California
Prison Industry Authority
It Gave Nearly $1.3 Million in Unlawful Gifts to
Other State Agencies and Repeatedly Violated
Merit‑Based Employment Principles
July 2021

INVESTIGATIVE REPORT I2019‑0559

CALIFORNIA STATE AUDITOR
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Elaine M. Howle State Auditor

July 27, 2021
Investigative Report I2019-0559
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
This report details the results of an investigation of the California Prison Industry Authority
(CalPIA), which we initiated as the result of multiple whistleblower allegations. As the office
that administers the statutory provisions of the California Whistleblower Protection Act, it is
the California State Auditor’s responsibility to receive, review, and investigate such allegations
of state employees committing improper governmental activities within state agencies. When
an investigation substantiates improper governmental activities, this office may issue public
reports summarizing our investigative work, but we do so only after carefully weighing the
interests of the State and our obligation to keep confidential the identities of the whistleblowers
and the employees involved.
In this case, we found that, from 2017 through 2018, CalPIA repeatedly violated state laws when
it provided other state agencies with nearly $1.3 million in gifts that did not relate to CalPIA’s
purpose. Some examples of the improper gifts include more than $80,000 in artificial turf,
$66,000 in digital cameras, and $150,000 in furniture.
We also found that, from 2016 through 2019, CalPIA executives improperly directed subordinate
staff to hire and promote friends, relatives, and other favored candidates on at least 10 different
occasions in violation of the California Constitution, which requires civil service hiring decisions
to be based on the principle of merit, not favoritism. In some of these instances, the subordinate
staff told us that they followed the executives’ directions because they were concerned
about possible retaliation.
State agencies such as CalPIA must report to us any corrective or disciplinary action taken
in response to our recommendations within 60 days after we notify them of the improper
governmental activity and monthly thereafter until corrective action is completed. In June 2021,
CalPIA provided its response, which we have summarized herein.
Respectfully submitted,

STEPHANIE RAMIREZ-RIDGEWAY
Chief Counsel

621 Capitol Mall, Suite 1200

|

Sacramento, CA 95814

|

916.445.0255

|

916.327.0019 fax

|

w w w. a u d i t o r. c a . g o v

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Selected Abbreviations Used in This Report
Conservation Corps

California Conservation Corps

CDCR

California Department of Corrections and Rehabilitation

CalPIA

California Prison Industry Authority

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Contents
Introduction

1

Chapter 1
CalPIA Gave Nearly $1.3 Million in Unlawful Gifts
to Other State Agencies

7

Chapter 2
CalPIA Repeatedly Circumvented the Civil Service Hiring Process

13

Summary of Agency Responses
California Prison Industry Authority

23

California Department of Corrections and Rehabilitation

24

California Conservation Corps

24

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INTRODUCTION
Results in Brief

Investigative Highlights . . .

The California Prison Industry Authority (CalPIA) is responsible
for providing work opportunities for incarcerated individuals under
the jurisdiction of the California Department of Corrections and
Rehabilitation (CDCR). Because CalPIA is a semiautonomous state
agency, it has a certain degree of latitude in its operations, but it
must still comply with critical state laws and regulations related to
its spending and hiring processes. It repeatedly violated these state
laws and regulations when it provided other state agencies with
nearly $1.3 million in gifts that did not relate to CalPIA’s purpose
and when it hired and promoted favored individuals without
regard for merit‑based hiring principles. The laws CalPIA violated
exist specifically to prevent misuse of public funds and safeguard
against favoritism.

Our investigation of allegations of
improper activity at CalPIA revealed that it
repeatedly violated state laws governing
spending and hiring.

From 2017 through 2018, CalPIA improperly provided nearly
$1.3 million in gifts to CDCR and the California Conservation
Corps (Conservation Corps). These gifts—which included more
than $80,000 in artificial turf, $66,000 in digital cameras, and
$150,000 in furniture—did not serve any of the purposes for which
CalPIA was established. CalPIA’s funding structure is unique in
state government, giving it flexibility to use its funds with little
oversight. In these instances, CalPIA abused this flexibility by
spending its funds in a way that was inconsistent with its mission
and purpose. The executive with direct knowledge of these gifts
refused to answer our questions about the reasons for them, instead
invoking the Fifth Amendment privilege against self-incrimination.
In addition to CalPIA’s unlawful spending, its executives repeatedly
circumvented merit-based hiring principles from 2016 through
2019.1 The California Constitution requires CalPIA to base its
civil service employment practices on the principle of merit, not
favoritism. Nonetheless, CalPIA executives improperly directed
subordinate staff to hire and promote friends, relatives, and other
favored candidates on at least 10 different occasions. In some
of these instances, the subordinate staff stated they followed
the executives’ directions because they were concerned about
possible retaliation.
CalPIA’s repeated violations of state laws governing spending and
hiring constitute gross misconduct on the part of the responsible
individuals. The executives involved disregarded the standards
1

Some of the executives involved in this investigation are no longer employed with CalPIA.
However, to protect the identities of the individuals involved, we do not distinguish between
current and former executives throughout this report.

» From 2017 through 2018, it improperly
provided nearly $1.3 million in gifts to
CDCR and the Conservation Corps.
• Such gifts did not serve any of the
purposes for which CalPIA was
established and included artificial
turf, digital cameras, and furniture.
• The executive with direct knowledge
of these gifts refused to answer
our questions, invoking the
Fifth Amendment privilege against
self‑incrimination.
» Its executives circumvented merit-based
hiring principles by directing subordinate
staff to hire and promote friends,
relatives, and other favored candidates
on at least 10 different occasions.
» CalPIA’s repeated violations constitute
gross misconduct on the part of the
individuals involved—executives failed
to act in the best interest of CalPIA and
harmed prospective job applicants.

