Performance audit, Arizona Automobile Theft Authority

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
ARIZONA
AUTOMOBILE THEFT
AUTHORITY
July 2001
Report No. 01-14
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee
composed of five senators and five representatives. Her mission is to provide independent and impar-tial
information and specific recommendations to improve the operations of state and local government
entities. To this end, she provides financial audits and accounting services to the state and political
subdivisions and performance audits of state agencies and the programs they administer.
The Joint Legislative Audit Committee
Senator Ken Bennett, Chairman
Representative Roberta L. Voss, Vice-Chairman
Senator Herb Guenther Representative Robert Blendu
Senator Dean Martin Representative Gabrielle Giffords
Senator Peter Rios Representative Barbara Leff
Senator Tom Smith Representative James Sedillo
Senator Randall Gnant (ex-officio) Representative James Weiers (ex-officio)
Audit Staff
Dorothy Reinhard—Manager
and Contact Person (602) 553-0333
Anita Rifkin—Team Leader
Catherine Dahlquist—Team Member
Anne Hunter—Team Member
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
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Phoenix, AZ 85018
(602) 553-0333
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2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
July 30, 2001
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Mr. Paul Mortensen, Executive Director
Arizona Automobile Theft Authority
Transmitted herewith is a report of the Auditor General, A Performance Audit of the
Arizona Automobile Theft Authority. This report is in response to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. The performance audit was
conducted as part of the Sunset review set forth in A.R.S. §41-2951 et seq. I am also
transmitting with this report a copy of the Report Highlights for this audit to provide a
quick summary for your convenience.
As outlined in its response, the Arizona Automobile Theft Authority agrees with the
report Finding and will implement all of the recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on July 31, 2001.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
OFFICE OF THE AUDITOR GENERAL
Program Fact Sheet
Arizona Automobile Theft Authority
Revenues: $3,980,500
(fiscal year 2001 estimates)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
1999 2000 2001 (est.)
Revenue is generated primarily through a semiannual fee of 50
cents per insured vehicle. This fee is collected from insurance com-panies
issuing motor vehicle liability policies within the State.
$2,009,811
$4,117,298 $3,980,500
Facilities: The Authority leases office space
and storage space in Phoenix for an annual
cost of almost $34,000.
Equipment: The Authority owns only
standard office equipment.
Services: The Automobile Theft Authority is responsible for analyzing methods of combat-ing
Arizona’s automobile theft problem and promoting successful methods of reducing the
number of vehicle thefts in Arizona. The Authority participates in or provides funding for
three major types of programs: 1) Public awareness—the Authority increases public aware-ness
by educating Arizona citizens about automobile theft and theft protection through use of
media campaigns, community events, and other public relations efforts and issuing grants to
law enforcement agencies; 2) Prosecution—the Authority provides some funding to the three
county attorney offices with the highest vehicle theft rates in order to focus efforts on prose-cuting
auto theft cases; and 3) Investigation—the Authority funds the Arizona Vehicle Theft
Task Force, which coordinates a statewide law enforcement effort to combat vehicle theft.
Authority membership: 12
members who serve four-year
terms:
n 2 police chiefs;
n 2 county attorneys;
n 2 sheriffs;
n DPS director or designee;
n MVD assistant director or
designee;
n 2 general public members; and
n 2 employees of insurance
companies who write motor
vehicle policies.
Personnel: 5 full-time positions:
n 1 Executive Director;
n 1 Administrative Services Officer;
n 1 Public Information Officer; and
n 2 Administrative Assistant positions
(one position currently vacant).
OFFICE OF THE AUDITOR GENERAL
Program Goals: (fiscal years 2001-2003)
1. To reduce the occurrence of vehicles sto-len
throughout the State of Arizona by 10
percent each year.
2. To support the identification and appre-hension
of vehicle theft organizations
and chop shops (dismantling of stolen
vehicles for profit).
3. To implement prosecution programs in
four counties by funding staff resources
to prosecute cases referred by the Ari-zona
Vehicle Theft Task Force.
4. To increase public awareness in vehicle
theft prevention and promote the “Watch
Your Car” program.
5. To develop and implement an effective
border interdiction program.
Adequacy of Performance Measures:
The Arizona Automobile Theft Authority’s
five goals appear to be appropriate for its
mission, and it has established 26 perform-ance
measures that correlate to its goals. A
review of its performance measures indicates
that the Authority has generally established
only inputs or outputs as performance
measures and needs to expand the number
and type of performance measure data it
gathers for each major program it funds.
To expand its performance measures in a
meaningful way, the Authority should look
for ways to measure program outcome, effi-ciency,
and quality, and use this information
to analyze the value of each program.
n The Authority should establish outcome
measures. Outcome measures indicate
the results achieved and whether the
program is meeting its proposed targets,
such as the percentage increase in felony
arrests, convictions, or program partici-pants.
n The Authority should establish efficiency
measures. Efficiency measures reflect the
cost of providing the program or ser-vices,
such as the cost per felony arrest,
conviction, or program registrant.
n The Authority should also establish qual-ity
measures. Quality measures empha-size
reliability or responsiveness to the
customer or stakeholder, such as interest
in or satisfaction with the program.
Authority Mission:
“To reduce vehicle theft through a
statewide cooperative effort by
supporting law enforcement
investigation, prosecution, and
public awareness programs.”
i
OFFICE OF THE AUDITOR GENERAL
SUMMARY
The Office of the Auditor General has conducted a performance
audit and Sunset review of the Arizona Automobile Theft Au-thority
(Authority) pursuant to a June 16, 1999, resolution of the
Joint Legislative Audit Committee. This audit was conducted
under the authority vested in the Auditor General by Arizona
Revised Statutes §41-2951 et seq.
The Arizona Automobile Theft Authority was established in
1992 and is responsible for determining the scope of the State’s
motor vehicle theft problem and analyzing the various methods
of combating it. In fiscal year 2001, the Authority will distribute
about $2.8 million in grants for a statewide law enforcement ef-fort
to investigate vehicle theft, programs dedicated to prosecut-ing
auto theft cases, and public education efforts. The Authority’s
revenue is generated through a semiannual assessment of 50
cents per insured vehicle from all insurance carriers who sell mo-tor
vehicle liability policies in the State.
The Authority Needs to Improve
Its Management Information and
Operating Procedures
(See pages 9 through 17)
The Authority lacks adequate information, procedures, and
guidelines to ensure that it is meeting its mission. Although the
number of auto thefts has continued to decrease since the Au-thority
began its major programs, the Authority does not have
enough information to determine how much effect, if any, its
programs are having on this continued decline. Changes in the
number of auto thefts can be influenced by many factors in addi-tion
to deterrent or prevention programs, including demo-graphic
changes and changes in the economy. However, the Au-thority
can improve its efforts to analyze the various methods it
uses to combat the motor vehicle theft problem by expanding the
number and type of performance measures gathered for each
Summary
ii
OFFICE OF THE AUDITOR GENERAL
program. For example, the Authority should establish some out-come
measures to ensure its programs are meeting their pro-posed
targets, such as the percentage increase in felony arrests or
convictions. Efficiency measures, such as the cost per felony ar-rest
or cost per program registrant, would also be important data
to capture. It should then use this data to make decisions about
whether it should continue funding these programs.
In addition, the Authority lacks guidelines for the process it uses
to decide which projects should receive grant funding. For ex-ample,
the Authority has no guidelines that justify its decision to
solicit grant applications from only 6 of Arizona’s 15 counties.
Although the Authority indicates that grant solicitations were
sent to the counties with the highest auto theft rates, monies used
for grants are collected statewide. Other states have established
grant award procedures and guidelines outlining the programs
eligible to receive grants, acceptable expenditures, criteria under
which applications are evaluated, and monitoring and reporting
requirements. Further, the Legislature should consider granting
the Authority rule-making power so that the Authority can for-malize
the grant guidelines in administrative rule with public
input.
To further ensure resources are safeguarded, the Authority also
needs to establish basic written operational procedures. At the
time of our audit, the Authority lacked written procedures for its
day-to-day functions. Written policies and procedures became
even more critical in January 2001 when the responsibility for
collecting revenues (totaling more than $3 million annually) from
motor vehicle insurance companies was transferred from the
State’s General Accounting Office to the Authority. The Author-ity
is in the process of drafting a policies and procedures manual
that it expects to have in place July 1, 2001. Finally, to assist in
achieving its objectives, the Authority should develop an opera-tional
plan as specified by A.R.S. §41-3451.
