Audit Finds Wasteful Spending in State Court Administrator’s Office

The office spent millions on no-compete contracts and employee payments

Ralph L. Carr Colorado Judicial Center Courthouse

The Office of the State Auditor concluded Dec. 7 that the State Court Administrator’s Office wasted millions of dollars over four years on no-compete contracts, payments to convince employees to quit, and paid leave and that many of those uses of taxpayer funds were not authorized or not supported by required documentation. The state auditor said its report “raise[s] questions about the efficacy of the SCAO’s system of internal control, including, in particular, its culture of accountability.” 

The SCAO is the judicial branch’s arm for managing finances, human resources, and technology and is budgeted about $47 million per year from the state’s general fund. Its 260 employees also provide data relating to judicial branch operations to the state Supreme Court, oversee probation services and give operational guidance to local courts. “Overall, we found that the [SCAO] should improve its administrative framework to increase accountability and cultivate public trust in its operations, including improvement to controls over awarding voluntary separation incentives and sole source contracts, staff use of paid administrative leave and procurement cards, and human resources document retention,” the audit concluded.

During the fiscal year 2017-2020 period covered by the audit, nine SCAO employees received “voluntary separation incentives,” or payments designed to encourage them to leave state employment, totaling about $518,000. The state court administrator approved them, but three other sign-offs were needed. Those were not obtained before the VSIs were executed. Had those employees been given buyouts by the executive branch, the taxpayers would have saved about $75,000, according to the report. 

Auditors also concluded SCAO had granted 26% of the paid administrative leave time given to employees without records showing why and that more than 1,000 of those unexplained leave hours, spread across 102 occurrences of leave, exceeded the ordinary amount granted to employees. Whether the remaining 74% of paid administrative leave hours given to SCAO employees was in the best interest of the state, as required by judicial branch human resources rules, could not be determined. Overall, the report states the SCAO spent $476,000 on administrative leave during the audit period and the state court administrator had not maintained records of reasons for leave nor imposed any limit on the amount of administrative leave available to employees.

Among other findings are that six of 10 contracts worth $3.87 million, and on which more than $1 million were spent, were awarded on a no-bid basis but were not supported by adequate documentary support; 10 of 135 Family and Medical Leave uses were not supported by legally required documentation; and about a quarter of purchases with office procurement cards were inconsistent with judicial branch fiscal rules.

The audit report hinted that SCAO had not established written policies to govern the use of VSIs and that its leadership has not always fostered a workplace expectation of honesty. “The SCAO should implement an effective system of internal control that fosters a culture of integrity, including implementing policies and monitoring activities to ensure that controls are working properly and staff adhere to Rules,” it said.

Colorado’s audit office is an agency of the General Assembly. It reports to the Legislative Audit Committee, which is currently chaired by lame duck Republican Rep. Lori Saine of Firestone under an arrangement requiring control of the gavel to rotate among the two parties. Saine called the report’s findings “horrifying,” according to a report in the Colorado Sun.

Jon Sarche, a spokesperson for the state’s judicial branch, said that neither SCAO Steven Vasconcellos nor Chief Justice Nathan Coats would comment on the SAO report. Coats told the General Assembly’s Legislative Audit Committee on Dec. 7 that the Colorado Supreme Court is now taking a more active role in overseeing SCAO, with individual justices assigned to oversee particular aspects of the agency’s work. “I think we’ll continue with that closer supervision,” Coats said. 

He also explained that many of the SCAO’s senior management have left the agency since the audit period began, including the state court administrator, chief of staff, director of human resources, director of financial services and the controller. Vasconcellos was appointed in July 2019 on an interim basis before being given the permanent job in October 2019. His predecessor, Christopher Ryan, resigned in the aftermath of a Denver Post investigation of his award of a $2.5 million sole source contract to a former SCAO employee who had started the company given the contract while still working for SCAO.

Sen. Bob Gardner, R-Colorado Springs, said he is unsure that the General Assembly can do much to impose greater controls on SCAO in response to the audit. “I think [we’ll] mostly ask a great number of questions,” he said. “I wouldn’t look for any legislation, and I would expect any legislation that would somehow call for oversight of the judicial department to be resisted mightily.”

“The judicial branch operates largely as a separate branch of government only dependent on the legislature and the governor for funding and, in that sense, we are pretty limited in what we can do,” Gardner continued. The veteran legislator, who was first elected to the General Assembly in 2006 and is the ranking member of the Senate Judiciary Committee, said that he is optimistic that Vasconcellos is working on correcting management problems at SCAO. “I think the new state court administrator is committed to resolving the issues and doing business differently,” he said. 

— Hank Lacey

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