Performance audit, Arizona Department of Agriculture animal disease, ownership and welfare protection program, report to the legislature

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
June 2000
Report No. 00-8
ARIZONA
DEPARTMENT
OF
AGRICULTURE
ANIMAL DISEASE,
OWNERSHIP AND
WELFARE PROTECTION
PROGRAM
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee
composed of five senators and five representatives. His 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, he 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
Representative Roberta L. Voss, Chairman
Senator Tom Smith, Vice-Chairman
Representative Robert Burns Senator Keith Bee
Representative Ken Cheuvront Senator Herb Guenther
Representative Andy Nichols Senator Darden Hamilton
Representative Barry Wong Senator Pete Rios
Representative Jeff Groscost Senator Brenda Burns
(ex-officio) (ex-officio)
Audit Staff
Dale Chapman—Manager
and Contact Person (602) 553-0333
Jay Dunkleberger—Audit Senior
Charles McTheny—Staff
Mark McCain—Staff
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
(602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
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
June 8, 2000
Members of the Legislature
The Honorable Jane Dee Hull, Governor
Mr. Sheldon R. Jones, Director
Arizona Department of Agriculture
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona
Department of Agriculture—Animal Disease, Ownership and Welfare Protection Program.
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
to provide a quick summary for your convenience.
This is the second in a series of reports to be issued on the Arizona Department of Agriculture.
As outlined in its response, the agency agrees with all of the findings and 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 June 9, 2000.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
OFFICE OF THE AUDITOR GENERAL
Program Fact Sheet
Department of Agriculture—
Animal Disease, Ownership and
Welfare Protection Program
Services: The Animal Disease, Ownership and Welfare Protection Program, which
consists of the Livestock Inspection and Animal Disease Control Subprograms, offers
the following services: 1) Livestock inspection—Verifies ownership whenever livestock
are sold or transported in Arizona; 2) Horse registration—Issues horse ownership-hauling
certificates that individually identify horses, mules, and burros in the State; 3)
Livestock brand registration—Records brands and earmarks used by livestock owners
in the State; 4) Livestock law enforcement—Enforces state laws regarding livestock
theft, abuse, or illegal killing; and 5) Animal disease detection—Regulates the importa-tion
of animals into the State; and tracks, investigates, and eradicates livestock diseases
in the State.
Facilities: The program operates no facilities
outside of the Department’s offices at the Capi-tol
complex in Phoenix. The program’s livestock
inspectors, stationed in various parts of the
State, generally operate from their homes.
Revenue: $3.9 million (Fiscal Year 2000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
FY 1998 FY 1999 FY 2000
Collections for Beef Council
Fees, Fines, and Other Revenue
General Fund Revenue
$3.8
Million
$3.8
Million
Personnel: 55.8 FTEs (As of April 2000)
Livestock
Officers/Inspectors
(41.0)
Support Staff
(Clerks, Dispatchers,
Administrative Staff)
(13)
Veterinarians
(1.8)
Equipment: The Department has purchased
several items used extensively by the program,
including:
n 45 state vehicles, con-sisting
of ½-ton
trucks, ¾-ton trucks,
or 4X4 vehicles. These
vehicles were leased
from the Department
of Administration at a
cost of over $225,000
in 1999.
n 16 horse trailers for
transporting seized,
lost, or unclaimed live-stock.
(continued)
$3.9
Million
OFFICE OF THE AUDITOR GENERAL
Equipment: (Concl’d)
n 46 semi-automatic pistols
for use by the Depart-ment’s
certified peace of-ficers.
n A $58,000 radio/dispatch
system housed in the
Phoenix office.
Adequacy of Goals and Performance
Measures:
Several improvements could be made to
the Department’s four goals for its two
subprograms and their performance
measures.1
n The program’s goals are overly broad, and
incorporate too many performance meas-urements
to effectively track performance.
For example, under the goal, “To maintain
an effective system of livestock inspection,”
the Department has developed and at-tempts
to track 30 performance measures.
n For some of its performance measures, the
Department has not instituted a mecha-nism
to assess its performance. For exam-ple,
each of the four program goals has
measurements requiring the Department to
assess customer satisfaction. However, the
Department has not developed survey in-struments
to collect and analyze customer
satisfaction data for all of these goals.
n While the program generally employs
appropriate outcome and efficiency meas-urements,
some are inappropriate and oth-ers
could be added to enhance specific as-pects
of the program. Specifically, the De-partment
has developed some efficiency
performance measurements for the Animal
Disease Control Subprogram that do not
apply to program activities. Further, the
Department lacks measures for assessing
the efficiency and cost of its livestock in-spection
operations and its investigation
activities.
Program Goals
(Fiscal Years 2000-2002)
Subprogram 1: Animal Disease
Control
1. To provide an overview of inspec-tion
and regulatory measures.
2. To maintain an effective system of
livestock and commercial fish dis-ease
surveillance and response.
Subprogram 2: Livestock Inspection
1. To provide an overview of inspec-tion
and regulatory measures.
2. To maintain an effective system of
livestock inspection.
1 The Department incorporated two of these goals and
associated performance measures in order to comply
with guidelines specified in the Budget and Planning In-structions
for fiscal years 2000 and 2001 issued by the
Governor’s Office of Strategic Planning and Budgeting.
OFFICE OF THE AUDITOR GENERAL
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SUMMARY
The Office of the Auditor General has conducted a performance
audit of the Arizona Department of Agriculture’s Animal Disease,
Ownership and Welfare Protection Program pursuant to a June
16, 1999, resolution of the Joint Legislative Audit Committee. This
audit was conducted as part of the Sunset review set forth in
A.R.S. §§41-2951 through 41-2956, and is the second in a series of
audits to be conducted on programs within the Arizona Depart-ment
of Agriculture.
The Animal Disease, Ownership and Welfare Protection Program
consists of the Livestock Inspection and the Animal Disease
Control Subprograms. The Livestock Inspection Subprogram’s
goal is to protect owners from livestock theft and livestock from
abuse. One of the subprogram’s main functions is to inspect
Arizona cattle and horses to verify ownership. Within the Animal
Disease Control Subprogram, the Department regulates imported
animals, and monitors, investigates, and limits the spread of
livestock diseases within the State.
Several Changes Needed to
Improve Cattle Inspection Process
(See pages 9 through 19)
The Legislature and the Department can make a number of
statutory and procedural changes to improve the cattle inspection
process. These inspections protect cattle owners against theft by
verifying ownership whenever cattle are sold or transported.
However, Arizona law currently requires the Department to
conduct thousands of inspections that are potentially duplicative.
The law requires the Department to inspect cattle before they are
transported, but cattle going to auctions or feedlots are inspected
again by Department inspectors when they arrive. Nearly 180,000
head of cattle received both a pre-transit inspection and a second
inspection upon arriving at an auction or feedlot in fiscal year
1999. Cattle industry representatives indicate that the duplicative
inspections are unnecessary and unjustified by current cattle theft
Summary
ii
OFFICE OF THE AUDITOR GENERAL
rates. The Legislature should consider allowing cattle owners to
transport their animals to auctions or feedlots without first re-ceiving
a pre-transit inspection.
Additionally, current cattle inspection fees the Department can
charge do not permit it to recover its direct costs for cattle inspec-tions.
A typical inspection costs the Department over $14, with
inspector travel time and vehicle operating costs accounting for 56
percent of this cost. However, for the majority of the inspections it
performs, the Department collects $3.75 or less in inspection fees.
Since travel costs represent over half of the Department’s expense
for inspections, the Legislature should consider granting the
Department the authority to impose a travel fee. Several other
Western states have adopted a separate travel fee or surcharge to
recover travel expenses incurred. Additionally, this fee would be
charged to customers who request inspection services on their
property. While Arizona’s cattle inspection fees have not changed
in nearly 20 years and the cattle industry has resisted previous
attempts to increase them, industry representatives suggest that
cattle owners may be receptive to a travel fee if the industry and
the Department work together to improve the inspection process.
These improvements include encouraging owners to take their
cattle to a location where inspectors are regularly stationed,
meeting inspectors at a convenient mid-point, and reviewing the
possibility of increasing the number of part-time or seasonal
inspectors stationed in rural areas. Implementing these improve-ments
could also reduce the travel currently required for inspec-tions,
and potentially reduce inspection costs for the Department
and inspection fees for cattle owners.
Current Fee Does Not
Support Inspection Costs
for Horse Registration
(See pages 21 through 25)
While horse registration is mandated by law, the current fees
charged to register horses are insufficient to cover the Depart-ment’s
costs for providing registration and inspection services.
