Citizens Oversight Board California Clean Energy Jobs Act

PROGRAM AUDIT OF THE CALIFORNIA CLEAN ENERGY JOBS ACT Audit Report PROPOSITION 39 PROGRAM Chapter 29, Statutes of 2013 July 1, 2018, through June 30, 2019 BETTY T. YEE California State Controller June 2020 BETTY T. YEE California State Controller June 30, 2020 Adrienne Alvord, Chair Citizens Oversight Board 1516 9th Street, MS 19 Sacramento, CA 95814 Dear Ms. Alvord: The State Controller’s Office (SCO) audited a selection of completed projects related to the California Clean Energy Jobs Act for the period of July 1, 2018, through June 30, 2019. As of June 30, 2019, 212 local educational agencies (LEAs) reported $171,890,450 in completed project costs and 59 community college districts (CCDs) reported $66,985,654 in completed project costs. From the list of completed projects, we selected for audit 17 LEAs and four CCDs, which together reported total expenditures of $45,102,262. Our audit found that:  Six LEAs sole-sourced a portion of their project costs, resulting in unallowable costs of $9,537,047;  Twelve LEAs and four CCDs did not identify the projected energy savings in the awarded contracts, and four LEAs did not have a signed contract;  One LEA spent Proposition 39 funds on ineligible expenditures, resulting in unallowable costs of $3,034; and  Nine LEAs submitted their final project completion reports after the deadline. We also identified an issue that is not significant to the audit objectives, but warrants the attention of management. Specifically, we found that two LEAs with unused planning funds properly applied the funds to program implementation. However, as these funds were not included in the LEAs’ approved energy expenditure plans, the amount of Proposition 39 funds paid to these LEAs exceeded their approved energy expenditure plans by $232,713. This final audit report identifies six LEAs that sole-sourced a portion of their project costs, in violation of Public Resources Code (PRC) section 26235(c). This final audit report also identifies one LEA that spent Proposition 39 funds on ineligible expenditures, in violation of the California Energy Commission’s Proposition 39: California Clean Energy Jobs Act – 2013 Program Implementation Guidelines and the California Community Colleges Chancellor’s Office’s California Community Colleges Proposition 39 Implementation Guidelines. Adrienne Alvord, Chair -2- June 30, 2020 PRC section 26240(h)(1) states, “The Superintendent of Public Instruction shall require local education agencies to pay back funds if they are not used in accordance with state statute or regulations….” Findings 1 and 3 are both apportionment-significant for LEAs. If you disagree with either finding, you have 30 days from the date the SCO emailed this report to request a summary review of any apportionment-significant audit findings on the grounds of substantial compliance. In addition, you have 60 days from delivery of this letter—or 30 days following the conclusion of a summary review regarding the finding included in that review—to file a formal appeal of any apportionment-significant audit findings on any one or more of the grounds set forth in Education Code (EC) section 41344(d). The request for a summary review or formal appeal should be submitted to the following address: Executive Officer Education Audit Appeals Panel 770 L Street, Suite 1100 Sacramento, California 95814 If you have any questions regarding the summary review process or the appeal process, please see the Education Audit Appeals Panel (EAAP) website (www.eaap.ca.gov) or call EAAP at (916) 445-7745. LEAs working to resolve audit exceptions may request structured repayment plans under EC section 41344. To request a repayment plan, the LEA must submit a letter to the California Department of Education (CDE) within 90 days of receipt of this letter; within 30 days of withdrawing or receiving a determination of a summary review if there is no appeal; or within 30 days of withdrawing or receiving a final determination regarding an appeal pursuant to EC section 41344(a). More information on repayment plans can be found on the CDE’s website (http://www.cde.ca.gov/fg/au/ag/resolution.asp) or by contacting the CDE, School Fiscal Services Division, Categorical Allocations and Management Assistant Unit, at (916) 323-8068. If you have any questions about the audit findings, please contact Lisa Kurokawa, Bureau Chief, by telephone at (916) 327-3138. Sincerely, Original signed by JIM L. SPANO, CPA Chief, Division of Audits JLS/ls Adrienne Alvord, Chair -3- June 30, 2020 cc: Jack Bastida, Contract Manager Citizens Oversight Board Jim Bartridge, Program and Policy Advisor Citizens Oversight Board Tony Thurmond, Superintendent of Public Instruction California Department of Education Kimberly Tarvin, Director of Audits and Investigation California Department of Education Caryn Moore, Director School Fiscal Services Division California Department of Education Derrick Andrade, Education Fiscal Services Consultant School Fiscal Services Division California Department of Education David Hochschild, Chair California Energy Commission Drew Bohan, Executive Director California Energy Commission Michael Sokol, Deputy Director Efficiency Division California Energy Commission Bill Pfanner, Proposition 39 K-12 Project Manager Efficiency Division California Energy Commission Tom Epstein, President Board of Governors California Community Colleges Chancellor’s Office Eloy Ortiz Oakley, Chancellor California Community Colleges Chancellor’s Office Lizette Navarette, Vice Chancellor College Finance and Facilities Planning Division California Community College Chancellor’s Office Hoang Nguyen, Interim Director of Facilities Planning College Finance and Facilities Planning Division California Community College Chancellor’s Office Tracy Britten, Specialist College Finance and Facilities Planning Division California Community Colleges Chancellor’s Office Mary C. Kelly, CPA, Executive Officer Education Audit Appeals Panel Lillian Markind, President Board of Education Brisbane School District Ronan Collver, Superintendent Brisbane School District Aida Wong Gamba, Administrative Coordinator Brisbane School District Adrienne Alvord, Chair -4- June 30, 2020 Tamara Otero, President Board of Trustees Cajon Valley Union School District David Miyashiro, Superintendent Cajon Valley Union School District Scott Buxbaum, Assistant Superintendent Business Services Cajon Valley Union School District Sharon Dobbins, Director Long-Range Planning Department Cajon Valley Union School District Gloria Negrete McLeod, President Governing Board Chaffey Community College District Henry D. Shannon, Ph.D., Superintendent/President Chaffey Community College District Kim Erickson, Executive Director Business Services Chaffey Community College District Lisa Bailey, Associate Superintendent Business Services and Economic Development Chaffey Community College District Patrick Cabildo, CPA, Internal Auditor Chaffey Community College District Mary Helen Ybarra, President Board of Education Corona-Norco Unified School District Michael H. Lin, Ed.D., Superintendent Corona-Norco Unified School District Alan P. Giles, Assistant Superintendent Business Services Corona-Norco Unified School District Andrew Sterner, Administrative Director Support Services Corona-Norco Unified School District Michael Wood, Energy Manager Support Services Corona-Norco Unified School District Kathy Babcock, President Board of Education Fort Bragg Unified School District Rebecca Walker, Superintendent Fort Bragg Unified School District Barry Silva, Manager Facilities, Maintenance, Operations and Transportation Fort Bragg Unified School District Adrienne Alvord, Chair -5- June 30, 2020 Wendy Boise, Director Business Services Fort Bragg Unified School District Guadalupe Solis, Ed.D., President Board of Trustees Lemoore Union High School District Debbie Muro, Superintendent Lemoore Union High School District Mark Howard, Director Business Services Department Lemoore Union High School District Joe Scoto, President, Board of Education McSwain Union Elementary School District Mike Crass, Interim Superintendent McSwain Union Elementary School District Jody Beard, Chief Business Official McSwain Union Elementary School District Jude Cazares, President Board of Education Norwalk-La Mirada Unified School District Hasmik Danielian, Ed.D., Superintendent Norwalk-La Mirada Unified School District Estuardo Santillan, Assistant Superintendent Business Services Norwalk-La Mirada Unified School District Gerald Mitchell III, Director Maintenance & Operations Norwalk-La Mirada Unified School District Greg White, President Board of Trustees Panama-Buena Vista Union School District Kevin M. Silberberg, Ed.D., Superintendent