Last week, the Judicial Council met for the second time since State Auditor Elaine Howle released her searing critique of the way in which the AOC/Judicial Council staff runs its entire operation. As you’ll recall, the State Auditor concluded that the AOC has channeled money away from the trial courts to pay for services that should have come out of its own budget; that it provides services that the trial courts don’t need; that it has wasted $30 million on bloated salaries, perks, and other questionable business practices over a four-year period; and that it has proven impervious to reform.
The Council’s response to this landmark review was, to say the least, tepid. Only 20 minutes of the meeting were devoted to the audit. The chair of the Working Group on Audit Recommendations, Justice Douglas Miller, didn’t even appear. The message from the Council—as it was when the SEC report came out in 2012—is that the problems with the AOC have already been identified and addressed. In her introduction of Administrative Director Martin Hoshino’s report to the Council, Judge Marcia Slough claimed that “the work the SEC completed is covered by much of the same ground as that of the State Auditor.” But the State Auditor was, to put it mildly, underwhelmed by the actions that the Council took in the wake of the SEC report, finding that the AOC distorted the SEC’s directives and exaggerated its compliance.
Director Hoshino opted not to address the calls for a complete overhaul of AOC business practices, choosing instead to focus on pay and benefits. He claimed that the other issues raised by the audit—the really big ones—will be addressed in a more detailed report due early next month.
Director Hoshino spoke earnestly, but his remarks raised as many questions as they answered. He noted, for example, that the payment of the retirement contributions of top AOC executives—up to five percent on top of salary—will end as of July 1. We wonder if there is some contractual or legal reason that prevents that perk from being eliminated as of right now. Director Hoshino claimed that the issue of excessive pay was being addressed by a comprehensive classification and compensation study. He did not, however, acknowledge the State Auditor’s recommendation that the AOC first figure out which staff members it really needs before deciding how much to pay them.
Director Hoshino devoted a large chunk of his time to the issue of the AOC’s 66-car fleet, which has cost the branch $712,000 over the last four years. The director conceded that he was “comfortable eliminating” 22 vehicles from the fleet. In other words, there was never any valid business-related reason for having spent $237,000 of taxpayer money on cars. We note that the State Auditor analyzed how three AOC executives drove their state cars and found that, on average, the vehicles were used for personal business 80 percent of the time.
Director Hoshino claimed that 45 cars were assigned to staff in the Real Estate and Facilities and Capital Programs offices, and maintained that these vehicles have “a legitimate business purpose.” According to the latest AOC staffing metrics, however, a total of only 123 people work in those two offices. Forty-five cars for 123 people seems a tad excessive.
You can read about the meeting in greater detail in this article by Maria Dinzeo of Courthouse News Service, which is reprinted below.
If the Council thinks that the criticisms raised by the audit can be ignored, it’s got another think coming. The Legislative Analyst’s Office just came out with its review of the Governor’s proposed criminal justice budget. The Legislative Analyst wrote:
“The Governor’s budget includes $109.9 million in increased General Fund support for trial court operations—$90.1 million from a 5 percent base increase and $19.8 million to backfill an expected decline in fine and fee revenue in 2015-16. There are no reporting requirements for, or constraints on, the use of these funds to ensure that they will be used in a manner that is consistent with legislative priorities. To help increase legislative oversight, we recommend that the Legislature (1) provide courts with its priorities for how the funds from the augmentation should be spent and (2) take steps towards establishing a comprehensive trial court assessment program, which will help the Legislature determine whether the funding provided to the courts is being used effectively.”
In other words, additional funding will come with additional oversight. That’s the price our branch leaders will pay for dithering instead of reforming.
We trust—we hope—that in the near future, the Council will address the audit in a thorough and serious manner that befits the gravity of the issues it raised. We hope that the dismissive remark made by one Council member—that the portion of the judicial budget covered by the audit was just “a bucket of water in Lake Tahoe”—is not a reflection of the Council’s current thinking. If it’s just a bucket, it’s an awfully big one. And in a drought, every drop counts.
Directors, Alliance of California Judges
Courthouse News Service
Thursday, February 19, 2015 Last Update: 3:20 PM PT
New Director of California Court Agency Cuts Perk for Top Brass
By MARIA DINZEO
SACRAMENTO (CN) - In his first round of big changes to California's court bureaucracy, new director Martin Hoshino answered a scathing report from the state auditor with a series of reforms that included eliminating a lavish pension benefit for the top brass.
The controversial perk was cut back in 2012 by Chief Justice Tani Cantil-Sakauye, but top executives were still receiving another 22% in pension contributions from public funds on top of their salaries, including Chief Operating Officer Curt Childs, Chief Administrative Officer Curt Soderlund and Chief of Staff Jody Patel.