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of behavior that a state agency should rightfully expect from its
employees. In doing so, these executives demonstrated ongoing
indifference toward the procedures and protocols that underpin
fiscal oversight and help ensure that the most qualified applicants
are hired for government positions. Based on the whistleblowers’
allegations we received and the verified evidence we analyzed
during the course of this investigation, we have concluded that
CalPIA executives neglected their duties as stewards of CalPIA
funds, failed to act in the best interest of CalPIA, and harmed
prospective job applicants.
Background
In 1983 the Legislature established CalPIA as a semiautonomous
and self-supporting state agency to operate California’s prison
industries in a manner similar to private industry. State law outlines
CalPIA’s threefold purpose:
• Develop and operate manufacturing, agricultural, and service
enterprises that provide work opportunities for incarcerated
individuals under the jurisdiction of CDCR.
• Create and maintain working conditions within these enterprises
that are as much as possible like those that prevail in private
industry to provide incarcerated individuals the opportunity
to work productively, to earn funds, and to acquire or improve
effective work habits or occupational skills.
• Operate work programs for incarcerated individuals that are
self-supporting through the generation of sufficient funds from
the sale of products and services to pay all of CalPIA’s expenses,
thereby avoiding the cost of CDCR having to provide alternate
inmate programming.
The agency currently employs about 900 people who work primarily
on-site at CDCR’s 35 adult institutions throughout California, and
its programs produce more than 1,400 goods and services such
as office furniture, clothing, food products, and printing services.
CalPIA’s revenue comes from the sale of its products and services
to governmental organizations and is accounted for in the Prison
Industries Revolving Fund. CalPIA has annual operating revenues
of about $250 million.
When the Legislature created CalPIA, it established the Prison
Industry Board to oversee the new agency’s operations, much like
a corporate board of directors. The 11-member board sets general
policy for CalPIA, oversees the performance of existing CalPIA
industries, determines which new industries CalPIA will establish,

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and appoints and monitors the performance of CalPIA’s general
manager. The secretary of CDCR serves as the chair of the board.
If, at any time, the CalPIA board chair and the director of the
Department of Finance agree that CalPIA has more money than it
needs to carry out its purposes, they are required to have the excess
balance transferred to the State’s General Fund.
Although the board is responsible for overseeing the agency,
CalPIA’s executives, who are generally located at its headquarters in
Folsom, are responsible for the day-to-day operations.
Relevant Laws and Regulations
Under the provisions of the California Whistleblower Protection
Act, the California State Auditor’s Office investigates complaints of
improper governmental activities by state agencies and employees.
These include, but are not limited to, actions that violate a
state or federal law, are economically wasteful, or involve gross
misconduct, incompetency, or inefficiency. We have interpreted
gross misconduct to mean glaringly noticeable mismanagement of
governmental responsibilities, usually because of inexcusably bad or
objectionable behavior.
State law created CalPIA to accomplish specific goals, and its power
to act is limited to those statutory purposes. State law similarly
limits CalPIA’s use of the money in the Prison Industries Revolving
Fund to its purposes, including expenses related to materials,
equipment, salaries, construction, and program administration.
Additionally, the California Constitution prohibits state agencies
such as CalPIA from making gifts of public funds. Courts have
ruled that this prohibition means that an expenditure by one
agency on behalf of another is not permissible unless it serves the
specific public purposes of the donor agency and the recipient
agency uses it exclusively for these purposes.
State law also mandates that all agencies base appointments to state
jobs on only candidates’ knowledge, skills, and abilities to effectively
complete a position’s duties. This law has been in effect since 1913,
and California voters cemented this cornerstone of California’s
merit‑based employment principles with the passage of the Civil
Service Act of 1934, which amended the California Constitution
and requires that state civil service jobs be open to competition
among all qualified candidates.
The State Personnel Board (Personnel Board) and the California
Department of Human Resources (CalHR) are responsible for
enforcing civil service employment laws. Both entities ensure that
agencies comply with the decentralized merit‑based selection

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system and make good faith hiring decisions (appointments).
Figure 1 presents some of the elements of a good faith appointment.
As part of this investigation, and in accordance with state law,
we requested that the Personnel Board staff assist us as subject
matter experts.
Figure 1
Both the Employer and Candidate Must Act in Good Faith to Achieve a
Valid Appointment

Employer’s
Good Faith Obligations

Candidate’s
Good Faith Obligations

• Intend to obey the spirit and
intent of the law.

• Intend to serve in the appointed
class and location specified in
the appointment documents.

• Ensure the candidate is eligible
for a properly classified position.
• Adhere to the documented and
advertised specifications of the
job posting, application process,
and appointment documents.
• Uphold the rights and privileges
of other people affected by the
appointment, including those of
other eligible candidates.

• Provide complete, factual, and
truthful information as required
for the employer to make a
proper appointment.
• Reasonably attempt to seek
correction of any aspects of the
appointment the candidate
knows are illegal.

If either the employer or candidate fails to act in good faith,
the transaction results in a bad faith appointment.
The Personnel Board has the authority
to correct bad faith appointments.

Source: California Code of Regulations, title 2, section 249.
Note: In April 2018, the Personnel Board updated regulations pertaining to good faith
appointments. Nonetheless, the regulations cited in this report were those in effect at the time the
events occurred.

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In contrast, when a successful candidate is preselected—that
is, when the hiring decision makers have chosen the individual
they intend to employ before, or in lieu of, conducting a fair
and open competitive selection process—it is considered a
bad faith appointment.
Another hiring practice that violates the spirit of good faith hiring
principles is nepotism—the act of appointing relatives to positions
in one’s organization without regard for potentially better qualified
candidates. During the period the events detailed in this report
occurred, there were no state laws specifically prohibiting nepotism.
However, the California Constitution requires employment
practices to be based on the principle of merit, not familial
relationships. Moreover, CalPIA has its own nepotism policy,
which extends beyond familial relationships, and advises employees
to avoid the hiring of anyone in a relationship that could create
conflict between the private interests of the employee and his or her
public obligations.

