Performance audit, Livestock Board, State Veterinarian

              PERFORMANCE AUDIT
LIVESTOCK BOARD
STATE VETERINARIAN
Report to the Arizona Legislature
By the Auditor General
March 1985
85- 4
DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
March 7, 1985
Members o f the Ari zona Legi s l ature
The Honorable Bruce Babbitt, Governor
Mr. Earl Kelly, Executive Director
Arizona Livestock Board
Transmitted herewith i s a report of the Auditor General, A Performance
Audit o f the Arizona Livestock Board and a l i m i t e d review o f the State
Veterinarian. This report i s i n response t o an A p r i l 27, 1983, resolution
o f the J o i n t Legislative Oversight Committee. The performance audit was
conducted as a part o f the Sunset Review set f o r t h i n A. R. S. § § 41- 2351
through 41 - 2379.
This performance a u d i t r e p o r t i s submitted t o the Arizona State
Legislature f o r use i n determining whether t o continue the Livestock Board
and State Veterinarian beyond t h e i r scheduled termination date o f
July 1, 1986. The report addresses two areas i n which the State can save
a t o t a l o f almost $ 1 m i l l i o n annually by 1 ) eliminating unnecessary
inspection a c t i v i t i e s , and 2) transferring meat and poul try inspection
responsi b i l i ty t o the United States Department o f Agricul ture. The report
also addresses a need t o strengthen the Livestock Board's enforcement o f
the laws under i t s j u r i s d i c t i o n .
My s t a f f and I w i l l be pleased t o discuss or c l a r i f y items i n the report.
Respectfully submitted,
DOU~# S R. Norton
Auditor General
S t a f f : William Thomson
Mark Fleming
Arthur E. Heikkila
Jerome E. M i l l e r
Larry L. Houpt
P a t r i c i a Krueger
Enclosure
1 1 1 WEST MONROE SUITE 600 PHOENIX. ARIZONA 85003 0 ( 602) 255- 4385
SUMMARY
The Office o f t h e A u d i t o r General has conducted a performance audit o f the
Arizona Livestock Board i n response t o an A p r i l 27, 1983, r e s o l u t i o n of
the J o i n t L e g i s l a t i v e Oversight Committee. This performance audit was
conducted as p a r t o f the Sunset Review set f o r t h i n Arizona Revised
Statutes ( A. R. S. ) § § 41- 2351 through 41 - 2379.
The Arizona Livestock Board i s responsible f o r p r o t e c t i n g t h e general
pub1 i c from unwholesome meat and poul try products, protecting the i ndustry
from t h e f t , and exercising general supervision over the 1 ivestock
i n t e r e s t s o f the State. The Board i s mandated by law t o keep records o f
1 ivestock inspections, recommend 1 egi s l a t i o n i n the area o f 1 ivestock and
a s s i s t i n the prosecution o f those who v i o l a t e 1 ivestock laws.
The Livestock Board Coul d Save $ 620,000 Annual ly
By El i m i nating Unnecessary Inspection A c t i v i t i e s ( see page 13)
The Livestock Board could save $ 620,000 annually by eliminating a c t i v i t i e s
t h a t do not s i g n i f i c a n t l y contribute t o i t s primary goals o f t h e f t and
disease control . A1 though brand records and v e r i f i c a t i o n inspections are
necessary t o prevent t h e f t and a i d animal disease control e f f o r t s , other
Livestock Board a c t i v i t i e s , i n c l udi ng some p o i n t o f o r i g i n inspections and
feed l i e n a c t i v i t i e s are unnecessary. Point o f o r i g i n inspections f o r
pasture t o pasture movements are not needed since no change o f ownership
occurs. Other point o f o r i g i n i nspections are a1 so unnecessary because
inspectors l a t e r inspect the 1 ivestock a t t h e i r destination points.
Inspector involvement i n feed l i e n cases i s not needed because these cases
are p r i v a t e matters. Other miscell aneous a c t i v i t i e s such as criminal
investigations and i nvestigations o f i 11 egal butcheri ngs unnecessarily
dupl icate 1 ocal 1 aw enforcement a c t i v i t i e s .
The Livestock Board can achieve i t s goal of preventing t h e f t and disease
by concentrating inspections a t major c o l l e c t i o n points, changes of
ownership between ranches and out- of- State movement. This would be
s i m i l a r t o procedures used i n other c a t t l e producing states such as
Montana and California, and would allow the Board to eliminate unnecessary
inspections and activities. As a result, the Board could reduce i t s staff
by 25 full time equivalent positions and save approximately $ 620,000
annually . The Legislature shoul d consider amending Title 24 of Arizona
Revised Statutes to delete requirements for unnecessary inspections. In
addition, the Board should recover a1 1 of i t s inspection costs through
increased fees. Inspection activity primarily benefits the 1 ivestock
industry, b u t the Board recovers only about 25 percent of i t s costs. The
Board should review costs for its services and recommend a fee structure
to the Legislature that will pay full cost for the services provided.
State Could Save $ 345,000 Annually By Using
Federal Meat And Poultry Inspection ( see page 29)
Arizona could save $ 345,000 annually by requesting that the United States
Department of Agricul ture ( USDA) assume the State meat i nspection
program. Under Federal law the USDA must assume meat and poultry
inspection duties i f a state discontinues i t s meat inspection program.
USDA inspection would provide better trained supervisors and would enable
all meat and poultry plants now under State inspection to market their
products to Federal installations and out- of- State plants and businesses.
Although changing to Federal inspection may impose additional costs on
Arizona meat and poultry plants, experience in other states suggests that
most plants make the transition successfully. Arizona shoul d request that
the U. S. Secretary of Agriculture designate Arizona for Federal meat and
poul try i nspection.
Livestock Board Needs To Strengthen
Enforcement Efforts ( see page 37)
The Arizona Livestock Board has not fully exercised i t s existing authority
to ensure compliance w i t h laws under i t s jurisdiction. The Board's
administrative personnel have n o t taken action against several meat plants
with repeated sanitary problems. A1 though the Board has the authority to
levy fines and suspend or revoke licenses i t relies on the courts for
enforcement - a policy that often results i n less stringent action than
the Board could take. Enforcement of brand inspection laws has been
inconsistent. Although some individuals have been penalized for improper
use of self- inspection forms, the Board has taken no action against
several others who also allegedly misused the forms. Further, lack of
enforcement i n cases involving Board members may create the appearance of
a conflict of interest. The Board should use i t s own authority t o
consistently penal ize individual s who viol ate statutes, rules and
regulations before referring cases to the courts. The Board should also
use i t s authority to hire and retain hearing officers to hear evidence and
make recommendations i n a1 1 cases involving legal violations.
TABLE OF CONTENTS
LIVESTOCK BOARD
Page
INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . 1
SUNSET FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FINDING I: THE LIVESTOCK BOARD COULD SAVE $ 620. 000 ANNUALLY BY ELIMINATING UNNECESSARY INSPECTION ACTIVITIES . . . . 13
Some Inspector A c t i v i t y I s Unnecessary . . . . . . . . . . . . . . 13
El imi n a t i ng Unnecessary A c t i v i t i e s Would Reduce S t a f f i n g Requirements . . . . . . . . . . . . . . . . . . . . . . . 18
Fees Should Be Increased To Defray Program Costs . . . . . . . . . 23
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . 27
FINDING 11: STATE COULD SAVE $ 345. 000 ANNUALLY BY USING FEDERAL MEAT AND POULTRY INSPECTION . . . . . . . . . . . . . . . . 29
USDA Must Inspect Meat And Poultry Plants If State Does Not . . . . 29
State Would Benefit From Federal Meat Inspection . . . . . . . . . 31
Federal Procedures L i m i t Impact O f Change On State. InspectedP1ants . . . . . . . . . . . . . . . . . . . . . . 33
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FINDING 111: LIVESTOCK BOARD NEEDS TO STRENGTHEN ENFORCEMENT EFFORTS . . . . . . . . . . . . . . . . . . . . . . . . 37
The Board Has Not Taken Action Against Problem Plants . . . . . . . 37
Enforcement O f Sel f- Inspection Requirements I s Not Consistent. . . . . . . . . . . . . . . . . . . . . . . . . 41
Limited Enforcement Creates Appearance o f Confl i c t
o f I n t e r e s t . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Hearing Officers Would Improve The Process . . . . . . . . . . . . 45
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . 45
TABLE OF CONTENTS ( C o n t . )
Page
OTHER PERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . 47
AREAS FOR FURTHER AUDIT WORK . . . . . . . . . . . . . . . . . . . . . 51
AGENCYRESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
STATE VETERINARIAN
INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . 57
SUNSETFACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
AGENCY RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
LIST OF TABLES
LIVESTOCK BOARD
Page
TABLE 1 - Livestock Board Appropriations And Expenditure
For F i s c a l Years 1981 - 82 Through 1984- 85. . . . . . . . . . 4
TABLE 2 - Livestock Board Revenues For Fiscal Years
1981 - 82 Through 1984- 85 . . . . . . . . . . . . . . . . . . 5
TABLE 3 - Livestock Board Cattle Inspection A c t i v i t y For
Fiscal Year 1983- 1 984 . . . . . . . . . . . . . . . . . . . 15
TABLE 4 - Other Projected Livestock Board Inspector A c t i v i t i e s
Fiscal Year 1983- 84 . . . . . . . . . . . . . . . . . . . . 15
TABLE 5 - Hours Required To Perform Livestock Board
Inspector A c t i v i t y . . . . . . . . . . . . . . . . . . . . . 19
TABLE 6 - PProosjieticotneds SNet aedfef idn Fgo Arn dE sCsoesntt iSaal vAincgtsi v i t i e s . . . . . . . . . 20
TABLE 7 - S t a f f i n g And Work Load I n States With Point O f
Destination Inspections . . . . . . . . . . . . . . . . . . 21
TABLE 8 - S t a f f i n g And Work Load I n , t a t e s With Point Of
Origin Inspections. . . . . . . . . . . . . . . . . . . . . 22
TABLE 9 - Brand Inspection Program - Expenditures And Revenues For Fiscal Year 1983- 84. . . . . . . . . . . . . . 24
TABLE 10 - Designation O f States For Federal Meat And
Poultry Inspection. . . . . . . . . . . . . . . . . . . . . 30
TABLE 11 - Actual And Estimated State Expenditures
Meat And Poultry Inspection For Fiscal Years
1982- 83 Through 1984- 85 . . . . . . . . . . . . . . . . . . 32
TABLE 12 - Livestock T h e f t I n v e s t i g a t i o n And Conviction Rates
1980- 81 Through 1983- 84 . . . . . . . . . . . . . . . . . . 47
STATE VETERINARIAN
TABLE 1 - Animal Disease Control Expenditures ( Actual O r ~ pproved)
Fiscal Years 1981 - 82 Through 1984- 85. . . . . . . . . . . . 58
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of
the Arizona Livestock Board i n response to an April 27, 1983, resolution
of the Joint Legislative Oversight Committee. T h i s performance audit was
conducted as part of the Sunset Review s e t forth i n Arizona Revised
Statutes § § 41- 2351 through 41 - 2379.
The Livestock Board was originally established as the Territorial
Livestock Sanitary Commission i n 1887. Since then the Legislature has
expanded the Board's duties, and the Board i s currently responsible for
protecting the general public from unwholesome meat and poultry products,
protecting the industry from t h e f t , and exercising general supervision
over the livestock interests of the State. The Board is also mandated by
law to keep records of livestock inspections, recommend livestock
legislation and a s s i s t i n the prosecution of those who violate livestock
1 aws.
Arizona Livestock Industry
Cattle constitute a major portion of Arizona's 1 ivestock industry. The
value of a1 1 beef produced i n Arizona totaled $ 304 million in 1982.
Arizona's c a t t l e population was approximately one mill ion i n 1982, and
the s t a t e ranked 35th i n the nation i n c a t t l e population. Range c a t t l e
constituted 51 percent of t h e t o t a l c a t t l e i n the State i n 1952. Since
1979 the horse population i n Arizona has risen 6 percent a year, and was
estimated to be 290,600 i n 1982.
Between 1980 and 1983 1 ivestock officers inspected between 1.1 and 1 .5
mill ion animal s annual ly. These inspections took place a t auctions,
feedlots and i n the field. Since mid- 1981 when the Board instituted a
self- inspection form for ranchers to use, the number of animals checked
during field inspections has decreased by more than 400,000 head. Board
staff also conduct daily inspections of 69 meat establishments i n the
State t h a t process and s e l l wholesale meats. Inspectors also v i s i t an
additional 38 custom exempt plants t h a t slaughter and process meat.
Organization And Personnel
The Board consists o f nine members, eight o f whom are members o f specific
industries. Statutes require t h a t the Board membership consist o f one
, c a t t l e feeder, two c a t t l e growers, one horse owner engaged i n equestrian
+ ' a c t i v i t i e s , one meat packing industry representative, one dairy industry
representative, one sheep and goat industry representative, one swine
producer, and one member o f the general public. The Livestock Board
appoints a d i r e c t o r t o oversee d a i l y operation o f the Board's four major
divisions. These divisions are: Brand Inspection, Meat And Poul try
Inspection, Animal Disease Control, and Administrative Services. The
State Veterinarian also works under the guidance o f the Arizona Livestock
Board, and oversees the Meat And Poultry and Animal Disease Control
functions. ( For f u r t h e r d e t a i l on the State Verterinarian see the
Introduction and Sunset Factors f o r the State Veterinarian, pages 57
through 63). The Board has a s t a f f o f 11 5.2 authorized f u l l - t i m e
equivalent ( FTE) positions: 17.5 i n Administrative Services, f i v e i n
Animal Disease Control, 67 i n Livestock Inspection, 24.7 i n Meat And
Poul try Inspection, and one d i r e c t o r .
Revenues And Expenditures
The Livestock Board i s funded p r i m a r i l y through the General Fund, with
Federal reimbursements f o r meat and poultry inspection a c t i v i t i e s . A l l
revenues except those of four special funds go t o the General Fund. The
four special funds are as follows.
0 Seizure Fund - A l l proceeds from the sale o f unclaimed 1 ivestock
seized by the Board are deposited i n t o t h i s fund t o o f f s e t the costs
of hauling, feeding and boarding animals. I f an owner claims an
animal a f t e r a sale, the Board pays the owner the amount received
minus handling and feeding costs. Balances i n excess of $ 3,000
revert t o the General Fund a t the end of each f i s c a l year.
Stray Fund - T h i s fund is similar t o the Seizure Fund, b u t i s used to
pay the costs of feeding and handling stray 1 ivestock he1 d by the
Board. Balances i n excess of $ 5,000 revert t o the General Fund a t
the end of each fiscal year.
a Horse Maintenance Fund - The Board receives proceeds from selling
horses, and public donations to care for and feed horses seized by
the Board because of willful neglect or cruel treatment. A. R. S.
$ 24- 552.0 directs that these donations be deposited i n the Horse
Maintenance Fund. These monies do not revert t o the General Fund.
