[Audit Report on Followup of Recommendations Concerning Personnel and Payroll Practices, Legislative Branch, Government of Guam]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 97-I-1051

Title: Audit Report on Followup of Recommendations Concerning Personnel
       and Payroll Practices, Legislative Branch, Government of
       Guam

Date: July 31, 1997
                  **********DISCLAIMER**********

This file contains an ASCII representation of an OIG report.  No attempt has been made to display
graphic images or illustrations.  Some tables may be included, but may not resemble those in the
printed version.

A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
of Inspector General, Division of Acquisition and Management Operations at (202) 208-4599.
                  ******************************

United States Department of the Interior

OFFICE OF INSPECTOR GENERAL

Washington, D.C. 20240

MEMORANDUM

TO

FROM:



SUBJECT SUMMARY: Final Audit Report for Your Information - "Followup of
                     Recommendations Concerning Personnel and Payroll Practices,
                    Legislative Branch, Government of Guam" (No. 97-I-1051)

Attached for your information is a copy of the subject final audit report. The objective of
the followup review was to determine whether the Guam Legislature had satisfactorily
implemented the recommendations in our 1991 report and whether any new
recommendations were warranted.

We concluded that the Guam Legislature had implemented only 1 of the 10
recommendations made to it in our original report. The Legislature continued to: (1) allow
legislative employees to accrue annual leave at the maximum rate; (2) make lump-sum
payments of annual leave to senators and employees at the end of each term; and (3) issue
personal services contracts that contained vague performance requirements. As a result, from
January 1, 1993, through September 30, 1995, the Government of Guam incurred excess
personnel costs of about $3.6 million and did not ensure that full value was received from
the $4.6 million of personal services contracts issued. Accordingly we requested in our
followup report that the Guam Legislature respond to eight new recommendations to address
the issues still outstanding from the original report.

Based on the response we received from the Guam Legislature, we considered two of the
eight new recommendations made in our followup report to be implemented and two
recommendations to be resolved but not implemented. In addition, we withdrew three of the
recommendations based on additional information presented by the Legislature. However,
regarding the remaining recommendation, which related to prohibiting senators from
receiving Government of Guam retirement payments concurrent with their senatorial pay,
we revised the recommendation to request that the Guam Code be amended to prohibit
elected officials from receiving retirement annuities until they leave government service. We
asked the Legislature to reconsider its position in view of our additional comments on the
revised recommendation.

If you have any questions concerning this matter, please contact me at (202) 208-5745 or
Mr. Robert J. Williams, Assistant Inspector General for Audits, at (202) 208-4252.

Attachment

 
N-IN-GUA-002-95A

United States Department of the Interior

OFFICE OF INSPECTOR GENERAL
   Washington, D.C. 20240

AUDIT REPORT

The Honorable Antonio R. Unpingco
Speaker
24th Guam Legislature
155 Hesler Street
Agana, Guam 96910

Dear Mr. Speaker:

Subject: Audit Report on Followup of Recommendations Concerning Personnel and
Payroll Practices, Legislative Branch, Government of Guam (No. 97-I-1051) 

This report presents the results of our followup review of recommendations contained in
our February 1991 audit report entitled "Personnel and Payroll Practices, Legislative
Branch and Other Elected Officials, Government of Guam" (No. 91-I-372). The objective
of the followup review was to determine whether the Guam Legislature had satisfactorily
implemented the recommendations in the prior report and whether any new
recommendations were warranted.

BACKGROUND

The Guam Legislature was established by Section 10 of the Organic Act of Guam (Title
48, Section 1421, of the United States Code Annotated). The Legislature is composed of
21 senators elected at large every 2 years and is governed by Title 2 of the Guam Code
Annotated.  The operation of the Legislature, including administrative rules and
procedures, is set forth in the Standing Rules, which are adopted at the beginning of each
legislative term. The Legislature's Committee on Rules is responsible for implementing
the Standing Rules, including establishing an annual budget; maintaining, through a Chief
Fiscal Officer, an accounting system; and preparing annual financial statements. The
Central Offices, under the Rules Committee, administer the personnel, payroll,
procurement/property, accounting, legal, protocol, and archival functions and maintain the
Legislature's checking accounts. The Central Offices draw down funds against their
budget from the Department of Administration, which is part of the Government of
Guam's Executive Branch.

The Department of Administration also provides accounting, training, data processing,
procurement, and personnel services support to Government of Guam Executive Branch
agencies. The Department's function is to ensure the effectiveness and efficiency of

 
Government program objectives by providing administrative direction and establishing
policies for the implementation of supportive services to all Government agencies.

SCOPE OF AUDIT

To accomplish our audit objective, we reviewed the Legislature's payroll and leave records
for senators and their employees, as well as personal services contracts for the 22nd and
the 23rd Legislatures. 1 In addition, we interviewed legislative personnel responsible for
administering payroll and personal services contracts. We did not perform any detailed
reviews of elected officials outside of the Legislature. This followup review covered
actions that occurred during the period of January 1993 through December 1995.

