Summary

rotiduA etatS ainrofilaC S T I D U A E T A T S F O U A E R U B Department of Industrial Relations: Its Division of Apprenticeship Standards Inadequately Oversees Apprenticeship Programs September 2006 2005-108 The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by check or money order. You can obtain reports by contacting the Bureau of State Audits at the following address: California State Auditor Bureau of State Audits 555 Capitol Mall, Suite 300 Sacramento, California 95814 (916) 445-0255 or TTY (916) 445-0033 OR This report is also available on the World Wide Web http://www.bsa.ca.gov The California State Auditor is pleased to announce the availability of an on-line subscription service. For information on how to subscribe, please contact the Information Technology Unit at (916) 445-0255, ext. 456, or visit our Web site at www.bsa.ca.gov Alternate format reports available upon request. Permission is granted to reproduce reports. C S A ALIFORNIA TATE UDITOR ELAINEM.HOWLE STEVENM.HENDRICKSON STATEAUDITOR CHIEFDEPUTYSTATEAUDITOR September 7, 2006 2005-108 The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: As requested by the Joint Legislative Audit Committee, the Bureau of State Audits presents its audit report concerning the oversight of apprenticeship programs (programs) by the Department of Industrial Relations’ Division of Apprenticeship Standards (division). This report concludes that the division inadequately oversees programs. The division suspended program audits in 2004 and did not follow up on corrective action related to audits it started. Until the division resumes its audits and ensures that the apprenticeship committees correct any weaknesses in their programs, it will have difficulty measuring the success of the programs and the quality of the training apprentices receive. Additionally, the division has not resolved apprentice complaints in a timely manner, taking over four years in some cases to investigate the facts of complaints. The division has not adequately monitored the apprentice recruitment and selection process, making it nearly impossible to determine whether committees are adhering to equal opportunity requirements or to identify potential barriers to women and minorities. Finally, division field offices could improve their oversight of committees through improved attendance at committee meetings, a formal process for tracking the resolution of issues or questions, and maintaining an up-to-date list of programs. While the division’s staffing levels have not increased in step with legal obligations, it has failed to document priorities for meeting these obligations for existing staff, which would help maximize the use of existing staff and identify additional staffing needs. In addition to problems with oversight, the division does not adequately track and disseminate information to the Legislature, thus missing the opportunity to make it aware of programs and gain valuable feedback. Additionally, the department is slow to distribute apprenticeship training contribution funds. It has distributed as grants only $1.1 million of the roughly $15.1 million that had been deposited into the training fund by June 30, 2005. Finally, the division does not properly maintain its data on the status of apprentices. This data, if accurate, could be used to oversee programs. Respectfully submitted, ELAINE M. HOWLE State Auditor BUREAU OF STATE AUDITS 555 Capitol Mall, Suite 300, Sacramento, California 95814 Telephone: (916) 445-0255 Fax: (916) 327-0019 www.bsa.ca.gov ConTenTS Summary 1 Introduction 7 Audit Results The Division Suspended Program Audits in 2004 and Did Not Follow up on Corrective Action Related to Audits It Had Started 17 The Division Has Not Resolved Apprentice Complaints in a Timely Manner 18 The Division Has Not Adequately Monitored the Apprentice Recruitment and Selection Process 21 Division Field Offices Can Improve Their Oversight of the Committees 25 Although Staffing Levels Have Not Increased Commensurate With Its Legal Obligations, the Division Has Not Documented Priorities for Existing Staff 28 The Division Does Not Adequately Track and Disseminate Information to the Legislature as State Law Requires 31 The Department Is Slow to Distribute Apprenticeship Training Contribution Funds and Has Used More Funds for Division Operations Than for Grants 33 Information in the Division’s Database Could Be Used to Oversee Programs, if Better Maintained 37 Recommendations 40 Appendix The Division of Apprenticeship Standards Maintains Useful Information on Apprentice Status, but the Data Are Unreliable 43 Response to the Audit Labor and Workforce Development Agency 55 SUMMARY RESULTS IN BRIEF Apprenticeship programs (programs) help prepare individuals for careers in the skilled crafts and trades by providing access to classroom instruction and on‑the‑job training. Classroom instruction gives apprentices Audit Highlights . . . an understanding of the theoretical aspects of their crafts or trades; on‑the‑job training affords them the opportunity to Our review of the Department of Industrial Relations’ put into practice what they learn under the supervision of an Division of Apprenticeship experienced journeyman. The Division of Apprenticeship Standards’ (division) oversight Standards (division) under the Department of Industrial of apprenticeship programs Relations (department) has primary responsibility for the (programs) found that: oversight of programs. State law requires the division to foster,  The division suspended promote, and develop the welfare of the apprentice and program audits in 2004 industry; to improve the working conditions of apprentices and did not follow up on corrective action related and advance their opportunities for profitable employment; to to audits it had started. ensure that selection procedures are impartially administered to all applicants for apprenticeship; and to cooperate in the  The division has not development of programs and randomly audit them. resolved apprentice complaints in a timely manner, taking over The division suspended program audits in 2004. Further, it four years in some cases did not follow up on corrective action related to audits it had to investigate the facts of complaints. started. Program audits are the means by which the division can ensure that the apprenticeship committees (committees),  The division has not which sponsor the programs, are following their state‑approved adequately monitored the standards and also by which it can measure their success.2 A apprentice recruitment and selection process. comprehensive audit plan that subjects all programs to possible In particular, it has not random audits, gives priority to auditing programs with known conducted Cal Plan deficiencies, and targets programs with a high‑risk profile would reviews since 1998. maximize the use of the division’s limited audit resources. Until  Division consultants did the division resumes its audits and ensures that the committees not consistently provide correct any weaknesses in their programs, it will have difficulty oversight through measuring the success of the programs and the quality of the attendance at committee meetings. training apprentices receive.  The division’s staffing levels have not increased in step 1 Consistent with regulation and statute, we use the term journeyman to refer to a person, with legal obligations, and either male or female, who has completed an accredited apprenticeship or equivalent in it has failed to document his or her trade. priorities for meeting these obligations for 2 Apprenticeship program sponsors—joint apprenticeship committees, unilateral labor or management committees, or individual employer programs—submit to the division an existing staff. application for approval of their programs, along with proposed program standards and other relevant information. Because committees were the program sponsors for more continued on next page . . . than 97 percent of all active apprentices as of December 31, 2005, we refer to program sponsors as committees throughout the report. California State Auditor Report 2005-108 1  The division did not The division has not resolved apprentice complaints in a timely report annually to the manner. Apprentices or other interested parties may file a complaint Legislature for calendar with the department director when they believe a decision, years 2003 through 2005, order, or action of a committee is unfair or unreasonable or and the annual reports contain grossly inaccurate that the committee has violated related apprenticeship codes, information about regulations, standards, agreements, or policies. Although there program completion. is no regulatory or statutory time limit for the division to  The department is slow to investigate and resolve apprentice complaints, a time period of distribute apprenticeship more than two years—and more than four years in some cases— training contribution to investigate the facts of a complaint seems excessive. Most of funds. Only $1.1 million of the complaints we reviewed that remained open in June 2006 the roughly $15.1 million that had been deposited related to allegations of unfair cancellation or suspension of into the training fund by an apprentice from a program. In these situations, a timely June 30, 2005, has been determination is critical because apprentices who are unfairly distributed as grants. canceled are unable to become journeymen in their chosen field.  The division does not properly maintain its The division has not conducted adequate oversight of the data on the status of committees’ recruitment and apprentice selection procedures apprentices. to ensure that they promote equality of opportunity in state‑ approved apprenticeship programs. State regulations require committees to submit their apprenticeship selection standards to the division for approval. Among other things, the standards must include provisions for determining the qualifications of apprentice applicants and must specify a fair and impartial means of selecting applicants through uniform procedures. State regulations require the State of California Plan for Equal Opportunity in Apprenticeship (Cal Plan) to be incorporated into the standards the division approves for the committees. However, the division exercises limited oversight over the implementation of the committees’ selection procedures. Its chief stated that the division has not conducted systematic reviews of apprenticeship programs, also known as Cal Plan reviews, since 998. Consequently, the division cannot determine the extent to which committees comply with their Cal Plans. The division’s failure to monitor the recruitment and selection processes makes it nearly impossible to determine whether committees are adhering to equal opportunity requirements or to identify potential barriers for women and minorities. In addition, division field offices can improve their oversight of the committees. A key role of the division’s consultants, each of whom advises and oversees an assigned group of committees, is to attend committee meetings, especially if an apprentice is to appear before the committee. Despite the stated importance of the consultants’ attendance at committee meetings, our review of files at six field offices found that they did not consistently 2 California State Auditor Report 2005-108 attend these meetings. The field offices also lack a formal, centralized process for tracking the resolution of issues or questions that may arise at committee meetings or during the normal course of business, which may lead to inefficiencies. Further, although state regulations allow the division’s chief to cancel programs that have had no active apprentices for two years, until recently the consultants had not consistently identified inactive programs. Maintaining an up‑to‑date list of apprenticeship programs is important because the division can use it to more evenly prioritize and distribute committees to its consultants, improving their ability to monitor and advise their committees. Although the division’s legal obligations have increased, its staffing levels have not increased commensurately, and the division has failed to document priorities that would help existing staff to meet these obligations. The division’s chief indicated that a lack of staff prevents the division from completing its monitoring requirements. His priorities for 2006 are to focus on customer service and to improve the division’s processes to enable staff to meet requirements in a timely and accurate manner; his priorities for 2007 are to focus on promotion and expansion of apprenticeship into trades not typically associated with apprenticeship, such as the health care field, and to ensure the quality of programs through consistent implementation of oversight activities. We agree that these priorities may help the division to better meet its legislative requirements, but it should also take the next step to document specific priorities and goals for its staff, both to maximize the use of existing staff and to identify additional staffing needs. The division does not adequately track and disseminate information to the Legislature as mandated by state law. State law requires the division’s chief and the California Apprenticeship Council (council) to report annually to the Legislature and the public on their activities. According to the chief, the division did not do so for calendar years 2003, 2004, and 2005, thus missing the opportunity to make the Legislature aware of the apprenticeship programs and gain valuable feedback on the direction of the programs. The annual reports that have been prepared also contain grossly inaccurate information about program completion, due to a programming error. The department has been slow to distribute funds intended for apprenticeship training grants and has used more funds for division operations than for grants. These funds are collected from some contractors who employ apprentices on public California State Auditor Report 2005-108  works projects. Although the department has been authorized to award $.2 million in grants in each year of the last three fiscal years and state law required the department to begin distributing grants to programs from the apprenticeship training contribution fund (training fund) in 2003, it did not award its first grants until May 2006. Employer contributions to the training fund have increased significantly since the original authorization, and in fiscal year 2004–05, these contributions were four times greater than the allotted $.2 million. Although the department has distributed $. million in grants, it has spent significantly more on division operations. As of June 30, 2005, about $5. million had been deposited into the training fund. During fiscal years 200–02 through 2004–05, the division used a total of $4 million from this fund to pay for salaries, benefits, and other costs. Additionally, during fiscal years 2002–03 and 2003–04, a total of $2.8 million was transferred from the training fund to the State’s General Fund. The department’s expenditure projections for fiscal year 2006–07 call for the division to use $4.3 million of the projected $4.8 million it expects to receive. If it continues its approach of allotting only $.2 million for grants, the remaining $3. million will be used for general division expenses. As a result of the department failing to revise its estimate, a smaller portion of the employer contributions than originally intended have been or will be used for training unless the department revises the amount to be distributed as grants. If better maintained, the information on apprentices in the division’s database could be used to manage the programs. However, the division does not have a standardized process for updating the database and for reconciling the apprentice data it contains with information maintained by the committees. As a result, data on the current status of apprentices are not reliable. Without accurate status data, the division cannot measure actual program performance, such as the rate at which apprentices cancel or complete their apprenticeships. It could use this information, if accurate, to set performance goals, pinpoint program successes and failures, and focus its monitoring efforts. In addition, it could examine such issues as why completion rates for women are lower than for men in certain occupations such as carpentry and why apprentices in trades such as firefighting have higher completion rates than others such as roofing.  