the operational cost. The majority of DOP’s inmates, 52%, are assigned to medium custody.
To ensure inmates are fairly and consistently assigned to a custody, the DOP has a primarily objective classification process. Each inmate’s custody is determined through a worksheet called a classification instrument. The instrument is made up of a risk factor score, mandatory criteria established in NRS and Department policy, and discretionary exclusions for staff judgement. Based on the auditors’ review of classifi-cation literature, DOP’s classification instrument is similar to those used in other states. They also felt the classification process is well designed; however, improvements can be made.
Mr. Conforti discussed weaknesses in the classification process limited DOP from meeting its goal of placing inmates in the lowest appropriate custody. Of 187 inmates tested, 35 were not in the lowest appropriate custody. The majority of these were at medium custody but should have been at minimum custody. Problems in the hold/detainer verification process and the health classification process led to most of these inmates remaining at medium custody.
Chairman Dini asked if part of the problem was a shortage of beds. Mr. Conforti answered overcrowding is a problem and does make decisions difficult at times, but the DOP has a pretty good system in place for managing that problem without taking unreasonable risks. Overcrowding should be less of an issue with all of the prison development going on right now.
A felony hold means another legal jurisdiction has convicted an inmate of a crime. A detainer means another legal jurisdiction wants to prosecute an inmate for a crime. Holds and detainers affect whether or not an inmate can go to minimum custody. Two problems were identified in the hold detainer verification process. First, Department policy does not provide a consistent time frame in which classification staff have to verify the hold or detainer. Second, classification staff do not always perform adequate verification.
An additional area DOP needs to address to ensure inmates are placed in the appropriate custody, is minimum custody criteria. The auditors found staff did not consistently apply some minimum custody eligibility criteria. In order to place an inmate to minimum custody or lower, staff have to be sure an inmate does not meet mandatory exclusions established in NRS and Department policy. Some of these exclusions require staff to make a subjective decision. Department policy may not provide enough guidance to ensure consistent decisions.
The Department needs to improve the inmate health classification process. The audit revealed inmates eligible for minimum custody often remained at medium custody because of problems in the health classification process. Health classification is conducted by the medical division to ensure an inmate’s medical and mental health needs are not placed at risk by being placed in the wrong institution or facility. Department policy sets specific time frames for when health classification should be conducted. Mr. Conforti found that the medical division has not conducted health classification in accordance with policy and the classification staff does not follow up on health classification issues.
Another area DOP needs to address to ensure inmates are place in appropriate custody is walkaways. Mr. Conforti explains a walkaway is an escape from minimum custody or lower. The auditors identified that some inmates who walked away from conservation camps and restitution centers were not in the proper custody. This is the severe consequence of not placing an inmate in the proper custody. The errors result in the public safety being jeopardized and will cost the State hundreds of thousands of dollars. Between 1994 and 1997, 10% of the inmates we tested that walked away, were misclassified. The auditors tested 119 inmates that had escaped or walked away. Of the 119 inmates, 116 were walkaways from conservation camps or restitution centers, and 3 were escapes or attempted escapes from secure institutions. Twelve of the 116 walkaways were not in the appropriate custody. Eleven of the 12 inmates were not eligible for the custody in which they were placed. The other inmate had a high risk factor score and a history of institutional violence.
Mr. Conforti added that walkaways were sentenced to additional prison time. Using fiscal year 1997 costs, he estimates the additional prison sentences will cost the State up to $500,000. This financial impact does not include the cost to recapture and prosecute the inmates, or future medical expenses. Three of the inmates jeopardized public safety by committing crimes while on escape status.
The auditors also identified that between July 1, 1995, and June 30, 1997, the number of walkaways and escapes decreased nearly 60%. According to DOP personnel, increased scrutiny of inmates placed at minimum custody and the restitution centers has contributed to the decrease in escapes and walkaways. Despite this assertion, the auditors believe the DOP needs to do a better job of ensuring inmates classified to minimum custody and the restitution centers meet eligibility criteria. Another explanation for the decline may be the 1995 change in sentencing laws which established a mandatory minimum time inmates must serve. According to DOP, this change impacted the number of inmates eligible for minimum custody. The audit recommended the DOP ensure inmates classified to minimum custody and the restitution centers meet eligibility criteria.
Mr. Conforti went over the three areas where DOP can enhance the classification process and ensure inmates are appropriately classified. First, classification staff can make better use of the Nevada Corrections Information System called an NCIS. Nearly all the misclassifications we identified could have been prevented or corrected through NCIS. Central Office and the institutions should make better use of the system. Second, DOP should expand the classification data stored in NCIS. The third area is management controls. Classification management can strengthen controls by increasing the use of management reports, having Central Office conduct evaluations of institutional classification practices, and expanding Central Office’s review of some inmates placed in close custody.
NCIS ability to generate management reports provides the ability to monitor inmate custody assignments to ensure they are appropriate. Used regularly, these reports can prevent inmates from remaining misclassified for long period of time. For example, the inmates Mr. Conforti identified misclassified due to holds and detainers could have been corrected through management reports.
NCIS is a key part of the classification process and at present, DOP has only one computer network specialist trained to program and administer the computer system. This is a concern because DOP has no outside source of technical support for NCIS. Consequently, if the computer network specialist left DOP, essential NCIS support functions could not be performed and the classification process would be at risk.
Evaluations of classification practices are required by Department policy, but have not been done. The auditors found institutional practices vary. Moreover, they found that about 60% of the misclassified inmates came from one institution. These inmates were overclassified. If the Central Office evaluates the classification practices of institutions, it can have reasonable assurance that institutions are conducting efficient and effective classification.
Assemblyman Dini asked why 60% was coming from one institution. Mr. Conforti responded that the nature of inmate classification is always moving and one of the most important functions to be done is caseworker follow-up to stay on top of inmate case factors as they change. It is the job of the classification staff to do the follow-up. Even though policy specifies follow-up should be done, it is still up to institutional management to make sure it gets done.
The value of Central Office evaluations is the ability to correct poor classification practices. Yet, the Chief of Classification and Planning may not have sufficient authority to change the classification practices at the institutions. The auditors believe the Department should evaluate the Chief of Classification and Planning’s authority to ensure it adequately facilitates the achievement of classification goals and objectives.
Mr. Conforti went over the last area needing to be addressed which is Central Office’s review of some inmates assigned to close custody. Department policy requires an inmate sentenced to life in prison with parole and an inmate sentenced to life in prison without parole to be initially classified to close custody for a period of observation. This is regardless of the inmate’s risk score which recommend the inmate be at a lower custody. When the period of observation is up, institutional classification staff deter-mine if the inmate remains at close custody without Central Office review. This may not ensure inmates are placed at the lowest appropriate custody. Including Central Office in the review process would help ensure the best decision is made. The report contains six recommendations to help DOP enhance the classification process and ensure inmates are in the appropriate custody. The agency accepted all 10 recommendations.
Bob Bayer, Director of Prisons, and Glen Whorton, Chief of Classification and Planning, thanked the auditors and will try to implement the changes.
Assemblyman Dini asked if their biggest problem is the resources. Mr. Bayer answered they will do as much as possible with what they have and then they will ask for additional resources, perhaps to back up the one computer person. He feels auditors put focus on some processes that need more attention.