During the last two fiscal years, the Department inspected ap-proximately
15,000 to 19,000 horses annually, issuing registration
certificates that act as ownership documents and allow horses to
Summary
iii
OFFICE OF THE AUDITOR GENERAL
be freely transported throughout the State. However, the inspec-tion
fee for horse registration, set by statute at $5 per horse, is far
below the inspection’s estimated $14.50 cost. The fee is also lower
than fees charged in other Western states. The Legislature should
consider:
(1) Increasing the current inspection fee to recover more of the
Department’s costs for conducting horse inspections;
(2) Authorizing a travel fee by establishing a maximum fee that
limits how much the Department can charge for traveling to a
horse owner’s property to conduct inspections; and
(3) Giving the Department authority to set the actual travel fee by
administrative rule, so long as the fee does not exceed the
maximum established by statute.
As with cattle inspections, the Department can reduce costs, and
therefore keep the rate as low as possible, by encouraging horse
owners to transport their animals to convenient inspection loca-tions.
Other Pertinent Information
(See pages 27 through 31)
During the audit, other pertinent information was collected re-garding
the Department’s efforts to prevent, detect, and limit the
spread of livestock diseases. The state and the federal govern-ments
track six diseases that potentially threaten Arizona live-stock,
and in some cases could be transmitted to humans. The
State Veterinarian, within the Animal Disease Control Subpro-gram,
is charged with detecting and controlling these and other
infectious livestock diseases that appear in Arizona. The State
Veterinarian requires owners to prove that the animals they
import into the State are disease-free; collects and disseminates
reports of infected animals; and investigates and eradicates dis-ease
outbreaks. Most of the diseases being monitored have not
appeared in Arizona in the past two years. The Department is
responding to industry concerns over the potential impact of
disease outbreaks by instituting a new training program for
livestock inspection staff that would increase the Department’s
ability to identify infected livestock.
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v
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background............................ 1
Finding I: Several Changes Needed
to Improve Cattle
Inspection Process........................................... 9
Background..................................................................................... 9
Department May Perform
Thousands of Duplicative Inspections.............................. 11
Opportunity Exists to
Recover Costs More Fully and
Improve Inspection Efficiency............................................... 13
Recommendations....................................................................... 19
Finding II: Current Fee Does Not
Support Inspection Costs
for Horse Registration...................................... 21
Department Responsible
for Registering Horses............................................................... 21
Inspection Process
Needs Improvement................................................................... 22
Recommendations....................................................................... 25
Other Pertinent Information................................. 27
Animal Disease Control Program....................................... 27
Agency Response
Table of Contents
vi
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (concl’d)
Page
Tables and Figure
Table 1 Arizona Department of Agriculture
Livestock Inspection Subprogram
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended or Ending June 30, 1998,
1999, and 2000 (Unaudited)............................ 3
Table 2 Arizona Department of Agriculture
Animal Disease Control Subprogram
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended or Ending June 30, 1998,
1999, and 2000 (Unaudited)............................ 5
Table 3 Arizona Department of Agriculture
Animal Disease, Ownership and
Welfare Protection Program
Number of Cattle per Inspection
February 1999 through October 1999........ 14
Table 4 Arizona Department of Agriculture
Animal Disease, Ownership and Welfare
Protection Program
Comparison of Cattle Inspection Fees
in Selected Western States
As of January 2000............................................... 16
Figure 1 Arizona Department of Agriculture
Animal Disease, Ownership and Welfare
Protection Program
An Example of the Livestock Inspection
Process As of January 31, 2000...................... 10
Photo
Photo 1 A livestock inspection............................ 2
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OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance
audit of the Arizona Department of Agriculture’s Animal Dis-ease,
Ownership and Welfare Protection Program pursuant to a
June 16, 1999, resolution of the Joint Legislative Audit Commit-tee.
This audit was conducted as part of the Sunset review set
forth in A.R.S. §§41-2951 through 41-2956, and is the second in a
series of audits to be conducted on programs within the Arizona
Department of Agriculture.
The State’s interest in livestock inspections and animal disease
control precedes statehood. In 1887, the Livestock Sanitary
Commission (later the State Livestock Board) was established,
which published rules and regulations to protect domestic
animals from contagious diseases, and for the efficient inspection
of cattle shipped or slaughtered in the Arizona Territory. The
State Livestock Board was responsible for livestock regulation in
Arizona through 1990. On January 1, 1991, the Legislature com-bined
several separate livestock and poultry inspection, fruit and
vegetable standardization, and agricultural pesticide and fertil-izer
regulatory boards and commissions to create the Arizona
Department of Agriculture. Currently, the Department’s Animal
Disease, Ownership and Welfare Protection Program is charged
with protecting Arizona livestock from the threat of theft, abuse,
or disease. The Department has further organized this program
into the Livestock Inspection and Animal Disease Control Sub-programs.
Livestock Inspection
in Arizona
The Livestock Inspection Subprogram (52 FTEs)—This
subprogram seeks to protect owners from livestock theft, and
livestock from abuse, by regulating all facets of livestock owner-ship
and movement and maintaining documentation of livestock
activity.
In 1990, the Department of
Agriculture became respon-sible
for livestock regulation
and health.
Introduction and Background
2
OFFICE OF THE AUDITOR GENERAL
Photo 1: A livestock inspection.
These activities include registering livestock brands, issuing
horse identification cards, investigating stray livestock or cases of
alleged livestock abuse or theft, and seizing livestock when
ownership is disputed. The subprogram also assists state and
local law enforcement agencies in livestock issues, such as identi-fying
and disposing of dead cattle. One of the subprogram’s
main functions is to inspect Arizona cattle and horses to verify
ownership. To protect against livestock theft, the Department
individually registers each horse, mule, and burro in the State,
and inspects cattle before they are moved or sold in Arizona.
During fiscal year 1999, the subprogram reports that staff in-spected
approximately 664,000 livestock, including 15,000 horses,
and received reports of 22 cases of cattle theft, and 16 cases of
horse theft. The Department employs 41 full-time livestock
inspection and investigation staff, including 31 certified peace
officers.
Livestock Inspection Budget—During fiscal year 2000 and as
illustrated in Table 1 (see page 3), the Livestock Inspection sub-program
will receive an estimated $2.3 million in General Fund
monies, while generating an estimated $259,000 in livestock
Introduction and Background
3
OFFICE OF THE AUDITOR GENERAL
Table 1
Goes Here
Table 1
Arizona Department of Agriculture
Livestock Inspection Subprogram
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended or Ending June 30, 1998, 1999, and 2000
(Unaudited)
1998 1999 2000
(Actual) (Actual) (Estimated))
Revenues:
State General Fund appropriations $2,178,600 $2,280,100 $2,307,200
Charges for services—
Beef Council fees 655,537 621,927 627,000
Inspection fees 252,095 272,950 259,100
Title certificate fees 118,916 121,489 121,500
Licenses and permits 162,601 203,483 209,400
Livestock custody proceeds 1 103,066 71,060 74,800
Intergovernmental 4,895
Interest on investments 3,750
Fines and forfeits 386 17,224 17,200
Other 30,407 99 31,400
Total revenues 3,506,503 3,592,082 3,647,600
Expenditures:
Personal services 1,404,964 1,462,254 1,504,500
Employee related 351,788 365,288 346,300
Professional and outside services 39,045 34,122 41,200
Travel, in-state 233,055 236,076 250,900
Travel, out-of-state 6,260 5,181 8,200
Other operating 209,764 250,323 247,000
Equipment 57,245 57,933 1,000
Total expenditures 2,302,121 2,411,177 2,399,100
Excess of revenues over expenditures 1,204,382 1,180,905 1,248,500
Other financing sources (uses):
Net operating transfers in 24,947 12,500
Remittances to the State General Fund (537,257) (605,859) (597,900)
Remittances to the Beef Council (612,874) (599,676) (627,000)
Total other financing uses (1,125,184) (1,193,035) (1,224,900)
Excess of revenues and other sources over
(under) expenditures and other uses $ 79,198 $ (12,130) $ 23,600
1 Includes payments from owners and proceeds from public auctions to recover costs of hauling, feeding, and caring
for seized animals.
Source: The Arizona Financial Accounting System (AFIS) Accounting Event Transaction File for the years ended June 30,
1998 and 1999. The Department estimated the financial information for the year ending June 30, 2000.
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
inspection fees; $121,500 in livestock brand registration fees;
$209,000 in licenses and permits, primarily consisting of horse
inspection, registration, and transfer fees; and over $17,000 in
fines. These revenues are remitted to the General Fund. The
program’s inspectors will also collect an estimated $627,000 in
inspection surcharges earmarked for the Arizona Beef Council
and the National Beef Board, private organizations that petition
state and federal governments on behalf of the industry and
promote the use of beef among consumers. Under a statutorily
mandated agreement, state inspectors collect a $1 surcharge on
each head of cattle sold in the State, remitting the money to the
Council while retaining $.05 of this surcharge to pay for admin-istrative
costs.