The audit was made, as applicable, in accordance with the "Government Auditing
Standards, " issued by the Comptroller General of the United States. Accordingly, we
included such tests of records and other auditing procedures that were considered
necessary under the circumstances.

PRIOR AUDIT COVERAGE

In our February 1991 audit, we concluded that elected officials and legislative employees
received benefits that either were not consistent with benefits provided to other
Government of Guam employees or were in excess of those authorized by law.
Specifically, elected officials who had previously retired from Government service and
were reemployed received both their retirement annuity and their salary, a benefit denied
nonelected Government employees. In addition, all elected officials accrued annual leave--
a practice that we found to be unique to Guam. Moreover, contrary to Guam law, all
elected officials accrued sick leave. Furthermore, senators and legislative employees were
allowed to receive lump-sum payments for annual leave while remaining in Government
service. Our prior audit further disclosed that the Guam Legislature did not adequately
control personal services contracts.

These conditions occurred because: (1) senators either exempted themselves from laws that
applied to other Government of Guam employees or authorized certain benefits to
themselves, other elected officials, and legislative employees and (2) senators exempted
themselves from existing Government contracting regulations and guidelines and did not
establish their own internal controls. As a result of these conditions, the Government of
Guam incurred: (1) about $360,000 annually in excess personnel costs for retirement
benefits beginning in March 1990; (2) about $1.9 million in excess personnel costs from
leave benefits from October 1988 through February 1990; and (3) $3.7 million of costs
relating to personal services contracts during 1988 and 1989 with little assurance that full
value was received. We made 10 recommendations in the prior report to correct these

 
conditions.  These 10 recommendations were subsequently reported as resolved and
implemented.

RESULTS OF AUDIT

Of the 10 recommendations made in our February 1991 report relating to excess personnel
costs for elected officials and to the improvement of legislative contracting procedures for
personal services contracts, we found that 9 recommendations were not implemented and
1 recommendation was implemented.  (The status of the recommendations and corrective
actions taken is in Appendix 2.) Specifically, the Legislature continued to: (1) allow
legislative employees to accrue annual leave at the maximum rate; (2) make lump-sum
payments of annual leave to senators and employees at the end of each legislative term;
(3) allow senators, contrary to the Guam Code, to accrue sick leave; and (4) issue personal
services contracts for services that were not openly solicited and that contained vague
performance  requirements.   As a result,  from January  1, 1993, through
September 30, 1995, the Government of Guam incurred excess personnel costs of about
$3.6 million and did not have assurance that full value was received from the $4.6 million
of personal services contracts awarded.

Prior Audit Report Recommendations

Recommendation A. 1. Submit legislation to discontinue annual leave accrual by elected
officials.

Our prior audit report questioned the propriety of elected officials accruing annual leave
when the basic relationship with which leave is accrued and used by an employee does not
exist with respect to senators. The prior report stated that "basic leave principles require
that a systematic approach exist for measuring the accrual and use of leave," including
procedures for approving or disapproving leave. For example, an employee with 15 years
of service working a pay period that includes 10 &hour days would accrue 8 hours of
annual leave for the pay period. If the same employee (with the approval of a supervisor)
took a workday off during the period, 8 hours of leave would be deducted from the leave
balance. However, elected officials do not have supervisors and are answerable only to
their constituents.

Our followup review found that senators continued to accrue annual leave. The Standing
Rules for the 22nd and the 23rd Legislatures prescribe annual leave policies for legislative
employees but do not address senatorial accrual and use of annual leave. Also, senators
were not charged leave when they were absent.  For example, a senator of the 23rd
Legislature was away from his job for at least 70 consecutive workdays (560 hours) but
was not charged any leave for that time period. As of September 30, 1995, senators of
the 23rd Legislature had accrued a total of 2,596 hours of annual leave, but only 1 of the
21 senators had used and was charged for annual leave (136 hours). Because the senators
continued to accrue annual leave, we consider the recommendation unimplemented.

3

 
Recommendation A.2. Initiate action to revise the Legislature's Standing Rules for
nonelected emnlovees' annual leave accrual to conform to the nrovisions of Title 4,
Section 4109. of the Guam Code Annotated.

Our prior audit found that legislative employees accrued annual leave at the maximum rate
of 8 hours per pay period regardless of their length of service. Title 4, Section 4109(a),
of the Guam Code Annotated authorizes annual leave to be granted to employees
occupying permanent positions as follows:

- Less than 3 years of service: 4 hours per pay period.
- Three but less than 15 years of service: 6 hours per pay period.
- Fifteen years or more of service: 8 hours per pay period.

However, the Legislature had modified the accrual rate for senators and legislative
employees through the Standing Rules. As a result, senators and their employees had
accumulated 57,405 hours of excess annual leave, valued at $487,859, from
January 1, 1982 (the date the law was amended), through February 24, 1990.

