SCO
San Jose Unified School District
The Stull Act
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SAN JOSÉ
UNIFIED SCHOOL DISTRICT
Audit Report
THE STULL ACT PROGRAM
Chapter 498, Statutes of 1983;
and Chapter 4, Statutes of 1999
July 1, 1999, through June 30, 2008;
July 1, 2010, through June 30, 2012; and July 1, 2013, through June 30, 2015
BETTY T. YEE
California State Controller
June 2018
BETTY T. YEE
California State Controller
June 28, 2018
Nancy Albarrán, Superintendent
San José Unified School District
855 Lenzen Avenue
San José, CA 95126
Dear Ms. Albarrán:
The State Controller’s Office (SCO) audited the costs claimed by San José Unified School
District for the legislatively mandated Stull Act Program for the period of July 1, 1999, through
June 30, 2008; July 1, 2010, through June 30, 2012; and July 1, 2013, through June 30, 2015. We
did not include the costs claimed for July 1, 2008, through June 30, 2010, in the audit period
because the statute of limitations to initiate the audit of these years had expired. The district did
not file a reimbursement claim for July 1, 2012, through June 30, 2013.
The district claimed $3,740,878 for the mandated program. Our audit found that $1,335,781 is
allowable ($1,342,346 less a $6,565 penalty for filing a late claim) and $2,405,097 is
unallowable. The costs are unallowable primarily because the district claimed reimbursement for
non-mandated activities. The State paid the district $1,841,150. Following the issuance of this
report, the SCO’s Local Government Programs and Services Division will notify the district of
the adjustments via a system-generated letter for each fiscal year in the audit period.
This final audit report contains an adjustment to costs 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report, regardless of whether this report is subsequently supplemented, superseded, or otherwise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.
If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by
telephone at (916) 327-3138.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD, CPA
Chief, Division of Audits
Nancy Albarrán, Superintendent -2- June 28, 2018
JVB/as
cc: Susan Ellenberg, President
Board of Education
San José Unified School District
Florence Eng, Director
Business Support Services
San José Unified School District
Marichi Valle, Manager
Business Support Services
San José Unified School District
Albert Beltran, Internal Audit Specialist
Business Support Services
San José Unified School District
Lorena Jung, Mandated Cost Analyst
Business Support Services
San José Unified School District
Judy Lee Kershaw, Director
District Business and Advisory Services
Santa Clara County Office of Education
Caryn Moore, 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
Anita Dagan, Manager
Local Government Programs and Services Division
California State Controller’s Office
San José Unified School District The Stull Act Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 3
Follow-up on Prior Audit Findings .................................................................................. 3
Views of Responsible Officials .......................................................................................... 4
Restricted Use .................................................................................................................... 4
Schedule—Summary of Program Costs .............................................................................. 5
Finding and Recommendation .............................................................................................. 10
Other Issue .............................................................................................................................. 17
San José Unified School District The Stull Act Program
Audit Report
Summary The State Controller’s Office (SCO) audited the costs claimed by San José
Unified School District for the legislatively mandated Stull Act Program
for the period of July 1, 1999, through June 30, 2008; July 1, 2010, through
June 30, 2012; and July 1, 2013, through June 30, 2015. We did not
include the costs claimed for July 1, 2008, through June 30, 2010, in the
audit period because the statute of limitations to initiate the audit of these
years had expired. The district did not file a reimbursement claim for
July 1, 2012, through June 30, 2013.
The district claimed $3,740,878 for the mandated program. Our audit
found that $1,335,781 is allowable ($1,342,346 less a $6,565 penalty for
filing a late claim) and $2,405,097 is unallowable. The costs are
unallowable primarily because the district claimed reimbursement for non-
mandated activities. The State paid the district $1,841,150.
Background Chapter 498, Statutes of 1983, and Chapter 4, Statutes of 1999, added
sections 44660 through 44665 to the California Education Code. The
legislation provided reimbursement for specific activities related to
evaluation and assessment of the performance of “certificated personnel”
within each school district, except for those employed in local,
discretionary educational programs.
On May 27, 2004, the Commission on State Mandates (Commission)
determined that the legislation imposed a State mandate reimbursable
under Government Code (GC) section 17514.