Animal Disease Control
in Arizona
The Animal Disease Control Subprogram (3.8 FTEs)—This
subprogram is charged with regulating the importation of live-stock,
poultry, ratites (ostriches and emus), fish, dogs, cats, and
non-restricted wildlife species into Arizona, and monitors the
health of all livestock in the State. The subprogram is directed by
the State Veterinarian, who supervises two other veterinarians.
The State Veterinarian and his staff investigate disease outbreaks
and, when appropriate, issue quarantines to prevent diseases
from spreading. The subprogram also protects public health by
using its ability to quarantine and destroy infected animals to
eradicate and prevent the reintroduction of animal diseases that
are contagious to humans.
Animal Disease Control Budget—This subprogram relies
almost entirely upon General Fund revenues to fund its efforts to
identify, diagnose, and prevent the spread of livestock diseases.
Specifically, as seen on Table 2 (see page 5), the subprogram will
receive an estimated $269,500 in General Fund revenue during
fiscal year 2000, and about $22,000 from licenses, permits, inter-governmental
aid, and other revenue.
The State Veterinarian is
responsible for animal disease
control.
Introduction and Background
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Privatization
Review
The Department recently initiated a study to evaluate the feasi-bility
of privatizing the Livestock Inspection Subprogram. In
November 1999, the Governor’s Office for Excellence in Gov-ernment
(OEG) requested that each state agency identify at least
one program within its agency to study for potential privatiza-tion.
In response, the Department selected the Livestock Inspec-tion
Subprogram for review. In conjunction with the OEG, the
Department will determine the costs of the State providing the
program’s services and compare that to private companies’ cost.
This study should be completed by December 2000, and if this
Table 2
Arizona Department of Agriculture
Animal Disease Control Subprogram
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended or Ending June 30, 1998, 1999, and 2000
(Unaudited)
1998 1999 2000
(Actual) (Actual) (Estimated)
Revenues:
State General Fund appropriations $246,800 $236,800 $269,500
Licenses and permits 13,267 10,420 10,300
Intergovernmental 4,000 4,000 10,100
Other 620 1,907 1,900
Total revenues 264,687 253,127 291,800
Expenditures:
Personal services 114,814 106,7 55 130,400
Employee related 27,561 26,676 30,000
Professional and outside services 65,307 65,183 68,300
Travel, in-state 8,239 8,674 15,400
Travel, out-of-state 3,356 712 7,400
Other operating 33,021 29,380 27,000
Equipment 5,230 13,541 11,200
Total expenditures 257,528 250,921 289,700
Excess of revenues over expenditures 7,159 2,206 2,100
Remittances to the State General Fund (3,530) (2,780) (2,800)
Excess of revenues over (under) expenditures
and remittances to the State General Fund $ 3,629 $ (574) $ (700)
Source: The Arizona Financial Accounting System (AFIS) Accounting Event Transaction File for the years ended June 30,
1998 and 1999. The Department estimated the financial information for the year ending June 30, 2000.
Introduction and Background
6
OFFICE OF THE AUDITOR GENERAL
analysis suggests that the State should privatize the subprogram,
the Department will solicit bids from private companies.
Audit Scope
and Methodology
This audit focuses on the Department’s efforts to fulfill its re-sponsibilities
to regulate and monitor the movement, sale, and
identification of cattle and horses throughout the State, and to
present information on the Department’s current efforts to
protect the State from infectious animal diseases. Several meth-ods
were used to study the issues addressed in this audit, in-cluding:
n Selecting and analyzing a statistically valid random sample
of 285 daily livestock inspector and officer activity reports,
consisting of 382 cattle and 227 horse inspections that were
conducted from February 1999 through October 1999.1 These
inspections were analyzed to determine their direct costs, in-cluding
vehicle costs, inspection time, and travel time.2
n Observing inspectors as they carried out their inspection
duties and touring major inspection locations, including an
auction house, a dairy, and two feedlots to gain firsthand
knowledge of inspector activities and industry operations;
n Reviewing and verifying the Department’s livestock inspec-tion
statistics for fiscal years 1997, 1998, and 1999;
n Reviewing the Department’s fiscal year 1999 investigation
reports to determine the occurrence of livestock theft;
1 For certain analyses, some inspections were excluded due to insufficient
inspection data.
2 Travel time was calculated assuming staff average 35 miles per hour
driving to the location. Further, this cost represents a conservative esti-mate,
as it was calculated using mileage for only a one-way trip, and
does not include the overhead costs for administering the Department.
Introduction and Background
7
OFFICE OF THE AUDITOR GENERAL
n Contacting officials in ten Western states that conduct live-stock
inspections similar to Arizona’s to obtain information
about their inspection processes and procedures for compari-son
to Arizona’s practices;1
n Interviewing experts and others involved in the livestock
industry and its regulation to obtain their perspective on the
benefits and drawbacks of the livestock inspection program
and the Department’s performance. Interviewees included
state legislators; United States Department of Agriculture and
Arizona Department of Agriculture staff; cattle and horse in-dustry
representatives; ranchers; auction, dairy, and feedlot
managers; and horse owners.
The report presents findings and recommendations in two areas:
n The Legislature and the Department should make changes to
the cattle inspection process to reduce unnecessary inspec-tions,
increase the flexibility and cost-efficiency of inspec-tions,
and allow the Department to recover more of its costs
through the implementation of a travel fee; and
n The Legislature should consider increasing the current fee for
horse inspections and adopting a separate travel fee to allow
the Department to more fully recover its costs for conducting
these inspections and the Department should take various
steps to reduce these costs.
In addition, the report contains Other Pertinent Information
regarding the Department’s efforts to prevent, detect, and eradi-cate
livestock diseases.
This audit was conducted in accordance with government
auditing standards.
The Auditor General and staff express appreciation to the Di-rector
and staff of the Department of Agriculture for their coop-eration
and assistance throughout the audit.
1 The ten states contacted were California, Colorado, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
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OFFICE OF THE AUDITOR GENERAL
FINDING I SEVERAL CHANGES NEEDED
TO IMPROVE CATTLE
INSPECTION PROCESS
The Legislature and the Department can make several statutory
and procedural changes to improve the inspection process for
verifying cattle ownership in Arizona. Some inspections, al-though
required by statute, essentially duplicate others. A
statutory change would be needed to eliminate the duplication.
Additionally, the direct cost, or the cost of traveling to a site and
conducting the inspections, is considerably higher than current
fees. Therefore, the Legislature should consider supplementing
the current statutory livestock inspection fee with a travel fee that
would allow the Department to recover its inspection travel
costs. Further, to keep this fee to a minimum, the Department
should take several steps to make the inspection process more
efficient by reducing inspectors’ travel costs.
Background
The Livestock Inspection Subprogram seeks to protect against
cattle theft by inspecting livestock, investigating animal theft and
cruelty cases, and licensing brands. One of the inspection sub-program’s
most important functions is to act as an unbiased
third party to verify cattle ownership whenever cattle are sold,
transported out of state, or moved within the state. The Depart-ment
verifies ownership by reviewing brands, marks, and any
pertinent documentation, such as ownership papers and health
certificates. As Figure 1 (see page 10) illustrates, inspections can
occur at several different points in the process of raising cattle
and bringing them to market. For instance, inspections are re-quired
before cattle are transported on Arizona roads and when
there is a change in ownership.
To reduce the number of inspections it performs, the Department
has created a self-inspection program for certain cattle owners.
Under this program, the Department has granted self-inspection
rights to 887 dairies, feedlots, and ranchers who may transport
One of the subprogram’s
functions is verifying owner-ship
of sold or transported
cattle.
Finding I
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Mr. Smith’s Property—No inspection is
required until Mr. Smith decides to trans-port
his steer to a feedlot. He calls for a state
inspector to visually inspect the animal. The
inspector issues inspection papers that pro-vide
proof he owns the animal.
Feedlot—At the feedlot, a different state inspector
confirms the steer’s description with the first set of
papers.
Auction—Mr. Smith wants to sell his steer. He again calls a
state inspector, who inspects the steer to verify that Mr.
Smith owns it. When the steer arrives at the auction house,
another state inspector compares incoming animals against
their transit inspections.
Mr. Jones’ Property—Mr. Jones buys the steer at
the auction. His purchasing papers allow him to
take it home without an inspection.
Packinghouse—Mr. Jones wants to slaughter the
animal, so a state inspector comes to his property
and inspects the animal before it goes to the pack-inghouse.
