CA Sex Offender Placement Audit 2004-111

• Topics: Discrimination, Sex Offenders (Discrimination)

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S
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Departments That Are Responsible for
Placing Sex Offenders Face Challenges, and
Some Need to Better Monitor Their Costs

R
U
B

California State Auditor

Sex Offender
Placement:

December 2004
2004-111

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December 9, 2004

2004-111

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the Bureau of State Audits presents its audit report
concerning the process and related costs incurred by the departments of Developmental Services (Developmental
Services), the Youth Authority (Youth Authority), and Mental Health (Mental Health) to house sex offenders in
the community.
This report concludes that Developmental Services cannot identify the total number of individuals it serves who
are sex offenders, and is not required to do so. Consequently, it cannot isolate the costs associated with placing
them in local communities. Furthermore, when regional centers identify sex offenders, they face barriers in
placing them in local communities. We also found that the Youth Authority’s out-of-home placement standards
do not conform to laws and regulations otherwise governing housing facilities. In addition, its parole offices do
not always follow procedures for supervising parolees who are sex offenders. Moreover, the Youth Authority’s
contracts with homes do not contain some of the elements of a valid contract and it cannot track the cost of housing
sex offenders in the community because it lacks adequate controls over its billing system. Although only three
sexually violent predators (SVPs) have been released to Mental Health’s Forensic Conditional Release Program,
procuring housing for SVPs may continue to be difficult, and the program has proven costly given the small number
of people who qualify. Mental Health could improve its fiscal oversight of the program by routinely performing
audits and detailed reviews of costs. Finally, the State currently has no process to measure how successful the
SVP component of its Forensic Conditional Release Program is or to determine how to improve it.
Respectfully submitted,

ELAINE M. HOWLE
State Auditor

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CONTENTS
Summary

Introduction

Chapter 1
Various Laws Complicate the Treatment of
Sex Offenders by the Department of
Developmental Services

Recommendations

Chapter 2
The Department of the Youth Authority Has Problems
With Placement and Monitoring of Sex Offenders, as
Well as With Contracting
27
Recommendations

Chapter 3
The Department of Mental Health Should Improve
Fiscal Oversight of the Forensic Conditional Release
Program, and the State Lacks a Process to Measure
Its Success

Recommendations

Responses to the Audit
Health and Human Services Agency,
Department of Developmental Services

Youth and Adult Correctional Agency,
Department of the Youth Authority

Health and Human Services Agency,
Department of Mental Health

California State Auditor’s Comments on the
Response From the Department of Mental Health

SUMMARY
RESULTS IN BRIEF

Audit Highlights . . .
Our review of the departments
of Developmental Services
(Developmental Services), the
Youth Authority (Youth
Authority), and Mental Health
(Mental Health) processes
and related costs for releasing
sex offenders into the local
community revealed:

þ Developmental Services
cannot identify the total
number of individuals it
serves who are registered
sex offenders, or the related
costs, and is not required
to do so.

þ Youth Authority’s out-ofhome placement standards
do not conform to laws
and regulations otherwise
governing housing
facilities. In addition, it
cannot track the cost of
housing sex offenders in the
community because of an
inadequate billing system.

þ Only three sexually violent
predators (SVPs) have been
released to Mental Health’s
Forensic Conditional
Release Program, but
procuring housing for
SVPs may continue to be
difficult, and the program
has proven costly.
In addition, the State currently
has no process to measure how
successful the SVP component
of this program is or to
determine how to improve it.

s of July 1, 2004, more than 100,000 sex offenders were
registered in the State. A number of entities participate
in the process of releasing these sex offenders in the
community when appropriate. This report examines the process
and related costs incurred by the departments of Developmental
Services (Developmental Services), the Youth Authority (Youth
Authority), and Mental Health (Mental Health) in housing
sex offenders in the community. For purposes of our audit, we
define sex offenders as follows: At Developmental Services, these
are individuals with developmental disabilities (consumers)
who are required to register as sex offenders under the Penal Code,
Section 290; at the Youth Authority, this population includes
youthful offenders eligible for placement in its Sex Offender
Treatment Program; at Mental Health, this population includes
sexually violent predators as defined by the Welfare and
Institutions Code, Section 6600.1
Developmental Services cannot identify the total number of its
consumers who are sex offenders and is not required to do so.
Specifically, the Lanterman Developmental Disabilities Services
Act does not require that consumers provide criminal histories,
such as prior sex offenses, when accessing services provided
through regional centers. Furthermore, the law only allows
the California Attorney General (attorney general) to provide
Developmental Services the criminal histories of its potential
consumers in very limited circumstances. That same law
generally prohibits law enforcement agencies and others from
sharing this information with Developmental Services or the
regional centers. Because Developmental Services cannot always
identify the registered sex offenders in its consumer population,
it cannot isolate the costs associated with placing them in
local communities. When regional centers identify consumers
who are sex offenders, they face barriers in placing them in
local communities. For example, one community’s protest
caused Developmental Services to postpone a regional center’s
implementation of the community placement plan for a small
group of consumers in that community.
1

Section 290 of the Penal Code includes sex offenses such as rape; lewd or lascivious acts
with a child under the age of 14; and sodomy or oral copulation with a minor; or when
committed by force, violence, duress, menace, or fear of immediate and unlawful bodily
injury on the victim or another person.

California State Auditor Report 2004-111

We also found that the Youth Authority’s standards to assure
that basic and specialized needs of the parolees are met do
not conform to laws and regulations otherwise governing
housing facilities. Because parole agents do not always complete
evaluations and inspection of these homes, the safety of the
parolees may be in jeopardy. Also, parole offices do not always
follow procedures for supervising parolees who are sex offenders,
making it difficult for parole agents to promptly identify
whether these youths need more intensive monitoring.
In addition, the Youth Authority’s contracts with homes do not
contain some of the elements of a valid contract. For example,
the contracts do not specify the term for the performance or
completion of the services, nor do they clearly describe the level
of service the homes are to provide. Further, the Youth Authority
has not adequately designed and implemented a billing system to
track housing costs for youthful offenders. Finally, although the
Youth Authority has a conflict-of-interest code meant to avoid
potential conflicts of interest, it does not ensure that all of its
supervising parole agents file statements of economic interests.
Superior courts at the county level play a major role in the release
of sexually violent predators (SVPs) to Mental Health’s Forensic
Conditional Release Program (Conditional Release Program) and
retain jurisdiction over these individuals throughout the course
of the program. Once an SVP resides in a secure facility for at
least one year, he or she is eligible to petition the court to enter
the Conditional Release Program. Although few SVPs qualify for
the program (only three since the program’s inception in 1995),
procuring housing for them may continue to be difficult, and
Mental Health needs to improve its fiscal oversight. For example,
it lacks adequate procedures to monitor Conditional Release
Program costs. According to the former chief of Mental Health’s
Forensic Services Branch, due to budget cuts it no longer has an
auditor position available to perform audits and detailed reviews of
costs. In addition, Mental Health does not adhere to its policies and
procedures designed to reduce program costs. For example, it does
not presently ensure that SVPs apply for other available financial
resources such as food stamps and social security income. Finally,
the State currently has no process to measure how successful its
Sex Offender Commitment Program is (the Conditional Release
Program is its fifth treatment phase in this program) or to determine
how to improve it.

California State Auditor Report 2004-111

RECOMMENDATIONS
To most appropriately provide services and supports to its
consumers, Developmental Services should consider seeking
legislation to enable it and the regional centers to identify
those consumers who are sex offenders by obtaining criminal
history information from the attorney general. If the Legislature
chooses not to allow access to criminal history information,
Developmental Services should seek to modify its laws and
regulations governing the individual program plan process to
include a question that asks potential consumers if they must
register as sex offenders.
To assure that at a minimum it meets the basic and specialized
needs as well as safety of sex offenders who are on parole, the
Youth Authority should address the deficiencies in its out-of-home
placement standards and modify its regulations accordingly.
To ensure the safety of the public, the Youth Authority should
conduct periodic reviews of a sample of the parolees’ case files to
ensure parole agents’ compliance with its supervising procedures.
To ensure that its contracting process meets state requirements,
the Youth Authority should seek guidance from the departments
of General Services and Finance.
To ensure that it can accurately identify the costs associated with
housing sex offenders in the community, the Youth Authority
should identify and correct erroneous data in its billing system,
implement controls and procedures to ensure the completeness
and accuracy of the records, and reconcile the invoices in its
billing system with the payments in its accounting records.
To ensure that it avoids potential conflicts of interest, the Youth
Authority should ensure that all supervising parole agents and
employees who are performing duties similar to those of the
supervising parole agents file a statement of economic interests.
To ensure that contractors adhere to the terms and conditions in
its contracts, Mental Health should either reinstate the auditor
position or designate available staff to fulfill the audit functions.
In addition, Mental Health should follow through on its policy
to reduce costs associated with the SVP component of the
Conditional Release Program.

California State Auditor Report 2004-111

To enable the State to measure the success of the SVP component
of the Conditional Release Program, the Legislature should consider
directing Mental Health to conduct an evaluation of the program.

AGENCY COMMENTS
Developmental Services agrees with our recommendations and
intends to work toward implementing them. The Youth Authority
also agrees with our recommendations and has assigned a project
coordinator to oversee various groups that will have responsibility
for addressing the deficiencies noted in our report. Finally, Mental
Health agrees with our recommendations and has already taken
some actions to address them. n

California State Auditor Report 2004-111

INTRODUCTION
BACKGROUND

number of state departments, such as the Department of
Corrections (Corrections), are responsible for releasing
in the community individuals convicted or adjudicated of
committing sex offenses.2 The California Department of Justice
(Justice) maintains a database of registered sex offenders
in the State, and as of July 1, 2004, it contained more than
100,000 names. This report examines the process and related
costs incurred by the departments of Developmental Services
(Developmental Services), the Youth Authority (Youth Authority),
and Mental Health (Mental Health) to house sex offenders in
the community.

DEVELOPMENTAL SERVICES
State laws, primarily the Lanterman Developmental Disabilities
Services Act (Lanterman Act), charge the State with establishing
a service delivery system for eligible persons with developmental
disabilities (consumers) to meet their needs and choices, as
well as to facilitate their integration into the mainstream life
of the community. Eligibility for services is based on whether
the person has mental retardation, cerebral palsy, epilepsy,
autism, or other disabling conditions closely related to mental
retardation or requiring treatment similar to that given for
mental retardation. Any consumer can receive services as long
as the disability originates before his or her 18th birthday, it
continues or can be expected to continue indefinitely, and
it constitutes a substantial disability. Developmental Services
administers the service delivery system.
In fiscal year 2004–05, Developmental Services expects to spend
$3.5 billion providing services and supports to nearly 203,000
consumers in its seven facilities and in local communities.
Developmental Services contracts with a statewide network of
21 regional centers—nonprofit private corporations—to provide a
local resource to help find and access the many services available
to consumers. The services offered by regional centers can include

When a youthful offender is accused of a crime and the case is decided in a juvenile court,
that determination is known as an adjudication.

California State Auditor Report 2004-111

assessing and diagnosing an individual to determine his or her
eligibility. They also assign service coordinators to work with
eligible consumers, and where appropriate their parents, legal
guardians, conservators, or authorized representatives, to develop
an individual program plan that considers each consumer’s
needs, strengths, capabilities, preferences, lifestyle, and cultural
background. Through this collaborative process, regional
centers also generally decide whether consumers should enter
a developmental center or remain in the community, although
the court can order that certain consumers be placed in a specific
setting. When regional centers become aware that a consumer
is a registered sex offender, they often consider this factor
when developing individual program plans. The location of the
21 regional centers is shown in the Figure.
Developmental Services operates five developmental centers.
The centers provide around-the-clock services that include care,
treatment, and supervision to consumers who have greater
medical and behavioral problems than do those living in the
community. However, a 1993 lawsuit settlement, known as
the Coffelt Settlement, called for the State to help residents of
developmental centers to integrate into their communities to
the extent that integration is appropriate based on the needs
of the individual. In 2000, Developmental Services began
operating two smaller community facilities that also provide
around-the-clock services. These facilities were designed to
provide services to consumers with challenging behavioral
issues. When consumers residing in these facilities demonstrate
acceptable behavioral control and personal responsibility, as well
as appropriate work, social, and living skills, they are assisted
in returning to their own communities or other less restrictive
living arrangements. According to Developmental Services’
unaudited data, the number of consumers living in its facilities
dropped from 5,400 in January 1995 to less than 3,300 in
September 2004.
The legislative intent of the Lanterman Act is to require that
consumers receive appropriate services and supports under the
least restrictive conditions. Another legislative intent of the
Lanterman Act is that consumers have a right to make choices in
their own lives, including where and with whom they live; their
relationships with people in their community; the way they
spend their time, including education, employment, and leisure;

California State Auditor Report 2004-111

FIGURE
Services for California Residents With Developmental Disabilities Are
Provided Through a Statewide Network of 21 Locally Based Regional Centers
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Humboldt

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Shasta

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Napa

Sacramento

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San Joaquin

San Francisco
Alameda
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Santa Clara

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Fresno
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Kern
San Bernardino

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Santa Barbara
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Los Angeles

Orange

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San Diego

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Source: Department of Developmental Services.
Note: Colors correspond to areas served by each regional center.

California State Auditor Report 2004-111

the pursuit of their personal future; and program planning and
implementation. Regional centers must respect the choices made
by consumers or their parents, legal guardians, or conservators.
For example, the Lanterman Act places a high priority on
providing opportunities for adult consumers, regardless of the
degree of disability, to live in homes they own or lease with
support available as often and for as long as it is needed, when
that is the preferred objective in their individual plans. Regional
centers can assist consumers in securing their own homes
and provide any support they need to live on their own. The
Lanterman Act also places a priority on providing opportunities
for adult consumers to live in the homes of families approved
by private not-for-profit family home agencies and to receive
necessary services and supports in those settings consistent with
their individual plans. Among other alternatives, consumers
may choose to live in community care facilities licensed by the
Department of Social Services that can provide around-the-clock
nonmedical residential care to those in need of personal services,
supervision, or assistance essential for sustaining the activities of
daily living or for self-protection.

THE YOUTH AUTHORITY
State law mandates that the Youth Authority provide, among
other things, offender training and treatment aimed at the
correction and rehabilitation of young persons who have
committed public offenses. The Youth Authority pays for these
services because youthful offenders—those persons under the
age of 18—are under its jurisdiction. Youthful offenders can be
committed to the Youth Authority by both juvenile and criminal
courts. Those who violate any California or federal law or most
California city or county ordinances defining crimes typically
fall within the jurisdiction of the juvenile courts. In some cases,
however, a youthful offender may be prosecuted in a criminal
court as an adult and, in that case, can be convicted of a crime.
Upon receiving a youthful offender, the Youth Authority
reviews documents provided by the court to identify factors
such as the individual’s public offense, confinement time, and
history of criminal or delinquent behavior. The Youth Authority
has established a Sex Offender Treatment Program to provide
treatment to youthful offenders who meet the criteria shown in
the text box.