The program’s parameters and guidelines establish the State mandate and
define the reimbursement criteria. The Commission adopted the
parameters and guidelines on September 27, 2005. In compliance with GC
section 17558, SCO issues claiming instructions to assist school districts
in claiming mandated program reimbursable costs.
The Commission-approved reimbursable activities are as follows:
Evaluating and assessing the performance of certificated instructional
employees related to the instructional techniques and strategies used
by the employee and the employee’s adherence to curricular
objectives (Education Code section 44662(b) as amended by
Chapter 498, Statutes of 1983);
Evaluating and assessing the performance of certificated instructional
employees who teach reading, writing, mathematics, history/social
science, and science in grades 2 through 11 related to the progress of
pupils toward the state adopted academic content standards as
measured by state adopted assessment tests (Education Code section
44662(b) as amended by Chapter 4, Statutes of 1999); and
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San José Unified School District The Stull Act Program
Assessing and evaluating permanent certificated, instructional, and
non-instructional employees who perform the requirements of
educational programs mandated by state or federal law and receive an
unsatisfactory evaluation in the years in which the permanent
certificated employee would not have otherwise been evaluated
pursuant to Education Code section 44664. The additional evaluations
shall last until the employee achieves a positive evaluation, or is
separated from the school district (Education Code section 44664 as
amended by Chapter 498, Statutes of 1983).
Objective, Scope, The objective of our audit was to determine whether costs claimed
represent increased costs resulting from the legislatively mandated Stull
and Methodology
Act Program. Specifically, we conducted this audit to determine whether
costs claimed were supported by appropriate source documents, were not
funded by another source, and were not unreasonable and/or excessive.
The audit period was from July 1, 1999, through June 30, 2008; July 1,
2010, through June 30, 2012; and July 1, 2013, through June 30, 2015.
To achieve our audit objective, we:
Reviewed the annual mandated cost claims filed by the district for the
audit period to identify the material cost components of each claim
and to determine whether there were any errors or any unusual or
unexpected variances from year to year. We also reviewed the
activities claimed to determine whether they adhered to the SCO’s
claiming instructions and the program’s parameters and guidelines;
Completed an internal control questionnaire by interviewing district
staff, and discussed the claim preparation process with district staff to
determine what information was obtained, who obtained it, and how it
was used;
Requested supporting time documentation for the entire audit period.
The district only maintained contemporaneous time documents for
fiscal year (FY) 2007-08, FY 2010-11, FY 2011-12, FY 2013-14, and
FY 2014-15. We calculated an average time allotment for permanent,
probationary, and temporary employees for each fiscal year. We
applied the averages to the individuals on the completed evaluations
list that did not have an actual time document available;
Requested and reviewed listings of employees evaluated for
FY 2007-08, FY 2010-11, FY 2011-12, FY 2013-14, and
FY 2014-15. Using a random number generator, we randomly selected
a non-statistical sample and tested 778 evaluations (out of 3,065) for
the audit period. During testing, we identified 14 errors in the sample
that were not projected to the population;
Traced a haphazardly selected sample of employees’ claimed
productive hourly rates (PHRs) to supporting documentation from the
district’s payroll system. For FY 2007-08, FY 2010-11, FY 2011-12,
FY 2013-14, and FY 2014-15, we sampled and tested 186 employees.
We noted material variances; therefore, we used the recalculated
individual employees’ PHRs for FY 2007-08 and average PHR for
FY 2010-11, FY 2011-12, FY 2013-14, and FY 2014-15;
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San José Unified School District The Stull Act Program
Traced all claimed training costs to supporting documentation
provided by the district, and noted any unallowable costs;
Traced all claimed materials and supplies costs to supporting
documentation provided by the district, and noted no errors; and
Compared all claimed indirect cost rates to the rates allowed by the
California Department of Education. We noted no errors; therefore,
we accepted the rates as claimed.
The legal authority to conduct this audit is provided by GC sections 12410,
17558.5, and 17561. We conducted this performance 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 objective. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our
audit objective.
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. Our audit scope did
not assess the efficiency or effectiveness of program operations. We did
not audit the district’s financial statements.
Conclusion Our audit found an instance of noncompliance with the requirements
outlined in the Objective, Scope, and Methodology section. This instance
is quantified in the accompanying Schedule (Summary of Program Costs)
and described in the Finding and Recommendation section of this report.