Figure 1
Arizona Department of Agriculture
Animal Disease, Ownership and Welfare Protection Program
An Example of the Livestock Inspection Process
As of January 31, 2000
Source: Auditor General staff summary of information obtained from Department of Agriculture personnel and
A.R.S. §3-1336.
Finding I
11
OFFICE OF THE AUDITOR GENERAL
their cattle to an auction, feedlot, pasture, or slaughterhouse by
recording the number and description of the cattle they trans-port,
similar to what the Department would do during a state
inspection. However, most cattle owners do not have self-inspection
privileges and require the Department to conduct
cattle inspections.
Department May Perform
Thousands of Duplicative Inspections
Arizona law currently requires the Department to conduct
thousands of inspections that are potentially duplicative. The law
requires the Department to inspect cattle before they are trans-ported,
but cattle going to auctions or feedlots are inspected
again when they arrive. To reduce duplicative inspections, the
Legislature should consider allowing cattle owners to transport
their animals to auctions or feedlots where inspections would
occur without a pre-transit inspection.
Unnecessary inspections burden the Department and the indus-try—
Inspections conducted before cattle are transported to
auctions and feedlots are unnecessary and burden the Depart-ment
and the industry. Currently, the Department inspects cattle
when they arrive at one of Arizona’s 7 livestock auction houses
or 24 feedlots. In fiscal year 1999, the Department reported that
its staff inspected nearly 180,000 head of cattle before these
animals were shipped to one of these locations. These animals
were subsequently inspected again when they arrived. Depart-ment
officials indicate that these initial inspections protect
against livestock theft by ensuring that inspectors are aware of
legitimate cattle movement and provide proof of ownership
during transit. However, representatives of the Arizona Cattle-men’s
Association indicate that these pre-transit inspections are
unnecessary and current theft rates do not justify pre-transit
inspections. Specifically, a review of Department records for
fiscal year 1999 revealed only 21 reported cases involving stolen
cattle.
In fiscal year 1999, 180,000
cattle were unnecessarily
inspected.
Finding I
12
OFFICE OF THE AUDITOR GENERAL
These duplicative inspections place unnecessary burdens on the
Department and the industry. Traveling to ranches to inspect
cattle adds considerably to the Department’s inspection costs.
Additionally, such inspections can inconvenience cattle owners.
According to industry representatives, some cattle owners must
wait to transport cattle until an inspector arrives to perform the
inspection, costing them time and money.
Statutory change needed to permit cattle to be transported
without an inspection—Under A.R.S. §3-1336(A), the Depart-ment
must verify ownership before anyone can move or sell
livestock:
[Cattle]…shall not be slaughtered, sold, purchased,
driven, transported, shipped or conveyed unless the ani-mals
have been inspected by a livestock officer or in-spector
for health, brands and marks immediately before
they are slaughtered, sold, purchased, driven, trans-ported,
shipped or conveyed and the inspection fee paid.
To decrease the number of duplicative and costly inspections, the
Legislature should consider amending A.R.S. §3-1336(A) to
allow owners to transport cattle to an auction or feedlot without
first receiving a Department inspection. Industry representatives
have expressed support for an inspection program that inspects
cattle arriving at feedlots and auction houses and eliminates pre-transit
inspections conducted by the Department. Moreover,
they indicated that this program could be implemented without
decreasing the Department’s oversight of cattle movements.1
Specifically, cattle owners could use other documentation such
as previous inspection or ownership papers to replace the in-spection
forms prepared by Department inpsectors prior to
transporting cattle. In fact, the Department indicated it already
informally allows owners to use this documentation in lieu of a
pre-transit inspection for some cattle movements.
1 While Department officials agree with the need to reduce pre-transit
inspections, they indicate that in some circumstances, pre-transit inspec-tions
would still be necessary. For example, yearling calves, who are un-likely
to have any ownership documentation, may require an inspection
prior to being moved.
Finding I
13
OFFICE OF THE AUDITOR GENERAL
A review of ten Western states found that three other states do
not require cattle to be inspected before they are transported
within state boundaries.1 Unless cattle are being shipped from a
designated area, California does not require cattle to be inspected
before they are transported within state boundaries. Instead,
cattle are inspected after they arrive at slaughterhouses, feedlots,
and sale yards. Oregon requires an inspection before cattle are
moved out of state and before they are sold or slaughtered.
However, this inspection is not necessary if the cattle are in-spected
when they arrive at an auction yard or sale yard.
Opportunity Exists to
Recover Costs More Fully and
Improve Inspection Efficiency
Many cattle inspections incur significant travel costs, and current
fees fail to recover these costs. Greater recovery of costs would
require statutory changes to the current inspection fees, such as
allowing the Department to charge for the costs of travel, a
practice followed in several other Western states. Additionally,
the Department could keep these charges to a minimum by
reducing its travel costs through several program improvements.
Most inspections recover a fraction of their cost—Based on a
statistically representative review of 281 cattle inspections, a
typical inspection has an estimated cost of over $14 in inspection
costs, and travel expenses, which consist of vehicle operations
costs and the cost of inspector salaries while traveling. However,
on average, only 44 percent of this cost is for the actual inspec-tion,
while the Department incurs the remaining cost for the
travel associated with each inspection.
1 The states included in the survey were California, Colorado, Idaho,
Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyo-ming.
A typical inspection costs the
Department $14 but recovers
only $3.75 or less in fees.
Finding I
14
OFFICE OF THE AUDITOR GENERAL
Table 3
Arizona Department of Agriculture
Animal Disease, Ownership
and Welfare Protection Program
Number of Cattle per Inspection
February through October 1999
Number
Inspected
Percentage of
Inspections1
1 33
2-3 22
4-8 18
9-20 10
21-80 7
81 and up 10
1 Excludes three cases in which the cattle were not inspected because the cattle
owners lacked appropriate documentation.
Source: Auditor General staff analysis of 382 cattle inspection reports randomly
selected from the Department’s records.
The Department typically recovers only a portion of this cost.
Under A.R.S. §3-1337(A), the fee for an inspection is set at $3,
plus $.25 per head of cattle inspected. Further, as illustrated in
Table 3, 55 percent of all inspections are for 3 or fewer head of
cattle. These inspections would yield between $3.25 and $3.75 in
fees. However, for inspections involving 1 to 3 head of cattle, the
fees generated fall far short of the over $14 in costs associated
with a typical inspection. Moreover, in instances where inspec-tors
have to travel unusually large distances, the costs incurred
for inspector time and vehicles can far surpass the fees gener-ated.
For example, in February 1999, an inspector based in
Northern Arizona traveled 154 miles to inspect 8 head of cattle.
The inspector spent six-and-a-half hours in travel and inspection
time to inspect the cattle at an estimated cost to the Department
of $125 in inspector time and vehicle cost. Yet, this inspection
generated only $5 in inspection fees.
Geographic and seasonal schedules affect travel costs—The
Department incurs significant travel costs because the cattle
Finding I
15
OFFICE OF THE AUDITOR GENERAL
industry is geographically dispersed and the inspection work
varies seasonally. Though some clusters of owners with a small
amount of cattle exist in urban areas, many cattle owners are
located in rural areas across the State. As a result, inspectors
must often travel to these areas to conduct inspections. For
example, the Department reports that its inspectors traveled
872,000 miles during fiscal year 1999 to carry out their duties (the
Department does not report the number of miles specifically for
inspections). Additionally, analysis of inspector activity shows
that for half of the inspections the Department conducted, it
traveled 12 miles or less one-way. However, for the other half of
inspections conducted, the Department traveled from 12.5 to 102
miles one-way. The Department also travels more in response to
the seasonal nature of the cattle industry. According to the
Department and industry officials, cattle inspections occur more
often during the fall and spring seasons. Cattle owners have a
greater need for timely inspections during these more active
months, meaning inspectors must travel more during months
with a high volume of cattle movements.
The Department has attempted to reduce its staff’s inspection
load and travel time by implementing the self-inspection pro-gram
and by locating its inspectors throughout the State. How-ever,
the self-inspection program, which relies on owners to
report cattle movement to the Department, is limited to branded
cattle and/or cattle at licensed feedlots and dairies. As a result,
the Department must still conduct inspections for unbranded
cattle, and for cattle whose owners lack self-inspection privileges
or appropriate paperwork. Additionally, while the Department
has located several inspectors in rural areas to help alleviate
some of the problems created by the geographic dispersion of the
cattle industry, inspectors still travel extensively.
