SCO
San Jose/Evergreen Community College District
Integrated Waste Management
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SAN JOSE/EVERGREEN COMMUNITY
COLLEGE DISTRICT
Audit Report
INTEGRATED WASTE MANAGEMENT PROGRAM
Chapter 1116, Statutes of 1992,
and Chapter 764, Statutes of 1999
July 1, 1999, through June 30, 2009
J C
OHN HIANG
California State Controller
January 2013
J C
OHN HIANG
California State Controller
January 31, 2013
Maria Fuentes, President
Board of Trustees
San Jose/Evergreen Community College District
4750 San Felipe Road
San Jose, CA 95135
Dear Ms. Fuentes:
The State Controller’s Office audited the costs claimed by the San Jose/Evergreen Community
College District for the legislatively mandated Integrated Waste Management Program (Chapter
1116, Statutes of 1992, and Chapter 764, Statutes of 1999) for the period of July 1, 1999, through
June 30, 2009.
The district claimed $3,105,838 ($3,125,838 less a $20,000 penalty for filing late claims) for the
mandated program. Our audit disclosed that $48,914 is allowable and $3,056,924 is unallowable.
The costs are unallowable because the district overstated reimbursable costs and understated
offsetting savings and revenues. The State paid the district $13,193. Allowable costs claimed
exceed the amount paid by $35,721.
If you disagree with the audit findings, you may file an Incorrect Reduction Claim (IRC) with
the Commission on State Mandates (CSM). The IRC must be filed within three years following
the date that we notify you of a claim reduction. You may obtain IRC information at the CSM’s
website at www.csm.ca.gov/docs/IRCForm.pdf.
If you have any questions, please contact Jim L. Spano, Chief, Mandated Cost Audits Bureau, at
(916) 323-5849.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
JVB/sk
Maria Fuentes, President -2- January 31, 2013
cc: Rita Cepeda, Chancellor
San Jose/Evergreen Community College District
Peter Fitzsimmons, Director of Fiscal Services
San Jose/Evergreen Community College District
Christine Atalig, Specialist
College Finance and Facilities Planning
California Community Colleges Chancellor’s Office
Ed Hanson, Principal Program Budget Analyst
Education Systems Unit
Department of Finance
Jay Lal, Manager
Division of Accounting and Reporting
State Controller’s Office
San Jose/Evergreen Community College District Integrated Waste Management Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 2
Views of Responsible Officials .......................................................................................... 3
Restricted Use .................................................................................................................... 3
Schedule 1—Summary of Program Costs ........................................................................... 4
Findings and Recommendations ........................................................................................... 13
San Jose/Evergreen Community College District Integrated Waste Management Program
Audit Report
Summary The State Controller’s Office audited the costs claimed by San
Jose/Evergreen Community College District for the legislatively
mandated Integrated Waste Management Program (Chapter 1116,
Statutes of 1992, and Chapter 764, Statutes of 1999) for the period of
July 1, 1999, through June 30, 2009.
The district claimed $3,105,838 ($3,125,838 less a $20,000 penalty for
filing late claims) for the mandated program. Our audit disclosed that
$48,914 is allowable and $3,056,924 is unallowable. The costs are
unallowable because the district overstated reimbursable costs and
understated offsetting savings and revenues. The State paid the district
$13,193. Allowable costs claimed exceed the amount paid by $35,721.
Background On March 25, 2004, the Commission on State Mandates (CSM) adopted
its statement of decision finding that Public Resources Code sections
40148, 40196.3, 42920-42928; Public Contract Code section 12167 and
12167.1; and the State Agency Model Integrated Waste Management
Plan (February 2000) require new activities that constitute new programs
or higher levels of service for community college districts within the
meaning of Article XIII B, Section 6, of the California Constitution, and
impose costs mandated by the State pursuant to Government Code
section 17514.
Specifically, the CSM approved this test claim for the increased costs of
performing the following specific activities:
Complying with the model plan (Public Resources Code section
42920(b)(3) and State Agency Model Integrated Waste Management
Plan, February, 2000);
Designating a solid waste reduction and recycling coordinator (Public
Resources Code section 42920(c);
Diverting solid waste (Public Resources Code sections 42921 and
42922(i);
Reporting to the Board (Public Resources Code sections 42926(a) and
42922(i); and
Submitting recycled material reports (Public Contract Code section
12167.1.
The program’s parameters and guidelines establish the state mandate and
define the reimbursement criteria. The CSM adopted the parameters and
guidelines on March 30, 2005, and last amended them on September 26,
2008. In compliance with Government Code section 17558, the SCO
issues claiming instructions to assist local agencies and school districts in
claiming mandated program reimbursable costs.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Objective, Scope, We conducted the audit to determine whether costs claimed represent
increased costs resulting from the Integrated Waste Management
and Methodology
Program for the period of July 1, 1999, through June 30, 2009.
Our audit scope included, but was not limited to, determining whether
costs claimed were supported by appropriate source documents, were not
funded by another source, and were not unreasonable and/or excessive.
We conducted this performance audit under the authority of Government
Code sections 12410, 17558.5, and 17561. We did not audit the district’s
financial statements. We conducted the audit in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
We limited our review of the district’s internal controls to gaining an
understanding of the transaction flow and claim preparation process as
necessary to develop appropriate auditing procedures.
Conclusion Our audit disclosed instances of noncompliance with the requirements
outlined above. These instances are described in the accompanying
Summary of Program Costs (Schedule 1) and in the Findings and
Recommendations section of this report.
For the audit period, San Jose/Evergreen Community College District
claimed $3,105,838 ($3,125,838 less a $20,000 penalty for filing late
claims) for costs of the Integrated Waste Management Program. Our
audit disclosed that $48,914 is allowable and $3,056,924 is unallowable.
For the fiscal year (FY) 1999-2000 claim, the State made no payment to
the district. Our audit disclosed that $1,994 is allowable. The State will
pay that amount, contingent upon available appropriations.
For the FY 2000-01 claim, the State made no payment to the district. Our
audit disclosed that $16,643 is allowable. The State will pay that amount,
contingent upon available appropriations.
For the FY 2001-02 claim, the State paid the district $3,647. Our audit
disclosed that $3,015 is allowable. The State will offset $632 from other
mandated program payments due the district. Alternatively, the district
may remit this amount to the State.
For the FY 2002-03 claim, the State paid the district $9,546. Our audit
disclosed that $3,800 is allowable. The State will offset $5,746 from
other mandated program payments due the district. Alternatively, the
district may remit this amount to the State.
For the FY 2003-04 claim, the State made no payment to the district. Our
audit disclosed that $3,545 is allowable. The State will pay that amount,
contingent upon available appropriations.
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San Jose/Evergreen Community College District Integrated Waste Management Program
For the FY 2004-05 claim, the State made no payment to the district. Our
audit disclosed that $4,308 is allowable. The State will pay that amount,
contingent upon available appropriations.
For the FY 2005-06 claim, the State made no payment to the district. Our
audit disclosed that $5,450 is allowable. The State will pay that amount,
contingent upon available appropriations.
