Performance audit, Arizona Department of Agriculture sunset factors, report to the Arizona Legislature

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
September 2000
Report No. 00-17
ARIZONA
DEPARTMENT
OF
AGRICULTURE
SUNSET FACTORS
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
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—Team Leader
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
September 28, 2000
Members of the Legislature
The Honorable Jane Dee Hull, Governor
Mr. Sheldon Jones, Director
Arizona Department of Agriculture
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona
Department of Agriculture—Agencywide Sunset Factors. The analysis of the 12 Sunset
factors was prepared as part of the Sunset review set forth in Arizona Revised Statutes
(A.R.S.) §§41-2951 et seq.
This is the eighth in a series of reports to be issued on the Arizona Department of Agriculture.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on September 29, 2000.
Sincerely,
Debbie Davenport
Auditor General
i
OFFICE OF THE AUDITOR GENERAL
ARIZONA
DEPARTMENT
OF
AGRICULTURE
SUNSET FACTORS
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background ......................... 1
Sunset Factors.................................................. 7
Item
Item 1 List of Statutorily Mandated Advisory
and Commodity Research Councils
As of August 2000 ............................................. 5
iii
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
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OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has prepared agency-wide
Sunset factors for the Arizona Department of Agriculture (De-partment).
The analysis of the 12 Sunset factors was prepared as
part of the Sunset review set forth in Arizona Revised Statutes
(A.R.S.) §§41-2951 et seq.
In order to prepare this analysis of the 12 Sunset factors and
pursuant to a June 16, 1999, resolution of the Joint Legislative
Audit Committee, the Office conducted a series of seven per-formance
audits of the Arizona Department of Agriculture.
These audits covered 7 of the Department’s 10 programs, repre-senting
over 85 percent of the Department’s $17.7 million fiscal
year 2000 expenditures, and nearly 90 percent of the Depart-ment’s
391 FTEs.1 Three programs were not selected as they
had either been recently reviewed through the Program Au-thorization
Review (PAR) process, or received a relatively small
legislative appropriation.
Department Organization
The Department is divided into ten programs as described be-low.
Those programs marked with a ü were included in this
series of audits:
n Administrative Services (32.0 FTE)—Composed of both
the Office of the Director and Administrative Services, this
program supports the Department by supplying legislative
services, rules, legal services, strategic planning, and public
information. In addition, it provides each agency program
with accounting, payroll, budgeting, human resources,
1 These figures do not include the approximately $2.4 million expended by
various private agriculture industry councils, commissions, and boards
whose activities are included in the Commodity Development Program’s
expenditures.
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
training, information technology, procurement, and facili-ties
management services.
n Agriculture Consultation and Training (3.0 FTE)—This
program provides advice to the agricultural community on
how to comply with state statutes, regulations, policies, and
federal mandates. Staff conduct on-site visits to evaluate
compliance with these mandates and produce reports out-lining
recommendations to increase compliance with spe-cific
issues of regulatory concern. In addition, the program
is responsible for providing advice and consultation to the
racing industry to ensure compliance.
ü Animal Disease, Ownership and Welfare Protection
(55.8 FTE)—To protect agricultural animals from disease or
abuse and livestock owners against theft, this program
regulates all facets of livestock ownership and movement,
and maintains documentation of livestock activity. Staff in-spect
animals upon sale, register brands, issue equine own-ership
and hauling certificates, resolve animal ownership
disputes, and investigate complaints of livestock theft or al-leged
abuse. The program also protects the health, quality,
and marketability of Arizona animals by identifying, diag-nosing,
and preventing existing and emerging diseases.
ü Commodity Development and Promotion (5 FTE)—This
program promotes marketing activities that stimulate do-mestic
and export agricultural sales of Arizona farm and
food products; educates domestic and international whole-salers,
retailers, and consumers on the advantages of choos-ing
Arizona-grown foods; and encourages agricultural de-velopment.
In addition, it provides administrative support
services to agricultural industry research and promotion
groups.