Revising inspection fees—As indicated in Table 4 (see page 16),
Arizona has one of the lowest cattle inspection fees when com-pared
to ten other Western states surveyed by Auditor General
staff. These other states employ various methods to recover their
inspection costs. Many recover their travel costs by charging
either a minimum fee for inspecting small numbers of cattle, or
by charging a time and mileage fee if inspectors have to travel to
an inspection. For example, Oregon targets high-cost inspections
by adding a $10 travel fee when inspectors must travel to the
animal. Also, when inspectors travel to inspections involving ten
Finding I
16
OFFICE OF THE AUDITOR GENERAL
or fewer head of cattle, Nevada charges a $12 per hour travel fee
and $.325 per mile fee to recover travel costs.
Therefore, the Legislature should consider instituting a travel fee
because time spent traveling represents a significant portion of
the inspection cost. The Legislature could consider retaining the
current $3 fee plus $.25 per head, but also allow the Department
to impose a travel fee that would recover more of its time and
mileage expenses for traveling to inspect livestock. Additionally,
this fee would only be charged to customers who request that
Department inspectors travel to their property to provide in-spection
services. Based on the estimated cost of over $14 for a
typical inspection, the majority of which is for travel costs, the
Legislature could consider granting the Department the author-ity
to impose an additional travel fee not to exceed $15. With this
The Legislature should
consider adding a travel
surcharge for customers who
request inspectors to travel to
their property.
Table 4
Arizona Department of Agriculture
Animal Disease, Ownership and Welfare Protection Program
Comparison of Cattle Inspection Fees in Selected Western States
As of January 2000
State Inspection Fee Travel Fee
Arizona $3 plus .25/head
California $.90/head or $10, whichever is more
Colorado $.40/head or $10, whichever is more $.28/mile1
Idaho $.75/head $3
Montana $.35/head
Nevada $.70 head or $7, whichever is more $12/hour plus $.325/mile2
New Mexico $5 plus .35/head
Oregon $.75/head $10
Utah $.50/head or $3, whichever is more
Washington3 $.60/head $15/hour plus $.31/mile
Wyoming $1.00/head $3
1 Charged only when an inspector must travel to inspect unbranded, unweaned calves going to sale barns.
2 Time and mileage charged only when inspectors travel to inspect fewer than 11 head of livestock.
3 When inspectors travel, they charge the higher of the per head fee or the travel fee.
Source: Auditor General staff telephone survey of state livestock inspection staff in the states listed.
Finding I
17
OFFICE OF THE AUDITOR GENERAL
authority, the Department could then establish a travel fee that
reflects its travel costs, but also have the flexibility to modify the
fee as those costs change.
The cattle industry may now be more receptive to exploring
proposals to increase inspection fees. The existing fee level was
established in 1982, and the industry has historically resisted
proposals to increase it on the grounds that fee increases would
be detrimental to business. However, a representative from the
Arizona Cattlemen’s Association stated that the industry would
be more receptive to a travel fee if the Department and the in-dustry
work together to improve the inspection processes.
Changes needed to keep costs as low as possible—The Depart-ment
could improve its inspection process by reducing the travel
associated with inspections. To reduce travel time, the Depart-ment
should:
n Conduct regular, centralized inspections—The Depart-ment
should promote regular, centralized inspections at con-venient
locations, including places where inspectors are al-ready
located, such as auctions. Owners could bring their
cattle to these locations when they transfer ownership or
move cattle out of state. Encouraging owners to bring their
cattle to the inspection site would reduce the number of in-spector
travel miles and thus reduce the cost of these inspec-tions.
Additionally, to encourage owners to bring their cattle
to a centralized location, the Department could reduce or
eliminate the recommended travel fee. Furthermore, pro-moting
centralized inspections would enable the Department
to allocate its limited inspection staff resources more effi-ciently.
n Promote inspections at locations convenient for both the
inspector and the cattle owner—In addition to conducting
inspections at central locations, the Department could en-courage
its inspectors to meet cattle owners at a convenient
mid-point rather than traveling to the owner’s home or
ranch. For example, when owners request an inspection, they
could be encouraged to meet an inspector at a mutually con-venient
location. To give the owner an incentive, the inspec-tor
could reduce the proposed travel fee. The Department
and a representative of the Arizona Cattlemen’s Association
The Department should take
steps to keep inspection costs
as low as possible.
Finding I
18
OFFICE OF THE AUDITOR GENERAL
agree that inspectors already occasionally meet cattle owners
at an agreed-upon central location, noting that there would
be no reason why this could not become a common practice.
n Increase number of part-time inspectors—In addition to
establishing convenient locations for inspections, the De-partment
should consider increasing the number of part-time
inspectors it employs. Locating more part-time inspectors in
rural areas would reduce the number of miles that inspectors
travel, and increase the Department’s ability to respond to in-spection
requests in a timely manner, especially during the
busy months of the year. Currently the Department is plan-ning
to replace many of its full-time peace officers with full-time
inspectors. The Department should also consider re-placing
some of these officer positions with part-time, re-gionally
based inspectors. Additionally, since part-time in-spectors
are paid less than full-time inspectors, increasing the
number of part-time inspectors could potentially lower in-spection
costs.
Finding I
19
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. To reduce duplicative inspections, the Legislature should
consider amending A.R.S. §3-1336(A) to eliminate the need for
the Department to conduct pre-transit cattle inspections to
auctions and feedlots.
2. The Department should significantly reduce the number of
pre-transit cattle inspections it conducts at the owner’s prop-erty
by allowing owners to transport cattle to an auction or
feedlot without this inspection and instead allowing previous
ownership inspection documentation to identify cattle during
transit.
3. The Legislature should consider amending A.R.S. §3-1337 to
give the Department the authority to impose a travel fee not
to exceed $15. Implementing this travel fee would allow the
Department to recover its travel costs from customers who
request the Department’s inspectors to travel to their prop-erty
to provide inspection services.
4. To reduce travel costs associated with inspections, the De-partment
should:
a. Promote regular, centralized inspections at convenient lo-cations.
b. Adopt a policy encouraging inspectors to meet cattle
owners at a convenient mid-point rather than traveling to
the owner’s home or ranch.
c. Consider replacing some of the full-time officers, through
attrition, with part-time or seasonal inspectors to increase
the ability of inspectors to respond to the seasonal and
geographically dispersed nature of the industry.
20
OFFICE OF THE AUDITOR GENERAL
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21
OFFICE OF THE AUDITOR GENERAL
FINDING II CURRENT FEE DOES NOT
SUPPORT INSPECTION COSTS
FOR HORSE REGISTRATION
Although horse registration is mandated by law, the current fees
charged to register horses with the State do not support the
Department’s costs for performing horse registration activities.
These inspection fees, which are set by statute, are insufficient to
cover the Department’s costs and are substantially lower than
fees charged in other Western states. The Legislature should
consider increasing the current inspection fee and adopting a
separate travel fee, while the Department should take steps to
keep inspection costs as low as possible.
Department Responsible
for Registering Horses
A.R.S. §3-1344 charges the Department with issuing lifetime
horse (i.e., horses, mules, and burros) ownership and hauling
certificates. By identifying the horse and its owner, these certifi-cates
help to protect against theft and allow owners to freely
transport their horses throughout the State. Currently, A.R.S.
§§3-1331, 3-1344, 3-1336, and 3-1444 require that owners of
horses, other than those registered in the racing industry, obtain
these certificates before weaning the horse, or within 30 days of
bringing a horse into the State. The Department issues these
hauling certificates after inspecting the animal, verifying its
ownership, and drawing a likeness of the horse on the certificate.
Each inspection costs the owner $5 and produces a certificate
that is valid for the life of the horse. The Department reports that
it inspected nearly 15,000 horses in fiscal year 1999, and more
than 19,000 in fiscal year 1998.
When a state-registered horse is sold or ownership is transferred,
an inspection is not required. Instead, the new owner of the
horse completes a transfer request form and remits this form
with $5 to the Department. The Department then issues a new
Nonracing horses need an
ownership-hauling certificate.
Finding II
22
OFFICE OF THE AUDITOR GENERAL
ownership certificate to the new owner. In fiscal year 1999, the
Department collected over $150,000 in horse inspection, registra-tion,
ownership transfer, and replacement registration fees.
While the need for mandatory horse registration was reviewed
during this audit, it was difficult to draw conclusions because of
the wide variety of registration processes and opinions that exist.
For example, of the ten other Western states reviewed, only
Arizona requires mandatory lifetime horse registration, while
California does not register horses. The other states surveyed are
somewhere in between.1 Most states contacted require horses to
be inspected at transfer of ownership or with the movement of
the horse over a certain distance, but provide additional registra-tion
or permitting options to lifetime registration. Further, while
registration was thought to help to protect against theft, few
horses are reported stolen. In fact, Department records show that
there were only 16 reported cases of horse theft in fiscal year
1999. However, the Department indicates that registration is
useful for resolving ownership disputes, which occur more
frequently than theft. Finally, alternate means may exist for
registering horses. State law exempts privately registered racing
horses from state registration, and the Arabian Horse Associa-tion
sought but did not receive a similar exemption during the
2000 legislative session.