California State Auditor Report 2005-108 RECOMMENDATIONS To better manage the State’s apprenticeship system, the division should do the following: • Follow through on its planned resumption of audits, and ensure that recommendations are implemented and that audits are closed in a timely manner. • Establish time frames for resolving complaints and develop a method for ensuring that complaints are resolved within these time frames. • Conduct systematic audits and reviews of apprenticeship recruitment and selection to ensure compliance with Cal Plan requirements and state law. • Ensure that it submits annual reports to the Legislature that are accurate, timely, and consistent with state law. • Request increased budgetary authority as necessary to distribute apprenticeship training contribution fund money received each fiscal year first to the division for its estimated expenses to administer the grants program for the year the distribution is made and then as grants to applicable programs. • Establish a process for regularly reconciling information on the current status of apprentices in the division’s database with information maintained by committees. AGENCY COMMENTS The Labor and Workforce Development Agency, the Department of Industrial Relations, and the Division of Apprenticeship Standards accept and support the recommendations with the exception of some portions of those recommendations related to training contribution funds. n California State Auditor Report 2005-108 5 Blank page inserted for reproduction purposes only.  California State Auditor Report 2005-108 InTRoDUCTIon BACKGROUND California has regulated apprenticeships since at least 858, when the Legislature enacted a statute that offered apprentices a basic education. Congress passed the National Apprenticeship Act in 937. As a result, California passed the Shelley‑Maloney Apprentice Labor Standards Act in 939, which created the regulatory framework that currently governs apprenticeship in the State. The Department of Industrial Relations (department) oversees this regulatory framework, but the apprenticeship programs (programs) are run by sponsors—joint apprenticeship committees formed through a collaboration of management and labor, unilateral labor or management committees, or individual employer programs. Because committees were the program sponsors for more than 97 percent of all active apprentices as of December 3, 2005, we will refer to program sponsors as committees throughout the report. Programs help prepare individuals for careers in the skilled crafts and trades by providing access to classroom instruction and on‑the‑job training. Classroom instruction gives apprentices an understanding of the theoretical aspects of their crafts or trades; on‑the‑job training affords them the opportunity to put into practice what they learn under the supervision of an experienced journeyman.3 Programs cover a wide range of crafts and trades, from baking to firefighting to roofing, but most apprentices participate in programs related to the construction industry. Between January , 200, and December 3, 2005, construction‑related programs accounted for 75 percent of active apprentices. Programs do not cover all crafts and trades. Federal regulations define an occupation qualifying for apprenticeships as a skilled trade that is customarily learned in a practical way through a systematic program of on‑the‑job training commonly recognized throughout an industry, and which requires related instruction to supplement on‑the‑job training and involves manual, mechanical, or technical skills and knowledge requiring at least 2,000 hours of on‑the‑job work experience. State regulations use a similar definition. Program duration varies by trade, ranging 3 Consistent with regulation and statute, we use the term journeyman to refer to a person, either male or female, who has completed an accredited apprenticeship or equivalent in his or her trade. California State Auditor Report 2005-108  between one and six years. According to the department’s data on apprentices active between January , 200, and December 3, 2005, the average estimated length of time to complete a program was 3. years. Programs can benefit both the apprentice and the employer. In addition to gaining marketable skills, apprentices earn wages that increase as their knowledge and skills increase. Apprentices receive free coursework but may be required to pay reasonable ancillary costs. One way employers benefit from the programs is the reduced need for expensive recruitment efforts. Employers in the building and construction industry also benefit from hiring apprentices for their public works projects. Specifically, if the employers on such projects use apprentices who are participating in approved programs, they pay them a prevailing per diem wage rate derived from the department’s survey of wages paid on public works projects in the geographic area of the craft or trade. This wage rate is lower than the wage rate paid to journeymen. MANY ENTITIES PLAY A ROLE IN THE APPRENTICESHIP SYSTEM The department’s Division of Apprenticeship Standards (division) has primary responsibility for the oversight of programs. State law requires the division to foster, promote, and develop the welfare of the apprentice and industry; to improve the working conditions of apprentices and advance their opportunities for profitable employment; to ensure that selection procedures are impartially administered to all applicants for apprenticeship; and to cooperate in the development of programs and randomly audit them. However, many other players are involved in the administration of the programs. They include the California Apprenticeship Council (council), the apprenticeship committees (committees), the California Department of Education (Education), the California Community Colleges Chancellor’s Office (Chancellor’s Office), and local education agencies such as secondary schools, regional occupational centers and programs, adult schools, and community colleges. Figure  shows the roles played by these entities and the flow of oversight and funds among them. 8 California State Auditor Report 2005-108 California State Auditor Report 2005-108  FIGURE 1 Roles Various Entities Play in the State’s Apprenticeship System Oversight flow California Department of Education Department of Industrial Relations Fund flow and California Community Colleges Chancellor’s Office The director is the administrator of apprenticeship. • Distribute state apportionments to local education agencies for related and supplemental instruction. • Provide students with information on apprenticeship programs. Local Education Agencies Division of Apprenticeship Standards California Apprenticeship Council • Develop curriculum for instruction. • Foster, promote, and develop the welfare of the • Assist the Department of Industrial Relations with apprentice and industry. formulating policies. • Administer and supervise related and supplemental instruction for apprentices. • Improve the working conditions of apprentices. • Issue rules and regulations. • Coordinate instruction with job experience. • Ensure that selection procedures are impartially • Hear appeals on complaints of alleged violations of administered to all applicants for apprenticeship. the terms of an apprentice agreement. • Select and train teachers and coordinators. • Cooperate in the development of apprenticeship • Hear appeals of Division of Apprenticeship programs and advise on problems affecting Standards decisions. apprenticeship standards. • Randomly audit apprenticeship programs. • Process complaints alleging violations of apprenticeship agreements. Apprenticeship Committees Employers • Establish procedures for selecting apprentices. • Provide on-the-job training. • Approve apprentice agreements. • Provide the main source of funding for committees. • Develop apprenticeship standards. • For public works projects, contribute to the council Apprentices if not already contributing funds to a committee. • Perform functions and duties as agreed to in the apprenticeship standards. Sources: State laws and regulations and the Department of Industrial Relations’ Web site. State law established the council within the division and requires it to be made up of 4 members selected by the governor. Six are employers or from employer organizations that sponsor apprenticeship programs, six are from employee organizations that sponsor apprenticeship programs, and two are representatives from the public. The superintendent of public instruction, the chancellor of the community colleges, and the director of the department are also included. The council assists the director of the department in formulating policies for the effective administration of the regulatory framework for apprenticeships. It also issues rules and regulations that establish standards for minimum wages, maximum program hours, and working conditions for apprentice agreements, referred to as apprenticeship standards. However, the council cannot set standards lower than those in state law. For example, state law establishes a Apprenticeship standards cover the terms and conditions for programs, including probationary period of not more than ,000 hours the following: of employment and 72 hours of related instruction. Finally, the council hears appeals of division • Occupation and an outline of work process decisions and rules on complaints from interested • Qualifications of employers and apprentices parties who allege a violation of the terms of an • Recruitment apprentice agreement. • Selection • Employment and training Committees submit to the division an application for approval of their programs, along with • Working conditions proposed program standards and other relevant • Wages, benefits, and other compensation information. The chief of the division is to Source: California Code of Regulations, decide whether to approve a program within Title 8, Chapter 2. 90 days after receiving the committee’s completed application. As shown in Table , 54 committees had active apprentices as of December 3, 2005. Committees with fewer than five active apprentices accounted for 235, or 43.4 percent, of these committees, but they represent less than  percent of the roughly 68,000 active apprentices. In contrast, the 23 committees with more than 500 active apprentices each accounted for 50.4 percent of active apprentices. Committees are responsible for the day‑to‑day administration of programs. They must establish selection procedures that specify minimum requirements for formal education or equivalency; physical examinations, if any; subject matter of written tests and oral interviews; and any other criteria pertinent to the selection process. Committees must also approve apprenticeship agreements, adjust disputes, and perform such other functions and duties as agreed to in the apprenticeship standards. 10 California State Auditor Report 2005-108 TABLE 1 Distribution of Committees by Number of Active Apprentices as of December 1, 2005 Number of Active Apprentices in Each Committee 1– 5–50 51–500 501–5,5 Totals Number of apprenticeship committees* 235 125 158 23 51 Percentage of total committees each range of active apprentices makes up 43.4% 23.1 29.2 4.3 100.0% Total number of active apprentices for each range† 425 2,497 30,865 34,312 8,0 Active apprentices for each range as a percentage of the total 0.6% 3.7 45.3 50.4 100.0% Source: California apprenticeship system as maintained by the Division of Apprenticeship Standards of the Department of Industrial Relations. * Single employers accounted for 220, 49, three, and one committees, respectively, in each range. † Single employers accounted for 398, 509, 211, and 795 active apprentices, respectively, in each range. Education and the Chancellor’s Office are responsible by state law for making available to apprentices related and supplemental instruction. As provided through state and local boards responsible for vocational education, this involves the preparation of trade analyses and the development of curriculum for instruction, the administration and supervision of related and supplemental instruction for apprentices, the coordination of instruction with job experience, and the selection and training of teachers and coordinators for this instruction. Upon agreement with the committees, the boards cooperate with them to perform this function. Both Education and the Chancellor’s Office administer programs offering vocational learning opportunities. PROGRAMS AND STATE OVERSIGHT ARE PRIMARILY FUNDED THROUGH EMPLOYER CONTRIBUTIONS Although the State spends roughly $35 million per year on programs, our sample of 0 committees indicated that employer contributions are the main funding source for committees. Most apprentices are trained under joint committees, which are formed through a collaboration of management and labor. The collective bargaining agreements that govern these joint committees specify that participating employers make California State Auditor Report 2005-108 11 contributions generally ranging between $0.25 and $.00 per hour for apprenticeship training. These contributions are deposited into trusts, in accordance with federal law, and fund apprentice training and education expenses as well as related administrative expenses of committees. Unilateral committees may also receive contributions from participating employers through payments the employers make to trusts. Financial information from nine of the 0 committees we visited indicated that employer contributions provided 8 percent to 98 percent of the committees’ revenues. The tenth committee did not receive any employer contributions because, according to the program director, the local employers associated with the committee conduct the related and supplemental instruction for their apprentices. State regulations require that contractors employing apprentices on public works projects, who are neither required nor wish to make apprenticeship training contributions to a local training trust, make contributions to the council. The department’s Division of Labor Statistics and Research sets the required apprenticeship training contribution amount on public works projects as part of its determination of the general prevailing rate of per diem wages. This prevailing rate includes the basic hourly wage paid to the majority of workers, the rate for holiday and overtime work, and employer payments for benefits such as health and welfare and apprenticeship training. In addition, Education and the Chancellor’s Office receive appropriations from the State’s General Fund to reimburse local education agencies for each hour of teaching time devoted to each apprentice in an approved program who is enrolled in and attending classes of related and supplemental instruction at a rate of $4.86 per hour. As Table 2 shows, reimbursements have totaled between $25 million and $29 million per year since fiscal year 2000–0. 12 California State Auditor Report 2005-108 TABLE 2 Expenditures Paid to Reimburse Apprentices’ Related and Supplemental Instruction Fiscal Years 2000–01 Through 200–05 (In Thousands) Funding Source 2000–01 2001–02 2002–0 200–0 200–05 California Community Colleges Chancellor’s Office $11,692 $12,191 $12,195 $12,729 $12,729 California Department of Education 13,906 15,350 15,850 15,851 16,386 Totals $25,58 $2,51 $28,05 $28,580 $2,115 Sources: California Community Colleges Chancellor’s Office and California Department of Education. The funds the division receives to administer the apprenticeship program also come primarily from employers. Table 3 on the following page presents the division’s apprenticeship program expenditures by funding source. A large funding source for the division is the employment training fund, which is financed by an assessment of 0. percent of wages from employers in the State of California. The employment training fund typically receives $70 million to $00 million annually, which it distributes to various entities, including employers and public and private training agencies, for use in employment training programs. For example, in fiscal year 2004–05, manufacturing firms received $33 million in employment training funds from completed training contracts. A small portion of the employer assessments is distributed to the division. As shown in Table 3, for fiscal years 2000–0 through 2004–05, the division received between $2.4 million and $3.2 million in employment training funds each year. Employers provide additional funding for the division through payments to the apprenticeship training contribution fund. As noted earlier, this fund is financed through contributions made to the council by some contractors that hire apprentices on public works projects. This money is then distributed to the division and committees. See the Audit Results for further discussion of distributions from the apprenticeship training contribution fund. California State Auditor Report 2005-108 1 TABLE  Division of Apprenticeship Standards Apprenticeship Program Expenditures by Funding Source Fiscal Years 2000–01 Through 200–05 (In Thousands) Expenditures by Funding Source 2000–01 2001–02 2002–0 200–0 200–05 Governmental General Fund $1,798 $2,130 $1,694 $1,683 $ 0 Federal Trust Fund 72 217 169 146 87 Subtotals, Governmental 1,80 2, 1,8 1,82 8 Employer Employment Training Fund 3,129 3,230 3,137 2,930 2,423 Apprenticeship Training Contribution Fund 0 382 110 709 2,809 Subtotals, Employer ,12 ,12 ,2 , 5,22 Totals $, $5,5 $5,110 $5,8 $5,1 Sources: Governor’s Budget for fiscal years 2002–03 through 2006–07. Note: Figures do not include amounts for the electrician certification program which the division also manages. The federal government provides funding for the division through the federal trust fund, and prior to fiscal year 2004–05, the State did so through the General Fund. The General Fund is the principal operating fund for the majority of state governmental activities and consists of all money received into the Treasury that is not required by law to be credited to any other fund. The federal trust fund serves as a depository for all money received by the State from the federal government for which the expenditure is administered through or under the direction of any state agency. The division receives money from the federal government as reimbursement for salaries and travel expenses incurred by the State while performing Veterans Affairs–related activities. These activities include performing all duties necessary for the inspection, approval, and supervision of courses, programs, or tests pursued by veterans and other eligible persons. The division chief said that the division is about to undertake an in‑depth analysis of the actual costs of facilitating Veterans Affairs‑related duties as the funding has decreased over recent years and workload has increased. According to the chief, estimates suggest that the cost may be as high as $500,000. 