Senator Jacobsen was concerned that each evaluation takes place at each individual institution, and asked if the administration has the chance to overrule classification judgements. Mr. Whorton explained the system is a centralized objective classification. When there is a recommendation from the institution to reduce a person’s custody level from minimum custody to the restitution center, it is reviewed by the Central Office. What the Central Office says is what occurs. It is required that an inmate be seen at least once every six months, face to face, by a caseworker.
ASSEMBLYMAN MARVEL MOVED TO ACCEPT THE AUDIT REPORT
ON INMATE CLASSIFICATION. SECONDED BY SENATOR RAWSON
AND PASSED UNANIMOUSLY.
B. Department of Prisons, Computer System Security
Mr. Crews introduced Lee Hanson, Data Processing Audit Manager, to present the report.
Mr. Hanson completed the audit of the Department of Prisons AS/400 computer system security controls which is different from the computer system used in Prison Classifi-cation. The AS/400 system handles the inmate banking, inmate payroll, canteen sales and inventory, warehouse inventory, and accounting systems. The objective of the audit was to determine whether the system controls provide reasonable assurance the Department of Prisons’ data, programs, and software are protected from unauthorized access.
To accomplish the audit objectives, the auditors interviewed Prison staff, reviewed computer system security policies and procedures, evaluated the design of the system controls, and tested whether controls were operating as prescribed. The auditors examined system controls, user access controls, user profiles, production library controls, and backup and recovery as of May 30, 1997.
Mr. Hanson found the AS/400 did provide reasonable assurance the data and programs are protected from unauthorized access. The front end controls were exceptionally strong because of the constant automatic monitoring of the user profiles. However, a few secondary system settings were found to be inconsistent with the higher support levels as established by the Department. When the settings were identified, the staff immediately set the values to higher levels. He also found the computer room was not protected from disasters, such as fire.
The Department of Prisons accepted both audit recommendations
Assemblyman Marvel asked how much it would cost. Mr. Hanson felt that if they had a fire extinguisher and smoke detector equipment it would, at least, get them started. The Department of Prisons has just installed a new backup system where the data will be stored off site.
Bob Bayer, Director of Prisons, testified they have already installed a smoke detector and they have made a number of changes in the room so it is not quite as cluttered. They are looking into the different kinds of fire suppression systems. This is the last thing they need to do and it will not cost a lot of money. If there are any things of consequence, they will request it in the upcoming budget, but right now they think they can do it with existing dollars.
Mr. Bayer explained to Assemblyman Arberry they have put two battery-style smoke detectors up right now rather than putting in a hard wire. This was the quickest way to ensure some kind of security. They are also looking into hard wiring.
Senator Jacobsen inquired about the adequacy of the room and Mr. Bayer replied he wants to relocate the room in the future to a better location.
ASSEMBLYMAN MARVEL MOVED TO ACCEPT THE AUDIT REPORT
ON THE DEPARTMENT OF PRISONS, COMPUTER SYSTEM SECURITY.
SECONDED BY ASSEMBLYMAN ARBERRY AND PASSED UNANIMOUSLY.
C. Department of Information Technology
Gary Crews introduced Doug Peterson, Deputy Legislative Auditor, to present the audit report on the Department of Information Technology.
Mr. Peterson explained the audit included an evaluation of the Department’s system of management controls and included a review of selected information systems worked on by the Department. The objective of the audit was to determine if the Department has a system of management controls sufficient to ensure its services meet the needs of state agencies.
The Department of Information Technology (DoIT) was created to ensure the state’s information needs are met economically. Mr. Peterson explained he will discuss the following areas in his presentation: resources spent on information technology in recent years, problems with selected systems, and the Department’s needs to strengthen management controls in order to manage the inherent risks in the development process.
Continuing, Mr. Peterson mentioned that although the State does not track total expenditures for DoIT, they estimated that during fiscal years 1996 and 1997 the State spent more than $100 million on information technology. DoIT’s expenditures have risen from $8.1 million in fiscal year 1991 to $23.2 million in fiscal year 1996—an increase of 188%. Their budget for fiscal year 1998 is nearly double that of the previous year—increasing from $22.6 million to $43.8 million. The number of employees authorized for DoIT has also grown much faster than the rest of state government. In fiscal year 1991 DoIT had 81 employees; by fiscal year 1996 it had 143—an increase of 77%. Their budget for fiscal year 1998 included 44 new positions —an increase of 31% over the prior year. Mr. Peterson explained the auditors recognize the state’s investment in technology will only continue to grow. 1) More and more processes will be automated; 2) new state programs and more participants will be needed; 3) there will be new technologies; and 4) the Department will need to maintain the current and future systems.
Recent legislative audits have identified problems with systems and as part of this audit they reviewed eight systems. They found certain problems including cost overruns, project delays, and poor system performance. Each of the eight systems reviewed exceeded the amount budgeted for the project. The total development costs budgeted for these systems was $25.4 million and to date over $61 million has been spent. The individual variances for these systems range from 1% over budget to more than 1,000% over budget. In addition, some systems will require additional development costs to become fully functional.
Some of the budget variances may be due to poor cost estimates or difficulty in accounting for project costs. Mr. Peterson added the auditors also recognize some variances can be to accommodate changes in laws and regulations for both state and federal programs. Large scale variances are also caused by the inability to control costs and by poor project management. Both of these are symptoms of ineffective management controls.
On average, the eight systems took twice as long to complete as anticipated. An example was the Portable Tax Auditor System which was estimated to take 4 months to complete and eventually took 35 months to complete. Five of the systems had major functionality problems. These problems included systems that create errors, do not process critical information or provide needed reports, or do not operate at all. Poorly performing systems can impact agency budgets and the efficiency and quality of services to the public, and the benefits of poorly performing systems are questionable.
The auditors interviewed top officials at 16 state agencies to determine their level of satisfaction with DoIT’s services and found many were less than satisfied.
Mr. Peterson added DoIT lacks management controls. The Department lacks basic information to monitor the development of the state’s information projects and does not provide complete, accurate, and timely information on the status of projects. However, the director has developed a temporary management report to overcome some of these problems.
As part of the audit the auditors requested basic information on the status of projects such as budgeted and actual costs, and completion dates on projects. DoIT indicated to the auditors they could not provide this without additional programming. When the data was received by the auditors, 40% of the work orders in the DoIT’s tracking system were missing information such as costs, hours, and dates. DoIT’s billed programming costs for the BISON system were more than $200,000; however, staff recorded only $5,500 in the project tracking system. The auditors also reported DoIT’s completion dates were different than those reported by the user agencies.
Mr. Peterson reported DoIT does not always bill agencies for the full cost of developing information systems. As a result, the true cost can be more than reported. Four of the eight projects reviewed had unbilled work and for two projects agencies would have needed Interim Finance Committee approval had DoIT billed for all work on the projects.
Mr. Peterson found the Department does not always follow management regulations which include requiring agencies to submit written requests for services, conduct feasibility studies, or require agencies to evaluate completed information systems. Of the 15 in-house project files reviewed by the auditors, 9 did not contain a written request. A feasibility study was not conducted on four of the eight projects reviewed. Of the eight projects reviewed for user agency approval, five did not have evidence of project evaluation by the user agency once the project had been finished. Involving user agencies is extremely important because it provides assurance requirements have been met and it prevents misunderstandings as to when a system is completed.
The Department of Information Technology does not provide adequate supervision to employees. This includes work performance standards, performance evaluations, and the monitoring of overtime.
DoIT’s efforts to implement sound management controls have been hindered by long-standing organization and planning problems. These include high turnover in top management positions, constant changes in the organizational structure, inadequate strategic planning, lack of guidance and direction from advisory committees, and failure to implement audit recommendations.