California State Auditor Report 2004-111

Generally, the Youth Authority’s jurisdiction
over youthful and young adult offenders expires
Casework specialists or parole agents refer to
the Youth Authority’s Sex Offender Treatment
when they reach the age of 21; however, if they
Program youthful offenders who meet one or
have committed certain offenses such as rape or
more of the following conditions:
other forcible sex offenses, its jurisdiction can
1. The offender is committed to the Youth
extend until they reach age 25. Under California’s
Authority for a sex offense.
determinate sentencing law, adult prisoners are
2. The offender was adjudicated or convicted
released on parole dates that are fixed by statute
of a sex offense prior to his or her current
based on the seriousness of the offense. In contrast,
commitment.
a Youth Authority ward’s readiness for parole is
3. The offender has a documented pattern or
determined by the Youth Authority Board (parole
history of sexually inappropriate behavior.
board). Prior to a parole consideration hearing, a
4. The offender discloses his or her involvement
Youth Authority parole agent in one of 16 parole
in sexually inappropriate behavior.
offices located throughout the State completes
a placement plan that specifies any special
Source: The Department of the Youth Authority.
conditions of parole relevant to the youthful
offender’s commitment offense. The parole agent
investigates the institution’s recommended
placement and develops alternate placements, if necessary.
If, after reviewing the case, the parole board determines that
a youthful offender under supervision and with appropriate
conditions of parole is not likely to present a significant danger
to the public, it orders that the offender be referred to parole.
The parole agent then assists the parolee in obtaining adequate
housing, employment, financial assistance, social and medical
services, educational placements, and other resources or services
that will increase the likelihood of the parolee’s adjustment in
the community.
Depending on the plan, parole agents may place parolees with
relatives, in facilities that house more than six persons, group
homes, or foster homes.3 Additionally, the Youth Authority will
subsidize housing for parolees who live independently. However, the
preference is to place the parolee in the approved home of a relative
or the approved home of an unrelated extended-family member.
According to the Youth Authority, it released 6,911 youthful
offenders on parole between July 2001 and June 2004. Only 811,
or 11.8 percent, met the criteria for the Sex Offender Treatment
Program. However, 51 of these offenders were released more
than once during this period. Table 1 on the following page
shows the number of sex offenders released by offender type.

The Youth Authority defines a group home as a residence that provides room, board,
care, and supervision for not more than six persons.

California State Auditor Report 2004-111

TABLE 1
Number of Sex Offenders Released by the
Department of the Youth Authority to Parole by Type
Fiscal Years 2001–02 Through 2003–04
Type of Sex Offender

Number of
Sex Offenders

Commitment offense is a sex offense as defined in Welfare and
Institutions Code, Section 727.6.*

337

Commitment offense is a sex offense other than those sex offenses
defined in Welfare and Institutions Code, Section 727.6.

182

The offender has been adjudicated or convicted of a sex offense prior
to his or her current commitment, or has a documented pattern
or history of sexually inappropriate behavior, or discloses his or her
involvement in sexually inappropriate behavior.

292

Total†

811

Source: The Department of the Youth Authority (Youth Authority) Research Division data,
Bureau of State Audits’ analysis.
Note: For the purpose of this audit, we defined a sex offender using the categories
described in the Youth Authority’s Sex Offender Treatment Program.
* The Welfare and Institutions Code, Section 727.6, states that any minor adjudged a
ward of the court and committed to the Youth Authority for committing a sexually
violent offense, as defined in the Welfare and Institutions Code, Section 6600, must
receive sex offender treatment. Sexually violent offenses include acts of oral copulation,
sodomy and rape when committed by force, violence, duress, menace, or fear of
immediate and unlawful bodily injury on the victim or another person.
†

Total includes 51 sex offenders that the Youth Authority released to parole more
than once during fiscal years 2001–02 through 2003–04.

MENTAL HEALTH
Mental Health provides services to individuals residing within
the State who have mental disorders. Corrections and the
Board of Prison Terms screen individuals under Corrections’
jurisdiction (inmates) who may be sexually violent predators
(SVPs) and are generally within at least six months of their
scheduled release date from prison.4 Inmates are selected for
screening based on whether they have committed a sexually
violent predatory offense and on a review of their social,
criminal, and institutional history. If the screening indicates
that the inmate is likely to be an SVP, Corrections refers him
or her to Mental Health for a full evaluation. Mental Health’s
Sex Offender Commitment Program implements state laws
that create a civil commitment process for SVPs. The director
of Mental Health must designate two independent practicing
4

The Board of Prison Terms is California’s adult parole board. It is composed of
nine commissioners who are appointed by the governor, with the advice and consent of
the Senate, for a term of four years.

California State Auditor Report 2004-111

State law defines a sexually violent predator
as a person who has been convicted of a
sexually violent offense against two or more
victims and who has a diagnosed mental
disorder that makes the person a danger to
the health and safety of others in that it is
likely that he or she will engage in sexually
violent predatory criminal behavior.
State law also defines the following terms:
• Sexually violent offenses include the
following acts when committed by force,
violence, duress, menace, or fear of
immediate and unlawful bodily injury on
the victim or another person: rape, lewd or
lascivious acts with a child under the age
of 14, spousal rape, and oral copulation or
sodomy with a minor.

psychiatrists or psychologists, or one practicing
psychiatrist and one practicing psychologist to
evaluate the inmate and determine if he or she
meets the definition of an SVP. Two independent
evaluators must concur that the inmate has a
diagnosed mental disorder so that he or she is
likely to engage in acts of sexual violence without
appropriate treatment and custody. Then, the
director of Mental Health must forward a request for
a petition to be filed for the inmate’s commitment
to a secure facility for mental health treatment
to the county’s designated counsel, which can be
either its own counsel or the district attorney.

If the county’s designated counsel concurs with
the recommendation, he or she files a petition for
• Diagnosed mental disorders include
commitment in the Superior Court of the county
congenital or acquired conditions affecting
the emotional or volitional capacity that
where the inmate was convicted of the offense and
predisposes the person to the commission
committed to the jurisdiction of Corrections. The
of criminal sexual acts in a degree
constituting the person a menace to the
judge will review the petition and determine if it,
health and safety of others.
on its face, supports a finding of probable cause
• A predatory act is one directed toward a
that the individual named in the petition is likely
stranger, a person of casual acquaintance
to engage in sexually violent predatory criminal
with whom no substantial relationship exists,
behavior upon his or her release. If so, the judge
or an individual with whom a relationship
has been established or promoted for the
will hold a full hearing to determine whether
primary purpose of victimization.
the person committed would be a danger to the
health and safety of others in that it is likely that
Source: Welfare and Institutions Code, Section 6600.
he or she will engage in sexually violent criminal
behavior due to his or her diagnosed mental
disorder while under supervision and treatment in
the community. If probable cause is determined, the judge must
order that the person remain in custody in a secure facility until
a trial is completed. If the court or jury finds that the person is
an SVP, the person is committed for two years to the custody
of Mental Health for appropriate treatment and confinement
in a secure facility. Typically, Mental Health will place an SVP in
the state hospital at either Atascadero or Patton. The SVP must
undergo an examination of his or her mental condition at least
once every year.
The SVP can be released into Mental Health’s Forensic Conditional
Release Program (Conditional Release Program) in one of two
ways. The director of Mental Health can determine that the
SVP has so changed that he or she is not likely to commit acts
of predatory violence while under supervision and treatment
in the community. If this occurs, the director must forward

California State Auditor Report 2004-111

a report and recommendation for conditional release to the
county’s designated counsel, the SVP’s attorney of record, and
the committing court. Alternatively, the SVP can petition the
court for conditional release without the recommendation or
concurrence of the director. However, the SVP must have been
in the custody of Mental Health, confined in a secure facility, for
not less than one year from the date of the order of commitment
before filing the petition.
Upon receipt of either the director’s report and recommendation
or the SVP’s petition, the court must hold a hearing to determine
if the SVP would be a danger to the health and safety of others
in that it is likely that he or she will engage in sexually violent
criminal behavior due to his or her diagnosed mental disorder if
under supervision and treatment in the community. If the court
determines that the SVP would not be a danger to others due to
his or her diagnosed mental disorder while under supervision
and treatment in the community, it must order the SVP placed in
Mental Health’s Conditional Release Program for one year. The
court must hold another hearing at the end of a year to determine
if the SVP should be unconditionally released from commitment.
The court retains jurisdiction of the SVP throughout his or
her placement in the Conditional Release Program. Mental
Health’s Forensic Services Branch within its Long Term
Care Services Division is responsible for providing program
direction and policy development of mental health treatment for
SVPs and for supervising their direct outpatient treatment using
outside contractors. Since the enactment of state law establishing
the SVP component of the Conditional Release Program in 1995,
the courts have conditionally released three SVPs. Recently, a
court unconditionally released one of the three SVPs. Upon
release, Mental Health is no longer responsible for providing
supervision and treatment to these individuals.

SCOPE AND METHODOLOGY
The Joint Legislative Audit Committee (audit committee) asked
us to review the process and costs of Developmental Services, the
Youth Authority, and Mental Health for placing sex offenders
in local communities. Specifically, the audit committee asked
us to review the three departments’ policies and procedures
for identifying, evaluating, and placing sex offenders in local
communities. It also asked us to review the contracts these
departments have with homes used to house sex offenders and
to identify the placement costs that each department incurred
12

California State Auditor Report 2004-111

for the last three fiscal years. Finally, the audit committee asked
us to evaluate the relationship between regional centers’ housing
agents and homeowners for a sample of placements made
through Developmental Services during the last fiscal year. For
purposes of our audit, we defined a sex offender as follows: At
Developmental Services, these are consumers who are required
to register as sex offenders under the Penal Code, Section 290; at
the Youth Authority, this population includes youthful offenders
eligible for placement in its Sex Offender Treatment Program; at
Mental Health, this population includes SVPs as defined by the
Welfare and Institutions Code, Section 6600.
To obtain an understanding of the policies and procedures of
Developmental Services and regional centers for identifying,
evaluating, and placing sex offenders in local communities,
we reviewed relevant state laws and regulations. We also
interviewed various management and staff from Developmental
Services. In addition, we interviewed personnel from 10 regional
centers located throughout the State and reviewed a total of
30 consumer files from these centers. Developmental Services
is not required to track the number of sex offenders it serves;
therefore, we attempted to identify this segment of its consumer
population by cross-referencing its records to the database of
all registered sex offenders in the State maintained by Justice.
However, our effort was unsuccessful because Developmental
Services and Justice use different identifying data to track
their respective populations. Because we could not identify
the population of sex offenders that Developmental Services
serves, we also could not separately identify its cost of providing
services to these individuals.
To evaluate the relationship between regional centers and the
facilities they use to house sex offenders, we reviewed revelant
laws and regulations governing their ability to obtain vendors
or contractors who provide residential services for its consumers
within the community. Additionally, we assessed Developmental
Services’ and regional centers’ compliance with laws and
regulations established to avoid potential conflicts of interest.
To obtain an understanding of the Youth Authority’s process
for identifying, evaluating, and placing sex offenders in local
communities, we reviewed laws, regulations, and its policies
and procedures. We also compared the Youth Authority’s out-ofhome placement standards to other state laws and regulations
governing housing facilities. Finally, we interviewed key
department staff.

California State Auditor Report 2004-111

To identify the number of youthful offenders who met the
criteria for the Youth Authority’s Sex Offender Treatment
Program and who were placed in homes, we matched its
offender database against its billing system. We also reviewed
the Youth Authority’s offender database for reliability, accuracy,
and completeness with regard to the data provided for all
youthful sex offenders. For example, we selected samples from
an independent database and the Youth Authority’s intake files,
and traced the records to the offender database.
To determine whether it follows its policies and procedures
for identifying, evaluating, and placing sex offenders, we
randomly selected and reviewed case files for a sample of 60
sex offenders from each of the Youth Authority’s 16 parole
offices. Our review of the case files entailed, among other things,
determining whether parole offices were conducting background
checks of home owners, operators, and employees; conducting
evaluations of the homes; and monitoring sex offenders in the
community. We also reviewed annual inspections and audits of
the parole offices that were conducted by the Youth Authority’s
headquarters staff during calendar years 2001 and 2002. We
interviewed key staff at each parole office. Finally, to evaluate
the relationships between parole agents and home owners, we
reviewed the Youth Authority’s compliance with state law meant
to avoid potential conflicts of interest.
To determine the Youth Authority’s costs to place sex offenders
in local communities for fiscal years 2001–02 through 2003–04,
we reviewed housing and sex offender counseling costs. We
interviewed key accounting and information technology staff. We
also reviewed the Youth Authority’s billing system and selected
a sample of invoices to determine whether the accounting
department accurately processes housing payments. For example,
we agreed the payment dates to the Youth Authority’s contract
terms with homes. To determine the total counseling costs, we
reviewed the sex offender counseling contracts and payment
logs. We reviewed the contract costs for accuracy and reliability
by judgmentally selecting a month from the payment log and
tracing the payment to the accounting records.
To obtain an understanding of Mental Health’s process for
identifying, evaluating, and placing SVPs in local communities,
we reviewed pertinent state laws related to its Conditional
Release Program. We also interviewed key staff in Mental Health’s
Forensic Services Branch and Long Term Care Services Division.

California State Auditor Report 2004-111

To determine Mental Health’s costs to place SVPs in local
communities, we interviewed staff from Mental Health and
its contractor. Further, we evaluated whether the expenditures
and services were allowable, properly classified, and supported
by documentation. n

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Blank page inserted for reproduction purposes only.

California State Auditor Report 2004-111

CHAPTER 1
Various Laws Complicate the
Treatment of Sex Offenders by the
Department of Developmental Services
CHAPTER SUMMARY

he Department of Developmental Services (Developmental
Services) and the regional centers do not maintain
a database to track the total number of consumers who
are sex offenders, nor are they required to do so. Although the
California Attorney General (attorney general) must maintain
summary information pertaining to the identification and
criminal history of any person, it can only share the criminal
history of potential consumers of Developmental Services in very
limited circumstances. Thus, Developmental Services cannot
identify the total number of sex offenders it serves or the
associated costs. In addition, regional centers are unable to
ensure that these consumers are not inadvertently placed in
a housing situation that is not legally permitted. Although the
individual program plan process is not designed to identify sex
offenders and the Lanterman Developmental Disabilities Services
Act (Lanterman Act) does not require consumers to provide
criminal histories such as prior sex offenses, opportunities do exist
for the regional centers to solicit this information.
Further, in spite of the legislative intent of the Lanterman Act to do
so when appropriate, regional centers face barriers when placing
sex offenders in the community. For example, negative community
reaction and concern for consumer safety caused Developmental
Services to postpone one regional center’s implementation of the
community placement plan for a small group of consumers.

STATE LAW LIMITS USE OF ATTORNEY GENERAL
INFORMATION TO IDENTIFY SEX OFFENDERS
Under state law, the attorney general is required to maintain
a summary of the criminal history information of any person,
but may only provide that information to designated persons or
entities. For example, the law only allows the attorney general
to provide Developmental Services the criminal histories of
its potential consumers in very limited circumstances. Neither
California State Auditor Report 2004-111

Developmental Services nor the regional centers maintain a
database to track the total number of consumers who are sex
offenders. Consequently, Developmental Services cannot identify
the total number of consumers who are sex offenders it serves or
determine the costs associated with providing them services.