Our followup review found that legislative employees continued to accrue annual leave in
excess of the rates specified for Government of Guam employees.  Specifically, Rule
XXII, Section 22.09.11, of the Standing Rules of the 22nd and the 23rd Legislatures states
that employees will accrue annual leave at the rate of 1 day (8 hours) for each full
biweekly pay period. As a result, legislative employees accumulated, from February 24,
1990, through September 30, 1995, an additional 88,736 hours of excess annual leave,
valued at $1,112,165. Because the legislative employees continued to accrue annual leave
in excess of rates specified in the Guam Code Annotated, we consider the recommendation
unimplemented.

Recommendation A. 3. Rea_uire the Legislature's Executive Director to initiate collection
actions to recoun the imnroner lump-sum navments made bv the Government.

Recommendation A.4. Initiate action to establish nrocedures for limiting lumn-sum
pavment of accrued annual leave to emnlovees onlv when thev actuallv terminate
Government employment.

Our prior audit report stated that senators and legislative employees received lump-sum
payment for their unused annual leave balance at the end of each legislative term
regardless of whether the senator was reelected or the employee continued to work for the
Government of Guam. We concluded that senators and legislative employees would be
entitled to the lump-sum payment only if they were not reelected or otherwise employed
by the Government. Our position was supported by a January 1989 memorandum issued
by Guam's Attorney General, which stated that there was no separation from Government
employment if an official was reelected. Because lump-sum payments were not limited,
the Government of Guam incurred excess personnel costs of $361,427 in January 1989.

4

 
that actions had not been
leave incorrectly paid to

Regarding Recommendation A.4, our follow-up review found that senators and legislative
employees continued to receive lump-sum payments for their unused annual leave balance
at the end of each legislative term regardless of whether the senator was reelected or the
employee continued to work for the Government of Guam. As a result, the Government
of Guam incurred additional excess personnel costs of $2,103,869 for lump-sum payments
of annual leave in fiscal years 1993 ($1,347,525) and 1995 ($756,344). Because lump-
sum payments continued to be received by senators and legislative employees, we consider
the recommendation unimplemented.

Recommendation A.5. Direct the Legislature's Executive Director to discontinue the
accrual of sick leave for senators and to eliminate all sick leave balances nreviouslv
accrued bv senators.

Our prior audit report found that senators and other elected officials of the Government
of Guam accrued sick leave, which was contrary to existing law. Title 4, Section 4108,
of the Guam Code Annotated authorizes Government of Guam employees to accrue sick
leave at the rate of 4 hours per pay period. However, Section 4108 does not include
elected officials in the definition of Government employees. Because sick leave was
accrued by senators and other elected officials, as of February 24, 1990, the Government
of Guam had incurred a potential liability of at least $1.1 million relating to the accrual
of sick leave for these individuals.

In our follow-up review, we found that the practice of accruing sick leave continued despite
an April 19, 1995, memorandum from the Legislative Legal Counsel which stated that the
Inspector General's position had legal merit and that senatorial sick leave accrual should
be discontinued. As a result, from January 1, 1993, through September 30, 1995, the
Government of Guam incurred an additional potential liability of at least $373,350 for sick
leave accrued by senators of the 22nd and the 23rd Legislatures. Subsequent to our
completion of fieldwork, legislation was enacted on July 26, 1996, that eliminated the
accrual of sick leave by members of the 24th Guam Legislature, which began on
October 1, 1996. However, the legislation did not address sick leave balances that were
accrued previously.  Because the sick leave balances previously accrued were not
eliminated, we consider the recommendation unimplemented.

Recommendation A.6. Submit legislation to eliminate the nrovisions of Title 2. Section
1120(b). of the Guam Code Annotated. which allows elected officials to receive retirement
annuities while thev are emnloved bv the Government.

Our prior audit found that officials retired from elected Government positions but did not
leave the Government. In these cases, they received both their retirement annuity and

5

 
their salary, a benefit denied nonelected Government employees. Title 4, Section 8 121,
of the Guam Code Annotated states that a Government retiree who becomes reemployed
by the Government "shall have his/her retirement annuity suspended. " However, in
December 1984, the Legislature exempted itself and other elected officials from this
provision through enactment of Title 2, Section 1120(b), of the Guam Code Annotated.
Because of the dual compensation, at March 1990, the Government of Guam had incurred
$367,477 in excess personnel costs.

Although no examples were noted, our followup review found that the dual compensation
provision for elected officials had not been eliminated. Therefore, we consider the
recommendation unimplemented.

Recommendation A.7. Submit legislation to amend the nrovisions of Title 4 of the Guam
Code Annotated (Section 8170(a)(3)) so that a senator's retirement annuitv will be based
on the average of the senator's three highest annual salaries actuallv received.

