El Camino Community College District

BETTY T. YEE California State Controller May 12, 2016 Jo Ann Higdon, Vice President of Administrative Services El Camino Community College District 16007 Crenshaw Boulevard Torrance, CA 90506 Dear Ms. Higdon: The State Controller’s Office performed a desk review of costs claimed by the El Camino Community College District for the legislatively mandated Minimum Conditions for State Aid Program (Education Code sections 66010.2, 66010.7, 66721.5, 66731, 66732, 66736, 66738, 66740, 66742, 70902, 78015, and 78016 as added and/or amended by various legislation, and Title 5, California Code of Regulations, sections 53203, et al) for the period of July 1, 2013, through June 30, 2014. We conducted our review under the authority of Government Code sections 12410, 17558.5, and 17561. Our review was limited to ensuring that the district’s share of the state general apportionment from the fiscal year (FY) 2013-14 Budget Act is properly reported as offsetting revenues/reimbursements. The district claimed $6,147,752 for the mandated program. Our review found that the entire amount is unallowable. The district did not report on its claim any of the state general apportionments it received. The costs are unallowable because the unreported apportionments exceed direct costs claimed, as described in the attached Summary of Program Costs and the Review Results. For the FY 2013-14 claim, the State made no payment to the district. Our review found that the claimed costs are unallowable. This final audit report contains an adjustment to costs previously claimed by the district. If you disagree with the audit finding, you may file an Incorrect Reduction Claim (IRC) with the Commission on the State Mandates (Commission). Pursuant to section 1185, subdivision (c), of the Commission’s regulations (California Code of Regulations, Title 3), an IRC challenging this adjustment must be filed with the Commission no later than three years following the date of this report, regardless of whether this report is subsequently supplemented, superseded, or otherwise amended. You may obtain IRC information on the Commission’s website at www.csm.ca.gov/forms/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 Jo Ann Higdon, Vice President of -2- May 12, 2016 Administrative Services 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/rg Attachments RE: S16-MCC-9027 cc: Janice Ely, Business Manager El Camino Community College District Mario Rodriguez, Assistant Vice Chancellor California Community Colleges Chancellor’s Office Christine Atalig, Specialist, College Finance and Facilities Planning California Community Colleges Chancellor’s Office Chris Ferguson, Principal Program Budget Analyst Education Systems Unit, California Department of Finance Keith Nezaam, Staff Finance Budget Analyst Education Systems Unit, California Department of Finance Jay Lal, Manager Division of Accounting and Reporting State Controller’s Office El Camino Community College District Minimum Conditions for State Aid Program Attachment 1— Summary of Program Costs July 1, 2013, through June 30, 2014 Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment1 July 1, 2013, through June 30, 2014 Direct costs:2 Salaries and benefits Transfer Centers $ 2,565,048 $ 2,565,048 - Standards of Scholarship 1,208,936 1,208,936 - Curriculum 2 43,890 243,890 - Open Courses 2 24,967 224,967 - Subtotal, Salaries and benefits 4,242,841 4,242,841 - Materials and supplies Transfer Centers 1 37 137 - Standards of Scholarship 1 65 165 - Curriculum 12,947 12,947 - Degree and Certificates 2 75 275 - Open Courses 5,467 5,467 - Subtotal, Materials and supplies 18,991 18,991 - Contract Services Participation in District and College Governance 4,644 4,644 - Subtotal, Contract services 4,644 4,644 - Total direct costs 4,266,476 4,266,476 - Indirect costs 1,881,276 1,881,276 - Total direct and indirect costs 6,147,752 6,147,752 - Less offsetting savings/reimbursements - (31,752,692) (31,752,692) Subtotal 6,147,752 (25,604,940) (31,752,692) Review adjustments that exceed costs claimed - 25,604,940 25,604,940 Total program costs $ 6,147,752 - $ (6,147,752) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ - _________________________ 1 See Attachment 2, Review Results. 2 Includes only ongoing activities. 1 of 1 El Camino Community College District Minimum Conditions for State Aid Program Attachment 2— Review Results July 1, 2013, through June 30, 2014 BACKGROUND— Education Code sections 66010.2, 66010.7, 66721.5, 66731, 66732, 66736, 66738, 66740, 66742, 70902, 78015, and 78016, and Title 5, California Code of Regulations, sections 53203, et al. address the standards for the formation and basic operation of the California Community Colleges. The sections were added and/or amended by:  Chapter 973, Statutes of 1988  Chapter 1188, Statutes of 1991  Chapter 1198, Statutes of 1991  Chapter 365, Statutes of 1998  Chapter 187, Statutes of 2000 On May 26, 2011, the Commission adopted a statement of decision finding that the test claim statutes and regulations impose a partially reimbursable state-mandated program upon community college districts within the meaning of article XIII B, section 6 of the California Constitution and Government Code section 17514. The Commission separated the activities found to be reimbursable into the following seven program areas: 1. Participation in district and college governance 2. Transfer centers in community colleges 3. Vocational education 4. Standards of Scholarship 5. Curriculum 6. Degrees and certificates 7. Open courses The program’s parameters and guidelines establish the state mandate and define the reimbursable criteria. The Commission adopted the parameters and guidelines on April 19, 2013. In compliance with Government Code section 17558, the SCO issues claiming instructions to assist community college districts in claiming mandated program reimbursable costs. FINDING— The district did not report offsetting savings/reimbursements totaling $31,752,692. The district did not report any of the apportionments Unreported offsetting received from the California Community Colleges Chancellor’s Office savings/reimbursements (CCCCO) on its mandated cost claim for the review period. 