10/22/2019 scgrandjury.org Mail - Acttc response to 2019 grand jury report Grand Jury Acttc response to 2019 grand jury

The County’s portrayal of its public defense services is not transparent. AGREE PARTIALLY DISAGREE – explain the disputed portion X x DISAGREE – explain why Response explanation (required for a response other than Agree): The public defense services contracts are very complex, and some have been in place for many years. However, the terms of the contracts are stated, understandable, and accessible. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

+Bene The County’s accounting for separate overhead subsidies has for years caused the County to understate the compensation of the County’s public defense contractors in line-item budgets and in reports to the Board of Supervisors. AGREE PARTIALLY DISAGREE – explain the disputed portion x DISAGREE – explain why Response explanation (required for a response other than Agree): The published budget documents for the Public Defense contractors includes all costs associated with the required service. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

The County’s duty to fund public defense services does not require the County to provide public defense contractors with free office space. x AGREE PARTIALLY DISAGREE – explain the disputed portion DISAGREE – explain why Response explanation (required for a response other than Agree): Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

When the County provides free office space to a contractor, the Controller’s Office does not know to ask whether the cost of the office space should be included in the contractor’s compensation for tax purposes. AGREE PARTIALLY DISAGREE – explain the disputed portion x DISAGREE – explain why Response explanation (required for a response other than Agree): The County rents various facilities throughout the County for which the Auditor- Controller’s Office makes the lease payments. The Auditor-Controller did not have a process in place to review each of these leases to determine if any IRS fringe benefit rules would apply for the person or party using the leased space. Such a process will be in place prior to the issuance of 2019 year-end 1099 forms to County vendors. The review process will include seeking legal assistance to review the IRS Fringe Benefit Exclusions instructions to determine if these areas are included or not and what retroactive reporting to the IRS will be required. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

The County’s contract policies and standard forms are not integrated with each other, are difficult to use, are not available to the public, are incomplete, and in some cases are poorly written. AGREE x PARTIALLY DISAGREE – explain the disputed portion DISAGREE – explain why Response explanation (required for a response other than Agree): The County’s standard forms are not integrated in that they are not always reproduced or referenced by form number within the Contract section of the County Policy and Procedures Manual. These Policies and Procedures are updated twice per year through an open and transparent Board of Supervisor’s process. Incomplete or poorly written documentation can be reviewed and re-written semi-annually as requested by users. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

The County’s public defense contracts violated written County policies without consequences. AGREE x PARTIALLY DISAGREE – explain the disputed portion DISAGREE – explain why Response explanation (required for a response other than Agree): The primary public defense contract was originally written many years ago. Over the years, the County policies have changed. Although the contract has been revised several times, there may be elements of these updated contract requirements that are not included in this older contract. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

Standard forms are an excellent way to implement some County policies, but they must be used to be effective. x AGREE PARTIALLY DISAGREE – explain the disputed portion DISAGREE – explain why Response explanation (required for a response other than Agree): Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

County leaders misinterpret the meaning of County Counsel’s approval of a contract “as to form.” AGREE PARTIALLY DISAGREE – explain the disputed portion x DISAGREE – explain why Response explanation (required for a response other than Agree): It is expected professional practice that County Managers approving the contracts understand “as to form” does not mean anything besides “as to form.” Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller

The County lost potentially valuable information when the County destroyed copies of contracts with, and reports submitted by, the public defense contractors. AGREE x PARTIALLY DISAGREE – explain the disputed portion DISAGREE – explain why Response explanation (required for a response other than Agree): The Auditor-Controller’s Office complies with Accounting Standards & Procedures for Counties record retention policies as issued by the State Controller. There is a potential benefit to permanently keeping all forms of documentation the County produces, however, the risk-benefit analysis performed at the State level provides the Auditor-Controller with guidance for record retention. Respond by September 25, 2019 Santa Cruz County’s Public Defense Contracts Santa Cruz County Auditor-Controller