Regional Centers Cannot Determine Costs Associated With
Sex Offender Community Placements Due to Inability to
Identify Such Consumers
The attorney general maintains a master record of summary
information pertaining to the identification and criminal history
of any person, but state law limits access to that information to
designated persons or entities such as state courts, peace officers,
district attorneys, public defenders, and probation and parole
officers if needed in the course of their duties under certain
circumstances. The law only allows the attorney general to provide
Developmental Services the criminal histories of its potential
consumers in very limited circumstances. That same law generally
prohibits law enforcement agencies and others from sharing this
information with Developmental Services or the regional centers.

Neither Developmental
Services nor the regional
centers maintain a
database to track
the total number of
consumers who are sex
offenders, nor are they
required to do so.

Neither Developmental Services nor the regional centers maintain
a database to track the total number of consumers who are sex
offenders, nor are they required to do so. Developmental Services
will learn that a person is a sex offender if the developmentally
disabled person has been found mentally incompetent to stand trial
on a complaint charging a sex offense described in the Penal Code,
Section 290.5 In those circumstances, the court orders the person be
delivered to a state hospital or other secure treatment facility such
as a state developmental center for the care and treatment of the
developmentally disabled unless it makes a specific finding on
the record that an alternative placement would be more appropriate
for the person’s treatment and would not pose a threat to the health
and safety of others. The court must transmit a copy of its order to
the regional center director and to the director of Developmental
Services. The court orders the regional center director to evaluate
the defendant and submit to it within 15 judicial days a written
recommendation for placement. When the court orders that the
person be confined in a state hospital or other secure treatment
facility, it provides copies of relevant documents, such as the
person’s summary criminal history information, to the facility.

California State Auditor Report 2004-111

Although the regional centers’ individual program plan process
is not designed to identify sex offenders and the Lanterman Act
does not require consumers to provide criminal histories such as
prior sex offenses, opportunities do exist for the regional centers
to solicit this information. For example, according to the regional
centers, a potential consumer or family member may voluntarily
tell them that the potential consumer is a sex offender. In
addition, information on prior sex offenses may surface as a
regional center gathers details on the potential consumer’s
medical, psychosocial, psychological, or educational background.
However, regional centers do not consistently ask potential
consumers about their prior sex offenses. To the regional centers’
credit, when they were able to identify potential consumers as
registered sex offenders, they often considered this information
when developing individual program plans. Nevertheless,
capturing sex offender data on a voluntary basis results in a hitor-miss approach and hinders Developmental Services’ ability to
identify its total population of sex offenders.

According to
Developmental Services,
it spent approximately
$6.9 billion supporting
eligible consumers in local
communities between
fiscal years 2001–02 and
2003–04. However, it
cannot separately identify
the cost of providing
services to sex offenders.

According to Developmental Services, it spent roughly $6.9 billion
between fiscal years 2001–02 and 2003–04 supporting eligible
consumers in local communities, including supported living
arrangements, day programs, respite, counseling, training, and
transportation. However, because Developmental Services cannot
identify those consumers who are registered sex offenders, it
cannot separately identify the cost of providing services to these
individuals. Because of the structure of its service delivery system,
any cost Developmental Services incurs related to a specific
consumer is driven primarily by the consumer’s needs based on
his or her developmental disability.
Of the 30 consumers convicted of sex offenses whose files we
reviewed, most lived independently, many lived in community care
facilities, and a few lived with their families.6 The community care
facilities housing these consumers had service levels ranging from
2 to 4I. The service levels vary depending on the supervision and
special services each consumer needs. In 2004, the cost of providing
level 2 services was between $1,700 and $1,900 per month, while
the monthly cost of providing level 4I services was $5,000, more
than double the cost of level 2 services. The court ordered that
one of these consumers be placed in a level 3 facility at a current
monthly cost of $2,200 and another be placed in a level 4 facility at
6

Section 290(b) of the Penal Code requires any person who has been released,
discharged, or paroled from a penal institution, where he or she was confined because
of the commission or attempted commission of a sex offense, to register as a sex
offender. One consumer was not convicted of a sex offense but is required to register
under this section.

California State Auditor Report 2004-111

a monthly cost of nearly $4,000. In addition to the housing costs,
we also noted that regional centers often provided sex offender
counseling to the consumers.

A Lack of Data on Consumers’ Status as Sex Offenders Limits
a Regional Center’s Ability to Assist Them in Complying With
Certain Laws
Because regional centers cannot identify the population of consumers
who are sex offenders that it serves, it cannot assist those individuals
in complying with state and federal laws related to their status as a sex
offender. One such law is the state law, known as Megan’s Law, that
generally requires that a person who is released, discharged, or paroled
from a jail, state or federal prison, or other facility where he or she was
confined because of the commission or attempted commission of a
sex offense, as defined in Section 290 of the Penal Code, be informed
of his or her duty to register as a sex offender. In addition, the
institution that releases a registered sex offender must
report the address where the individual expects to live
to the California Department of Justice and local law
Federally assisted housing means a dwelling
enforcement agencies having jurisdiction over the area
unit that meets any of the following criteria:
where the person expects to reside.
1. Situated in public housing.

2. Receives tenant-based assistance or projectbased assistance under Section 8 of the
United States Housing Act of 1937.
3. Provides supportive housing for the elderly
in various forms, such as rental assistance.
4. Provides supportive housing for individuals
with disabilities.
5. Is financed by a loan or mortgage insured
under the National Housing Act.
6. Is insured, assisted, or held by the Secretary
for Housing and Urban Development or a
state or state agency under the National
Housing Act.
7. Receives assistance from loans issued
by the Secretary for Housing and Urban
Development to private nonprofit
corporations, consumer cooperatives, and
Indian tribes to provide rental or cooperative
housing and related facilities for elderly or
handicapped persons or families of low or
moderate income or other persons and
families of low income in rural areas.
Source: Title 42 of the United States Code,
Section 13664.

State law also requires any person required to
register as a sex offender under Section 290 to
disclose that fact to the licensee of a community
care facility before becoming a client of that
facility. A community care facility client who fails
to disclose to the licensee his or her status as a
registered sex offender is guilty of a misdemeanor.
Furthermore, state law prohibits anyone who has
ever been convicted of a sex offense against a
minor from residing in a community care facility
that is located within one mile of an elementary
school. We reviewed the placements of 30 consumers
convicted of sex offenses from 10 different
regional centers throughout the State and found
that some who had committed sex offenses
against minors were placed in community care
facilities that were within one mile of one or more
elementary schools in violation of this law.
Federal law requires owners of federally assisted
housing to prohibit admission to such housing for
any household that includes an individual who is
subject to a lifetime registration requirement under
a state sex offender registration program. California’s
California State Auditor Report 2004-111

Without the ability to
identify those consumers
who are sex offenders,
regional centers are
unable to ensure that
they are not inadvertently
placed in a housing
situation that is not
legally permitted.

sex offender registration program requires, with certain exceptions,
that every person who is subject to that law for the rest of his or
her life, while residing in, or, if he or she has no residence, while
located in California, or while attending school or working in
California, comply with the registration requirements of that
law. Thus, California law generally imposes a lifetime registration
requirement, and consumers who are registered sex offenders
cannot reside in federally assisted housing. Without the ability to
identify sex offenders, regional centers are unable to ensure that
they are not inadvertently placed in a housing situation that is not
legally permitted. The director of Developmental Services agrees
that absent the provision of information about consumers who
are registered sex offenders, regional centers are unable to ensure
that such consumers’ placements will comport with existing
statutory requirements. In addition, because regional centers are not
necessarily aware of a consumer’s prior sex conviction, they may
also not be able to identify and assist the consumer with specific
services and supports needed to address the behaviors related to his
or her conviction.

REGIONAL CENTERS SOMETIMES FACE BARRIERS WHEN
PLACING CONSUMERS IN THE COMMUNITY
Regional centers have generally complied with the Lanterman Act
that requires them to establish an array of services and supports
to meet the needs and choices of each person with developmental
disabilities and to facilitate their integration into the mainstream
life of the community. However, they face certain barriers when
trying to place sex offenders in the community.
A regional center’s determination that a consumer will be best
served by placement in the community rather than in one of
Developmental Service’s seven facilities is guided by the Lanterman
Act. The legislative intent of this act requires that consumers
receive appropriate services and supports in the least restrictive
environment. As discussed in the Introduction, a collaborative
process is used to develop an individual program plan to identify
what a consumer will need to successfully integrate into the
community, as well as to reach his or her goals and objectives.
The Lanterman Act also requires each regional center to prepare
an annual community placement plan to identify consumers in
developmental centers whose needs could be better met in the
community. The community placement plan outlines funding
needed to conduct comprehensive assessments of selected
developmental center consumers and to move them into the
California State Auditor Report 2004-111

community. A team comprising representatives from the regional
centers, developmental centers, and Developmental Services’
Regional Resource Development Project coordinates to develop
the individual program plans for these consumers. It also includes
proposals to divert certain consumers from initial placement in a
developmental center to a direct placement in the community.

Although the court ordered
one regional center to
release a small number
of consumers with a
history of sex offenses
into the community,
the community’s
negative reaction caused
Developmental Services
to postpone the regional
center’s implementation of
the community placement
plan for these consumers.

Our review of 30 consumer files from 10 regional centers
throughout the State found that regional centers appear to be
placing consumers in the community based on their needs, as
the Lanterman Act requires. However, regional centers can face
community opposition when trying to place sex offenders. For
example, negative community reaction and the potential for
consumer safety to be jeopardized caused Developmental Services to
postpone one regional center’s implementation of the community
placement plan for a small group of consumers. This small group
of consumers all had a history of sexual offenses, and some but
not all were required to register as sex offenders. According to the
regional center, these consumers were ordered by the court to
participate in a sex offender treatment program. Following their
completion of this program, an interdisciplinary team composed of
developmental center and regional center staff, including medical
and psychological personnel and family members, determined that
these consumers were ready to progress to community placement
and recommended that the court so order. The court agreed with
these recommendations and ordered the regional center to release
these consumers into the community. Despite the fact that these
individuals had undergone court-ordered sex offender treatment
and their release into the community was ordered by the court,
the regional center encountered significant community opposition
when attempting to place these individuals.
According to the regional center, to facilitate placing them in the
local community, it sent out a request for proposals to identify
organizations that could provide housing and support services in a
community setting. The regional center stated that it received only
one response; however, it was a proposal from an entity that
had experience working with sex offenders. The regional center
proceeded to contract with this organization to provide a home
and related supports and services for this small group of consumers.
According to the regional center, a year later, the provider
identified and purchased a home in San Bernardino County. The
home had a fence built directly around it and another around
the entire property. In addition, to ensure adequate security, the
provider installed an alarm in the house. The cost of the home
and the related services was projected to be almost $70,000 per
month, although the regional center planned to reduce these

California State Auditor Report 2004-111

expenses by working toward decreasing the level of services as it
deemed appropriate to meet the needs of the consumers. According
to the regional center, it had also notified local law enforcement of
its plan to move the group of consumers into the home one year
before the home’s development.

The legislative intent
of the Lanterman Act
is that persons with
developmental disabilities
have the right to receive
appropriate treatment,
habilitation services,
and supports in the least
restrictive environment.

According to the regional center, four days before the consumers
were to be moved into the home, the local community
became aware of the placement and reacted adversely.
Consequently, Developmental Services determined that the
safety of the consumers could not be ensured in the group
home and cancelled implementation of the plan. According to
Developmental Services, this regional center was subsequently
able to place some of these consumers in other group homes
in the community. However, as of October 2004, the regional
center was still trying to locate community housing for the
other consumers who remain in the developmental center.
The Lanterman Act states that it is the intent of the Legislature
that persons with developmental disabilities have the same legal
rights and responsibilities guaranteed all other individuals by the
United States Constitution and laws and the State Constitution
and laws. Specifically, the Lanterman Act states that no otherwise
qualified person by reason of having a developmental disability
shall be excluded from participation in, be denied the benefits of,
or be subjected to discrimination under any program or activity
that receives public funds. Further, the legislative intent of the
Lanterman Act is that persons with developmental disabilities have
the right to receive appropriate treatment, habilitation services,
and supports in the least restrictive environment. However, public
opposition regional centers experience when they attempt to place
developmentally disabled individuals who are sex offenders in the
community makes it very difficult to achieve the legislative intent of
the Lanterman Act.

STATE LAW CONTAINS SPECIAL CONFLICT-OF-INTEREST
PROVISIONS THAT APPLY TO REGIONAL CENTER
BOARD MEMBERS AND THEIR EMPLOYEES WHEN THEY
SELECT RESIDENTIAL SERVICES FOR CONSUMERS
The Lanterman Act and its implementing regulations prescribe a
framework that allows regional centers to obtain vendors or
contractors who will provide residential services for its consumers
within the community. To act as a vendor, the provider must meet
various state requirements, some of which are described in the
textbox on the following page.
California State Auditor Report 2004-111

Persons who wish to provide residential
services must meet requirements that include:
1. Possessing a valid community care
facility license issued by the Department
of Social Services.
2. Generally, providing a basic staffing level
of no less than one direct-care staff person
at all times when consumers are under the
supervision of facility staff.
3. Submitting a program design that
includes an organizational chart for the
facility; statement of purpose; a description
of the consumer services and outcomes;
and the characteristics of the consumer
population the facility intends to serve,
including age range, gender, ambulatory
status, medical conditions, self-help skills,
and behavioral characteristics.
4. Describing staff qualifications and providing
a duty statement for each staff position in
the facility.
Source: Title 17 of the California Code of Regulations.

The requirements also specifically preclude certain
entities from becoming a vendor, for the apparent
purpose of avoiding potential conflicts of interest.
Specifically, the following entities cannot act as a
vendor of residential services:
• Any state officer or employee.
• Any applicant in which an officer or employee
of the State has a “financial interest,” as that
term is defined for purposes of the Political
Reform Act of 1974.7
• Any employee and board member of any regional
center who has a conflict of interest, as defined
by regulations applicable only to regional center
board members and their employees.
• Any applicant in which the regional center
employee or board member has a relationship
that creates a conflict of interest as defined by
those regulations applicable only to regional
center board members and their employees.

In addition to the vendor selection process, regional centers
can obtain residential services for consumers by contract.
Specifically, regional centers must give public notice of their
intent to contract for family home agency services. Family home
agencies are private, not-for-profit agencies that recruit, approve,
train, and monitor family home providers; provide services and
supports to family home providers; and assist consumers in
moving into, or relocating from, family homes.
Regional centers review the agencies’ applications, make their
selection based on certain criteria, and give public notice of their
intent to contract with the agencies. Regional centers negotiate
contracts with the agencies, which require the agencies to also
become vendors. Thus, contractors would be subject to the same
requirements that specifically preclude certain entities from
becoming a vendor, for the apparent purpose of avoiding potential
conflicts of interest.

The Political Reform Act of 1974 provides that a public official has a financial interest in a
decision if it is reasonably foreseeable that the decision will have a material financial effect,
distinguishable from its effect on the public generally, on the official, a member of his or
her family, or on any of certain entities, including, but not limited to, any business entity
in which the public official has a direct or indirect investment of $2,000 or more.