Mr. Peterson informed the subcommittee the Department of Information Technology has not implemented or sustained corrective action on many prior audit recommen-dations. The following problems from the 1984 audit remain unresolved: monitoring overtime, conducting cost/benefit analysis before projects start, formally requesting projects, conducting acceptance testing once projects are finished, and using an advisory committee. In addition, sufficient action has not been taken to address many recommendations from the 1988 audit.
The auditors realize DoIT has made progress toward addressing some of its long-standing management control problems. The current director has recognized many control weaknesses and has taken steps to address them. Although these are a good start, much work remains to be done. Sustained top management attention and commitment to continuously improve performance will be needed to ensure long-term implementation of management controls.
The audit contained 10 recommendations. DoIT accepted all 10 recommendations.
Assemblyman Marvel inquired how the unbilled costs are paid. Mr. Peterson explained DoIT has an overhead rate they use to account for certain individuals in the department that are typically not billed. When they do work it is simply run through their system as unbilled costs and eventually someone has to pay for that. Mr. Marvel thought all agencies had to pay DoIT for services rendered and if they are not billing, how can they be paid. Mr. Crews replied they end up spreading it to all user agencies.
Marlene Lockard, Director of the Department of Information Technology, reported to the subcommittee that of the 10 recommendations, 90% of those are completed and they expect full completion by the end of May. She added that in the last two years the Department recognized and pointed out many of the management concerns that are in the audit to the auditors during their many discussions. She feels they have moved very aggressively in tackling the management problems and have policies and procedures in place with strict adherence to those policies and procedures.
Ms. Lockard discussed the new Technology Improvement Project and Investment Justification form which is a comprehensive document to help and assist state agencies in planning their information technology projects. This form is also a mechanism for DoIT to properly review and assess different proposed technology projects and will track projects from conception to completion. This should eliminate many problems identified in the audit report. In addition, DoIT is going to implement what has been referred to in the industry as the Ten Commandments of Relationships with Program Agencies. She added they have developed information and programming procedures for the programming section so they all follow the same uniform practices and procedures within the agency.
Ms. Lockard noted in her response to the audit that she was very disappointed the audit did not address the funding issue for DoIT which she feels is one of the core problems for trying to develop successful comprehensive technology projects. It is very difficult to be responsive 18 months ago in planning and estimating technology projects. DoIT requested money for a funding study which was approved by the Legislature and this study is under way. Hopefully there will be some guidance and information by the end of May to help implement some of the recommendations.
Ms. Lockard informed the committee some of the projects reviewed were done by outside contractors and the audit does not draw the distinction between the manage-ment role of DoIT and outside contracted projects versus in-house projects. This is an important distinction to make. She stressed they should all be successful, but there are different approaches and responsibilities when a project is contracted to an outside third-party vendor.
Senator Rawson noticed the number of exempt agencies and that they are putting into their planning efforts a high-speed backbone in Nevada that could be beneficial to everyone in the State. He asked if there was some way to coordinate these efforts to speed the process. Ms. Lockard explained there is an exemption with certain parts of state government so the audit leads the reader to believe DoIT has total control over all technology projects. They do not and this is part of the problem. She has done quite a bit of research and thinks there can be a hybrid approach where there is one overall encompassing standard technology methodology applied and planned for state government to follow. She felt this is the direction DoIT has to move so it can fulfill the mission of enforcing statutes.
Senator Rawson added that the backbone is going to put the State significantly behind some of the other states. Ms. Lockard mentioned they are working on a project in collaboration with the Department of Transportation and the University System for that purpose. They all have the same goal and objective, and all three entities recognize the importance of the collaboration to fill the state’s mission. Senator Rawson suggested DoIT not try to go through another legislative session without having the authority needed to do this.
Senator Rawson had another major concern that was not really addressed in the audit and that is the reasons for the high turnover. He felt that by the next session the salary issue needs to be addressed for stability. Ms. Lockard replied that Gardner Group takes a full three-year implementation period after putting in a new structure and standards before the benefits can be seen. When there is instability and different approaches in starting over again, an organization is constantly in chaos and turmoil. In technology a stable environment is needed.
Senator Rawson expressed his frustration with those companies the State contracts with and then they steal the employees. Ms. Lockard said the recruitment and retention issue is a major issue for government organizations and the private sector. Currently, there are over 350,000 technology jobs vacant that no one has applied for.
Senator Jacobsen asked if the State had been penalized in any manner for not fulfilling some of the requirements imposed by the Federal Government. Ms. Lockard replied they have not, but with the NOMADS issue there could potentially be some penalties.
Assemblyman Dini inquired on the status of the State for the year 2000. Ms. Lockard explained DoIT has renovated over 2 million lines of code and they are moving right along on the renovation. The bottleneck is in testing and they are trying to get more help to the year 2000 team.
Assemblyman Marvel asked if the State of Nevada is getting caught up on the NOMADS project. Ms. Lockard noted Nevada is not the only state behind on the project. It is almost universal. Only three or four states have completed their Welfare Reform.
ASSEMBLYMAN MARVEL MOVED TO APPROVE THE AUDIT ON
THE DEPARTMENT OF INFORMATION TECHNOLOGY. SECONDED
BY SENATOR JACOBSEN AND PASSED UNANIMOUSLY.
D. 1997 Statewide Single Audit
Mr. Crews explained the Statewide Single Audit is an audit they contracted for with the firm of Kafoury Armstrong and Co. It is a three-year contract awarded by the Audit Subcommittee. This is the first year of the audit under the contract. He then introduced Tim Brown, Audit Supervisor, who coordinates and monitors the activities of the contractor to go over the audit.
Mr. Brown explained Kafoury Armstrong and Co. issued an unqualified opinion dated December 12, 1997, for the Single Audit of the State of Nevada for the year ended June 30, 1997. The auditors’ report on compliance and internal controls dated January 22, 1998, identified no material weaknesses or noncompliance with applicable laws, regulations, contracts, or grants. Kafoury Armstong and Co. reports the schedule of expenditures of federal awards for the year ended June 30, 1997, is fairly stated. The schedule shows total federal financial assistance expenditures of $819,000,000, of which over 86% were expended on programs exceeding $3 million in annual expenditures. This year’s report contains four recommendations. The auditors indi-cated 8 of the 21, 1996 recommendations have been fully implemented, 2 had no action, and 11 are no longer applicable.
Mr. Brown explained to the subcommittee why certain recommendations were not implemented. These recommendations had to do with the allocation, through data processing, of costs to various cost centers. The agency was in the process of implementing those recommendations when the auditors were in their office to audit for the current year. Follow-up will be done during the next audit.
Mr. Crews pointed out there were 4 recommendations this year and in the prior year there were 21 recommendations. This does not mean anything because the federal government used to require all instances of noncompliance be reported and that rule was changed to material issues should be reported. That is why it went from 21 down to 4.
ASSEMBLYMAN ARBERRY MOVED TO APPROVE THE SINGLE AUDIT
OF THE STATE OF NEVADA FOR THE YEAR ENDED JUNE 30, 1997.
SECONDED BY SENATOR RAWSON AND PASSED UNANIMOUSLY.
E. Nevada Disability Advocacy and Law Center
Gary Crews introduced Jane Bailey, Deputy Legislative Auditor, to present the report.