1 California State Auditor Report 2005-108 SCOPE AND METHODOLOGY The Joint Legislative Audit Committee (audit committee) requested that the Bureau of State Audits review the apprenticeship programs regulated by the division and the council. Specifically, the audit committee asked us to review and evaluate the laws and regulations significant to the programs and to identify the roles and responsibilities of the various agencies involved in them. It also asked us to determine the type of data collected by the division for oversight purposes and the extent to which it uses the data to measure the success of the programs and to evaluate the division’s performance/accountability measures. In addition, the audit committee asked us to examine data for the last five fiscal years regarding the programs’ application, acceptance, enrollment, dropout, and graduation rates, including the rates for female and minority students, and the programs’ graduation timetables. Further, the audit committee asked us to review the extent and adequacy of the division’s efforts related to recruitment into state‑approved programs, and to identify any potential barriers to student acceptance into the programs. The audit committee wanted to know whether the division’s management and monitoring practices have complied with relevant statutory requirements and whether the division has taken action against programs that do not meet regulatory or statutory requirements. Finally, the audit committee asked us to review the program’s funding structure to determine whether employer contributions to programs reasonably relate to the costs of providing training. To review and evaluate the laws, rules, and regulations significant to programs and to determine the roles and responsibilities of the department, division, council, and applicable state educational agencies, we interviewed staff from the division, Education, and the Chancellor’s Office. Additionally, we reviewed relevant state and federal laws and regulations and the division’s policies and procedures manuals. To determine the extent to which the division uses data to measure the success of the programs, we interviewed division staff and found that it does not use the data for this purpose. Although we were asked to examine certain data from the last five fiscal years, the division’s data did not lend itself to such an analysis. The division does not capture data regarding the application and acceptance of apprentices. In addition, although it collects data related to enrollment, dropout, graduation rates, California State Auditor Report 2005-108 15 and graduation timetables, when we performed an analysis in accordance with the federal Government Accountability Office’s standards, we found the data related to dropout and graduation rates to be unreliable. See the Audit Results for a further discussion of our testing methodology and of error rates. Because the data were unreliable, we could not use them to draw conclusions about dropout and graduation rates. To review the extent and adequacy of the division’s efforts related to student recruitment into state‑approved programs and to identify any potential barriers to student acceptance into programs, we interviewed staff at the division and at education agencies to determine practices related to outreach and recruitment efforts and compared them to legal and regulatory requirements. In addition, we interviewed the staff of 0 judgmentally selected committees and reviewed documentation to identify the committees’ recruitment efforts. To evaluate the division’s management and monitoring of programs, we interviewed its staff and reviewed the status of program audits it conducted. We also reviewed the division’s handling of apprentice complaints. Finally, we reviewed the division’s processes that would result in actions against programs that did not meet regulatory or statutory requirements. To review the program’s funding structure to determine whether employer contributions to the programs reasonably relate to the costs of providing training, we reviewed laws, case law, rules, and regulations, and interviewed department staff to gain an understanding of how federal law affects the authority of the department to regulate such costs. The department indicated that the overwhelming majority of employer contributions to apprenticeship training programs are a component of “employee benefit plans,” which are regulated by the federal Employee Retirement Income Security Act (ERISA). ERISA preempts any state law that relates to employee benefits and as a result places constraints on the authority of the department to determine whether employer payments for apprenticeship training programs are reasonably related to the cost of training. The department believes that ERISA precludes the department from auditing ERISA apprenticeship plans to determine whether the contribution or funding level is reasonable in relation to the costs of providing training. As a result, we are also precluded from determining whether employer contributions to programs reasonably relate to the costs of providing training. n 1 California State Auditor Report 2005-108 AUDIT ReSULTS THE DIVISION SUSPENDED PROGRAM AUDITS IN 200 AND DID NOT FOLLOW UP ON CORRECTIVE ACTION RELATED TO AUDITS IT HAD STARTED Although state law required it to begin randomly auditing approved apprenticeship programs (programs) during each five‑year period beginning January , 2000, the Division of Apprenticeship Standards (division) did not complete the audits it started, and it stopped conducting audits in February 2004. Program audits are the means by which the division can ensure that apprenticeship committees (committees) are following their state‑approved standards and also can measure their success.4 It randomly selects programs to audit, reviewing the committees’ records and evaluating Division audits should focus on determining the following: whether they are meeting the requirements shown in the text box. Upon completion of an audit, a division • If programs comply with their standards. auditor sends the proposed report to the sponsoring • If journeymen are performing all committee for its review and comment. Once the on-the-job training. division chief approves the final report, the division • If programs are providing all related and sends a timeline letter to the committee directing it supplemental instruction required by the apprenticeship standards. to complete remedial actions within 90 days, and the division then sends the report to the California • If programs are covering all required work processes. Apprenticeship Council (council). The audit can be • If graduates complete the program’s closed when the division consultant for the committee requirements. has verified that the remedial actions are completed. • If apprentices are graduating on schedule or are dropping out. Between 2000 and 2004, the division selected • If graduates obtain employment as journeymen. 25 programs to audit. After performing their preliminary review of the selected programs, its Source: California Labor Code, Section 3073.1. auditors determined that 47 were not eligible for audit for reasons such as inactivity. As of March 4, 2006, the division had actually commenced an audit of only 57 of the remaining 78 programs. According to its data, two audits are still in progress and 55 have been submitted (0 as long ago as April 2002) to the chief and are awaiting his approval. 4 Apprenticeship program sponsors—joint apprenticeship committees, unilateral labor or management committees, or individual employer programs—submit to the division an application for approval of their programs, along with proposed program standards and other relevant information. Because committees were the program sponsors for more than 97 percent of all active apprentices as of December 31, 2005, we refer to program sponsors as committees throughout the report. California State Auditor Report 2005-108 1 In February 2004, the division discontinued conducting program audits. The division chief, appointed in 2006, said he IInn FFeebbrruuaarryy 22000044,, tthhee was told that there had been insufficient staff to complete the ddiivviissiioonn ddiissccoonnttiinnuueedd audits due to a combination of staff vacancies and workload ccoonndduuccttiinngg aauuddiittss,, bbuutt iitt priorities such as registering apprentices. He stated he made a ppllaannss ttoo rreessuummee tthheemm iinn decision not to further pursue the original selections as well as OOccttoobbeerr 22000066.. audits in partial stages of completion since so much time had passed that the data would not be credible. The chief also said that he has directed staff to focus on closing inactive programs and reconciling active program records prior to the planned implementation of a revised audit program focused upon specific selection criteria, and that the division plans to resume audits consistently in October 2006. State law requires the division to recommend remedial action to correct deficiencies found during its audits. It also specifies that a failure to correct deficiencies within a reasonable period of time shall be grounds for withdrawing state approval of a program. Until the division resumes its audits and ensures that the programs correct any weaknesses that are found, it will have difficulty measuring the success of the programs and the quality of the training apprentices receive. In addition to subjecting all apprenticeship programs to possible audits from a random selection process once every five years, statutes direct the division to give priority to conducting audits of programs that have been identified as having deficiencies. Regulations define deficiencies as previously determined violations of laws, regulations, or program standards. However, the division does not have explicit statutory authority to audit programs with high risk factors such as division‑identified low graduation rates, high dropout rates, or low employment rates. A comprehensive audit plan that subjects all programs to possible random audits, gives priority to auditing programs with known deficiencies, and targets programs with a high risk profile would maximize the use of the division’s limited audit resources. THE DIVISION HAS NOT RESOLVED APPRENTICE COMPLAINTS IN A TIMELY MANNER State regulations require the director of the department to receive, investigate, and decide on complaints filed by apprentices. However, until recently the division did not consistently track these complaints. As a result, it did not review, investigate, and issue decisions in a timely fashion. It has now identified 18 California State Auditor Report 2005-108 complaints from as far back as 993 that have been pending resolution. It has worked to close these cases, and the division chief stated that the division is currently working to ensure that it reviews and investigates apprentice complaints more quickly. Apprentices or other interested parties may file a complaint with the department director when they believe that a decision, order, or action of a committee is unfair or unreasonable or that the committee has violated related apprenticeship codes, regulations, standards, agreements, or policies. The senior consultant who previously staffed the apprentice complaint desk stated that the division’s process for handling complaints until June 2006 was first to review the complaint to ensure that it contained the necessary information and then to determine whether to investigate or dismiss it. If it found the complaint had merit, or if the complainant appealed a dismissal, the division would assign the complaint to one of its seven field offices, and the senior consultant at that field office would assign a consultant to investigate the complaint. The investigating consultant would provide a statement of fact and recommend a decision to the division chief, who, in conjunction with department legal counsel, would then issue a determination on behalf of the director. The complainant then had the option to appeal the decision to the council. Although the division has maintained a log of complaints received since 2004, this log does not consistently track their progress. According to an area administrator, in the spring of 2006, the division created a work sheet to track complaints by reviewing all of IInn tthhee sspprriinngg ooff 22000066,, tthhee its complaint files. In the process of creating the work sheet, it came ddiivviissiioonn aaddmmiinniissttrraattiivveellyy across a number of old files that appeared to still be open. The area cclloosseedd 2299 ccoommppllaaiinntt administrator stated that in the spring of 2006 the division chief ccaasseess bbeettwweeeenn sseevveenn aanndd and deputy chief administratively closed 29 cases that were between 1133 yyeeaarrss oolldd.. seven and 3 years old, as they determined that the cases were too old to reasonably continue pursuing. The area administrator stated that, for cases opened in or after calendar year 2000, staff have been working to formally close complaints as applicable—for example, by contacting the complainant to determine whether he or she is still interested in pursuing the complaint. In reviewing the status of complaints filed during calendar years 2000 through 2005, we found that the division did not investigate them in a timely manner. Figure 2 on the following page shows the number of complaints filed by calendar year and their disposition as of June 3, 2006. Although there is no regulatory or statutory time limit for the division to investigate California State Auditor Report 2005-108 1 and resolve apprentice complaints, a time period of more than two years—and more than four years in some cases—to investigate the facts of a complaint seems excessive. Most of the complaints we reviewed that remained open as of June 2006 related to allegations of unfair cancellation or suspension of an apprentice from a program. In these situations, a timely determination is critical because apprentices who are unfairly canceled are unable to become journeymen in their chosen field. FIGURE 2 Status of Apprentice Complaints as of June 1, 200 File lost or status unclear Open—post-investigation phase Open—investigation phase Open—initial phase Closed 40 1 35 9 30 1 2 25 6 4 1 7 20 2 2 2 22 1 3 3 19 2 1 15 16 9 15 15 10 10 5 0 2000 2001 2002 2003 2004 2005 Year Source: Apprentice Complaint Log of the Division of Apprenticeship Standards of the Department of Industrial Relations. 