California State Auditor Report 2004-111

State regulations establish specific conflict-of-interest provisions
that apply exclusively to regional center board members and
their employees. These provisions are modeled closely after the
State’s central law related to conflicts of interest in the public
sector, the Political Reform Act of 1974, but they sometimes
impose requirements on regional center board members and
their employees that hold them to an even higher standard than
the standard to which other public officials are held.
The starting point for complying with these conflict-of-interest
regulations is that each regional center board member and
employee who has decision or policy-making authority must
prepare and file an initial conflict-of-interest statement;
declaring under penalty of perjury that he or she has no present
or potential conflict of interest.

A regional center employee
could not participate in
making a decision to select
a provider of residential
services if that employee
had an investment in that
provider of residential
services worth more
than $1,000.

These regulations also define the circumstances under which a
conflict of interest may arise for regional center governing board
members and regional center employees. Specifically, a conflict of
interest may arise for a regional center employee if the employee
or a family member of that employee holds a management or
decision-making position in any business entity or provider that
provides services to the regional center, or the employee makes a
decision regarding regional center operations involving a business
entity or provider of services to the regional center in which the
employee has a financial interest. For purposes of this prohibition,
an employee has a financial interest if it is reasonably foreseeable
that the employee’s interest or the employee’s decision regarding
that interest will have a material effect, as distinguished from its
material effect on the regional center’s clients and their families
generally on any of certain ownership or income interests of the
employee. For example, under this prohibition, a regional center
employee could not participate in making a decision to select a
provider of residential services if that employee had an investment
in that provider of residential services worth more than $1,000.
The regulations also prescribe the procedures for addressing
present or potential conflicts of interest. The regulations allow
an employee who has a conflict of interest to seek a waiver that
would allow the employee to remain within the employ of the
regional center as long as he or she met certain conditions,
including developing a plan for resolving his or her conflict of
interest and complying with certain limitations on his or her
involvement in the decision-making process related to the
conflict-of-interest situation. An employee who has a present or
potential conflict of interest who does not seek a waiver has 30 days
within which to eliminate the conflict of interest or resign from

California State Auditor Report 2004-111

employment with the regional center. During the 30-day period,
the employee must avoid all involvement with or participation in
regional center activities involving the conflict in question.

Developmental Services
does not have a proactive
process in place to enforce
its conflict-of-interest
regulations.

State law requires the director of Developmental Services to
enforce conflict-of-interest regulations to ensure that the
standards and procedures are enforced. However, Developmental
Services does not, as part of its fiscal or program audit protocols,
monitor regional centers’ compliance with the requirement
that employees file conflict-of-interest statements. According
to Developmental Services, it does enforce the conflict-ofinterest requirements when it learns that any regional center
employee or board member has such a conflict. Nevertheless,
Developmental Services does not have a proactive process in
place to enforce its conflict-of-interest regulations.
Each of the 10 regional centers we reviewed were able to
demonstrate that they obtain conflict-of-interest statements from
their employees who approve residential services for consumers and
thus appear to be complying with related state laws and regulations.

California State Auditor Report 2004-111

CHAPTER 2
The Department of the Youth
Authority Has Problems With
Placement and Monitoring of Sex
Offenders, as Well as With Contracting
CHAPTER SUMMARY

lthough the Department of the Youth Authority (Youth
Authority) places paroled youthful sex offenders in
facilities that house more than six persons, group homes
with less than six persons, or foster homes (in this chapter
we use “home” as a generic term to include all types of youth
living facilities in the community) in communities throughout
the State, its out-of-home placement standards do not address
many of the laws and regulations that govern housing facilities.8
The safety of these parolees is further jeopardized because
parole agents often fall behind or do not complete important
evaluations of group homes.
Parole agents also fail to adequately monitor youthful sex
offenders released to parole to protect the community.
Specifically, the Youth Authority could not provide
documentation to demonstrate that parole agents held case
conferences for nine of the 60 paroled sex offenders in our
sample. Moreover, according to our review, parole agents were
up to 96 working days late in documenting the case conferences
for 36 of the sex offenders.
The Youth Authority cannot track the cost of housing sex
offenders in the community because it lacks adequate controls
over its billing system. We found errors in 6 percent of the
138 invoices we reviewed from fiscal years 2001–02 through
2003–04, resulting in duplicate payments, overpayments, and
underpayments. The Youth Authority had failed to detect any
of these errors. In addition, its contracts with homes that we
reviewed lacked ending dates and other vital information required
by the Department of General Services (General Services) for
valid contracts, and the Youth Authority does not submit these
contracts to General Services for approval before executing them.
8

See page 13 in the Introduction for the definition of the Youth Authority’s sex
offender population.

California State Auditor Report 2004-111

THE YOUTH AUTHORITY CAN IMPROVE ITS OUT-OFHOME PLACEMENT OF SEX OFFENDERS
The Department of Social Services (Social Services) licenses
community care facilities such as foster family homes, group
homes, and residential facilities. This licensing process is designed
to ensure that these facilities meet adequate standards of care and
to ensure that caregivers with certain prior criminal convictions
do not operate or work in them. However, California law exempts
juvenile placement facilities from these licensing requirements.
A juvenile placement facility is not defined in statute or regulation,
but the Youth Authority defines it broadly to include group homes,
which means the group homes it uses to house youthful offenders
are not subject to Social Services’ licensing requirements.
The Youth Authority’s policy is to require standards of care and
services in all out-of-home placements that, at a minimum, assure
that both basic and specialized needs of the parolees are met.
It has developed certain standards that facilities such as group
homes must meet.9 Parole agents are to evaluate potential homes
for compliance with these standards prior to placing parolees
in them and to conduct semiannual inspections thereafter.
However, the Youth Authority’s standards do not always ensure
its out-of-home placement facilities provide the same standards
of care as facilities that conform to laws and regulations otherwise
governing housing facilities. Additionally, parole agents do not
always complete the evaluations and inspections of such homes
and therefore cannot ensure that these standards are met. For
example, only 17 of the 28 required semiannual inspections for
the 14 homes that we reviewed were completed on time.
Parole officers did not
adhere to policies and
procedures for supervising
more than 30 of the 60 sex
offenders in our sample.

Parole offices also do not always follow procedures for supervising
parolees who are sex offenders. Specifically, the parole offices did
not adhere to policies and procedures for supervising more than
30 of the 60 sex offenders in our sample. As a result, parole agents
cannot promptly identify whether released sex offenders are in
need of more intensive monitoring.

The Youth Authority’s Standards Do Not Conform to Laws
and Regulations Governing Housing Facilities
The Youth Authority’s out-of-home placement standards do not
address many of the laws and regulations that govern housing
facilities. State regulations require the Youth Authority to ensure
that the out-of-home placement facilities it uses conform to
9

If parolees are placed with relatives, the residence is exempt from the Youth Authority’s
out-of-home placement standards.

California State Auditor Report 2004-111

The Youth Authority’s
out-of-home placement
standards do not cover
many important laws and
regulations governing
the homes used to house
youthful offenders. Further,
the Youth Authority’s
standards are silent on
how parole offices should
deal with homes that they
determine do not meet
its standards.

other state laws and regulations, including those governing fire
safety. However, the Youth Authority standards simply do not
cover many important requirements for the homes it uses to
house youthful offenders. For example, regulations require that
when evaluators determine that a deficiency exists, they must
discuss the deficiency with the home administrator, operator, or
other person in charge of the facility and develop a corrective
action plan. The evaluator must then conduct follow-up visits to
the home to determine compliance with the plan. However, the
Youth Authority standards are silent on how parole offices should
deal with homes that they determine do not meet its standards.
In another example, the Youth Authority’s standards make no
mention of any financial requirements a home must meet,
including developing and maintaining financial plans and records
to ensure necessary resources to meet operating costs before
receiving youthful offenders, as required by state regulations.
We found that one group home was not in good standing with
the State. Specifically, the group home had its corporate powers,
rights, and privileges suspended on December 1, 1999, because
it had not filed the proper tax forms with the Franchise Tax
Board. The Youth Authority was not aware of the group home’s
noncompliance until we brought the issue to its attention.
Although the Youth Authority’s standards address some laws
and regulations governing housing facilities, they do not go
far enough. For example, state regulations specify that a home
administrator must have the ability to establish the facility’s
policies, program, and budget; recruit and train qualified staff;
and provide the type of care and supervision needed by its clients,
including the ability to communicate with them. However, the
Youth Authority’s standards do not address all of these issues but
simply state that home owners and operators must provide an
emotional climate appropriate to parolees, as well as supervision
of daily functions such as chores, activities, and curfew hours.
In yet another example, regulations require those persons who
have the authority and responsibility for the home to maintain
a written disaster plan that addresses the contingency plan
for actions to be taken during fires, floods, and earthquakes,
including the means of exiting the home and contacting local
law enforcement agencies and other civil defense and disaster
authorities. Additionally, disaster drills must be conducted and
documented at least every six months. Although the Youth
Authority’s standards specify that homes must have a written
emergency plan that includes some of the elements described, it

California State Auditor Report 2004-111

does not require that the homes practice evacuating the parolees
and document these practices or identify the steps to be taken if
relocation is necessary.
Finally, state laws and regulations require that all home owners,
operators, and employees obtain a criminal record clearance prior
to working in the home. The persons who have the authority over
and responsibility for the home must submit their fingerprints
to the California Department of Justice (Justice) and the Federal
Bureau of Investigation. Additionally, each person must sign a
criminal record statement under penalty of perjury declaring
whether he or she has been convicted of a crime other than a
minor traffic violation and providing information about the
conviction. The laws and regulations also identify the specific
types of convictions that disqualify an individual from working
at a facility, such as committing a lewd and lascivious act with a
child under the age of 14.

Parole offices failed to
perform background
checks on home owners,
operators, and employees
for 12 of the 14 homes
we reviewed.

The Youth Authority’s standards require parole agents to verify
the identity of all home owners, operators, and employees
prior to placing parolees in the homes and to contact local law
enforcement agencies and Justice to determine if a criminal record
exists. Additionally, a memorandum issued by the director of the
Youth Authority in February 2002 instructed the parole offices
to conduct background checks on all contractors using Live Scan
to fingerprint them.10 However, parole offices failed to perform
background checks for 12 of the 14 homes we reviewed, and
the Youth Authority lacks a policy to identify the types of prior
criminal convictions that would preclude an individual from
working in a home. The two homes that complied with the Youth
Authority’s Live Scan requirement employed individuals who had
prior criminal convictions, such as receiving stolen property.
The Youth Authority acknowledges that it needs to improve its
out-of-home placement standards, and it plans to convene work
groups to focus specifically on these standards, as well as to meet
with the departments of Social Services and Alcohol and Drug
Programs to review their licensing standards. The Youth Authority
expects the work groups to develop regulations that will
incorporate higher standards. It also plans to submit requests to
all home owners, operators, and employees in order to Live Scan
all persons who have not previously been fingerprinted. Until
the Youth Authority addresses the deficiencies in its standards, it
10

Live Scan technology allows digitally scanned fingerprints to be submitted electronically
to the Department of Justice and allows criminal background checks to be processed
usually within 72 hours.

California State Auditor Report 2004-111

cannot ensure that it is complying with state laws and regulations
that govern housing facilities. Further, without obtaining criminal
record clearances, it is unaware of individuals who have prior
criminal convictions and are working with paroled sex offenders.

Parole Offices Do Not Always Conduct Evaluations of Homes
State regulations established in the early 1980s require the Youth
Authority to place sex offenders on parole in homes that meet
certain criteria. The Youth Authority established a policy to
incorporate some state regulations and define its standards.
Parole agents must evaluate homes in the areas of safety and
sanitation, living accommodations, care and supervision, health
and nutrition, and liability and insurance. The Youth Authority’s
policy requires parole agents to conduct an initial evaluation
prior to placing parolees and semiannual inspections thereafter,
but it has no process in place for ensuring that parole agents
regularly do this. Although in the past its headquarters staff
conducted annual inspections or audits of the parole offices that
included a review of their out-of-home placement evaluations,
the Youth Authority stated that these audits were discontinued
18 months ago because of budget constraints. However, we
believe the audits are necessary.

Previous reviews noted
deficiencies in the parole
office’s implementation of
policies and procedures
relating to the Youth
Authority’s Sex Offender
Treatment Program.

According to records of previous reviews, three of 16 parole
offices did not complete all of the required semiannual
evaluations. Previous reviews also showed that 14 out of
16 parole offices did not complete the criminal background
checks. Additionally, these reviews noted deficiencies in the
parole offices’ implementation of policies and procedures
relating to the Youth Authority’s Sex Offender Treatment
Program. For example, reviewers noted no documentation for
seven of the 16 parole offices that demonstrated parole office
staff and therapists were teaching the sex offenders how to
prevent themselves from reoffending. We found evidence that
these types of deficiencies still occur; for eight of 14 group
homes we reviewed, parole agents failed to conduct one or both
semiannual evaluations in fiscal year 2003–04.
The chief deputy director of the Youth Authority stated
that resuming the audits in their entirety is predicated on a
reorganization of the Youth and Adult Correctional Agency,
which is responsible for the oversight of the Youth Authority.
However, in the interim, the Youth Authority would direct its
compliance unit to conduct spot audits focused on specific
operations of the parole offices. Until the Youth Authority

California State Auditor Report 2004-111

reinstates the audits, it is unable to effectively monitor parole offices’
compliance with its policies and procedures. The parole
offices’ failure to conduct semiannual evaluations places the
safety of the parolees at risk.

Parole Offices Do Not Ensure Compliance With Out-of-Home
Guidelines for Placing Certain Sex Offenders

The Youth Authority
placed one parolee who
had been convicted of a
sex offense into a group
home within one mile of
an elementary school,
despite its policy not to
make such placements.

The Youth Authority has established a policy specifically for
placing sex offenders who are on parole, which embraces a state law
Social Services must follow when licensing community care facilities.
State law prohibits an individual who has ever been convicted of
a sex offense against a minor from residing in a community care
facility that is within one mile of an elementary school. However,
despite its policy, the Youth Authority placed one parolee who had
been convicted in a criminal court of a sex offense in a group home
less than a mile from an elementary school. This individual’s parole
placement plan states that no schools or parks are within one mile
of the group home, but using Mapquest we found an elementary
school within one mile that has been in existence since 1980.
According to the assistant deputy director of the Youth Authority’s
Parole Services and Community Corrections Branch, staff in the
parole office told him that the elementary school is exactly one
mile from the home. However, we believe the parole office should
have erred on the side of caution and placed the parolee in another
home. The assistant deputy director stated that the Youth Authority
will review its policy and clarify the method parole offices should use
to calculate the distance of one mile.

PAROLE OFFICES DO NOT ALWAYS FOLLOW
PROCEDURES DESIGNED TO MONITOR SEX OFFENDERS
IN THE COMMUNITY
To enhance public protection, state law requires that the Youth
Authority supervise youthful offenders released to parole. State
regulations require that each parolee have at least one face-to-face
contact each week during the first 30 days of parole and every
other week thereafter. The Youth Authority established procedures
that are inconsistent with state regulations. Specifically, depending
on the results of case conferences, parole agents can conduct less
frequent face-to-face contacts with parolees after the first 30 days.
A case conference is a formal group discussion between the parole
agent, the casework supervisor, and, if possible, the parolee to review,
assess, and modify the parolee’s program. The meetings that parole
agents hold with parolees allow them to determine the appropriate
level of supervision each offender needs through evaluating parole
32

California State Auditor Report 2004-111

Youth Authority procedures require parole
agents to make face-to-face contact with
parolees as follows:
1. At least once each week during the first
30 days of parole.
2. If the case conference results indicate the
parolee requires maximum supervision, faceto-face contact occurs twice each month.
3. If the case conference results indicate the
parolee requires medium supervision, faceto-face contact occurs once each month.

performance, assessing the offender’s need for services,
and determining the risk the offender poses to society.
The supervising and other parole agents have the
option of overriding the recommended supervision
levels, depending on special circumstances or other
factors affecting the parolee. The Youth Authority
requires parole agents to conduct 30-day, 90-day,
and 120-day case conferences within certain
deadlines and to document the results within two
days of the conference.