Beef Council Fund - A. R. S. $ 24- 166. A directs the Board t o collect a
25 cent fee on a l l c a t t l e over 6 months old that are inspected when a
change of ownership occurs. These funds, minus 5 percent retained by
the Board for administrative expenses, are turned over to the Arizona
Beef Council for use i n promoting beef and beef products.
Table 1 summarizes Board appropriations and expenditures from fiscal year
1981- 82 through fiscal year 1984- 85. Table 2 shows revenues collected by
the Board during the same period.
TABLE 1
LIVESTOCK BOARD APPROPRIATIONS AND EXPENDITURES
FOR FISCAL YEARS 1981 - 82 THROUGH 1984- 85
Appropriations 1981 - 82 1982- 83 1983- 84 1984- 85
FTE Positions 144.2 1 26.2 122.2 115.2
General Funds
Operating $ 3,893,100 $ 3,440,700 ( 1) $ 3,261,500 ( 1) $ 3,355,000 ( 1)
Predator Control 39,200
Tubercul osi s and
Bruce1 1 osi s Control 20,000
Keactor Indemnities 4,000
Total $ 3.956.300 -$ 3,440-. 700 $ 3.261.500 $ 3.355.000
Expenditures
• Personal Services $ 2,461 ,600
Empl oyee- Re1 ated
Expenses 575,300
Professional And
Outside Services 6,300
Travel
State 31 9,600
O u t Of State 5,500
Other Operating Expenses 144,000
Equi pclent 64,400
Total
Expenditures $ 3,576.700
( 1 ) Lump sum appropriation
e
Source: Livestock Board budget requests and appropriations reports from
1981 - 82 through 1984- 85
TABLE 2
LIVESTOCK BOARD REVENUES FOR
FISCAL YEARS 1 981 - 82 THROUGH 1 984- 85
Actual
Revenues 1981 - 82
General Funds
Livestock Inspection Fees $ 21 7,428
Equine Transfer Requests 26,628
Brand Recording And Rerecording 98,809
Overtime Payments 31 ,046
Permit Fees
Feed1 ots/ Garbage Feeders 5,030
Meat Out1 ets/ Sl aughter Houses 5,130
Horse Traders 2,050
M i scel 1 aneous 3,454
Actual Actual Estimated
1982- 83 1983- 84 1984- 85
S e c i a l Funds
h d 1 ,791 1,016 3,378 1,800
Stray Fund 41,386 28,593 44,302 22,000
Beef Council Fund 10,853 10,731 12,585 14,000
Horse Maintenance Fund 130 461 00 100
Federal Funds
Reimbursements f o r
Meat and Poul try Inspection 509,524 41 8,687 345,916 380,000
Total Revenues $ 953.259 $ 949.421 $ 977.81 9 $ 1.004.1 55
Source: Livestock Board budget requests from 1981- 82 through 1984- 1985
Audit Scope And Purpose
The purpose o f t h i s a u d i t i s t o evaluate the need f o r and effectiveness
of the Arizona Livestock Board. The audit report presents f i n d i n g s i n
three areas. These three areas are:
the need f o r brand inspection,
0 the need t o maintain a State meat and poultry inspection program, and
e Board enforcement a c t i v i t i e s .
I n addition, we developed i nfornation about the Livestock Board's special
i n v e s t i g a t i o n s u n i t . T h i s information i s presented i n the section Other
Pertinent Information.
Due t o time constraints, we were unable t o address a l l potential issues
i d e n t i f i e d during our audit work. The section Areas For Further Audit
Work describes these potential i ssues.
The Auditor General and s t a f f express appreciation t o the Livestock Board
members and s t a f f f o r t h e i r cooperation and assistance during our audit.
SUNSET FACTORS
I n accordance with Arizona Revised Statutes $ 41 - 2354, the Legislature
should consider the f o l l o w i n g 12 factors i n determining whether the
Arizona Livestock Board should be continued o r terminated.
1. Objective and purpose i n establishing the Board
The Livestock Board's objectives encompass regulating and protecting
the 1 ivestock industry. A. R. S. § 24- 104 establ ishes the Board's basic
functions. These functions i n c l ude:
e exercising general supervision over the 1 ivestock i n t e r e s t s o f
the State,
a p r o t e c t i n g t h e l i v e s t o c k i n d u s t r y f r o m t h e f t ,
protecting the 1 ivestock and p o u l t r y industries from contagious
and i n f e c t i o u s disease, and
a p r o t e c t i n g the pub1 i c from diseased and uns~ holesome meat and
meat products.
2. Effectiveness with which the Board has met i t s objective and purpose
and the e f f i c i e n c y w i t h which the Board has operated
The Board has been generally e f f e c t i v e i n meeting i t s objective and
purpose. However, the Board could increase effectiveness by using
i t s own a u t h o r i t y t o enforce i t s regulations governing meat and
poultry products, and by more consistently enforcing r e q ~ i r e ~ s s r i tfso r
use of s e l f - i n s p e c t i o n f o r ~ ~ wsh en ranchers move c a t t l e without
inspection by a l i v e s t o c k o f f i c e r ( see Finding 111, page 37).
The Board could i~ nprove e f f i c i e n c y by e l iminating 1 ivestock o f f i c e r
duties such as inspecting a t p o i n t o f o r i g i n i f livestock are- shipped
t o destinations where they may be reinspected, serving court orders
i n feed l i e n disputes and other a c t i v i t i e s t h a t have l i t t l e e f f e c t i n
deterring t h e f t . These changes would eliminate the need for 25
f u l l - t i m e equivalent positions and save the State approximate1 y
$ 620, OQO annually ( see Finding I , page 13). The Board could also
save $ 345,000 annually by transferring responsibility for meat and
poul try i nspecti on to the U. S. Department of Agri cul ture ( USDA) , ( see
Finding 11, page 29).
3. The extent to which the Board has operated within the public interest
The Board has not operated in the pub1 ic interest to the extent that
it has not consistently enforced the laws under i t s jurisdiction.
The lack of consistent enforcement may create an appearance of
partial ity in enforcement actions against Board members ( see Finding
111, page 37).
4. The extent to which rules and regulations promulgated by the Board
are consistent with 1 egi sl ative mandatg
Livestock Board rules and regulations appear t o be consistent with
the Board's legislative mandate. The current rules and regulations
were reviewed and approved by the Attorney General in 1982.
5. The extent to which the Board has encouraged input from the public
before promulgating i t s rules and regulations and the extent t o which
i t has inforined the public as t o i t s actions and their expected
impact on the public
General ly , t'ie 3odrrl accepts a,~ d,? n,- ol_ rtlagssi n 7l; t fro ; I the ,),~ bi? c a, ii
informs the livestoci: industry of the impact of i t s a c t i q ~ s . Th?
last rule revision for the Livestock Board occurred in 1982. ilt that
tine tile Board informed the public of the rule changes through pub1 ic
notices. The Board norinally conducts a1 1 offical meetings in
accordance with the open meeting law. However, according t o , I
Department of Public Safety investigation the Board violated the open
meeting law in 1984 when five Board members and the director qet at a
restaurant near the Soard's Phoenix office to discuss business. I n
addition, the agency suspended three meat operators' licenses without
holding a public hearing as rquired by law.
6. The extent t o which the Board has been able t o i n v e s t i g a t e and
resolve compl a i nts which are w i t h i n i t s j u r i s d i c t i o n
The Board attempts t o i n v e s t i g a t e and resolve a l l complaints
i n v o l ving 1 ivestock and meat and poul try inspection.
The Brand Inspection D i v i s i o n receives a v a r i e t y o f complaints about
l i v e s t o c k . Most complaints are made by telephone and a l i v e s t o c k
o f f i c e r i s assigned t o investigate. Upon compl e t i n g an i n v e s t i g a t i o n
the o f f i c e r makes out a d a i l y r e p o r t describing the incident. A
random sample o f the 1,890 d a i l y reports f i l e d during 1983 shows t h a t
more than 40 percent involved stray animals, 19 percent involved
animals k i l l e d on highways o r by r a i l r o a d s , 1 4 percent d e a l t w i t h
missing animal s, and 4 percent involved ill egal butcherings and other
t h e f t .
The Meat and P o u l t r y Inspection D i v i s i o n receives fewer complaints
than the Brand I n s p e c t i o n D i v i s i o n . Most complaints involve
restaurants and other establishments not under the D i v i s i o n ' s
j u r i s d i c t i o n . Since 1980 the D i v i s i o n has received f o u r complaints
concerning e n t i t i e s under i t s j u r i s d i c t i o n . D i v i s i o n s t a f f
i n v e s t i g a t e d a l l f o u r complaints and found no cause f o r f u r t h e r
action. The D i v i s i o n has a1 so i n v e s t i g a t e d approximately 20 other
consumer compl a i n t s by submitting samples f o r 1 aboratory analysi s t o
detect p r o h i b i t e d additives. Only one sample was p o s i t i v e . Because
the p l a n t involved had changed t o Federal i n s p e c t i o n t h e D i v i s i o n
r e f e r r e d the case t o Federal a u t h o r i t i e s f o r f u r t h e r action.
7. The extent t o which the Attorney General o r other applicable agency
of State government has the a u t h o r i t y t o prosecute actions under
enabl ing l e g i s l a t i o n
The Attorney General has f u l l a u t h o r i t y t o enforce the Livestock
Board's enabl i n g statutes. A. R. S. S24- 646 d i r e c t s the Attorney
General o r a county attorney t o represent the Board i n a l l l e g a l
actions. I n addition, A. R. S. 5524- 1 04, 24- 645 and 24- 646 authorize
the Board t o seek i n j u n c t i v e re1 i e f against s t a t u t e v i o l a t o r s .
8. The extent t o which the Board has addressed deficiencies i n the
enabling l e g i s l a t i o n which prevent it from f u l f i l 1 ing i t s s t a t u t o r y
mandate
I n 1982 the Livestock Board sought l e g i s l a t i o n t o r e c l a s s i f y the a c t
o f adulterating meat as a felony and t o eliminate the need f o r an
o f f i c i a l pub1 i c hearing f o r adulterated meat v i 01 ations ( SB 1050).
The Board was attempting t o strengthen i t s a b i l i t y t o ensure
wholesomeness o f meat products and t o take t i m e l y a c t i o n i n such
cases. The 1982 Legislature d i d not enact e i t h e r provision.
9. The extent t o which changes are necessary i n the laws o f the Board t o
adequately comply with factors l i s t e d i n the Sunset Law
Based on our audit work we recommend t h a t the Legislature consider
the following changes t o the Livestock Board's statutes.
m Amend A. R. S. 524- 262 and A. R. S. SS24- 267. A, 24- 267. B and
24- 267. E t o el iminate unnecessary 1 ivestock inspections
including p o i n t o f o r i g i n inspections when 1 ivestock are moved
t o a d e s t i n a t i o n where inspections are also performed and when
no change o f ownership takes place ( see Finding I , page 13).
Amend A. R. S. S24- 108. A t o e l i m i n a t e t h e requirement t h a t the
Livestock Board appoint an inspector i n a l o c a l i t y upon p e t i t i o n
by a t l e a s t f i v e cattlemen.
m Amend A. R. S. SS24- 601 through 24- 663 t o delete provisions f o r
state meat and p o u l t r y inspection and l i c e n s i n g i f t h i s
r e s p o n s i b l i t y i s transferred t o the USDA ( see Finding 11,
page 29 1.
10. Extent t o which termination o f the Board would s i a n i f i c a n t l v harm the
publ i c heal t h y safety o r welfare
Terminating the Livestock Board woul d not d i r e c t l y harm the publ i c
health, safety or welfare. Most Board a c t i v i t i e s do not a f f e c t the
general publ i c and those t h a t do, such as meat and poultry inspection
and animal disease control, could be assumed by the Federal
government or the State Veterinarian. However, terminating the Board
woul d e l i m i nate important services t o the 1 ivestock industry i n
Arizona, such as brand recording, inspection and other ownership
records t h a t discourage t h e f t and a1 1 ow t r a c i n g o f animal s. A1 though
a t 1 east one western state r e l i e s on a voluntary brand recording and
inspection system, a statewide system enforced by a state agency
provides the greatest assurance o f compliance and r e l i a b i l i t y .
11. The extent t o which t h e l e v e l of regulation exercised by the Board i s
appropriate and whether less or more stringent l e v e l s o f regulation
woul d be appropriate
The Board could reduce some unnecessary regulation without harming
e i t h e r the publ i c or the industry. Unnecessary a c t i v i t i e s include
most point o f o r i g i n inspections and feed 1 ien a c t i v i t i e s , both o f
which have a marginal e f f e c t on livestock theft. Continued
inspection a t points o f destination and p o i n t o f o r i g i n inspection
f o r out- of- State shipments and ranch- to- ranch sales w i l l allow the
Board t o adequately p r o t e c t l i v e s t o c k owners from t h e f t . I n
addition, the Board could eliminate i t s meat and poultry inspection
program without endangering the publ i c by t r a n s f e r r i n g t h i s
responsi b i 1 i ty t o the USDA.
12. The extent t o which the Board has used p r i v a t e contractors i n the
performance of i t s duties and how e f f e c t i v e use of p r i v a t e
contractors coul d be accompl i shed
The Board hires veterinarians i n o u t l y i n g areas on a c o n t r a c t basis
t o assist i n handling the f i n a l disposition o f carcasses suspected of
Sei ng unwholesome f o r human consumption.
FINDING I
THE LIVESTOCK BOARD COULD SAVE THE STATE $ 620,000 ANNUALLY BY ELIMINATING
UNNECESSARY INSPECTION ACTIVITIES
The Arizonza State Livestock Board could save $ 620,000 annually by
e l iminati ng unnecessary inspection a c t i v i t i e s . A1 though brand records and
v e r i f i c a t i o n inspections are necessary t o prevent t h e f t and a i d animal
disease control e f f o r t s , some other Livestock Board a c t i v i t i e s contribute
1 i ttl e toward achieving these goal s. El i m i n a t i ng unnecessary inspections
and a c t i v i t i e s would reduce the Board's s t a f f by 25 f u l l - t i m e equivalent
( FTE) positions and save approximately $ 620,000 annually. Because
Livestock Board ownership records and v e r i f i c a t i o n programs b e n e f i t the
i n d u s t r y r a t h e r than the public, user fees should support these a c t i v i t i e s .
The Livestock Board regulates the movement and disposition o f livestock
w i t h i n Arizona. The Board i s charged with protecting the livestock
industry from t h e f t , keeping animal s disease free, and inspecting meat and
poultry products. Livestock inspection accounts f o r the 1 argest share o f
Board a c t i v i t y . Brand Inspection Division s t a f f maintain brand and
ownership records and i nspect 1 ivestock t o v e r i f y ownership o f animal s.
Inspectors a1 so investigate t h e f t s , assist i n i d e n t i f y i n g stray animal s
and animals k i l l e d on highways, and perform other livestock related
tasks. The D i v i s i o n i s authorized 66 inspectors Statewide t o perform
these duties.
