AUDIT REPORTS PAY CRISIS IN SHERIFF'S DEPT.

Byline: Lee Condon Daily News Staff Writer

An audit of the Los Angeles County Sheriff's Department released Tuesday found widespread payroll and spending problems, and raises disturbing questions about management of the agency's $1 billion budget.

The audit by the county Auditor-Controller's Office found that the Sheriff's Department exceeded its overtime budget by $17 million last year; failed to put multimillion-dollar contracts out to bid; and purchased items without appropriate approvals.

In one example, eight sheriff's sergeants each earned between $50,000 and $60,000 in overtime.

In another case, the audit determined one vendor providing inmate counseling has held a contract unchallenged since 1973. The contract currently is worth $8 million.

``The overall conclusion of our review is that the department does not have sufficient control over its payroll operations,'' wrote Alan T. Sasaki, the county's auditor-controller. ``Certain managers and staff are either unaware of requirements and procedures or are choosing not to comply with them.''

The audit released is one of a series of audits of the department, which the Board of Supervisors requested in the aftermath of its budget crisis. Board members complained they had little information about the department's $1 billion budget, and no idea where to start cutting back.

Sheriff Sherman Block could not be reached Tuesday. As part of the audit, Block and his staff responded to each of the recommendations in the report.

Undersheriff Jerry Harper said the department's 13,000 employees have been told they need to comply ``100 percent'' with county rules regarding overtime, contracts and purchasing.

``We're not taking this lightly,'' Harper said.

As for some of the more glaring examples the auditors noted, Harper said they show that the department needs to put more safeguards in place.

``We certainly didn't know these specific things were happening or we would have stopped it. These are not general practices,'' Harper said. ``We anticipate that at the end of this process that the Sheriff's Department will be a much stronger department. We're not there yet.''

County supervisors said they were alarmed by the findings, especially instances uncovered by the audit in which the department apparently misled the board about who low bidders were on contracts.

``I'm shocked,'' said Zev Yaroslavsky, chairman of the Board of Supervisors. ``The findings of the audit are very troubling and cry out for a total restructuring of the Sheriff's Department budget.''

Supervisor Yvonne Brathwaite Burke said the Sheriff's Department will face increased budget scrutiny.

``The Sheriff's Department is not sacrosanct anymore,'' she said. ``The idea developed over a period of time that nobody was ever going to question them. The Sheriff's Department has operated without being in the public eye.''

This was the first county audit of the department's payroll, contract and procurement operations to be conducted since the late 1980s.

Among the findings:

At least 100 employees worked in excess of 650 hours of overtime, which averages out to more than 12 hours a week, contributing to a $17 million overrun in overtime budgets.

Employees continued to receive bilingual pay bonuses for years after they had switched to positions that do not qualify for the bonuses. In other cases, employees received night bonuses while working days.

Security is lax at the Men's Central Jail pharmacy, where all pharmacy staff members have the ability to place orders for supplies.

When the department put contracts out to bid, the process for scoring the bidders was inconsistent.

``We noted instances where the winning bidders were given points for information that was not in their proposals, while losing bidders had points deducted when their proposals contained the required information.''

Staff members are not required to sign time cards, a violation of county policy.

Purchases have been fragmented into parts in order to get around the requirement that all purchases over $5,000 be approved by the county's Internal Services Department.

For two years, the department increased a $6.4 million contract by $900,000 per year without notifying supervisors. The Sheriff's Department is required to get approval from the board of all contract increases exceeding $100,000.

In their response, Block and sheriff's officials offered several explanations for why some department operations were out of line.

As for the overtime, Block cited costs associated with the Malibu-Calabasas wildfire, the O.J. Simpson civil trial, the Twin Towers jail transition, multiple-murder investigations and inmate disturbances.

Undersheriff Harper said the department has had to pay out a lot of overtime in part to cope with vacancies in the department that could not be filled because of the budget crisis. Department officials wrote that they would have administrators review overtime expenditures on a monthly basis. They noted that a special committee has been formed to identify improper bonuses.

To address contracting problems, the department suggested its new Contracts Unit, in operation for the last eight months, would be able to correct the competitive bidding problem.

The department will implement new purchasing evaluation processes and review procedures, officials wrote.

Yaroslavsky said the audit shows the need for greater independent oversight of budgets overseen by elected officials like Block, District Attorney Gil Garcetti and Assessor Kenneth Hahn.

In November 1996, Kurt R. Sjoberg, state auditor, concluded that the Sheriff's Department could save $44 million by closing its bakery, converting jail and administrative jobs to civilian posts, and cutting costs at the Twin Towers Correctional Facility.

Last month, KPMG/Peat Marwick released a management audit recommending that the department could save $16 million to $22 million a year by cutting the number of managers and converting some sworn positions to civilian jobs.