For the FY 2006-07 claim, the State made no payment to the district. Our
audit disclosed that $4,738 is allowable. The State will pay that amount,
contingent upon available appropriations.
For the FY 2007-08 claim, the State made no payment to the district. Our
audit disclosed that $5,407 is allowable. The State will pay that amount,
contingent upon available appropriations.
For the FY 2008-09 claim, the State made no payment to the district. Our
audit disclosed that $194 is allowable. The State will pay that amount,
contingent upon available appropriations.
Views of We issued a draft report on January 4, 2013. We contacted Peter
Fitzsimmons, Director of Fiscal Services, by e-mail on January 23, 2013.
Responsible
Mr. Fitzsimmons responded by e-mail on January 23, 2013, stating that
Official
the district will not be submitting a response to the draft report.
Restricted Use This report is solely for the information and use of San Jose/Evergreen
Community College District, the California Community Colleges
Chancellor’s Office, the California Department of Finance, and the SCO;
it is not intended to be and should not be used by anyone other than these
specified parties. This restriction is not intended to limit distribution of
this report, which is a matter of public record.
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
January 31, 2013
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1—
Summary of Program Costs
July 1, 1999, through June 30, 2009
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 1999, through June 30, 2000
Divert solid waste/maintain required level:
Direct costs:
Contract services $ 1,500 $ — $ (1,500) Finding 2
Fixed assets 32,880 — (32,880) Finding 3
Total direct costs 34,380 — (34,380)
Indirect costs 2,407 — (2,407) Findings 2, 3
Total divert solid waste/maintain required level 36,787 — (36,787)
All other activities:
Direct costs:
Salaries and benefits 1,864 1,864 —
Indirect costs 130 130 —
Total all other activities 1,994 1,994 —
Total program costs $ 38,781 1,994 $ (36,787)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 1,994
July 1, 2000, through June 30, 2001
All other activities:
Direct costs:
Salaries and benefits $ 402 $ 402 $ —
Contract services 14,950 14,950 —
Travel and training 34 34 —
Total direct costs 15,386 15,386 —
Indirect costs 1,077 1,077 —
Total all other activities 16,463 16,463 —
Total program costs $ 16,463 16,463 $ —
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 16,463
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2001, through June 30, 2002
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 219,162 $ 18,786 $ (200,376) Finding 1
Fixed assets — 210 210 Finding 3
Total direct costs 219,162 18,996 (200,166)
Indirect costs 24,600 1,889 (22,711) Findings 1, 3, 4
Total direct and indirect costs 243,762 20,885 (222,877)
Less offsetting revenues — (560) (560) Finding 5
Less offsetting savings — (87,087) (87,087) Finding 6
Subtotal 243,762 (66,762) (310,524)
Adjustment to eliminate unused portion of
offsetting savings — 66,762 66,762
Total divert solid waste/maintain required level 243,762 — (243,762)
All other activities:
Direct costs:
Salaries and benefits 2,742 2,742 —
Indirect costs 277 273 (4) Finding 4
Total all other activities 3,019 3,015 (4)
Subtotal 246,781 3,015 (243,766)
Less late filing penalty 2, 3 (10,000) — 10,000
Total program costs $ 236,781 3,015 $ (233,766)
Less amount paid by the State (3,647)
Allowable costs claimed in excess of (less than) amount paid $ (632)
July 1, 2002, through June 30, 2003
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 234,738 $ 27,015 $ (207,723) Finding 1
Materials and supplies 216 216 —
Contract services 4,745 — (4,745) Finding 2
Total direct costs 239,699 27,231 (212,468)
Indirect costs 38,112 4,368 (33,744) Findings 1, 2, 4
Total direct and indirect costs 277,811 31,599 (246,212)
Less offsetting revenues — (1,723) (1,723) Finding 5
Less offsetting savings — (116,081) (116,081) Finding 6
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2002, through June 30, 2003 (continued)
Subtotal 277,811 (86,205) (364,016)
Adjustment to eliminate unused portion of
offsetting savings — 86,205 86,205
Total divert solid waste/maintain required level 277,811 — (277,811)
All other activities:
Direct costs:
Salaries and benefits 3,275 3,275 —
Indirect costs 521 525 4 Finding 4
Total all other activities 3,796 3,800 4
Total program costs $ 281,607 3,800 $ (277,807)
Less amount paid by the State (9,546)
Allowable costs claimed in excess of (less than) amount paid $ (5,746)
July 1, 2003, through June 30, 2004
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 266,330 $ 29,782 $ (236,548) Finding 1
Materials and supplies 290 290 —
Contract services 2,648 — (2,648) Finding 2
Total direct costs 269,268 30,072 (239,196)
Indirect costs 40,482 4,610 (35,872) Findings 1, 2, 4
Total direct and indirect costs 309,750 34,682 (275,068)
Less offsetting revenues — (896) (896) Finding 5
Less offsetting savings — (113,334) (113,334) Finding 6
Total costs 309,750 (79,548) (389,298)
Adjustment to eliminate unused portion of
offsetting savings — 79,548 79,548
Total divert solid waste/maintain required level 309,750 — (309,750)
All other activities:
Direct costs:
Salaries and benefits 3,074 3,074 —
Indirect costs 467 471 4 Finding 4
Total all other activities 3,541 3,545 4
Total program costs $ 313,291 3,545 $ (309,746)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 3,545
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2004, through June 30, 2005
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 277,258 $ 30,668 $ (246,590) Finding 1
Materials and supplies — — —
Contract services 15,712 1,685 (14,027) Finding 2
Total direct costs 292,970 32,353 (260,617)
Indirect costs 42,697 11,660 (31,037) Findings 1, 2, 4
Total direct and indirect costs 335,667 44,013 (291,654)
Less offsetting revenues (1,453) (1,274) 179 Finding 5
Less offsetting savings — (182,086) (182,086) Finding 6
Subtotal 334,214 (139,347) (473,561)
Adjustment to eliminate unused portion of
offsetting savings — 139,347 139,347
Total divert solid waste/maintain required level 334,214 — (334,214)
All other activities:
Direct costs:
Salaries and benefits 3,167 3,167 —
Indirect costs 488 1,141 653 Finding 4
Total all other activities 3,655 4,308 653
Total program costs $ 337,869 4,308 $ (333,561)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 4,308
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2005, through June 30, 2006
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 291,866 $ 32,260 $ (259,606) Finding 1
Contract services 27,962 6,631 (21,331) Finding 2
Fixed assets — 221 221 Finding 3
Total direct costs 319,828 39,112 (280,716)
Indirect costs 82,288 14,773 (67,515) Findings 1, 2, 4
Total direct and indirect costs 402,116 53,885 (348,231)