Some Inspector A c t i v i t y
I s Unnecessary
Some inspector a c t i v i t y i n Arizona i s unnecessary. The purpose o f the
brand inspection program i s t o prevent t h e f t and t o c o n t r o l i n f e c t i o u s
disease by maintaining accurate records o f 1 ivestock ownership and
movement. However, some inspection a c t i v i t i e s are unnecessary and do not
contribute t o achieving t h i s purpose. The Board should eliminate
unnecessary a c t i v i t i e s . It coul d s t i l l provide e f f e c t i v e t h e f t protection
by concentrating i t s inspections on d e s t i n a t i o n p o i n t s as i s done i n a t
l e a s t two other states.
Current A c t i v i t y - The a c t i v i t i e s o f the Brand Inspection D i v i s i o n s t a f f
center on recording brands and inspecting range cattle.* Per the Board's
1983- 84 Budget Appropriation Report, the primary goal o f these a c t i v i t i e s
i s t o prevent t h e f t by providing a re1 i a b l e record f o r t r a c i n g ownership
and t o prevent the spread o f disease. Ownership records and v e r i f i c a t i o n
inspections l i m i t opportunities f o r c a t t l e t h e f t and a1 so allow
i n v e s t i g a t o r s t o 1 ocate diseased c a t t l e and track t h e i r movement.
Livestock o f f i c e r s perform d u t i e s required by T i t l e 24 o f the Arizona
Revised Statutes. T i t l e 24 requires branding o f a l l range c a t t l e and
recording o f brands with the Livestock Board.** Current law provides f o r
p o i n t o f o r i g i n and some destination inspections. These require
inspection o f c a t t l e p r i o r t o moving them, whether they are changing
ownership or being moved from pasture t o pasture, out o f State, t o
slaughter o r t o sale yards. I n some cases t h e s t a t u t e s allow f o r self
inspection by owners rather than 1 ivestock inspectors. Arizona i s one o f
many states with a brand recording and inspection system. An Auditor
General survey of 15 states found that a l l 15 require some form o f brand
inspection, although Texas has a voluntary system c a r r i e d o u t by a p r i v a t e
association a t the county l e v e l . Table 3 shows inspection a c t i v i t y f o r
f i s c a l year 1983- 84.
* The Division inspects goats, sheep and horses i n addition t o c a t t l e .
However, t h i s a c t i v i t y i s considerably less than c a t t l e inspection i n
terms o f numbers and volume. Most inipection a c t i v i t y involves c a t t l e .
** I n addition, A. R. S. $ 24- 108. A requires the Livestock Board t o appoint
a livestock inspector i n a l o c a l i t y upon p e t i t i o n t o the Board by not
less than f i v e cattlemen.
TABLE 3
LIVESTOCK BOARD CATTLE INSPECTION ACTIVITY
FOR FISCAL YEAR 1983- 84
Activity Number Number of Cattle
Range Inspections 25,753
Auction Inspections N A
Feed1 ot Inspections N A
Dairy Inspections N A
Other Activities 1,890
NA: Information was not available.
Source: Livestock Board budget request and a Board official
Inspectors a1 so perform other 1 ivestock related a c t i v i t i e s . These include
investigating thefts, highway k i l l s, i l legal butcherings, strays, cruelty
to animals, missing, injured or dead livestock, and dog bites; and
participating i n feed lien cases. Table 4 shows the type and amount of
1 ivestock and re1 ated a c t i v i t i e s performed by 1 ivestock inspectors during
fiscal year 1 983- 84.
TABLE 4
OTHER PROJECTED LIVESTOCK BOARD INSPECTORA CTIVITIES1( )
FISCAL YEAR 1983- 84
Number
Strays 794
Highway Kills 359
Missing Livestock 265
Injured Or Dead Stock 113
Feed Liens 11 3
M i scel 1 aneous 246
Total
Percentage of Total
( 1 ) The activity frequencies are based on a random sample of 200 actual
cases selected from fiscal year 1983- 84 inspector daily reports.
Source: L i vestock Board activity records for f i scal year 1983- 84
Some A c t i v i t i e s Are Unnecessary - Some Livestock Board inspection
a c t i v i t i e s are unnecessary. Unnecessary a c t i v i t i e s do not s i g n i f i c a n t l y
contribute t o the Board's goals o f t r a c i n g movement o f 1 ivestock and
veri fyi ng ownership, because they dupl i cate other Board s t a f f a c t i v i t i e s
o r a c t i v i t i e s of other State agencies. Unnecessary a c t i v i t i e s t y p i c a l ly
i nvol ve small numbers o f 1 ivestock a t scattered points throughout the
State. Additional ly, many o f the unnecessary a c t i v i t i e s are dupl icated by
other State agencies. Unnecessary a c t i v i t i e s include some p o i n t o f o r i g i n
inspections and involvement i n feed 1 ien cases.
Point of Origin Inspections - A. R. S. $ 24- 267 requires p o i n t o f o r i g i n
inspections before owners can move or s e l l livestock. Some point of
o r i g i n inspections are not necessary. These i ncl ude:
Backyard Inspections - According t o the Livestock Board, backyard
inspections involve a 1 ivestock inspector inspecting a small number of
livestock before sale o r slaughter. This a c t i v i t y accounted f o r a
bulk of inspector work load i n 1983. I n these cases the inspector
only inspected one or two head o f c a t t l e each v i s i t . Backyard
inspections involving 1 ivestock destined for auction are unnecessary.
The Board assigns inspectors t o a l l auction houses t o process
livestock ownership changes.
Pasture To Pasture Movements - Pasture t o pasture movements are point
o f o r i g i n inspections t h a t take place when a rancher moves livestock
from one area t o another.* No change of ownership occurs and the
inspector usually waives the inspection fee.
Some point of o r i g i n inspections are necessary. Those i n v o l v i n g ranch
t o ranch sales or livestock shipped out o f State are not duplicated
and should be continued t o ensure protection against t h e f t .
* A. R. S. 5 § 24- 267. E and 24- 268. D allow inspection and fee waiver of
pasture t o pasture movements a t the inspectors' discretion.
e Feed Liens - A. R. S. $ 33- 921 outlines necessary requirements for an
i n d i v i d u a l t o hold l i e n f o r feed and pasturage. Livestock o f f i c e r s
p a r t i c i p a t e i n these cases by ensuring t h a t the p a r t i e s involved meet
a1 1 legal requirements, a1 though statutes do n o t r e q u i r e 1 ivestock
o f f i c e r involvement. These a c t i v i t i e s involve p r i v a t e matters between
two i n d i v i d u a l parties.
Inspection Program Change - Two f a c t o r s i n d i c a t e t h a t the Livestock Board
could eliminate many current a c t i v i t i e s without reducing protection t o the
livestock industry. F i r s t , the inspections t h a t would be retained would
be focused on points a t which major t h e f t s might occur.* Second,
livestock t h e f t does not appear t o be as s i g n i f i c a n t a problem as the
Board has suggested.
The Board should focus s t a f f resources a t points where major t h e f t s might
occur. Concentrating inspections a t sal e yards, feedlots, slaughterhouses
and on shipments going out o f State would reduce the potential gain from
livestock t h e f t by e l i m i n a t i n g t h e most l i k e l y avenues f o r the sale o f
st01 en animals. Presently, C a l i f o r n i a and Montana regul ate 1 ivestock i n
t h i s manner. Cal i f o r n i a requires inspections a t sale yards, a t feed1 ots,
p r i o r t o slaughter, and f o r l i v e s t o c k going out o f state. Montana
requires inspections a t sale yards ( 1 head or more), p r i o r t o slaughter,
and f o r change o f ownership a t ranches, county l i n e s and feedlots.
Livestock t h e f t does not appear t o be a s i g n i f i c a n t problem i n Arizona.
Although a number o f Livestock Board and industry sources i d e n t i f i e d t h e f t
as a major problem, 1 i t t l e evidence supports t h i s claim. None o f the 15
s h e r i f f ' s departments i n Arizona i d e n t i f i e d t h e f t as a major problem, and
only two i d e n t i f i e d s i g n i f i c a n t cases of theft. A survey of Livestock
Board d a i l y reports f o r f i s c a l year 1983- 84 revealed two recorded cases o f
livestock t h e f t out of a sampl e o f 200 reports. Interviews with industry
representatives and f i n a n c i a l i n s t i t u t i o n s found no s i g n i f i c a n t documented
amounts of t h e f t . I n fact, members of the financial community report
losses from t h e f t to be no higher than those expected through natural
- k These inspections include a l l ownerskip changes, l i v e s t o c k going t o
slaughter and livestock being moved out- of- State.
a t t r i t i o n . The 1 imited incidence o f documented t h e f t i s especially
s i g n i f i c a n t i n 1 i g h t o f the Board's r e s t r i c t e d enforcement policy. Board
statutes r e s t r i c t inspections t o daylight hours only, thus allowing
prospective thieves the freedom t o operate a t night. Also, u n t i l very
recently the Board's selective road stop program, which allows inspectors
t o stop vehicles and request a1 1 necessary proof o f ownership documents,
was not s t r i c t l y enforced. F i n a l l y , criminal investigations accounted f o r
less than 1 percent o f inspector a c t i v i t y i n f i s c a l year 1983- 84.*
E l iminating Unnecessary A c t i v i t i e s
Would Reduce S t a f f i n g Requirements
Changing the l i v e s t o c k inspection program t o eliminate unnecessary
a c t i v i t i e s would reduce Board s t a f f requirements. Our analysis shows t h a t
changes i n inspection requirements would eliminate the need f o r 25 FTE
positions. Combined with reduced cost f o r vehicle operations, a reduction
i n inspection s t a f f would save the State $ 620,000 annually. Further, even
with these reductions the inspector work load i n Arizona would remain low
compared with other states with comparable numbers of range c a t t l e .
Future trends i n the 1 ivestock industry may produce additional savings by
f u r t h e r reducing the need f o r livestock inspections.
S t a f f i n g Reduction - The Livestock Board could eliminate 25 FTE
positions by reducing unnecessary inspections and performing point o f
destination inspections. Unnecessary a c t i v i t i e s account for 35 percent o f
inspector s t a f f time. Inspections a t destination points, ranch t o ranch
sales and slaughterhouses, and on shipments out of State would provide
adequate records o f l i v e s t o c k ownership and movement and save the Board
approximately $ 547,500 i n personnel costs. The staffing reduction would
produce an additional savings o f almost $ 74,000 i n vehicle operation costs.
Some duties performed by livestock inspectors are necessary, others are
not. The necessary functions include inspecting c a t t l e a t a l l points o f
destination ( including auctions), inspecting c a t t l e sold between ranches
and those going t o slaughter, and inspecting c a t t l e p r i o r t o shipments out
* One percent i s a projection based on an Auditor General random sample
survey o f 200 d a i l y report cases f o r f i s c a l year 1983- 84.
o f State. A1 so, inspectors should continue t o i n v e s t i g a t e reports o f
stray 1 ivestock and highway k i l l s. A1 1 other a c t i v i t i e s are unnecessary.
These include most p o i n t o f o r i g i n i nspections, i 1 l e g a l butcherings, dog
b i t e s and missing, i n j u r e d o r dead l i v e s t o c k , and feed l i e n a c t i v i t y .
Table 5 shows the s t a f f hours required t o perform both the necessary and
unnecessary a c t i v i t i e s i n f i s c a l year 1983- 84. E l i m i n a t i n g unnecessary
a c t i v i t i e s would have reduced the t o t a l inspector work hours required i n
t h a t year from 117,216 t o 66,946.
TABLE 5
HOURS REQUIRED TO PERFORM
LIVESTOCK BOARD INSPECTOR ACTIVITY
FISCAL YEAR 1983- 84
Auction
Ownership Change Inspections
Custom Slaughter
A l l Other Inspections
Daily Report A c t i v i t i e s
Total Hours
Essential
S t a f f Hours
Unnecessary
S t a f f Hours
( 1 ) Includes 20,677 hours f o r i n v e s t i g a t i n g s t r a y l i v e s t o c k r e p o r t s ,
2,872 hours t o i n v e s t i g a t e highway k i l l s and allowance o f 8 percent
( 3,939 hours) f o r miscellaneous a c t i v i t i e s such as t h e f t
investigation, c r u e l t y t o animal complaints and r a i l r o a d k i l l s .
Source: Complied by Auditor General s t a f f from Board records and reports
The essential a c t i v i t i e s i d e n t i f i e d i n Table 4 are those t h a t
s i g n i f i c a n t l y promote the goals o f the brand inspection program. The
reduction i n inspector a c t i v i t i e s s t i l l provides f o r a meaningful
deterrent against t h e f t , because the points o f f e r i n g the greatest
p o t e n t i a l economic gain from t h e f t would s t i l l be regulated. El i m i nating
unnecessary a c t i v i t i e s would allow the Livestock Board t o reduce i t s
inspector s t a f f by 25 FTE positions. Table 6 shows the p r a c t i c a b l e
s t a f f i n g reductions and projected savings. However, imp1 ementi ng these
reductions may necessitate e l i m i n a t i n g A. R. S. $ 24- 1 08. A t h a t requires the
19
Board t o appoint a l i v e s t o c k o f f i c e r a t the request o f f i v e cattlemen.
The Board may also be able t o reduce the cost o f inspection a c t i v i t y .
Fewer inspections and d a i l y r e p o r t s c o u l d e l i m i n a t e the need f o r some
c l e r i c a l personnel.
TABLE 6
PROJECTED STAFFING AND COST SAVINGS
POSITIONS NEEDED FOR ESSENTIAL ACTIVITIES
Positions
Total Hours Needed
Divided By
Hours Per FTE P o s i t i o n
FTE Positions
Mu1 t i p 1 i e d By
Training A1 1 owance
FTE Positions Needed
Savings
Current FTE Positions
Less Needed Positions
FTE Savings
Mu1 t i p l i e d By Cost
Per P o s i t i o n
Personnel Cost Savings
Plus Vehicle Operating Savings
Total Savings
Source: Auditor General s t a f f a n a l y s i s of Livestock Board data
( 1) The 1,776 standard annual productive hours f i g u r e i s derived by
subtracting vacation, sick leave and other nonproductive a c t i v i t y
hours from the t o t a l annual hours figure o f 2,080.
( 2) The Livestock Board i s authorized 66 FTE inspector positions f o r
1984- 85. Only 59 p o s i t i o n s were f i l l e d as o f November 28, 1984.
However, the Board has requested the 66 positions f o r 1985- 86.
Thus, the projected s t a f f i n g savings i s based on the t o t a l number o f
authorized p o s i t i o n s .
The projected $ 620,000 represents a minimum savings. Personnel costs are
based on the starting salary of a Livestock Officer I ($ 17,310 per year)
plus employee related expenses and uniform allowance ($ 4,600). Thus, the
Board would save a t l e a s t $ 21,910 per inspector. Vehicle operations
savings are based on the average number of miles driven by inspectors i n
1983- 84 mutliplied by 15 cents ( the average cost per mile that year). The
analysis is based on the assumption that work load and vehicle operation
costs remain constant.