Ms. Bailey informed the subcommittee the Legislative Auditor was requested to perform an audit of the Nevada Disability Advocacy and Law Center (NDALC) by a Legislative Letter of Intent dated July 22, 1997. In September 1997 the Legislative Commission approved the request for this audit. She explained they were not able to complete the audit because NDALC would not provide complete access to agency files; however, the report does contain findings, conclusions, and recommendations based on the limited work they were able to complete.
This audit was intended to cover the financial, administrative, and program activities of NDALC for the period July 1, 1995, through September 30, 1997. The audit objectives were to evaluate NDALC’s compliance with its policy and procedures, federal requirements, state contracts, and a Legislative Letter of Intent. In addition, the objectives were to include verification of NDALC’s performance measures reported to the State and federal granting agencies. The auditors were not able to complete the audit objectives because NDALC would not provide complete access to agency files.
Ms. Bailey noted the auditors were not able to determine if NDALC complied with state contracts and federal grant requirements because they could not verify program information reported to the state and federal granting agencies. In addition, they could not determine if NDALC complied with certain terms of its contract with the Department of Business and Industry because they could not verify if NDALC conducted investigations of incidents reported to it by the Division of Mental Hygiene and Mental Retardation.
Ms. Bailey informed the subcommittee they were not able to determine if NDALC complied with its policy and procedures for case handling, supervisory review, or investigations because they could not review client or investigative files. They were also unable to verify if NDALC implemented the recommendations of the last audit because they were not allowed access to client files and information to support the numbers reported to federal granting agencies and the Nevada Legislature. In addition, they were not able to determine the timeliness of NDALC’s actions on cases and investigations.
Ms. Bailey found NDALC does not follow its policy and procedures for expenditures because it lacks adequate internal controls. As a result, some expenditures incurred during federal fiscal year 1997 may not be allowable under federal guidelines for nonprofit organizations. NDALC’s Board of Directors has not complied with two federal acts and its Articles of Incorporation because of high turnover and extended vacancies on the Board. High staff turnovers and vacancies may have contributed to diminished services being available to individuals with developmental disabilities or mental illness, including investigations of suspected incidents of abuse or neglect in Nevada’s inpatient facilities. In addition, the activity measures reported to state and federal granting agencies may not be accurate.
The auditors’ limited review of NDALC expenditures revealed NDALC did not follow its policy for expenditures, including severance pay, employee travel, and purchase of equipment. Therefore, some costs may not be allowable under federal grant guidelines for nonprofit organizations which could result in reduction of future grants.
Assemblyman Marvel asked if any federal agency audits NDALC. Mr. Crews responded they contract with a private auditor to conduct an audit on an annual basis which is a requirement of A-133. He does not believe they get into the depth the Legislative Auditors do. Based on the auditors’ limited review, they found considerable problems within the agency.
Although the limited access to agency files did not allow the auditors to determine the exact cause of these problems, management’s disregard for NDALC’s policy may have contributed to noncompliance.
Ms. Bailey found that severance payments are not in accordance with NDALC’s policies. NDALC paid about $36,000 in severance pay to two former employees. In both cases these payments did not comply with NDALC’s established policy and, therefore, they may not be allowable costs under OMB Circular A-122. In one case, at the time of the employee’s termination, NDALC’s policy allowed for payment of one month’s severance pay for permanent employees and no severance pay for proba-tionary employees. The Board of Directors authorized negotiation of a severance pay agreement with the employee almost six months after the employee was terminated. At the same Board meeting six months after the employee’s termination, the Board amended NDALC’s policy to allow severance payments to probationary employees at the Board’s discretion. The following month NDALC paid the employee almost $13,000, or an amount equal to 14 weeks of pay plus one week’s vacation pay.
In the second case, NDALC’s files show the Executive Director resigned in July 1997. Nine days prior to his resignation, NDALC’s policy allowed the Executive Director two months’ severance pay if he was terminated by the Board. However, nine days before his resignation, the Board amended NDALC’s policy to allow the Executive Committee of the Board to provide additional severance pay to the Executive Director. NDALC paid the former Executive Director $23,462, or four months’ severance pay and three weeks’ vacation pay. In addition, NDALC’s policy allows for payment of severance pay only in instances where the employee is terminated; the former Executive Director resigned.
NDALC’s controls did not ensure travel expenses were processed according to established policy and procedures and internal control objectives were achieved. NDALC spent about $27,000 on travel during fiscal year 1996. The auditors’ review of employee travel claims and charge card billings revealed instances where NDALC did not follow its policy and procedures. These included reimbursing one employee for travel and other expenses even though the request for the expenses were as much as 10 months old. Policy requires requests for reimbursements be submitted within 30 days of the expense. In addition, one employee was found to have purchased at least 15 airline tickets in a two-month period in 1997 using NDALC’s charge card. Some of these tickets were used for personal travel for the employee and a friend. Some of the airfare was repaid five months after the expense was incurred, but not until after the employee had resigned and after a Legislative Letter of Intent requesting this audit was issued.
Assemblyman Arberry asked how much of the money was repaid. Ms. Bailey did not have the actual number with her, but she did know that it was not 100% of the amount. Mr. Arberry asked her to find out the exact amount. He would like someone to repay the money.
NDALC files also contain no documentation that out-of-state travel by the former Executive Director was approved by the President of the Board of Directors as required by NDALC policy.
Ms. Bailey also found NDALC has not established appropriate policy and procedures for the use of its charge cards, allowing staff to bypass Board control over purchases of equipment and publications.
NDALC did not comply with provisions of its contract with the Department of Business and Industry or with a Legislative Letter of Intent issued in July 1997. The Letter of Intent and NDALC’s contract with the Department of Business and Industry require NDALC to submit monthly financial and operational reports to the Interim Finance Committee. As of December 29, 1997, NDALC had not submitted the required reports.
NDALC’s contract also requires them to submit monthly status reports to the Interim Finance Committee on progress toward resolution of coordination issues and the development of client protocols involving access to the Division of Mental Hygiene and Mental Retardation client files and conduct of investigations. As of the end of 1997, NDALC has not submitted these required reports.
The Letter of Intent also recommended NDALC’s contract with the Department of Business and Industry be strengthened to include a provision for the Director of the Department of Business and Industry to serve on the NDALC Board of Directors. The Acting Executive Director of NDALC indicated the agency would accept the Director on the Board if the Governor would appoint her to one of the two Governor appointed board positions. Subsequent to the conclusion of the audit, the Director was appointed by the Governor to the Board of Directors.
Several key NDALC staff positions have remained vacant for extended periods since July 1995. These vacancies may have caused problems with case handling continuity and the amount of services delivered to the disabled. Key positions have been vacant 31% of the time since July 1995. The Director of Advocacy Services and the two Investigator positions were vacant more than 50% of the time from July 1, 1995, through September 30, 1997. These extended vacancies have limited the amount of services available to Nevadan’s with developmental disabilities or mental illnesses. For example, MH/MR referred 39 possible incidents for investigation to NDALC during a 6-month period and only 7 incidents were investigated.
NDALC’s Board of Directors has also experienced high turnover and poor attendance since July 1995. NDALC began with seven board members but increased the number to nine in November 1995. One board position had never been filled as of August 1997. Because these positions were vacant for extended periods of time, NDALC has not complied with two federal acts governing its program or its Articles of Incorporation. Limited board involvement does not provide sufficient oversight of agency operations.
Between July 1995 and August 1997 the average length of a vacancy on the board was 253 days. Six vacancies remained open for more than 180 days during that time. The Articles of Incorporation state the number of directors shall in no case be less than five. Between May and September 1996, the board had less than five members. The Board met three times during this four-month period with only two members.