Our prior audit found that a senator's retirement annuity computation was based on the
higher of: (1) the average of the senator's three highest annual salaries or (2) the annual
compensation paid to the Director, Department of Administration, at the time the senator
applied for retirement. Three senators who retired in 1989 had been paid $26,000 each
in 1987 and 1988 and $41,500 in 1989 (a 3-year average of $31,167). However, at the
time these senators applied for retirement, the Director of Administration's salary was
$50,000. Thus, each senator's average salary for annuity computation purposes was
increased by $18,833 because the Director's salary was used as the basis for retirement
purposes.

In our followup review, we found that the recommendation had been implemented with
enactment of Public Law 23-33 on June 28, 1995, which changed the basis for computing
a senator's retirement to the average of the three highest annual salaries actually earned
by the senator. Therefore, we consider the recommendation implemented.

Recommendation A. 8. Instruct the Director T Denartment of Administration. to discontinue
the accrual of sick leave for elected officials of the executive branch and to eliminate the
sick leave balances previouslv accrued bv these officials.

Our prior audit found that elected officials of both the Executive and the Legislative
Branches of the Government of Guam accrued sick leave, which was contrary to existing
law. Because the Department of Administration maintained the leave records for all
elected officials, we recommended that the Governor instruct the Department's Director
to eliminate sick leave balances for elected officials in the Executive Branch. However,
our follow-up review was limited to practices of the Legislative Branch. In the review, we
found that, based on the leave records for each senator that were maintained at the
Legislature's Personnel and Payroll Office (see Recommendation A.5), sick leave was still
being accrued and sick leave balances were not eliminated. Since we noted the problem

in the Legislative Branch and we did not receive documentation subsequent to our prior

6

 
audit confirming that corrective actions were taken as they relate to the Executive Branch,
we consider the recommendation unimplemented.

Recommendation A.9. Instruct the Director of the Retirement Fund to recompute the
retirement annuities for elected officials who have retired to exclude the sick leave
previouslv granted imnronerlv.

Our prior audit found that elected officials accrued sick leave, which was contrary to the
Guam Code. The sick leave was used in computing retirement annuities. For example,
the three senators who retired during the prior audit received retirement credit for 4,132
hours of accrued sick leave. In our follow-up review, we found that this practice still
existed. For example, two senators who retired during the 22nd Legislature (1993 and
1994) used a combined total of 1,495 hours of sick leave in computing their years of
service. Therefore, we consider the recommendation unimplemented.

Recommendation B.1. Initiate action to establish and implement written procedures that
include but are not limited to soliciting for nersonal services and awarding. monitoring the
progress of. and evaluating nerformance under Personal services contracts.

Our prior audit found that contracts for personal services: (1) were not openly solicited;
(2) were awarded for questionable services; (3) did not contain specific terms or
deliverables; and (4) appeared to duplicate existing services. The Government of Guam
had guidelines for and regulations that specified how and under what circumstances
personal services contracts could be awarded. However, the Legislature exempted itself
from such regulations and did not establish its own control procedures. As a result, the
Legislature did not have assurance that full value was received from the $3.7 million of
personal services contracts awarded during 1988 and 1989.

Our prior audit found that the 21 senators had a support staff of approximately 250
employees during calendar years 1988 and 1989. In addition to the support staff, the
Legislature awarded 574 personal services contracts: 310 contracts awarded to 195
individuals in 1988 and 264 contracts awarded to 173 individuals in 1989. Our followup
review found that the 21 senators had an average support staff of 334 employees for the
22nd and the 23rd Legislatures. In addition to the support staff, the 22nd Legislature
awarded 261 personal services contracts to 261 individuals, and the 23rd Legislature
awarded 177 personal services contracts to 161 individuals. The values of these contracts
were $2,859,465 and $1,765,658, respectively, for the 22nd and the 23rd Legislatures.

In our follow-up review, we found that the same conditions previously noted still existed.
We also noted that legislative personnel paid contractors without valid contracts and that
senators' offices prepared the contractors' invoices.  Specifically, we found that
consultants generally did not submit their own billings. Instead, payment forms were
prepared by the respective senator's office in a manner similar to an employer processing
payroll for an employee, where payment was based on the passage of time rather than on
the attainment of specific objectives in the contracted scope of work. For example, a

7

 
consultant received an advance payment of $4,000 for April on March 15, 1995, and
received another $4,000 for May 1995 .2 However, the consultant had resigned and left
Guam in April 1995. The May 1995 invoice form was submitted for payment by the office
of the employing senator on May 2, 1995.  These conditions occurred because the
Legislature did not have written procedures for contracting with consultants. As a result,
the Legislature did not have assurance that full value was received from over $4.6 million
of personal services contracts it awarded during the 22nd and the 23rd Legislatures.
Because corrective actions regarding personal services and personal services contracts
were not taken, we consider the recommendation unimplemented.

Recommendations

We recommend that the Speaker of the Legislature:

1. Submit legislation to discontinue annual leave accrual by senators.

  2. Revise the Legislature's Standing Rules to ensure that legislative employees
accrue annual leave in accordance with Title 4, Section 4109(a), of the Guam Code
Annotated.

