JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION

MEMBERS

ChairmanDelegate Richard M. Bagley

Vice ChairmanSenator Hunter B. Andrews

Delegate Robert B. Ball. Sr.Senator Herbert H. BatemanSenator John C. BuchananDelegate Vincent F. Callahan, Jr.Delegate L. Cleaves ManningDelegate Theodore V. Morrison. Jr.Delegate Lacey E. PutneyDelegate Ford C. QuillenSenator Edward E. WilleyCharles K. Trible, Auditor of Public Accounts

DirectorRay D. Pethtel

Outcomes of Legislative EvalL.wtion................. 5

Ongoing Projects............ 37

1

Page

Table of Contents

Regular Proj ect s , 4...................... 21Federal Funds , 4...................... 21Use of Consultant s 4..... . . . . . . . . . . . . . . . . . 22Deinstitutionalization _...................... 23VPI&SU Extension Division _ . . . . . . . . . . . .. .. . . . . . . . 24Sta t e-Dwned No t o r Vehicle s. . . . . . . . . . . . . . . . . . . . . . 25Camp Pendleton _...................... 26Capital Outlay 4' • • • • • • • • • • • • • • • • • • • • • 26VSRS. . • • . . . . . . • . . . . . . • • •. •..•••.........•..•...• 27Sunset, Zero-Base BudgetiJOg, Evaluation 28Zero-Base Budgeting? 4 •• • • • • •• • • • • • • • • • • • • • • 28The Sunset Phenomenon _...................... 29Stat e-Dwned Aircraft " •........•............. 29Marine Resources......... •...................... 30State-Owned Land. . . . . . . .• 30Vocational Rehabilitation....................... 31Water Resources.......... . ...•...•............... 32VllIS. • . . • . . . . . . . • • . . • . . •• •••..••..•.•..•.•...... 33Drug Abuse Cant rol Program...................... 34Working Capital Funds.... .....•................. 34Virginia Community College System............... 35

Subcommittees Which Have Served with JLARC 38

Evaluation Act Projects ..•.. _...................... 11Transportation Series " . . . • . . .. . . . . . . . . 11

DHT Organization and ACiministration .•........ 11Cost Responsibility Methodology. . . . . . . . . . . ... 12

Social Services Series ... _. . . . . . . . . . . . . . . . . . . . . . 13SDW Organization and Aciministration 13Title XX .•............ _...................... 14General Relief ..•..... _...................... 15Homes for Adults _ , • 16

Heal th Series _.. . . . . . . . . . . . . . . . . . . . . 17Certificate-of-Need _...................... 17Outpatient Care _...................... 18Inpatient Care ......•. 4...................... 18Health Care Overview.. 4...................... 19Long Term. Care........ ... . • . . . . . . . . . . . . . . . . . . . . 20

JLARC Purpose and Role .

July 10, 1981

The Honorable Members of the Virginia General AssemblyState CapitolRichmond, Virginia

My Dear Colleagues:

it is my pleasure to transmit to you the second biennial report of the JointLegislative Audit and Review Commission. This Report to the General Assemblyincludes a summary statement on each Commission project completed to date, andfocuses on how agencies have responded to legislative oversight findings andrecommendations.

One of OUf major accomplishments during the past two years has been the fullimplementation of the Legislative Program Review and Evaluation Act. Two series ofreports, one dealing with health cafe subjects and one dealing with social servicesubjects, have been completed. A third series of reports which evaluates highway andtransportation issues is nearing completion. The series approach is important because itanows a more comprehensive review of each function of State government than wouldbe possible if we limited our work to single topics in each area.

During 1980, a select committee assessed JlARC's performance in implementingthe Evaluation Act. The committee concluded that the act has worked very well. Ourrecommendations have influenced many program and management improvements. Infact, the follow-up findings we report on for 1981 have shown that: the GeneralAssembly has been successful in generating a great deal of useful inforrr-iation. JlARCreport findings and recommendations have saved the Commonwealth rnilli ons of dollarsand greatly improved the effectiveness and efficiency of governmental agencies andprograms.

Virginia's prominence in legislative oversight is recognized far beyond the boundariesof our Commonwealth. JLARC has received several awards for research excellence. Ithas been cited for consistently high quality products by its peers. Because of itssuccess, the Commission has been requested by the Eagleton tnstttuts at RutgersUniversity to participate in a national study of legislative oversight.

The bottom line that I use to judge the value of legislative oversiqh t . however, isresults. And I believe the results shown in this report speak highly of the efforts ofthe Virginia General Assembly and the cooperation of the executive agencies withwhich we work.

My two years as chairman of JLARC have been challenging and rewarding. 1 amproud to submit this document for your review.

JLARC Purpose and Role

The Joint Legislative Audit and ReviewCommission is an oversight agency for theVirginia General Assembly, It was established in1973 to review and evaluate the operations andperformance of State agencies, programs, andfunctions.

The Commission is composed of sevenmembers of the House of Delegates appointed bythe Speaker, four members of the Senateappointed by the Privileges and ElectionsCommittee, and the Auditor of Public Accounts,ex officio. The chairman is elected by a majorityof Commission members. A director is appointedby the Commission and confirmed by the GeneralAssembly for a six-year term of office. Thedirector is responsible for employing staff andmanaging staff activities.

Under authority of Section 2,1-155, Code ofVirginia, the Commission serves as the point oflegislative focus for financial audit reports, Theability of the Legislat... re to assess agencyperformance is enhanced by this combination ofprogram and fiscal reviews.

Working capital funds are used to finance andaccount for support ser-vices provided by oneState agency to another , Section 2.1-196,1 ofthe Code of Virginia gives JLARC authority toestablish new working capital funds and todiscontinue those no longer needed, JLARC canalso authorize the transfer of excessive retainedearnings from working capital funds to the Stategeneral fund. To carry out these responsibilities,the Commission reviews on a continuing basisworking capital funds for graphics, systemsdevelopment, telecom munications , centralwarehouse, and computer services.

To carry out its mandate, JLARC issuesseveral types of legislative reports. Performancereports evaluate the accomplishment of legislativeintent and assess whether program expendituresare consistent with appropriations. Operationa!reports are made on practices of State agenciesin making efficient and effective use of space,personnel, or equipment. Special reports are madeof State operations and functions at the directionof the Commission or at the request of theGeneral Assembly.

Fulfilling the Mandate

The Statutory MandateThe reporting responsibility assigned to the

Commission is specified in Section 30-58,1, Codeof Virginia, Reports of findings andrecommendations made by JLARC are to include:

@Ways in which agencies may operate moreeconomically and efficiently.

eWays in which agencies can provide betterservices to the State and to the people,

@Areas in which functions of State agenciesare duplicative, overlap, fail to accomplishlegislative objectives, or for any other reasonshould be redefined or redistributed,

The Commission has also been assignedauthority to make supplemental studies andreports relating to its evaluations. Once eachbiennium, the Commission conducts a systematicfollow-up of its work. From time to time, usuallycoinciding with the biennial report, agencies arerequested to file "status of action" reports ontheir efforts to address the Commission's findingsand recommendations. Special follow-up studiesare required in cases where the Commission hascited waste, extravagance, fraud, or misuse ofpublic funds,

The specialized accounting and financial auditresources of the Office of the Auditor of PublicAccounts are also available to the Commission.

Senator Willey Delegate Bagley Delegate Ball

1

Generalmatterson the

the attention of theany significant policy

a subject that may be

Senator Andrews Delegate ManningIn the delivery of health care services, and anassessment of the pilot review. The purpose ofthe provision was to provide an early opportunityfor improving the Evaluation Act based on theexperiences of members, staff, and agencies inactually working with it,

The pilot review effort lasted about two yearsand resulted in five health care reports. Thestudies were coordinated with the SenateCommittee on Education and Health and theHouse Committee on Health, Welfare andInstitutions.

The Commission was assisted in itsassessment of the pilot effort by a selectcommittee composed of legislative and executiverepresentatives. The committee met in October1980 and reached two major conclusions. First,the Evaluation Act was working effectively andneeded no statutory revisions. Second, the studyprocedures were basically sound. Suggestedrefinements and clarifications included thefollowing:

elncrease agency involvement in selectingstudy topics,

.Give agencies sufficient time in which toreview exposure drafts and prepare writtenresponses.

-Achieve better balance in report tone bygiving more credit for positive performance.

-Involve study subcommittees in follow-upactivities.

eBring toAssemblyregardinghorizon.

The Commission is considering ways in whichto implement the committee's recommendations.

Legislative Program Review andEvaluation Act

One provision of the Evaluation Act called fora piiot review of programs and agencies involved

Health Pilot Assessment

In 1978, JLARC embarked on a uniqueapproach to oversight under the auspices of theLegislative Program Review and Evaluation Act.The act provides for periodic review andevaluation of selected topics from among theseven program functions of State government.The functions are classified as (1) Individual andFamily Services, (2) Education, (3) Transportation,14) Resource and Economic Development, 15)Administration of Justice, (6) Enterprises, and (7)Genera! Government.

The Evaluation Act has three major thrusts, Itinvolves legislators from standing committees ofthe House and Senate in the process of selectingand scheduling topics for JLARC study, It setsout a procedure for coordinating oversight studiescompleted by JLARC with the standingcommittees which have jurisdiction over thesubject under review. lt encourages utilization ofoversight information by requiring a public hearingon the review subject after completed reportshave been transmitted to the General Assembly,

Since 1975, JLARC has issued 34 rep orisincluding 28 evaluative studies, three reports onlegislative oversight, and three descriptivesummaries. Each report is annotated in thispublication, In addition, eight letter reports havebeen prepared on specific topics of interest tothe Commission. Twelve new projects are inprogress.

to produceof agency

examples ofby JlARC

Mr. Pethtel Delegate Callahan Delegate Putney

distinctions among types of highwayprojects and, therefore, increased theaccuracy of cost allocation by vehicle class.

.Analysis of aerial photographs was used asan unobtrusive way 1:0 examine unauthorizedconstruction at State institutions.

sAnalysis of 488 ra ndornlv selected socialservice cases yielded descriptive informationon welfare clients and the services theyreceived. Because of the representativenature of random samples, a variety ofdescriptive information could be estimatedstatewide, and a profile could be developedof a typical Title XX client.

oA random survey of 2,690 communitycoheqe students, teachers, and counselorswas used to assess student satisfaction,test enrollment cl .asaifications, documentfaculty productivity, and measure counselingworkload.

filA computerized sirm.station of reimbursementformulas used by third-party pavers.including 81ue Cross, Medicare, Medicaid,and State welfare offices, analyzed theimpact of indigent care and occupancy levelson hospital rates.

Senator WilleySenator Bateman

eTa determine the quality of care available inhomes for adults. experts in the fields ofnutrition, sanitation, and fire safety wererequested to evaluate a randomly selectedsample of homes. The experts' ratings wereused as one measure of quality of care.

GAs part of a complex vehicle costresponsibility study, the equitable allocationof costs among users of Virginia's highwaysystem required analysis of manyconstruction projects. Highway designcharacteristics of all projects completed in1980 were collected and used to clusterprojects into 18 groups for analysis. Theclustering procedure permitted an allocationof costs which was sensitive to the

Research MethodsOne characteristic of JlARC work is its

methodological rigor. This use of rigorous researchmethods increases the accuracy and reliability ofthe information reported by JlARC.

Applying rigorous methodologies to thepractice of legislative oversight requires a varietyof research tools, such as statistical sampling,survey instruments, recording schedules, and data

analysis techniques. The use of each method isweighted to determine if it will yield appropriateand reliable information that will hold up to publicscrutiny.

Research methods are selectedinformation about specific aspectsoperations or program impacts. Someresearch methods and tools usedinclude the following:

oA variety of computerized statistical packagesis used in research analysis. The StatisticalAnalysis System (SASI and the StatisticalPackage for the Social Sciences (SPSSI arecommonly used. These computer packagesallow staff to do statistical analysesinvolving massive numbers of calculations ina minimal amount of time. In one study,the SAS general linear model procedure wasused to determine which of 45 residenciesof the Department of Highways andTransportation had productivity that washigher or lower than would normally beexpected on 14 maintenance activities. Thehigh and low residencies were then targetedfor further field investigation to determinedifferences in operations and organizations.

The StaffThe JLARC staff director is responsible for

preparing the budget, hiring personnel,administering the organization, managing research,and long-range planning.

The staff is organized into two researchdivisions, each headed by a division chief. Projectteams, commonly ranging in size from two tofour people, are assigned to the divisions foradministrative and research purposes. Teamleaders have responsibility for project management

Audit and Review ProcessLegislative oversight projects begin when the

Commission, or one of its subcommittees,identifies a topic for review. The Commissionauthorizes project initiation and the project isassigned to a staff team.

A work plan is prepared which documentsthe research approach to be used by the team.After the team completes its research, it preparesa report which is reviewed internally andsubjected to quality control standards.Subsequently, an exposure draft is distributed toappropriate agencies for review and comment.The exposure draft, which contains any commentsan agency wishes to make, is reported to theCommission.

The Commission, or one of itssubcommittees, reviews the report and preparesan action agenda. The agenda includes keyfindings and recommendations that theCommission wishes to endorse. Copies of theaction agenda are distributed to legislativecommittees and other appropriate officials.

The Commission authorizes distribution of thestaff report and recommendations to theGovernor, members of the General Assembly, andother interested parties.

I JOINT l-IOGlSLATlVe AUOlT AND l'lEVlIOW COMMISSION II DlReCTOl'l I

I ASStSTANT IQlReCTOl'l

OFfiCE Ofl"lCE , speCIAl- 51SeFNlCES MANAGER ASSIGNMENTS

DIVISION DlVlSlON ICHIEF CHIEf

IResEARCH I-~I lEGAl- I I <>ROJECTPROJECT METHODS RESEARCHTEAMS TEAMS

I f>Uel-ICA-TION ISERVICES

JlARC Organizational Structure

and directing teams on a day-to-day basis. Theteams are supported by specialists in researchmethods, !egal research, and publication services.

The varied education, training, andprofessional experience of the research staff are

important to the Commission. Among the fieldsrepresented by undergraduate and graduateeducation are business administration, economics,education, engineering, English, journalism, law,philosophy, planning, political science, psychology,public administration, and urban systems. Mostmembers of the research staff have graduatedegrees.

Staff titles reflect formal education, training,and experience at JLARC. The titles are assistant,associate, senior, principal, and chief analyst.Promotions are based on merit. Salaries arecompetitive with those of similar types ofexecutive and legislative employment, and eachstaff member participates in State-supportedbenefit programs. Professional development isencouraged through membership in relevantassociations, on-campus credit instruction in fieldsrelated to the work of the Commission, andin-service training programs.

