YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

November 25, 2002

Report No. 2002-114

The following problems were discovered as a result of an audit conducted by our office of selected operations of the Department of Corrections (DOC).

�        According to Department of Corrections policy, all receipts are to be immediately transmitted to the Department of Revenue.� However, our cash count determined the Inmate Revolving Fund (IRF) unit was holding undeposited receipts totaling over $191,000 comprised of over 3,100 money orders for the electronic monitoring program (EMP).� Some of these receipts had been held for more than 8 weeks.

Offenders are to pay $5 for every day they are assigned to the EMP program.� The department's records indicated the amount owed by offenders in the program� as of April 2002 was over $4 million, and at least $2 million of this amount was due prior to July 1, 2001.� Our review determined that the records of amounts owed contained a significant number of errors which limited the ability of probation officers to effectively enforce the collection of EMP monies from the 12,800 offenders that owed monies.

�        Our cash count determined Missouri Vocational Enterprises (MVE) was holding over $652,000 comprised of 265 checks that had been received during a two month period.� We continued to follow these undeposited receipts and noted it took the department nearly five months to properly process and deposit this backlog of checks.

�        Our count of DOC central office cash on hand found 22 undeposited checks totaling over $17,000 and over $450 in cash.� Further analysis of central office handling of receipts revealed the loss of a check received in September 1999 for over $450,000.� The lost check was received from the Department of Elementary and Secondary Education and consisted of $150,000 in federal grant funds and $300,000 in state General Revenue Funds.� The DOC internal audit discovered in November 2001 the check had never been deposited and was missing, leading to the recovery of the federal funds, but the state General Revenue funds could not be recovered by the department because the state appropriation had already expired.

The findings of the audit in the receipt area were caused by several different employees handling the monies with little monitoring, monies not always being recorded upon receipt, and untimely processing and depositing of collections.

�        The DOC has confiscated and is holding over $1 million from over 5,000 offenders who escaped or absconded from supervision since August 1993.� There does not appear to be a statutory basis under which the DOC is authorized to seize and hold for future use offender funds when an escape is declared.� The confiscated escape monies are currently placed in the Inmate Canteen Fund and the appropriate future use for the benefit of inmates is to be determined by the central canteen committee.

Based on the absence of statutory authority for the department to seize and spend confiscated escape balance monies, it appears the over $1 million currently held should be used for certain other offender obligations such as court ordered obligations, child support, and costs of incarceration.� Any remaining escape balances should be considered abandoned property that would fall under the lost and unclaimed property rules, and should be turned over to the State Treasurer's Unclaimed Property Section in compliance with state law.

�        The state's General Revenue Fund is subsidizing the operations of the inmate canteens by nearly $2.8 million annually.� This amount represents all salary costs for civilian employees who oversee canteen operations.� Based on state laws which authorized the canteens, it appears the operational costs related to the canteens should be paid from canteen earnings.

�        As noted in our prior audit, the department retained over $19,000 in the Inmate Canteen Fund that should be turned over to the State Treasurer as unclaimed property.� In response to the prior audit, the DOC indicated that the money would be turned over to the State Treasurer as unclaimed property; however that action was never taken.

�        Unreimbursed state fringe benefit costs could reach as much as $4.8 million by 2006 because the DOC has again failed to ensure the medical services contractor appropriately reimburses the state for fringe benefits costs incurred for state employees.� These costs are incurred for state employees who were allowed to retain state employee status when their state jobs were taken over by the private contractor.

�        The DOC has not fully utilized all available federal assistance and, as a partial result, appears to have lost future federal grants for the substance abuse treatment programs.� In fiscal year 2001, the DOC had paid $125,000 in salary and benefits costs of the academic education program from the state's General Revenue Fund that should have been paid from the department's federal fund appropriation.

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