Budget Woes Drown State in Paperwork

This is a back-office story of dusty old files, the minutiae of the state budget crisis and the maxim that cost-cutting measures can be costly.

It begins in this industrial suburb, poor cousin to the state capital across the river. Here, California keeps its official papers inside two giant warehouses known as the State Records Center. In normal times, the center receives tens of thousands of old files each month from departments of the state government.

But for the cash-strapped state government, these are not normal times. Departments are seeing budgets sliced ever deeper as the government groans under the strain of a multibillion-dollar deficit.

So California’s memory is closed.

That the State Records Center can no longer take in the old files, maps and canceled checks of state departments may seem at first like a minor inconvenience. But for the clerks, janitors and low-level managers who make Sacramento run, it’s a crisis, akin to a city’s losing its sewers.

So while public attention is focused on the state’s budget shortfall, the immediate concern in the hallways and cramped offices of state government is a mounting surplus of paper.

To find a place for all that paper, most state departments have been forced to contract out for storage and shredding services. That means taking on new costs when departments are scouring their budgets for the tiniest expenses to cut. Because private storage and shredding services are often more expensive than using the state’s own records center, efforts to cut government spending may actually be costing the state government money.

“What is happening is ridiculous,” said Gary Noland of American Mobile Shredding, a company with offices in Sacramento and Fresno. “We are getting business from the state government because of this, but honestly I’d rather not get this business. They’ve got all the same equipment at the State Records Center that we do. As a taxpayer, I’d rather the state people do this themselves.”

The State Records Center is a full-service facility, divided between two warehouses. Together, they have the square footage of two Costcos. One warehouse, an older facility holding more than 366,000 cubic feet of records, has been full for decades. The newer facility has space for nearly 700,000 cubic feet of records, arrayed in shelves either 12 feet or 16 feet high. There are small white boxes containing checks, piles of rolled-up maps and hundreds of thousands of file boxes, all of them the same size -- one cubic foot -- to make filing more efficient.

A giant shredder used for confidential documents that, by law, must be destroyed occupies two rooms. It turns the documents into long, thin strips of paper that are compressed into 1,100-pound bales and sold to paper recyclers.

Visitors are infrequent -- the occasional auditor from a state department and a few determined workers’ compensation attorneys -- but most leave slack-jawed at the center’s size. It is the second-largest public records storage complex in the country, after the federal government’s system of records centers scattered around the country.

“It’s big and it’s lonely,” said Melodie Cato, who oversees the center. “But that’s OK. We are loners.”

In the accounting of the state government, the State Records Center is considered a self-financed operation. It is funded entirely by user fees, albeit user fees paid by other parts of state government. State departments pay $3.52 a year for each cubic foot of records they store at the State Records Center, and 8 cents a pound for shredding. Those fees provide the center with an annual budget of nearly $4 million.

But the records center is a state agency and its employees are state workers. As a result, it is subject to across-the-board measures to cut state spending.

At full strength, the State Records Center has 33 workers. But in October 2001, Gov. Gray Davis announced a hiring freeze. In May 2002, with the state’s budget situation worsening, he signed an executive order to reform the state’s procurement process, which eventually forced the Department of General Services, the center’s overseer, to transfer center employees to that effort. The result: the records center was down to 22 employees by last fall.

Even in good times, the workload is grueling. While a new wing of the center allows for some automation, most of the work consists of filing and refiling records by hand, which can require workers to climb ladders and lift heavy boxes themselves.

In bad times, the short-handed staff was quickly overtaxed. Injuries left the center with 14 able-bodied employees.

“It’s a really physical job, a meat grinder,” said Vernon Foster, the records center manager. “And pretty soon we didn’t have the people.”

The backlog quickly grew unmanageable. The records center not only has to process files being sent from the state departments, it also must respond to requests for files from them. State policy demands that a requested file be found and delivered within 24 hours. But when those documents are returned, they must be refiled. And the refiling backlog grew to more than 35,000 files.

Even the shredder had a waiting list: more than 60,000 boxes needed to be destroyed, an effort that would take several months.

In September, the center’s managers announced that the circumstances left them little choice. The Department of General Services sent a memo to all state departments declaring that the records center would no longer accept new items for storage or destruction. The memo said the center would need its remaining staff merely to handle the records it already had.

As soon as the records center closed, documents began piling up all over Sacramento.

The paper piled highest at the records center’s biggest customer, the Department of Industrial Relations, whose workers’ compensation files account for 150,000 cubic feet of the state records center’s space and about $525,000 of its budget. Without anywhere to put case files from the Workers Compensation Appeals Board, workers’ compensation offices in Stockton and San Francisco had file boxes stacked to the ceilings. State employees reported having to climb over boxes simply to go about their work. Fire marshals objected to the storage.

In a letter distributed publicly earlier this month, the department, citing safety and health problems caused by the mountains of files, announced a change in its long-standing rules for keeping case files of workers’ compensation appeals. Previously, files on closed cases were kept for 15 years. With the records center closed, the state decided to throw out such files after five years.

Some state agencies have called the records center, begging for exemptions. The center refers them to private businesses: three private records centers in Sacramento and eight document destruction companies around the state.

But such arrangements have drawbacks, particularly for the state’s archivists, who must cull through each department’s old files for materials that should be preserved for legal or historical reasons. Those old records are scattered in private warehouses.

“There could be long-term consequences,” said Walter P. Gray III, chief of the archives and museum division for the secretary of state’s office, which oversees the California State Archives. “It’s a valid concern in economic times like this that we don’t lose track of our heritage or other public documents that need to be kept for public, evidentiary or historical reason.”

The private storage and shredding facilities report a surge of interest from state departments.

John Dent, operations manager for a family-owned storage company in Redding, says the state business has been strong enough to help fill a new warehouse the firm opened in Sacramento.

On top of the threat to heritage, there is the cost. With the exception of the state controller’s office, which says it found a discount on space, state departments say they are paying more for private storage and destruction than they paid at the State Records Center.

Typically, private costs are about 25% higher for storage and nearly double for shredding -- 15 cents per pound of material to be shredded compared with 8 cents at the records center.

An obscure state rule has made the costs of private shredding even higher. When a confidential state document is destroyed, a state employee is required to witness the destruction. At the records center, staffed by state employees, finding a witness is easy.

But when private shredders are in charge, the witnessing rule means that the state must either pay someone to witness the destruction or hire companies with truck-mounted shredders that can be driven to the office that holds the paper.

Such truck-mounted shredding can be three to five times as expensive as shredding at a fixed facility, said Tami Maynard, sales manager of Safeshred Co. in Commerce.

“It doesn’t make any sense what the state is doing,” said Maynard, who has received inquiries about shredding services from state prisons and the parole board.

At the State Records Center, officials say they too are frustrated. But until the budget allows them to hire employees, there is little chance they can reopen.

In recent weeks, the remaining staff has focused on curbing some of the backlog still facing the center. In February, the staff managed to destroy 20,000 boxes. But that still leaves nearly 50,000 boxes in the backlog.

When it comes to old files and the vast paper sea of Sacramento, “the situation is just not workable,” said Foster, the records center manager. “Something had to give, and it was us.”