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  Consent-General Government   #   12.    
Board of Supervisors Financial Services  
Meeting Date: 08/01/2017  
Brief Title:    2008-2016 Court Revenues Audit by State Controller
From: Howard Newens, Chief Financial Officer, Department of Financial Services
Staff Contact: Chad Rinde, Accounting Manager, Department of Financial Services, x8050

Subject
Receive and file the State Controller's Office Court Revenues Audit Report for the period of July 1, 2008 to June 30, 2016 and adopt a budget resolution to address the impacts of the Court Audit results. (Net addition of $1.1 million to general fund) (4/5 vote required) (Newens/Rinde)
Recommended Action
  1. Receive and file the State Controller's Office Court Revenues Audit Report for the period of July 1, 2008 to June 30, 2016; and
     
  2. Adopt a budget resolution to address the impacts of the Court Audit results, by appropriating $458,204 in the Criminal Justice Facilities Construction Fund, and $470,741 in the Courthouse Construction  Fund to remit required amounts to the State Treasurer. (Attachment C)
Strategic Plan Goal(s)
Operational Excellence
 
Reason for Recommended Action/Background
State statutes govern the distribution of court revenues, which include fines, penalties, assessments, fees, restitution, bail forfeitures, and parking surcharges. The County is responsible in government code for the distribution of these Court revenues to the State, County and other local agencies. There are two main types of revenues received by the County for distribution: (1) fines, penalties, fees, restitution and forfeitures from the Yolo Superior Court, and (2) parking surcharges received by the agencies enforcing parking laws including the Cities of Davis, West Sacramento, Woodland, Winters and colleges of UC Davis and Woodland Community College.

The Yolo Superior Court provides the County a monthly payment along with detail on the fines and fees collected with a completed copy of their state remittance instructions (TC-31). The parking agencies also provide monthly payments to the County and include detail on the parking surcharges being remitted to the County.

The Court Audit Report (Attachment A) reported four findings as described below:
  • Finding 1 - Overremitted the 50% excess of qualified fees, and penalties by $749,742.
    • The County calculates by August 15th of each year a 50%/50% split of the qualified fees and penalties in accordance with Government Code 77201.1(b)(2). The Department of Financial Services (DFS) had a variety of calculation errors resulting in the overpayment which will be corrected going forward with the MOE payment on August 15, 2017.
  • Finding 2 - Underremitted state parking surcharges and equipment/tag violations by $1,929,542
    • The County is required to distribute the $12.50 in parking surcharges collected by parking agencies in accordance with government code with $1.50 to the County Courthouse Construction Fund, $1.50 to the County Criminal Justice Facilities Fund, $2 to the General Fund, $4.50 to the State Court Construction Fund and $3 to the State Trial Court Trust Fund, and 50% of vehicle tag violations and 20% of handicap citations going to the state. The total under remittance to the state was $1,929,542 which is due to some amounts being undermitted to the County by parking agencies and the County  failed to consistently distribute received funds properly.
  • Finding 3 - Underremitted the 30% red-light traffic violator school (TVS) bail by $44,835
    • The court incorrectly distributed 30% of the DNA penalties from red-light violations during the period of July 2008 to July 2016. The Court also did not distribute the $4 Medical Air Transportation  penalty properly. These errors occurred because the court's accounting system was not programmed to comply with the statutory requirements. The court corrected and tested its accounting system to correct as of December 2016.
  • Finding 4 - Overremitted TVS bail by $1,040,233.
    • The Court incorrectly distributed the DNA Identification Fund (Prop 69) from Traffic Violator School (TVS) bail for the period of July 2008 through June 2016. The Court incorrectly distributed the $4 Emergency Medical Air Transportation penalty from TVS bail. Starting in January 2011, Government Code Section 76000.10 required a $4 penalty for criminal offense including traffic offense. However when traffic school is elected, the fines are TVS bail and EMAT are not included. Per Prop 69 Distribution Guidelines, DNA  Penalty assessments are also part of the TVS fee. 2% of the fee should have been deducted from City base fines and distributed to the County General Fund. These errors occurred because the court's accounting system were not programmed to comply with the statutory requirements. The court's corrected and tested their accounting system to correct as of December 2016.
The overall financial impact by agency is described in Attachment B summarizing the Audit results by agency. The County had to pay a net total of $184,402 to the State Treasurer to the settle the result of the findings but will need to collect various amounts from the Parking agencies and charge County funds that were overallocated. DFS staff in the have attended State training and has made all necessary adjustments to distribution procedures.

A budget resolution has been included in Attachment C to address the expenditure impacts to the County Criminal Justice Facilities Fund of $458,204 and the County Courthouse Construction Fund of $470,741. The County General Fund will receive additional revenues of $1,144,291 and the EMS fund will receive an additional $4,620. These amounts remain in fund balance until further disposition during the Adopted Budget hearings in September.
Collaborations (including Board advisory groups and external partner agencies)
The County of Yolo DFS collaborated with the Yolo Superior Court financial staff during the State Controllers Office's (SCO) audit process which lasted from August 2016 to final report issuance in June 2017. The SCO also visited agencies that collect parking fines in the county including the cities of Davis, West Sacramento, Winters, and Woodland and UC Davis and Woodland Community College. DFS is continuing to collaborate with these parking agencies to repay the County their respective amounts owed based on the results of the SCO audit.

Fiscal Information
Fiscal impact (see budgetary detail below)
Fiscal Impact of this Expenditure
Total cost of recommended action $928,945
Amount budgeted for expenditure $0
Additional expenditure authority needed $928,945
One-time commitment     Yes
Source of Funds for this Expenditure
Criminal Justice Facility $458,204
Courthouse Construction $470,741
Further explanation as needed
The audit results had negative impact on the County Criminal Justice Facilities Construction Fund in the amount of $458,204 and the County Courthouse Construction Fund in the amount of $470,471 due to incorrect distribution formula used by the County. The correction of audit results also yield an additional $1.1 million revenue to the county General Fund. This amount remains in fund balance for possible appropriation at the Adopted Budget hearings in September.
Attachments
Att. A. Court Revenues Audit Report
Att. B. Summary of Findings
Att. C. Budget Resolution

Form Review
Inbox Reviewed By Date
County Counsel Hope Welton 07/25/2017 09:58 AM
Form Started By: Chad Rinde Started On: 06/15/2017 07:21 AM
Final Approval Date: 07/25/2017
Level double AA conformance,
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