Inspection Process
Needs Improvement
The Legislature and the Department should consider steps that
would allow the Department to recover more of its inspection
costs through fees while at the same time reducing the travel
costs associated with inspections. Currently, the $5 statutory
horse inspection fee is able to recover only a portion of the in-spection
costs incurred by the Department for getting the in-spector
to the animal and conducting the inspection.
1 Of the states contacted, those that register horses are Colorado, Idaho,
Nevada, New Mexico, Montana, Oregon, Utah, Wyoming, and Wash-ington.
Finding II
23
OFFICE OF THE AUDITOR GENERAL
Department cannot recover costs for horse inspections—The
Department’s horse inspections currently cost far more in direct
time and travel costs than it can charge for these inspections. An
inspection costs the Department $14.50 in the inspector’s travel
and inspection time, and expenses necessary to operate and
maintain vehicles, based on a statistically valid random sample
of 219 horse inspections. The current $5 inspection fee covers
approximately a third of these costs. Much of the gap results
from travel costs. A typical inspection requires an inspector to
travel 11.5 miles one-way to the horse owner’s residence, and
almost half of the estimated $14.50 cost is the result of inspector
travel time and vehicle operating costs. In many cases, the costs
are much higher. For example:
n In March 1999, the Department sent an inspector nearly 39
miles one-way to inspect one horse. While the inspector col-lected
a $5 inspection fee, the Department’s costs in time and
mileage for this one-way trip were estimated to be over $25.
n In another case, an inspector traveled 36 miles one-way to
inspect two horses. Although the inspector collected $10, the
inspection, travel time, and mileage costs were nearly $60 for
this one-way trip.
Legislature should consider increasing inspection fee and
adopting a separate travel fee—To allow the Department to
recover more of its costs, the Legislature should consider raising
the current inspection fee and adopting a separate travel fee that
the Department could require when inspectors travel to conduct
horse inspections. Specifically, analysis suggests that the Legis-lature
could increase the $5 inspection fee to potentially $10
while granting the Department the authority to establish a sepa-rate
travel fee through administrative rule. While the current $5
fee has been in place since 1988, increasing this fee and adding a
travel fee will allow the Department to more accurately match
these fees to inspection costs. In giving the Department authority
to establish a travel fee, the Legislature could limit the amount of
the fee. For example, it could allow the Department to set an
appropriate travel fee, not to exceed a maximum of $15. Finally,
because travel represents a significant portion of the total inspec-tion
cost, the Department should ensure that it accurately cap-tures
the costs of travel in the proposed fee.
The Legislature should
consider increasing the horse
inspection fee and adopting a
separate travel fee to cover
more costs.
Finding II
24
OFFICE OF THE AUDITOR GENERAL
Department officials and members of the horse industry ac-knowledge
the need to alter the horse inspection fee structure.
Department management indicates that the current fee is inap-propriately
low and that an increase in the horse ownership-hauling
certificate fee along with the adoption of a separate
travel fee is justified. Additionally, members of the Arizona
Cattlemen’s Association and the Arizona State Horsemen’s
Association indicate that it would be appropriate to review the
current inspection fee. For example, a representative of the
Horsemen’s Association indicated that the current fee is negligi-ble
and could conceivably be raised much higher without un-duly
burdening horse owners.
A review of other states supports a higher fee and a travel sur-charge.
The nine surveyed states with lifetime horse inspection
fees charge from $10 to $25 for one horse, compared to Arizona’s
current inspection charge of $5. Further, six of the nine charge
time and mileage fees, inspection surcharges, or minimum fees
to recover travel costs.1 For example, in 1997 Colorado’s De-partment
of Agriculture calculated that it costs approximately
$12.25 for each horse inspection. As a result, Colorado re-examined
its fee, implementing a $10 base fee, plus $15 per horse
inspected. Further, Nevada also takes the cost of inspector travel
into account by charging a flat inspection rate per horse, or a $12
per hour and 32.5 cents per mile travel fee, whichever is higher.
Department should improve process so that inspections are
conducted more efficiently—Although higher fees are needed to
recover costs, the Department should also explore ways to
conduct more efficient inspections and keep costs as low as
possible. Specifically, the Department’s horse registration pro-gram
should adopt the same measures recommended to reduce
travel for cattle inspections (see Finding I, pages 9 through 19).
For example, the Department should develop and promote a
regular schedule of times and locations where inspectors are
available for inspections and also encourage inspectors to meet
owners at an agreed-upon location other than the owner’s prop-erty
to reduce the travel associated with inspections. To give
horse owners an incentive to bring the animals to inspectors, if
1 The six states are Colorado, Nevada, New Mexico, Utah, Washington,
and Wyoming.
The Department should take
steps to reduce inspection
costs.
Finding II
25
OFFICE OF THE AUDITOR GENERAL
the Legislature grants the Department the authority to increase
inspection fees, the Department could institute a reduced fee that
reflects savings in inspector time and travel.
Recommendations
1. The Legislature should consider amending A.R.S. §3-1344(B)
to increase the current inspection fee and allow the Depart-ment
to institute a separate travel fee not to exceed a maxi-mum
amount established by the Legislature.
2. Pending legislative approval and granting of authority, the
Department should adopt an appropriate travel fee that
would allow it to recover the costs of traveling to horse in-spections.
As these costs change, the Department should
modify the travel fee to reflect these costs.
3. The Department should reduce travel expenses of the horse
ownership-hauling certificate and its inspection process by:
a. Establishing a regular schedule of inspection times at
central locations and encouraging horse owners needing
inspections to transport horses to these locations; and
b. Encouraging horse owners to meet inspectors at mutu-ally
convenient locations rather than traveling to the
horse owner’s property.
4. To provide incentive to horse owners, the Department
should waive the travel fee if owners bring their horses to the
Department’s inspection staff, or a mutually agreed upon lo-cation
for inspection.
26
OFFICE OF THE AUDITOR GENERAL
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27
OFFICE OF THE AUDITOR GENERAL
OTHER PERTINENT INFORMATION
During the audit, other pertinent information was gathered
regarding the Department of Agriculture’s current efforts to
prevent, detect, and limit the spread of livestock diseases.
Animal Disease Control Program
While Arizona remains free of many livestock diseases, the
Department of Agriculture and its Office of the State Veterinar-ian
are taking additional steps to protect the public and Arizona
livestock from a number of harmful diseases. The Department
and the federal government have targeted and tracked six major
livestock diseases. To detect and eliminate these and any other
livestock diseases appearing in the State, the Department moni-tors
cattle shipped to Arizona, coordinates disease identification,
and investigates and quarantines infected animals. In an effort to
further detect diseases, the Department is introducing a new
training program that will enable livestock inspectors to help
identify these diseases.
Potentially dangerous diseases targeted—To help guard the
public and livestock from diseases spread through animals, the
federal and state governments work together to track and elimi-nate
six targeted livestock diseases. Not only do these diseases
threaten other domestic animals and possibly humans, they also
pose a potential risk to the Arizona livestock industry. Specifi-cally,
industry officials indicate that the appearance of disease in
cattle could limit the marketability and use of Arizona livestock,
possibly creating a hardship to the estimated 2,000 commercial
livestock operators in the State. The six major diseases being
tracked are:
n Equine Infectious Anemia—A viral disease affecting
horses, mules, and donkeys, equine anemia is related to the
virus that causes AIDS in humans. While this disease is not
known to transfer to humans, it can kill infected animals.
There were seven identified cases of equine infectious anemia
in Arizona during fiscal year 1999.
Other Pertinent Information
28
OFFICE OF THE AUDITOR GENERAL
n Brucellosis—Brucellosis causes cows to be slow breeders,
miscarry calves, or become sterile. It can be transmitted to
other animals and rarely, humans, in the form of undulant
fever. Undulant fever can cause severe intermittent fever,
psychoneurosis, weakness, and headaches, but is rarely fatal.
There have been no reported cases of brucellosis in Arizona
for over three years.
n Bovine Tuberculosis—Bovine tuberculosis is spread as
cattle inhale tuberculosis bacteria from infected animals.