20 California State Auditor Report 2005-108 stnialpmoC fo rebmuN In 2006, the division implemented two major changes aimed at assuring its timely resolution of apprentice complaints. The work sheet mentioned earlier, which tracks complaints from their receipt to resolution, includes a function that notes the due dates for the various stages of the complaint process, for example, when an investigative report should be completed for a specific case. This system should help division staff to better determine the current stage of open files and when complaints should move to the next phase. Additionally, the division has taken steps to streamline the process it uses to handle complaints. After reviewing a complaint for completeness TThhee ddiivviissiioonn wwiillll nnoo and ensuring that it meets basic criteria, the division will request lloonnggeerr uussee iittss ssttaaffff ttiimmee supporting information from the respondent and complainant ttoo iinnvveessttiiggaattee ccoommppllaaiinnttss,, and forward the complaint to a hearing officer in the department’s hheellppiinngg aalllleevviiaattee ssoommee ooff legal office. Thus, the division will no longer use its staff time to iittss rreessoouurrccee lliimmiittaattiioonnss.. investigate complaints, helping to alleviate some of its resource limitations. The chief stated the division is still working with the department’s legal division to establish time frames for holding and completing hearings, but he expects hearings to be scheduled as soon as the legal division receives the complaint. We agree that these two steps will improve the division’s process for reviewing and resolving apprentice complaints, and the division should continue its work in this area. Given the time sensitivity of apprentice complaints, the division should further focus on establishing standardized time frames for all complaint resolutions, as well as a method to periodically ensure that the complaints are being resolved within the established time frames. THE DIVISION HAS NOT ADEqUATELY MONITORED THE APPRENTICE RECRUITMENT AND SELECTION PROCESS The division has not conducted adequate oversight of the committees’ apprentice selection procedures to ensure that they promote equality of opportunity in state‑approved apprenticeship programs. State regulations require committees to submit their apprenticeship standards to the division for approval. Among other things, the standards include provisions for determining the qualifications of apprentice applicants and uniform procedures for assuring the fair and impartial selection of applicants. State regulations require the State of California Plan for Equal Opportunity in Apprenticeship (Cal Plan) to be incorporated into the standards the division approves for each committee. Furthermore, the regulations require the division to regularly conduct systematic reviews of apprenticeship programs to determine the extent to which committees are complying with their Cal Plans. The division is also to conduct reviews when circumstances warrant, and to take appropriate action regarding committees that do not comply with their Cal Plans. Additionally, state law requires the division to audit all selection proceedings of apprentices or prospective apprentices and to ensure that the committees impartially administer their selection California State Auditor Report 2005-108 21 procedures. Finally, state law requires the chief of the division to coordinate the exchange, by the council, the committees, the Fair Employment and Housing Commission, community organizations, and other interested persons, of information on available minorities and women who may serve as apprentices. The division has not met most of these requirements. The division can approve a wide range of practices based on the Cal Plan’s selection procedures (see the text box). The standards of nine of the 0 committees we reviewed incorporated alternative selection methods, which can vary greatly. For instance, one committee’s Cal Plan outlines four acceptable methods for selecting apprentices: method places applicants who are at least 8 years old on eligibility lists, which then allows them 1. Selection on the basis of rank from a pool of to seek employment with approved employers.5 eligible applicants. Another committee requires applicants to be 2. Random selection from a pool of eligible applicants. at least 8 years old and ranks them according 3. Selection from a pool of current employees. to their scores on an oral interview and their 4. Selection according to an alternative method. application date. The committee then directs applicants to local unions for employment in Source: State of California Plan for Equal Opportunity order of application date. A third committee has in Apprenticeship. minimum age and educational requirements as well as test requirements. Applicants are placed on an accepted applicant list based on their test scores and referred to job openings in descending order from the list. The 0th committee we reviewed is subject to compliance with the State Personnel Board Affirmative Action Plan rather than the Cal Plan. Furthermore, its member employers follow the equal opportunity/affirmative action plans set up by their respective city, county, state, or federal jurisdiction. Because of the committees’ varying selection methods, the division’s fulfillment of its regulatory responsibilities is particularly important. However, the division exercises limited oversight over the implementation of the committees’ selection procedures. Its chief stated that the division has not conducted systematic reviews of apprenticeship programs, also known as Cal Plan reviews, since 998 due to insufficient staff. The chief also stated that staff do not audit or review selection proceedings for the same reason. Consequently, the division cannot determine the extent to which committees comply with their Cal Plans. For example, of the nine committees we reviewed subject to Cal Plan, many stated that they have little to no control over the selection 5 This selection method is sometimes referred to as the “hunting license” in the apprenticeship field. 22 California State Auditor Report 2005-108 process. For five committees the applicants’ acceptance into apprenticeship programs is handled primarily by third‑party organizations, which may be employers or local unions affiliated with the committee. For example, when applicants must seek employment with approved employers after they are placed on an eligibility list, the employers determine which apprentices the committee will accept into its program. The reliance on third parties to handle the selection process means that committees may not be fully aware of the details of the process and may not oversee it adequately. For example, the coordinator for one committee stated that he did not know the TThhee rreelliiaannccee oonn tthhiirrdd specific method the unions affiliated with his committee use to ppaarrttiieess ttoo hhaannddllee tthhee match individuals with available employment. The reliance on sseelleeccttiioonn ooff aapppprreennttiicceess third parties also allows for variation in the selection process. mmeeaannss tthhaatt ccoommmmiitttteeeess For example, one committee we reviewed is associated with mmaayy nnoott bbee ffuullllyy aawwaarree ooff two local unions, and each maintains lists for prospective tthhee ddeettaaiillss ooff tthhee pprroocceessss apprentices. However, according to its representative, one local aanndd mmaayy nnoott oovveerrsseeee iitt union starts a new list for prospective apprentices every week aaddeeqquuaatteellyy.. and does not allow employers to request apprentices with specific experience levels. The other local union, according to its business manager, does not start new lists weekly and allows employers to request apprentices with specific experience levels. Additionally, committees may not maintain adequate records, such as their basis for selecting or rejecting each applicant, to demonstrate their compliance with the Cal Plan. The Cal Plan states that applicants who have been placed in an eligibility pool shall be retained on such a list for two years. When we asked two of the committees for their lists, they were unable to provide them. The standards for another committee indicate that applicants will be ranked chronologically according to the time and date of their application and that the applicants on the top of the list will be referred to an employer requesting an apprentice. However, our review of its January 2005 applicants found that the committee did not have documentation to support the basis for passing over 32 of the 43 applicants in favor of others who were lower on the list. On the other hand, the standards of another committee require applicants to be listed on the new applicant referral list in numerical sequence in the order in which their application was received, but the standards also allow for several exceptions. The committee documented that between March 2004 and March 2006, all of the 702 applicants it accepted as apprentices were brought on through an exception process. It accepted California State Auditor Report 2005-108 2 roughly 49 percent using the exception that allows employers to request a new applicant by name (name call exception) from the new applicant referral list based on a collective bargaining agreement, 3 percent using an exception that allows for the reinstatement of canceled or self‑terminated apprentices, and the remainder using miscellaneous other exceptions. The same committee’s data allowed us to compare applications and acceptances by ethnicity and gender. The data for this committee OOnnee ccoommmmiitttteeee’’ss ddaattaa suggest that its reliance on using exceptions may hinder minorities aalllloowweedd uuss ttoo ccoommppaarree but help women. Roughly 42 percent of the white applicants were aapppplliiccaattiioonnss aanndd accepted into the program compared to 24 percent of the minority aacccceeppttaanncceess bbyy eetthhnniicciittyy applicants. However, roughly 27 percent of the male applicants were aanndd ggeennddeerr,, aanndd ssuuggggeesstteedd accepted as opposed to nearly 40 percent of the female applicants. tthhaatt iittss sseelleeccttiioonn pprroocceessss mmaayy hhiinnddeerr mmiinnoorriittiieess bbuutt The data also highlighted the different exceptions used to gain hheellpp wwoommeenn.. entrance into the apprenticeship program by ethnicity and gender. Of newly accepted applicants (not including those reinstated from a canceled or self‑terminated status), 68 percent of the minority candidates and 80 percent of the white candidates entered under the name call exception. However, roughly 77 percent of the newly accepted women entered using an exception for pre‑apprenticeship trainees, while 75 percent of the newly accepted men entered under the name call exception. According to its training director, the committee has been working on its pre‑apprenticeship training programs and requires the programs to graduate at least one woman for every four men. Furthermore, although Cal Plan requires committees to participate in a significant number of appropriate activities relating to outreach and recruitment and to keep adequate records for verification of compliance with this requirement, committees do not consistently maintain such documentation. All 0 of the committees we reviewed stated they participated in recruitment efforts. However, one committee was unable to provide any documentation of its recruitment efforts, and several others were able to provide only limited documentation. For example, one committee could furnish documentation of its attendance at only two career fairs. Additionally, three committees were unable to provide any documentation of recruitment efforts specifically targeted toward women or minorities. As a result, it is impossible to verify whether committees have undertaken a significant number of appropriate activities as required in the Cal Plan. Finally, according to its chief deputy, the division has not fulfilled its responsibility for coordinating the exchange of information on available minorities and women who may serve as apprentices 2 California State Auditor Report 2005-108 among the council, the committees, the Fair Employment and Housing Commission, community organizations, and other TThhee ddiivviissiioonn hhaass sshhiifftteedd interested persons. The chief stated that he plans to begin an iittss pprriioorriittiieess ttoo eennaabbllee iitt aggressive outreach effort in 2007. Increasing coordination of ttoo rreeiinnssttaattee iittss CCaall PPllaann information would help facilitate this process. rreevviieewwss,, tthhee fifirrsstt ooff wwhhiicchh iitt eexxppeeccttss ttoo ccoommpplleettee bbyy The division chief believes that Cal Plan reviews serve to focus eeaarrllyy SSeepptteemmbbeerr 22000066.. on improvements that need to be made in the committees’ equal opportunity efforts. As a result, the division has shifted its priorities to enable it to reinstate its Cal Plan reviews. According to the chief, in March 2006 it implemented a system for reviewing the Cal Plans for every committee with more than five apprentices once every three years. He anticipates completing the first cycle of reviews by early September 2006. The division’s failure to monitor the recruitment and selection processes makes it nearly impossible to determine whether committees are adhering to equal opportunity requirements or to identify potential barriers for women and minorities. Until the division consistently completes Cal Plan reviews, it will have a limited understanding of the state of affairs at the committee level. DIVISION FIELD OFFICES CAN IMPROVE THEIR OVERSIGHT OF THE COMMITTEES Nearly one‑third of the division’s 68 authorized positions are apprenticeship field office consultants and senior consultants whose responsibilities include overseeing the committees. However, both the need to balance oversight with their other responsibilities and a lack of documentation limit the effectiveness of their monitoring efforts. Each committee is assigned to a consultant located at one of the division’s seven field offices. Consultants have numerous responsibilities, as shown in the text box. The chief deputy is responsible for coordinating and overseeing their activities. He stated that a key role of consultants is to attend committee meetings, especially if an apprentice is to appear before the committee. Despite the stated importance of the consultants’ attendance at committee meetings, our review of files at six field offices found that consultants failed to consistently provide oversight through meeting attendance. For four of 0 committees we visited, the minutes maintained at the field offices responsible for these committees indicated the consultants had not attended any California State Auditor Report 2005-108 25 of the committees’ meetings between January 2005 and April 2006. Several factors contributed to this Field office consultants’ responsibilities include: lack of attendance. For example, from May 2004 through January 2006, consultants in the Los Angeles • Assisting in processing new apprentice agreements, field office were directed to reduce a backlog of amending existing agreements, and terminating agreements. Additionally, consultants process unprocessed trade certificates, new apprentice certificates of completion for those apprentices agreements, cancellations of agreements, and who satisfy the program requirements. apprentice certifications.6 Consultants we spoke • Approving and canceling training establishments. with at other field offices mentioned factors In doing so, the consultant may visit the establishments. such as turnover and the need to reduce travel expenses. The division estimates that it currently • Conducting audits. has 586 active committees being handled by • Assisting in the development of new programs and standards. a staff of 6 consultants—an average of about 37 committees per consultant. • Assisting in the modification or cancellation of existing programs as well as the modification of program standards. The field offices also lack a formal, centralized • Reviewing program standards to ensure they process for tracking the resolution of issues or meet legal requirements and wage changes. questions that may arise at committee meetings • Attending committee meetings to advise, consult, or during the normal course of business, which inform, and recommend actions relative to the administration of apprenticeship. may lead to inefficiencies. The division chief said that these inefficiencies, among other things, • Investigating and reporting on complaints regarding the apprenticeship program. contribute to excessive time periods for the approval • Assisting in the development and revision of of new programs or revisions to existing program selection procedures, as well as reviewing and standards and that there is some history to suggest monitoring the selection process for compliance. that approval times have exceeded two years in • Conducting Cal Plan reviews. some cases. The chief expressed a commitment to • Conducting Veterans Administration reviews dramatically improving the program approval process and approving programs for the Veterans and communication management in general. Administration. • Responding to public inquiries, including requests for wage information related to public The division chief recognizes the need for a formal works projects. centralized tracking system, and the division is in the process of developing a standard visit/ Sources: Division of Apprenticeship Standards’ communications log with which consultants operations manual and interviews with consultants conducted during spring 2006. can document their communications with the committees. The form is also being designed to capture information such as the last time the committee’s standards were updated and a reconciliation of the number of active apprentices. The chief also stated that the division has purchased software that will enable senior consultants and division management to review the information and indicated that he expects to install the software by September 2006. Implementing this new central tracking system will give the division a standard means of accessing ongoing committee issues and will allow it to more evenly prioritize and distribute the consultants’ workload. 