Audit Release: Oregon’s Framework for Regulating Marijuana Should Be Strengthened to Better Mitigate Diversion Risk and Improve Laboratory Testing


Report Highlights

Gaps in Oregon’s developing marijuana regulatory framework increase the risk of legal marijuana diverting to the black market, especially in the medical marijuana program. To improve marijuana laboratory testing and protect public health, the state should consider requiring testing for heavy metals and microbiological contaminants, enhance test oversight, and ensure labs meet accreditation standards.

Background

Voters approved Measure 91 in 2014, legalizing the production and sale of recreational marijuana in Oregon. However, marijuana remains illegal federally, and federal officials have expressed serious concerns about marijuana from Oregon crossing into other states. The Oregon Liquor Control Commission (OLCC) regulates the recreational marijuana market, while the Oregon Health Authority (OHA) oversees medical marijuana and marijuana lab testing rules. As of November 2018, retail sales had generated $207 million in tax revenue.

Purpose

This audit’s purpose was to determine whether Oregon has adequate controls to deter the diversion of legal marijuana to the black market and to oversee marijuana laboratory testing to ensure test results are accurate.

Key Findings

  1. OLCC is still establishing a regulatory framework for recreational marijuana and has put many controls in place, such as requiring seed-to-sale product tracking and surveillance cameras. However, with no cap on the number of licenses and more applications than expected, staffing and inspections have not kept pace. As a result, only 3% of retailers and 32% of growers have had a compliance inspection.
  2. Structural weaknesses in the medical marijuana program greatly increase the risk of diversion. In contrast to OLCC, OHA lacks the authority to put important controls in place, such as requiring medical growers to have surveillance cameras. The agency has only four permanent staff to inspect roughly 14,000 grow sites and has struggled with decreasing revenues, turnover, and performance management.
  3. All recreational marijuana in Oregon must be tested for pesticides and solvents, but most medical marijuana is not required to be tested. Also, OHA does not require heavy metal and microbiological testing, in contrast to some other states. These contaminants could pose a risk to consumers.
  4. Without a mechanism for verifying test results, Oregon’s marijuana testing program cannot ensure that test results are reliable and products are safe. Limited authority, inadequate staffing, and inefficient processes reduce OHA’s ability to ensure Oregon marijuana labs consistently operate under accreditation standards and industry pressures may affect lab practices and the accuracy of results.

Recommendations

OLCC and OHA agreed with all 23 of our recommendations; for three of them, OHA indicated it would be unable to take action without further statutory authority. The agencies’ responses are included at the end of the report.

Read full report here.

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Audit Release, Oregon Department of Revenue: Enhancing Organizational Culture and Addressing Customer Service Challenges Will Optimize Agency Performance


Report Highlights

Organizational culture is key to shaping how members interact with each other and how they achieve their mission and objectives. However, organizational culture in an organization, such as the Department of Revenue (DOR), can be difficult to assess or change. Both DOR staff and management have identified a desire to shift towards a more collaborative agency culture and share perspectives on how culture can be enhanced to meet employees’ needs. DOR leadership makes decisions regarding agency operations; this report provides information that can help inform some of those decisions. DOR leadership has been engaged with the audit and acknowledged that enhancing the culture is a good opportunity within the agency.

Background

DOR has undergone tremendous change in the last five years. This include several changes in leadership positions, including the Director, and implementation of a critical and expansive information technology system. These significant governance and operational changes affected both internal and external stakeholders. For example, DOR’s customer service rating decreased dramatically, drawing the attention of the Legislature in 2017. We utilized a specialized methodology to assess how enhancing culture could help optimize the agency’s performance. The DOR Director has been supportive of our methodology and appears committed to enhancing the agency’s culture.

Purpose

The purpose of this audit was to determine how changes to DOR’s culture could improve agency performance and to identify factors for the decline in customer service satisfaction from 2013 through 2016 that can be addressed to enhance customer service moving forward.