Symptoms include the growth of lumps in the animal’s
lungs, bones, or lymph glands. The disease can be spread to
humans through the consumption of unpasteurized milk. It
has been largely eradicated in the United States, and there
have been no cases of bovine tuberculosis reported in Ari-zona
for over three years.
n Swine Pseudorabies—Swine contract pseudorabies, a form
of herpes, from infected swine or other wildlife. The disease
causes fever, loss of appetite, convulsions, and even death,
and is spread as healthy animals are exposed to infected
swine. While the disease can be transferred to other animals,
it does not affect humans. There have been no cases of this
disease reported in Arizona in over three years.
n Psoroptic Mange—Commonly infecting cattle and sheep,
psoroptic mange is carried by mites. The disease causes in-tense
itching and lesions on infected animals, resulting in hair
loss. The disease is easily treated by sprays, dips, or injections
and is believed to have been eradicated in the United States.
n Boophilus Ticks—Also called Cattle Fever Ticks, these
parasites are considered the most serious tick threat to live-stock.
Not only do they cause debilitating infestations, but
they also carry diseases. While present throughout the world,
these ticks are not found in the United States. However, fed-eral
regulations require foreign cattle to be inspected and
dipped to prevent the ticks from being reintroduced into the
United States.
Other Pertinent Information
29
OFFICE OF THE AUDITOR GENERAL
Department of Agriculture carries out animal disease control in
Arizona—Arizona’s State Veterinarian is charged with detecting
and controlling these targeted diseases, as well as other infec-tious
diseases that threaten Arizona livestock, by:
n Requiring proof that imported cattle are disease-free—
Arizona requires owners importing livestock to prove that
their animals are healthy before they enter the State.
Livestock imported into Arizona must have a health
certificate issued by veterinarians or other state officials in
their origin state, and apply for and receive an Arizona entry
permit. These documents are checked by Department staff if
the animals pass through one of the four state entry ports
manned by the Department, although no physical inspection
of incoming animals occurs. Further, the State Veterinarian
maintains the authority to quarantine any animal lacking the
appropriate documents, or refuse entry to livestock from any
state or county with a disease outbreak. Nevertheless,
animals not arriving through one of these ports do not
necessarily have their papers checked.
n Coordinating the identification of infected animals within
Arizona—The State Veterinarian works closely with local
veterinarians by collecting and disseminating reports on the
appearance of infected animals. For example, under state and
federal regulations, Arizona veterinarians must immediately
report an incidence of any of the six targeted diseases to the
State Veterinarian. Further, the State Veterinarian collects re-ports
of disease outbreaks from Arizona dairies, who regu-larly
test their herds for tuberculosis. Finally, the Department
receives blood samples for all cattle killed in Arizona
slaughterhouses and tests these animals for bovine brucello-sis.
Further, the State Veterinarian may take custody of any
animal to determine if it is infected with a contagious dis-ease.
1
n Taking measures to identify and eradicate diseases—
The State Veterinarian is also charged with investigating
potentially diseased livestock, and eliminating identified
infestations. Specifically, veterinarians working for the State
1 This authority is granted under A.R.S. §3-1205(B).
Other Pertinent Information
30
OFFICE OF THE AUDITOR GENERAL
investigate the outbreak by examining the infected animal
and tracing its movements through ownership and trans-portation
documents issued by the State’s cattle inspectors.
The State Veterinarian may also establish quarantines, de-stroy
infected animals, or control the movement of animals or
agricultural products to limit the spread of the disease.
Department taking additional steps to detect livestock dis-ease—
The Department is currently responding to industry
concerns over the potential threat of livestock disease by in-creasing
staff training. As noted in Finding I (see pages 9 through
19), the Department inspects livestock sold or transported in
Arizona to verify ownership. During fiscal year 1999, Depart-ment
staff inspected approximately 664,000 livestock. However,
officials in the livestock industry believe that while ownership
verification remains important, livestock disease represents a
potentially greater threat to the industry and therefore, the
Department should enhance its focus on inspecting livestock for
potential diseases.
Therefore, the Department instituted a new inspector training
program in March 2000 designed to increase inspectors’ ability to
identify infected cattle, horses, or sheep. Currently, as the De-partment’s
inspectors check for ownership, those with sufficient
knowledge of livestock diseases visually observe animals for the
presence of disease. However, a majority of the Department’s
livestock inspectors have not been trained to visually inspect for
disease and thus cannot assist in detection efforts. Therefore, the
State Veterinarian developed a training program for livestock
inspectors. The 40-hour mandatory program teaches inspectors
to recognize the six diseases targeted by federal and state gov-ernments,
and other diseases seen in the United States or in
animals imported from abroad. The program also includes
practical demonstrations for examining livestock. Once this
training is completed, the Department plans to require staff to
take annual supplementary courses.
The Department developed a
training program for identi-fying
diseased animals.
Other Pertinent Information
31
OFFICE OF THE AUDITOR GENERAL
This training program places Arizona among the most advanced
of the ten Western states surveyed for this audit. Specifically, of
these ten states, only Utah has a regular program that trains
inspectors on how to identify diseases. According to the state’s
chief livestock inspector, for at least ten years, Utah’s State Vet-erinarian
has required livestock inspectors to attend biannual
seminars that include animal health training. During these
seminars, inspectors are taught how to identify livestock that
have not met the state’s inoculation requirements, or livestock
that are infected with disease.
1 These states are California, Colorado, Idaho, Montana, Nevada, New
Mexico, Oregon, Utah, Washington, and Wyoming.
32
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
OFFICE OF THE AUDITOR GENERAL
AGENCY RESPONSE
May 25, 2000
Ms. Debbie Davenport
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
Dear Ms. Davenport:
Enclosed is the Arizona Department of Agriculture’s response to the ADA, Animal Disease,
Ownership and Welfare Protection Program audit. The ADA agrees in general with the findings
and recommendations of the audit team.
The ADA is pleased to note that it has already identified many of the issues documented in your
report as areas for improvement and has begun implementing corrective action. Our goal for the
next twelve to sixteen months is to continue the efforts already underway with a strong emphasis
on improving the delivery of quality customer service to our internal and external stakeholders.
We extend our appreciation to the audit team for their professionalism and attention to detail. I
certainly appreciate their willingness to seek out the department’s input and clarification of
issues identified in this report.
Sincerely,
Sheldon R. Jones
Director
SRJ: NW
Enclosure
1
AUDITOR GENERAL’S RECOMMENDATIONS
AGENCY RESPONSE
Overview:
The Arizona Department of Agriculture (ADA) agrees in general with the findings and
recommendations of the audit team and would like to thank the Auditor General’s staff for the
professional manner in which the audit was performed.
We believe the ADA, while it continues to identify methods of improving its delivery of service
to Arizona’s commercial and non-commercial livestock owners, is accepting the challenge of
regulating agricultural activity in an increasingly changing environment. We take very seriously
our mission and our charge to regulate and support Arizona agriculture in a manner that
promotes farming, ranching and agribusiness while protecting consumers and natural resources.
The Animal Disease, Ownership and Welfare Protection program is designed to regulate the
importation of livestock, ratites, and live fish into Arizona. By regulating the importation of this
segment of animal agriculture, the Department is able to identify, diagnose, and even prevent the
establishment of emerging diseases that would threaten those industries. Through its monitoring
and preventative actions, the program assists in ensuring that dangerous animal diseases and
pests are not established in Arizona’s livestock herd populations, thereby supporting the supply
of safe and wholesome animal food products to the consuming public.
While this cabinet level agency was created only ten years ago, to serve and regulate Arizona’s
agriculture industry, a number of things have and continue to change about the industry we
serve. Arizona’s animal agriculture industry is changing at a rapid rate. Arizona’s urban equine
ownership today is at record levels, forcing the Department to find new ways to service a
segment of the community that may not have any other connection with production agriculture.
There was a time when the greatest threat to a livestock owner was theft. Times have changed.
Today, animal diseases, some of them zoonotic, are the greatest threat to Arizona’s livestock
owners. For the commercial livestock producer, any single animal disease infestation could result
in lost markets, diminished income, and could mean the difference between realizing a profit and
taking a loss. In response to these changes, the Arizona Department of Agriculture, prior to this
audit, structured and began implementing a plan to replace some of our peace officer trained
livestock officers, through attrition, with the hiring of livestock inspectors . Our educational and
training focus of our livestock inspection program is on animal health rather than animal theft.
Because of the changing face of our customers, and the public’s demands for faster, more
efficient service, the ADA recognizes more must be done to meet the challenges we face today
and those we will face in the future. The livestock industry has embraced this millennium with
great optimism and is eager to meet the challenges of competing in a global marketplace. By
incorporating the recommendations of this audit with the current improvement efforts underway,
the Arizona Department of Agriculture stands poised to assist the industry well into the future.