ü Food Safety and Quality Assurance Program (136.5
FTE)—This program ensures that the public food supply
meets established standards for quality and safety by pro-viding
inspections for the safety and/or quality of meat,
poultry, ratites (ostriches, rheas, or emus), milk, eggs, and
fresh produce. For example, to protect the public health and
safety, the Department inspects meat, dairy, and egg proc-
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
essing plants and collects and tests samples of meat and
dairy products for microbiological, chemical, and physical
food hazards. Further, the program conducts inspections to
ensure that citrus, fruits, vegetables, or pecans marketed
within or exported from Arizona conform to state quality
standards and that certain fresh produce products imported
from Mexico meet the United States Department of Agricul-ture’s
(USDA) quality requirements.
n Native Plant and Cultural Resources Protection (9.0
FTE)—Charged with protecting and conserving Arizona’s
native plants, this program regulates the harvesting, trans-porting,
and sale of more than 350 native plant species
through the issuance of permits. In addition, it enforces the
Arizona Native Plant Law and investigates and prosecutes
natural resource theft and destruction.
ü Non-Food Product Quality Assurance Program (10.5
FTE)—This program protects the public’s interest by ensur-ing
the quality of Arizona’s feed, fertilizer, pesticide, forage,
and seed. To regulate the content and distribution of prod-ucts
that could potentially affect public health, this program
registers pesticides and fertilizers used in Arizona; and is-sues
licenses to feed, fertilizer, forage, and seed dealers and
labelers. Additionally, inspectors collect feed, fertilizer, pes-ticide,
and seed samples to ensure compliance with labeling
and quality requirements. Inspectors also respond to indi-vidual
consumer complaints regarding product quality con-cerns.
ü Pest Exclusion and Management Program (99.2 FTE)—
This program prevents, controls, and eradicates infestations
of harmful pests, plant diseases, and noxious weeds,
thereby also reducing the necessity of pesticide applications.
The program inspects trucks entering Arizona at six De-partment
of Transportation Ports-of-Entry and at trucking
destinations throughout Arizona to ensure these vehicles
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
are not carrying harmful pests, plant diseases, or noxious
weeds.1 Additionally, the program inspects nurseries, en-sures
that cotton growers comply with statutory plow-down
requirements, and oversees eradication efforts when
harmful plant infestations are found.
ü Pesticide Compliance and Worker Safety (10.5 FTE)—
This program works to protect public health, agricultural
workers, and the environment by ensuring the proper use
of crop protection products. To accomplish this, the pro-gram
conducts inspections that address the handling, mix-ing,
loading, storage, disposal, and application of agricul-tural
pesticides. Further, program inspectors confirm that
agricultural workers have been properly trained and pro-vided
with adequate decontamination and protective
equipment as required by the federal worker protection
standards. The program also provides training and testing
for private and commercial pesticide applicators to ensure
competency for certification.
ü State Agricultural Laboratory (29.5 FTE)—This program
provides agricultural and environmental laboratory analy-sis,
identification, certification, and training services to the
Department and others. Laboratory activities include identi-fying
potential insect or plant hazards transported into Ari-zona,
analyzing pesticide and other chemical samples to
verify chemical composition, analyzing feed and fertilizer
samples to ensure that their labeling properly describes the
product’s contents, and testing food and milk samples for
food-borne pathogens.
Agriculture Advisory
and Research Councils
In addition to its programs, the Department also works with a
number of statutorily established councils and commissions. As
1 The Department began inspecting trucks at the Douglas and Duncan
ports on July 17, 2000. The Department signed an agreement with the
State of California whereby Arizona inspectors will staff these two ports,
while California provides monies to operate them.
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
Item 1: List of Statutorily Mandated
Advisory and Research Councils
As of August 2000
n Department of Agriculture Advisory Council (A.R.S. §3-104)
n Animal Services Division Advisory Council (A.R.S. §3-105)
n Citrus, Fruit and Vegetable Advisory Council (A.R.S. §3-527.01)
Commodity Research Councils
n Arizona Iceberg Lettuce Research Council (A.R.S. §3-526.01)
n Arizona Citrus Research Council (A.R.S. §3-468.01)
n Arizona Wine Commission (A.R.S. §3-552)
n Arizona Grain Research and Promotion Council (A.R.S. §3-582)
n Arizona Beef Council (A.R.S. §3-1232)
n Cotton Research and Protection Council (A.R.S. §3-1082)
Source: Auditor General staff compilation from relevant Arizona Revised Stat-utes.
illustrated in Item 1, statutes create several advisory councils that
offer industry input into agency operations. Specifically, the De-partment
of Agriculture Advisory Council, composed of indus-try
representatives, assists the Director in formulating and re-viewing
administrative rules and reviewing the Department’s
budget. Additionally, the Director is required to appoint an advi-sory
council for the Department’s Animal Services Division that
assists and makes recommendations to the Department for im-plementing
various functions within that Division such as meat,
poultry, egg, and livestock inspection and regulation. The Direc-tor
also has the discretion to create similar councils for other De-partment
units. Finally, the Citrus, Fruit and Vegetable Advisory
Council provides guidance and oversight regarding the Depart-ment’s
efforts to enforce minimum quality standards for all cit-rus,
fruit, vegetables, pecans, and dates produced or sold in the
State.