Key Findings

  1. Opportunities exist to enhance DOR’s operating culture and employee morale. Specifically, DOR management should develop a formal strategy and take action to better incorporate collaborative values within the agency. The strategy should include robust internal communications, an effective accountability framework, a collaborative feedback process, and improved workplace interactions.
  2. The agency’s customer satisfaction declined between 2013 and 2016. A portion of this decrease was due to implementation of a critical and complex IT system known as GenTax. DOR has already identified and addressed a number of customer service deficiencies; as a result, customer service ratings increased in 2017 and 2018. DOR should complete efforts underway to address these challenges.

Recommendations

We made five recommendations to DOR for actions needed to improve its organizational culture and customer satisfaction. DOR agreed with all of our recommendations. The agency’s response can be found at the end of the report.

Read the full report here.

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Audit Release: ODE and PPS Must Do More to Monitor Spending and Address Systemic Obstacles to Student Performance, Particularly at Struggling Schools


Report Highlights

At the Oregon Department of Education (ODE) and Portland Public Schools (PPS), monitoring of spending and evaluation of performance is limited and inconsistent, even as student performance continues to lag. This lack of sustained focus limits achievement gains and affects students at high-poverty schools the most. Oregon’s K-12 education funding has fallen into the lower half among states and retirement costs are rising quickly, increasing the importance of ensuring effective education spending.

Background

Since the 1990s, K-12 education funding has shifted substantially to the state, which spends about $4.3 billion a year in addition to local property taxes collected for education. Despite some recent improvement, the state as a whole and PPS specifically still face low graduation rates and large achievement gaps, underscoring the need to improve returns on this investment. However, improving K-12 education requires navigating multiple layers of government, from local to state to federal. PPS’s new leadership has taken important steps toward developing a uniform core curriculum, improving training, and adding student support, but still has substantial work to do. The state is also transitioning to the latest in a series of accountability systems. These challenges increase the risk that a sharp, unified focus on improving student achievement will be further delayed.

Purpose

The purpose of this audit was to examine spending at ODE and PPS, the state’s largest school district, including transparency, controls, and priorities, and determine additional steps these agencies could take to improve returns on the state’s education investments and increase achievement. As a component of the audit, we honored a request from the Oregon Legislature to audit ODE grant management.

Key Findings

  1. ODE does relatively little to support and monitor efficient district spending. The Legislature has not required detailed reviews of school district efficiency outside of narrowly focused initiatives.
  2. PPS has more money to spend per student than many of its state and national peer districts, but the district is spending proportionately less on instruction and more on support services than many of its peers. Potential savings areas we identified include executive administration, substitute teacher use, health benefits, bus service, and legal costs.
  3. PPS needs to develop a more transparent budget, publicly report on the results of its investments in student achievement, and detail how its revenues and spending compare to peer districts. The district also needs to better control increasing employee use of purchasing cards.
  4. ODE and PPS are not adequately evaluating whether grants, contracts, and other dollars, often intended for Oregon’s most vulnerable students, are improving student performance. At PPS, contract issues include poor oversight of alternative education contracts and limited scrutiny of non-competitive contracts. ODE has not adequately evaluated its school improvement efforts under the federal Title I program, focused on some of the most vulnerable children in the state. The lack of sustained focus at PPS and statewide has the most detrimental effect on schools serving high numbers of African-American, Latino, and economically disadvantaged students.
  5. At PPS, inequities affecting these students include relatively high rates of teacher turnover and absences at high-poverty schools, a disconnect between teachers and administrators on managing student conduct, and a teacher hiring and transfer system that contributes to high-poverty schools having less experienced teachers. The district has also not prioritized principal or teacher stability at high-poverty schools, adequately supported principals, or developed a consistent and effective performance evaluation system.
  6. In comparison to students in peer districts, PPS does relatively poorly with African-American, Latino, and economically disadvantaged students. Conversely, the district does relatively well compared to peers with white students and students who are not economically disadvantaged.
  7. ODE’s limited enforcement of district standards, a new K-12 accountability system at risk of delays, a reliance on short-lived improvement initiatives, and a disjointed system of education funding all increase the risk that the state’s student performance will continue to lag. ODE enforcement of standards designed to improve student achievement is limited, and education leaders and the Legislature have not resolved how best to improve districts without infringing on local control.

