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Other Budget Issues

Last Updated: 2/24/2012
Budget Issue: Reorganization of the Office of the Inspector General
Program: Office of the Inspector General
Finding or Recommendation: Adjust Governor's January budget proposal to reduce funding for OIG because the administration’s proposal to remove positions from OIG reduces the associated funding based on the minimum salary step, rather than the mid step salary. Accordingly, we recommend a further reduction of $496,000 in the current year and $665,000 in the budget year.
Further Detail

Proposed Organizational and Budget Changes. As part of the 2011-12 budget package, the Legislature passed budget trailer legislation that made significant changes to the Office of the Inspector General's (OIG) statutory mission. Specifically, the  legislation (1) removed the peace officer status for certain OIG employees, (2) eliminated the OIG’s ability to conduct certain audits and investigations at its discretion, (3) eliminated the requirement that OIG conduct quadrennial facility operation reviews and one-year warden follow-up audits, and (4) codified in statute the OIG’s medical inspection function.

In response to its mission changes, the OIG is proposing various organizational changes. For example, rather than have staff that carry out specialized functions (such as medical inspections) on a statewide basis, the OIG is proposing that staff be cross-trained in multiple functions that would be carried out on a more regional basis. In order to reflect the reduced duties and responsibilities of the OIG and its reorganization, the Governor’s budget includes a proposal to reduce the OIG budget by $4.9 million in the current year and $7.3 million in the budget year. This includes a reduction of positions totaling 39 positions in the current year and 48.5 positions in the budget year.

 “Mid-Step” Typical Budgeting Approach. When position authority is added to or removed from a department, the standard budgeting approach is to adjust the department’s budget using the “mid-step”—the mid-range of the salary scale—for the added or removed positions. The state budgets department positions at mid-step because the mid-step functions like an average salary for all department employees within each classification. The state assumes that some positions in a department will be filled by employees earning below the mid-step salary while other positions will be filled by more senior employees earning higher pay.

Salaries Not Adjusted at Mid-Step. The administration’s proposal to remove positions from OIG reduces the associated funding based on the minimum step—or entry level salary—for each affected position. As a result, the administration’s proposal under-reports the amount of savings that should be achieved by these position reductions by about $496,000 in the current year and  $665,000 in the budget year.

Analyst Recommendations. We do not have any policy concerns with the administration’s proposal to reorganize and reduce the budget of OIG. We do, however, recommend that the Legislature further reduce the OIG’s budget by $665,000 in 2012-13, and direct the administration to reduce the 2011-12 budget by $496,000 in 2011-12 on a technical basis. This reduction would better match the administration’s budget request with its proposed position reduction based on funding those positions at the mid-step as is normal budgeting practice.