Madera Unified School District

BETTY T. YEE California State Controller September 18, 2015 Edward C. González, Superintendent Madera Unified School District 1902 Howard Road Madera, CA 93637 Dear Mr. González: The State Controller’s Office performed a desk review of costs claimed by the Madera Unified School District for the legislatively mandated Collective Bargaining and Collective Bargaining Agreement Disclosure Program (Chapter 961, Statutes of 1975; and Chapter 1213, Statutes of 1991) for the period of July 1, 2010, through June 30, 2012. We conducted our review under the authority of Government Code sections 12410, 17558.5, and 17561. Our review was limited to ensuring that direct and indirect costs were properly reported in accordance with program requirements. The district claimed $161,159 for the mandated program. Our review found that $150,981 is allowable and $10,178 is unallowable. The costs are unallowable because the district did not report the Winton Act base-year costs and did not claim indirect costs for contract services, as described in the attached Summary of Program Costs and the Review Results. The State made no payments to the district. The State will pay $150,981, contingent upon available appropriations. We informed Teri Bradshaw, Director of Fiscal Services, of the findings via email on August 25, 2015. 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 (Commission). The IRC must be filed within three years following the date of this report. You may obtain IRC information at the Commission’s website at www.csm.ca.gov/docs/IRCForm.pdf. P.O. Box 942850, Sacramento, CA 94250  (916) 445-2636 3301 C Street, Suite 700, Sacramento, CA 95816  (916) 324-8907 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754  (323) 981-6802 Edward C. González, Superintendent -2- September 18, 2015 If you have any questions, please contact Jim L. Spano, Chief, Mandated Cost Audits Bureau, by telephone at (916) 323-5849. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/as Attachments RE: S15-MCC-9055 cc: Teri Bradshaw, Director of Fiscal Services Madera Unified School District Geri Kendall Cox, Chief Business and Administrative Services Officer Financial and Administrative Services Madera County Office of Education Peter Foggiato, Director School Fiscal Services Division California Department of Education Amy Tang-Paterno, Education Fiscal Services Consultant Government Affairs 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 Madera Unified School District Collective Bargaining and Collective Bargaining Agreement Disclosure Program Attachment 1— Summary of Program Costs July 1, 2010, through June 30, 2012 Actual Costs 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 $ 21,743 $ 21,743 $ - Travel and training 2,599 2,599 - Contract services 22,404 22,404 - Subtotal 46,746 46,746 - Less base-year direct costs adjusted by the Implicit Price Deflator - (6,875) (6,875) Finding 1 Increased direct costs, G1 through G3 46,746 39,871 (6,875) Component activities G4 through G7: Salaries and benefits 777 777 - Contract services 5,872 5,872 - Increased direct costs, G4 through G7 6,649 6,649 - Total increased direct costs, G1 through G7 53,395 46,520 (6,875) Indirect costs 1,263 2,340 1,077 Findings 1, 2 Total program costs $ 54,658 48,860 $ (5,798) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 48,860 July 1, 2011, through June 30, 2012 Direct costs: Component activities G1 through G3: Salaries and benefits $ 40,004 $ 40,004 $ - Materials and supplies 203 203 - Travel and training 3,548 3,548 - Contract services 45,105 45,105 - Subtotal 88,860 88,860 - Less base-year direct costs adjusted by the Implicit Price Deflator - (7,107) (7,107) Finding 1 Increased direct costs, G1 through G3 88,860 81,753 (7,107) Component activities G4 through G7: Material and supplies 33 33 - Travel and training 566 566 - Contract services 14,749 14,749 - Increased direct costs, G4 through G7 15,348 15,348 - Total increased direct costs, G1 through G7 104,208 97,101 (7,107) Indirect costs 2,293 5,020 2,727 Findings 1, 2 Total program costs $ 106,501 102,121 $ (4,380) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 102,121 1 of 2 Madera Unified School District Collective Bargaining and Collective Bargaining Agreement Disclosure Program Attachment 1 (continued) Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment Reference 1 Summary: July 1, 2010, through June 30, 2012 Total increased direct costs, G1 through G7 $ 157,603 $ 143,621 $ (13,982) Indirect costs 3,556 7,360 3,804 Total program costs $ 161,159 150,981 $ (10,178) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 150,981 _______________ 1 See Attachment 2, Review Results. 