(a) Every Local Agency may operate its Personnel System for Program employees in the same manner as it does for other employees of the Local Agency after the Department reviews and approves the Personnel System in order to confirm that the Personnel System is merit-based and satisfies the Federal Requirements. Upon request by a Local Agency, the Department shall review the Local Agency's Personnel System, may require additional information as it deems necessary, and shall make a determination as to the adequacy of the Personnel System and advise the Local Agency of the Department's decision.

(b) In determining whether a Local Agency's Personnel System is consistent with the Federal Requirements, the Department shall review elements of the Personnel System that relate to the Federal Requirements including:

(c) Once approved to operate its Personnel System for Program employees as for other employees, a Local Agency shall certify to the Department in the form and manner that the Department requires that it is operating its Personnel System in accordance with the information reviewed and approved by the Department and that it will continue to do so. The certification shall be renewed by the Local Agency on Department request.

(d) Any Local Agency approved to operate its own or any part of its Personnel System prior to January 1, 2014 shall be deemed approved by the Department. The Department may require that the Local Agency acknowledge its acceptance of any new standards adopted by the Department.

(e) A Local Agency that wants to apply a particular policy, standard, or procedure governing its Personnel System for its employees to Program employees may submit documentation that the policy, standard, or procedure is consistent with the Federal Requirements to the Department and ask the Department for approval. If the Department approves the request, the Local Agency may thereafter apply the approved policy, standard or procedure and the Department will administer the remainder of the personnel management system for the Local Agency in accordance with Chapter 2 of this division.

(f) If the Department denies the request of a Local Agency to operate all or part of its Personnel System for Program employees, it shall advise the Local Agency of the reasons for the denial in writing. The Local Agency may resubmit its request at any time.

(g) Any Local Agency approved to operate all or any part of its Personnel System for Program employees shall retain records pertaining to personnel management of Program employees. A copy of the policy on retention of personnel and related human resources records or a written advisement of the Local Agency's plan to preserve the records shall be provided to the Department upon request. If the Local Agency has no such policy, the Local Agency shall agree to retain records for seven (7) years from the date of the action or the date of the employee's separation, whichever is longer.

(h) Any Local Agency approved to operate all or part of its Personnel System for Program employees is subject to audit by the Department to determine compliance with the Federal Requirements. The audit schedule, scope, and frequency are within the discretion of the Department. The audit process may include an entrance conference with the Local Agency, a review of documentation, field work as necessary to clarify or expand on the documentation, an exit interview, and an opportunity for comment by the Local Agency to the draft report prepared by the Department. If a Local Agency submits written comments in response to a draft report, the response shall be included in the final audit report.