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background..................... 1
Finding I: The Authority Needs to
Improve Its Management Information
and Operating Procedures ..................... 9
Additional Management
Information Needed................................................. 9
Grant Process and
Guidelines Needed ................................................... 12
Authority Needs Basic
Operational Procedures............................................ 15
Recommendations .................................................... 17
Sunset Factors............................................. 19
Agency Response
Items
Item 1 Arizona Auto Thefts ............................... 1
Item 2 Authority Membership........................... 4
Table
Table 1 Arizona Automobile Theft Authority
Statement of Revenues, Expenditures, and
Changes in Fund Balance
Years Ended June 30, 1999,
2000, and 2001 (Unaudited).................... 6
Table of Contents
iv
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (Concl’d)
Page
Figure
Figure 1 Arizona Automobile Theft Authority
Comparison of Vehicle Theft Trends
Years Ended December 31, 1993 through
1999.......................................................... 10
1
OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance
audit and Sunset review of the Arizona Automobile Theft Au-thority
(Authority) pursuant to a June 16, 1999, resolution of the
Joint Legislative Audit Committee. This audit was conducted
under the authority vested in the Auditor General by Arizona
Revised Statutes (A.R.S.) §41-2951 et seq.
Authority’s History and
Responsibilities
Laws 1992, Chapter 75 established
the Arizona Automobile Theft
Authority to address automobile
theft. However, no funding provi-sion
was imposed, which limited
the Authority’s activities to ap-pointing
Board members and se-lecting
volunteers to research anti-theft
programs and gather auto-mobile
theft statistics. Consistent
with statute, the Authority solic-ited
voluntary donations from in-surance
companies and other cor-porations
with a vested interest in reducing automobile theft. The
Authority received approximately only $158,000 in donations;
therefore, Laws 1996, Chapter 263 established funding for the
agency through an assessment of automobile insurers who issue
motor vehicle liability policies in the State. However, the Author-ity
believes its program is really just beginning, since full collec-tion
of its fee revenue did not begin until fiscal year 2000 (see
Table 1, page 6).
Item 1: Arizona Auto
Thefts
n Since 1997, Arizona has
been listed annually as #10
in the nation for number of
auto thefts and #2 in auto
thefts per 100,000 resi-dents.
n 38,247 motor vehicles were
stolen in Arizona during
calendar year 1999.
Introduction and Background
2
OFFICE OF THE AUDITOR GENERAL
The Authority’s basic responsibilities include determining the
scope of the motor vehicle theft problem and analyzing the vari-ous
methods of combating it. Its mission is:
To reduce vehicle theft through a statewide cooperative effort by
supporting law enforcement investigation, prosecution, and
public awareness programs.
The Authority seeks to fulfill this mission by administering or
providing grant funding for several programs designed to pro-mote
auto theft prevention. These programs can be classified
under three broad categories.
n Law enforcement investigation—The Authority provides
funding for two law enforcement programs.
Ø Arizona Vehicle Theft Task Force—The Arizona Vehi-cle
Theft Task Force was established in November 1996
after the Department of Public Safety approached the Au-thority
with a funding request to coordinate a statewide
law enforcement effort to combat vehicle theft. The Task
Force investigates property crimes involving vehicles, ve-hicle
parts, and insurance fraud, as well as providing
technical expertise and training to other law enforcement
agencies. Its membership consists of 42 officers and 3 ci-vilian
members and represents 13 city, county, and state
law enforcement agencies, as well as a national nonprofit
insurance organization.1 Although it is administered by
the Department of Public Safety, the Authority provides
the majority of its funding. In fiscal year 2001, the Task
Force will receive an estimated $2.45 million from the Au-thority.
Ø Border interdiction—The Authority, with the help of the
Task Force, is starting a project that would improve vehi-cle
recovery for U.S. automobiles discovered in Mexico
1 Task Force participants represent the State—Department of Public Safety,
Department of Insurance, and Motor Vehicle Division of the Arizona De-partment
of Transportation; County Sheriff’s Offices—Cochise, Yavapai,
and Yuma; city police departments—Chandler, Glendale, Marana, Mesa,
Phoenix, Scottsdale, and Tucson; and the National Insurance Crime Bu-reau.
The Arizona Vehicle
Theft Task Force com-bats
vehicle theft state-wide.
Introduction and Background
3
OFFICE OF THE AUDITOR GENERAL
and identify stolen vehicles as they cross the border. The
Authority provided $50,000 in fiscal year 2001 to test and
evaluate the use of computer technology to assist in this
effort.
n Prosecution—The Authority provides funding for prosecu-tion
programs in the three counties with the highest theft
rates: Maricopa, Pima, and Pinal. These programs focus on
prosecuting vehicle theft cases and give priority to cases in-vestigated
and referred by the Arizona Vehicle Theft Task
Force. Attorneys from these programs also offer legal train-ing
and advice to task force members. The Authority will
provide an estimated $177,000 to fund three prosecutors and
one legal secretary in fiscal year 2001.
n Public awareness—These programs are designed to pro-vide
information to the public about automobile theft and
how to help prevent it. The Authority provides information
through press releases, TV, and radio and newspaper inter-views.
In addition, the Authority participates in or provides
funding for the following public awareness programs.
Ø Media campaigns and safety fairs—The Authority’s
staff provides information to the public on preventing
vehicle theft by participating in community events such
as the Arizona State Fair, police safety fairs, shopping
mall public safety events, and neighborhood safety fairs.
Ø Prevention program—The Authority also operates an
auto theft prevention program called “Watch Your Car.”
People registered in the program place stickers on their
vehicles that allow law enforcement officials to stop the
vehicles without cause between the hours of 1 to 5 a.m.,
the time when most automobile thefts occur. In fiscal year
2001, the Authority will receive an estimated $240,000 in
federal grant monies to conduct outreach activities and
operate this program.
Ø Grants—Another responsibility of the Authority is to
annually award grant funds to public agencies for
projects that prevent, combat, and reduce motor vehicle
theft and improve prosecution. For example, during fiscal
Introduction and Background
4
OFFICE OF THE AUDITOR GENERAL
year 2001, a grant was awarded to the Peoria Police De-partment
to purchase steering-wheel-locking devices to
be awarded to citizens at community events, and a grant
was awarded to the Phoenix Police Department to pro-vide
overtime funding for police officers who give pres-entations
on auto theft prevention at city or neighbor-hood
events. In fiscal year 2001, seven grants were
awarded that totaled $136,371.
Organization
and Staffing
The Authority consists of 12 members who serve four-year
terms. Members include law enforcement officials, insurance
company representatives, and the public (see Item 2 below).
To assist the Authority in its duties for fiscal year 2001, the Au-thority
was authorized five full-time-equivalent (FTE) positions.
The executive director is assisted by a public relations officer,
administrative services officer, and an administrative assistant,
with one administrative assistant position currently vacant.
In addition, Laws 1997, Chapter 263, Section 14 created an eight-member
Automobile Theft Authority Committee consisting of
six legislators (three each from the Senate and House), the Gov-ernor
or Governor’s designee, and the director of the Depart-ment
of Insurance. The committee is tasked with reviewing the
Item 2 Authority Membership
Members Appointed by
Director of DPS or designee
Police Chiefs (2)1 Arizona Chiefs of Police Association
Sheriffs (2)1 Arizona Sheriffs’ Association
County Attorneys (2)1 Governor
General Public Members (2) Governor
Insurance Company Employees (2) Governor
Assistant Director of Motor Vehicle
Division in Arizona Department
of Transportation or designee
1 Statute requires police chief, sheriff, and county attorney membership to be ap-pointed
from both urban and rural populations.
Introduction and Background
5
OFFICE OF THE AUDITOR GENERAL
Authority’s prevention programs, funding sources, and impact
of the Authority’s programs on auto theft rates and motor vehi-cle
insurance costs. However, the committee has not met since
November 19, 1998, and has a repeal date of December 31, 2003.
Budget
Although the Legislature authorizes the Authority’s expendi-tures,
the Authority does not receive any General Fund Appro-priations.
Rather, the Board receives its funding through an as-sessment
on insurance companies issuing motor vehicle liability
insurance policies in the State. A semiannual fee of 50 cents per
insured vehicle is collected and deposited in the Automobile
Theft Authority Fund. In fiscal year 2001, this assessment is esti-mated
to generate almost $3.5 million in revenue. Additional
funding is derived from interest earned, grants, or gifts. Table 1
(see page 6) illustrates the Authority’s actual and estimated reve-nues
and expenditures for fiscal years 1999 through 2001.