Panama-Buena Vista Union School District Glenn Imke, Assistant Superintendent Business Services Panama-Buena Vista Union School District Katie Gonzalez, Director of Fiscal Services Business Services Panama-Buena Vista Union School District Rob Moen, President Governing Board Penn Valley Union Elementary School District Torie F. England, Ed.D., Superintendent Penn Valley Union Elementary School District Kayla Wasley, Chief Business Official Penn Valley Union Elementary School District Adrienne Alvord, Chair -6- June 30, 2020 Diana Clearwater, Principal Ralph A. Gates Elementary School Edward Wong, Ed.D., President Board of Education Saddleback Valley Unified School District Crystal Turner, Ed.D., Superintendent Saddleback Valley Unified School District Connie Cavanaugh, Assistant Superintendent Human Resources and Fiscal Services Saddleback Valley Unified School District Susan Cortum, Director Fiscal Services Saddleback Valley Unified School District Paul Madonna, President Board of Education San Luis Obispo County Office of Education James J. Brescia, Ed.D., County Superintendent of Schools San Luis Obispo County Office of Education Sheldon K. Smith, Ed.D., Assistant Superintendent Business Services San Luis Obispo County Office of Education Katy Bates, Accounting Manager Business Services San Luis Obispo County Office of Education Paul Piette, Principal Grizzly ChalleNGe Charter School Bob Romness, President Board of Trustees Sierra Joint Community College District William Duncan, Superintendent/President Sierra Joint Community College District Erik Skinner, Vice President of Administrative Services Sierra Joint Community College District Su-Lin Shum, Director of Finance Sierra Joint Community College District William N. Enos, President Board of Education Siskiyou County Office of Education Kermith R. Walters, County Superintendent Siskiyou County Office of Education Deborah Pendley, Associate Superintendent Business Services Siskiyou County Office of Education Cheryl Quinones, President Board of Trustees South Bay Union School District Katie McNamara, Ed.D., Superintendent South Bay Union School District Adrienne Alvord, Chair -7- June 30, 2020 Janea Marking, Assistant Superintendent Business Services South Bay Union School District Brad Wilkinson, Director Fiscal Services South Bay Union School District John Leal, President Board of Trustees State Center Community College District Paul Parnell, Ph.D., Chancellor State Center Community College District Cheryl Sullivan, Vice Chancellor Finance and Administration State Center Community College District Wil Schofield, Director of Finance State Center Community College District Melissa Ferry, Executive Assistant to the Chancellor State Center Community College District Kathy Garcia, President Board of Education Stockton Unified School District John E. Deasy, Ph.D., Superintendent of Schools Stockton Unified School District Lisa Grant Dawson, Chief Business Official Business Services Stockton Unified School District Susanne Montoya, Executive Director Business Services Stockton Unified School District Steve Breakfield, Director Facilities and Planning Stockton Unified School District Stephanie Hernandez-Jarvis, President Board of Education West Contra Costa Unified School District Matthew Duffy, Superintendent West Contra Costa Unified School District Tony Wold, Ed.D., Associate Superintendent Business Services West Contra Costa Unified School District Luis Freese, Associate Superintendent Maintenance and Operations West Contra Costa Unified School District Julio Arroyo, Executive Director Maintenance and Operations West Contra Costa Unified School District Adrienne Alvord, Chair -8- June 30, 2020 Linda Storli, President Board of Education William S. Hart Union High School District Mike Kuhlman, Superintendent William S. Hart Union High School District Ralph Peschek, Chief Business Officer Business Services William S. Hart Union High School District Collyn Nielsen, Chief Administrative Officer William S. Hart Union High School District Leslie Beggs, Board Chair Board of Trustees Yosemite Community College District Henry C. V. Yong, Chancellor Yosemite Community College District Susan C. Yeager, Ed.D., Vice Chancellor Fiscal Services Yosemite Community College District Jeremy Salazar, Controller Yosemite Community College District Judy Lancaster, Director Facilities Planning and Operations Yosemite Community College District Bill Clark, Deputy Superintendent Business and Administrative Services Contra Costa County Office of Education Steve Mattern, Director District Advisory Services Kern County Superintendent of Schools Jamie Dial, Assistant Superintendent Business Services Kings County Office of Education Keith D. Crafton, Director Business Advisory Services Los Angeles County Office of Education Becky Jeffries, Assistant Superintendent Business and Administrative Services Mendocino County Office of Education Janet Riley, Assistant Superintendent Business Services Merced County Office of Education Darlene Waddle, Chief Business Official Business Services Nevada County Office of Education Dean West, CPA, Associate Superintendent Business Services Orange County Department of Education Adrienne Alvord, Chair -9- June 30, 2020 Tina Daigneault, Chief Business Official Administrative and Business Services Riverside County Office of Education Michael Simonson, Deputy Superintendent Business Services San Diego County Office of Education Peter Foggiato, Division Director District Business Services San Joaquin County Office of Education Denise Porterfield, Deputy Superintendent Business Services Division San Mateo County Office of Education Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Audit Authority .................................................................................................................. 4 Objectives, Scope, and Methodology ............................................................................... 4 Conclusion .......................................................................................................................... 6 Follow-up on Prior Audit Findings .................................................................................. 7 Views of Responsible Officials .......................................................................................... 7 Restricted Use .................................................................................................................... 8 Schedule 1—Total Completed Proposition 39 Program Costs for Local Educational Agencies ....................................................................... 9 Schedule 2—Total Completed Proposition 39 Program Costs for Community College Districts ..................................................................... 14 Findings and Recommendations ........................................................................................... 16 Observation and Recommendation ...................................................................................... 20 Appendix—Audit Results by Local Educational Agencies and Community College Districts ..................................................................... A1 Attachment A—Cajon Valley Union School District’s Response to Audit Results Attachment B—Fort Bragg Unified School District’s Response to Audit Results Attachment C—Nestor Language Academy Charter School’s Response to Audit Results Attachment D—Saddleback Valley Unified School District and Ralph A. Gates Elementary School’s Response to Audit Results Attachment E—West Contra Costa Unified School District’s Response to Audit Results Attachment F—William S. Hart Union High School District’s Response to Audit Results Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Audit Report Summary The State Controller’s Office (SCO) audited a selection of completed projects related to the California Clean Energy Jobs Act for the period of July 1, 2018, through June 30, 2019. As of June 30, 2019, 212 local educational agencies (LEAs) reported $171,890,450 in completed project costs and 59 community college districts (CCDs) reported $66,985,654 in completed project costs. From the list of completed projects, we selected for audit 17 LEAs and four CCDs, which together reported total expenditures of $45,102,262. Our audit found that:  Six LEAs sole-sourced a portion of their project costs, resulting in unallowable costs of $9,537,047;  Twelve LEAs and four CCDs did not identify the projected energy savings in the awarded contracts, and four LEAs did not have a signed contract;  One LEA spent Proposition 39 funds on ineligible expenditures, resulting in unallowable costs of $3,034; and  Nine LEAs submitted their final project completion reports after the deadline. We also identified an issue that is not