The auditors were not able to verify the accuracy of program information reported to federal granting agencies and the Nevada Legislature because they were denied access to agency case files. Several things came to the auditor’s attention causing them to conclude this information may not be accurate.
The report contains four recommendations. NDALC management disagreed with the audit findings and conclusions. Ms. Bailey added the Audit Division stands behind its findings and conclusions.
Jack Mayes, Executive Director of the Nevada Disability Advocacy and Law Center greeted the subcommittee and informed them he has been the Executive Director since December 1997. NDALC has started taking action on identified issues needing to be addressed. In regard to Board vacancies, they had submitted names to the Governor’s office and they were awaiting his appointments for an expended period of time. In regards to case management, NDALC has implemented a computerized case management system which collects the data for their reports. Mr. Mayes added that all questioned travel cost reimbursements were reimbursed. There were some costs that were legitimate in the reimbursement and those were charged to the agency.
Assemblyman Marvel told Mr. Mayes that he is really perplexed with his response, particularly when he says the audit was very unprofessional. He asked how he came to that conclusion. He feels the auditors are one of the most professional staff in government.
Mr. Mayes replied that his concern comes under the auditing standards and the government auditing standards found in the yellow book. Section 7.5 states that when an audit is terminated prior to the completion, auditors should communicate the termination to the auditee and other appropriate officials and should write a memor-andum explaining why the audit was terminated. Mr. Mayes presented a copy of an independent audit that came in after the audit was suspended. The auditors were mailed a copy.
Assemblyman Arberry asked why the Board went ahead and conducted meetings when only two members showed up, not the required 5 members. Mr. Mayes explained there was significant turnover on the Board as well as staff. The two members had to meet to discuss getting more Board members. Mr. Arberry inquired into what appears to be the problem. Mr. Mayes explained the agency hired a lot of people at once who have different views and directions of how they would like to see the agency go, as well as with the Board itself. There were some internal differences that led to the turnover. Mainly there was a large growth and some differences of how they would like to see the agency go.
Mr. Arberry asked if these people were warned of what to expect when they came on with NDALC. Mr. Mayes was not involved at that time so he could not speak to that.
Assemblyman Marvel asked why so few of the MH/MR investigations were conducted. Mr. Mayes responded that a lot of the incidences are considered nonpriority. Mr. Mayes added that MH/MR has implemented a checkoff to indicate if it is a priority or not.
Assemblyman Dini stated he was still not sure why NDALC refused the auditors access to all the files. Gloria Stendardi, Litigation Director for NDALC, explained that as an attorney she is required by Supreme Court rule, as a condition of her license, to protect the confidentiality of the client files. Also, the federal grants require client information be kept confidential except in the course of any federal investigation or federal audit. She stated there is simply no exception for the kind of access the legislative auditors wanted; however, initially there was an agreement with the auditors to get around this problem. NDALC was going to copy documents from files, black out the names, and leave certain client identifiers on the files. That would satisfy the legal requirements to keep information confidential. This was agreed to by the auditors and was in writing. The next thing Ms. Stendardi knew, the audit was called off because the auditors wanted unrestricted access to client files.
Mr. Crews responded to Mr. Marvel’s question about the termination of the audit. He explained there was an agreement and NDALC reneged on the agreement by indicating they would not provide all files they would want. The selection process would have to be approved by them, it was to be done in a particular manner, and by the time the auditors would have requested the information, they felt the integrity of that information would be questionable. If the auditors do not have access to the records, they do not know what records they are getting. No reliance can be placed on the records. Mr. Marvel stressed his concern of the integrity of the agency.
Ms. Stendardi said they agreed the auditors would select files randomly from a list that had case numbers and they would select the files. NDALC would pull the files, copy the documents, and black out the names. She added it was the auditors’ selection process and NDALC did not dictate the selection process. Ms. Bailey agreed there was that agreement; however, when they responded in writing to their agreement, NDALC said they reserved the right to deny access to certain files. In essence, they wanted veto rights.
Ms. Stendardi explained there were certain case files where the issues in the file were publicly known because there had been litigation and the client could have been identified, even with the name blacked out. Another issue Ms. Stendardi was concerned about was NDALC has litigation pending against the State and litigation plans in some files. Being audited by an arm of the State puts NDALC in an untenable position.
Assemblyman Arberry asked what could be done to resolve the problem and get it done. Mr. Mayes replied NDALC would be happy to white out names and hand the auditors files as they outlined. They made the commitment to do that.
Mr. Crews responded there was not only the issue of client files but also the issue of personnel files of employees of the agency that they were also denied access to. At this point in time, Mr. Crews questioned the integrity of records that would be made available to them. They have no assurance they would have the whole population of records to audit. He added he has reservations as to whether they have all the records and how would they know that. Unless there is complete unrestricted access to the records, the auditors cannot have the assurances needed to make any conclusion.
Mr. Arberry asked Mr. Crews if there is a concern with the blacking out of the names. Mr. Crews replied there isn’t necessarily a problem with blacking out of the names but there still needs to be a certain identifying number to make sure you have the correct record. There has to be some identifying number on each document to trace documents from one to another.
Ms. Stendardi said they agreed they would leave sufficient identifying information on each document so it could be identified as belonging to that file. Assemblyman Dini suggested that perhaps a legal opinion was needed.
Senator Rawson asked Ms. Stendardi to tell them about the authority of NDALC. She replied that the agency is a private, non-profit corporation—not a state agency in any way, shape, or form. NDALC receives mostly federal money and a small amount of state money only because federal law prohibits the supplanting of state money with federal money. This goes back to when the agency was called the Office of Protection and Advocacy and was part of the State. Positions were funded to do investigations and when the function became private, partly because of the conflict of having the agency be part of the State, the State had to make a choice. Either contract with NDALC to continue providing investigations of abuse and neglect in state facilities or fund new positions within the State. The State chose to contract with NDALC to have them investigate abuse and neglect. This is the only reason NDALC receives money.
Senator Rawson explained there is a mandate the State and Federal Government have an interest in to see the rights of the people are protected and upheld. The State has an obligation, a right, a responsibility to see that job is being done correctly. He asked the Chairman to seek a legal opinion from the Legislative Counsel Bureau as to what access the Legislature has to those confidential records. He added the Audit Division is set up to deal with issues of confidentiality, such as patient and financial information. This is the nature of their business and their profession requires confidentiality. If there is legal ground to stop this then Senator Rawson felt it should be dealt with through an independent third party, if there is no legal ground, then the Legislature would call for a change in the agency or access to the agency. Questions have been raised by people who need to be protected and the Legislature will get to the heart of the problem.
Senator Rawson added that when the legislative staff goes in with a supervisory role, that cannot be at NDALC determination. There needs to be an understanding that the information looked at and reviewed is confidential information. The auditors are bound by law as much as NDALC employees not to release that information that might harm these individuals in any significant way.
Ms. Stendardi answered there is simply no exception. The rules she has to follow as an attorney to protect client confidentiality do not allow for that exception. Senator Rawson felt that was her opinion and added he would like to seek the Legislature’s legal opinion on this matter.