Less offsetting revenues (1,459) (1,459) —
Less offsetting savings — (329,704) (329,704) Finding 6
Subtotal 400,657 (277,278) (677,935)
Adjustment to eliminate unused portion of
offsetting savings — 277,278 277,278
Total divert solid waste/maintain required level 400,657 — (400,657)
All other activities:
Direct costs:
Salaries and benefits 3,956 3,956 — Finding 1
Indirect costs 1,116 1,494 378 Findings 1, 4
Total all other activities 5,072 5,450 378
Total program costs $ 405,729 5,450 $ (400,279)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 5,450
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2006, through June 30, 2007
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 314,914 $ 34,631 $ (280,283) Finding 1
Contract services 28,113 — (28,113) Finding 2
Fixed assets — 859 859 Finding 3
Total direct costs 343,027 35,490 (307,537)
Indirect costs 90,191 13,374 (76,817) Findings 1, 2, 4
Total direct and indirect costs 433,218 48,864 (384,354)
Less offsetting revenues (2,529) (2,412) 117 Finding 5
Less offsetting savings — (515,732) (515,732) Finding 6
Subtotal 430,689 (469,280) (899,969)
Adjustment to eliminate unused portion of
offsetting savings — 469,280 469,280
Total divert solid waste/maintain required level 430,689 — (430,689)
All other activities:
Direct costs:
Salaries and benefits 3,441 3,441 —
Indirect costs 1,149 1,297 148 Finding 4
Total all other activities 4,590 4,738 148
Subtotal 435,279 4,738 (430,541)
Less late filing penalty 4 (10,000) — 10,000 Finding 7
Total program costs $ 425,279 4,738 $ (420,541)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 4,738
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2007, through June 30, 2008
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 336,279 $ 38,449 $ (297,830) Finding 1
Contract services 60,850 14,559 (46,291) Finding 2
Total direct costs 397,129 53,008 (344,121)
Indirect costs 112,284 16,752 (95,532) Findings 1, 4
Total direct and indirect costs 509,413 69,760 (439,653)
Less offsetting revenues (4,671) (5,362) (691) Finding 5
Less offsetting savings — (520,889) (520,889) Finding 6
Subtotal 504,742 (456,491) (961,233)
Adjustment to eliminate unused portion of
offsetting savings — 456,491 456,491
Total divert solid waste/maintain required level 504,742 — (504,742)
All other activities:
Direct costs:
Salaries and benefits 3,630 3,766 136 Finding 1
Indirect costs 1,212 1,641 429 Finding 4
Total all other activities 4,842 5,407 565
Total program costs $ 509,584 5,407 $ (504,177)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 5,407
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2008, through June 30, 2009
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 328,748 $ 41,624 $ (287,124) Finding 1
Contract services 108,336 9,109 (99,227) Finding 2
Total direct costs 437,084 50,733 (386,351)
Indirect costs 110,230 20,436 (89,794) Findings 1, 4
Total direct and indirect costs 547,314 71,169 (476,145)
Less offsetting revenues (7,033) (1,697) 5,336 Finding 5
Less offsetting savings — (551,342) (551,342)
Subtotal 540,281 (481,870) (1,022,151)
Adjustment to eliminate unused portion of
offsetting savings — 481,870 481,870
Total divert solid waste/maintain required level 540,281 — (540,281)
All other activities:
Direct costs:
Salaries and benefits 130 130 —
Indirect costs 43 64 21 Finding 4
Total all other activities 173 194 21
Total program costs $ 540,454 194 $ (540,260)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 194
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San Jose/Evergreen Community College District Integrated Waste Management Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
Summary: July 1, 1999, through June 30, 2009
Divert solid waste/maintain required level:
Direct costs:
Salaries and benefits $ 2,269,295 $ 253,215 $ (2,016,080)
Materials and supplies 506 506 —
Contract services 249,866 31,984 (217,882)
Fixed assets 32,880 1,290 (31,590)
Total direct costs 2,552,547 286,995 (2,265,552)
Indirect costs 543,291 87,862 (455,429)
Total direct and indirect costs 3,095,838 374,857 (2,720,981)
Less offsetting revenues (17,145) (15,383) 1,762
Less offsetting savings — (2,416,255) (2,416,255)
Subtotal 3,078,693 (2,056,781) (5,135,474)
Adjustment to eliminate unused portion of
offsetting savings — 2,056,781 2,056,781
Total divert solid waste/maintain required level 3,078,693 — (3,078,693)
All other activities:
Direct costs:
Salaries and benefits 25,681 25,817 136
Contract services 14,950 14,950 —
Travel and training 34 34 —
Total direct costs 40,665 40,801 136
Indirect costs 6,480 8,113 1,633
Total all other activities 47,145 48,914 1,769
Subtotal 3,125,838 48,914 (3,076,924)
Less late filing penalty (20,000) — 20,000
Total program costs $ 3,105,838 48,914 $ (3,056,924)
Less amount paid by the State (13,193)
Allowable costs claimed in excess of (less than) amount paid $ 35,721
_________________________
1 See the Findings and Recommendations section.
2 The district deducted a 10% penalty for filing a late claim pursuant to Government Code section 17561,
subdivision (d)(3).
3 The district filed its fiscal year (FY) 2001-02 initial reimbursement claim on October 26, 2006, for $3,647 before
the filing deadline of March 31, 2009, and amended it on April 26, 2009, for $239,781 ($246,781 in costs less a
$10,000 late filing penalty) before the deadline to file a late claim. There is no late filing penalty, as the claim
filed before the initial filing deadline exceeded allowable costs of $3,015.
4 The district filed its FY 2006-07 annual reimbursement claim on December 24, 2008, for $425,279 ($435,279 less
a $10,000 late filing penalty) before the filing deadline of March 31, 2009. When receipting the filed claim, the
SCO’s Division of Accounting and Reporting did not reduce claimed costs by the late penalty because the claim
was filed on time.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Findings and Recommendations
FINDING 1— The district claimed $2,294,976 in salaries and benefits during the audit
period. We determined that $279,032 is allowable and $2,015,944 is
Overstated salaries
unallowable. The costs are unallowable because the district claimed:
and benefits and
related indirect costs
Costs based on estimates of time to perform reimbursable activities;
Costs for activities that are not reimbursable under the mandated
program;
Allowable costs that were not allocated based on the difference
between the district’s actual solid waste diversion percentage during
fiscal year (FY) 2007-08 (the time study year) and the actual
diversion percentage for fiscal years prior to FY 2007-08;
Duplicate costs for the Facilities Planner; and
Understated productive hourly rates in its FY 2003-04 claim.
The related unallowable indirect costs, based on the indirect cost rates
claimed, totaled $469,798.