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CHAPTER 1
CalPIA Gave Nearly $1.3 Million in Unlawful Gifts
to Other State Agencies
In 2017 and 2018, CalPIA gave nearly $1.3 million in goods, services,
and its own products to other agencies, including CDCR and the
Conservation Corps. We could not determine CalPIA’s motives for
its actions because a CalPIA executive who had direct knowledge
about these gifts invoked the Fifth Amendment privilege against
self-incrimination when we questioned him. Nonetheless, our
investigation revealed that the gifts were unlawful because they did
not serve to advance a CalPIA purpose under state law. Although
the goods and services that CalPIA gifted benefitted other state
agencies, employees of the recipient agencies stated it was highly
unlikely they would have purchased some of the goods and services
had CalPIA not provided the gifts. Furthermore, several CalPIA
employees believed the agency’s actions were improper but did not
question them for fear of retaliation from executive management,
who did not obtain approval from the Prison Industry Board before
providing almost all of these gifts. Figure 2 summarizes the total
funds executive management either gifted or attempted to gift.
CalPIA Unlawfully Spent Its Funds on Goods and Services for CDCR
In one example of an unlawful expenditure, CalPIA spent more
than $82,000 in 2018 when it purchased artificial turf for one of
CDCR’s prisons despite the purchase providing no benefit to CalPIA
and not furthering CalPIA’s mission. Although we found evidence
indicating that CalPIA planned for incarcerated individuals to
install the turf in the prison’s main yard, CalPIA does not offer any
training programs that would have provided these individuals with
certifications for installing the turf. Therefore, the purchase was not
related to a training program or any other CalPIA purpose under
state law. Several CalPIA employees informed us that they believed
it was improper for CalPIA to purchase the turf for CDCR. Some
employees stated that they believed they could not question or
disagree with executive management because they were concerned
about retaliation if they did so.
In addition to being an unlawful expenditure, purchasing the
turf was wasteful: as of March 2021, CDCR had not installed it.
CDCR did not install the turf because it did not realize that it
would cost more than $100,000 to do so and that the installation
process would require the use of metal stakes that could pose a
security risk. A CDCR official informed us that the prison hopes
to eventually install the turf, presumably once it determines how
to do so in a safe and cost-effective manner. Nevertheless, the

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official also acknowledged that CDCR very likely would not have
purchased it on its own. If CalPIA had not spent $82,000 for this
turf, it could have saved those funds or used them on a lawful
CalPIA project more beneficial to the State.
Figure 2
Costs Associated With CalPIA’s Unlawful Gifts

$7,000

$66,000

Furniture for CDCR

Digital Cameras

$7,000

$82,000

Bronzed State Seal

Artificial Turf

$89,000

Remodeling a
Building at a
Fire Camp

$443,000

Perimeter Security
Cameras

$1,254,000

$156,000
Furniture for
Conservation
Corps

$191,000

Various Equipment
for CDCR

$213,000
Prison Warden
Training

HALTED PROJECTS

$850,000

Security Cameras to Monitor Inmates

$150,000

Training Instructor’s Salary

Source: Review of CalPIA’s contract, procurement, and email records.

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In 2018 CalPIA unlawfully approved spending more than $450,000
on executive leadership training that was intended for, and used
almost exclusively by, CDCR staff. Based on internal discussions
between CalPIA staff, the intent of this program was to train
CDCR wardens, not CalPIA employees. In fact, during discussions
about implementing this training program, CalPIA employees and
an executive consistently referred to the training as the “wardens’
training” and even mentioned that it was specifically developed for
wardens. Training records show that during one of the training
sessions, all 22 participants were CDCR staff and that during
another session, all but two of the 24 participants were from CDCR.
As of January 2021, CalPIA had spent about $213,000 on this
training program.2
Because the training did not further the statutory purposes of
CalPIA, CalPIA unlawfully spent these funds. Nonetheless, the
employee involved with helping execute the contract for this
training informed us that he believed a CalPIA executive would
have fired him had he refused to carry out the plans. Other
executives from CalPIA and CDCR stated that this training should
have been funded by CDCR, not CalPIA, or they simply could not
explain why CalPIA paid for the training.
CalPIA similarly spent nearly $443,000 for a perimeter camera
system around a CDCR prison without establishing any specific
CalPIA purpose. CalPIA has enterprises located at numerous
CDCR prisons and, at times, has installed cameras to monitor
activities for its enterprises. However, in this circumstance, CalPIA
paid to install a camera system to cover an area of the prison where
CDCR had concerns about possible illegal activity, but where
CalPIA had no specific need. A CDCR official told us that CalPIA
has neither access to, nor a need to review, the resulting video
footage, which was intended for the prison rather than CalPIA.
The CDCR official also stated that he believed the installation of
external cameras at that particular prison was a lower priority
than at other prisons. After reviewing purchasing documents
and interviewing relevant CalPIA employees, we still lack clarity
on whether CalPIA used the entire $443,000 for this perimeter
camera system or appropriately used portions of this contract to
install other cameras covering CalPIA areas. However, CalPIA staff
informed us that, based on the purchasing documents, it appears
that most of the costs relate to the perimeter camera system.
Accordingly, at least a large portion of this expenditure was, in
our view, a gift of public funds.

2

Included in the $213,000 is a January 2021 bill CalPIA received for $5,600 that is pending payment
as of June 2021.

CalPIA spent nearly $443,000 for a
perimeter camera system around
a CDCR prison without establishing
any specific CalPIA purpose.