Gary Crews informed the committee that he did not get an official legal opinion, but he did discuss the concept with the Legal Division. The statutes provide access to the confidential records of the same nature of state agencies, such as mental health, personnel records, etc. He added the Legal Division told the auditors they do not have the same rights to access records of NDALC because they are a private/nonprofit corporation. The only way the auditors could have access to the records would be through the willingness of the agency to provide that access. The legal staff did indicate the auditors could work with NDALC in the same manner they work with private auditors who have access to records. Federal agencies have access to that type of information when they conduct a survey or audit. There are ways to work within those constraints.
Senator Rawson suggested if the Legislature cannot get access to NDALC then he felt they need to ask the GAO to do an audit. If the Legislature can’t ever get access then they need to make other arrangements.
Assemblyman Marvel commented to Mr. Mayes that he is disturbed with the high rate of turnover and asked if he felt NDALC is performing the functions they were designed to perform. Mr. Mayes replied that he does and explained that the positions that were vacant were primarily administrative—not direct service. Some investigator positions were vacant, but they were frozen because of the uncertainty of the state money. Mr. Mayes passed out an exhibit on NDALC statistics. (See Exhibit A)
Assemblyman Dini inquired how NDALC gets their money from the State. Mr. Mayes thought it was released quarterly, but did not know in detail.
Connie Ewing, formerly employed by NDALC for two years as a Rights Advocate, testified that she was terminated on April 1, 1998, for filing complaints with the Board of Director’s for violations of Title VII of the Civil Rights Act of 1964 and for "talking to a legislative auditor". She explained she was told directly by Jack Mayes and Lois Johnson that she was not to speak to the auditors without one of them present. She did attempt to meet with auditors on one occasion but was interrupted by Mr. Mayes and Ms. Johnson. During this meeting the auditors asked pertinent and knowledgeable questions which she attempted to answer while constantly being interrupted by Mr. Mayes. Following her termination, she was forced to file a federal EEOC complaint.
Ms. Ewing added she will also have to file a U.S. Labor Department complaint in an attempt to recoup overtime pay she was denied as an hourly employee. She received no severance pay. Additionally, she never received insurance benefits for herself and her five children during her employment with NDALC. She believes all of these issues would have been uncovered by an audit, and finds it difficult to believe that concern for her right to privacy prompted the agency to refuse access to the auditors.
Ms. Ewing explained it is obvious she would be somewhat severe in her appraisal of the agency given the past few months, but she still believes she has critical information to share about the problems she attempted to address while on staff. NDALC was designed to ensure the civil rights of citizens who have been institutionalized due to their disabilities are protected. NDALC was also designed to create a quality service system responsive to the need for support that will allow citizens with disabilities to work and live in our communities and to move away from costly institutional placements and state welfare funding. Her son is one of those citizens.
Continuing, Ms. Ewing stressed that NDALC is the yellow brick road to quality service for her son. Her son has been vested with courage and heart and she intends to create a society that responds to his humanity instead of punishing his disability.
Poor leadership in this agency has led to the failure of the investigate unit to conduct appropriate investigations into the deaths of institutional clients, and incidents of serious abuse and neglect resulting in bodily injury of those same clients. NDALC has access to any site serving people with developmental disabilities and/or mental illness. Federal law guarantees broad access to this agency.
At times Ms. Ewing worked closely with the Senior Investigator. It was a horrifying experience to watch the rights and sometimes the lives of people be thoroughly denigrated by the poor quality investigations done by NDALC. Worse still were the investigations that were never completed. The most critical component of an investigation after accurate facts and policy review is the recommendations for corrective action. While in a meeting with the Senior Investigator for NDALC, the investigator advised Dr. Rosin of the Nevada Mental Health Institute, "I don’t do recommendations."
In the past six months Ms. Ewing has referred three cases to the investigative unit that were reported to her as an advocate involving abuse of children and adults in private psychiatric facilities. The reports were never followed up on.
Ms. Ewing expressed the most significant display of disregard of the importance of this investigative unit occurred on March 17, 1998. The Senior Investigator for the agency flew from Las Vegas to Reno where she would spend the night in a hotel to interview a client. Ms. Ewing was instructed to drive her to Carson City for the interview. Upon arriving at a local congregate facility, the Senior Investigator began to cry and told me that she didn’t really have a client. She further advised that her "man" slept with the manager of the site and she was only there to "get a look at her". Ms. Ewing informed the subcommittee members she advised NDALC management of this incident in a memo dated March 24, 1998.
In conclusion, Ms. Ewing thanked the Legislature for taking such a keen interest in NDALC and added there were staff willing to talk with the auditors and assist them in the audit process. A commitment to the citizens served at the Protection and Advocacy agency should also be a commitment to high standards of excellence. A willingness to be scrutinized and held to those standards is part of providing quality services. A refusal to hold yourself open to such scrutiny is tantamount to saying the quality of your services makes no difference. The disabled citizens in our State have done with second best long enough.
Deidra Hammon advised the subcommittee that she is also a recent former employee of the NDALC. On November 13, 1997, she was one of three professional staff members in the northern office to file a written complaint with the Board of Directors opposing actions by Mr. Jack Mayes, then the Acting Executive Director, which were in violation of the provisions of Title VII of the Civil Rights Act of 1964. The complaints were specific in regards to sexual harassment and harassment on basis of disability. The Board subsequently hired Mr. Mayes on November 21, 1997, relocated the executive position to the northern office with the complainants, provided him with copies of the complaints, and advised the female staff that he was a gift. Ms. Hammon was terminated on February 23, 1998. The two other complainants have also been eliminated from the northern office—one through termination and one through forced relocation to Las Vegas.
Ms. Hammon feels that having made her current standing with NDALC clear to the subcommittee, she still felt she is in a unique position to address a number of the issues that should be of a concern to the Legislature and Governor. Her daughter has taught her a great deal about disability issues because she deals with society’s response to her disability daily. It is on her behalf that Ms. Hammon first became involved in a move to privatize the Office of Protection and Advocacy. She worked with a volunteer committee to structure an investigation of the Office of Protection and Advocacy. Extensive research was conducted regarding the status of other P & A’s in other states, the congressional intent behind the funding streams, the triad approach invisioned between the protection and advocacy system, the developmental disabilities planning council, and the university affiliated programs to improve services for people with disabilities. After securing agreements from the federal funding sources to complete audits of the Office of Protection and Advocacy Ms. Hammon was asked to come to work for the state agency and through the transition to the private non-profit and is very familiar with the agency and its reporting processes.
Ms. Hammon felt there was no reason this audit could not have been completed had the agency cooperated as they had agreed to initially. As an employee she was not advised to cooperate with the auditors and received no memos regarding the agreement between the Board and LCB. She was advised not to talk to the auditors when they came to the Reno office but she did have a brief conversation with Mr. O’Nan and Ms. Bailey and both of them were pleasant and professional at all times.
It appears the concern for client confidentiality was simply a cover to deny access to agency, staff, and client records. Ms. Hammon would have been glad to discuss case handling, data collection, client numbers, client grievance processes, and client satisfaction evaluation processes. This information may have been of significant concern to the NDALC administration as the southern office staff had reported at a case review meeting that they were authorized by Mr. Mayes, when he became the Acting Executive Director, to abandon a majority of case handling procedures. The Senior Attorney, Gloria Stendardi, did determine that a complete abandonment of such procedures would conflict with the requirements of the agency’s malpractice insurance. She maintained some of those procedures. However, the last staff training was provided prior to the 68% turnover in staff which has occurred in the last three years.