As shown in Item 1, statutes also create several commodity
research councils that conduct or participate in research to im-prove
their commodities. These councils do not receive General
Fund appropriations, but fund their activities through industry
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
assessments or donations. While the Department does not par-ticipate
as a member in these councils, it does provide adminis-trative,
accounting, or revenue collection support, which these
councils pay for.
Scope and Methodology
The Department’s performance was analyzed in accordance
with the 12 statutory Sunset factors. Previous audit work in the
following programs was included:
n Animal Disease, Ownership and Welfare Protection (Audi-tor
General Report No. 00-8);
n Commodity Development and Promotion (Auditor General
Report No. 00-15);
n The Department’s Licensing function (Auditor General Re-port
No. 00-5);
n Food and Non-Food Quality Assurance (Auditor General
Report No. 00-10);
n Pest Exclusion and Management (Auditor General Report
No. 00-13);
n Pesticide Compliance and Worker Safety (Auditor General
Report No. 00-16); and
n State Agricultural Laboratory (Auditor General Report No.
00-14).
Information obtained from Department officials, the Governor’s
Regulatory Review Council, the Department of Administration,
and the Office of the Attorney General is also included.
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OFFICE OF THE AUDITOR GENERAL
SUNSET FACTORS
In accordance with Arizona Revised Statutes (A.R.S.) §41-2954,
the Legislature should consider the following 12 factors in de-termining
whether the Arizona Department of Agriculture
should be continued or terminated. The evidence assembled
under these 12 factors indicates the need for the functions per-formed
by the Department. However, the audits of 7 of the De-partment’s
10 programs identified opportunities to improve the
Department operations in a variety of ways. The following sec-tions
discuss each Sunset factor along with the audit findings
relevant to the factor.
1. The objective and purpose in establishing the De-partment.
In 1989, the Legislature passed Laws 1989, Chapter 162,
establishing the Department of Agriculture to provide
for a uniform and coordinated agricultural program and
policy in the State. Prior to its formation, most of the De-partment’s
current duties were carried out by four
smaller state agencies: the Arizona Commission of Agri-culture
and Horticulture, the Arizona Livestock Board,
the State Egg Inspection Board, and the State Dairy
Commissioner.
The Department began operating as a state agency on
January 1, 1991, and has defined its mission as:
“To regulate and support Arizona agriculture in a
manner that encourages farming, ranching, and agri-business
while protecting consumers and natural re-sources.”
In support of this mission, the ten programs within the
Department perform six central functions:
n Inspection—The Department inspects livestock for
ownership, and meat, poultry, and fresh produce for
Sunset Factors
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OFFICE OF THE AUDITOR GENERAL
food safety and quality. In addition, the Department
inspects non-food products such as feeds, fertilizers,
pesticides, forage, and seed to ensure the quality of
the product and the accuracy of its labeling. The De-partment
also inspects trucks entering the State that
meet certain criteria, such as those bearing agricul-tural
loads or originating from certain points, and
conducts surveys and inspections at nurseries and
other locations for the presence of pests. Finally, the
Department conducts inspections to review how ag-ricultural
workers are trained in pesticide use, and
how they handle, mix, and apply pesticides.
n Licensing—The Department issues over 70 different
agricultural-related licenses and registrations, includ-ing
licenses for fruit and vegetable dealers, milk dis-tribution
plants, meat-processing plants, pesticide
users and applicators, and livestock brands.
n Testing—The Agricultural Laboratory provides a
variety of testing services to both the Department
and other agencies, including animal disease testing,
feed and fertilizer formulation analysis, insect identi-fication,
and pesticide residue analysis.
n Investigation—The Department investigates com-plaints
from the public, as well as on its own initia-tive,
in a variety of areas. These include animal cru-elty
complaints, complaints of stolen or lost cattle,
and complaints of inaccurate labeling on feed, fertil-izer,
or meat product packaging labels. In addition,
the Department can initiate investigations concern-ing
possible violations of pesticide use requirements,
violations of the Native Plant Law, and animal dis-ease
outbreaks.
n Training —The Department provides training to the
agricultural community. Through this function, the
agricultural community may seek advice and train-ing
from the Department on complying with the
statutes, regulations, policies, and federal mandates
for which they are held accountable. Further, the
Sunset Factors
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Department provides training and testing services to
private and commercial pesticide applicators to en-sure
competency for pesticide certification.
n Promotion —The Department promotes Arizona
agricultural products domestically and abroad by
familiarizing and educating wholesalers, retailers,
and consumers about the quality and diversity of
Arizona’s agricultural products. The Department
also strives to increase the consumption of these
products.