The following table summarizes the claimed, allowable, and audit
adjustment amounts for the audit period by fiscal year:
Amount Amount Audit
Fiscal Year Claimed Allowable Adjustment
1999-2000 $ 1,864 $ 1,864 $ -
2000-01 402 402 -
2001-02 221,904 21,528 ( 200,376)
2002-03 238,013 30,290 ( 207,723)
2003-04 269,404 32,856 ( 236,548)
2004-05 280,425 33,835 ( 246,590)
2005-06 295,822 36,216 ( 259,606)
2006-07 318,355 38,072 ( 280,283)
2007-08 339,909 42,215 ( 297,694)
2008-09 328,878 41,754 ( 287,124)
Total salaries and benefits 2,294,976 279,032 ( 2,015,944)
Related indirect costs 538,135 68,337 ( 469,798)
Grand total $ 2,833,111 $ 347,369 $ ( 2,485,742)
Time Study Hours
For FY 2001-02 through FY 2007-08, the district claimed salaries and
benefits totaling $1,937,473 for certain employee classifications based on
a time study that it conducted during FY 2007-08. We determined that
$211,591 is allowable and $1,725,882 is unallowable. The costs are
unallowable because the costs claimed for time spent by Groundskeepers
on reimbursable activities was based entirely on estimates. In addition,
all of the costs claimed for time spent by Facility Maintenance Workers,
the Purchasing Agent, and the Purchasing Clerk were spent on
unallowable activities.
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San Jose/Evergreen Community College District Integrated Waste Management Program
The district also did not adjust the number of hours spent on mandated
activities in years prior to FY 2007-08 based on the level of effort
expended to divert solid waste. During the year of the time study, hours
recorded for time spent on mandated activities were based on diversion
percentages of 74.29% for San Jose City College (SJC) and 75.9% for
Evergreen Valley College (EVC) and District Office (DO). In order to
properly apply the time study results to prior years, the level of effort
must be adjusted based on the applicable diversion percentage for each
year. To do this, we allocated allowable costs based on an allocation of
the actual diversion percentage for each year for each college divided by
the diversion percentages for FY 2007-08.
The following table summarizes the claimed, allowable, and audit
adjustment amounts for the audit period by employee classification:
Amount Amount Audit
Classification Claimed Allowable Adjustment
Warehouse Coordinator $ 6 4,769 $ 8 ,987 $ (55,782)
EVC Custodian I 81,023 5 0,958 (30,065)
SJC Custodian I and II 2 08,580 143,230 (65,350)
EVC Groundskeeper II 7 77,183 - (777,183)
SJC Groundskeeper II 6 10,852 - (610,852)
Facility Maintenance Worker 1 61,567 - (161,567)
Purchasing Agent 488 - (488)
Warehouse Distributor 32,144 8,416 (23,728)
Purchasing Clerk 867 - (867)
$ 1,937,473 $ 211,591 $ (1,725,882)
Time Study Methodology
The district performed a 12-month time study from June 1, 2007, through
July 31, 2008. The time study consisted of tracking time spent by 13
EVC Custodian Is, 10 SJC Custodian Is, three SJC Custodian IIs, three
EVC Groundskeeper IIs, four SJC Groundskeeper IIs, four Facility
Maintenance Workers, one Warehouse Coordinator, one Warehouse
Distributor, and one Purchasing Clerk performing activities related to the
Diverting Solid Waste/Maintaining the Required Level cost component.
Estimated Costs
The district claimed salaries and benefits totaling $1,388,035 for time
spent by Groundskeepers on activities for FY 2001-02 through FY
2007-08 ($777,183 for district staff at EVC and $610,852 for district
staff at SJC). We determined that the entire amount is unallowable. The
costs are unallowable because the district claimed costs that were based
entirely on estimates.
The costs claimed were for time spent by Groundskeepers performing
activities related to mulching trees and grass and preparing shrubs and
small bushes for recycling pickup. The time sheets submitted showed
one line item reporting 10 to 20 hours weekly for mulching trees and
grass. It also showed one line item reporting three to seven hours weekly
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San Jose/Evergreen Community College District Integrated Waste Management Program
for preparing shrubs and small bushes for recycling pickup. During
fieldwork, we met with EVC and SJC Groundskeepers and discussed the
time they spent on mandated activities and the activity logs they
completed during the course of the district’s time study. The
Groundskeepers stated that the activity logs are estimated because of the
nature of their jobs, which include both reimbursable and non-
reimbursable activities such as:
Mowing and caring for the college’s fields and surrounding shrubs,
plants, and trees;
Spraying the plants and grass for weeds;
Mowing, edging, and blowing the fields;
Power-sweeping the leaves and trash on campus grounds; and
Fixing and repairing any irrigation issues that may arise on the
grounds.
The Groundskeepers explained that they perform mulching once a week
and this activity sometimes requires more than eight hours of work.
However, the level of activities performed varies according to the season
and any recreational events that may be scheduled throughout the fiscal
year. For example, during winter months, Groundskeepers perform little
or no mulching activities. Therefore, the groundskeepers did not report
actual hours performed. Instead, the hours reported on the time sheets
were based on estimates of time spent performing mandated activities.
Accordingly, the costs claimed are unallowable.
We determined that there is no reasonable way to determine the level of
effort actually spent by Groundskeepers on reimbursable activities based
on the information provided. In the absence of actual cost information,
the entire amount claimed for these activities is unallowable. The district
will need to track the actual time required to perform the activities for an
entire year in order to make a reasonable determination of the time
required to perform these reimbursable activities. The district must also
identify who performed the activities and the number of activities
performed. If a correlation can be made that the level of effort required
during that year would be consistent with any other year, we may be able
to apply the results to the audit period and revise the audit report as
appropriate.
Unallowable Activities
The district claimed salaries and benefits totaling $259,835 ($161,567 for
time spent by Facility Maintenance Workers, $64,769 for time spent by
the Warehouse Coordinator, $32,144 for time spent by the Warehouse
Distributor, $867 for time spent by the Purchasing Clerk, and $488 for
time spent by the Purchasing Agent) on reimbursable activities for FY
2001-02 through FY 2007-08. We determined that $17,403 is allowable
and $242,432 is unallowable. The costs are unallowable because the
district claimed costs for activities involving hazardous waste, which are
unallowable activities, and did not allocate allowable costs based on the
difference between the district’s actual solid waste diversion percentage
during FY 2007-08 (the time study year) and the actual diversion
percentage for fiscal years prior to FY 2007-08.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Facility Maintenance Workers:
The district claimed salaries and benefits totaling $161,567 for time
spent discarding fluorescent lamps, electronic ballasts, and acid
batteries. These materials have been determined to contain hazardous
waste (such as mercury, silver, lead, and chromium). Reimbursement
for the mandated program is limited to activities involving diverting
solid waste materials from landfills. Public Resources Code section
42921(b) states that “…each large facility shall divert 50% of all solid
waste [emphasis added] through source reduction, recycling, and
composting activities.” In addition, Public Resources Code section
40191 (b) (1) states that “Solid waste does not include hazardous
waste.” Therefore, these activities are not reimbursable under the
mandated program and the entire amount claimed for activities
involving hazardous waste is unallowable.
Purchasing Clerk and Purchasing Agent
The district claimed salaries and benefits totaling $1,355 ($867 for
time spent by the Purchasing Clerk and $488 for time spent by the
Purchasing Agent) for “making out receipts and receiving money.”