6 Registering apprentices in a timely manner is important because only registered apprentices may be paid an apprentice wage on public works projects. 2 California State Auditor Report 2005-108 Further, although state regulations allow the division chief to cancel programs that have had no active apprentices for two years, until recently the consultants have not consistently identified AA rreevviieeww ooff pprrooggrraammss tthhaatt inactive programs. In February of 2006, the division’s database hhaadd nnoo aaccttiivvee aapppprreennttiicceess listed ,490 programs. According to the chief, he directed staff dduurriinngg tthhee pprreevviioouuss to review all programs that had no active apprentices during the ttwwoo‑‑yyeeaarr ppeerriioodd rreessuulltteedd previous two‑year period. This review resulted in the cancellation of iinn tthhee ccaanncceellllaattiioonn ooff more than 800 programs, or 54 percent of them, as of July , 2006. mmoorree tthhaann 880000 pprrooggrraammss Maintaining an up‑to‑date list of apprenticeship programs is iinn 22000066.. important because it will help ensure that the division more evenly prioritizes and distributes committees to its consultants, improving their ability to monitor and service their committees. Finally, the consultants do not consistently enforce regulations requiring self‑review and improvement plans. State regulations require committees to annually prepare and submit a self‑assessment review, as well as a program improvement plan, to the division chief. The self‑assessment review must include an objective and critical appraisal of multiple aspects of the program, including its curriculum and instruction, use of competent and qualified personnel, and the program’s accountability measures. The program improvement plans must address the committee’s remedial priorities, program improvement objectives, resources needed, and timelines for the completion of the objectives. Three of the five senior consultants we interviewed indicated that they did not require committees to submit this information annually, and none of the field offices had these annual reports for any of our 0 selected committees for the period of January , 200, through December 3, 2005. One of these consultants stated specifically that the reason for not requiring committees to submit these reports was staff limitations. The chief stated that the division’s management feels that these reports are a valuable tool to help ensure quality programs and will inform the committees that they must submit their current reviews and plans by December 3, 2006, and annually thereafter. Consultants will be responsible for reporting the committees’ progress by mid‑September and for following up with those that do not submit their reports by the deadline. By enforcing the submission of these reports, the division will be better able to measure the success of the apprenticeship programs. California State Auditor Report 2005-108 2 ALTHOUGH STAFFING LEVELS HAVE NOT INCREASED COMMENSURATE WITH ITS LEGAL OBLIGATIONS, THE DIVISION HAS NOT DOCUMENTED PRIORITIES FOR EXISTING STAFF The division chief indicated that a lack of staff prevents the division from completing its monitoring requirements. From fiscal years 999–2000 through 200–02, its staffing levels TThhee cchhiieeff ssttaatteedd tthhaatt increased, as did its legislated mandates. From fiscal year bbuuddggeett aanndd ssttaafffifinngg 200–02 to fiscal year 2004–05, the division lost some of its rreedduuccttiioonnss wweerree ttaakkeenn authorized positions without a decrease in programmatic aass aa ddee ffaaccttoo ssuussppeennssiioonn requirements. It has taken steps to address this issue, but ooff ssoommee mmaannddaatteess tthhaatt it could benefit from establishing specific priorities and ccoouulldd nnoott bbee mmeett.. measurable goals to maximize its efforts. Its chief stated that the division’s budget and staffing were decimated in the 990s while workload activity increased significantly as apprenticeship counts, public works requirements, and the implementation of the electrician certification program grew dramatically. He further stated that although these duties remained on the books, budget and staffing reductions were taken as a de facto suspension of some mandates. Our review of the division’s authorized positions, shown in Figure 3, supports the division chief’s statement regarding a decline in staffing. Following a 45 percent decrease in the number of authorized positions from fiscal years 990–9 to 99–92, the number of authorized positions remained between 55 and 60 until fiscal year 999–2000. Between fiscal years 998–99 and 200–02, the division’s authorized positions increased 3 percent, from 56.5 to 74 positions to assist with ongoing tasks, including addressing a backlog of public works complaints,7 deploying consultants to committee meetings, and improving processing times for the approval and revision of program standards. Positions were also provided to support several new legislative mandates, including randomly auditing apprenticeship programs every five years, establishing and implementing an electrician certification program, and making grants to approved apprenticeship programs from employer contributions received by the council. 7 The division is required to investigate and issue a determination on complaints filed by members of the public related to the use of apprentices on public works projects. 28 California State Auditor Report 2005-108 FIGURE  The Division’s Authorized Positions Fiscal Years 10–1 to 2005–0 Fiscal Year Sources: Governor’s Budget Salaries and Wages Supplement for fiscal years 1991–92 through 2006–07. * The Department of Industrial Relations had not developed information on the number of filled positions in fiscal year 2005–06 by the end of the audit. California State Auditor Report 2005-108 2 snoitisoP dezirohtuA 120 Unfilled positions Filled positions 100 25.7 80 77.8 15.5 12.3 68.0* 60 13.9 8.9 8.0 15.8 16.4 18.2 11.6 9.0 10.8 14.6 58.2 58.5 7.1 54.6 51.4 6.8 48.5 47.5 49.1 40 43.7 44.9 45.7 45.2 41.9 40.1 38.3 20 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 9 9 0– 9 9 1– 9 9 2– 9 9 3– 9 9 4– 9 9 5– 9 9 6– 9 9 7– 9 9 8– 9– 2 0 0 0 0– 0 0 1– 0 0 2– 0 0 3– 0 0 4– 0 0 5– 1 1 1 1 1 1 1 1 1 9 2 2 2 2 2 2 9 1 After fiscal year 200–02, however, the number of authorized positions declined while the division’s functions did not. In fiscal year 200–02, the division had 36 authorized consultant and senior consultant positions; in fiscal year 2004–05 it had only 27 consultant and senior consultant positions, a 25 percent decrease over three years. The number of authorized clerical staff positions dropped from 26 to 6 during this same time period. Overall, the division lost 22 positions from fiscal years 200–02 to 2004–05, a 30 percent reduction. The department’s budget officer stated that the number of authorized positions decreased because of budget reductions, the expiration of limited‑term positions, and the loss of vacant positions. The budget officer further explained that in the case of departmental budget reductions, the department director and division heads work together to submit the best plan possible to the agency secretary, who in turn approves the reduction plan. During this same time period, the division did not experience a decrease in legislatively mandated requirements. In fact, according to the division chief’s statistical reports to the council, the number of active apprentices increased 9 percent from June 2000 through June 2005, from 58,99 to 70,259.8 Additionally, according to the accounting unit’s unaudited data, the number of apprenticeship training contribution fund checks deposited by its clerical staff almost doubled from fiscal year 2003–04 to 2005–06, to a total of nearly 29,000 checks per year. To further increase the challenge of meeting workload requirements, according to the division chief, the division was unable to fill any limited‑term positions for the electrician certification program until spring 2006, and these vacancies created a tremendous workload that kept management and staff from fulfilling their other apprenticeship program responsibilities. The division has taken some steps to help it meet its increasing responsibilities, given its staff limitations. It requested and received additional authorized positions for fiscal year 2005–06 TThhee ddiivviissiioonn iiss tteessttiinngg and transferred the responsibility for investigating complaints aa nneeww ssyysstteemm ttoo to the department director’s legal staff in July 2006. The division fifillee nneeww aapppprreennttiiccee chief also stated the division has decreased its average time to aaggrreeeemmeennttss eelleeccttrroonniiccaallllyy process training fund contribution checks and created a new Web aanndd eexxppeeccttss ttoo hhaavvee site that enables the public to search for information related to ssooffttwwaarree iinnssttaalllleedd bbyy these contributions, which the chief expects to decrease the number SSeepptteemmbbeerr 22000066 tthhaatt wwiillll of public records act requests the division receives in the public ffaacciilliittaattee ccoommmmuunniiccaattiioonn works area. The division has also streamlined the procedure bbeettwweeeenn ccoonnssuullttaannttss aanndd for processing apprenticeship agreements, and it is testing a ddiivviissiioonn mmaannaaggeemmeenntt.. new system to file new apprentice agreements electronically. Additionally, the chief stated that the division expects to have software installed by September 2006 that will facilitate communication between consultants and division management related to program visits to committees by consultants. The division chief stated that since his appointment in January 2006, the division has made a good‑faith effort to meet the spirit and the letter of the law regarding audits. He also 8 The division chief’s statistical reports are based on data from the division’s database. Because we found that the error rate of the status field in the database may be as high as 15 percent, we do not consider the information presented here to be reliable. We discuss this issue in more detail later in the report. 0 California State Auditor Report 2005-108 stated that he has created priorities for the division for the next two years. In 2006 his priority is to focus on customer service and to improve the division’s processes to enable staff to meet requirements in a timely and accurate manner; his priorities for 2007 are to focus on the promotion and expansion of apprenticeship into trades not typically associated with apprenticeship, such as the health care field, and to ensure the quality of programs through consistent implementation of oversight activities. We agree that these priorities may help the division to better meet its legislative requirements, but it should also take the next step to document specific priorities and goals for its staff, both to maximize the use of existing staff and to identify additional staffing needs. THE DIVISION DOES NOT ADEqUATELY TRACK AND DISSEMINATE INFORMATION TO THE LEGISLATURE AS STATE LAW REqUIRES State law requires the division’s chief and the Annual reports to the Legislature include council to report annually to the Legislature and the following required elements: the public on their activities. According to the chief, the division did not do so for calendar • Number of individuals registered as apprentices, years 2003, 2004, or 2005, thus missing the including number of women and minorities. opportunity to make the Legislature aware of • Number and percentage of apprentices registered in each program having five or more apprentices the apprenticeship programs and gain valuable and the percentage of those who completed their feedback on the direction of the programs. programs successfully in the current year and in each of the previous five years, including minorities and women. The division’s deputy chief stated that the annual • Remedial actions taken to assist programs having reports have not been submitted for various reasons, difficulty reaching their affirmative action goals such as administrative errors and lack of sufficient or those with very low completion rates. time to complete them. As of June 2006, a copy • Number of disputes involving apprentice of the 2004 report, which covers multiple years, agreements submitted to the division for determination and number of these disputes was available on the division’s Web site. However, resolved by the council on appeal. neither this report nor the 200 and 2002 reports • Number of program applications received by contain all of the required information, as shown the division, number approved, number denied in the text box. For example, as previously discussed, and the reason for these denials, and number being reviewed and deficiencies, if any. the division has not conducted Cal Plan reviews since 998 due to insufficient staff. Additionally, • Number of programs approved by the division but disapproved by the council and the reasons for according to the deputy chief, it does not actively those disapprovals. review and analyze apprentices’ completion rates to measure program success. Therefore, the division Source: California Labor Code, Section 3073.5. reported no remedial actions resulting from its monitoring activities. California State Auditor Report 2005-108 1 The annual reports also contain grossly inaccurate information about program completion. The 2004 report includes a significantly higher number of apprentices who had completed their programs during calendar years 200 through 2004 than can be corroborated. For example, for committees with five or FFoorr 22000011 tthhrroouugghh 22000044,, more apprentices, the 2004 report shows 8,652 completions, tthhee aannnnuuaall rreeppoorrtt ccllaaiimmeedd 07 percent more than the 8,995 completions included in bbeettwweeeenn 6699 ppeerrcceenntt aanndd the division’s database. For 200, 2002, and 2003, the report 112222 ppeerrcceenntt mmoorree pprrooggrraamm claims 69 percent, 22 percent more, and 00 percent more ccoommpplleettiioonnss tthhaann tthhoossee completions, respectively, than those listed in the database. lliisstteedd iinn tthhee ddaattaabbaassee.. After we brought this problem to the division’s attention, it discovered a programming error that included in its completion totals apprentices who had dropped out. According to the deputy chief, the programming error affected legislative reports as far back as 997. In addition, some of the division’s data are questionable. We address this more completely in the last section of this report. Although the 200, 2002, and 2004 reports all include the number of program applications received and approved by the division, it could not furnish support for the numbers it reported. Further, because staff in the field offices enter into the database only the finalized proposed applications resulting from negotiations with the committees, it is difficult to ascertain the number of applications denied or being reviewed. None of the reports include required information about the number of programs approved by the division but disapproved by the council. By reviewing council meeting minutes, we found that the council reversed the division’s approval of two new programs in 200 and one new program in 2004. Tracking and providing the required information could help the division improve its program. Analyzing the committees’ statistics on apprenticeship selection and completion rates by gender and ethnicity would help the division assure that all applicants and apprentices are treated fairly and that committees take corrective action as needed. Tracking the progress of possible new programs from the point at which program sponsors first show interest could help the division identify problems field offices have in processing new program applications and better assess its success in fostering new programs. Additionally, understanding the potential barriers to new programs through the division‑ and council‑level approval process could help the division provide better support to applicants who are developing new programs. 