2
Agency Response: Overview
Page 2
May 25, 2000
As indicated in the Auditor General’s report, certain characteristics of the program contribute to
duplication of effort and resources on the part of both the Department, as well as the public it
serves. The ADA appreciates the Auditor General’s recognition of the many efforts and
initiatives made by ADA staff in conjunction with suggestions made by the public and industry
to explore new efficiencies in our delivery of service to Arizona’s commercial and non-commercial
livestock owners.
The findings and recommendations of this audit report will be incorporated into our discussions
with our counterparts in other states and other agency stakeholders to further refine the system
for meeting the dynamic and ever-changing needs of Arizona’s livestock industry and the public
at large.
3
Finding I: Several Changes Needed to Improve Cattle Inspection Process
Recommendation 1: To reduce duplicative inspections, the Legislature should consider
amending A.R.S. §3-1336(A) to eliminate the need for the Department
to conduct pre-transit inspections to auctions and feedlots.
Agency Response: The finding of the Auditor General is agreed to and the audit
recommendation will be implemented consistent with Legislative
mandate.
The Arizona Department of Agriculture agrees with the findings of the
Auditor General and will cooperate with the regulated industry to
implement this audit recommendation, if the Legislature so directs.
Recommendation 2: The Department should significantly reduce the number of pre-transit
cattle inspections it conducts at the owner’s property by allowing
owners to transport cattle to an auction or feedlot without this
inspection and instead allowing previous ownership inspection
documentation to identify cattle during transit.
Agency Response: The finding of the Auditor General is agreed to and the audit
recommendations will be implemented.
The Arizona Department of Agriculture has begun implementing this
recommendation. While statutes require that cattle receive a pre-transit
inspection, the Arizona Department of Agriculture is allowing current
ownership inspection documents to suffice as identification of non-commercial
cattle during transit. This has proven especially useful for the
casual, non-commercial livestock owner or cattle hobbyist. The
Department is enabled to reduce the number of potentially duplicative pre-transit
inspections it conducts by verifying the ownership of the animal at
its destination.
The biggest challenge the Department faces in this effort to reduce the
number of pre-transit inspections it conducts on non-commercial cattle is
the fact that many casual cattle owners or hobbyists do not retain the
proper ownership inspection papers. The Department recognizes the net
efficiencies of time and resources that may be gained by allowing
ownership inspection documentation to suffice as identification during
transit. To realize these efficiencies, the Department is committed to
develop methods to educate the public on the importance of maintaining
the proper paperwork from the time the animal is purchased to the time it
is sold or slaughtered.
4
It is also important to note, however, that it remains necessary to conduct
an inspection at the owner’s property to verify ownership of any offspring
prior to any transit.
For the commercial cattle operator, the Arizona Department of Agriculture
worked closely with cattle industry leaders to develop the self-inspection
program. This program was created, as the report summarizes, to reduce
the number of inspections the Department performs. Under this program,
the Department has granted self-inspection rights to over 800 cattle
operations that may transit their cattle to a destination where ownership is
later verified by a Department inspector.
Recommendation 3: The Legislature should consider amending A.R.S. §3-1337 to give the
Department the authority to impose a travel fee not to exceed $15.
Implementing this travel fee would allow the Department to recover
its costs from customers who request the Department’s inspectors to
travel to their property to provide inspection services.
Agency Response: The finding of the Auditor General is agreed to and the recommendation
will be implemented consistent with Legislative mandate.
The Arizona Department of Agriculture agrees with the finding of the
Auditor General and will cooperate with the regulated industry to
implement an appropriate travel fee, if the Legislature so directs.
Recommendation 4: To reduce travel costs associated with inspections, the Department
should:
a. Promote regular, centralized inspections at convenient locations.
b. Adopt a policy encouraging inspectors to meet cattle owners at a
convenient mid-point rather than traveling to the owner’s home or
ranch.
c. Consider replacing some of the full-time officers, through
attrition, with part-time or seasonal inspectors to increase the
ability of inspectors to respond to the seasonal and geographically
dispersed nature of the industry.
Agency Response: The finding of the Auditor General is agreed to and the recommendation
will be implemented.
The Arizona Department of Agriculture agrees to the finding and
recommendations and is, in fact, already operating with the goal of fully
implementing these recommendations where possible.
5
First, the Arizona Department of Agriculture presently attempts to
centralize its ownership inspection activities at the points of sale or
slaughter. By providing centralized inspections, the Department is able to
reduce travel time associated with numerous inspections and additionally
provides timely service to the requesting public.
Second, the Arizona Department of Agriculture presently allows its
inspection staff to meet cattle owners at a convenient mid-point rather than
traveling to the owner’s home or ranch. The Department will implement
the audit recommendation by formalizing this position in policy.
Third, the Arizona Department of Agriculture believes that the role of a
regulatory agency is as much about compliance assistance as it is about
penalizing those who violate the law. Inasmuch as we are able, the
Department advocates for the decriminalization of livestock movement
violations.
The Department will implement the third portion of the recommendation
by considering replacing the officer, through attrition, with part-time or
seasonal inspectors. In its long range strategic vision, the Arizona
Department of Agriculture has already implemented a plan of reducing
certified peace officers, through attrition, over the next few years. The
vacant positions created by this plan will be filled with livestock
inspectors who, as the report emphasized in the “Other Pertinent
Information” section, will be trained to identify a number of animal health
problems in the field.
The Department’s long term strategic vision for the Livestock Inspection
program has long been an issue of discussion among numerous
agricultural associations and the Department plans to continue its strong
relationship with its stakeholders to effect any necessary changes.
6
Finding 2: Current Fee Does Not Support Inspection Costs for Horse Registration
Recommendation 1: The Legislature should consider amending A.R.S. §3-1344(B) to
increase the current inspection fee and allow the Department to
institute a separate travel fee not to exceed a maximum amount
established by the Legislature.
Agency Response: The finding of the Auditor General is agreed to and the audit
recommendation will be implemented consistent with Legislative
mandate.
The Arizona Department of Agriculture agrees with the findings of the
Auditor General and will cooperate with the regulated industry to
implement this audit recommendation, if the Legislature so directs.
Recommendation 2: Pending legislative approval and granting of authority, the
Department should adopt an appropriate travel fee that would allow
it to recover the costs of traveling to horse inspections. As these costs
change, the Department should modify the travel fee to reflect these
costs.
Agency Response: The finding of the Auditor General is agreed to and, pending the
approval of the Legislature and granting of authority, the audit
recommendation will be implemented.
The Arizona Department of Agriculture agrees with the findings of the
Auditor General and will cooperate with the regulated industry to
implement this audit recommendation, if the Legislature so directs.
Recommendation 3: The Department should reduce travel expenses of the horse
ownership-hauling certificate and its inspection process by:
a. Establishing a regular schedule of inspection times at central
locations and encouraging horse owners needing inspections to
transport horses to these locations; and
b. Encouraging horse owners to meet inspectors at mutually
convenient locations rather than traveling to the horse owner’s
property.
Agency Response: The finding of the Auditor General is agreed to and the audit
recommendation will be implemented.
The Arizona Department of Agriculture has begun work on implementing
both components of the audit recommendation. Presently, the Arizona
7
Department of Agriculture has begun working on a public outreach
campaign that educates Arizonans about the importance of registering
their equines with the State and is exploring locations at which it may
conduct regularly scheduled centralized equine inspections.
Other Performance Audit Reports Issued Within
the Last 12 Months
99-8 Department of Water Resources
99-9 Department of Health Services—
Arizona State Hospital
99-10 Residential Utility Consumer
Office/Residential Utility
Consumer Board
99-11 Department of Economic Security—
Child Support Enforcement
99-12 Department of Health Services—
Division of Behavioral Health
Services
99-13 Board of Psychologist Examiners
99-14 Arizona Council for the Hearing
Impaired
99-15 Arizona Board of Dental Examiners
99-16 Department of Building and
Fire Safety
99-17 Department of Health Services’
Tobacco Education and Prevention
Program
99-18 Department of Health Services—
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Disease Control Services
99-19 Department of Health Services—
Sunset Factors
99-20 Arizona State Board of Accountancy
99-21 Department of Environmental
Quality—Aquifer Protection Permit
Program, Water Quality Assurance
Revolving Fund Program, and
Underground Storage Tank Program
99-22 Arizona Department of Transportation
A+B Bidding
00-1 Healthy Families Program
00-2 Behavioral Health Services—
Interagency Coordination of Services
00-3 Arizona’s Family Literacy Program
00-4 Family Builders Pilot Program
00-5 Department of Agriculture—
Licensing Functions
00-6 Board of Medical Student Loans
00-7 Department of Public Safety—
Aviation Section
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Naturopathic Physicians Board of
Medical Examiners
Department of Agriculture’s
Food Safety and Quality Assurance Program