The staff participates in preparing both theagenda and subject matter briefings for themonthly meetings of the Commission.

JLARC is housed on the tenth and 11thfloors of the General Assembly Building, adjacentto the State Capitol. Library and computerservices are available in the legislative building.Mr. TribleDelegate Morrison

Outcomes of Legislative Evaluation

Legislative evaluation of State agencies andprograms can be a powerful tool for goodgovernment. If evaluation findings are used, theresults can be significant.

Cost savings are the most visible outcome.JLARC recommendations and agencyimplementation have resulted in measurable costsavings and economies that exceed $43 million.These savings have involved such items as thesale or transfer of State-owned land, use ofexcessive balances in special purpose accounts,improved debt collection, and more efficientvehicle management. Frequently, however, savingsare difficult to measure. They may take the formof deferred spending or postponed increasesrather than actual cost reductions.

Improvements in the administration andmanagement of programs are another importantevaluation outcome. Supplying needed services isthe business of government, and improvedeffectiveness means better performance indelivering services.

Specific legislative mandates are created whenlegislation is written and enacted. Evaluation canassess compliance with such legislative intent.

This section reports on outcomes of legislativeevaluations performed by JLARC. Examples havebeen taken from selected reports to illustrate thefollowing:

etrnprovemsnts in compliance with legislativeintent.

elmprovements in management practices.

elmprovements in program practices.

eCost savings, economies, and transfers.

Some changes are direct outcomes ofJlARC's evaluation. In other cases, evaluationserved as a catalyst for improvements.

Improvements in ComplianceWith Legislative Intent

Appropriation of Federal Funds

Virginia's constitution provides that "nomoney shall be paid out of the State Treasury

except in pursuance of appropriations made bylaw.' ' To provide the Stare with needed flexibilityto receive unanticipated federal funds duringlegislative interims, the General Assembly madeprovisions for the acceptance and expenditure offunds not specified in the Appropriations Act,

While this provision gave agencies neededflexibility, JLARC found that, during the 1978-80biennium, over one-half billion dollars in federalfunds was authorized for expenditure withoutlegislative participation. Overuse of this budgetprocedure represented a significant erosion of theGeneral Assembly's appropriation prerogative.

As a result of JLARC's identification of thisissue, a limit was estab lished on amounts thatcan be routinely received in excess ofappropriations. The feasibility of more accurateagency estimates was demonstrated at the 1980Session when, in response to legislative pressure,agencies offered $29 million in budgetamendments dealing vvith expected federalfunding.

Rights of Nursing Home Patients

In 1976, the General Assembly passed anursing home patient bill-of-rights which includeda mandate that patients be free to complain tooutside Sources without fear of reprisal. Despitethis mandate, a 1978 JlARC study found thatthe State did not have an effective way toprocess complaints. Many complaints did notreach the proper authorities and evidencesuggested that patients who did not have familiesor frequent visitors had no effective way to voicea complaint.

In response to JLARC recommendations,legislation was passed assigning the Departmentof Health lead responsibility for resolving nursinghome complaints. A complaint coordinator nowhandles all complaints in accordance with writtenprocedures. The department has also revised therules and regulations for the licensure of nursinghomes to include a section on patients' rights. inaddition, a telephone hotline has been establishedin the Office on Aging to receive complaints ofnursing home residents.

Improvements in ManagementPractices

Reduction of VIMS Deficit

As early as 1976, JLARC reported the startof an operating deficit at the Virginia Institute ofMarine Science (VIMS). Subsequent auditsrevealed a $6,9 million deficit as of June 30,1980. Since VIMS merged with the College ofWilliam and Mary On July 1, 1979, there havebeen significant improvements in VIMS's financialmanagement. The college reports VIMS is nolonger operating at a deficit. Reduced vesseloperations have resulted in savings of $200,000.Beginning June 30, 1981, VIMS anticipatesmaking an annual contribution of $400,000toward reducing the past accumulated deficit.

Reducticn of Title XX ProgramOverexpendlture

JLARC found that the State had overexpendedits allotment of federal Title XX funds by a totalof $3.95 million for two of three federal fiscalyears. Conditions which led to this programdeficit included overallocation of available funds,late billing by some agencies, inadequatemonitoring of fund balances, and unanticipated

federal actions.

The Commission recommended that theDepartment of Welfare develop a plan foramortizing the over expenditure of federal fundsand concentrate its efforts on monitoring andcontrolling expenditures in a period of tightenedresources.

The Department of Welfare has taken stepsto amortize the Title XX overexpenditure andprojects that federal funds will be in balance bySeptember 30, 1981.

Reduction of Case Worker Errors

A 1980 JlARC review found that inapproximately 24 percent of genera! relief caseslocal workers made judgmental or proceduralerrors which resulted in incorrect payments orpayments to ineligible persons. The cost of theseerrors was estimated to be at least $1.3 millionand possibly as high as $2.2 million.

To strengthen program administration, theCommission recommended that the Department ofWelfare increase casework monitoring to assessworker compliance vvith program requirements anddevelop guidelines for local workers on verifyingclient eligibility.

The Department of Welfare is developing astatewide financial services monitoring systemthat will include the general relief program. Thedepartment reports that the system will identifyproblem areas, and that corrective action initiatedby State and local staff should reduce errors. Thedepartment is also developing guidelines onverifying eligibility to be included in the generalrelief manual,

Deferral of Highway EquipmentPurchases

A 1980 JLARC review found that much ofthe Department of Highways and Transportation'sfleet equipment was underutilized. JlARC analysisshowed that as much as $9.4 million could besaved by deferring purchase of replacementequipment. The department reports thatapproximately $8 million has been saved throughsuch deferrals.

The departmenr has appointed a specialcommittee which is studying criteria forpurchasing equipment, setting utilization standards,and finding ways to reduce the equipmentinventory. Plans have also been announced tosignificantly reduce equipment purchases over thenext two years.

Unified BudgetingIn 1978, the State's capital outlay budget

process was separate from the operating budgetprocess. Because of this split, no one agency

performed a comprehensive program review ofcapital outlay requests. Some recently builtprojects were standing vacant or not being usedas originally planned because operating needswere not coordinated with capita! plans.

JlARC recommended unifying the budgetingprocess and this has been largely achieved. Thestatutory responsibility of the former Division ofEngineering and Buildings was removed by theGeneral Assembly in 1979. The Department ofPlanning and Budget: now directs a single system01 budgeting for both program and capitaloutlays.

JlARC's study of Camp Pendleton in 1979evaluated the potential use of camp property forrecreational, as well as military, purposes. Thestudy found that although the City of VirginiaBeach contained more than 37 miles of qualitybeaches, only one-fifth of this was open andaccessible to the public; To help alleviate thiscondition, JLARC encouraged the Department ofMilitary Affairs to facilitate greater public use ofits property, including a 1,200-foot beach. Thelegislature appropriated $100,000 to fund aparking lot near the beach.

Use of the Camp Pendleton beach hasincreased substantially. In 197B, the beach wasopen for use 35 days and total attendance was4,726. By 1980, the beach was open for use98 days and attendance had increased to28,692.

Improvements in ProgramPractices

Clarification of Mission and Avoidanceof Duplication

During the 1979 review of the ExtensionDivision of Virginia Tech, JlARC found thatcooperative extension program priorities were notclearly defined. Program growth had placed theextension division on a potential collision coursewith the mandates and programs of at least 23other State agencies.

ln response to Commission recommendations,the division developed a revised missionstatement which was approved by the 1981General Assembly. This statement restrictedprogram scope and helped clarify budgeting andprogramming functions.

Increased Use State Property

Cost reporting policies and procedures havebeen clarified and cost reporting forms are beingrevised by the Department of Welfare. For thefirst time, the department has generated actualcost data which the House AppropriationsCommittee has used in setting the maximumauxiliary grant rate.

The division has developed memorandums ofunderstanding with 30 Slate agencies defining thescope of activities to be carried out by eachagency; a duplicatedeffort; strengthened relationships with localcoordinating groups; and taken the lead inestablishing new coordinating groups where they

appear to be necessary.

Strengthened Licensure Procedures

The State Departm ent of Welfare hasstatutory responsibility for residentialhomes for adults and care facilities forchildren. In separate studies of adult and childcafe facilities, JlARC conducted on-siteassessments of cornet iance with minimumlicensure standards and reviewed the Departmentof Welfare's licensing and enforcement activities.Although most facilities were in compliance, somewere found to operate V\fith significant violationsof health and safety standards.

The Commission recommended severalcorrective actions, increased foroperators and licensure staff, use of unannouncedvisits for licensure decisions, expandedfor the State Fire Marshal In adulthomes, and improvement in the use of aprovisional license as a sanctioning device in alltypes of facilities,

The General Assembly has enacted le9islationto provide the fife rrrarshet with expandedauthority and to limit "the use of provisionallicenses to a six-month, non-renewableThe department has provided additional trainingopportunities to operators. Steps have been takento strengthen the inspection process by limitingadvance notice of compliance inspections andincluding results of unannounced supervisory visitsin licensure decisions.

WelfareImproved Rate-Setting

grants administered by theDepartment of Welfare pay for the care received

many residents of licensed adult homes. A1979 JlARC review found that grantrates were not based on reliable or audited costdata. The Commission recommended strengtheningthe auxiliary grant program by redesigning costreporting forms, requiring audited cost data, andbasing rates on reliable data.

7

Cost Savings,Transfers

Economies, and

GROWTH OF STATE SPENDING

ExpendituresInBillions

4

Sale of Surplus LandIn 1977, a study of land management

reported that 9,100 acres of surplus and unusedproperty were owned by the State. About 5 AOOacres of this property was valued at $10.3million. If some of the unneeded surplus landwere sold, the report concluded, revenue could begenerated for State needs.

In 1979, the Governor began to implementthe report recommendations. Ten properties havebeen sold, producing $678,663 in revenue. Sevenproperties valued at $15,042,000 have beentransferred between agencies to meet State needswithout additional real estate purchases. Increasedtimber harvesting on State-owned land hasproduced $55,927 in revenues.

-- Total Stateannual expenditures

Additional State revenues are expected fromimproved agency management of federal cashflow. JlARC identified $286,000 in annualinvestment revenues that the State should be ableto realize by improved use of federal letters ofcredit.

Potential annual investment

3

2

land sales .Property transfers .Timber revenue .

Investment of State Funds

revenue .

$678,663$15,042,000

$55,927

s 286,000

--- Adjusted for Inflation,1972 base year

70 71 72 73 74 75 76 77 78 79 80

Fiscal Year

inflation and the rrsmq costs of Stategovernment have resulted in the needfor increased legislative attention tothe evaluation of existing programsrather than the creation of new ones.

Working Capital Fund TransfersSection 2.1-196.1 of the Code of Virginia

gives JlARC responsibility to establish ordiscontinue working capital funds, which are usedto finance and account for central supportservices provided by one State agency to another.JlARC can also authorize the transfer ofexcessive retained earnings from such funds tothe State general fund. The Commission closed13 inappropriate funds in 1977. The Commissionhas directed the State Comptroller to transfer$1.2 million in excess retained earnings to thegeneral fund.

Transfer to general fund $1,332,000

New Debt Collection Procedures

Use of excess cash in healthrevenue account $4,100,000

Annual debt setoff revenue $500,000 to$2,000,000

During the JLARC review of social serviceprograms, the Commission proposed and the1981 General Assembly enacted the Setoff DebtCollection Act. The act requires State agencies toidentify delinquent bills owed to the State so theDepartment of Taxation can withhold any taxrefund owed the debtor. The legislation shouldhelp recover $500,000 in its first year ofoperation and as much as $2 million each yearthereafter.

1,332,000

$390,0002,900,000

95,22055,927

Reduction in general relief case

errors (annual)

Improved outpatient billingsImproved inpatient billingsDebt setoff collections lannual)

233,000678,663500,OQQ

$6,184,810

Opportunities for Recurring Savings$ 1.300,000­

2,200,000

2,000,0003,000,000

500,000­2,000,000

Investment revenue (annual) 286,000

$ 7,086,000- 90486,000

Total $43,200,799in addition to savings, transfers, and newrevenue, oversight has irrnproved legislative controlover federal funds ($29 million in amendmentsduring 1980 session) and community collegeenrollment forecasts ($9.1 million forecastrevision). Scrutiny of VIMS financial managementhas resulted in progress toward eliminating anoperating deficit totaling $6.9 million and growingat a rate of $1.5 million each year.

Ongoing Savings and RevenuePurchase of compact carsImproved Medicaid cost controlsCommuting revenue (annual)Timber revenueWorking capital fund tr a rtsfers to

the general fundRevenue from charging C EC

users (annual)Land salesReduction in low enrollment classes

JLARC's expenditures si nee its inception havetotaled $3.6 million. During this time, theCommission has recomm ended ways to save inexcess of $43.2 million, a potential return of $12in savings for every $1 spent.

A BALANCE SHEET ONLEGISLATIVE OVERSIGHT

One-Time Savings and RevenueSurplus property transfers $15,042,000Use of surplus health revenue 4,100,000Improved use of State cars 850,842Surplus motor pool fund use 1,788,057Improved motor pool billings 149,090Deferral of equipment purchases 8,000,000

$29,929,989

$233,000Annual savings from charging all

costs to facility users .. ""... "... ".

Use of Excess Cash

Collection of Revenues to SupportVPI&SU Continuing Education Center

The Continuing Education Center of VPI&SUprovides genera! extension education throughconferences and meetings. Significant costs forcenter operations were borne by theCommonwealth contrary to a generally held Statepolicy not to support non-credit activities fromthe general fund. JLARC recommended that thesecosts, which totaled $233,000 in FY 1978, becharged to facility users. As of July 1, 1980, thecenter had become completely self-supporting.

A 1979 review of outpatient health carefound that the cash balance held in a Departmentof Health revenue account was at timesunnecessarily high. The high balance resulted fromtwo factors: underestimation of revenues, and thepractice of collecting and retaining revenues foran entire fiscal year before using them in asucceeding year. JLARC recommended that excesscash held in the account be used as an offset tothe general fund appropriation for local healthservices. The resulting appropriations offsetrepresented an immediate, one-time savings tothe Commonwealth of $4.1 million.

9

Improved Management and Use ofState-Owned Vebicles

Medicaid Nursing HomeReimbursement

A 1978 JLARC review of long-term carefound that the Department of Health employed avariety of cost controls to ensure that Medicaid

A 1979 review of vehicle management foundthat the Commonwealth could save millions ofdollars by improving the use of its genera!purpose passenger vehicles. Many State cars wereunderutilized, and the minimum annual mileagecriterion for permanent assignment of a vehiclewas unrealistically high and therefore notenforced. State employees were not beingcharged for commuting, and financial managementof the central garage motor pool needed to bestrengthened. In addition, the State was movingaway from the practice of purchasing fuel efficient

cars.

