The Los Angeles County Sheriff’s Department provided $552 million worth of service to contract cities in the 2011-12 budget year, but the contract cities paid just $371 million for those services.

That’s one finding of a report dated Jan. 25 by County Auditor-Controller Wendy L. Watanabe and forwarded to the Board of Supervisors, which has been discussing ways to improve patrol services in the county’s unincorporated areas.

Contract cities are independent cities (like Santa Clarita) that hire other agencies to perform certain municipal functions, rather than use their own staff to perform those functions. Santa Clarita hires the Sheriff’s Department for police services instead of hiring its own police officers like Los Angeles and Long Beach do.

On Tuesday the Board of Supervisors will consider spending an additional $22 million in one-time funds to hire patrol deputies to fill positions that were eliminated from the unincorporated areas when funding dried up during the recent economic downturn.

As a longer-term solution, they’ll also consider adding some itemization to the budget that’s prepared each year for sheriff’s services to keep better track of unincorporated patrol costs – and they might go so far as to demand they be billed for those services just like contract cities are billed.

The recommended action doesn’t lay the issue to rest. On Jan. 22 the supervisors instructed the county administrator and auditor to hire an outside auditing firm to conduct a forensic audit of the Sheriff’s Department budget – specifically “the use of sworn personnel performing civilian duties” – and to report back with the findings when it’s done.

Meanwhile, the auditor-controller’s Jan. 25 report alleges that in fiscal 2011-12, when the sheriff faced a $100 million shortfall, the sheriff “overstated” his estimated $447.5 million cost for unincorporated area patrol services by $44.8 million, so the county cut his budget request by that amount. (The $22 million on the table Tuesday is to replace half of the amount that was carved out.)

The auditor’s report also alleges that although the sheriff notifies contract cities of changes to their service levels, the sheriff doesn’t similarly notify the Board of Supervisors of changes to service levels in the unincorporated areas.

The report states that when the board asked for information Jan. 22 about the suspension of overtime for unincorporated area patrol that went into effect, Jan. 13, “the sheriff further instructed that the (unincorporated areas) were to absorb all service level cuts.”

Tuesday’s proposed budgeting changes are intended to “provide the board and the sheriff with a more effective and transparent manner for budget accountability of the sheriff’s patrol service levels and expenditures, particularly as it relates to (unincorporated area) patrol services.”

If approved, the budgeting for patrol services would be split into four parts: unincorporated area patrol services budget, contract (cities) patrol services budget, specialized and unallocated patrol services budget; and patrol clearing account budget.

The county auditor-controller and chief administrator William J. Fujioka are further recommending that the supervisors call on Sheriff Lee Baca to provide an annual service level plan for the unincorporated areas, starting with the coming 2013-14 fiscal year.

The plan would detail the number of patrol staff, cars and work shifts in the unincorporated areas, broken down by supervisorial district. It would also establish processes for service level adjustments, create a mechanism for establishing billing rates, and call for monthly invoices.

In effect, the county would be billed for sheriff services to the unincorporated areas just like contract cities are billed for services provided within their jurisdictions.

“The CEO and the (auditor-controller) recognize that there are significant challenges to working through the details of the recommendations,” Fujioka and Watanabe say in their report to the supervisors. “However, the CEO and the (auditor-controller) are committed to working with the sheriff  to find the appropriate budgetary and accounting processes to accomplish monitoring of (unincorporated area) patrol services.