Monterey County Office of Education – Lagunita Elementary School District Report

Extraordinary Audit of the Lagunita Elementary School District Commissioned by the Monterey County Office of Education Administrative Agent Larry E. Reider 4/4/2008 Office of Kern County Superintendent of Schools Chief Executive Officer Joel D. Montero Fiscal Crisis & Management Assistance Team April 4, 2008 Dr. Nancy Kotowski, Superintendent Monterey County Office of Education 901 Blanco Circle Salinas, California 93912-0851 Dear Superintendent Kotowski: In December 2007, the Monterey County Office of Education and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement to provide an Assembly Bill (AB) 139 extraordinary audit of the Lagunita Elementary School District. Specifically, the agreement states that FCMAT will perform the following: 1. Review district policies and procedures related to Public Contract Code Sections 20111, 20116 & 22002. The review shall include an evaluation of independent con- tracts to determine whether district personnel or board members violated the Public Contract Code. 2. Evaluate the district’s policies and purchasing procedures to determine if conflicts of interest existed in accordance with Government Code Section 1090 in the award of independent contracts by district personnel or board members. The attached final report contains the study team’s findings and recommendations. We appreciate the opportunity to serve you and we extend our thanks to all the staff of the Monterey County Office of Education and the Lagunita Elementary School District. Sincerely, Joel D. Montero Chief Executive Officer FCMAT Joel D. Montero, Chief Executive Officer . . 1300 17th Street - CITY CENTRE, Bakersfield, CA 93 . 301-4533 Telephone 661-6 . 36-4611 Fax 661-63 . 6-4647 422 Petaluma Blvd North, Suite. C, Petaluma, CA 94952 Telephone: 707-775-2850 Fax: 707-775-2854 www.fcmat.org Administrative Agent: Larry E. Reider - Office of Kern County Superintendent of Schools Fiscal Crisis & Management Assistance Team TABLE OF CONTENTS i Table of Contents Foreword ...........................................................................iii Introduction ...................................................................... 1 Background ..............................................................................................................................................1 Study Guidelines ....................................................................................................................................2 Study Team ..............................................................................................................................................3 Executive Summary ......................................................... 5 Findings and Recommendations ................................... 7 Background and Chronology ..........................................................................................................7 Conflict of Interest ..............................................................................................................................9 Bidding Practices .................................................................................................................................15 Appendices ......................................................................19 FOREWORD iii Foreword FCMAT Background The Fiscal Crisis and Management Assistance Team (FCMAT) was created by legislation in accordance with Assembly Bill 1200 in 1992 as a service to assist local educational agencies in complying with fiscal accountability standards. AB 1200 was established from a need to ensure that local educational agencies throughout California were adequately prepared to meet and sustain their financial obligations. AB 1200 is also a statewide plan for county offices of education and school districts to work together on a local level to improve fiscal procedures and accountability standards. The legislation expanded the role of the county office in monitoring school districts under certain fiscal constraints to ensure these districts could meet their financial commitments on a multiyear basis. AB 2756 provides specific responsibilities to FCMAT with regard to districts that have received emer- gency state loans. These include comprehensive assessments in five major operational areas and periodic reports that identify the district’s progress on the improvement plans. Since 1992, FCMAT has been engaged to perform nearly 700 reviews for local educational agencies, including school districts, county offices of education, charter schools and community colleges. Services range from fiscal crisis intervention to management review and assistance. FCMAT also provides professional development training. The Kern County Superintendent of Schools is the administrative agent for FCMAT. The agency is guided under the leadership of Joel D. Montero, Chief Executive Officer, with funding derived through appropriations in the state budget and a modest fee schedule for charges to requesting agencies. Total Number of Studies....................694 Total Number of Districts in CA ..........982 Management Assistance.............................658 (94.8%) Fiscal Crisis/Emergency ................................36 (5.2%) Note: Some districts had multiple studies. Districts (7) that have received emergency loans from the state. (Rev. 2/21/08) Study Agreements by Fiscal Year 80 70 60 50 40 30 20 10 0 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 Projected Monterey County Office of Education – Lagunita Elementary School District seidutS fo rebmuN Fiscal Crisis & Management Assistance Team INTRODUCTION 1 Introduction Background The Lagunita Elementary School District is a single-school district located approximately two miles north of the city of Salinas in Monterey County and is governed by a three member board. The district was established in 1897 and serves approximately 88 students at one K-8 elementary school. The district is the second smallest in Monterey County. When a county superintendent becomes aware of an alleged misuse of public funds, the superintendent is responsible for determining whether sufficient evidence exists to sup- port the allegations and is authorized to request a review or audit and report the results to the governing body of the local educational agency (LEA) and the local district attorney and law enforcement. In December 2007 the Fiscal Crisis and Management Assistance Team (FCMAT) received a request from the Monterey County Office of Education for an Assembly Bill (AB) 139 extraordinary audit of the Lagunita Elementary School District. The county office had received a written complaint and allegations that the district had violated pro- visions of the Public Contract Code and Government Code regarding public bidding and conflicts of interest by members of the school board. The county office requested that FCMAT provide for the assignment of professionals to study specific aspects of the Lagunita Elementary School District. These professionals may include staff from FCMAT, county offices of education, the California Department of Education (CDE), school districts, or private contractors. FCMAT and the county office subsequently entered into a study agreement. All work is to be performed in accordance with the terms and conditions of this agreement, which specifies that FCMAT will perform the following: 1. Review district policies and procedures related to Public Contract Code Sections 20111, 20116 & 22002. The review shall include an evaluation of independent contracts to determine whether district personnel or board members violated the Public Contract Code. 2. Review district board minutes to determine whether any other irregular transac- tions involving the governing board’s award of bids occurred during the last two fiscal years. 3. Evaluate the district’s policies and purchasing procedures to determine if conflicts of interest existed in accordance with Government Code Section 1090 in the award of independent contracts by district personnel or board members. Thus FCMAT’s focus is on the district’s policies and procedures related to the Public Contract Code to determine if the district and/or its personnel or board members violated Government Code 1090, Conflict of Interest. Monterey County Office of Education – Lagunita Elementary School District 2 STUDY GUIDELINES Study Guidelines FCMAT provides a variety of services to school districts and county offices of education upon request. Based on Education Code Section 1241.5 (b), a county superintendent of schools may review or audit the expenditures and internal controls of any school district in his or her county if he or she has reason to believe that fraud, misappropriation of funds, or other illegal fiscal practices have occurred that merit examination. The review or audit conducted by the county superintendent shall be focused on the alleged fraud, misappropriation of funds, or other illegal fiscal practices and shall be conducted in a timely and efficient manner. The basis of this review is to determine if sufficient evidence exists to further investigate the findings, or if there is evidence of criminal activity that should be reported to the local district attorney’s office. This is in accordance with Education Code Section 42638 (b), which states the following: If the county superintendent determines that there is evidence that fraud or mis- appropriation of funds has occurred, the county Superintendent shall notify the governing board of the school district, the State Controller, the Superintendent of Public Instruction, and the local district attorney. AB 139 Extraordinary Audit Findings & Classifications Each audit finding is classified as a material weakness, a reportable condition or an area for management improvement. These classifications are provided to assist the district in developing a corrective plan of action. The district’s plan should first address the mate- rial weaknesses, then the reportable conditions, and finally the areas for management improvement. Material Weakness Material weaknesses are deficiencies in the district’s internal controls that are so serious that errors or fraud may occur and not be detected in a timely manner by employees during the normal course of business. A material weakness may also be a violation of cur- rent laws or regulations. A material weakness is the most serious type of finding. Reportable Condition A reportable condition is a significant deficiency in the design or operation of the dis- trict’s internal control processes that could adversely affect the district’s ability to record, process, summarize and report financial data. Management Improvement A management improvement is not a material weakness or reportable condition, but provides suggestions for improving the district’s operations to conform to industry best practices. FCMAT representatives visited the district in January and February of 2008 to conduct interviews, collect data and review documents. Specifically, FCMAT reviewed business records including board policies, board minutes, administrative regulations, and contracts and financial reports secured from various district departments and from independent Fiscal Crisis & Management Assistance Team STUDY TEAM 3 sources. The review process also included interviews with current board members and administrators to develop information concerning any alleged mismanagement or fraud during the past two fiscal years. This report is the result of those activities and is divided into the following sections: I. Executive Summary II. Background and Chronology III. Conflict of Interest IV. Bidding Practices Study Team The FCMAT study team was composed of the following members: Anthony Bridges Deborah Deal Deputy Executive Officer Fiscal Intervention Specialist FCMAT FCMAT John Lotze Public Information Specialist FCMAT Monterey County Office of Education – Lagunita Elementary School District 4 Fiscal Crisis & Management Assistance Team EXECUTIVE SUMMARY 5 Executive Summary Background and Chronology In 2005, after receiving notice from Monterey County that the water from its existing well contained unacceptable levels of nitrate, the Lagunita Elementary School District requested an engineer’s report from Landset Engineers, Inc. to evaluate its options. On June 28, 2005, the district filed an extreme hardship funding application with the State Allocation Board and attached a copy of the Landset Engineers, Inc. report that detailed the cost estimate for connecting the school to California Water Service, establishing the need for funding. On December 15, 2005, the State Allocation Board approved the district’s application for extreme hardship funding in the amount of $378,282 to connect the school district’s water system to the California Water Service Company. On April 25, 2006, the Lagunita School District governing board reviewed public bids from three companies for the installation and extension of the main water line from the nearby California Water Service Company substation to the school site. The three bids were as follows: Granite Construction Company $351,595 Monterey Peninsula Engineering $348,981 Don Chapin Company $309,700 Conflict of Interest According the board meeting minutes of April 25, 2006, the district’s governing board awarded the bid to the Don Chapin Company. Subject A, Board President and owner of Landset Engineers, Inc. and the Don Chapin Company, abstained from voting on the bid award. The board president’s abstention from this vote was appropriate; however, a conflict of interest may have existed prior to the award of the bid due to his involvement with a sub- sidiary company in preparation of the original engineering specifications. Prior detailed knowledge regarding the nature, scope and projected cost of the project appears to have provided the board president with an economic advantage in the public bidding process and should have caused him to abstain from any stage of the decision making process. Because abstention alone does not cure a violation of Government Code 1090, the con- tracts the district entered into with Don Chapin Company and Landset Engineering, Inc. may be rendered void. A conflict of interest occurs when an employee or board member has an economic or personal interest in a transaction that adversely affects the organiza- tion. The district’s board consists of three members, two of whom are related. This Monterey County Office of Education – Lagunita Elementary School District 6 EXECUTIVE SUMMARY relationship may have also interfered with the remaining board member’s ability to make judgments or decisions based upon the best interest of the district. FCMAT determined that material weaknesses and deficiencies exist in the district’s inter- nal controls regarding the award of bid to the Don Chapin Company. In accordance with Education Code section 42638(b), the county superintendent should notify the district’s governing board, the State Controller and other agencies that viola- tions of Government Code sections 1090 and 87300 may have taken place. The district’s governing board should request that designated employees confirm that outside activities do not conflict with their role or responsibilities with regard to the district, and should question designated employees and board members regarding outside activities or finan- cial interests. Ethics training is also recommended. Bidding Practices The Public Contract Code requires school districts to bid and award to the lowest responsible bidder any contract for $15,000 or more for most types of construction and renovation related to publicly owned facilities. The district limited bidding on the water project to four companies and did not advertise for bids as required by Public Contract Code section 20112. The district also did not include an Affidavit of Noncollusion in the bid packet as required by Public Contract Code section 7106. A review of the district’s contracts, bids and change orders revealed a serious material weakness in the district’s internal control process related to these functions, including financial reporting and compliance with applicable laws and regulations. These weak- nesses increase the probability of fraud and abuse. Every organization faces a variety of internal and external risks that must be managed. While all employees in the organization have some responsibility for internal controls, the governing board, superintendent and upper management are ultimately responsible. The district should develop and implement more stringent oversight of bidding and of the hiring of vendors and contractors and should ensure that all purchase orders and contracts for work are in compliance with the Public Contract Code. Fiscal Crisis & Management Assistance Team BACkGROUND AND ChRONOLOGY 7 Findings and Recommendations Background and Chronology When a county superintendent becomes aware of an alleged misuse of public funds, the superintendent is responsible for determining whether sufficient evidence exists to sup- port the allegations. The county superintendent is authorized to request a review or audit of the allegations and to report the results of the review or audit to the governing body of the local educational agency (LEA) and to the local district attorney and law enforce- ment. California Assembly Bill 139 (2001) amended Education Code section 1241.5 (b). This section defines the role of a county superintendent under these circumstances as follows: At any time during a fiscal year, the county superintendent may review or audit the expenditures and internal controls of any school district in his or her county if he or she has reason to believe that fraud, misappropriation of funds, or other illegal fiscal practices have occurred that merit examination. The review or audit conducted by the county superintendent shall be focused on the alleged fraud, misappropriation of funds, or other illegal fiscal practices and shall be conducted in a timely and efficient manner. After receiving notice from Monterey County that the water from its existing well contained unacceptable levels of nitrate and a recommendation to consolidate with the California Water Service Company to resolve the problem, the district requested an engi- neer’s report from Landset Engineers, Inc. to evaluate replacing the existing well with a like system or explore other options to improve water quality. On December 15, 2005, the State Allocation Board approved the district’s application for extreme hardship funding in the amount of $378,282. The grant award was to fund the district’s deferred maintenance project to connect the school district site to the California Water service public utility. On April 25, 2006, the district’s governing board reviewed public bids from three different companies for the installation and extension of the main water line down San Juan Grade Road from California Water Service Company Substation #45-01 to the school site. The following three bids were received: Granite Construction Company $351,595 Monterey Peninsula Engineering $348,981 Don Chapin Company $309,700 According to the district governing board meeting minutes of April 25, 2006, the board awarded the bid to the Don Chapin Company. Subject A, board president and owner of the Don Chapin Company and Landset Engineering, Inc., abstained from voting on the bid award. Table 1 provides a chronology of events to assist in interpreting and determining if viola- tions of the Public Contract Code and Government Code may have occurred. Monterey County Office of Education – Lagunita Elementary School District 8 BACkGROUND AND ChRONOLOGY Table 1: Chronology of Events Date Correspondence Description January 12, 2005 Superintendent letter to Michael Jones Request to have CA Water extend the at CA Water Services Co. service line to the school. Exhibit A June 23, 2005 CA. Water Service Co., Michael Jones Offers to be of assistance to the school letter to board. district but the district would be respon- Exhibit B sible for the extension line cost, etc. September 1, 2005 Landset Engineering letter by Charles Enclosing “cost estimates.” “…for both Potter, PE to OPSC; According to Form replacing the existing well system … 700 filed. and for connection to the nearest public water utility.” Also enclosed his “engi- Landset Engineering is owned and oper- neers report” dated June 2005. Total ated by Subject A cost $362,649 to connect to CA Water Exhibit C Service Co. January 30, 2006 Superintendent letter to Michael Jones, Notifying of state award $378,282 from CA Water the State Allocation Board to connect Exhibit D the service line to the school. February 8, 2006 Superintendent letter to Michael Jones, Enclosing $500 deposit for planning and CA Water development of the project. Exhibit E April 18, 2006 Addendum issued for bid Exhibit F April 25, 2006 Board meeting minutes Opened bids: Exhibit G 1- Don Chapin $309,700; 2-Monterey Peninsula Engineering $345,150; 3- Granite Construction Co. $348,981 May 22, 2006 CA Water letter to district Options and CA Water cost estimate of Exhibit h $416,983 September 20, 2006 Chapin invoice “Extra work” ~ $12,000. Exhibit I November 28, 2006 Warrant approved for $321, 700 Exhibit J December 14, 2006 CA. Water Service Co, Michael Jones Identifying 4 companies that were “ac- letter; requested by district ceptable” to do the work. Exhibit k January 23, 2007 CA. Water Service Co, Letter from Accepting completed facilities by con- Linda Przybyla tractor. Exhibit L June 7, 2007 District receives letter from Correspondence regarding possible vio- Department of General Services and lations of Education Code Section 35233 Office of Public School Construction and Government Code Section 1090 Exhibit M Fiscal Crisis & Management Assistance Team CONFLICT OF INTEREST 9 Conflict of Interest When faced with questions involving conflicts of interest caused by the employment or appointment of a public official, such as a school board member or an administrator, it is important to consider the legal and ethical issues and to review any applicable board poli- cies that may be even more restrictive than the statutory mandates. If a school board member or administrator is in a meeting when the board intends to gather information, discuss or deliberate about a contract in which he or she has a personal financial interest, the board member or administrator should remove himself or herself from the meeting and ensure that the abstention and departure are recorded in the minutes. Even if the board member or administrator does not participate in the original contracting process, he or she may violate the law for taking subsequent action on the contract, such as authorizing payment under a contract or negotiating disputes over contract terms. Therefore, the school board member or administrator should abstain from all discussions, negotiations and votes that are related to the contract with which he or she has a personal financial interest. California Government Code section 1090 applies to school districts and employees of school districts and states the following: Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity. As used in this article, “district” means any agency of the state formed pursuant to gen- eral law or special act, for the local performance of governmental or proprietary functions within limited boundaries. Business relationships between a board member and vendors or consultants who do business with the district are described in this report. The resulting conflicts of interest are evidenced by contracts and invoices involving the district and the district’s board member. There are some exceptions to this prohibition, including Government Code sections 1091 and 1091.5, which state that no conflict exists in situations in which the employee or offi- cial has only a remote interest in the contract. Remote interests include being an officer in a nonprofit corporation, landlord of the contracting party, an owner who owns less than 3% of a for-profit corporation and for whom the total income from dividends from the corporation does not exceed 5% of total annual income, and being a non-salaried member of a nonprofit corporation. The Political Reform Act, Government Code section 81000 and following, was enacted by Proposition 9 in June 1974 and is the starting point in any consideration of conflict of interest laws in California. Chapter 7 of the Political Reform Act (Government Code Monterey County Office of Education – Lagunita Elementary School District 10 CONFLICT OF INTEREST sections 87100-87500)deals exclusively with conflict of interest situations. The Political Reform Act also limits the receipt of specified gifts and honoraria. One of the legislative declarations at the outset of the Political Reform Act forms the foundation of the conflict of interest provisions: “Public officials, whether elected or appointed, should perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them.” (section 81001(b)) The stated intent of the Political Reform Act was to establish a mechanism whereby “[a]ssets and income of public officials which may be materially affected by their official actions . . . [are] disclosed and in appropriate circumstances the officials . . . [are] disqual- ified from acting in order that conflicts of interest may be avoided.” (section 81002(c)) The Fair Political Practices Commission ( FPPC) is the agency primarily charged with advising officials, informing the public, and enforcing the conflict