    3. Revise the Legislature's Standing Rules to limit lump-sum payments of accrued
annual leave to only those individuals who are not reelected or are no longer employed by
the Government of Guam.

  4. Amend Title 2, Section 1120(b), of the Guam Code Annotated to prohibit
elected officials from receiving retirement annuities until they leave elected government
service.

  5. Initiate action to establish and implement written procedures for openly
soliciting and awarding contracts with specific terms and deliverables, including the
processing of contractor invoices based on the completion of contract deliverables.

Guam Legislature Response and Office of Inspector General Reply

The February 28, 1997, response (Appendix 3) to the draft report from the Chairman of
the Committee on Rules, Government Reform and Federal Affairs, 24th Guam
Legislature, on behalf of the Speaker of the Guam Legislature, expressed concurrence with
Recommendations 1, 2, 3, and 8 and nonconcurrence with Recommendations 4, 5, 6, and
7. For Recommendations 4, 5, and 7 in our draft report, we requested the retroactive
recovery of improper lump-sum payments for accrued annual leave, the elimination of sick
leave balances improperly accrued by senators, and the recomputation of retirement
annuities of elected officials to omit credit for sick leave. The Legislature, however, said

2The consultant's contract stipulated that he be paid $4,ooO per month for 9 months.

8

 
that these recommended actions were "impractical" because a "large number of
individuals" would be affected by implementation of the recommendations and thus the
"real possibility of litigation over the issue, simply makes collection more trouble than it
is worth and likely one that will cost more money than will be gained." We agree that
litigation may occur and be costly as a result of any attempt to retroactively implement
these recommendations.  In addition, the time that has elapsed from the previous
recommendation to the present appears to make it impractical to initiate collection actions.
As such, we have eliminated Recommendations 4, 5, and 7 from the final report and
renumbered Recommendations 6 and 8 from our draft report as Recommendations 4 and
5, respectively.

Regarding Recommendation 4 (Recommendation 6 in the draft report), which requested
amendment of the provisions of the Guam Code Annotated that allow elected officials to
receive retirement annuities while they are employed by the Government, the Legislature
stated, in response to Recommendation 1, that a premise for eliminating annual leave
accrual by senators was that senators were not full-time government employees and were
not eligible for the benefits of full-time employees.  Therefore, according to the
Legislature, senators should not be subject to the same prohibitions against dual
compensation that govern full-time employees.  The Legislature also stated that retirees
from the private sector and from the Federal Government would not have to forgo their
retirement benefits if they were elected to the Legislature. Further, the response stated
that implementation of the recommendation would discourage "literally thousands of our
brightest, most experienced, and talented" government retirees from seeking elected
office.

We agree that because senators are not full-time government employees they should not
be subject to the same post-retirement government reemployment restrictions and that
government retirees should be allowed to retain their pensions if they later decide to run
for office. However, our recommendation was meant to address a somewhat different
situation, which had occurred at the time of our 1991 audit with respect to 13 elected
officials, including 3 senators. At that time, the 13 elected officials met government
retirement qualifications and began to receive retirement annuities.  However, they
actually remained in office, thus collecting both their retirement annuities (although they
never retired) and their regular salaries. We believe that, in such cases, the retirement
annuities should have been deferred until the individuals left elected government service.
Although our followup review did not disclose additional situations as the 13 prior
instances, the law that permitted the dual compensation is still in effect. Therefore, we
have revised Recommendation 4 accordingly, and we request that the Legislature respond
to the revised recommendation.

Based on the Legislature's response, we consider Recommendations 1 and 5 resolved and
implemented and Recommendations 2 and 3 resolved but not implemented. Also based
on the response, we request that the Legislature respond to Recommendation 4, which has
been revised to request that the Guam Code be amended to prohibit elected officials from
receiving retirement annuities until they leave elected government service.

9

 
The Inspector General Act, Public Law 95-452, Section 5(a)(3), as amended, requires
semiannual reporting to the U.S. Congress on all audit reports issued, the monetary impact
of audit findings (Appendix l), actions taken to implement audit recommendations, and
identification of each significant recommendation on which corrective action has not been
taken.

In view of the above, please provide a response, as required by Public Law 97-357, to this
report by September 30, 1997, to our North Pacific Regional Office, 238 Archbishop F.C.
Flores St., Suite 807, Pacific News Building, Agana, Guam, 96910. The response should
provide the information requested in Appendix 4.

We appreciate the assistance of Guam Legislature personnel in the conduct of our audit.

Sincerely,

Inspector General

10

 
APPENDIX 1

CLASSIFICATION OF MONETARY AMOUNTS

Finding Areas

Benefits
Annual have
Sick Leave

Personal Services Contracts

Total

Funds To
Be Put To
Better Use*

$3,216,034
373,350

4.625.123

$8.214:507

*Amounts represent local funds.