significant to the audit objectives, but warrants the attention of management. Specifically, we found that two LEAs with unused planning funds properly applied the funds to program implementation. However, as the funds were not included in the LEAs’ approved energy expenditure plans (EEPs), the amount of Proposition 39 funds paid to these LEAs exceeded their approved EEPs by $232,713. A separate summary of the audit results for the 17 LEAs and four CCDs selected for audit is included as an Appendix to this report. Background The California Clean Energy Jobs Act was created with the approval of Proposition 39 (Chapter 29, Statutes of 2013) in the November 2012 statewide election. The statute changed the corporate income tax code to allocate projected revenue from the General Fund to the Clean Energy Job Creation Fund for five fiscal years, beginning with fiscal year (FY) 2013-14. Under the initiative, it is estimated that up to $550 million is available annually to be appropriated by the California State Legislature for purposes of funding eligible projects that create jobs in California while improving energy efficiency and expanding clean energy generation. Senate Bill 73 requires that 89% of the funds deposited annually into the Clean Energy Job Creation Fund be made available to LEAs for energy efficiency and clean energy projects, and 11% be made available to CCDs for energy efficiency and clean energy projects. -1- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program An eligible energy project is an installation at or modification to a school site that improves energy efficiency or expands clean energy generation. Energy efficiency measures include heating, ventilation, and air conditioning (HVAC) system retrofits and various interior and exterior retrofits; clean energy generation measures include photovoltaic (solar) panels. All facilities within an LEA are eligible for Proposition 39 program funding. Citizens Oversight Board Proposition 39 also established the Citizens Oversight Board (COB) to review expenditures, audit the Clean Energy Job Creation Fund, and maintain transparency and accountability of the Fund. Members of the COB are appointed by the California Treasurer, Attorney General, and State Controller with two ex officio members from the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC). California Department of Education The California Department of Education (CDE) is responsible for distributing Proposition 39 funding to LEAs that serve grade K-12 students. CDE allocates funds based on the following formula:  85% based on average daily attendance reported as of the second principal apportionment for the prior year (P-2); and  15% based on the number of students eligible for free and reduced- priced meals in the prior year. These funds may be used by LEAs for energy efficiency and clean energy projects, as well as related energy planning, energy training, and energy management. LEAs are required to submit an EEP to the CEC for consideration and approval. An EEP includes a technical description and project specifications for the proposed eligible energy measures. Funds are released to an LEA only after the CEC approves the EEP. LEAs with prior-year average daily attendance of 1,000 or lower are eligible to receive funding for both the current year and the following year in the current year. LEAs that select this option do not receive a funding allocation in the following year. LEAs whose first year of eligibility was FY 2013-14 also had the option of requesting a portion of that year’s award allocation for energy planning activities without submitting an EEP to the CEC. The energy planning funds can be spent only on the following four activities:  Energy audits and energy surveys/assessments;  Proposition 39 program assistance;  Hiring or retaining an energy manager; and  Energy-related training. Any unused energy planning funds must be applied toward implementing energy projects from an LEA’s approved EEP. -2- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program California Energy Commission The CEC is the primary state agency responsible for energy policy and planning. Public Resources Code (PRC) section 26235(a) requires the CEC to establish guidelines in consultation with the State Superintendent of Public Instruction, the Chancellor of the California Community Colleges, and the CPUC. On December 19, 2013, the CEC adopted the Proposition 39: California Clean Energy Jobs Act – 2013 Program Implementation Guidelines (Proposition 39 Program Implementation Guidelines). These guidelines provide direction to LEAs on the types of awards and the required proposals, explain the screening and evaluation criteria, describe the standards to be used to evaluate project proposals, and outline the award process. Included in Proposition 39 Program Implementation Guidelines is a savings-to-investment ratio (SIR) calculation. To be approved for Proposition 39 funding, the eligible energy project must achieve a SIR above 1.0. For example, for every dollar invested in the eligible energy project, the LEA must accrue over $1 in savings. The SIR calculation is based on the present value of the savings divided by project installation costs, subtracting rebates and other grant funding sources. The Proposition 39 Program Implementation Guidelines also include a formula for estimating job creation benefits, pursuant to PRC section 26235(e)(10). The CEC also developed the Proposition 39: California Clean Energy Jobs Act – 2015 Energy Expenditure Plan Handbook (EEP Handbook), which includes step-by-step instructions to assist LEAs in completing the required forms. California Community Colleges Chancellor’s Office The California Community Colleges Chancellor’s Office (CCCCO) is the state agency that oversees the California community college system. The CCCCO is responsible for distributing Proposition 39 funding to individual CCDs. The funds may be used by CCDs for energy efficiency and alternative energy projects, along with related improvements and repairs, that contribute to reducing operating costs and improving health and safety conditions in the community college system. The CCCCO developed its Proposition 39: Clean Energy Jobs Act of 2012 – California Community Colleges Energy Project Guidance (Energy Project Guidance) to assist CCDs with implementing projects that meet the Proposition 39 requirements. Projects must be consistent with the State’s energy loading order, which guides the State’s energy policies and decisions according to the following priority order: 1) decreasing electricity demand by increasing energy efficiency and reducing energy usage in periods of high demand or cost, 2) meeting new energy supply needs with renewable resources, and 3) meeting new energy generation needs with clean fossil-fuel generation. -3- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program CCDs have been pursuing and implementing energy efficiency and renewable energy projects for many years through such programs as the CPUC-administered California Community Colleges/Investor Owned Utilities Energy Efficiency Partnership. This public-private partnership has been working on behalf of CCDs since 2006 and has aggressively reduced energy usage, resulting in over $12 million in costs savings for the community college system. Audit Authority Government Code section 12410 and PRC section 26210 provide the legal authority to conduct this audit. Government Code section 12410 states that the Controller shall superintend the fiscal concerns of the State and audit the disbursement of any state money for correctness, legality, and for sufficient provisions of law for payment. The SCO’s interagency agreement with the COB, pursuant to PRC section 26210(d)(2), commissions the SCO to review a selection of completed projects to assess the effectiveness of the expenditures in meeting the objectives of the California Clean Energy Jobs Act. Objectives, Scope, On July 17, 2019, we entered into an agreement with the COB to conduct an audit of a selection of completed projects (80% LEA projects and 20% and Methodology CCD projects) to evaluate their effectiveness in meeting the objectives of the Clean Energy Job Creation Fund’s program guidelines. We selected 17 LEAs and four CCDs for audit. We did not audit their financial statements. We conducted this 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 objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. To achieve our audit objectives for the LEA K-12 Proposition 39 Program, we selected 17 of 212 LEAs with project costs totaling $37,700,150 and determined whether:  Planning funds were expended in accordance with program requirements and unused planning funds were applied towards implementing eligible energy projects approved by the CEC;  The LEA submitted an EEP to the CEC consistent with the LEA’s priority of eligible projects;  The CEC approved the EEP in compliance with the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook; -4- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program  The approved EEP included: o A signed utility data release form from the LEA allowing the CEC to access both historical and future utility billing data; o A benchmarking process established by the CEC to determine a prioritized plan for implementing the eligible energy projects; o An identification of eligible energy projects according to any one of the three methods available to LEAs (these include an energy survey; an American Society of Heating, Refrigerating and Air- Conditioning Engineering Level 2 energy audit; or data analytics); o A SIR that adheres to the cost-effectiveness determination set forth by the CEC; and o A job-creation benefits estimation that adheres to the formula set forth by the CEC.  