2. The effectiveness with which the Department has
met its objective and purpose, and the efficiency
with which it has operated.
The Department has met its overall objective and pur-pose.
However, in a series of seven reports, the Auditor
General has identified ways the Department of Agricul-ture
could improve its efficiency and effectiveness. Spe-cifically,
the Department could:
n Centralize Licensing Functions—The Department
of Agriculture could improve its efficiency by cen-tralizing
the various licensing functions within the
Department. Currently, the Department employs 12
separate licensing functions to issue over 70 types of
licenses. With this fragmented approach, the De-partment
operates with a number of inefficiencies
and weaknesses, including duplication of personnel
and other resources, increased financial risk due to
inappropriate cash-handling controls, and poor cus-tomer
service. Therefore, the Department should
centralize its fragmented licensing functions and
pursue implementing a single licensing database to
store and track all licensing data (Report No. 00-5).
n Improve Agricultural Promotions—The Depart-ment’s
role in promoting Arizona agricultural prod-ucts
through a $50,000 Arizona Grown appropriation
could be improved by promoting specialty and
processed products produced in the State and target-
Sunset Factors
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OFFICE OF THE AUDITOR GENERAL
ing consumers most likely to buy local products. To
measure the impact of its promotions, the Depart-ment
should develop processes to measure project
effectiveness. Further, the Department should in-crease
its available funding for Arizona Grown by
taking advantage of additional funding that industry
may be willing to contribute (Report No. 00-15).
n Enhance Pesticide Application Monitoring and
Compliance—The Department could enhance the
effectiveness of its pesticide application monitoring
and regulatory enforcement efforts by requiring pes-ticide
law violators to notify the Department in ad-vance
of making pesticide applications. Although it
is part of its pesticide regulatory efforts, during fiscal
year 1999, the Department reports that it monitored
only 77 of the over 26,800 agricultural pesticide ap-plications
it had on record. While increased monitor-ing
of all pesticide applications is not necessarily
warranted, requiring pesticide law violators to pre-notify
the Department of pesticide applications
would enable the Department to focus monitoring
efforts on violators of state pesticide laws (Report
No. 00-16).
n Improve Border Inspections and Charge Fees for
Some Services—The Department should create
additional inspector positions and add these inspec-tors
to uncovered, high-traffic ports such as Topock
and/or Kingman to increase the number of trucks it
inspects for harmful pests and plant diseases. The
Department should consider creating these positions
by reallocating some of the staff positions reduced as
a result of the Department centralizing its licensing
functions. The Department should also work with
the Department of Transportation to enhance its port
inspection activities.
Additionally, the Department does not recover all of
its costs for issuing some interstate and federal
phyto-sanitary certificates. These certificates confirm
agricultural products are free from specified pests,
diseases, and/or weeds, and are required by some
Sunset Factors
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states and other countries in order to import Arizona
products. However, in some cases the Department
lacks statutory authority to charge a fee for issuing
these certificates. In cases where it has the ability to
charge fees, those fees are not always sufficient to re-cover
its costs. Therefore, the Department should
continue with its efforts to identify its total costs for
issuing phyto-sanitary certificates, seek legislative
authority to charge for these certificates, and estab-lish
appropriate fees (Report No. 00-13).
n Improve Livestock Inspection Process—The De-partment
and the Legislature can make a number of
changes to improve cattle and horse inspections, in-cluding
raising fees to recover more of the Depart-ment’s
inspector travel costs and eliminating dupli-cate
inspections for as many as 180,000 cattle. The
Legislature should authorize the Department to
adopt a travel fee and raise the current horse inspec-tion
fee. The Department should reduce the costs of
inspections by conducting regular, centralized in-spections,
promoting inspections at convenient loca-tions,
and increasing the number of part-time inspec-tors.
