Milpitas Unified School District

BETTY T. YEE California State Controller August 2, 2016 Cary Matsuoka, Superintendent Milpitas Unified School District 1331 East Calaveras Boulevard Milpitas, CA 95035 Dear Mr. Matsuoka: The State Controller’s Office performed a desk review of costs claimed by the Milpitas Unified School District for the legislatively mandated High School Exit Examination (HSEE) Program (Chapter 1, Statutes of 1999x; and Chapter 135, Statutes of 1999) for the period of July 1, 2000, through June 30, 2004. We conducted our review under the authority of Government Code sections 12410, 17558.5, and 17561. Our review was limited to ensuring that the California Department of Education HSEE Program apportionment was properly offset on the district’s claims. The district claimed $50,591 for the mandated program. Our review found that $40,839 is allowable and $9,752 is unallowable. The costs are unallowable because the district did not offset the funding provided in the State Budget for the HSEE Program, 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 $40,839, contingent upon available appropriations. We informed Wendy Zhang, Director of Business Services, of the review finding via email on June 28, 2016. Ms. Zhang responded the same day, stating that the district agrees with the finding. 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 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 Cary Matsuoka, Superintendent -2- August 2, 2016 Attachments RE: S16-MCC-9037 cc: Wendy Zhang, Director of Business Services Milpitas Unified School District Judy Lee Kershaw, Director of District Business and Advisory Services Santa Clara 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 Milpitas Unified School District High School Exit Examination Program Attachment 1— Summary of Program Costs July 1, 2000, through June 30, 2004 Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 July 1, 2000, through June 30, 2001 Direct costs: Salaries and benefits: Documentation of adequate notice $ 166 $ 166 $ - HSEE administration 4,903 4,903 - Total direct costs 5,069 5,069 - Indirect costs 333 333 - Total direct and indirect costs 5,402 5,402 - Less offsetting reimbursements - (2,898) (2,898) Total program costs $ 5,402 2,504 $ (2,898) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 2,504 July 1, 2001, through June 30, 2002 Direct costs: Salaries and benefits: Documentation of adequate notice $ 206 $ 206 $ - HSEE administration 9,853 9,853 - Total direct costs 10,059 10,059 - Indirect costs 687 687 - Total direct and indirect costs 10,746 10,746 - Less offsetting reimbursements - (897) (897) Total program costs $ 10,746 9,849 $ (897) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 9,849 1 of 2 Milpitas Unified School District High School Exit Examination Program Attachment 1 (continued) Actual Costs Allowable Review Cost Elements Claimed per Review Adjustment 1 July 1, 2002, through June 30, 2003 Direct costs: Salaries and benefits: Documentation of adequate notice $ 219 $ 219 $ - HSEE administration 22,344 22,344 - Total direct costs 22,563 22,563 - Indirect costs 1,379 1,379 - Total direct and indirect costs 23,942 23,942 - Less offsetting reimbursements - (3,621) (3,621) Total program costs $ 23,942 20,321 $ (3,621) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 20,321 July 1, 2003, through June 30, 2004 Direct costs: Salaries and benefits: Documentation of adequate notice $ 102 $ 102 $ - HSEE administration 9,776 9,776 - Total direct costs 9,878 9,878 - Indirect costs 623 623 - Total direct and indirect costs 10,501 10,501 - Less offsetting reimbursements - (2,336) (2,336) Total program costs $ 10,501 8,165 $ (2,336) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 8,165 Summary: July 1, 2000, through June 30, 2004 Direct costs: Salaries and benefits: Documentation of adequate notice $ 693 $ 693 $ - HSEE administration 46,876 46,876 - Total direct costs 47,569 47,569 - Indirect costs 3,022 3,022 - Total direct and indirect costs 50,591 50,591 - Less offsetting reimbursements - (9,752) (9,752) Total program costs $ 50,591 40,839 $ (9,752) Less amount paid by the State - Allowable costs claimed in excess of (less than) amount paid $ 40,839 _________________________ 1 See Attachment 2, Review Results. 2 of 2 Milpitas Unified School District High School Exit Examination Program Attachment 2— Review Results July 1, 2000, through June 30, 2004 BACKGROUND— On March 25, 2004, the Commission on State Mandates (Commission) adopted a Statement of Decision for the High School Exit Examination (HSEE) Program finding that Education Code sections 60850, 60851, 60853, and 60855 as added in 1999, along with California Code of Regulations, Title 5, sections 1200-1225 that became effective in 2001 and 2003, constitutes a new program or higher level of service and imposes a reimbursable state-mandated program upon school districts. The program’s parameters and guidelines establish the state mandate and define the reimbursement criteria. The Commission adopted the parameters and guidelines on April 26, 2006. The parameters and guidelines categorize reimbursable activities into the following six components: adequate notice, documentation of adequate notice, determining English language skills, HSEE administration, test security/cheating, and reporting data to the Superintendent of Public Instruction. In compliance with Government Code section 17558, the State Controller’s Office issues claiming instructions to assist local agencies, school districts, and community college district in claiming mandated program reimbursable costs. Senate Bill 172 was signed on October 7, 2015, suspending administration of the California HSEE Program and the requirement that students completing Grade 12 successfully pass the high school exit exam as a condition of receiving a diploma for the 2015-16 through 2017-18 school years. FINDING— The district did not report the HSEE Program apportionments received from the California Department of Education (CDE), totaling $9,752, for Unreported offsetting the period of July 1, 2000, through June 30, 2004. reimbursements Education Code section 60851, subdivision (a), specifies that the State Superintendent of Public Instruction apportion funds to school districts to enable them to administer the HSEE Program. The CDE establishes the amount of funding to be apportioned per test administered, based on a review of the cost per test. For the review period, the district received $9,752 from the CDE. 1 of 2 Milpitas Unified School District High School Exit Examination Program The following table summarizes the unreported offsetting reimbursements for the review period: Fiscal Year 2000-01 2001-02 2002-03 2003-04 Total HSEE apportionment $ (2,898) $ (897) $ (3,621) $ (2,336) $ (9,752) Less offset apportionment - - - - - Review finding $ (2,898) $ (897) $ (3,621) $ (2,336) $ (9,752) The parameters and guidelines (Section VII. Offsetting Savings and Reimbursements) state, “Reimbursement shall be offset by funding provided in the State Budget for the HSEE Program.” Recommendation The HSEE Program was suspended in the fiscal year (FY) 2015-16 Budget Act. Further, 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 HSEE Program becomes active and if the district chooses to opt out of the block grant program, we recommend that the district ensure that all applicable reimbursements are offset against mandated program costs. 2 of 2