Plumas Unified School District

J C OHN HIANG California State Controller December 9, 2013 Micheline G. Miglis, Superintendent Plumas Unified School District 50 Church Street Quincy, CA 95971 Dear Ms. Miglis: The State Controller’s Office reviewed the costs claimed by Plumas Unified School District for the legislatively mandated Collective Bargaining Program (Chapter 961, Statutes of 1975; and Chapter 1213, Statutes of 1991) for the period of July 1, 2008, through June 30, 2012. Our review was limited to ensuring that direct and indirect costs were properly reported in accordance with program requirements. The district claimed $84,200 for the mandated program. Our review found that $51,852 is allowable and $32,348 is unallowable. The costs are unallowable because the district did not report any Winton Act base-year costs and did not claim indirect costs on contract services, as described in the attached Summary of Program Costs and the Findings and Recommendations. The State paid $5,810. The State will pay allowable costs claimed that exceed the amount paid, totaling $46,042, contingent upon available appropriations. We informed Yvonne Bales, Director of Business Services, of the review findings via email on November 18, 2013. We did not receive a response from the district. If you disagree with the review 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, by phone at (916) 323-5849. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/kw MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250-5874 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 (916) 324-8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754-7619 (323) 981-6802 Micheline G. Miglis, Superintendent -2- December 9, 2013 Attachments RE: S14-MCC-934 cc: Yvonne Bales, Director of Business Services Plumas Unified School District Scott Hannan, Director, School Fiscal Services Division California Department of Education Carol Bingham, Director, Fiscal Policy Division California Department of Education Thomas Todd, Assistant Program Budget Manager Education Systems Unit, California Department of Finance Jay Lal, Manager Division of Accounting and Reporting State Controller’s Office Plumas Unified School District Collective Bargaining Program Attachment 1— Summary of Program Costs July 1, 2008, through June 30, 2012 Actual Cost Allowable Review Cost Elements Claimed per Review Adjustment Reference 1 July 1, 2008, through June 30, 2009 Direct costs: Component activities G1 through G3: Salaries and benefits $ 1 4,907 $ 14,907 $ — Contract services 3,960 3,960 — Subtotal 18,867 18,867 — Less base-year direct costs adjusted by the implicit price deflator — (8,384) (8,384) Findi ng 1 Increased direct costs, G1 through G3 18,867 10,483 (8,384) Component activities G4 through G7: Salaries and benefits 1,209 1,209 — Contract services 8,638 8,638 — Increased direct costs, G4 through G7 9,847 9,847 — Total increased direct costs, G1 through G7 28,714 20,330 (8,384) Indirect costs 1,280 1,614 334 Finding s 1, 2 Total program costs $ 29,994 21,944 $ (8,050) Less amount paid by the State (3,715) Allowable costs claimed in excess of (less than) amount paid $ 18,229 July 1, 2009, through June 30, 2010 Direct costs: Component activities G1 through G3: Salaries and benefits $ 15,226 $ 15,226 $ — Contract services 5,848 5,848 — Subtotal 21,074 21,074 — Less base-year direct costs adjusted by the implicit price deflator — (8,477) (8,477) Findi ng 1 Increased direct costs, G1 through G3 21,074 12,597 (8,477) Component activities G4 through G7: Salaries and benefits 1,322 1,322 — Contract services 2,869 2,869 — Increased direct costs, G4 through G7 4,191 4,191 — Total increased direct costs, G1 through G7 25,265 16,788 (8,477) Indirect costs 1,501 1,523 22 Finding s 1, 2 Total program costs $ 26,766 18,311 $ (8,455) Less amount paid by the State (2,095) Allowable costs claimed in excess of (less than) amount paid $ 16,216 1 of 3 Plumas Unified School District Collective Bargaining Program Attachment 1 (continued) Actual Cost Allowable Review Cost Elements Claimed per Review Adjustment Reference 1 July 1, 2010, through June 