For the audit period, San José Unified School District claimed $3,740,878
for costs of the legislatively mandated Stull Act Program. Our audit found
that $1,335,781 is allowable ($1,342,346 less a $6,565 penalty for filing a
late claim in FY 2010-11) and $2,405,097 is unallowable.
For the FY 1999-2000 through FY 2007-08 claims, we found that
$713,490 is allowable. The State paid the district $1,839,150.
For the FY 2010-11, FY 2011-12, FY 2013-14, and FY 2014-15
claims, we found that $622,291 is allowable. The State paid the district
$2,000. The State will pay allowable costs claimed that exceed the
amount paid, totaling $620,291, contingent upon available
appropriations.
Following the issuance of this report, the SCO’s Local Government
Programs and Services Division (LGPSD) will notify the district of the
adjustments via a system-generated letter for each fiscal year in the audit
period.
Follow-up on We have not previously conducted an audit of the district’s legislatively
mandated Stull Act Program.
Prior Audit
Findings
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San José Unified School District The Stull Act Program
Views of We issued a draft audit report on May 14, 2018. Marichi Valle, Manager,
Responsible Business Support Services, responded by email dated May 23, 2018,
neither agreeing nor disagreeing with the actual finding. However, the
Officials
district’s response is related to the overpayment of claims, which is
addressed in the Other Issue section of this report. This final audit report
includes the district’s response.
Restricted Use This report is solely for the information and use of San José Unified School
District, the Santa Clara County Office of Education, the California
Department of Education, 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, CPA
Chief, Division of Audits
June 28, 2018
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San José Unified School District The Stull Act Program
Schedule—
Summary of Program Costs
July 1, 1999, through June 30, 2008;
July 1, 2010, through June 30, 2012;
and July 1, 2013, through June 30, 2015
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment¹
July 1, 1999, through June 30, 2000
Direct costs:
Salaries and benefits
Evaluation activities $ 150,761 $ 63,709 $ (87,052)
Total direct costs 150,761 6 3,709 (87,052)
Indirect costs 7,659 3,236 ( 4,423)
Total program costs $ 158,420 6 6,945 $ (91,475)
Less amount paid by the State2 ( 158,420)
Amount paid in excess of allowable costs $ ( 91,475)
July 1, 2000, through June 30, 2001
Direct costs:
Salaries and benefits
Evaluation activities $ 161,720 $ 66,527 $ (95,193)
Total direct costs 161,720 6 6,527 (95,193)
Indirect costs 7,164 2,947 ( 4,217)
Total program costs $ 168,884 6 9,474 $ (99,410)
Less amount paid by the State2 ( 168,884)
Amount paid in excess of allowable costs $ ( 99,410)
July 1, 2001, through June 30, 2002
Direct costs:
Salaries and benefits
Evaluation activities $ 156,576 $ 68,013 $ (88,563)
Total direct costs 156,576 6 8,013 (88,563)
Indirect costs 8,690 3,775 ( 4,915)
Total program costs $ 165,266 7 1,788 $ (93,478)
Less amount paid by the State2 ( 165,266)
Amount paid in excess of allowable costs $ ( 93,478)
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San José Unified School District The Stull Act Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment¹
July 1, 2002, through June 30, 2003
Direct costs:
Salaries and benefits
Evaluation activities $ 69,456 $ 70,066 $ 6 10
Total direct costs 6 9,456 7 0,066 610
Indirect costs 5,161 5,206 45
Total direct and indirect costs 7 4,617 7 5,272 655
Less allowable costs that exceed costs claimed3 - ( 655) (655)
Total program costs $ 74,617 7 4,617 $ -
Less amount paid by the State2 (74,617)
Allowable costs claimed in excess of amount paid $ -
July 1, 2003, through June 30, 2004
Direct costs:
Salaries and benefits
Evaluation activities $ 185,394 $ 72,656 $ (112,738)
Total direct costs 185,394 7 2,656 (112,738)
Indirect costs 1 0,438 4,091 ( 6,347)
Total program costs $ 195,832 7 6,747 $ (119,085)
Less amount paid by the State2 ( 195,832)
Amount paid in excess of allowable costs $ (119,085)
July 1, 2004, through June 30, 2005
Direct costs:
Salaries and benefits
Evaluation activities $ 173,075 $ 76,996 $ (96,079)
Total direct costs 173,075 7 6,996 (96,079)
Indirect costs 9,311 4,142 ( 5,169)