Since the study, the State has savedapproximately $3.3 million by improving vehicleuse, charging employees for commuting in Statecars, using excess cash held in a surplus propertyaccount, reducing overdue accounts, andpurchasing compact rather than standard-sizedcars.

expenditures for nursing home care werereasonable and necessary. Not all of thesecontrols, however, were adequately developed orenforced, and the Commission recommendedstrengthening them. The department reports thatactions have been taken to strengthen costcontrols. Analysis of transactions between relatedparties has been improved, and the Medicaidprogram audit staff have disallowed $2.1 million inbuilders' profits that were inappropriately claimed.Audit staff have also improved their analysis ofinterest expense. In excess of $800,000 wasdisallowed as unrelated to patient care orunreasonable during FY 1979 and FY 1980.

$2,900,000

Cutlect ien

improved cost controls

Improved Billing andProcedures

Two 1979 health care studies found thatimproved billing and collection of fees charqsd topatients able to pay for medical services wouldbring more revenue to State health care agencies.A study of local health departments identified atleast $2 million in outpatient fees that had notbeen billed to patients. Similarly, a review ofState teaching hospital programs found about $3million in patient fees that had been written offas bad debts against State tax funds, eventhough the hospitals did not have adequatecollection procedures. Billing and collectionsystems have both been strengthened.

Potential billing procedures revenue $ 2,000,000Potential collection procedures revenue $ 3,000,000

$850,842

$95,220

$1,788,057

$149,090

$390,000

Improved utilization .

Annual commuting charges _ .

Use of surplus funds .

Reduction in overdue accounts .

Savings from compact cars .

HI

Evaluation Act

Transportation Series

Projects

Senate Joint Resolution 50, enacted by the1980 Session of the General Assembly, mandatedthat JlARC review the programs and activities ofthe Department of Highways and Transportation.The resolution called for JlARC to focus ontransportation needs, functions, expenditures,revenues, and methods of cost allocation. Review

efforts are being coordinated with the SenateCommittees on Finance and Transportation andthe House Committees on Finance and Roads and

Internal Navigation.

Two interim reports were1981. The first presented

released in Januaryfindings on the

organization and administration of the Departmentof Highways and Transportation. The seconddescribed a cost responsibility methodologydeveloped to analyze the balance between userrevenues and user costs of the Commonwealth'shighway system.

Four final reports are under way. Theorganization and administration interim reportdivided into two areas for further study:construction needs, and organization andmanagement. Studies on transportation financingand findings of the cost responsibility study arealso in progress. These studies are described inthe section on ongoing studies and activities.

DUT Organizationand Administration

The Department of Highways andTransportation is one of the largest Stateagencies. It has approximately 12,000 authorizedstaff positions and was appropriated about $1.9billion for the 1980-82 biennium. The departmentis responsible for construction and maintenance ofapproximately 111,000 lane miles, thethird-largest state-maintained highway system inthe United States. During FY 1980, approximately500 construction projects valued over $650million were under way. The department alsospends almost $200 million annually to maintainthe existing highway system.

This interim report focused on departmentalactivities in construction planning and fundallocation procedures, equipment management,contract administration, organization, and staffing.

Every year the department uses an allocationprocess to budget highway construction funds.Policy direction from the Legislature and inputfrom local officials and the general public serve asthe basis for allocation decisions. Allocations areviewed by legislators and the general public as acommitment to construct specific projects.

JlARC found that actual expenditure patternsoften varied from allocations. Over the past 15years, $248 million allocated to urban, primary,and secondary road systems was spentelsewhere. In contrast, expenditures for theinterstate system exceeded allocations by $72million over this period. Such variations may notbe consistent with legislative intent, tend tomislead public officials, and do not provide anadequate basis for State budgetarydecision-making. Other important findings includedthe following:

eThere is a need to provide the public andthe General Assembly with up-to-date,accurate information on the status andpriorities of the construction program. Thepresent system of multiple plans, allocation

lists, programs, and construction schedulesprovides only a limited amount ofinformation to interested observers outside

of the department.-Weaknesses in the management of fleet

equipment contributed to the purchase andretention of potentially unneeded equipmentand corresponding underutilization. JlARCanalysis showed that as much as $9.4million could be saved in FY 1981 bytransferring available underutilized equipmentinstead of purchasing items.

11

Methodology tor a Vehicle CostResponsibility Study, January 12, 1981 (70 pp.)

Cost ResponsibilityMethodology

cost ofState's

thethe

Rising construction and maintenance costshave placed an increasing strain on Virginia'sability to meet its highway needs. As part of itsresponse to this problem, the General Assemblypassed Senate Joint Resolution 50, whichdirected JLARC to study the "lair apportionmentand allocation of the cost 01 building andmaintaining the roads and bridges 01 theCommonwealth between motor vehicles of varioussizes and weights."

JLARC began this study by developing a costresponsibility methodology to analyze therelationship between highway revenues contributedby various vehicle types and the costs ofproviding roads and bridges suitable for their use.The methodology was proposed by a planningteam headed by JLARC staff and assistedpersonnel from the Department of Highways andTransportation and the Virginia Highway andTransportation Resear-ch Council. The methodologywill be implemented by JLARC staff.

Three principles guided development of thecost responsibility methodology:

OHighwey users should pavconstructing and maintaininghighways.

-Increasing vehicle size and weight increasesconstruction and maintenance costs inmeasurable increments.

@The proportion of revenues contributed byeach vehicle class should be equal to theproportion of construction and maintenancecosts which can be assigned to that class.

The design of the cost responsibility studywas based on Virginia's actual highwayexpenditures, revenue sources, and constructionand maintenance standards. Much of themethodology was keyed to empirical analysis of170 sample construction projects completed in FY1980. Grounding the methodology in this wayyields the most accurate data, and increases theGeneral Assembly's ability to use the results.

The findings of the cost responsibility studywill be contained in a broader report on Virginia'shighway and transit financing structure to bepresented to the 1982 General Assembly.

@Procedures used the department inpreparing and awarding contracts requiredstrengthening. The prequafification processdid not ensure complete and accuratedisclosure of corporate affiliations. Thepre-bid estimate, intended to serve as acheck on the reasonableness of bids, mayhave actually added to the costs of a fewprojects because of the way it was used bythe department. In addition, managementtools used to enforce time limits oncontracts did not appear to be fullyeffective.

e'The department is facing an era of decliningrevenues. As a result, some previouslyappropriate policies regarding organizationand staffing need to be reconsidered. Forexample, a reorganization of the maintenanceprogram, focusing on two factors, couldresult in a 13 percent increase in staffproductivity. These factors are a reduction infield offices, which would free administrativestaff for other purposes, and an increaseduse of part-time employees to meetpeak-period workloads.

Clarification of legislative intent regarding therelationship of allocations to expenditures, thepreparation of a complete status report on ailactive projects, and the preparation and annualupdating of a multi-year construction programwere recommended by the Commission tostrengthen construction planning and allocation.

To improve utilization of fleet equipment,JLARC recommended systematic assessment ofuse. In addition, the department was urged todefer fleet equipment purchases until an improvedneeds assessment process has been implemented.

The Commission also recommended evaluationof alternatives for organizing and staffing highwaymaintenance operations and measures tostrengthen contract administration. Measuresincluded revision of the application form to requirethat all officers and owners of prequalified firmsdisclose interests in other prequalified firms,regular verification of a sample of applications,fuller use of performance reports, and revision ofthe bid proposal to require contractors to statethe source of personnel and equipment to beused on a project.

Organization and Administration of theDepartment ot Highways and Transportation,January 12, 1981 (85 pp.)

12

Social Services Series

and oversight of localdid not adequately ensure

by esufficient to

comprehensiveto the

Senate Joint Resolution 133, enacted duringthe 1979 Session, directed JLARC to evaluateprograms and agencies in the individual and

services area. Review efforts werecoordinated with the House Committee on Health,Welfare and Institutions and the SenateCommittee on Social Services and Rehabilitation.

Socia! services were selected for in-depthstudy because of the dramatic growth of welfareprograms during the 19605, as well as theadministrative complexity of the system. Nearly

SDW Organizationand Administration

The fourth and final report in the socialservice series focused on the administrativeefficiency and organizational effectiveness of theState Department of Welfare. has aState-supervised, locallv-adrnirustered system, Thatis, the State develops program policy, procedures,and administrative support systems, but clientcontact IS carried out staff in the 124 localwelfare agencies. The Department of Vvelfare alsohas responsibility for adult and child carefacilities, and for child supportpayments from parents who abandon their

children.

The report found that the Department ofWelfare had developed useful procedures forsystem management. The needed tobuild on this foundation to enhance the system's

to changing conditions and tomeet increasing needs for programmatic andadministrative accountsbilitv. Key findings in thereport include:

@The effectiveness of several departmentalorganizational units required improvement.The responsiveness of regional staff to localneeds was hampered by unclear roles andconflicting directions from central officestaff, In addition, the department had notfully developed or used internal auditors andresearch staff.

-SDW's supportprogram delivery

50 types of financial assistance programs andsocial services were provided in FY 1980 to473,000 people at a cost of $359,7 million, TheState Department of Welfare develops programpolicy, procedures, and administrative supportsystems but most client contact is carried out bycaseworkers at 124 local welfare aqencies,

Studies completed were on homes for adults,the general relief proqr'arn. Title Xx, and theorganization and administration of the Departmentof Welfare,

clear and timely policy direction, appropriatestaffing levels, or consistent fraud detection.

@The majority of licensed care facilitiesfor children offered good care. oomefacilities, however, operated with numerousviolations of health and safety standards.

@There was substantial potentia! to recovermonies owed to the State for child supportof Aid to Dependent Children families.Progress had been made inadministrative problems that had impededcollections in the past, but staffingand accounting difficulties still existed.

The Commission made severalrecommendations to improve theability to ensure consistent administration ofprograms across the State and to assess agency

recommendations included

strengthening regionalcentral office position withresolve organizationalreporting of internal auditState Board of Welfare; and enforcingstandards in local aoerrcies. Overstaffing as ofJune 1980 totaled 482 positions that cost from$4.7 to $7,3 million, Proper adjustment ofunderstaffed positions would offset some of thiscost.

The Commission also addressed means ofreducing fraud and recouping funds throughincreased support of local fraud detection effortsand improvements in collection of child supportpayments,

Update. Recovery of delinquentsupport enforcement collections wil! be easier asa result of legislation proposed by JLARC and

enacted by the 1981 General Assembly. TheSetoff Debt Collection Act requires all Stateagencies to identify delinquent bills owed to theStale so the Department of Taxation can withholdany tax refund owed the debtor. The legislationshould help recover $500,000 in its first year ofoperation and as much as $1-2 million each yearthereafter.

Consistent with recommendations regardingthe licensure of homes for adults, JLARC calledfor unannounced compliance inspections ofchildren's day care facilities and a strengthenedenforcement process, In response, the Departmentof Welfare proposed and the 1981 GeneralAssembly approved legislation providing that aprovisional license may only be used for asix-month, non-renewable period. A conditionallicense may be granted for new facilities notpreviously licensed.

Several other actions have been reported bythe department. First, an additional fraud trainingposition has been created to provide moresupport to local fraud workers. Second, thedepartment has developed measures to increasethe effective utilization of support enforcementstaff. Third, the department is establishing acentral monitoring and evaluation unit. Fourth,steps are being taken to update, validate, andfully implement caseload standards, themechanism used to control IDea! staffing levels.Both under- and overstaffing will be corrected tobring agencies into compliance with standards.

Organization and Administration of SocialServices in Virginia, April 13, 1981 (136 pp.)

Title XXTitle XX of the Social Security Act of 1974

is the principal funding source for social servicesin Virginia. In FY 1980, State expenditures underTitle XX totaled more than $94.4 million.JLARC's study of Title XX focused on the StateDepartment of Welfare's use and administration ofthese funds, and included a special analysis ofthe characteristics of clients served and servicesreceived.

In keeping with legislative intent, theDepartment of Welfare successfully expandedservice programs and increased the number ofrecipients in order to use all available federalfunds. In a typical month, 172,000 people wereincluded on service rolls.

JLARC found, however, that the Slateoverexpended its allotment of federal Title XXfunds for two of three federal fiscal yearscovering 1978-1980. Conditions which led to thiscontinued overexpenditure and a growing Title XXprogram deficit included overallocation of availablefunds, late billing by some agencies, inadequatemonitoring of fund balances, and unanticipatedfederal actions.

Key findings of the report included thefollowing:

oThe formula used by the State Departmentof Welfare to allocate funds to localagencies did not fully measure local need. Amajor component of the forrnule--caseloadfigures reported by local agencies-was foundto be inflated by 20 percent, furtherdistorting the calculation of local needs.

oThe federal cap on Title XX funds hadlimited the growth of social services inVirginia. Attention needed to be focused onincreased efficiency in service delivery andsetting priorities among services.

"The process for establishing rates forpurchased services was, in most cases,based on undocumented costs withoutsystematic guidance or oversight from thedepartment's central office. As a result,rates may not have reflected the actual costof providing services.

JLARC's special analysis found that manysocial service clients are either children or elderlyand unable to care for themselves. About 40percent of the cases included someone who washandicapped or ill. Most adult clients had littleschooling.

JLARC recommended that the Department ofWelfare develop a plan for amortizing the

ovsrexpenditure of federal Title XX funds andconcentrate its efforts on monitoring andcontrolling expenditures in a period of tightenedresources. The Commission also recommendeddiscontinuing the allocation of more Title XXfunds than are projected to be available,developing an allocation formula which betterreflects local effort and service needs, refining thecaseload reporting system, and systematizingrate-setting activities to ensure consistentprocedures and accurate rates.

1981 Update. The Department of Welfarehas taken significant steps to amortize the Title

XX overexpenditure and projects that federalfunds will be in balance by September 30, 1981(the end of the federal fiscal year). Thedepartment Is enforcing a 9O-day limit onpayment of Invoices, and has restricted thereallocation of Title XX funds among localities andState contracting agencies. The department hasalso discontinued the practice of overallocatingprojected federal funds during FY 1981-82.

The department has reported that it is in theprocess of revising the Title XX allocationformula. Alternative formulas are being exploredand updated census data will be incorporated for1981-82 allocations. In addition, a negotiator'smanual is being developed for purchase of servicestaff to provide guidance and enhance consistencyin rate-setting and vendor monitoring.

