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Ronald Reagan Presidential Library Digital Library Collections This is a PDF of a folder from our textual collections. Collection: Reagan, Ronald: Gubernatorial Papers, 1966-74: Press Unit Folder Title: [Government Organization] - Summary Report and Recommendations: Governor's Survey of Efficiency and Cost Control, February 1968 (1 of 2) Box: P36 To see more digitized collections visit: https://reaganlibrary.gov/archives/digital-library To see all Ronald Reagan Presidential Library inventories visit: https://reaganlibrary.gov/document-collection Contact a reference archivist at: [email protected] Citation Guidelines: https://reaganlibrary.gov/citing National Archives Catalogue: https://catalog.archives.gov/ SUMMARY REPORT GOVERNOR' AND SURVEY ON EFFICIENCY RECOMMENDATIONS AND COST CONTROL FEBRUARY 1968 E THE SUMMARY REPORT GOVERNOR'S SURVEY ON AND RECOMMENDATIONS EFFICIENCY AND COST Copyright, February, 1968 by the Governor's Survey on CONTROL Efficiency and Cost Control. All rights in this book are reserved. No part of this book may be used or reproduced in any manner FEBRUARY 1968 whatsoever without written permission / Twenty-five dollars GOVERNOR'S SURVEY ON EFFICIENCY AND COST CONTROL POST OFFICE BOX 931, SACRAMENTO, CALIFORNIA 95804 GOVERNOR'S SURVEY ON EFFICIENCY AND COST CONTROL P.O. BOX 931, SACRAMENTO, CALIFORNIA 95804 O. KENNETH PRYOR Chairman February, 1968 The Honorable Ronald Reagan Governor of the State of California Sacramento, California 95804 Dear Sir: The members of the Governor's Survey on Efficiency and Cost Control are pleased to submit their report sum- marizing the results of a study of the state's operations. This project was conducted in accordance with your Executive Order, which is reproduced on the following page. The study was made during the past 10 months by over 250 volunteers from the private sector with the excellent cooperation of countless state employees. This report is a condensation of the Survey's findings and recommendations, and does not purport to be complete in detail. However, it will give you, the Legislature and the public in general a clear idea of what can be accomplished when everyone works toward a common goal. The men who devoted their time and talents to this under- taking have found personal reward in the feeling that they have contributed to better and more economical governmental opera- tions and thus have performed a service to the public. By order of the Executive Committee Chairman Executive Department State of California EXECUTIVE ORDER R2-67 In recent years, expenditures for state services have increased at a rate far in excess of population growth, resulting in a critical current excess of expenditures over available revenues. I consider it vital to the economic health and prosperity of California that state govern- ment be conducted in the most business-like and economical manner, and that the people of this state be assured that their tax dollars are spent wisely. At the last meeting of the Governor's Council, I announced an impending study designed to help the departments evaluate existing programs and adjust them to the level of current revenue. Prominent leaders of business and industry have in the public interest volun- teered to conduct intensive research of the current programs and procedures of state government as a contribution to our determined effort to provide essential services at a cost the taxpayer can afford to pay thereby lessening the burden of government. By virtue of the authority vested in me as Governor of the State of California, I am, therefore, initiating on this date, the Governor's Survey on Efficiency and Cost Control, and appointing O. Kenneth Pryor as Chairman. The survey has retained Warren King & Associates, Inc. as consultants to the program. I authorize the survey to make such studies and investigations as they consider necessary to determine how the services of the State of California may be provided its citizens in the most efficient, expeditious, and economical manner, and to that end, further authorize them to select and retain as their agents and assistants such executives and experts from business and industry as are skilled in the conduct of private enterprise. With the initiation of this survey, I further direct each officer and employee of this state to furnish the consultants and their representatives complete information concerning their respective agencies, departments, and subdivisions thereof, and to give the con- sultants and their agents every assistance in the performance of their duties. Raned Reagan GOVERNOR ATTEST: SECRETARY OF STATE Bent Clinhaton FOREWORD GOVERNOR'S SURVEY ROSTER GOVERNOR'S Section 1 EXECUTIVE AND SURVEY ON CONSTITUTIONAL OFFICES EFFICIENCY CONTENTS 1 An Overall Perspective AND COST 3 Governor's Office 4 Department of Finance CONTROL 7 State Controller FEBRUARY 1968 11 Public Utilities Commission 12 Franchise Tax Board 13 Department of Justice Section 2 GENERAL SERVICES 17 Department of General Services 17 Automatic Data Processing 18 Systems Analysis and Management Planning 19 Office of Administrative Procedure 20 Office Services Division 21 Records Management 23 Office of State Printing 24 Fleet Management 25 Office of Procurement 30 State Personnel Board 32 Communications Division 33 Office of Architecture and Construction 36 Property Acquisition Division 37 Office Planning and Utilization 83 Department of Conservation 39 Building and Grounds Division 89 Department of Agriculture 41 California State Police 94 Department of Harbors and Watercraft 41 Office of Local Assistance 94 Department of Parks and Recreation 96 Department of Fish and Game Section 3 98 Reclamation Board REGULATORY 99 Colorado River Board AND PROTECTIVE Section 5 43 Secretary of Business and Transportation HUMAN RESOURCES 44 Department of Public Works 101 Secretary of Human Relations 49 Department of Motor Vehicles 102 Department of Employment 53 California Highway Patrol 104 Department of Industrial Relations 59 Military Department 106 State Department of Social Welfare 60 California Disaster Office 109 State Department of Public Health 60 Department of Alcoholic Beverage Control 115 Office of Health Care Services 62 Alcoholic Beverage Control Appeals Board 118 Department of Mental Hygiene 63 The San Francisco Port Authority 121 Department of Veterans Affairs 64 Office of the State Fire Marshal 123 Department of the Youth Authority 65 California Horse Racing Board 125 Department of Corrections 65 Department of Professional and Vocational 126 Human Relations-ADP Standards Section 6 66 Department of Investment EDUCATIONAL RESOURCES 70 Department of Insurance 129 Coordinating Council for Higher 72 District Securities Commission Education 72 Division of Aeronautics 130 The University of California Section 4 135 State Colleges of California NATURAL RESOURCES 137 State Department of Education 75 Secretary for Resources Section 7 76 Department of Water Resources SPONSORS This report documents the findings and recommendations of a most successful joint study venture conducted by government and the private sector. The success of this project can already be measured in terms of accom- plished improvements in the state govern- ment operations of California. In addition, further positive benefits will continue to ac- crue in future years, providing lasting advan- tages to all citizens and all sectors of the state's economy. The Governor's Survey To insure the effectiveness and efficiency of any operating or administrative function, continued effort, constant controls and peri- odic management reviews are essential. GOVERNOR'S Otherwise, inefficiencies in the form of un- necessary activities, wasteful procedures and SURVEY ON excessive duplication soon become a part of EFFICIENCY FOREWORD recognized operating procedures. In a busi- ness organization, this is detrimental to AND COST profits. In government, it means available CONTROL funds are not used in the most advantageous manner. Therefore, the quality and quantity FEBRUARY 1968 of services rendered do not reflect the full benefits expected of each tax dollar. Early in 1967, Governor Ronald Reagan realized it would be sound business practice to conduct an immediate examination and evaluation of the management and adminis- trative practices in all operating sectors of California state government. In magnitude and complexity, this represented an enor- mous undertaking. However, the potential benefits seemed to offer outstanding oppor- tunities for improvement. Therefore, the de- cision was made to initiate and complete this task as quickly as feasible. To carry out this program, Governor Reagan sought and obtained the full CO- operation of state employees as well as the wholehearted support of the business com- munity in California. As the vehicle for im- plementation, the Governor's Survey on Efficiency and Cost Control was officially established by Executive Order. The Governor's Survey consisted of more suggested, the quality of services would not than 250 highly-qualified executives, man- be sacrificed. agement specialists and professional people. Overall, about 2,000 specific recommen- To accomplish its objectives, the Governor's dations for improvement were made and dis- Survey devoted over 17,000 man-days to this cussed with appropriate department direc- undertaking. Normally, such talent could not tors. Some were presented orally. Others have been retained on a project basis. How- were documented in memoranda or working ever, business and industry furnished these papers, then communicated to appropriate executives on a full-time volunteer basis. In state employees for action. Many sugges- addition, many companies and individuals tions have already been implemented, and made monetary contributions to defray the plans are being made to accomplish others. expenses of the study. In fact, this entire project was conducted without cost to the Full implementation of the Survey team's state. recommendations could mean large poten- tial savings if accepted and appropriate ac- Much of the success of this joint venture tion is taken by the Administration and the can be attributed to the excellent working Legislature. relationship established between state em- ployees and the Governor's Survey. The re- The recommendations could reduce costs sponse of state employees was immediate and avoid expenditures of general and spe- in supplying needed background material. cial funds by an estimated amount of $233- Many beneficial improvements have resulted million annually and generate a one-time from ideas and suggestions presented by saving of $22-million. In addition, recommen- state employees. dations have been made to reduce, or forego altogether, planned expenditures for facili- Survey scope ties in the amount of 153-million. Also, the This concentrated study of management Survey team has suggested the long-term methods covered the day-to-day operations deferment of other capital expenditures and long-term plans of over 60 individual de- amounting to approximately 118-million. partments and functions of state govern- Besides the savings in state funds, there ment. The studies encompassed practically could be reduced costs and cost avoidance all state expenditures under an annual budget in county and local funds of $67-million an- of more than $5-billion. nually and in federal funds of about $92- To conduct this study effectively, state million annually. government operations were divided into The suggested program for improvement seven areas, with a study team headed by is complex and time-consuming and can only a member of the Survey's Executive Com- be accomplished over a period of years. In mittee assigned to each. Survey team mem- some areas, for example, systems analysis, bers were instructed to confine their efforts program budgeting and automatic data to a review of organization structures and processing, additional costs will be incurred management practices. They did not attempt before the potential savings can be realized. to evaluate the effectiveness of specialized This opportunity for service has been a professional activities such as teaching or unique and stimulating experience. However, patient care and treatment. it is only the first step in what should be a Survey benefits continuing effort to insure the best use of state funds. It is anticipated the overall im- All determinations involved a cost VS. value pact of this program will be reflected in appraisal of management and administrative practices. Where financial savings have been future internal state operations and in the efforts of state employees. Wallace Aitchison James Allen Carl E. Anderson, M.D. George L. Anton William Assmus Evelien C. Auerhamer W.A. Auth William S. Autrey Howard Bailor William Bandaruk John E. Barbeau Vivian Barbeau Phil Bardos Don J. Barker Guy S. Bear L.H. Beckendorf, Jr. Jerry Benedict William Benedon O. Kenneth Pryor, Chairman H. W. Bissell Charles A. Black EXECUTIVE COMMITTEE Deuel W. Born Frank J. Cleary Louis J. Boss Jay Davis, Jr. Bruce H. Bratton R. Paul Bray Harold B. Haught Robert O. Brink A. Howard McHarg Marjorie Bromagem Marshall G. Mustain GOVERNOR'S SURVEY ON Charles E. Bruce Ralph W. Seely A. David Bryan William H. Spurgeon, III EFFICIENCY AND COST CONTROL William C. Burns Larry Busboom MANPOWER AND FINANCE Leland E. Butler John M. Cage Holmes Tuttle, Chairman Herb Caldwell Joseph W. Cochran, III J.T. Calhoun William R. Callister CONSULTANTS John Calvert Warren King Donald H. Cameron William B. Carman and Associates, Inc. W. Frank Cavier Allan M. Chambliss Paul Chapman Ira L. Christensen J.J. Christensen Gene Clark Harold W. Claugus Ernest L. Clements G.S. Coblentz Raymond I. Colbourn Robert E. Collin Donald K. Congrove Wm. Hunt Conrad Dale O. Cooper Dr. Jack E. Coppage Owen M. Cornell Robert D. Cortelyou Eugene C. Cowell C.E. Crabill Josephine E. Cressy Geraldine Cristoni Dr. Edward Crosby W.H. Cross M. J. Dahlager E. James Kenney John R. Schnebly Malcolm S. Demurjian Ira W. Kinsey Harry R. Schroeter George M. Derry Mildred N. Knoll Gerald L. Scott Vincent T. Donnelly Irl Korsen Emil I. Seim Albert E. Donovan Charles L. Krause Robert Sellers John L. Dowdell George C. Krueger Donald N. Sells Marvin A. E'Golf Bruno Laan L.E. Shamblen Robert J. Emerson Douglas McCawley W.W. Sharon Hugo Engkvist Virgil O. McCollum Pat Sharp William P. Ewens Frank R. McDougall Malcolm Sherman J.S. Ewing John McEvoy Jack C. Shofner Dennis B. Farrar Keith C. McKinney Richard Silliman Martin Fenton, Jr. George R. McMillen Wm. C. Silverthorne Richard Fenton, Jr. Harry McMillen Ralph B. Simons P.E. Field Hugh F. McReynolds F.J. Sitek Orion Fink Howard N. Marlett Jerald H. Skatvold Robert Finnegan Keith W. Mattison C. Jay Slaybaugh H. Russell Fisher, M.D. James H. Miles Lawrence J. Sloane Park Fisher Wilbur J. Mills Herbert W. Smelser James O. Foster Charles D. Minnihan Larry T. Smith Charles Frazee Mark Mitchell William F. Smith L. O. Frith Gerald O. Moore James E. Smits David C. Fulton John P. Morgan William E. Squires Joseph M. Gaalken James S. Moulton Camil Stanley G. Glen Gage W. H. Mullin Robert Stanton James T. Gardenier Maurice A. Murray Jeffery Stein Theodore M. Garhart Robert Musser Walter K. Steinkamp Paul Glass Ivan Nealon Charles E. Stine Terry B. Gleason W. S. Needham Bonnie Stocker Ralph Goodson M. E. Nelson A.J.Stoja Robert Googins Richard L. Nelson James L. Stoll Bill Gordon Robert G. Nelson Jack H. Stuart James J. Graham Ted Novis Leo Tamamian Thomas D. Grant Robert Nuetzman J.B. Taylor J.S. Green Lee Ohlinger Lee R. Taylor Duncan Gregg Robert W. Oliver Brian E. Thorne Alan G. Grey Stuart Opotowsky Richard E. Veasey Forest J. Grunigen, M.D. Alan O'Reilly Dr. William H. Wade William A. Gunn W. E. Pace Maynard R. Watson Richard N. Haislet Robert H. Patten Stanley Watson Arch D. Hardyment Fred W. Pawell Harold E. Weber Frederick H. Hawkins Cecil Peirano Marshall J. Weigel Harold W. Herzig C. A. Peña Theodore Weiland Edward C. Hickey George H. Pence, Jr. Donald G. Whipple William J. Higgins Carl A. Philipp Bonnie Whisman George H. Holthaus William Popp Richard S. Wilbur, M.D. John M. Hopkins Albert S. Porter R. Ken Wilhelm Kenneth A. Housman L.A. Quaney David E. Willett Gerald A. Huch Edward T. Rainey Jerry W. Williams William R. Hudson, Jr. Duane L. Reineke S.E. Williamson J.J. Ireland Michael O. Riley Walter T. Winsborrow Creed H. Jenkins Dr. E. K. Ritter Norman Witte Ray A. Jensen Nancy Roberts Sidney M. Wolf John Harold Johnson B. Laurence Rogers Howell D. Wood Loren K. Johnson Howard J. Runyan Robert J. Woodward O. T. Jones Charles Russell S. Robert Wormald Earl Jordan Charles E. Rutherford Noel Wright Earl S. Jordan Lloyd G. Samaha David S. Young Richard E. Kazen Raymond O. Scarr James M. Zanotti William J. Keese Leslie C. Scherling Chris H. Zeimantz Harold A. Keith E.T. H. Schmidt P. C. Zinsli SECTION 1 GOVERNOR'S SURVEY ON EFFICIENCY EXECUTIVE AND AND COST CONSTITUTIONAL OFFICES CONTROL FEBRUARY 1968 EXECUTIVE AND CONSTITUTIONAL OFFICES This initial report section reviews the opera- ing economy. Reviews of the Governor's tions and organization of the Governor's Of- Office and other organizational entities en- fice, the overall executive and administrative vision short-term changes to immediately organization, the Department of Finance, the improve communications and define respon- constitutional Offices of Controller and De- sibilities. partment of Justice as well as the Franchise This group of reports encompasses budget Tax Board and Public Utilities Commission. expenditures of about $52-million annually The recommendations concerning the ex- and employment of about 5,350. Even more ecutive and administrative organization en- significant, this group exercises direct or in- vision a long-term accomplishment. This direct control over the major portion of total should provide sufficient flexibility in organi- state expenditures. Therefore, their effec- zational concepts to permit the state to meet tiveness is reflected in the performance of the needs of a rapidly expanding and chang- the entire state government. AN OVERALL PERSPECTIVE Among all states, California has a unique do they offer measures of performance or position in terms of growth and natural re- cost-benefit ratios. Therefore, it is impossible sources. In the past decade, population has to evaluate individual projects, compare pro- increased 39%, from 14.2-million to 19.7- grams by meaningful, quantitative values or million, while total employment figures indi- rank them on the basis of results. Further- cate a rise of 34%, from 5.5-million to 7.4- more, budgets prepared at the department million. During this same period, the number level seldom reflect an improvement in effec- of state employees rose from about 101,000 tiveness or a decline in activity. to 172,000, up some 70%. Furthermore, Further complications arise when new pro- general fund expenditures increased 172% grams of major proportion are started from $1.1-billion to over $3-billion. without adequate planning, established ad- These statistics clearly indicate the expan- ministrative controls or full realization of sion of government functions in California anticipated costs. As a result, programs have been disproportionately high when com- themselves create administrative problems pared to population growth and the increase in the process of relieving social and eco- in the productive segment of the economy- nomic weaknesses. This situation causes fur- the total work force. The Governor's Survey ther disruption in organization structures and found several reasons for this imbalance. For communications. example, current operating methods of budg- eting and staffing tend to perpetuate a faster Recommended action growth rate in government services, employ- The application of better planning methods ment, expenditures and taxes than popula- and modern management techniques to gov- tion or economic expansion warrant. ernment operations can provide a means of controlling growth and allocating resources Appraisal of performance so optimum service can be provided at a The Governor and major administrators re- more reasonable cost. Many of these estab- view a multitude of plans and budgets each lished and advanced planning techniques year calling for greater expenditures. The have been recommended in this report. How- usual reasons for these increases are greater ever, specific statistical data must be gene- workloads as well as a public demand for rated for their application. For example, more services. However, most budgets do projections of population, income and re- not specify desired objectives or goals, nor lated statistics should be developed for a 1 10-year period to provide knowledge of the Legislature for final approval as early as pos- anticipated tax base of the state. On the sible in 1968. basis of these figures, a decision must be Even though the present organization is made regarding whether the present per- working well, the Survey team believes, over centage of tax compared to total income will a period of time, it should eventually be ex- be maintained, raised or lowered. Determina- panded to six major agencies SO as to provide tion of the desired tax base then establishes a single responsibility for similar functions a working figure on the total financial re- without creating an overly wide span of con- sources available for state expenditures. trol. A grouping could be made to bring As a further step in effective management together the planning and coordination of planning, the costs of every existing program neglected or expensively proliferating func- in state government should be projected for tions such as ADP and fleet management. 10 years. These projections should include For communication purposes, all education fixed costs such as interest and bond retire- matters should be directed through an edu- ments, as well as anticipated figures on the cation coordinator. However, individual seg- minimum amounts of money needed to pro- ments within the agency structure should vide necessary services. Deducting the fixed retain their ability to communicate directly and essential elements of all programs from with the Governor when necessary. anticipated total revenues identifies the funds available for discretionary distribution Responsibilities of the agency adminis- by the executive and legislative branches. trators should be made clear. The enabling statutes could be interpreted to authorize Criteria for selecting which programs agency administrators to exercise line re- should receive further support and the sponsibility between the Governor and amount of allocations must then be de- individual departments of the executive veloped. Such judgments should consider branch. The present administration has as- which programs are essential as well as which sumed that agency administrators should will pay for themselves directly or through perform a policy making, communicating and increasing the tax base. coordinating function rather than exercising Improving working relationships within the direct line authority. This organization ar- overall executive and administrative organi- rangement extends the administrator's role to zation would increase operating effective- include cabinet responsibility. As such, the ness. This could be accomplished by extending administrators have responsibility for imple- the present grouping of existing departments menting the Governor's policies and pro- and agencies into logical, homogeneous grams through the component units of their structures. The present agency communica- agencies. Any uncertainty of line relationship tions concept is intended to accomplish this and authority of the administrator group goal to some degree by reducing the number should be resolved. of people reporting directly to the Governor. Later sections of this report recommend The Governor and his Cabinet have re- changes in individual agency and depart- cently drawn up preliminary plans for a re- mental organizations. These suggestions alignment of departments within the four should be implemented independently of agencies, each to be headed by a Secretary overall changes at the executive and admini- who would be a member of the Cabinet. strative level. However, coordination is nec- These preliminary plans have been submitted essary to insure effective operation. to the Commission on California State Gov- To help achieve smoother operations, Ex- ernment Organization and Economy for com- ecutive Assistant Administrators should be ments. It is anticipated that a final plan will created within each agency. Much of an ad- be submitted to the Commission and to the ministrator's duties involve external matters, 2 thus leaving insufficient time for his admini- the concept of program budgeting appears strative functions. There seems to be no way to differ in a number of respects by indi- to relieve administrators of these extraneous vidual departmental applications. burdens. Therefore, an Executive Assistant To round out the capabilities of the execu- could assume responsibility for many day-to- tive branch, a Management Systems Agency day operating agency functions. This prac- should be organized. This would create a tice is already in effect in at least one agency planning, organizing and systems-developing and is working well. In addition, a minimum group to take the long-range view and estab- but adequate staff should also be provided lish policy governing internal state govern- to keep the administrator informed on day- ment procedures. Included in its function to-day operations and major policy matters. should be management planning, work Administrators should be fully involved in measurement, management information sys- planning and budgeting processes. A princi- tems and systems analysis. The fragmented pal obstacle to this is the unclear channels of capabilities of ADP for the state could also administrative management. Departments be centralized here. prepare their individual budgets and review Other regrouping of departments con- them with Department of Finance. If ac- cerned with public protection and regulatory cepted, they become a Department of Fi- activities as well as natural resources should nance budget rather than one to which the be considered. agency administrators and the Cabinet are Recommendations presented in later sec- committed. tions of this report will provide substantial To further aid administrators in establish- savings when implemented individually. How- ing fiscal stability, program budgetary tech- ever, the full benefits of long-range eco- niques and performance measurements nomical operations will depend on the ability should be established for all projects. To of executive and administrative offices to classify project costs as fixed, essential or utilize these broad recommendations to discretionary does not mean that economies generate new ideas. The reorganization struc- are not attainable within the framework of a ture suggested in this section is a long-term project. Program budgeting is a step to- goal. Recent actions taken by the administra- ward gaining these economies. Performance tion are, in effect, a first step toward this measurement is an equally important step in long-term goal. the evaluation of executive performance. GOVERNOR'S OFFICE Another step in establishing better overall financial control involves development of an Operations within the Governor's Office pro- improved cost accounting and management vide staff services for effective administration information reporting system. This will offer of the state's business, planning for the future strong support and guidance to a depart- and administrative coordination of the indi- mental program budgeting system for use vidual activities of state agencies. In addi- throughout all agencies and departments. To tion, the Governor presents the state budget avoid unnecessary and cumbersome paper- and means of financing it to the Legislature. work and reports, a management by excep- He makes legislative proposals and appoints tion approach should be considered as part various state officers and members of many of this system. boards and commissions. The Governor's Of- fice staff totals 86 and has a budget of $1.2- Many departments of the various agencies million. have engaged in program budgeting efforts over the past several years. Some have Appraisal of performance progressed further than others. However, in the absence of strong direction in this area, As with every executive having great respon- sibility, the Governor is dependent upon a 3 capable and efficient staff. Therefore, it is DEPARTMENT OF FINANCE worthwhile to continually seek opportunities The Department of Finance is responsible for for improving office functions. performing six activities-financial manage- Recommended action ment of state government, manpower and cost control, analysis of new legislation, CO- The following suggestions are intended to ordination of state planning, state economic clarify reporting relationships and to point development and management of public out opportunities for improved effectiveness. lands. A key recommendation would revise the or- ganization of the Governor's Office to clarify The department's manpower and budget the roles of the organizational elements. Also, for the year ending June 30, 1968 are 507 the present Cabinet should be expanded positions and $6-million. Its most important to include a legislative coordinator, the Lieu- functions relate to responsibilities for finan- tenant Governor and the Educational Sec- cial management. retary. Appraisal of performance Another recommendation would require There is a need to provide continuous leader- the Secretary of Education to report to the Executive Secretary and act as a liaison be- ship and supervision in the solution of finan- tween the Governor's Office and the De- cial management problems brought about by partment of Education, the Coordinating the rapid growth and increasing complexity of state government operations. Council for Higher Education, the Trustees of the State Colleges and the Regents of Recommended action the University of California. If the following recommendations are imple- In addition, steps should be taken to place mented, total annual savings of approxi- the Governor's daily schedule in his hands mately $648,000 could be realized. no later than the afternoon of the day before A number of important recommendations its application. deal with a reorganization of the department Further, the research library should be to improve supervision, eliminate unneces- transferred to the Position Research unit. This sary positions and increase overall effective- unit should provide information to assist in ness. Among other things, these recommen- answering inquiries about statements pre- dations would: viously made by the Governor. Establish a Division of Program Evalua- In the area of office functions, all auto- tion and Cost Control in the Department matic typing equipment in the Correspond- of Finance. ence unit should be moved into the room Transfer the control activities of the Ac- with the addressograph and letter stuffing counting and Fiscal Management and machine. Operators of this equipment should Systems section from the Department of report to a working supervisor responsible General Services to the Department of to the Office Manager. Finance. Additionally, a control system is needed Reduce the staffing in the State Planning for the Governor's mail which is distributed Office. to staff secretaries and administrative agen- cies or departments. Also, standards to con- Restructure the five organizations that trol the staff level in the Office Services units promote California's business, industry, should be developed and job descriptions commerce and tourism. prepared for each position on the staff with Transfer the State Lands Division from the agreement of each incumbent and his the Department of Finance to the De- superior. partment of Conservation. 