Liquor Board report to Annapolis

Senator James C. Rosapepe, Co-chair, Joint Audit Committee
Delegate Guy J. Guzzone, Co-Chair, Joint Audit Committee
Members of Joint Audit Committee
Annapolis, Maryland

Ladies and Gentlemen,

On March 28, 2013, the Department of Legislative Services (DLS) released an Audit Report (report) concerning the state of operations within the Board of Liquor License Commissioners of Baltimore City. (BLLC) The report conducted by DLS covered four categories of operation within the BLLC: Licensing, Inspections, Disciplinary Proced ures,and Management Oversight. Among the four categories of operation, the DLS report identified 24 findings wherein it found that BLLC performance was either inefficient and Ineffective or non-compliant with State law.

I was hired as the Executive Secretary and began work for the BLLC in late May of 2014. Concurrent to my arrival, the Hon. Thomas Ward and Dana Petersen Moore were named to the three-member Board of the BLLC by Governor Martin O’ Malley.Upon being appointed to our respective positions we immediately got to work on devising and implementing policies and procedures to address the findings identified by the DLS report Over the past six months the BLLC has been able to address many of all the recommendations identified by the DLS report

However, the issues that are tied to automation improvements are still underway and will not be completed until the summer 2015.With this in mind, I am respectfully requesting that our next DLS audit is postponed until October 2015 because many of our processes remain paper based.

A full status report on our progress on the outstanding items to be addressed and new administrative rules implemented by the BLLC has been attached as “Measures Taken by BLLC and Key Finding In DLS Report” along with a spreadsheet entitled “BLLC Audit Update” for your review. These reports contain a more comprehensive review of all of the findings and recommendations made by the DLS in the report and the progress BLLC is making in addressing those recommendations.

I look forward to the opportunity to formally present this report to the Joint Audit Committee on December 9, 2014. If you have any questions or concerns regarding any of the material in this report, please do not hesitate to contact me at 410-396-4380.

Executive Secretary
Board of Liquor License Commissioners of Baltimore City
Michelle Bailey- Hedgepeth December 3, 2014
__________________________________________________________________________________________________

Measures Taken by BLLC to Address Key Findings in OLS Report

As stipulated above,the report conducted by DLS covered four categories of operation within the BLLC: Licensing, Inspections, Disciplinary Procedures, and Management Oversight.Below is a review and status update on the new policies and procedures implemented by the BLLC to address DLS’ findings over the four categories of operation.

Conversion and Automation: Improving Licensing and Inspection Operations

Licensing Operations
To address the deficiencies in tracking licensee compliance the BLLC has committed itself to converting its paper­ based records system to an electronic database and filing system. In October of 2014 the Mayor’s Office of
Information and Technology (MOIT) dedicated two personnel to transition all paper based records to electronic files to ensure that all licensee information is readily accessible and can be viewed in real time. To accomplish this task, BLLC is creating a Sharepoint based software application that will allow inspectors,office personnel,and licensees to view online new licensee applications, transfers, and renewals and upload and review pertinent documents.

Once the Sharepoint System is in place,the BLLC expectations are that:

• Licensees will only be issued a license if all required documents have been submitted
• All records and documents will be maintained in a consistent manner and safeguarded
• All fees and fines for licensees will be tracked and outstanding balances will be paid in full
• Transfers of licensees will be tracked to ensure that licensees meet the 180 day requirement

As the Committee was made aware in the DLS report, standard operating procedures guiding inspector performance did not exist nor was there a system in place to hold inspectors accountable for their performance. To address the lack of operating policies, the BLLC began t< ;> draft and implement some operating policy changes in response to the audit. Starting in January of 2015, the BLLC will begin to engage its inspector and office personnel
in the lean business process model to clarify, formalize,and publish standard operating agency procedures.

lnsoection Operations
To improve inspection operations the BLLC along with MOIT is creating an automated software appl cation to monitor the performance and resulting outcomes of Inspections performed.Once implemented, BLLC will be able to track inspector performance utilizing data that has been entered into the Sharepoint system. Already, the BLLC has worked with MOIT to receive and track the inception and disposition of all 311 complaints.