 
APPENDIX 2
Page 1 of 2

STATUS OF RECOMMENDATIONS AND CORRECTIVE ACTIONS
   FOR AUDIT REPORT "PERSONNEL AND PAYROLL
      PRACTICES, LEGISLATIVE BRANCH
       AND OTHER ELECTED OFFICIALS,
           GOVERNMENT OF GUAM"
             (No. 91-I-372)

Recommendations

A. 1. Submit legislation to discontinue
annual leave accrual by elected officials.

A.2. Initiate action to revise the
Legislature's  Standing Rules for the

nonelected employees' annual leave accrual
to conform to the provisions of Title 4,
Section 4109, of the Guam Code
Annotated.

A.3. Require the Legislature's Executive
Director to initiate collection actions to
recoup the improper lump-sum payments
made by the Government.

A.4. Initiate action to establish procedures
for limiting lump-sum payment of accrued
annual leave to employees only when they
actually    terminate    Government
employment.

A.5. Direct the Legislature's Executive
Director to discontinue the accrual of sick
leave for senators and to eliminate all sick
leave balances previously accrued by
senators.

Status of Corrective Action

Not implemented.

Not Implemented.

Not implemented.

Not implemented.

Not i mplemented.

12

 
APPENDIX 2
Page 2 of 2

Recommendations         Status of Corrective Action

A.6. Submit legislation to eliminate the
provisions of Title 2, Section 1120(b), of
the Guam Code Annotated, which allows
elected officials to receive retirement
annuities while they are employed by the
Government.

Not implemented.

A.7.  Submit legislation to amend the
provisions of Title 4 of the Guam Code
Annotated (Section 8170(a)(3)) so that a
senator's retirement annuity will be based
on the average of the senator's three highest
annual salaries actually received.

Implemented. On June 28, 1995, Guam
Public Law 23-33 was enacted, which
changed the basis for computing a
senator's retirement to the average
of the three highest salaries actually
earned.

AX. Instruct the Director, Department of
Administration, to discontinue the accrual
of sick leave for elected officials of the
executive branch and to eliminate the sick
leave balances previously accrued by these
officials.

Not implemented.

A.9. Instruct the Director of the Retirement
Fund to recompute the retirement annuities
for elected officials who have retired to
exclude the sick leave previously granted
improperly.

Not implemented.

  Initiate action to establish and
implement written procedures that include
but are not limited to soliciting for personal
services and awarding, monitoring the
progress of, and evaluating performance
under personal services contracts.

Not implemented.

13

 
APPENDIX 3

Page 1 0f 4

24th Guam Legislature
Committee on Rules, Government
   Reform and Federal Af%irs
Senator Mark Forbes, Cbaiman

Wilma A. Lewis
Inspector General
U.S. Department of the Interior
Office of Inspector General
Agana, Guam 96910

Dear Ms. Lewis:

  On behalf of Speaker Antonio R. Unpingco and the 24th Guam Legislature, I
have been tasked to respond to the follow-up audit conducted by your office on the
personnel and payroll practices of the Guam Legislature, specifically during the 22nd
and 23rd Guam Legislature. Allow me to extend our appreciation for the additional
time we have been granted to make this response. The extension was quite
necessary, as we are still in many ways getting our feet wet in our new role as the
majority party, a position we have not had the honor of holding for the past
fourteen years.

  This response will be more or less patterned after the recommendations made
in the follow up audit. From time to time, I may stray from the specific of a

recommendation to make a more generalized point. I hope you will forgive this
deficiency in style, but I do think that several of the problems noted by the audit
have a root in certain philosophical issues the Legislature has failed to deal with in
the past, and that -- at least in part -- solutions can be found by dealing with certain
general principles as well as through specific action steps. To the extent that this may

muddle our presentation, I apologize. -

Recommendations 1 and 6

  I concur that senators in the Guam Legislature should not accrue annual
leave. It has been argued, by some, that senators are full-time, regular employees of
the government and thus should be eligible for all employee benefits. This is not the
case. Senators clearly are not in the same boat as regular employees of the
government. Senators are permitted to draw retirement annuities from the

government concurrent with the drawing of their paychecks, something regular
employees are prohibited from doing with the exception of teachers and nurses in

the government of Guam. Teachers and nurses are granted this exemption only due

** [OFFICE OF INSPECTOR GENERAL NOTE: As stated in our report, Recommendations
  4, 5, and 7 have been deleted,  and Recommendations 6 and 8 have been
  renumbered as Recommendations 4 and 5, respectively.]