4 Remove the Director of Finance or his The Department of Finance should estab- representative from boards and commis- lish a financial management information re- sions which are non-essential to financial porting system capable of providing other policy-making. levels of management with a comprehensible Additional important recommendations insight into the state's financial condition. The would: information contained in these reports should be "calendarized" by quarters and estimates Introduce a supervisory development should contain comparisons to actual expe- program to provide backup personnel for rience. key supervisory positions. Include the timing of proposed expendi- Augment the clerical staff of the Fiscal tures in the Governor's budget. Control section and extend use of ADP methods to compile budget estimates. In the present budget documents, data is shown with a limited time horizon. Yet many Contract for expert skills deemed neces- decisions related to each prospective year's sary to meet unanticipated, urgent and budget also have significant implications for important financial management prob- a number of future years. However, these lems. implications cannot be obtained from the Obtain formal endorsement on program budget document itself. The present support budgeting from the Governor and both and local assistance budget displays only Houses of the Legislature. annual data. With a longer time horizon in- Reactivate the Deputy Directors' Pro- corporated in all budget documents, par- gram Budget Committee. ticular programs and activities as well as con- struction projects can be viewed in terms of Assign responsibility for developing pro- their "total" cost. gram-budgeting cost-accounting to Ac- counting and Fiscal Management. Present to the Governor essentiality and priority recommendations on competing Centralize responsibility for financial and non-competing programs. management in the Department of Fi- Because it is impossible to adequately fund nance. all programs, executive management must All fiscal matters, including accounting, weigh the relative needs, costs and benefits budgeting and financial reporting pertain- of programs as they relate to each other. The ing to all state agencies, should be the re- justification of the Governor's budget should sponsibility of the Department of Finance. not be a result of judging the merits of each The State Controller should continue to es- program in isolation from all other programs tablish controls over, and process, all dis- or on the basis of incomplete facts. bursements, both payroll and claims. The State Controller should supply the Depart- Restructure the presentation of the ment of Finance with information required. Governor's budget. Finance should not actually operate the ac- As presented, the Governor's budget con- counting system by direct line supervision of tains such an unwieldy amount of detail that any installation of processing equipment and it is most difficult for the Legislature to make its operators. It should be empowered, how- sense of it from policy and objective view- ever, to specify its accounting requirements points. and be able to obtain reports and data ac- cording to its needs, in terms of timeliness, The Governor should submit to the Legis- kinds and accuracy. lature a sufficiently general program budget to permit the Joint Legislative Budget Com- Install a comprehensive financial report- mittee as a whole to consider it. Based on this ing system. consideration, the committee could publish 5 guidelines for more intensive examination by edgement of the need for realistic latitude the various subcommittees. for contingencies. The overall contingency To achieve the simplification and altera- for a department should be derived through tions proposed by this recommendation statistical methods such as variance analysis, would require the Legislature to enact suf- and should not be the sum of each section or ficiently broad appropriations on a program division's variance. In case of doubt, the de- basis. It might also require the Legislature cision should be on the side of prudence. to be willing to allow the Governor and his Improve the documentation of financial agency administrators to make justified sub- analyses and decisions. program appropriation transfers and reallo- cations. Too often, the department's communica- tions are oriented around phone calls, scratch Discontinue publishing of the "Budget paper, informal notes, incomplete files, and Supplement." particularly the vast knowledge and ex- The information shown in this publication perience of key, upper-level department is readily available as a machine tabulation. managers. For the most part, budget analyses Individual departments, the Budget Division, are in the form of sketchy outlines and brief the Legislative Analyst, and others could be hearing agendas. provided with copies of these machine-pro- Develop more effective control and re- duced reports in whatever quantities are view techniques for capital outlay necessary. projects. Delegate more responsibility to the other departments and agencies, and issue poli- The Department of Finance plays a pre- cies and guidelines to help them make dominant role in the selection of projects their own financial decisions. which will undergo preliminary planning. It also influences the submission of project pro- The size, scope and complexity of state posals to the Public Works Board. Periodic government seem to have outpaced the reviews and approvals are required by Fi- department's development of streamlined nance, but it has not published any guide- financial control techniques. As a conse- lines. The Finance workload peaks and quence, many decisions on minor transac- authorizations are released to agencies er- tions are made by Finance while multi-million ratically. Conflicts between the department dollar programs go practically unquestioned and the agencies are not brought to the or are unduly delayed. Public Works Board to arbitrate disputes. The Although some delegations have been effect of the numerous reviews and approvals made in specific agencies, the department by Finance is that the flow of work is signifi- should examine and evaluate the necessity cantly delayed, criteria may be changed and effectiveness of the current level of re- at many points, and Finance's control of view of transactions carried out by the the Public Works Board meeting agenda Budget Division. lengthens the time required before issues are Establish realistic contingency reserves recognized. within the total state budget, and allow Simplify contract procedures and con- departments to more reasonably nego- trols by Department of Finance and De- tiate for additional funds during the fiscal partment of General Services. year. The contract approval process generally The Department of Finance should adopt requires from 12 to 90 days. A few contracts a better management concept of the intent are approved in less time and a number ex- of budgets. The budgets should be con- ceed 90 days. The processes are additive, sidered as an estimate with an acknowl- because the contracts flow through the two 6 departments consecutively, rather than on organization. Particularly at odds are the a concurrent basis. fiscal control and tax administration activi- ties. It is difficult to find cogent arguments STATE CONTROLLER to support this grouping of functions under The State Controller, an elected official, has one administrative head. two areas of responsibility. He is the head of the Controller's Office and holds member- Recommended action ship on 20 state boards, commissions and The Governor's Survey found opportunities committees. The most important are the for reducing costs over $600,000 annually. Board of Equalization, Franchise Tax Board, All improvements deal with the three princi- State Lands Commission, Pooled Money In- pal functions and are grouped accordingly. vestment Board and Board of Control. The Controller's Office employs 604 staff mem- Division of Audits bers and has a current budget of $4.7- million. It is divided into three principal The Constitution and statutes require that no groups with similar functions. They are fiscal money be withdrawn from the State Treasury control, tax administration and fiscal affairs except as authorized by law pursuant to an of local governments. appropriation by the Legislature and upon warrant drawn by the State Controller after Appraisal of performance the legality and validity have been verified. In each area of its conglomerate activities, In order to accomplish its objectives, the the Controller's Office has demonstrated an division is comprised of the Bureau of Claim awareness of the need for efficient opera- Audits (CAB) and the Bureau of Field Audits tions. An increase in staff and dollar expendi- (FAB). tures of less than the state average indicates the success this office has achieved through Recommended action improved methods in the face of generally Much has been said about duplication of increasing costs. audit effort by the Office of the Controller. However, in the fiscal control area there Personnel of various state agencies have, in appears to be duplication of the work per- many cases, performed a similar audit of ex- formed and certified by the authorizing penditures. The duplicate claim checking by agency. Certain activities can be performed CAB is not essential to an adequate system more expeditiously by the submitting agency. of internal accounting control over state The ADP capabilities in the Disbursements expenditures. Therefore, one key recommen- Division are markedly under-utilized. Further, dation would authorize the administrative there has been too little effort devoted to head of the respective agencies to approve developing new applications. claims prior to payment and reduce the pre- In the tax administration area, there has audit function of the Controller to sampling been overstaffing to meet peaks of activity. and testing. The controversial inheritance and gift tax Another major recommendation would appraiser system requires considerable at- initiate audits of state school building aid tention if progressive reforms are to be programs as soon after notice of completion effected. In addition, the fiscal affairs-local as possible and formalize the findings government program offers opportunity for promptly in a complete report to the School improvement through organizational realign- Aid Bureau (SAB). ments. At present, there is a delay of from two to The disparate nature of the function of the four years from completion of construction Controller's Office poses management prob- lems that do not exist in a more homogeneous until the final completion report is rendered. Further, the report of FAB is not rendered 7 until it is reviewed, corresponded about and Treasury. It maintains the uniform state pay- passed upon by the Office of Local Assist- roll system and provides automatic data ance (OLA). It should be possible for FAB processing services to other divisions of the auditors to complete their work and reach State Controller's Office. Receipt, batching, conclusions from OLA and SAB perusal with- control and auditing of ADP processing and out referring their findings back and forth storage of source documents prepared by between governmental units before wind-up. other agencies to initiate preparation of Any disputed items, at the time of audit, general disbursement warrants are responsi- can be commented upon and left for OLA bilities of a general control section within the follow-up and disposition as appropriate. ADP organization. Acceptance of this recommendation would The division's ADP computer center in expedite audit work, reduce correspondence Sacramento is the only facility in the state between agencies and enable OLA and FAB which serves the Office of the Controller and to promptly identify areas of differences in its divisions. The center's function is to de- expenditure of school aid funds. velop procedures and process data re- quested by the divisions and approved by Accounting Division the Controller and Chief of Disbursements. The principal functions and responsibilities of Most applications are financial in nature with this division are to maintain the control ac- emphasis on payroll, general disbursements counts covering the receipts, disbursements and fund accounting. and balances of all state funds. It audits and designates funding for all deposits into the Recommended action State Treasury and prepares various financial The potential for improvement in machine statements covering repayment of state and personnel utilization and efficiency ap- school building apportionments. Further- pears to be great. The ADP organization more, the division enforces various laws re- and computing equipment are capable of lating to unclaimed money or property and increasing machine utilization approximately administers the Judges' Retirement System. 100% by addition of a third shift each day Recommended action and by operating seven days a week. Since the equipment is owned by the state, addi- The Governor's Survey made several recom- tional operating costs, other than the per- mendations designed to increase the efficien- sonnel required, would be slight. Specific key cy of the Accounting Division by improving recommendations this division would do the methods. Some of these would: following: Improve information retrieval from the Abolish district disbursement offices, computer. transfer essential functions to the Dis- Eliminate duplication of records. bursements Division to be performed on Eliminate unnecessary steps in processing a centralized basis by an ADP office and of remittance advices. eliminate all non-essential functions. Transfer to the Department of Fish and Establish an integrated ADP financial Game the follow-up and collection of fish management information system utilizing and game case reports. the Disbursements Division's ADP center. Improve and expand the use of existing Establish the existing ADP facilities in the ADP equipment. Division of Disbursements as an ADP serv- ice center for disbursements and ad- Disbursements Division ministration. The division performs the State Controller's responsibility to draw warrants on the State Several agencies are conducting studies to determine specifications for establishing 8 their own ADP centers. Capital costs and This approach would reduce likelihood of lead time will be large before they are oper- abuse. It might create the possibility of ating efficiently which can easily be two or increased administrative costs because a more years. Moreover, their establishment larger number of civil service appraisers and will have marginal justification, if at all, and clerical personnel may be required to handle will conflict with the Governor's directive a comparable number of cases. Such a de- establishing the Office of Management Serv- velopment can be controlled by installing ices in the Business and Transportation improved reporting, clerical methods, con- Agency. trols and the like. The Division of Disbursements' ADP center From a long-range standpoint, a study is already established and has much unused should be undertaken to determine whether a ADP capabilities. It also has an adequate fundamental change should be made in the nucleus of trained personnel which can be death tax concept in the state. Aside from augmented as necessary to assume new func- questions of relative equity of the state's tions. By using the ADP center in Disburse- inheritance tax versus the federal estate tax ments as a service unit, there would be a approach, use of the latter approach would saving in most capital costs for the proposed, afford great opportunities for cost reduc- but not installed ADP equipment. tions in administration. Appraisements ob- Inheritance and Gift Tax Division tained by the decedent's estate to satisfy federal revenue agents could probably also The division has responsibility for administra- be used for preparing the state return. Tax tion and collection of inheritance and gift calculation procedures would also be greatly taxes as provided under the Revenue and simplified. Taxation Codes. Key to this function is the A number of other important recommen- Inheritance Tax Appraiser (ITA), an appointee of the State Controller who is non-civil serv- dations for this division would suggest doing ice and serves without tenure. The Controller the following: is required by statute to appoint at least one Initiate a program for assuring that uni- appraiser in each county; many counties have form operating procedures are adhered several. These appointees constitute a panel to on a state-wide basis. from which the probate court must select an Standardize handling of documents per- appraiser for each case to be probated. taining to the decedent. For the last fiscal year, inheritance tax Encourage establishment of a state-wide revenues totaled $ 106.6-million and gift tax training program for ITAs under the proceeds amounted to $7.8-million. aegis of the Inheritance Tax Appraisers Association. Recommended action A key recommendation would secure reforms Eliminate compensation to inheritance in the present inheritance tax appraiser sys- tax appraisers under the Revenue and tem. These goals suggest only persons with Taxation Code. demonstrated qualifications should be al- Compensation accounts for some 6% of lowed to appraise assets whose value is not the appraisers' total gross income. These readily ascertainable. Administrative pro- fees, totaling about $190,000 annually, ap- cedures should be established for reviewing pear to be used by the Controller as a sub- the work of persons selected for this position sidy to appraisers with lower gross earnings. to assure the necessary degree of uniformity. The need arises because of the light workload The basis on which a person may be removed in the less populous counties. If appraisers from the position should be clearly defined were appointed on the basis of workload and established. rather than geography, there would be no 9 need for this supplemental form of income. Tax-Deeded Land Division It is likely the Code does not preclude the Controller from appointing the same indi- The prime purpose of this division is to foster vidual to act as the appraiser in more than the return to local tax rolls of properties one county. Therefore, every effort should be which have become subject to sale because expended to limit appraisers' compensation of delinquent taxes. to probate appraisal fees. The anticipated Recommended action savings would be approximately $190,000 The significant recommendation here would per year. eliminate the Tax-Deeded Land Division as an Tax Collection and Refund Division organizational entity and transfer its remain- ing functions to the Local Government Fiscal The division administers the fuel tax refund Affairs Division. to certain non-highway users and collects the off-setting state and local sales taxes. In addi- Local Government Fiscal Affairs Division tion, the division keeps accounts and collects Prescribed duties of this division provide a delinquent taxes for six taxes which are as- measure of control over methods of account- sessed by other agencies. ing used by local entities, assure the validity of reporting expenditures of cities and coun- Recommended action ties for streets and roads, including gasoline Significant recommendations for this division tax audits and collect, compile and publish would: fiscal reports of various entities of local Adopt a policy permitting a longer in- government. process time for handling fuel tax refund Recommended action claims during peak periods. Improvements in this division can be ob- Reduce the number of positions in the tained by: operation unit and office audit unit of the Fuel Tax Refund section. Combining the gas tax review audit group with the field audit group of the An important recommendation would Audits Division. study amending or repealing the motor vehi- Stepping up development of a uniform cle transportation tax. Presently, the tax system of accounts for California cities. covers only vehicles for hire and is based on their operating revenues. Its intent is to tax Developing uniform system of accounts for school districts. operators of heavy equipment which travel on the roads to cover the cost of maintaining Transferring the remaining duties of the these routes. However, it excludes 454,507 Tax-Deeded Land Division to the Division state-registered vehicles weighing 4,000 of Local Government Fiscal Affairs. pounds and over. Of this number, about 20% Administrative Services Division or 85,590 are for hire and, therefore, subject to the tax. The revenue produced amounts to This division assists the Controller in adminis- $17.3-million annually. Consideration should tration of his statutory duties. It provides be given to raise this amount of money by accounting, filing, personnel and other mis- imposing a tax on all heavy trucks. Therefore, cellaneous office services for the other seven it would seem more equitable for the cost divisions. of the tax to be shared by all users. On a proportionate basis, this could reduce the Recommended action taxes for trucks now being assessed and The proposed recommendations for this di- would impose a nominal tax on those not vision would result in a reduction in author- now being assessed. ized positions, a reduction in record storage 10 costs and a better utilization of present ADP Recommended action equipment. The recommendations would: Suggested improvements are directed to- Discontinue maintenance of duplicate ward increased speed in rendering decisions, sets of personnel records. improved utilization of manpower, increased Utilize the Office Services capabilities of efficiency and elimination of needless dupli- General Services. cation of effort and responsibility. If imple- Convert to open shelf files in the Central mented, they offer the opportunity of saving Services section. approximately $893,000 annually. Recom- Reduce retention periods on records. mendations covering the PUC as a whole would do the following: Several additional recommendations are aimed at better utilization of ADP equip- Adopt a total management information ment. They would reduce clerical staff needs system. and improve performance and accuracy. Establish an effective manpower control system by developing engineered work PUBLIC UTILITIES COMMISSION standards. The Commission has the responsibility for Eliminate duplication of effort and over- regulating some 1,500 privately-owned pub- lapping responsibilities between divisions lic utilities and certificated transportation and between branches. companies and over 16,000 permitted for- Make greater use of prehearing con- hire truck operators. It also represents Cali- ferences. fornia interests in proceedings before federal Require advance distribution of exhibits, regulatory agencies and federal courts. The affidavits or prepared testimony where Commission is an administrative agency appropriate. with both quasi-legislative and quasi-judicial Re-examine the present procedure for re- powers. view of decisions. Well-qualified professional and semi-pro- fessional personnel are required to meet the Reduce the number of supervisors by broad scope of regulatory and statutory combining and eliminating jobs. functions of PUC. The Commission em- ploys 484 professional and semi-professional Legal Division personnel to handle these functions. An addi- The Legal Division represents PUC in pro- tional 286 clerical employees provide neces- ceedings at all levels in both state and federal sary support services. The budget for fiscal courts as well as before federal agencies. An 1967-68 is approximately $10.9-million. Of important part of the federal litigation in- this, $5.8-million will be financed from the volves oil and gas producers and pipeline General Fund and $5.1-million from the corporations. Transportation Rate Fund. Recommended action Appraisal of performance The suggestions concerning activities for The six operating divisions of the Commission which this division is either completely or par- have become strong and united over the tially responsible would: years to meet day-to-day demands and pro- Assign a staff counsel to commission vide continuity of operations. This has re- sulted in a high degree of autonomy. hearings to minimize representation by Personnel are intelligent, knowledgeable in personnel of other divisions. their respective fields, dedicated to their Transfer at least two attorneys to the Los work and perform their assignments capably Angeles office. and diligently. Establish a stenographic pool within the 11 Legal Division and establish work per- nual revenue would be generated. This formance standards for its members. change would require legislative action. Determine if it would be advantageous Eliminate duplicate efforts and overlap- to contract with private printing firms for ping responsibilities between Rate and all legal printing. Engineering Economics branches. Study the feasibility of a central law Abolish the mobile surveillance unit. library at the State Building in San Fran- Study the minimum rate structure to de- cisco. termine if rates are too high. Division of Examiners Reorganize the Special Studies branch. Each petition or case filed with PUC is as- In the present organization of the Special Studies branch, employees of the Engineer- signed to a Commissioner: He arranges for ing Studies unit, the Programming and Data the processing of the petition or case through Processing section and the Traffic Studies public or informal hearings. The appropriate divisions of the Commission provide testi- unit report to two supervisors. This organiza- mony and evidence, legal services and tech- tion should be changed so each employee is nical reviews. The Commissioner presents his responsible to only one supervisor. proposed decision to the full Commission. FRANCHISE TAX BOARD An affirmative vote of three Commissioners is required to accept the proposed decision The Franchise Tax Board consists of the Con- as final. troller, the Director of Finance and the Chair- man of the Board of Equalization. It adminis- Recommended action ters the state's personal income, bank and One suggestion would require hearing corporation tax laws. An executive officer is officers to make timely determinations in appointed by the board and substantially advance of or during hearings to avoid un- all of its powers are delegated to him. The necessary delays. board's staff has approximately 1,200 perma- Another recommendation would require nent and 235 temporary employees. Current hearing officers to reject repetitious and budget totals approximately $13-million. irrelevant evidence. Appraisal of performance Transportation Division Administration of the personal, bank and cor- poration tax laws for the state is a rapidly This division regulates the activities of com- growing activity. From 1950 to 1964, the panies engaged in for-hire transportation of number of Californians reporting state in- passengers and property. come tax returns increased from 3.8-million Recommended action to 14.6-million. Suggestions pertinent to this division would The board is taking a forward-looking ap- do the following: proach to these problems. Advancements are being made in utilization of ADP, insti- Review and revise all fees charged by the tuting the work measurement program and Commission to reflect increased costs. encouraging employee rotation. Establish a filing fee for petitions to amend permits and certificates of public Recommended action convenience and necessity. A fee of $150 Implementation of improvements could in- is charged for the original permit. If a crease employee efficiency and reduce oper- similar $150 fee were charged for every ating costs by $500,000 annually. Key petition to amend a permit or certificate, approximately $240,000 in additional an- recommendations of the Governor's Survey include: 12 Obtain larger and more efficient facili- ings of over $1-million, primarily generated ties for headquarters operations. from the Division of Law Enforcement. This Reduce scope of the work measurement should be realized over the next five years. program after one year unless results Immediate annual savings should amount to dictate otherwise. $433,000 but in the first year will be offset by Extend audit and compliance enforce- a required expenditure of $487,000, includ- ing a one-time outlay of $105,000. Major ment activities. savings will result from modified procedures Eliminate alphabetical filing of income and automated systems which will reduce tax returns by using block filing and ADP future manpower requirements. for indexing. The Office of the Attorney General has a Charge a $5 handling fee for each dis- high reputation state-wide and nationally. It honored check. must maintain this position in order to attract and retain qualified lawyers. Suggestions DEPARTMENT OF JUSTICE made should accomplish this result and in- This department includes the legal activities crease productivity and efficiency to justify of the constitutional Office of the Attorney any cost involved. General plus the criminal identification, in- Immediate steps should be taken to en- vestigation and statistical reporting responsi- hance recruitment and retention of high cali- bilities of the Division of Law Enforcement. ber lawyers. The ability of the office to Appraisal of performance handle a workload which has increased 250% in five years depends on the capability of In recent years, the department has faced a legal personnel, adequate supervision and dramatic increase in workload, 90% of which increased flexibility. Salary structures were is beyond its control. Federal and state court generally not made a part of the survey decisions in criminal matters, growing crime scope, but the department specifically re- rates and increasing state population indi- quested that the survey team comment on cates this trend will continue. the job classifications and salary structure in The 1967-68 budget authorizes 1,491 posi- the Office of the Attorney General and its tions. Of these, 59 are allocated to general effect upon employee attrition. The condi- administration, 539 to the Office of the At- tion found was sufficiently serious to warrant torney General (259 of which are attorneys) recommendations to correct apparent in- and 893 to the Division of Law Enforcement. equities and establish certain new job classi- The net budget is about $15.8-million. fications. There is a need for major and rapid A new classification is recommended to changes in operation and organization to reward exceptional lawyers who otherwise carry out the department's missions effi- have no advancement except to positions ciently and economically. More effective requiring administrative duties. Often their action must be taken in the areas of long- real value to the state is greatly diminished range planning, recruitment and retention of and manpower costs increased by such key personnel, supervision, definition of ob- moves. jectives and use of automated systems. Man- agement analysis capability must be enlarged A new class of intermediate working super- visors is also recommended. In addition, the and made available throughout the depart- ment. career executive assignments should be ex- tended through the section head level. Recommended action The salary compaction that exists at the Specific recommendations for improvement section head level and above should be re- should ultimately produce a net annual sav- lieved. 