Audit Scope
and Methodology
Audit work focused on the effectiveness of the Authority’s pro-grams
and the efficiency with which it operates. This audit in-cludes
one finding and recommendations.
n The need for the Authority to better demonstrate the value of
its programs and establish written policies and procedures,
including grant guidelines, to help ensure that its programs
meet its objectives.
Several methods were used to study the issues addressed in the
audit including:
n Interviewing staff and nine Board members, an Arizona Ve-hicle
Theft Task Force representative, a legislator, and repre-sentatives
from two state agencies that interact with the Au-thority
to obtain information about the Authority and to de-termine
the auto theft prevention programs that existed be-fore
the Authority was created.
The Authority does not
receive any General Fund
appropriations.
Introduction and Background
6
OFFICE OF THE AUDITOR GENERAL
Table 1
Arizona Automobile Theft Authority
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended June 30, 1999, 2000, and 2001
(Unaudited)
1999 2000 2001
(Actual) (Actual) (Estimated)
Revenues:
Vehicle Inspection and Title Enforcement
Fund Appropriation $ 150,000 1
Charges for services $2,001,035 $4,030,873 2 3,450,000
Intergovernmental 50,000 240,000 3
Earnings on investments 8,776 36,425 140,000
Private gifts _________ _________ 500
Total revenues 2,009,811 4,117,298 3,980,500
Expenditures:
Personal services 167,674 144,732 182,100
Employee-related 29,505 26,287 27,200
Professional and outside services 117,324 115,754 163,000
Travel, in-state 4,768 2,389 7,500
Travel, out-of-state 4,348 12,704 12,000
Aid to individuals and organizations 4 1,751,370 1,914,300 2,851,400
Other operating 109,201 241,672 250,300
Equipment 5,709 21,356 65,000 3
Total expenditures 2,189,899 2,479,194 3,558,500
Excess of revenues over (under) expenditures (180,088) 1,638,104 422,000
Fund balance, beginning of year 208,838 28,750 1,666,854
Fund balance, end of year $ 28,750 $1,666,854 $2,088,854
1 This appropriation from the Arizona Department of Transportation’s Vehicle Inspection and Title Enforcement Fund is for
educating the public about auto theft, enhancing border enforcement, and supporting prosecution of auto theft cases.
2 Amount includes more than $1 million of past-due assessments collected from insurance companies that were using the
incorrect method for calculating their assessments.
3 In 2001, the Authority received a $240,000 grant from the U.S. Department of Justice, Bureau of Justice for the Watch Your Car
program. Approximately $30,000 of these monies are allocated for buying a van dedicated to program activities.
4 Amount consists of grants made to the Arizona Vehicle Theft Task Force and other law enforcement agencies.
Source: Auditor General staff analysis of the Arizona Financial Information System Revenues and Expenditures by Fund, Program,
Organization, and Object and Trial Balance by Fund reports for the years ended June 30, 1999 and 2000; and Authority-provided
estimates for the year ending June 30, 2001.
Introduction and Background
7
OFFICE OF THE AUDITOR GENERAL
n Contacting nine other states to compare their structure, fund-ing,
and program operations with Arizona’s program. States
were selected based on auto theft statistics, border or port ac-cessibility,
and similarities to the Authority’s organizational
structure. States selected were Florida, Illinois, Maryland,
Michigan, Minnesota, New York, Pennsylvania, Texas, and
Virginia.
n Inspecting the “Watch Your Car” registrant records and
comparing them to the number of vehicles registered in Ari-zona.
n Reviewing and analyzing literature, including news articles,
Internet Web sites, and research studies about motor vehicle
theft prevention activities.
n Contacting the U.S. Department of Justice, Bureau of Justice
Assistance to discuss its “Watch Your Car” grant program
and review federal motor vehicle legislation.
n Reviewing annual reports, statutes, board minutes, and
budget documents to learn of the Authority’s past and cur-rent
efforts to comply with state mandates.
n Examining grant applications for the past three years and
Authority contracts with other agencies and outside entities.
n Attending three Board meetings of the Arizona Automobile
Theft Authority to observe Board functions and compliance
with open meeting law.
This audit was conducted in accordance with government audit-ing
standards.
The Auditor General and staff express appreciation to the Ari-zona
Automobile Theft Authority’s Board members, executive
director, and staff for their cooperation and assistance through-out
the audit.
8
OFFICE OF THE AUDITOR GENERAL
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9
OFFICE OF THE AUDITOR GENERAL
FINDING I THE AUTHORITY NEEDS TO
IMPROVE ITS MANAGEMENT
INFORMATION AND OPERATING
PROCEDURES
The Authority needs to gather additional management informa-tion
and improve its operating procedures. Currently, the Au-thority
has little information to determine the effect its programs
are having on reducing auto theft. As a result, the Authority is
not in a strong position to assess which programs should be con-tinued.
The Authority also has no policies and procedures to
help ensure that grant monies have been allocated properly and
fairly, or to ensure that adequate management controls are in
place for the more than $3 million it collects from insurance
companies each year. The Authority should follow the example
of other states with similar programs and establish written pro-cedures
for handling all its functions and programs.
Additional Management
Information Needed
The Authority should gather additional management informa-tion
to help demonstrate the value of its programs. Although the
number of auto thefts in Arizona has been decreasing, the Au-thority
does not collect enough performance measure data now
to establish whether its programs are impacting this trend. De-veloping,
collecting, and analyzing additional information
would help the Authority assess the value of its programs and
determine whether programs should be continued or eliminated.
Program impact unclear—Although the Authority was estab-lished
to provide funding for programs designed to prevent auto
theft, it is difficult to conclusively determine the impact of its
programs on the overall number of auto thefts. One of the key
reasons for this difficulty is that the number of auto thefts began
decreasing in calendar year 1996 before the Authority had a
dedicated funding source (see Figure 1, page 10). In addition,
Auto thefts in Arizona are
decreasing, following the
national downward trend.
Finding I
10
OFFICE OF THE AUDITOR GENERAL
Figure 1
Arizona Automobile Theft Authority
Comparison of Vehicle Theft Trends
Years Ended December 31, 1993 through 1999
Arizona
0
10,000
20,000
30,000
40,000
50,000
60,000
1993 1994 1995 1996 1997 1998 1999 Number of Vehicles
United States
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1993 1994 1995 1996 1997 1998 1999
Number of Vehicles
Source: Auditor General staff analysis of auto theft statistics contained in the U.S. Department of
Justice Federal Bureau of Investigation, Uniform Crime Report, as reported in the Ari-zona
Vehicle Theft Task Force Fiscal Year 2000 annual report.
Finding I
11
OFFICE OF THE AUDITOR GENERAL
as noted in a study of Maryland’s Motor Vehicle Theft Preven-tion
Program, there are several competing explanations for why
the number of auto thefts rise and fall, including demographic
changes, changes in law enforcement practices, and changes in
the economy.1 A subsequent review of auto theft prevention
programs in Maryland and a review in Michigan also noted the
difficulty in making conclusive statements about the program’s
impact.2
Steps needed to further demonstrate program value—Despite the
difficulty in conclusively determining its impact on the overall
number of auto thefts, the Authority could do more to demon-strate
the value of the programs it funds. The Authority is statu-torily
responsible for analyzing the various methods of combat-ing
the vehicle theft problem. However, the Authority does not
currently gather enough performance measure data on the pro-grams
it funds to conduct such an analysis. Specifically, the Au-thority
has generally established only basic performance meas-ures
for each program, which include input and output meas-ures
such as the number of stolen vehicles, number of vehicles
recovered, and number of felony arrests.
To expand performance measures in a meaningful way, the Au-thority
needs to look for ways to measure program outcome, ef-ficiency,
and quality. Outcome measures indicate the results
achieved and whether the program is meeting proposed targets,
such as the percentage increase in felony arrests and convictions.
Efficiency measures reflect the cost of providing the program,
such as the cost per felony arrest, or program registrant. Quality
measures emphasize the Authority’s reliability or responsiveness
to the customer or stakeholder, such as interest in or perception
of the program or service provided. Some of this information is
already being gathered by the programs the Authority funds,
1 Cheesman,II, Fred L., Jennifer L. Bridger, and George C. Payer. An Impact
Evaluation of Maryland’s Motor Vehicle Theft Prevention Program, Executive
Summary. University of Baltimore, Schaefer Center for Public Policy, Octo-ber
21, 1996.
2 Thomas, Larry W., Ann Cotton, and Dennis McGrath. Update of the Impact
Evaluation of the Maryland Vehicle Theft Prevention Programs. University of
Baltimore, Schaefer Center for Public Policy, January 6, 2000. Michigan Of-fice
of the Auditor General. Performance Audit of the Automobile Theft Preven-tion
Authority, Michigan Department of State Police, August 1, 1995.