Total program costs $ 182,386 8 1,138 $ (101,248)
Less amount paid by the State2 ( 182,386)
Amount paid in excess of allowable costs $ (101,248)
July 1, 2005, through June 30, 2006
Direct costs:
Salaries and benefits
Evaluation activities $ 245,921 $ 81,191 $ (164,730)
Total direct costs 245,921 8 1,191 (164,730)
Indirect costs 1 2,321 4,068 ( 8,253)
Total program costs $ 258,242 8 5,259 $ (172,983)
Less amount paid by the State2 ( 258,242)
Amount paid in excess of allowable costs $ (172,983)
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San José Unified School District The Stull Act Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment¹
July 1, 2006, through June 30, 2007
Direct costs:
Salaries and benefits
Evaluation activities $ 342,621 $ 85,224 $ (257,397)
Training activities 8,693 1,819 ( 6,874)
Total direct costs 351,314 8 7,043 (264,271)
Indirect costs 1 2,682 3,142 ( 9,540)
Total program costs $ 363,996 9 0,185 $ (273,811)
Less amount paid by the State2 ( 363,996)
Amount paid in excess of allowable costs $ (273,811)
July 1, 2007, through June 30, 2008
Direct costs:
Salaries and benefits
Evaluation activities $ 249,958 $ 89,740 $ (160,218)
Training activities 1 1,819 3,978 ( 7,841)
Subtotal, salaries and benefits 261,777 9 3,718 (168,059)
Materials and supplies
Training activities4 201 201 -
Subtotal, materials and supplies 201 201 -
Total direct costs 261,978 9 3,919 (168,059)
Indirect costs 9,529 3,418 ( 6,111)
Total program costs $ 271,507 9 7,337 $ (174,170)
Less amount paid by the State2 ( 271,507)
Amount paid in excess of allowable costs $ (174,170)
July 1, 2010, through June 30, 2011
Direct costs:
Salaries and benefits
Evaluation activities $ 441,729 $ 109,898 $ (331,831)
Training activities 4,311 1,067 ( 3,244)
Total direct costs 446,040 110,965 (335,075)
Indirect costs 1 9,135 4,760 (14,375)
Total direct and indirect costs 465,175 115,725 (349,450)
Less late filing penalty5 - (6,565) ( 6,565)
Total program costs $ 465,175 109,160 $ (356,015)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 109,160
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San José Unified School District The Stull Act Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment¹
July 1, 2011, through June 30, 2012
Direct costs:
Salaries and benefits
Evaluation activities $ 423,385 $ 113,166 $ (310,219)
Training activities 328 - (328)
Total direct costs 423,713 113,166 (310,547)
Indirect costs 2 1,567 5,760 (15,807)
Total direct and indirect costs $ 445,280 118,926 $ (326,354)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 118,926
July 1, 2013, through June 30, 2014
Direct costs:
Salaries and benefits
Evaluation activities $ 465,085 $ 183,614 $ (281,471)
Training activities 1,994 144 ( 1,850)
Total direct costs 467,079 183,758 (283,321)
Indirect costs 2 5,082 9,868 (15,214)
Total direct and indirect costs 492,161 193,626 (298,535)
Less amount paid by the State2 (1,000)
Allowable costs claimed in excess of amount paid $ 192,626
July 1, 2014, through June 30, 2015
Direct costs:
Salaries and benefits
Evaluation activities $ 473,811 $ 190,411 $ (283,400)
Total direct costs 473,811 190,411 (283,400)
Indirect costs 2 5,301 1 0,168 (15,133)
Total direct and indirect costs $ 499,112 200,579 $ (298,533)
Less amount paid by the State2 (1,000)
Allowable costs claimed in excess of amount paid $ 199,579
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San José Unified School District The Stull Act Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment¹
Summary: July 1, 1999, through June 30, 2008; July 1, 2010 through June 30, 2012;
and July 1, 2013, through June 30, 2015
Direct costs:
Salaries and benefits
Evaluation activities $ 3 ,539,492 $ 1 ,271,211 $ (2,268,281)
Training activities 2 7,145 7,008 (20,137)
Subtotal, salaries and benefits 3,566,637 1,278,219 ( 2,288,418)
Materials and supplies
Training activities4 201 201 -
Subtotal, materials and supplies 201 201 -
Total direct costs 3,566,838 1,278,420 ( 2,288,418)
Indirect costs 174,040 6 4,581 (109,459)
Total direct and indirect costs 3,740,878 1,343,001 ( 2,397,877)
Less allowable costs that exceed costs claimed3 - ( 655) (655)
Less late filing penalty5 - (6,565) ( 6,565)
Total program costs $ 3 ,740,878 1,335,781 $ (2,405,097)
Less amount paid by the State2 (1,841,150)
Amount paid in excess of allowable costs $ (505,369)