2 of 2 Madera Unified School District Collective Bargaining and Collective Bargaining Agreement Disclosure Program Attachment 2— Review Results July 1, 2010, through June 30, 2012 BACKGROUND— 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 [Commission]) 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 Commission 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 seven components are as follows: G1 – Determining bargaining units and exclusive representatives G2 – Election of unit representatives G3 – Cost of negotiations G4 – Impasse proceedings G5 – Collective bargaining agreement disclosure G6 – Contract administration G7 – Unfair labor practice charges The program’s parameters and guidelines establish the state mandate and define the reimbursement criteria. The Commission 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 Madera Unified School District Collective Bargaining and Collective Bargaining Agreement Disclosure Program The current findings are the result of our review of the mandated cost claims filed for the legislatively mandated Collective Bargaining and Collective Bargaining Agreement Disclosure Program for the period of July 1, 2010, through June 30, 2012. FINDING 1— The district did not report the Winton Act direct costs on its mandated cost claims for FY 2010-11 and FY 2011-12. Specifically, the district did not Unreported Winton Act offset the Winton Act base-year costs against the current-year Rodda Act base-year direct costs costs for components G1 through G3, thus understating the Winton Act and related indirect base-year costs by $13,982 for the review period. In addition, unallowable costs related indirect costs total $712. The following table summarizes the unreported Winton Act base-year cost adjustments by fiscal year: Fiscal Year 2010-11 2011-12 Total Winton Act base-year costs, FY 1996-97 $ (1,500) $ (1,500) Implicit Price Deflator (IPD) × 4.583 × 4.738 Winton Act base-year costs adjusted by the IPD (6,875) (7,107) $ (13,982) Less reported Winton Act base-year costs - - - Unreported Winton Act base-year costs adjusted by the IPD (6,875) (7,107) (13,982) Related indirect cost adjustment (345) (367) (712) Review adjustment $ (7,220) $ (7,474) $ (14,694) 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 is reported in the SCO’s annual claiming instructions. 2 of 3 Madera Unified School District Collective Bargaining and Collective Bargaining Agreement Disclosure Program Recommendation Commencing in FY 2012-13, the district elected to participate in a block grant program, pursuant to Government Code section 17581.6, in lieu of filing annual mandated cost claims. If the district chooses to opt out of the block grant program, we recommend that the district ensure that all Winton Act base-year costs are adjusted by the Implicit Price Deflator, as listed in the SCO’s annual claiming instructions, and are properly offset against the district’s current-year Rodda Act direct costs claimed. The district did not claim indirect costs for contract services for FY FINDING 2— 2010-11 and FY 2011-12, resulting in an understatement of $4,516. We Unclaimed indirect determined allowable indirect costs by multiplying claimed contract costs for contract services by the indirect cost rate claimed by the district, which agreed to services the indirect cost rate 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 are applied to total direct costs (salaries and benefits, materials and supplies, and contract services). The following table summarizes the calculation of unclaimed indirect costs for contract services by fiscal year: Fiscal Year 2010-11 2011-12 Total Claimed contract services $ 28,276 $ 59,854 Claimed indirect cost rate 5.03% 5.17% Review adjustment $ 1,422 $ 3,094 $ 4,516 Recommendation Commencing in FY 2012-13, the district elected to participate in a block grant program, pursuant to Government Code section 17581.6, in lieu of filing annual mandated cost claims. If the district chooses to opt out of the block grant program, we recommend that the district follow the SCO claiming instructions for calculating indirect costs. 3 of 3