of interest provisions of the Political Reform Act. To determine whether a conflict of interest exists under the Political Reform Act, the FPPC applies the following eight step process: STEP 1: Is the individual a public official? STEP 2: Is the public official making, participating in making, or influencing a governmental decision? STEP 3: Does the public official have one of the six qualifying types of eco- nomic interest? STEP 4: Is the economic interest directly or indirectly involved in the govern- mental decision? STEP 5: Will the governmental decision have a material financial effect on the public official’s economic interests? STEP 6: Is it reasonably foreseeable that the economic interest will be materially affected? STEP 7: Is the potential effect of the governmental decision on the public offi- cial’s economic interests distinguishable from its effect on the general public? STEP 8: Despite a disqualifying conflict of interest, is the public official’s par- ticipation legally required? In the state of California, state officers and certain state employees are required to file a Form 700, Statement of Economic Interests, issued by the FPPC. According to the district’s Board Policy 9270, the district has adopted policies regarding conflicts of inter- est and statements of economic interest in accordance with Government Code sections 87300-87313. These types of policies are typically adopted by the governing board and usually include attachments that identify the positions which are required to disclose Fiscal Crisis & Management Assistance Team CONFLICT OF INTEREST 11 information and the categories for disclosure. Once filed, the Statement of Economic Interests becomes a public document. Form 700 is distributed to all Lagunita Elementary School District board members and to the following staff members: Superintendent Assistant superintendents Purchasing agent The governing board may determine at any time whether any outside activity is incom- patible as long as such determination is consistent with Government Code sections 1125-1128. Responses during interviews with the current board members indicated that the board has not acted upon this type of policy. A conflict of interest arises when an individual’s private interests, such as outside profes- sional or financial relationships, might interfere with his or her professional obligations to a public employer. Such situations do NOT necessarily imply wrongdoing or inap- propriate activities. Conflicts of interest often arise at the intersection of two fundamental missions: to push the boundaries of knowledge and to apply the use of that knowledge in a manner that brings financial gain. For example, outside consulting or other interests may bring an individual significant financial gain. The perception that such incentives might lead to personal benefit may detract from the overall benefits to educational programs whose objectives depend on the individual’s direction. To resolve erroneous perceptions, such conflicts must be identified and mitigated or eliminated. Strong conflict of interest policies can protect an educational agency from any of the following allegations: • Exploitation of students for private gain • Compromise of appropriate controls in the conduct of research • Undue personal gain from public funds • Compromise of educational priorities due to financial considerations • Compromise of scientific objectivity in the conduct of research • Use of educational resources for private gain • Adverse influence by those in leadership roles on the professional or academic activities of colleagues, staff or students as a result of outside interests To protect against such situations, governing boards must exercise their duty to safeguard district assets and develop appropriate guidelines for disclosure. These guidelines could include, but need not be limited to, employee compliance with the LEA’s policies related to conflict of interest, and disclosure of outside professional activities and financial interests on their part or on the part of their immediate family members. In addition, disclosure could be required on an ad hoc basis for any situations that may raise questions about conflict of interest, such as sponsored research, gifts, or licensing of intellectual property. Monterey County Office of Education – Lagunita Elementary School District 12 CONFLICT OF INTEREST Under California Government Code section 1126, educational agencies may also adopt an incompatible activities policy. This type of policy could prohibit employees from engag- ing in outside work that is incompatible with their official duties. The statute allows an agency to have a policy, but the agency must formally adopt a policy to make it effective (See appendix A for California Government Code section 1126). District Practices Based on the documentation and review, FCMAT has found that violations of Education Code Section 35233 and Government Code Sections 1090 and 87300 may have existed regarding the award of bid to Don Chapin Company on April 25, 2006. The Lagunita School District governing board reviewed public bids from three companies for the installation and extension of the main water line along San Juan Grade Road from California Water Service Company Substation #45-01 to the Lagunita Elementary School site. According to the minutes of the April 25, 2006 meeting of the district’s board of trustees, the board awarded the bid to Don Chapin Company. Subject A, Board President and owner of the Don Chapin Company and Landset Engineering, Inc., abstained from voting on the bid award. Although the abstention of the board president from voting on this contract is noted in the board minutes, the conflict of interest may have existed prior to the award of bid. Further, abstention alone may not satisfy the requirements of Government Code 1090; as a result, the contracts the district entered into with Don Chapin Company and Landset Engineering, Inc. may be rendered void. As identified in the district’s Form 700, Subject A owns and operates Landset Engineering, which prepared the engineering specifications for the district’s Extreme Hardship funding application. According to the engineer’s report dated June 2005 and prepared by Landset Engineering, the total cost to connect the district to the California Water Service Company was estimated at $362,649. The final engineered plans and specifications used by all bidders were prepared by the California Water Service Company and were dated March 3, 2006. The bid submitted by Don Chapin Company was $41,895 lower than the highest bid and $47,051 lower than the figure provided in his own company’s engineering report. Other bidders had access to the engineering report; however, prior detailed knowledge regarding the project’s nature, scope and projected cost appears to have provided the board president with an unfair advantage in the public bidding process and should have caused him to abstain from any part of the decision making and award process for any other contracts connected to the award of this bid. Although there may appear to be a savings to the district as a result of choosing the lowest bidder, there was still a financial incentive to the Don Chapin Company. A financial incentive occurs whenever the transaction results in a profit. Under the Fair Political Practices Act, public officials are disqualified from participating in government decisions in which they have a financial interest. The act does not prevent Fiscal Crisis & Management Assistance Team CONFLICT OF INTEREST 13 officials from owning or acquiring financial interests that conflict with their official duties, nor does the mere possession of such interests require officials to resign from office. The disqualification provision of the Fair Political Practices Act hinges on the effect a decision will have on a public official’s financial interests. When a decision is found to have the requisite effect, the official is disqualified from making, participating in making, or using his or her official position to influence the making of that decision at any stage of the decision making process. By establishing a broad, objective disqualification standard, the act attempted to cover both actual and apparent conflicts of interest between a public official’s private interests and his or her public duties. It is not necessary to show actual bias on the part of the official to trigger disqualification, nor is it usually necessary to show that an official’s assets or the amount of his or her income will be affected by a decision; other more attenuated effects may bring about an official’s disqualification. Though the disqualification requirement is broad, it is by no means all-inclusive. Material Weaknesses Based on the findings in this report, FCMAT determined that material weaknesses and deficiencies exist in the district’s internal controls regarding this transaction and award of bid to the Don Chapin Company. Violation of Government Code section 1090 voids the contract and exposes the violator to penalty, imprisonment and permanent disqualification from holding any office of the state. Monterey County Office of Education – Lagunita Elementary School District 14 CONFLICT OF INTEREST Recommendations The county superintendent should: 1. In accordance with Education Code section 42638 (b), notify the governing board of the school district, the State Controller, the Superintendent of Public Instruction, the Office of Public School Construction and the local district attor- ney that violations of Government Code sections, 1090 and 87300 may have taken place. 2. Pursuant to Education Code section 1241.5(b), report the findings and recom- mendations of this audit report to the governing board of the school district at a regularly scheduled school district board meeting within 45 days of completing the audit. The district’s governing board should: 3. Exercise its oversight role to request designated employees to confirm that outside activities do not conflict with their role, responsibility, or work calendar required under the terms of their employment or voluntary service with the district. 4. Exercise its authority to question designated employees and members of the board regarding outside activities or financial interests included in Government Code sections 1090 and 1126. 5. Ensure that all new employees and elected or appointed board members who are in the classifications which require them to complete form 700 do so and submit the form to the proper county agency. 6. Ensure that the district’s elected officials, administration and designated employ- ees complete ethics training regarding the roles and responsibilities of public officials in relation to conflicts of interest and the Fair Political Practices Act. The district should: 7. Take all necessary action to preserve all writings within the meaning of Evidence Code section 250 (see footnote) referenced in this audit report or related to the transactions which are the subject of the audit report. 