13 The cost of these changes is estimated at of the dramatic growth in activity. This would approximately $50,000 a year. This should be cost an estimated $50,000. Meanwhile, the more than compensated by improved mo- duties of the geographical office heads rale, reduced attrition and added recruit- should be redefined and strengthened in ment incentive. In order to implement this some areas and limited in others. Certain recommendation, the department must show sections can be consolidated and reorgan- initiative in improving liaison with the De- ized. Also, a central depository for informa- partment of Finance, Legislative Analyst and tion concerning fraudulent activities should State Personnel Board whose cooperation is be established as an adjunct to the Bureau of vital. Criminal Statistics under proper safeguards Procedures should be simplified and as- to assure confidentiality. signments diversified. The increase in work- There is a need to improve the use of non- load has centered primarily in the field of legal personnel, facilities and equipment. criminal law. The criminal load of 6,000 cases Increased flexibility in use of legal stenog- is about four times the volume five years ago. raphers is urgently needed while the clerical This imbalance results in the assignment of staff is seriously deficient in numbers. It new recruits to writing criminal briefs and should be increased by about 8 to 10 new presents serious threats to the continued ac- positions. The added annual cost of about quisition and retention of top lawyers. The $50,000 would be more than offset by im- office should explore all possibilities for proved operating efficiency. Additional elec- simplifying the handling of criminal writs and tronic tape typewriters and dictating units appeals. Split assignments between criminal should be acquired. A capital expenditure of and civil work should be instituted and re- as much as $50,000 is needed to bring the allocation of deputies among offices and sec- office up to modern standards. tions made wherever possible to relieve workload imbalances. Other requirements include a central filing Steps should also be taken to improve system for each office and a library index file communications, time reporting and training. for significant briefs and legal memoranda. Inter and intra-office communication through Also, office facilities should be consolidated frequent meetings and extension of written and arranged so men working in the same information and advice should be stressed. fields are located near each other. Planning Accurate daily timekeeping by attorneys on should begin for future office requirements. a quarter-hour basis should also be immedi- In line with these plans. Operational studies ately adopted. The Los Angeles orientation are required to develop improved systems program for new recruits should be installed and procedures on a continuing basis. in the other offices. The possibility of a short- The Division of Law Enforcement should time exchange program for young lawyers be reorganized to place the Deputy Director between the office and district attorneys' on the same level as the Chief Assistant At- and county counsels' offices should be ex- torney General. Grouping similar functions plored. In addition, more attention should be under common direction provides strength- paid to recruitment from out-of-state law ened supervision and clear lines of authority schools. and communication. All investigative and An in-depth organizational and opera- enforcement activities should be directed tional study of the office should be con- by a person oriented to law enforcement. ducted by a competent management con- The information, identification and criminal sulting firm aided by office personnel and analysis functions should be supervised by outside voluntary consulting lawyers. The someone with a business management back- present organizational structure, established ground. The new organization will remove in 1952, should be examined in detail in view communication and operational barriers, 14 provide the flexible structure necessary to nation. Also, programs being developed are implement other improvements and reduce mainly direct conversions of existing incom- annual operating costs by an estimated patible manual systems. A thorough manage- $64,000. ment and systems study is required to devise The staff of the Management Analysis sec- an overall efficient plan. The result would be tion should be strengthened to implement a future cost avoidance of at least $125,000. in-depth organizational, operational and pro- Revision of the present systems and pro- cedural studies embracing automated sys- cedures for compiling, retaining, and dissemi- tems, training and standards. These proposed nating criminal information and elimination studies should produce net annual savings of of inefficient processing of records are approximately $507,500. needed. Also, pooling clerical services and Present computer programming work for investigative equipment as well as reducing the former Bureau of Criminal Statistics and the number of undercover automobiles used Modus Operandi section of the Bureau of by civil investigators would improve effi- Criminal Identification and Investigation ciency. Implementing these recommenda- should be suspended. The present conversion tions should result in net savings of $218,800 lacks sound planning and centralized coordi- per year. 15 GOVERNOR'S SECTION 2 SURVEY ON EFFICIENCY GENERAL SERVICES AND COST CONTROL FEBRUARY 1968 the GENERAL SERVICES Implementation of the recommendations of losophy at all levels and has already made the 17 reports in this section will have a major many improvements. However, the organiza- impact on General Services, as presently con- tion structure can be improved through the stituted. Strengthening of state-wide func- combination of certain functions and realign- tions of procurement, fleet management, ment of others. records management and facilities planning At present, General Services has an annual and space utilization is contemplated. operating budget of approximately $55-mil- The administration of General Services is lion and is authorized to employ about 4,200 aggressively taking steps to imbue this phi- people. DEPARTMENT OF GENERAL SERVICES Individual reports on units in the present ment composed of Office Planning and Department of General Services recommend Utilization, Property Acquisition, Build- expansion in scope and control of major ac- ings and Grounds, Architecture and Con- tivities. To carry out these objectives it is struction, Office Services and Security proposed that the role of General Services Guard functions. be changed from a housekeeping depart- Organize the Operations Department by ment and elevated to agency status for de- combining communications, fleet man- veloping and implementing essential internal agement and printing. government services. Set up the Personnel and Supporting Under the proposal, it will act as the state- Services Department to be composed of wide operating agency for motor vehicles, the materiel function, records manage- communications and printing. With the pro- ment, data processing service center, in- posed addition of the Personnel Board, the surance, merit award and personnel. major functions dealing with the internal re- The Office of Administrative Procedure quirements of the executive branch will be primarily conducts public hearings involving combined under one management control. activities licensed by the state. Therefore, However, to preserve the necessary checks this organization belongs more logically in and balances, finance, overall planning and the proposed Regulatory and Protective ADP policy have been excluded from the Agency. Similarly, the Office of Local Assist- proposed agency organization. ance, basically a money loaning activity for Appraisal of performance school building programs, should be trans- ferred to the Department of Finance. The traditional role and philosophy of General Services will have to undergo a change if it is to achieve the effectiveness AUTOMATIC DATA PROCESSING expected. Greater benefits can accrue from Administrators of state government at all long-range planning and centralized state- levels must have appropriate and timely in- wide control of internal service operations. formation on which to base decisions. They Recommended action cannot plan or direct operations efficiently without such information. For this reason, a To coordinate, control and operate essential state-wide master plan on management in- internal state-wide activities, major reorgani- formation systems should be developed to zation of the present department will be re- obtain such information efficiently and eco- quired. The most significant changes would: nomically. Modern scientific techniques Establish a Building Management Depart- should be utilized. 17 California has failed to develop meaning- Revise Sections 4800 to 5999 of the State ful guidelines or a master plan for state-wide Administrative Manual SO they become Management Information Systems (MIS) and the controlling document covering all in- Automatic Data Processing (ADP). This has formation processing systems. resulted in an uncoordinated proliferation of Prepare a master plan for all state infor- ADP equipment and a failure to realize their mation processing systems. The objective full potential. should be an orderly program of consoli- Findings of the Governor's Survey indi- dation for efficiency and economy. This cate that future annual savings of at least should lead to applications and installa- $26-million can, over a period of time, be tions that are most beneficial to all agen- achieved through better procurement and cies in the state-and not just one de- control of the state's ADP activities and partment. management information. As the state's ac- tivities grow, the annual savings could be Improvements underway several times this figure. When the total in- As a result of a foregoing recommendation, formation requirements are considered, the the Governor already has issued an executive effective planning and operation of an infor- order establishing the Office of Management mation system becomes a task of great Services to be responsible for information magnitude and complexity. processing systems in the state. Appraisal of performance Despite the recognition of the needs and SYSTEMS ANALYSIS AND many efforts to meet them, there still exists MANAGEMENT PLANNING no suitable organization to implement a master plan for state-wide information pro- The present Systems Analysis Office and the cessing systems. Management Planning Office are both treated in this section. Their combination Recommended action into a Data Processing Service Division in the The Governor's Survey team recommended Department of General Services is highly several steps to develop the necessary state- recommended. wide program of information management. The Systems Analysis Office designs and These steps would do the following: installs some state-wide accounting systems, Call on the Governor to issue a firm supervises certain state financial and business policy statement endorsing the concept policy regarding ADP and accounting activi- of a state-wide information processing ties and reviews ADP equipment contracts. system, and encouraging all state em- During 1967-68, the office will operate with ployees and organizations to support the an authorized staff of 46 employees and a efforts of the Management Systems budget of $733,500. Office. The Management Planning Office provides Provide for effective communication be- assistance to General Services and other tween MSO and the various governmen- selected departments in developing policies, tal agencies. As a part of this process, organization, systems and procedures and certain ADP committees would work data processing services. It also furnishes closely with MSO. Others, however, guidance and instructions through such proj- could be disbanded and their functions ects as departmental manuals, the State Ad- transferred to MSO. ministration Manual, Board of Control rules Halt the uncoordinated acquisition of and administrative orders. Staffing for 1967- ADP equipment until a comprehensive 68 is authorized at 60 employees with a master plan is developed. budget of $628,000. 18 Appraisal of performance Computer-related personnel and activi- The Management Planning Office pursued a ties should be reassigned to existing or multitude of projects which have resulted in proposed entities according to their $692,000 savings in the past year. The cost- nature. benefit ratios vary greatly among these proj- The computer-related staff of the present ects. For example, $543,000 of the savings Systems Analysis organization and related came from projects on which only $13,000 units in other state departments should be was spent. On other projects, costs actually integrated as appropriate into units of the exceeded benefits. Therefore, project selec- new Data Processing Service Division. A com- tion and control need improvement. prehensive training program to develop an The Systems Analysis Office has provided adequate force of systems analysts and pro- substantial savings for each dollar spent in the grammers should be undertaken. This should past year and has performed well in many not entail an increase in total manpower. areas. However, there is a need to improve Policy and top-level planning activities for cost accounting and economic analysis capa- ADP, the State Federated Information Sys- bilities. In addition, there are no effective tem (SFIS) and coordination and control controls over the letting of software con- over computer hardware and software con- tracts by state departments. The office's ef- tracting and purchasing activities should be forts to establish state-wide coordination and transferred to the new Office of Manage- control over ADP applications and equip- ment Services. DPSD should continue to per- ment procurement have not been successful. form the basic research required by OMS This is partially because the work was under- for its top-level planning. taken unilaterally without fully taking into ac- Those activities in the present Systems count the need to satisfy all user departments. Analysis operation that involve development Recommended action of uniform accounting procedures should be transferred to the Department of Finance. The suggestions proposed by the Governor's Survey will offer opportunities for saving Management Planning activities should over $4.5-million of Department of General be reassigned to existing or proposed Services and other agency expenses. entities according to their nature. A Data Processing Service Division should The Management Analysis unit of Man- be established in the Department of Gen- agement Planning should be transferred to the Office of the Director of General Serv- eral Services, incorporating the existing ices. Also, the ADP planning activities should Systems Analysis and Management Plan- be transferred to the Office of Management ning units. Services. ADP programming activities should Pursuant to the Governor's Policy State- be assigned to the Computer Programming ment of October 11, 1967 and his Executive unit of the new Data Processing Service Divi- Order of November 2, 1967 on automatic sion and ADP operations activities should be data processing, a Data Processing Service moved to the Computing Services unit of the Center should be established in the Depart- new division. ment of General Services. This center should implement the policies of the Automatic OFFICE OF Data Processing Policy Committee. It should incorporate the present Systems Analysis ADMINISTRATIVE PROCEDURE Office and the Management Planning Office It is the function of the Office of Administra- and operate in coordination with the Office tive Procedure to provide hearing officers of Management Services. It should be titled for all cases referred to it by appropriate a division instead of a center. state agencies. Where requested, the office 19 will provide personnel to record and repro- Suggestions by the Governor's Survey duce a verbatim transcript of each hearing. offer a potential savings of $300,000 annu- A report of the findings or recommendations ally. Significant improvements would involve is then submitted to the appropriate agency. the following: In addition, the Office of Administrative Pro- Conducting research with the regular cedure has the responsibility for codification staff instead of the present research staff. and research of all state agencies' rules and regulations as they are detailed in the Ad- Conducting all hearings in the present ministrative Code. permanent offices of the OAP. The present organizational structure calls Eliminating recording hearings by steno- for a manpower level of 62 positions. The graphers and utilizing tape recordings proposed budget for 1967-68 is $1.1-million. instead. (This would require permissive OAP has permanent offices in Sacramento, legislation.) Los Angeles and San Francisco. The hearing OFFICE SERVICES DIVISION officers and reporters also travel extensively and conduct hearings elsewhere throughout Office Services of the Department of the state. General Services provides reproduction services, office machine maintenance, mail Appraisal of performance and messenger service and related functions The office appears to offer an economical to agencies whose work load does not war- hearing and review procedure for the people rant independent service units. It also assists who deal with the state agencies. The hearing agencies which operate service units by ab- officers seem capable of giving the re- sorbing work beyond their capabilities. In spondent a fair and impartial hearing without addition, it negotiates master contracts for undue pressure from the agency involved. rental and maintenance of office machines. Having the hearing officers come from a separate department outside the agency in- Appraisal of performance volved is more equitable and economical Proposed budget for 1967-68 is $923,000 than the former system where each agency and total employment is 74. Because of the had this function. peaks and valleys of its work, this section Hearings are conducted in a judicial at- could handle substantially more volume with mosphere. Generally, the hearing rooms are the same machinery and personnel. adequate. However, the need for rearrange- Recommended action ment and better utilization of space is ap- parent. For example, in the Los Angeles Reproduction service is commonly dupli- building where OAP's office is located, other cated by other agencies. Therefore, it was agencies such as the Fair Employment Prac- the focal point of suggested improvements. tice Commission, the Conciliation Service Implementation will result in anticipated sav- and the Public Utilities Commission maintain ings of approximately $580,000 per year. extensive separate hearing rooms. None is All reproduction and auxiliary services now fully utilized. being performed by various agencies in the state should be merged into the Office Recommended action Services Division of the Department of The Office of Administrative Procedure has General Services. Potential savings through recently taken steps to reduce its costs by a the reorganization of all agencies' reproduc- total of nearly $80,000 per year including tion facilities should total $300,000 per year. the elimination of two positions. However, Another recommendation suggests the there appear to be opportunities for further State Rehabilitation Service institute job re- economies. training in the work of reproduction. The 20 state is currently paying $1,500 plus sub- Appraisal of performance sistence to private trade and job training Within any agency, the only forms controlled schools to train each recently discharged are those which are usually processed through prisoner or unemployable school drop-out in its Management Analysis groups. Those for needed skills. In addition, the division should use by an individual unit are not controlled. It redefine differences in offset processes and is estimated that there are 60,000 individual printing. forms. The division has not been involved in The Administrative Manual should be reviews of filing systems or equipment other changed to raise the number of impressions than filing cabinets. from 15,000 to at least 30,000 that can be reproduced by offset within the division be- Recommended action fore the job must be sent to the State Printer. Savings of general and special fund monies The type of work processed on offset or attainable through adoption of the Survey duplicating machines can usually be more team's recommendations could amount to an economically handled in the local unit. Cur- estimated $2.1-million annually, plus a one- rently, work must be mailed and processed in time saving of $227,000. In addition, they Sacramento, then returned. Sometimes, a job could result in avoiding certain capital is over a month in transit. A more economical expenditures of $910,000 and deferring method of reproducing such work would save $350,000 for a long period of time. $25,000 per year. Reproduction and microfilm equipment The following recommendations cover sug- purchase requests should be coordinated and gestions for improvements and savings. controlled through General Services. This of- The records retention schedules for all fice should have authority to disallow re- agency centers should be up-dated and con- quests and recommend alternate methods of solidated with the schedules of the new State accomplishing reproduction. Annual savings Records Center in Sacramento. On a state- of about $49,000 can be achieved. wide basis, an estimated 60,000 cu. ft. of records would be transferred to the Records The use of silver recovery units in photo laboratories should be studied. The increas- Center. This would produce estimated an- ing price and scarcity of silver makes it nual savings of $174,000 in filing space and worthwhile to recover the metal content of equipment. In addition, $50,000 can be saved chemicals used in photographic laboratories. annually through destruction of needless records. Further consolidation within the new Annual savings of $12,000 are expected. center will provide an annual savings poten- Furthermore, anhydrous ammonia units tial of $135,000. should be installed in areas of heavy repro- duction of whiteprint operations. Ammonia A complete survey of forms should be processing of copies is economical. Annual made and improved procurement techniques savings of $4,800 are possible. developed. This survey should be coordi- nated and directed by the division, but RECORDS MANAGEMENT carried on by individual agencies. Careful examination of procurement practices Records Management is an administrative and stronger controls over design, printing function. It concerns planned control of and use of new and old forms could re- records and information from their creation duce annual expenditures by approximately to final disposition. In addition, it has respon- $500,000. Furthermore, the authority for ap- sibility for forms coordination and manage- proving acquisition of microfilm equipment ment programs. At present, there are 12 and methods and procedures related to its employees in the State Records Service Divi- use should be centralized in this division. sion of the Department of General Services. Proper control and review of microfilming 21 equipment could save an estimated $275,000 retrieval. This system is priced at $ I-million. annually in equipment and personnel time. It would appear more practical to consider The division should cancel existing depart- a double decking concept of shelving. This ment schedule certifications and establish a would provide additional space and, in the more meaningful system of filing equipment shifting, permit necessary purging. Such a controls. It should also place a moratorium decking system would cost considerably less on file cabinet purchases to assure maximum than the mechanized equipment. While the use of surplus equipment. This division has no mechanized retrieval system has not been knowledge of filing study activities of other budgeted, any comparable system would be agencies. A moratorium on the purchase of in the same price range. Thus, an estimated filing equipment and better utilization of sur- cost avoidance of $750,000 is possible plus equipment will produce an estimated through this action. savings of $350,000. All semi-active and inactive files should The present employer alpha-index files be transferred from the Franchise Tax Board should be converted to microfilm in the Ac- to the State Records Center. This would re- counting and Tax Division, Department of lease office space valued at $24,000 per Employment. The 1.5-million cards in this file year, warehouse space at $2,800 per year can be easily identified through indexing and and equipment at $13,000. Transferring an limited to three microfilm reader stations for additional year's personal income tax returns viewing and searching. The present system to the center should also be considered. This costs $152,000 annually for personnel, space would net an additional potential space sav- and equipment. A microfilm system could be ing valued at $17,000 per year and would established and maintained for $28,000 an- release equipment valued at approximately nually. This would result in a net savings of $53,000. about $124,000. The microfilm proposal and related purg- The present microfilm jacket system for ing activities in the Department of Education adoption records in Department of Social should be cancelled. The department has ex- Welfare should be eliminated and the trans- pended $160,000 on microfilm equipment fer of records to the State Records Center and supplies which have been in a warehouse should be rescheduled. The present micro- for the past year and not used. The equip- filming program is not necessary. Records ment and supplies should be turned over to should be sent to the Records Center earlier General Services for more gainful use. The than presently scheduled. Savings potential purging of files for microfilm purposes should of $131,000 can be realized through imple- be stopped. Implementing these recommen- mentation of a more effective system of dations will realize a one-time savings poten- transfer and retention. tial of $350,000 and make equipment which is valued at $160,000 available to other de- A system for purging record folder files in the Bureau of Criminal Identification and partments. Investigation, Department of Justice, should Additionally, the employee roster file in be developed and existing double-deck files the office of the Personnel Board should be should be employed in lieu of the proposed eliminated. A total of 26 employees is used mechanized retrieval system. At present, to maintain the historical records, which over 3.2-million criminal record files are main- are the responsibility of the Director of tained by this bureau. They occupy almost General Services. This cost, plus associated three miles of shelving space. The depart- computer time, floor space and filing equip- ment is currently considering use of a system ment, represents an estimated payroll cost of which would retain the documents in their $200,000 per year for personnel that could original form and store them for mechanized be saved by phasing out the function. 