Recommendations

We made 26 recommendations to help improve return on education investments at ODE and PPS.

Among the key recommendations for ODE:

  • Coordinate with the Governor’s Office, the State Board of Education, the Legislature, and districts to develop a plan to align education investments for the long-term.
  • Work with the State Board and stakeholders to evaluate Division 22 district standards for clarity and enforceability and ensure that ODE has adequate resources to review compliance and enforce standards when districts fall short.
  • For key grants, incorporate best-practice performance management, including setting quantitative and qualitative performance expectations in contracts, establishing baseline measurements, and providing timely and constructive feedback to grantees.

Among the key recommendations for PPS:

  • Investigate and report on potential savings areas in depth, including the level of executive administration, use of substitute teachers and educational assistants due to educator absences, health benefits, bus services, legal services, and building utilization.
  • While working to improve instructional quality, address other obstacles that create inequities at high-poverty schools. Strategies include changes to attendance rules, boundary changes, and practices that could encourage retention of high-quality principals and teachers at high-poverty schools, such as additional pay, enhanced training, and additional classroom support.

We also made a recommendation to the PPS school board. In general, the board should ensure that district administrators prioritize key steps to improve the efficiency and effectiveness of district operations. These steps include developing a strategic plan that focuses on long-term investment and measurement of results, and addressing inequities at high-poverty schools.

ODE and PPS agreed with all of our recommendations, with agency leaders detailing steps the agencies have already taken and providing timelines for completion. The auditees’ responses are at the end of the report.

Read the full report here.

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Oregon Health Authority Audit Release: Constraints on Oregon’s Prescription Drug Monitoring Program Limit the State’s Ability to Help Address Opioid Drug Misuse and Abuse


Report Highlights

The Prescription Drug Monitoring Program provides an important tool to address prescription drug abuse, including opioid abuse, and help improve health outcomes. Oregon’s laws have put constraints on the program that limit its effectiveness and impact. Restrictions are placed on what data are collected, analyses that can be done with the data, and with whom information can be shared. Correcting weaknesses in Oregon’s program will maximize its potential and help address opioid and other substance abuse issues the state faces.

Background

Oregon has the highest rate in the nation of seniors hospitalized for opioid-related issues such as overdose, abuse, and dependence. The state also has the sixth highest percentage of teenage drug users. The Oregon Health Authority (OHA) manages the state’s Prescription Drug Monitoring Program (PDMP), which collects information on controlled substance prescriptions within the state. The program was designed to promote public health and safety and to help improve patient care. It was also developed to support the appropriate use of prescription drugs.

Purpose

The purpose of this audit was to determine if Oregon can better leverage its PDMP to help with the opioid epidemic.

Key Findings

  1. OHA could better use PDMP data to analyze trends in prescribed drugs, including identifying patterns of possible opioid misuse and abuse. State laws prevent OHA from sharing information with key stakeholders, such as health licensing boards and law enforcement, on questionable activity. Our analysis found people who have received opioid prescriptions from excessive numbers of prescribers, as well as instances of dangerous drug combinations and prescriptions for excessive dosages of drugs. One person who received an excessive amount of opioid prescriptions had some of those prescriptions paid for by Medicaid.
  2. Oregon is one of only nine states that does not require prescribers or pharmacies to use the PDMP database before an opioid prescription is written or dispensed. Mandating use can be effective in reducing opioid misuse and other health related outcomes.
  3. Due to statutory restrictions, Oregon’s PDMP does not collect some prescription information that could be critical in preventing prescription drug abuse. This includes prescriptions filled by pharmacies other than only retail, veterinarian prescribed prescriptions, prescriptions for Schedule V drugs and drugs known to be abused or misused such as gabapentin, and prescription details such as method of payment, lock-in status, and diagnosis information.