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In addition to the three unlawful purchases we describe, CalPIA
made at least four other unlawful expenditures as we list in the Table.
Table
CalPIA’s Additional Unlawful Expenditures
EXPENDITURE

AMOUNT
CALPIA SPENT

NOTES

Remodel of a building
at a fire camp for CDCR

$89,000

A CalPIA executive initially set aside $500,000
for this project. CalPIA ultimately spent about
$89,000 because another executive halted
the project after learning it did not further a
CalPIA purpose established by law.

A bronzed state seal
for a CDCR prison

$7,000

A high-level CDCR official asked one of
CalPIA’s executives whether CalPIA made
these seals. Rather than replying that CalPIA
did not, the CalPIA executive offered to use
CalPIA funds to purchase the seal for CDCR
from a private vendor.

Digital cameras for CDCR

$66,000

A CalPIA executive offered to provide a digital
camera for every CDCR institution because
this executive believed CDCR’s existing digital
cameras were not adequate.

Various equipment for
CDCR, including a van,
camera lenses, audio/
video equipment,
and drones.

$191,000

Although CDCR staff told us that CalPIA
provided these types of items to CDCR on
an annual basis, the estimated amount in
this table reflects the costs of the equipment
CalPIA purchased for CDCR in 2017 and
2018 only.

Source: Analysis of CalPIA emails, purchasing documents, and employee interviews.

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CalPIA executive management approved other unlawful purchases
that the agency ultimately canceled because another executive
raised questions about the spending. For example, CalPIA
management approved spending about $850,000 on an additional
camera system to monitor inmates at a CDCR prison. After an
executive who reviewed the project later raised questions about
the propriety of this expenditure, CalPIA halted the purchase,
and CDCR opted to go through the proper process to pay for the
camera system. This same executive similarly stopped executive
management’s prior decision to spend $150,000 for an instructor to
teach welding at a federal institution—another project that would
have served no CalPIA purpose.
We learned from CDCR and CalPIA executives that CalPIA may
have paid for expenses for CDCR because CalPIA has more latitude
and autonomy over how it spends its funds, whereas CDCR must
typically go through a more thorough and lengthier approval
process when making purchases. A CDCR manager also stated
that CDCR was sometimes unable to provide certain items to its
employees because it did not have the budget to do so. However,
CalPIA’s provision of goods and services for CDCR circumvents the
appropriate process CDCR uses to procure goods and services to
ensure that those expenditures represent the best use of state funds.
In fact, a CDCR executive acknowledged that he thought CalPIA’s
paying for goods and services for CDCR was direct evidence of
circumventing that process.
CalPIA Unlawfully Gifted Furniture It Built to Other Agencies
Over the course of 2018, CalPIA gifted to the Conservation
Corps up to $156,000 worth of furniture it produced, including
desks, chairs, and file cabinets. When asked, a CalPIA executive
could not explain why CalPIA gave away the furniture or how it
furthered CalPIA’s purposes, other than to simply support another
agency. This executive, along with others, believed that it was not
appropriate to provide this furniture free of charge. An executive
from the Conservation Corps informed us that CalPIA provided
this furniture at no cost because it had surplus furniture. However,
evidence contradicts this claim, instead showing that a CalPIA
executive approved providing this furniture for free without
knowing whether CalPIA had a surplus of furniture. Furthermore,
CalPIA generally does not build furniture until it is ordered.
CalPIA also provided $7,000 worth of free furniture, consisting
primarily of height-adjustable tables, to CDCR executive staff.
Given that CalPIA relies on revenue from the sale of its products to

A CDCR executive acknowledged
that he thought CalPIA’s paying for
goods and services for CDCR was
direct evidence of circumventing
that process.

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fund its programs, providing furniture at no cost to this degree was
not only unlawful, but also led to a reduction in revenue CalPIA
needed for its operating expenses.
Recommendations
To remedy the effects of the improper governmental activities
this investigation identified and to prevent those activities from
recurring, CalPIA should take the following actions:
• Take appropriate disciplinary action against any of the employees
responsible for authorizing the unlawful use of funds. If any such
individuals are no longer employed by CalPIA, consider placing a
notice of this investigation in their personnel files.
• Work with the Prison Industry Board to establish sufficient
controls, such as providing training to executive staff to better
understand how CalPIA funds and resources should be used,
and implement a more thorough approval process to ensure that
CalPIA does not gift funds to other state agencies.
• Cancel the executive leadership training contract so that no
additional funds are spent from it.
CDCR and the Conservation Corps should implement new, or
strengthen existing, controls and procedures to ensure that a gift
to the agency from any source, public or private, is appropriately
accepted or declined and that sufficient documentation is kept to
create a record of it.

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CHAPTER 2
CalPIA Repeatedly Circumvented the Civil Service
Hiring Process
CalPIA executives influenced personnel actions to preselect desired
candidates, including relatives and friends, for jobs and promotions.
The agency’s email records, personnel files, and witness statements
demonstrate the following instances of the executives’ failures to
follow civil service hiring rules:
• CalPIA violated the law when it circumvented civil service
hiring requirements to appoint two individuals into the
special consultant classification that should have been filled by
traditional civil servant positions.
• CalPIA preselected an employee by changing the classification
for an ongoing recruitment and then did not
re‑advertise the position.
• CalPIA precluded open and fair competition and
violated the rights and privileges of job applicants
when executives improperly influenced or directed
subordinate staff to hire four individuals for positions
at CalPIA.
Figure 3 shows these 10 bad faith appointments that
resulted from the actions of CalPIA employees from 2016
through 2019.
When we interviewed a high-ranking executive regarding
these unlawful appointments, the executive refused to
answer any questions, invoking the Fifth Amendment
privilege against self-incrimination. Although the
executive chose not to share his perspective, the evidence
we obtained from other sources substantiated the
allegations.
CalPIA Misused the Special Consultant Classification for
Two Individuals
In 2018 CalPIA hired Employee A and Employee B as
special consultants, despite the requirements of the
job not meeting the criteria for such a classification.
The special consultant classification requires no
competitive examination and is used to make temporary
appointments to meet short‑term needs for highly
specialized services that cannot be accommodated within