Title XX in Virginia, January 12, 1981 (104pp.)

General ReliefThe general relief program provides cash

payments and emergency assistance to needypeople who are not eligible for federal incomemaintenance programs. Each locality determinesthe scope of local assistance in conformance withstandards developed by the State Department ofWelfare. The program is entirely funded by theCommonwealth and its localities. Approximately$10.2 million was spent during FY 1979 to aidabout 6,500 clients each month.

The evaluation focused on the administrationof general relief at the State and local levels. Amajor finding was that local eligibility workersmade judgmental or procedural errors in manygeneral relief cases. In approximately 24 percentof general relief cases, JlARC found that localworkers made errors which resulted in incorrectpayments or payments to ineligible persons. Thecost of these errors was estimated to be at least$1.3 million and possibly as high as $2.2 millionduring FY 1980. State and local scrutiny of theprogram has been minimal. Other findingsincluded:

eTne types of assistance offered variedsubstantially among localities. local optionallowed localities to use general relief inaccordance with their own needs, fundingcapabilities, and attitudes.

eAdministrative weaknesses in the programwere indicated by inaccurate methods ofestimating expenditures, the absence ofuseful managem ent information, andinappropriately reimbursed expenditures.

eNeeds of clients and the adequacy of generalrelief assistance were difficult to assess dueto inadequate planning data, fragmentedrecord-keeping, and inconsistent referralpatterns.

The Commission made 12 recommendationsto strengthen the adm i nistration of the generalrelief program. One recommendation was that theDepartment of Welfare develop caseworkmonitoring mechanisms to assess workercompliance with program requirements. Inaddition, the departmen-t was urged to improvethe general relief policy manual, develop guidelinesfor local workers on verifying client eligibility, anddevelop appropriate train ing programs for generalrelief workers.

Further recommendations were that theDepartment of Welfare devote greater attention tobudgeting and allotment procedures, increasescrutiny of local reimbursement requests, and

provide greater controj and consistency overdisability determinations -for general relief.

1981 Update. The Department of Welfareis developing a statewide financial servicesmonitoring system that will include the generalrelief program. The department reports that themonitoring system will "identify problem areas,and corrective action ini1:iated by state and localstaff should reduce errors in the General Reliefprogram." The system vvill also evaluate whetherlocal agencies are in compliance with theirapproved general relief pi ans.

The department is planning to includeguidelines for verifying eligibility in the generalrelief manual. Until this is accomplished, localworkers have been advi sed to apply verificationprocedures used for other financial servicesprograms.

In the area of disability determination, thedepartment is in the process of revising themedica! evaluation form.

The General Relief Program in Virginia,September 8, 1980 (72 pp.)

Hi

Homes for AdultsHomes for adults provide domiciliary care

(room, board, and discernible supervision} to theaged, infirm, and disabled. As of July 1979,approximately 8,800 people lived in 314 licensedhomes for adults throughout the Commonwealth.The State Department of Welfare is responsiblefor protecting the health, safety, and welfare ofpersons residing in these homes.

The primary focus of the JlARC evaluationwas on the department's administration of theadult home licensing function and of the auxiliarygrant program. At the time of the study, auxiliarygrants were paying for the care received byapproximately 2,500 residents of licensed homesfor adults.

Demand for domiciliary care in adult homeshas grown substantiallv in recent years. Much ofthis growth can be attributed to the search forlower cost alternatives to nursing homes and theincreasing need for community residences fordeinstitutionahzed people.

At the time of the study, most adult homesin the Commonwealth appeared to provide abasic level of care. homes housing auxiliarygrant and deinstitutionaiized residents, however,were found to be out of compliance withminimum licensing standards. Unsatisfactoryconditions observed in some homes resulted fromfailure of operators to comply with health, safety,and nutrition standards and from weaknesses inthe department's licensure and enforcementprocesses. In addition, rates paid for the care ofauxiliary grant recipients in adult homes were notbased on reliable or audited cost data. Keyrecommendations of the Commission included:

etrnprovs the inspection process and thequality of nutrition and sanitation in adulthomes. Ways recommended to accomplishthis were (1) conductinginspections without prior notice to operators,(2) strengthening the sanctioning effect ofthe provisional license, and {31 offering

in nutrition and sanitation tolicensing specialists and licensees.

@Strengthen the grant programrequiring audited cost data for eachseparately licensed home, redesigning thecost reporting form to facilitate accuratereporting, and basing rates on actual costdata. In addition, the department was urged

to monitor auxiliary grant payments todetect fraud and abuse .

• Develop requirements and simple forms toavoid possible misuse or abuse ofmedications in adult homes.

.Provide the State fire marshal with authorityto inspect all State-licensed homes foradults.19111 Update. In response to the JlARC

findings, the department conducted unannouncedinspections of 144 licensed homes, and tookcorrective action against i 4 homes with seriousdeficiencies. Overall, the department reports that"positive results are already in evidence" becauseof increased attention to adult homes.

Revised licensing standards were implementedin 1980, and nutrition training has been offeredto licensing staff as well as operators of adulthomes. Operators have also been offered trainingin sanitation and drug management.

legislation proposed by the department andenacted during the 1980 General Assembly qavethe State fire marshal authority to inspect alllicensed homes for adults.

To strengthen the licensure process, legislationwas passed in 1981 limiting provisional licensesto one six-month, non-renewable period, Aconditional license may now be granted for newadult homes not previously licensed. in addition,although the department has not yet adoptedunannounced compliance visits, the notificationperiod has been reduced to 48 hours and resultsof unannounced supervisory visits are consideredin licensure decisions.

In response to JLARC recommendations, theHouse Appropriations subcommittee on humanrelations asked the Department of Welfare togenerate cost data on which to base auxiliarygrant payments. JLARC staff assisted thedepartment in developing an appropriatemethodology. The methodology implementedthe department involved an unbiased sample ofhomes for which fiscal audits were conducteddepartment staff. Significant expenses for ailhomes were then projected from the sample.

Based on the department's findings, the1981 General Assembly increased the maximum<ate for auxiliary grants from $409 to $450. Thiswas the first time the subcommittee had actualcost data on which to base the maximum ratefor auxiliary grants.

Homes for Adults in Virginia, December1979 (80 pp.)

Health SeriesMedical care for the poor is the third largest

and fastest growing area of expenditure in thebiennial budget. Because of this growth, JLARCundertook a series of comprehensive studies onmedical assistance programs in Virginia.Subsequently, these studies were incorporatedunder the pilot review provisions of the EvaluationAct. Study activities were coordinated with theHealth Pilot Subcommittee,

JLARC focused on three types of health careand issued separate reports on each: (1)outpatient care-medical treatment given principally

Certificate-of-NeedThe certificate-at-need law is a regulatory

mechanism for controlling development of medicalfacilities and services. In 1977, the Genera!Assembly directed JLARC to examine whether thelaw served the interest.

The the law's inimplementing health care plans and in containinghealth care costs. Without a certificate-at-needlaw, the State could have lost $35 million infederal assistance each year.

Despite the key regulatory function thecertificate-at-need law played, it had not beencompletely effective in its intendedpurpose. the growth of newbeds had been curbed and shortages ofhome beds eliminated, existing beds continued tobe approved for renovation, andconversion, even in overbedded areas of theState. The program needed:

@Greater administrative consistency.@A more stable health planning process for

determining facility and service needs>oBelter defined authority to deal with existing

beds,@A strengthened monitoring system to provide

reliable information on the existing supply ofbeds and to discourage unapproved changesin beds and services.

$Enhanced coordination with other health careregulatory functions.

by local health departments to people who donot require hospitalization; (2) inpatient care-­medica! treatment given to people required tostay overnight In a hospital; and (3) long-termcare-extended treatment in nursing homes andcertain mental health institutions for patients whoneed daily assistance in routine activities such aseating and dressing.

Two other reports vvere made in the series.The first presented an overview of existing healthcare programs for the poor. The second evaluatedthe State's certificate-of-need program.

Because there were federal requirements for acertificate-of-need law, and in view of thefunctioning of the health cere market, theCommission recommended that the State keepand improve the certifioate-ot-need program. Anaction agenda containing 11 recommendationsand six additional considerations wasthe Commission and referred to the healthcommittees of the House and Senate.

Update. At the 1981 Session of theGeneral Assembly, a provision was added to theAppropriations Act directing the commissioner ofhealth to a one-year moratorium on theissuance of certificates for home beds.This requirement was one of several issued to

contain the long-term of medicalassistance costs.

The Department of Health has made severaladministrative changes in response to JLARCfindings and recommendations. Steps have beentaken to improve health theMedica] Facilities Plan format to more closelycoincide with the format of the State Health PlanoThe department reports it has improvedmonitoring of health care construction projects by

regulations and licensureresponsibilities with the Department of MentalHealth and Mental Retardation. In addition, thecommissioner is now documentingcertificate-of-need decisions when they arecontrary to recommendations of other reviewagencies.

Certiiicaie-oi-Need in Virginia o August1979 (140 pp,)

17

Outpatient CareIn Outpatient Care in Virginia, JLARC

reviewed the extent to which local healthdepartments provided medical care to indigents,the effectiveness of State oversight of local healthdepartment management, and the potentia! forduplication in public outpatient services. Principalfindings included:

eBetter cooperation between local healthdepartments and teaching hospitals wasneeded to ensure that continued expansionof outpatient care did not lead to duplicationof services in areas served by both types offacilities.

oLocal health departments varied considerablyin the outpatient care which they offered topoor people. Some urban health departmentsoffered an extensive range of services whileothers offered only limited medical care.Local health department expenditures foreach indigent persor, ranged from $11 toover $171.

-The formula which determined State andlocal funding shares was outdated. Theformula did not take into account revenuesuch as sales or utility taxes, and did notinclude measures of local need or ability tofund programs.

$Maintenance of patient accounts andcollection of fees at local health departmentswere hindered by a lack of uniform recordsmanagement. A review of patient accountsfor one year suggested that between $2and $7.5 million in fees was not collected.

oThe balance in the local health departmentrevenue account was unnecessarily high.This resulted from underestimation ofrevenues by the Department of Health andthe practice of collecting and retainingrevenue for an entire fiscal year before usingit.

JLARC recommended that excess cash held inthe health revenue account be put to more timelyuse. In response, the Department of Health usedthe excess cash balance to offset part of itsappropriation for the 1978-80 biennium. Thisresulted in an immediate, one-time savings to thegeneral fund of $4.1 million.

Other recommendations called for a revisedmethod of determining State support for localhealth departments; a uniform, reliable records

III

management procedure: and a uniform definitionof indigence.

nlll Update. Several follow-up actionshave been reported by the Department of Health.First, a committee was appointed to study theoptions for changing the formula for determiningState and local shares of costs of local healthdepartments. A new formula is targeted forimplementation in the 1984-86 biennium. Second,a uniform system of records management and astandard listing of patient fees have beenestablished. Third, a new definition of indigencyand a uniform method for determining eligibility toreceive outpatient services were implemented onJanuary 1, 1981.

Outpatient Care in Virginia, March 13, 1979180 pp.)

Inpatient CareInpatient Care in Virginia was primarily

concerned with the programs and servicesavailable to the poor in Virginia hospitals. Thestudy focused on the availability andaccountability of public funds spent in this healthcare area. Important study findings included:

eThe State had spent substantial sums forindigent hospital care, but had little controlover hospital rates or health care costs. InFY 1976, federal and State payments forindigent hospital care (excluding teachinghospitals) totaled $64.9 million. Thisamounted to about eight percent of totalhospital revenues of $783.4 million.

oResponsibility for delivery of indigent hospitalcare was fragmented among at least nineprograms, the State teaching hospitals, andprivate hospitals.

-State teaching hospital expenditures forindigent care, approximately $23 million ingeneral fund expenditures annually, werealmost equal to the State share of Medicaidexpenditures for inpatient care. However,oversight of teaching hospitals was limited,and each hospital employed different anduneven procedures for processing patientaccounts.

$Access to the State-Local Hospitalizationprogram was not provided evenly throughoutthe State. Eligibility standards varied and anincreasing number of localities had opted outof the program.

-Surplus beds, which existed in each healthservice area, contributed to low occupancyrates and higher costs for all pavers. By1983, the cost of maintaining the projected2,100 surplus beds could be as high as$50 million.

Recommendations focused on the key issue ofcost containment. A primary COncern wasreduction of surplus beds statewide. TheDepartment of Health was requested to evaluatemethods for reducing the number of bedslicensed, decertifying existing beds and services,and converting beds to other uses. It wasrecommended that Medicaid reimbursement bedetermined prospectively and be based on anacceptable occupancy rata of 80 to 85 percentwhen actual occupancy was below that level.

Other administrative problems were alsodiscussed. For example, it was recommended thatState teaching hospitals be requested to developand implement procedures for determining patient

eligibility for State-subsidized indigent care.Recommendations were made to improve hospitalcare reporting for Medicaid purposes and tobetter define the purpose of the State-LocalHospitalization program.

1981 Update. As a result of the JLARCstudy and continued concern Over spiralingMedicaid costs for acute and long-term care,language was added to the 1981 AppropriationsAct directing the commissioner of the Departmentof Health to develop a plan for reducing excesshospital beds in the Commonwealth. In response,the department plans to identify bedsinappropriately classified tor licensure purposes orbed space permanently converted to otherhospital uses. Data reported by individualhospitals over the last five years, as well ason-site evaluations, will provide the commissionerwith sufficient documentation for making decisionson reclassification or reduction. The plan will besubmitted to the 1982 General Assembly.

The Appropriations Act also directs thecommissioner to calculate nursing home rates ata minimum occupancy level of 95 percent, exceptfor homes with a licensed capacity of 30 orfewer beds which may be reimbursed at aminimum occupancy level of 85 percent.

The department and the Statewide HealthCoordinating Council are continuing to pursue theconcept of reqionalization of services throughplanning efforts. Regiona!!zation would discourage

the proliferation of small hospitals offering limitedservices and encourge the regional use of largemulti-service hospitals, resulting in betterutilization of all facilities.

In addition, a plan was developed in 1978 tomonitor Professional Standard ReviewOrganizations which make reviews to ensure thatMedicaid payments are issued only formedically-necessary services. Initial implementationof the monitoring plan is under way.

The University of Virginia hospital hasreported that steps have been taken to identifythe costs of free care and patient eligibility. Amanual billing system for all outpatient clientservices is in place and an automated system isbeing developed. A standard charge structure forthe outpatient clinic has been established to aidin Medicaid reimbursement. Eligibility for hospitalservice is now determined by a uniform screeningprocess and fees are assessed when appropriatebased on a written sliding scale.