Finally, the Legislature should consider elimi-nating
the need for the Department to conduct pre-transit
inspections at auctions and feedlots, a step
that could eliminate the need for the Department to
inspect as many as 180,000 head of cattle annually
(Report No. 00-08).
Further, several inefficiencies within the Department’s
information technology system were identified. The per-formance
audits completed on programs within the De-partment
identified a number of deficiencies, including:
n Redundant Licensing Databases—The Depart-ment
uses over 30 databases to issue licenses. Many
of its licensees appear in more than one database,
creating an unnecessary duplication that could be
eliminated by developing and implementing a single
licensing database.
Sunset Factors
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OFFICE OF THE AUDITOR GENERAL
n Outdated Databases—Some databases are old, lack
code documentation, and need to be replaced. For
example, several of the databases used in the live-stock
inspection subprogram are outmoded, and one
is so poorly designed that when data entry staff
make an error, the program stops running. If staff
continue typing, data is entered directly into the pro-gramming
code. Additionally, according to the De-partment’s
information technology staff, many of the
current databases lack proper documentation de-scribing
their contents. As a result, it is occasionally
difficult to properly interpret data in order to draw
conclusions.
n Lack of Automation—Operations could be auto-mated
to improve efficiency. For example, the De-partment
manually records and stores documents is-sued
to horse owners to prove ownership. Not only is
the process unwieldy, but there are no provisions for
removing records of horses that no longer exist.
The Department is aware of these problems and is taking
steps to upgrade its information technology systems. For
example, the Department worked with the Government
Information Technology Agency (GITA) to obtain over
$200,000 during fiscal years 2000-2001 for computer up-grades,
including upgrading its personal computers and
making its information systems year 2000 compliant.
However, the Department still lacks sufficient funds to
address all of its technology needs, and should continue
working with GITA and the Legislature to obtain neces-sary
funding to upgrade its computer equipment and in-formation
systems.
3. The extent to which the agency has operated within
the public interest.
The Department of Agriculture has generally operated in
the public interest by regulating and supporting Arizona
agriculture. Specifically, the Department regulates the fol-lowing
areas:
Sunset Factors
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n Food Safety—Department inspectors fulfill an im-portant
public health role by ensuring that Arizona
has safe, wholesome meat, poultry, and dairy prod-ucts
that are properly labeled. During fiscal 1999, the
Department reports that it conducted over 17,000
meat inspections, condemning over 120,000 pounds of
meat, and issuing seven letters of warning and four
criminal citations. Additionally, the Department re-ports
that it conducted 845 on-site inspections of dair-ies
and milk processing plants, removing 353,853
pounds of milk from sale.
n Worker Safety—To regulate the safety and health of
workers who work with and around pesticides, the
Department reports conducting 97 worker safety in-spections
during fiscal year 2000 and identifying and
addressing nearly 3,700 worker safety issues.
n Pest and Disease Protection—The Department in-spects
trucks at six ports as well as interior locations
to identify and eradicate dangerous plant and animal
pests and diseases, and noxious weeds. The Depart-ment
also performs regular surveys to prevent the
introduction, establishment, and spread of these
pests; regulates the movement of plant nursery stock;
and facilitates establishing quarantines when neces-sary.
The Department reports inspecting over
150,000 shipments at the ports, during fiscal year
1999, and rejecting more than 4,000 due to the pres-ence
of pests or violations of quarantine require-ments
(Report No. 00-13).
n Agricultural Product Registration—Finally, the
Department seeks to protect the public’s interest by
regulating feeds, fertilizers, pesticides, forage, and
seed through registering and licensing nearly 5,000
individuals and facilities employed in these areas.
Further, the Department employs inspectors who
confirm product registration and dealer licensing,
and regularly sample products to ensure label state-ments,
product quarantines, and that applicable laws
are adhered to. During fiscal year 1999, the Depart-
Sunset Factors
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ment conducted 761 inspections, collecting nearly
1,300 samples of feed, fertilizer, pesticides, and seed
for testing. Despite these actions, the program lacks a
systematic collection method that contains a com-prehensive
list of retailers and adjusts its sampling
for violations to ensure representative samples are
collected (Report No. 00-10).
Additionally, the audits of the Department identified
several other ways it can better protect the public’s in-terest.