The final report to the CEC contained the information outlined in PRC section 26240, subdivision (b), paragraphs (1) through (7);  The LEA did not use a sole-source process to award funds;  The LEA had a signed contract that identified project specifications, costs, and projected energy savings;  The LEA supported project costs; and  The LEA paid back Proposition 39 funds if the project was torn down, remodeled, or deemed surplus and sold prior to the payback of the project. Errors found in the selected samples were not projected to the intended (total) population. To achieve our audit objectives for the CCD Proposition 39 Program, we selected four of 59 CCDs with completed project costs totaling $7,402,112 and determined whether:  The CCD submitted a Proposition 39 Funding Application to the CCCCO, and the CCCCO approved the application consistent with its Proposition 39: Clean Energy Jobs Act of 2012 – California Community Colleges Proposition 39 Implementation Guidelines (issued in May 2013 and revised in April 2015);  The CCD submitted a Call for Projects form that identified projects as energy efficiency or renewable energy generation;  The Proposition 39 Close-out Project Completion form and the Annual Project Expenditure Report submitted to the CCCCO contained the following information: o The estimated amount of energy saved, accompanied by specific energy consumption and utility bill cost data for the individual facility where the project is located; o The nameplate rating of the new clean energy generation method installed; o The number of trainees resulting from the project; o The amount of time between awarding financial assistance and completing the project or training activities; -5- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program o The entity’s energy intensity before and after project completion, as determined by an energy rating or benchmark system; and o The number of direct full-time equivalent employees created by each project and the average number of months or years of utilization of each of these employees.  The CCD did not use a sole-source process to award funds;  The CCD had a signed contract that identified project specifications, costs, and projected energy savings;  The CCD supported project costs; and  The CCD paid back the Proposition 39 Program funds if the project was torn down, remodeled, or deemed surplus and sold prior to the payback of the project. Errors found in the selected samples were not projected to the intended (total) population. Conclusion As a result of conducting the audit procedures, we found instances of noncompliance with the audit objectives outlined in the Objectives, Scope, and Methodology section. These instances are quantified in the Schedules and described in the Findings and Recommendations section of this report. We selected 17 LEAs and four CCDs with completed projects for audit. These 21 agencies reported total completed project costs of $45,102,262 ($37,700,150 for LEAs and $7,402,112 for CCDs). Our audit found:  Six LEAs sole-sourced a portion of their project costs, resulting in unallowable costs of $9,537,047;  Twelve LEAs and four CCDs did not identify the projected energy savings in the awarded contracts, and four LEAs did not have a signed contract;  One LEA spent Proposition 39 funds on ineligible expenditures, resulting in unallowable costs of $3,034; and  Nine LEAs submitted their final project completion reports after the deadline. We also identified an issue that is not significant to the audit objectives, but warrants the attention of management. Specifically, we found that two LEAs with unused planning funds properly applied the funds to program implementation. However, as these funds were not included in the LEAs’ approved EEPs, the amount of Proposition 39 funds paid to these LEAs exceeded their approved EEPs by $232,713. This issue is described in the Observation and Recommendation section of this report. -6- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Follow-up on We previously conducted an audit of 16 LEAs and three CCDs with projects completed between July 1, 2017, and June 30, 2018, and issued Prior Audit an audit report on June 28, 2019. The report found that: Findings  Seven LEAs and three CCDs sole-sourced a portion of their project costs, resulting in unallowable costs of $3,013,770;  Ten LEAs and three CCDs did not identify the projected energy savings in the awarded contracts;  One LEA and one CCD spent Proposition 39 funds on ineligible expenditures, resulting in unallowable costs of 19,579 ($27,654 less $8,075 that was also sole-sourced);  Five LEAs submitted their final project completion reports after the deadline; and  Four LEAs with unused planning funds properly applied them to program implementation. However, as these funds were not included in their approved EEPs, the amount of Proposition 39 funds paid to these LEAs exceeded their approved EEPs by $26,238. The 17 LEAs and four CCDs selected for the current audit were not previously audited under the Proposition 39 Program. However, we found that the current audit identifies the same issues noted in prior audit reports. Views of We discussed our audit results with representatives of the 17 LEAs and four CCDs selected for testing during audit fieldwork and via email at the Responsible end of the audit. All responses to the findings have been included in the Officials LEA’s or CCD’s respective section of the Appendix; and all formal responses received on letterhead have been included as an Attachment to this report. -7- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Restricted Use This report is solely for the information and use of the COB, the CDE, the CEC, the CCCCO, Brisbane School District, Cajon Valley Union School District, Chaffey Community College District, Corona-Norco Unified School District, Fort Bragg Unified School District, Grizzly ChalleNGe Charter School, Lemoore Union High School District, McSwain Union Elementary School District, Nestor Language Academy Charter School, Norwalk-La Mirada Unified School District, Panama-Buena Vista Union School District, Penn Valley Union Elementary School District, Saddleback Valley Unified School District, Sierra Joint Community College District, Siskiyou County Office of Education, State Center Community College District, Stockton Unified School District, West Contra Costa Unified School District, William S. Hart Union High School District, Yosemite Community College District, and 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, and is available on the SCO website at https://www.sco.ca.gov. Original signed by JIM L. SPANO, CPA Chief, Division of Audits June 30, 2020 -8- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 1— Total Completed Proposition 39 Program Costs for Local Educational Agencies July 1, 2018, through June 30, 2019 Program Planning Amount Local Educational Agency Implementation Funds1 Total Unallowable Reference2 Completed projects selected for audit: Brisbane School District $ 218,044 $ 41,194 $ 259,238 $ (56,822) Finding 1, 2, 4 Cajon Valley Union School District 3,927,181 - 3,927,181 - Finding 2 Corona-Norco Unified School District 8,588,274 - 8,588,274 - Finding 4 Fort Bragg Unified School District 586,437 - 586,437 - Finding 2 Grizzly ChalleNGe Charter School 249,680 11,577 261,257 - Lemoore Union High School District 546,344 22,297 568,641 - Finding 2, 4 McSwain Union Elementary School 253,487 19,800 273,287 (46,950) Finding 1, 2 Nestor Language Academy Charter 290,230 - 290,230 - Finding 2, 4 Norwalk-La Mirada Unified School District 4,258,041 289,023 4,547,064 (23,478) Finding 1, 2, 3 Panama-Buena Vista Union School District 3,406,613 124,191 3,530,804 - Finding 2 Penn Valley Union Elementary School District 270,717 105,292 376,009 - Finding 2 Ralph A. Gates Elementary School 262,577 - 262,577 ( 262,577) Finding 1, 2, 4 Saddleback Valley Unified School District (EEP Nos. 1164, 1440, 2033) 4,753,967 1,062,261 5,816,228 ( 5,418,069) Finding 1, 2, 4 Siskiyou County Office of Education 149,071 - 149,071 - Finding 2 Stockton Unified School District (EEP No. 2365) 2,223,853 200,000 2,423,853 - Finding 4 West Contra Costa Unified School District 1,634,936 195,097 1,830,033 - Finding 2, 4 William S. Hart Union High School District 3,732,185 277,781 4,009,966 ( 3,732,185) Finding 1, 4 Total, completed projects selected for audit $ 35,351,637 $ 2,348,513 $ 37,700,150 3 $ (9,540,081) Completed projects not selected for audit: Academies of the Antelope Valley $ 1 49,716 $ - $ 149,716 Acalanes Union High School District 5 8,600 1 30,000 188,600 Acton-Agua Dulce Unified 2 61,136 - 261,136 Alpine Union Elementary 5 32,501 5 ,850 538,351 Alview-Dairyland Union Elementary 1 60,000 1 0,783 170,783 Alvord Unified School District (EEP No. 110) 4 ,442,149 2 89,676 4,731,825 Alvord Unified School District (EEP No. 5007) 1 58,516 1 7,860 176,376 Architecture, Construction & Engineering Charter High (ACE) 1 55,546 4 ,611 160,157 Arena Union Elementary 2 20,673 3 0,000 250,673 Arvin Union School District 8 23,300 - 823,300 Atwater Elementary School District 9 88,246 - 988,246 Bellevue Union Elementary School District (EEP No. 1598) 3 24,546 1 16,000 440,546 Bellevue Union Elementary School District (EEP No. 1820) 2 2,880 1 16,467 139,347 Bert Corona Charter 2 46,754 5 ,190 251,944 Big Springs Union Elementary (EEP No. 4980) 8 5,211 - 85,211 Big Springs Union Elementary (EEP No. 5547) 9 1,653 - 91,653 Big Valley Joint Unified School District 2 28,785 1 5,919 244,704 Biggs Unified School District 2 19,990 3 9,008 258,998 Black Oak Mine Unified School District 5 35,077 - 535,077 Blake Elementary 4 1,684 1 5,032 56,716 Bonny Doon Elementary 1 33,620 1 1,832 145,452 Bonsall Unified School District 3 11,575 2 ,038 313,613 BRIDGES Charter 2 01,941 5 0,729 252,670 Burrel Union Elementary School District 2 50,699 7 ,227 257,926 Byron Union Elementary School District 5 13,264 2 1,386 534,650 Cabrillo Unified School District 6 2 5,000 25,006 Calipatria Unified School District 1 1,622 8 ,500 20,122 -9- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 1 (continued) Program Planning Local Educational Agency Implementation Funds1 Total Completed projects not selected for audit (continued): Calistoga Joint Unified School District $ 9 0,577 $ 1 5,000 $ 1 05,577 Campbell Union High School District 1 ,215,269 8 3,000 1 ,298,269 Capistrano Unified School District 2 ,490,333 7 0,873 2 ,561,206 Cecil Avenue Math & Science Academy 2 43,156 6 0,789 3 03,945 Center Joint Unified School District 4 14,379 - 4 14,379 Central Unified School District 3 ,565,907 215,930 3 ,781,837 Charter Alternatives Academy 2 30,718 - 2 30,718 Charter School of Morgan Hill 1 75,684 1 1,500 1 87,184 Chino Valley Unified School District 1 ,111,510 3 9,000 1 ,150,510 Chula Vista Elementary School District 2 ,380,896 - 2 ,380,896 Chula Vista Elementary School District – Arroyo Vista Charter 1 9,332 - 1 9,332 Chula Vista Elementary School District – Discovery Charter 3 6,691 - 3 6,691 Coachella Valley Unified School District 2 14,828 - 2 14,828 College Preparatory Middle 1 51,435 2 5,361 1 76,796 Colusa County Office of Education 6 4,420 1 1,000 7 5,420 Community Roots Academy 2 50,000 - 2 50,000 Conejo Valley Unified School District 1 ,419,798 143,555 1 ,563,353 Covina-Valley Unified School District (EEP No. 1478) 2 ,609,027 186,884 2 ,795,911 Covina-Valley Unified School District (EEP No. 2233) 4 83,594 - 4 83,594 Credo High School 1 31,102 - 1 31,102 Cypress Charter High School 1 2,621 - 1 2,621 Cypress Elementary (EEP No. 1466) 3 43,834 - 3 43,834 Cypress Elementary (EEP No. 1621) 3 47,000 5 2,606 3 99,606 Da Vinci Charter Academy 1 00,467 - 1 00,467 Davis Joint Unified 2 39,766 127,429 3 67,195 Dehesa Elementary 2 47,773 7 ,650 2 55,423 Del Vista Math & Science Academy 2 33,988 5 8,497 2 92,485 Denair Charter Academy (EEP No. 1751) 1 82,477 - 1 82,477 Denair Charter Academy (EEP No. 2037) 1 7,782 - 1 7,782 Dunsmuir Joint Union High School District 6 3,740 - 6 3,740 Durham Unified School District 2 72,434 - 2 72,434 Earlimart Elementary 6 30,945 - 6 30,945 Eastside Union Elementary School District (EEP No. 527) 5 61,038 130,000 6 91,038 Eastside Union Elementary School District (EEP No. 899) 1 80,291 130,000 3 10,291 Eel River Charter School 4 4,644 2 ,500 4 7,144 El Monte City School District 2 ,017,022 144,797 2 ,161,819 El Segundo Unified School District 6 0,421 130,000 1 90,421 Encinitas Union Elementary School District 1 ,115,508 - 1 ,115,508 Escondido Union High School District 2 23,831 105,000 3 28,831 Eureka City Unified School District 1 79,572 1 7,102 1 96,674 Fallbrook Union Elementary School District 4 50,741 1 5,068 4 65,809 Feaster (Mae L.) Charter 6 4,575 - 6 4,575 Fowler Unified School District 6 24,113 - 6 24,113 Galt Joint Union High School District 4 97,165 2 9,145 5 26,310 Gateway Unified School District 5 29,477 7 0,000 5 99,477 George Washington Charter 2 70,020 - 2 70,020 Gerber Union Elementary School District 2 19,425 1 3,744 2 33,169 Geyserville Unified School District 2 1,168 5 1,000 7 2,168 Gilroy Prep School (Navigators School) 1 39,388 2 1,525 1 60,913 Glendora Unified School District 6 85,468 2 5,000 7 10,468 Global Youth Charter School 8 5,188 - 8 5,188 Golden Plains Unified School District 4 92,082 127,584 6 19,666 Gorman Elementary 1 34,162 - 1 34,162 Grass Valley Charter 2 2,800 4 6,015 6 8,815 Guadalupe Union Elementary School District 2 65,776 3 5,180 3 00,956 Guerneville Elementary 2 61,898 - 2 61,898 -10- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 1 (continued) Program Planning Local Educational Agency Implementation Funds1 Total Completed projects not selected for audit (continued): Hanford Elementary School District $ 1 ,315,435 $ 130,000 $ 1,445,435 Hanford Joint Union High School District 4 73,307 4 7,475 520,782 Happy Camp Union Elementary School District 1 84,441 - 184,441 Happy Valley Elementary (EEP No. 410) 1 29,960 1 8,106 148,066 Happy Valley Elementary (EEP No. 1866) 3 8,622 3 9,846 78,468 Hayward Unified School District 4 ,352,338 - 4,352,338 Heber Elementary 5 73,934 - 573,934 Hesperia Unified School District 2 23,168 260,000 483,168 Hickman Community Charter 5 15,593 9 ,841 525,434 High Tech High 2 54,677 1 0,000 264,677 High Tech Middle 2 44,696 1 5,000 259,696 Hughson Unified School District (EEP No. 1750) 8 6,410 - 86,410 Hughson Unified School District (EEP No. 2012) 8 0,000 - 80,000 Huntington Beach City School District 1 ,478,866 - 1,478,866 Huntington Beach Union High School District 3 ,229,831 206,159 3,435,990 iLEAD Lancaster Charter 2 00,913 5 0,475 251,388 Imperial Beach Charter School 2 89,782 - 289,782 Intermountain STEM Academy Charter 3 0,050 - 30,050 Jefferson Charter Academy 1 55,862 - 155,862 Junction Elementary 3 5,469 1 5,301 50,770 Jurupa Unified School District 1 ,906,727 - 1,906,727 Kern County Office of Education (EEP No. 5557) 1 00,535 - 100,535 Kern County Office of Education (EEP No. 5562) 1 12,335 - 112,335 Kern County Office of Education (EEP No. 5563) 1 21,202 2 ,500 123,702 Keyes to Learning Charter School 1 62,144 2 ,804 164,948 Keyes Union School District 2 97,184 3 ,620 300,804 Klamath River Union Elementary School District 6 0,394 9 ,450 69,844 La Canada Unified School District 1 48,036 7 6,204 224,240 Laguna Beach Unified School District 5 52,927 6 0,000 612,927 Lake Elsinore Unified School District (EEP No. 670) 1 ,546,664 152,351 1,699,015 Lake Elsinore Unified School District (EEP No. 1535) 9 01,947 302,138 1,204,085 Lake Elsinore Unified School District (EEP No. 1838) 2 ,509,249 302,138 2,811,387 Lake Tahoe Unified School District (EEP No. 1671) 7 63,154 - 763,154 Lake Tahoe Unified School District (EEP No. 3791) 1 50,532 - 150,532 Lakeside Union Elementary School District 1 ,044,852 1 1,000 1,055,852 Lammersville Joint Unified School District 6 97,868 2 4,190 722,058 Latrobe School District 2 29,791 2 0,763 250,554 Leadership Public Schools – Hayward 1 70,589 1 4,504 185,093 Learning Choice Academy 2 46,330 2 9,746 276,076 Leggett Valley Unified School District 1 82,714 5 0,855 233,569 Lennox School District 4 0,630 130,000 170,630 Liberty Elementary 1 10,000 5 0,000 160,000 Literacy First Charter School 2 73,853 2 ,000 275,853 Mammoth Unified School District 4 34,756 109,341 544,097 Maria Montessori Charter Academy 2 55,355 1 ,800 257,155 McFarland Unified School District 7 49,073 130,000 879,073 Meadows Arts and Technology Elementary 1 99,361 5 0,317 249,678 Meadows Union Elementary School District 2 75,183 - 275,183 Mendocino Unified School District 2 63,968 - 263,968 Menifee Union Elementary School District 2 ,182,863 - 2,182,863 Merced Union High School District 2 ,524,893 - 2,524,893 Middletown Unified School District 5 15,088 4 4,518 559,606 Modoc County Office of Education 7 8,036 - 78,036 Monterey Bay County Office of Education – Monterey Bay Charter 8 6,560 - 86,560 Morgan Hill Unified School District 1 ,853,893 5 5,000 1,908,893 -11- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 1 (continued) Program Planning Local Educational Agency Implementation Funds1 Total Completed projects not selected for audit (continued): Mountain View Elementary School District $ 1 ,871,427 $ 8 ,455 $ 1,879,882 Mountain View Los Altos High School District 6 59,376 - 659,376 Multicultural Learning Center 2 43,731 2 3,572 267,303 Natomas Pacific Pathways Prep 2 01,053 5 3,299 254,352 Natomas Pacific Pathways Prep Middle 1 96,964 5 3,073 250,037 Natomas Unified School District 2 ,158,532 130,000 2,288,532 Nevada City School of the Arts 2 17,936 4 5,236 263,172 Newhall School District 1 ,471,329 5 8,199 1,529,528 Nicasio School 1 2,785 - 12,785 Nueva Vista Language Academy 2 48,284 6 2,071 310,355 Ontario-Montclair School District (EEP No. 1438) 8 70,984 206,560 1,077,544 Ontario-Montclair School District (EEP No. 1439) 1 ,009,806 206,560 1,216,366 Orange Center School District 2 08,825 5 4,820 263,645 Pacific Elementary School District 7 0,367 5 0,349 120,716 Pierce Joint Unified School District 5 68,917 - 568,917 Pioneer Union Elementary School District 5 35,425 - 535,425 Placer Union High School District 4 31,657 130,000 561,657 Plumas Lake Elementary School District 4 98,398 3 3,595 531,993 Point Area Joint Union High School 2 28,045 3 0,000 258,045 Quail Lake Environmental Charter 2 59,573 - 259,573 Ravendale-Termo Elementary School District 1 9,422 1 5,032 34,454 Red Bluff Joint Union High School District 5 09,251 4 6,004 555,255 Redlands Unified School District 1 ,912,724 1 5,000 1,927,724 Rio Elementary School District 5 18,013 130,000 648,013 Ripon Unified School District 6 09,743 4 7,775 657,518 Roseville City Elementary School District 6 39,178 5 8,500 697,678 Ross Valley Elementary School District 7 2,251 - 72,251 Salida Union School District 6 22,815 2 5,445 648,260 San Benito High School District 6 86,029 - 686,029 San Dieguito Union High School District 1 ,165,482 145,004 1,310,486 San Francisco Unified School District 2 25,347 686,419 911,766 San Juan Unified School District (EEP No. 2055) 1 ,933,763 147,527 2,081,290 San Juan Unified School District (EEP No. 2139) 2 ,105,612 400,049 2,505,661 San Luis Coastal Unified School District 1 68,000 5 ,000 173,000 San Marino Unified School District (EEP No. 2141) 1 46,986 6 0,700 207,686 San Marino Unified School District (EEP No. 5600) 4 45,250 6 0,700 505,950 San Pasqual Union Elementary School 2 51,250 6 ,250 257,500 San Ysidro Elementary School District 1 ,269,426 - 1,269,426 Santa Clarita Valley International 2 48,759 1 5,000 263,759 Santa Paula Unified School District 1 ,273,321 130,000 1,403,321 Saucelito Elementary School District 7 9,532 - 79,532 School of Arts and Enterprise 2 83,031 - 283,031 Shasta Union High School District 8 31,768 130,000 961,768 Sixth Street Prep 2 12,305 5 2,847 265,152 Sonora Union High School District 3 91,690 4 1,040 432,730 Soquel Union Elementary School District 1 55,309 - 155,309 South Bay Union School District 1 ,395,548 2 2,117 1,417,665 Stockton Unified School District (EEP No. 5269) 1 ,758,994 2 0,000 1,778,994 Sulphur Spring Union School District (EEP No. 1093) 6 13,707 5 4,254 667,961 Sulphur Spring Union School District (EEP No. 2319) 6 14,212 130,000 744,212 Sycamore Academy of Science and Cultural Arts 2 50,432 - 250,432 Sylvan Union Elementary School District (EEP No. 5173) 1 ,661,419 107,500 1,768,919 Sylvan Union Elementary School District (EEP No. 5223) 1 43,075 - 143,075 Temecula Valley Unified School District 5 84,185 - 584,185 Templeton Unified School District 5 20,026 - 520,026 Today’s Fresh Start – Compton 2 2,263 2 5,000 47,263 -12- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 1 (continued) Program Planning Local Educational Agency Implementation Funds1 Total Completed projects not selected for audit (continued): Torrance Unified School District (EEP No. 195) $ 531,710 $ - $ 531,710 Torrance Unified School District (EEP No. 708) 1 ,091,573 - 1,091,573 Tulare City School District 2 ,424,400 - 2,424,400 Val Verde Unified School District 79,960 123,910 2 03,870 Valley Center-Pauma Unified School District (EEP No. 1429) 812,215 - 8 12,215 Valley Center-Pauma Unified School District (EEP No. 5501) 143,229 - 1 43,229 Valley Home Joint Elementary 213,657 14,355 2 28,012 Valley Life Charter School 216,821 47,378 2 64,199 Valley Oaks Charter School 68,487 2 ,862 71,349 Vantage Point Charter School 20,192 - 20,192 Vaughn Next Century Learning Center 523,655 16,872 5 40,527 Victor Valley Union High School District 2 ,455,473 - 2,455,473 Wasco Union Elementary School District 544,719 24,897 5 69,616 Washington Colony Elementary School District 263,808 11,128 2 74,936 Washington Unified School District 540,122 51,128 5 91,250 West Park Elementary School District 241,162 31,724 2 72,886 Westmorland Union Elementary School District 26,650 55,019 81,669 Westside Elementary School District 261,856 24,431 2 86,287 Willow Creek Elementary School 69,000 8 ,000 77,000 Wilsona Elementary School District 591,252 - 5 91,252 Wiseburn Unified School District 471,879 72,000 543,879 Woodville Union Elementary School District 273,561 - 273,561 Yuba County Office of Education 249,609 52,852 302,461 Total, completed projects not selected for audit 124,367,508 9 ,822,792 134,190,300 Total completed projects $ 159,719,145 $ 12,171,305 $ 171,890,450 _________________________ 1 The planning funds are requested directly from CDE before an EEP is submitted. 2 See the Findings and Recommendations section. 3 We tested 100% of the costs reported, totaling $37,700,150, for the 17 LEAs selected for audit. -13- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 2— Total Completed Proposition 39 Program Costs for Community College Districts July 1, 2018, through June 30, 2019 Program Amount Community College District Implementation Unallowable Reference1 Completed projects selected for audit: Chaffey Community College District $ 1 ,538,729 $ - Finding 2 Sierra Joint Community College District 1 ,253,188 - Finding 2 State Center Community College District 1 ,914,406 - Finding 2 Yosemite Community College District 2 ,695,789 - Finding 2 Total, completed projects selected for audit $ 7 ,402,112 2 $ - Completed projects not selected for audit: Antelope Valley Community College District $ 234,826 Barstow Community College District 159,975 Butte-Glenn Community College District 4 0,990 Cabrillo Community College District 550,936 Cerritos Community College District 1 ,470,044 Chabot-Las Positas Community College District 2 ,053,362 Citrus Community College District 839,319 Coast Community College District 1 ,710,569 Contra Costa Community College District 2 ,776,435 El Camino Community College District 786,073 Feather River Community College District 130,267 Foothill-De Anza Community College District 826,430 Gavilan Joint Community College District 298,371 Glendale Community College District 543,535 Grossmont-Cuyamaca Community College District 1 ,341,956 Hartnell Community College District 920,224 Imperial Community College District 126,623 Kern Community College District 782,127 Lake Tahoe Community College District 119,003 Long Beach Community College District 1 7,026 Los Angeles Community College District 3 ,134,580 Los Rios Community College District 5 ,317,817 Marin Community College District 546,337 Mendocino-Lake Community College District 4 ,483 Merced Community College District 340,627 MiraCosta Community College District 1 ,046,999 Monterey Peninsula Community College District 724,324 Mt. San Antonio Community College District 3 ,929,543 North Orange County Community College District 2 ,070,983 Ohlone Community College District 293,269 Palo Verde Community College District 8 8,824 -14- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Schedule 2 (continued) Program Community College District Implementation Completed projects not selected for audit (continued): Palomar Community College District $ 1 ,937,058 Pasadena Area Community College District 1 ,606,122 Peralta Community College District 714,545 Rancho Santiago Community College District 655,628 Redwoods Community College District 4 2,709 Riverside Community College District 1 ,496,915 San Bernardino Community College District 1 ,192,463 San Diego Community College District 3 ,357,028 San Joaquin Delta Community College District 370,733 San Jose/Evergreen Community College District 1 ,035,205 San Mateo County Community College District 1 ,207,246 Santa Barbara Community College District 1 ,312,752 Santa Clarita Community College District 1 ,142,432 Santa Monica Community College District 799,174 Sequoias Community College District 719,566 Shasta-Tehama-Trinity Joint Community College District 9 4,803 Siskiyous Community College District 9 2,574 Sonoma County Junior College District 1 ,631,415 South Orange County Community College District 1 ,793,701 Southwestern Community College District 751,300 Ventura County Community College District 2 ,459,989 Victor Valley Community College District 690,936 West Hills Community College District 494,639 Yuba Community College District 758,732 Total, completed projects not selected for audit $ 59,583,542 Total completed projects $ 66,985,654 ______________________ 1 See the Findings and Recommendations section. 