The Authority needs to
expand its performance
measures to assess the
value of its programs.
Finding I
12
OFFICE OF THE AUDITOR GENERAL
but should also be incorporated into the Authority’s perform-ance
measures. Using appropriate performance measures, basic
demographic information, and crime statistics would help the
Authority assess the value of its programs and determine
whether programs should be continued or eliminated.
The “Watch Your Car” program offers an example of how the
use of additional performance measures might help the Author-ity
decide which programs should continue to receive funding.
Few vehicle owners currently participate in this program—only
about 9,540 of Arizona’s almost 3.5 million passenger vehicles
are registered.1 Although a survey conducted by the Authority’s
public relations firm in 1998 found some potential for greater
participation, a federal official indicated that the pool of people
who are interested in the program already take other precau-tionary
measures, such as locking their cars and keeping them in
the garage. The Authority’s staff is expanding presentations on
the program, developing curriculums for schools and employees
of large businesses, and requiring grantees to train their agency
police about the program. Applying additional performance
measures to this program, such as the percentage increase in par-ticipants,
cost per registrant, and the number of Watch Your Car
vehicles stopped by police, would help the Authority determine
whether the program was beneficial, or whether funding should
be shifted to some other program.
Grant Process and
Guidelines Needed
The Authority needs to institute procedures to ensure monies are
distributed in a fair and equitable manner and to assist it in solic-iting,
awarding, evaluating, and monitoring grants. The Author-ity
lacks specific guidelines for its major function—allocating
funding to public agency programs designed to prevent motor
vehicle theft. Establishing grant guidelines and administrative
rules similar to other states would benefit the Authority in
achieving its objectives.
1 The Authority provided the number of Watch Your Car registrants as of
June 1, 2001.
Finding I
13
OFFICE OF THE AUDITOR GENERAL
Grant guidelines are needed—The Authority has not established
guidelines or procedures for determining how grants should be
awarded and monitored. During fiscal year 2001, the Authority
will provide grant monies totaling about $2.8 million. To ensure
monies are awarded in a fair and equitable manner and meet
statutory intent, the Authority should implement a grant award
process and written grant guidelines. Specifically,
n Notice of grant availability—The Authority should establish
a process for announcing the availability of grant funds
statewide. Currently, not all law enforcement entities
throughout the State are notified of grant fund availability.
For fiscal year 2001, the Authority mailed 30 grant solicitation
letters to possible applicants in only 6 of Arizona’s 15 coun-ties.
1 Although the Authority indicates that it sent grant so-licitations
to the counties that have the highest auto theft
rates, monies used for grants are collected statewide. The
Florida Motor Vehicle Theft Prevention Authority puts grant
information on its Web site, annually announces grants
through a state publication, and mails notices of the availabil-ity
of grant funds to all Florida law enforcement entities, state
attorneys, and other interested businesses and organizations.
n Acceptable expenditure guidelines—The Authority
should establish grant guidelines to ensure that monies are
granted according to statutory intent. Statute indicates that
monies shall be allocated to public agencies to establish,
maintain, and support programs designed to prevent motor
vehicle theft. However, because there are no guidelines, it is
difficult to determine if the Authority’s awards comply with
statutory intent. Auditors’ review of recent law enforcement
grants found that the Authority provided monies for “food,
drink and entertainment at public awareness events, a four-wheel-
drive vehicle, and computers and accessories.” A re-view
of other states’ guidelines found that these types of ex-penditures
were both allowed and disallowed. For example,
the Texas Automobile Theft Prevention Authority grant
1 Grant solicitations were mailed to the following counties: Maricopa, Mo-have,
Pima, Pinal, Santa Cruz, and Yuma. The nine counties that were not
notified were Apache, Cochise, Coconino, Gila, Graham, Greenlee, La Paz,
Navajo, and Yavapai.
Grant award process and
guidelines are needed for
the nearly $3 million
awarded annually.
Other states have specific
grant guidelines and poli-cies
to determine how
grant funds should be
allocated.
Finding I
14
OFFICE OF THE AUDITOR GENERAL
guidelines allow the purchase of vehicles but exclude the
purchase of computer hardware and software, whereas the
Florida Motor Vehicle Theft Prevention Authority grant ap-plication
and review packet does not specifically exclude the
purchase of computers but does not allow grants for food or
vehicles.
n Grant review criteria—The Authority should establish grant
evaluation criteria and may also want to consider establish-ing
a committee to evaluate grant applications and make rec-ommendations
regarding grant awards to the full Authority.
Currently, only Authority staff review the applications and
make recommendations. Maryland, Illinois, and Pennsyl-vania
have grant review subcommittees that review grant
applications and make recommendations to their full coun-cils
or boards. In addition, Florida appoints a committee to
evaluate applications based on a scoring system.
Establishing a committee may help ensure that grants com-ply
with statutory intent and established guidelines. Audi-tors’
review of grants found that, although the Authority’s
statutes restrict grant funding to public agencies, the Author-ity
has provided monies to the Arizona Auto Theft Investiga-tors
Association, a nonpublic professional organization affili-ated
with the International Association of Auto Theft Investi-gators.
During the last three years, grants totaling approxi-mately
$25,500 have been provided for support of the Asso-ciation’s
annual meetings and to pay for some association
members’ attendance fees at international meetings.
n Monitoring and reporting requirements—The Authority
could improve its monitoring of grants by ensuring that re-porting
requirements are met by grantees and conducting
site visits, if necessary. Although the Authority requires quar-terly
reports, until recently, no staff had been assigned to re-view
these reports and follow up with agencies when reports
were not submitted. Some states also use site visits to ensure
grant awards are used appropriately. Illinois and Pennsyl-vania
use grantee site visits to monitor grants. To determine
adherence to stated project goals and review progress,
Michigan conducts periodic program reviews of the funded
projects and Texas monitors its grants by verifying such
Finding I
15
OFFICE OF THE AUDITOR GENERAL
items as adherence to performance measures stated in the
grant application.
Administrative rules are needed—To ensure the public has ac-cess
to and input on any formal grant procedures established, the
Legislature should consider providing the Authority with rule-making
powers. The Governor’s Regulatory Review Council ad-vises
that the Authority should have rule-making power since it
grants money. Several other states’ theft authorities, such as Flor-ida,
Pennsylvania, and Illinois, have rule-making authority. If the
Legislature grants the Authority rule-making power, the Author-ity
should then ensure its grant procedures are outlined in ad-ministrative
rules.
Authority Needs Basic
Operational Procedures
To assist in achieving objectives and safeguarding resources, the
Authority needs to establish written management procedures
and develop an operational plan. Despite its responsibility for
collecting and disbursing several million dollars, the Authority
lacks basic management controls and operational procedures.
Further, even though specified in statute, the Authority has no
current operational plan.
Authority lacks basic operational procedures and internal con-trols—
At the time of our audit, the Authority lacked basic opera-tional
procedures. For example, it lacked procedures for opening
mail, processing cash receipts, billing insurance companies, and
processing outstanding invoices. Written policies and proce-dures
became even more critical in January 2001, when the re-sponsibility
for collecting revenues (totaling more than $3 million
annually) from motor vehicle insurance companies was trans-ferred
from the State’s General Accounting Office to the Author-ity.
The Authority is in the process of drafting a policies and proce-dures
manual that it expects to have in place July 1, 2001. To
maintain a strong system of internal controls, the Authority
needs to ensure it establishes complete operational procedures.
To assist in its efforts, the Authority could refer to the State of Ari-
Finding I
16
OFFICE OF THE AUDITOR GENERAL
zona Accounting Manual, which describes policies and proce-dures,
and sample forms that could be adopted and followed.
Authority needs to develop operational plan—The Authority
needs to establish an operational plan as specified by A.R.S. §41-
3451.
Auditors’ review of other states’ plans suggests that an opera-tional
plan could present the Authority’s statutory responsibili-ties,
an analysis of the auto theft problem, a statewide strategy
for reducing auto theft, and grant procedures and guidelines. For
example, the Maryland Vehicle Theft Prevention Council’s plan
includes information on the Council’s statutory responsibilities
and objectives, its strategy for preventing vehicle theft, and its
grant conditions and policies. The Michigan Automobile Theft
Prevention Authority’s plan of operation “presents a general
plan for the disbursement of the funds collected by the author-ity.”
The Michigan plan outlines the organizations and programs
eligible to receive funding, the type of expenditures allowed and
other grant requirements, and describes the vehicle theft prob-lem
in Michigan.