RELEVANT CRITERIA
State agencies typically employ individuals
using civil service classifications and merit-based
recruitment and hiring processes; however, to meet
highly specialized business needs, an exception
allows an agency to appoint an individual to a
classification that is outside the realm of regular
classifications and the civil service selection process.
Special consultant is a unique classification that
agencies can use if no other existing civil service
classification can provide the specialized skills,
knowledge, or expertise needed to fulfill a particular
business need. The nature of the work must be
of an expert, unique, or technical nature, and the
candidate must have a professional background
that matches the specialized requirements used to
justify and describe the special consultant position.
Although a special consultant performs services
similar to those necessitating the need of an
independent contractor, special consultant differs
from an independent contractor in that it is an
established civil service classification.
Because this classification does not require
recruitment or advertisement, it is especially critical
for an agency to differentiate a need for truly
specialized expert consultation from a desire to hire
a particular individual based on personal preference
or relationship.

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the regular civil service classification and examining structure. In
this instance, individuals in traditional civil service classifications
could, and likely should, have executed the duties that CalPIA hired
Employees A and B to perform as special consultants.
Figure 3
Bad Faith Appointments CalPIA Executed From 2016 to 2019

Classmates

C

A

Staff Manager
2018

Multiple
Appointments
20162018

B
Special
Consultants
2018

Office
Assistant
20172018

I

D
\

I
I
I

Siblings

E

In-law
Spouse

G
I

Skilled
Laborer
2019

F
Associate Governmental
Program Analyst (analyst)
2017

Source: CalPIA personnel files.

In May 2018, a CalPIA executive provided Employee A with a
general job description of a staff services manager (staff manager)
and indicated that this classification would be used to lead a new
unit within CalPIA. A few days later, Employee A submitted an
application for a special consultant position, and in June 2018,
CalPIA appointed her to the unique classification. However, the
duties CalPIA asked Employee A to perform as a special consultant

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align with the duties of a staff manager, a traditional civil service
classification. When we interviewed Employee A, she agreed that
CalPIA could have used the staff manager classification to fill
the role. In fact, CalPIA hired a staff manager to fill Employee A’s
position after she left the job.
The executive who hired Employee A had established connections
with her through a graduate program they had both recently
attended. According to Employee A, the executive was “always
talking about” her coming to work at CalPIA, telling her that
she would be a great person to have on the team. Employee A
acknowledged that although she felt she was hired based on
her merits, the executive may have appointed her to the special
consultant position to circumvent the traditional hiring process.
Similarly, in October 2018, a CalPIA executive hired Employee B
as a special consultant to supervise staff, oversee bill analyses, and
perform other duties. These duties not only fell within the realm of
a traditional classification, they were nearly identical to those of a
previously established staff manager position. Furthermore, when
CalPIA sent an email out to all staff, it introduced Employee B
as a staff manager, not the special consultant classification into
which she was actually hired. Our interviews with Employee B, her
supervisor, and a personnel manager all confirmed that CalPIA
hired Employee B to replace a vacant staff manager position. The
personnel manager stated that the executive directed her to process
Employee B’s appointment as a special consultant without any
prior discussion regarding Employee B’s employment at CalPIA.
The personnel manager stated that when she brought the issue to
her supervisor, her supervisor told her to follow the executive’s
direction. Fearing retaliation, she processed the appointment.
We determined that CalPIA circumvented the State’s merit-based
hiring process and violated good faith appointment requirements
by improperly classifying Employees A and B as special consultants
when the employees’ duties constituted the work of a traditional
civil service classification. To fill a special consultant position,
CalPIA should have demonstrated that the work or project was
of an expert, unique, or technical nature and that the specialized
skills, knowledge, and experience needed were unavailable within
traditional civil service classifications, but CalPIA failed to do so.
Instead, it utilized the special consultant classification for these
employees because it does not require recruitment or competition.
CalPIA’s actions prevented other eligible candidates’—including
existing civil servants with government experience—opportunities
to secure employment for the positions into which CalPIA hired
Employees A and B.

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CalPIA Preselected a Candidate for a Management Position
In October 2018, Employee C and 32 other candidates applied for an
information technology supervisor (IT supervisor) position that
CalPIA had publicly advertised. The position was in the new unit
that CalPIA hired Employee A to manage a few months prior.
Like Employee A, Employee C also attended the same graduate
program as the aforementioned executive. Email records show that
10 days prior to holding interviews for the position, the executive
told an individual from their shared graduate program that he
had already hired Employee A and that Employee C would be
his next hire. The executive and Employee A interviewed
RELEVANT CRITERIA
Employee C in early November of 2018. However, a personnel
An agency is not required to re-announce a
manager later determined that Employee C did not meet the
job vacancy if, in part, an identical vacancy
minimum qualifications for the IT supervisor position.
was posted within 180 days. However, to be
considered identical, the vacancy must have
the same classification code.

