1998 Legislative Audits


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1. Summary of Report 98-01: OFFICE OF HEALTH DATA ANALYSIS

Because of the concern over rising health care costs, HDA was created in 1991 to provide comparative cost and performance information to the public regarding Utah's hospitals and health plans. The hope was that publicly available cost and performance data would stimulate competitive forces in the health care market, help control costs, and overall promote greater provider accountability.

Our objective in this audit was to determine how the health care information produced by HDA is actually used, and how it may benefit the public. The main findings are summarized below:

1. State-produced health care data do appear to provide a public benefit. Consequently, we believe HDA is fulfilling its legislative purpose and should be re-authorized to continue making health care information available to the public.

2. Improvements to the HDA program can be made in at least three areas: (1) we believe that data users should help pay for HDA's operation, (2) we believe the Legislature should clarify what types of data HDA is allowed to collect, and (3) better distribution of HDA data products would enhance the value of the program.

Full Report -Audit of the Office of Health Data Analysis

2. Summary of Report 98-02: WORKER'S COMPENSATION FUND

This report contains the results of a survey of the marketing and advertising practices of Worker's Compensation Fund of Utah (WCFU). Also, we have verified some selected performance indicators of WCFU. WCFU, in defense of their compensation practices, cited their outstanding financial performance as a justification for their executives' salaries. Below is a list of the most significant issues found in this report:

1. WCFU Marketing, Advertising and Agent Expenses Have Expanded.
2. WCFU Leased NBA Arena Suite which Accounts for 87% of Marketing Expenses.
3. WCFU Independent Agent Incentive Expenses are Significant.
4. Economy and Industry Have Greatly Influenced WCFU's Performance Indicators.
5. WCFU Claims Have Decreased at a Higher Rate Than Competitors.
6. WCFU was not Declared Insolvent, Despite Recent Statements.

Full Report -Audit of Workers' Compensation Fund Marketing Practices and Performance Indicators

3. Summary of Report 98-03: TECHNOLOGY FINANCE CORPORATION

Questions regarding mission compliance and the adequacy of existing controls resulted in the Legislature requesting this audit of the Utah Technology Finance Corporation (UTFC). UTFC, created in 1983 by the Utah Legislature, has defined goals in the Utah Code. The organization has sought to identify its purpose and the means to measure its effectiveness within the written definition of the Utah Code. We believe this to be inherently difficult given the mission as stated by the Legislature as well as the Legislature's informal directive to become self-sufficient.

In our opinion, the mission and this informal directive result in conflicting goals for UTFC---to be self-sufficient and to support high-risk, start-up businesses. UTFC has attempted to address both goals. Despite these attempts, UTFC remains dependent on continued state financial support. Further, a broadening of their mission interpretation may be pulling UTFC away from high-risk, start-up companies. In addition to what appears to be conflicting UTFC goals are UTFC's problems with insufficient oversight by its board and non-compliance with some internal administrative controls.

Full Report -A Performance Audit of the Utah Technology Finance Corporation

4. Summary of Report 98-04: INSPECTION OF SCHOOL CONSTRUCTION

We have identified concerns in several areas. These include the following:

1. Inspections of school building construction may be inadequate and do not always comply with statutory requirements.
2. The role of local building officials, when school districts fail to provide for inspections, is unclear.
3. The Utah State Office of Education does not provide sufficient oversight and should consider reorganizing the information provided to districts about inspection requirements.

Because we found confusion and misunderstanding among the school districts' staff, local building officials, and inspectors about their respective roles, responsibilities, and authority, we believe that the Utah Code needs to be clarified in places dealing with inspection requirements and responsibilities. Building inspections are required by law to help ensure that construction meets relevant building and safety code standards; inspectors do this by ascertaining that buildings are constructed according to the plans and specifications, which are certified to have met the relevant code requirements.

Full Report -A Performance Audit of the Inspection of School Construction

5. Summary of Report 98-05: STATE OFFICE OF EDUCATION DISCRETIONARY FUNDS

As requested by the Public Education Appropriations Subcommittee, we have completed a survey of discretionary fund balances and expenditures within the State Office of Education (SOE). Based on our limited review, we believe there is justification for the existence of these discretionary funds and conclude that they are being put to reasonable and appropriate use. Therefore, we do not see a need to conduct further work in this area.

In conducting this survey, we primarily reviewed non-lapsing balances in the Minimum School Program (MSP) which is financed by the Uniform School Fund (USF) and by local property tax revenues. The USF is the primary source of financing for public education, accounting for about 75% of the entire $2 billion budget. The MSP is the core component of the public education system and it comprises all basic and special purpose programs for kindergarten, elementary, and secondary schools. It totals about $1.6 billion and is by far the largest program in the public education budget.

Full Report -A Performance Audit of the State Office of Education Discretionary Funds

6. Summary of Report 98-06: CONSTRUCTION MANAGEMENT BY POLITICAL SUBDIVISIONS

This audit addresses several issues dealing with construction of buildings by political subdivisions. We were first asked to study construction management (CM) as a specific project delivery system because of concerns expressed by legislators that the use of CM had caused problems in some projects. Concerns included whether CM is a cost beneficial project delivery system and whether CM lacks necessary controls, thereby increasing costs to entities using it. Subsequently, we were asked to review the issue of why cities and counties some- times choose to fund construction with lease revenue bonds instead of general obligation bonds.

Full Report -A Performance Audit of Construction Management by Political Subdivisions

7. Summary of Report 98-07: COSTS & SERVICES FOR INDIVIDUALS WITH DEVELOPMENTAL DISABILITIES

This report compares the costs and services for individuals with mental retardation and developmental disabilities (MR/DD) who require a high level of care in three programs:

1. Home and Community Based Services (HCBS) group homes and apartments
2. Utah State Developmental Center (USDC)
3. Private Intermediate Care Facilities for the Mentally Retarded (ICF/MR)

Because resources are limited and needs are great, difficult decisions must be made about how to best balance costs incurred with services provided. The purpose of this report is to provide decision makers reliable information to help them evaluate the difficult policy alternatives.

Full Report -A Performance Audit of the Costs and Services for Individuals with Developmental Disabilities

8. Summary of Report 98-08: DEPARTMENT OF CORRECTIONS

The Utah Department of Corrections (UDOC) faces a challenge as its inmate population continues to grow at a rapid rate. Non-traditional methods of incarceration, such as contracts with county jails and private prisons, present fiscal and non-quantitative concerns. Other related challenges facing UDOC are correctional officers' compensation and training, inmate medical services and treatment programs and internal security.

This audit was performed for the Legislative Process Committee in cooperation with the Office of the Legislative Fiscal Analyst. It was limited to identifying costs of incarceration in county jails and to reviewing efficiency/ effectiveness issues in officer training, medical services and therapeutic services. The report also reviews some security issues.

Full Report -A Performance Audit of the Utah Department of Corrections

9. Summary of Report 98-09: PUBLIC EDUCATION CAREER LADDER PROGRAM

The Career Ladder Program is well-supported by Utah's educational system and appears to provide a benefit. However, it does not operate as a true merit pay program that primarily rewards outstanding teachers. Rather, because of the controversy and divisiveness caused by a merit pay system, the Career Ladder Program essentially compensates teachers for curriculum and professional development activities and for assuming extra job responsibilities. If the Legislature desires a system that primarily rewards outstanding teachers, further study of program design is likely to be necessar

Full Report -A Survey of the Utah Public Education Career Ladder Program