The Youth Authority could not provide
documentation demonstrating that the parole agents
held all required case conferences for nine of the
60 paroled sex offenders in our sample. Moreover,
Source: Department of the Youth Authority’s Parole
parole agents were up to 96 working days late in
Dictation Guide.
documenting the case conferences that were held
for 36 of the sex offenders. The Youth Authority is
aware that the parole offices’ actual practices do not
adhere to its policies and procedures for case conferences. The chief
deputy director of the Youth Authority stated that an increase in its
population in the late 1980s was a major factor in the parole offices’
development of practices contrary to Youth Authority policy. The
Youth Authority plans to clarify the roles and expectations for case
conferences and, if necessary, will revise its regulations. Until it takes
steps to align its polices and practices, the Youth Authority will be
unable to effectively evaluate the appropriate level of supervision
for parolees, which is based on factors such as the risk individual
parolees pose to society. This is particularly important because the
law and regulations state that the parole board may renew or revoke
a youthful offender’s parole based on the Youth Authority’s report
that a possible parole violation has occurred.
4. If the case conference results indicate the
parolee requires minimum supervision, faceto-face contact occurs every other month.

THE YOUTH AUTHORITY HAS FLAWS IN THE PROCESS
IT USES TO CONTRACT WITH HOMES AND CANNOT
ACCURATELY IDENTIFY ITS COSTS
The Youth Authority’s contracts with homes do not contain
some of the elements of a valid contract and therefore do not
adhere to state contracting policies and procedures. For example,
the contracts do not specify the term for the performance or
completion of the services, nor do they clearly describe the
level of service the home must provide. Moreover, the Youth
Authority could not justify the rates it pays to homes. Further,
because the Youth Authority has not adequately designed

California State Auditor Report 2004-111

and implemented a billing system to track housing costs for
youthful offenders, it cannot accurately assess its costs for housing
sex offenders placed in the community. Of the 138 transactions
we reviewed, 6 percent were erroneous. Finally, the Youth
Authority generally complies with policies and procedures to
ensure that parole agents do not have a financial interest in the
homes in which it places sex offenders.

Contracts the Youth Authority Enters Into With Homes Do
Not Meet State Requirements
The contracts the Youth Authority enters into with homes are
missing some of the key elements of a valid contract. They do
not contain the length of time a home will provide services.
When the contracts are initially signed by the home director
and the parole agent, they only have a start date. We found that
in a few instances as many as eight months could elapse before
the parole agent completes the end date on a contract.
The Youth Authority’s contracts also do not enumerate the
maximum amount it will pay homes in a given year to house
parolees. General Services has statutory authority to approve
state contracts. Typically, contracts to obtain services require
approval unless they are exempt (for example, public works
and engineering contracts or contracts for services that are less
than $5,000). However, because its contracts do
not contain a length of time, the total amount to
be paid to the home for all parolees is unknown
A valid contract should contain the
following elements:
at the time the contract is executed, and the
Youth Authority does not obtain General Services’
1. Identification of the parties.
approval. According to Youth Authority data, two
2. Term for the performance or completion of
homes we reviewed were due payments of more
the contract (dates or length of time).
than $95,000 each during fiscal year 2003–04. The
3. The maximum amount to be paid and the
contract also does not clearly describe the scope of
basis on which payments will be made
services the home should provide. It merely states
(for example, a fixed amount regardless
of time spent, billing based on time spent
that the Youth Authority agrees to pay the home
at a specified rate plus actual expenses,
owner a monthly rate to provide food, lodging,
or cost recovery).
personal needs, clothing, recreation and incidentals,
4. The work, service, or product to be
and parental care to the parolees. In addition, the
performed, rendered, or provided.
contracts are signed by parole agents who have
5. Other general or unique terms and
not been authorized to sign on behalf of the Youth
conditions of the agreement.
Authority by its director.
6. Signature by a person for each party who
is authorized to bind that party.
Source: State Contracting Manual, Section 2.05.

The chief deputy director of the Youth Authority
stated that as best as it can determine, General
Services approved its current method of contracting
in 1967, which provides the foundation for the
California State Auditor Report 2004-111

Youth Authority to approve contracts with homes without
viewing them within the strictest terms of a contract. However,
the Youth Authority also acknowledges that General Services’
approval was formulated with factors that are not applicable
today. It plans to ask General Services, and possibly the
Department of Finance (Finance), to review its process for
contracting with homes and bring its contracts into compliance
with state laws and regulations. Until the Youth Authority seeks
guidance, its contracts will continue to lack conformity with
existing contracting polices and procedures.

The Youth Authority Cannot Accurately Identify the Costs
Associated With Placing Sex Offenders in Homes
The Youth Authority can only track payments for housing
paroled offenders using a billing system it created. However,
the billing system contains several records for invoices that its
accounting department has never paid or has paid in error.
Our review of payments made to homes between July 2001
and June 2004 found some invoices recorded in the billing
system that do not agree with payments recorded in the
Youth Authority’s accounting records. The billing system
was developed with virtually no controls in place, leaving it
vulnerable to errors and possible abuse or fraud. As a result,
the Youth Authority is unable to rely on the billing system to
determine how much it has spent on payments to homes.
The Youth Authority uses its billing system to generate and
print monthly invoices on behalf of each home. The parole
offices send the accounting technician the original copies of the
contracts, which include the start date for the services and the
monthly payment rate. The accounting technician continues to
generate invoices each month until he receives a duplicate copy
of the contract from a parole office that contains the date the
services were discontinued.
The Youth Authority developed its billing system without
adequate controls in place; it allows the accounting technician
to manually create and adjust invoices without supervisory
approval. The billing system also lacks sufficient edits or checks
to identify potential errors or omissions. Consequently, the
accounting technician is able to adjust invoices that have
already been paid, create duplicate invoices so that invoices
paid in prior months are paid again, or change the monthly
rate and parolee’s length of stay in a home. For example, the
accounting technician generated two invoices for services
rendered to one parolee during January 2004. One invoice was
California State Auditor Report 2004-111

The Financial Integrity and State Manager’s
Accountability Act of 1983, requires agencies
to establish and maintain an adequate system of
internal controls. A key element in such a system
is separation of duties. Adequate separation of
duties should include not allowing one person
to perform more than one of the following
types of duties:
1. Designing systems

processed on January 28, 2004, and the other on
February 24, 2004. Consequently, the home was
overpaid $1,000. The Youth Authority was not
aware of this until we brought the overpayment to
its attention in September 2004. According to the
accounting administrator, the parole agent faxed the
contract to expedite the payment process. Receipt of
the original contract generated the second invoice.

2. Programming

Additionally, adjustments made by the accounting
technician to invoices overwrite the existing record,
but the billing system does not contain a log to
4. Initiating disbursement document
document adjustments and store a history of the
5. Approving disbursement document
values that were entered. Furthermore, the Youth
Authority has not established adequate separation
6. Inputting disbursement information
of duties, which is a basic control that can prevent
7. Receiving and depositing remittances
or detect errors and irregularities; the accounting
8. Inputting receipt information
technician is the only user of the system. To further
9. Controlling blank check stock
compound the problem, the Youth Authority has
10. Reconciling input to output
never attempted to reconcile invoices recorded in
11. Initiating or preparing invoices
the billing system with payments recorded in its
accounting records. As a result, errors in the billing
Source: Department of General Services, State
system remain undetected. For example, for one
Administrative Manual.
parolee the billing system reflects a $1,600 payment
due to the home for services rendered during
December 2003. However, the contract states that
services were discontinued on November 14, 2003, and the
accounting system does not have a payment record for the month
of December. A reconciliation of the invoices recorded in the
billing system and payments recorded in accounting records would
have identified this discrepancy and the need for further follow-up
with the parole office.
3. Maintaining records file and operating
mechanized equipment

The accounting administrator stated that it is the responsibility
of the parole offices to reconcile expenditures in the accounting
records with their allotment registers and invoice copies. However,
based on our discussions with parole office agents and review of
the parole services accounting procedure manual, the parole offices
are not reconciling these expenditures to billing information and
such a requirement does not exist. The billing system contains
sufficient data on each parolee and home, as well as invoice totals
by account codes, to allow the accounting department to perform
the reconciliation by tracing the invoices to transaction and cash
disbursement registers. Additionally, the parole offices are to
provide the accounting department with a monthly listing that
verifies the parolees who are residing in homes, which it can use to
follow up on discrepancies in the length of stay.
36

California State Auditor Report 2004-111

Databases should be designed with controls in place to ensure
the completeness and accuracy of the records and the validity of
the entries. Adequate procedures also should exist to prevent or
detect errors and irregularities. Without adequate controls and
procedures, the Youth Authority cannot identify accurately the
costs it incurs to house parolees in the community or ensure
payments to homes are correct.
According to the Youth Authority’s billing system, it incurred costs of
$1.1 million between fiscal years 2001–02 and 2003–04 to house sex
offenders in the community. Table 2 shows that the total housing
costs for sex offenders increased 46 percent in fiscal year 2002–03
and another 13 percent in fiscal year 2003–04. The average daily
rates paid for each sex offender type have also been increasing.

TABLE 2
The Department of the Youth Authority Housing
Costs by Type of Sex Offender
Fiscal Years 2001–02 Through 2003–04*
Fiscal Year 2001–02

Fiscal Year 2002–03

Fiscal Year 2003–04

Type of Sex Offender

Annual
Cost

Average
Daily
Rate

Annual
Cost

Average
Daily
Rate

Annual
Cost

Average
Daily
Rate

Total Annual
Cost for Three
Fiscal Years

Commitment offense is a sex offense as
defined in Welfare and Institutions Code,
Section 727.6.†

$138,981

$27

$222,300

$30

$277,943

$31

$ 639,224

Commitment offense is a sex offense,
other than sex offenses defined in Welfare
and Institutions Code, Section 727.6.

61,585

64,617

81,119

207,321

The offender has been adjudicated or
convicted of a sex offense prior to his or her
current commitment, or has a documented
pattern or history of sexually inappropriate
behavior, or discloses his or her involvement
in sexually inappropriate behavior.

67,100

103,757

80,665

251,522

Totals*

$267,666

$390,674

$439,727

$1,098,067

Source: The Department of the Youth Authority (Youth Authority), Research Division and Accounting Division data, Bureau of
State Audits’ analysis.
Notes: For the purpose of this audit, we defined a sex offender using the categories described in the Youth Authority’s Sex
Offender Treatment Program.
* The Youth Authority’s billing system does not accurately account for all costs it incurs to house parolees in the community
because it lacks adequate controls and procedures. We reviewed a sample of 138 transactions in the billing system and found
errors in eight, which results in a 6 percent error rate.
†

The Welfare and Institutions Code, Section 727.6, states that any minor adjudged a ward of the court and committed to the
Youth Authority for committing a sexually violent offense, as defined in the Welfare and Institutions Code, Section 6600, must
receive sex offender treatment. Sexually violent offenses include acts of oral copulation, sodomy and rape when committed by
force, violence, duress, menace, or fear of immediate and unlawful bodily injury on the victim or another person.

California State Auditor Report 2004-111

The Youth Authority could
not explain how it sets the
rates paid to homes it uses
to house sex offenders.

The chief deputy director of the Youth Authority stated that a
portion of the 46 percent increase between fiscal years 2001–02
and 2002–03 can be attributed to additional funding it received
to provide parole transitional housing. However, the Youth
Authority could not explain how it sets rates for the homes it
uses to house parolees. Its parole services manual states that
payments to group homes should be based on the permissible
rates allowed by Finance for the county where the placements
are made, and in the 1970s it submitted the out-of-home
placement rates to Finance, according to the chief deputy. The
chief deputy also stated that it appears that over the years,
this practice evolved into the Parole Services and Community
Corrections Branch setting the rates. However, the Youth
Authority could not locate specific documents to support how
the rates are set. Without this information, the Youth Authority
cannot explain adequately why the housing costs for sex
offenders are increasing.
In addition to housing costs, the Youth Authority also provides
treatment to the sex offenders while they live in the community.
During fiscal years 2001–02 through 2003–04, it paid more than
$450,000 for sex offenders to receive counseling.

The Youth Authority Generally Ensures That Designated
Parole Office Staff Adhere to Its Conflict-of-Interest Code
Although the Youth Authority has a conflict-of-interest code
that is designed to avoid potential conflicts of interest, it is not
ensuring that all of its supervising parole agents file a statement
of economic interests. The Youth Authority’s supervising parole
agents are responsible for, among other things, approving
contracts and monthly payments for out-of-home placement
facilities housing parolees.
State and local government agencies must adopt and promulgate
conflict-of-interest codes. In October 2000, the Fair Political
Practices Commission approved the Youth Authority’s conflictof-interest code. The Youth Authority requires its supervising
parole agents to disclose all investment in, as well as sources
of income from, businesses that provide services, supplies,
materials, machinery, or equipment to their parole office. We
found that one of the Youth Authority’s 13 supervising parole
agents did not complete a statement of economic interests;
the parole agent assumed the position after the annual filing
process for calendar year 2003. The Youth Authority plans to
obtain this missing statement during its annual filing process
for calendar year 2004. However, in addition to the annual
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California State Auditor Report 2004-111

The Youth Authority
requires its supervising
parole agents to disclose
all investment in, as well
as sources of income
from, businesses that
provide services, supplies,
materials, machinery,
or equipment to their
parole office.

filing, the Fair Political Practices Commission requires that
a designated employee complete a statement of economic
interests when assuming or leaving the office. We also found an
assistant supervising parole agent who is performing the duties
of the supervising parole agent; the assistant’s position does not
require a statement of economic interests. Therefore, the Youth
Authority did not require the employee to file one. The chief
deputy director stated that by February 2005, the Youth Authority
will review the need to include this position as a designated
employee. Without these statements, the Youth Authority cannot
ensure that its supervising parole agents do not benefit from their
out-of-home placement decisions for parolees.