Inspector Work Load Remains Low - Even w i t h the proposed staffing
reductions, the work load for Arizona livestock inspectors would be much
lower than work loads i n other states, which indicates that resources
would be more than adequate to f u l f i l l Livestock Board duties.* Table 7
shows staffing and work loads in states w i t h point of destination
inspections. The Auditor General proposal for inspection is similar to
the programs in California and Montana, b u t s t i l l leaves Livestock Board
inspectors w i t h only 16 percent of California's inspector work load and 27
percent of i- lontana's work 1 oad.
TABLE 7
STAFFING AND WORK LOAD IN STATES WITH
POI: JT OF DESTINATI0; I INSPECTIONS
( Program Proposed For Arizona 1
Inspectors Cattl e
Range Cattle Full Time Part ~ irnei) l Per FTE Inspectq, r
Arizona 476,000 4 1 0 11,610
Cal ifornia 3,449,003 2 5 46 71,854
ilontana 3,043,000 68 ( 2 ) 6 42,859
( 1 ) Part tiine inspectors in these other s t a t e s work half time. Many are
seasonal empl oyees
( 2 ) Includes 18 investigators
Source: Auditor General State survey and ' Jnited States Departzent of
Agricul tare
* Auditor Senera1 s t a f f surveyed 15 states. Table 7 and Table 8 1 ist
neigiiborirlg states ~ ritti 5rand inspection requirements and significant
c a t t l e populations.
2 1
The d i s p a r i t i e s i n the proposed program are s i m i l a r t o t h e differences
between Arizona's current s t a f f i n g program and other western states with
comparable p o i n t o f o r i g i n inspections. For example, as shown i n Table 8,
Arizona's c u r r e n t inspector work load i s 50 percent o f New Mexico's work
load and 20 percent o f Colorado's work load.
TABLE 8
STAFFING AND WORK LOAD IN
STATES WITH POINT OF O R I G I N INSPECTIONS
( Current Arizona Program)
Arizona
Col orado
Nevada
New Mexico
Utah
Range I n spectors C a t t l e Per
Cattl e F u l l Time ~ a r t - ~ i m e) F( Tl E Inspector
476,000 59 0 8,068
( 1 ) Part- time inspectors i n these other states work h a l f time. Many are
seasonal empl oyees
Source: Auditor General State survey and United States Department o f
Agricul t u r e
Additional Savings - The Board may r e a l i z e a d d i t i o n a l savings by improving
inspector p r o d u c t i v i t y and reducing inspection costs. A d d i t i o n a l l y ,
i n d u s t r y trends p o i n t t o a d e c l i n e i n the need f o r f i e l d inspections.
The differences i n work load measures between Arizona and other western
states suggest t h a t the Livestock Board may produce a d d i t i o n a l savings by
improving inspector p r o d u c t i v i t y . * For example, 1 ivestock inspectors
could each be responsible f o r 11,600 c a t t l e under the p o i n t o f d e s t i n a t i o n
* The seasonal nature of much o f the inspection a c t i v i t y , and the
extensive use o f part- time inspectors by other states, suggests t h a t
one means o f increasing p r o d u c t i v i t y may be the use of part- time o r
seasonal empl oyees.
inspection program proposed by the Auditor General. Increasing inspector
work load t o one- third the Montana level ( 14,286 c a t t l e per inspector)
would reduce the number o f i nspectors needed from 41 t o 33, a savings of
approximately $ 1 75,280. Further audit work i s needed t o determine why
work loads f o r Arizona livestock inspectors are lower than other western
states and what changes, i f any, can be made t o f u r t h e r reduce the number
o f inspectors i n Arizona." Reducing the number o f inspectors t o 41 and
e l iminating unnecessary f i e 1 d inspections coul d decrease the number o f
motor vehicles needed by the Livestock Board. The s t a f f i n g reductions
noted above eliminate the use o f 18 Board owned vehicles. Substituting
these excess vehicles f o r 18 o f the 20 vehicles the Board rents from the
Department of Admi n i s t r a t i on Motor Pool coul d save an addi ti onal $ 38 , I 60
annually. Concentrating inspections a t major destination points may a1 so
reduce mileage and therefore, may reduce vehicle operation costs.
Further savings may also be possible because o f trends i n the 1 ivestock
industry. Nationwide, consumers are eating less beef. Lower demand f o r
beef, lower prices and high production costs are causing the number o f
ranches t o decline, and many remaining ranches are corporate controlled.
The t o t a l number o f c a t t l e i n the State has steadily declined from a peak
o f 1.4 m i l l i o n head i n 1973 t o 1 m i l l i o n head i n 1984. The continuing
decline of range c a t t l e i n d i c a t e s l e s s need f o r f i e l d inspection.
Fees Should Be Increased
To Defray Program Costs
Livestock Board fees should be increased t o cover a greater portion o f
program costs. A1 though the Board ' s program benefits the industry rather
than the general public, fees currently pay only 25 percent of i t s costs.
Increased fees would r e s u l t i n higher costs t o t h e l i v e s t o c k industry.
However, 1 ivestock programs i n several western states are s e l f supporting.
* The Livestock Board reduced the number o f i t s inspectors when it
i n s t i t u t e d a sel f- inspection program for ranchers i n 1981.
Self- inspection allows ranchers t o move l i v e s t o c k under some
circumstances without an inspector's approval. This contributed t o
the reduction o f inspectors from 82 i n 1981 t o 67 presently.
A1 though the Arizona 1 ivestock industry pays personal and real property
taxes, we could not determine the amount contributed t o the State General
Fund.
Program Benefits Industry - The brand inspection program benefits the
c a t t l e industry almost exclusively, and other Board registration and
verification a c t i v i t i e s benefit other segments of the livestock industry.
Ownership records and brand inspections aid the industry by providing
information and verification needed to deter theft and reduce losses from
disease. However, the general public does not benefit directly from this
program. Despite the limited benefits to the general public, the
livestock industry fees supported less than 25 percent of program cost i n
fiscal year 1983- 84 ( Tab1 e 9).
TABLE 9
BRAND INSPECTION PROGRAM - EXPENDITURES AND REVENUES
FISCAL YEAR 1 983- 84
Program Expenditures
Direct cost
Indirect cost
Total Expenditures $ 2.300.000
Revenue
Fie1 d inspections
Ca t t l e $ 1 34,000
Sheep and Goat 12,000
Horses 62,000
$ 208,000
Auctions $ 48,000
Feed1 ots 135,000
Dairies 8,000
Equine Transfers $ 64,000
Brand Recording 90,000
Total Revenue $ 553,000
Source: Livestock Board records and interviews
Increased Fee Impact - Because the i nspection program provides 1 i ttl e
b e n e f i t t o the general public, fees should cover program costs. The
reduced program previously recommended would require an additional
$ 888,000 i n fees per year, and could necessitate substantial fee increases
f o r typical a c t i v i t i e s . The f o l l owing examples i l l u s t r a t e the cost o f
inspection based on average inspector, m i 1 eage, and vehicle costs. *
0 Range Inspection - An inspector inspects two c a t t l e before they are
sold. The inspector drives about 25 miles t o the inspection p o i n t .
This a c t i v i t y takes about 1- 1/ 2 hours, including 54 minutes of d r i v i n g
time and completion o f a l l necessary paperwork. The actual cost i s
$ 23.30. The State c o l l e c t s $ 3.50, a difference o f $ 19.80.
Sale Yard Inspection - Three livestock o f f i c e r s assigned t o a sale
yard inspect 300 1 ivestock. One inspector works 8 hours, two
inspectors work 4 hours each. The cost f o r salaries i s $ 168.48. This
does not include any vehicle costs or inspector d r i v i n g time. The
State c o l l e c t s $ 75 i f a1 1 animals are c a t t l e , which have the highest
inspection fees. The difference between the actual expenses and money
collected i s $ 93.48. No service fee i s levied against the livestock
owners.
Industry F u l l y Supports Program I n Other States - I n contrast t o Arizona,
the livestock industry f u l l y supports regulation i n some states. The
programs i n Cal i f o r n i a , Colorado, New Mexico, Texas and Washington are
f u l l y self- supporting. The industry bears the cost of regulation through
inspection fees and fines. Other states also use d i f f e r e n t methods f o r
assessing the cost of state regulation. Montana and Nevada use d i f f e r e n t
types of taxes t o support t h e i r programs. Montana l e v i e s a m i l l tax on
livestock, which i s c o l l e c t e d by the counties and used t o o f f s e t program
costs. Nevada charges livestock owners a livestock head tax which
accounts f o r a p o r t i o n of t h e i r budget. Only a portion o f the Montana and
Nevada operating budgets for brand inspection i s raised by fees and
permits.
* Costs are based on the salary o f a Livestock O f f i c e r I and a mileage
cost o f 15 cents per mile t o operate vehicles.
Because o f the v a r i a t i o n i n the types o f fees and the time required t o
inspect the various types of l i v e s t o c k , t h e Board should review i t s fee
s t r u c t u r e and those used i n o t h e r s t a t e s t o determine the most e f f i c e n t
and equitable method o f financing i t s 1 ivestock inspection a c t i v i t i e s .
Property Taxes - A1 though the l i v e s t o c k industry pays property taxes on
livestock, the amount contributed t o t h e S t a t e general fund cannot be
determined. Industry representatives and Board members contend t h a t
property taxes assessed on 1 ivestock by Arizona counties are a s i g n i f i c a n t
burden f o r which 1 ivestock owners ( prirnari ly c a t t l e owners) receive few
county services. They feel t h a t t h e i n d u s t r y ' s property tax payments
e n t i t l e them t o State- funded services from the Livestock Board. Some
p o r t i o n o f these property tax payments are p a i d t o the State General
Fund. However, the counties do n o t separate l i v e s t o c k - r e l a t e d personal
and real property taxes from o t h e r p r o p e r t y taxes paid by the industry.
Therefore, we could not determine the amount t h i s t a x c o n t r i b u t e s t o the
General Fund. *
CONCLUSION
Livestock ownership records and v e r i f i c a t i o n are necessary t o deter
p o t e n t i a l t h e f t and prevent disease. However, many Livestock Board
a c t i v i t i e s are unnecessary and do not c o n t r i b u t e s i g n i f i c a n t l y t o
achieving the Board's purpose. E l i m i n a t i ng unnecessary a c t i v i t i e s woul d
allo\ v the Board t o reduce i t s s t a f f by 25 FTE positions and save
$ 620,000. Because ownership records and v e r i f i c a t i o n p r i m a r i l y b e n e f i t
the industry, the Board should review i t s costs f o r these a c t i v i t i e s and
recommend a s t r u c t u r e t h a t would pay f o r the f u l l cost o f these a c t i v i t i e s .
* One county o f f i c i a l t o l d us t h a t t h e p r o p e r t y tax on l i v e s t o c k i s
d e c l i n i n g i n importance as a revenue source due t o changes i n the
nature o f t h e l i v e s t o c k industry. With the trend toward f e e d l o t
production fewer ranchers r a i s e c a t t l e from calves t o slaughter.
Instead, many c a t t l e are sold t o feedlots during the year. Any
1 ivestock he1 d less than one year are considered inventory r a t h e r than
personal property and are n o t s u b j e c t t o personal property taxes.
2 6
RECO! dMENDATI ONS
1. The Legislature shoul d consider amending A. R. S. § 24- 262. A and A. R. S.
§ § 24- 267. A, 24- 267. B and 24- 267. E t o e l iminate unnecessary 1 ivestock
inspections. These unnecessary i nspections include p o i n t o f o r i g i n
inspections when l i v e s t o c k are moved t o a d e s t i n a t i o n where
i nspecti ons are a1 so performed.
2. The Legislature should consider amending A. R. S. $ 24- 1 08. A t o e l iminate
the requirement t h a t the Livestock Bord appoint an inspector i n a
l o c a l i t y upon p e t i t i o n by a t 1 east f i v e cattlemen.
3. The Livestock Board should eliminate inspector r e s p o n s i b i l i t y f o r feed
l i e n cases, and other miscellaneous cases.
4. The Livestock Board should review i t s expenses and revenues f o r
ownership record and v e r i f i c a t i o n a c t i v i t i e s and recommend t o the
Legislature a fee schedule t h a t f u l l y supports the cost o f the program
a c t i v i t i e s .
FINDING I1
STATE COULD SAVE $ 345,000 ANNUALLY BY USING FEDERAL MEAT AND POULTRY
INSPECTION
Arizona should a1 1 ow the United States Department o f A g r i c u l t u r e ( USDA)
t o assume a l l meat and p o u l t r y inspection r e s p o n s i b i l i t i e s i n the State.
Under Federal law, the USDA must assume meat and p o u l t r y inspection
duties i f a s t a t e discontinues i t s meat inspection program. USDA
inspection woul d save Arizona $ 345,000 annually and woul d provide other
benefits. Although State- inspected plants may i n c u r some costs as a
r e s u l t o f the change t o Federal inspection, USDA can modify i t s
procedures t o l i m i t the cost t o these plants.
USDA Must Inspect Meat And P o u l t r y
P l a n t s If State Does Not
~, Ll-. Federal 1 aw requires USDA t o assume r e s p o n s i b i l i t y f o r a1 1 meat and , .
p o u l t r y inspection i n Arizona i f t h e S t a t e chooses n o t t o inspect meat
??^/ P
and poultry. Since 1973, 23 states and seven o f 12 western states have I&
t r a n s f e r r e d t h e i r meat and p o u l t r y inspection programs t o USDA. However,
Arizona has maintained a cooperative meat and p o u l t r y inspection program ' J'" / J."
with the Federal government. dk$
",&? bJ - ,,- Z
The Federal Meat Inspection Act and the Poultry Products Inspection Act i,;- p",
say t h a t i f a s t a t e does not maintain a meat and p o u l t r y inspection ' Tiy '
i
program equal t o the Federal program, USDA must perform a l l meat and
p o u l t r y inspection i n t h a t state. According t o USDA, t h i s Federal
takeover can occur because a s t a t e f a i l s : 1 ) t o maintain a program t h a t
meets Federal standards, o r 2) decides not t o conduct i t s own program.
Because the Federal Meat Inspection Act allows f o r e i t h e r state o r
Federal meat inspection programs, USDA i s responsible f o r a1 1 meat and
p o u l t r y inspection i n approximately h a l f the states. Since 1973, 23
states, i n c l u d i n g seven o f the 12 western states, have been designated for
Federal inspection.* A USDA pub1 i c a t i o n expl a i ns t h a t some desi gnations
resulted from unacceptable state programs, but most occurred when a
governor or state 1 egi s l ature requested designation t o save state funds.
Table 10 shows the trend toward Federal designation and h i g h l i g h t s
western states.