This activity was related to yard sales conducted by the district to sell
surplus equipment and furniture. We discussed the yard sales with
district representatives who stated that the yard sales were conducted
for the sale of surplus district property such as furniture, computers,
computer monitors, equipment, tools, etc. We noted that items such as
computers and monitors are designated as e-waste, which consists of
hazardous materials. As noted above, hazardous waste is not included
in the definition of solid waste, and any associated diversion activities
for this material are not reimbursable under the mandated program.
District representatives advised us that they were not able to
distinguish what portion of the yard sales were related to e-waste
versus other property that would not be classified as hazardous.
Therefore, the entire amount claimed is unallowable.
Warehouse Coordinator
The district claimed salaries and benefits totaling $64,769 for the
Warehouse Coordinator based on 262 hours identified within the
district’s time study for this employee classification. We reviewed the
activities included in the time study and determined that 58 hours
were spent on mandated activities and 204 hours were spent on
unallowable activities (such as activities related to hazardous waste
and district yard sales of surplus equipment and furniture). We also
allocated allowable costs based on the difference between the
percentage of solid waste diverted during the year of the time study
versus the diversion percentages in prior years. Therefore, $8,987 of
the amount claimed is allowable and $55,782 is unallowable.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Warehouse Distributor
The district claimed salaries and benefits totaling $32,144 for the
Warehouse Distributor based on 134 hours identified within the
district’s time study for this employee classification. We reviewed the
activities included in the time study and determined that 56 hours
were spent on mandated activities and 78 hours were spent on
unallowable activities (such as activities related to hazardous waste
and district yard sales of surplus equipment and furniture). We also
allocated allowable costs based on the difference between the
percentage of solid waste diverted during the year of the time study
versus the diversion percentages in prior years. Therefore, $8,416 of
the amount claimed is allowable and $23,728 is unallowable.
Custodians
The district claimed salaries and benefits totaling $289,603 ($81,023
for EVC/DO Custodians and $208,580 for SJC Custodians) based on
1,353.39 hours identified within the district’s time study. We
reviewed the activities included in the time study and determined that
all of the hours reported were spent on mandated activities. We
allocated allowable costs based on the difference between the
percentage of solid waste diverted during the year of the time study
versus the diversion percentages in prior years. Therefore, $194,188
of the amount claimed is allowable and $95,415 is unallowable.
The following table summarizes the allowable pre-allocated amounts for
each classification by fiscal year:
Allowable Pre-Allocated Salaries and Benefits
Warehouse Warehouse EVC and DO SJC
Fiscal Year Coordinator Distributor Custodians Custodians Total
2001-02 $ 1,724 $ 1 ,651 $ 8,867 $ 24,455 $ 36,697
2002-03 1,839 1,669 9,867 26,215 39,590
2003-04 2,054 1,869 11,080 28,668 43,671
2004-05 2,096 1,914 11,577 29,393 44,980
2005-06 2,192 1,995 12,315 30,824 47,326
2006-07 2,158 2,099 13,166 33,355 50,778
2007-08 2,362 2,321 14,691 37,003 56,377
Total $ 14,425 $ 13,518 $ 8 1,563 $ 209,913 $ 3 19,419
Allocated Time Study Hours
For FY 2001-02 through FY 2007-08, the allowable pre-allocated
salaries and benefits total $319,419, as noted in the table above. After
allocating these costs based on the difference between the diversion
percentage during the time study year versus the diversion percentages in
prior years, we determined that $211,591 is allowable and $107,828 is
unallowable. The allowable cost is noted below.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Allocation Percentages
The time study that the district performed during FY 2007-08 tracked
the amount of time required to achieve solid waste diversion
percentages of 77.86% at EVC and DO, and 71.14% at SJC. In order
to apply the time study results to prior fiscal years, we allocated the
time study results to be consistent with the requirements of the
mandated program. Accordingly, we adjusted the level of effort
performed in each calendar year and applied an allocation diversion
percentage to allowable salaries and benefits.
The following table is an example of our calculations of the adjustment
factors for FY 2005-06:
FY 2007-08
Maximum Time-Studied Allocation
Allowable % Diversion % Diversion %
FY 2005-06 ( A ) ( B ) ( A ÷ B )
EVC and DO
07/01/05-12/31/05 50.00% 77.86% 64.22%
01/01/06-06/30/06 50.00% 77.86% 64.22%
SJC
07/01/05-12/31/05 50.00% 71.14% 70.28%
01/01/06-06/30/06 50.00% 71.14% 70.28%
The following table is an example of our calculations of the allowable
allocated salaries and benefits for FY 2005-06:
Allowable Pre-Allocated Allocation Allowable Allocated
Salaries and Benefits Diversion % Salaries and Benefits
FY 2005-06 ( A ) ( B ) ( A x B )
Warehouse Coordinator $ 2,192 64.22% $ 1,408
Warehouse Distributor 1,995 64.22% 1,281
EVC/DO Custodians 12,315 64.22% 7,909
SJC Custodians 30,824 70.28% 21,662
Total $ 47,326 $ 3 2,260
The following table summarizes the allowable salaries and benefits
allocated for each employee classification by fiscal year:
Allowable Allocated Salaries and Benefits
Warehouse Warehouse EVC and DO SJC
Fiscal Year Coordinator Distributor Custodians Custodians Total
2001-02 $ 8 30 $ 7 95 $ 4,271 $ 12,890 $ 18,786
2002-03 1 ,181 1 ,072 6,338 1 8,424 27,015
2003-04 1 ,319 1 ,200 7,116 2 0,147 29,782
2004-05 1 ,346 1 ,229 7,434 2 0,659 30,668
2005-06 1 ,408 1 ,281 7,909 2 1,662 32,260
2006-07 1 ,386 1 ,348 8,455 2 3,442 34,631
2007-08 1 ,517 1 ,491 9,435 2 6,006 38,449
Total $ 8,987 $ 8,416 $ 5 0,958 $ 143,230 $ 2 11,591
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San Jose/Evergreen Community College District Integrated Waste Management Program
FY 2008-09 Hours
The district claimed salaries and benefits totaling $328,748 for FY
2008-09 (excluding the Facilities Planner time, which is noted below).
We determined that $41,624 is allowable and $287,124 is unallowable.
The costs are unallowable because the district claimed costs that were
not supported and claimed costs for unallowable activities similar to
what was described for FY 2001-02 through FY 2007-08.
Duplicated Costs – Facilities Planner
The district claimed salaries and benefits totaling $28,755 for the
Facilities Planner during the audit period. We determined that $25,817 is
allowable and costs were misstated by $2,938 (overstated by $3,074 and
understated by $136). The costs are unallowable because the district
claimed costs totaling $3,074 twice for the Facilities Planner in its claim
for FY 2003-04. Costs totaling $3,074 were claimed correctly for
preparing the annual recycling report, although the same costs were
claimed again for Diverting Solid Waste and Maintaining Required
Level activities. For FY 2007-08, allowable costs were understated by
$136 because the district understated productive hourly rates used in its
claims.