Recommendations

Our report includes 12 recommendations to OHA for optimizing the state’s PDMP. OHA can implement some of
these within existing statutes and rules, and for others it needs to work with the Legislature. OHA agreed with
all of the recommendations, but stated that because seven fall outside the scope of its statutory authority, its
ability to implement them is limited. The agency’s response can be found at the end of the report.

Read full report here.

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Audit Release: Opportunities Exist to Increase the Impact of State Agency Internal Audit Functions


Report Highlights

When internal audit functions are properly structured and resourced, they are a valuable asset for mitigating risks and improving agency performance and accountability. However, internal auditing has not been a priority in Oregon. Although the Department of Administrative Services (DAS) has the authority to create policy and a legal requirement to support audit functions, the agency has not strategically promoted the role of internal audit functions due to a number of factors. DAS has not effectively monitored, coordinated, or reported on internal audit function impacts, challenges, and resource needs to state legislators and other stakeholders.

Background

Internal audit functions help organizations achieve their objectives and improve performance. The Oregon Legislature determined internal audit activities within state government should be coordinated to promote effectiveness, and directed DAS to adopt rules and set standards to ensure the integrity of internal auditing.

Purpose

The purpose of this audit was to determine the steps DAS should take to more effectively coordinate state internal audit functions, and what actions can be taken to increase the impact of these critical functions.

Key Findings

  1. The effectiveness of an agency’s internal audit function is defined by the tone at the top. In general, the internal audit function at state agencies in Oregon is not prioritized or well understood by agency management and the Legislature. Many current challenges and deficiencies have persisted for more than two decades.
  2. Internal audit independence and impact is directly influenced by the effectiveness of the audit committee and the committee’s relationship with agency leadership. Internal audit functions in some state agencies do not follow important elements of professional audit standards that ensure independence from management. These deficiencies reduce the effectiveness of the functions and leave agencies more vulnerable to fraud, wasted taxpayer dollars, and other substantial risks.
  3. Poor guidance and a lack of strategic management and effective coordination from DAS has contributed to internal audit challenges at state agencies. DAS reporting on statewide internal audit activities and impact could be a valuable tool for both internal auditors and policymakers, but DAS reports are often inaccurate, confusing, and uninformative.
  4. Many internal audit functions are staffed by well-trained, qualified professionals who make contributions to the agencies they serve despite governance and resource challenges. With additional emphasis and resources they could increase their value and return on investment potential.

Recommendations

We include 16 recommendations to DAS intended to enhance the value and impact of state agency internal audit functions. DAS agreed with 13 of 16 recommendations. The agency declined to say whether it agreed or disagreed with three recommendations.

 

Read full report here.

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Oregon State Police: Forensic Division Has Taken Appropriate Steps to Address Oregon’s Sexual Assault Kit Testing Backlog

Report Highlights


Oregon State Police (OSP) has taken appropriate steps to manage an influx of Sexual Assault Forensic Evidence (SAFE) kits sent by local law enforcement agencies after Melissa’s Law passed in 2016, including adding staff and equipment, changing how they prioritize the testing of DNA evidence, and using more efficient technologies for DNA processing. Many of these changes occurred too recently to definitively determine whether they will successfully eliminate the remaining backlog. However, the actions taken are aligned with best practices and OSP officials estimate they will largely eliminate the backlog by the end of 2018.

Background

The Forensic Services Division of OSP provides Oregon’s only full-service forensic lab system. The intent of Melissa’s Law is to prevent a future SAFE kit testing backlog at local law enforcement agencies by mandating all non-anonymous kits be sent to OSP for testing.