8. Pursuant to Education Code section 1241.5(b), no later than 15 calendar days after receipt of the audit report, notify the County Superintendent of its proposed actions on the County Superintendent’s recommendations. Note: Evidence Code section 250 defines “Writing” to mean handwriting, typewriting, printing, photostating, photographing, photocopying, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing, any form of communication or representation, including letters, words, pictures, sounds or symbols, or combinations thereof, and any record thereby created, regardless of the manner in which the record has been stored. Fiscal Crisis & Management Assistance Team BIDDING PRACTICES 15 Bidding Practices Advertising Requirement Public Contract Code sections 20111 and 22002 (see Appendix B) require school districts to bid and award to the lowest responsible bidder any contract for $15,000 or more for the construction, reconstruction, erection, renovation, alteration, improvement, demolition, and repair of publicly owned, leased or operated facilities. Public Contract Code section 20116 prohibits splitting or separating into smaller work orders or projects any work, project, service or purchase for the purpose of evading the law that requires competitive bidding. The district requested assistance from the California Water Service Company in developing the engineering specifications and planning for this project in order to secure state funding. In correspondence dated March 27, 2006, the California Water Service Company submitted an estimate with instructions regarding the district’s election to hire their own qualified contractor. The March 27, 2006 correspondence stated, in part, the following: IF YOU ELECT TO HIRE YOUR OWN QUALIFIED CONTRACTOR: Before construction begins: • Pick up detailed plans and specifications • Provide installing contractor’s name, insurance and license information. See attached Form 1518 • Materials must be on-site and inspected by CWS. • Pay remaining deposits ($45,730) In a subsequent letter from California Water Service Company, dated December 14, 2006, eight months after the bids were awarded; California Water Service Company informed the Lagunita Elementary School District superintendent that the following companies were acceptable to the company for this project: • West Valley Engineering • Granite Construction • Don Chapin Company • Monterey Peninsula Engineering The district mistakenly interpreted this correspondence, and earlier verbal communication from the California Water Service Company, as identifying the only qualified contractors acceptable to the California Water Service Company. During the bidding, which was prior to receipt of the December 14, 2006 letter but after the verbal communication and the March 27, 2006 letter from the California Water Service Company, the district limited bids to only four contractors. This may have pre- cluded other qualified bidders from participating. Monterey County Office of Education – Lagunita Elementary School District 16 BIDDING PRACTICES The district did not advertise for bids as required by Public Contract Code section 20112 (see Appendix B); because the district interpreted verbal information and subsequent correspondence from the California Water Company as identifying only four qualified bidders, the district did not publish a request for bids in the local newspaper as required. The district also did not include an affidavit of noncollusion in the bid packet as required by Public Contract Code section 7106 (see Appendix C). The limited documentation related to this project and the information obtained during the audit indicates that not all of the district’s contracts are bid as required by the Public Contract Code. In addition, change orders were not bid in accordance with the policies specified in the district’s policy and procedures manual. Purpose of Internal Controls Illegal acts, misappropriation of funds or fraud can include an array of irregularities char- acterized by intentional deception and misrepresentation of material facts. The principal mechanism for deterring fraud or illegal practices in an organization is a strong system of internal controls. Effective internal control processes provide reasonable assurance that a district’s operations are effective and efficient, that the financial information produced is reliable, and that the district is operating in compliance with all applicable laws and regu- lations. The internal control structure includes the policies and procedures used by district staff, accounting and information systems, the work environment and the professionalism of employees. Ineffective internal controls include, but are not limited to, the following: • Failure to segregate duties and responsibilities of authorization • Unrestricted access to assets or sensitive data (such as cash, fixed assets, or personnel records) • Not recording transactions, resulting in lack of accountability • Not reconciling assets with the appropriate records • Unauthorized transactions • Unimplemented controls because of unqualified personnel • Collusion among employees where little or no supervision exists A system of internal controls consists of policies and procedures designed to provide management with reasonable assurance that the school district achieves its objectives and goals. Traditionally referred to as hard controls, these include segregation of duties, limiting access to cash, management review and approval, and reconciliations. Other types of internal controls include soft controls such as management tone, performance evaluations, training programs, and maintaining established policies, procedures and standards of conduct. The internal control environment also includes the integrity, ethical values and competence of personnel; the philosophy and operating style of management; the way management assigns authority and responsibility and organizes and develops its Fiscal Crisis & Management Assistance Team BIDDING PRACTICES 17 people; and the attention and direction provided by the governing board and executive management. Effective Internal controls are designed to ensure the following: • Effectiveness and efficiency of operations • Reliability of financial reporting • Compliance with applicable laws and regulations Internal controls can provide only reasonable assurance, not absolute assurance, that the district will be successful in achieving its goals and objectives. Material Weaknesses FCMAT found significant material weaknesses in the district’s internal controls related to conflicts of interest and public bidding processes, which increase the probability that fraud and/or abuse can occur. Every organization faces a variety of internal and external risks that must be identified, assessed and managed. While all employees in the organiza- tion bear some responsibility for internal controls, the governing board, superintendent and upper management are ultimately responsible. These leaders must identify informa- tion and communicate it clearly and in a timely manner so that personnel can carry out their responsibilities. Regular external audits are a strong deterrent to mismanagement and fraud, but they cannot serve as the only method of ensuring accountability. It is imperative that the district review the documentation and allegations disclosed during the audit process so that additional documentation can be developed to hold the responsible parties account- able, restore the diminished morale of district personnel and re-establish the community’s confidence in the Lagunita Elementary School District. The district mistakenly interpreted correspondence and earlier verbal communication from the California Water Service Company as identifying the only qualified contractors acceptable to work on the project. During the bidding, which was approximately six months prior to the receipt of the December 14, 2006 letter but after the verbal communication and the March 27, 2006 letter from the California Water Service Company, the district limited bids to only four contractors. This may have precluded other qualified bidders from participating. The district did not advertise for bids as required by Public Contract Code section 20112 (see Appendix B). Because the district interpreted verbal information and later corre- spondence from the California Water Service Company as identifying only four qualified bidders, the district did not publish a request for bids in the local newspaper as required. Monterey County Office of Education – Lagunita Elementary School District 18 BIDDING PRACTICES Affidavit of Noncollusion Requirement The district also failed to include an Affidavit of Noncollusion in the bid packet as required by Public Contract Code section 7106 (see Appendix C). An Affidavit of Noncollusion is designed to ensure the district that the bidder has not directly or indirectly colluded, conspired, connived, or agreed with any other bidder to fix the bid price, or that the bidder has not had any advantage against the public body awarding the contract. Retention Requirement Public Contract Code sections 7107 and 9203 (see Appendix D) are applicable to con- struction of any public work of improvement. These sections of the code mandate that a district (or public entity) withhold a percentage of the total contract price until final completion and acceptance of the project by the district. The district did not withhold any retention from progress payments made to Don Chapin Company as required. Recommendations The district should: 1. Develop and implement more stringent oversight regarding the bidding and hiring of vendors and contractors, and ensure that existing district guidelines for changes to contracts are adhered to. In addition, the district should use these findings as the basis for additional audit work applicable to construction costs and contracts with vendors. 2. Ensure that all purchase orders or contracts for work to be performed are in compliance with the Public Contract Code and are reviewed and approved by the district’s designated officer. 3. Seek professional development assistance for the designated officer in compliance with Public Contract Codes and Government Codes related to bidding require- ments, practices and procedures. 4. Review the district’s internal control structure, policies and procedures to provide management a reasonable assurance that the district’s operations are effective and efficient. Fiscal Crisis & Management Assistance Team APPENDICES 19 Appendices Appendix A Education Code section 1126 Appendix B Definition of Public Project: Public Contract Code 20111(b), 20112 and 22002 (c) Appendix C Affidavit of Non Collusion in Bid Packet: Public Contract Code 7106 Appendix D Release of Retention: Public Contract Code section 7107 and Mandated Retention: Public Contract Code Section 9203 Appendix E Exhibits Appendix F Study Agreement Monterey County Office of Education – Lagunita Elementary School District 20 APPENDICES Fiscal Crisis & Management Assistance Team APPENDICES 21 Appendix A Education Code section 1126 1126. (a) Except as provided in Sections 1128 and 1129, a local agency officer or employee shall not engage in any employment, activity, or enterprise for compensation which is inconsistent, incompatible, in conflict with, or inimical to his or her duties as a local agency officer or employee or with the duties, functions, or responsibilities of his or her appointing power or the agency by which he or she is employed. The officer or employee shall not perform any work, service, or counsel for compensation outside of his or her local agency employment where any part of his or her efforts will be subject to approval by any other officer, employee, board, or commission of his or her employing body, unless otherwise approved in the manner prescribed by subdivision (b). (b) Each appointing power may determine, subject to approval of the local agency, and consistent with the provisions of Section 1128 where applicable, those outside activities which, for employees under its jurisdiction, are inconsistent with, incompatible to, or in conflict with their duties as local agency officers or employees. An employee’s outside employment, activity, or enterprise may be prohibited if it: (1) involves the use for private gain or advantage of his or her local agency time, facilities, equipment and supplies; or the badge, uniform, prestige, or influence of his or her local agency office or employment or, (2) involves receipt or acceptance by the officer or employee of any money or other consideration from anyone other than his or her local agency for the performance of an act which the officer or employee, if not performing such act, would be required or expected to render in the regular course or hours of his or her local agency employment or as a part of his or her duties as a local agency officer or employee or, (3) involves the performance of an act in other than his or her capacity as a local agency officer or employee which act may later be subject directly or indirectly to the control, inspection, review, audit, or enforcement of any other officer or employee or the agency by which he or she is employed, or (4) involves the time demands as would render performance of his or her duties as a local agency officer or employee less efficient. (c) The local agency shall adopt rules governing the application of this section. The rules shall include provision for notice to employees of the determination of prohibited activities, of disciplinary action to be taken against employees for engaging in prohibited activities, and for appeal by employees from such a determination and from its applica- tion to an employee. Nothing in this section is intended to abridge or otherwise restrict the rights of public employees under Chapter 9.5 (commencing with Section 3201) of Title 1. (d) The application of this section to determine what outside activities of employees are inconsistent with, incompatible with, or in conflict with their duties as local agency officers or employees may not be used as part of the determination of compensation in a collective bargaining agreement with public employees. Monterey County Office of Education – Lagunita Elementary School District 22 APPENDICES Fiscal Crisis & Management Assistance Team APPENDICES 23 Appendix B Definition of Public Project: Public Contract Code 20111(b), 20112 and 22002 (c) 20111.5. (a) The governing board of the district may require that each prospective bidder for a contract, as described under Section 20111, complete and submit to the district a standardized questionnaire and financial statement in a form specified by the district, including a complete statement of the prospective bidder’s financial ability and experi- ence in performing public works. The questionnaire and financial statement shall be veri- fied under oath by the bidder in the manner in which civil pleadings in civil actions are verified. The questionnaires and financial statements shall not be public records and shall not be open to public inspection. (b) Any school district requiring prospective bidders to complete and submit question- naires and financial statements, as described in subdivision (a), shall adopt and apply a uniform system of rating bidders on the basis of the completed questionnaires and finan- cial statements, in order to determine the size of the contracts upon which each bidder shall be deemed qualified to bid. 20112. For the purpose of securing bids the governing board of a school district shall publish at least once a week for two weeks in some newspaper of general circulation published in the district, or if there is no such paper, then in some newspaper of general circulation, circulated in the county, and may post on the district’s Web site or through an electronic portal, a notice calling for bids, stating the work to be done or materials or supplies to be furnished and the time when and the place and the Web site where bids will be opened. Whether or not bids are opened exactly at the time fixed in the public notice for opening bids, a bid shall not be received after that time. The governing board of the district may accept a bid that was submitted either electronically or on paper. 