One of the case handling procedures which is inconsistently applied by the southern office was a provision where intakes cannot be classified as a case unless an advocate or an attorney spent at least an hour on the case or was required to intervene with an outside agency on behalf of the client. The result is literally hundreds of intakes being classified as cases under the PAMI Grant when they may have resulted in little more than a brief conversation regarding how medications were working.
Most problems with NDALC, while currently endangering the fiscal viability of the agency, could likely be corrected by appropriate leadership. An independent, well-trained nominating committee to establish a Board of Directors was not used. The Board of Directors has been selected exclusively by the previous executive directors, except the Governor’s appointees. This is a civil rights agency. The president of the NDALC Board apparently perceives himself as a paternalistic guardian of the staff and clients. He reportedly advised the most qualified applicant for the executive director’s position—a woman who used a wheelchair for mobility—"I’m on the Board to tell you people when you get out of line." Citizens would never tolerate such an attitude from an individual appointed to a board or for an agency who advances the civil rights of individuals who are African-American or female. We certainly cannot accept it from a board member of an agency that represents the rights of people who are routinely abused, institutionalized, and segregated in response to their disabilities. The current Executive Director, Mr. Jack Mayes, reportedly made a deal with the special education director in the Elko County School District to abandon the rights of students with disabilities.
Ms. Hammon stressed her daughter will not live in an institution or be denied an opportunity to go to school in her neighborhood. She is committed to creating change so the discrimination she faces on a daily basis will be eliminated. The protection and advocacy system in this State is critical to ensuring an end to the blatant discrimination affecting all Nevada citizens with disabilities. She offered her skills and knowledge to help redefine the system.
She concluded the State does have an obligation to audit NDALC. The Governor signs assurances the money will be spent appropriately and he needs assurance this is being done.
Assemblyman Marvel agreed with Senator Rawson that there needs to be a legal opinion to see what rights the Audit Subcommittee has in order to have an oversight position on NDALC. He added he feels as long as state dollars are involved, the state shares the responsibility to make sure the agency functions appropriately.
Robert DeSoto-Holguin, introduced himself as a special education parent, a citizen of the State of Nevada, a President of Washoe County School District’s Special Ed Parent Advisory Committee, a member of the Washoe County Transition team from high school to the world of work or higher education, and an innovator of the Learning Disability Association of the State of Nevada. He also participates in the different disability organizations in the Northern Nevada Center for Independent Living. He added he is an honorable Viet Nam veteran with disabilities from birth, and a native American with Hispanic ancestry. He informed the subcommittee the testimony they have heard today constitutes patterns and practices of de jour, de facto, and defrauding disability discrimination. He has contacted the U.S. Attorney General Janet Reno to investigate a whole series of agencies that Mr. Mayes is associated with and his compadres. This includes agencies receiving federal and state funding that is allocated for citizens with disabilities that have been abused.
Mr. DeSoto-Holguin explained he is the person who instituted the change that the Nevada State Office of Protection and Advocacy be changed to the Nevada Disability and Advocacy Law Center. Mr. Mayes was the first chairperson of the NDALC and ended up the director. This was not his intention as a parent. In 1994 he and other parents met with the Director of the Department of Business and Industry. He agrees the audit needs to be reopened. The Attorney General’s Office and federal investi-gators need to be included in this investigation. It is not enough to go forward to clear up the problems the subcommittee is aware of. It is just the tip of the iceberg.
Mr. DeSoto-Holguin said there was an executive order by the Governor of the State of Nevada that giving the Legislature Auditor authority over Mr. Mayes. He added Mr. Mayes and his attorneys had defrauded the Legislature. He explained this procla-mation by the Governor was the conversion from the Nevada State Office of Protection and Advocacy and is a legal document. NDALC was permitted to be a private non-profit organization under the Secretary of State laws when it was receiving federal and state public money. It should have been a public non-profit agency.
Mr. DeSoto-Holguin felt the agency should be abolished but not the rights and needs of citizens with disabilities. When the advocating process began there were only 11 governors in the United States that had state agencies advocating for people with disabilities. After a federal audit found the State of Nevada in complete fault with not serving citizens with disabilities, Governor Miller consented to go this direction. NDALC falls under rehabilitation and again today he filed federal defrauding charges against them. He added the bureaucracy needs to look closer at the people with disabilities because appropriate services are not being provided. NDALC does not fall under the Open Meeting Law because it is a private non-profit organization.
Michelle Goff works with the disability community and explained they are even more concerned with the direction of NDALC now than when it was under the directorship of Mr. Travis Wall. She went over a letter she had written to the Board about one year ago. She informed the Board she was instrumental in privatizing the Office of Protection and Advocacy, she stressed her disappointment with the effectiveness and credibility of the new agency. She was concerned the information about the agency seems to be a guarded secret. When calling the Northern Nevada office asking any general information related to the office, she is told the staff do not know standard operational information and she must speak to Travis Wall as he is the only person with access to this information. In reviewing the three-year plan developed by the community and the agency, she has not seen the level of legal intervention that they had worked so diligently to ensure. The Advocacy staff are knowledgeable, effective, and cooperative in addressing individual client issues; however, I see no steps being taken toward system changes by the attorneys theoretically hired to work toward that change. She added staff seems terrified to speak about the circumstances of Daniel Brzovic’s departure from the NDALC staff. During the number of staff departures, Ms. Goff has noticed advocacy staff confidence in their ability to create change has been seriously undermined by the instability of the agency and the inability of the staff to be open regarding agency issues which affect the public and the clients.
She mentioned to the subcommittee members that she volunteered her time during the most recent crisis in staffing. She was advised by the northern office that she was not allowed to volunteer.
In the conclusion of her letter she requested names and the contact phone numbers of the NDALC Board members because she could not obtain a list from either office. To date, she has had no communication from NDALC in response to this letter.
Norma Brownell, past president of the Northern Nevada alliance for the Mentally Ill, is the mother of an adult son who is mentally ill. She feels the lack of advocacy is no longer a civil manner and has become a criminal manner. Clients are fragile, advocates are necessary. Without reorganization, the NDALC advocacy for the mentally ill and those with other disabilities will not progress forward.
Jack Mayes followed up after the testimony. He informed the committee members that he was unable to respond to some of the allegations because of pending litigation. He just wanted to reiterate he has been in the position since December and he is making corrective action to deal with some existing concerns. He asked to see a copy of the memo regarding the investigators visit to Carson City which he had not received. He added the Board is currently staffed, and the staff is full with one vacancy in the Reno office. He said he would make himself available to meet with any of the individuals who have expressed concerns.
Chairman Dini told Mr. Mayes it looks like this agency was originally created as an executive order of the Governor, and what we have is noncompatibility between the clients and their parents, and the NDALC. It looks as no one has done anything about it and now it is out of control and the Legislature is in a position where they cannot see the books. No one in the advocacy groups is happy with NDALC. Mr. Dini reminded Mr. Mayes that even though a portion of the money is from Nevada taxpayer money, it is still all taxpayer money, federal or state. He asked if they would open up to the Legislature or are they going to have to go to the Attorney General or the Legislative Counsel and take some remedial action against them.
Mr. Mayes expressed that as long as the client confidentiality is protected they are willing to do that. They will be happy to work something out as long as the confidentiality is protected.
Mr. Dini responded that the auditors do not want to hurt anybody, they just want to get into the records as much as they can legally. The auditors have audited SIIS and other agencies with confidential records and the auditors were able to get to the records.