22 OFFICE OF STATE PRINTING to obtain competitive bids from industry. Potential annual savings of about $750,000 The Office of State Printing provides serv- are indicated. ices to agencies, the Legislature and public schools. It operates the Legislative Bill In addition, the office should contract out Room and distributes documents to libraries business cards, rubber stamps and library throughout the state. Legislative printing binding and give small printing jobs to the embraces special reports and printing of bills, prison. Private industry and the prison can forms and journals. State printing for other perform these functions in a more economi- agencies includes forms, directives, annual cal manner. Annual savings through a re- reports and pamphlets. Textbook printing in- duction of personnel would amount to ap- volves production of the majority of elemen- proximately $233,000. tary textbooks which have been specified by The State Printing Office should create an the Board of Education. equipment purchasing committee to review The plant is a modern industrial building proposals for new equipment, quality control with 254,000 sq. ft. of floor space and 40,000 and standards for composing room produc- sq. ft. of warehouse for storage of paper. For tion. It should be comprised of experienced 1967-68, the office's operating budget will industry men selected by the Governor or be close to $19.9-million. Its staff is author- appointed by local trade associations and ized at 1,038 employees. report jointly to the Governor and the Legis- lative Analyst. Appraisal of performance Purchase of a four-color web press should Time required to produce and deliver print- be delayed and major capital expenditures ing jobs is much greater than is normal in deferred until a policy decision on objec- private industry. Comparison with ratios pro- tives and methods of operation is developed. vided by the Printing Industry of America indicates that a reduction of manpower is Furthermore, printing reproduction and attainable. duplicating functions carried out in other agencies should be examined. Nearly every Recommended action department has some form of duplicating Annual savings of about $3.2-million over equipment and many have extensive installa- several years will be realized when the sug- tions. Evidence indicates the man-year costs gestions are implemented. run into millions of dollars and are, to a large The office should modernize its printing degree, unnecessary. approach for the Legislature's needs. An A work improvement and measurement investigation of new types of duplicating program should be instituted. Low utilization equipment should be made for use in pro- of equipment and manpower and continuous duction of legislative printing. The office is build-up of printing offices makes a work seriously considering conversion to photo measurement program desirable. Also, areas composition and high speed production. of responsibility and authority and assign- However, there is no clear program on either ment of duties should be analyzed. direction or approach. No action should be Overlapping in duties and responsibilities taken until all of the latest equipment and exists throughout the Printing Office and techniques are carefully analyzed. Savings plant. By redefining areas of responsibility, potential, through reorganization of the legis- the administrative staff can be reduced by lative bill printing process, is approximately one and possibly two positions. Other ad- $ 1 - million annually. ministrative personnel could be reduced by If the estimate on a job by State Printing about 20 employees by tightening control is over $200, an agency should be allowed and reassigning duties. Estimated annual 23 savings of $188,000 will accrue from these Services for an equivalent type of service. actions. Despite this, opportunities still exist for For greater economy, the office should achieving better efficiency and cost control. phase out 31 copyholders, 10 positions in re- Recommended action ceiving and shipping, five machine shop per- sonnel and four foremen from its major The Governor's Survey found opportunities operating departments. Combined savings for saving more than $4-million annually in from these actions are estimated at over fleet management costs. One key recom- $400,000 annually. mendation would establish a Fleet Manage- ment Division within the Department of FLEET MANAGEMENT General Services and an Advisory Commit- This state-wide operation involves over 40 tee composed of representatives of the four state departments and an estimated 26,000 principal fleet user agencies. wheel and track motor vehicles. The total This division is needed to develop a man- budget for all state-wide fleet operations is agement control and coordination system estimated at $55-million for fiscal year 1967- and exercise authority to effect potential 68. About 3,000 employees are directly in- savings. The proposed organization is illus- volved in over 200 garages and maintenance trated by the chart on next page. centers. In terms of replacement require- The Advisory Committee on Fleet Manage- ments, approximately 3,000 cars and light ment is needed to improve communications trucks have been purchased in each of the among and between the principal user agen- last three years. cies, to provide guidance to the manager of There are eight principal departments that the Fleet Management Division and to ensure operate fleets of wheel and track vehicles. state-wide coordination of procurement, They are General Services, California High- operations and maintenance. It will be com- way Patrol, Conservation, Public Works, Fish posed of the Secretaries, or their delegated and Game, Water Resources, Agriculture representatives, of Resources, Business and and Parks and Recreation. Transportation, Health and Welfare and Each of these eight departments adminis- Agriculture. ters a separate state-wide garaging and The manager of the Fleet Management maintenance operation. The Department of Division would establish a program to de- General Services is charged with the respon- velop state-wide fleet management policies sibility of renting cars to other government and controls as well as supervise all state departments. However, many state agencies motor vehicle operations. have their own fleets. When requirements ex- ceed the number of cars in their own garage, Another recommendation is to develop they rent from General Services. and implement a program to secure potential savings and benefits from additional pooling Appraisal of performance of vehicles, garages and services. The state uses a decentralized system of or- With many of the state's 160,000 em- ganization for its fleet management opera- ployees traveling in 16,000 passenger cars, tion. It does not have a central focal point the economies of automotive pools to service for development of overall policy and super- these needs are readily apparent. The num- vision of fleet operations, maintenance and ber of state vehicles can be reduced 10% or replacement. more without affecting the state's transpor- A survey of numerous industrial and gov- tation needs. Each vehicle thus eliminated ernmental fleet operations shows no one is would save the state approximately $530 per operating at a lower cost than does General year. This sum represents the fixed charges 24 DIRECTOR Proposed Organization Chart DEPARTMENT OF Fleet Management Division GENERAL SERVICES MANAGER FLEET MANAGEMENT DIVISION STAFF ANALYSTS ADVISORY COMMITTEE FIELD OPERATIONS HIGHWAY GENERAL FISH AND WATER PATROL SERVICES GAME RESOURCES PUBLIC CONSERVATION AGRICULTURE WORKS per car for depreciation, insurance, storage, out on transferred equipment. If these means administration and capital expenses. Annual are developed, over $2-million annually can be savings of $850,000 to $ I.I-million are indi- saved from better utilization of equipment. cated. Other significant recommendations would: An important improvement would be the Encourage additional use of private auto- development of procedures to identify idle mobiles where paying a mileage allow- equipment that can be readily moved to an ance is more economical than providing area of need. In many instances, equipment a state vehicle. is idle for a month or more. In particular, heavy equipment often is used on a seasonal Develop programs to reduce accidents, basis. In addition, vehicles in good shape which cost over $6-million annually. often can be put into one of the low-mileage Investigate the potential savings avail- services at the completion of a normal able by purchasing new vehicles from the period of usage. U. S. General Services Administration. The first step in effectively achieving such economies is to develop a program utilizing OFFICE OF PROCUREMENT the vehicle management information analysis system to identify idle equipment quickly. The Office of Procurement exists to provide Methods for both temporary and permanent coordination and control over purchasing and transfer are needed. These procedures should related services for all state agencies except also insure that proper maintenance is carried the University of California. In carrying out 25 this function, it has an obligation to the agen- cessed by formal competitive bidding, ex- cies, the business community and taxpayers cept in cases of emergency. Sealed bids are to assure purchase expenditures are made in received and publicly opened. Less formal an atmosphere of open competition. The pri- procedures apply on purchases between $25 mary goal is to fulfill the state's material and and $1,000. While centralized control is main- related service needs at the lowest cost con- tained, considerable authority to obtain ma- sistent with required quality. The Office has terial has been given to the using agencies. three basic areas of operation: purchasing, Purchases amounted to about $140-million warehousing and distribution and traffic. in 1966, including an estimated $5-million Appraisal of performance placed directly by departments, under the $25 delegation. Purchasing activities for various state de- partments are highly centralized and are con- Purchasing offices are organized on a com- trolled by the Sacramento office. However, modity specialization basis with individual warehousing and distribution, which includes buyers reporting either to a principal buyer reutilization of surplus property, is limited to or a Deputy State Purchasing Agent. Person- a relatively few common items. The Traffic nel staff in Sacramento is 68; in Los Angeles, Division is mainly concerned with auditing of 23; and in San Francisco, 25 for a total of 116 freight bills and filing of loss and damage purchasing employees. claims against carriers. Accordingly, the Appraisal of performance Warehousing and Traffic Divisions have the opportunity to contribute materially to re- The Director and Deputy Director of General ducing costs to the state. This is contingent Services and the State Procurement Officer upon a major enlargement of their responsi- are newly appointed. They are in the process bilities. of initiating changes in policy and operating methods. Recommended action Purchasing has not yet assumed its proper If improvements recommended by the Gov- role in effectively and economically satisfy- ernor's Survey are fully implemented, an ing the state's requirement for materials, estimated annual savings of $16-million and supplies and equipment. a reduction in present inventories of $13.6- Organizational concepts have not kept million could be realized. abreast of the growth and changing condi- As one of the first steps, it is recommend- tions in the state. The present structure is ed the organizational structure be changed. top-heavy with supervisors and lacks required Charts of both the present and proposed flexibility. While working relationships with organization are shown on next page. The state departments and vendors appear satis- change in title from the Office of Procure- factory, procurement personnel should have ment to Office of Materiel is proposed to more face-to-face meetings with state agen- show the broader scope of its responsibility. cies to gain a better appreciation of their needs and problems. Purchasing Communications within the Office of Pro- The purchasing program includes converting curement were rated poor in most areas. agency requisitions into competitive bid in- There has been insufficient training of per- vitations, getting these invitations out to sonnel and a deficiency of meaningful man- suppliers who have indicated an interest in agement information at all levels. supplying the state, and making awards. Basic rules stipulate all purchases over $25 shall be Recommended action controlled by the Office of Procurement. The suggestions made by the Governor's Sur- Purchases in excess of $1,000 must be pro- vey, when fully implemented, should result in 26 Present Organization Chart DIRECTOR Office of Procurement PROCUREMENT OFFICER DEPUTY STATE DEPUTY STATE DEPUTY STATE DEPUTY STATE PURCHASING PURCHASING PURCHASING PURCHASING AGENT AGENT AGENT AGENT AREA I AREA II AREA III SACRAMENTO SACRAMENTO SAN FRANCISCO LOS ANGELES CHIEF TRAFFIC CONTRACT PURCHASING MANAGER MANAGEMENT SERVICES STANDARDS CENTRAL STORES PROPERTY AND DOCUMENTS REUTILIZATION PLANNING AND PUBLICATIONS Proposed Organization Chart DIRECTOR Office of Materiel STATE MATERIEL OFFICER ADMINISTRATIVE SERVICES DIVISION TRAFFIC PURCHASING WAREHOUSING DIVISION DIVISION DIVISION SOUTHERN NORTHERN DIVISION DIVISION LOS ANGELES SACRAMENTO 27 savings to the state of $10-million annually state departments and makes needed rules in the purchasing area. However, much of and regulations for proper and economical this savings will be realized only if other state purchasing. These commodities are obtained departments revise their budgets and reduce in substantial volume for resale to the actual expenditures correspondingly. agencies at a savings. It also handles state Of the improvements recommended in the documents and publications for sale to the purchasing area, three offer the opportunity public and distribution to selected libraries to save $1-million or more. They involve: as well as reusable surplus equipment from Expanding the scope of the present con- state departments. solidated purchasing program and taking There are two general types of state ware- full advantage of the state's buying vol- housing. One is performed by General Serv- ume. However, this must be supported ices to handle commodities common to more by adequate standardization, quality con- than one agency or department. The other is trol, value analysis and cost reduction performed by each agency to handle com- programs. Full implementation would modities for its own use. provide annual savings of $6.9-million. The present manpower level in the General Developing and installing an inspection Services warehouses, including property re- and quality control program. Immediate utilization, is 46 positions. Currently, because steps are required to prevent acceptance of a serious backlog of unfilled orders, four of poor quality material by the state. This temporary positions are being filled. kind of program could provide an esti- Total space occupied in some 140 ware- mated $1-million in annual savings. houses of various departments throughout Permitting the use of open-end or need the state amounts to about 2-million sq. ft. at type contracts. Savings, estimated at $1- an annual cost-leased or owned by the state million annually, are based on the ability -of nearly $1.5-million. Average inventory to permit advance and orderly purchas- carried is over $30-million and cost of opera- ing action for known requirements in any tion, in terms of salaries for over 700 em- new budget year. Further savings will ployees, exceeds $4-million annually. Other accrue through lower prices and reduc- expenses amount to about $2-million. tions in the large volume of small orders. General Services warehouses are located Other significant improvements in the pur- in Sacramento, Los Angeles and San Fran- chasing area involve: cisco. Other state departments have ware- Reorganizing the Sacramento office. houses located where they have operating units. Activating an aggressive state-wide Sales to departments during 1965-66 were standardization program. $4.1-million for 1,917 line items. The bulk was Inaugurating a cost reduction program to office and janitorial supplies and standard consolidate purchasing, standardization forms. A catalog of stocked items is com- and quality control procedures. piled and distributed to using departments. Adopting a new common commodity and Stock ordering and distribution of items in a common vendor coding system. the three General Services warehouses are Activating a training program. controlled at Sacramento. All requisitions are received and forwarded to the warehouse Streamlining the bidding process. location from which orders are filled. Statis- Warehousing and Distribution tics on the warehouse operations; namely, inventory, disbursements and operating General Services operates warehouses for costs, are maintained on a punch card data handling commodities commonly used by processing system. 28 The warehouse in Los Angeles takes 24 to One recommendation offers the oppor- 48 hours to fill a requisition. San Francisco tunity for a savings conservatively estimated takes 7 to 19 days and Sacramento about 40 at $4-million annually. It involves the closing, days. Currently, all three warehouses are out on an orderly basis, of intermediate ware- of stock on 8% to 10% of items ordered. houses now serving as redistribution points. Other significant recommendations in the Appraisal of performance area of warehousing involve the following Centralized warehousing has been adopted specific actions: by the state only to a limited extent. Each Closing the San Francisco warehouse and department has its own warehouses to handle centralizing operations in Sacramento its material. Generally, lighting is sufficient and Los Angeles. and modern materials handling equipment is being used. Installing a data processing system to provide up-to-date information. With the concept of centralized warehous- ing limited to common-use supply items, only Establishing a Warehousing Division re- an estimated 5% of total material ware- porting directly to the Office of Materiel. housed moves through the three General Centralizing control of all state ware- Services facilities. Centralized warehousing housing under General Services. results in substantially less capital tied up in Establishing, in General Services, an of- inventories and fewer warehouse personnel. fice equipment supply pool to get maxi- Furthermore, the system requires less storage mum equipment utilization. space, reduces transportation costs, permits greater standardization of products stored Traffic and provides cost reduction through volume purchases. It also permits concentration of Traffic services consist of providing the most effort and talents toward improving ware- economical modes of transportation in line housing operations. with service requirements, utilization of car- With each department responsible for its riers that provide the best service and knowl- own warehousing, there is little standardiza- edge of packaging requirements and tariffs. tion of operating procedures, equipment and Also, they consist of classifying commodities facilities. General Services, for instance, has shipped or received, handling of loss and different pallet sizes, rack styles and operat- damage claim service and issuing of consoli- ing procedures within its own organization. dation and distribution instructions. Most departments keep perpetual inven- There are six employees headed by a Traf- tory records and reconcile periodically with fic Manager. His staff consists of a senior a physical inventory. However, few have rate clerk, two traffic rate clerks and two been able to make use of the computer for typists. Proposed funds for 1967-68 show controlling inventories. salaries totaling $52,936. The office is located in the Department of General Services in Recommended action Sacramento. Great economies can be realized by chang- ing from a fragmented department ware- Appraisal of performance housing concept to a state-wide centralized Traffic is not adequately providing the state system. The recommendations of the Gover- with economies in transportation or cost con- nor's Survey, therefore, have two objectives. trols. The three rate clerks are devoting most The first is concerned with immediate of their time to auditing freight bills rather changes to improve the existing organization than controlling costs of transportation. Both structure. The second deals with changing to activities are important. However, control- a centralized warehousing system. ling transportation costs would save the state 29 many times the amount saved through freight Appraisal of performance bill audits. Much of the board's hearing time is occupied Recommended action by relatively minor issues that should be re- solved at a much lower level. Appeals involv- Specific recommendations made for improv- ing the qualification appraisal panel are ing the traffic area are designed to minimize prime examples. the expensive and small shipments of goods by individual departments throughout the The periodic wage and salary surveys con- state. The Traffic organization, with freight ducted by the staff do not disclose a com- movement data available, is in a position plete comparison of state compensation to prescribe the most economical methods with that of outside employers. A more real- of shipment. Full implementation of these istic comparison would include fringe bene- suggested improvements should yield annual fits as well as compensation. savings of approximately $2.1-million. Signi- The present personnel system needs addi- ficant recommendations would involve doing tional techniques, policies and practices to the following: motivate the employee. The employee has Restructuring the organization and staff- minimal incentive to demonstrate his compe- ing it with a manager, three cost analysts, tence, motivation or good personal profes- a senior rate clerk, a rate clerk and two sional traits. typists. Recommended action Arranging to have an outside firm audit freight bills under $50. The Governor's Survey estimated annual Shipping materials between departments potential savings of over $2.3-million can be on a prepaid basis to permit freight con- realized by various departments through im- solidations and allow the most economi- plementation of the following recommenda- cal modes of transportation. tions. Providing state departments with pub- A management-by-objective program lished routing instructions. should be established and the performance Assigning responsibility for obtaining review program reorganized. Employees public warehousing for all state depart- should be given definite goals and objectives ments to Traffic. to govern performance and measure accom- plishments. Also, adequate space, curriculum and facilities should be provided for manage- STATE PERSONNEL BOARD ment training. This need has been given high The State Personnel Board (SPB) is responsible priority and thorough documentation in pre- for the administration of personnel functions vious management reports. Such a facility of civil service employees except those in the might be part of a higher educational institu- state colleges and University of California. tion in Sacramento, San Francisco and Los The board controls permanent appointments Angeles or be guided by the Training Division and promotion in accordance with a general of the Personnel Board. As a part of this pro- civil service system based upon merit, effi- gram, a performance review should be re- ciency and fitness, as ascertained by com- organized as an effective management tool. petitive examination. To perform its func- The automated personnel transaction data tions, the Personnel Board and staff is divided communications (APTDAC) program should into nine sections. The 1967-68 manpower be re-evaluated. Objectives of the APTDAC authorization of the board is 501. Its modi- project should be re-defined in terms of im- fied operating budget is approximately $4.6- mediate potential payoff in efficiency, time, million. money and man-hours. The broad planning 30 and guidance of the APTDAC program aged. Between $200,000 and $300,000 per should be coordinated and controlled by the year might be realized from these fees. newly established Office of Management The board should devote its meeting time Services. to important policy issues and delegate rou- Salary increases to professional and office tine but time-consuming matters to its staff. employees should be awarded on a merit A different title should be established for basis. The state should operate under a merit the staff of the board. Changing the official concept of salary adjustments as used by name of the staff function for the five-man most successful private concerns. Here, in- personnel board to State Personnel Depart- creases are based only on merit and not on ment or similar title would eliminate current cost of living or seniority. confusion. There are presently two meanings For greater efficiency, the State Personnel to the title Personnel Board. One refers to Board should eliminate custom-written tests the five-man board itself and the other to the and replace them with SPB-developed, stand- 500-man staff. ardized tests wherever possible. Last year The wage and salary administration of civil 1,629 separate examinations were given. service employment should be overhauled. In Some 67% of these involved custom-written making wage and salary exchanges, the com- tests. A typical examination can require as pensation package should be used for com- many as 81 individual steps between deter- parisons. It should be based on the total cost mination of need for a new list and certifica- of the employee to the employer, whether tion from that list. With this heavy orienta- government or private, and should include tion toward individual examinations, approxi- not only pay, but insurance benefits and the mately 50% of the budgetary and manpower like. Furthermore, the number of job classifi- efforts of the board are presently consumed cations for state service should be reduced. by examination processes. General classes should be established and A single standard form should be de- specific qualifications should be added for veloped for employment development ap- particular positions when this is absolutely praisals (EDA) applicable to broad classes of necessary. This would save an enormous work. Currently, individual EDA forms are amount of paper work. developed for each new class that comes Because of its importance, the Personnel under the program. This creates a continuous Board should issue a policy statement on per- and unnecessary workload in addition to the sonal safety and establish and support a CO- needless proliferation of forms. Forms analyst ordinated safety program. The promotion of duties could be very profitably assigned to safety and its coordination for the state a staff member. should be increased from a single-man opera- Written tests for most higher level pro- tion to at least four persons. This would in- motion examinations should be replaced by crease the payroll expense by some $50,000 employee developmental appraisals. As a per year. The goal should be to decrease ac- minimum goal, written tests for intradepart- cident costs as well as the frequency rate by mental promotions within a class series should 15% a year until the safety program is func- be eliminated and EDA's used. This shift tioning at an acceptable level. The goal, if would improve selection decisions and con- achieved, could result in estimated savings of tribute to better job performance. It would over $1-million in each of the next five years also reduce the workload of the SPB. In addi- by eliminating lost time and other injury costs. tion, a $3 filing fee for examinations should The ADP training program should be ex- be established. Those persons who file for panded and placed under the guidance of examinations for practice or for highly specu- the newly created Office of Management lative reasons would be somewhat discour- Services. The expected large expansion in 31 ADP use will result in an increased need for The Personnel Board should implement a technical training of programmers and con- manpower validation and work measurement cept training for managers. Currently, there program similar to the program installed by are programs under way in both these areas. the Franchise Tax Board. Use of the validated However, they should be submitted to the workload criteria derived from work measure- Office of Management Services for re-evalu- ment studies should establish division, unit ation. If full use of ADP were to be initiated, and individual performance standards. This, it is expected that more than 500 program- plus the elimination of the unnecessary prepa- mer trainees would be hired over the next five ration of statistical data, offers a total po- years. There are about 6,000 managers who tential savings of 15% to 25%. It represents would benefit from exposure to the present a reduction of about $300,000 per year. Course J. A mandatory retirement age of 65 should COMMUNICATIONS DIVISION be set for all state employees. The state allows its employees to work until they be- The Communications Division is responsible come 70. This is inconsistent with general for assisting all state agencies in determining practices in industry, which commonly has a the most appropriate and economical com- retirement age of 65. munications systems and services for efficient A review should be made of the use of the agency operations. Equipment and services include wire communications such as tele- authorized total of 25 minutes per day of work break by all employees. Vending ma- phone, teletype, closed circuit television and chines or coffee carts should be made avail- sound systems. Additionally, it encompasses able in the work areas. The cafeterias should forms of electromagnetic transmission such be open for meals only. as radio, telemetering, television, broadcast- ing and microwave. There should be no per diem allowance for travel of less than 24 hours' duration but em- The division provides 24-hour emergency ployees should be entitled to recover out-of- repair service and routine preventive mainte- nance for the state's radio and microwave pocket expense when overtime is involved. The authorized dinner allowance of $3.50 now equipment. In addition, it provides technical paid to department employees who work advice to the Budget Division of the Depart- overtime is equitable. Reducing the present ment of Finance in reviewing communications per diem to the authorized dinner allowance equipment budget requests and purchase estimates. should easily effect a savings of 20% of the travel budget. This would mean a savings Created by the California State Com- potential of $184,000 in the department. munications Act of 1947, the division's func- State-wide savings are estimated at approxi- tions encompass the proper controlled use of mately $ -million after complete implemen- allocated radio frequencies, representation tation. before the Federal Communications Com- mission and coordination of communications The pay procedure should be revised. State pay practices should be studied and changed systems created by local government juris- to coincide more closely with industry prac- dictions. Further, it provides economical tices. This matter is not entirely a Personnel management of communications systems Board responsibility, since the pay procedure through engineering, installation and mainte- nance services that are as low or lower than problems range all the way from accounting practices to unnecessary employee incon- those paid by other comparable govern- venience. In addition, the criteria for deter- mental or large commercial users. mining workload and budget justification The division's budget for fiscal 1967-68 should be revised. provides for 157 authorized positions and 32 total expenditures of $2-million. This does not munications services. It is estimated that co- include billings of telephone companies which ordination and control over requests for amount to almost $ 15-million annually. equipment and service alone would save $750,000 annually. Appraisal of performance Separate switchboard systems should be Its duties lie principally in the engineering of consolidated wherever it is economically the mobile radio and microwave systems feasible. Some of the 280 systems throughout owned and operated by the public safety the state could be merged with others to ad- agencies and in providing installation and vantage. The division could see that this is ac- maintenance services for this equipment. complished with fairness for assured service User agencies are sometimes critical of the to all agencies. Consolidating small switch- division's performance and point out that boards into fewer automatic dialing systems charges made for services do not compare would increase the economic feasibility of favorably with those available to large com- their becoming a part of the ATSS network. mercial users. Some of these complaints may Thus, substantial savings in long distance toll be motivated by the aspirations of several charges would accrue. agencies for authority to create their own The Survey team made several important communications service organization. For ex- money-saving recommendations of a techni- ample, the Division of Highways has a com- cal nature. They included the use of intrastate munications department and does not use the and interstate WATS at major switchboard full services of the Communications Division. functions, installing toll diverting equipment In the area of telephone services, the divi- at locations which remain off the ATSS net- sion provides technical advice and direction work and merging the University network of of the state-wide network (ATSS), the large nine campus locations into the state ATSS Centrex system and arranging for bulk pur- with seven switching centers. chases of circuits (Telpak). The details and ex- Recommendations relating to the state's tent of telephone service at the level of the mobile radio system, which includes over individual user have been delegated largely 14,000 units, would: to agency personnel with budgetary and ad- ministrative authority. Authorize only the purchase of complete- ly transistorized mobile radio transmitters A clear definition of the state's communi- and receivers to reduce maintenance cations policy and the role of the Communi- costs. cations Division is needed. There is a recog- nition and acceptance, in varying degrees, Achieve greater standardization in mo- of Communications Division's responsibilities bile equipment through design and pur- for appropriate and efficient communica- chase specification techniques. tions. However, there is confusion regarding Confine installations of mobile radios to what control it can or should exercise in vehicles assigned principally to personnel achieving the economic management of state whose duties are operational and for communications systems. whom such equipment is essential. Recommended action OFFICE OF ARCHITECTURE The Survey's recommendations are expected to save the state several million dollars annu- AND CONSTRUCTION ally. A basic suggestion is to redefine the The Office of Architecture and Construction scope of the division to give it authority to (OAC) is a unit of the Department of develop and enforce policies and procedures General Services. The prescribed function of to assure the effective operations of all com- OAC covers three distinct fields of activity. 