Specifically:
n Revise Laboratory Services—The Department can
serve the public interest by revising two of its testing
services, as reported in a performance audit of the
State Agricultural Laboratory. The report found that
the opportunity exists for the Lab to shift brucellosis
testing of slaughtered cattle’s blood samples from the
State to a USDA-approved regional facility. By tak-ing
this step, the Department can shift 1.5 staff posi-tions
now used for brucellosis testing to other areas,
such as food safety testing. Further, the Department
should more fully recover its costs for testing pesti-cide
samples for the Structural Pest Control Com-mission
(SPCC) by accurately calculating the costs
for this testing, and reflecting these costs in its service
agreement with the SPCC (Report No. 00-14).
n Increase Cash Controls—Audit work also revealed
the need for the Department to strengthen controls
protecting monies paid to the Department. Specifi-cally,
audits of the Department’s licensing functions
(Auditor General Report No. 00-5) and the Fed-eral/
State Inspection Service Office in Nogales (Audi-tor
General Report No. 00-10), reveal weaknesses in
the Department’s cash-processing controls. Currently,
most of the Department’s various licensing functions
have only one employee receiving, processing, and
depositing cash receipts, making it difficult to appro-priately
segregate these cash-handling functions and
leaving the process open to theft or misappropriation.
Additionally, the Department’s Nogales Office, which
Sunset Factors
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processes $2 million in cash receipts annually, has one
employee who calculates and sends invoices, receives
payments, endorses checks, posts payments, stores
checks, and completes deposit slips. Therefore, the
Department should establish processes and proce-dures
to appropriately segregate its cash-handling
functions, and seek a periodic procedural review from
the State’s General Accounting Office to ensure it ad-heres
to established procedures.
4. The extent to which rules and regulations promul-gated
by the agency are consistent with legislative
mandate.
According to staff of the Governor’s Regulatory Review
Council (GRRC), the Department has done a commend-able
job of promulgating rules consistent with its legisla-tive
mandate for the seven Departmental programs au-dited.
The Department is allowed by statute to develop
rules on a variety of subjects, ranging from importing
animals and poultry into the State to establishing rules
necessary to certify laboratories. GRRC concluded that
the Department has created all rules mandated by statute,
and any rules that are lacking are rules promulgated at
the Director’s discretion.
However, in its most recent 5-year rule review cycle, the
Department determined that more than 80 rules should
be revised or clarified. While the Department has made
some progress in addressing these rules, more time is re-quired
to fully address all of the rules that require revi-sion.
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 Department indicates that when it drafts rules, it so-licits
input from all affected parties. Rule proposals are
Sunset Factors
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OFFICE OF THE AUDITOR GENERAL
sent to applicable agricultural associations and interested
parties, including local agricultural leaders. The Depart-ment
then holds meetings with the affected parties, and
also conducts surveys. The proposed rules, including no-tices
of dates and locations of hearings being held to ob-tain
public comment, are published in the Arizona Ad-ministrative
Register.
The Department also conforms with the requirements of
the open meeting laws by posting notices of public
meetings at least 24 hours in advance, at the required lo-cations,
and having the required statement of where
meeting notices will be posted on file with the Secretary
of State.
6. The extent to which the agency has been able to
investigate and resolve complaints that are within its
jurisdiction.
The Department has the authority to investigate and re-solve
complaints involving the many aspects of its regu-latory
authority. For example, the Department investi-gates
cases of reported livestock cruelty, neglect, or
abuse and seizes animals that appear to be mistreated.
During fiscal year 1999, the Department reports investi-gating
107 cases, confirming 42 of these cases, and seiz-ing
27 livestock. The Department also investigates cases
involving potential violations of the State’s pesticide laws,
including possible violations of worker protection stan-dards
or allegations of pesticide misuse. Additionally, the
Department has the authority to investigate cases where
native plants and archaeological artifacts were improperly
removed or vandalized. In fiscal year 1999, the Depart-ment’s
staff received 36 complaints and conducted 184 in-vestigations
involving native plants or cultural artifacts.
However, the current series of audits found one deficiency
in the Department’s civil penalty authority. From July
1997 to June 2000, the Department penalized 21 pesticide
misuse violations with fines. However, based on reviews
of the violations and penalties, the Department’s civil
penalty actions are not strong enough to deter violators
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OFFICE OF THE AUDITOR GENERAL
from committing subsequent violations. Therefore, the
Legislature should increase civil penalties for violations
that may have a direct or immediate relationship to safety,
health, or property damage, and the Department should
revise its penalty system as laid out in administrative rule.
7. The extent to which the Attorney General or any other
applicable agency of state government has the au-thority
to prosecute actions under enabling legisla-tion.