2 California State Auditor Report 2005-108 The division chief acknowledged that the reports to the Legislature do not meet statutory requirements. He stated that the division will create a report covering calendar years 2003 TThhee ddiivviissiioonn cchhiieeff through 2005 that will meet all of the state law requirements aacckknnoowwlleeddggeedd tthhaatt tthhee and will deliver this report to the Legislature by September 2006. rreeppoorrttss ttoo tthhee LLeeggiissllaattuurree He also stated that the division will create a master calendar that ddoo nnoott mmeeeett ssttaattuuttoorryy includes the submission of an annual report to the Legislature in rreeqquuiirreemmeennttss,, bbuutt July of each year. ssttaatteedd tthhaatt tthhee ddiivviissiioonn wwiillll ccrreeaattee oonnee tthhaatt Although submitting annual reports does not affect the division’s ddooeess aanndd wwiillll ddeelliivveerr oversight of apprenticeship programs, it provides a means for iitt ttoo tthhee LLeeggiissllaattuurree bbyy the division to provide information related to apprenticeship SSeepptteemmbbeerr 22000066.. to the Legislature. These reports provide an opportunity for the division to promote apprenticeship, and they also provide a measure of accountability from the division to the Legislature, as it requires reporting on several of the division’s activities. Finally, these reports provide an opportunity for the Legislature to review the success of individual programs and apprenticeship programs as a whole in providing a diverse, skilled, and experienced workforce for California. THE DEPARTMENT IS SLOW TO DISTRIBUTE APPRENTICESHIP TRAINING CONTRIBUTION FUNDS AND HAS USED MORE FUNDS FOR DIVISION OPERATIONS THAN FOR GRANTS Although state law mandated the department to begin distributing grants to programs from the apprenticeship training contribution fund (training fund) in 2003, it did not distribute its first grants until May 2006. The department’s failure to revise the amount estimated to be available for grants has negatively impacted the legislative goal of funding apprenticeship programs. As a result of the department failing to revise its estimate, a smaller portion of the employer contributions than originally intended have been or will be used for training unless the department revises the amount to be distributed as grants. State law requires contractors on public works projects of more than $,000 to pay all workers at least the general prevailing rate of per diem wages for similar work in the area where the public work is performed. This rate includes employer payments for apprenticeship or other training programs. If contractors employ journeymen or apprentices in any trade and are not contributing to a committee, they must contribute the amount instead to the council, which is required by law to deposit the contributions in the training fund. Effective January , 200, state law requires the California State Auditor Report 2005-108  department9 to distribute these contributions, less the division’s cost of administering the program, in the form of grants, to approved multiemployer apprenticeship programs serving the same trade and geographic area from which the contributions came. The law was amended to authorize use of the money for expenses of the division. Specifically, the law states that any contributions not distributed in this way (for example, if no such apprenticeship programs exist in that area) may be used to defray the division’s future expenses. The department’s legal counsel states that this reflects a legislative intent to give division expenses a similar funding priority to grants. As a practical matter, the issue of what purposes these funds are spent on is revisited in the annual budget process when the division seeks authority to spend requested amounts for grants and for division expenses. The law was also amended to require the council to begin distributing grants at the conclusion of fiscal year 2002–03 and each fiscal year thereafter. California Labor Code, Section 777.5 (m) states: 2) At the conclusion of the 2002–03 fiscal year and each fiscal year thereafter, the California Apprenticeship Council shall distribute training contributions received by the council under this subdivision, less the expenses of the Division of Apprenticeship Standards for administering this subdivision, by making grants to approved apprenticeship programs for the purpose of training apprentices. The funds shall be distributed as follows: (A) If there is an approved multiemployer apprenticeship program serving the same craft or trade and geographic area for which the training contributions were made to the council, a grant to that program shall be made. (B) If there are two or more approved multiemployer apprenticeship programs serving the same craft or trade and geographic area for which the training contributions were made to the council, the grant shall be divided among those programs based on the number of apprentices registered in each program. (C) All training contributions not distributed under subparagraphs (A) and (B) shall be used to defray the future expenses of the Division of Apprenticeship Standards. 9 The department distributes contributions for the council based on the division’s calculations.  California State Auditor Report 2005-108 (3) All training contributions received pursuant to this subdivision shall be deposited in the Apprenticeship Training Contribution Fund, which is hereby created in the State Treasury. Notwithstanding Section 3340 of the Government Code, all money in the Apprenticeship Training Contribution Fund is hereby continuously appropriated for the purpose of carrying out this subdivision and to pay the expenses of the Division of Apprenticeship Standards. The department did not begin distributing grants to committees until May 20060 even though it had authority to spend $.2 million on grants in each of the last three fiscal years. Its budget officer attributes part of this delay to a lack of regulatory authority. The council did not provide the draft regulations outlining how to calculate grant amounts to the Office of Administrative Law until January 2005 and they were not finalized until May 2005. As of June 30, 2005, about $5. million had been deposited into the training fund. During fiscal years 200–02 through AAss ooff JJuunnee 3300,, 22000055,, 2004–05, the division used $4 million from this fund to pay aabboouutt $$1155..11 mmiilllliioonn hhaadd for salaries, benefits and other costs. Additionally, during bbeeeenn ddeeppoossiitteedd iinnttoo tthhee fiscal years 2002–03 and 2003–04, a total of $2.8 million was ttrraaiinniinngg ffuunndd,, bbuutt tthhee transferred from the training fund to the State’s General Fund. ddeeppaarrttmmeenntt lliimmiitteedd iittss Consequently, the June 30, 2005, fund balance was $8.3 million. ddiissttrriibbuuttiioonn ooff ggrraannttss ttoo $$11..11 mmiilllliioonn.. According to claim schedules provided by the department, the department distributed grants of $. million in May and June 2006. Although contributions to the training fund in fiscal year 2004–05 were four times greater than the $.2 million allotted for grant distributions, the department has not requested the authority to spend more of the employer contributions as grants. The division’s chief said that the division did not request increased authority for grants because the division did not know enough about the first distribution to be able to make any recommendations on the second. However, the division expects to have information to derive a reasonable recommendation for a larger distribution in fiscal year 2007–08. According to the department’s expenditure projections, in fiscal year 2006–07 the division plans to use $4.3 million of the projected $4.8 million it expects to receive. If it continues its approach of only allotting $.2 million for grants, the remaining $3. million will be used for general division expenses. The department’s legal counsel stated that the department believes its use of the funds meets legislative requirements. He further stated the law was written when 10 The department distributes these funds on behalf of the council. California State Auditor Report 2005-108 5 General Fund money supported the division, and the training fund’s major purpose was to make grants available to the apprenticeship programs. According to the department’s legal counsel, from fiscal year 2000–0 to 2003–04, the division lost 25 percent of its positions including two senior apprenticeship consultants, five apprenticeship consultants, and 8.5 clerical staff in the district offices due to General Fund budget cuts. In fiscal year 2003–04, the General Fund was completely eliminated and the apprenticeship training contribution fund, with Legislative approval, was added as a funding source to provide some stability to that program. He added that faced with a 3 percent reduction of General Fund money in fiscal year 2004–05, the Labor and Workforce Development Agency and the department determined that using the training contributions to offset the reduction was a viable option and would not impact the division’s ability to fund grants. However, the department’s use of employer contributions has significantly impacted the division’s ability to fund grants because less cash is now available to support increases in grant spending authority and subsequent grant distributions. The Assembly Floor Analysis of the initial legislation reflects a legislative intent to fund grants to apprenticeship training programs. It states: This bill requires the California Apprenticeship Council (Council) to distribute apprenticeship training contributions received from construction contractors, less certain specified expenses, as grants to approved multi‑employer apprenticeship programs to the same craft or trade and geographic area from which the contributions were received by the Council. In an October 2000 budget change proposal, the department estimated the cost to administer the grant program at less than $00,000. The budget change proposal is also clear that the division “is authorized to use a portion of the funds to defray the expenses of collecting the funds and administering the training contribution program.” However, according to the budget officer, the department is not tracking the cost of administering the grants program. Assuming that the $00,000 estimated cost of administering the grants was reasonably accurate, if the division had implemented the program as described in the budget change proposal, through fiscal year 2005–06, the division could have distributed about $2 million in grants, rather than the 11 This amount reflects $15.1 million in contributions less $2.4 million transferred to the General Fund and $100,000 in annual costs for six years to administer the program.  California State Auditor Report 2005-108 $. million that it did distribute. Clearly, the use of $4 million primarily for general division expenses prior to the distribution of grants adversely affects the division’s ability to fund grants to committees because less cash is available to support increases in spending authority for grants and subsequent grant distributions. INFORMATION IN THE DIVISION’S DATABASE COULD BE USED TO OVERSEE PROGRAMS, IF BETTER MAINTAINED Because the division does not properly maintain its data on the status of apprentices, it cannot determine actual program performance, such as the rate at which apprentices cancel or complete their apprenticeships. It could use this information, if accurate, to set performance goals, pinpoint program successes and failures, and focus its monitoring efforts. Field office staff are responsible for updating and verifying the information entered in the database; however, according to a few of the consultants, staffing limitations prevent them from performing this function on a regular basis. Thus, the division’s deputy chief, on a case‑by‑case basis, sends committees an electronic listing of active apprentices in their programs and asks them to update the information, which he then uses to update the division’s database. A standardized process for updating the database on a regular basis could help increase the accuracy of the information it contains. Further, the division would be able to use the database to measure program performance. For example, it could use the information to examine why completion rates for women are lower than for men in certain occupations such as carpentry and why apprentices in trades such as firefighting have higher completion rates than others such as roofing. Our review found that the division’s information on the current status of apprentices is unreliable. To conduct the review, we judgmentally selected 0 programs. We compared the total number of active apprentices each of the 0 committees listed OOuurr aannaallyyssiiss iinnddiiccaatteedd as of December 3, 2005, to the division’s database. Our analysis aa 1166..66 ppeerrcceenntt oovveerraallll indicated a 6.6 percent discrepancy between the database and ddiissccrreeppaannccyy bbeettwweeeenn tthhee program information overall. The discrepancies for the various ddiivviissiioonn’’ss ddaattaabbaassee aanndd committees ranged from  percent to 66.9 percent. In addition, pprrooggrraamm iinnffoorrmmaattiioonn ffrroomm we selected 0 active files from each committee’s files and traced 1100 sseelleecctteedd ccoommmmiitttteeeess.. them to the database as a test of whether the database contains information on all apprentices. All of these apprentices were included in the database. California State Auditor Report 2005-108  Finally, we tested the division’s data for 90 apprentices who had been noted as active participants in the programs anytime during the period of January , 200, to December 3, 2005. We broke the sample into two groups. The first group consisted of a random sample of 29 apprentices from a population of 4,305 the database listed as active on December 3, 2005, but who were expected to complete their apprenticeship prior to December 3, 200. Because the 29 apprentices should have completed their programs so long ago, we believed their status was in error, so we focused our test for this group on the apprentices’ status. In fact, our testing showed that 27 out of the 29 apprentices were not active. At a 95 percent level of confidence, the result of our random sample indicates that at least 78 percent of this population, or 3,358 of the apprentices listed as active in the division’s database, were not active as of December 3, 2005. The second group consisted of a random sample of 6 from the roughly 70,000 remaining apprentices that had been noted as active sometime during our audit period. We verified each apprentice’s social security number, first and last name, gender, ethnicity, agreement start and estimated completion dates, and current status code (canceled, completed, or active) as of December 3, 2005. Our testing indicated that the database OOuurr tteessttiinngg iinnddiiccaatteedd tthhaatt is accurate for all fields except the apprentices’ current status, tthhee ddiivviissiioonn’’ss ddaattaabbaassee iiss which is essential for determining program performance. nnoott aaccccuurraattee wwiitthh rreeggaarrdd ttoo We found errors for four of the 6 apprentices. At a 95 percent aapppprreennttiicceess’’ ccuurrrreenntt ssttaattuuss.. confidence level, this result indicates that the error rate may be as high as 5 percent. Consequently, using the division’s current status information as the basis for determining apprentices’ cancellation and completion rates would probably lead to incorrect conclusions about program performance. See the Appendix for a further discussion of information derived from the division’s database. The division chief and deputy chief acknowledge the value and importance of having accurate data. They say that, except for the database error found on the annual reports, the data in the division’s files fairly accurately reflect the data received from the programs. They cite a long history of inconsistent reporting by the committees of apprentices who leave programs. For the short‑term, the division chief says staff have been directed to work directly with the programs to synchronize apprenticeship records and to instruct committees to accurately and timely report apprentices who leave their programs. The division chief 8 California State Auditor Report 2005-108 and deputy chief believe that the implementation of electronic data interchange technology for the larger programs will ensure ongoing accuracy. The accuracy of the data is also important for gauging whether committees are following Cal Plan policies and procedures to promote equal opportunity in state‑approved apprenticeship programs. The Cal Plan’s goal for minority apprentices in a program is generally the proportion of minorities in the population of the counties served by a program’s committee. For women the Cal Plan goal is 50 percent of the proportion of the women in the workforce in the committee’s labor market. According to the 2004 United States Census Bureau