The City of New Orleans has overpaid for Sheriff Marlin Gusman’s electronic ankle monitoring program since he was awarded the contract for pre-trial defendants in 2010 — at least $200,000 over two years, according to a report released today by the city’s Inspector General.
The report also criticizes the city for not catching overbillings or improper charges for monitoring convicts who weren’t supposed to be part of the sheriff’s contract.
The city gave the deal to the Orleans Parish Sheriff’s Office under unusual circumstances, as The Lens reported at the time. After taking bids for the contract — with the sheriff not offering the lowest price — the city canceled the competitive process and simply awarded the work to Gusman through a governmental maneuver.
Today’s report said Gusman was more than $100,000 over budget in 2011 and again in 2012 for a program that was created to reduce social and financial costs of incarceration for relatively low-risk suspects facing trial.
“The City should ensure that it pays a competitive price for its program and only pays for the pretrial defendant population the program is intended to serve,” Inspector General Ed Quatrevaux wrote in a release. “The Sheriff’s Office must also do a better job of managing the public monies that pay for the program.”
The program had revenues of $555,579 in 2011 and 568,048 in 2012. It spent $681,829 the first year and $682,469 the second.
That put the program in the red by $126,250 in 2011 and $114,421 in 2012. Yet the city still paid those bills.
How did this happen?
“They keep very poor records,” Quatrevaux said of Gusman’s office during an interview with The Lens. “Their accounting system is not good.”
Not only did the sheriff’s office overspend, Quatrevaux said, but it also reported indirect costs for the program that couldn’t be verified or that were grossly miscalculated — including paying $140,000 a year in rent.
And it was Gusman, the landlord, charging an eye-popping rate to Gusman, the tenant, and the city paying the tab. That’s because the monitoring program rents space in Gusman’s Intake Processing Center.
Evaluators consulted a real estate quarterly report to determine that the Sheriff’s Office was overcharging the program for rent.
Instead of calculating the per-square-foot rent by the year, as is the industry standard, Gusman’s office was calculating it by month. So it charged 12 times as much as it should have, Quatrevaux’s office reported.
It charged $15 per square foot every month for the 782-square-foot office used by employees of the monitoring program. That’s $11,730 per month.
“At $179 per square foot, OPSO’s Intake Processing Center would be listed in the real estate quarterly report as ‘the highest priced office space in the New Orleans metropolitan area,’ according to the author of the quarterly report,” the Inspector General’s report reads.
The Inspector General’s report also says that the electronic monitoring program’s deputies’ schedules included regularly planned overtime, which raised personnel costs by more than $100,000 over base salaries for the two years combined. In 2012 alone, overtime accounted for more than $81,000 — equivalent to two monitoring deputy positions with an average salary of $34,000.
Overtime accounted for 23 percent of personnel costs, the report found.
The Office of Inspector General also discovered that the Sheriff’s Office billed the city more than $65,000 for post-conviction monitoring — even though the program was specifically created to serve pretrial defendants.
Yet another finding shows that everyday errors accounted for other inflated bills in 2011 and 2012.
“According to evaluators’ calculations, at its current budget level OPSO should be able to charge the City a lower daily rate, hire at least two additional monitoring deputies, and enroll additional pretrial defendants,” in the program, the report reads.
The Inspector General’s office recommended that the Sheriff’s Office improve its controls and keep a separate budget for the electronic monitoring program, as well as renegotiate the program’s cost per unit per day. The report also recommended that the city take more responsibility for making sure billing is accurate.
In a written response to the findings, included in Quatrevaux’s report, Gusman said his office segregated electronic monitoring program costs from the rest of the budget, added staff to oversee the billing process and strengthened communication with the court system to make sure the correct clients were registered in the program.
In terms of overtime, however, Gusman said that while he has considered placing more staff on shorter schedules of 8-hour shifts, the cost is prohibitive.
“Currently, the program does not include sufficient funds for a night shift, and the number of call-outs overnight is very low and does not warrant full-time personnel,” Gusman said. He added that three eight-hour shifts a day “would require renegotiation with the City of New Orleans for additional funds.”
Gusman’s anticipated revenue for the program included money from the city agreement, as well as from defendants who paid their own monitoring expenses.
Mayor Mitch Landrieu gave the work to Gusman’s office through a cooperative endeavor agreement in late 2010. This kind of arrangement between governmental agencies is allowed by law, but it came after a competitive bid process that Gusman did not win.
In November 2010, The Lens reported that the cost of the cooperative endeavor agreement was not only higher than the lowest bidder for the program, but that it was higher than what Gusman’s office initially proposed.
The bidding process was canceled because of procedural questions, but the bids were made public.
Moreover, in 2012, The Lens reported that the city budget for the ankle monitoring program was well short of what Gusman needed, nor was it anywhere close to the amount uttered by city officials during public hearings.
Quatrevaux told The Lens that, compared to a report his office issued last year on the city’s jail funding, the budget problem surrounding the electronic monitoring program was “small stuff.”
“The real problem, which we identified in the jail-funding report, is that the person writing the checks has no control over the person funding the expenses,” Quatrevaux said.
In other words, even though the mayor is obligated to pay the jail, the sheriff runs it.
“If someone gave you an unlimited checkbook you might not maintain it as well as you maintained your own, either,” he added. “That’s what we call the root cause.”
In that report, the inspector general’s office recommended that the city either demand good accounting from the sheriff, or consider taking over the jail.
Otherwise, he added, it’s unfair to taxpayers.
“You’re a victim,” he added.