Finding I
17
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Legislature should consider providing the Authority
with rule-making powers so that the Authority can establish
formal procedures, such as grant guidelines, in rules.
2. To analyze and demonstrate the value of its programs, the
Authority should expand its performance measures to in-clude
program outcome, efficiency, and quality measures.
The Authority should then gather needed data and use this
information to help determine which programs should be
funded.
3. The Authority should establish written grant award guide-lines
that include processes for:
a. Advertising the amount of grant funding available,
b. Soliciting grants from law enforcement agencies on a
statewide basis,
c. Explaining which expenditures are acceptable, and the
criteria under which applications will be evaluated, and
d. Monitoring grantee reports for financial compliance and
adherence to program goals.
4. The Authority should cease granting funds to the Arizona
Automobile Theft Investigators Association since it has no
current statutory authority to provide monies to private enti-ties.
5. To ensure that resources are safeguarded, the Authority
should complete its written policy and procedure manual
that outlines the internal control structure, including how it
will process cash receipts and its methods for performing all
office functions and programs.
6. To assist in achieving its objectives, the Authority should de-velop
an operational plan as required by A.R.S. §41-3451.
18
OFFICE OF THE AUDITOR GENERAL
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19
OFFICE OF THE AUDITOR GENERAL
SUNSET FACTORS
In accordance with A.R.S. §41-2954, the Legislature should con-sider
the following 12 factors in determining whether the Ari-zona
Automobile Theft Authority should be continued or termi-nated.
1. The objective and purpose in establishing the
agency.
The purpose of the Arizona Automobile Theft Authority
is to reduce motor vehicle theft in Arizona. The Authority
was established by the Legislature in 1992 and its mission
is “to reduce vehicle theft through a statewide coopera-tive
effort by supporting law enforcement investigation,
prosecution, and public awareness programs.”
The Authority consists of 12 members representing law
enforcement, the automobile insurance industry, prosecu-tion,
and the general public. Its statutory responsibilities
include:
n Determining the scope of the motor vehicle theft
problem, including areas of the State where the prob-lem
is greatest.
n Analyzing various methods of combating the motor
vehicle theft problem.
n Developing and implementing an operational plan
and a financial plan.
n Allocating monies from its fund to public agencies to
establish, maintain, and support programs designed
to prevent motor vehicle theft, such as supporting law
enforcement and prosecution agencies and funding
programs designed to educate and assist the public.
Sunset Factors
20
OFFICE OF THE AUDITOR GENERAL
2. The effectiveness with which the agency has met its
objective and purpose and the efficiency with which
the agency has operated.
The Authority needs to take several steps to ensure it
meets its objective and operates efficiently. First, the Au-thority
should expand its performance measures to in-clude
program outcome, efficiency, and quality measures.
Then the Authority should gather needed data and use
the information to demonstrate the value of its programs
and to help it determine which programs should be
funded. In addition, the Authority needs to improve its
operational efficiencies. Auditors’ review found that the
Authority lacked even basic operating policies and pro-cedures.
Because the Authority receives and disburses
several million dollars annually, written procedures are
needed to ensure that its programs meet its objectives, use
its resources consistent with laws and regulations, and
ensure that resources are guarded against waste, loss, and
misuse. The Authority is drafting a policies and proce-dures
manual that it expects to have in place July 1, 2001
(see Finding I, pages 9 through 17).
3. The extent to which the agency has operated within
the public interest.
The Authority has operated within the public interest in
some ways, but could improve its efforts in other areas.
The Authority operates in the public interest by partici-pating
in or providing funding for programs designed to
reduce auto theft. For example, the Authority provides in-formation
about auto theft and ways to reduce it through
its participation in community events, news interviews,
and information provided on its Web site.
The Authority fails to operate in the public interest by not
establishing grant guidelines for its award process and
notifying all counties of available grant dollars. Without
written standards, the Authority cannot ensure that its
approximately $2.8 million in grant monies is spent on
appropriate programs that could best benefit the public.
Further, although monies to fund grants are collected
Sunset Factors
21
OFFICE OF THE AUDITOR GENERAL
from all counties, not all counties within the State are
made aware of these grant funding opportunities (see
Finding I, pages 9 through 17). In addition, the Authority
could better work in the public interest by helping the
Governor ensure that the Authority’s two general public
member positions are filled by general public members.
Although statute does not define a public member, one of
the persons currently holding a public member position
does not appear to meet this qualification because the
person serves as an official in the Governor’s Office and
sits on the Authority’s oversight committee.
4. The extent to which rules and regulations promul-gated
by the agency are consistent with the legisla-tive
mandate.
Currently, the Authority has no rule-making power.
However, the Governor’s Regulatory Review Council in-dicates
that since the Authority grants money, it should
have rule-making authority.
5. The extent to which the agency has encouraged in-put
from the public before promulgating its rules and
regulations, and the extent to which it has informed
the public as to its actions and their expected impact
on the public.
The Authority currently has no authority to promulgate
rules and regulations, but it informs the public of its ac-tions
through meetings that are open to the public and by
maintaining a Web site. The Authority generally complies
with Open Meeting Laws by posting public meeting no-tices,
although it was not in full compliance with posting
requirements for its three most recent meetings. Specifi-cally,
the Authority failed to post its meeting notices in
the State Capitol lobby, even though it filed a statement
including this site as one of its posting locations. Addi-tionally,
the Authority did not follow Open Meeting Law
requirements for keeping Executive Session minutes until
auditors recently brought this problem to the Authority’s
attention. Moreover, the Authority can improve its ability
Sunset Factors
22
OFFICE OF THE AUDITOR GENERAL
to inform the public on its Web site by including informa-tion
such as its meeting schedule, grant awards it has
made, and other major decisions or actions taken.
6. The extent to which the agency has been able to in-vestigate
and resolve complaints that are within its
jurisdiction.
This factor is not applicable because the Authority does
not have investigative or regulatory authority.
7. The extent to which the attorney general or any other
applicable agency of state government has the au-thority
to prosecute actions under the enabling legis-lation.
This factor does not apply to the Authority since it has no
regulatory or oversight responsibilities.
8. The extent to which the agency has addressed
deficiencies in the enabling statutes that prevent it
from fulfilling its statutory mandate.
Legislation passed during the 2000 legislative session
changed the membership of the Authority from 9 to 12
members to represent the population of both large and
small communities by adding an additional police chief,
county sheriff, and county attorney.
9. The extent to which changes are necessary in the
laws of the agency to adequately comply with the fac-tors
listed in the Sunset Laws.
To assist the Authority in complying with its statutory
mandates, the Legislature should consider modifying
A.R.S. §41-3451 to permit the Authority to promulgate
administrative rules. If the Authority’s statutes are re-vised,
the Authority should work with the Governor’s
Sunset Factors
23
OFFICE OF THE AUDITOR GENERAL
Regulatory Review Council to write and implement rules
that are needed for properly operating its programs, such
as its grant award process (see Finding I, pages 9 through
17).
10. The extent to which termination of the agency would
significantly harm the public health, safety or welfare.
Terminating the Authority may not directly harm public
health, safety, or welfare. Prior to the Authority receiving
a permanent funding source, some specific efforts existed
to address automobile theft, including a multi-agency
task force operating in Tucson and vehicle theft investiga-tion
units at both the Department of Public Safety and the
Phoenix Police Department. However, the Authority’s
funding was the impetus behind the creation of the
statewide vehicle theft task force and has also provided
funding for prosecution efforts dedicated to exclusively
focusing on auto theft cases in the three counties with the
highest auto theft rates. If the Authority is terminated, it is
not clear whether these specific efforts would continue.
11. The extent to which the level of regulation exercised
by the agency is appropriate and whether less or
more stringent levels of regulation would be appro-priate.
The Automobile Theft Authority is not a regulatory
agency and therefore has no regulatory authority.
12. The extent to which the agency has used private con-tractors
in the performance of its duties and how e f-fective
use of private contractors could be accom-plished.
The Authority continues to review its use of private con-tractors.
It has used private contractors for public rela-tions
activities but determined that discontinuing such
contracts and bringing the function in-house could
achieve cost savings. It has also used a private contractor
Sunset Factors
24
OFFICE OF THE AUDITOR GENERAL
to provide technology services. Further, the Authority
will use private contractors for its statutorily mandated
annual audit of the Automobile Theft Authority Fund
and for future Web site development. Except for these
two areas, the Authority does not see a need to use addi-tional
private contractor services at this time.