The Medical College of Virginia has adoptedcriteria and guidelines for the determination ofindiqencv, and has implemented an improvedHospital Information System which identifiescharges for indigent care. The hospital reportsthat improved accounting and collectionprocedures have resulted in improved collection of

accounts receivable.

Inpatient Care in Virginia, January 2, 1979(/24 pp.)

Health Care OverviewMedical Assistance Programs in Virginia: An

Overview was 8 unique JlARC report in that itwas almost totally descriptive. It was designed toserve as a legislative reference tool and toprovide a base of information: on which otherhealth care reports could build. It included aninventory of 19 public programs providing healthcare to the poor at a cost of more than $700million during the 1976-78 biennium, Individualsummaries highlighted program expenditures,source of funds, services provided, and eligibilityrequirements. The legislative basis for eachprogram was also described.

Medical Assistance Programs in Virginia: AnOverview, June 13, 1978 (100 pp.)

HI

approximatelynursing homes,

Long Term Care

sOrientation and ongoing in-service arenow required for all home

including aides and orderlies.Regulations that after July 1, 1982,nursing homes may employ only aides andorderlies who have State-approvedtraining. ln addition, a special task force hasrecommended a curriculum for geriatric aidetraining, and an implementation plan isscheduled for completion by the fall of1981.Long Term Care in Virginia. March 28, 1978

(120 pp.)

significant actions include the following:

@Financial penalties are now levied by theDepartment of Health when cost reports aresubmitted late. Analysis of transactionsbetween related parties has been improved,and the Medicaid program audit steff havedisallowed $2.1 million in builders' profitsthat were inappropriately claimed. The auditstaff have also improved their analysis ofinterest expense. The department reportsthat in excess of $800,000 was disallowedover FY 1979 and FY 1980 as beingunrelated to patient care or unreasonable.

@The "Nursing Home Payment System,"adopted in 1978 and revised in 1979, linksefficiency incentive payments and return onequity capita! to nonwaivable quality of carestandards. The Department of Health hasindicated that the new prospective paymentsystem has helped control nursing home

costs.3Legislation has been passed giving the

Department of Health lead responsibility forresolving complaints and a telephone hotlinehas been established in the Office onto receive

slegisiation has been passed theDepartment of Health intermediate sanctionsto enforce licensure standards. TheCommissioner of Health now has authorityto restrict or new admissions to

homes which violate licensureThis has been

exercised six times, and in each instancethe homes were into compliance.This enables the department toenforce control standards withrealistic sanctions short of ciosure-c-a stepnever before taken thebecause of the potentia! of

notauthorities.

JLARC made a number of recommendationsrelating to report A hearing on thereport and its recommendations was held !n

December 1978 the House Committee onHealth, Welfare and institutions and the SenateCommittee on Education and Health. Since that

action has been taken On many of the

recommendations.

The study on long-term care had twoobjectives: to evaluate the effectiveness

of State oversight of nursing homes in terms ofcost and quality of care, and to review Medicaidreimbursement processes. important study findings

included:@Tne licensing standards and inspection

process used in nursing homes weregenerally adequate. However I enforcement ofcompliance with standards was hampered bya lack of effective sanctions. Somestandards needed to be strengthened.

@Many Medicaid cost controls were notenforced. Property-related expenses were

areas of potentia! abuse.@The payment system used for Medicaid

encouraged private investment but did littleto control cost increases or promoteefficiency. The House AppropriationsCommittee had determined that aprospective system, where fates aredetermined in advance, wouldincentives for efficiency and help controlcosts on a long-term basis.

@Nursing aides, who75 percent of the care inwere not trained.

of nursing home patients were

channeled to the

HUll the 1981 GeneralAssembly, language was added to theAppropriations Act directing the Commissioner ofHealth to (1) financing and constructioncost limits for homes, and (2) developplans addressing needs projection, nursing homereimbursement procedures, and reduction ofsurplus hospital beds. These actions are expectedto help control costs in the nursing homeindustry, which 1S still the fastest growingcomponent of the Medicaid budget. Other

Federal FundsFederal funds make up approximately 25

percent of all State revenues. During FY 1979.over 300 federal programs provided $1. 7 billionto the State and its localities-a 300 percentjump over the past ten years. Concern overgrowing federal influence on State programsprompted the General Assembly to pass HouseJoint Resolution 237 in 1979. The resolutiondirected JLARC to study the impact and influenceof federal funds on State agencies and localgovernments.

An interim report was issued in December1979 and published as House Document 16. Thereport detailed the extent to which theCommonwealth depended on federal funds andfocused attention on weaknesses in legislative andexecutive oversight measures. A second report,released in October 1980, suggested furthermeasures for strengthening the State's controlover federal funds. Key findings, conclusions, andrecommendations from both reports, and thestatus of implementation measures, werepresented in a summary report published inJanuary 1981. Principal findings included thefollowing:

OOne hundred and twenty-five State agenciesspent $1.2 billion in federal funds in FY1979. Of the 125 Slate agencies thatreported spending federal funds, 10 1 wererequired to provide matching funds. At least$352.4 million, or seven percent of theState's FY 1979 expenditures, was spent tomatch federal funds.

*Substantial federal influence was exercisedthrough the use of 59 cross-cuttingrequirements. These federal requirements arepowerful levers of influence intended topromote social, economic, and administrativegoals which are broader than those ofindividual programs or grants.

eState agencies consistently underestimatedanticipated federal fund revenues.Consequently, major portions of Stateexpenditures were not appropriated by theLegislature. In FY 1979, million in

Regular Projectsfederal funds was authorized for expenditurewithout going through the legislativeappropriation process. Durinq the 1978-80biennium, one-half billion dollars in federalfunds was authorized for expenditure withoutlegislative participation.

@Some agencies used inefficient procedures forreceiving and spending federal funds, JLARC

identified $286,000 in potential investmentgains that could be achieved annually byimproving agency cash flow management.

To promote better management and control offederal funds in Virginia, the Commission madesix interim and 24 final recommendations. Therecommendations focused on improving agencybudgetary estimates, better management ofreceipt mechanisms, and strengthened informationon the impact and influence of federal funds.

19lH Update. Substantial implementationof these recommendations has taken place.Severa! corrective measures in budgeting federalfunds were adopted in 1980. Significantly, theLegislature reemphasized its long-standing policythat agencies include in their budgets allreasonable estimates of nongeneral revenues.Legislative intent was also clarified amendingthe Appropriations Act to require the executive tofurnish a written reconciliation between agencyestimates and actual receipts of nongeneral fundrevenue.

In response to legislative interest in accuratefederal fund estimates, $29 million was added tothe 1980 budget bill as a result of last-minute,agency-initiated amendments. These appropriationscleartv reflected legislative insistence on fulleridentification of anticipated federal funding.

Administration and Finance Directive 1-80,which took effect on 1, 1980, containedcomprehensive new procedures for controlling thebudgeting and management of federal funds.Under the new procedures, revenues in excess of110 percent of the agency's appropriation mustbe approved by the Governor. This limitation wasintended to give agencies an incentive toaccuratelv estimate anticipated federal revenuesduring the appropriation process. The 1981Appropriations Act was revised to include

problems, JLARCState improve its

language giving statutory authority to the 1 10percent limit.

Improved cash flow procedures were alsomandated by A&F Directive 1-80. Provisionsrequire agencies to use letters of credit and cashadvances wherever feasible. Full implementation ofthis policy will free substantial funds, therebyincreasing the cash on hand in the State Treasuryand generating additional revenue through theState's investment program. In addition, thedirective addressed staffing limits, assumption ofcost, and reporting requirements.

To anticipate lederal impacts better, theDepartment of Planning and Budget set up aninteragency federal budget impact team. Reportsare periodically prepared on the effect that federalactions may have on funds earmarked for Virginia.The most recent report concerned the Reaganadministration's FY 1981 budget proposals.

Numerous State agencies, including JLARC,have assisted the U.S. Office 01 Management andBudget in developing the Federal AwardsAssistance Data System, a new system geared toimproving State information on federal assistanceIlowing to the State. In addition, JLARC receiveda $5,000 grant lrom the National Conference ofState legislatures to develop one series of reportson federal fund expenditures within Stateagencies. These reports, along with otherinformation, should give the State betterinformation on and control over the substantia!federal funding it receives.

Special Study: Federal Funds, December 10,1979 (96 pp.)

Federal Funds in Virginia, October 13, 1980(136 pp.)

Federal Funds: A Summary, January 1981(20 pp.)

Use of ConsultantsIn FY 1979, State agencies used consultants

for 1,338 projects. These consultant projectswere valued at $47.5 million, and included awide range of services.

JLARC found that agencies employedconsultants for justifiable purposes in most cases.However, there were weaknesses in proceduresused for selecting and managing consultants, andin agency and central information systemsregarding consultant services. These weaknesses

22

limited agency accountability and raised questionsabout the adequacy of controls.

Specilically, it was found that three-quarters01 the 1,338 consultant projects examined hadnot been competitively bid, including 5 1 percentof the projects involving commercial firms.Agencies lacked documentation as to why aconsultant was needed in 101 of the 160 largestprojects. Documentation is especially needed onlarge projects to ensure full consideration wasgiven to the decision to use a consultant. Therewas almost no documentation for smallerprojects. In addition, one-quarter 01 the 1,338projects conducted during FY 1979 did not havea written contract.

Agency monitoring of projects conducted byconsultants was found to be an area of concern.Agency monitoring procedures, necessary toensure satisfactory projects, varied widely.One-hall 01 the iarge projects with a value over$5,000 did not have a single progress report onfile.

To address theserecommended that themanagement processes by:

eMore thoroughly assessing the need lorconsultants.

.Mandating a preference for competitivebidding.

.Requiring written contracts.-Specifying contract form and content..Monitoring projects more systematically.e!mproving central accounting records.$!mproving documentation of project files.

19111 Update. These recommendations havebeen implemented through Administration andFinance Directives 2-80 and 4-80. Promulgated inMay 1980, A&F Directive 2-80 providesdefinitions of consulting services and establishespolicies on how to obtain such services. Itencourages State agencies to make the maximumuse of State service agencies such as theDepartment of Management Analysis and Systems

Development, the Department of Personnel andTraining, and the Department of Accounts.

Detailed guidelines lor implementing A&FDirective 2-80 were contained in MASD's June1980 publication "Guidelines for the Use ofConsulting, Professional, and Individual Services."The guidelines provide information on determiningthe need for services, selecting a consultant,preparing a contract, and measuring project

results. The guidelines are detailed andcomprehensive.

A&F Directive 4-80 was promulgated in July1980. This directive requires that writtencontracts be executed on all consultant projects.it further requires that each agency maintain acentral file of all consultant contacts.

Management and Use of Consultants byState Agencies, May 12, 1980 (80 pp.)

DelnstitutionalizationJLARC's review of the Commonwealth's

dainstitutionalization policy was made inconjunction with the legislative Commission onMental Health and Mental Retardation. The reportfocused on the process for transfer of mentally iiiand mentally retarded clients from Stateinstitutions to community settings, and linkingthem with continued treatment and supportservices.

The Department of Mental Health and MentalRetardation adopted the policy ofdsinstituticnalizaticn in 1972. Since then,populations of mental health hospitals and mentalretardation training centers have been reduced byapproximately 44 and 28 percent, respectively.

Policies and procedures to meet the needs ofdischarged clients. however, had not beenadequately developed to ensure that communityservices were available or delivered on astatewide basis. Most problems were in thelinkages between the institutional and communitynetworks and in availability of services. Importantfindings included the following:

-The transfer of discharged clients toappropriate community services was inhibitedby inadequate and inconsistentlyadministered discharge procedures at Stateinstitutions. Prompt notification of localservice agencies about released clients wasoften hampered by the failure of institutionsto obtain timely approval for the release ofconfidential case information. Hospitals hadno forma! discharge plans for clients, andnotes relevant to post-discharge needs werescattered throughout client records.

.The needs of discharged clients were notbeing adequately met due to gaps incommunity services and to the limitedcapacity of existing services. For example,

for over 50 percent of all aftercare patients,

the only community service provided wasmedication monitoring. A basic core ofcommunity services for deinstitutionalizedclients had not been established statewide.

sA coordinated system of care for thementally ill and mentally retarded had notbeen developed In the Commonwealth.Responsibility for service delivery wasfragmented among numerous State and IDea!agencies, without: centra! direction.

To ensure continuity of care, JLARCrecommended that the department establishprocedures to obtain early consent from clients so

that case information could be released tocommunity service agencies on a timely basis.State institutions were urged to use a Single,standardized format for preparing client dischargeplans, and to involve community agencies indischarge planning.

The Commission recommended that thedepartment and the General Assembly considermandating a basic core of services for dischargedclients. JLARC also recommended clarification ofthe department's leadership role, greatermonitoring of community service boards,development of a statewide information system,and enhanced interagency coordination fordeinstitutionalization.

1981 Update. Legislation was enactedduring the 1980 Session which directed theDepartment of Mental Health and MentalRetardation to establish core services to beprovided by community service boards by JUly 1,1982. Comprehensive discharge plans were alsomandated, and the department is developing astandardized plan format and discharge planningguidelines. The guidelines will include communityagencies in discharge planning.

An administrative policy and standardsstatement for commun itv service boards has beendrafted and presented to the State Board ofMental Health and Mental Retardation in July1981. The department has also drafted casemanagement guidelines to be used by communityservice boards, and is in the process of approvingcase management pilot projects in communityagencies.

A statewide information system is beingdeveloped by the department. Computer hardwarehas been installed at several sites around theState and staff are receiving training on operationof the system.

Deinstitutionalization and CommunityServices, September 1979 (88 p.)

23

administrative policies onuse of the Continuing

conflict of interest, and

elocrease cooperation and eliminateduplication by localcoordinating committees, developinginteragency coordinating committees, anddeveloping memorandums of understandingwith appropriate State agencies.

andlevels,supervisorya third level.

.Strengthen two

reduce staffing for

@institute bettertravelEducationfield office supervision.

The Extension Division of Virginia PolytechnicInstitute and State University represents theCommonwealth's largest investment in continuingeducation. In FY 1979, the division wasappropriated $25.3 million. JLARC's programreview of the division focused on the role andmission of the cooperative extension program.Principal findings of the study included thefollowing:

VPI&SU ExtensionDivision

@Aithough the scope of cooperative extensionwas within its broad legislative mandate,program priorities were not dearly defined.Lack of a and generallymission statement hindered reviewand led to within the divisionabout the proper role of the extensionprogram. The statement had not beenreviewed the General since

1966.

The Commission made 27 recommendations,including:

@Review the statutory mission of thecooperative extension program.