Understated Productive Hourly Rates
For FY 2007-08, allowable costs were understated by $2,030 ($54,347-
$56,377) for salaries and benefits related to non-diversion activities
because the district understated productive hourly rates used in its
claims. We recalculated employee productive hourly rates using each
employee’s annual salary divided by 1,800 annual productive hours. We
determined that the district understated productive hourly rates by
3.74%.
The parameters and guidelines (section IV, Reimbursable Activities)
state:
…to be eligible for mandated cost reimbursement for any fiscal year,
only actual costs may be claimed. Actual costs are those costs actually
incurred to implement the mandated activities. Actual costs must be
traceable and supported by source documents that shows the validity of
such costs, when they were incurred, and their relationship to the
reimbursable activities. A source document is a document created at or
near the same time the actual cost was incurred for the event or activity
in question. Source documents may include, but are not limited to,
employee time records or time logs, sign-in sheets, invoices, receipts,
and the community college plan approved by the Board.
Evidence corroborating the source documents may include, but is not
limited to, worksheets, cost allocations reports (system generated),
purchase orders, contracts, agendas, training packets, and declarations.
Declarations must include a certification or declaration stating, "I
certify (or declare) under penalty of perjury under the laws of the State
of California that the foregoing is true and correct," and must further
comply with the requirements of Code of Civil Procedure section
2015.5. Evidence corroborating the source documents may include data
relevant to the reimbursable activities otherwise in compliance with
local, state, and federal government requirements. However,
corroborating documents cannot be substituted for source documents.
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San Jose/Evergreen Community College District Integrated Waste Management Program
The parameters and guidelines (section V.A.1) – Claim Preparation and
Submission – Direct Cost Reporting – Salaries and Benefits) require
claimants to:
Report each employee implementing the reimbursable activities by
name, job classification, and productive hourly rates (total wages
divided by productive hours). Describe the specific reimbursable
activities performed and the hours devoted to each reimbursable
activity performed.
The parameters and guidelines (section IV.E – Reimbursable Activities,
Annual Report) state that districts should:
Annually prepare and submit, by April 1, 2002, and by April 1 each
subsequent fiscal year, a report to the Board summarizing its progress
in reducing solid waste.” The parameters and guidelines go on to
explain the information that should be reported by districts, at a
minimum.
Recommendation
We recommend that the district ensure that claimed costs include only
eligible costs, are based on actual costs, and are supported by source
documentation. We also recommend that the district identify the
mandated functions performed and support the actual number of hours
devoted to each function.
District’s Response
The district did not respond to the audit finding.
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San Jose/Evergreen Community College District Integrated Waste Management Program
FINDING 2— The district claimed $264,816 in contract services for the audit period.
Overstated contract We determined that $46,934 is allowable and $217,882 is unallowable.
The costs are unallowable because the district claimed reimbursement for
services costs
costs related to solid waste disposal (instead of diversion) and recycling
of hazardous wastes. These costs are not reimbursable under the
mandated program. The related unallowable indirect costs totaled
$6,121.
The following table summarizes the claimed, allowable, and audit
adjustment amounts for the audit period by fiscal year:
Amount Amount Audit
Fiscal Year Claimed Allowable Adjustment
1999-2000 $ 1,500 $ - $ ( 1,500)
2000-01 14,950 14,950 -
2001-02 - - -
2002-03 4,745 - ( 4,745)
2003-04 2,648 - ( 2,648)
2004-05 15,712 1,685 ( 14,027)
2005-06 27,962 6,631 ( 21,331)
2006-07 28,113 - ( 28,113)
2007-08 60,850 14,559 ( 46,291)
2008-09 108,336 9,109 ( 99,227)
Total salaries and benefits 264,816 46,934 ( 217,882)
Related indirect costs 9,298 3,177 ( 6,121)
Grand total $ 274,114 $ 50,111 $ ( 224,003)
Review of Costs Claimed by Vendor
The following presents the results of our review of contract services
costs claimed by individual vendor.
Environmental Planning Consultants
The district claimed $14,950 in contract services for Environmental
Planning Consultants to prepare the Integrated Waste Management Plan
for FY 2000-01. We determined that the entire amount is allowable.
Stevens Creek Disposal and Recycling
The district claimed $127,865 in contract services for Stevens Creek
Disposal and Recycling for the audit period. We determined that $31,984
is allowable and $95,881 is unallowable. The costs are unallowable
because the district claimed reimbursement for services related to
hauling fees, weight charges, and franchise fees for various solid waste
containers. We determined that these containers are used strictly for trash
disposal instead of solid waste diversion activities. Therefore, the related
costs are unallowable.
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San Jose/Evergreen Community College District Integrated Waste Management Program
All Chemical Disposal Inc., ECS Refining, Stericycle, and Evergreen Oil
Inc.
The district claimed $85,594 in contract services for the vendors All
Chemical Disposal Inc., ECS Refining, Stericycle, and Evergreen Oil
Inc. during the audit period. We determined that the entire amount
claimed is unallowable. The district claimed costs for the pickup of
hazardous materials, pickup and disposal of infectious medical wastes
and sharp objects, and the pickup and recycle of used oil and anti-freeze.
Hazardous waste material including electronic waste, batteries, used
oil/antifreeze, paint, fluorescent lights, universal waste, and medical
waste cannot be disposed of as ordinary trash and are not included as
reimbursable solid waste diversion activities. Public Resource Code
section 40191, subsection (b), states that “Solid waste” does not include
hazardous waste, as defined in Section 40141.
American Trash Management
The district claimed $18,359 for the vendor American Trash
Management. We determined that the entire amount claimed is
unallowable. The costs claimed are for installation and trash management
services setup (a one-time fee), compactor setup, preventative
maintenance (a one-time fee), and for servicing and monitoring the level
of trash in the compactor. After a discussion with the Facilities
Supervisor, we determined that the compactor is used exclusively for
trash. As no solid waste diversion activities are involved, all costs
claimed for the services related to the compactor are unallowable.
CINTAS (formerly known as Certified Document Destruction)
The district claimed $18,048 in contract services for the vendor
CINTAS. We determined that the entire amount claimed is unallowable.
The district claimed costs for the pickup, purging, and shredding of
documents. These costs are not reimbursable under the mandated
program. While costs associated with shredding paper are not
reimbursable, we will revise the audit results as appropriate if the district
can separate the cost of diverting solid waste from the cost of shredding.
The parameters and guidelines (section V.A.3 – Claimed Preparation and
Submissions – Direct Costs Reporting – Contract Services) requires
claimants to:
Report the name of the contractor and services performed to implement
the reimbursable activities. Attach a copy of the contract to the claim. If
the contractor bills for time and materials, report the number of hours
spent on the activities and all costs charged. If the contract is a fixed
price, report the dates when services were performed and itemize all
costs for those services.
Public Resources Code section 42921, subdivision (b), states that
“…each large facility shall divert 50% of all solid waste [emphasis
added] through source reduction, recycling, and composting activities.”
In addition, Public Resources Code section 40191, subdivision (b) (1),
states that “Solid waste does not include hazardous waste.”