30, 2011 Direct costs: Component activities G1 through G3: Salaries and benefits $ 6,351 $ 6,351 $ — Contract services 236 236 — Subtotal 6,587 6,587 — Less base-year direct costs adjusted by the implicit price deflator — (8,676) (8,676) Findi ng 1 Subtotal 6,587 (2,089) (8,676) Adjustment to eliminate negative balance — 2,089 2,089 Total increased direct costs, G1 through G3 6,587 — (6,587) Component activities G4 through G7: Salaries and benefits 737 737 — Contract services 7,848 7,848 — Increased direct costs, G4 through G7 8,585 8,585 — Total increased direct costs, G1 through G7 15,172 8,585 (6,587) Indirect costs 703 851 148 Finding s 1, 2 Total program costs $ 15,875 9,436 $ (6,439) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 9,436 July 1, 2011, through June 30, 2012 Direct costs: Component activities G1 through G3: Salaries and benefits $ 7,185 $ 7,185 $ — Contract services 1,750 1,750 — Subtotal 8,935 8,935 — Less base-year direct costs adjusted by the implicit price deflator — (8,969) (8,969) Findi ng 1 Subtotal 8,935 (34) (8,969) Adjustment to eliminate negative balance — 34 34 Increased direct costs, G1 through G3 8,935 — (8,935) Component activities G4 through G7: Salaries and benefits 2,029 2,029 — Increased direct costs, G4 through G7 2,029 2,029 — Total increased direct costs, G1 through G7 10,964 2,029 (8,935) Indirect costs 601 132 (469) Finding s 1, 2 Total program costs $ 11,565 2,161 $ (9,404) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 2,161 2 of 3 Plumas Unified School District Collective Bargaining Program Attachment 1 (continued) Actual Cost Allowable Review Cost Elements Claimed per Review Adjustment Reference 1 Summary: July 1, 2008, through June 30, 2012 Total increased direct costs, G1 through G7 $ 80,115 $ 47,732 $ (32,383) Indirect costs 4,085 4,120 35 Total program costs $ 84,200 51,852 $ (32,348) Less amount paid by the State (5,810) Allowable costs claimed in excess of (less than) amount paid $ 46,042 _________________________ 1 See Attachment 2, Findings and Recommendations. 3 of 3 Plumas Unified School District Collective Bargaining Program Attachment 2— Findings and Recommendations July 1, 2008, through June 30, 2012 Background The current findings are the result of our review of the mandated cost claims filed for the legislatively mandated Collective Bargaining Program for the period of July 1, 2008, through June 30, 2012. In 1975, the State enacted the Rodda Act (Chapter 961, Statutes of 1975), requiring the employer and employee to meet and negotiate, thereby creating a collective bargaining atmosphere for public school employers. The legislation created the Public Employment Relations Board to issue formal interpretations and rulings regarding collective bargaining under the Rodda Act. In addition, the legislation established organizational rights of employees and representational rights of employee organizations, and recognized exclusive representatives related to collective bargaining. On July 17, 1978, the Board of Control (now the Commission on State Mandates [CSM]) determined that the Rodda Act imposed a state mandate upon school districts reimbursable under Government Code section 17561. Chapter 1213, Statutes of 1991, added Government Code section 3547.5; this section requires school districts to publicly disclose major provisions of a collective bargaining effort before the agreement becomes binding. On August 20, 1998, the CSM determined that this legislation also imposed a state mandate upon school districts reimbursable under Government Code section 17561. Claimants are allowed to claim increased costs. For components G1 through G3, increased costs represent the difference between the current- year Rodda Act activities and the base-year Winton Act activities (generally, fiscal year [FY] 1974-75), as adjusted by the implicit price deflator. For components G4 through G7, increased costs represent actual costs incurred. The program’s parameters and guidelines establish the state mandate and define the reimbursement criteria. The CSM adopted the parameters and guidelines on October 22, 1980, and amended them ten times, most recently on January 29, 2010. In compliance with Government Code section 17558, the State Controller’s Office (SCO) issues claiming instructions to assist school districts in claiming mandated program reimbursable costs. 