@Severa! administrative areas required greaterattention, including controls on staff travel,monitoring conflict of interest, andmanagement and of the ContinuingEducation Center.

definedof to

appears that the newhas increased both

effectiveness of the Divisioncommunication and increased

andand

Afterthe

results

and

Virginia Polytechnic Institute and StateUniversity Extension Division, September1979 (118 pp.)

thethroughaccountability.' ,

Since 1, 1980. the Continuing EducationCenter has been operating on abasis. As recommended JLARC, the cost ofadministrative overhead is being charged to each-revenue-qeneratinq activity. This represents adollar savings of at least $233,000 to thegeneral fund each fiscal year.

andfound to

colleges@Extens\on programs were

many programs of cornrnunitvlocal governmentextension programs were notprograms of State agencies, programhad placed extension on a potentia! collisioncourse with the mandates and programs ofat least 23 other State aoencies.

@The Extension Division waswell-managed, JLARC found, however, thatthe responsibilities of two levels of the

structure required clarificationand strengthening. There appeared to be anexcessive number of supervisory in

a third level, and up to 23 of thesepositions could be reallocated or abolished.

24

State-Owned MotorVehicles

FY 1978, Stale employees usedpassenger cars to travel almost 96 million miles­greater than the distance from the earth to thesun-at a cost of $13.4 million, Half of thistravel occurred in employee-owned vehicles andwas reimbursed by the State. The remainingmileage was accumulated by 2,600 generalpurpose passenger cars owned the State.

The JlARC review of State-owned carsexamined the economy and effectiveness ofvehicle management. Principal findings includedthe following:

eMany State cars we:« underutitized. As manyas 327 cars assigned to agencies andindividuals were found to be uneconomicaland not justified on the basis of operatorduties.

e'Ibe minimum annual mileage criterion forpermanent assignment of a centra! garagevehicle was 18,000 miles, This criterionwas high based on economicuse and was not enforced.

*Greater control of employee commuting inState-owned cars was needed.Approximately 660 employees regularly usedassigned cars to commute between homeand office, accounting for approximately 2.5million miles of travel in FY 1978, Althoughall agencies were authorized to chargeemployees for commuting, only twoemployees were actually being charged.

.Financial management of the central garagemotor pool needed to be strengthened. Themotor pool had not used all availablesources of revenues to finance pooloperations, and had accumulated a cashbalance in excess of $1 "5 million in aspecial revenue account. In addition, thecentra! garage did not have adequateprocedures to ensure that accounts werepaid in a timely manner. There was$151,090 in overdue accounts receivable asof February 1979,

sResponsibiiity for central garage operationswas fragmented, limiting effectivemanagement and accountability.

eln a time of escalating fuel costs, the Statewas moving away from the practice ofpurchasing fuel efficient cars.

The Commission recommended developingmore dearly defined policies governing assignment

and use of pool cars; charging employees forcommuting use where appropriate; improvingfinancial management; expanding and defining thefjeet manager's role; and purchasing compact, fuel

efficient cars.

1981 Update. Siqnificent actions havebeen taken in response to the Commission'srecommendations. For example, the responsibilityfor centra! garage operations has been centralizedand the fleet manager's authority has beenexpanded and better defined.

Vehicle assignment and use have beenimproved, In accordance with a JlARCrecommendation, the minimum mileage criterionfor permanent assignment has been loweredbased on economic analysis, The fleet managerhas been monitoring mileage and working withagency transportation officers to turn in vehiclesnot meeting the criterion. Since January 1980,193 cars have been turned in and reassigned tofill pending requests. This reassignment representsa one-time capital avoidance savings ofapproximately $850,000.

Appropriations Act and central garage policieshave been clarified to commuting chargesand to define when they are applicable. Currently,141 employees pay commuting charges whichwill result in an estimated $95,000 savings tothe general fund during FY 1981.

Financial management practices of the centralgarage motor pool have also been strengthened.An excessive balance in a special revenue accountwas used to offset an agency rate increase whichhad been authorized for FY 1980. Thistransaction resulted in a $1.8 million savings togeneral fund agencies. In addition, improvedprocedures to monitor accounts receivable havebeen implemented. The fleet manager nowreceives monthly reports and closely monitorsoverdue accounts, As of April 1981, overdueaccounts receivable were only $2,000.

Centra! garage has also resumed buyingcompact cars. In addition to being fuel efficient,these smaller cars are less expensive to purchasethan standard size cars. Centra! garage will saveapproximately $390,000 in 1980 and 1981 bypurchasing compact instead of standard size cars.

Management and Use of State-Dwned MotorVehicles, July 9, 1979 (74 pp,)

25

Camp PendletonA special study 01 Camp Pendleton, the State

military reservation at Virginia Beach, wasrequested by House Joint Resolution 14 01 the1978 Session. The study evaluated the use 01Camp Pendleton, the needs 01 the VirginiaNational Guard lor training facilities, and theneeds of adjacent communities for public purposeland. Review efforts were coordinated with theCamp Pendleton task force appointed lor thestudy.

The study found that military training atCamp Pendleton was substantial. About 69,000man days of military training occurred at CampPendleton in 1976 and 1977. In addition tomilitary use, almost hall of the camp's 874 acresare under long-term lease to the City of VirginiaBeach. Much 01 that property is used for suchrecreational purposes as golf, tennis, andswimming.

Although Virginia Beach was already usingmuch of Camp Pendleton, the city was seekingfurther use of the 1,200-Ioot beachfront at thecamp. Virginia Beach has high quality beaches,but only one-fifth 01 the city's 37 and one-halfmiles of beachfront are accessible to the public.

There were, however, numerous constraints tothe further development of Camp Pendleton as arecreational area, including:

@Estimated replacement cost of necessarymilitary facilities 01 more than $15 million.

oPotential conflicts with the fe deralgovernment over use of property adjacent toCamp Pendleton.

• legal encumbrances involving property,leases, and facilities.

JlARC and the study committee concludedthat Camp Pendleton should continue to serve asthe State military reservation, but recommendedthat the Department 01 Military Affairs facilitatepublic use 01 the property under more flexibleguidelines. The study committee also proposedthe adoption of a joint resolution urging theGovernor and Virginia's congressional delegation totry to secure the return of 727 acres of SeashoreState Park, which the federal governmentcondemned and took during World War II.

During the 1979 Session of the GeneralAssembly, the Department 01 Military Affairsproposed a plan under which the camp's beach

26

parcel could be used for recreational purposes.The proposal was accepted by the City ofVirginia Beach and a three-year agreement wassigned. An appropriation 01 $100,000 was made

to fund improvements to the beach area. Thefunds were used to construct a parking lot nearthe beach, which is used primarily for surfing.

The 1979 Session also adopted SJR 136urging the return of land at fort Story toSeashore State Park. Copies 01 the resolutionwere forwarded to members of Virginia'scongressional delegation.

1981 Update. Guidelines lor use 01 CampPendleton property by public groups have beenadopted by the Department of Military Affairs.The guidelines provide a relatively simpleapplication and approval process and clearlyestablish the terms and responsibilities 01 use.

Military use 01 Camp Pendleton has increasedduring recent years. In 1979 and 1980, 93,696man days of military training occurred at CampPendleton, 34 percent more than In 1976 and1977.

Civilian use of the property has alsoincreased. Attendance at the Camp Pendletonbeach increased from 4,726 in 1978 to 28,692in 1980. Under more flexible rules by theDepartment 01 Military Affairs, the beachremained open 98 days in 1980, compared to35 days in 1978.

No change has occurred in the ownershipstatus 01 the disputed beachfront at fort Story.

Special Stud)!: Camp Pendleton, November 2,1978 (72 pp.)

Capital OutlayVirginia's capital outlay process provided for

building, renovating, and acquiring about $1 billionin construction projects from 1966 to 1976.During this time, the process was notsystematically developed and lacked proceduralunity. Planning and budgeting relationshipsbetween the operatinq and capital budgetprocesses were ambiguous. l.eqislative andadministrative policies needed to explicitly definethe roles of the Department 01 Planning andBudget and the Depar trnent of General Services incapital planning and budgeting.

was not properlyVSRS board. the

Governor, and the

The lack of systematic attention to projectmonitoring and control resulted in nearly $1million worth of unauthorized agency building.Money had been spent to construct or alterbuildings without the prior approval of theGovernor or the General Assembly. Many projectsreviewed needed additional funding and haddelays of six months or longer. JLARCrecommendations addressing these problem areaswere adopted in October 1978.

1I11l1 Update. Procedural unity in thecapital outlay process has been largely achieved.The Department of Planning and Budget nowdirects a single svstsrn of budgeting for ell Stateexpenses including capital outlays. The statutoryinvolvement of the former Division of Engineeringand Buildings in the capital budget process was.removed by the General Assembly in 1979 whenit repealed Section 2.1-483 of the Code ofVirginia. Definitions and instructions relating tocapital outlays have been included in theCommonwealth Planning and Budgeting Systemmanual. The instructions require that requests forfixed assets be included in program requests forall agencies. These requests are reviewed in detailby the Department of Planning and Budget.

The capital outlay manual prepared by theDepartment of General Services has also beenimproved. The manual contains new proceduresregarding design fees and cost estimates. Themanual is now loose-leaf to facilitate revision.

Legislation was enacted in the 1980 Sessionto establish procedures for selecting architectsand engineers. These procedures are nowspecified in the capital outlay manual. A selectionprocess has been established which encouragesdiversity and competition. Amendments to theAppropriations Act prohibit agencies from havingcontracts in perpetuity with architectural andengineering firms.

The Capital Outlay Process in Virginia,October 10, 1978 (100 pp.)

VSRSThe discovery of fraudulent payments of more

than $100,000 in retirement system fundsprompted a management review of the Virginia

Supplemental Retirement System (VSRS). Thestudy was requested by the Auditor of PublicAccounts to support his financial audit. At therequest of the Governor, a staff member of theDepartment of Management Analysis and SystemsDevelopment also participated in the review.

The study had three objectives: to review thepolicies and oversi ght practices of the VSRSBoard of Trustees ~ to assess VSRS internalmanagement, and to evaluate services provided toVSRS members. Important findings included the

following:.Although VSRS was responsible for assets in

excess of $1 billion, financial practices wereinadequate. 1mproved financial leadership andadditional staff were required.

.Financial and membership records were notin good condition. Some importantmembership information was not accuratelymaintained.

-VSRS did not have an accurate organizationalplan which detailed the duties of thefunctional divisions, internal relationshipsamong departments, and personnel needs ofthe agency.

oTraining programs presented by VSRS toagency personnel were not supported bynecessary manuals. As a result, there wasmisunderstan ding among agencyrepresentatives about applicable policies,reporting requirements, and membershipdocumentation.

-Actuarial informationcommunicated to theVSRS members. theGeneral Assem bly.

JLARC made 1 3 recommendations, including

the following:-Introduce legislation to require an annual

audit..Strengthen financial oversight by the Board

of Trustees.OOverhaul the financial reports and control

systems by adding additional staff.reclassifying the duties of some exrstmqstaff, and improving financial reporting.

-Prepare an annual management plan forboard review and approval.

-Revise agency training procedures.-Purge and correct membership records.Since completion of the JLARC study, VSRS

management practices have received increasedscrutiny. Legislation was enacted in 1979 to

27

require an annual audit of the VSRS by theAuditor of Public Accounts, and a managementletter was released by the auditor in June 1979.

Implementation of the JLARCrecommendations has been thorough. OnDecember 12, 1978, the chairman of the VSRSBoard of Trustees presented a detailed report tothe Commission on action taken in response tothe management recommendations. The reportindicated general agreement with most of thereview findings, and outlined planned correctivesteps.

1981 Update. A follow-up review by theDepartment of Management Analysis and SystemsDevelopment was released in August 1980. Thatreview reported notable improvement in generaladministration, actuarial and investment oversight,and field services. It reported that VSRS was nolonger understaffed, poorly equipped, lacking inprofessional expertise, or operating under heavypressure to overcome delays and remain currentwith normal administrative and member responseactivities.

Financial leadership of VSRS has beenimproved principally through the addition of achief financial officer and an internal auditor. Fournew committees have been created within theBoard of Trustees: (1) an audit committee, (2) afinance committee, (3) an actuarial committee,and (41 a long-range planning committee. Thechief financial officer of VSRS meets with thefinance committee of the Board of Trustees on amonthly basis. In addition, an investment advisorycommittee has been formed to provide the boardwith advice from the private investmentcommunity.

Improvements in member services are alsonotable. Problems in the distribution of memberhandbooks were corrected. In July 1980, acomprehensive procedures manual was distributedto agency employee contacts.

Virginia Supplemental Retirement System,October 10, 1978 (108 pp.)

Sunset, Zero-BaseBudgeting, Evaluation

In 1977, the General Assembly requested acomprehensive study of a nationally popularapproach to legislative oversight known as sunset

28

legislation. JlARC was assisted in its study by a12-member sunset task force appointed under theauthority of House Joint Resolution 178.

The task force held a series of meetings andthree study forums on legislative oversight.Participants included members and staff of the U.S. Congress and state leqislatures. agencyadministrators, and representatives of variouspublic and private organizations. The proceedingsof each study forum were published. The studyreports, and conclusions and recommendations ofthe sunset study committee, provided the basisfor development of the Legislative ProgramReview and Evaluation Act of 1978.

The first report in the legislative oversightseries consisted of transcripts of a conferenceheld in May 1977. Conference participantsincluded U.S. Congressman James J. Blanchard(D. Mich.]. Dr. Allen Schick (Urban Institute), Dr.Benjamin Shimberg (Educational Testing Service),Linda A. Adams (Director, Connecticut ProgramReview), and Ray D. Pethtel (JLARC director).

The proceedings demonstrated that sunset,zero-based budgeting, and evaluation, whenproperly used, have the potential to enhancelegislative oversight. Successful implementation ofthese concepts, however, depends on alegislature's commitment to using the informationgenerated by these processes.

Sunset, Zero-Base Budgeting, Evaluation,May s-s, 1977 (88 pp.)

Zero-Base Budgeting?The second report in the series contained

transcripts of testimony received at a zero-basebudgeting forum held in 1977. Forum participantswere S. Kenneth Howard (Wisconsin State BudgetDirector), Thomas L. Bertone (New Jersey Officeof Fiscal Affairs), Andrew B. Fogarty (Director,House Appropriations Committee of Virginia), andMaurice B. Rowe (Virginia Secretary of Commerceand Resources).

Forum participants generally agreed thatVirginia's new program budget system neededtime to be fully implemented and tested beforefurther modification was attempted. Zero-basebudgeting as a legislative tool was not endorsed.