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San Jose/Evergreen Community College District Integrated Waste Management Program
Recommendation
We recommend that the district ensure that claimed costs include only
eligible costs, are based on actual costs, and are supported by source
documentation. We also recommend that the district identify the
mandated functions performed and support the actual costs devoted to
each function.
District’s Response
The district did not respond to the audit finding.
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San Jose/Evergreen Community College District Integrated Waste Management Program
FINDING 3— The district claimed $32,880 in fixed assets for the audit period. We
Overstated fixed asset determined that $1,290 is allowable and $31,590 is unallowable. The
costs are unallowable because the district claimed costs related to
costs
equipment that is used exclusively for trash disposal instead of solid
waste diversion activities. The related unallowable indirect costs totaled
$1,993.
The following table summarizes the claimed, allowable and audit
adjustment by fiscal year:
Amount Amount Audit
Fiscal Year Claimed Allowable Adjustment
1999-2000 $ 32,880 $ - $ ( 32,880)
2001-02 - 210 210
2005-06 - 221 221
2006-07 - 859 859
Total 3 2,880 1,290 (31,590)
Indirect costs 2,302 309 (1,993)
Total $ 35,182 $ 1 ,599 $ ( 33,583)
During audit fieldwork, we identified allowable costs totaling $1,290 for
the purchase of mulching kits that were not included in the district’s
claims.
The parameters and guidelines (section VI – Supporting Data) state that:
for audit purposes, all costs shall be traceable to source documents
(e.g., employee time records, invoices, receipts, purchase orders,
contracts, worksheets, calendars’, and declarations) that show evidence
of the validity of such costs and their relationship to the state mandated
program.
The parameters and guidelines (section V.A – Claim Preparation and
Submission – Supporting Documentation – Direct Costs) state that
“…direct costs are defined as costs that can be traced to specific goods,
services, units, programs, activities, or functions.”
Public Resources Code section 42921, subdivision (b), states that
“…each large facility shall divert 50% of all solid waste (emphasis
added) through source reduction, recycling, and composting activities.”
In addition, Public Resources Code section 40191, subdivision (b) (1),
states that “Solid waste does not include hazardous waste.”
Recommendation
We recommend that the district ensure that claimed costs include only
eligible costs, are based on actual costs, and are supported by source
documentation.
District’s Response
The district did not respond to the audit finding.
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San Jose/Evergreen Community College District Integrated Waste Management Program
FINDING 4— The district claimed $549,771 in indirect costs for the entire audit period.
Overstated indirect We determined that $95,975 is allowable and $453,796 is unallowable.
costs
The following table summarizes the claimed costs, allowable costs, and
audit adjustment amounts for indirect costs by fiscal year:
Amount Amount Audit
Fiscal Year Claimed Allowable Adjustment
1999-2000 $ 2,537 $ 130 $ (2,407)
2000-01 1,077 1,077 -
2001-02 24,877 2,162 (22,715)
2002-03 38,633 4,893 (33,740)
2003-04 40,949 5,081 (35,868)
2004-05 43,185 12,801 (30,384)
2005-06 83,404 16,267 (67,137)
2006-07 91,340 14,671 (76,669)
2007-08 113,496 18,393 (95,103)
2008-09 110,273 20,500 (89,773)
Total $ 549,771 $ 95,975 $ (453,796)
Unallowable indirect costs totaling $477,912 were overstated because of
the unallowable costs identified in Findings 1 through 3. Indirect costs
were also overstated by $2,418 (overstated by $2,465 in FY 2001-02 and
understated by $47 in FY 2005-06) due to calculation errors the district
made on its claims. We also noted that indirect costs were understated by
$26,534 during the audit period due to misstated indirect cost rates.
For FY 2001-02, the district incorrectly included the amount in the
Human Resources Management expense account as an indirect cost
rather than a direct cost when calculating the SCO FAM-29C indirect
cost rate. We recalculated the rate consistent with the FAM-29C
instructions. Our calculations revealed that the district overstated its
indirect cost rate by 0.16%, as shown in the table below.
For FY 2002-03 through FY 2004-05, the district misclassified costs
between indirect costs and direct costs when calculating the SCO
FAM-29C indirect cost rate. For FY 2004-05, the district also excluded
depreciation applicable to the district’s buildings and equipment. We
used allowable indirect cost rates based on our prior audit of the district’s
Collective Bargaining Program claims for the period of July 1, 2002,
through June 30, 2005. We recalculated the rate consistent with the
FAM-29C instructions using depreciation amounts from the district’s
Basic Financial Statements’ Notes. The revised audit report was issued
on November 16, 2011, and identifies that the claimed rates for these
three years were understated. The claimed and allowable rates are noted
in the table below.
For FY 2005-06 through FY 2008-09, the district excluded depreciation
applicable to the district’s buildings and equipment when calculating the
SCO FAM-29C indirect cost rate. We also noted that the district’s claim
for FY 2006-07 used two different indirect cost rates, one rate of 28.64%
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San Jose/Evergreen Community College District Integrated Waste Management Program
for solid waste diversion activities and one rate of 33.39% for preparing
the annual report to the California Integrated Waste Management Board.
We recalculated the rate consistent with the FAM-29C instructions using
depreciation amounts from the district’s Basic Financial Statements’
Notes. As a result, the indirect cost rate increased in each of the four
years.
The following table summarizes the claimed and allowable indirect cost
rates and the rate variances by fiscal year:
Rate Rate Rate
Fiscal Year Claimed Allowable Variance
1999-2000 7.00% 7.00% -
2000-01 7.00% 7.00% -
2001-02 10.10% 9.94% -0.16%
2002-03 15.90% 16.04% 0.14%
2003-04 15.20% 15.33% 0.13%
2004-05 15.40% 36.04% 20.64%
2005-06 28.21% 37.77% 9.56%
2006-07 28.64% * 37.68% 9.04%
33.39% * 37.68% 4.29%
2007-08 33.39% 43.57% 10.18%
2008-09 33.53% 49.10% 15.57%
* For FY 2006-07, the district claimed indirect costs rates of 28.64% for solid waste diversion activities
and 33.39% for preparing the report to the California Integrated Waste Management Board
The parameters and guidelines state:
Community colleges have the option of using: (1) a federally approved
rate, utilizing the cost accounting principles from the Office of
Management and Budget Circular A-21, “Cost Principles of
Educational Institutions”; (2) the rate calculated on State Controller’s
Form FAM- 29C; or (3) a 7% indirect cost rate.
The SCO’s FY 2004-05 Mandated Cost Manual for Community Colleges
was revised in December 2005. Part of the revision included changes to
the SCO’s FAM-29C methodology. The revised computation excludes
Capital Outlay and Other Outgo in accordance with the federal Office of
Management and Budget (OMB) Circular A-21 methodology. The
revised indirect cost rate computation includes any depreciation or use
allowance applicable to district buildings and equipment. The FAM-29C
methodology provides for the following costs to be classified as indirect
costs: Operation and Maintenance of Plant; Planning, Policy Making,
and Coordination; General Institutional Support Services (excluding
Community Relations); and depreciation or use allowance. Community
Relations includes fundraising costs, which are unallowable under OMB
Circular A-21.