The pension benefit for the top officials caught the attention of the California State Auditor, who honed in on the perk in a scathing report released in January after a nearly year-long investigation of the bureaucracy, formerly known as the Administrative Office of the Courts. The new director said the benefit would end July 1st.
At Thursday's meeting of the Judicial Council, Hoshino, who took over the job as director of the bureaucracy in September 2014, gave a brief update on the staff's progress in implementing the auditor's recommendations in anticipation of a 60-day progress report due to the auditor on March 7.
He said that several other perks noted by the auditor had also been cut, like parking reimbursements for executives, and the staff's fleet of 66 vehicles. Hoshino said 22 of those vehicles were eliminated, and that he planned a cost-benefit analysis of the remaining 44, which he said are primarily used in maintaining the state's 500 courthouses.
After listening to Hoshino's report, retired Judge Charles Horan of Los Angeles said in an email that he expected more changes.
"The cessation of paid pension benefits (which will not occur until July, when it should have stopped years ago), the paring of the AOC fleet of vehicles from 66 to 44, and the cessation of parking allowances was low hanging fruit," he said. "The important parts of the auditor's recommendations were not addressed today, including the up to $300 million spent by the AOC from trial court funds on activities that arguably should have been paid for from the AOC's own internal budget."
Horan was referring to the auditor's finding that the AOC could have paid consultants and temporary employees out of its own budget, but used trial court funds instead.
"Over the past four years, the AOC spent $386 million on behalf of the trial courts including $186 million in payments to consultants, contractors, and temporary employees using the trial courts local assistance appropriations; however, the AOC could have paid a portion of these costs using its own appropriation," the auditor wrote.
Horan added that it was strange that Hoshino made the announcement about the end to staff executive benefits, as opposed to the council.
"The Council is the body that should be making these decisions, as pointed out by the auditor," said Horan. "It seems that that message has not yet worked its way into the Council's thinking."
In her report, Auditor Elaine Howle also pointed to five Judicial Council staff employees who worked in Sacramento, but because of "poor record-keeping," were paid above the maximum salary range for that area. On Thursday, Hoshino said that problem had been fixed.
"We have done the work of correcting and reconciling the pay for the five employees that were identified in the report," Hoshino said. "We will be conducting quarterly reconciliations of each employee's primary work location to assure that any issues identified in the future are rectified in a timely and appropriate manner."
Hoshino added that the staff changed its policy on IT contracts. "Contractors may not exceed one year in duration unless pre-approved by myself or by the chief administrative officer," he said. "To ensure the Council has adequate information on this we will also create an annual reporting mechanism to the Judicial Council for any exceptions to this particular rule."
During the council meeting Thursday, Chief Justice Tani Cantil-Sakauye, who appointed a committee of four judges, two justices and one court clerk to go through the audit's recommendations, said, "I'm greatly pleased by the process thus far and the report getting ready for March 7. I know these were not easy decisions at all."
Hoshino's report, billed on the council agenda as an "information item," was presented without discussion or a vote.
But the council later voted to approve several cost-cutting measures related to technology, including reducing the number of IT contractors, and re-evaluating the California Courts Technology Center, a server in Phoenix, Arizona still used to host the Court Case Management System, a software system only used by a handful of courts.
The plan was to implement CCMS statewide, but cost overruns led to the council pulling the plug on the project in 2012. The Phoenix server also hosts California's court protective order registry and the judiciary's statewide human resources and accounting system.
"We would like to review all of the services that are hosted by the CCTC and costs associated with those services to see if they could be accomplished at less expensive costs," said Judge Laurie Earl of Sacramento, who heads the Trial Court Budget Advisory Committee.
Earl also recommended that IT experts from the Judicial Council's staff and from larger trial courts be sent out to smaller courts to help them find ways to cut costs through technology.
"They do not have IT departments. Some of them don't have a single IT person on staff in their building, and they rely on sharing an IT person that might come to the court once a month or so. So we believe that there may be cost savings and efficiencies by creating a working group to work with them, to see if we can leverage the work that larger courts are able to do in helping the small courts," she said.
Judge Brian McCabe of Merced County asked Earl if her committee planned to periodically review whether smaller courts' IT needs were being met in a cost-efficient way.
"Needs change, costs are variable, what they cost today may be completely different in three years from now. So is that part of the policy you're looking at as well, set in place a mechanism for annual reviews or something so you know you're getting the best bang for your buck and at the same time, needs are being met?" McCabe asked.
Earl said she recommended a new committee to make ongoing reviews.
The chief justice said she was hesitant to form a new committee just for that purpose.
"I worry about the proliferation of task force workgroups and I know, especially with technology, often we have too many tentacles," she said.
"I think it would be helpful for us to bring it back at the next meeting," Earl said.
The council also voted to give the Napa County Superior Court $187,000 in emergency funding, as it had to relocate its courthouse, which was badly damaged in an earthquake.