Zero-Base Budgeting?, August 23, 1977 (56pp.)

The SunsetPhenomenon

The Sunset Phenomenon, the report whichconcluded the oversight series, contained therecommendations which led to adoption of theLegislative Program Review and Evaluation Act.

Sunset was reported as a popular concept oflegislative self-discipline which forces evaluation ofexisting government activities. Sunset shiftsattention from promulgation of new programs toreview of existing ones. It has an action-forcingmechanism that schedules automatic terminationof agencies or programs unless they areperiodically reauthorized. However, theeffectiveness of sunset laws was called intoquestion because few, if any, agencies orprograms of any significance had been terminated.

The study committee urged that the GeneralAssembly not enact sunset legislation. Thecommittee offered an alternative oversightproposal which built on Virginia's existinglegislative evaluation activities. The committeeproposal was adopted by the 1978 Session ofthe General Assembly and signed into law by theGovernor effective July 1, 1978.

The Sunset Phenomenon, July 25, 1977 (96pp.)

State-Owned AircraftOwnership, use, cost, and management of

State-owned aircraft were examined in a specialreport. Study findings included:

e()f 22 aircraft owned or operated by Stateagencies, only three were statutorilyauthorized. There were no State guidelineson aircraft acquisition, use, orrecord-keeping.

Gin FY 1976, the cost of operating agencyaircraft was about $560,000. Travel inagency-owned aircraft over short distanceswas frequently more expensive and lesstimely than alternative means oftransportation.

-Seven agencies administered, maintained, andoperated aircraft, but only three had writtenpolicies governing its use.

-Some State-owned aircraft may not havebeen justified in light of agency use and

changing program needs. Some aircraft wereused inefficiently, uneconomicallv, or forquestionable purposes.

CtAgency aircraft operations were decentralized.It was unclear whether the system ofairfleet management was effective orefficient. Increased utilization, improvedscheduling, and greater supervision ofemployee use of aircraft were needed.

JlARC recommended the establishment ofgeneral guidelines for agency aircraft use andrecord-keeping. In addition, it suggested theGovernor make a com prehensive assessment ofState aircraft needs. Pending completion of suchactions, the Commission recommended that allaircraft acquisitions be identified in theAppropriations Act, and that the act's generalprovisions be amended to require the Governor toestablish guidelines for the acquisition, use, andreview of aircraft.

Severa! study recommendations weresubsequently incorporated into the AppropriationsAct, Section 4-9.07 of the act was amendeddirecting the Governor to ( 1) prepare generalguidelines regarding aircraft acquisition and use,12) examine the aircraft needs of agencies, and13) determine the most efficient and effectivemethod of organizing and managing the State'saircraft operations. Agency requests to purchasenew aircraft are included in the AppropriationsAct as line item requests.

1981 Update. Effective March 1981, theGovernor issued a directive on State-ownedaircraft. The directive pertains to aircraft in the

Richmond area and deals with operational control,priority of use, and charges. in addition to theGovernor's directive, the Secretary ofTransportation has required the Department ofAviation and the Department of Highways andTransportation to maintain detailed records on theuse of their aircraft and related direct and indirectcosts.

Detailed, written procedures for agency aircraftuse do exist at some agencies and institutions.There are, however, still no State guidelines foragency aircraft use and record-keeping as calledfor by the Appropriations Act. There is no centralinventory of aircraft owned and operated by Stateagencies.

Use of State-Dwned Aircraft, October 24,1977 (36 pp.)

29

Marine ResourcesMarine resource management involves a wide

array of programs ranging from regulation ofoyster fisheries to marine science education. Theprimary purpose of JLARC's study was toevaluate the marine resource effort in Virginia,focusing on the management of program andagency activities. Important findings of the studywere:

in Virginia,

limited federal Sea Grant funds led JLARC tosuggest the creation of a Sea Grant Consortiumas one administrative option. The concept wassubsequently endorsed the State Council ofHigher Education. In 1979, the General Assemblyauthorized formation of the consortium. TheVirginia Graduate Marine Science Consortiumconsists of the College of William and Mary{ViMSj, Old Dominion University, the University ofVirginia, and Virginia Polytechnic Institute andState University. The consortium is located at theUniversity of Virginia and employed its firstdirector on June 1, 1981,

Legislation has also been adopted to improvethe State's oyster management system. Thelegislative changes focus on encouraging greaterfishing activity in leased oyster beds. Changesinclude shortened lease terms, elimination of leaserenewals on an automatic basis, and evidence ofproduction as a condition of lease renewal.

The Marine R.esources Commission has alsobeen given greater flexibility in regulating fishingareas. Flsxibilitv management of a largearea in the Tangier and Pocornobe sounds wasgiven to the commission in 1978, !n 1981, theGeneral Assembly the size of the area,Similar has been the commissionover areas of the Rappahannock and Corrotomanrivers.

Marine ResourceJune 28, 1977 !198

State-Owned LandThe report on management of State-owned

land assessed the extent to which agencieswith legislative intent in identifying

unused and surplus land which could be sold ortransferred for use other State agencies. Thestudy reviewed the land management function ofthe Division of Engineering and Buildings. Principalfindings included:

eMany agencies had not withstatutory requirements pertaining toidentification of surplus land. Sixteenagencies owned more than 9,100 acres ofsurplus land and an additional 5,000 acresof underutilized land. Based on local taxestimates, 5,400 acres of the surplus landwere worth $10.3 million.

'Most agencies had not developed plans formanaging timber resources on their property.

inonhad relied

practices

-The oyster industry has suffered a sharpdecline in production and employment since1900. A more efficient and effective oysterfishery management program was needed.

@The of the Marine ResourcesCommission to respond expeditiously to thechanging conditions of the commercia!fisheries was greatly constrainedlegislation.

-Marine resource agenciesoutdated administrativeimplementing responsibilities.

*lack of coordination among marine scienceeducational programs and shortcomings ineducational administration needed to beovercome. The educational atfili ativerelationship between the College of Williamand and the Virginia institute ofMarine Science {VIMSI had noteffective oversight or coordinatedinstructional

JLARC recommended that the GeneralAssembly review the effectiveness and efficiencyof oyster fishery management and administrativepractices. The Commission the StateCouncil of Higher Education to make acomprehensive study of marine science education.This study was to take a close look at theaffiliative relationship between VIMS and theCollege of William and

The State Council of Higher Education study.completed in 1978, recommended the merger ofthe Virginia Institute of Marine Science with theCollege of Wiliiam and Mary. The recommendationwas enacted into iaw by the 1979 GeneralAssembly. On July 1, 1979, VIMS became theSchool of Marine Science of the College ofWilliam and Mary.

11181 Update. The fragmentation of marinescience graduate education and competition for

oThe lack of a specific policy for determiningthe value of surplus land hindered theexpeditious sale of unneeded parcels.

@Central land records were not accurate orcomprehensive. Discrepancies between therecords and agency files ranged from justunder ten acres for land controlled by theDepartment of Corrections to 923 acres atthe University of Virginia.

The Commission recommended developmentof uniform criteria for identifying surplus andunderutilized land, improvement of the central landinventory, and legislation to require preparation oftimber management plans.

The General Assembly responded initially tothe findings and recommendations by adoptinglegislation requiring (1) development of criteria toidentify and classify surplus properties and (2)development of timber management plans forappropriate tracts of State land. The Departmentof Conservation and Economic Developmentsubsequently proposed and the General Assemblyapproved legislation strengthening and unifyingunder one section of the Code of Virginia alltimber management law.

In February 1979, the Governor announced aplan to fully implement recommendations of theJLARC report. The Department of GeneralServices subsequently issued a directive entitled"Management Program for Real Property of theCommonwealth of Virginia." The directiveprovided comprehensive instructions on landmanagement, including:

.Procedures on the identification, reporting,and transfer or disposal of surplus property.

-Criteria for declaring property surplus..Timber management policy.eCentral real property records policy.

1981 Update. Implementation of theprogram is well under way and the departmentreports that many surplus parcels are beingdisposed of. Sales have been consurnated on tenproperties, producing $678,663 in revenue. Sevenother properties valued at $15,042,000 havebeen transferred between agencies to meetagency needs without additional rea! estatepurchases.

There has been greater attention to managingforest resources on State-owned lands. Forestmanagement potentia! of 138 State propertieshas been reviewed and detailed reports covering25,000 acres are on file. As of 1981, 1here

were 25 harvesting or reforestation projects underway throughout the Commonwealth.

Timber harvesting on State-owned land hasproduced $55,927. Many similar projects areunder way or planned. The Division of Forestryreports that the harvesting program has notrequired additional employees or equipment.

Management of State-Owned Land inVirginia, April 19, 1979 (120 pp.)

VocationalRehabilitadon

JLARC's evaluation of vocational rehabilitationprograms managed by the Department ofRehabilitative Services and the Commission for theVisually Handicapped sought to:

eDetermine the number of Virginians in needof vocational rehabilitation.

oReview client eligibility..Assess the adequacy of service..Determine whether clients remained employed

and became economically independent oncethey were rehabilitated.

.Assess organizational management.

The number of handicapped Virginians eligiblefor rehabilitation exceeded the department'savailable resources. This shortfall in servicecapacity reinforced the need for effective e!igibilitycontrols to ensure that the most severely disabledwould be served first. To meet productivity goalsset by the department, however, counselors hadaccepted clients who represented the easiestcases. As a result, only 24 percent of thedepartment's clients in FY 1975 were in severelydisabled categories.

Follow-up of clients placed in wage-payingjobs found that as many as two-thirds remained

employed. Of the severely disabled with aphysical handicap, 55 percent were steadilyemployed compared to about 60 percent for allclients. For all clients who remained employed,the average annual income was $4,600.

The Commission recommended that thedepartment take the following steps:

$Develop priority systems to shift emphasisfrom serving large numbers of minimally

disabled clients to serving the most severelyhandicapped.

@Deve!op a weighted Closure system to ensurecounselor compliance with

:n

elnclude welfare recipients as a "priority

category for rehabilitation.\ilExercise greater control over counselor

expenditures.@Place greater emphasis on alternative funding

programs and job placement.

1981 Update. Increased emphasis has beenplaced on serving the most severely handicappedclients. A "Statement of Service Priorities" hasbeen developed and implemented by thedepartment to assist caseworkers in selectingclients for rehabilitation. Severely disabled clientscomprised 50 percent of the department's totalcaseload during FY 1980, a significant increasesince the JlARC study, Disabled welfarerecipients have also been given high priority in

selection.The department has developed and will

implement by September 1982 a weightedclosure system. Weighted closure shoulddiscourage counselors from selecting onlyeasy-to-rehabilitate clients, and will assistsupervisors in evaluating productivity.

Counselor expenditures are being more closelycontrolled. Each level of management receives amonthly "status of funds against budget"statement. The department is also in the processof reviewing its resource allocation procedures toensure that funds are spent in accordance withdepartmental goals and priorities.

The department has strengthened its jobplacement services. Twenty counselors have beenreleased from other duties and assigned solely asplacement specialists. All staff have received basictraining in job placement, and specialists andsupervisors have received advanced training.Increased counselor involvement in job placementhas been targeted as an agency objective, andthe department reports that counselors havesuccessfully met the objective.

In response to a JLARC recommendation toidentify alternative funding, the department has(1) developed a "Similar Benefits Directory" tofulfill its mandate of using other availableresources before using vocational rehabilitationfunds, 12) established optimum use of similarbenefits as an agency goal, 13) strengthened thepolicy and procedure manual regarding similarbenefits, and 14) developed similar benefits

training.

Vocational Rehabilitation in Virginia,November 9, 1976 (190 pp.)

32

Water Resources

The report on water resource managementassessed the effectiveness of theCommonwealth's laws and programs for managingwater resources. The evaluation revealed a lack ofwater resource planning in the State andinadequate enforcement of wastewater discharge

conditions.Between 1972 and 1976, water resource

planning had focused primarily on. contr?lIing

water pollution, with insufficient attention paid toproblems of water supply, Southeastern andNorthern Virginia faced potentially severe watershortages. Industrial and municipal wastewatertreatment plants appeared to regularly violateconditions under which they were permitted todischarge into the State's waters. little effortwas made to enforce these conditions.

JlARC recommended that the State WaterControl Board place greater emphasis oncomprehensive water resource planning. To devoteeven greater attention to this subject, the 1977Genera! Assembly created the State Water StudyCommission to look at local water supply andallocation problems. The commission has beenactive since that time and was continued again in1981. To date, the State Water StudyCommission has focused its attention on waterproblems in Northern and Southeastern Virginia.Water shortages in both areas have been severeas a result of droughts in recent years.

11181 Update. The need for effective waterresource planrunq was brought into sharp focusas State drought conditions worsened considerablyIn 1980, before abating somewhat in 198LAlthough drought conditions focused greater publicattention on water supply problems in recentyears, State Water Control Board officialsconceded that "we are no closer to solving thewater supply problems of Northern andSoutheastern Virginia than we were five years

ago.As a result or recommendations by the Water

Study Commission, legislation was adopted in1981 which directed the State Water ControlBoard to take specific water resource planningactions and to complete a State water supplyplan by 1989. Effective solutions to such water

resource problems are stili years away.in other areas which were the subject of

JlARC recommendations, notable progress hasbeen made, including:

elmproved certification and training oftechnical personnel.

@!mproved coordination with the StateDepartment of Health in areas of overlappingresponsibility.

oEstablishment of a program for dam safety,-Reduction in the number of State river miles

which are not fishable or swimmable.oMore aggressive enforcement procedures

against major polluters.Progress has been made in the area of

enforcement in particular. Since the time of theJlARC study, the board's enforcement activitieshave increased substantially and criminalinvestigations have been initiated against majorpolluters.

STATE WATER CONTROL BOARDENFORCEMENT ACTIVITIES

1972-1976 1977-1980

Special orders issued toindustrial and municipalpermittees 31 90

Court actions 10 63

Criminal investigations 0 22

Another measure of enforcement effectivenesscan be seen in the collection of civil penaltiesfrom polluters. Prior to the JlARC study, no civilpenalties had been obtained. Since the study, 29penalties have produced $425,950 in revenue andprovide a meaningful deterrent to potentialpolluters.

Water Resource Management in Virginia,September 15, 1976 (266 1'1'.)

VIMSDuring JlARC's study of marine resource

programs, numerous management problems wereobserved at the Virginia Institute of Marine

Science (VIMS). A special report was prepared bythe Commission and submitted to the Governor.The report examined the institute's financialstatus, temporary loan balances, institutional

management, and vessel operations. JlARC foundthat the institute had a substantial deficit, andtemporary loans could not be repaid in a timelyfashion.

