Key Legislator to AOC: “What the hell did you do with that money?”

Posted on March 12, 2015

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Yesterday, the Joint Legislative Audit Committee and Assembly Budget Subcommittee #5 on Public Safety held hearings on the recent audit of the Judicial Council and the AOC.  State Auditor Elaine Howle did not pull any punches.  She painted an ugly picture of an agency that has lost its way, one that has strayed from its primary mission and sucks money away from local courts.  Ms. Howle recited the now-familiar litany of AOC excesses and missteps: the millions that the AOC’s top staffers receive in excessive pay, generous benefits, and unearned geographic salary differentials; the maintenance of a largely unnecessary fleet of 66 cars; the unauthorized hiring of temps to get around hiring freezes.  She pinpointed $186 million in AOC spending on consultants, contractors, and temps that she was “not convinced” benefited local courts.  She decried the general lack of oversight, noting the failure of the Council’s Accountability and Efficiency Committee to promote either accountability or efficiency. She took aim at the misleading manner in which the AOC has described its compliance with the recommendations of the 2012 SEC report.  She concluded that the AOC has strayed from its core mission of serving the courts, a mission it can’t possibly fulfill because the AOC has never figured out what the courts really want or need.  “There needs to be fundamental change at the AOC,” she said; “They talk the talk, but they don’t walk the walk.”

Assembly Member Reginald Jones-Sawyer, the leading voice in the Legislature calling for the audit, spoke even more bluntly.  Addressing the AOC, he said: “The real question is, ‘What the hell did you do with that money?  What did you do to effectively manage the courts in a way that we did not have to close courts, people did not have to travel a hundred or more miles to get access to justice?’”

We highly recommend Maria Dinzeo’s detailed article about the hearing for Courthouse News, available here and reprinted below.  KCRA 3, Sacramento’s NBC affiliate, covered the hearings in a story entitled “Millions Misspent?” You can view their coverage by clicking on this link.  Reporter Brian Heap concluded that unless the Legislature sees significant changes or an oversight board, the courts may have a hard time getting the extra funding recommended by the Governor.

One of the most important, but largely overlooked, conclusions of the auditor was that not only had the AOC and Judicial Council grossly misstated the number of SEC recommendations implemented, but that their most touted “reform”—the supposed improved management structure of the AOC—was in fact completely at odds with the SEC’s own recommendation.  She found that changes to the organizational chart were mainly cosmetic, the net result being merely the subtraction of one of 13 managers.

Tellingly, although the auditor’s findings stressed the unacceptable and chronic lack of oversight of the AOC by the Judicial Council, not a single voting member of that Council was at the table to address the committee members, that duty being primarily left to new AOC head Martin Hoshino.  The Chief Justice—chair of the Council—and all 12 voting members selected by her stayed away.  Where was Justice Douglas Miller, head of the Council’s Executive and Planning Committee, the person primarily responsible for implementing the SEC recommendations?  Where was Justice Huffman, the chair of the so-called  “Accountability” committee that the auditor revealed was not about accountability at all?  Why weren’t they there to explain why the SEC implementations loudly touted by the council are largely illusory, and that the AOC was free to do as it pleased?  Instead, they sent yet another AOC Director to speak for them.  The joint committee, and the public, deserved answers from those ultimately responsible for the failings brought to light by the auditor.

Though the committee members unequivocally stressed to Mr. Hoshino that nothing short of a “fundamental cultural change at the AOC” would be acceptable to them, Mr. Hoshino stated his opinion that cultural change might be beyond reach, as it would take from “ten to twenty years to achieve.”  The committee members were not impressed with Mr. Hoshino’s timeline.  Assembly Member Mike A. Gipson took note of the 4,000 court employees who have lost their jobs and the 200 courtrooms that have shut down: “We don’t have time to wait five or ten years,” he said.  He’s right; we don’t.

This audit won’t go away.  Try as they might, the Council and the AOC can’t put any kind of positive spin on its findings.  They can’t hunker down until the clamor subsides, then carry on with business as usual.  They can’t claim that the problems highlighted by the audit have been already been addressed and fixed; that’s what they said when the SEC report came out back in 2012, and that dog won’t hunt.

We take particular note of those who spoke during the public comment portion of the hearing in favor of the audit recommendations: Alliance directors Tia Fisher and Kent Hamlin; court clerks, including Mark Natoli of Los Angeles, who pointed out that the branch would still be wasting money on CCMS had it not been for the work of the State Auditor and the actions of the Legislature; and representatives of organized labor from all across the state.  The archived video of the entire hearing and public comment period can be found here.

Slowly but surely, the Legislature, the press, and the public are connecting the dots between AOC mismanagement and court closures.  More and more people are coming to the realization that the judicial branch is not a single, monolithic entity; that the AOC and the trial courts are different things; that one can support the trial courts and the judiciary without giving a free pass to the bureaucracy.

At the start of the hearing, Assembly Member Jones-Sawyer mentioned that he had originally wanted to extend the audit to the AOC’s construction program.  We sincerely hope he does.

Directors, Alliance of California Judges

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Wednesday, March 11, 2015       Last Update: 10:39 AM PT

‘What the Hell Did You Do With All That Money?’ CA Legislator Asks

By MARIA DINZEO

SACRAMENTO (CN) – California legislators laid into the administrative bureaucracy of California’s courts at a hearing in the capitol on Wednesday, where State Auditor Elaine Howle presented a highly critical audit documenting the bureaucracy’s waste of hundreds of millions of dollars that should have gone to keeping the courts running during the state’s long-running budget crisis.

“There’s probably close to $2 billion that have been pushed into the courts. So the real question is, ‘What the hell did you do with that money?'” Assemblymember Reginald Jones-Sawyer said.

