Grant Joint Union High School District

MALIA M. COHEN CALIFORNIA STATE CONTROLLER December 31, 2024 Mr. Douglas Crancer, Chief Business Official Galt Joint Union High School District 150 Camellia Way Galt, CA 95632 Dear Mr. Crancer: The State Controller’s Office performed a review of costs claimed by Galt Joint Union High School District for the legislatively mandated Graduation Requirements Program (Chapter 498, Statutes of 1983) for the period of July 1, 2010, through June 30, 2014. We conducted our review under the authority of Government Code sections 12410, 17558.5, and 17561. Our review was limited to confirming that the district properly identified the offsetting revenues requested by Education Code section 42238.24 for teacher salary and benefit costs. The district claimed $1,443,256 for the mandated program. Our review found that the entire amount is unallowable. The costs are unallowable because the district did not offset all the state funding that it received for teacher salary and benefit costs, as described in the attached Summary of Program Costs and the Review Results. The State made no payments to the district. This letter contains an adjustment to costs claimed by the district. If you disagree with the finding, you may file an Incorrect Reduction Claim (IRC) with the Commission on State Mandates (Commission). Pursuant to section 1185(c), of the Commission’s regulations (Title 2, California Code of Regulations), an IRC challenging this adjustment must be filed with the Commission no later than three years following the date of this report, regardless of whether this report is subsequently supplemented, superseded, or otherwise amended. You may obtain IRC information on the Commission’s website at https://www.csm.ca.gov/request-form.php. MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Mr. Douglas Crancer December 31, 2024 Page 2 of 2 If you have any questions regarding this report, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by telephone at 916-327-3138. Thank you. Sincerely, Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits KAT/ac Attachments RE: S24-MCC-9033 Copy: Anna Trunnell, Superintendent Galt Joint Union High School District David Gordon, Superintendent of Schools Sacramento County Office of Education Elizabeth Dearstyne, Director School Fiscal Services Division California Department of Education Susan Little, Director Government Affairs Division California Department of Education Jessica Holmes, Program Budget Manager Education Systems Unit California Department of Finance Melissa Ng, Principal Program Budget Analyst California Department of Finance Darryl Mar, Manager Local Reimbursement Section State Controller's Office Everett Luc, Supervisor Local Reimbursement Section State Controller's Office MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Galt Joint Union High School District Graduation Requirements Program Attachment 1— Summary of Program Costs July 1, 2010, through June 30, 2014 Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 2 July 1, 2010, through June 30, 2011 Direct costs: Salaries and benefits $ 3 09,166 $ 309,166 $ - Total direct costs 3 09,166 309,166 - Indirect costs 1 9,694 19,694 - Total direct and indirect costs 3 28,860 328,860 - Less: offsetting revenue - (9,019,552) (9,019,552) Subtotal 3 28,860 (8,690,692) (9,019,552) Audit adjustment to eliminate negative balance - 8,690,692 8,690,692 Total program costs $ 3 28,860 - $ (328,860) Less amount paid by the State 1 - Allowable costs claimed in excess of amount paid $ - July 1, 2011, through June 30, 2012 Direct costs: Salaries and benefits $ 3 13,904 $ 313,904 $ - Total direct costs 3 13,904 313,904 - Indirect costs 2 2,695 22,695 - Total direct and indirect costs 3 36,599 336,599 - Less: offsetting revenue (3,048) (9,025,045) (9,021,997) Subtotal 3 33,551 (8,688,446) (9,021,997) Audit adjustment to eliminate negative balance - 8,688,446 8,688,446 Total program costs $ 3 33,551 - $ (333,551) Less amount paid by the State 1 - Allowable costs claimed in excess of amount paid $ - 1 of 3 Galt Joint Union High School District Graduation Requirements Program Attachment 1 (continued) 2 of 3 J D T I TL SA