MiraCosta 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 27, 2009 Division of Accounting and Reporting State Controller’s Office From: Jeffrey V. Brownfield, Chief Division of Audits State Controller’s Office Subject: MIRACOSTA COMMUNITY COLLEGE DISTRICT HEALTH FEE ELIMINATION PROGRAM MANDATED COST CLAIMS FOR THE PERIOD OF JULY 1, 2002, THROUGH JUNE 30, 2008 We reviewed the costs claimed by MiraCosta 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 of July 1, 2002, through June 30, 2008. Our review was limited to validating the authorized health service fees that the district reported. The district claimed $440,114 for the mandated program. Our review disclosed that $39,942 is allowable and $400,172 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) 2002-03 claim, the State paid the district $112,411. Our review disclosed that the claimed costs are unallowable. The State should offset $112,411 from other mandated program payments due the district. Alternatively, the district may remit this amount to the State. For the fiscal year (FY) 2003-04, FY 2005-06, and FY 2007-08 claims, the State made no payment to the district. Our review disclosed that the claimed costs are unallowable. For the FY 2004-05 claim, the State made no payment to the district. Our review disclosed that $39,942 is allowable. The State should pay that amount, contingent upon available appropriations. For the FY 2006-07 claim, the State paid the district $32,454. Our review disclosed that the claimed costs are unallowable. The State should offset $32,454 from other mandated program payments due the district. Alternatively, the district may remit this amount to the State. Mike Havey -2- July 27, 2009 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-913 cc: Jill Kanemasu, Bureau Chief SCO-Division of Accounting and Reporting Ginny Brummels, Manager SCO-Division of Accounting and Reporting MiraCosta Community College District Health Fee Elimination Program Attachment 1— Summary of Program Costs July 1, 2002, through June 30, 2008 Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 July 1, 2002, through June 30, 2003 Direct costs $ 268,918 $ 268,918 $ — Indirect costs 72,339 72,339 — Total direct and indirect costs 341,257 341,257 — Less authorized health service fees (228,846) (385,908) (157,062) Subtotal 112,411 (44,651) (157,062) Review adjustments that exceed costs claimed — 44,651 44,651 Total program costs $ 112,411 — $ (112,411) Less amount paid by the State (112,411) Allowable costs claimed in excess of (less than) amount paid $ (112,411) July 1, 2003, through June 30, 2004 Direct costs $ 300,135 $ 300,135 $ — Indirect costs 21,009 21,009 — Total direct and indirect costs 321,144 321,144 — Less authorized health service fees (268,734) (342,654) (73,920) Subtotal 52,410 (21,510) (73,920) Review adjustments that exceed costs claimed — 21,510 21,510 Total program costs $ 52,410 — $ (52,410) 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 $ 365,373 $ 365,373 — Indirect costs 25,576 25,576 — Total direct and indirect costs 390,949 390,949 — Less authorized health service fees (333,081) (351,007) (17,926) Total program costs $ 57,868 39,942 $ (17,926) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 39,942 Attachment 1–Page 1 of 3 MiraCosta Community College District Health Fee Elimination Program Attachment 1 (continued) Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 July 1, 2005, through June 30, 2006 Direct costs $ 323,216 $ 323,216 $ — Indirect costs 22,625 22,625 — Total direct and indirect costs 345,841 345,841 — Less authorized health service fees (255,780) (423,458) (167,678) Less offsetting savings/reimbursements (30,639) (30,639) — Subtotal 59,422 (108,256) (167,678) Review adjustments that exceed costs claimed — 108,256 108,256 Total program costs $ 59,422 — $ (59,422) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — July 1, 2006, through June 30, 2007 Direct costs $ 330,559 $ 330,559 $ — Indirect costs 101,151 101,151 — Total direct and indirect costs 431,710 431,710 — Less authorized health service fees (365,712) (505,701) (139,989) Subtotal 65,998 (73,991) (139,989) Review adjustments that exceed costs claimed — 73,991 73,991 Total program costs $ 65,998 — $ (65,998) Less amount paid by the State (32,454) Allowable costs claimed in excess of (less than) amount paid $ (32,454) July 1, 2007, through June 30, 2008 Direct costs $ 395,518 $ 395,518 $ — Indirect costs 120,949 120,949 — Total direct and indirect costs 516,467 516,467 — Less authorized health service fees (424,462) (516,788) (92,326) Subtotal 92,005 (321) (92,326) Review adjustments that exceed costs claimed — 321 321 Total program costs $ 92,005 — $ (92,005) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — Attachment 1–Page 2 of 3 MiraCosta Community College District Health Fee Elimination Program Attachment 1 (continued) Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 Summary: July 1, 2002, through June 30, 2008 Direct costs $ 1,983,719 $ 1,983,719 $ — Indirect costs 363,649 363,649 — Total direct and indirect costs 2,347,368 2,347,368 — Less authorized health service fees (1,876,615) (2,525,516) (648,901) Less offsetting savings/reimbursements (30,639) (30,639) — Subtotal 440,114 (208,787) (648,901) Review adjustments that exceed costs claimed — 248,729 248,729 Total program costs $ 440,114 39,942 $ (400,172) Less amount paid by the State (144,865) Allowable costs claimed in excess of (less than) amount paid $ (104,923) _________________________ 1 See Attachment 2, Finding and Recommendation. Attachment 1–Page 3 of 3 MiraCosta Community College District Health Fee Elimination Program Attachment 2— Finding and Recommendation July 1, 2002, through June 30, 2008 FINDING— The district understated authorized health service fees by $648,901. 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, 2002, 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 Fee Rate Fiscal Year Semester Summer 2002-03 $ 12 $ 9 2003-04 12 9 2004-05 13 10 2005-06 14 11 2006-07 15 12 2007-08 16 13 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 3 MiraCosta 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 2002-03: Number of enrolled students 6,959 15,072 15,725 Less number of BOGG recipients (555) (1,647) (1,794) Subtotal 6,404 13,425 13,931 Authorized health fee rate × $(9) × $(12) × $(12) Authorized health service fees $ (57,636) $ (161,100) $ (167,172) $ (385,908) Less authorized health service fees claimed 228,846 Review adjustment, FY 2002-03 (157,062) Fiscal Year 2003-04: Number of enrolled students 5,452 13,876 14,613 Less number of BOGG recipients (446) (1,744) (1,945) Subtotal 5,006 12,132 12,668 Authorized health fee rate × $(9) × $(12) × $(12) Authorized health service fees $ (45,054) $ (145,584) $ (152,016) (342,654) Less authorized health service fees claimed 268,734 Review adjustment, FY 2003-04 (73,920) Fiscal Year 2004-05: Number of enrolled students 5,188 13,568 14,123 Less number of BOGG recipients (623) (2,036) (2,166) Subtotal 4,565 11,532 11,957 Authorized health fee rate × $(10) × $(13) × $(13) Authorized health service fees $ (45,650) $ (149,916) $ (155,441) (351,007) Less authorized health service fees claimed 333,081 Review adjustment, FY 2004-05 (17,926) Fiscal Year 2005-06: Number of enrolled students 5,712 13,952 14,434 Less number of BOGG recipients (700) (2,077) — Subtotal 5,012 11,875 14,434 Authorized health fee rate × $(11) × $(14) × $(14) Authorized health service fees $ (55,132) $ (166,250) $ (202,076) (423,458) Less authorized health service fees claimed 255,780 Review adjustment, FY 2005-06 (167,678) Fiscal Year 2006-07: Number of enrolled students 5,858 14,317 14,710 Authorized health fee rate × $(12) × $(15) × $(15) Authorized health service fees $ (70,296) $ (214,755) $ (220,650) (505,701) Less authorized health service fees claimed 365,712 Review adjustment, FY 2006-07 (139,989) Fiscal Year 2007-08: Number of enrolled students 6,580 14,771 12,182 Authorized health fee rate × $(13) × $(16) × $(16) Authorized health service fees $ (85,540) $ (236,336) $ (194,912) (516,788) Less authorized health service fees claimed 424,462 Review adjustment, FY 2007-08 (92,326) Total review adjustment $ (648,901) Attachment 2–Page 2 of 3 MiraCosta Community College District Health Fee Elimination Program 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 3 of 3