22002. (a) “Public agency,” for purposes of this chapter, means a city, county, city and county, including chartered cities and chartered counties, any special district, and any other agency of the state for the local performance of governmental or proprietary functions within limited boundaries. “Public agency” also includes a nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency. (b) “Representatives of the construction industry” for purposes of this chapter, means a general contractor, subcontractor, or labor representative with experience in the field of public works construction. (c) “Public project” means any of the following: (1) Construction, reconstruction, erection, alteration, renovation, improvement, demo- lition, and repair work involving any publicly owned, leased, or operated facility. (2) Painting or repainting of any publicly owned, leased, or operated facility. (3) In the case of a publicly owned utility system, “public project” shall include only the construction, erection, improvement, or repair of dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. Monterey County Office of Education – Lagunita Elementary School District 24 APPENDICES Fiscal Crisis & Management Assistance Team APPENDICES 25 Appendix C Affidavit of Non Collusion in Bid Packet: Public Contract Code 7106 7106. Any public works contract of a public entity shall include an affidavit, in the following form: “NONCOLLUSION AFFIDAVIT TO BE EXECUTED BY BIDDER AND SUBMITTED WITH BID State of California ) County of _________ ) ss. ) ____________, being first duly sworn, deposes and says that he or she is______ of _______ the party making the foregoing bid that the bid is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, asso- ciation, organization, or corporation; that the bid is genuine and not collusive or sham; that the bidder has not directly or indirectly induced or solicited any other bidder to put in a false or sham bid, and has not directly or indirectly colluded, conspired, connived, or agreed with any bidder or anyone else to put in a sham bid, or that anyone shall refrain from bidding; that the bidder has not in any manner, directly or indirectly, sought by agreement, communication, or confer- ence with anyone to fix the bid price of the bidder or any other bidder, or to fix any overhead, profit, or cost element of the bid price, or of that of any other bidder, or to secure any advantage against the public body awarding the contract of anyone interested in the proposed contract; that all statements contained in the bid are true; and, further, that the bidder has not, directly or indirectly, submit- ted his or her bid price or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organization, bid depository, or to any member or agent thereof to effectuate a collusive or sham bid.” Monterey County Office of Education – Lagunita Elementary School District 26 APPENDICES Fiscal Crisis & Management Assistance Team APPENDICES 27 Appendix D Release of Retention: Public Contract Code section 7107 and Mandated Retention: Public Contract Code Section 9203 Release of Retention: Public Contract Code Section 7107 7107. (a) This section is applicable with respect to all contracts entered into on or after January 1, 1993, relating to the construction of any public work of improvement. (b) The retention proceeds withheld from any payment by the public entity from the original contractor, or by the original contractor from any subcontractor, shall be subject to this section. (c) Within 60 days after the date of completion of the work of improvement, the retention withheld by the public entity shall be released. In the event of a dispute between the public entity and the original contractor, the public entity may withhold from the final payment an amount not to exceed 150 percent of the disputed amount. For purposes of this subdivision, “completion” means any of the fol- lowing: (1) The occupation, beneficial use, and enjoyment of a work of improvement, exclud- ing any operation only for testing, startup, or commissioning, by the public agency, or its agent, accompanied by cessation of labor on the work of improvement. (2) The acceptance by the public agency, or its agent, of the work of improvement. (3) After the commencement of a work of improvement, a cessation of labor on the work of improvement for a continuous period of 100 days or more, due to factors beyond the control of the contractor. (4) After the commencement of a work of improvement, a cessation of labor on the work of improvement for a continuous period of 30 days or more, if the public agency files for record a notice of cessation or a notice of completion. (d) Subject to subdivision (e), within seven days from the time that all or any portion of the retention proceeds are received by the original contractor, the original contractor shall pay each of its subcontractors from whom retention has been withheld, each subcontrac- tor’s share of the retention received. However, if a retention payment received by the original contractor is specifically designated for a particular subcontractor, payment of the retention shall be made to the designated subcontractor, if the payment is consistent with the terms of the subcontract. (e) The original contractor may withhold from a subcontractor its portion of the retention proceeds if a bona fide dispute exists between the subcontractor and the original contrac- tor. The amount withheld from the retention payment shall not exceed 150 percent of the estimated value of the disputed amount. (f) In the event that retention payments are not made within the time periods required by this section, the public entity or original contractor withholding the unpaid amounts Monterey County Office of Education – Lagunita Elementary School District 28 APPENDICES shall be subject to a charge of 2 percent per month on the improperly withheld amount, in lieu of any interest otherwise due. Additionally, in any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to attorney’s fees and costs. (g) If a state agency retains an amount greater than 125 percent of the estimated value of the work yet to be completed pursuant to Section 10261, the state agency shall distribute undisputed retention proceeds in accordance with subdivision (c). However, notwithstanding subdivision (c), if a state agency retains an amount equal to or less than 125 percent of the estimated value of the work yet to be completed, the state agency shall have 90 days in which to release undisputed retentions. (h) Any attempted waiver of the provisions of this section shall be void as against the public policy of this state. Mandated Retention: Public Contract Code Section 9203 9203. (a) Payment on any contract with a local agency for the creation, construction, alteration, repair, or improvement of any public structure, building, road, or other improvement, of any kind which will exceed in cost a total of five thousand dollars ($5,000), shall be made as the legislative body prescribes upon estimates approved by the legislative body, but progress payments shall not be made in excess of 95 percent of the percentage of actual work completed plus a like percentage of the value of material delivered on the ground or stored subject to, or under the control of, the local agency, and unused. The local agency shall withhold not less than 5 percent of the contract price until final completion and acceptance of the project. However, at any time after 50 percent of the work has been completed, if the legislative body finds that satisfactory progress is being made, it may make any of the remaining progress payments in full for actual work completed. (b) Notwithstanding the dollar limit specified in subdivision (a), a county water authority shall be subject to a twenty-five thousand dollar ($25,000) limit for purposes of subdivi- sion (a). Fiscal Crisis & Management Assistance Team APPENDICES 29 Appendix E Exhibits Monterey County Office of Education – Lagunita Elementary School District 30 APPENDICES Fiscal Crisis & Management Assistance Team APPENDICES 31 Exhibit A Monterey County Office of Education – Lagunita Elementary School District 32 APPENDICES Fiscal Crisis & Management Assistance Team '-.- c;g~ cg,~ $cJuwt Cf!JidUc1/ . 975&",,'wzn,ci:JuzJe,~ SaJiwu"~93907 ~'ii./,&u". S~ (831)""9-2800 ~(831) ""9-9671 1uuv./~~M2.COL. Ir-O. - . . January 12,2005 . MichaelJones Actin8DistrictManager, Salinas District 25'4CommissionStreet SaliDas,CA 93901-3737 Dear Mr. Jones: TheLagunita Element8ry SchoolDistrictis atiny public school district in arural locationatthe comer of San Juan GradeRoadandCrazyHorse Canyon Road. We serve studentsfrom Preschool through 8thgradeandhavebeenin'continuous operation forthe. "v past 107years. Throughout these years,the districtbasprovided the schoolwith its entirewatersupply from an on-sitewell. Always avery low-producing well,recentlythiswell has persisteD.t1yviolated the total coliformrule. We feel that the continuedpresenceof coliformbacteria inthe well presentsanacuterisk to the health andwelfareoftheschool's population. It isourbelieftbat the best long-termsolutionforthe improvement ofthe . LagunitaSchoolWatJ:rSystem wouldbeto eliminAtethe well andto connectthe school to apublicwater utility. I am writingtodaytorequestthat the California.Water Service Companyconsider extenning its servicelineto provideour school site.at 975San Juan GradeRoadwith awater connection to yoursystem. Pleasecontact me at (831)449-2800atyoUrconvenience to discuss the viability ofmyrequest. .' ~~~ Filbin SuperintendentlPrincipal --- mfilbi.naVmonterev.k12.ca.us APPENDICES 33 Exhibit B Monterey County Office of Education – Lagunita Elementary School District 34 APPENDICES Fiscal Crisis & Management Assistance Team . CALIFORNIA WATER SERVICE COMPANY SALINAS DISTRICT . 25.. COMMISSION STREET. SALINAS, CA 93901-3737 (831) 757.36 fAX(831) 757-0"97 June 23,2005 'J, Board~fTrustees LagunitaSchool District 975San Juan,grade Road Salinas,CA 93907 Re: Will,Serve Letter (LagunitaSchool District) DearBoardofTrustees: California Water Service Company (Cal Water) has reviewed the request for water availabilityforthe Lagunita School locatedat 975San Juan Grade Road. In order for us to provide adequate water fordomestic use and fire service protection it may be necessary for the developer to advance the cost of Special Facilities, such as wells, booster pumps or a storage tank, in addition to the cost of extending the water mains and installing allservices. Installation offacilities wouldbe made in accordance with the Main Extension Rulesof the California Public Utilities Commission (CPUC). The installation ofallfacilitieswill be contingent upon Cal Water receiving the full estimated deposit for installing the facilities and receiving approval from the CPUC to extend our service area boundaries. Our engineering department will provide us with more precise information when you provide uswith firedepartment requirements and improvement plansforyourproject. We meet all State ~. Public Utilities Commission regulations pertaining to water quality and quantity. 