RECOMMENDATIONS
To assure that, at a minimum, it meets the basic and specialized
needs as well as safety of sex offenders who are on parole, the
Youth Authority should do the following:
• Pursue its plans to convene work groups to address the
deficiencies in its out-of-home placement standards and
modify its regulations accordingly.
• Perform Live Scan fingerprint checks on all owners, operators,
and employees of homes that it uses to house parolees. It
should also identify the type of prior criminal convictions
that would exclude individuals from working in these homes.
• Require headquarters staff to resume audits of the parole offices.
To ensure the safety of the public, the Youth Authority should
do the following:
• Perform periodic reviews of parole placement plans to
determine the parole agents’ adherence to its policy relating
to the placement of certain sex offenders within one mile of
an elementary school.
• Pursue its plans to review and clarify the method parole
offices should use to calculate the distance of one mile from
elementary schools.
• Require parole agents to adhere to case conference schedules and
to document their results in accordance with its policies
and procedures, and conduct periodic reviews of a sample of
the parolees’ case files to ensure compliance.
California State Auditor Report 2004-111

• Pursue its plans to clarify the roles and expectations for case
conferences and modify its regulations accordingly.
To ensure that its contracting process meets State requirements,
the Youth Authority should do the following:
• Pursue its plans to seek guidance from General Services
and Finance.
• Ensure that any revisions to its contracting process include
a mechanism for supervising parole agents to review and
approve invoices prior to payment.
To ensure that it can accurately identify the costs associated with
housing sex offenders in the community, the Youth Authority
should do the following:
• Identify and correct erroneous data in its billing system, then
implement controls and procedures to ensure the completeness
and accuracy of the records and the validity of the entries.
• Implement management controls that include adequate
separation of duties and supervisory reviews. For example,
the accounting technician should not be allowed to create
invoices and then make adjustments to them.
• Reconcile the invoices in its billing system with the payments
in its accounting records.
To ensure that it places paroled sex offenders in group homes
that provide the most adequate services for the least amount of
money, the Youth Authority should do the following:
• Conduct a study of the out-of-home placement rates paid by
each of its parole offices.
• Establish a process for reviewing and approving its rate schedule.
• Ensure that the rates set are commensurate with the services
the homes provide.
• Ensure that parole offices adhere to its established rates.
To ensure that it avoids potential conflicts of interest for all
employees who are responsible for approving contracts and
monthly payments for out-of-home placement facilities housing
parolees, the Youth Authority should do the following:

California State Auditor Report 2004-111

• Require that designated employees complete statements of
economic interests when they assume or leave their office, as
well as annually while holding the position.
• Include positions for employees who are performing duties
similar to those of supervising parole agents in the pool of
positions that must file a statement of economic interests. n

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Blank page inserted for reproduction purposes only.

California State Auditor Report 2004-111

CHAPTER 3
The Department of Mental Health
Should Improve Fiscal Oversight of
the Forensic Conditional Release
Program, and the State Lacks a
Process to Measure Its Success
CHAPTER SUMMARY

he Forensic Conditional Release Program (Conditional
Release Program) operated by the Department of Mental
Health (Mental Health) allows a sexually violent predator
(SVP) the opportunity to be released back into the community,
as dictated by state and federal laws. Despite additional state
legislation in August 2004, procuring housing for SVPs may
continue to be difficult, and the program has proven costly
given the small number of people who qualify.
Mental Health could improve its fiscal oversight of the program
by routinely auditing invoices and supporting documentation for
services. The loss of an audit position has not allowed it to do so.
Mental Health could also better monitor costs for appropriateness,
such as providing security to SVPs. It paid almost $190,000
to a private contractor and the Department of Corrections
(Corrections) to guard one SVP and his housing area, which
appears excessive. In addition, Mental Health could better follow
its policies and procedures designed to reduce program costs.
For example, it is providing one SVP housing and a monthly
allowance at a cost of almost $1,500 although its policy dictates
less than $800.
Currently, the State has no process to measure how successful its
Sex Offender Commitment Program, of which the Conditional
Release Program is its fifth treatment phase, is or to determine
how to improve it.

California State Auditor Report 2004-111

STATE AND FEDERAL LAWS AND COUNTY SUPERIOR
COURTS DICTATE THE PLACEMENT OF SEXUALLY
VIOLENT PREDATORS IN COMMUNITIES
County superior courts play a major role in the release of SVPs
to the Conditional Release Program and retain jurisdiction over
the person throughout the course of the program. Once an
SVP resides in a secure facility for at least one year, he or she is
eligible to petition the court to enter the Conditional Release
Program. If the court grants the petition, state law requires
Mental Health to make the necessary placement arrangements
and, within 21 days after receiving notice of the finding,
place the SVP in the community in accordance with his or her
treatment and supervision plan, unless good cause for not doing
so is presented to the court. Courts can establish alternative
time frames for Mental Health to locate and secure appropriate
housing for SVPs. A court can also weigh in on whether the
housing is suitable and appropriate for the implementation of
an SVP’s outpatient treatment. As of October 2004, two SVPs are
participating in the Conditional Release Program. A third SVP
entered the program in August 2003 and was unconditionally
released by the court in August 2004.

Attempts to secure
housing for SVPs prior to
August 12, 2004, were
not always successful.
Mental Health contacted
more than 100 housing
agents or home owners
in its efforts to locate
housing for one SVP.

Attempts to secure housing for SVPs prior to August 12, 2004,
were not always successful. According to the former chief of
its Forensic Services Branch, Mental Health would begin the
search for housing in the county where the SVP was committed
to its jurisdiction. It would inform county officials and law
enforcement agencies of the SVP’s impending release into their
community. However, Mental Health received letters from
county and city officials expressing their concerns about placing
an SVP in that particular community. In some instances, cities
have also petitioned the courts to intervene in their placement
decisions. The former chief also stated that some county officials
often established unreasonable restrictions such as requiring it
to locate housing 10 miles away from a school. Mental Health
contacted more than 100 housing agents or home owners in its
efforts to locate housing for one SVP. The housing agents’ or home
owners’ responses varied. Several said they would not accept SVPs
due to the impact their presence would have on other tenants or
neighbors. Some indicated that their property was either in close
proximity to schools or had children present. Others expressed
concern with exposing themselves to liability issues.
Effective August 12, 2004, state law requires Mental Health to
place SVPs in their county of domicile prior to their incarceration
unless the court finds that extraordinary circumstances require

California State Auditor Report 2004-111

State law, effective
August 2004, requires
Mental Health to place
SVPs in their county
of domicile prior to
their incarceration,
unless the court finds
that extraordinary
circumstances require
placement elsewhere.

placement elsewhere. State law defines county of domicile as the
county where the SVP’s true, fixed, and permanent home and
principal residence was and to which he or she has manifested
the intention of returning. The county of domicile must designate
a county agency or program that will provide assistance and
consultation in the process of locating and securing housing within
the county. Although Mental Health will receive county assistance
in placing SVPs in the community, it may still face opposition
from local communities and owners of federally-assisted housing.
As discussed in Chapter 1, federal law requires owners of federally
assisted housing to prohibit admission to such housing for any
household that includes an individual who is subject to a lifetime
registration requirement under a state sex offender registration
program. California law generally imposes a lifetime registration
requirement, thus SVPs cannot reside in federally assisted housing.
The State has no control over this restriction.

MENTAL HEALTH CAN IMPROVE ITS FISCAL OVERSIGHT
OF THE CONDITIONAL RELEASE PROGRAM
Mental Health has neither conducted an audit nor reviewed
the supporting documentation for services billed monthly by
the contractor who has provided pre-release planning and postrelease services for SVPs in the Conditional Release Program since
March 2003. In addition, Mental Health paid a private security
company and Corrections a total of almost $190,000 to guard one
SVP and his housing area, which appears excessive. Mental Health
is also remiss in following through on its policies and procedures
designed to reduce program costs. For example, it does not ensure
that SVPs apply for other available financial resources before
assisting them with their living arrangements, food, and personal
and incidental needs, as dictated by its policies.

Mental Health Lacks Adequate Procedures to Monitor
Conditional Release Program Costs
Since March 2003, Mental Health has used a contractor to provide
pre-release planning and court-ordered post-release services such
as mental health treatment, supervision, and monitoring for SVPs
in the Conditional Release Program. However, Mental Health
has neither conducted an audit nor reviewed the supporting
documentation for most services billed by the contractor.
Mental Health pays the contractor using two types of rates:
negotiated net amount and negotiated rate. Negotiated net amount
services include the contractor’s administrative costs such as
California State Auditor Report 2004-111

personnel and operating expenses. Each month Mental Health
pays the contractor one-twelfth of its approved annual budget for
those services. Mental Health paid almost $1 million for negotiated
net amount services rendered between March 2003 and June 2004.
Negotiated rate services include the contractor’s costs of providing
core services to SVPs such as individual and group face-to-face
meetings and home visits. The contractor uses subcontractors to
provide other negotiated rate services such as sex offender treatment,
medication, medical testing, independent living support, and
vocational services. Mental Health’s contract specifies the negotiated
rate amounts and requires the contractor to submit monthly
reimbursement claims. Mental Health paid roughly $57,000 for these
expenditures in fiscal year 2003–04.

Since July 2004, Mental
Health has not conducted
a detailed review of the
summary the contractor
prepares to support its
reimbursement claim and
accompanying receipts,
rather it relies on the
contractor to accurately
record all expenditures.

The former chief of Mental Health’s Forensic Services Branch
stated that Mental Health has not conducted an audit or
reviewed the supporting documentation for the negotiated
net amount services billed by the contractor. Furthermore,
since July 2004, it no longer conducts a detailed review of the
summary the contractor prepares to support the reimbursement
claim and accompanying receipts. It relies on the contractor to
accurately record all expenditures and reviews only some of the
larger receipts. The former chief stated that due to budget cuts,
Mental Health no longer has an auditor position available to
perform these audits and detailed reviews.
Our review of the invoices paid by Mental Health and the
contractor’s accounting records found that Mental Health paid
for items not allowable under the contract, not supported by
documentation, or that exceeded the contract limits. For example,
the former chief stated that it paid travel expenses of $750 for
an SVP’s family member to escort the SVP from Atascadero State
Hospital to his designated housing because he could not afford
to transport himself from another state to carry out the court
order to do so. However, Mental Health could have sought an
amendment to the order instead of paying this expense.
Mental Health also paid $1,100 in travel expenses for a therapist
to provide therapy sessions at an SVP’s residence despite the
fact that the contract does not cover reimbursement of travel
expenses. The deputy director of Mental Health’s Long Term
Care Services Division stated that it covered the cost because
there was a crisis situation due to the community’s opposition
to the SVP’s placement and that it was concerned for the SVP’s
safety. Additionally, Mental Health was eager to begin his
treatment. Nevertheless, the State Contracting Manual prohibits
the contract manager from directing the contractor to do work

California State Auditor Report 2004-111

that is not specifically described in the contract. Mental Health
should have executed an emergency contract, which would
have required only the director’s approval because state law
allows it to contract with certain private providers without
obtaining the approval of the Department of General Services
(General Services).
Finally, Mental Health paid $20,000 without obtaining and
reviewing the supporting documentation, which represents
more than 30 percent of the expenditures it was billed for in
fiscal year 2003–04. The contractor was also unable to provide us
with documentation to support $4,000 of the $20,000. The State
Contracting Manual requires Mental Health’s contract manager
to review and approve invoices for payment to substantiate
expenditures for work performed. Mental Health’s contract
terms require it to “monitor and audit services rendered and
may take fiscal sanctions against the Contractor.” Finally, Mental
Health’s Conditional Release Program policies and procedures
require that auditors determine if the reported costs for the
negotiated net amount services were allowable and reasonable
in accordance with its contract and policies. The auditors are
also supposed to ensure that requirements for staffing and core
standards were met. Similarly, Mental Health’s auditors are to
determine if the negotiated rate expenditures and services were
allowable, properly classified, and supported by documentation
in the SVP’s case records.

The deputy director of
Mental Health’s Long
Term Care Division
acknowledges that Mental
Health needs to improve
its oversight of this
contractor’s payments.

The deputy director of its Long Term Care Division acknowledges
that Mental Health needs to improve its oversight of this
contractor’s payments. Mental Health plans to revise its
procedures to include a review of the invoices and supporting
documentation prior to payment. In addition to these efforts,
we believe that Mental Health should reinstate the auditor
position or designate available staff to fulfill the audit functions.
Mental Health also uses the services of a company to monitor
the SVPs’ movements with a global positioning system (GPS).
According to the contract, the company was to maintain aroundthe-clock monitoring of the SVPs, store and transmit monitoring
data, notify Mental Health of any violations, and train Mental
Health’s staff to use the system. Mental Health paid almost
$39,000 for the use of five GPS units and services rendered
between October 2001 and June 2003. However, because the
courts did not release the first SVP into the Conditional Release
Program until August 2003, we question payment of these costs.
The former chief of Mental Health’s Forensic Services Branch stated

California State Auditor Report 2004-111

the payments were necessary to field test the equipment and fully
understand how it would function. The former chief also pointed
out that although the first SVP did not enter the Conditional
Release Program until August 2003, the court ordered him into the
program in early 2003. Nevertheless, Mental Health’s statement
does not explain why it chose to pay for services in 2001 and 2002
instead of exercising the 60-day termination clause. Moreover,
although the former chief and a representative from the company
both recalled one or two meetings, neither were able to provide
training records to support efforts to field test and fully understand
the equipment during this time.

Mental Health Security Costs for One SVP Appear Excessive

Mental Health paid both a
private security company
and the Department
of Corrections almost
$190,000 to guard one
SVP and his housing area.

Conditional Release Program policies and procedures do not
require it to provide security to SVPs. However, Mental Health
paid a private security company and Corrections a total of almost
$190,000 to guard one SVP and his housing area. Mental Health
entered into a contract with Corrections on April 30, 2004, for
$4,500 to prepare a site for the installation of a trailer to house
an SVP and $154,000 to guard and patrol the trailer site. Under
this contract, Mental Health paid Corrections $132,000 for guard
and patrol services provided during the months of August 2003
through June 2004. These security services were in addition to
the $57,000 that Mental Health paid to a private company to
provide security services for this SVP between August 11, 2003, and
November 1, 2003. The director of the Long Term Care Services
Division stated that it paid Corrections for guard and patrol
services because there was a crisis situation due to community
opposition to the SVP’s presence. However, we question why it
was necessary to have both Corrections and a private security
company guard one SVP for a period of three months.
Moreover, Mental Health did not submit its interagency agreement
with Corrections to General Services for approval, as dictated in
the State Contracting Manual. General Services must approve
all interagency agreements greater than $50,000 unless the
agency has a higher delegation authority. According to Mental
Health’s contracting staff, it erred in its interpretation of a state
law that allows it to furnish treatment and supervision in the
community for judicially committed persons either directly or
through private contractors or county mental health agencies
without having to meet the requirements contained in the
Public Contract Code and the State Administrative Manual, and
from approval by General Services. Mental Health also allowed
Corrections to provide services beginning in August 2003, eight

California State Auditor Report 2004-111

months prior to the execution of the contract. In the future,
Mental Health must ensure that its contracts comply with state
contracting policies and procedures when it is faced with a
crisis situation.

Although It Has Policies and Procedures Designed to Reduce
Conditional Release Program Costs, Mental Health Does Not
Adhere to Them

Mental Health has
established a loan
program to assist SVPs
who have little or no
financial resources
to sustain them in
their transition to
the community.