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San Jose/Evergreen Community College District Integrated Waste Management Program
Recommendation
We recommend that the district ensure that the indirect cost rate
calculations used are consistent with the methodology outlined in the
SCO’s Mandated Cost Manual for Community Colleges for the
preparation of Form FAM-29C.
District’s Response
The district did not respond to the audit finding.
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San Jose/Evergreen Community College District Integrated Waste Management Program
FINDING 5— The district identified $17,145 in offsetting revenues for the audit period.
Overstated offsetting We determined that the district overstated offsetting revenues by $1,762
and should have reported offsets totaling $15,383 for the audit period.
revenues
The following table summarizes the amount claimed, amount allowable,
and audit adjustment by fiscal year:
Amount Amount Audit
Fiscal Year Claimed Allowable Adjustment
2001-02 $ - $ (560) $ (560)
2002-03 - (1,723) (1,723)
2003-04 - ( 896) ( 896)
2004-05 (1,453) (1,274) 179
2005-06 (1,459) (1,459) -
2006-07 (2,529) (2,412) 117
2007-08 (4,671) (5,362) ( 691)
2008-09 (7,033) (1,697) 5,336
Total $ ( 17,145) $ ( 15,383) $ 1 ,762
We determined that certain revenues recorded in accounts 10-96-999-
00000-48912 (Sale of Waste Materials) and 10-96-6772-00000-54300
(Supplies, Non-Instructional) should have been offset on the district’s
mandated cost claims. We identified revenues that the district received
from the sale of recyclable materials resulting from solid waste diversion
activities performed by Custodians and the Warehouse Coordinator. If
the district can document that certain revenues in these accounts are not
from the sale of recyclables as a result of implementing the district’s
Integrated Waste Management Plan, we will revise the audit adjustment
as appropriate.
The parameters and guidelines (section VII – Offsetting Revenues and
Reimbursements) state that “Offsetting revenues shall include all
revenues generate from implementing the Integrated Waste Management
Plan.”
Recommendation
We recommend that the district offset all revenue received on its
mandated claims for this program from implementation of its Integrated
Waste Management plan.
District’s Response
The district did not respond to the audit finding.
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San Jose/Evergreen Community College District Integrated Waste Management Program
FINDING 6— The district did not identify any offsetting savings in its mandated costs
Understated offsetting claims for the audit period from implementation of its Integrated Waste
Management Plan. We determined that offsetting savings were
savings
understated by $2,416,255.
We limited the application of offsetting savings to allowable costs for the
activities of diverting solid waste. If the facility diverts more than 25%
on or after January 1, 2000, and 50% on or after January 1, 2004, the
community college district should limit its offsetting savings to the
maximum diversion percentage. However, if the facility fell short in
reaching the maximum diversion percentage the community college
district should apply the entire amount of offsetting savings.
As a result, allowable offsetting savings totaled $359,474 and offsetting
savings realized exceeded allowable costs by $2,056,781 ($2,416,255
less $359,474). Any excess offsetting savings applicable to FY 2001-02
through FY 2008-09, as identified in the following table, will be applied
to any additional allowable costs identified for that year:
Allowable Offsetting Realized Unused
Diversion Savings Offsetting Audit Portion of
Fiscal Year Costs * Claimed Savings Adjustment Savings
2001-02 $ 20,325 - $ (87,087) $ (66,762) $ (66,762)
2002-03 2 9,876 - (116,081) (86,205) (86,205)
2003-04 3 3,786 - (113,334) (79,548) (79,548)
2004-05 4 2,739 - (182,086) (139,347) (139,347)
2005-06 5 2,426 - (329,704) (277,278) (277,278)
2006-07 4 6,452 - (515,732) (469,280) (469,280)
2007-08 6 4,398 - (520,889) (456,491) (456,491)
2008-09 6 9,472 - (551,342) (481,870) (481,870)
Total $ 359,474 $ - $ (2,416,255) $ (2,056,781) $ (2,056,781)
* Total allowable diversion costs less offsetting revenues
Offsetting Savings Calculation
To compute the savings amount, we multiplied allowable diversion
percentage, times tonnage diverted times the average hauling and landfill
rates per ton. Essentially, the calculation is determining the expenditure
amounts that the district did not incur with its solid waste disposal
vendor through implementation of its Integrated Waste Management
Plan.
The following table summarizes our calculation of offsetting savings
realized for FY 2005-06:
Allowable Avoided Realized
Diversion Tonnage Hauling and Landfill Offsetting
Percentage (%) Diverted Disposal Fee Savings
FY 2005-06 ( A ) ( B ) ( C ) ( A ) x ( B ) x ( C )
EVC/DO 65.88% 813.00 $ 2 10 $ 112,476
SJC 67.30% 1,537.03 $ 2 10 $ 217,228
Total $ 329,704
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San Jose/Evergreen Community College District Integrated Waste Management Program
Tonnage Diverted
For calendar years 2002 through 2007, we used tonnage of solid waste
diversion amounts that the district provided.
Avoided Landfill Disposal and Hauling Fees
For FY 2001-02 to FY 2003-04, we calculated the average landfill
disposal and hauling fees from the invoices that the district provided
from its solid waste disposal vendor, Stevens Creek Disposal.
For FY 2004-05 to FY 2007-08, the district provided the landfill
disposal and hauling fee rates per ton.
The parameters and guidelines for the program (section VIII – Offsetting
Cost Savings) state:
…reduced or avoided costs realized from implementation of the
community college districts’ Integrated Waste Management plans shall
be identified and offset from this claim as cost savings, consistent with
the directions for revenue in Public Contract Code sections 12167 and
12167.1.
Public Contract Code sections 12167 and 12167.1 require agencies in
state-owned and state-leased buildings to deposit all revenues from the
sale of recyclables into the Integrated Waste Management Account in the
Integrated Waste Management Fund; the revenues are continuously
appropriated to the Board for the purposes of offsetting recycling
program costs. For the audit period, the district did not deposit any
revenue into the Integrated Waste Management Account in the Integrated
Waste Management Fund. Regardless, we have determined that the
district had reduced or avoided costs realized from implementation of its
Integrated Waste Management plan that it did not identify and offset
from its claims as cost savings.
The Commission on State Mandates’ (CSM) Final Staff Analysis of the
proposed amendments to the parameters and guidelines (Item #8–CSM
hearing of September 26, 2008) state:
…cost savings may be calculated from the annual solid waste disposal
reduction or diversion rates that community colleges must annually
report to the Board pursuant to Public Resources Code section 42926,
subdivision (b) (1).
Recommendation
We recommend that the district offset all savings realized from
implementation of the community college district’s Integrated Waste
Management plan.
District’s Response
The district did not respond to the audit finding.
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State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250-5874
http://www.sco.ca.gov
S11-MCC-019