1'here isno expiration on ourwillingnessto serve. We willsupplyonly such domestic water at suchpressureasmaybe available asa result ofour operation ofthe system. Ifyouhave anyquestions concerning this matter, pleasecontact meat this office. Sincerely, Michael L.Jones Acting District Manager Pc:LindaPryzbyla Engineering Dept "-. File DlnaJCT O.fflaa. ANT . ELOPEvALin .. ImlSf1E1D . . IAYSHORE . lEAl . OIIICH . CHICO . . DIXON . E . AST 105 . ANGElES . IC . EiN IIVEI . VAllEY . IC . ING CITY . LlVEiMORE105AlTOS MAIYSVIIIEOIOVIIIE IANCHODOMINGUEZaeDWOODYAIlEYSAUNAS SElMA STOCKTONYISAuA WfSTlA1CfWillOWS APPENDICES 35 Exhibit C Monterey County Office of Education – Lagunita Elementary School District 36 APPENDICES Fiscal Crisis & Management Assistance Team --- -- - - ----- bAlID$E~-<$r ENGINEERS, INC. ENGINEERING. LANDPLANNING SURVEYING. ENVIRONMENTAL CONSULTING -~_. 1 September 2005 Mr.BillJohnstone ProjectManager Officeof Public School Construction Departmentof GeneralServices 1130KStreet, Suite400 Sacramento,CA 95814 RE: Application Number 40/66076-04-01 DearMr.Johnstone: Inresponseto your letterofAugust 19,2005,I haveenclosed costestimatesfor bothreplacingthe existingwellsystemwith alike kindsystem and for connection tothenearest publicwater utility. Additionally,the estimates have been revised toreflectthefonnat requiredintheExtremeHardshipFunding Application (Fonn SAB40-22) as outlined inyour letter. Asstated in my EngineersReport(June2005), Iwishto reiterate that replacing the existingwell with a likekindsystemisnotconsidered a practicalsolutionto ..'"'----.... theongoingwater quantityand qualityproblemsexperienced bythe Lagunita SchoolDistrict. Drillinga newwelldoes notguarantee that the quantity or quality ofthewater supplied totheschoolwill beimproved. The existingwell was drilled in 1997and has had continuingproblemsincludingthe previously documented qualityissuesas well astheannualpumpreplacementrequired by the extremely lowproduction rate. An additionalproblem,asoutlined in my report, is providing asitefor a newwell due to the locationof buildings,parking, athleticfields, septic tanks,and septic leechfields. Insupportof myopinion, Ihave enclosed acopy ofa letterfrom the MontereyCountyDepartmentof Health stating their concerns regardingthe situation attheschool. Ifyouhave anyquestions or concerns,pleasecontact me atyour convenience. Sincerely, ~ Charles E. Potter. P.E. Cc:Marsha Filbin .-. Ene. 520-0CrazyHorseCanyonRoad.SalinasC. A93907 · (831)443.6970· Fax(831)443-3801· Landset@aol.com .... Cost Estimate "'--.- California Water Service Connection to Lagunita School (Revised 9/01/05) lli!!n Quanltv UnitCot Amount Furnishand Install68PVC, Class 200,Water Main 4225 LF $ 35.00/LF $147,875.00 Furnishand InstallFire Hydrant 1EA $3,500.00/EA $3.500.00 Furnishand Install28 DomesticWaterService 1EA $2,000.00/EA $2,000.00 ConnecttoExist.System 1EA $ 3,000.00/EA $3,000.00 PatchPaveWaterTrench, " 38AC,68CI.2AS 9000SF $ 6.00/SF $54.000.00 ChipSeal 10000SF $ 0.50/SF $5,000.00 TrafficControl LS $36,000.00 $36.000.00 AbandonExist.Wells LS $12,000.00 $12,000.00 ',--," ConnectionFees LS $25,000.00 $25,000.00 SpecialFacilities(Pumps, etc.) LS $20,000.00 $20.000.00 Sub-Total Construction Costs $308,375.00 PlanningandEngineering@ 12% $37.005.00 Sub-Total $345,380.00 Contingencies@5% i1L269.00 Total Estimated Costs $362,649.00 Date Received 700 STATEMENTOFECONOMICINTERESTS 0IIfda1 Use arq CA~IFORNIA FORM COVERPAGE ...~~.LP.Y?UT;CA_L .PRACTICES CO~Ht.lSSI0'J. A Public Document Please type or print InInk (LAST) (RRSi) (MIDDLE) DAYTIME TaEPHONE NUMBER Chapin Donald D. Jr. (831 )449-4273 MAlUNGADDRESS STREET CITY sr.u.TE ZIPCODE OPTIONAL.: FAXIE-MAIL ADDRESS (Nayuse business address) 560 Crazy Horse Cyn. Rd. Salinas, CA 93907 831-444-4116 1.Office,Agency, or Court 4. Schedule Summary (Checkapplicableschedules or-NoreportableInterests.., Name ofOffice,Agency, or Court - Lagunita School District During the reporting period, dId you have any reportable interests to disclose on: Division, Board, District, ifapplicable: Board of Trustees ScheduleA-1 cJ Yes- scheduleattached Investments (Lessthan10% Ownership) Your Position: - President Schedule A-2 IXJ Yes scheduleattached - Investments (10%orgl8ster Ownership) Iffilingfor multiple positions, list additional agencyQes)/ - Schedule B 89 Yes schedule attached position(s): (Attacha separate sheet ifnecessary.) RealProperty Agency: - ScheduleC IXJYes scheduleattached Income, Loans, & Business Positions (IncomeOtherthanGJrr$IItId 1I'av1ll Paym/lllts) Position: - Schedule D(Eliminated reportloansonScheduleC) - 2. Jurisdiction of Office (Checkatleastonebox) Schedul-e E 0 I'es schedule attached o Income Gifts State - ~ Countyof Monterey Schedule F 0 Yes schedule attached - o Income Travel Payments Cityof -or- o Multi-County - o 0 Noreportable interests onany schedule Other Totalnumber of pages 3. Type of Statement (Checkatleastonebox) completed includingthis coverpage: o Assuming Office/lnitial KJ Annual:TheperiodcoveredisJanuary 1,2004, 5.Verification throughDecember31,2004. -or- Ihave used all reasonable difigence inpreparing this statement. O Theperiodcoveredis-.l-.l ,through Ihave reviewed this statement and to the best of my knowledge December31,2004. the information contained herein and inany attached schedules istrue and complete. o LeavinOgfficeDateLeft-.l--.J_ Icertify under penalty ofperjury under the laws oftheState (Check one) of California that the fi:u:eaoing is true and correct. o TheperiodcoveredisJanuary1,2004, through the date ofleavingoffice. -or- OTheperiodcoveredis -.l-.l_ through \"-' the date of leaving office. Sign o oIIIdi.) Candidate FPPC Fonn 700 (200412005) FPPC Toll-Free Helpline: 8661ASK-FPPC 700 SCHEDULEA-1 CALIFORNIA FORM FAIR-POLITICAL PRACTICES COMrmSSlmJ - Investments Name Stocks, Bonds, and Other Interests (OWnershipInterest is Less Than 10%) '~ ' Do not attach brokerage or financial statements. )0 NAMEOFBUSINESSENTITY » NAME OF BUSINESS ENTITY The Don Chapin Company Inc. The Don Chapin Company Inc. GENERALDESCRIPTIONOF BUSINESS ACTMTY GENERAlDESCRIPTIONOF BUSINESS ACTIVITY Development Construction Land FAIRMARKETVALUE FAIR MARKET VALUE 0$2,000. $10,000 o $10,001 - $100,000 o $2,000 . $10,000 o $10,001 - $100,000 0$100,001 -$1,000,000 rn Over $1.000.000 0$100,001 . $1,000,000 KJ Over $1,000,000 NATURE OF INVESTMENT o NATUREOFINVESTMENT IXlStock Stock o Other 50 Other 50% Partner (Describe) (De8a1be) IFAPPUCABLE, UST DATE: IFAPPUCABLE, UST DATE: ___L_~~ 1 1~ 1 1~ ---1---1..M- ACQUIRED DISPOSED ACQUIRED DISPOSED )0 NAMEOFBUSINESSENTITY )0 NAMEOF BUSINESS ENTITY Assured" Aggregates Company Inc. Blohm Rd. Jt. Venture GENERAL DESCRIPTION OF BUSINESS ACTMTY GENERAL DESCRIPTIONOF BUSINESS ACTIVITY Truckinq & Materials Development, Home Sales FAIR MARKE . TVALUE o - FAIR MARKE-T VALUE - 0$2.000 $-10,000 $10,001 $100,000 0$2.000 $-10,000 0$10,001 $100,000 ~-- 0$100.001 $1,000.000 [XI Over $1,000,000 0$100,001 $1,000,000 !XI Over$1,000,000 NATURE OFINVESTMENT oNATUREOF INVESTMENT 50 Stock (Spouse) Stock o 53% Owner Partner Other XJ Other (DesaIbe) (Desc:rIbe) IFAPPUCABlE, UST DATE: IFAPPUCABLE, UST DATE: 1---1. 04 1 1-.M... ---1 1..M.- ---1---1~ ACQUIRED DISPOSED ACQUIRED DISPOSED )0 NAME OFBUSINESSENTITY Pesante Rd. Partners GENERAl DESCRIPTIONOFBUSINESSACTIVITY Land Development FAIR MARKET VALUE - 0$10,001 $100,000 0$2.000 . $10,000 0$10,001 . $100,000 o DOver $1,000,000 $100,001 . $1,000,000 EXOver$1,000,000 NATURE OF INVESTMENT NATUREOFINVESTMENT Gl o Stock Stock o Other IKI Other 50% Owner Partner (Desatbe) (Oesaibe) IF APPUCABLE, UST DATE: IFAPPUCABLE, UST DATE: ---1---1...9£ ---1---1..M- ACQUIRED DISPOSED Comments: FPPC Fonn 700 (200412005) Sch.A.1 FPPC TolI.Free Helpline: 866/ASK.FPPC SCHEDULEA-2 700. CAUFORN!A FORM . . .. - . --- Investments, Income, and Assets FAIR POLITICAL PRACTICES cor,1r.,ISSION of Business Entities/Trusts Name (Ownership Interest is 10% or Greater) . . ,. BUSINESESNTITYORTRUST 1. BUSINESSENTITYORTRUST' ' Landset Engineers 2BA Electric Name 11Name 520 B Crazy Horse Cyn Rd. Salinas Address I IAddress ~~ ~~ o Trust, fP' ID2 mI Business Entity,complete the box, then go ID2 0 Trust, go to 2 0 Business Entity,completethebox,thengo to 2 II GENERAl. DESCRIPTION OF BUSINESS ACTIVITY GENERAl.DESCRlFTlONOFBUSINESSACTMTY Electrical Contractor Engineering FAIRMARKETVALUE IFAPPUCABLE. UST DATE: FAIR MARKET VALUE IF APPUCABLE, UST DAlE: o 52.000 - - S10.000 ---1---1 04 ---1---1 04 0o$2.000 - -$10.000 ---1---1. 04 ---1--1 04 0$10,001 $100.000 S10,001 -$100,000 5oa 5100.001 - $1.000,000 ACQUIRED DISPOSED 0$100,001 $1.000.000 ACQUIRED DISPOSED OVer$1.000,000 [XI Over $1,000,000 NATURE OF INVESTMENT NATURE OF INVESTMENT o SoIePToprietorshlp 0 Partnership IJi r.orporation o SoIePmprietolShip 0 Partnership KJ Corporation Director Other YOURBUSINESPSosmON President 0ChIr YOUR BUSINESS POSmON . 0 0 $ $ 0 5 -$ 0 4 0 99 -$1.000 & o I $ O 1 V 0. E 0 R 01 $1 - 0 $ 0 1 . 0 0 0 0 . 0 000 Qog $ $5 0 00 $ - 49 $-1 9 ,000 0 o $1 O 0 V ,0 E 0 R 1 5 -$ 10 1 0 0 ,0 0 0 . 0 000 0$1.001- $10,000 0$1.001 $10.000 .,:3..:.);JST-THEt<_ArIllE QF EACH REPORTABLE SINGLE SOURCE OF . 3. LIST THE NAME OF EACH REPORTABLE SINGLE SOURCE OF '.'~~~:-::.';.tN'torn8'~OF~.:~b:ooa-.OR-'MORE ..(i,i!~,:!!;:SI":J~;)r;.'I~,';it,>,--~.!~r~Lr:r~:..::r~'1 INCOME OF S10,000 OR r~ORE,,"m'" >'-0"'"'" "'"eI ,f,"CO<>5'''', Various clients, Don Chapin Co. Various clients, 'Don Chapin CO. Associated Companies, etc. Associated Companies, etc. ~..:LINVEs_nIllEI~.TSAt!DINTERESTS..ltJ REAL PROPERTY HELD BYTHE > I., INVESTMENTSANDINTERESTS INREALPROPERTY HELDBYTHE '--:'SUSINSSSENTITY CP.TRUST '-'- , BUSINESS ENTITY ORTRUST ~ onebar. o o oCheck one box: o INVESTMENT REAL PROPERI"Y INVESTMENT REALPROPERlY Name of-Business -EntIty m Nameof BusinessEntitym StreetAddress orAssessor'sParcelNumberofReal PToperty StreetAddressorAssessor'sParcelNumberofRealProperty Description of Business Activity SIr DesCription of Business ActivitY m CIty or Other Precise location of Real Property City or Other Precise Location of Real Property oFAIRMARKE-TVAUJE IFAPPUCABLE, UST DAlE: FAIR MARKETVALUE IFAPPUCABLE, UST DAlE: 0$1 $ 0 2 .0 .0 0 0 1 0 -$ - 1 $ 0 1 , 0 0 0 0 . 0 000 ---1---104 ---1---104 0 0 $ $ 2 1 ,0 0 0 ,0 0 01 .51 $ 0 1 ,0 0 0 0 0 ,000 ---1---1 04 ---1-1 04 ACQUIRED DISPOSED - ACQUIRED DISPOSED 0$100.001 $1.000,000 0$100,001 -$1,000,000 DOver $1.000,000 DOVer $1,000,000 o NAT P U ro R pe E rt O y F O IN w T ne E r R sh E lp S l T Deed ofTrust o Stock - 0 Par1nership o NAT P U r R o E per O ty F O IN w T n E e R rs E h S ip T IDeed of Trust o Stock o Partner&hlp o o o o Leasehold Other Leasehofd Other Yrs.remaIring YIS.remaining _. o o Checlt box IfaddlUonal schedules reporting Investments or real property Check box Ifadditional schedules reporting Investments or real property are attached are attached Comments: FPPC Fonn 700 (200412005) Sch. A.2 FPPC Toll-Free Helpline: B66/ASK.FPPC _ APPENDICES 37 Exhibit D Monterey County Office of Education – Lagunita Elementary School District 38 APPENDICES Fiscal Crisis & Management Assistance Team ~~ cg~ $~ CflJiWdcJi ~ 975San,'-cfJ~9?oaJ, ~93907 ~7I~, S~tincipat (831)449-2800c;QJe/ (831) 449-9671 Itup-://~~M 2.CQ/.~~ January 30, 2006 MichaelL.Jones ActingDistrictManager CaliforniaWaterService Company 254CommissionStreet Salinas,CA 93901-3737 DearMr.Jones: LagunitaElementary SchoolDistricthas recentlyreceivedspecialfunding nom the State AllocationBoardinthe amountof$378,282forthepurposeofconnectingthe schoolcampusat 975 SanJuanGradeRoadwith waterservicesftomyourcompany. The proposal involves extendingamainline fromyour station45-01onSanJuanGradeRoad,tothe schoolcampus (approximately8/10ofonemile),andinstallingasmallerconnection lineattheschoolbuildings. Pertherestrictionsofour fundingftomthe StateAllocationsBoard, we haveuntilDecember 15, 2006tocompletethisproject. Therefore, itisimportantforusto beginright away. Iunderstandthatyour companypreferstodotheengineeringdesignaspect ofallsuchprojects. I amrequestingthatyou forwardmyrequestandallattachedinformationtoyour engineering departmentsothatthe engineeringprocessmightbegin. Ialso understand that California Water Service Company has an approved list of contractors for such work. Once the engineering design iscomplete, we will need to accumulate at least three bids from such contractors so that the Lagunita School Board of Trustees may choose a contractor per Education Code guidelines. Iwould appreciate your help and advice in obtaining these bids. I lookforwardtoworking withyou andyourcompanyonthisproject. It isanexciting advancementforthe schooldistrictandwehaveeveryconfidence inyourcompany's expertise. Sincerely, +lv-J/t-:- MarshaFilbin SuperintendentlPrincipal APPENDICES 39 Exhibit E Monterey County Office of Education – Lagunita Elementary School District 40 APPENDICES Fiscal Crisis & Management Assistance Team "---".