_________________________
1 See the Finding and Recommendation section.
2 Payment amount current as of February 14, 2018.
3 GC section 17568 stipulates that the State will not reimburse any claim more than one year after the filing deadline
specified in the SCO’s claiming instructions. That deadline has expired for FY 2002-03.
4 The district did not apply the indirect cost rate to claimed materials and supplies costs for FY 2007-08. After review,
we found that an additional $7 should have been claimed, and those costs are allowable.
5 The district filed its FY 2010-11 annual reimbursement claim for $50,079 by the due date specified in GC
section 17560, and amended it to $455,175 after the due date. Pursuant to GC section 17568, the State assessed a
late filing penalty equal to 10% of allowable costs that exceed the timely filed claim amount, not to exceed $10,000.
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San José Unified School District The Stull Act Program
Finding and Recommendation
FINDING — The district claimed $3,566,637 in salaries and benefits for the audit
period. We found that $1,278,219 is allowable and $2,288,418 is
Overstated salaries
unallowable. The costs are unallowable primarily because the district
and benefits and
claimed reimbursement for non-mandated activities. Unallowable related
related indirect costs
indirect costs total $109,466.
The district overstated salaries and benefits because it misinterpreted the
program’s parameters and guidelines requirement that it maintain
contemporaneous source documentation to support claimed costs, and
claimed non-reimbursable activities during the teacher evaluation process.
The following table summarizes the unallowable salaries and benefits and
related indirect costs by fiscal year:
Salaries and Benefits Related Indirect Costs
Indirect Indirect
Fiscal Amount Amount Audit Cost Costs
Year Claimed Allowable Adjustment Rate Adjustment
1999-2000 $ 150,761 $ 63,709 $ (87,052) 5.08% $ ( 4,423)
2000-01 161,720 6 6,527 (95,193) 4.43% (4,217)
2001-02 156,576 6 8,013 (88,563) 5.55% (4,915)
2002-03 69,456 7 0,066 610 7.43% 45
2003-04 185,394 7 2,656 (112,738) 5.63% (6,347)
2004-05 173,075 7 6,996 (96,079) 5.38% (5,169)
2005-06 245,921 8 1,191 (164,730) 5.01% (8,253)
2006-07 351,314 8 7,043 (264,271) 3.61% (9,540)
2007-08 261,777 9 3,718 (168,059) 3.64% (6,118)
2010-11 446,040 110,965 (335,075) 4.29% ( 14,375)
2011-12 423,713 113,166 (310,547) 5.09% ( 15,807)
2013-14 467,079 183,758 (283,321) 5.37% ( 15,214)
2014-15 473,811 190,411 (283,400) 5.34% ( 15,133)
Total $ 3,566,637 $ 1 ,278,219 $ (2,288,418) $ (109,466)
Supporting Time Documents
For FY 1999-2000 through FY 2005-06, the district reported an average
estimated time spent (in minutes) on the evaluation activities. Within these
time documents, the evaluators did not identify the teachers who were
evaluated. In addition, the time documents were not collected
contemporaneously as they were dated and signed in March 2006.
For FY 2006-07, the district did not provide their evaluator time
documents to support the time study summary. Therefore, we could not
verify whether the district used similar time documents in FY 1999-2000
through FY 2005-06 to those used for FY 2006-07.
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San José Unified School District The Stull Act Program
For FY 2007-08, FY 2010-11, FY 2011-12, FY 2013-14, and
FY 2014-15, the district recorded actual time spent on evaluation activities
for specific employees being evaluated throughout the year. We used these
time documents to calculate an average time allotment, and applied it to
those evaluators on the completed evaluation list who did not submit a
time document for each fiscal year.
