Merced Community College District

State of California John Chiang, State Controller M e m o r a n d u m To : Mike Havey, Chief Date: July 22, 2009 Division of Accounting and Reporting State Controller’s Office From: Jeffrey V. Brownfield, Chief Division of Audits State Controller’s Office Subject: MERCED COMMUNITY COLLEGE DISTRICT HEALTH FEE ELIMINATION PROGRAM MANDATED COST CLAIMS FOR THE PERIOD OF JULY 1, 2003, THROUGH JUNE 30, 2006 We reviewed the costs claimed by Merced Community College District for the legislatively mandated Health Fee Elimination Program (Chapter 1, Statutes of 1984, 2nd Extraordinary Session, and Chapter 1118, Statutes of 1987) for the period July 1, 2003, through June 30, 2006. Our review was limited to validating the authorized health service fees that the district reported. The district claimed $114,327 ($115,327 less a $1,000 penalty for filing a late claim) for the mandated program. Our review disclosed that the entire amount is unallowable. The costs are unallowable because the district understated authorized health service fees, as described in the attached Summary of Program Costs and Finding and Recommendation. For the fiscal year (FY) 2003-04 through FY 2005-06 claims, the State made no payment to the district. Our review disclosed that the claimed costs are unallowable. We recommend that the Division of Accounting and Reporting notify the district of the results of this review. If you have any questions, please contact either Jim L. Spano, Chief, Mandated Cost Audits Bureau, at (916) 323-5849 (jspano@sco.ca.gov), or Steve Van Zee, Audit Manager, at (916) 323-2368 (svanzee@sco.ca.gov). JVB/sk Attachments Re: S09-MCC-905 cc: Jill Kanemasu, Bureau Chief SCO-Division of Accounting and Reporting Ginny Brummels, Manager SCO-Division of Accounting and Reporting Merced Community College District Health Fee Elimination Program Attachment 1— Summary of Program Costs July 1, 2003, through June 30, 2006 Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 July 1, 2003, through June 30, 2004 Direct costs $ 135,169 $ 135,169 $ — Indirect costs 11,737 11,737 — Total direct and indirect costs 146,906 146,906 — Less authorized health service fees (115,107) (255,876) (140,769) Less late filing penalty (1,000) (1,000) — Subtotal 30,799 (109,970) (140,769) Review adjustments that exceed costs claimed — 109,970 109,970 Total program costs $ 30,799 — $ (30,799) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — July 1, 2004, through June 30, 2005 Direct costs $ 149,549 $ 149,549 — Indirect costs 19,277 19,277 — Total direct and indirect costs 168,826 168,826 — Less authorized health service fees (114,723) (274,298) (159,575) Subtotal 54,103 (105,472) (159,575) Review adjustments that exceed costs claimed — 105,472 105,472 Total program costs $ 54,103 — $ (54,103) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — July 1, 2005, through June 30, 2006 Direct costs $ 159,235 $ 159,235 $ — Indirect costs 21,478 21,478 — Total direct and indirect costs 180,713 180,713 — Less authorized health service fees (151,288) (363,748) (212,460) Subtotal 29,425 (183,035) (212,460) Review adjustments that exceed costs claimed — 183,035 183,035 Total program costs $ 29,425 — $ (29,425) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — Attachment 1–Page 1 of 2 Merced Community College District Health Fee Elimination Program Attachment 1 (continued) Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 Summary: July 1, 2003, through June 30, 2006 Direct costs $ 443,953 $ 443,953 $ — Indirect costs 52,492 52,492 — Total direct and indirect costs 496,445 496,445 — Less authorized health service fees (381,118) (893,922) (512,804) Less late filing penalty (1,000) (1,000) — Subtotal 114,327 (398,477) (512,804) Review adjustments that exceed costs claimed — 398,477 398,477 Total program costs $ 114,327 — $ (114,327) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — _________________________ 1 See Attachment 2, Finding and Recommendation. Attachment 1–Page 2 of 2 Merced Community College District Health Fee Elimination Program Attachment 2— Finding and Recommendation July 1, 2003, through June 30, 2006 FINDING— The district understated authorized health service fees by $512,804. Understated authorized Mandated costs do not include costs that are reimbursable from health service fees authorized fees. Government Code