155 He&r Place o &ma, Guam o `g910 o Telephone Numks 47203512,472-3407/8

14

 
**

APPENDIX 3
Page 1 0f 4

24th Guam Legislature
Committee on Rdes, Government
   Reform and Federal Afbirs
Senator Mark Forbes, Cbaimtan

Wilma A. Lewis
Inspector General
U.S. Department of the Interior
Office of Inspector General
Agana, Guam 96910

Dear Ms. Lewis:

  On behalf of Speaker Antonio R. Unpingco and the 24th Guam Legislature, I
have been tasked to respond to the follow-up audit conducted by your office on the
personnel and payroll practices of the Guam Legislature, specifically during the 22nd
and 23rd Guam Legislature. Allow me to extend our appreciation for the additional
time we have been granted to make this response. The extension was quite
necessary, as we are still in many ways getting our feet wet in our new role as the
majority party, a position we have not had the honor of holding for the past
fourteen years.

  This response will be more or less patterned after the recommendations made
in the follow up audit. From time to time, I may stray from the specific of a
recommendation to make a more generalized point. I hope you will forgive this
deficiency in style, but I do think that several of the problems noted by the audit
have a root in certain philosophical issues the Legislature has failed to deal with in
the past, and that -- at least in part -- solutions can be found by dealing with certain
general principles as well as through specific action steps. To the extent that this may
muddle our presentation, I apologize.

Recommendations 1 and 6

  I concur that senators in the Guam Legislature should not accrue annual
leave. It has been argued, by some, that senators are full-time, regular employees of
the government and thus should be eligible for all employee benefits. This is not the
case. Senators clearly are not in the same boat as regular employees of the
government. Senators are permitted to draw retirement annuities from the
government concurrent with the drawing of their paychecks, something regular
employees are prohibited from doing with the exception of teachers and nurses in
the government of Guam. Teachers and nurses are granted this exemption only due
** [OFFICE OF INSPECTOR GENERAL NOTE: AS stated in our report, Recommendations
  4, 5, and 7 have been deleted,  and Recommendations 6 and 8 have been

renumbered as Recommendations 4 and 5, respectively.]

155 Hesler Place o Agana, Guam o `35910 o Telephone Numbers 472.3512,472~340718
                 14

 
APPENDIX 3
Page 2 of 4

to a critical shortage of these vital personnel in Guam. No similar shortage of
political candidates exists.

  Unlike most regular government employees, senators are not compensated
on an hourly basis, indeed, senators need not keep hours at all. Under law, a senator
receives a set amount of pay equally divided into twenty-six installments. Should a
senator choose never to show up at the office, or indeed fail to attend a single day of
session, the senator would nonetheless receive precisely the same degree of
compensation as one who diligently attended each session and worked at the office
daily from 8:OO a.m. to 5:00 p.m. It is precisely this absolute work flexibility that
makes the notion of leave for senators an absurdity. Would a senator be docked pay
for showing up at 11:OO a.m. at the office rather than 8:OO a.m.? No. It never
happens. There is no mechanism for such a reduction in pay that is practicable or
even conceivable. There is no immediate supervisor for any senator, no one to act
as timekeeper. The argument, that the "supervisor" of senators is the people of
Guam, is moot. Yes, the people do elect senators, but can a senator wishing to take
leave for eight hours on a given day circulate his or her leave form to the general
public to receive approval ? Attendance on the job for regular employees is not a
matter of public ratification every two years, it is a daily matter of record keeping
and failure to show up to work is reflected in the amount of pay a regular employee
receives every two weeks.

  The entire reason why such a thing as leave exists for regular employees of
the government is absent in the case of a senator, who is in fact his or her own
timekeeper. That is why -- in practical effect -- most senators never take annual

leave, and those few who do submit leave forms (during vacations) do not do so
with absolute consistency. In short, senators are not regular employees of the
government of Guam and are not by definition entitled to all the benefits that
regular employees receive. Most assuredly, we are not entitled to leave -- or more
accurately -- senators have the ability to take leave at will and it is automatically paid

leave since there is no correlation between the number of hours actually worked
and the level of compensation we receive.

  Since virtually all leave granted to senators under current practice is
converted to cash payments to senators every two years, the current leave
provisions for senators amount to nothing more than a sub-rosa mechanism for
increasing senatorial pay by an average of $3,000 to $4,000 annually.

  Terminating annual leave accrual for senators will require change in statute. I
will, within the next thirty days introduce into the Twenty-fourth Guam Legislature
a bill which when passed into law will end the accrual of annual leave. Further,
references to senators as full-time and regular employees of the government of
Guam as exist in various areas of the code will be repealed.