-. February 8,2006 MichaelL. Jones ActingDistrictManager CaliforniaWater Service Company 254 Commission Street Salinas,CA 93901-3737 Dear Mr. Jones, .---..... I am enclosingthe deposit of$500thatwediscussedinour meeting today. My understanding isthat with this deposit, CaliforniaWater ServiceCompany willbegin planning anddevelopment ofthe projecttoconnectLagunita Elementary SchoolDistrict with yourpublic water utility. I enjoyedmeetingwith you andyourcompanyrepresentativestoday. Thank you forthe very clearinformationthat you shared. MarshaFilbin SuperintendentIPrincipal _.' APPENDICES 41 Exhibit F Monterey County Office of Education – Lagunita Elementary School District 42 APPENDICES Fiscal Crisis & Management Assistance Team --- April 18,2006 Addendum to Invitation to Bid and Bidding Instructions Lagunita School Water Main Installation Project TO: All Bidders Pleasebe advisedthat a few itemshavedevelopedsomequestionsthat need to be addressedin yourbids. Pleaseconsiderthisasnoticethatthe items listed belowmust be includedwithinyourproposals forthe completewaterlinework contemplated bythe bid. . Form 1518is aform asprovidedby CalWaterServiceCo. Each contractor may acquirethe form fromeitherCal Water,orhereatLagunita School. The form MUST be included withthe bid. Anybidreceived without the formmay be rejected asnon responsive. Thisformis theformthat willbe usedby Cal Water to qualifyeach bidderto installCal Waterfacilities. . Thepayment ofPrevailingWagesmust alsobe includedwithin yourbids. This is aprovision ofPublic ContractingCodeandwill includethe requirement that CertifiedPayrollsbe providedtothe Districtprior to anypayments being released t9 the contractor. ThisPrevailingWagerequirementwill extend to any Subcontractorsemployed ontheworkaswell. . Abidbond must accompanyyourproposals. Thebid bond should be on a bonding company standard bidbondform. Bondingcompanies usedmust meet requirements ofCaliforniaBondingCompaniesandmust be acceptable to the District. Theamount ofthe bondisto benot lessthanten percent ofthe total amount ofthe bid forthe work. . BondsforFaithful Performance andPaymentBondsMAY be required ofthe prospective contractor andbidder. Todeterminethe cost ofpotential bonding requirements,please indicateonyourproposalsan "ADD ALTERNATE" forthe costto furnishPerformance andPaymentBonds. Adetermination ofwhether the bonds will berequired will bemadeupondeterminingfirstthe lowestresponsible bidder. . Toalleviate confusion intheplans, itisthe intentionofthe District tohave the 2" serviceandthe fire hydrantlocatedjust to the northeastofthe track. Thatwill -- locate the service andhydrant adjacentto thepaved drivewayin the middle ofthe schoolcampus. Regardless ofhowmanyfeetofpipe is shown onthe plans,the pipeline must be terminated atthispointwiththe serviceandhydrant. Please includethe total footageofmainlinepipetobe 4170 lineal feet. This does not include the crossings forthe hydrant. Shouldthe bidders have any questions aboutthis location,pleasecontactthe schoolfora sitevisit. Pleaseincludeacopy ofthis addendumwithyourbidproposal. This addendum should be signedasindicated bythe bidders,whichsignaturewillattestthat this informationwas usedinthe preparation ofbids. Thebiddate andtime have remainedthe same. Sincerely, MarshaFilbin PrincipalandAdministrator Thebidder, having received this addendum,reviewed the site,andpreparedtheirbid,herebyconfirms that the bid enclosedherewith doesinclude informationincludedwithinthis addendum, and is completeascontemplated bythe plans andspecifications. Date By Title '.........._- '-- APPENDICES 43 Exhibit G Monterey County Office of Education – Lagunita Elementary School District 44 APPENDICES Fiscal Crisis & Management Assistance Team Lagunita School ............... Board of Trustees Regular Meeting BoardMinutes I. Callto Order - DonChapin,BoardPresident,calledthemeetingtoorderat5:01pm. ll. - Quorum Established PresentwereDonChapin,BoardPresident;ErnestHoward,Clerk; Chuck Shearn, newly appointed Trustee; and Marsha Filbin, Secretary to the Board. Quorum was established. Members of the community that were present were Mike Roads, George Lopez, Kris Van Gelder, and Donna Avila. ID. ThePledgeofAllegiance IV. Actions A. NewlyappointedTrusteeChuckShearnwasswornintoofficebyBoardPresidentDon Chapin. B. TheminutesofMarch28,2006wereapproved.HIS3-0 I C. Warrantsinthe amountof$3,232.56 fromtheGeneralFundwereapproved. Awarrant . for$21,865 fromtheDeferredMaintenancefundwasapproved. S/H3-OPresidentDon Chapinexcludedhimself fromvotingonInvoice#2015 forfuelfromDonChapinCo.in February. '_.-- D. The Boardopenedsealedbidsfortwoupcomingdeferredmaintenanceprojects. · Abandonmentoftwowaterwells. Thereweretwobids. MaggioriaBros.- $6,790perwell=$13,580 Salinas Pump-well #1.$7745.56.well #2.$8145.56 =$15.891.12 Because ofdifferencesinwordinginthetwobids,theBoardwasunsure ifthese were equalbids. ChuckShearnmovedtoauthorizeDonChapinasBoard representativeandMarshaFilbinasDistrictrepresentativetomeetwiththe bidders to clarifythebids. Theirinformationwillcomebacktothe Board. Thebidaward onthisproject wmbedetermined atthenext meeting. SIll 3-0 · CaliforniaWaterutilityexpansionproject: TheBoard's authoritytoawardabid onthisprojectextendsonlytothebasebidforan 8"watermainanda performancebond. TheBoardreceivedthree qualifiedbids. - Monterey Peninsula Engineering $345,150basebid,$2,500bond=$347,650 GraniteConstruction--$348,981basebid,$2,614bond= $351,595 Don ChapinCo.- $309,700basebid,$2,000bond =$311,700. The appfl1'e1lltowbidderwasIdendjled asthe Don Chapin Co. ChuckShearn would liketogooverthebidwiththeapparent lowbiddertoidentifYanyexclusion thatmight beinthebid. IfthebiddoesmeettheDistrict's needs, thentheawardwill gototheapparentlowbidder. SIB2-0 PresidentDonChapin excludedhimself &omtheopeningofthesebidsandthediscussionofaward. v. NewBusiness A. AdministratorMarshaFilbinpresentedapreliminarybudgetfor2006-2007. The finalizedbudgetwillcomebeforetheBoardforapprovalatthe June27,2006meeting. 1 B. MarshaFilbinpresentedanddiscussedtheproposedcalendarforthe 2006-2007school year. Thecalendarwasconstructedwithinputfromtheteaching staff. TheBoard '----- approvedtheproposedcalendar. HIS3-0 C. TheBoardreviewedthepreferredfieldtriplist. Proposedchangestothe listwerethe deletionofthe SugarloafHike (becausepermissiontohikeontheproperty cannolonger beobtained) andtheadditionofa7th/Sthgradetriptoarockclimbinggym. HIS3-0 D. The schooladministratorreportedtothe SchoolBoardthat,pursuanttoWilliams UniformComplaintprocedures,nocomplaintshavebeenfiledwiththe schooldistrictin the litcalendarquarterof2006. VI. Old Business A. G.roundsandMaintenance - Water project based upon completion of the bid process, the District may now apply for the release of the Hardship Funding that was awarded by the State Allocations Board for this project. B. Lagunita Administrator's Report The administrator had no items to report that were not already discussed in the body of the meeting. C. SchoolSiteCouncilReport Atthe lastmeeting,theCouncilheardreportsfromtheDisaster PreparednessCommittee andthe SocialStudiesTextbookAdoptionCommittee. TheCouncilalso encouragedthe teaching stafftoplanmoreparent-involvementactivitiesthatreflecttheschool curriculum. Parentswillbe invitedtoa"Reader's Cafe"literacyeventinMay. George LopezcompiledinformationfromtheParentlStaff7andStudentsurveysthatwere collected inMarchandpresentedthatinformationtotheBoard. The Councilintendsto usethe surveyinformationtohelpthemidentifyareasthatneed improvement. The Councilwillsharethe informationwithparentsaswell. D. Lagunita Parent Teacher Club Report TheclublastmetonApril 18,2006. Therewere 15peopleinattendance. Theclubhas $5,400 inbankaccounts. Ofthat,$2,000willgotowardthepurchaseofupdatedlearning software foralltheclassrooms. Upcomingevents: STARsnacks,BookFair,andthe annualBBQfundraiserwithnewauctionitems. Theclubneeds newchildcareproviders fornextyear. Theyneedtofindababysittingclass;andtheyhaveaskedthe uppergrade teachers forrecommendationsonstudentstobe babysitters. Theclub's nextmeeting is scheduled forMay8,2006. May 15isthelastdayforthe SchoolCents fundraising competition. Lagunitaiscurrentlyinthirdplace. Wemayearn$1,000 or$1,500 from theNorthridge Mall. vu. InformationandProposals A. CommunitIynput There was none. B. LettersandInformation None. VllI. Future Planning ThenextregularlyscheduledBoardmeetingwillbeTuesday,May23,2006 at6:00pm. IX. Closed Session TheBoardwent intoclosedsessionat6:38pm. · Duringclosedsession,theBoarddiscussedproposed teachercontractsforthe2006-07 schoolyear. TheBoarddirectedtheAdministratortopresentthecontractstoteachersfor . theirreview andacceptance. sm 3-0 TheBoardvotedanincreaseoU17,500 tothecurrent$5,000administrativestipend. Thenewstipendamountwillequal$22,500. sm 3-0 · The Board voted increases in some classified wages. HIS 2-0 2 ,'.. The Board came out of closed session at 7:27 pm. x. Adjournment The meeting was adjourned at 7:27 pm. ApprovedbytheGoverningBoardof LagunitaSchoolDistrict , . ,--. 3 APPENDICES 45 Exhibit H Monterey County Office of Education – Lagunita Elementary School District 46 APPENDICES Fiscal Crisis & Management Assistance Team May 22, 2006 Marsha Filbin,Principal Lagumta MiddleSchool 975 San Juan GradeRoad Salinas, CA 93907 Re: Lagunita Middle School Project - 15224 Dear Ms. Filbin: Per our engineering. department, the ,.evisedestimated the cost, including taxes, of the above projecttobe$417,483: Seeattached sheetfordetailedbreakdown. . This estimate is .baSed upon current costS and materials, obtained through regular sources. In.sta1la.tionof water facilities will be after stonn drain and sanitary sewers, but prior to other utilities or improvements such as street paving. .sidewalks,drivew:ays,etc. All excess spoil IN TRACT isto remain trenchside and all excessspoilOFFTRACT isto be removed. IF YOU WISH CALWATER TO COMPLETETHISINSTALLATION: . Remit paYmentof$416,983 (your deposit of$22,365 has been deducted from the total). . Provide 3copiesofthe recorded map. . .. Agreement-The following information isrequired,inwritinl!.to prepare the agreement: .1)Names ofthe parties with whom the agreementisto be made, 2) Description ofcontracting parties, 3) Address to which"notices to applicant shouldbe sent. and 4) Name and-addressof single party to receive refunds if applicable. The agreement must be prepared, signed and reti.1medpriorto start ofconsttUCtion. Seeattached Rule 15for details. . . IF YOU ELECT TO HIRE YOUR OWN QUALIFIED CONTRACTOR: Before construction bevins: it Pick up detailedplans and specifi~ations. · Provide installing conttactor's name, insm:an.ceand license infonnation. See attached Form. ~1& . · Materials mustbe on.--siteand inspe~d by CWS. . .Payremaining deposits ($23,865.00)* (see attached Detailed Cost Estimate). __ _ YA . W!T . . . . . . IAICIISftIIJ) IAYSHOII llAI GUlCH CIUCCI 01XON !AlT LOS ANamQ KIlN UVU"VAUlT' ICINGan . UYIUoIOU . L08MTOI . MAlYlYIUI . OIOVUl . UNl:HO DOIoIINGUU . I!DWOOD VAU!\' . L\UHAS . SBMA . STOCXTON . YISAUA. WlS1tAICI . WlUOWl ." '~_.._------_.- ----- ... . -- ... .- - -.----- -- .'f''-'" D. SpecialFacility~ee ~ $O E. Other (workbyCWS) $0 F. Total DepositsRequired(Sub-Total) $46,230 G. LessAdvanceDeposit~ <$22.365> H. Total BalanceDue $23,863.00 Before tie..in ofnew facilities: · Provide 3 copiesofthe recOTded'map. . Agreement-The followinginfonnation isrequired, inwritiIu!.to prepare the agreement: 1) Names of the patties with whom the agreement is to be made, 2) Description of contracting parties, 3) Addressto which notices.to applicant should be sent, and 4) Name and addressof single party to receive refun~ if applicable. Theagyeement 'must be prepa:recl,signed and returned prior to tie-in.. See attached Rule 15fordetails. . . This estimate is submitted as preHm;nary information only. The. figures and information contained herein aresubject to execution ofan agreementwithin (30) daysofthis date."Following completion ofthe project and detetmination ofthe final Cost,any remAiningfundswillbe returned to you, or ifadditional funds arerequired, ~ey willberequested 6fyou. . NOTE: A In'e..constTuctionmeeting will not be scheduled until this officehas received aUthe required paperwork and deposits. ~red paperwork is asfoUows: 1. Form 1291 (Enclosed) 2. Form 1518 (Enclosed) " 3. Cop, of Contractor'sLicense (Installing contractor must hold a Class.A or Class C..34 License) (SeeFonn 1518) . 