The district’s time documents recorded the time that it took district
evaluators to perform eight main activities within the teacher evaluation
process. The district evaluated permanent, probationary, and temporary
certificated instructional employees. Time increments for the following
five activities described in the district’s time documents are not
reimbursable:
Conducting a pre-assessment conference with the certificated staff
member to review their goals and objectives;
Conducting a pre-observation conference with the certificated staff
member;
Conducting a post-observation conference with the certificated staff
member;
Conducting a final evaluation conference with the certificated staff
member; and
Discussing Standardized Testing and Reporting results and how to
improve instructional abilities with the certificated staff member
outside of the activities identified.
We determined that the time spent on the following three activities is
reimbursable:
Classroom observations (formal and informal);
Writing a report regarding observations; and
Writing the final evaluation report.
After we removed the unallowable activities reported by the district, the
district’s contemporaneous time records show the following averages:
FY 2007-08
1.97 hours for each permanent employee evaluation
2.63 hours for each probationary employee evaluation
2.74 hours for each temporary employee evaluation
FY 2010-11
2.15 hours for each permanent employee evaluation
1.73 hours for each probationary employee evaluation
1.73 hours for each temporary employee evaluation
FY 2011-12
1.86 hours for each permanent employee evaluation
2.79 hours for each probationary employee evaluation
4.58 hours for each temporary employee evaluation
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San José Unified School District The Stull Act Program
FY 2013-14
2.95 hours for each permanent employee evaluation
3.40 hours for each probationary employee evaluation
3.40 hours for each temporary employee evaluation
FY 2014-15
5.35 hours for each permanent employee evaluation
4.86 hours for each probationary employee evaluation
Completed Evaluations
The district’s Human Resources Department assembled a master list of
evaluations for FY 2007-08, FY 2010-11, FY 2011-12, FY 2013-14, and
FY 2014-15. These lists are the basis of support for the total evaluation
population for the audit period.
We reviewed the completed evaluation list for each fiscal year to ensure
that only eligible evaluations were counted for reimbursement. The
program’s parameters and guidelines allow reimbursement for evaluations
conducted for certificated instructional personnel who perform the
requirements of education programs mandated by state or federal law
during specific evaluation periods. The parameters and guidelines also
allow reimbursement once per year for evaluations conducted for
probationary employees, and every other year for permanent employees.
The following table shows the number of evaluations that are not
reimbursable under the mandated program:
Number of Completed Evaluations
District-
Fiscal Year Provided Audited Difference
2007-08 587 498 (89)
2010-11 858 685 (173)
2011-12 835 645 (190)
2013-14 917 741 (176)
2014-15 529 482 (47)
Total 3,726 3,051 (675)
The following is a list of the 675 evaluations that were excluded for the
tested period:
Certificated employees with non-instructional job classifications (i.e.,
psychologists, nurses, counselors, etc.) (505);
Evaluations of employees at preschools and charter schools (84);
Teacher evaluations claimed multiple times in one school year (14);
Permanent biannual teacher evaluations claimed every year rather
than every other year (24);
Evaluations removed by the district from the population (31) and
evaluations with incomplete information related to the date of the
evaluation (3); and
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San José Unified School District The Stull Act Program
Evaluations we requested during testing that the district was unable to
locate (14).
Productive Hourly Rates
The district calculated an average PHR for FY 1999-2000 through
FY 2005-06, FY 2010-11, FY 2011-12, FY 2013-14, and FY 2014-15. For
FY 2006-07 and FY 2007-08, the district calculated each individual’s PHR
rather than an average.
As the district provided its first full list of completed evaluations beginning
with FY 2007-08, we tested the PHRs for only the last five fiscal years of
the audit period. We determined that the district’s claimed PHRs were
overstated. The district used productive hours ranging from as low as 660
to a high of 1,400 hours for FY 2011-12; and as low as 1,494 to a high of
1,574 hours for FY 2013-14. The district did not provide any
documentation to support how these hours were computed. Therefore, we
recalculated the PHRs based on the payroll and benefits rate data, and
actual productive hours as identified in the salary schedules provided by
the district. We then applied the recalculated rates to the number of
allowable evaluations and allowable hours (or average hours) per
evaluation.