OFFICE OF THE AUDITOR GENERAL
AGENCY RESPONSE
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
ARIZONA AUTOMOBILE
THEFT AUTHORITY
RESPONSE TO THE REPORT
OF
THE AUDITOR GENERAL
PAUL MORTENSEN
DIRECTOR
June 26, 2001
June 26, 2001
Ms. Debbie Davenport
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, AZ. 85018
Dear Ms. Davenport:
The Arizona Automobile Theft Authority wishes to express its
appreciation to the Office of the Auditor General for the high level
of professionalism and cooperative spirit by its staff auditors
during the performance audit process.
Attached please find the Authority’s final response to the Auditor
General’s draft report and recommendations.
Sincerely,
Paul Mortensen
Paul Mortensen
Executive Director
Arizona Automobile Theft Authority
Response to the Auditor General’s Performance Audit Report
June 26, 2001
Summary
The Arizona Automobile Theft Authority (Authority) has reviewed the Performance Audit Report prepared by the
Office of the Auditor General. The Authority greatly appreciates the professionalism and positive suggestions of
the Auditor General’s staff during the performance audit process.
The Authority agrees with the findings and recommendations included in the Auditor General’s report and will be
making every effort to enhance and improve current administrative policies and program performance measure-ments
guidelines while continuing our mission of combating vehicle theft in Arizona.
In addition to the agreed upon recommendations identified in the Auditor General’s report, the Authority would
like to provide some further additional clarification on the accomplishments of the Authority and its current short
and long range goals.
In fiscal year 2000, the Authority was only able to fund two of its programs; the Arizona Vehicle Theft Task Force
and Public Awareness. In that same year, the Authority corrected its revenue shortfall, which increased revenue
from $ 2.0 million in 1999 to $3.5 million in 2002.
In fiscal year 2001, the Authority will increase its budget from $2.6 million to $3.8 million. In addition, the
Authority will receive a federal grant of $240,000 from the U.S. Department of Justice. Not only will the Authority
increase its funding for the Arizona Vehicle Theft Task Force and Public Awareness, but six new program initiatives
will be added which include:
1. Development of anti-vehicle theft curriculum for public schools
2. Implementation of Border Interdiction Program with U.S. Customs
3. Vehicle theft Prosecutors in 3 counties in Arizona
4. Grants to local law enforcement agencies for public awareness
5. Grants to local law enforcement for additional vehicle theft investigations, equipment or training
6. Statewide vehicle theft prevention mailing to every vehicle owner in the State
The Auditor General’s report primarily focuses on some administrative weaknesses and does not acknowl-edge
areas where the Authority is in compliance with Statute or where the Authority demonstrates
progressive, measurable, and positive results in accomplishing its mission.
Mission Statement
The mission of the Arizona Automobile Theft Authority is to
reduce vehicle theft through a statewide cooperative effort
by supporting law enforcement investigation, prosecution,
and public awareness programs.
Introduction
Under Arizona Revised Statutes 41-2952, the State of Arizona Office of the Auditor General conducts reviews
under the “Sunset Law” for the purpose of providing the Arizona Legislature with information necessary “for
determining if the merits of a program justify its continuation rather than termination.” The Arizona Automobile
Theft Authority (Authority) acknowledges and appreciates the efforts of the Office of the Auditor General in con-ducting
this performance review.
The Arizona Automobile Theft Authority further appreciates the recommendations for agency improvements in
administrative efficiency and effectiveness as presented in this report, and is already proceeding with the imple-mentation
of recommendations.
While the Authority concurs with the findings and recommendations of the Auditor General’s report, the report
does not accurately reflect the Authority’s funding history or positive accomplishments in developing and
implementing programs to combat vehicle theft in Arizona.
Auditor General’s Report Omits Results
The Authority disagrees with the Auditor General’s statement on page 9 that, “Currently, the Authority has little
information to determine the effect its programs are having on reducing auto theft.” The table below shows signifi-cant
results from the efforts of the Arizona Vehicle Theft Task Force, which was created and funded by the
Authority in 1997.
The Auditor General’s report omits the effective results of the Arizona Vehicle Theft Task Force since its inception:
Felony Arrests 1,013
Chop Shops Closed 121
Altered/Switched VINS 1,167
Insurance Fraud Cases 162
Vehicles Recovered 7,814
Value of Recoveries $70,256,000
Without funding of the statewide Task Force, dozens of chop shops, hundreds of criminals and scores of auto theft
rings would still be in operation in communities throughout Arizona with over $70 million dollars of stolen property
lost to its residents. For every dollar that the Authority has funded, the Arizona Vehicle Theft Task Force has recov-ered
over $11 in stolen property for the citizens of Arizona.
2
3
Arizona Automobile
Theft Authority
Return on Funding
For every dollar that the AATA has funded, The Arizona
Vehicle Theft Task Force has recovered over in stolen
property for the citizens of Arizona.
$1
$1 $1
$1 $1
$1
$1
$1
$1
$1
$1
=
$11
4
4,075,000
4,218,000
4,428,000
4,555,000
4,669,000
Year
Population
Information obtained from the U.S. Department of Justice Federal
Bureau of Investigation "Crime in the United States" Uniform Crime Report
4,778,000
Arizona’s Population
1994 - 1999
3,600,000
3,800,000
4,000,000
4,200,000
4,400,000
4,600,000
4,800,000
5,000,000
1994 1995 1996 1997 1998 1999
Arizona Vehicle Theft
1993 - 1999
Year
Source: Arizona Vehicle Theft Task Force
30,000
35,000
40,000
45,000
50,000
1993 1994 1995 1996 1997 1998 1999
33,998
43,467
48,019
41,034
44,201
40,391
38,247
The Auditor General’s report fails to consider the fact that the theft rate in Arizona has declined from 1995 – 1999
by 20.3 percent while the population of the State grew significantly. Although there has been proven progress,
these statistics reinforce the importance of the Authority’s efforts to continue to combat the State’s vehicle
theft rate.
The theft of personal property, specifically vehicle theft, affects the quality of life for all citizens in the State of
Arizona. In many cases, victims of vehicle theft are economically disadvantaged and cannot afford the loss of their
vehicle, which may be a single means of transportation thereby causing serious hardship. The loss of one’s vehicle
in our vehicle dependent society can mean the loss of income for the owner who depends on his or her vehicle for
their livelihood.
In many instances, stolen vehicles are used in the commission of more egregious crimes, i.e., armed robbery, drive
by shootings, carjackings, transporting narcotics, etc. The reduction of vehicle theft can and should translate to a
similar reduction of these other serious offenses.
Criminals are known to follow the path of least resistance. The elimination of the Authority would effectively send
a message to this element that the State is again open game for rampant auto theft. This condition existed prior to
1996 when the State of Arizona reached its unfavorable and dubious distinction of being the number one state for
auto theft crime. As vehicle theft is a property crime, it is the responsibility of all state law enforcement agencies
(police departments) to investigate this infraction of the law. The reality is that the law enforcement community as
well as county attorneys must operate within a set budget. In most, if not all instances, the budget is not sufficient
to adequately address the investigation and prosecution of all criminal activity. Due to the definition of vehicle
theft as a property crime it falls to the bottom of priority crimes list and does not receive the attention needed to
reverse its affect on our State. In summary, local authorities (law enforcement and county prosecutors) do not have
the means (funding) to focus on this insidious and far-reaching crime.
Background
The Arizona Automobile Theft Authority has been in existence since 1992, however, proper funding initially
restricted its activities. In 1996, the Legislature enacted legislation requiring all insurance companies to pay an
assessment to the Automobile Theft Authority Fund based on a pro-rata method based on earned car years.
Effective July 1, 1997, the Legislature approved HB2070 and changed that method, requiring insurance companies
to pay semi-annually $ .50 per vehicle insured. The Legislature also created a 9-member Board of Directors with
members being appointed from the insurance industry, law enforcement, public prosecutors, and the general public.
The Authority estimated revenue at approximately $3 million in the fiscal year ending June 30, 1999, which was
the first year the Authority was fully funded under the provisions of HB2070. However, only $2 million was col-lected
at that time.
In reviewing the assessment payments, the Authority discovered that most insurers were using the incorrect method
to calculate their assessment. In fiscal year 2000, Authority staff had not only corrected the revenue shortfall, but
had collected over $1 million in past due assessments. However, the Authority was unable to receive additional
spending authority from the Legislature to fund its programs until fiscal year 2001.
The full impact of the Arizona Automobile Theft Authority will not be realized until 2003.
In its present form, the Authority has only been in existence since July 1, 1997. Prior to 1997, a funding mecha-nism
was all but non-existent and therefore the Authority did not realize its full potential in developing and funding
AATA programs and initiatives.
