California auditors criticize $800,000 in state spending on contracts, millions for retirement bonuses

California auditors investigating dozens of whistleblower complaints against state agencies have found more than $800,000 in inappropriate expenditures and millions of dollars more that the state will wastefully spend unless it takes corrective action, according to a report released Thursday.

The investigations during the first half of 2020 substantiated nine allegations involving several state agencies, including the California Department of Veterans Affairs, where a senior executive or his designee improperly approved 10 emergency contracts that totaled nearly $628,000 under circumstances that did not qualify as emergencies.

“The most egregious example involved nearly $187,000 CalVet spent on renovations of two employee housing units for administrators,” the audit said.

The report did not identify those who approved and benefited from the renovations at the Yountville Veterans Home, but said the actions circumvented competitive bidding requirements aimed at saving taxpayer money. In response to the auditor’s findings, the secretary of CalVet admonished two senior executives through written memoranda to abide by state contracting procedures.

California State Auditor Elaine Howle releases at least two reports each year on the findings of investigations into whistleblower complaints provided to her office.

Her office initiated investigations for 34 cases and notified other agencies of concerning information regarding 89 cases so they could investigate the matters further.

“Our investigations found wasteful and improper personnel decisions, improper contracting, a conflict of interest, misuse of state resources, and dishonesty,” Howle wrote in a letter to Gov. Gavin Newsom and the Legislature on Thursday.

The auditor’s report faulted the Department of State Hospitals for improperly providing 17 tele-psychiatrists with extra retirement benefits meant for workers who are exposed to a risk of physical injury because of their regular and substantial contact with incarcerated patients.

The psychiatrists do not have regular, substantial, in‑person contact with patients, auditors said.

“We estimate that this decision will result in millions of dollars in overpaid retirement benefits if left uncorrected,” Howle’s report said.

The department agreed to take corrective action by asking the state personnel agency to determine whether tele-psychiatrists met the criteria for safety retirement benefits. The department is awaiting a decision but says taking the benefits away may hamper recruitment, the report said.

The auditor’s report also said a battalion chief for the California Department of Forestry and Fire Protection had a conflict of interest because he participated in making a $100,000 contract with a construction company that employed his wife and was owned by his wife’s family.

“The battalion chief’s superiors knowingly allowed the conflict to occur,” Howle wrote.

Among other findings, auditors also found that six employees in a Caltrans maintenance office improperly used state vehicles to commute to and from work at a cost of $22,000.

All of the state agencies have 60 days to report to Howle on any disciplinary and corrective actions they take.