2 We tested 100% of the costs reported, totaling $7,402,112, for the four CCDs selected for audit. -15- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Findings and Recommendations FINDING 1— We found that six LEAs sole-sourced a portion of their project costs, totaling $9,537,047, as follows: Sole-sourced project costs Contract Local Education Agency Amount Brisbane School District $ 56,822 McSwain Union Elementary School District 4 6,950 Norwalk-La Mirada Unified School District 2 0,444 Ralph A. Gates Elementary School 262,577 Saddleback Valley Unified School District (EEP Nos. 1164, 1440, 2033) 5,418,069 William S. Hart Union High School District 3,732,185 Total $ 9 ,537,047 These six LEAs did not provide supporting documentation to show that they considered other vendors before awarding contracts. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” We have interpreted the requirement to “not use a sole source process to award funds” as the necessity for a competitive process. Competitive processes improve cost-effectiveness, prevent favoritism, and make the procurement process transparent. For the Proposition 39 program, LEAs hired contractors to perform critical functions for energy upgrades. However, despite their reliance on contractors, these LEAs and CCDs used noncompetitive processes to contract for these vital services and, thus, did not ensure the cost- effectiveness of these services. Recommendation We recommend that the CDE take appropriate action in response to funds paid to LEAs that did not meet the sole-source requirement. No additional recommendation for LEAs is applicable to this finding, as the Proposition 39 program has ended. LEAs’ Response We notified the six LEAs of this finding during audit fieldwork and at the end of the audit via email. Findings and Recommendations for individual LEAs are included in the Appendix. All responses to the findings have been included in the LEA’s respective section of the Appendix; and all formal responses received on letterhead have been included as an Attachment to this report. -16- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program FINDING 2— We found that 12 LEAs and four CCDs did not identify the required projected energy savings in the awarded contracts. In addition, four LEAs Projected energy did not have signed contracts. The table below summarizes this finding: savings not identified and/or Projected no signed contracts Energy Savings Not No Signed Local Educational Agency Identified Contract Brisbane School District1 X X Cajon Valley Union School District X Fort Bragg Unified School District X Lemoore Union High School District X McSwain Union Elementary School District2 X X Nestor Language Academy Charter X Norwalk-La Mirada Unified School District3 X Panama-Buena Vista Union School District X Penn Valley Union Elementary School District X Ralph A. Gates Elementary School X Saddleback Valley Unified School District4 X X Siskiyou County Office of Education X West Contra Costa Unified School District X Community College District Chaffey Community College District X Sierra Joint Community College District X State Center Community College District X Yosemite Community College District5 X 1 For Brisbane School District, we found that the district did not have signed contracts for two vendors. 2 For McSwain Union Elementary School District, we found that the district did not have signed contracts for two vendors. 3 For Norwalk-La Mirada Unified School District, we found that the district did not have a signed contract for one vendor. 4 For Saddleback Valley Unified School District, we found that the district did not have signed contracts for two vendors. In addition, one of the three awarded contracts did not identify the required projected energy savings. 5 For Yosemite Community College District, we found that two of the six awarded contracts did not identify the required projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation for LEAs and CCDs is applicable to this finding, as the Proposition 39 program has ended. LEAs’ and CCDs’ Response We notified the affected LEAs and CCDs of this finding during audit fieldwork and at the end of the audit via email. Findings and Recommendations for individual LEAs and CCDs are included in the Appendix. All responses to the finding have been included in the LEA or CCD’s respective section of the Appendix; and all formal responses received on letterhead have been included as an Attachment to this report. -17- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program FINDING 3— We found that one LEA applied Proposition 39 funds to project costs not Proposition 39 funds approved by the CEC, resulting in ineligible costs of $3,034. applied to ineligible Norwalk-La Mirada Unified School District expenditures We reviewed the invoices from Sunbelt Controls ($1,980), California Coalition ($274), and School Energy Coalition ($780) for conferences, seminars, and memberships. We determined that these services/activities were not related to the approved project costs in the district’s EEP. Therefore, we found that $3,034 for conferences, seminars, and memberships is ineligible for Proposition 39 funding. The district self-certified in its EEP that “The LEA commits to use the funds for the eligible energy project(s) approved in its energy expenditure plan.” The CEC’s Proposition 39 Program Implementation Guidelines state, “LEAs can only use Proposition 39 funding for the eligible energy projects approved in their energy expenditure plans.” Recommendation We recommend that the CDE take appropriate action in response to ineligible project costs. No recommendation for Norwalk-La Mirada Unified School District is applicable to this finding, as the Proposition 39 program has ended. LEA’s Response We informed the district of the audit finding via email on March 10, 2020. Estuardo A. Santillan, Assistant Superintendent, Business Services, responded via email on April 13, 2020, stating that SCO may move forward with the audit exceptions and finalize the audit. FINDING 4— We found that nine LEAs submitted their final project completion report Final project after the deadline. Each LEA is required to submit a final project completion reports completion report to the CEC 12 to 15 months after the EEP is completed. An EEP is considered complete when the LEA has completed all measures submitted after the in the approved EEP. deadline The following table identifies the number of months the final report was submitted after the project was completed: District Months Brisbane School District 22 Corona-Norco Unified School District 16 Lemoore Union High School District 16 Nestor Language Academy Charter School 16 Ralph A. Gates Elementary School 20 Saddleback Valley Unified School District 23 Stockton Unified School District 26 West Contra Costa Unified School District 25 William S. Hart Union High School District 16 -18- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board….To the extent practical, this report shall also contain information on any of the following: (1) The total final gross project cost before deducting any incentives or other grants and the percentage of total project cost derived from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2. (2) The estimated amount of energy saved, accompanied by specified energy consumption and utility bill cost data for the individual facility where the project is located, in a format to be specified by the Energy Commission. (3) The nameplate rating of new clean energy generation installed. (4) The number of trainees. (5) The number of direct full-time equivalent employees and the average number of months or years of utilization of each of these employees. (6) The amount of time between awarding of the financial assistance and the completion of the project or training activities. (7) The entity’s energy intensity before and after project completion, as