33 Planning and Design Services provides Planning and Design section to 346 and Ad- other state agencies with planning and design ministrative to 74 employees. capability for capital outlay programs and There is a downward trend in operating projects, principally for buildings and miscel- expenses of OAC principally because of re- laneous engineering services which are of a duction in personnel. Operating expenses of consulting nature. OAC for fiscal year 1965-66, for example, Construction Services inspects construc- were $10.8-million compared to $10.2-million tion and administers construction contracts. submitted with the Governor's adjusted bud- It also supervises the performance of day- get for 1967-68. Direct personnel costs (pay- labor work on restoration projects and cer- roll and benefits) represent approximately tain minor construction programs. 85% of OAC's total expenses. Schoolhouse Services checks drawings of private architects for the construction of Appraisal of performance public school buildings and supervises the Planning and Design Services is greatly over- construction of such buildings. staffed in proportion to present and pro- In addition to these three operating units, jected workloads. The reduction of force by OAC also has an Administrative Services attrition, now underway, is much too slow to section which provides office services to the bring about a balance with a reasonable pro- other sections. It handles matters such as ac- jection of future workload. The situation will counting and details of construction contract be aggravated if capital outlay projects in- administration. volving OAC fail to materialize. With certain exceptions, state agencies The present organization and administra- are required by law to refer design and con- tion of Planning and Design seems to have struction projects to OAC. Exempted from more layers of supervision than is required. this requirement are the University of Cali- Effective manpower control is handicapped fornia, the state colleges, Department of by the difficulty of making accurate forecasts Water Resources and San Francisco Port of future workload. Authority. Projects amounting to less than Inspection of field construction projects, $5,000 may be administered by other agen- as presently handled by OAC, costs substan- cies without referral to OAC. Projects cost- tially more than is required to assure conform- ing between $5,000 and $65,000 may be ance to plans and specifications. Much of handled by the initiating agency with OAC this unnecessary cost is due to excessively concurrence. rigid legal requirements covering state con- The design and construction of public struction projects. Some of it is due to pres- school buildings, including alterations and ent practices in administering construction additions whose cost exceeds $10,000, must contracts. be supervised by OAC under the provisions Current practices in supervising design of the portion of the Education Code com- and construction of school buildings go far monly known as the Field Act. Hence, designs beyond the work required to meet the origi- for all such construction are submitted for nal intent of the Field Act-to assure the review by OAC. structural safety of school buildings. In addi- Planning and Design Services is the largest tion, the procedure for review of drawings group within OAC, having 402 employees as submitted by private architects is not de- of January, 1967. Construction Services had signed to encourage private and licensed 165 employees, Schoolhouse had 83 and Ad- architects and engineers to assume full re- ministrative Services had 91. Recent reduc- sponsibility for complying with all legal re- tions in work force, particularly in the Los quirements in school building design. These Angeles office, have reduced the staff of the factors combine to produce excessive costs. 34 In the administrative area, excessive Reduce the cost now incurred in prepar- amounts of paperwork, lack of efficient sys- ing preliminary drawings by using less tems, proliferation of reports of questionable expensive means of defining a project for value and failure to make optimum use of budgetary purposes and by reducing the automatic data processing, all combine to number of projects for which preparation produce high costs. of such drawings are authorized. About 30% of the productive time in Plan- Recommended action ning and Design is devoted to preparation of Several areas offer opportunities for both preliminary drawings. A considerable portion savings and more efficienti operation. The of this time-from 25% to 50%-is wasted total savings obtainable by the implementa- because many proposed projects are not au- tion of proposed changes would amount to thorized for construction and some are au- an estimated $3.2-million annually. Of this, thorized only after extensive changes to the $200,000 would represent county funds. original drawings. Recommendations of the Governor's Survey Improve manpower planning and control would accomplish the following: by developing better methods for fore- Reduce manpower to the level required casting of workload, both long and to handle the minimum anticipated work- medium-range; by increasing emphasis load. Retain outside architects for re- on manpower control as an integral part quirements in excess of what can be met of the line supervisors' responsibilities; by by the reduced staff. improving techniques used for manpower In common with most architectural and planning and scheduling and by develop- engineering offices, OAC suffers from radi- ing a manual to guide agencies and de- cal changes in workload from time to time, partments in their forward planning of depending upon the availability of funds for capital outlay projects. construction of state buildings and other fa- Effective manpower planning and control cilities and the manner in which use of these is vital to efficient operation of any architec- funds is programmed by the state agencies tural and engineering organization. Even with involved. In a private firm, it is normal prac- a reduced staff, manpower will be wasted tice to hire additional men and to lay them unless future requirements can be antici- off, in accordance with the need for man- pated and personnel assignments scheduled power as dictated by the workload. How- to meet job requirements. This will permit ever, a state agency such as OAC with Civil utilization of the time and talents of each in- Service employees does not have the flexi- dividual. Improvement in existing approaches bility of a private firm in adjusting its man- to the problems of manpower planning and power requirements to meet the variations control is both possible and desirable. in demand. Increase effectiveness of Planning and There will be substantial fluctuations in the Design by revising the organization struc- state's requirements for architectural and ture to eliminate excessive supervision. engineering services. Unless OAC is staffed Pinpoint authority and responsibility, to handle only the minimum anticipated level combine small organizational units doing of work, money will be wasted whenever the related work and provide more flexibility workload drops below the level for which the in handling the different types of design organization is staffed. projects. Total savings from implementation of this A good start in improving OAC's organi- recommendation and the two recommenda- zational effectiveness was made not long ago tions which follow are estimated at $2.45- when management instituted the team con- million annually. cept in handling design projects. Implemen- 35 tation of the recommendations in this area oughly reviewed by the architects and should help appreciably in remedying these engineers responsible for the design and defects and could save $232,000 annually. have been signed by them to certify the Revise the present requirement for full- completeness and accuracy of the fin- time inspection by state inspectors of ished drawings. construction projects, by requiring the Current practice in OAC permits school contractor to call for inspection as building plans to be submitted for review be- it is needed. fore they are signed by the responsible archi- Current procedures result in extremely in- tect or engineer. This practice permits abuses efficient use of construction inspectors. The by allowing an architect to use OAC as a contractor can be relied upon to call for in- "checking service." By insisting that the spection as needed because the state will not architect's office complete its design re- pay for work not accepted. Estimated sav- sponsibilities before submitting the plans for ings are $152,000 annually. checking, OAC can reduce its expense by an estimated $67,000 annually. Amend the Field Act if necessary to limit the scope of responsibility for supervision Conduct an intensive survey to eliminate of design and construction of school duplication of record keeping, eliminate redundant and little-used records and re- buildings to structural safety. This will eliminate the extra expense of double- ports and improve the flow of essential checking all school plans for details relat- data for management information and ing to mechanical and electrical work and control. Concurrently, expedite research provisions for fire and panic. into data processing applications for OAC, to the end that automatic data Because school buildings must be designed processing is utilized for all applications by professionally qualified and licensed archi- where it is economically advantageous. tects and engineers and code requirements OAC has a tremendous amount of paper- governing design are adequate and specific, work, some of which appears of questionable it is debatable whether the expense of value. Many records and reports outlive the double-checking the designs is justifiable. At purpose for which they were created. The present, however, continuation of the check- proposed survey should effect not only a sub- ing of buildings for structural safety appears stantial reduction in this paperwork, but warranted; partly because school buildings should also result in better and more timely are inherently more susceptible to damage data for management control purposes. by seismic forces than are many other types of buildings, and partly because the exposure Conduct a survey of salaries of all tech- of children in large groups justifies special nical positions in OAC for the purpose of precautions against structural failure. keeping them in line with those paid in private industry for comparable work. These reasons do not justify the double- checking now being done for mechanical and PROPERTY electrical installations and the provisions for fire and panic. The checking of construction ACQUISITION DIVISION by state inspectors should be adequate to detect any error or oversight. It is antici- It is the responsibility of the Property Acqui- pated that savings of $100,000 annually sition Division to acquire private lands for could be realized. state purposes, manage these lands prior to their use and maintain evidence of the state's Take steps to assure that, when plans for title to such lands. The division can also dis- school buildings are submitted to OAC pose of lands no longer needed and review for checking, the plans have been thor- real estate transactions of other agencies 36 when the Department of General Services' OFFICE PLANNING approval is required. AND UTILIZATION The Property Acquisition Law subjects all state land acquisitions to control by the Pub- The state has approximately 8.36-million sq. lic Works Board, unless expressly exempt. ft. of office space to house 54,000 of its Obtainment programs currently exempted office employees, excluding the University of are those of the University of California, De- California and state colleges and institutions. partments of Water Resources and Public Of this total, 3.3-million sq. ft. are leased. Works, the Reclamation and Wildlife Con- The remainder involves space in state-owned servation Boards and Division of Highways. buildings. On behalf of the Public Works Board, the The Facilities Planning Division assigns and division selects and acquires real property reassigns space in state-owned and leased for use by the state. buildings, forecasts future space needs and Manpower planning of the division was develops basic state leasing policies to ob- set at 99 positions when the fiscal 1966-67 tain optimum space use. In addition, it main- budget was originally submitted. However, tains an inventory of existing state-controlled present manpower totals 90. The proposed office space, negotiates leases of real prop- budget for 1967-68 is approximately $1.2- erty for state use and approves leases ne- million. The Property Acquisition Division has gotiated by other agencies. permanent offices in Sacramento and Los The division is organized into three sec- Angeles. tions of Advance Planning, Leasing and Space Utilization. It has a total staff of 22 Appraisal of performance and an anticipated budget for 1967-68 of With few exceptions, the division appears to about $359,000. be well organized. Its staff is desirous of at- Appraisal of performance taining a high degree of efficiency. In addi- tion to encouraging continuous study and Although the department has responsibility allowing personnel to attend training semi- to acquire, assign, operate, maintain and nars, the Chief Land Agent has rotated his manage all real office building property for force to provide it with a good background the state government, effective control is not in all phases of operations. A workload meas- exercised. Facilities Planning has been organ- urement and staffing standard system has ized, to a large extent, on a service basis also been implemented. More experience in rather than on a management coordination its use will help in determining manpower re- and control basis. Currently, it controls only quirements on a realistic basis. about 50% of the state's property manage- ment functions. The prime reason for its in- Recommended action efficient space management is the lack of centralized control. Improvements and savings can be achieved through increased liaison with state agencies, Recommended action changes in certain departmental policies, As a result of task force studies, it is esti- increased delegation of authority and cer- mated $9.3-million in annual savings can be tain organizational changes. Recommenda- realized. The recommendations suggest: tions of the Governor's Survey, when imple- mented, will eliminate the requirement for Total management responsibility for plan- nine positions from the previously authorized ning and operational management of of- but unfilled total of 99 and result in an es- fice buildings should be centralized. timated cost avoidance of approximately The Department of General Services $75,000 per year. should serve as the landlord for state office 37 Proposed Organization and Functions of Office Planning and Utilization Unit of OFFICE PLANNING AND UTILIZATION Proposed Building Management Division ADVANCE PLANNING SECTION SPACE UTILIZATION SECTION Forecasts, determines amount and types Maintains inventory of all state of space required. buildings. Prepares master plans covering space Maintains up-to-date floor layouts. requirements. Develops programs for additional space. Controls and assigns all existing office space and relocates tenants as required. Initiates property acquisition for new buildings and establishes basic criteria Authorizes and supervises alterations to for construction. existing space to meet changing needs. Coordinates state plans with federal, county and city agencies. STANDARDS & INSPECTION LEASING SECTION SECTION Develops and maintains space Negotiates state leases for office space. utilization standards. Develops state leasing policy on tax Develops and maintains occupancy escalation, bonding, and bidding. guides. Determines site for leased premises, Develops and maintains furniture and secures options. equipment standards. Supervises leasing program. Develops design criteria for office Maintains data on current rental market. buildings. space. The users of the office space should developed to carry out the responsibili- act as the tenants. Daily management of ties and to exercise the authority for the buildings, including maintenance and office management, coordination, planning and services, should be the responsibility of a allocation of office space. proposed Building Management Division A suggested organization-function chart within the Department of General Services. for this unit is shown above. It indicates the An office planning and utilization group in responsibilities proposed for each sub-divi- this proposed division should control and sion of the unit. The present Facilities Plan- assign space. It should be responsible for ning Division forms a logical nucleus on which arranging the moving of tenants within a to build the new group. However, Facilities building or from one building to another to Planning does not currently have all the per- meet the combined needs of all state units. sonnel required to carry out the activities Implementation of this recommendation outlined in this report. will lead to better space utilization for an Much of the work involved in planning and average annual savings of approximately constructing new office facilities is done on $7.5-million per year for 10 years. In addition, a piecemeal basis. Each agency acts inde- after three or four years, savings of $400,000 pendently of other agencies in initiating ac- could probably be realized through lower lease rental rates. quisition of new office space. To centralize responsibility and authority for these activi- An organization within the proposed ties requires an organization which is ade- Building Management Division should be quately staffed in numbers and in skills. 38 There should be a reduction in total work type office buildings to reduce the state's force since much of the work and many use of leased space to I-million sq. ft. This of the personnel can be transferred from could lead to estimated savings of $1.5- other agencies. This will result in savings of million per year in lease costs plus a reduction $600,000 per year in salaries and expenses. in leasing personnel of $126,000 per year. Management information should be de- For every additional 1-million sq. ft. that veloped for the Office Planning and is better utilized, an increase of 1% in the Utilization unit to carry out effective efficiency of its occupants will result. This will planning and control activities. realize savings of about $700,000 per year. Layout plans showing existing require- Construction of new office buildings ments of offices and unoccupied space would should be initiated when the need has make it possible to analyze the type of addi- been established, and the entire project tional space required. Substantial savings in coordinated by the Office Planning and alterations can be made by matching the Utilization unit. space to the function. When construction of new office buildings All existing assignments of office space is required, the basic project data on loca- should be reviewed using the approved tion, size and special features should be occupancy standards as criteria. prepared. This suggestion is based on the fundamental concept that one state agency This should result in reassigning space and must be given the responsibility and authority relocating agencies to make the most effi- to act as the "owner" of all state buildings. cient use of the areas available, with due regard to the operating needs of the agen- Periodic inspections of office space cies involved. At present, agencies are allo- should be made to assure conformance cated space equivalent to the amount they to approved space standards. now occupy plus the added amount required The purpose of these inspections would be to take care of five years anticipated growth. to obtain comments and suggestions for im- Until this growth materializes, the state is proving space utilization. They should also wasting space and money. Offices should be provide reference information in developing reassigned to meet only present needs in and revising space standards, furniture re- conformity with approved standards. quirements, occupancy guides and office A system for planning to meet future design features. Only partial inspection of office space needs of all state agencies space-approximately I out of 7 offices-is should be developed. currently being carried out because of lack of manpower. Without a master plan which is continually adjusted to reflect changing conditions, it BUILDING AND is impossible to know how expenditures can ensure suitable office space will be avail- GROUNDS DIVISION able for the most efficient and economical This division provides custodial services, op- operations of state government. A master erating and maintenance of heating and plan would be extremely useful to the Finance cooling equipment, general repairs, elevator Department, the Governor and the Legisla- operation and telephone services to 54 office ture in determining why, when and where buildings under its jurisdiction. This does not state buildings should be constructed. Such include structures of the University or the a plan should be projected on both five and State College system. Most are in Sacra- 10-year forecasts, then kept current on a mento, Los Angeles, San Francisco, Oakland, yearly basis. Consideration should be given San Diego, Fresno, San Bernardino and to building modern, modulized and open- Stockton. 39 The amount of service furnished varies. Two factors that should be used in the eval- Total services are provided to General Fund uation of efficiency are square footage buildings. It is supplied to "special fund" covered per custodian and the minimum buildings requesting total service and to necessary standards of cleanliness for state "public building construction fund" struc- buildings. Here, the division seems to fall tures where operation and maintenance are below par in relation to other governmental under the jurisdiction of General Services. and private office buildings. Of the total budget proposed for 1967- The level of cleanliness is low. This is mainly 68, $9.2-million represents manpower, of due to lack of programming and worker moti- which approximately one-half is for janitors vation. The square footage covered should and janitor foremen. be at least 14,000 per man. The division staffs on the basis of only 11,000 sq. ft. per cus- Appraisal of performance todian. Custodial service personnel show a lack of Productivity of the division's janitors interest in their work. There is a serious lack should be increased through improved moti- of planning and scheduling by supervisory vation and supervision. The division should and management personnel. Absence of ade- develop formal on-the-job training programs, quate direction is the main problem with the provide better opportunities for advance- state's janitorial program. ment, establish a merit award system to ac- The division currently delegates authority knowledge achievement and furnish uniforms to the building managers without sufficient to encourage higher caliber janitors to apply. training review, follow-up and coordination. Responsibilities for servicing all state- This results in a loss of flexibility, absence of owned buildings, regardless of how funded, standardization and lack of enforcement of should be consolidated. Overall efficiency divisional policies. would best be served by placing all building For similar service, the state's hourly billing maintenance and janitorial functions in the rates are 7% to 10% higher than those of proposed Building and Management Division commercial operators in hourly labor costs. of the Department of General Services. Sub- If a factor for the state's apparent lower effi- stantial savings can be achieved by using the ciency is introduced, the relative differential advantages available to a central, specialized in billing rates rises to over 20%. service department. Recommended action The specialist system should be used for cleaning large state-owned buildings. Such The custodial program should be reorganized staffing is made up of specialists. For exam- and a centralized building cleaning approach ple, trashmen empty and wipe ashtrays and should be developed. The reorganization waste receptacles, floormen sweep and dust should establish cleaning requirements for all tile or hard surfaced floors and vacuum men state-owned buildings, establish cleaning clean carpeted areas. frequencies and evolve standard methods and job procedures. It should also develop The merits of subcontracting custodial services now performed by custodians scheduling and assign work by individual job. assignments, establish programs to train em- should be studied. Current court interpreta- tions of the State Constitution make it ques- ployees and develop methods of control, re- tionable whether an agency can subcontract porting and performance evaluation. Imple- mentation of the recommendations can lead to private industry any work which can be to estimated annual savings of $1.2-million. accomplished by a civil service job classifica- tion. A study should be initiated to deter- The division should develop efficient stand- mine the merits of this policy with respect to ards for custodial functions and methods. building maintenance. 40 The Assistant Chief should be assigned contract with the Los Angeles District, Divi- responsibility for determining what items sion of Highways, to provide a one-officer should be stocked. The stores operations in patrol of unoccupied state-owned structures Sacramento, San Francisco and Los Angeles on proposed highway routes. However, CSP do not satisfactorily provide for material coverage is not effective. The Division of needs of building managers and craftsmen. Highways should install alarm devices or con- There is a lack of uniformity and standards tract with private patrol agencies, which on what supplies should be kept in stores. charge rates considerably under those im- posed by the CSP. This would save $60,000 CALIFORNIA STATE POLICE annually. The California State Police (CSP) is primarily Local police should be relied on to provide concerned with the protection of state build- motor patrol protection to state buildings ings and grounds. This 144-man organization during the late night and early morning hours. has a budget of $1.1-million. The CSP presently guards state office buildings day and night. Alarm installations, Appraisal of performance wired to local police departments, can effec- Protection services are not supplied eco- tively work in place of the assigned police. nomically or efficiently. Service is provided If local authorities extend night patrols to where it is not needed in some cases. In protect state installations, savings of approxi- others, the level of service is inadequate. mately $82,000 are attainable after allow- Also, this agency is performing some func- ance of $10,000 for alarm installations. tions not intended for the State Police. The division should discontinue the 24-hour Recommended action guard service at the Governor's unoccupied As a result of observations made by the mansion. This should provide estimated sav- Governor's Survey, it is estimated that ings of $18,000 annually. $182,000 in annual savings can be realized. Also, one-time savings of approximately OFFICE OF LOCAL ASSISTANCE $82,000 are available. The Office of Local Assistance serves as staff Criteria and standards should be estab- to the Local Allocation Board. This board is lished for determining the level of protective made up of two senators, two assemblymen services. Presently, no such standards exist. and the Directors of Education, Finance and Individual state agencies budget for protec- General Services. tive services at the level desired. This has The function of the Local Allocation Board resulted in excessive protection in some is to disburse funds, in the nature of loans instances. to local school districts in accordance with The division should provide personnel provisions of the State School Building Aid training consistent with positions to be filled. Laws, and to disburse funds under other as- There has been a tendency to overtrain. Train- sistance programs. Bond issues for these pur- ing for security guard positions should be poses, totaling $1.836-billion, have been limited to firearms and basic security courses. passed by the electorate since 1949. Reducing the period of training from five to The Office has three units and activities two weeks would save an estimated $12,000 annually. are divided between Sacramento and Los Angeles. The Los Angeles office processes The division should discontinue patroling state school building aid applications from undemolished buildings on rights-of-way for the southern California area. All other activi- the Division of Highways. The CSP has a ties of the department are conducted out of 41 the Sacramento office. The 1967-68 budget, This will enable a school district to obtain which is funded out of the sale of school consistent consultation on construction and building aid bonds, is approximately $1.1- management of school projects. million for staffing 93 positions. Establish district-wide application pro- cedures and maintain district-wide files Appraisal of performance on school facilities in each district. There are numerous areas for improved efficiency and cost control. Undetermined Districts applying for state school building savings could be achieved by formulating aid should make only one annual application, detailed building specifications, general con- accompanied by a five-year plan which is ditions, standard appraisal formats, standard updated annually. The greatest savings would arise because local school districts would be form construction and site development con- tracts, title reports, agreements between forced to make five-year plans and detailed school districts and architects. district-wide proposals. Further, it will help eliminate overlapping use of population or Recommended action attendance projections and allow more criti- cal evaluation of plans. Suggestions of the Governor's Survey would do the following: Require architects and engineers working on state-aided projects to maintain time Upgrade employee qualifications of the cards on all office and field work. Field Services section. The architect's fee, agreed upon before- OLA should require a bachelor's degree in hand, and expressed as a percentage of the a field of engineering directly related to con- total job cost, should be the upper limit for struction plus a minimum of three years of his services. This should shorten total archi- directly related experience after completion tectural and engineering time and reduce of education. Equivalent experience should fees by approximately 50%. not be accepted in place of a degree. Prepare a revised square foot cost sched- Require the state to be a signatory to all ule on no more than five categories of contracts for construction of schools or construction for use in estimating. for any work in excess of $5,000. At present, there are 17 separate con- It should be unlawful to pay public money struction categories. A school district archi- for any work performed without an executed tect should be required to specify the contract. This is consistent with the Constitu- systems required for lighting, heating, air tion which places the burden of responsibility conditioning, ceiling and floor. The systems for construction of schools on the state gov- should be specified according to broad cost- ernment and will require legislative action. wise specifications recommended by OLA. Consolidate the functions of the repre- By instituting greater uniformity among sentatives of the Bureau of School Plan- documents, better cost-experience records ning and the Office of Local Assistance. can be accumulated. 