Report for California, women make up 44 percent of the State’s workforce. Therefore, female participation in apprenticeship programs would be targeted at 22 percent for the State as a whole. Minorities represent 54 percent of the California population according to the 2004 census report. The division has developed a report for comparing the Cal Plan goals to the percentage of women and minorities taken into a program during a given period and to the percentage of active female and minority apprentices in a program at the end of that period to determine whether the committees are meeting established Cal Plan goals. As noted earlier, the division’s data were reliable for fields such as agreement start dates and apprentice gender and ethnicity, fields that are useful for determining intake figures. Our data reliability tests, however, indicate that the division’s data on TThhee ppeerrcceennttaaggee ooff current apprentice status, which would be useful for analyzing mmiinnoorriittiieess eenntteerriinngg active apprenticeships, are unreliable. We therefore analyzed aapppprreennttiicceesshhiipp pprrooggrraammss only intake figures. As Table A. in the Appendix indicates, bbeettwweeeenn 22000011 aanndd the percentage of minorities entering apprenticeship programs 22000055 wwaass 6611..11 ppeerrcceenntt,, between 200 and 2005 was 6. percent according to the ssiiggnniifificcaannttllyy aabboovvee tthhee division’s database, significantly above the 54 percent goal. 5544 ppeerrcceenntt ggooaall.. However, the overall statistic masks significant variations among various trades. During the five calendar years ending in 2005, roofing programs had the highest minority intake rate, at 92.8 percent, while firefighter programs had the lowest minority intake rate, at 30.2 percent. Of the 23 occupation categories listed, 4 exceeded the target for minority participation. The division’s data show that female intake rates for the State’s apprenticeship programs rarely met the Cal Plan goal of 22 percent. Table A. in the Appendix shows that the female intake rate for all programs during the five calendar years ending in 2005 was only 6. percent. Again, numbers vary among the California State Auditor Report 2005-108  various trades. The barbering and cosmetology programs had the highest female intake rate, at 70 percent, while only 0.6 percent of entrants to carpet, linoleum, and soft tile programs were women. Of the 23 trades, 2 did not meet the 22 percent intake goal, and 0 of these trades had female intake rates below 2 percent. The division’s data also show that female intake rates have dropped steadily over the five years, from 8.8 percent in 200 to 4.5 percent in 2005. The higher rate in 200 was in part due to a court order that required certain carpentry programs to meet goals for female intake. The United States District Court for the Northern District of California closed the file and terminated all pending motions related to the court order in 2002. As the table shows, the female intake rate for carpentry in 200 was 8.2 percent, and it fell to 3. percent in 2005. RECOMMENDATIONS To effectively implement program audits and follow up on corrective action related to audits, the division should do the following: • Follow through on its planned resumption of audits of programs, and ensure that recommendations are implemented and that audits are closed in a timely manner. • Request that the Legislature amend auditing requirements to allow it to select programs for audit using a risk‑based approach. To resolve apprentice complaints in a timely manner, the division should do the following: • Work with the department’s legal division to establish time frames for resolving complaints and develop a method for ensuring that complaints are resolved within these time frames. To monitor the apprentice recruitment and selection process, the division should do the following: • Conduct systematic audits and reviews of apprenticeship recruitment and selection to ensure compliance with Cal Plan requirements and state law. 0 California State Auditor Report 2005-108 • Require committees and their associated third‑party organizations to maintain documentation of their recruitment and selection processes for a time period consistent with Cal Plan requirements. • Develop a process for coordinating the exchange of information on available minority and female apprentices with those entities detailed in state law. To improve field office oversight of the committees, the division should do the following: • Require its consultants to enforce regulations that call for committees to submit annual self‑assessment reviews and program improvement plans. To meet increased legal obligations by identifying priorities for its staff, the division should do the following: • Document specific priorities and goals for its staff both to maximize the use of existing staff and to identify additional staffing needs. To better track and disseminate information to the Legislature as state law requires, the division should do the following: • Ensure that it submits annual reports to the Legislature that are accurate, timely, and consistent with state law. To facilitate distribution of apprenticeship training contribution funds as grants, the division should do the following: • Request increased budgetary authority as necessary to distribute apprenticeship training contribution fund money received each fiscal year first to the division for its estimated expenses to administer the grants program for the year the distribution is made and then as grants to applicable programs. • Request increased budgetary authority as necessary to distribute the fund balance as grants to applicable programs. • If the department believes that amounts collected from employers for deposit into the fund should be used to fund division expenses at the same priority level as grants to apprenticeship programs, the department should seek statutory changes that clearly reflect that employers are also funding general expenses. California State Auditor Report 2005-108 1 To better maintain its database and use it to oversee programs, the division should do the following: • Establish a process for regularly reconciling information on the current status of apprentices with information maintained by committees. • Use data to set performance goals and to pinpoint program successes and failures. We conducted this review under the authority vested in the California State Auditor by Section 8543 et seq. of the California Government Code and according to generally accepted government auditing standards. We limited our review to those areas specified in the audit scope section of this report. Respectfully submitted, ELAINE M. HOWLE State Auditor Date: September 7, 2006 Staff: Joanne Quarles, CPA, Audit Principal James Sandberg‑Larsen, CPA Helen Beckon Nick Cline Jessica Oliva Jasdeep Uppal Leonard Van Ryn, CISA 2 California State Auditor Report 2005-108 APPenDIX The Division of Apprenticeship Standards Maintains Useful Information on Apprentice Status, but the Data Are Unreliable The Joint Legislative Audit Committee (audit committee) directed the Bureau of State Audits to report on data regarding the application, acceptance, enrollment, dropout rate, graduation rate, and graduation timetables for state‑approved apprenticeship programs, including rates for female and minority students participating in the state‑approved apprenticeship programs. However, data from the Division of Apprenticeship Standards (division) in the Department of Industrial Relations did not lend themselves to such an analysis. Specifically, we could not examine data regarding the application and acceptance of apprentices because the division does not capture such information. It does collect data related to enrollment, dropout rate, graduation rate, and graduation timetables; however, its data related to the current status of apprentices are unreliable. To examine the division’s apprenticeship information, we obtained and analyzed data it collects regarding agreements entered into between apprentices and program sponsors (these include joint apprenticeship committees, unilateral labor or management committees, and individual employer programs). Because committees were the program sponsors for more than 97 percent of all active apprentices as of December 3, 2005, we refer to program sponsors as committees. These data include agreement start dates; status; status dates; scheduled completion dates; the apprentice’s name, social security number, gender, and ethnicity; and the committee’s name and apprenticeable occupation. Staff in the division’s headquarters and district offices input the data in its database using information provided by the committees. We assessed the reliability of the data, using criteria from the federal Government Accountability Office’s Assessing the Reliability of Computer-Processed Data or “Gray Book.” Specifically, we interviewed the division’s information technology and program staff, performed electronic testing on relevant fields in its database, and selected a random sample of apprentices and verified their information with relevant documentation. We found that the data were not sufficiently reliable for the purposes of determining the California State Auditor Report 2005-108  apprentices’ current status in apprenticeship programs. See the Audit Results section of this report for our finding related to this issue. Tables A.2 through A.5 are dependent on this unreliable information. We present this information to show that the division could use its data to measure the success of programs if it were better maintained. We based our tables on apprenticeship agreements indicating that the apprentices were active at some point during calendar years 200 through 2005. The division’s data contained records on 74,000 such agreements. However, we determined that 4,300 records were erroneous because they showed an “active” status at December 3, 2005 even though the apprentices were expected to complete their apprenticeships by December 3, 200. We tested a sample of 29 of these records and found all but two of the apprentices to be inactive. As a result, we removed these 4,300 records and used the remaining roughly 70,000 records to generate the tables in this appendix. We categorized the data according to industry and, in some cases, occupation. The categories presented in the tables include at least  percent of the active apprentices in our audit period. Consequently, the tables include the following industries: construction; manufacturing; public administration; services; and transportation, communications, electric, gas, and sanitary services. We placed the remaining industries into a category named “other industries,” which includes agriculture, forestry and fishing, finance, insurance and real estate, mining, and retail trade. For some industries, especially construction, we used occupation information in the database to further break down the information. This resulted in 23 categories in each of our five tables. Finally, for the tables that include minority information, we considered all ethnicities that were not Caucasian to be minorities. The following is a list of the tables that make up the remainder of this appendix: Table A.1—Female and Minority Apprentices Initiated by Trade, 2001 Through 2005 This table provides the total number of apprenticeships initiated in each of the calendar years 200 through 2005 and includes the proportion of those that were female and those that were minority. According to the data, 20,500 apprenticeships were initiated during the calendar years 200 through 2005.  California State Auditor Report 2005-108 Table A.2—Apprentices Active Between January 2001 and December 2005 This table provides information on the status as of December 3, 2005, of all apprentices who were active at some point between January , 200, and December 3, 2005. The table separates apprentice agreements with an active status into two categories—active on track and active late. Active on track apprentices have active agreements with an estimated completion date of December 3, 2005, or later. Conversely, active late apprentices are those who have active agreements with estimated completion dates that have already passed. As previously mentioned, the division’s database current status field is not sufficiently reliable. Table A.—Apprenticeships Completed by Year, 2001 Through 2005 This table provides the total number of apprentices who completed their apprenticeship programs by calendar year. As previously mentioned, the division’s database current status field is not sufficiently reliable. Table A.—Completion Rates for Apprentices Active Between January 1, 2001, and December 1, 2005, Who Were Expected to Complete by December 1, 2005 Using the universe of apprentices whose estimated dates of completion fell prior to December 3, 2005, we calculated the proportion whose status reflects program completion. As previously mentioned, the division’s database current status field is not sufficiently reliable. Table A.5—Breakdown of Completions by Time Required to Complete, January 1, 2001, Through December 1, 2005 This table breaks down the timeliness of the apprentices who completed their programs by showing whether the program was completed before or after their scheduled completion dates. As previously mentioned, the division’s database current status field is not sufficiently reliable. California State Auditor Report 2005-108 5 TABLE A.1 Female and Minority Apprentices Initiated by Trade, 2001 Through 2005 Entering Apprentices by Trade 2001 2002 200 200 2005 Five-Year Totals Construction—carpentry All entering apprentices ,11 ,2 ,0 5,52 5, 2,28 Percentage—female 18.2% 4.9% 4.6% 3.4% 3.1% 6.3% Percentage—minority 64.9 65.3 68.9 69.0 69.7 67.9 Construction—carpet, linoleum, and soft tile All entering apprentices 180 2 2  02 1,08 Percentage—female 1.7 0.8 0.4 0.3 0.3 0.6 Percentage—minority 68.3 73.6 76.1 68.8 69.5 71.2 Construction—cement masons All entering apprentices 8 21    2,20 Percentage—female 3.1 1.9 1.5 0.4 0.8 1.4 Percentage—minority 87.0 87.5 85.5 83.2 87.3 86.1 Construction—drywall/lathing All entering apprentices 1,0 1,528 2,022 2,8 2,582 10,2 Percentage—female 1.1 1.3 0.7 1.0 1.2 1.1 Percentage—minority 70.4 71.1 71.7 73.7 78.3 73.6 Construction—electrical and electronic All entering apprentices 2,0 1,51 1,522 2,80 2,18 10, Percentage—female 2.9 3.1 3.5 3.1 2.3 3.0 Percentage—minority 41.8 40.2 43.8 49.2 47.2 45.0 Construction—engineering All entering apprentices 1 1 2 558 0 2,5 Percentage—female 7.0 5.8 6.1 3.8 6.4 5.8 Percentage—minority 42.3 37.4 37.2 31.2 34.8 36.1 Construction—heating, ventilation, and air conditioning All entering apprentices 8 1 2 25 2 1, Percentage—female 1.1 1.0 0.4 0.4 1.0 0.8 Percentage—minority 35.6 37.3 30.1 43.5 41.0 37.4 Construction—iron and steel work All entering apprentices 1,21 5 22 1,000 1,22 5,1 Percentage—female 1.8 0.9 1.8 1.9 1.3 1.6 Percentage—minority 61.5 51.9 58.6 63.2 63.1 60.5 Construction—labor All entering apprentices 5 5 85 1,8 1,2 5,015 Percentage—female 7.2 2.5 3.8 3.3 3.2 3.5 Percentage—minority 86.3 79.8 81.7 81.6 82.7 82.1 Construction—painting and decoration All entering apprentices 1,05 1,02  1,15 1,15 5,1 Percentage—female 3.5 2.6 4.3 3.1 3.5 3.4 Percentage—minority 75.3 77.7 77.1 77.1 81.5 77.8 Construction—plumbing All entering apprentices 1,1 1,18 1,1 1,5 1,55 ,512 Percentage—female 2.1 2.0 1.7 1.0 1.7 1.7 Percentage—minority 46.4 50.1 51.9 50.8 51.1 50.1 Construction—roofing All entering apprentices 1,01 1,2 1, 1, 1,2 8,28 Percentage—female 4.2 1.6 1.2 0.7 0.4 1.6 Percentage—minority 91.8 93.6 91.1 94.1 93.3 92.8  California State Auditor Report 2005-108 Entering Apprentices by Trade 2001 2002 200 200 2005 Five-Year Totals Construction—sheet metal All entering apprentices 50 0 5 8 52 2, Percentage—female 1.2% 1.9% 2.4% 1.3% 1.3% 1.6% Percentage—minority 39.6 43.0 45.6 52.3 52.0 46.7 Construction—tile laying/setting All entering apprentices  51 2 88 08 ,5 Percentage—female 2.7 1.6 0.8 1.0 0.8 1.3 Percentage—minority 67.3 59.5 66.3 68.7 70.5 66.9 Construction—other All entering apprentices 1,22 1,10 1,2 1,0 1,2 ,0 Percentage—female 2.8 3.0 1.4 1.6 1.5 2.1 Percentage—minority 56.2 44.4 37.6 55.3 48.0 47.7 Manufacturing All entering apprentices 2 11 11 1 1 88 Percentage—female 1.6 2.3 3.4 2.2 0.6 1.9 Percentage—minority 76.2 64.3 65.8 66.4 59.8 67.4 Public administration—correctional officer-related All entering apprentices 2, 2,52 1,818 8 1,2 8, Percentage—female 21.7 17.5 19.9 20.2 19.1 19.6 Percentage—minority 55.5 55.1 53.7 62.6 60.2 56.3 Public administration—firefighter-related All entering apprentices 2,18 2,00 1, 1,5 1,5 ,18 Percentage—female 4.5 4.7 4.6 4.8 3.5 4.4 Percentage—minority 33.8 30.8 28.4 29.2 27.9 30.2 Public administration—other All entering apprentices 251 1 118 12 22 88 Percentage—female 9.6 9.1 9.3 24.0 16.7 13.5 Percentage—minority 42.6 34.3 27.1 42.6 67.0 45.5 Services—barbering and cosmetology All entering apprentices 2 522 58 8 50 2,20 Percentage—female 67.8 71.1 66.4 71.6 74.3 70.0 Percentage—minority 60.2 63.6 71.2 71.0 69.1 67.5 Services—other All entering apprentices 22 1 28 20 2 1,50 Percentage—female 22.3 17.8 28.2 32.1 33.7 26.5 Percentage—minority 58.3 52.9 56.7 59.0 61.3 57.7 Transportation, communications, electric, gas, sanitary services All entering apprentices 2 0 8 1  2,1 Percentage—female 3.8 3.2 1.8 3.1 2.3 2.7 Percentage—minority 35.7 33.2 34.8 42.2 42.9 38.4 Other industries All entering apprentices 11 112 80 12 88 55 Percentage—female 7.8 5.4 17.5 10.6 10.2 9.8 Percentage—minority 58.9 60.7 53.8 59.1 63.6 59.3 Grand totals All entering apprentices 2,8 21,0 22,511 25,5 2,82 120,58 Average percentage—female 8.8 6.7 6.3 4.8 4.5 6.1 Average percentage—minority 58.5 57.9 60.2 63.4 64.2 61.1 Source: California apprenticeship system database as maintained by the Division of Apprenticeship Standards of the Department of Industrial Relations. California State Auditor Report 2005-108  TABLE A.2 Apprentices Active Between January 2001 and December 2005* Status as of December 1, 2005 Total Percentage Percentage Apprentices Active Completed/ Completed/ Total Late/ Late/ by Trade Completed on Track on Track on Track Active Late Canceled Canceled Canceled Totals Construction—carpentry All apprentices , ,8 1,020 5.0% 1,8 1,055 15,01 55.0% 28,21 Females 85 265 350 19.7 176 1,253 1,429 80.3 1, Minority 2,131 6,774 8,905 46.2 1,308 9,049 10,357 53.8 1,22 Construction—carpet, linoleum, and soft tile All apprentices 25 85 1,080 5.2 2 5 80 2.8 1,88 Females 0 2 2 16.7 5 5 10 83.3 12 Minority 191 557 748 57.6 252 298 550 42.4 1,28 Construction—cement masons All apprentices 81  1,11 0.1 155 1,50 1, 5. 