Assemblyman Marvel stressed that he wants to make sure the clients are adequately served with NDALC and he is not hearing that. This concerns him. He suggested the Legislature should take a real hard look at this agency at the next session. He suggested he move to accept the auditors’ report on the NDALC but the dialogue not be foreclosed on. Maybe the Legislative Commission should take some follow-up action.
Chairman Dini suggested maybe the proper action should be to leave the audit open until the auditors go back. Mr. Crews explained the report is now a public document and thought it would be appropriate to take action on the report. If there is some other actions the committee wishes to take, that would be appropriate also. Mr. Crews informed the subcommittee they have been down this process before, wanting access to records and they thought they had it and then they didn’t. It takes a considerable amount of resources to stop and start an audit. He added the auditors are more than happy to go into the agency and take a look at what they think are all the records but they will never have the assurances they have all the records. This makes it very difficult to audit under those circumstances. Also, when employees are in a position where they fear for their job, it is difficult to conduct a valid audit. He has his reservations, but if the committee feels it would be necessary he would be glad to take it to the Legislative Commission for their consideration.
Scott Wasserman, Chief Deputy Legislative Counsel, introduced Will Keane, Deputy Legislative Counsel, to give the committee a little background on the issue since they have looked into it. Will examined the issue of the power of the Legislative Auditor to obtain records from state agencies and essentially NRS 218.780 gives the Legislative Auditor broad power to obtain all records and information from agencies of the State. The crux of the matter is really whether NDALC is an agency of the State and for purposes of 218.780, any agency of the State outside of the Legislative Branch is defined to be an agency of the State for purposes of the Legislative Auditor. NDALC has not been examined.
Mr. Wasserman informed the committee they would have to look at how the statute giving the Legislative Auditor the authority to examine records of a public agency is going to be interpreted, in light of the fact that NDALC is supported by public revenue. It may be because the Legislative Auditor has the statutory authority to look into records, even records that are otherwise deemed confidential, that would give him the authority to look at records for this agency.
Assemblyman Marvel felt the information heard at this meeting should be conveyed to the Legislative Commission to see if there could be any follow-up auditing in the near future. He realizes the auditors’ resources are pretty well extended, but he feels there are people that need guarantees from this agency.
Chairman Dini added it was important to send this to the Legislative Commission to get this matter going because, if not, he believes the support the State is giving this advocacy group may disappear at the next session. Especially if there is no coop-eration and the people are not being served, which is the most important part. He urged everyone to work together.
ASSEMBLYMAN MARVEL MOVED TO ACCEPT THE REPORT
ON THE NEVADA DISABILITY ADVOCACY AND LAW CENTER
AND TO GO TO THE LEGISLATIVE COMMISSION TO AUDIT THE
AGENCY FURTHER. THIS SHOULD BE DONE BEFORE THE
NEXT SESSION. SECONDED BY ASSEMBLYMAN ARBERRY
AND PASSED UNANIMOUSLY.
Item 4 - Presentation of six-month reports.
A. Department of Museums, Library and Arts, State Council on the Arts.
Mr. Brown, Audit Supervisor, stated the audit report on the State Council on the Arts was presented in March 1997 and contained seven recommendations. The Depart-ment of Administration indicates all seven recommendations have been partially implemented.
Mr. Brown explained the audit found the Council had not developed written procedures over the monitoring, accounting, and reporting of grant activity. The auditors recommended the Council develop written procedures for recording and classifying costs, calculating and preparing federal reimbursements and federal reports, monitoring grantee progress and compliance, and reviewing grantee funding requests and final evaluation reports. The Council also needs to establish grant expenditure allocation methods and document key elements of the grant process. The Administrator indicates the Council has received detailed documentation and training from the Office of Financial Management, Training and Controls and recommendations 1 through 3 have not been completed due to staffing shortages. Recommendations 4 through 7 have been drafted and are being critiqued by a volunteer. The Administrator further indicated all recommendations were expected to be fully implemented by April of 1998. Mr. Brown suggested the Subcommittee ask if the seven recommendations have been fully implemented and, if not, what their current status is.
Susan Boskoff, Director of the Nevada Council on the Arts, informed the subcommittee they have just hired their first grants analyst with an accounting background. The Department was also able to hire an ASO. These two people have been integral in the development of their internal controls and grants management controls documents.
Scott Cisco, Administrative Services Officer for the Department of Museums, Library and Arts, informed the subcommittee he has only been in his position approximately six weeks and during this time they have implemented a complete automated accounting system for the Arts Council. The first draft of their internal controls procedure manual has been written and that will be forwarded to the Department of Administration for their review.
ASSEMBLYMAN MARVEL MOVED TO ACCEPT THE SIX-MONTH
REPORT ON THE COUNCIL ON THE ARTS. SECONDED BY
ASSEMBLYMAN ARBERRY AND PASSED UNANIMOUSLY.
B. Department of Museum, Library and Arts, Nevada Historical Society
Tim Brown, Audit Supervisor, explained the audit report on the Nevada Historical Society was issued in April 1997 and contained five recommendations. The Department of Administration indicates all five recommendation have been fully implemented.
SENATOR JACOBSEN MOVED TO ACCEPT THE SIX-MONTH
REPORT ON THE NEVADA HISTORICAL SOCIETY. SECONDED
BY SENATOR RAWSON AND PASSED UNANIMOUSLY.
C. Department of Administration, Hearings Division
Paul Townsend, Audit Supervisor, explained the six-month report on the Hearings Division was presented at the Audit Subcommittee meeting in January 1998. The Department of Administration indicated one recommendation had been fully imple-mented and three had been partially implemented. At that time, the auditors suggested the subcommittee obtain more detailed information on the status of the three partially implemented recommendations. Since the Hearings Division was unable to send a representative to the Audit Subcommittee meeting, the subcommittee requested the Division reply in writing to the questions regarding the three recommendations.
In a letter dated February 17, 1998, Brian Nix, Senior Appeals Officer, responded to the questions. Mr. Nix indicated the regulations are in draft form and were to be presented for a public workshop within the next 30 to 60 days with final public hearings to be scheduled within 30 days after the workshop and finalized shortly thereafter. Mr. Nix responded they have identified what they need from the information system and the hardware was delivered in January. He concluded in his letter the computer tracking system is in development with the Department of Information Technology and the software is to be implemented in phases. This is estimated to take six to nine months for completion. Mr. Townsend suggested the subcommittee may want to inquire as to the most recent developments in regard to these recommendations.
Terry Rankin, Appeals Officer, responded the regulation hearing and the public workshop is scheduled for April 30. No complications are expected. She added the only hardware that hasn’t been installed is the server in the Carson City office and it should arrive next week. The data development is partially implemented and Mr. Nix meets with DoIT approximately once a week.
In response to Mr. Marvel’s questions, Ms. Rankin replied both the hearings office and appeals office have shortened their time between hearings.
ASSEMBLYMAN MARVEL MOVED TO ACCEPT THE SIX-MONTH
REPORT ON THE HEARINGS DIVISION. SECONDED BY
SENATOR RAWSON AND PASSED UNANIMOUSLY.
Item 5 - Public Comment
Senator Jacobsen thanked Mr. Crews for the honor to sit in on the committee today and for the excellent packet of information.
There being no further business, the meeting was adjourned.
Respectfully submitted,
Marie Cavin, Secretary to the
Legislative Auditor
Assemblyman Joseph E. Dini, Jr.
Chairman of the Audit Subcommittee
of the Legislative Commission
Date
Wm. Gary Crews, Legislative Auditor
and Secretary to the Audit Subcommittee
of the Legislative Commission
Date