section 17514 states that “costs mandated by the state” means any increased costs that a school district is required to incur. To the extent community college districts can charge a fee, they are not required to incur a cost. In addition, Government Code section 17556 states that the Commission on State Mandates shall not find costs mandated by the State if the school district has the authority to levy fees to pay for the mandated program or increased level of service. For the period of July 1, 2003, through December 31, 2005, Education Code section 76355, subdivision (c), states that health fees are authorized for all students except those who: (1) depend exclusively on prayer for healing; (2) are attending a community college under an approved apprenticeship training program; or (3) demonstrate financial need. Effective January 1, 2006, only subdivisions (c)(1) and (c)(2) are applicable. The California Community Colleges Chancellor’s Office (CCCCO) identified the fees authorized by Education Code section 76355, subdivision (a). The following table summarizes the authorized fee per student: Authorized Health Service Fee Fiscal Year Semester Summer 2003-04 $ 12 $ 9 2004-05 13 10 2005-06 14 11 We obtained student enrollment, apprenticeship program enrollment, and Board of Governors Grant (BOGG) recipient data from the CCCCO. The CCCCO identified enrollment and BOGG recipient data from its management information system (MIS) based on student data that the district reported. CCCCO identified the district’s enrollment based on its MIS data element STD7, codes A through G. Within the student enrollment, CCCCO identified the number of apprenticeship program enrollees based on its Data Element SB23, Code 1. CCCCO eliminated any duplicate students based on their social security numbers. From the district enrollment, CCCCO identified the number of BOGG recipients based on MIS data element SF21, all codes with first letter of B or F. Attachment 2–Page 1 of 2 Merced Community College District Health Fee Elimination Program The following table shows the authorized health service fee calculation and review adjustment: Period Summer Fall Spring Session Semester Semester Total Fiscal Year 2003-04: Number of enrolled students 4,776 13,026 13,191 Less number of BOGG recipients (1,036) (3,780) (3,919) Subtotal 3,740 9,246 9,272 Authorized health fee rate × $ (9) × $ (12) × $ (12) Authorized health service fees $ (33,660) $ (110,952) $ (111,264) $ (255,876) Less authorized health service fees claimed 115,107 Review adjustment, FY 2003-04 (140,769) Fiscal Year 2004-05: Number of enrolled students 4,732 13,406 13,956 Less number of BOGG recipients (1,308) (4,487) (4,409) Subtotal 3,424 8,919 9,547 Authorized health fee rate × $ (10) × $ (13) × $ (13) Authorized health service fees $ (34,240) $ (115,947) $ (124,111) (274,298) Less authorized health service fees claimed 114,723 Review adjustment, FY 2004-05 (159,575) Fiscal Year 2005-06: Number of enrolled students 5,556 13,192 14,011 Less number of BOGG recipients (1,370) (4,510) — Subtotal 4,186 8,682 14,011 Authorized health fee rate × $ (11) × $ (14) × $ (14) Authorized health service fees $ (46,046) $ (121,548) $ (196,154) (363,748) Less authorized health service fees claimed 151,288 Review adjustment, FY 2005-06 (212,460) Total review adjustment $ (512,804) Recommendation We recommend that the district deduct authorized health service fees from mandate-related costs claimed. To properly calculate authorized health service fees, we recommend that the district identify the number of enrolled students based on CCCCO data element STD7, codes A through G. We also recommend that the district identify the number of apprenticeship program enrollees based on data elements SB 23, code 1, and STD7, codes A through G. The district should eliminate duplicate entries for students who attend more than one of the district’s colleges. In addition, we recommend that the district maintain documentation that identifies any students the district excludes from the health service fee based on Education Code section 76355, subdivision (c)(1). If the district denies health services to any portion of its student population, it should maintain contemporaneous documentation of a district policy that excludes those students and documentation identifying the number of students excluded. Attachment 2–Page 2 of 2