The following table summarizes the claimed and recalculated average
PHRs:
Average Average
Fiscal PHR PHR Audit
Year Claimed Recalculated Adjustment
2010-11 $ 93.44 $ 78.09 $ (15.35)
2011-12 $ 93.39 $ 79.37 $ (14.02)
2013-14 $ 89.89 $ 79.89 $ (10.00)
2014-15 $ 87.95 $ 78.38 $ (9.57)
Per the SCO’s Mandated Cost Manual, school districts may use one of the
following methods to compute PHRs:
The actual annual productive hours for each employee;
The weighted-average annual productive hours for each job title; or
1,800 annual productive hours for all employees.
The manual also states, “If actual annual productive hours or weighted-
average annual productive hours for each job title is chosen, the claimant
must maintain documentation of how these hours were computed.”
Calculation of Allowable Evaluation Costs
To arrive at allowable salaries and benefits for evaluation activities for
FY 2007-08, FY 2010-11, FY 2011-12, FY 2013-14, and FY 2014-15, we
multiplied the number of allowable evaluations by allowable hours (or
average hours) per evaluation and the allowable PHRs.
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San José Unified School District The Stull Act Program
For FY 1999-2000 through FY 2006-07, we used the allowable evaluation
costs in FY 2007-08 as the base year. We applied an implicit price deflator
to total allowable evaluation activities costs in FY 2007-08 to determine
allowable evaluation activities costs for FY 1999-2000 through
FY 2006-07.
The following table summarizes the audit adjustments related to
evaluation activities by fiscal year and the related indirect costs:
Evaluation Activities Related Indirect Costs
Indirect Indirect
Amount Amount Audit Cost Costs
Fiscal Year Claimed Allowable Adjustment Rate Adjustment
1999-2000 $ 1 50,761 $ 63,709 $ (87,052) 5.08% $ ( 4,422)
2000-01 161,720 6 6,527 (95,193) 4.43% (4,217)
2001-02 156,576 6 8,013 (88,563) 5.55% (4,915)
2002-03 69,456 7 0,066 6 10 7.43% 45
2003-04 185,394 7 2,656 (112,738) 5.63% (6,347)
2004-05 173,075 7 6,996 (96,079) 5.38% (5,169)
2005-06 245,921 8 1,191 (164,730) 5.01% (8,253)
2006-07 342,621 8 5,224 (257,397) 3.61% (9,292)
2007-08 249,958 8 9,740 (160,218) 3.64% (5,832)
2010-11 441,729 109,898 (331,831) 4.29% ( 14,236)
2011-12 423,385 113,166 (310,219) 5.09% ( 15,790)
2013-14 465,085 183,614 (281,471) 5.37% ( 15,115)
2014-15 473,811 190,411 (283,400) 5.34% ( 15,134)
Total $ 3,539,492 $ 1 ,271,211 $ (2,268,281) $ (108,677)
Calculation of Allowable Training Costs
The district claimed total training costs of $27,145 for the audit period.
We found that $7,008 in training costs is reimbursable under the mandate
and $20,137 is not reimbursable. The costs are unallowable for the
following reasons:
The district did not provide sufficient documentation (i.e., sign-in
sheets, agendas) to support the costs related to the one-time activity of
training staff on the implementation of reimbursable activities listed
in the parameters and guidelines;
The district did not properly calculate the time related to training staff
or attending a training class required to perform the evaluations. Some
of the training/meeting agendas included non-mandate-related topics.
Therefore, we recalculated the time (in hours) that was related to the
Stull Act Program for each fiscal year of the audit period;
The district claimed several employees who attended a training class
after their first year of reimbursement. Any costs for other training
classes claimed for the same employees in subsequent years are
unallowable;
The district claimed certain job classifications (i.e., Internal Auditor,
Director of Finance, Public Information Officer, etc.) that are not
required to perform the evaluations; and
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San José Unified School District The Stull Act Program
The district used incorrect PHRs for each employee claimed.
Therefore, adjustments were made to PHRs for each employee who
received training and/or provided the training.