In response, the personnel manager and Employee A changed
the classification of the position from IT supervisor to staff
manager and obtained approval from another executive to not
re-advertise the position. They justified not re-advertising the
position by stating that they already had “an eligible candidate
[who could] immediately meet [their] needs.” When we interviewed
Employee A, she admitted that they shifted the classification to staff
manager solely to make Employee C eligible for hire.
We concluded that CalPIA circumvented the State’s merit-based
hiring process and violated good faith appointment requirements
through its preselection of Employee C. This action prevented the
other 32 candidates who had applied for the IT supervisor position,
as well as any candidates who might have applied for a staff
manager position, from competing for the position.
CalPIA Influenced or Facilitated Multiple Hiring Decisions for an
Executive’s Son
Employee D is the son of a CalPIA executive and the
sibling of Employee E. Starting in 2016, CalPIA unlawfully
hired or promoted Employee D into several positions of
increasing responsibility.
Skilled Laborer
Employee D first came to work at CalPIA as a civil servant in
August 2015, in a temporary skilled laborer position. When
we interviewed the hiring manager regarding Employee D’s
initial appointment, she stated that she did not feel pressured
to hire Employee D for this role, as he was the best candidate.

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However, the hiring manager told us that a CalPIA executive
groomed Employee D, and she believed that this executive
wanted Employee D to work at CalPIA.
CalPIA later improperly appointed Employee D to a permanent
skilled laborer position. Starting in April 2016, email records show
that an executive informed Employee D’s parent that CalPIA
would be holding an examination for a permanent skilled laborer
position before Employee D’s limited‑term appointment expired,
adding, “so he should be good.” However, Employee D’s score on
the examination was not high enough among the candidates to be
considered for permanent appointment. Email records show that
several CalPIA staff, including an executive, the hiring manager,
and a personnel manager, worked together to make Employee D
eligible for the appointment: They went through a process to abolish
CalPIA’s ranked list of eligible candidates and instead used another
agency’s list for the same classification, on which Employee D ranked
higher. CalPIA then appointed Employee D to the position, which
it also failed to advertise. Because it manipulated the process to
make Employee D eligible and did not allow other eligible candidates
to compete for the position, we concluded that when CalPIA
appointed Employee D to a permanent skilled laborer position in
November 2016, it did so in bad faith.
Industrial Supervisor
Seven months later, in June 2017, CalPIA promoted Employee D
by upgrading his position to the industrial supervisor classification
without opening the position to fair competition. However,
Employee D did not provide complete, factual, and truthful
information for the promotion application. Specifically, the
industrial supervisor classification requires a candidate to
possess two years of production experience. The only qualifying
experience Employee D possessed was work he performed helping
at his parent’s business. In his industrial supervisor application,
Employee D claimed to work continuously for the family business
from 2009 through April 2017. However, Employee D’s job
application from an earlier recruitment in 2015 stated that he
stopped working for his parent’s business in 2012.
When we spoke to Employee D’s parent, the parent initially stated
that the family stopped operating the business after moving
around 2013, though the executive was uncertain of the exact
year. However, the parent later claimed to have done side work
and Employee D assisted with this work. Although we asked
Employee D’s parent to provide us with documentation to support
these claims, the parent did not do so. Moreover, we were unable
to find any evidence of his parent’s business when we conducted

Email records show that several
CalPIA staff, including an
executive, the hiring manager,
and a personnel manager,
worked together to make an
ineligible employee eligible
for the appointment.

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our own search of state-licensed businesses. We concluded that
Employee D acted in bad faith by accepting the promotion to
industrial supervisor based on false and incomplete information.
Prison Industries Superintendent II
One year later, in May 2018, the hiring manager improperly
promoted Employee D to prison industries superintendent II
(superintendent) without opening the position to fair
competition. This promotion was unlawful in four key
ways. First, the hiring manager stated that an executive
RELEVANT CRITERIA
came into her office and told her that CalPIA was going
In some instances, state law allows an agency to
to promote Employee D. She told us that the promotion
promote an employee without going through
was “absolutely” about fast‑tracking and creating a path
the State’s regular civil service competitive
for Employee D to move up in the agency. In fact, she
hiring process. This act is often referred to as a
told us that she found it “almost pointless” to review
promotion in place. CalHR’s Human Resources
Manual outlines the conditions under which an
Employee D’s application because she already knew that
agency cannot promote an employee in place.
he would be getting the promotion based on her previous
For example, an employee cannot be promoted
conversation with the executive who wanted him in
in place from a rank-and-file classification to a
the position.
supervisory or managerial classification. Also,
a promotion in place cannot involve a change
in supervisory relationship. If a promotion does
not meet the legal requirements, the agency is
required to follow the State’s regular civil service
hiring process.

Second, CalPIA promoted Employee D by using a method
known as a promotion in place that is allowed under
narrow circumstances when specific requirements are
met, as described in the text box. The promotion from
industrial supervisor—a rank‑and-file classification—to
superintendent—a supervisory classification—violated
these requirements. Further, Employee D’s duties
increased significantly and resulted in new subordinate
relationships. Hence, under state law, CalPIA should have followed
the State’s standard competitive civil service hiring process and
required Employee D to compete for the promotion. Instead,
CalPIA promoted Employee D and labeled his promotion as a
promotion in place in his hiring paperwork.
Third, Employee D’s application shows that he lacked the
supervisory experience needed to meet the minimum qualifications
for his new position. The superintendent classification provides
three methods by which a candidate can meet the minimum
qualifications. The first two methods required specific state
experience that Employee D did not have, leaving the third method
as the only remaining path by which he could qualify. The third
method requires four years of production experience, two of which
must be in a supervising capacity. His submitted application did
not identify any relevant supervisory experience, yet a personnel
manager approved it, allowing the promotion to proceed. The
personnel manager told us that she approved the application
with the understanding that Employee D supervised crews while

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working at the family business. However, both Employee D and
his parent admitted in our interviews that Employee D had not
supervised any staff because the parent’s business employed only
two individuals: Employee D and the parent.
Finally, we found that Employee D again failed to provide
complete, factual, and truthful information on his application.
The same misrepresentations we noted on his industrial supervisor
application regarding the duration of time worked were also
present in this application, as well as the misrepresentations of his
supervisory experience that we discuss above.
As a result of our investigative findings, we concluded that the
actions of the hiring manager, the personnel manager, the executive,
and Employee D constitute bad faith on the part of both the employer
and the employee. When an employee acts in bad faith, the State can
require that employee to return all compensation unlawfully earned.
For the nearly four years Employee D held the industrial supervisor
and superintendent positions, the State paid Employee D more than
$266,000 in wages alone.
CalPIA Unlawfully Hired an Executive’s Child
In September 2017, Employee E—the child of a CalPIA
executive—applied for a permanent office assistant
position at CalPIA. CalPIA’s human resources staff
deemed Employee E ineligible for the position because the
employee’s examination score was not in the top three
ranks required for hire. However, the hiring manager for
this recruitment stated that an executive directed her to
interview Employee E. In response, the hiring manager
contacted a personnel manager to inform her that she
would like to give Employee E a “courtesy interview.”