Until year 2000, the revenue shortfall and two-year budget cycle forced the Authority to limit its programs. During
fiscal year 2000, the Authority not only continued in the development of innovative programs to combat vehicle
theft in Arizona, but it reviewed ways it could implement its programs with greater efficiency and cost savings.
5
The Auditor General’s report fails to mention that the full impact of the Authority’s programs will not be
fully realized until 2003 when the Border Interdiction Program will be fully operational.
In 2002, the Authority is scheduled for a Sunset Review. It should also be noted that in year 2002, we may also
experience our first rise in vehicle theft in Arizona in the last four years. This increase will be due to a national
economic decline and significant population growth in the State. The Authority’s budget of $2.2 million in 2001
will increase to $3.8 million in fiscal year 2002. The Auditor General’s report fails to consider the impact of the
increase in resources available to combat vehicle theft in the State or the impact of new programs to be funded in
2002 and future years.
The Arizona Automobile Theft Authority, with increased funding, has received approval from the Arizona
Legislature to spend $7.8 million of revenue collected from automobile insurance companies through the
2002/2003 budget cycle. In addition, the Authority was recently awarded a $240,000 grant from the U.S.
Department of Justice for public awareness and promotion of the Watch Your Car Program.
The Auditor General’s report fails to recognize that the full impact of the
Agency’s program will not be realized until 2003.
The Auditor General’s report fail to consider that the impact of the increase in resources and the effect new pro-grams
will have on reducing the vehicle theft rate in Arizona. These programs include:
1. Development of anti-vehicle theft curriculum for public schools
2. Implementation of Border Interdiction Program with U.S. Customs
3. Vehicle theft Prosecutors in 3 counties in Arizona
4. Grants to local law enforcement agencies for public awareness
5. Grants to local law enforcement for additional vehicle theft investigations, equipment or training
6. Statewide vehicle theft prevention mailing to every vehicle owner in the State
Automobile Theft Authorities Success in other States.
While the Authority has not yet conducted a study of the specific impact it has had on the reduction of vehicle
theft, studies and comparisons from other States show that ATAs such as the Arizona Automobile Theft Authority
are having a positive impact on auto theft. For example, a study updating an evaluation of programs sponsored by
the Maryland Vehicle Theft Prevention Council by the Schaefer Center for Public Policy at the University of
Baltimore concluded that, “This update of the evaluation of the Vehicle Theft Prevention Council’s programs has a
report on three statistical analysis of motor vehicle theft data in Maryland. Two of the analyses, the “regression
analysis” and the “statewide time series analysis,” provided strong evidence that the programs of the Council have
been effective. The third analysis, the “time series analysis” of monthly data in the State’s largest jurisdictions, pro-vided
weaker evidence, but in general, corroborated the findings of the other two analyses. In short, the models
generated by statistical analysis indicate a strong, continuing effect of the Vehicle Theft Prevention Council’s
program in preventing thefts. Together the three analyses provide highly persuasive evidence that the programs
have been successful.”
6
7
163,837
145,048
124,822
110,772
104,939 104,895
101,687
96,614
91,992
Year
Motor Vehicle Thefts in Texas
1991 - 1999
1991 1992 1993 1994 1995 1996 1997 1998 1999
Decrease in auto thefts
since the inception of
the Texas Automobile
Theft Prevention Authority:
44%
80,000
90,000
100,000
110,000
120,000
130,000
140,000
150,000
160,000
170,000
Maryland’s Vehicle Theft Prevention Program has been in effect, and as the above quoted study indicates, has been
effective in combating the problem in that state. The vehicle theft prevention program in Texas was established in
1992, with a steady decline of auto theft rate reach 44% since that program began.
Taking the results in both Maryland and Texas and comparing them to the results in Arizona since the inception of
the Authority, provides a reasonable basis for assuming a continued downward trend in Arizona will continue as a
result of the programs the Arizona Automobile Theft Authority is implementing.
Auditor General’s report fails to fully recognize significant analysis and
innovations being developed and deployed by the Authority to combat the
changing nature of vehicle theft.
The Auditor General’s report fails to adequately discuss the Authority’s current Border Interdiction Program. Over
the last 10 years, vehicle theft rates in Arizona have risen to an alarming rate. Today, Arizona is listed as one of the
highest states in the nation for stolen vehicles with Phoenix (#1) and Tucson (#12) listed as numbers 1 and 12, on
the National Insurance Crime Bureau’s (NICB) 2001 Top 15 list of the major cities in the United States for
vehicle thefts.
The causes of the sudden rise in auto thefts in Arizona over the last few years include the rise of auto theft crime
syndicates, increase in export markets, the high value of stolen cars, and the relatively low risk of being apprehend-ed.
The FBI estimates that vehicle theft is an $8 billion dollar industry in the U.S. annually.
In Arizona in 1999, 38,247 vehicles were reported stolen. Approximately 64% of all stolen vehicles are recovered.
Furthermore, according to the NICB, over 30% of stolen vehicles nationally are never recovered. The Authority has
been analyzing the problem of un-recovered stolen vehicles in Arizona and has determined that there is a signifi-cant
problem with regard to stolen vehicles crossing the Arizona/Mexico border. To address this issue, the
Authority has formed partnerships with the U.S. Customs Service to purchase an automated License Plate Reader
(LPR) manufactured by the Perceptics Corporation that is now being installed at all border crossing points along
the United States southwest border. This system has the capability to:
1. Automatically identify the plate number and State in all weather conditions, 24 hours a day
2. Interface automatically (with no human involvement) with local, regional, and national databases
3. Provide immediate alerts to law enforcement when suspect vehicles are identified
4. Provide accurate statistics
These systems have already been installed at most of the inbound lanes at the different Ports of Entry (POE) in
Arizona. Continued deployment is underway at the remaining Ports of Entry with special attention to the outbound
lanes as well.
These automated LPRs offer the State of Arizona a valuable potential resource. With cooperation from the U.S.
Customs Service, it will now be possible to make dual use of all the data captured by the LPR to quickly and accu-rately
screen for stolen vehicles. Indeed, a pilot effort in California, which featured an LPR collecting data at an
outbound lane in San Diego, had dramatic and unexpected success in detecting outbound stolen vehicles.
The development of this project over the last three years has been a major initiative of the Arizona Automobile
Theft Authority. With the funding and implementation of this pilot program in partnership with U.S. Customs in
2002/2003, significant progress in decreasing the theft and exportation of vehicles is expected. This program is one
of several that the Authority will be implementing to protect the safety and property of the residents of Arizona.
8
Legislative Intent Being Fulfilled
The Legislature established the Arizona Automobile Theft Authority in 1992 to combat and reverse a growing
increase in vehicle theft throughout the State of Arizona. The statutes establish the following as objectives of
the agency:
1. Determine the scope of the problem of automobile theft, including particular areas of the State where
the problem is greatest
2. Analyze the various methods of combating the problem of motor vehicle theft
3. Develop and implement a plan of operation
4. Develop and implement a financial plan
5. Solicit and accept gifts and grants
The original legislative intent in establishing the Authority was to reduce vehicle theft through a statewide coopera-tive
effort by supporting law enforcement investigation, prosecution and public awareness programs. It should be
noted that the composition of the Board was intended to create a cross section of representation of law enforce-ment,
auto insurance industry, prosecution, and the general public. This representation would represent both rural
and metropolitan areas. House bill 2087, passed in April of 2000 expanded the Board from 9 members to 12 in an
effort to broaden the rural representation.
The goals and objectives of the Authority reflects its mission statement, “To reduce vehicle theft through a
statewide cooperative effort by supporting law enforcement investigation, prosecution and public awareness pro-grams,”
in the following manner:
Operational Procedures Manual Completed
The staff has completed a written Policies and Procedures Manual. At the August 24, 2000 Board of Directors
meeting, a fourth full-time position was authorized. Immediately after hiring this staff person, the Authority’s
Administrative Services Officer held meetings with the Director and other staff members to implement a draft out-line
policy for internal controls. Among other items, this policy specified that the responsibilities for the processing
of receipts would be divided among three staff members. This outline was designed in accordance with the Arizona
State Accounting Manual.
Prior to January 1, 2001 all processing of receipts and claims for the Authority was completed by the Central
Services Bureau of the General Accounting Office. The Auditor General’s allegation on page 15 of the report
claims that “The Authority lacks basic operational procedures and internal controls – At the time of our audit, the
Authority lacked basic operational procedures. For example, it lacked procedures for opening mail, processing cash
receipts, billing insurance companies, and processing outstanding invoices.”