42 GOVERNOR'S SECTION 3 SURVEY ON EFFICIENCY REGULATORY AND PROTECTIVE AND COST CONTROL FEBRUARY 1968 REGULATORY AND PROTECTIVE To effectively evaluate operations of the California Highway Patrol and Motor Ve- regulatory and protective services in the hicles. Other reports cover the Business and state, the Governor's Survey made detailed Transportation Agency, Disaster Office, Pro- evaluations of 16 departments, agencies and fessional and Vocational Standards, District boards. This section contains review data and Securities Commission, Military Office, suggestions for improving operations of in- Alcoholic Beverage Control Board, Horse dividual departments concerned primarily Racing Board, Alcoholic Beverage Control with business, transportation, motor vehicles, Appeals Board, Division of Aeronautics, The public works, insurance and investment. All San Francisco Port Authority, Office of the of these departments protect the interest of Fire Marshal and the Departments of Insur- the state's citizens. ance and Investment. Their diverse operations were examined in The agencies discussed individually on the detail. Reporting varies from activity to ac- following pages are currently accountable tivity depending upon the number of signi- for total budget expenditures in excess of ficant recommendations and complexity of $1.1-billion annually. The number of perma- operations. As a result, major emphasis is nent personnel assigned to the regulatory directed at the Departments of Public Works, and protective units exceeds 36,000. SECRETARY OF BUSINESS AND TRANSPORTATION In early 1967, the scope of this agency was and the circumstances under which the staff expanded and renamed-The Office of the was assembled. Secretary of Business and Transportation. Formerly, only the Departments of Public Recommended action Works, Motor Vehicles and the California To implement further improvements, a clear Highway Patrol were included in this func- definition of the authority, responsibility and tion. Now, departments dealing with various accountability of the Office of the Secretary aspects of business have been added. of Business and Transportation is needed. On The Transportation Agency organization the basis of this information, the Secretary includes the Administrator, his assistant and can then proceed to establish an adequate two clerical positions operating on a 1967-68 organization to effectively deal with all as- budget of about $80,000. To adequately ful- signed responsibilities. A total of 16 separate fill his responsibilities, the Secretary has departments report to the Secretary. Trans- borrowed personnel from departments within ferring of some non-related functions and his group to act as staff. The Administrator combining others would help reduce this span also acts as a member of the Bay Toll Cros- of control. sing Authority and member of the Bay Area On an agency-wide basis, improvement Transportation Study Commission. He is also should also be made in the accident reporting on several inter-governmental committees. system currently used in California. It in- volves three departments, the cities, counties Appraisal of performance and the federal government. The three state This agency has required departments to departments are the Highway Patrol, Motor establish realistically tight budgets to insure Vehicles and Public Works. This reporting improved efficiency. Other responsibilities system is complex and only partially satisfac- have been dealt with quite effectively con- tory particularly where property damage is sidering the very diverse and heavy workload involved. Streamlining the procedure could 43 save an estimated $400,000 annually when and especially the Division of Highways. If all implementation is complete. recommendations were implemented, poten- tial savings would be $26.1-million annually. DEPARTMENT OF PUBLIC WORKS There would also be a one-time saving in The Department of Public Works is one of capital expenditures of $1.6-million. Addi- several departments which report to the tionally, suggestions were made which would Secretary of Business and Transportation. It increase revenues by $2-million. is responsible for design, construction and The following suggestions refer specifically maintenance of California's highways and to functions and operations of the Director's bridges. The department's authorized 1966- office. The present organization chart is 67 programs amounted to about $ I-billion. shown at the top of the next page. Of this amount, about $156-million was for A key recommendation would revise the subventions, $70-million for personnel for organization of the department, transferring highway maintenance and $183-million for non-operating functions from the divisions to administration and engineering. The re- the office of the Director. For a more cohe- mainder was spent for capital outlay such as sive department, the Director should have acquisition of rights-of-way and construction direct control of all functions involving ex- programs. ternal relations, departmental organization, Departmental administration provides personnel policies and fiscal control. To ac- overall direction of the activities of the High- complish this, certain units which are now ways, Bay Toll Crossings and Legal Divisions. assigned to operating divisions should be re- In addition, it acts as the staff function for assigned to the office of the Director. The the California Toll Bridge Authority and the proposed organization chart for the depart- California Highway Commission. Its annual ment is shown at bottom of next page. budget of $1.3-million is charged to the State A second department-wide recommenda- Highway Fund, except for an annual contri- tion would establish a staff function to study bution of $10,000 from the Bay Toll Crossings the interrelationship between the various Revenue Fund. It is authorized 92 positions. forms of transportation. It is becoming ap- Appraisal of performance parent there is an important relationship among various forms of transportation. This The Director and his immediate staff, until is evidenced, for example, by the establish- recently have been almost exclusively con- ment of the U.S. Department of Transporta- cerned with external relations and end results tion. Public Works is currently participating in of division activities. Not enough attention II regional planning studies. Therefore, the has been given to day-to-day operations. deputy charged with interrelation of trans- There is also a need to lower operating costs portation activities should keep the Director and develop sound engineering economics informed about these matters. Any perma- in the divisions. nent agency within the state charged with Good management principles dictate that responsibility for continuing study of trans- the Director should have the staff and neces- portation should be placed in this depart- sary information to fulfill his responsibility as ment. Present and proposed studies should chief executive officer of the department. be critically examined to assure that utiliza- The head of each division should be the chief tion of the data derived is sufficient to justify operating officer. study costs. A third department-wide recommenda- Recommended action tion would maintain tight control on addi- The Governor's Survey made extensive tional hiring by use of ceilings on either total recommendations regarding the department number of jobs or total money available. 44 Present Organization Chart DIRECTOR Director's Office, Department of Public Works CHIEF DEPUTY DIRECTOR DEPUTY DEPUTY DIRECTOR DIRECTOR ASSISTANT ASSISTANT PERSONNEL DIRECTOR DIRECTOR OFFICER PUBLIC SUPERVISOR OPERATIONS MANAGEMENT INFORMATION CLERICAL SECURITY ANALYST OFFICER SERVICES OFFICER INTERNAL AUDIT SECTION Proposed Organization Chart DIRECTOR Department of Public Works CHIEF DEPUTY DIRECTOR DIVISION OF LEGAL DEPUTY DEPUTY DIVISION OF BAY TOLL DIVISION DIRECTOR DIRECTOR HIGHWAYS CROSSINGS TRANSPORTATION INTERRELATION SYSTEMS ASSISTANT FISCAL ASSISTANT PERSONNEL RESEARCH DIRECTOR OFFICER DIRECTOR AND MANAGEMENT ANALYSIS PUBLIC CLERICAL INFORMATION OPERATIONS SERVICES INTERNAL AUDIT 45 Division of Highways within the division. The proposed merger of The Division of Highways, with more than Bridge and Highway field forces should bring 16,500 employees, is the largest of the three about a reduction in pick-up requirements. units reporting to the Director of Public It is suggested the division's 5,344 units be reduced by 800 vehicles. At $2,000 each, Works. The division is responsible for plan- this would save $1.6-million on a replacement ning, design, preparation of plans and speci- basis. fications issued to prospective bidders, analysis and award of contracts, mainte- Another key recommendation would ex- nance of highways and related matters. tend Highway Maintenance Superintend- ent's and foremen's territories and institute Recommended action a work measurement program. Where studies A major recommendation would revise or- have been made in private industry, they ganization structure and responsibility of have resulted in 25% to 30% savings in per- functions reporting to the Deputy State sonnel. If a minimum 10% saving could be Highway Engineer-Administration: Such a made by the division, the amount would be change would provide the needed levels of approximately $5.8-million per annum. supervision and management controls. A suggestion to charge for all transporta- A recommendation that offers a great tion and encroachment permits would allow cost saving would eliminate mandatory re- this service to be self-supporting. Transpor- quirements for labor, material and perform- tation permits allow equipment to be moved ance bonds and give the State Highway on the highways and require policing by the Engineer authority to determine, on an in- California Highway Patrol. Cost of these per- dividual project basis, the circumstances that mits should be borne by the users, not the warrant additional cost of bonds for specific public at large. Furthermore, bond require- contractors or projects. Contracts for pro- ments should be examined with the view of jects of less than $50,000 averaged only eliminating a source of considerable paper 1.4% of total dollars during the last four work. Encroachment permits also benefit the years. The risk of loss from default is, there- user rather than the public. During fiscal fore, quite low while the bond rate for such 1966-67, the division issued 94,997 transpor- small contracts is nearly double that for tation and 12,033 encroachment permits. larger contracts. Elimination of the require- Making this service self-supporting would re- ment for these bonds would yield a net an- sult in savings of $1-million per year. nual saving of approximately $1.35-million. The proposed plan to merge landscape Another recommendation offering multi- projects with highway maintenance work of- million dollar savings would develop an effec- fers a great potential savings. Landscape tive manpower control system through estab- forces are used as separate units, ex- lishment of engineered work standards. Work cept when their services are utilized with measurement studies could effect savings in maintenance personnel in repairing excessive clerical work forces, janitorial and mainte- storm damage. The Personnel Board should nance forces, survey crews, material labora- change the classification of landscape fore- tory and reproduction operations, totalling men and workers to permit integration of up to $2.2-million per year. these forces. Better utilization of the groups One suggestion made by the Governor's should be made, particularly during rainy Survey would reduce the number of Division months of the year, when landscape work of Highways' sedans and pick-ups and allow requires minimum attention. Streamlining employees who make occasional trips to use and programming highway maintenance work their private autos. There is an over-abun- should realize estimated savings in excess of dance of state-owned sedans and pick-ups $5-million per year. 46 In addition to the preceding recommenda- kept in service after they should have been tions, each of which can offer substantial sav- replaced, is approximately $200,000. ings, the Governor's Survey offered other Other key recommendations for the divi- suggestions involving the Division of High- sion would: ways. Each contributed to the overall pos- sible savings of $26.1-million in the Depart- Install a new shop record system for con- ment of Public Works. These added recom- trol of maintenance and repair. mendations deal with: Reduce the number of passenger cars in Consolidating clerical forces into steno- use by increased use of pooling. Pooling could be increased to an average of 50% graphic and typing pools. and the total number of passenger cars Establishing cost reduction programs. reduced by 15%. Based on 375 vehicles, Establishing better management infor- each driven 15,000 miles, annual savings mation systems. of $90,000 can be attained. Improving the utilization of ADP. Reduce the stock of equipment. Simplifying internal policy procedures. Change the color specifications for pas- Reducing the non-productive time of de- senger cars. The color now used on partment employees. Division of Highways passenger cars be- comes almost invisible under poor light- Consolidating field forces. ing conditions and presents a driving Streamlining paperwork procedures. hazard. It is suggested the specifications for new cars be changed to any light The Equipment Maintenance Department color. Experience with commercial fleets cares for all highway maintenance equipment has proved successful. and rents it to the Maintenance and Con- struction Departments at rates sufficient to support the entire cost of its operation. Its Legal Division present working force totals 664 employees The division provides legal services for the in administration, production and engineer- Highways and Bay Toll Crossings Divisions. ing functions. It maintains approximately 11,500 pieces of equipment. Recommenda- Recommended action tions for improving operations and proce- dures within the department could effect One suggestion for the division would elimi- annual savings estimated at $393,000, if im- nate promotional examinations. Through the plemented. years, promotional examinations have been abolished in all grades up to attorney IV. One recommendation would replace pas- However, an oral and written test is re- senger cars and pick-ups when major repairs quired for promotion to attorney IV and are required, regardless of accumulated mile- assistant chief. An employee development age. With this program, usually only inspec- appraisal process is now used for promotion tion, preventive maintenance and minor from junior counsel through grade III. A panel repairs are necessary during the vehicle's life. -composed of the Chief, the Sacramento Such a program has been in use in a major Deputy Chief and the Legal Division Per- public utility fleet of approximately 5,000 sonnel Officer-judges an applicant for pro- passenger cars and half-ton trucks for 17 motion on the basis of written appraisals from years. The annual total cost per mile for this two of his immediate superiors and his an- fleet has not changed during the 17 year nual performance reports. Use of this system period. Estimated annual savings in repairs for grade IV and assistant chief promotions now made on vehicles which are approaching would permit the division to exercise greater replacement, and on low-mileage vehicles flexibility at a lower cost. 47 A second key recommendation would re- Recommended action duce appraisal costs on acquisitions. Proper- One key recommendation for this division ty sought for highway acquisition purposes is would establish and apply work measurement appraised by a right-of-way staff appraiser. standards for all grades of employees. Pro- Under procedure established by the depart- duction records are not being kept, even on ment, staff appraisers operate in teams and letter-writing and typing functions. Some each appraisal is reviewed. Where the ap- averages and minimums have been specified praisal on interstate projects is in excess of but are not enforced. A work measurement $100,000, the U.S. Bureau of Public Roads program should be adopted without delay requires a second appraisal. in the Administration unit, which has 18 It is present policy of the department to support positions. The experience of private make two staff appraisals on state projects industry indicates that labor cost savings of exceeding $100,000. However, there is no at least 10% are to be expected from an statutory or other requirement to do SO. The effective program. A 10% saving in this area right-of-way chief justifies use of two ap- would amount to $140,000 per year. praisers on two grounds. First, it is often im- Another recommendation would consider possible to determine whether there will be the discontinuance of commuter books on federal participation. Second, it would be in- all bridges except the Richmond-San Rafael. equitable to property owners to use two with The number of commuter tickets issued is some and one with others. relatively small in comparison to total non- Only one staff appraisal could be made on commuter use of bridge facilities. The work property acquired when state highway use involved in handling these books is quite is identifiable at time of acquisition. During costly. Further, when cash fare for autos and fiscal 1965-66, the state acquired 200 par- commuter ticket rates are closer in price, use cels appraised at over $100,000 each. A total of commuter books might be discontinued on of 82, or 41%, were used for highway pur- that bridge. poses. A single appraisal would have saved Abolition of commuter tickets would avoid approximately $82,000. delays, particularly around the first of each Another recommendation involving ap- month when they are bought in quantity. praisers would maximize the use of staff ap- Also, it would eliminate the necessity for praisers as expert witnesses in condemnation increasing tolls. Implementation should re- litigations. The present policy of the division sult in reduction of three employees for a is to have two outside appraisers testify at saving of $24,000 per year and printing costs the trial, or at least be prepared to do SO. of approximately $50,000. In addition, reve- The standard fee paid by the state for an nues would be increased by over $1-million outside appraiser is $100 per day. Last year, annually. outside appraisers were paid fees amounting The Governor's Survey also recommends to $896,610. Use of staff appraisers in place that tolls at the various bridges, with ex- of outside appraisers last year would have ception of Richmond-San Rafael should be saved approximately $188,000. doubled and the charge should be collected Division of Bay Toll Crossings only one way. This would allow free passage in one direction. The arrangement would Policy and fiscal decisions concerning state have to be compatible on other bridges to toll bridges are made by the Toll Bridge Au- guard against making toll-free circuit tours. thority. The Division of Bay Toll Crossings This would reduce the probability of acci- has been assigned the responsibility of carry- dents in one direction at each bridge, speed ing out directions of the authority concern- up traffic and save an estimated $1.13-million ing toll crossings. per annum in employees wages. 48 Several additional recommendations in- Personnel, timekeeping and payroll pro- volve reducing the number of state-owned cedures are cumbersome and expensive. automobiles used by the division, contract- However, improvements in these areas must ing for janitorial services, streamlining the usually originate with other state agencies. accounting procedures, eliminating unneces- In particular, two practices result in large sary paperwork and realigning certain posi- economies. First, although considerable over- tions for greater effectiveness. time work is necessary, at most only straight time rates are paid, never premium rates. In DEPARTMENT OF MOTOR VEHICLES fact, many employees are not paid at all for The Department of Motor Vehicles (DMV) overtime but are given compensatory time performs several functions, but its two major off. Neither is there any premium pay for responsibilities are the issuance and control second or third shift work. of drivers licenses and the registration of ve- Second, DMV makes efficient use of per- hicles, including collection of statutory fees. manent intermittent employees. These are Some DMV employees are concerned with people who have passed required civil serv- administration and enforcement of the Finan- ice examinations but who prefer part-time cial Responsibility Laws, the Driver Improve- work. Thus, they are paid only for hours ac- ment Program, Smog Device Laws and the tually devoted to DMV duties. Implied Consent Law. In addition, other tasks have recently been assigned to DMV by Recommended action legislative action. The Governor's Survey made recommenda- A measure of the DMV workload is illus- tions that offer the opportunity of saving trated by the increase in the number of motor $4.3-million in one-time cost reductions, plus vehicles registered (including trailers) and a continuing annual savings of $8.9-million. outstanding drivers licenses in recent years. There will, however, be a one-time cost of ap- Registration of motor vehicles rose from proximately $500,000. about 8.7-million in 1960 to 11.7-million in Pertinent to the entire department, the 1966 while the number of drivers licenses feasibility of eliminating the layer of man- jumped from 7.95-million in 1960 to 10.4- agement just below Division Chief should be million in 1966. studied. At present, each Chief has not more The department's operating budget for than four assistant chiefs or other subordi- fiscal year 1967-68 is approximately $41- nates. Each assistant chief supervises no more million. It will have an authorized staff of than two or three section heads. If the eight approximately 6,800 employees. assistant chiefs were eliminated, no Division Chief would have more than five subordi- DMV is in the process of automating the nates. This could result in an annual savings of vehicle registration and driver license files by approximately $147,000. use of an electronic data processing system known as Automated Management Informa- Data compiled by the department in tion System (AMIS). Additional expense and March, 1967 predict a substantial savings will subsequent savings resulting from this con- be realized after conversion to AMIS is com- version are shown on the chart on next page. pleted. These indicate cumulative expendi- tures will reach a maximum of $ 16.5-million Appraisal of performance in 1969-70. After that, AMIS will produce a In general, there is a tendency to accumulate cumulative savings of $23.8-million by 1975- vast archives to meet any and all contingen- 76. Savings are anticipated subsequent to cies which might develop. In this effort to 1976 of at least $7-million annually. resolve a relatively small percentage of prob- Advancing the annual registration period lem cases, excessive costs are incurred. by one month could result in the collection of 49 7.0 DOLLAR DIFFERENCES SUPPORT: PRESENT vs PROPOSED SYSTEM 6.0 5.0 Department of Motor Vehicles Budget Changes With Further Automation 4.0 AUTOMATED MANAGEMENT INFORMATION SYSTEM 3.0 ADDED COSTS 2.0 FROM CONVERSION DOLLARS IN MILLIONS 1.0 0 PROJECTED PRESENT SYSTEM COSTS 1.0 2.0 RECOVERED 3.0 CONVERSION COSTS AND SAVINGS 4.0 5.0 6.0 FISCAL YEAR 7.0 1964 '65 '66 '67 '68 '69 '70 71 '72 '73 '74 '75 76 an additional 25% ($90-million) in December 1980 and probably will never be needed. instead of after the first of the year. Addi- Until at least 1980, DMV's space require- tional interest of $185,000 would be earned ments can be met by utilization of the area by this change. being vacated by Social Welfare plus the large area now covered by files. In turn, DMV Improvements underway can withdraw its request for CHP "A", leav- DMV now occupies two buildings in Sacra- ing that structure in CHP's possession. Result- mento while the California Highway Patrol ing savings will be $4.3-million plus annual now occupies a third unit in this complex maintenance, utility and interest avoidance (CHP "A"). It moved into a fourth structure of $400,000. Costs for refurbishing CHP "A" (CHP "B") in August, 1967. Because of pres- will be $500,000. ent plans for DMV to take possession of CHP This recommendation was originally made "A", the new three-story CHP "B" unit will in June, 1967 and was immediately accepted not be adequate for CHP's needs. Thus, a and acted upon by the Governor and officials 10-story facility has been designed for erec- of the departments involved. tion adjacent to the "B" building. Administration Division It has been proved to the DMV Director and the CHP Commissioner that the pro- The Division of Administration provides a posed 10-story building is not needed before wide variety of staff functions within DMV. 50 Recommended action cable transactions per year, revenue would By establishing an effective manpower con- be increased by $3.1-million. trol system through development of a work Discontinue the keypunch unit of data measurement program, the department processing in July, 1968. could realize estimated potential savings of Work now being performed by 182 key- over $4-million. This same approach would punch operators will, in July, 1968, be per- reduce the number of janitorial employees formed by 96 key entry operators on 48 from 95 to 66 by conforming with normal video-interrogators. During annual registra- building maintenance criteria used by com- tion renewal, keypunch operation costs in- mercial service companies. This would save crease approximately 80%. The total annual approximately $125,000 per year. cost of keypunch is about 1.9-million. The A concerted effort should be made to re- equivalent cost with video-interrogators, in- duce excessive sickness absenteeism. Reduc- cluding temporary increase during annual tion of sick leave by one day per employee, registration renewal, will be about $1.2-mil- per year, would have resulted in an annual lion. Annual savings of more than $600,000 saving of $143,000. are indicated by this change. Discard engine number file and alpha file Division of Registration when AMIS becomes operational. The primary responsibilities of this division Implementation of this suggestion will are issuance, cancellation and revocation of result in annual savings of approximately vehicle registrations and issuance of certifi- $448,000. In addition, modify processing cates of ownership; collection of the use tax procedures of duplicate registration items. on vehicles; administration of the Health and This could result in an annual dollar saving of Safety Code relating to installation of smog about $79,500. devices on motor vehicles and maintenance of vehicle records. Division of Drivers Licenses Recommended action Primary duties and responsibilities of this division are administration and enforcement Key suggestions would do the following: of the Vehicle Code and other related laws, Augment misuse penalty on dealer trans- establishment of standards for road-testing actions from $3 to $5. of drivers and written driver tests used by This $3 fee, established in 1953, is not ade- the Field Offices Division. Additionally, it quate to cover cost of uncovering misuse enforces the Financial Responsibility Law, transactions, field investigations and collec- administers the Driver Improvement Pro- tions. If the penalty were increased to $5, gram, maintains the manual and electronic and if violations continue at the present rate, storage files for state-licensed drivers and there would be an increased annual revenue collects statutory fees. of $713,200. Recommended action Increase transfer fees and fees for dupli- cate registration and ownership certifi- Several recommendations