Prior to accepting an SVP into the Conditional Release Program,
Mental Health establishes terms and conditions for outpatient
treatment and documents them in writing. The SVP and a
Conditional Release Program representative sign the document
and attach it to the evaluation report that is submitted to
the committing court and public defender. One condition
requires the SVP to agree to pay for a portion of his or her basic
food, clothing, shelter, and personal and incidental expense,
depending upon available personal resources. To implement
this condition, Mental Health has established a loan program to
assist SVPs who have little or no financial resources to sustain
them in their transition to the community. This funding is
commonly referred to as life support payments.
The Conditional Release Program policy and procedure manual
states that although Mental Health may provide life support
funds for short- or long-term room, board, and basic living
expenses necessary to allow SVPs to achieve or maintain
independent living arrangements, staff must first pursue all
other sources of support for the SVP. SVPs must be willing to
apply for any funding sources for which they may be eligible,
including Social Security income/state supplement payment
(SSI/SSP), food stamps, and local general assistance. Life support
funding is to be used only after exhausting all other financial
resources, including personal funds. However, Mental Health
does not ensure that SVPs apply for other available financial
resources. For example, Mental Health did not request that its
contractor have the SVPs apply for food stamps until after we
brought this issue to its attention. Consequently, Mental Health
is not being proactive in reducing program costs.
The SVP is also expected to sign a promissory note of reimbursement
prior to receiving life support funds. Mental Health could not
provide a promissory note for one of the two SVPs who benefited
from the loan program. According to the current chief of the
Forensic Services Branch, the contractor did not present the SVP with
a repayment agreement at the time of his conditional release. The

California State Auditor Report 2004-111

Although an SVP is
expected to sign a
promissory note of
reimbursement prior to
receiving life support
funds, Mental Health could
not provide a promissory
note for one of the two
SVPs who benefited from
the loan program.

contractor’s recent attempt to secure a repayment agreement was
unsuccessful because the SVP refused to sign it. Consequently, the
contractor had to bring this issue before the court and is awaiting
the judge’s decision. The current chief also stated that Mental
Health has updated its terms and conditions to include life support
repayment agreements.
The Conditional Release Program policy and procedure manual
also outlines life support payment rates, but it is paying one SVP
twice the stated amounts. Mental Health paid $210 per week
for one SVP’s housing costs and in addition provided him with
$160 per week in life support funds. However, life support funds
are to include the actual cost for the living arrangement, food,
and personal and incidental needs up to the Department of
Social Services’ SSI/SSP rate for independent living. The rates for
calendar years 2003 and 2004 are $757 and $769, respectively.
During calendar year 2004, Mental Health paid the SVP almost
$1,500 per month. The former chief of the Forensic Services
Branch stated that although no specific authority requires it to
do so, providing the SVP with a stable residence is a primary
requirement to ensure the delivery of mental health treatment
in the community. The deputy director of the Long Term
Care Services Division acknowledged Mental Health is not in
compliance with its Conditional Release Program policy and
procedure manual. Mental Health plans to review this issue and
revise or delete the outdated portions of its manual.

THE STATE LACKS A PROCESS TO MEASURE THE SUCCESS
OF ITS SEX OFFENDER COMMITMENT PROGRAM
The State has no process in place to measure the success of its
Sex Offender Commitment Program (SOCP), which contains five
treatment phases. Phases one through four occur after the court
commits the SVP to the custody of Mental Health for two years
to obtain the appropriate treatment and confinement in a secure
facility. The SVP will undergo treatment to learn, among other
things, skills to prevent a reoffense. During phase four, the SVP
prepares to enter into the fifth phase, which is the Conditional
Release Program.
According to the deputy director of the Long Term Care
Services Division, since 1995 almost 500 individuals have been
committed to the SOCP, of which 64 have been discharged from
Atascadero and Patton State hospitals. He estimates the State has

California State Auditor Report 2004-111

spent more than $34 million providing supervision
and treatment to the 64 SVPs, which includes both hospital and
Conditional Release Program costs.

Although the State will
have invested millions
of dollars supervising
and treating SVPs, it is
unable to determine if
its goals are being met,
whether modifications to
its program are necessary,
and whether its goals are
producing the outcome
it seeks.

A major drawback to the SOCP is that a mechanism to track its
success does not exist. In 1985, when the Conditional Release
Program was established as an outpatient program for mentally
disordered and developmentally disabled offenders, state law
directed Mental Health to conduct an evaluation to determine
the program’s effectiveness in successfully reintegrating persons
who receive supervision and treatment in state institutions into
society after their release. The evaluation was also to include
a determination of the rate of reoffense while persons were
served by the program and after their discharge, as well as the
effectiveness of the various treatment components. However,
state law enacting the SVP component of the Conditional
Release Program in 1995 does not require a similar evaluation,
nor does it allow Mental Health to track the SVPs once they
leave the program. Consequently, although the State will have
invested millions of dollars in the supervision and treatment of
SVPs, it is unable to determine the extent to which its goals are
being met, whether modifications to its program are necessary,
and whether its goals are producing the outcome it seeks.

RECOMMENDATIONS
To ensure that contractors adhere to the terms and conditions in
its contracts, Mental Health should do the following:
• Pursue its plan to resume its review of invoices and supporting
documentation prior to making payments.
• Either reinstate the auditor position or designate available
staff to fulfill the audit functions.
To comply with state contracting policies and procedures,
Mental Health should do the following:
• Ensure that its future contracts with Corrections or other state
agencies above its delegation authority are subject to review
by General Services.
• Ensure that it executes emergency contracts when it finds
itself in a crisis situation.

California State Auditor Report 2004-111

To reduce costs associated with the Conditional Release Program,
Mental Health should do the following:
• Exercise its right to cancel contracts when it is unsure of the
impending need for the service.
• Ensure that SVPs pursue all other sources of support before
receiving life support funds.
• Ensure that SVPs sign life support repayment agreements at
the time they enter the Conditional Release Program.
• Reevaluate the amount of life support funds an SVP can
receive when it is also paying for the SVP’s housing costs and
modify its procedures accordingly.
To enable the State to measure the success of the SVP component
of the Conditional Release Program, the Legislature should consider
directing Mental Health to conduct an evaluation of the program.

We conducted this review under the authority vested in the California State Auditor by
Section 8543 et seq. of the California Government Code and according to generally accepted
government auditing standards. We limited our review to those areas specified in the audit
scope section of this report.
Respectfully submitted,

ELAINE M. HOWLE
State Auditor
Date:

December 9, 2004

Executive Staff: Philip J. Jelicich, CPA, Deputy State Auditor
Donna Neville, Esq., Senior Staff Counsel
Staff:

Joanne Quarles, Audit Principal, CPA
Michael Tilden, CPA
Michelle J. Baur, CISA
Barbara Henderson, CPA
Michelle Ludwick
Dawn Tomita
Loretta T. Wright

California State Auditor Report 2004-111

Agency’s comments provided as text only.

Department of Developmental Services
1600 Ninth Street, Room 240, MS 2-13
Sacramento, CA 95814

November 22, 2004

Ms. Elaine M. Howle
State Auditor
California State Auditor
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Dear Ms. Howle:
Response to Bureau of State Audits’ Report
“Sex Offender Placement: Departments That Are Responsible for Placing Sex
Offenders Face Challenges and Some Need to Better Monitor Their Costs”
This is the Department of Developmental Services (Department) response to the Bureau of State
Audit’s (BSA) November 16, 2004, Draft Report referenced above.
In response to the specific BSA recommendations, the Department submits the following comments:
1) The Department agrees that a mechanism should be in place to facilitate the regional
centers’ ability to identify which of their consumers are required to register as sex offenders
under Penal Code, Section 290. This information would, as stated in the report, enhance the
regional centers’ ability to assist their consumers in complying with related laws and also to
assess the appropriate type and level of services and supports that the person needs. To
that end, the Department will immediately begin exploring options, in collaboration with the
Association of Regional Center Agencies (ARCA), that address the need to obtain sufficient
information to meet the legal requirements for consumers who fall under Penal Code, Section
290. Such options will include a review of the Individual Program Planning process by which
the regional center has the ability to solicit information to ensure that consumers receive
services and supports appropriate to their needs and to protect consumers from situations
that may not be in their best interest.

California State Auditor Report 2004-111

Ms. Elaine M. Howle
November 22, 2004
Page two

In addition, the Department will:
a) Follow-up with BSA staff to identify the consumers referenced in the audit whom,
unbeknownst to the regional center(s) prior to this audit, were living in community care
facilities that were within one mile of one or more elementary school.
b) Inform the responsible regional centers that these consumers’ placements are in
violation of the law and that appropriate placements must be found.
c) Monitor the regional centers’ efforts to assure that consumers are placed in living
arrangements that are in compliance with the law.
2) The Department will incorporate into its fiscal or program audit procedures, a review of whether
regional center board members and employees are filing required conflict-of-interest statements.
The Department believes taking these actions will lead to a more comprehensive system that meets
the intent of the Lanterman Developmental Disabilities Services Act and will ensure that consumers
receive the quality services to which they are entitled.
Should you have any questions or need additional information regarding the Department’s
response to this report, please contact Dale Sorbello, Deputy Director, Community Operations
Division, at 654-1958.
Cordially,
(Signed by: Cliff Allenby)
CLIFF ALLENBY
Director

California State Auditor Report 2004-111

Agency’s comments provided as text only.

Youth and Adult Correctional Agency
1515 K Street, Suite 520
Sacramento, CA 95814
November 23, 2004

Elaine M. Howle
State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, California 95814
Dear Ms. Howle:
The Youth and Adult Correctional Agency (YACA) has reviewed your draft audit report entitled
“Sex Offender Placement: Departments That Are Responsible for Placing Sex Offenders Face
Challenges and Some Need to Better Monitor Their Costs.” We appreciate the opportunity to
respond to the draft report. Enclosed is the California Youth Authority’s response to the report’s
recommendations.
We appreciate the effort your staff put forth in auditing our sex offender placement practices and
procedures. Your staff were professional and at all times available to discuss key issues with our
staff. Please extend our appreciation to those who participated in this review.
YACA takes your recommendations to improve the management of its parole program and the
placement of sex offenders very seriously. In this regard, we are committed to making the
improvements addressed in the enclosed response and look forward to reporting our progress to you
in future reports. If you have any questions concerning the response, please contact me at 323-6001.
Continued Success,
(Signed by: Roderick Q. Hickman)
RODERICK Q. HICKMAN
Secretary
Youth and Adult Correctional Agency
Enclosures

California State Auditor Report 2004-111

State of California
Department of the Youth Authority
Office of the Director
Memorandum

Date

November 22, 2004

Roderick Hickman
Secretary
Youth and Adult Correctional Agency

(Signed by: Silvia Huerta Garcia)
From

Subject :

Silvia Huerta Garcia
Chief Deputy Director

Bureau of State Audits
Sex Offender Placement

The California Youth Authority has had the opportunity to review the results of the
Bureau of State Audit (BSA) on the Sex Offender Placement Programs draft report
issued on November 16, 2004. During our exit meeting on November 12, 2004,
with Ms. Quarles and her staff, CYA was able to discuss the findings in details and
afforded an opportunity to provide any additional information to the findings rendered
in the report. We were able to contact her throughout the audit process and her office
was very professional and helpful in her interactions with our Department.
CYA acknowledges the need to review many of our policies, procedures to ensure
that the programs are cost effective and provide the services required for youths
released to the community. We also appreciated Ms. Quarles efforts in assisting us
in resolving many of the problems.
To ensure that these programs meet the needs of and safety of sex offender
parolees, CYA has assigned a Project Manager to track the numerous issues noted
in the BSA as well as other issues identified by the Department. The BSA matrix
(Attachment 1) will assist us in tracking the assignment so that we may provide
status reports every 60 days, 6 months and one-year time frames.
We remain committed to improvements noted in our responses and I am confident
that we will accomplish all the tasks we have identified.

We have not included attachments in the report, however, they are available for review at the California State Auditor’s Office.
56

California State Auditor Report 2004-111

OVERVIEW

The California Youth Authority (CYA) has received and reviewed the recommendations contained
in the Bureau of State Audits’ (BSA) report on sex offender placement. CYA acknowledges that the
six major areas documented in this report are in need of review, analysis and revision. The CYA
is committed to improving the quality of rehabilitative services provided to youthful offenders as a
strategy for reducing the incidence of reoffending behavior and as a tool for improving public safety.
Much of what has been identified in this report as deficient are related to policies and procedures,
which have not been revised to reflect changes within the Department. These operating standards
have become inadequate or inefficient in their ability to provide consistent, statewide administrative
and procedural oversight for this very high-risk population of offenders.
The CYA proposes to address the recommendations proposed by the BSA in the following manner.
First, the CYA will draw upon the expertise of its staff and the Youth and Adult Correctional Agency
in the development of regulations and procedures. This will ensure that standards developed from
these requirements are procedurally sound and are consistent with state mandates and existing
regulatory practices. To facilitate this process a Project Coordinator has been assigned. The
Project Coordinator, in conjunction with the Assistant Deputy of Parole Services and Community
Corrections (PSCC) Branch, will assign staff members as chairpersons for specific workgroups and
convene those groups as soon as possible. Second, recommendations will be implemented within
the framework of the Departmental and Agency-wide reorganization currently underway.

California State Auditor Report 2004-111

SEX OFFENDER PLACEMENT
BUREAU OF STATE AUDITS

RECOMMENDATIONS
1.

To assure that it, at a minimum, meets the base needs and safety of sex offenders who are on
parole, the Youth Authority should do the following:
A. Follow through on its plans to convene work groups to address the deficiencies in its outof-home placement standards and modify its regulations accordingly.
CYA agrees with the need for both standards and regulations to address
deficiencies in the out-of-home placement process. A work group has been
established to address the deficiencies in its standards and to modify its
regulations. The first meeting was held in October 2004; and the attached agenda
outlines the scope of their assignment (Attachment 2). They have been instructed
to include specific input from the Department of Social Services, Community Care
Licensing, and the Department of Alcohol and Drug Programs on their respective
standards and licensing requirements. The Project Manager will track the progress
of the work group and ensure that status reports are provided consistent with BSA
requirements.

B. Perform Live Scan fingerprint checks on all owners, operators, and employees of homes
that it uses to house parolees. It should also identify the type of prior criminal convictions
that would exclude individuals from working in these homes.
CYA agrees. By December 1, 2004 the Parole Services and Community Corrections
(PSCC) Branch will submit requests for Live Scan to all out-of-home service providers
not currently Live Scanned to the Department’s Background unit for processing with
the Department of Justice (DOJ) (Attachment 3). Service providers presently licensed
or certified by another state agency (i.e. Department of Alcohol and Drug Programs and
Department of Social Services) would be excluded from this process. The Department’s
policy, which currently is silent on the issue of whether additional Live Scan is required
for operators screened by other state agencies, will be modified accordingly. The
assigned task force will establish guidelines on performing Live Scan fingerprint
checks on all owners, operators, and employees of homes that it uses to house
parolees. The task force will also ensure that the type of prior criminal convictions that
will exclude individuals from working in these homes is clearly identified.
By December 8, 2004 the Regional Administrators will assign a staff person in
each regional office to ensure that the results of Live Scan requests from service
providers are on file, and will monitor for timely reports back from the Department
of Justice. An existing PSCC Branch work group focused on Live Scan issues has
begun to develop regulations. A timetable for the development and implementation
of these regulations will be reported to the BSA in the 60-day Progress Report.
–2–
58

California State Auditor Report 2004-111

C. Require headquarters’ staff to resume audits of the parole offices.
Currently, Section 4860 of the Parole Services Manual requires the initial and semiannual evaluations of out of home placements. In addition to this requirement,
in 1998 the Department enhanced its audit requirements that exceeded the
requirements on Section 4860. It was this enhanced audit that was discontinued
18 months ago. The requirement contained in Section 4860 remains, and Parole
Services staff have never been instructed to curtail this activity. Nevertheless,
there is no current documented process that exists to measure compliance with the
provisions of Section 4860.
Regional Administrators will immediately, therefore, conduct a review of all out of
home placements to ensure that the requirements of Section 4860 have been met
and that proper documentation is completed. This task will be completed within
60 days and will be tracked using the matrix noted in Attachment 1.
In addition, the Department’s Program Compliance Unit has been assigned the task
of developing specific tools to ensure ongoing, statewide compliance of the semiannual out of home evaluations. The estimated date to complete this task will be
reported in the CYA’s 60-day progress report to the BSA.
2.