RELEVANT CRITERIA
To ensure that every civil service appointment
upholds merit-based hiring principles and that
the State hires the most competent candidate to
perform each job, hiring managers must equally
ensure that all candidates for a position meet
the minimum qualifications, classifications, and
application requirements listed in the advertised
job posting. An agency is permitted to hire only
candidates who score within the top three ranks
of its examinations.

After the interview, an executive directed the hiring
manager to hire Employee E. The hiring manager and a
personnel manager then worked together to find a way to
hire Employee E. With the personnel manager’s approval,
the hiring manager switched the position from permanent to a
six‑month temporary position. CalPIA re-advertised the vacancy
two days after Employee E’s interview. As fewer candidates are
typically interested in temporary state positions, this shift placed
Employee E in the third rank and eligible for hire. The hiring
manager selected Employee E, and Employee E began working at
CalPIA in October 2017. The hiring manager admitted that the only
reason she changed the recruitment from permanent to temporary
was to facilitate the hiring of Employee E. She added that she felt
obligated to do so based on the executive’s direction.

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The actions of the aforementioned executive, hiring manager, and
personnel manager constituted bad faith and prevented the other
175 candidates who applied for both positions from fairly competing
in the hiring process. Just three months into Employee E’s
six‑month temporary position, the hiring manager converted that
position into a permanent one. The hiring manager informed
us that she proactively worked to convert the position because
CalPIA had always intended the position to be permanent. Because
Employee E’s placement in the permanent position was only made
possible through CalPIA’s bad faith appointment of Employee E to
the temporary position, we concluded that CalPIA also made this
permanent appointment in bad faith.
CalPIA Unlawfully Hired an Executive’s Son-in-Law
An executive insisted
that a CalPIA manager
offer an analyst position
to a less qualified
candidate who was
related to a different
executive.

In March 2017, Employee F applied for an analyst position at
CalPIA. Employee F is the spouse of Employee E, as well as the
son-in-law of a CalPIA executive. The hiring manager stated
that she was aware during the recruitment that Employee F
was related to other CalPIA employees. She asserted that after
she conducted interviews, the hiring panel selected another
candidate for the position. However, when her supervisor—another
executive at CalPIA—discovered whom the hiring panel selected,
he overturned the selection and instructed her to instead hire
Employee F. The hiring manager stated that she did not want to
hire Employee F but that when she asked her supervisor whether
she had a choice, he replied that she “absolutely” did not.
The hiring manager stated that she did not feel empowered to
raise the issue to anyone else because she assumed the decision
to hire Employee F came from higher up in the agency. When
we interviewed the supervisor, he stated that Employee F’s
parent-in-law reached out to him on more than one occasion to
mention Employee F’s interest in working at CalPIA. However, the
supervisor asserted that he did not feel pressured or obligated to
hire Employee F. He also claimed that he overturned the hiring
panel’s decision so he could promote a more diverse workforce:
he said that he felt the unit needed more males and that the hiring
panel’s choice was a female. The supervisor’s claim is concerning as
it shows that he impermissibly considered factors other than merit
and fitness during the selection process for this position. Not only
is that another violation of the merit principle, it could also expose
the State to liability from other applicants. Notwithstanding, we
concluded that the actions of the parent‑in‑law and supervisor
negatively affected the 24 other applicants—in particular
the originally selected candidate—and resulted in a bad
faith appointment.

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We found that Employee F also accepted the appointment in
bad faith because he failed to provide complete, factual, and truthful
information on his application; further, he did not correct the
information when we interviewed him. To meet the minimum
qualifications for the analyst classification, Employee F needed
at least three years of professional analytical experience. On his
application, he claimed that he was a restaurant manager for three
years. However, when we contacted his former employer, that
employer contradicted his claim and asserted that he performed
some managerial duties for only two years. Moreover, his former
employer did not support Employee F’s assertions that his managerial
experience qualified as “professional analytical experience” to the
extent he claimed. When we questioned Employee F regarding
his managerial experience at the restaurant, he denied that he
embellished his qualifications. However, the evidence supports that
Employee F did not meet the minimum qualifications for the analyst
position and accepted the appointment in bad faith.
If the State were to require the employee to return all compensation
unlawfully earned as a result of his bad faith acceptance of the
appointment, it would find that during the nearly three years
Employee F held the analyst position, he earned more than
$169,000 in wages alone.
Without CalPIA’s Knowledge, One Employee Unlawfully Hired His In‑Law
During the course of our investigation, we learned
that Employee D unlawfully preselected and hired his
soon‑to‑be in-law, Employee G, in October 2019. Although
Employee G did not officially become Employee D’s in‑law
until three months later, the two employees shared a
familial connection for several years before the hire. Our
review found that Employee D screened the applications for
the position, made a specific request to human resources
that resulted in Employee G’s becoming eligible for the
position, wrote the interview questions, guided the hiring
panel, and selected Employee G as the winning candidate.