2,8 Females 11 5 16 28.6 6 34 40 71.4 5 Minority 342 641 983 41.0 141 1,273 1,414 59.0 2, Construction—drywall/lathing All apprentices 1, ,8 5,5 2. 1,01 ,20 ,20 5.1 12,5 Females 11 36 47 33.3 11 83 94 66.7 11 Minority 946 3,019 3,965 43.4 795 4,370 5,165 56.6 ,10 Construction—electrical and electronic All apprentices ,5 ,28 11,001 .0 21 5,85 ,5 .0 1,5 Females 136 159 295 53.2 28 232 260 46.8 555 Minority 1,938 2,840 4,778 62.0 283 2,646 2,929 38.0 ,0 Construction—engineering All apprentices 1,088 1,0 2,58 0.2 20 810 1,080 2.8 ,28 Females 70 75 145 62.8 21 65 86 37.2 21 Minority 408 510 918 68.5 109 314 423 31.5 1,1 Construction—heating, ventilation, and air conditioning All apprentices 2 81 1, 1. 10 52  28. 2, Females 9 8 17 100.0 0 0 0 0.0 1 Minority 313 311 624 70.6 41 219 260 29.4 88 Construction—iron and steel work All apprentices 1,2 2,01 ,08 51. 5 2,28 ,50 8. ,212 Females 18 32 50 42.4 8 60 68 57.6 118 Minority 923 1,300 2,223 52.3 372 1,652 2,024 47.7 ,2 Construction—labor All apprentices 5 2,1 2,5 5.  1, 2,00 . 5,15 Females 17 67 84 45.2 26 76 102 54.8 18 Minority 492 1,801 2,293 54.6 525 1,384 1,909 45.4 ,202 Construction—painting and decoration All apprentices 1,021 1,5 2, .  ,011 ,508 2. ,185 Females 21 61 82 32.7 31 138 169 67.3 251 Minority 772 1,319 2,091 38.3 383 2,989 3,372 61.7 5, Construction—plumbing All apprentices 2,058 ,2 ,0 2.8  2,81 ,0 .2 10,180 Females 46 70 116 54.5 16 81 97 45.5 21 Minority 794 2,128 2,922 60.9 408 1,468 1,876 39.1 ,8 Construction—roofing All apprentices 55 ,1 ,51 .1 1,088 , 5,2 55. 10,2 Females 4 36 40 25.5 9 108 117 74.5 15 Minority 501 3,711 4,212 44.8 994 4,204 5,198 55.2 ,10 8 California State Auditor Report 2005-108 Status as of December 1, 2005 Total Percentage Percentage Apprentices Active Completed/ Completed/ Total Late/ Late/ by Trade Completed on Track on Track on Track Active Late Canceled Canceled Canceled Totals Construction—sheet metal All apprentices 1,8 1,8 ,08 .2% 221 11 1,12 2.8% ,218 Females 26 18 44 57.1 7 26 33 42.9  Minority 647 837 1,484 77.4 101 333 434 22.6 1,18 Construction—tile laying/setting All apprentices 55 8 1,58 . 0 2, 2,05 . , Females 5 9 14 23.3 5 41 46 76.7 0 Minority 408 588 996 34.9 279 1,576 1,855 65.1 2,851 Construction—other All apprentices 1,8 2,5 ,81 5. 1,1 2,51 ,10 2. 8,1 Females 41 44 85 42.5 32 83 115 57.5 200 Minority 874 1,381 2,255 53.9 549 1,382 1,931 46.1 ,18 Manufacturing All apprentices 5 1 50 52.0 218 0 88 8.0 1,828 Females 7 6 13 22.4 8 37 45 77.6 58 Minority 346 237 583 52.9 130 390 520 47.1 1,10 Public administration—correctional officer-related All apprentices 12,10 1, 1,8 85.5 1,81 1 2,2 1.5 1,821 Females 2,579 388 2,967 85.4 369 137 506 14.6 , Minority 6,774 1,215 7,989 85.6 1,025 322 1,347 14.4 , Public administration—firefighter-related All apprentices 5,5 ,0 10,08 .2 1,02 1,85 2,8 22.8 1,0 Females 256 171 427 72.5 61 101 162 27.5 58 Minority 1,899 1,244 3,143 76.6 377 582 959 23.4 ,102 Public administration—other All apprentices 50  8 1. 22 2 5 8. 1, Females 64 67 131 87.3 10 9 19 12.7 150 Minority 205 200 405 57.6 107 191 298 42.4 0 Services—barbering and cosmetology All apprentices 1 5 1,50 51. 8 02 1,0 8. 2,820 Females 467 562 1,029 55.9 469 343 812 44.1 1,81 Minority 351 531 882 47.4 560 419 979 52.6 1,81 Services—other All apprentices  8 1,0 5. 2 8 12 .1 2,2 Females 168 159 327 62.2 134 65 199 37.8 52 Minority 517 459 976 67.2 254 222 476 32.8 1,52 Transportation, communications, electric, gas, sanitary services All apprentices 1,01 1,180 2,21 .5 115 5  25.5 ,010 Females 36 27 63 70.0 2 25 27 30.0 0 Minority 393 449 842 69.2 60 314 374 30.8 1,21 Other industries All apprentices 520 18 0 2.5 15 10 28 2.5 5 Females 45 17 62 62.6 16 21 37 37.4  Minority 298 121 419 77.7 88 32 120 22.3 5 Grand totals and average percentages All apprentices , 5,52 , 5. 1,8 5,5 1,05 2. 1,01 Females 4,122 2,284 6,406 58.9 1,450 3,023 4,473 41.1 10,8 Minority 22,463 32,173 54,636 55.0 9,141 35,629 44,770 45.0 ,0 Source: California apprenticeship system database as maintained by the Division of Apprenticeship Standards (division) of the Department of Industrial Relations. * Because we found that the error rate of the status field in the division’s database may be as high as 15 percent, we do not consider the information presented here to be reliable. The purpose of displaying it is to show how the division could use its current system to provide program performance information if it maintains accurate data. California State Auditor Report 2005-108  TABLE A. Apprenticeships Completed by Year, 2001 Through 2005* Apprentices by Trade 2001 2002 200 200 2005 Construction—carpentry All apprentices   5 5 20 Percentage—female 3.7% 3.0% 1.9% 2.0% 2.2% Percentage—minority 57.2 58.2 69.0 66.4 68.6 Construction—carpet, linoleum, and soft tile All apprentices 51 5 5  0 Percentage—female 0.0 0.0 0.0 0.0 0.0 Percentage—minority 60.8 60.0 71.4 67.1 65.0 Construction—cement masons All apprentices 8  81 1 8 Percentage—female 3.8 3.2 2.5 3.3 0.0 Percentage—minority 96.2 86.0 93.8 84.6 89.5 Construction—drywall/lathing All apprentices 20 1 25 5 25 Percentage—female 0.5 2.0 0.8 0.5 0.5 Percentage—minority 57.6 59.2 61.6 70.7 69.6 Construction—electrical and electronic All apprentices  851 88 1,1 1,11 Percentage—female 4.1 2.7 2.6 2.7 2.5 Percentage—minority 38.4 42.0 36.7 42.7 42.7 Construction—engineering All apprentices 21 22 188 21 18 Percentage—female 6.5 7.0 9.0 6.1 3.5 Percentage—minority 32.6 38.8 42.6 37.9 37.4 Construction—heating, ventilation, and air conditioning All apprentices 1 10 18 1 21 Percentage—female 0.6 1.3 1.1 0.5 1.4 Percentage—minority 30.8 27.5 29.5 38.1 40.7 Construction—iron and steel work All apprentices     21 Percentage—female 1.5 1.3 1.1 0.8 0.5 Percentage—minority 44.8 52.6 54.4 62.1 61.0 Construction—labor All apprentices 8 20 5 18 25 Percentage—female 0.0 0.0 3.6 3.2 3.1 Percentage—minority 87.5 90.0 94.6 85.6 86.1 Construction—painting and decoration All apprentices 21 20 1 188 2 Percentage—female 3.2 3.4 1.7 1.1 0.9 Percentage—minority 66.7 73.3 78.0 80.9 79.9 Construction—plumbing All apprentices 8 50 1 05 05 Percentage—female 2.6 1.6 2.4 2.7 2.0 Percentage—minority 37.3 36.2 36.2 39.3 44.2 Construction—roofing All apprentices 11  0 11 0 Percentage—female 1.5 0.0 1.1 0.0 1.1 Percentage—minority 90.1 90.3 91.1 92.9 95.6 50 California State Auditor Report 2005-108 Apprentices by Trade 2001 2002 200 200 2005 Construction—sheet metal All apprentices 20 28 255 28 5 Percentage—female 2.5% 2.8% 1.2% 2.8% 0.3% Percentage—minority 42.1 41.9 46.7 51.9 42.7 Construction—tile laying/setting All apprentices 111 11 12 120 12 Percentage—female 2.7 0.0 0.8 0.8 0.0 Percentage—minority 63.1 70.2 66.7 70.0 72.4 Construction—other All apprentices 20 5  88  Percentage—female 1.7 2.0 2.8 2.3 1.3 Percentage—minority 48.3 42.0 41.6 40.0 50.4 Manufacturing All apprentices 1 100  11 8 Percentage—female 1.5 1.0 1.3 0.8 1.1 Percentage—minority 52.6 66.0 65.8 68.1 51.7 Public administration—correctional officer-related All apprentices 5,0 2,1 1,50 1,808 1,185 Percentage—female 25.5 12.4 22.0 17.3 17.0 Percentage—minority 53.2 58.7 56.4 53.5 52.9 Public administration—firefighter-related All apprentices 8 1,01 8 1,50 1, Percentage—female 5.7 5.9 2.7 3.4 5.0 Percentage—minority 38.0 28.1 33.2 36.4 30.1 Public administration—other All apprentices 2 120 115 88 1 Percentage—female 2.8 10.0 16.5 17.0 11.9 Percentage—minority 47.2 40.0 37.4 27.3 41.8 Services—barbering and cosmetology All apprentices 8 18 1 1 11 Percentage—female 67.5 48.3 70.5 78.7 76.9 Percentage—minority 56.6 47.2 49.6 50.6 53.8 Services—other All apprentices 11 208 1 185 208 Percentage—female 7.3 16.8 11.2 13.0 36.1 Percentage—minority 45.0 49.5 56.4 55.1 59.6 Transportation, communications, electric, gas, sanitary services All apprentices 10 21 185 225 25 Percentage—female 2.8 4.1 3.2 4.4 2.5 Percentage—minority 51.4 48.9 28.1 30.2 34.2 Other industries All apprentices 10 10 10  1 Percentage—female 8.1 7.1 10.0 7.6 21.4 Percentage—minority 54.4 57.9 57.1 66.7 42.9 Grand totals and average percentages All apprentices 11,1 8,2 ,2 ,101 8,21 Percentage—female 15.2 7.0 8.2 7.3 6.5 Percentage—minority 50.5 49.6 49.8 51.1 50.5 Source: California apprenticeship system database as maintained by the Division of Apprenticeship Standards (division) of the Department of Industrial Relations. * Because we found that the error rate of the status field in the division’s database may be as high as 15 percent, we do not consider the information presented here to be reliable. The purpose of displaying it is to show how the division could use its current system to provide program performance information if it maintains accurate data. California State Auditor Report 2005-108 51 TABLE A. Completion Rates for Apprentices Active Between January 1, 2001 and December 1, 2005, Who Were Expected to Complete by December 1, 2005* Trade Overall Completion Rate Female Completion Rate Minority Completion Rate Construction—carpentry 18.3% 4.5% 18.3% Construction—carpet, linoleum, and soft tile 24.9 0.0 25.4 Construction—cement masons 20.0 16.4 20.6 Construction—drywall/lathing 16.3 8.5 15.5 Construction—electrical and electronic 47.6 36.2 44.6 Construction—engineering 47.8 37.9 45.9 Construction—heating, ventilation, and air conditioning 59.5 80.0 57.7 Construction—iron and steel work 29.8 17.3 29.1 Construction—labor 23.1 16.5 24.7 Construction—painting and decoration 19.0 9.9 19.6 Construction—plumbing 36.3 35.3 33.1 Construction—roofing 5.7 1.4 5.8 Construction—sheet metal 51.8 37.9 55.3 Construction—tile laying/setting 17.5 9.1 18.7 Construction—other 32.8 25.0 29.1 Manufacturing 35.4 13.2 35.8 Public administration—correctional officer-related 77.3 74.4 77.3 Public administration—firefighter-related 64.5 59.7 64.4 Public administration—other 44.6 78.7 37.4 Services—barbering and cosmetology 32.3 35.4 25.3 Services—other 47.2 37.0 47.9 Transportation, communications, electric, gas, sanitary services 61.3 50.9 53.4 Other industries 67.9 65.7 69.2 Average percentages .% .% 1.8% Source: California apprenticeship system database as maintained by the Division of Apprenticeship Standards (division) of the Department of Industrial Relations. * Because we found that the error rate of the status field in the division’s database may be as high as 15 percent, we do not consider the information presented here to be reliable. The purpose of displaying it is to show how the division could use its current system to provide program performance information if it maintains accurate data. 52 California State Auditor Report 2005-108 TABLE A.5 Breakdown of Completions by Time Required to Complete January 1, 2001 Through December 1, 2005* Percentage Percentage Percentage Estimated Percentage Completed Completed One Completed Over Average Time Completed on or Within One Year to Three Years Three Years to Complete Before Estimated After Estimated After Estimated After Estimated Trade (Years) Completion Date Completion Date Completion Date Completion Date Construction—carpentry 2.9 29.2% 47.6% 20.2% 3.0% Construction—carpet, linoleum, and soft tile 3.0 35.6 41.0 21.0 2.4 Construction—cement masons 2.5 46.2 45.9 7.3 0.5 Construction—drywall/lathing 2.7 18.8 43.8 32.2 5.2 Construction—electrical and electronic 4.1 57.1 36.3 5.6 1.0 Construction—engineers 3.3 32.9 47.8 17.7 1.6 Construction—heating, ventilation, and air conditioning 3.8 67.4 30.2 2.3 0.1 Construction—iron and steel work 2.7 27.2 61.3 10.5 0.9 Construction—labor 1.4 7.6 65.4 26.7 0.4 Construction—painting and decoration 2.6 46.2 39.4 12.6 1.8 Construction—plumbing 4.3 55.8 37.2 6.2 0.8 Construction—roofing 2.5 17.6 43.1 27.5 11.7 Construction—sheet metal 4.5 70.3 27.2 2.4 0.1 Construction—tile laying/setting 1.6 31.8 53.4 13.1 1.7 Construction—other 2.9 38.0 46.5 12.7 2.8 Manufacturing 3.3 65.1 27.1 4.5 3.3 Public administration—correctional officer-related 2.1 51.0 22.7 11.2 15.2 Public administration—firefighter-related 2.8 13.0 73.5 10.4 3.1 Public administration—other 2.6 66.8 20.2 4.3 8.7 Services—barbering and cosmetology 2.0 68.5 27.6 3.8 0.1 Services—other 3.1 59.9 31.9 3.0 5.2 Transportation, communications, electric, gas, sanitary services 2.6 63.8 27.4 8.8 0.0 Other industries 1.8 43.5 52.3 3.8 0.4 Grand totals 2.8 2.% 0.0% 11.2% 5.% Source: California apprenticeship system database as maintained by the Division of Apprenticeship Standards (division) of the Department of Industrial Relations. * Because we found that the error rate of the status field in the division’s database may be as high as 15 percent, we do not consider the information presented here to be reliable. The purpose of displaying it is to show how the division could use its current system to provide program performance information if it maintains accurate data. California State Auditor Report 2005-108 5 Blank page inserted for reproduction purposes only. 5 California State Auditor Report 2005-108 Agency’s Comments provided as text only. Labor and Workforce Development Agency 801 K Street, Suite 2101 Sacramento, California 95814 August 25, 2006 Elaine M. Howle State Auditor Bureau of State Audits 555 Capital Mall, Suite 300 Sacramento, CA 95814 RE: Audit of Department of Industrial Relations: Division of Apprenticeship Standards Draft Audit Report of August 21, 2006 Dear Ms. Howle: Thank you for the opportunity to review and comment on the Bureau’s audit of the Department of Industrial Relations’ Division of Apprenticeship Standards. We appreciate the extensive efforts your team made to identify opportunities for improvement within the Division of Apprenticeship Standards. As you know, Chief Rowan was appointed to lead the Division in January of this year and his assessment of the issues and priorities for the department is consistent with many of the recommendations made by the audit team. We also appreciate that you noted the Division’s early recognition of many of the issues as well as their efforts to resolve them. The Labor and Workforce Development Agency, the Department of Industrial Relations, and the Division of Apprenticeship Standards accepts and supports the recommendations included in the draft report of August 21st with the exception of some portions of those recommendations related to training contribution funds. (We will be happy to address concerns with those funding recommendations in our 60-day response to the audit.) We also note that the detail in the audit findings associated with apprenticeship recruitment and selection process as they relate to compliance with the Cal Plan requirements has caused the Division to reprioritize and refocus their efforts in this area. The Division will fully implement the recommendations as they are written. Sincerely, (Signed by Rick Rice) RICK RICE Undersecretary California State Auditor Report 2005-108 55 cc: Members of the Legislature Office of the Lieutenant Governor Milton Marks Commission on California State Government Organization and Economy Department of Finance Attorney General State Controller State Treasurer Legislative Analyst Senate Office of Research California Research Bureau Capitol Press 5 California State Auditor Report 2005-108