Subsequent audits revealed that the institutehad accumulated a deficit totaling $6.9 million,principally as a result of poor management ofgrants and contracts. In addition, JlARC's studyof the capital outlay process found that VIMShad built unauthorized facilities at a total costestimated to be at least $300,000. In July1979, the institute was formally merged with theCollege of William and Mary, The collegedeveloped new procedures and internal controlsintended to restore the institute's financialintegrity.

1981 Update. New planning, management,and accounting processes have been implementedto prevent overspending. A cost control systemwas established to monitor the progress ofindividual research projects and to help ensure thecompletion of projects on time and within budget.An automated billing system has been establishedand billings, which were as much as two yearsbehind, have been made Current. Additionalpersonnel have been hired to support financeoffice operations.

Vessel opsrations , a SOurce of seriousproblems in the past, have been consolidated intoa single unit. Vessel personnel have been cutfrom 48 to ten. Major vessels have been set upas cost centers for accounting purposes, providingmanagement with targeted information on costsand revenues. The Virginian Sea, a majorocean-going vessel which was prohibitivelyexpensive to maintain and operate, has beenreturned to the U. S. Navy. Together, these newcontrols over vessel operations will yieldestimated annual savings of $200,000.

A new appropriations commitment by theGeneral Assembly will help VIMS operate withoutdeficit spending. The repayment of State loans

supporting the $6.9 million deficit has beenscheduled to begin on June 30, 1981, with aninitial payment of $400,000. Other annualrepayments of $400,000 will be made until thedebt is cleared.

Special Report: Certain Financial andGeneral Management Concerns, Virginia Instituteof Marine Science, July 26, 1976 (40 pp.)

33

Drug Abuse ControlPrograms

JlARC's evaluation of drug abuse programstook a comprehensive view of ail types of controlfunctions including education, law enforcement,adjudication, and treatment. The report highlighteda number of concerns, includinq:

oThe drug abuse and alcohol control effortlacked effective coordination. A complicatedstructure of State, regional, and localorganizations was involved in substanceabuse control with overlapping andconflicting responsibilities.

eA comprehensive follow-up of former drugtreatment clients found that few remainedarrest-free and employed, two indicators ofsuccessful rehabilitation.

.Drug education programs had not reducedthe level of drug use as originally expected.

The report concluded that an independentdrug and alcohol agency was needed toeffectively coordinate all the Commonwealth'ssubstance abuse efforts.

19l!l Update. legislation originally enactedin 1976 and subsequently amended placed fullresponsibility for the administration, planning, andregulation of substance abuse services with theDepartment of Mental Health and MentalRetardation. The department, which now licensesevery drug and alcohol program in the State,reports that overall control and coordination ofsubstance abuse activities have beenstrengthened.

Letters of agreement have been signedbetween the Department of Mental Health andMental Retardation and the Department ofVocational Rehabilitation to jointly providerehabilitation, counseling, and placement servicesto clients. In addition, the Department of MentalHealth and Mental Retardation has entered intocooperative agreements with the Division ofJustice and Crime Prevention, the Department ofWelfare, and the Department of Education.

Severa! planning and management weaknesseshave also been addressed by the Department ofMental Health and Mental Retardation. Prioritypopulations have been targeted and the extentand nature of substance abuse are morethoroughly assessed at both the State andregional levels. The department is also developing

34

a comprehensive management information systemwhich will link by computer all 36 communityservice boards and 16 menta! health institutionswith Richmond.

Virginia Drug Abuse Control Programs,October 14, 1975 1350 pp.}

Working CapitalFunds

The report on working capita! funds evaluatedthe extent to which the use of working capitalfunds by agencies was consistent with legislativeintent and with principles of sound financialmanagement. Major conclusions of the studywere:

<Working capital funds can be helpful inaccounting for support services provided byone agency to another. However, 13 ofVirginia's 17 working capital funds wereinappropriate.

-Money had been advanced to working capitalfunds for start-up costs, a practice whichcircumvented the legislative process.

-Cumbersome interagency billing processesimpaired efficiency.

e'Ihe four functions financed by workingcapital funds-central telephone, centralwarehouse, computer services, and printingand graphics-h ad numerous operational andadministrative deficiencies.

The Commission ordered that all inappropriateworking capital funds be terminated and thatalternative financing mechanisms be developed. Asa result, the State Comptroller closed 13inappropriate funds.

Legislation was enacted to restrict workingcapita! fund advances to the amountsappropriated by law and to clarify oversightresponsibility. The Commission also directed theComptroller to transfer $1.2 million in excessretained earnings in the funds to the generalfund.

1981 Update. In accordance with Section2.1-196.1 of the Code of Virginia, JlARCreviews working capital funds on an ongoingbasis. This activity is described in the sectionentitled "Purpose and Role."

Working Capital Funds in Virginia, February11, 19761100 pp.)

Virginia CommunityCollege System

A study of Virginia's community collegesystem was the first project authorized by theCommission. The purpose of the report was toreview administrative and educational aspects ofsystem management after an eight-year period ofintensive building and development. Importantfindings of the 1975 study included:

eTwo-vear colleges with comprehensiveprograms were accessible throughout theCommonwealth, and there was a highdegree of student satisfaction with theschools,

eThe Department of Community Collegesneeded an operationally useful master planand a revised management information

system.

-Student classifications were not accurate orcomplete.

.In the system's attempt to meet a diversityof student needs, many programs wereoffered with insufficient enrollments. TheVCCS could have saved $500,000 over the1973-74 academic year just by limiting thenumber of classes with low enrollments.

el.imited progress had been made towardestablishing transfer agreements with publiclysupported senior colleges in Virginia.

elnaccuracies in enrollment forecasts hadresulted in appropriation of general funds ofabout $9,1 million more than justified, Ofthis, about $4,3 million had been returnedto the general fund,

The report recommended that the StateCouncil of Higher Education and the State Boardof Community Colleges take appropriate action to:

elrnprove enrollment forecasting.@Reduce program proliferation through

application of productivity standards.oEliminate the "unclassified student" category

to improve system planning and budgeting.eFormulate articulation agreements for the

orderly transfer of community college creditsto four-year institutions.

The Department of Community Colleges andthe State Council of Higher Education havereported to JLARC several times on steps takento improve system management. Over 40unproductive programs have been discontinued.

Revised procedures were established forenroliment projections. The Department ofCommunity Colleges developed a definitive studentclassification system which identifies theeducational objectives of almost all students.

A study of articulation problems betweentwo-year and four-year institutions wasrecommended by JLARC and performed by theState Council on Higher Education,

Hllli Update, Subsequent to the JLARCand SCHEV reports on the articulation process,transfer guides and articulation agreements weredeveloped, Although gaps in the articulationprocess remain, most schools report relatively fewdifficulties, A new SCH EV subcommittee has beenappointed to look into articulation issues.

Changes in the enrollment projection processhave partially succeeded in narrowing differencesbetween projections and enrollments, JLARCoriginally found enrollment forecasts for full-timeequivalent students to be an average of eightpercent above actual enrollments, ranging from1.8 percent over in 1971 to 13,3 percent overin 1973, Variance peaked at 17 percent in1976, Since 1976, variance has averaged lessthan five percent. The VCCS adjusted itsestimates downward at the 1980 Session of theGeneral Assembly, which resulted in a $4,5million reduction in the VCCS appropriation,

A stronger role by the State Council ofHigher Education has no doubt contributed togreater accuracy, In addition, the VCCSManagement Information System has also helpedimprove projections.

The VCCS has focused on improvingproductivity in two major areas: programs andcourses, and faculty teaching load, The VCCS hasan annual course and program review. Facultyquantitative productivity is measured by theProductivity Analysis System, Under this system,faculty productivity was measured at a 103percent efficiency factor for FY 1980,

Overall management of the system is beingaddressed through development of a ten-yearmaster plan, The plan is scheduled for completionand submission to the VCCS board by the end of1981, The plan addresses systemwide concernssuch as cooperative programs, as well as specificgoals for colleges which fill unique needs,

The Virginia Community College System,March 17, 1975 (346 p p.)

35

Evaluation Act SeriesTwo series of reports are currently being

conducted under the Legislative Program Reviewand Evaluation Act. These studies were authorizedby Senate Joint Resolution 50, passed by the1980 Session of the General Assembly, whichdirected the Commission to review the functionalareas of (1) Transportation and (2) Occupationaland Professional Regulation.

TransportationTwo transportation reports have already been

issued-a cost responsibility methodology and aninterim report on the organization andadministration of the Department of Highwaysand Transportation. Findings and recommendationsfrom these reports are detailed in an earliersection.

Four transportation studies are currently inprogress. Two will present the findings of thecost responsibility study and describe the highwayand transit financing structure in Virginia. Anotherwill assess the various definitions of constructionand maintenance needs in the Commonwealth.The fourth report will focus on the organizationand administration of the Department of

Regular ProjectsPublications Review

Senate Joint Resolution 166, passed by the1981 General Assembly, directed JLARC toreview State agency publications and expendituresfor public relations. The resolution called forsuggested guidelines for publications and specificrecommendations about where publications shouldbe eliminated.

JLARC will determine the number ofpublications. issued over a specific period of timeand provide cost data on recent publications.JLARC will also look into the purposes for whichpublications are produced and evaluate theappropriateness of their manner and expense. Thiswill provide the basis for guidelinerecommendations.

The evaluation is scheduled for completionprior to the 1982 Session of the GeneralAssembly.

Ongoing Projects

Highways and Transportation. It will cover suchareas as organizational structure, informationmanagement, inven tory management, andequipment maintenance. The studies are scheduledto be reported prior to the 1982 GeneralAssembly.

Occupational and ProfessionalRegulation

Two JLARC studies in the functional area ofResources and Economic Development will focuson a review of occupational and professionalregulation by the 28 commercial and healthregulatory boards organized within the Departmentof Commerce and the Department of HealthRegulatory Boards.

The Department of Commerce and theDepartment of Health Regulatory Boards haveadministrative responsibilities which includeprocessing applications, fees, complaints, andinvestigations. One review will examine selectedregulatory processes, such as rule-making andenforcement, which cut across organizationalentities. The second review will consist of anoverview of regulatory boards.

CETAThe Comprehensive Employment Training

Administration (CETA) provides federal funds forprograms to develop the employment potential ofdisadvantaged people who are unemployed orunderemployed. House Joint Resolution 268,passed by the 1981 General Assembly, directedJLARC to conduct an in-depth review and auditof the effectiveness of CETA programsadministered by State agencies. The primary Stateagencies involved with CETA are the Governor'sEmployment and Training Council and the VirginiaEmployment Commission.

JLARC will assess (1) the impact of CETAprograms on participants and the State and (2)how effectively and efficiently agencies administerCETA programs.

The study is scheduled for completion byDecember 1981.

37

Subcommittees Which Have Served with JLARC

Occupational and ProfessionalRegulation Subcommittee (19113-1!Ill!)

Delegate Ralph L. Axselle, Jr.

Delegate Alan A. Diamonstein

Delegate Calvin W. FowlerSenator Ray L. Garland

Senator Madison E. Marye

Delegate C. Jefferson StaffordSenator Stanley C. Walker

311

Transportation Subcommittee(11I110-US1)

Senator Peter K. BabalasDelegate Earl E. BellSenator Daniel W. Bird, Jr.Delegate Vincent F. Callahan, Jr.Delegate Archibald A. CampbellDelegate Orby L. CantrellDelegate C. Richard CranwellDelegate V. Earl DickinsonSenator J. Harry Michael, Jr.Delegate Theodore V. Morrison, Jr.Senator Richard L. SaslawDelegate Norman SisiskySenator William A. TrubanSenator L. Douglas WilderSenator Edward E. Willey

Social Services Subcommittee (1979-1981)Senator John H. ChichesterSenator Joseph V. Gartlan, Jr.Delegate Johnny S. JoannouDelegate Norman SisiskyDelegate W. Ward TeelSenator Stanley C. Walker

Camp Pendleton Task Force (l!l711)Delegate C. Richard CranwellSenator Joseph T. FitzpatrickMr. Clarence D. Fleming, Jr.Senator William B. HopkinsMr. E. Ralph James, Jr.Delegate George W. JonesDelegate Benjamin J. Lambert IIIDelegate C. Hardaway MarksDelegate Owen B. PickettThe Honorable Fred G. PollardMr. George W. StraubeSenator Russell I. Townsend, Jr.

Health Pilot Assessment Subcommittee(11180-1981)

Senator Peter K. BabalasDelegate Richard M. BagleyDelegate Robert B. Ball, Sr.Senator Herbert H. BatemanDelegate Robert S. BloxomSenator Adalar-d L. BraultMr. Andrew FogartyDelegate J. Samuel GlasscockSecretary Jean L. HarrisDelegate George H. Heilig, Jr.Delegate Elise B. HeinzSenator Richard J. HollandCommissioner James B. KenleyCommissioner William L. l.ukhardDelegate Mary A. MarshallSenator Willard J. Moody

Health Pilot Subcommittee (19711-1979)Senator John C. BuchananSenator Elman T. GrayDelegate Mary A. MarshallDelegate Owen B. PickettSenator Elliot S. SchewelDelegate W. Ward Teel

Sunset Task Force (1977)Delegate Earl E. BellSenator Adelard L. BraultMr. Arthur R. CecelskiDelegate J. Samuel GlasscockDelegate Raymond R. Guest, Jr.Delegate Charles W. Gunn, Jr.Mr. Julian J. MasonDelegate A. L. PhilpottSecretary Maurice B. RoweSenator Elliot S. SchewelMr. A. Howe ToddSenator Stanley C. Walker

JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION

Research Staff

F. Daniel Ahern, .J r .John M. BennettL. Douglas Bush, .Jr.Charles E. Cummings, .Jr.Mark S. FlemingLynn L. GrebensteinGary T. HenryClarence L. JacksonKirk JonasR. .Jay LandisWilliam E. LandsidleSarah .J. LarsonPhilip A. LeoneJoseph H. MaroonBarbara A. NewlinRay D. PethtelWalter L. SmileyPatricia G. SmythRonald L. TillettGlen S. TittermarySusan L. UrofskyKaren F. WashabauMark D. WillisWilliam E. WilsonMargi.J. Winters

Administrative Staff

Deborah A. ArmstrongSandy C. DavidsonPhyllis M. DyerSharon L. Harrison.Joan M. IrbyBetsy M. JacksonKim Rexrode

.JLARC STAFFFOH THIS REPORT

Kirk ,Tonos. Pf(~ject DirectorPhyllis Xl. DyerBarba ro A. NewlinPatricia G. S;nyth