T L A J D T I TL SA T L A C o s t E le m e n ts u ly 1 , 2 0 1 2 , th r o u g h J u n e 3 0 , 2 0 1 3 ir e c t c o s ts : S a la r ie s a n d b e n e fits o ta l d ir e c t c o s ts n d ir e c t c o s ts o ta l d ir e c t a n d in d ir e c t c o s ts e s s : o ffs e ttin g r e v e n u e u b to ta l u d it a d ju s tm e n t to e lim in a te n e g a tiv e b o ta l p r o g r a m c o s ts 1 e s s a m o u n t p a id b y th e S ta te llo w a b le c o s ts c la im e d in e x c e s s o f a m u ly 1 , 2 0 1 3 , th r o u g h J u n e 3 0 , 2 0 1 4 ir e c t c o s ts : S a la r ie s a n d b e n e fits o ta l d ir e c t c o s ts n d ir e c t c o s ts o ta l d ir e c t a n d in d ir e c t c o s ts e s s : o ffs e ttin g r e v e n u e u b to ta l u d it a d ju s tm e n t to e lim in a te n e g a tiv e b o ta l p r o g r a m c o s ts 1 e s s a m o u n t p a id b y th e S ta te llo w a b le c o s ts c la im e d in e x c e s s o f a m a la o u a la o u n n n n c e t p c e t p a a id id A c tu a l C o s ts C la im e d $ 3 6 6 ,2 8 0 3 6 6 ,2 8 0 3 0 ,5 4 8 3 9 6 ,8 2 8 - 3 9 6 ,8 2 8 - $ 3 9 6 ,8 2 8 $ 3 5 5 ,3 4 1 3 5 5 ,3 4 1 2 8 ,6 7 6 3 8 4 ,0 1 7 - 3 8 4 ,0 1 7 - $ 3 8 4 ,0 1 7 A llo w a b le p e r R e v ie w $ 3 6 6 ,2 8 0 3 6 6 ,2 8 0 3 0 ,5 4 8 3 9 6 ,8 2 8 ( 6 ,3 2 7 ,1 2 0 ( 5 ,9 3 0 ,2 9 2 5 ,9 3 0 ,2 9 2 - - $ - $ 3 5 5 ,3 4 1 3 5 5 ,3 4 1 2 8 ,6 7 6 3 8 4 ,0 1 7 ( 9 ,5 6 6 ,3 5 1 ( 9 ,1 8 2 ,3 3 4 9 ,1 8 2 ,3 3 4 - - $ - ) ) ) ) R e v ie w 2 A d ju s tm e n t $ - - - - ( 6 ,3 2 7 ,1 2 0 ( 6 ,3 2 7 ,1 2 0 5 ,9 3 0 ,2 9 2 $ ( 3 9 6 ,8 2 8 $ - - - - ( 9 ,5 6 6 ,3 5 1 ( 9 ,5 6 6 ,3 5 1 9 ,1 8 2 ,3 3 4 $ ( 3 8 4 ,0 1 7 ) ) ) ) ) ) Galt Joint Union High School District Graduation Requirements Program Attachment 1 (continued) 3 of 3 S D T I TL SA T L A C o s t E le m e n u m m a r y : J u ly 1 , 2 0 1 0 , th r o u g h ir e c t c o s ts : S a la r ie s a n d b e n e fits o ta l d ir e c t c o s ts n d ir e c t c o s ts o ta l d ir e c t a n d in d ir e c t c o s ts e s s : o ffs e ttin g r e v e n u e u b to ta l u d it a d ju s tm e n t to e lim in a te n e o ta l p r o g r a m c o s ts 1 e s s a m o u n t p a id b y th e S ta te llo w a b le c o s ts c la im e d in e x c e ts J u n e 3 0 , 2 g a tiv e b a la s s o f a m o u 0 1 4 n c e n t p a id A c tu a l C o s ts C la im e d $ 1 ,3 4 4 ,6 9 1 1 ,3 4 4 ,6 9 1 1 0 1 ,6 1 3 1 ,4 4 6 ,3 0 4 ( 3 ,0 4 8 1 ,4 4 3 ,2 5 6 - $ 1 ,4 4 3 ,2 5 6 ) A llo w a b le p e r R e v ie w $ 1 ,3 4 4 ,6 9 1 1 ,3 4 4 ,6 9 1 1 0 1 ,6 1 3 1 ,4 4 6 ,3 0 4 ( 3 3 ,9 3 8 ,0 6 8 ( 3 2 ,4 9 1 ,7 6 4 3 2 ,4 9 1 ,7 6 4 - - $ - ) ) R e v ie w 2 A d ju s tm e n t $ - - - - ( 3 3 ,9 3 5 ,0 2 0 ( 3 3 ,9 3 5 ,0 2 0 3 2 ,4 9 1 ,7 6 4 $ ( 1 ,4 4 3 ,2 5 6 ) ) ) _________________________ 1 Payment details current as of October 10, 2024. 2 See Attachment 2, Review Results. Galt Joint Union High School District Graduation Requirements Program Attachment 2— Review Results July 1, 2010, through June 30, 2014 BACKGROUND Chapter 498, Statutes of 1983 amended Education Code (EC) section 51225.3 to require that, beginning with the 1986-87 school year, no pupil shall receive a high school diploma without completing an additional science course above that which was required prior to the enactment of Chapter 498, Statutes of 1983. One year of science was required prior to Chapter 498, Statutes of 1983 and as a result of this legislation, two science courses are now required. The mandate specifies that the curriculum must include one course each of biological and physical science. On January 22, 1987, the Commission on State Mandates (Commission) adopted its Statement of Decision finding that EC section 51225.3, as amended by Chapter 498, Statutes of 1983, imposed a reimbursable state mandated program upon school districts, by requiring school districts to provide an additional science course to students prior to their graduation from the twelfth grade. On March 23, 1988, the Commission adopted the parameters and guidelines that establish the state mandate and define the reimbursement criteria. The parameters and guidelines have been amended several times since their adoption. The last amendment was adopted November 6, 2008, and applies