The Attorney General and the county attorneys have au-thority
to prosecute a wide variety of agriculture-related
unlawful actions under the Department’s enabling legisla-tion.
For example, the Department regulates the inspec-tion
of meat sold to the public under A.R.S §§3-2041
through 3-2058. As such, the Department has authority to
investigate and prosecute licensed establishments that il-legally
sell meat that has not been properly inspected ac-cording
to state law. If the Department confirms the illegal
sale, the Attorney General has authority to prosecute the
licensee. Further, the Department’s Animal Disease, Own-ership
and Welfare Protection staff investigate cases of sto-len
cattle, or cases of livestock cruelty, neglect, or abuse,
and refer these cases to local county attorneys for prose-cution.
As per A.R.S. §3-215.01, the Department’s Attorney Gen-eral
Representative also has the authority to prosecute
any person who knowingly transports, or causes the
transportation of crop, pests or crop diseases into the
State. The Department pursues these violations through
county superior courts, and can pursue a civil penalty of
up to $5,000 for each violation. Further, the Department
has responsibility for receiving complaints regarding ag-ricultural
pesticide use under A.R.S. §3-368. The Depart-ment
consults with the Attorney General’s Office to de-termine
if prosecution is necessary, and can impose pen-alties
up to $10,000 for each violation in cases of serious
pesticide misuse.
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OFFICE OF THE AUDITOR GENERAL
8. The extent to which the agency has addressed defi-ciencies
in the enabling statutes that prevent it from
fulfilling its statutory mandate.
The Department has made several changes to its enabling
statutes during the last two years. During the 2000 legisla-tive
session, the Department requested, and the Legisla-ture
approved, only one bill to address specific statutory
deficiencies. According to the Department, following a re-cent
review of its statutory requirements and authority, it
identified a number of statutes that needed to be updated
and repealed. Laws 2000, Chapter 234, addressed a num-ber
of technical changes to statute, but also addressed the
following changes:
n Establishing the Director’s discretionary authority to
enter into joint ventures promoting Arizona agricul-ture
that do not compete with the private sector;
n Allowing inspection charges for dairies and feedlots to
be paid monthly, rather than at the time of service; and
n Clarifying the Department’s authority to regulate all
domestic or commercial crops and plants.
During the 1999 legislative session, the Department re-quested,
and the Legislature approved, three separate bills
altering the Department’s statutes. Specifically:
n Laws 1999, Chapter 196—Certificate of Free Sale
This act improved the Department’s enabling statutes
by authorizing it to assess fees for Certificates of Free
Sale. These Certificates are required by some foreign
governments before Arizona products could be sold in
their country. Before this act, the Department issued
these certificates as a service to industry, but lacked the
legislative authority to charge a fee to recover the costs
of the service.
n Laws 1999, Chapter 7—Food and Feed Adultera-tion
The bill improved the State’s ability to address a po-tential
contaminant of Arizona milk. The act made the
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19
OFFICE OF THE AUDITOR GENERAL
Department of Agriculture, rather than the Depart-ment
of Health Services, responsible for approving the
process for reducing aflatoxin content in milk. Afla-toxin
is a fungus that infests cotton seeds, which are
fed to dairy cattle. The aflatoxin passes from the seed
to the cow, which in turn passes the fungus residue to
its milk.
n Laws 1999, Chapter 8—Egg Refrigeration Tem-perature
The act changed the storage temperature for shell
eggs in order to conform to federal regulations. Spe-cifically,
the legislation required eggs intended for
human consumption to be stored at 45 degrees rather
than 60 degrees Fahrenheit.
9. The extent to which changes are necessary in the
laws of the agency to adequately comply with the
factors in the Sunset Laws.
The series of audit reports, issued in 2000, on the De-partment
of Agriculture identified several statutory
changes the Legislature may wish to consider. In the
performance audit of the Animal Disease, Ownership
and Welfare Protection program (Report No. 00-8), the
Auditor General recommended:
n Amending A.R.S. §3-1336(A) to eliminate the need
for the Department to conduct pre-transit cattle in-spections
to auctions and feedlots in order to reduce
unnecessary cattle inspections.
n Revising A.R.S. §3-1337 to allow the Department to
impose a travel fee for cattle inspections not to ex-ceed
$15. The fee would be charged to customers
who request the Department’s inspectors to travel to
their property to provide inspection services and al-low
the Department to recover its travel costs.
n Similarly, revising A.R.S. §3-1344(B) to increase the
current inspection fee for horses and allowing the
Sunset Factors
20
OFFICE OF THE AUDITOR GENERAL
Department to institute a separate travel fee not to
exceed a maximum amount established by the Legis-lature.