were provided by cates and duplicate plates. the Governor's Survey. Key suggestions would include: A study by Management Analysis indi- cated actual cost for transfers are $2.83, Institute a procedure and methods study duplicate certificates $2.40 and duplicate to improve efficiency and reduce waste plates $2.84. This suggests present fees in this division. should be increased from $2 to $3 to cover This should be done by personnel from costs. With approximately 3.1-million appli- Management Analysis. Each 1% reduction 51 in payroll costs would result in a savings of sections should be borne by the violators and about $100,000. The Survey team believes not by the general motoring public. A spe- potential savings could total as much as 5% cific fee should be based on further study of to 10% over a given period. costs. However, a $10 fee would produce in- Implement a more effective mail brief come of approximately $1.3-million annually. service involving suspension and revoca- Phase out 45 driver improvement analyst tion actions. positions by increasing scheduled hear- Each successful brief service handled by ings from 27 to 36 per week. field examiners costs about $12.50. A force- It has been determined that field DIAs ful mail program may reduce the number of have sufficient time for 36 hearings per week cases presently being handled by field in- instead of 27. This would significantly reduce vestigators. Annual savings in the area of the number of field DIAs required with an $150,000 could be anticipated. annual savings of $445,000. Increase present drivers' license fee from Eliminate non-moving violation abstracts $3 to $5 for normal application proces- from drivers' license files except where sing while another $5 driver examination they have a direct bearing on future fee should be imposed on original or late license issuance. renewal applications. Approximately 25% of the 450,000 filed Study project 403, performed by the Ad- abstracts of violations are non-moving in- ministration Division, indicates the cost of fractions. If these violations are eliminated issuing drivers licenses without a driver's test from the files and other violations recorded approximates $4.69 each. It costs $7.75 when in the Data Center, savings would approxi- a driver's test is required. A $2 increase in mate $102,300 annually. Implementation will basic fee would result in added revenue of require legislative action. $4.6-million per year. An additional $5 driver Revise the procedure for processing fi- examination fee would add income of $4.4- nancial responsibility accident reports million. This added $5 fee should not apply SR-1 and SR-60. to elderly people or those taking examina- tions at DMV's specific request. A total in- To do SO along the lines suggested by the crease in revenue of close to $9-million could Governor's Survey would produce a savings be anticipated. in salary and benefits of $174,240. Adding cost of space at $12,300 and printing of Require companies to supply drivers li- SR-60 forms at $3,000, a net savings of cense numbers on record requests or $189,540 could be realized. charge an additional $0.30 to cover cost of processing. Division of Field Office Operation Of the 520,000 insurance and credit com- Responsibility and duties of the division in- pany inquiries per month, approximately clude registering of motor vehicles and 10% fail to include drivers' license numbers. trailers and the collection of fees; processing These inquiries must be processed at a cost dealer's and salesmen's license applications; of approximately $0.30 each. The costs examining driver applicants and participat- should be passed on to the recipients. This ing in surveys for acquisition of field office would result in added income of $187,200 quarters and lease negotiations. per year. Charge a fee for reinstatement of a sus- Recommended action pended or revoked drivers license. By eliminating the Los Angeles numeric file Nearly all the operating costs of the Driver when AMIS becomes operational, an annual Improvement and Financial Responsibility saving of $197,000 will accrue. Abolishing 52 the Los Angeles numeric file was under con- of $1,000 or more. Approvals of lesser con- sideration prior to this study. The Director tracts should be assigned to the originating must initiate this action at the proper time to organizations. realize the savings. The elimination of field offices where areas CALIFORNIA HIGHWAY PATROL can be served by travel crews should also be investigated. Net saving, including cost of The California Highway Patrol has the re- travel crews, would be at least $113,000 per sponsibility for assuring safe and efficient use of highways. As of June, 1967, the patrol had year. a complement of 4,376 uniformed and 1,342 Compliance Services Section civilian personnel. Personnel services repre- sent approximately 78% of total expenses. The Compliance Services section licenses and regulates vehicle dealers, manufacturers, CHP patrols more than 700 miles of free- transporters, salesmen, dismantlers and driv- ways in urban areas, 12,000 miles of state ing schools. highways and over 70,000 miles of county roads. Its budget for fiscal 1967-68 is ap- Recommended action proximately $75.5-million. It has been suggested that a study be made Appraisal of performance to determine the feasibility of dispensing with brief services by field investigators and It is difficult to appraise the current opera- establishing Highway Patrol access to AMIS. tions of the patrol because two current pro- The savings through eliminating this brief grams have created extraordinary burdens. service could amount to as much as $400,000 The first, resulting from legislation in 1965, annually on the basis of last year's cost. Legis- increased the motor vehicle registration fee lation or a favorable court decision might be and directed that the increase be used to required. Concurrence of the Highway Patrol double the size of the uniformed force. Thus, would, of course, be necessary to put the training facilities and personnel of the de- plan into effect. partment are feeling the impact of a sharp temporary increase in workload. Legal Services Section The second program is a departmental This section performs many duties. Its main study on the correlation between staff level functions include trial of administrative cases in a given highway section and frequency of and reply to Writs of Mandate, analysis accidents. Results of an earlier study, "Oper- of proposed and enacted legislation pertain- ation 101," indicates a significant reduction ing to motor vehicles and drivers, as well as of accidents is to be expected when a large writing new legislation for DMV. Addition- number of "on-view" officers is deployed in ally, it reviews proposed contracts, leases, an area. These results are currently being purchase orders and the like before they are tested by deployment of 500 officers in six transmitted to General Services. urban areas which are the major accident centers. This study has created temporary Recommended action but serious overburdening of facilities. A key suggestion would reduce some of the The sudden influx of officers was not ac- current workload to free lawyers' time for companied by adequate support planning in pressing legal matters. At present, all pro- facilities and communications. There is a posed contracts, purchase orders and lease need for integrated methods and systems agreements must be approved by the staff planning for both law enforcement and cleri- prior to transmittal to General Services. cal personnel. Manual and mechanized pro- Legal Services should review only contracts cedures should be standardized. 53 Recommended action given to 57% of accidents reported would More effective and responsible accounting is be substantially reduced. Anticipated annual required to provide management with per- savings of $281,000 in investigative time by formance comparisons. Control of vehicle officers does not include clerical time. costs, sick leave, disabling injuries and court Reduce the non-essential time in court time are a few of the problems. With mini- spent by CHP officers. mum additional effort in application of data Traffic officers spend approximately processing, information would be forthcom- 27,000 hours per month in court. For the fis- ing to alleviate them. It is estimated by the cal year 1966-67, the CHP incurred overtime Governor's Survey that potential annual sav- costs of over $1.5-million. It is estimated by ings of $4.1-million can be achieved. In addi- area commanders that testimony is required tion, a one-time net savings of approximately in only 20% of the cases. $4.7-million may be realized. To obtain these savings, the CHP may incur annual costs of Implementation of this recommendation approximately $389,000. Significant recom- should result in a 15% to 20% decrease in mendations of the Governor's Survey would overtime due to court time. Annual savings do the following: of $222,000 are anticipated. Modify the organizational structure of Operational Planning the California Highway Patrol. Charts of both the present and recommended or- and Analysis Division ganizations are shown on next page. Basic functions of the division include de- These changes would produce an annual velopment of operational plans and special saving of $56,000. Of greater benefit studies relating to department programs, would be improved management control. traffic activities, field operations and high- Utilize electronic and mechanical devices way safety. In addition, it includes design, to assist in reducing highway accidents. programming and operation of electronic data processing systems, provides photogra- Excessive speed is the cause of 32% of all phy, art, audio-visual and other related tech- accidents on our state highways. CHP would nical services. deal with this problem more effectively if the restriction on using speed control devices The CHP is currently operating two com- were removed. Consideration should be puter systems. One is the Automated State- given to allowing CHP to use radar and vas- wide Auto Theft Inquiry System known as Auto-Statis. About 1,000 to 1,400 transac- car devices to increase efficiency of speed limit enforcement. tions and 12,000 inquiries are handled each day. The second produces accident enforce- Reduce accident report form 110 to one ment patrol summaries for the field com- page for property damage accidents. manders, statistical reports, National Crime There is need for revamping the report Information Center processing and miscel- form used for property damage accidents. laneous administrative and fiscal processing. The form is long, requiring three to five Recommended action pages. In 1966, the CHP submitted 136,289 accident reports after investigation. Of this Key suggestions pertaining to operations would: total, 78,026 did not result in either death or bodily injury. Average time spent by officers Improve the control procedures over the investigating each accident was 2.25 hours. data processing input. This investigation time represented approxi- Significant problems are being experi- mately $1.2-million in salary expense. By enced in the field offices due to errors in data adopting a one-page report, investigation processing output documents. These errors 54 Present Organization Chart COMMISSIONER California Highway Patrol DEPUTY SUPERVISING COMMISSIONER INSPECTOR OPERATIONAL ZONE 1 ZONE 2 PLANNING AND TRAINING REDDING SACRAMENTO ANALYSIS ZONE 3 ZONE 4 ADMINISTRATIVE SAFETY SAN FRANCISCO FRESNO SERVICES SERVICES ZONE 5 ZONE 6 LOS ANGELES SAN DIEGO Proposed Organization Chart COMMISSIONER California Highway Patrol INFORMATION AND EDUCATION CHIEF DEPUTY CHIEF OF COMMISSIONER INSPECTOR STAFF ZONE 1 ZONE 2 INSPECTION INSPECTION ADMINISTRATIVE MANAGEMENT REDDING SACRAMENTO TEAM ONE TEAM TWO SERVICES SCIENCES ZONE 3 ZONE 4 SAFETY PERSONNEL SAN FRANCISCO FRESNO SERVICES SERVICES LAW ZONE 5 ZONE 6 ENFORCEMENT LOS ANGELES SAN DIEGO SERVICES 55 are often discovered much later by field offi- limited to a review. If an adequate county cers who keep manual records. Resolution of audit system is not available, the CHP should errors discovered subsequent to production maintain records at the area level and in- of final monthly reports is often difficult. Ex- stitute audit and inspection controls. An perience in industrial computer installations appraisal of each county audit system is re- indicates that lack of adequate input controls quired. Potential savings are in excess of is a major cause of data processing errors. $100,000 per year over a period of years. Proper batch controls accompanying docu- ments received each day by data processing Install comprehensive controls for ad- ministration of the CHP Workmen's will make it possible to resolve differences as they occur. Compensation program for uniformed personnel. Study the Departments of Motor Ve- hicles, Highway Patrol and Justice to Under provisions of the Workmen's Com- determine the most efficient location for pensation Act, uniformed members of the master files and computer logic asso- CHP are eligible for service disability leave ciated with Auto-Statis. with full pay in lieu of temporary disability There would be logic in having only one payments. The disability frequency rates for the CHP, when compared with the state central computer system. Such an installation would remove difficulties involved in inter- average, points to a high rate of job-related facing multiple systems. Also, it would elimi- disabling injuries. During 1966, the CHP nate the cost and other difficulties involved experienced 500 lost-time injuries, totaling with duplicate data files. 18,227 employee days. This is equivalent of approximately 65 full-time traffic officers or Administrative Services Division a salary cost of $625,000. The division has responsibility to direct and One zone is having success in reversing the coordinate the activities of the 10 sections. trend through a program to curb the number Each unit is headed by a section commander. of injuries. This type of program could be Seven of the heads report directly to the implemented throughout the state and be- Division Commander. The accounting, bud- come a useful rewarding tool in combating get analyst and internal auditor commanders lost-time injuries. It is felt a minimum of a report through the Fiscal Officer. 30% reduction in the number of days lost could be realized if management's control of Recommended action the program was strengthened. A substantial Some suggestions for Administrative Serv- effort should be made to obtain the interest ices would: and involvement of non-management person- Explore the feasibility of utilizing county nel. Estimated annual savings of $180,000 auditors by California Highway Patrol. can be anticipated. To insure fines are collected and to guard Provide guns and grant uniform allow- against embezzlement and collusion, the ances. patrol maintains two sets of records. One is The Motor Vehicle Fund should purchase kept in the area and the other at headquar- guns and provide them to traffic officers. By ters. These records are in addition to those purchase in large volume, revolvers would maintained by the counties which collect the cost $60 each. During 1967-68, approximate- fines. ly 960 traffic officers will be appointed. This The feasibility of using the county audi- would cost $57,600. In succeeding years, 400 tor's records should be explored. Where the cadets annually would be provided with guns CHP is convinced that a satisfactory internal at cost of $24,000. Also, a uniform allowance control system exists, the audit could be of $100 should be made upon appointment. 56 However, there should be an understanding Improve overall efficiency of the micro- that the entire amount would have to be re- wave system. paid if the employment period was less than This network was installed as emergency two years. Initial cost would amount to equipment and should be promptly im- $96,000 per year. After one year, all present proved. The facilities of several state agen- traffic officers should be eligible for similar cies are used. Therefore, cost of improve- allowances and receive the remuneration ments would have to be borne by each each two years thereafter. At the authorized agency in a proportionate manner. staffing of 5,226 officers below the rank of supervisory inspector, annual costs would be Merge small dispatch centers into more $261,330. Total annual costs for these items efficient large operations and install mod- would be approximately $285,300. ern communications equipment. Modify present accounting and data pro- By comparisons with installations in other cessing procedures for producing the major police departments, small CHP radio monthly expenditure report to provide dispatch equipment and operations are anti- management with motor vehicle and quated and outmoded. Large dispatch cen- motorcycle costs per mile. ters in the more populated areas would At present, the patrol does not have the permit a temporarily overloaded dispatcher capability to control vehicle maintenance to be relieved by another at an adjoining costs because they are not presented in console. CHP officials estimate six large in- proper detail. Data processing is presently stallations, each costing $250,000 would be keypunching all information needed to pre- required. This represents a one-time cost of pare area detail cost reports with the excep- $1.5-million and would permit direct CHP 24-hour service over most of the state. tion of the three-digit area code. With the addition of monthly area vehicle Establish a common set of radio frequen- mileages by class of vehicle, to be supplied cies accessible state-wide to every patrol by Motor Transport, data processing has the vehicle. input data required to produce the reports. In pursuit work, road block, civil disturb- Estimated annual maintenance savings from ances, natural disasters and extraordinary improved controls will amount to $250,000. traffic situations, direct two-way communi- Delay acquisition of motorcycles and dis- cation between vehicles is presently impossi- continue purchase of shotguns. ble on a state-wide basis. Some adjoining areas are assigned different radio channels CHP's budget for 1967-68 indicates that and have no one channel in common. This 196 new motorcycles are scheduled to be limits effectiveness in quick reaction situa- purchased. These will cost $364,000. As of tions. To rectify this condition, CHP esti- July 30, 1967, there were 219 new motor- mates it would cost $250,000 to purchase cycles in stock. Implementation would pro- and install multiplex receivers and crystals. duce a cost avoidance of $364,000. In addi- tion, the budget provides for the acquisition Re-evaluate plans to construct a shop of 571 shotguns at a total cost of more than and stores building in Los Angeles and $81,000. However, the patrol already has an additional Motor Transport shop in more shotguns than it needs. Some 55 shot- Sacramento. guns received over one year ago remain un- CHP's proposed 1967-68 and estimated opened in their original packing cases in one 1968-69 capital outlay budgets include a area office. In another, shotguns have been projected expenditure of $1.1-million for issued to traffic officers who store them in construction of a shop and stores building in their homes. These excess weapons should be Los Angeles. The proposed building is to be returned to the warehouse. used for equipping vehicles which are going 57 to be assigned in southern California. By nicians should be recruited for the actual equipping these vehicles in Los Angeles, registration and vehicle inspection portion of CHP would avoid freight and delivery costs the program. Two patrol officers would be of $30,000 annually. A projected cost avoid- assigned to each team to be responsible for ance of $30,000 annually is not, in itself, a traffic control and law enforcement activi- sufficient reason for a capital outlay of $1.1- ties. The civilian specialists would be perma- million. They do not presently plan to pro- nent. They would build up greater proficiency ceed with the projected building. than uniformed officers, who are not perma- Additionally, CHP's proposed 1967-68 nently assigned. By reducing traffic officer and projected 1968-69 budgets include an personnel from five to two and hiring two estimated expenditure of $625,000 for the civilian technicians, the staff of each team erection of a Motor Transport shop in Sacra- would be lowered to four. With 60 teams, mento. The existing Motor Transport shop at estimated annual savings of approximately Sacramento is adequate. Therefore, expendi- $850,000 should be realized. ture of $625,000 cannot be justified for such Equip each inspection team with one a building at this time. high-mileage Class A vehicle plus a small Discontinue policy of hiring personnel to equipment trailer. provide janitorial services at field offices The teams currently are using two Class A and contract with commercial mainte- vehicles. By providing a small trailer to carry nance companies for this service. equipment, one less Class A vehicle would be The patrol employs 90 janitors state-wide required per team. When on-site, the trailer and maintains 229,808 sq. ft. at an annual would be detached. This will allow use of the cost of $516,230. This represents more than vehicle for law enforcement duties. Annual twice the anticipated cost of contractual savings of over $103,000 will result. service. Annual state-wide savings of more Increase the testing fees charged to man- than $276,000 can be realized by implemen- ufacturers who submit motor vehicle de- tation of this recommendation. vices for approval. Safety Services Division During the past fiscal year, 1,197 items were tested. CHP studies indicate approxi- Basic functions of the division include in- mately seven hours of engineering time is spection of private and commercial vehicles, spent per item. The patrol is not being reim- including school buses; guiding safety regu- bursed for this expense. Average cost in lations and procedures through public hear- engineering amounts to $6.75 per hour. Test- ings; licensing of school bus drivers; testing ing costs per item to the manufacturer should and approving automotive devices and be increased by 50% in order to recover the equipment; providing surveillance for sale of costs. Increased revenue would save the tax- approved automotive devices; furnishing payers about $100,000 annually. traffic safety information and operating CHP's Auto Theft Information Center. Training Division Recommended action This division of CHP plans, directs and CO- Some of the key suggestions for Safety Serv- ordinates the training program for cadets ices would: and career officers. A departmental training council, consisting of headquarters and field Modify the staffing of passenger vehicle management personnel, identifies and recom- inspection teams. mends plans and programs. In recent years, There is no reason to staff the teams with emphasis has been on the training of cadets five police officers. Lower-rated civilian tech- and in-service training has been abandoned. 58 Recommended action provide additional training to those already Key suggestions for Training would: in the service. To provide a two week training Re-examine plans to construct a new period for 1,600 officers annually would cost Academy. approximately $102,000 exclusive of instruc- tion costs. The present Academy is adequate for the present and the next five years. Due to grow- MILITARY DEPARTMENT ing neighborhoods surrounding the facility, it may be necessary to relocate the pistol The Military Department consists of the Ad- ranges and high-speed auto course. The jutant General, the Office of the Adjutant Academy has facilities for 360 men on a 52- General, the State Military Reserve, the week basis. It provides a potential of 18,720 Army and Air National Guard, and the Cali- resident-student weeks. With 12 cadet fornia Cadet Corps. classes of 80 each scheduled yearly for a The department supplies military units for total of 11,520 weeks and in-service training federal mobilization missions and performs periods of two weeks for 1,600 officers, there such tasks as required by the Military and is a balance of 4,200 weeks before full capa- Veterans Code or as directed by the city would be reached. Governor. Nevertheless, construction of a new Acad- The Military Department plans to operate emy was recommended in February, 1967. It in 1967-68 on a budget of approximately assumed the need to train 1,200 cadets an- $4.3-million and a staff of 374. The federal nually for 16 week periods. Further, the study budget allows an additional $43-million to the found there was need to have the pistol department. Over the past five years, there ranges and auto course as an integral part of has been a gain of only one state-supported the grounds. While such a complex would be employee. ideal, the gain would not be worth the cost. Appraisal of performance Reduce size of cadet classes, lower basic training period from 16 to 12 weeks, pro- While the federal government provides 2,600 vide cadets with on-the-job training and full-time employees, it does not furnish all discontinue motorcycle training for CHP personnel required, nor does it supply hous- candidates. ing. This housing responsibility consumes 63% of the department's budget. Within its By reducing the number in cadet classes limited resources and the prescribed CO- from 120 to 80, greater personal attention operation with the National Guard and the could be provided, more individual partici- federal government, the Military Depart- pation would be forthcoming and better ment carries out its functions in an efficient trained cadets could reach the field in a manner. shorter time. Under the proposed plan, 12 classes of 80 each would result in 960 trained Recommended action officers. To train this number in 16 weeks Suggestions of the Governor's Survey would cost $2,375 per cadet. By reducing covered the following areas: the period to 12 weeks, cost per cadet would be $1,780. Total savings would amount to Implementing a long-range plan to house $570,000 per year. the department and its units. There have been no permanent headquarters, and Increase emphasis on in-service training. the present building is not appropriate Except for recent cadets, most CHP offi- for further long-term lease. cers have not been to the Academy for at Continuing the present maintenance pro- least four years. The patrol should match its cedures, which are excellent, and provid- efforts to train new officers with efforts to ing capital outlay funds for performing 59 deferred maintenance to protect its fa- filling of positions with qualified candi- cilities. dates difficult. Legislative action will be Making a total data processing system required. study by a qualified state agency. Improvements underway Establishing a Data Processing section The Director has taken steps to reduce costs within the Administrative and Personnel by eliminating, reassigning and reorganizing Division. staff functions for improved efficiency. The Disaster Office and the Department of Public CALIFORNIA DISASTER OFFICE Health have agreed to the transfer of the The prime responsibility of the California Medical and Health Division. This is in keep- Disaster Office is to plan, complete and CO- ing with the policy of not carrying out func- ordinate state-wide programs for emergency tions assigned to existing organizations. relief conditions. The office also is delegated Charts of the present organization, along to provide leadership and assistance to other with the proposed organization being imple- state agencies and local governments in de- mented by the office are shown on next page. veloping an effective state of readiness. The new organization reduces the budget The office's 1967-68 budget was approxi- and appears to place proper emphasis on the mately $1.1-million plus $846,000 to be de- mission of the office. rived from federal sources. The office has reduced its budget to $1-million which will DEPARTMENT OF ALCOHOLIC have some impact on federal funds. BEVERAGE CONTROL Appraisal of performance This department administers and enforces The office has done an outstanding job. The state liquor laws. It has the responsibility to innovations for saving time and improving license the manufacture, importation and work quality in the calibration of radiological sale of alcoholic beverages in California. instruments is one instance. It has developed Additionally, the department is charged with an emergency communication network and administration and enforcement of the Alco- also innovated special applications of surplus holic Beverage Control Act. equipment to law enforcement and fire res- ABC is responsible for allocation of 90% cue areas. of renewal, transfer and offer-in-compromise Recommended action fees to the cities and counties where licen- sees are located. The remaining 10% is de- The findings of the Governor's Survey were posited in the General Fund. aimed at increasing effectiveness, rather than reducing costs, since the department has al- The department is currently functioning ready reduced its budget. Some of the key with 438 authorized positions although its recommendations would: 1966-67 budget contemplated 462. The headquarters office accounts for 74, and 364 Strengthen planning and coordination of are stationed in the area and district offices. law enforcement activities with the Na- Of the latter, 225 are investigative person- tional Guard. nel. The department's budget for fiscal 1967- Study the automation of accounting 68 is $5.18-million, less reimbursements of records. $20,000. License and other fees collected Integrate the office's merit system with amounted to almost $15-million during fiscal the state system. Separation of this merit 1966-67. system from the rest of the state's Civil Approximately 44% of departmental ef- Service System causes confusion. It makes fort is devoted to issuance and renewal of 60 Present Organization Chart California Disaster Office DIRECTOR MANAGEMENT LAW MEDICAL TECHNICAL UTILITIES SERVICES ENFORCEMENT AND OPERATIONS DIVISION HEALTH DIVISION FIRE AND PLANNING AND SUPPORT RESCUE PROGRAMMING OPERATIONS FRESNO LOS ANGELES SAN FRANCISCO OROVILLE REGION REGION REGION REGION Proposed Organization Chart California Disaster Office DIRECTOR FISCAL AND PLANNING AND FIRE AND LAW MEDICAL AND UTILITIES ADMINISTRATION OPERATIONS RESCUE ENFORCEMENT HEALTH LOS ANGELES SAN FRANCISCO OROVILLE FRESNO REGION REGION REGION REGION 45 different types of alcoholic beverage be disclosed. However, there are indications licenses. At present, there are approximately some procedures are more elaborate than 48,000 in effect. may be necessary. Appraisal of performance In the area of administration, record main- tenance and licensing, the department has The department's internal control procedures not utilized the latest technological advances have been designed to provide maximum as- and laborsaving techniques. While mainte- surance that any dishonesty or mistakes will nance of complete records is mandatory, 61 Present Organization Chart DIRECTOR Department of Alcoholic Beverage Control DEPUTY DIRECTOR CHIEF ADMINISTRATIVE ADMINISTRATIVE SPECIAL SERVICES ASSISTANT INVESTIGATOR OFFICER SACRAMENTO PASADENA SAN FRANCISCO PRINCIPAL AREA AREA AREA COUNSEL ADMINISTRATION ADMINISTRATION ADMINISTRATION ASSISTANT ASSISTANT ASSOCIATE ASSOCIATE AREA AREA COUNSEL COUNSEL ADMINISTRATOR ADMINISTRATOR ASSISTANT ASSOCIATE ASSOCIATE AREA COUNSEL COUNSEL ADMINISTRATOR there is duplication of information. There is The department should also prepare to uti- also a lack of communication between vari- lize electronic data processing facilities. This ous levels of authority and compliance ac- would reduce current costs of tabulating tivity appears to be inadequate. services and clerical help. Recommended action The report also urges that consideration be given to a complete revision of the Alco- Suggested improvements recommended by holic Beverage Control Act. The function of the Governor's Survey offer an estimated the department is restricted and delayed by annual savings of $184,000 plus the more ef- the statute which it must administer and en- ficient use of personnel and improved serv- force. A proliferation of license types, in- ice to the public. Partially offsetting these adequate and illogical license fee structures, savings is an estimated $42,000 annual excessive notice requirements and cumber- expenditure needed to implement the recom- some provisions for additional fees, result in mendations. unnecessary administrative effort. Several recommendations concern a reor- ganization of the department to eliminate ALCOHOLIC BEVERAGES unnecessary branch offices, reduce the over- CONTROL APPEALS BOARD ly-high degree of supervision, and streamline clerical procedures. Charts of both present The Alcoholic Beverage Control Appeals and proposed organization are shown above Board was established for the purpose of and on the next page. providing an independent and separate ad- 62 Proposed Organization Chart DIRECTOR Department of Alcoholic Beverage Control ASSISTANT ASSISTANT ASSISTANT PRINCIPAL DIRECTOR DIRECTOR DIRECTOR COUNSEL SOUTHERN DIVISION NORTHERN DIVISION HEADQUARTERS ASSISTANT ASSISTANT ASSOCIATE SENIOR ADMINISTRATOR COUNSEL COUNSEL ADMINISTRATOR ENFORCEMENT LICENSING NORTHERN SOUTHERN DIVISION DIVISION ASSISTANT ASSISTANT ADMINISTRATOR ADMINISTRATIVE OFFICE ADMINISTRATOR ASSISTANT SUPERVISOR ENFORCEMENT LICENSING ministrative review of appeals from decisions sion Commission to conduct a comprehensive of the Department of Alcoholic Beverage and objective study to determine whether Control. Its 1967-68 budget is approximately the Appeals Board should continue to exist or $129,000. The three member board is sup- be abolished. ported by a staff of four. Appraisal of performance THE SAN FRANCISCO During the past four years, the board has PORT AUTHORITY considered and decided an average of 238 cases annually. About 15% of such cases_are The San Francisco Port Authority (SFPA) has appealed to the courts. The average elapsed the responsibility for administering all state time between date of filing an appeal with lands and facilities comprising the San Fran- the board and the date of its decision is 171 cisco waterfront. It provides and maintains days. When an appeal is filed, the appellant facilities to serve the needs of San Francisco is given 10 days notice to pay for the cost of maritime and fishing industries. This involves a transcript of the initial hearing before the planning, designing and constructing new Office of Administrative Procedure. There terminal facilities, maintaining, repairing and appears to be no reason why the period from replacing existing facilities and dredging. It date of receipt of a transcript to date of the operates a switching railroad; manages com- board's decision cannot be reduced. mercial and industrial properties; collects rents, wharfage and dockage charges; and Recommended action develops, promotes and administers pro- The primary recommendation of the Gover- grams to increase the economic usage of the nor's Survey was for the Constitutional Revi- port and its traffic advantages. 