1 of 4 El Camino Community College District Minimum Conditions for State Aid Program The FY 2013-14 Budget Act identifies offsetting revenues in Item 6870- 101-0001, Provision 39, which states: Funding provided to community college districts in Schedule (1) is provided to directly offset any mandated costs claimed by community college districts for the Minimum Conditions for State Aid (02-TC-25 and 02-TC-31) mandated program as determined by the Commission on State Mandates. For FY 2013-14, we calculated the district’s share of the state general apportionment from the FY 2013-14 Budget Act. To calculate the percentage of the total certified apportionment made to community college districts (CCDs), we divided the Schedule (1) Apportionments by the Statewide Total Certified General Apportionment. The statewide total certified general apportionment is obtained from the CCCCO’s Recalculation Apportionment Report, Exhibit D, which can be obtained at http://extranet.cccco.edu/Divisions/FinanceFacilities/FiscalServicesUnit/ Reports/ApportionmentReports.aspx. The following table shows the percentage of the total certified apportionment made to CCDs: Fiscal Year 2013-14 Schedule (1) apportionments $ ( 1,560,973,000) Statewide total certified general apportionment ÷ ( 2,280,516,475) % of the total certified apportionment made to CCDs 68.45% To compute the related Schedule (1) Apportionments for the district, we multiplied the district’s certified general apportionment by the percentage of the total certified apportionment made to CCDs identified in the table above. The district’s certified general apportionment is obtained from the CCCCO’s Recalculation Apportionment Report, Exhibit D. The following table shows the related Schedule (1) Apportionments applicable to El Camino Community College District: Fiscal Year 2013-14 District's certified general apportionment $ (47,370,170) % of the total certified apportionment made to CCDs × 68.45% Related Schedule (1) apportionments $ (32,424,881) To determine the percentage related to the district’s apportionment, we divided the related Schedule (1) Apportionments by the Total Schedule (1) Apportionments applicable for all CCDs statewide. 2 of 4 El Camino Community College District Minimum Conditions for State Aid Program The following table shows the percentage of the district’s apportionment in relation to the apportionments received by CCDs statewide: Fiscal Year 2013-14 Related Schedule (1) apportionments $ (32,424,881) Total Schedule (1) apportionments ÷ ( 1,560,973,000) % related to the district's apportionment 2.10% The FY 2013-14 Budget Act identifies the following provisions in Item 6870-101-0001 that should be deducted from Schedule (1) Apportionments: 3. The funds appropriated in Schedule (1) for apportionments include $31,409,000 to encourage district-level accountability efforts pursuant to Section 84754.5 of the Education Code. 14. Of the funds appropriated in Schedule (1), Apportionments: (a): Up to $100,000 is for maintenance allowance, pursuant to Section 54200 of Title 5 of the California Code of Regulations. (b): Up to $500,000 is to reimburse colleges for the costs of federal aid repayments related to assessed fees for fee waiver recipients. This reimbursement only applies to students who completely withdraw from college before the census date pursuant to Section 58508 of Title 5 of the California Code of Regulations. The following table summarizes the district’s share to be excluded from Schedule (1) Apportionment based on the three provisions cited above: Fiscal Year 2013-14 Provision 3 $ (31,409,000) Provision 14(a) (100,000) Provision 14(b) (500,000) Amount to be excluded from Schedule (1) (32,009,000) % related to the district's apportionment × 2.10% Schedule (1) allocation $ (672,189) Therefore, the district’s share of the state general apportionment should be the district’s related Schedule (1) Apportionments less the Schedule (1) Allocation, as identified in the table above. The following table summarizes the unreported offsetting revenues/reimbursements for the review period: Fiscal Year 2013-14 Related Schedule (1) apportionments $ ( 32,424,881) Less: Schedule (1) allocation 672,189 Net Apportionment - Schedule (1) $ ( 31,752,692) 3 of 4 El Camino Community College District Minimum Conditions for State Aid Program The program’s parameters and guidelines (section VII – Offsetting Revenues and Reimbursements) state: Any offsets the claimant experiences in the same program as a result of the same statutes or executive orders found to contain the mandate shall be deducted from the costs claimed. . . . In addition, reimbursement for this mandate from any source, including but not limited to, service fees collected, federal funds, and other state funds, shall be identified and deducted from this claim. Recommendation We recommend that the district report all mandate-related offsetting revenues/reimbursements on its mandated cost claims. 4 of 4