TABLE 10
DESIGNATION OF STATES FOR
FEDERAL MEAT AND POULTRY INSPECTION
1973- Kentucky
1974- Pennsyl vania
1975- COLORADO
Minnesota
MONTANA
NEVADA
New York
North Dakota
Connecticut
M i ssouri
Nebraska
New Jersey
OREGON
Tennessee WASHINGTON
1976- CALIFORNIA Massachusetts
1979- New Hampshire
1981 - Maine
1982- Arkansas
Michigan
IDAHO
Rhode Island
Sources: Code of Federal Regulations and USDA regional director
Arizona Inspection Program - I n contrast t o the states t h a t r e l y on USDA
f o r inspection, Arizona maintains i t s own inspection program i n
cooperation with USDA. This program applies only t o plants whose
products a r e s o l d for use i n Arizona. Federal law requires USDA t o
inspect a l l meat and p o u l t r y i n i n t e r s t a t e commerce. Therefore, as of
January 1984 USDA inspected neat or p o u l t r y i n the 38 Arizona plants t h a t
* Federal assumption of a state inspection program i s called
" designation." States i n which USDA performs a l l meat inspection are
c a l l ed " designated states. "
ship products across state l i n e s or s e l l products t o plants t h a t ship
interstate. The Arizona Livestock Board as o f November 1984 inspected
meat or p o u l t r y i n 69 plants t h a t s e l l only inside Arizona. I n addition,
the Livestock Board monitors sanitation and legal compliance i n about 38
custom exempt meat plants.* The Arizona meat and poultry program has
received high ratings during USDA quarterly reviews i n the past few
years, and a USDA o f f i c i a l described Arizona's program as satisfactory a t
the February 1984 Board meeting.
State W- ou- l . d- B enefit From
Federal Meat Inspection
Arizona woul d r e a l i z e s i g n i f i c a n t savings and other benefits from USDA
inspection. Arizona coul d save $ 345,000 annual l y by requesting t h a t USDA
designate Arizona f o r Federal inspection. I n addition, the USDA program
woul d provide the State w i t h b e t t e r trained meat inspection supervisors.
Further, Federal inspection woul d remove marketing r e s t r i c t i o n s from
State meat plants.
Federal Inspection Would Save Arizona $ 345,000 Annually - By requesting
Federal designation, Arizona coul d save $ 345,000 annual ly . The t o t a l
estimated d i r e c t cost o f Arizona's meat and p o u l t r y inspection program i n
f i s c a l year 1984- 85 i s $ 691,500. One- ha1 f o f t h i s cost i s reimbursed by
USDA, so the estimated cost t o the State i s $ 345,750. Requesting
designation for Federal inspection woul d e l i m i nate t h i s annual State
expenditure f o r meat and poultry inspection a c t i v i t i e s . Tab1 e 11 1 i s t s
the actual and estimated costs o f the meat and p o u l t r y inspection program
t o the State.
* Custom plants prepare meat f o r personal consumption by i n d i v i d u a l
animal owners. Because the meat i s not sold t o the ~ u b l i c . it i s
exempt from inspection. However, State and Federal i c i e s - require
quarterly v i s i t s t o these plants t o check sanitation and t o ensure
t h a t they do not s e l l uninspected meat t o the public.
TABLE 11
ACTUAL AND ESTIMATED STATE EXPENDITURES
FOR MEAT AND POULTRY INSPECTION
FISCAL YEARS 1982- 83 THROUGH 1984- 85
Actual Actual Estimated
FY 1982- 83 FY 1983- 84 FY 1984- 85
Personal Services $ 27 9,884 $ 239,377 $ 255,800
Empl oyee Re1 ated 61,449 55,178 55,800
Travel 24,170 17,327 21,050
Professional Services 456 7 70 3,600
Other Operating 10,600 10,334 9,000
Capital Out1 ay 0 2,959 500
Total ( l )
J
( 1 Indirect costs of the meat and poultry program do not appear i n the
expenditures but would be saved i f the State program were
eliminated. Indirect costs to the State were $ 38,809, $ 36,343 and
$ 38,763, respectively for fiscal years 1982- 83, 1983- 84 and 1984- 85.
( 2) Lower cost i n fiscal year 1983- 84 resulted from vacant positions. ILL
a1 1 funds had been expended, +$ the fiscal year 1983- 84 cost woul d h a s
Source: Arizona Livestock Board expenditure 1 edgers for fiscal year
1982- 83 through fiscal year 1983- 84, and 1985 Appropriations
Report for fiscal year 1984- 85
El imi nati ng State responsi bi 1 i ty for meat and poultry inspection i n •
Arizona would not significantly change the rules, regulations and
guide1 ines for meat and poul try inspection because the present!
cooperative inspection program already subjects the State to Federal
requirements. To achieve i t s " a t l e a s t equal to" status, the Arizona •
program had to develop and adopt legal and regulatory requirements 1 ike
those of USDA. For instance, Arizona's meat and poultry regulations
adopt a l l applicable Federal regulations by reference. In addition, the
State program uses the Federal meat inspection manual and several Federal a
pol icy manuals as program guides. Further, the State program i s subject
to quarterly Federal review. Auditor General staff surveyed the Arizona
plants that have changed from State to Federal inspection i n the l a s t 3
years and found that both programs provide the same level of W e c t i o n . •
Supervisors Better Trained - I n addition t o cost savings, the USDA meat
inspection program woul d provide b e t t e r trained meat i nspection "
r.,
supervisors ' f o r the State. USDA's slaughter supervisors are
veterinarians, as required by the Code o f Federal Regulations. I n
contrast, State inspection supervisors are not veterinarians b u t a r e
supervised by veterinarians. New State inspectors study Federal meat and
poultry inspection manuals i n a classroom environment and receive some
on- the- job i n s t r u c t i o n from experienced inspectors. No special t r a i n i n g
547+ i s required t o become a supervisor. I n contrast, Federal s l aughterhouse
: i
supervisors receive special t r a i n i n g i n Federal meat and poul try
inspection school beyond thei r veterinary training.
Market Restrictions Removed - USDA inspection would also remove marketing
r e s t r i c t i o n s from State- inspected meat plants. State- inspected meat
plants may not ship products i n t e r s t a t e or s e l l meat t o any Federally
inspected plant, inside or outside o f Arizona, I n contrast, Federally
e a t atand poultry : plirntg,. iWtq ~ l ! ~ ; ~ , ; ~ ~ ~ wit$ hoPut s .
r e s t r i c t i o n s . Therefore, State- inspected plants are operating a t a
disadvantage t h a t woul d be removed under Federal inspection.* Eight o f
the 10 State- i nspected plants t h a t v o l u n t a r i l y changed t o Federal
inspection between March 1981 and November 1984 made the change t o
i ncl ude Federal and out- of- State businesses i n t h e i r c l ientel e. A1 though
State- inspected plants can vol u n t a r i l y apply f o r Federal inspection, by
doing so they f o r f e i t allowances, such as the 3 year extension f o r
necessary construction upgrades i n t h e i r buildings, given So plants k
.*.*
during designation.
Federal Procedures Limi t Impact O f
Change On State- Inspected Plants
Although State- inspected plants would IS '
of Federal inspectionb USDA procedures l i m i t the impact o f change on
State plants. USDA waives some s t r u c t u r a l standards i n plants being
designated and allows plants 3 years t o make necessary s t r u c t u r a l changes.
~ l , & c o r d m to the , livet$ dg&,~~ oydso me state-, i ~ spectedp lants wou~ d
not market i n t e r s t d t e even with ? e" d'@ Fa7 i n ~ ~ e c t l ' o n . ~
I n addition, USDA usually h i r e s most state inspectors t o continue with
the Federal program.
State Plants W i l l Incur Costs - State plants w i l l incur some costs as a
resul t o f designation. Plants may experience one- time costs f o r
construction blueprints and some recurring costs f o r $ overtime
inspection. The actual cost t h a t Arizona plants would incur as a r e s u l t
o f Federal inspection i s unknown. The experiences o f states t h a t have
v o l u n t a r i l y transferred r e s p o n s i b i l i t y t o USDA indicates t h a t most
Arizona p l ants w i l l make a successful transition. However,
force some plants t o opt f o r a custom exempt r e t a i l ex
may cease operations.
Plants i n Arizona may experience one- time costs f o r construction,
blueprints and new product labels. Both USDA and the states use the USDA
handbook Federal Facil i t i e s Requirements f o r Small Existing Meat P l ants
t o waive s t r u c t u r a l requirements i n e x i s t i n g plants. However, Federal
o f f i c i a l s apparently apply a s t r i c t e r i n t e r p r e t a t i o n o f t h i s handbook
than state meat i nspection o f f i c i a l s, because USDA has required
s t r u c t u r a l changes i n many plants while designating other states as
Federal ly inspected states. Therefore, some State- i nspected p l ants i n
Arizona would have t o complete construction projects t o obtain USDA
inspection. Plants t h a t do not have a set o f blueprints would also incur
the cost o f producing b l ueprints for USDA approval , and a1 1 plants woul d
have t o redesign t h e i r 1 abel s with the Federal seal.
Meat plants may a1 so experience increased overtime inspection charges
under the Federal program. Inspection beyond normal 8 hour s h i f t s i s
considered overtime. Under the State program, slaughter plants pay
-,
per hour as o f July 1984 f o r overtime inspection and processing
plants pay nothing. Under USDA, a l l plants pay er hour f o r
overtime inspection. A review of the operating schedules o f
State- inspected processi ng pl ants showed t h a t 48 percent of them coul d
avoid any Federal overtime under t h e i r present schedules. An additional
13 percent could avoid overtime by changing t h e i r schedules by 3 hours
per week. According t o a USDA o f f i c i a l , overtime costs i n the remaining
plants would depend on: 1 ) whether the operations performed during
extended hours require inspection, and 2) how many other plants on the
same inspection route also operate overtime. For instance, i f an
inspector v i s i t s four plants daily, a l l o f which operate 10 hours per
day, the inspector would divide the overtime among the f o u r p l a n t s and
charge each plant 1/ 2 hour o f overtime daily. These plants could avoid,
overtime costs by 1 i m i ti ng t h e i r overtime a c t i v i t i e s t o operatirns t h a t
do not require inspection. ' ,
The experience of states t h a t have v o l u n t a r i l y transferred meat and
poultry r e s p o n s i b i l i t i e s t o USDA indicate t h a t most plants make a
successful t r a n s i t i o n . The number o f plants i n states whose program
e f f o r t was deemed a t l e a s t equal t o the Federal program changed 1 i t t l e .
Arkansas l o s t only 1 percent of i t s plants, Michigan experienced an 11
percent decrease i n the number o f p l a n t s w h i l e Idaho l o s t 8 percent of
i t s plants. I n each o f these states some plants changed t o a custom
exempt status t o remain i n operation. I n contrast, plant closures i n
states i n which USDA took over inspection r e s p o n s i b i l t i e s because the
program was d e f i c i e n t were as high as 24 percent.
dl 1 owances f o r Existing Pl ants - The Federal designation process provides
allowances t o decrease the cost and impact o f Federal inspection : on
State- i nspected plants. Before the o f f i c i a l designation date, Federal
o f f i c i a l s survey State plants t o determine what immediate and long- term
safety or sanitary changes each plant must make t o qua1 ify for Federal
inspection. During these reviews, USDA waives .+$ me - stru, q$ ur*
requirements -" in the state meat and p o u l t r y plants by using a handbook
t i t l e d Federal Facil i t i e s Requirements f o r Small Existing Meat Plants
instead o f the more stringent Handbook 570, which applies t o new
construction and t o voluntary applicants. These s t r u c t u r a l waivers dd
not a f f e c t product standards; USDA also a l t e r s i t s plant approval
process during designation by allowing each plant 18 months a f t e r
inspection i s granted t o produce blueprints and an additional 18 months
t o complete necessary construction projects. I n addition, USDA provides
plants with approximately 5,000 pressure sensitive stickers t o cover the
p l a n t ' s e x i s t i n g stock o f labels. Plants t h a t v o l u n t a r i l y apply f o r
Federal inspection receive none o f the'se benefits.
USDA Hires Q u a l i f i e d State Inspectors - U$ E) A ' l l y hires q u a l i f i e d
. L* . & A V '
state meat inspectors as needed when t a k i w S+) VW a st$ Se~ program.
According t o USDA records, the Federal program h i r e s an average o f 62
percent of state employees when a state i s designated. To e f f e c t t h i s
h i r i n g process, a Federal contact person meets with state employees
before the e f f e c t i v e designation date. USDA personnel also work with the
state agency and the state personnel department t o determine employee
experience and qual i f ications. USDA o f f i c i a l s determine thei r personnel
needs through the p l a n t surveys conducted before designation and h i r e
accordingly.
CONCLUSION
Arizona could save $ 345,000 annually by requesting t h a t USDA assume the
a t i nspecti on program. USDA inspection woul d provide-'
supervisors and would allow a l l meat plants now under State
Ri nspection t o market t h e i F prodircts' t d % feral and out- o* Stafe plants
and businesses. ' I n addition, USDA would modify i t s plant approval
process to decrease the impact of Federal inspection on State- inspected
plants and would h i r e qual i f i e d State inspectors as needed t o continue
with the Federal program.
RECOMMENDATIONS
1. Arizona should request t h a t the U. S. Secretary o f Agriculture
designate Arizona f o r Federal meat and poul try inspection,
2. If meat and p o u l t r y inspection i s transferred t o USDA, the
Legislature shoul d consider amending A. R. S. § § 24- 601 through * 4- 663
t o delete provisions f o r State meat and poultry inspection,&
FINDING I11
LIVESTOCK BOARD NEEDS TO STRENGTHEN ENFORCEMENT EFFORTS
. The A r i~ z o-& n,+ a . . Li v e$ i& q& kGdrBss@ - hrWn n o t ful JL.. ast~ cJh, s
a i t h o r i ty t o ensure compl faice *- if t h 1 aws ufidW - f 2s jd& c'lt8fct? on. The
Board has not taken action against several meat plants with repeated
sanitary problems. Enforcement o f brand inspection 1 aws has been
inconsistent. Lack of enforcement i n cases i nvol v i ng Board members may
create the appearance o f a c o n f l i c t o f i n t e r e s t . The Board could improve
enforcement by using hearing o f f i c e r s .
The Livestock Board's statutory purpose i s t o p r o t e c t t h e l i v e s t o c k
industry from t h e f t and t o ensure wholesome meat and p o u l t r y products f o r
public consumption. Arizona law provides the Board with a v a r i e t y o f
enforcement powers t o meet i t s statutory purpoe. A. R. S. § § 24- 106 and
24- 645 state t h a t any license issued by the b W $ ~' q-: >... t&* W. v, sL,$~~ poer n& 4 <. - 3
? evoked f o r v i o l a t i o n o f o r noncompl iance with tha- statutes, r u l e s and
.,- '
tegulations set f o r t h by the Board. A. R. S. § 24- 645. D gives the Board the
power t o f i n e meat and p o u l t r y establishments up t o $ 1,000 per
v i o l a t i o n . A. R. S. $ 24- 646 allows the Board t o r e f e r cases t o a county
attorney or the Attorney General f o r prosecution.
The Board Has Not Taken Action
Against Probl em P l ants
xhg Livestock Board has
I-"
sed i t s a u t h o r i t y t o enforce Arizona's meat $
? ws$ Although the Board has a range o f enforcement options, it has not
acted o r has taken only 1 imited action against several plants with
repeated violations. As a r e s u l t , i t s a b i l i t y to deter p o t e n t i a l 8
problems may be 1 essened.