The Department of Agriculture, Pesticide Compliance
and Worker Safety program performance audit (Report
No. 00-16) recommends strengthening the Department’s
civil penalty authority over pesticide applicators by
amending A.R.S. §3-370 to increase the penalty for non-serious
violations of pesticide application laws from
$500 to $1,000.
Finally, the Department of Agriculture, Pest Exclusion
and Management program performance audit (Report
No. 00-13) suggests that the Department can recover
more of its costs if the Legislature grants statutory au-thority
to the Department to set fees in administrative
rule, not to exceed a maximum amount determined by
the Legislature, for issuing phyto-sanitary certificates.
10. The extent to which the termination of the agency
would significantly harm the public health, safety, or
welfare.
Regulating agricultural products, ensuring food safety,
and detecting and eliminating animal diseases and agri-cultural
pests is necessary for the protection of public
health, safety, and welfare. For instance, the Department
regulates the importation of livestock into the State, and
investigates disease outbreaks, using its enforcement
powers to eradicate and prevent the reintroduction of
animal diseases that threaten agriculture and are poten-tially
contagious to humans. Additionally, the Depart-ment
strives to ensure pest-free agricultural products by
preventing, controlling, and eradicating agricultural
pests. Finally, the Department seeks to protect the envi-ronment
and the health of agricultural workers by en-suring
the proper use of agricultural pesticides. The De-partment
monitors pesticide use, and ensures that
workers are properly trained in the handling of pesticide
products.
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21
OFFICE OF THE AUDITOR GENERAL
Terminating the Department of Agriculture would likely
require that the federal government and other state
agencies and local governments assume these and other
Department functions. For example, under cooperative
agreements with the USDA, the Department’s meat in-spectors
are present whenever slaughtering or process-ing
facilities are operating, and the Department collects
and tests samples of meat and dairy products for micro-biological,
chemical, and physical food hazards. Should
the Department not perform these functions, the USDA
would likely have to assume these duties.
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.
Auditors’ work suggests that the current level of regula-tion
carried out by the Department is appropriate.
12. The extent to which the agency has used private
contractors in the performance of its duties and how
effective use of private contractors could be accom-plished.
The Department holds over 60 contracts with private
parties. For example, the Department contracts with pri-vate
individuals to plow-down cotton fields when the
fields’ owners refuse to do so as required by Arizona
Revised Statutes. Further, an industry group also re-ceives
$600 for publishing a list of cattle brands used in
the State. Similarly, the State Veterinarian’s Office con-tracts
with private veterinarians to conduct post-mortem
animal inspections in outlying areas and the Commod-ity
Development and Promotion Program pays $10,000
annually to support a spokesperson for the Arizona
Grown program.
The Department has also explored privatizing some of
the testing performed by the State Agricultural Labora-tory.
However, the Department received no bids in re-
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22
OFFICE OF THE AUDITOR GENERAL
sponse to a 1997 request for proposals. More recently,
the Department has initiated a study, in cooperation
with the Governor’s Office for Excellence in Govern-ment,
to evaluate the feasibility of privatizing the inspec-tion
and registration of Arizona equines. Working with
the Governor’s Office for Excellence in Government, by
December 2000 the Department will determine the costs
of these services and compare them to private compa-nies’
costs. As a result, the Department may solicit bids
from private companies wishing to take over equine in-spection
services.
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
Other Performance Audit Reports Issued Within
the Last 12 Months
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
00-8 Department of Agriculture—
Animal Disease, Ownership and
Welfare Protection Program
00-9 Arizona Naturopathic Physicians
Board of Medical Examiners
00-10 Department of Agriculture—
Food Safety and Quality Assurance
Program and Non-Food Product
Quality Assurance Program
00-11 Arizona Office of Tourism
00-12 Department of Public Safety—
Scientific Analysis Bureau
00-13 Arizona Department of Agriculture
Pest Exclusion and Management
Program
00-14 Arizona Department of Agriculture
State Agricultural Laboratory
00-15 Arizona Department of Agriculture
Commodity Development Program
00-16 Arizona Department of Agriculture
Pesticide Compliance and Worker
Safety Program
Future Performance Audit Reports
Arizona State Boxing Commission
Department of Economic Security—Division of Developmental Disabilities
Department of Corrections—Security Operations