RELEVANT CRITERIA
When an agency determines that an
appointment is unlawful, it can take corrective
action up to and including voiding the
appointment, provided that the agency
takes these actions within one year of
the appointment.

Employee D also improperly supervised Employee G
until CalPIA discovered the personal relationship a few months
later. When Employee D’s supervisor learned of the relationship
between Employees D and G, she worked with other executives
to discipline Employee D. Ultimately, CalPIA chose not to correct
Employee G’s unlawful appointment. When we asked an executive
why Employee G’s appointment was not corrected, she stated that
it was because CalPIA did not find that Employee G had acted in
bad faith despite CalPIA’s conclusion that Employee D used his
influence to hire his soon-to-be in-law into the position. However,

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given that the appointment had only been in place for a few
months when CalPIA discovered it and that other candidates were
negatively affected, the agency failed to take appropriate action
to correct the appointment. These actions, taken in their entirety,
constitute bad faith on the part of Employee D and violate CalPIA’s
nepotism policy.
Recommendations
To remedy the effects of the improper governmental activities
this investigation identified and to prevent those activities from
recurring, CalPIA should take the following actions:
• Take disciplinary action against executives who failed to
uphold their duty to protect the merit-based system for hiring
civil servants. If any of the employees responsible for these
appointments are no longer employed by CalPIA, consider
placing a notice of this investigation in their personnel files.
• Review all special consultant positions and work with CalHR to
determine whether they are properly classified.
• Require all executives, hiring managers, and human resource
managers to undergo CalHR or Personnel Board training on the
requirements for making good faith appointments.
• In consultation with the Personnel Board, consider voiding
appointments and requiring employees who acted in bad faith to
return all compensation as the table shows.

EMPLOYEE

CLASSIFICATION

DATE OF
APPOINTMENT

Employee A

Special consultant

June 2018

Employee B

Special consultant

October 2018

Employee C

Staff services manager II

December 2018

Skilled laborer

November 2016

Employee D

Industrial supervisor

June 2017

Prison industries superintendent II

May 2018

Employee E

Office assistant

Employee F

Associate governmental
program analyst

Employee G

Skilled laborer

October 2017
January 2018
May 2017
January 2019

VOID

RETURN
COMPENSATION

•
•
•
•
•
•
•
•
•

•
•

•

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Summary of Agency Responses
CalPIA Response
In June 2021, CalPIA provided us a summary of the actions it has taken,
or plans to take, to address the recommendations identified in this report.
In response to our recommendations pertaining to its unauthorized
use of agency funds as discussed in Chapter 1, CalPIA informed
us that it will place a notice of this investigation in the personnel
files of any former employees responsible for the improper use of
agency funds. CalPIA indicated that its current employees were
not responsible so disciplinary action is not warranted. In addition,
CalPIA informed us that it is working with the Prison Industry Board
to develop and establish subcommittees, in part, to ensure that
CalPIA adheres to appropriate financial controls. CalPIA stated that
it would also ensure that it provides training to executive staff on the
appropriate use of CalPIA funds and resources to prevent the gifting
of funds or resources to other state agencies.
In response to CalPIA’s improper spending of funds for CDCR’s
executive leadership training, CalPIA stated that it will not renew the
contract for this training, which was set to expire in June 2021.
In regards to the executives who failed to protect the merit-based
system of hiring as described in Chapter 2, CalPIA reported that
it would request that CDCR conduct an investigation into these
executives’ activities and advise CalPIA on appropriate disciplinary
action. CalPIA stated that it would place a notice of this investigation in
the personnel files of those executives whom CalPIA no longer employs.
CalPIA stated that in an effort to improve its oversight of hiring
practices and processes, it recently created a new unit within its human
resources branch specializing in classifications and pay. CalPIA stated
additionally that it has modified several of its processes to ensure
stricter adherence to state hiring requirements and has implemented a
new electronic system for completing the hiring process. CalPIA also
shared that its human resources branch recently provided training
on current hiring practices and the importance of adhering to state
policies and guidelines governing the hiring process. Moreover, CalPIA
reported that it is adding a mandatory training for all executives,
hiring managers, and human resource managers to ensure CalPIA’s
compliance with the requirements for making good faith appointments.
In response to CalPIA’s improper use of the special consultant
classification, CalPIA reported that it will work with CalHR to review
the special consultant positions it currently employs to perform
specialized work to ensure the positions are properly classified.

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In response to the recommendation to consider voiding specific
appointments and requiring employees who acted in bad faith
return all compensation, CalPIA responded that it will work with
CalHR to take appropriate action for all employees and their
respective positions identified in this report, regardless of their
current employment status with CalPIA.
Lastly, CalPIA informed us that it has taken actions to ensure
that employees at all levels of the agency are aware of how to report
suspected instances of improper activities by incorporating this
information in training classes and posting the information in
worksites statewide.
CDCR Response
In July 2021, CDCR reported that it would provide us with a
corrective action plan detailing how it would implement our
recommendation within 60 days. The plan will include actions that
CDCR plans to take to mitigate the risks identified in this report
and to strengthen existing controls and procedures to ensure the
gifts CDCR receives are appropriate and sufficiently documented.
CDCR indicated it will include training for executives and
employees in its corrective action plan.
Conservation Corps Response
In June 2021, the Conservation Corps reported that it will implement
additional, and strengthen existing, controls and procedures to
ensure executives and employees follow the appropriate procurement
process for goods and services. The Conservation Corps informed
us that it will no longer accept any goods or materials from another
state entity without the appropriate documentation on file. The
Conservation Corps stated that, in the coming weeks, it will
incorporate these rules as policies and procedures in its operations
manual and provide training to relevant staff.
Respectfully submitted,

STEPHANIE RAMIREZ-RIDGEWAY
Chief Counsel
July 27, 2021