Enforcement Options - The Livestock Board has f u l l authority t o take
action against meat packing plant owners who v i o l a t e the law. The Board
has several options t o ensure compl iance without t a k i n g formal action.
Most problems are solved quickly. If a problem arises the inspector
assigned t o the plant discusses it w i t h p l a n t o f f i c i a l s and the problem
i s usually corrected on the spot. If a problem i s not solved or cannot
be solved w i t h i n a reasonable time an inspector may choose t o place a red
tag on the item i n question. A red tag means t h a t the piece o f equipment
or the meat product cannot be used u n t i l the problem i s solved. I n most
cases a r e d t a g i s a temporary action t h a t leads t o p r o b l e ~ ~ ~ m s o l u t i o n
w i t h i n a short time. The Board may also take more s t r i n g e n t a c t i o n f o r
more serious violations. If a plant has a serious problem or continually
refuses t o correct deficiencies the Board may send the plant a notice o f
v i o l ation. These notices are infrequent and sent only when inspectors
observe a v i o l a t i o n o f State law or regulation. If a notice o f v i o l a t i o n
i s sent and compliance i s s t i l l not obtainecj the Board can then take
steps t o refer the matter t o the Attorney General or 1 ocal prosecutor f o r
% " $ t i ~ n . The Board can a1 so suspend the p l a n t ' s operation, revoke
the license o r f i n e the owner i n l i e u o f other action.
Limited Enforcement Action - .? he Board has t r no action on ,
i t s own against chronic v i o l a t o r s o f meat and p o u l t r y sanitation laws and
regulations. A1 though several plants have h i s t o r i e s o f repeat problems,
the Board has not suspended any meat plant licenses f o r sanitary
probl ems. Only three suspensions between January and December 1984 were
imposed by Board s t a f f , and these occurred when owners threatened or
attempted t o intimidate State meat inspectors. I n addition, the Board
has not fined any meat establishments since t h a t power was given t o them
i n 1982. Instead, it has r e l i e d on the courts f o r enforcement - an
option t h a t appears t o provide l i t t l e e f f e c t i v e deterrence,
The Board's strongest action f o r health and sanitation v i o l a t i o n s i n
recent years has been t o r e f e r cases t o county prosecutors, which often
resul t s i n no action or 1 i g h t e r fines than the $ 1,000 fine per v i o l ation
the Board can impose on i t s own. Referring cases t o the superior court
may not always be an e f f e c t i v e means o f enforcement because, court
prosecution has not resulted i n penalties t h a t prevent repeat
vibtations. The Board referred 22 cases t o the courts between March 1981
and November 1984. The courts dismissed two cases ( one because the
statute o f 1 imitations had expired), one case i s s t i l l pending, and the
Board lacks information about three others. The Board dropped charges
against one plant t h a t changed t o Federal inspection, and one owner was
found i n v i o l a t i o n o f State standards but not fined.
Thirteen cases resulted i n fines, ten o f which were $ 1,000 or 1 ess. The
%&#& Atp ena. lty was a + $
; payment by a company accused of
s e l l i n g uninspected meat t o i n s t i t u t i o n s and r e t a i l outlets. This
involved numerous offenses occurring w i t h i n a year. The company was not
charged with any v i o l a t i o n and negotiated the payment, which equaled i t s
p r o f i t on the meat, with the county prosecutor.
Most court- fmposed fines are low i n r e l a t i o n t o the v i o l a t i o n s i n v a ~ q & @ L C h . . _ b
The long h i s t o r y o f problems and mu1 t i p l e court r e f e r r a l s indicate t h a t
, the Board's enforcement pol i c y has 1 ittl e e f f e c t on repeat violators.
For exampl e:
a One meat plant has a h i s t o r y o f noncompliance and sanitary problems
dating from 1971. The plant has sold mislabeled and adul teratedrk
meat. Since 1971 the plant has received 14 l e t t e r s , two prel iminary
notices and eight incident reports. Since 1981 , the Livestock Board
has sent the plant , seven notices of v i o l a t i o n and the p l a n t has bee*
referred f o r prosecution three times.: The Livestock Board referred
the plant for prosecution i n May 1982, July 1983 and August 1984.
u r t fined the owner ( IR$ on two misdemeanor charges i n August
* > * a
af h n i s s e ~ th e second case : in mid- 1 983, and fined the owner"**
i n December 1984.
8 Another meat p l a n t was sent three notices o f v f u t a t i d n between 1981 t
and 1% 83. These v i o l a t i o n s were misbranding and adulteration of meat
products as well as transporting and o f f e r i n g t h a t meat f o r sale. I n
Adulterated meat i s any meat or meat food product t h a t contains
poi sonous or harmful substances, chemical additives, or food c010ri ng
t h a t may render the product u n f i t for human consumption. Adulterated
meat a1 so includes meat or meat products prepared under unsanitary
conditions, or meat with 1 abel s t h a t provide m i s l eadi ng information
on the value or content o f the meat product.
four cases the plant purchased spoiled and returned meat t o o f f e r it
f o r sale. The Board referred the company t o the court f o r
prosecution i n January 1982 and the owner was charged with - four
d i f f e r e n t misdemeanor counts. The owner entered i n t o a plea*
agreement f o r a misdemeanor charge o f i l l e g a l transportation o f meat
i n June 1983, and a f i n e and surcharge o f i w i m was'lmposed.
0 A t h i r d meat establishment has been a source o f problems s
Between 1981 and 1982 the company received ffve notices of w46lattbh
for problems such as an unacceptable sewer system, processing of
products t h a t had been held f o r f u r t h e r inspection by a meat
inspector, mislabel ing o f products, unauthorized use o f the State
mark o f inspection, f a i l u r e t o properly present products for
inspection, and i n t i m i d a t i o n o f the meat inspector. The Board
referred the case t o court i n January 1982. I n May 1984 t h e c o u r t
found the owner innocent o f the misdemeanor charges y e t found the'
p l a n t i n v i o l a t i o n o f State standards and ordered t h e p l a n t t o bring
the sewage system up t o standard.
I n addition t o the low fines, these cases i l l u s t r a t e two other
shortcomings o f re1 iance on court enforcement. F i r s t , court action i s
often slow. One case lasted 17 months, another lasted more than 2
years. During t h i s time the plants continued to operate. 8 Second, the
t h i r d example above shows t h a t a p l a n t can v i o l a t e State meat plant
standards without the owners being found g u i l t y o f a criminal v i o l a t i o n
of the law. Thus, clear v i o l a t i o n s may go unpunished.
When the Board re1 ies on the court system t o decide cases enforcement i s 6
weakened. Violations o f most Board statutes are c l a s s i f i e d misdemeanors,
which have a low p r i o r i t y i n the court system. If a case i s t r i e d the
punishment i s usually low i n r e l a t i o n t o the v i o l a t i o n and offenders have
l i t t l e incentive t o r e f r a i n from i l l e g a l acts i n the future. In
contrast, the Livestock Board has the authority t o hear these cases on
i t s own and impose penal t i e s f o r each v i o l a t i o n . If the Board feels that
f u r t h e r action i s warranted it can s t i l l refer cases t o the courts after
taking action on i t s own.
Enforcement O f Sel f- Inspecti on
Reauirements I s Not Consistent
Thef&!$ oard has been inconsistent i n enforcing brand 1 aws gov8n" ln% j,+ self
6spection o f c a t t l e . ' A1 though some v i o l a t o r s are punished, the Board
takes no action i n other cases. Inconsistent enforcement weakens e f f o r t s
t o trace ownership o f 1 ivestock through sel f inspection.
To reduce inspector work 1 oad and a1 1 ow 1 ivestock owners t o move c a t t l e
w i t h i n the State without always requiring an inspection, the Board
created a self- inspection form. Ranchers use the form when moving c a t t l e
from one location t o another w i t h i n Arizona as long as there i s no
ownership change;* Board pol i c y concerning the sel f- inspection form i s
very specific and explained i n d e t a i l on each book o f c e r t i f i c a t e s given
t o ranchers. The self- inspection c e r t i f i c a t e s can be used only under
certain circumstances.
0 Ranchers may move only c a t t l e using the self- inspection form, and no
other 1 ivestock may be moved without an inspection;
Movement cannot involve change o f ownership; and
0 The form cannot be used t o move c a t t l e without brands ( excluding
c a t t l e under 4 months o l d accompanied by t h e i r mothers) or c a t t l e
with new brands.
To properly use the self- inspection form the owner must account for and
completely fill out each c e r t i f i c a t e and void a form with any erasures or
cross outs. Self- inspection forms may only be used f o r the brands
specified on each form. Any fa1 s i fication, s u b s t i t u t i o n or a1 t e r a t i o n
may r e s u l t i n use of the book being suspended or revoked. I n such cases
owners must have the animals inspected by a livestock o f f i c e r before
moving them.
nables the Board t o track movement o f c a t t l e as
inspection laws without necessitating a v i s i t by a
Board inspector.
The Board has punished some ranchers for violating sel f- inspection
requirements. We identified 13 cases since mid- 1981 when use of the
forms was instituted, i n which self- inspection books were revoked for a
variety of reasons. In 12 cases we were able to document reasons for the
suspension or revocation. Four self- inspection books were taken away
because the owners used the forms when changing the ownership of
livestock, one rancher used them when moving cattle owned by someone
else, another was moving horses and using the form, one owner was moving
Catflgtoff an Indian r e s d a t i o n ( which is not considered moving cattle
within the State), and five books were suspended because the owner used
the wrong book when moving cattle.
However, i n a t least three other cases the Board failed to punish
ranchers who allegedly misused self- inspection forms.* None of these
alleged violations appear to be less significant than the violations of
the 13 ranchers who lost use of the self- inspection books.
Between June 1982 and January 1983 a 1 ivestock owner allegedly used
20 self- inspection forms to improperly move 2,448 cattle. The owner
used the forms for cattle that were branded w i t h a brand different
from the one on the self- inspection certificates. The ' owner should
have fully understood the requirements for self- inspection since he
was a Livestock Board member. However, this case was closed
administratively and never referred t o the Board.
e A livestock owner filled out a self- inspection certificate
i ncorrectly: the certificate was not dated, the orgi nal destination
was crossed out and a new one added, and the number of cattle being
moved differed from the number shown on the form. Four of the cattle
were seized by a livestock officer at a feedlot because they were not
branded w i t h the owner's brand. The Board returned the cattle and
reimbursed the owner for all feed costs accrued while the animals
a; Other examples of nonenforcement may exist b u t cannot be identified
since - Board records on sel f- i nspection books and viol atiops are
incomplete.
were held since the inspector a t the feedlot had not informed the
livestock o f f i c e r working i n the rancher's l o c a l i t y o f the seizure,
as required by Board policy.
e A rancher brought s i x cows and f i v e calves i n t o a feedlot. Four o f
the c a t t l e were newly branded. One cow did not have the owner's
brand. The owner's c a t t l e were seized and held for 10 days then
returned when the rancher proved the c a t t l e were his. This case was
c l osed admi n i s t r a t i vely and never referred t o tAc ' t06t12- d. No a c t i on
was taken t o suspend or revoke the rancher's use o f the
s e l f- inspection forms.
The Board does not f u l l y protect the industry and the public when i t s
enforcement i s inconsistent or not exercised. Since sel f- i nspection
c e r t i f i c a t e s a s s i s t the Livestock Board i n keeping track o f 1 ivestock
movement, improper use or abuse o f the forms reduces tear> e l i a b l i t y s f
Board records.
Limited Enforcement Creates
Appearance O f C o n f l i c t O f I n t e r e s t
The Board's reluctance t o use i t s own authority t o enforce meat and
poultry laws and inconsistent enforcement o f sel f- i nspection requirements
may create the appearance o f a c o n f l i c t o f i n t e r e s t 4 The appearance o f
c o n f l i c t i s heightened when the parties involved are c u r r e n t o r former
Board members.
One meat plant owned by a @& e; haxs a h i s t o r y o f sanitary problems 8
dating back t o 1980. State and Federal inspectors have noted various
sanitary problems w i t h i n the plant, p a r t i c u l a r l y i n the meat processing
department where the potential f o r contamination i s highest. The
problems i ncl uded dirty equipment, 7 ,
paCnt, fplugged d~ atns,''' and d$ b? ers
-*/, .
6 State inspectors b r i e f l y ha1 ted processing three times i n
A p r i l 1980 and f o r 2 days i n May 1984 for sanitation problems. Federaq'
enspectors r a t e d t h e plant milswtey" i n reports issued i n May and
September 1984. A1 though a November 1984 Federal report found the p l a n t ' s
sani t a t i on t o be acceptabl e, two consecutive unsanitary r a t i n g s i s very
unusual :*"
Despite these problems, the Board has taken no action t o ensure
compliance. The area supervisor f e l t t h a t plant o f f i c i a l s should be
c a l l e d before the Board t o explain why t h e i r 1 icense should not be
suspended because o f the sanitary problems. Board administrative
o f f i c i a l s stated t h a t no action has been taken because no &-, t3W@@ js a. k c a . *
v i o l a t i o n s have been observed. They added t h a t the p l a n t i s o l d and w i l l
always have problems, and as 1 ong as the owner cooperates i n resolving
the problems no f u r t h e r action i s needed.
However, i n 1981 an inspector reported t h a t the owner and employees
improperly moved products t h a t were being held because o f p o t e n t i a l
contamination, which i s a v i o l a t i o n o f Board r u l e s and regulations.
( Although such actions normally r e s u l t i n a notice o f v i o l a t i o n , none was
issued i n t h i s instance.) I n addition, Board inspectors have noted t h a t
the owner has not cooperated with t h e i r e f f o r t s t o make necessary ~ hanges.
The Board's handling o f cases involving i t s members creates an impression
o f favoritisrq. ( Other plants have received notices o f v i o l a t i o n s f o r
problems comparable t o those occurring i n the plant owned by the Board
member. ) Similarly, the Board's i n a c t i o n i n the case o f the Board member
who moved 2,448 c a t t l e i n c o r r e c t l y using s e l f- inspection forms a1 so
suggests selective enforcement. The lack o f action i n t h a t case i s
p a r t i c u l a r y g l a r i n g because the number o f c a t t l e involved was far higher
than those moved by other ranchers whose p r i v i l e g e s were suspended.
* The p l a n t ' s s a n i t a r y conditions are very poor compared with other
State- i nspected plants. Between January and October 1984 State
inspectors i d e n t i f i e d and tagged a t o t a l of 21 pieces o f equipment or
food products i n the p l a n t t h a t d i d not meet minimum sanitary
requirements. A random sample of 11 other State- inspected plants
i d e n t i f i e d a combined t o t a l of only 13 pieces of equipment or food
products tagged f o r not meeting sanitary requirements. Thus, the
p l a n t i n question had approximately 62 percent more unsanitary
equipment or food products than a l l 11 sample plants.