However, while that system is being created,the BLLC is taking steps to implement a CitiStat like performance measurement system to track employee production and related enforcement action. To this end Bailey­ Hedgepeth, in collaboration with both the Deputy Executive Secretary and Chief Inspector, has drafted automated applications for inspectors to record their performance data. Once collected the BLLC will analyze this data on a bi­ weekly basis to monitor performance,identify trends, and improve outcomes. The BLLC’s goal is to introduce the performance measurement system in mid-December of 2014.

By both reforming the standard operating procedures and developing usable performance measures,the BLLC expectations are that:

• There will be written policies and procedures in place concerning the inspection process
• There will be automated methodsin place to track inspector performance
• BLLC will be able to monitorits workload and determine proper staffing policies
• Timely follow ups of inspections concerning traders licensees and all complaints lodge will be conducted

Enforcement and Oversight: Increased Dlsclp/lnary Action and Improved Management Oversight

Discipli nary Actions
As a result of the DLS report, BLLC ended its practice of using “administrative conferences” to discipline licensees who were inviolation of its Rules and Regulations.Seeking to comport its practices and procedures with State law, the BLLC revamped itsinvestigation and charging process. The BLLC gathers its information concerning allegations made in connection with licensees’ establishments through inspector reports, police incident reports, 311 service requests, and citizen complaints. Once a determination has been made that an allegation against the licensee is substantiated the BLLC charges the licensee with a violation of the Rules and Regulations of the BLLC.

Under current BLLC policy the agency charges and presents all cases, which licensees have been identified as violating BLLC’s Rules and Regulations, before the Board. All licensees are given notice of the allegations and charging documents at least 10 days before a public hearing is held before the Board. Below is a chart that details and compares the Total Violations Charged and Guilty Findings against for FY 2014 and FY20151

As indicated in the chart, since July of 2014 the BLLC has initiated 132 violations charges against licensees.This figure represents a 12.8% increasein violation charges brought against licensees for the entire fiscal year of 2014. Along withInitiating more violation charges againstlicensees, the BLLC conviction rate has also increased from 80%in FY2014 to 90%in FY2015. Thus, through Its increased enforcement activities the BLLC has:

• Ended all informal alternatives to Board hearings to address violations
• Initiated a process to review and charge licensees with violations
• Formalized disciplinary polices that comply with the Open Meetings Act

Of note,the BLLC also addressed DLS’ finding that the BLLC did not monitor closed establishments.Starting in June of 2014,BLLC staff sent letters to all licensees who have not renewed or have been operating to determine their operatingstatus. Over the past few months the Board has reviewed these identified licensees through public hearings and has ceased to grant hardship extensions that exceeded their legal limits.

Management Oversight
The BLLC has put into place new procedures to address the management deficiencies identified by DLS. BLLC required all personnel to file financial disclosure forms with the Baltimore City Board of Ethics (BCBE).Over the past year all employees have filed their disclosure forms with the BCBE.

1Of note,the FY 2015 data only covers the time period between July 2014 and November 2014.

Implementations of new management strategies and personnel evaluations have been ongoing since July of 2014. However,due to numerous staffing changes over the last 6 months, BLLC has not been able to perform routine staff evaluations. With the recent hire of the Deputy Executive Secretary and Chief Inspector,the BLLC is in the process of crafting performance evaluation tools to measure and evaluate inspector production.Buttressed by the automated Sharepoint software application, BLLC looks forward to utilizing real-time production data from
inspectors to measure and improve agency performance.

BLLC has addressed all of the payroll issues in the report. With the hiring of a new Accounting Manager all payroll information has been centralized and the Executive Secretary oversees payroll herself to ensure compliance.