to claims for January 1, 2005, and thereafter. The amended parameters and guidelines were corrected on December 18, 2008. On July 25, 2011, the Department of Finance filed a Request for Parameters and Guidelines Amendment to identify offsetting revenues for teacher salary and benefit costs pursuant to EC section 42238.24. On September 26, 2011, the Graduation Requirements Mandate Resolution Committee filed a request for postponement of the proceeding on the ground that EC section 42238.24 was the subject of a court challenge in California School Boards Association v. State of California. On June 19, 2012, the Commission staff placed the matter on inactive status pending resolution of the court case. In 2012, the California State Legislature adopted the mandate block grant system as an alternative to filing reimbursement claims with the State Controller’s Office. Beginning in fiscal year 2013-2014, the Graduation Requirements Program became part of the mandate block grant system. On February 1, 2021, the Superior Court of California, County of Alameda, on remand of California School Boards Association v. State of California, resolved the remaining issues in the case by entering a judgment following a stipulation of the parties that Education Protection 1 of 4 Galt Joint Union High School District Graduation Requirements Program Account funding from Proposition 30 is not offsetting revenue under EC section 42238.24. On July 23, 2021, following a stay of the Department of Finance’s Request for Parameters and Guidelines Amendment pending the outcome of litigation in California School Boards Association v. State of California, the Commission adopted a Decision to amend Section IX., “Offsetting Revenue and Other Reimbursements,” to “incorporate the requirements of Education Code section 42238.24 . . . [Chapter 724, Statutes of 2010] for teacher salary and benefit costs incurred beginning October 19, 2010.” FINDING— Galt Joint Union High School District reported a total of $3,048 in offsetting revenue on its claim forms for the period of July 1, 2010, Underreported through June 30, 2014. We found that the district should have offset offsetting revenues $33,938,068 in state funding identified in EC section 42238.24 for teacher salary and benefit costs. The district claimed $1,443,256 ($1,446,304 less $3,048 in offsetting revenues) in salaries and benefits for Reimbursable Activity D (Increased cost to school district for staffing the new mandated science class) and related indirect costs for the review period. Fiscal Year Cost Component 2010-11 2011-12 2012-13 2013-14 Total Salaries and benefits $ 309,166 $ 313,904 $ 366,280 $ 355,341 $ 1,344,691 Related indirect costs 19,694 22,695 30,548 28,676 101,613 Subtotal 328,860 336,599 396,828 384,017 1,446,304 Less offsetting revenue - (3,048) - - ( 3,048) Total $ 328,860 $ 333,551 $ 396,828 $ 384,017 $ 1,443,256 On July 23, 2021, the parameters and guidelines were amended to identify the offsetting revenues required by EC section 42238.24 for teacher salary and benefit costs, beginning October 19, 2010. EC section 42238.24 states: Costs related to the salaries and benefits of teachers incurred by a school district or county office of education to provide the courses specified in paragraph (1) of subdivision (a) of Section 51225.3 shall be offset by the amount of state funding apportioned to the district pursuant to this article, or in the case of a county office of education pursuant to Article 2 (commencing with Section 2550) of Chapter 12 of Part 2 of Division 1 of Title 1, and the amount of state funding received from any of the items listed in Section 42605 that are contained in the annual Budget Act. The proportion of the school district’s current expense of education that is required to be expended for payment of the salaries of classroom teachers pursuant to Section 41372 shall first be allocated to fund the teacher salary costs incurred to provide the courses required by the state. 