Hearing Officers Woul d
Improve The Process
. Qe B,.~ *+ " r % q . gqyl d use hearlng of#&~%@: flhprbW- t t s effeetiwn@ ss. Some
Board members pointed out t h a t they do not have legal backgrounds and
therefore, feel more comfortable r e f e r r i n g cases t o court rather than
taking Board action. However, the Board could use i t s authority t o h i r e
hearing o f f i c e r s t o review the evidence, determine the facts and
recommend appropriate enforcement actions t o the Board. Hetiring o f f i c e r s
3~ 0udl' provide needed 1e gal expertise t h a t Board members feel they 1a cka
'.. LG - - 1
and ensure greater o b j e c t i v i t y i n decision making.
If a f u l l - t i m e hearing o f f i c e r were use4 the salary and related expenses
woul d be between $ 25,000 and $ 30,000. However, the Board waul d..@.@ k$ 1p7 a f wt n$@ l. @ f u l l - t i m e hearing o f f i c e r . ' Between March 1981 and December
'>*
1984 the Board referred 22 meat and poultry cases t o t h e courts f o r
prosecution. Even a s i g n i f i c a n t increase i n the number o f cases would
not necessarily require a f u l l - time hearing o f f i c e r .
CONCLUSION
The Livestock Board has not adequately exercised i t s enforcement powers.
The Board has not used i t s e x i s t i n g authority t o penalize meat and
poultry plant operators who v i o l a t e i t s rules and regulations.
Additionally, the Board does not ensure proper use o f self- inspection
forms. As a r e s u l t , the Board's a b i l i t y t o p r o t e c t t h e ' t ~ b u k t r y and t h g
pwbl'ic, . may be limited. ( The Board's l i m i t e d enforcement e f f o r t s may
create the appearance o f a c o n f l i c t o f i n t e r e s t , p a r t i c u l a r l y when Board
members are invol ved.
RECOMMENDATIONS
1. The Board should use i t s own authority t o consistently penal ize
individual s and establ ishments t h a t v i o l a t e statutes, rules and
regulations. The Board should r e f e r cases for prosecution only t&~;
repeat v i o l ations o r especially severe problems. "
2. The Board should use i t s a u t h o r i t y t o h i r e and r e t a i n a hearing
o f f i c e r t o take evidence and make recommendations t o the Board i n
cases i n v o l v i n g legal v i o l a t i o n s o f i t s statutes and rules. The
Board should use the hearing o f f i c e r ' s recommendation t o decide cases
and impose penalties if warranted.
OTHER PERTINENT INFORMATION
During the Audit, other pertinent information was developed regarding the
Livestock Board special investigations unit.
Livestock Board Special Investigations Unit
I n 1982 the Livestock Board administrative s t a f f created a special
investigations u n i t t o central ize 1 ivestock t h e f t investigation.
Originally, the u n i t consisted o f s i x s t a f f members. By 1984 the u n i t
personnel consisted of three 1 ivestock o f f i c e r s . On A p r i l 11, 1984, the
Livestock Board reorganized i t s i n v e s t i g a t i o n function and eliminated the
unit. Currently, 1 ivestock o f f i c e r s empl oyed by the Board are responsi bl e
for investigating cases w i t h i n t h e i r j u r i s d i c t i o n , the same procedure as
used before the u n i t was established.
Before the special investigations u n i t was establ i shed, r e l a t i v e l y few
people were convicted o f livestock t h e f t each year i n Arizona. I n 1982
the Legislature appropriated funds so the Livestock Board could create the
i n v e s t i g a t i o n s u n i t , which began operation i n July 1982. A f t e r the u n i t
was created, the conviction rate increased even though the number o f
investigations decl ined ( Tab1 e 12). I n the 6 months since i n v e s t i g a t i v e
a c t i v i t y was reorganized, two cases have been investigated leading t o four
people being convicted of 1 ivestock crimes.
TABLE 1 2
LIVESTOCK THEFT INVESTIGATION AND CONVICTION RATES
FISCAL YEARS 1 980- 81 THROUGH 1 983- 84
Convictions
Cases O f f i c e r s As a Percentaqe
Fiscal Year Investigated Involved Number o f ~ n v e s t i ~ a t i o n s
( 1 Through Apri 1 11 , 1984
Source: Livestock Board data
A1 though conviction rates increased, the criminal a c t i v i t y involved
appears t o have been minor. O f the 46 cases the u n i t turned over f o r
prosecution during i t s almost 2- year existence, seven ( 1 5 percent)
involved fraud, or t h e f t o f saddles o r other livestock r e l a t e d equipment.
These cases, although related t o the livestock industry, do not f a l l under
the j u r i s d i c t i o n o f the Livestock Board ( T i t l e 24) and were not handled by
the Board before t h e i n v e s t i g a t i o n s u n i t was created. O f the cases t h a t
d i d fa1 1 under the Livestock Board ' s j u r i s d i c t i o n , many involved monetary
val ues be1 ow $ 1,000. Of the 39 cases referred f o r prosecution t h a t f e l l
under the Board's j u r i s d i c t i o n , 29 o f them had monetary values placed on
the stolen items, and 16 o f the 29 involved 1 osses o f $ 1,000 o r 1 ess.
Some sheriffs, p a r t i c u l a r l y i n 1 arger counties, questioned the u n i t ' s
effectiveness and the qua1 i f i c a t i o n s o f i t s personnel. The s h e r i f f s
reported t h a t t h e i r departments were able t o handle investigations o f
criminal a c t i v i t y i n v o l v i n g 1 ivestock. The capabil i ty o f s h e r i f f s '
departments appears adequate i n l i g h t o f the f a c t t h a t criminal a c t i v i t y
i n the 1 ivestock industry appears t o be rather low i n Arizona. A survey
o f d a i l y reports completed by 1 ivestock inspectors i d e n t i f i e d no
s i g n i f i c a n t amount o f crime reported t o the Board. The number o f
l i v e s t o c k involved i s r e l a t i v e l y small and the value i s u s u a l l y n o t
great. I n addition, none o f Arizona's 15 county s h e r i f f ' s departments
i d e n t i f i e d livestock t h e f t as a major problem. Thus, the value of the
investigations u n i t may have been negligible.
Despite the minor nature of the u n i t ' s convictions, the Livestock Board
was never very clear i n i t s reasons f o r reorganizing i t s i n v e s t i g a t i v e
a c t i v i t y . A1 though Board members c i t e d a number o f reasons for disbanding
the unit, statements made a t the A p r i l 1984 Board meeting indicate t h a t no
attempt was made t o address these problems before disbanding the unit.
For example, several Board members complained that the u n i t needed more
d i r e c t i o n from the Board i t s e l f . However, a t l e a s t one Board member
pointed out that there had been ample time t o d i r e c t the u n i t and 1 i t t l e
e f f o r t put f o r t h i n providing any guidance. The Board also complained
t h a t increased coordination was needed with other 1 aw enforcement
agencies, y e t the Board made 1 i t t l e attempt during the u n i t ' s existence t o
ensure t h a t l i n e s o f comunication remained open. Thus, the Board was
never able t o c l e a r l y a r t i c u l a t e the specific reason or reasons f o r
disbanding the investigations unit, nor did the Board provide a l o g i c a l
rationale f o r n o t t a k i n g steps e a r l i e r t o provide greater d i r e c t i o n t o the
unit.
Because o f the controversy surrounding the reorganization o f the
investigations unit, the Arizona Department o f Pub1 i c Safety ( DPS )
investigated the Board's action t o determine whether the Board disbanded
the u n i t t o obstruct ongoing investigations. The DPS completed i t s
investigation i n September 1984 and found no evidence o f c o n f l i c t o f
interest, conspiracy or obstruction o f j u s t i c e i n the Board's action.
AREAS FOR FURTHER AUDIT WORK
I n Finding I we reviewed the need f o r f u r t h e r work regarding inspector
p r o d u c t i v i t y and the disposition o f 1 ivestock property taxes. During the
course o f the audit, we also i d e n t i f i e d several other potential issues
t h a t we were unable t o complete due t o time constraints. We have l i s t e d
these issues as areas f o r f u r t h e r audit work.
e Does the Livestock Board need t o establish s t r i c t e r control over i t s
fee c o l l ection process?
Livestock i nspectors col 1 ected $ 264,000 during 1983- 84, approximately
h a l f o f the Board's fee receipts. Monies c o l l e c t e d by livestock
inspectors are remitted t o the Livestock Board Office once a month.
Sometimes o f f i c e r s t u r n i n fee amounts t h a t d i f f e r from the amount
expected f o r the number o f inspections conducted. O f f i c e r s sometimes
mail i n cash t o cover the month's fees collected, and some o f f i c e r &
turn i n fee monies l a t e . Further a u d i t work i s necessary t o document
t h e extent of these problems and t o determine what procedures w i l l
ensure adequate control o f funds c o l l ected.
e Does the Livestock Board need t o store data from inspection
c e r t i f i c a t e s a t the Department of Administration's ( DOA) Data Center?
The Livestock Board stores data from 1i vestock inspe~ i'dti" f ~ i t h. k hs
DOA Data Center. he data storage costs totaled more than $ 53,00& * r r
between May 1982 and September 1984. The U. S. Bureau o f Land
Management ( BLM) contributed funds t o e s t a b l i s h t h e system but the
Livestock Board pays a l l maintenance and storage costs. Currently,
BLM does not use t h i s information and the Livestock Board o* nly uses ,- " ' 8 ' l i m i t e d categories. Further audit work i s heeded t o dwn tT'
costs and data use.
e Could the Livestock Board manage records more e f f i c i e n t l y ?
The Livestock Board must maintain a v a r i e t y o f records covering a wide
range of 1 ivestock a c t i v i t i e s . These include ownership and brand
records, inspection records, and inspectors' d a i l y reports. Many of
these records are not cross- filed, qnd r e t r i e v a l i s d i f f i c u l t i f a l l
the needed information i s not known, During the course o f our audit
we a1 so discovered some missing d a i l y reports and many d a i l y reports
t h a t lacked information on f i n a l action4 A1 though the Board does have
a computer and access t o computer use, it does not use these computers
f o r processing and s t o r i n g most records. Further audit work i s needed
t o document the extent t o which Board records are incomplete or
i naccessi b1 e and t o devel op recommendations f o r improvi ng management
techniques.
e Does the Livestock Board adequately manage i t s vehicle f l e e t ?
The Livestock Board owns 56 vehicles and leases 20 vehicles from the
Department of Administration Motor Pool. Vehicles owned by the Board
averaged more than 16,000 miles i n 1983- 84, and motor pool vehicles
traveled an average o f approximately 8,710 miles. Total costs for.
vehicl e operations i n f i s c a l year 1983- 84 were $ 178,55% Further
audit work i s needed t o determine whether: 1) owning or 1 easing
vehicles i s the better means o f meeting the Board's transportation
needs, 2)' vehicles are e f f i c i e n t l y u t i l i z e d , and 3) the Board has
adequate information t o manage i t s vehicle f l e e t .
BOARD MEMBERS
J. KENNETH CHILTON, CHAIRMAN
TUCSON . CATTLE GROWER
GLEN BINGHAM
SFFORD. SWINE INDUSTRY
E: Ef, R& E? i.? 2AL, Kk? bi, R
DWAYNE DOBSON
CHANDLER. SHEEP INDUSTRY
ATHENE GILMORE
TUCSON. EQUINE INDUSTRY
KERRY L. JONES
YUMA MEAT PACKING
KENNETH MORRISON
HIGLEY . DAIRY INDUSTRY
& ate of Arizona.
1688 West Adams - Room 322
Phoenix, Arizona 85007
Telephone ( 602) 255- 41 96
DR JOHN F PRINCE
2nOEh A . P. R. C UEURF9
JACK WILSON
WIKIEUP . CATTLE GROWER
Mr. Douglas R. Xorton
Auditor General
111 West Monroe, Suite 000
Phoenk, Arizona 85003
Dear Mr. Wort on:
AGENCY STAFF
EARL L. KELLY
DIRECTOR
DR. E. RAY HINSHAW
STATE VETERINARIAN
AND
MSISTANT DIRECTOR
CHARLES J. PARSONS
ASSISTANT DIRECTOR
Our formal coments to the issues raised in the performance a ~ t d i ta re expressed
herein. Due to the ten workday lhitation permitted to prepare this res-, onse,
our coments are directed cnlg to the more s i ~ n i f i c a n tc onclusions reached by
your staff and t h e i r attendant recomendaticns.
The report adequately addresses manpower needs lor inspection activities
follor~ ring the enactment of lezislation to eliiiinate sme point of or5; in
inspection. The report, hotlever, does not sufficiently take into accomt the
manpotrer needs involved in other activities such as the handling of strays and
seizures, theft investigations, highway or railroad k i l l s and monitoring
livestock movements. Nor does the report take into account the three office
clerical FTE's in t h i s prozram which are included in the t o t a l 67 Fm's
authcrized.
Pg. 15 of the report states that none of the 15 s h e r i f f ' s desartments in Arizona
indentified livestock theft as a major groblerr. A s we pointed out in our previous
written and oral responses t o t h i s staterrent, nearly a l l livestock cases in Gila,
Maricopa and Final Ccunties are referred to us for either individual or J o h t
handlinq. Ye are also involved in cases referred to us by other Ccuintles 2nd City
Police Departments. Since livestock cases :: enerally involve violaticns or' a low
misdemeanor classification, they do not receive the proper sttenti. cn by other law
enforcement a~ encies. Also, aost other acencies do not have personnel trained t o
Tucson Office: 416 West Congress, Room 105, Tucson, AZ 85701 ( 602) 628- 5383
Mr. Douglas R. IJorton, Auditor General
Page l%; o
March 0, 1985
investigate the various types of violations which occur. Not assigning manpower
t o work such cases might well lead other agencies to conclude, as stated, that
the problem is not significant. Of interest also is the fact that livestoclr
cases in other agencies are catergorized under vandalism ( illegal b u t c h e r a s )
or crhinal damage ( livestock missing or stolen). The continuing efforts of
livestock personnel in this area of activity is required i f protection to the
industry is to be afforded.
The agency's road stop program referred to on Page 18 has increased in recent
years as personnel were freed from point of origin inspections due to expanding
usege of rancher self- inspection forms. In 1984, this activity was hplemented
as a regularly scheduled program function with cne man per vehicle handling road
stops during d a y l i ~ h th ours and two men per vehicle handlirg road stops at nizht.
As with the conversion of ranchers from utilizing livestock inspection personnel
t o completix their om self- inspection forms, the process of traininq and
motivatinq livestock officers to switch from day to night work has been slm.
The installation of hiqh- band mobile radios in a l l vehicles in l a t e 1984 enables
contact with other law enforcement agencies, a protection v i t a l to night i: ork.
In 1985, it is anticipated we w i l l have from five to eight trgo+ an teams
monitoring night movement of livestock going out of state. As the need for
expansion or reduction of personnel assigned to this activity is determined,
staffing adjust~ entsw i l l be made accordingly.
31 Swmary, viith elimination of xaivers on inspections at soints of origi? and
correspondin& y, required use of self- inspecticn forms by oymers of branded
livestock; with elinination of in~.~ olvencnit? feed lien sales; ; dth : rider
utilization of part- time personnel in areas of low density livestock nmbers
and with s t a t i s t i c s developed from an on- coing twenty- four hour monitorinz of
livestock movement, ire expect to cormence an crderly reduction cf stafflnz
require~ entsi n F/ Y 19e6- 1917.