Once the Sharepoint Application Software and Performance Measures are in place, the BLLC expects to:

• Implement permanent and formal practices and manage agency function
• Create formal employee evaluations on inspector performance
• Incorporate payroll practices into automated systems established by Sharepoint software

Administrative RulesInitiated by the BLLC

Under Chairman Ward the BLLC now holds two dockets on hearing days. The morning docket, which starts at
ll:OOam,consists of new, transfer renewal,and hardship extension applications. The afternoon docket, which starts at 2:00pm, consists of all violation hearings.

Along with the bi-furcation of the docket, Chairman Ward also initiated two new administrative rules concerning licensees:

• Each licensee who has a matter before the board has 60 days to file a motion for reconsideration for any matter in which the licensee disagrees with the disposition of the hearing concerning that licensee’s matter before the Board
• StartingJanuary 15, 2015 at least one named licensee must be present in any case before the Board involving that licensee’s establishment

These rules were implemented in order to ensure that the licensee was personally engagedin the specific matter brought before Board and to allow the licensee a fair opportunity to request the Board’s reconsideration ofits decision against the licensee.

As indicated in the chart, since July of 2014 the BLLC has initiated 132 violations charges against licensees.This figure represents a 12.8% increasein violation charges brought against licensees for the entire fiscal year of 2014. Along withInitiating more violation charges againstlicensees, the BLLC conviction rate has also increased from 80%in FY2014 to 90%in FY2015. Thus, through Its increased enforcement activities the BLLC has:

• Ended all informal alternatives to Board hearings to address violations
• Initiated a process to review and charge licensees with violations
• Formalized disciplinary polices that comply with the Open Meetings Act

Of note,the BLLC also addressed DLS’ finding that the BLLC did not monitor closed establishments.Starting in June of 2014,BLLC staff sent letters to all licensees who have not renewed or have been operating to determine their operatingstatus. Over the past few months the Board has reviewed these identified licensees through public hearings and has ceased to grant hardship extensions that exceeded their legal limits.

Management Oversight
The BLLC has put into place new procedures to address the management deficiencies identified by DLS. BLLC required all personnel to file financial disclosure forms with the Baltimore City Board of Ethics (BCBE).Over the past year all employees have filed their disclosure forms with the BCBE.

1Of note,the FY 2015 data only covers the time period between July 2014 and November 2014.

Implementations of new management strategies and personnel evaluations have been ongoing since July of 2014. However,due to numerous staffing changes over the last 6 months, BLLC has not been able to perform routine staff evaluations. With the recent hire of the Deputy Executive Secretary and Chief Inspector,the BLLC is in the process of crafting performance evaluation tools to measure and evaluate inspector production.Buttressed by the automated Sharepoint software application, BLLC looks forward to utilizing real-time production data from
inspectors to measure and improve agency performance.

BLLC has addressed all of the payroll issues in the report. With the hiring of a new Accounting Manager all payroll information has been centralized and the Executive Secretary oversees payroll herself to ensure compliance.

Once the Sharepoint Application Software and Performance Measures are in place, the BLLC expects to:

• Implement permanent and formal practices and manage agency function
• Create formal employee evaluations on inspector performance
• Incorporate payroll practices into automated systems established by Sharepoint software

Administrative RulesInitiated by the BLLC

Under Chairman Ward the BLLC now holds two dockets on hearing days. The morning docket, which starts at
ll:OOam,consists of new, transfer renewal,and hardship extension applications. The afternoon docket, which starts at 2:00pm, consists of all violation hearings.

Along with the bi-furcation of the docket, Chairman Ward also initiated two new administrative rules concerning licensees:

• Each licensee who has a matter before the board has 60 days to file a motion for reconsideration for any matter in which the licensee disagrees with the disposition of the hearing concerning that licensee’s matter before the Board
• StartingJanuary 15, 2015 at least one named licensee must be present in any case before the Board involving that licensee’s establishment

These rules were implemented in order to ensure that the licensee was personally engagedin the specific matter brought before Board and to allow the licensee a fair opportunity to request the Board’s reconsideration ofits decision against the licensee.