Jones-Sawyer, a Democrat from Los Angeles, was the audit’s legislative sponsor.

At the hearing’s outset, he said that when he joined the State Assembly two years ago, the Legislature and the governor had already begun to pour a cumulative total of $2 billion back into the judiciary’s coffers as the California economy began to turn around.

With the new director of the AOC waiting to speak, the legislator he said he has not seen any fundamental change in the judicial bureaucracy. “I’m still not comfortable that there’s been any accountability,” said Jones Sawyer. “There seems to be relatively no oversight, and there’s no transparency.”

The hearing is the result of years of criticism from judges and legislators over the AOC’s spendthrift ways during a period of severe cuts to the courts, as California’s economy and its budget constricted. Thousands of trial court employees were laid off and courthouses shuttered up and down the state, but all the while the massive bureaucracy at the top of the court system cut little from its budget while pouring $500 million into a controversial statewide IT project.

Legislators, judges and union members hoped that with a new director appointed in the fall, things would change. The new director, Martin Hoshino, also spoke before the committee and declared that progress is coming slowly, as Service Employees International Union representative Michelle Castro wished the director well but added that the bureaucracy has “a very entrenched culture of poor decision-making and hubris.”

Howle’s audit, released in January, pointed to an excessive $30 million spent over a four-year period on salaries for employees of the judicial bureaucracy, the Administrative Office of the Courts, as well as $386 million spent by the AOC over four years on statewide services that nearly half of California’s 58 trial courts don’t use, including $186 million on contractors and consultants.

“Despite budget shortfalls and budget cuts, the AOC continued to provide its employees with unreasonably high salaries and generous benefits. There is a disconnect about what the AOC is doing and what the courts need,” Howle said, testifying Wednesday before a panel of lawmakers from the Joint Legislative Audit Committee, a budget sub-committee chaired by Jones Sawyer and Assemblymember Mark Stone who chairs the assembly’s judiciary committee..

She pointed to an internal investigation of the bureaucracy by a team of 14 judges back in 2012 called the Strategic Evaluation Committee, appointed by Chief Justice Tani Cantil-Sakauye to address wastefulness and mismanagement in the bureaucracy. In a lengthy report saying the bureaucracy needed to return to its first job of serving the courts of California, the SEC committee came up with 124 recommendations for reform.

Howle confirmed the criticism from many observers who said those reforms never got off the ground, and described the SEC report’s conclusions as similar to her own.

“The language is much quite frankly, stronger than in our report. It was interesting to us to see how similar many of the conclusions and recommendations were between the two reports, and that’s where my concern is raised, personally,” Howle said. “That report came out in May 2012. There has not been much progress in some of these key areas.”

“Here we are in March 2015, almost 3 years later,” she continued. “There needs to be fundamental change at the AOC. There’s some cultural change, with all due respect, that needs to happen at the executive level. They talk the talk, but they don’t walk the walk.”

Jones-Sawyer asked Howle, “There’s probably an entrenched group of people in the system that are comfortable with the status quo. Did you get a sense there is anyone who will take the bull by the horns?”

Howle pointed to the recent hiring of Martin Hoshino from the California Department of Corrections and Rehabilitation as the new AOC Director, as a good start.

“Certainly Martin was a good hire. But he’s only one person.”

While Jones-Sawyer had opened the hearing by saying he was “ecstatic about the audit,” not all legislators shared his enthusiasm.

Senator Richard Roth (D-Riverside), said that in the context of a total judiciary budget of $3 billion, a waste of $30 million does not compare to the much greater sum of $500 million wasted on the Court Case Management System, a software project declared dead in 2012 by the Judicial Council.

“If the total is $30 million on a $3 billion budget, while we should obviously be sensitive to that and urge the judicial branch to be more efficient,” said Roth. “It’s somewhat less impactful if it were $500 million and another computer project,” he said.

When it came his turn to speak, Hoshino defended his agency and said reform is underway.

“We have ended employer payment of employee retirement contributions, the office directors will no longer receive the option of receiving reimbursement for parking, and of the vehicles people spoke of, we have eliminated one third of those 66 vehicles,” he said. “For the balance of the recommendations, there are bigger, more systemic things that are getting into more of the strategic planning and definition of services. They take more time.”

Changing the longstanding culture of the AOC may take many more years, he argued.

“Culture change is measured in big chunks of time. It’s not going to get done in six months. These things will happen in 10 years, 20 years,” he said. “It’s really about getting the right vision and the right set of values. I tend to focus just on performance. Once you know what everyone is supposed to do and you set the expectations, this thing happens that we end up calling cultural change.”

In an interview after the hearing, Michelle Castro with the SEIU praised the changes Hoshino brought in his first months on the job, but said they haven’t been nearly enough.

“Those were a good start, but there’s more to do,” she said. “People feel really good about Hoshino, they have a lot of confidence in him. But it’s hard to separate the past form the current and the future, because the past has been so checkered. Everyone wants to give Martin a chance but he’s one person in an institution with a very entrenched culture of poor decision-making and hubris. We’re hoping he can be successful.”

As of now, she said, legislators are reluctant to pump more money into the judiciary if they sense that the money won’t be used to keep courts open. She added, “It’s going to be very hard for there to be more money coming beyond what the governor has already put into its budget.”

Jones-Sawyer’s budget committee is set to hold its own hearing on the audit. On Wednesday, he hinted at increased legislative control, saying, “Maybe we can even do some budget language to institutionalize this so we can ensure accountability and access to justice and transparency, all of those things.”

“There’s a larger branch of government that hangs over all three branches and that’s the people, and we manage the people’s money,” he said. “And at the end of the day, that’s what all three are answering to.”