Purpose

The purpose of this audit was to report on whether OSP has taken actions consistent with statute and best practices to address the SAFE kit backlog.

Key Findings

  1. OSP has complied with Melissa’s Law by increasing lab capacity and reporting results to legislators on efforts to reduce the SAFE kit backlog.
  2. OSP is following best practices outlined by the National Institute of Justice for forensic labs that process SAFE kits. For example, OSP’s “high-throughput” approach to obtaining DNA profiles from SAFE kits is recommended for decreasing kit backlogs.
  3. The agency’s decision to suspend DNA processing of property crime evidence to focus on SAFE kits could lead to a backlog of DNA evidence of this type at local law enforcement agencies. Local law enforcement agencies are eager for OSP to resume accepting DNA evidence for property crimes.
  4. As of January 2018, many of OSP’s capacity-building and process improvement efforts have been implemented. Since then, OSP has shown substantial improvement in the number of kits processed each month. Also, there has been a significant reduction in the statewide backlog. A 2017 survey of local law enforcement agencies found approximately 1,100 kits needing testing, down from approximately 4,900 in 2015. For these reasons, OSP believes it can eliminate the backlog by the end of 2018.

Recommendations

We recommend that OSP publicly post backlog status reports, examine options for a statewide SAFE kit tracking system, and plan for reintroducing DNA testing in property crimes.

OSP generally agrees with our recommendation. The agency’s response can be found at the end of the report.

Read full report here.

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Audit Release: The State Must Do More to Prepare Oregon for a Catastrophic Disaster

Report Highlights


Oregon is at risk of a major Cascadia earthquake and tsunami that will threaten infrastructure, cost potentially billions of dollars, and result in numerous deaths. The state must do more to prepare for such a disaster, including completing and implementing critical plans, fulfilling minimum standards for an effective emergency management program, and adequately staffing the agency charged with coordinating emergency management efforts.

Background

The emergency management system encompasses local governments and almost all of state government. The Office of Emergency Management (OEM) is charged with coordinating Oregon’s emergency management efforts, including mitigation, preparedness, response, and recovery.

Audit Purpose

The purpose of this audit was to determine the status of state agency and local emergency management efforts to prepare for a catastrophic event, such as a Cascadia earthquake and tsunami.

Key Findings

  1. Oregon does not meet key emergency management program standards. These national baseline standards are a tool to strengthen preparedness and response, demonstrate accountability, and identify resource needs.
  2. Planning efforts across all levels of Oregon’s emergency management system are lacking. Critical continuity plans that ensure functional government services in the wake of a disaster are either missing or incomplete. Additionally, insufficient staff resources put the state at risk of losing potentially millions of dollars in federal grant funding for future disasters.
  3. Current statewide staffing is inadequate to reduce Oregon’s vulnerability to disasters. OEM in particular is understaffed, despite repeated budget requests to the Legislature, which inhibits the agency’s capacity to coordinate emergency management efforts in the state.
  4. More accountability, such as public reporting and tracking, is needed to ensure progress on long-term resilience goals and projects and to enhance public awareness.

To reach our findings, we conducted a survey of state agencies and local emergency management programs. We also interviewed staff at OEM, other executive branch agencies, and the legislative and judicial branches of state government. We researched programs in other states and assessed emergency management program standards.

Recommendations

This audit includes 11 recommendations, five to OEM and six to the Governor’s Office. These recommendations include such actions as completing, implementing, and exercising emergency and continuity plans; meeting minimum emergency management program standards; reporting on efforts to improve state resilience; defining roles and responsibilities and assessing and filling resource gaps.

OEM agreed with all the recommendations we made to them. The Governor’s Office agreed with all but one of our recommendations. That recommendation, they believe they have already implemented. Both OEM and the Governor’s Office’s responses can be found at the end of the report.

Read the full report here.

Emergency Management Framework

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