63 The SFPA is a self-supporting state agency. Introduce a number of operating efficien- It has successfully operated for approxi- cies to reduce the costs of the State Belt mately 100 years without recourse to tax Railroad, such as eliminating unneeded funds. During this period, it has developed trackage. shipping and cargo handling facilities cur- Reorganize the Engineering Division for rently valued in excess of $350-million along more effective operation and the reduc- the San Francisco waterfront. It operates 42 tion of staff where possible. active piers and loads and discharges ap- proximately 200 ships per month. Establish the position of European Trade There has been a downward trend in the Development Manager to strengthen the SFPA position with this important, and number of personnel employed by the Au- growing, source of revenue. thority in recent years. In 1955-56, for ex- ample, the SFPA employed a total of 508 Study and compare procurement and personnel compared to 395 during 1966-67. stores procedures with recommendations made in the Procurement section of Appraisal of performance General Services. The performance record of the SFPA is very good. While total tonnage handled has de- OFFICE OF THE creased, the decrease has been in high volume, low value products generating low STATE FIRE MARSHAL profit margins. Current and forecasted busi- The Office of the State Fire Marshal was ness is increasingly higher in average value and profit margins. These increased earnings established in 1923. Originally, its function reflect effective sales effort, cost control and was to protect life and property from fire intelligent pricing. and enforce laws relating to fires and fire protection. Since its creation, the Marshal The SFPA appears to be operating under has been charged with a variety of additional policies completely consistent with the ob- responsibilities of regulation and enforce- jectives of efficiency and cost savings. It is ment. The office has 86 authorized personnel to be commended for having initiated these and a budget of about $960,000 for fiscal policies several years ago. 1967-68. Recommended action Major effort is directed to enforcement of minimum standards in certain public build- The Governor's Survey made recommenda- ings as established by the Health and Safety tions for specific improvements which offer Code. This is accomplished by examination estimated benefits of $100,000 annually. of design plans and site inspections of However, a number of the recommendations schools, nursing homes, hospitals, public audi- promise additional savings of indeterminate toriums, correctional institutions and state- amounts. owned buildings, except exempt educational Key improvement recommendations sug- facilities. gest doing the following: Inspection of dry cleaning establishments, Accelerate the development of the non- in which flammable or toxic liquids are used, maritime waterfront areas administered is another responsibility of the office. Also, by the SFPA. it administers and enforces the transporta- tion of flammable fluids. Almost 10,000 tank Review and adjust upward the rental rates for all commercial tenants to make them trucks are inspected biannually. competitive with similar rates on private Statutes require the Marshal to license properties. manufacturers, importers, exporters, whole- 64 salers and retailers of fireworks, as well as pari-mutuel wagering is conducted. As of pyrotechnicians. The last category includes August, 1967, the board employed a total technicians using pyrotechnics in radio, the- of 18 people, five in licensing, seven in in- atrical, television and public displays. vestigative and six in administrative func- tions. Its proposed operating budget for Appraisal of performance fiscal 1967-68 of approximately $235,000 The major asset of the Office of State Fire was based on anticipated revenues of over Marshal is a complement of experienced and $53.7-million from horse racing. well qualified dedicated employees. Present The headquarters office of the board is in methods and procedures have created a Los Angeles. It also maintains two mobile backlog of work. As a result, arson investiga- offices in northern and southern California tion has not been vigorous enough. during race meetings. The organization of the Marshal's office reflects a mixture of staff and line responsi- Appraisal of performance bilities. Channels of authority are not defini- The regulatory and control functions of the tive, and the combined headquarters and board are stringent to guard against illegal district office in Sacramento is inadequate. actions and regulatory violations among race Recommended action track employees. Compliance with the de- tailed rules and regulations is materially ac- The Governor's Survey submitted recommen- complished by the associations' own security dations aimed at eliminating the problems of forces, aided by the Thoroughbred Racing this function. Some of the improvements Protective Bureau. The small staff of the would save $197,000 but these savings should board's investigators relies significantly on be absorbed by reassignment of existing per- enforcement activities furnished by the in- sonnel to functions which would permit the dustry itself. office to fulfill its responsibility. The principal suggestions would do the following: Recommended action Revise the organizational structure to Expanded racing operations, as authorized separate line and staff functions to pro- by the California Horse Racing Act of 1967, vide for more effective supervision. make improvements in licensing procedures Relocate both the administrative staff and filing systems mandatory. The major and branch offices to reduce non-produc- recommendation of the Governor's Survey tive travel time and provide more ef- emphasized simplifying and improving these ficient utilization of available personnel. procedures. Transfer the licensing and inspection of flammable liquid tank trucks to the High- DEPARTMENT OF PROFESSIONAL way Patrol, which is already conducting quarterly safety inspections of com- AND VOCATIONAL STANDARDS mercial vehicles. In the interest of public health, safety and Revise and improve standard operating welfare, the department integrates business procedures to increase productivity and activities of 23 boards, five bureaus, two eliminate unnecessary paperwork. commissions and five committees under which individuals and facilities are licensed CALIFORNIA and regulated. HORSE RACING BOARD The department serves the interests of the public by licensing only persons and firms The California Horse Racing Board super- with demonstrated abilities to perform serv- vises all race meetings in the state where ices for the public. It prevents unauthorized 65 practices upon the public and disciplines Evaluate examination techniques and those licensed who fail in their public trust. practices. During 1967-68, the department plans to operate with a staff of 734. Its budget is DEPARTMENT OF INVESTMENT $12.6-million. The Department of Investment was created Appraisal of performance in 1929 to coordinate divisions with the com- The professional and occupational interests mon purpose of licensing individuals or com- are served by the current method of opera- panies to engage in financial transactions or tion. However, the department has been to assist others in discharging of financial weakened by turnover in the Director's posi- obligations. tion and lack of standard procedures. Strong The department currently consists of the effort should continue to be made to demon- Superintendent of Banks, Commissioner of strate to the boards that benefits can result Corporations, Commissioner of Insurance, from following legislative intent, i.e., that Commissioner of Real Estate and Commis- operations other than those for passing can- sioner of Savings and Loans. This group holds didates and revoking licenses should be as- periodic meetings to discuss matters of com- signed to the department rather than to the mon interest. With no administrative staff, board. the department has no specific operational The data processing activity has made responsibilities. considerable progress, but several boards still use manual systems. Also, the Division of Appraisal of performance Investigation has only partially centralized In view of the diverse complexities of the the inspection and investigative services. divisions represented, the current practice Recommended action of using the department as a public forum serves no useful purpose. The department Virtually all recommendations for improve- and its activities do not incur any appreci- ment offer the opportunity for substantial able costs to the taxpayer. savings. Total implementation should result in an estimated cost reduction of $2.1-million Recommended action annually. Some of the more important recom- mendations would do the following: No action should be taken toward combining the divisions or abandoning the departmental Reorganize staff functions to provide framework. The recommendations for each more efficient clerical and administrative division should be implemented. If these support in the proposed organization. steps are completed, a study should be made Centralize all similar clerical and cashier to forecast the probable advantages of cre- functions within the Division of Adminis- ating an actual Department of Investment. tration. The recommendations on individual divisions Plan remodeling of office, eliminate ineffi- offer the opportunity of saving $1.9-million ciencies in the assignment of office space annually. and increase rental charges. Develop work standards to determine Division of Corporations proper staffing. This division regulates the sale of securities Reduce administrative expense by phas- of corporations except for those specifically ing out positions, using department coun- delegated by law to another regulatory sel, using information clerks and increas- agency. The divisional budget for fiscal 1967- ing the span of control in administrative 68 is approximately $3.5-million. Total per- positions. sonnel in the four offices is 403. 66 Proposed Organization Chart Division of Corporations COMMISSIONER CHIEF DEPUTY COMMISSIONER ASSISTANT ASSISTANT ASSISTANT COMMISSIONER COMMISSIONER COMMISSIONER (LOS ANGELES) (SAN FRANCISCO) ADMINISTRATION LAW GROUP "A" LAW GROUP "B" SAN DIEGO SACRAMENTO LEGISLATIVE BRANCH OFFICE BRANCH OFFICE LIAISON Appraisal of performance mated at $144,000 could be derived from a The division provides the public with service reduction in clerical help, communications, and protection required by law. It is suffer- stationery, supplies and travel. ing from administrative inefficiencies, out- The Survey team suggested revising the moded operating practices and lack of or- statutes which require duplication of S.E.C. ganizational control. Within the past few procedures. The state now should take ad- months, the division has taken steps to reduce vantage of the federal government examina- operating costs through attrition. Combined tion procedures and simplify routines for with the following recommendations, this single issuees, to bring current statutes up-to- could provide annual savings of $947,000. date with the national market. A modern regulatory operation can provide better Recommended action service to investors and industry. Estimated The Division of Corporations is taking steps annual savings could be as much as $500,000. to place administrative functions at the point of highest workload and create reporting re- Division of Real Estate sponsibilities by function instead of along geographical lines. The proposed organiza- This division protects the public in matters tion chart is shown above. This reorganiza- pertaining to sale, purchase or lease of real tion eliminates considerable duplication of estate, and mineral, oil and gas rights. It also files, standardizes and leads to uniform ad- supervises the offering of subdivided proper- ministrative decisions. Annual savings esti- ties and real property securities. In addition, 67 Proposed Organization Chart Division of Real Estate COMMISSIONER REAL ESTATE COMMISSION CHIEF DEPUTY CHIEF DEPUTY ADMINISTRATIVE LEGAL COMMISSIONER COMMISSIONER ANALYST OPERATIONS EDUCATION AND ADMINISTRATION it furthers the professional orientation of vide greater operating economies and estab- the real estate business by assisting in the lish a framework for future service to the advancement of related education and re- public. The organization structure illustrated search. above shows a proposed division strength The division is currently operating with of 228 employees. Major changes in the pro- 258 employees. Its budget of approximately gram include closing of the Oakland office, $3.6-million, includes $480,000 for an edu- temporary closing of the Santa Ana office, cation fund. realignment of the legal and audit staffs, pro- vision for opening of offices in San Jose, Appraisal of performance Thousand Oaks and Redding and direct con- The division is performing its prescribed trol of operations and policy. Also included function well. A reduction in the number of is the appointment of a Chief Deputy Com- licenses issued, however, has adversely af- missioner of Operations and a Chief Deputy fected the budget. Therefore, a $10 increase Commissioner of Education and Administra- for a four-year license has been requested. tion. Total personnel savings are estimated In addition, the Legislature has been asked to be close to $386,000. to permit the transfer of a surplus accumula- tion from the Recovery Fund to the Real Another recommendation would reduce Estate Fund. office space to conform with stipulated allo- cations. Release of excess footage should Recommended action produce annual cost savings of $70,000. New The following recommendations would per- standards, issued since this report was mit greater economy and operating effi- written, increase savings by about 20%. ciency. Annual savings of $667,000 are Additional savings can be made if the de- estimated. partment would improve supply control of The most significant recommendation printed materials. This can be done by reduc- would make organizational changes to pro- ing inventories, setting low limits of on-hand 68 publications and producing smaller quanti- Appraisal of performance ties. Actual printing expense for 1965-66 was The division's organizational structure has $96,000. The budget for 1967-68 is $95,000 certain weaknesses due to lack of clearly for these publications. This budget should be defined lines of authority. Management is reduced to $65,000. aware of the need for improved organization A number of recommendations concern- and analytical tools to assist in effectively ing procedure have been offered by the regulating the savings and loan industry. To- survey team. Although they do not offer ward this end, the division is conducting a massive savings individually, the cumulative study to increase its effectiveness. total is impressive. These suggestions include developing standardized form letters, elimi- Recommended action nating unneeded files, simplifying license A key recommendation would modify the classifications, releasing unused office space, division's organizational structure as shown in developing uniform office procedures, in- the chart on the next page. This would retain creasing the use of ADP equipment, stand- strong, independent regional offices in Los ardizing reports and lowering communica- Angeles and San Francisco under the leader- tions expenses. ship of two Assistant Commissioners; reor- Division of Savings and Loan ganize the examination sections by redefin- ing duties and clarifying lines of authority; This division regulates the state licensed broaden scope of the present Report Analy- Savings and Loan Associations and their sis section by adding related functions; branches. It insures financial soundness and create an effective administrative function safety and legality of their operations. It also headed by a single administrative officer and registers and supervises holding companies provide safeguards for ensuring division-wide or individuals which own or control savings adherence to policies and standards. and loan associations. Several additional suggestions offer the Principal activities of the division are opportunity to increase effectiveness of the concentrated with processing applications, division while reducing costs. These involve performing annual examinations of licensed reassigning duties, releasing excess floor associations, conducting test appraisals of space, simplifying reports and improving real property, providing information services communications. to associations, approving firms engaged to conduct annual and special audits of associa- State Banking Department tions and establishing various reserves on associations' books to reflect potential or The State Banking Department regulates actual losses. state-chartered banks, trust companies and their banking and trust business. Principal ac- The fiscal 1967-68 budget called for 204 tivities of the department are processing ap- personnel-man years. As of July, 1967, the plications for new bank charters or branches division employed 185 persons. of existing banks, mergers, consolidations Financial support of the division is derived and the like. from the Savings and Loan Inspection Fund. As of July, 1967, the department em- It is based on percentage assessments against ployed 82 persons. Its financial support is assets of regulated savings and loan associa- derived from the State Banking Fund. Addi- tions. Additional revenue is acquired from tional revenue also is derived from fees and miscellaneous fees, penalties and other surplus money investments. Income for 1967- sources. The division's modified 1967-68 68 is estimated at approximately $1.25-mil- budget is $2.7-million. Estimated income lion. Expenditures of $1.3-million are antici- from all sources will be close to $2.75-million. pated. The deficit will be covered by an 69 Proposed Organization Chart Division of Savings and Loan COMMISSIONER FINANCIAL ECONOMIST SPECIALIST ASSISTANT CHIEF SENIOR ASSISTANT COMMISSIONER ANALYST COUNSEL COMMISSIONER LOS ANGELES LOS ANGELES LOS ANGELES SAN FRANCISCO CHIEF CHIEF LEGAL LEGAL EXAMINER APPRAISER SERVICES SERVICES LOS ANGELES LOS ANGELES LOS ANGELES SAN FRANCISCO ADMINISTRATION CHIEF CHIEF SERVICES EXAMINER APPRAISER LOS ANGELES REPORT REVIEW AND ANALYSIS STATISTICAL SECTION SERVICES accumulated surplus of more than $700,000 and both present and newly-recruited ex- in the State Banking Fund. aminers should be required to participate. Under the leadership of the Chief Deputy Appraisal of performance Superintendent, a procedural manual should Through cooperation with the Federal De- be developed and utilized in formal class- posit Insurance Corporation and Federal Re- room instruction. serve Bank, joint examinations are conducted A second key recommendation urges the by the department and those agencies. This department to utilize college recruitment to eliminates unnecessary duplication. It also re- fill vacant, but authorized examiner positions. sults in more comprehensive examinations of regulated banks and trust companies than A number of recommendations offer in- otherwise would be possible. The chief weak- creased efficiency by simplifying present ness of the department is the lack of an procedures, reducing the proofreading of effective training program intended to im- examination reports, eliminating duplicate prove the quality of the examining staff. files, reducing office space and charging for weekly bulletins. Recommended action The Governor's Survey recommends develop- DEPARTMENT OF INSURANCE ing a formal training program for all ex- This department certificates insurance com- aminer personnel. The program must be sub- panies and monitors security transactions ject to continuing modernization and review and mergers of such companies. It regulates 70 Proposed Organization Chart Department of Insurance COMMISSIONER SPECIAL CONSERVATION ASSISTANT AND LIQUIDATION COMMISSIONER OFFICER ADMINISTRATIVE GENERAL SERVICES COUNSEL OFFICER CHIEF CHIEF ASSISTANT DEPUTY COMMISSIONER COMMISSIONER COMPLAINTS, POLICY FIELD COMPANY RATE LICENSE INVESTIGATIONS APPROVAL EXAMINATION INFORMATION REGULATION BUREAU AND PRODUCER DIVISION BUREAU DIVISION AND ANALYSIS COMPLIANCE DIVISION SAN DIEGO SACRAMENTO OFFICE OFFICE operations, including conservatorship and The department is operated under a spe- liquidation of insurance companies, for pro- cial insurance fund which was established in tection of the public. Further, the depart- 1929 to account for fees, fines, penalties, ment regulates and licenses companies and taxes and other revenues collected by the individuals who engage in the sale of insur- Commissioner. This fund is expended in ad- ance and performs certain work relating to ministration and enforcement of the Insur- assessment and collection of insurance pre- ance Code and other insurance laws. mium taxes. These taxes exceed $ 100-million The headquarters of the department in San per year. Francisco has a staff of 191 employees. An The department has, through tradition, un- autonomous office, located in Los Angeles, dertaken extra-curricular activities in the has 123. In addition, branch offices, each with form of assistance and advice to legislators seven people, are maintained in Sacramento and other executive branches of the govern- and San Diego. Work of the department re- ment. Examples are work relating to the Bald- quires its examination staff to travel through- win Hills Dam disaster and the Watts riot. out California as well as to many other states. The original 1967-68 budget called for 328 positions. However, the final budget has Appraisal of performance been adjusted to 315. Total expenditures for The U.S. Congress has granted power of fiscal 1967-68 are slightly more than $3.6- regulation of insurance companies to indivi- million. dual states although the industry is primarily 71 inter-state. This arrangement led to forma- Appraisal of performance tion of the National Association of Insurance The Commission appears to be fulfilling its Commissioners. The association provides prescribed responsibilities. The administra- guidelines to be followed by all member tive staff can be reduced. However, consoli- states in this regulation. The Field Examina- dation into another department should be tion Division is almost completely reliant on considered. the audit and reporting procedures set down by the National Association of Insurance Recommended action Commissioners. The primary recommendation of the Gover- Recommended action nor's Survey was to consider the transfer of Suggestions of the Governor's Survey offer the Commission's functions to the Division of the opportunity for potential savings of Corporations where similar functions are per- $250,000 annually in the department. Sig- formed for mutual water companies. Others nificant improvements for the department would reduce the size of the Commission, decrease the volume of paperwork and re- propose: assign responsibility of certain on-site in- Reorganizing the department to achieve spections. Annual savings of $10,000 are more uniform state-wide policies and indicated. reduce supervisory requirements to pro- vide ultimate annual savings of $35,000. DIVISION OF AERONAUTICS The proposed organization chart is shown on the preceding page. The Division of Aeronautics has the responsi- Reducing the amount of office space now bility for fostering and assisting the develop- under lease by vacating the space now ment of aeronautics, as well as coordinating occupied in San Francisco and moving these activities with the federal government into smaller quarters, preferably in a and political sub-divisions of the state. It en- state building. forces rules, regulations and laws relating to aeronautics. In addition, it exercises control Re-aligning the tax assessment and collec- over proposed airport and heliport sites, tion functions. building sites, structures, natural growth and Re-examining the policies and proced- public utility facilities deemed to be hazards ures being followed in the Producer to air navigation. Further, it must report all Licensing Bureau. known aircraft accidents to appropriate fed- eral agencies and preserve and prevent re- DISTRICT moval of damaged aircraft during federal SECURITIES COMMISSION investigations. The Commission is charged with the super- Appraisal of performance vision of prescribed fiscal and operating The division appears to be substantially un- affairs of irrigation, water and water-storage derstaffed with a dedicated group of em- districts and other local entities. Its prime ployees working significant amounts of over- responsibility is to prevent excessive indebt- time to meet peak workloads. Offices are edness that could result in default. substandard and impair effective operation. The Commission has its office in San Fran- These conditions apparently will be rectified cisco and receives support from a staff of II by fiscal year 1967-68 budget granting six employees. It operates on an annual budget additional positions and approval of more of approximately $175,000. The Commission suitable office quarters. Its current operating has a fee schedule which is set to cover esti- budget is approximately $274,000 for a staff mated cost of operations. of 17 employees. 72 Recommended action Plan. The last plan was developed in 1947 and Legislation which became effective Novem- is now obsolete. Adequate peripheral air- ber 8, 1967, promises to solve some of the ports are germane to the highway and park- division's organizational problems observed ing problems involved in major metropolitan by the Governor's Survey. Among other airport operations. Outside consulting serv- things, it attaches the division directly to the ices should be employed to develop this plan. Transportation Agency. It is suggested that It should be coordinated closely with plans of a Deputy for Transportation, Department of the Division of Highways, Bay Toll Crossings, Public Works, be appointed to coordinate rapid transit, airport and other long-range the overall transportation problem for the transportation proposals. It is estimated at Transportation Agency. Logically, the Divi- least $150,000 will be needed to develop the sion of Aeronautics should report to this plan. The project should be started as soon agency. as possible. A target date of not later than A key recommendation is the develop- the end of 1968, should be set for its com- ment of an up-dated State Airport Master pletion. 73

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[Government Organization] - Summary Report and Recommendations: Governoräó»s Survey of Efficiency and Cost Control, February 1968 (1 of 2)

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collections	Ronald Reagan's Governor's Papers of the Press Unit Reports
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