What the report fails to mention is that while there were no written procedures until recently, there were policies in
place that were followed by staff in opening mail, processing receipts and invoices. The Auditor General’s report
fails to acknowledge that the Authority expanded its internal controls as the staff was expanded from 3 to 4
employees. At the time of the audit, all claims are reviewed and approved by both the Administrative Services
Officer and the Executive Director, before the claim can be prepared. The Administrative Services Officer reviews
the claim a second time before being sent to the General Accounting Office for processing.
The Auditor General’s report also ignores the fact that the Authority has developed and implemented a database for rev-enue
billing and collection. This database was in place at the time the Authority assumed the processing of
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revenues in-house in January 2001. The report also fails to mention that processing of receipts were handled by three staff,
one to open the mail, a second to prepare the check log and reconcile to the data base, a third to prepare the actual deposit.
In response to questions from the staff auditor during her field work (which was conducted during a peak collec-tion
period), the Auditor General’s Office was advised that the Authority was testing the internal controls for
processing receipts and indicated that the policy would be written based on the test results so there would be no
major omissions in that internal control policy. The same applied to the collection of past due receipts.
In March, the auditor staff was advised that the Authority was drafting its Policies and Procedures Manual. This
manual was completed in May 2001, with an implementation date of July 1, 2001, which was two months prior to
the issuing of the Auditor General’s report. It should also be noted that this project included 31 written policies and
procedures and was completed as expeditiously as the resources of the Agency permitted.
Contrary to statements in the report, the Authority considers its Procedures Manual complete and adequate in pro-viding
written guidelines on internal controls and other policies required of a State agency. This policy has been
distributed to the Director, three staff employees and the Chairman of the Authority’s governing Board. With the
exception of a section on Board Procedures, which will require Board approval, the Authority considers the manual
complete.
It will be the policy of the Authority to review, add, delete or modify its individual policies, as circumstances require.
Conclusions
As stated in the beginning of this response, the Authority wishes to point out that the Auditor General’s finding and
recommendations primarily focus on some administrative weaknesses and does not acknowledge areas where the
Authority is in compliance with Statute or where the Authority demonstrates progressive, measurable, and positive
results in accomplishing its mission. It is the belief of the Authority that the programs and initiatives it is currently
funding and has plans on funding through fiscal year 2003, will continue to impact the auto theft rate in the State
of Arizona therefore, improving the quality of life for its citizens.
The Arizona Automobile Theft Authority appreciates the efforts and professionalism of the Auditor General’s staff
during the 8-month performance audit.
10
Response of the Arizona Automobile Theft Authority to the specific
recommendations of the Auditor General.
Finding I
Recommendations
1. The finding of the Auditor General is agreed to, and the recommendation will be implemented
2. The finding of the Auditor General is agreed to, and the recommendation will be implemented
3. The finding of the Auditor General is agreed to, and the recommendation will be implemented
4. The finding of the Auditor General is agreed to, and the recommendation will be implemented
5. The finding of the Auditor General is agreed to, and the recommendation will be implemented
(Completed May, 2001)
6. The finding of the Auditor General is agreed to, and the recommendation will be implemented
11
Arizona Automobile Theft Authority
Response to the Auditor General’s Performance Audit Report
Sunset Factors
June 26, 2001
Sunset Factor 10: The extent to which termination of the agency would signifi-cantly
harm the public health, safety or welfare.
The Auditor General’s report states, “Terminating the Authority may not directly harm public health, safety, or
welfare and further that some specific efforts previously existed to address automobile theft, including a multi-agency
task force operating in Tucson and vehicle theft investigation units at both the Department of Public Safety
and the Phoenix Police Department.”
The Authority does not deny that a limited vehicle theft law enforcement component did exist prior to the forma-tion
and permanent funding of the Arizona Vehicle Theft Task Force by the Authority, but simply that this effort
was inadequate and not at the coordinated and consistent level that it is currently due to the aggressive efforts of
the Task Force.
And, as discussed earlier, the Auditor General’s report omits the effective results of the Arizona Vehicle Theft Task
Force since its inception:
Felony Arrests 1,013
Chop Shops Closed 121
Altered/Switched VINS 1,167
Insurance Fraud Cases 162
Vehicles Recovered 7,814
Value of Recoveries $70,256,000
Assist to Other Agencies 2,625
Without funding of the statewide Task Force, dozens of chop shops, hundreds of criminals and scores of auto theft
rings would still be in operation in communities throughout Arizona with over $70 million dollars of stolen proper-ty
lost to its residents. For every dollar that the Authority has funded, the Arizona Vehicle Theft Task Force has
recovered over $11 in stolen property for the citizens of Arizona.
The Auditor General’s report fails to consider the fact that the theft rate in Arizona has declined from 1995 – 1999
by 20.3 percent while the population of the State grew significantly. Although there has been proven progress,
these statistics reinforce the importance of the Authority’s aggressive law enforcement efforts to continue to com-bat
the State’s vehicle theft rate as well as continue to have the Task Force provide assistance to other agencies
around the State at no cost.
While local communities would continue their individual law enforcement efforts in combating vehicle, their
efforts would be limited due to funding limitations.
As stated earlier, the theft of personal property, i.e., vehicle theft, affects the quality of life for all citizens in the
State of Arizona. In many cases, victims of vehicle theft are economically disadvantaged and cannot afford the
12
loss of their vehicle, which may be a single means of transportation thereby causing serious hardship. The loss of
one’s vehicle in our vehicle dependent society can mean the loss of income for the owner who depends on his or
her vehicle for their livelihood.
In many instances, stolen vehicles are used in the commission of more egregious crimes, i.e., armed robbery, drive
by shootings, carjackings, transporting narcotics, etc. The reduction of vehicle theft can and should translate to a
similar reduction of these other serious offenses.
Criminals are known to follow the path of least resistance. The elimination of the Authority would effectively send
a message to this element that the State is again open game for rampant auto theft. This condition existed prior to
1996 when the State of Arizona reached its unfavorable and dubious distinction of being the number one state for
auto theft crime. As vehicle theft is a property crime, it is the responsibility of all state law enforcement agencies
(police departments) to investigate this infraction of the law. The reality is that the law enforcement community
must operate within a set budget. In most, if not all instances, the budget is not sufficient to adequately address the
investigation of all criminal activity. Due to the definition of vehicle theft as a property crime it falls to the bottom
of priority crimes list and does not receive the attention needed to reverse its affect on our State. In summary, local
authorities do not have the means (funding) to focus on this insidious and far-reaching crime.
The full impact of the Arizona Automobile Theft Authority will not be realized until 2003.
The Arizona Automobile Theft Authority, with increased funding, has received approval from the Arizona
Legislature to spend $7.8 million of revenue collected from automobile insurance companies. In addition, the
Authority was recently awarded a $ 240,000 grant from the U.S. Department of Justice for public awareness and
promotion of the Watch Your Car Program, with the increased resources now available to the Authority the citizens
of both metropolitan and rural areas can expect significant progress in combating vehicle theft.
Without this effort, auto theft would continue and contrary to the conclusion of the Auditor General, terminating
Arizona Automobile Theft Authority would harm and have a negative impact on public safety and welfare.
13
Other Performance Audit Reports Issued Within
the Last 12 Months
01-10
Future Performance Audit Reports
Department of Real Estate
Department of Veterans Services
00-16 Arizona Department of Agriculture—
Pesticide Compliance and Worker
Safety Program
00-17 Arizona Department of Agriculture—
Sunset Factors
00-18 Arizona State Boxing Commission
00-19 Department of Economic Security—
Division of Developmental
Disabilities
00-20 Arizona Department of Corrections—
Security Operations
00-20 Universities—Funding Study
00-21 Annual Evaluation—Arizona’s
Family Literacy Program
01-01 Department of Economic Security—
Child Support Enforcement
01-02 Department of Economic Security—
Healthy Families Program
01-03 Arizona Department of Public
Safety—Drug Abuse Resistance
Education (D.A.R.E.) Program
01-04 Arizona Department of
Corrections—Human Resources
Management
01-05 Arizona Department of Public
Safety—Telecommunications
Bureau
01-06 Board of Osteopathic Examiners in
Medicine and Surgery
01-07 Arizona Department
of Corrections—Support Services
01-08 Arizona Game and Fish Commission
and Department—Wildlife
Management Program
01-09 Arizona Game and Fish
Commission—Heritage Fund
01-10 Department of Public Safety—
Licensing Bureau
01-11 Arizona Commission on the Arts
01-12 Board of Chiropractic Examiners
01-13 Department of Corrections—Private
Prisons