1 of 3 Plumas Unified School District Collective Bargaining Program FINDING 1— The district did not report any Winton Act direct costs on its mandated cost claims for FY 2008-09 through FY 2011-12. Specifically, the Unreported Winton Act district did not offset the Winton Act base-year costs against the current- base-year direct costs, year Rodda Act costs for components G1 through G3, thus understating and related indirect the Winton Act base-year costs by $34,506 for the review period. costs Unallowable related indirect costs total $2,670. The following table summarizes the unreported Winton Act base-year cost adjustment by fiscal year: Fiscal Year 2008-09 2009-10 2010-11 2011-12 Total Winton Act base-year costs, FY 1996-97 $ (1,893) $ ( 1,893) $ (1,893) $ ( 1,893) Implicit price deflator (IPD) × 4.429 × 4.478 × 4.583 × 4.738 Winton Act base-year costs adjusted by the IPD (8,384) ( 8,477) (8,676) ( 8,969) (34,506) Less reported Winton Act base-year costs - - - - - Unreported Winton Act base-year costs adjusted by the IPD (8,384) ( 8,477) (8,676) ( 8,969) (34,506) Related indirect cost adjustment (666) ( 768) (653) ( 583) (2,670) Review adjustment $ (9,050) $ ( 9,245) $ (9,329) $ ( 9,552) $ (37,176) The parameters and guidelines (Section H – Supporting Data for Claims – Report Format for Submission of Claim) state: a. For component activities G1, G2, and G3: 1. Determination of the “increased costs” for each of these three components requires the costs of current year Rodda Act activities to be offset [reduced] by the cost of the base-year Winton Act activities. The Winton Act base-year is generally fiscal year 1974- 75. Winton Act base-year costs are adjusted by the Implicit Price Deflator prior to offset against the current year Rodda Act costs for these three components. The Implicit Price Deflator shall be listed in the annual claiming instructions of the State Controller. The Winton Act base-year costs were obtained from the FY 1996-97 claim the district submitted to the SCO’s Division of Accounting and Reporting. The implicit price deflator (IPD) is reported in the SCO’s annual claiming instructions. Recommendation We recommend that the district ensure that all Winton Act base-year costs are adjusted by the IPD, as listed in the SCO’s annual claiming instructions, and are properly offset against the district’s current-year Rodda Act direct costs claimed. 2 of 3 Plumas Unified School District Collective Bargaining Program FINDING 2— The district did not claim indirect costs on contract services for FY 2008-09 through FY 2011-12, resulting in an understatement of Unclaimed indirect costs $2,705. We determined allowable indirect costs by multiplying allowable on contract services contract services by the indirect cost rates claimed by the district, which agreed to the indirect cost rates approved by the California Department of Education (CDE). The parameters and guidelines allow indirect cost rates provisionally approved by the CDE. The CDE indirect cost rates apply to total direct costs (salaries and benefits, materials and supplies, and contract services). The error occurred because the district followed the claiming instructions identified on Form 1 for the Collective Bargaining Program that inadvertently excluded contract services from the calculation of indirect costs. The Collective Bargaining Program claiming instructions have since been corrected. The following table summarizes the calculation of unclaimed indirect costs on contract services by fiscal year: Fiscal Year 2008-09 2009-10 2010-11 2011-12 Total Allowable contract services $ 12,598 $ 8,717 $ 8,084 $ 1,750 Claimed indirect cost rate 7.94% 9.07% 9.91% 6.53% Review adjustment $ 1,000 $ 790 $ 801 $ 114 $ 2,705 Recommendation We recommend that the district follow the updated guidance in the claiming instructions for calculating indirect costs on contract services. 3 of 3