2 of 4 Galt Joint Union High School District Graduation Requirements Program We reviewed the district’s financial data at ed-data.org and identified the Local Control Funding Formula (LCFF)/Revenue Limit State Aid as follows: 3 of 4 O C 8 8 b o 0 0 je d 1 1 c e 1 9 t L L C C F F F F /R /R e e v v e e n n u u e e L L T R im im y p e o f e v e n u e it S ta te A it S ta te A T o ta l id id – – C P u r r io r e n r Y t Y e a e a r s r 2 0 1 0 - 1 $ 9 ,1 1 1 ,0 ( 9 1 ,5 $ 9 ,0 1 9 ,5 1 9 3 5 1 9 2 ) F 2 0 1 1 - 1 $ 9 ,0 1 4 ,8 1 0 ,1 $ 9 ,0 2 5 ,0 is c 2 8 3 6 2 4 5 a l Y e a r 2 0 1 2 - 1 $ 6 ,3 0 3 ,1 2 3 ,9 $ 6 ,3 2 7 ,1 3 2 9 2 2 8 0 2 0 1 3 - 1 $ 9 ,3 1 9 ,7 2 4 6 ,6 $ 9 ,5 6 6 ,3 4 2 2 5 2 9 1 T o ta $ 3 3 ,7 4 8 1 8 9 $ 3 3 ,9 3 8 l ,8 ,2 ,0 1 5 6 8 0 8 We determined that the total offsetting revenues exceed the district’s claimed salaries, benefits, and indirect costs for all fiscal years in the review period. All claimed salaries, benefits, and indirect costs are unallowable. Criteria Section IX., “Offsetting Revenues and Reimbursements,” of the parameters and guidelines states, in part: . . . The following offsetting revenues are specifically identified for this program and shall be identified and deducted from this claim: • Total science teacher salary and benefits costs, including related indirect costs, that are funded from the following sources as required by Education Code section 42238.24 (Stats. 2010, ch 724, AB [Assembly Bill]1610): A. For school districts, the amount of state funding apportioned pursuant to Article 2 of Chapter 7 of Part 24 of Division 3 of Title 2 of the Education Code (commencing with section 42238 et seq.) for the courses specified by Education Code section 51225.3(a)(1) and required by Education Code sections 42238.24 and 41372 to first fund the teacher salary and benefit costs incurred for all 13 state required courses, which are used for the second science course mandated in the Graduation Requirements program by Education Code section 51225.3(a)(1)(C). . . . These funds are a mandatory offset and only after all of these funds have been expended exclusively for the teacher salary and benefits costs for the (currently 13) state required courses, may any additional remaining teacher salary and benefits costs be claimed for the mandated second science course; B. For county offices of education, the amount of state funding apportioned pursuant to Article 3 (commencing with Section 2550) of Chapter 12 of Part 2 of Division 1 of Title 1 of the Education Code for the courses specified by Education Code section 51225.3(a)(1) and required by Education Code sections 42238.24 and 41372 to first fund the teacher salary and benefit costs incurred for all 13 state required courses, which are used for the second science course mandated in the Graduation Requirements program by Education Code section 51225.3(a)(1)(C). . . . These funds are a mandatory offset and only after all of these funds have been expended Galt Joint Union High School District Graduation Requirements Program exclusively for the teacher salary and benefits costs for the (currently 13) state required courses, may any additional remaining teacher salary and benefits costs be claimed for the mandated second science course; and C. The amount of state funding received from any of the items listed in Education Code section 42605 from fiscal years 2008-2009 through 2012-2013 and required by Education Code sections 42238.24 and 41372 to first fund the teacher salary and benefit costs incurred for all 13 state required courses, which are used for the second science course mandated in the Graduation Requirements program by Education Code section 51225.3(a)(1)(C). . . . These funds are a mandatory offset and only after all of these funds have been expended exclusively for the teacher salary and benefits costs for the (currently 13) state required courses, may any additional remaining teacher salary and benefits costs be claimed for the mandated second science course. . . . Recommendation Commencing in fiscal year 2014-15, the district elected to participate in a block grant program, pursuant to Government Code section 17581.6, in lieu of filing annual mandated cost claims. If the district chooses to opt out of the block grant program, we recommend that the district ensure that it apply all related offsetting revenues to claimed costs. 4 of 4