  Having said the foregoing,  I must respectfully disagree with the
recommendation that senators who have retired from government service be
prohibited from receiving their annuities while they serve in the Legislature. A
prohibition would make sense if senators are in fact full-time regular employees of
the government. But, as previously stated, I do not believe they are regular
employees of the government (and that we must expunge all references to such a
status). Senators are arguably not even full-time. The total number of session days

2

15

 
APPENDIX 3
Page 3 of 4

in a year usually number sixty or less. Public hearings will occur an average of three
times a week, but no senator is a member of every committee and no member
attends every public hearing for every committee he or she is a member of.
Constituent work can be demanding at times, but presumably that is why senators
have full-time staffs and such staffs also (in varying degrees) assist in the drafting of
legislation and the introduction, hearing, mark-up and promotion thereof. I suspect
that it is the essential part-time nature of a senator's job that allows so may senators
to conduct stellar careers as professionals (doctors and lawyers) or business people
during the time they spend in the Legislature. If a senator is not a regular employee
of the government and may in fact be a part-time employee at that, why should a
person who has previously retired from the government be denied their annuity
upon assuming office? Where is the conflict ? We wouldn't expect a federal retiree
or military retiree or someone retired from a private business to forego their

annuity as a condition of public service.  Indeed, given  the tremendous
contributions retirees can make to the formation of public policy and law, I would be
very reluctant to embrace a policy that would effectively discourage our people who
have retired from seeking office, especially here in Guam, where literally thousands
of our brightest, most experienced and talented people are in fact government
retirees.

  The fact is that senators cannot have it both ways. We cannot consider
ourselves regular government employees when it suits us (as when we want to get
leave benefits) and call ourselves special when it doesn't suit us to be regular (as in
justifying the simultaneous receipt of annuities and salaries). We have to resolve
this one way or the other, and I favor resolution against regular status, under which
we would be denied leave, but also under which  annuitants  could seek office

with .out fear of losing their annuities.

Recommendation 2

  We concur entirely. In the next thirty days, I will introduce a resolution to
amend the Standing Rules and conform employee leave provisions in the
Legislature to _4109., 4GCA.

Recommendation 3

  We concur entirely. In the next thirty days, I will introduce a resolution
which will amend the Standing  Rules to limit lump-sum payments as

recommended.

Recommendation 4

  The recommendation is impractical. Turnover in previous Legislatures was
legendary. Lord knows how many thousands of people have passed through
employment in the past three or four Legislatures (especially the Twenty-first and
Twenty-second). The large number of individuals that would be effected, plus the
real possibility of litigation over this issue, simply makes collection more trouble
than it is worth and likely one that will cost more money than will be gained.

3

16

 
APPENDIX 3
Page 4 of 4

**  Recommendation 5 and 7
    These recommendations are also impractical, for reasons similar to those
detailed above. Sometimes, it is pointless to attempt to change what has happened
and better to resolve no to recapitulate previous error.

**

Recommendation 8

  We concur that personnel service contracts are poorly used in the Guam
Legislature and that things need to change. Currently, personnel service contracts
are being used to hire people who are essentially full-time legislative employees.
Here is our proposal for changing this. We propose to create two classes of employee
in the Legislature.

  CLASS 1. Unrestricted employee. When hired on a full-time basis, CLASS 1
employees are eligible to receive full benefits (medical, dental and life insurance)
and may choose to join the GovGuam Retirement plan. Annuitants may not
become CLASS 1 employees without foregoing their annuities.

  CLASS 2. Restricted employee. CLASS 2 employees are ineligible for medical,
dental or life insurance benefits. They may not join the GovGuam Retirement plan
but FICA must be paid on such employees. Annuitants may be CLASS 2 employees
without losing their annuities. CLASS 2 employees can be valuable to the
Legislature inasmuch as they would cost less, saving taxpayers' dollars.

  At the same time that this is done, the rules governing the use of contracts
must be tightened up in the Standing Rules, so that contracts can only be used for
the acquisition of professional services with specific deliverables, such as legal
services, audit services, construction contracts, maintenance contracts, etc. and that
such contracts be openly solicited and awarded, in a manner designed to endure
competition for the purpose of reducing costs associated with contractual services.
  I will introduce a resolution amending the Standing Rules as detailed above

within the next thirty days.

Sen i tor, Chairman
Committee on Rules,
Government Reform
and Federal Affairs

17

 
APPENDIX 4

STATUS OF AUDIT REPORT RECOMMENDATIONS

Finding/Recommendation
  Reference

Status       Action Required

1 and 5

Implemented.

No fbrther action is required.

2 and 3

Resolved; not
Implemented.

Advise the Office of Inspector General
when the Legislature's Standing Rules
have been revised regarding accrued
annual leave and lump-sum payments of
annual leave for legislative employees.

Unresolved.

Respond to   the   revised
recommendation.  If concurrence is
indicated, provide an action plan that
includes target dates and titles of
offkials responsible for implementation.
If nonconcurrence is indicated, provide
reasons for the nonconcurrence.

18

 
ILLEGAL OR WASTEFUL ACTIVITIES
   SHOULD BE REPORTED TO
THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:            Calling:

Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
1849 C Street, N.W.
Mail Stop 5341
Washington, D.C. 20240
    ,

Our 24.hour
Telephone HOTLINE
l-800-424-5081 or

Outside the Continental United States

Caribbean Region

U.S. Department of the Interior
Office of Inspector General
Eastern Division - Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209

North Pacific Region

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. Flores Street
Suite 807, PDN Building
Agana, Guam 96910