This question :\. as the subject of a Le; islative revier.] durir!! the 1983 Session;
not because of lack of confidence in the administering of the proSrLm zt the
State level ' out sinply due to constrcints feared from an snttcipated reven7Je
short- fall. '= he philosophical issue of a State's ri,; hts and responsibilities
vs. Federal intervention and dictates must again be addressed. Simpl:: put, a l l
persons desirinz to continue to slaughter and/ or process meat and meat ? rod-~ cts
for resale u- rder State inspection may continire to do so zs long as they cor. zly
with State statutes md Board regulations kihich Ere desiwed to provide an
inspection service on m " equal to" status to the Federal progrzm. In crder to
meet the physical p l a t f c c i l i t y requirenents t o qua1i. Q~ for acceptance ? under
Federg1 inspection service, a l l plants presently under State inspection would
have to invest substmtial a~ ountso f capital or :. iithdra; r from the r9tail
carket cr close their doors. The reference to the removal of marketing
restrictions under Federal inspection (? y. 31) is misleading to anyone kfno is
kno~~ ledzeablaeb out the market areas presently served by plsnts under Stste
Mr. Dowlas R. Norton, Auditor General
Page Three
March 6, 1985
inspection. We deal almost exclusively with small family- type operations v~ hich
gen&- ally serve the r e t a i l trade in their geographic area. Any of these plants
have to option to apply for Federal inspection at any time; the fact that they
have not chosen to do so speaks for i t s e l f ,
FINDING 111: N E D ; fO S m T G m J 3JFORC234EJT mORTS
Rather than to cite violators and refer such actions for prosecution, the report
recommends the Board of Directors, acting under statutory suthority, hear and
dispose of such actions themselves or engage the services of a hearin$? officer
and follow ensuing deteminations. This recommendation was well received and a
study is now underday to determine benefits, time frames and costs. For the
record, some members of the Board of Directors, past and present,. have not f e l t
qualified t o personally act in this area of authority, electing instead to refer
Cases for prosecution where both parties would be represented by counsel. The
fact that cases adjudicated i n courts i n lessor penalties than
might have been imposed by the Board ' wmi: Under the options
available to it, the Board's actions ornition and handlin- of
its' responsibilities consistent with the advice and consent of the ~ s s i s c a n t
Attorney General representing the Board,
The report's table of contents assigns Pz. 53 for the agency's response to the
questions raised in the Areas For Further Audit Xork. In order, 11,511 briefly
touch on each issue.
o The agency policy for collectin> y, accountin.; for and remittinr livestock
inspection fees to the Board has been retiewed many tiiies over the years
by your financial audit staff. 31 addition, opinions received from the
Office or" Attorney General supported t h i s procedure which has remained
virtually unchanged,
o Detailed cost/ benefit decisions were made prior to computerizing certain
livestock inspection data. Plans are i n progress to more ccnoletel;~
automate a l l inspection data which is reauired pursuant t o A. 3. S.
E24- 104 ( 3) t o be maintained permane~ tly. Access to records stored by
DOA Data Cenker is iiiediate and eliminates the many hours of research
previously required t o produce copies of certificates.
o Daily reports, since this deficiency t; as pointed out by your staff are
nox cross- filed. In addition, the responsibility for obtaini?? final
disposit5ons on a l l reports has Seen assiped to pro5ra- m personnel.
o Agency ~ ana~ enenoft vehicles owned as well as vehicles assicrned b: i lXjA
Kotor Fool has resulted in the accumulation and review of volrminous
s t a t i s t i c s over the years. 3egin; nine with Ti 1985- 1926, this
r e s ? ~ n s i b i l i t y at the agency level :; ill ' oe elir;, iiiated within three to
four years. Fundin, for a< ency vehicle re~ lacements ( 21;. In our 1965- 17E6
Mr. Douglas R. Norton, Auditor General
Page Four
March 6, 1985
budget request) w i l l be zppropriated directly to DOA. Eventually, a l l
vehicles used in the agency v ~ i l . 1b e assigned by the I. iotor Pool.
Pg. 63 provides for the agency's resyonse to the review of the State Veterinarian's @
powers and duties. Ne are i n complete accord with your findings and support the
recomrnendztion on Pg. 02 t o strengthen the penalty provision.
Although Board members, agency staff and I i n i t i a l l y viewed your audit and report
with some concerns, I was pleased to note the many positive aspects addressed and
the questions of involvement raised for our further studjr. I now view your report
as a guide t o e l i n i n z t i q certain activities and improvins both the effectiveness
and efficiency of our operations.
Sincerely ,,
INTRODUCTION AND BACKGROUND
The Office o f the Auditor General has conducted a 1 imited review o f the
State Veterinarian i n response t o an A p r i l 27, 1983, r e s o l u t i o n o f the
J o i n t Legislative Oversight Comnittee. This l i m i t e d review was conducted
as p a r t o f the Sunset Review set f o r t h i n Arizona Revised Statutes
§ § 41- 2351 through 41 - 2379.
State Veterinarian Powers And Duties
The State Veterinarian i s authorized by law t o enforce State animal
disease control laws and regulations under the guidance o f the Arizona
Livestock Board. The State Veterinarian supervises the Board's animal
d i sease control s t a f f , which investigates reported cases o f contagious
animal disease and c o n t r o l s t h e movement o f diseased animals i n t o and
w i t h i n Arizona. The State Veterinarian control s movement o f di seased
animals i n t o the State by examining and issuing entry permits f o r animals
transported i n t o Arizona, and control s movement o f d i seased animal s
w i t h i n the state through quarantines and hold orders on Arizona
1 ivestock. Other disease control methods i" ncl ude: 1 ) inspecting swine
garbage feeders* and beef c a t t l e feedlots, 2) issuing permits t o garbage
feeders and licenses t o feedlots, 31 v e r i f y i n g t h a t shippers r e t e s t
animals f o r disease when they a r r i v e i n Arizona, 4)' r e t e s t i n g herds t h a t
react t o the brucellosis r i n g test, and 5)' t r a c i n g disease t o the herd of
o r i g i n through e x i s t i n g 1 ivestock records.
The State Veterinarian and the animal disease control s t a f f perform some
o f t h e i r a c t i v i t i e s i n conjunction with United States Department 09
Agriculture, Animal and Plant Health Inspection serviceq ( USDA- APHIS)
through a cooperative work agreement. USDA- APHIS has 23 f u l l - time
employees, and plays a s i g n i f i c a n t r o l e i n control 1 i n g 1 ivestock diseases
t h a t are covered under a Federal eradication program, such as bovine
brucell osi s. FedePal personnel perform most disease control functions i8
6uMyi ng areas.
41. Swine garbage feeders are premises where swine are fed on garbage
which contains waste parts o f animals or poultry. Periodic
inspections are intended t o ensure t h a t fed garbage - i s cooked o r
treated before use.
57
Budget And Personnel
The State Veterinarian d i r e c t s the animal disease control s t a f f w i t h i n
the Arizona Livestock Board. Two assistant State veterinarians, a @
l i v e s t o c k o f f i c e r , and a secretary work i n the Animal Disease Control
Division under the State Veterinarian. The animal d i seae control budget
i s p a r t of a lump sum agency appropriation from the General Fund. The
actual and projected expenditures f o r animal disease control i n f i s c a l
year 1982 through f i s c a l year 1985 are shown i n Tab1 e 1.
TABLE 1
ANIMAL DISEASE CONTROL EXPENDITURES ( ACTUAL OR APPROVED)
FISCAL YEARS 1 981 - 82 THROUGH 1 984- 85
Budgeted Full - Time
Equivalent Positions
Expenditures :
Personal Services
Employee Related
Profess. & Outside Svcs.
Travel :
Out- Of- State
In- State
Other Operating
Equipment
Disease Control
Total Expenditures
Actual Actual Actual Approved
1981 - 82 1982- 83 1983- 84 1984- 85
Source: J o i n t L e g i s l a t i v e Budget Committee Appropriations Report,
Livestock Board budget requests, and Livestock Board expenditure
1 edgers 0
Audit Sco~ e and Pur~ ose
Our purpose i n reviewing the State Veterinarian was t o address the 12
.~ @ i i t ' F d C l o r F s e t f o r t h i n A. R. S. 841 - 2354.*
The Auditor General and s t a f f express t h e i r appreciation t o the State
Veterinarian and animal disease control s t a f f f o r t h e i r cooperation and
assistance during the course o f our audit.
SUNSET FACTORS
I n accordance with A. R. S. § § 41- 2354 through 41 - 2379, the Legislature
should consider t h e f o l l o w i n g 12 factors i n determining whether the State
Veterinarian shoul d be conti nued or termi nated.
1. Objective and purpose i n e s t a b l i s h i n g t h e State Veterinarian
The objective and purpose o f the State Veterinarian i s t o control
animal disease i n Arizona as authorized by statute, under the
direction o f the Arizona Livestock Board. The State V e t e r i n a r i a n ' s
specific d u t i e s include suggesting new animal disease control
regulations f o r promulgation by the Board, examining animals
suspected o f having contagious diseases and taking custody o f them i f
necessary, approving o r denying t h e e n t r y o f animals i n t o Arizona,
imposi ng quarantines w i t h Board authorization, and establ i shi ng
procedures f o r the administration o f euthanasia solutions t o animal s.
2. The effectiveness with which the State Veterinarian has met i t s
objective and purpose and the efficiency with which it has operated
arian has been ePfectiy@ i n control 1 i n . According t o the United States Department o f
Agriculture, Animal and P l ant Health Inspection Service ( USDA- APHIS),
Arizona has a low frequency of brucellosis and tuberculosis. The
State Veterinarian reports a low incidence o f other contagious
diseases such as pseudorabies,$ scabies and hog cholera. The
effectiveness o f the State Veterinarian i s due a t l e a s t i n p a r t t o a
working r e l a t i o n s h i p with Federal animal disease control personnel.
USDA- APHIS has 23 f u l l - time animal d i sease control personnel i n
Arizona. Some o f the work performed by the State Veterinarian and
the four- member animal disease control s t a f f i s done t o a s s i s t
pes v i r u s y h a t causes sow@
may cause sudden death i n
baby pigs. The ost mammals2and birds, br$$
not t o humans.
USDA- APHIS i n Federal disease eradication programs through a
cooperative work agreement. USDA- APHIS also expends funds on
1 ivestock diseases not i ncl uded i n Federal eradication programs.
3. The extent t o which the State Veterinarian has operated w i t h i n the
publ i c i nterest
The State Veterinarian has operated w i t h i n the public i n t d r e s t by
control 1 i ng animal d i seases such as tubercul o s i s and brucell osi s
( undulant fever) which are comnunicable t o humans, and other diseases
t h a t a f f e c t the livestock industry i n Arizona.
4. The extent t o which rules and regulations promulgated by the State
Veterinarian are consistent with the 1 egi s l a t i v e mandate
A. R. S. 524- 1 04. B a1 lows the Arizona Livestock Board t o promulgate
animal disease control rules and regulations with the advice o f the
State Veterinarian. The Board has made additions and deletions with
the advice o f the State Veterinarian i n recent years. For instance,
new regulations t o control pseudorabies i n swine took effect i n
1984. Our review o f the State Veterinarian found HQ s* stencies
with the laws and regulations f o r animal disease c'ontrol .
5. The extent t o which the State Veterinarian has encouraged input from
the public before promulgating i t s rules and regulations and the
extent t o which it has informed t h e p u b l i c as t o i t s actions and
t h e i r expected impact on t h e p u b l i c
0
The State Veterinarian and the Livestock Board have n o t i f i e d the "
livestock industry and the publ i c of proposed rules and regulations
f o r animal disease control . Before promul gati ng the 1984
pseudorabies regulations, the board he1 d hearings with the Arizona
Pork Producers and the public. I n addition, the State Veterinarian
took steps t o n o t i f y t h e p u b l i c i n general o f the nature and e f f e c t s
o f a pseudorabies outbreak. Our review indicates t h a t the State
Veterinarian and the board hpve complied with the open meeting 1 aw i n
% atteris&* ' rel . ati ng to animal di sease control .
6. The extent to which the State Veterinarian has been able to
investigate and resolve complaints that are w i t h i n i t s jurisdiction
The State Veterinarian receives few complaints regarding animal$
disease: Our audit work identified only one substantive complaint. .,
In 1981 a citizen alleged that diseased animals were being
slaughtered and fed to State prison inmates. The State Veterinarian
responded i n writing w i t h i n a week and the assistant State
veterinarian conducted an on- site investigation and produced a
written report within 10 days.
Most & kca the State Veterinarian are minor.
For example, a 1 ivestock trader may call to complain that cattle are
being held up by a 1 ivestock officer because they were being shipped
without a health certificate. In such cases, the animals are
immediately examined and issued health certificates i f no problems
are found. Occasional ly , cattl e owners question 1 ab tests thad
reveal disease i n a herd. A ret c ted;?
7. The extent to which the Attorney General or any other applicable
agency of State government has the authority to prosecute actions
under enabl i ng 1 egi sl ati on
Under A. R. S. 524- 1 05. B, violating a 1 awful order, rule, regulation or
quarantine issued to control animal disease i s a class 2 misdemearid
and as such i s subject to prosecution by the Attorney General's
Office or a county attorney's office. However, the Attorney ene era*
representative to the Arizona Livestock Board considers t h i d
cl ~ bsiftcatotn t@:; ' bWGibna cteqtraEe- -'$ o@ del i berate viol ations ' o f
quarantines that protect public as well as animal health. For
instance, del i berate and unauthorized movement of cattl e under
quarantine for tuberculosis could threaten pub1 ic health. The
Attorney General representative recommends t h a t breaking such $ a
qiiglfihtine be a class 1 misdemeanor or class 6 felony4
8. The extent t o which the State Veterinarian has addressed deficiencies
i n the enabling statutes which prevent it from f u l f i l l i n g i t s
statutory mandate
Our review revealed no l e g i s l a t i v e proposals from the State*
I
Vete cade. However, according t o the State
Veterinarian and the Attorney Genera1 representative, the law as it
stands has been s u f f i c i e n t t o allow the State Veterinarian t o f u l f i l l
the l e g i s l a t i v e mandate. We found no evidence t o the contrary.
9. The extent t o which changes are necessary i n the laws o f the State
Veterinarian t o adequately comply with f a c t o r s 1 i s t e d i n the Sunset
- Law
We i d e n t i f i e d no necessary changes i n 1 ivestock laws r e l a t i n g t@
animal disease control.
10. The extent t o which termination o f the State Veterinarian would
s i g n i f i c a n t l y harm the pub1 i c heal th, safety, o r we1 fare
Complete elimination o f the State Veterinarian and a l l State animal
di sease control a u t h o r i t y woul d harm animal disease c o n t r o l i n $
Arizona. A1 though USDA- APHIS could assume some State animal disease
control a c t i v i t i e s , several important a c t i v i t i e s would not be
performed without a State