The following table summarizes audit adjustments to salaries and benefits
for training costs by fiscal year, and the related indirect costs:
Training Activities Related Indirect Costs
Indirect Indirect
Fiscal Amount Amount Audit Cost Costs
Year Claimed Allowable Adjustment Rate Adjustment
2006-07 $ 8 ,693 $ 1 ,819 $ (6,874) 3.61% $ (248)
2007-08 1 1,819 3,978 (7,841) 3.64% ( 286)
2010-11 4,311 1,067 (3,244) 4.29% ( 139)
2011-12 328 - ( 328) 5.09% (17)
2013-14 1,994 144 (1,850) 5.37% (99)
Total $ 27,145 $ 7 ,008 $ ( 20,137) $ (789)
Section IV.A.1 of the parameters and guidelines states that the following
is reimbursable:
Evaluate and assess the performance of certificated instructional
employees that perform the requirements of educational programs
mandated by state or federal law as it reasonably relates to the
instructional techniques and strategies used by the employee and the
employee’s adherence to curricular objectives.
Reimbursement for this activity is limited to:
a. reviewing the employee’s instructional techniques and strategies
and adherence to curricular objectives, and
b. including in the written evaluation of the certificated instructional
employees the assessment of these factors during the following
evaluation periods:
o once each year for probationary certificated employees;
o every other year for permanent certificated employees; and
o beginning January 1, 2004, every five years for certificated
employees with permanent status who have been employed at
least ten years with the school district, are highly qualified, and
whose previous evaluation rated the employee as meeting or
exceeding standards, if the evaluator and certificated employee
being evaluated agree.
Section IV.A.2 of the parameters and guidelines states that the following
is reimbursable:
Evaluate and assess the performance of certificated instructional
employees that teach reading, writing, mathematics, history/social
science, and science in grades 2 to 11 as it reasonably relates to the
progress of pupils towards the state adopted academic content standards
as measured by state adopted assessment tests.
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San José Unified School District The Stull Act Program
Reimbursement for this activity is limited to:
a. reviewing the results of the Standardized Testing and Reporting test
as it reasonably relates to the performance of those certificated
employees that teach reading, writing, mathematics, history/social
science, and science in grades 2 to 11, and
b. Including in the written evaluation of those certificated employees
the assessment of the employee’s performance based on the
Standardized Testing and Reporting results for the pupils they teach
during the evaluation periods specified in Education Code section
44664, and described below:
o once each year for probationary certificated employees;
o every other year for permanent certificated employees; and
o beginning January 1, 2004, every five years for certificated
employees with permanent status who have been employed at
least ten years with the school district, are highly qualified, and
whose previous evaluation rated the employee as meeting or
exceeding standards, if the evaluator and certificated employee
being evaluated agree.
Section IV.C of the parameters and guidelines states that the district may
train staff on implementing the reimbursable activities listed in Section IV
of the parameters and guidelines. This is a one-time activity for each
employee.
Section IV of the parameters and guidelines also states:
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 show 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, and
receipts.
Recommendation
Commencing in FY 2015-16, the district elected to participate in a block
grant program, pursuant to GC 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 mandated program
claiming instructions and parameters and guidelines and ensure that
claimed costs include only eligible costs, are based on actual costs, and are
supported by contemporaneous source documentation.
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San José Unified School District The Stull Act Program
Other Issue
OTHER ISSUE— On May 23, 2018, we received an email response to the draft audit report
from Marichi Valle, Manager, Business Support Services. The response
Overpayment of
did not address the finding; rather, the district provided a comment related
claims
to the overpayment of claims for the audit period.
Our audit found that $1,335,781 is allowable. The State paid the district
$1,841,150 for the audit period, resulting in an over-payment of $505,369.
The district requested that the SCO reduce the payment amount in the
report to $1,335,781, which is the allowable amount.
The district’s response and SCO comment is as follows:
District’s Response
As discussed in our exit meeting, we’re questioning about the $1.8M that
was applied and netted against the District’s onetime mandated funding.
Per audit, it was determined that the total allowable claim was only
$1,335,571.00, however, the report reflected that the District got
overpaid by $505,369.00. Please correct the total amount paid by the
State to reflect exactly the total allowable claim of $1,335,571.00 to
avoid unnecessary confusion.
SCO Comment
The Summary of Program Costs (Schedule) remains unchanged. The
district incorrectly identified the allowable costs as $1,335,571, rather than
$1,335,781. An analyst from the SCO’s LGPSD will address the district’s
overpayment issue separate from this audit report.
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State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250-5874
http://www.sco.ca.gov
S17-MCC-0004