To ensure the safety of the public, the Youth Authority should do the following:
A. Perform periodic reviews of parole placement plans to determine the parole agents’
adherence to its policy relating to the placement of certain sex offenders within one mile of
an elementary school.
The CYA agrees. Current policy does not speak to the methodology used to
determine the distance from an out of home placement site to an elementary school.
A Sex Offender Specialist will be assigned (refer to BSA Audit Project Coordinator
Matrix) to convene a work group; conduct a review of policy, regulations and
statute; and prepare a recommendation identifying a specific methodology to
calculate the mileage from state subsidized sex offender placement and all other
sex offender sites to/from an elementary school. Inclusive in this process will be a
comparison of the related policies from the Department of Corrections.
Once the policy has been formalized, the Program Compliance Unit will be assigned
to develop specific tools related to use of the parole placement plans to ensure
adherence to the policy of placement of sex offenders. CYA will provide the BSA
with a timetable for the completion of the policy and management tools in the 60day progress report.

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B. Follow through on its plans to review and clarify the method parole offices should use to
calculate the distance of one mile from elementary schools.
This issue is partially addressed above. If regulations are required, staff will submit
the necessary documents to effectuate the change. A timetable to complete this
activity will be provided to the BSA in the 60-day progress report.
C. Require parole agents to adhere to case conference schedules and to document their
results, in accordance with its policies and procedures. It should also conduct periodic
reviews of a sample of the parolees’ case files to ensure compliance.
CYA agrees with this finding. The Department will devise a plan for getting back
into compliance with regard to conducting case conferences and will provide the
BSA with a timetable in its 60-day progress report.
D. Follow through on its plans to clarify the roles and expectations for case conferences and
modify its regulations accordingly.
Please refer to the response provided above.

To ensure that its contracting process meets State requirements, the Youth Authority should:
A. Follow through on its plans to seek guidance from General Services and Finance.
CYA agrees. The Administrative Services Deputy Director (A) has been assigned
the task of coordinating a meeting with the Department of General Services and
the Department of Finance to ensure that our contract process is consistent with
state law and Departmental policies (Attachment 5). CYA anticipates that the first
meeting will be held by December 30, 2004, but no later than 60 days from the date
of this response.
B. Ensure that any revisions to its contracting process include a mechanism for supervising
parole agents to review and approve invoices prior to payment.
The Administrative Services Deputy Director (A), and a Staff Services Manager II will
spearhead a workgroup to formalize a contracting process that includes an approval
process (Attachment 5). In addition, the scope of service agreement currently in
place will be reviewed by the Contracts Department by December 30, 2004 it can be
formalized.

To ensure that it can accurately identify the costs associated with housing sex offenders in the
community, the Youth Authority should do the following:

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California State Auditor Report 2004-111

A. Identify and correct erroneous data in its billing system, then implement controls and procedures
to ensure the completeness and accuracy of the records and the validity of the entries.
CYA agrees and notes that the billing system was never designated to track the cost
of the sex offender group home placement. It was designed only to print invoices.
The appropriate tracking costs associated with housing sex offenders is one of the
issues that will be addressed by the work group spearheaded by the Administrative
Services Deputy Director (A), and a Staff Services Manager II. CYA’s plan and
timetable to implement the BSA’s recommendation will be provided in the 6-month
progress report.
B. Implement management controls that include adequate separation of duties and
supervisory reviews. For example, the accounting technician should not be allowed to
create invoices and then make adjustments to them.
Two Deputy Directors have been assigned as the chairpersons that will look at the
separation of duty functions and supervisory review requirements (Attachment 6).
The CYA will provide an update in the 60-day progress report on when management
controls are expected to be in place. The work group will also address additional
resources, manpower, and information technology needs necessary to ensure an
effective accounting system for our sex offender group homes.
C. Reconcile the invoices in its billing system with the payments in its accounting records.
A Deputy Director and a Staff Services Manager II will also address this issue as
part of the workgroup assigned to review the billing, contracting, and payment
process. The CYA will provide an update in the 60-day progress report on when the
BSA’s recommendation will be completed.
5.

To ensure that it places paroled sex offenders in group homes that provide the most adequate
services for the least amount of money, the Youth Authority should:
A. Conduct a study of the out-of-home placement rates paid by each of its parole offices.
CYA agrees. The PSCC Deputy Director (A) and the Project Coordinator will assign
(refer to BSA Audit Project Coordinator Matrix) a staff person by December 15, 2004
to conduct a study of the current out of home placement rates paid by each office.
The estimated date to complete the study will be reported in the CYA’s 60-day
progress report to the BSA.

B. Establish a process for reviewing and approving its rate schedule.
CYA agrees. As noted above, the PSCC Deputy Director (A) and the Project Coordinator
will assign (refer to BSA Audit Project Coordinator Matrix) a staff person by December
15, 2004 to chair a work group to establish guidelines related to reviewing and approving
a rate schedule, to ensure that rates are commensurate with the services requested, and
–5–
California State Auditor Report 2004-111

to develop a monitoring tool to ensure office compliance. The group will seek input from
the Department of Social Services, the Department of Alcohol and Drug Programs and
other state agencies that incorporate payment for out of home placement services.
The work group will also seek input from control agencies such as the Department
of Finance. The breadth of information received and the complexity of setting
comparable rates across the entire state for a most needy population, will determine
the final due date for the guidelines.
C. Ensure that the rates set are commensurate with the services the homes provide.
CYA agrees. Please refer to the response above.

D. Ensure that parole offices adhere to its established rates.
CYA agrees. Please refer to the response above.
6.

To ensure that it avoids potential conflicts of interest between all employees who are
responsible for approving contracts and monthly payments for out-of-home placement facilities
housing parolees, the Youth Authority should:
A. Require, in additional to annually, that designated employees complete a statement of
economic interests when they assume or leave their office.
CYA’s headquarters’ Personnel Office is in the process of establishing a checklist to
ensure compliance with the completion of Form 700, Conflict of Interest Code when
an employee assumes or leaves their office.
B. Review its designation of those positions that must file a statement of economic interests.
Specifically, it should include positions for employees who are performing duties similar to
the supervising parole agents.
CYA agrees. The Regulation Coordinator revised the Conflict of Interest Code Policy
for fiscal year 2005/06 to include positions for the employees who are performing
duties similar to the supervising parole agents. CYA was not able to add the
additional decisions to the policy but will do so for next year’s revision (Attachment 7).
The revision is scheduled to take effect in October 2005. In the interim, the
Administrative Services Branch will provide the Conflict of Interest package to all
Parole Agent II (Supervisors) positions. The Parole Services Deputy Director will
request that they all complete the Form 700 provided by the Personnel Department
(Attachment 8& 9).

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California State Auditor Report 2004-111

Agency’s comments provided as text only.
Department of Mental Health
1600 9th Street, Sacramento, CA 95814
November 22, 2004
Elaine M. Howle, State Auditor*
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Dear Ms. Howle:
This is the Department of Mental Health’s (DMH) response to your draft audit report titled “Sex
Offender Placement: Departments That Are Responsible for Placing Sex Offenders Face Challenges
and Some Need to Better Monitor Their Costs,” dated December 2004. Overall, we agree with the
administrative recommendations made in the report and have already taken actions to address them.
As the draft report has described, DMH is responsible for the custody of and providing treatment to
individuals found by the court or jury to be Sexually Violent Predators (SVPs). SVPs are individuals who
already have been convicted of multiple sexual offenses and who have been determined to be likely to
engage in sexually violent criminal behavior upon their release from prison. The SVP treatment program
in the state hospitals is intensive and lengthy, culminating in the final phase of release to the Forensic
Conditional Release Program (CONREP). Although the SVP program has existed since 1996, the first
SVP was not released to CONREP until 2003. The placement of the first SVP in CONREP presented
DMH with many new and significant challenges, such as overcoming opposition when attempting to
place an SVP in the community, ensuring public safety once the SVP is placed, and monitoring an
SVP’s daily activities including the use of global satellite system technology.
One such challenge, providing security over a CONREP patient, was never an issue until the first
SVP entered the CONREP. Although the draft audit report faults DMH for security costs that appear
to be excessive, DMH believes that the costs incurred to ensure public safety in this instance both
reasonable and necessary under the circumstances. Because of strong community opposition to
placement and numerous failed attempts to secure housing for the first SVP entering CONREP,
DMH purchased a trailer and entered into an agreement with the Department of Corrections
to place the trailer on vacant land at a state prison. The level of security that DMH agreed to
provide over the trailer was in direct response to the strong, emotional concerns expressed by
the community to house an SVP in close proximity to people living on prison grounds and close
to migrant seasonal workers and their families living in a neighboring housing complex. DMH is
committed to ensuring public safety in the SVP program, and will continue to make appropriate
programmatic adjustments in this regard as more experience is gained.
The audit report points out the recent enactment of state law requiring DMH to place SVPs in their
county of domicile as determined by the courts and that the county of domicile must designate a
county agency or program that will provide assistance and consultation in the process of locating
and securing housing within the county. It is hoped that early notification of an SVP’s county of
* California State Auditor’s comments appear on page 67.

California State Auditor Report 2004-111

Ms. Elaine Howle
Page 2
November 22, 2004
domicile and receiving county assistance will facilitate the timely placement of additional SVPs into
the community, thus avoiding similar circumstances that lead to incurring costs to place and guard a
trailer on state prison grounds.
As noted in the report, DMH has addressed many of the recommendations made in the report and
will continue to update and/or develop new policies and procedures to strengthen our administration
over the release of SVPs to the CONREP. Following are our responses to specific recommendations:
Recommendation:
To ensure that contractors adhere to the terms and conditions in its contracts, Mental Health should:
• Follow through on its plan to resume its review of invoices and supporting documentation
prior to making a payment.
• Either reinstate the auditor position or designate available staff to fulfill the audit functions.
Response:
DMH will review invoices and supporting documentation prior to making a payment. Beginning with
invoices submitted by its contractor, Liberty Healthcare, for the month of November 2004, CONREP
operations staff will review supporting documentation and match it to approved expenditure
categories to determine that costs are reasonable and allowable under the terms of the contract.

Due to the severe budget constraints of recent fiscal years, DMH has had to make difficult choices
regarding the allocation of administrative staff. Although the department will need to receive new funding
to reinstate positions eliminated through past budget reductions, we will use CONREP operations staff to
review invoices and supporting documentation prior to making a payment as noted above.
Recommendation:
To comply with state contracting policies and procedures, Mental Health should:
• Ensure that its future contracts with Corrections or other state agencies are subject to review
by General Services.
• Ensure that it executes emergency contracts when it finds itself in a crisis situation.
Response:
DMH’s contract unit is now aware of the requirement to have these types of contracts reviewed by the
Department of General Services. In addition, DMH will update the CONREP policies and procedures
manual to require that contracting procedures are followed when faced with a crisis situation.

California State Auditor Report 2004-111

Ms. Elaine Howle
Page 3
November 22, 2004
Recommendation:
To reduce the costs associated with the Conditional Release Program, Mental Health should do
the following:
• Exercise its right to cancel contracts when it is unsure of the impending need for the service.
• Ensure that SVPs pursue all other sources of support before receiving life support funds.
• Ensure that SVPs sign a life support repayment agreement at the time they enter the CONREP.
• Re-evaluate the amount of life support funds an SVP can receive when it is also paying for
the SVP’s housing costs. It should modify its procedures accordingly.
Response:
DMH will update the CONREP policies and procedures manual to specify the right to cancel
contracts if circumstances cause the service or product to be no longer needed.
Effective November 2004, Liberty Healthcare enacted procedures to ensure that SVPs are made
aware of and follow through with the need to pursue all other sources of support before they receive
life support funds.
Effective November 2004, Liberty Healthcare added language to its standard terms and conditions
boilerplate form stating that the amounts received by SVPs in CONREP as life support funds must
be repaid by the SVP.
DMH will update the CONREP policies and procedures manual to specify that the amount an
SVP receives in life support funds to pay the cost of housing will be evaluated and determined
separately from the amount received to pay the cost of other items such as food and clothing.
Recommendation:
To enable the State to measure the success of the SVP component of the Conditional Release Program,
the Legislature should consider directing Mental Health to conduct an evaluation of the program.
Response:
DMH supports evaluating programs to determine the level of success and improve program
administration including the SVP component of CONREP. However, the Legislature should
consider the following before requesting such an evaluation:
• Legislation would need to be enacted giving DMH (or other designated entity) the authority to
track SVPs after courts order them unconditionally released from their civil commitment.
California State Auditor Report 2004-111

Ms. Elaine Howle
Page 4
November 22, 2004
• To effectively evaluate a program, a sufficient number of program participants need to be
available for follow-up. Only one SVP has been unconditionally released into the community
following CONREP, and that SVP moved out of the state. It may be years before a sufficient
number of SVPs are released unconditionally into the community to allow for a credible
evaluation of the SVP component of CONREP.
Thank you for the opportunity to respond to the draft report. Implementing the corrective actions
to address the recommendations made in your report will improve our overall administration of the
CONREP. If you have any questions, please call John Rodriguez, Deputy Director, Long Term Care
Services, at (916) 654-2413.
Sincerely,
(Signed by: Robert L. Garcia, Chief Deputy Director, for)
STEPHEN W. MAYBERG, Ph.D.
Director
Department of Mental Health

California State Auditor Report 2004-111

COMMENTS
California State Auditor’s Comments
on the Response From the
Department of Mental Health

o provide clarity and perspective, we are commenting
on the Department of Mental Health’s (Mental Health)
response to our audit. The numbers below correspond to
the numbers we have placed in its response.

We disagree with Mental Health’s belief that the security costs
incurred for one sexually violent predator (SVP) were reasonable
and necessary. Specifically, as stated on page 48, Mental Health
paid almost $190,000 to guard one SVP and his housing area
over a period of 11 months, which appears excessive. Moreover,
for three of these months we question why it was necessary to
have both the Department of Corrections and a private security
company guard the SVP.

Mental Health did not address fully its efforts to ensure that
contractors adhere to the contract terms and conditions for the
SVP component of the Forensic Conditional Release Program
(Conditional Release Program). Specifically, although Mental
Health plans to review invoices and supporting documentation
prior to making payments to its contractors, as the State
Contracting Manual requires, it fails to address adequately the
steps it will take to fulfill the audit functions we describe on
page 47. Specifically, Mental Health does not indicate if it will
seek funding for the auditor position nor does it outline the
specific audit steps its Conditional Release Program staff will
undertake. Thus, we look forward to Mental Health’s subsequent
responses relating to this audit issue.

California State Auditor Report 2004-111

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California State Auditor Report 2004-111