4. Certificate of Insurance (Contractor must have minimum insurance coverage of $1,000,000.00per occu1Tence,$2,000,000.00 annual aggTegatenaming California.Water Sewice Compan:yas'AdditiorUd Insured and Certificate Holder) (SeeForm 1518) 5. Total Deposits'(Mentioned in letter) 6. Finalcostofinstallation to be submitted upon completion ofIn'oject ShoUldyou have any questions or'need additional information, pl~e feel free to contact me at this office. " ". . Sincerely. ,. " 7U~ Michael'L Jones Assistant District Manager Enclosures pc: L Pnvbyla FUe-SLN-Project 15224 ., ---" ---. APPENDICES 47 Exhibit I Monterey County Office of Education – Lagunita Elementary School District 48 APPENDICES Fiscal Crisis & Management Assistance Team --- --- -- PAGE 62/£13 DO:1 AO;TG 61/B9/20B7 15:35 tnvoice 2080'103 tag. 1fQ, -1- pay 660 Crazy Horse Canyo . n Road App11clt1cn Dab8 Qx!tract Salinas,CA93907-8434 ('"""" J:lhOne:831-449-4273 Fax:831-449-<J700 ~ , 20 SBP 200' aocou I . JQ!) Co.\: project: 30fOGl I LAGtmITA1f.m.1SNTAIty' I lMUHttA SCIIJOlo 1IM1Sft LIft SCIICOto D.t8'.t'JlIC'1' I a. IfADillMUM "5 81Uf JI11IN CJlW)JI :!OM I meT 1D./tb JU1t1fGRADB eAI.IIIiU. c:1o.'3'07 I IALIKLG, ~ '3'OC ~.~-MArlED S.EP'-2 6 21116 Prav10wl cw:r.nt To~t. Quant:l.~y QUantity Quantity _-BID 8 IN. C-no %IS 1.0000 .1.0000 0.0000 1.0000 30"00.0000 1.0000 1.0000 0.0000 1.0000 '.00.0000 1.0000 1.0000 0.0000 1.0000 8600.0000 " Pl_ QIQIn)OMcopywilli 18111=I1. ' ' {~-,u IaVllIat1ft... wtd\In 30day.r.o.n cl.18<llnvolc:c. Pac dut Involctl at. f\l1;.f~ to . lalt Sltymcnt ."flIt cumpwd 81~~ per=nth (2+'" 11\II1II1~p me) 011the cI"".IU\I>(. -'-W'J ACCIPTVISA/MAS'naCARO/pt8COna . Wi.II.(i~l'TVISAIMMTDCAKDIDISCOVER. WEACCBPTVtSAIHABTB),CAJ.DIOISCOVlR APPENDICES 49 Exhibit J Monterey County Office of Education – Lagunita Elementary School District 50 APPENDICES Fiscal Crisis & Management Assistance Team Lagunita School Board of Trustees Regular Meeting " 1..i.~'~itf6r~~~~'i~;;t{~~~';i;~';,(: " ....... ,:.. Board Minutes I. Call to Order - DonChapin.BoardPresident.calledthemeetingtoorderat6:30pm. n. - Quorum Established PresentwereDonChapin,BoardPresident;Ernest Howard,Clerk; ChuckShearn,Trustee;andMarshaFilbin,SecretarytotheBoard. Quorumwas established. MembersofthecommunitypresentwereSheriDurganandMichaelMarshall. m. ThePledgeofADegiance IV. Actions A. The minutes of October 24,2006, were approved aspresented. SIC 2-0. Clerk Ernest Howard abstained, because he was absent ftom the October meeting. B. Warrants inthe amount of $9171.07 for general fund and $301.80 for deferred maintenance were approved. HIS 3-0, with Mr. Chapm abstaining ftom approval ofthe one warrant for fuel ftom his company. Further warrants for the deferred maintenance fund in the amount of$321,7oo.00 forthe water main extension project were approved. SIH 2-0. Mr. Chapin abstained. V. NewBusiness A. Tbeboardhelditsannualorganizationalmeeting. Itwasmoved,seconded, andapproved thattheBoardwillmaint9U:titsofficersintheircurrentpositions. SIH3-0 TheBoard alsoreaffirmedthatitsregularlyscheduledmeetingswillbeheldonthefourthTuesday ofeverymonthat6:00pm. B. TheBoardpassed Resolution#0412006-2007DesignatingAuthorizedAgentto Sign SchoolOrders. AllBoardmembersandtheSuperintendentlPrincipalareauthorized signers. SIH3-0 C. TheBoardpassedResolution#0512006-2007WithdrawalofMembership inthe Schools ExcessLiabilityFundJPA. HIS3-0 VI. Old Business A. Gro·undsandMaintenance TheBoardreviewedinformationalquotesftom theDonChapin Companyfor theremovaloftreerootsandtheresurfacingoftheSugarloafPreschool playground. Therewasdiscussionoflessexpensiveoptionsforresurfacing the area. TheBoardsuggestedthatpreschoolteacherCathyMillsearmark$10,000 ofherBingodonationsfundstousetowardtheprojectandthenthe school districtcouldfundthebalanceofpossibly$3,000. MarshaFilbinandCathy Millswillcontinuetoinvestigatepossible,lesscostly,solutionsforresurf8cing theplayground. · Mr.BudBaumanandMr.MichaelPattersonarewillingto donatetheir laborto repairtheschoolbuildingftontsteps. TheschooldistrictwillpayforaU materials,whichareexpectedtototalunder$1,000. · Inthewaterconnectionproject,afinalaccountingofcostsrevealsthatthe districthad$392,046availabletospend,and spent$383,394. B. LaguuitaAdmioJstrator'sReport · First quarter ended and parent-teacher conferences were held. Awards were given forperfectattendance,honorroll,andPrincipal'shonorroll. November 28, 2006 1 . Halloweenactivitieswereheldonaminimumday. . Thanksgiving activitiestookonanewlookthisyearwith90minutesofrotational --.....--- stations inwhichstudentslearnedaboutdifferentaspectsofthe Thanksgiving . holiday. Revenuestobereceivedthisyeararecurrentlyprojected at$42,000aboveamounts budgeted. Mrs.FilbinwentoverabudgetupdatehandoutwiththeBoard. C. SchoolSiteCouncilReport Marsha Filbin gave the report. The site council met on Tuesday, November 28, 2006. They discussed teachers' long-range teaching plans, reviewed local reading assessments for beginning 2006-2007, and discussed possible revisions to the Single Plan for Student Achievement. This year's committees have allmet at least once and are at work on revising the Tecbnology Plan, the Safe School Plan, and the Gifted and Talented Education application. The Disaster Preparedness committee isplanning arealistic fire drill by the end of January, 2007. The SiteCouncil continues to look for possible grants to fund special school programs. Aparticular need is inthe area of computer hardware replacement. D. LagunitaParentTeacherClubReport SheriDurgan gavethereport. TheLPTCmetonNovember 13,2006, with11in attendance. Money inthebankequals$5,980. KidsGo Shoppingisplannedfor December4, 5,and6intheschoolhlmuy. TheclubisalsoplanningaTamaleSale beforetheWmterBreak. VIT. Information and Proposals A. CommuniItnyput There was none. B. LettersandInformation . Mrs.FilbinsharedinfonnationwiththeBoardabouttoolsfor SchoolBoardSelf- Evaluation. . TheBoardlookedatachartcomparingcertificatedsalaryschedulesforMonterey Countyschooldistricts. TheBoardwouldliketoseeaparitystudyofcounty districts' certificatedpayscheduleswhichincludesbenefitpackages. Itwas suggestedthattheBoardcouldstudysuchareport inearlyspring, incasetheywish toupdatethe salaryschedulepriortoofferingteacher contracts. . TheBoardreceivedtheMontereyCountyQuarterlyTreasurer's Report. · TheBoardreceived aletterwm MCOEstatingthatnomathematicalortechnical coJTectionswerenotedinthedistrict's2005-2006unaudited financialreport. vm. FuturePlanning ThenextregularmeetingwasrescheduledtoTuesday,December 19,2006,6:00 pm,to accommodatetheChristmas holiday. IX. ClosedSession The Board went into closed session at7:40 pm. During closed session, personnel issues and teacher evaluations were discussed. No actions were taken. The Board came out of closed session at8:00pm. X. Adjournment The meeting was adjourned at 8:00 pm. ApprovedbytheGoverningBoard of LagunitaSchoolDistrict Ernest ~.. November 28, 2006 2 APPENDICES 51 Exhibit K Monterey County Office of Education – Lagunita Elementary School District 52 APPENDICES Fiscal Crisis & Management Assistance Team -- -- --- ..----.. December 14,2006. TOWHOMITMAYCONCERN: The pmpose ofthis letter is to verifythat .CaliforniaWater ServiceCompany pennits only specifically qualified contractorsto worleonwater mains. Lagunita School District's recent project involvedthe extension ofamain line down San JuanGradeRoadnom ourStation45-01totheschoolcampus.Forthiswatermain . project, the use of a specifically qualified contr8ctorwas required.. We informed Superintendent Filbinthat the following companieswere acceptable to CaliforniaWaterServiceforthisproject: . . West Valley Engineering . Granite Construction .. Don Chapin Company. Monterey PeninsulaEngineering We subsequently employed West Valley Engineering to developthe engineering bid'that California Water Service Company made onthisproject. The school district was at liberty to accept that bid orto hire another contractor nom.the list above. Sincerely, Michael 1. Jones Assistant District Manager Dln8IC1"O.ff.c:IS. AN.TIiLCI'tV!AUP.'. IAUISI'I!.I.D . IAYSHOIE. t!!At GUIOI. CHICO..DIXON. E.ASTIDS.ANGElES. a . iM IlVEIVAllEY. KINGC:ITY. UVflM01! W$ AtJO$ MAlYSVlUI OIOVIUl IANl:HO DOMINGUEZ ~IEDWOOD VAU£Y UUNAS SElMA STOc:XTON VISAW.W. U1lAK.!WIUOWS -- -- - - - - - - - - APPENDICES 53 Exhibit L Monterey County Office of Education – Lagunita Elementary School District 54 APPENDICES Fiscal Crisis & Management Assistance Team . - ... - .-- -. .~--.._.- _.- 0- , CALIFORNIA WATER SERVICE COMPANY 1720 NORTHFIRSTSTREET.SANJOSE.CA95112.4598 (408) 367.8200 January 23,2007 LagunitaElementary School 975 SanJuan GradeRoad Salinas,CA 93907 Re: LagunitaMiddleSchooLOurProj.SLN-15224 Regardingthat certainwater main extensionagreementdated July 17, 2006 attachedis ourForm1531,acceptingthefacilitiesinstalledbyyour contractor toserveLagunitaMiddleSchool. . In accordance with paragraph 5 of the agreement, please furnish us with a statement ofyour actual cost of installingthe water facilities. Attaching acopy of our Form 1531to your transmittal letter, showingthe installation cost of the items listed,would be satisfactory. If youhave anyquestions orneedadditionalinformationregarding the cost statement, pleasecontact meat (408)367-8274. Sincerely, ,~~~ LindaPrzybyla -. Administrative Assistant Operations Enclosure cc: ftmSmith . DllfllCt O"ICIS. ANTfLOPf YAUIY IAUIUlfUl . ,,,,,110II . .EAIOIACK. CHICO. DIXON. EASTLOSANOIIES. UINIrvelYAlUY. UNOCITY. UYEIMOI£ . LOSALTOS. MAlYSYIUI . OIOYI"1 . IANCHO DOMINGUez. leowOOD VAU" . SAIINAII:.CII . n .uo...... _ __ __. ______ u ---- .~tE<CEfV.f [ ...1 - .' L'fov-ol ACCEPTANCEOFFACILITIES JAN- 8 ,ZOC1 District alinas ~ Project No. :--... . DrawingNo.SLN4757-Rl £~ ~ 11 '--Underdateo~__ 20 Q!,the undersignedand. . {...(,{/1/tr.:. r ~:J / ("Subdivid~ intoanagreemenptrovidinga,mongo~, fortheinstallationbythe;~~der or his contractorofcertainfacilities describedtherein fortheserviceofwaterto a subdivisiondescribedtherein, . situatedinthe undersigned's 5~\, naB district. Theundersignedhereby acknowledgesacceptance by it ofthefacilitiesdescribedbelow installed pursuantto saidagreementand confirmsthat saidfacilities so accepted by ithavebeeninstalledin accordance withthe specifications,ExhibitC to said agreement,butthe foregoing acceptanceandconfirmationshallunderno circumstancesbedeemedto constitute approvalofthe materials or workman!:lhipinvolvedinsuchfacilities forpurposes ofparagraphs4(c) or 8(d)of saidagreement DESCRIPTIONOFFACILITIESACCEPTED: ~enlrtb Size Tvne ofPiDe Location 4195FEET 12INCH DUcrILE IRON From CWS STA.45.Nortb. San Juan Grade Rd. OTHER FACILITIESACCEPTED: 6INCH FIRE HYDRANT ASSEMBLY.CLOW 950 fa>s.outb driveway. La2Unita School , lea :2INCH WATER SERVICE Ca>.soutdbriveway. La2Unita School FACllJTIES NOTACCEPTED: I!m:. December 26.20!t2 CaliforniaWater ServiceCompany Its:Constl"uctionSuoerintendent '''----- APPENDICES 55 Exhibit M Monterey County Office of Education – Lagunita Elementary School District 56 APPENDICES Fiscal Crisis & Management Assistance Team · State of California Arnold Schwarzenegger, Governor State and Consumer Services Agency DEPARTMENT OF GENERAL SERVICES Interagency Support Division 707ThirdStreet WestSacramento,CA 95605 (916) 376-1938 Fax(916)376-5018 www.dos.ca.oov o 0 0 0 June 7,2007 Ms.Marsha Filbin DistrictSuperintendent LagunitaElementarySchool District 975 SanJuan Grade Road Salinas,CA 93907 Dear Ms.Rlbin: A concernedcitizenhasraised seriousallegationsofpossibleimproprieties inthe construction contractingofthe Lagunita ElementarySchoolDistrict'sDeferred Maintenance project, Application Number40/66076-04-01. Basedonthe allegationfrom this citizen, andthe attachedLagunitaSchool Board minutesfrom itsApril25,2006 meeting,the districtmay havebeeninviolation of EducationCode Section 35233 andGovernment Code Section 1090when it initiatedconstruction contractsfor this project.These sections define conflict-of-interestlawsandspecifythat members of school districtgoverning boards are prohibitedfrombeingfinancially interested inany contract made by them intheir official capacity, regardlessofwhetherthey actually participated personally inthe executionofthe contracts. Any contract entered intobythe governing board of anyschool district bythese means may beconsideredvoid. We takethis mattermost seriously. Pleaseprovidea letterofexplanation byJune 22, 2007 regardingthe possibleimproprietiesto: Mr. DavidZian, Chief ofFiscalServices Office of PublicSchoolConstruction 1130 KStreet, Suite400 Sacramento, CA 95814 Shouldyouhave anyquestions concerningthis matter,please contact Mr.Zian via email at david.zian@dgs.ca.gov, or bytelephone at(916)322-9448. Sincerely, RobCook Deputy Director DepartmentofGeneral Services MW:cp cc: MontereyCounty Office of Education Mr. DavidZian, Chief of FiscalServices - Projectfile Application Number40/66076-04-01 ~_.' BUILDING GREEN BUYING GREEN WORI<INGGREEN APPENDICES 57 Appendix F Study Agreement Monterey County Office of Education – Lagunita Elementary School District 58 APPENDICES Fiscal Crisis & Management Assistance Team