determined from an energy rating or benchmark system… Recommendation No recommendation for LEAs is applicable to this finding, as the Proposition 39 program has ended. LEAs’ Response We notified the nine LEAs of this finding during audit fieldwork and at the end of the audit via email. Findings and Recommendations for individual LEAs are included in the Appendix. All responses to the finding have been included in the LEA’s respective section of the Appendix; and all formal responses received on letterhead have been included as an Attachment to this report. -19- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Observation and Recommendation We found that two LEAs with unused planning funds properly applied the Unused planning funds to program implementation. However, as these funds were not funds included in LEAs’ approved EEPs, the amount of Proposition 39 funds paid to these LEAs exceeded their approved EEPs by $232,713, as follows: Program Planning Total Total Unused Local Educational Agency Implementation Funds EEP Approved CDE Apportionment Planning Funds A B C = B - A Nestor Language Academy Charter School $ 231,073 $ 59,157 $ 290,230 $ 292,643 $ 2,413 Saddleback Valley Unified School District 4,753,967 1,062,261 5,816,228 6,046,528 230,300 Total $ 4,985,040 $ 1,121,418 $ 6,106,458 $ 6,339,171 $ 232,713 We reviewed the districts’ ledgers and found that these LEAs received funds in excess of the total amounts indicated in the EEPs approved by the CEC because these LEAs applied their unused planning funds to project implementation. LEAs had the option of requesting planning funds for energy planning activities in FY 2013-14 without submitting an EEP to the CEC. The funds were intended to be used for planning activities for FY 2013-14 through FY 2017-18. Any unused planning funds can be applied toward implementing energy projects that are part of an approved EEP. The two LEAs in our sample opted to either use only a portion or none of their planning funds, and were able to apply the remaining funds toward project implementation. However, the unspent planning funds were not included in an approved EEP. CDE releases program implementation funds based solely on the amounts requested in approved EEPs; as a result, these LEAs received program implementation funds in excess of their approved EEP amount. PRC section 26235(f) states: The Superintendent of Public Instruction shall not distribute funds to an LEA unless the LEA has submitted to the Energy Commission, and the Energy Commission has approved, an expenditure plan that outlines the energy projects to be funded. An LEA shall utilize a simple form expenditure plan developed by the Energy Commission. The Energy Commission shall promptly review the plan. … A portion of the funds may be distributed to an LEA upon request for energy audits and other plan development activities prior to submission of the plan. The CEC’s Proposition 39 Program Implementation Guidelines state: LEAs whose first year of eligibility was fiscal year 2013-14, the first year of the program, had the option of requesting a portion of that year’s award allocation for energy planning activities in 2013-14 without submitting an energy expenditure plan(s) to the Energy Commission. This option was available only for the fiscal year 2013-14 award allocation of the Proposition 39 program and was intended to be used for planning activities for subsequent fiscal years (2013-14 through 2017-18). -20- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program The CEC’s Proposition 39 Program Implementation Guidelines also state that “Any unused energy planning funds shall be applied toward implementing eligible energy project(s) approved as part of an LEA’s energy expenditure plan(s).” Recommendation We recommend that:  CDE take appropriate action in response to unused planning funds identified; and  CDE and CEC account for unspent planning funds that were applied to program implementation without being included in an approved EEP. CDE’s Response We initially communicated the results of our observation to a CDE representative via email on April 17, 2020. Derrick Andrade, Education Fiscal Services Consultant, responded by email on May 4, 2020, stating: I was able to vouch your numbers and agree that the 2 districts audited had unused planning funds that should be returned to the state. However, I do not consider them to be “overpaid EEP funds” per the payment process established for this program, but rather “unused planning funds” that should be returned to the state. We will proceed to bill for return of unused planning funds once a finding is issued. -21- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Appendix— Audit Results by Local Educational Agencies and Community College Districts Local Educational Agencies Brisbane School District .................................................................................................................. A2 Cajon Valley Union School District ................................................................................................ A5 Corona-Norco Unified School District ............................................................................................ A7 Fort Bragg Unified School District .................................................................................................. A9 Grizzly ChalleNGe Charter School ................................................................................................. A11 Lemoore Union High School District .............................................................................................. A12 McSwain Union Elementary School District ................................................................................... A14 Nestor Language Academy Charter School ..................................................................................... A16 Norwalk-La Mirada Unified School District ................................................................................... A18 Panama-Buena Vista Union School District .................................................................................... A20 Penn Valley Union Elementary School District .............................................................................. A22 Ralph A. Gates Elementary School ................................................................................................. A23 Saddleback Valley Unified School District ..................................................................................... A26 Siskiyou County Office of Education .............................................................................................. A30 Stockton Unified School District ..................................................................................................... A31 West Contra Costa Unified School District ..................................................................................... A33 William S. Hart Union High School District ................................................................................... A35 Community College Districts Chaffey Community College District .............................................................................................. A38 Sierra Joint Community College District ......................................................................................... A39 State Center Community College District ....................................................................................... A40 Yosemite Community College District ............................................................................................ A41 -A1- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Brisbane School District Proposition 39 Program Background The California Energy Commission (CEC) approved Brisbane School District’s EEP for $218,044. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Brisbane Elementary $ 65,254 Kitchen, HVAC, HVAC controls, exterior lighting retrofit $ 6,979 Lipman Middle 86,499 Kitchen, HVAC controls, interior/exterior lighting retrofit, relamping 5,996 Panorama Elementary 66,291 Kitchen, HVAC, HVAC controls, interior/exterior lighting retrofit 5,511 Total $ 218,044 $ 1 8,486 With these energy efficiency measures, the district reported a combined SIR of 1.29 and the creation of 1.22 direct job-years. In addition, the district received $41,194 in planning funds directly from the CDE, which it used for energy management services. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs We found that the district sole-sourced its contract with EnLight Energy Efficient Lighting, totaling $36,278, for the lighting retrofit project. In addition, the district sole-sourced its contract with Myers Restaurant Supply, totaling $20,544, for the replacement of three energy-efficient kitchen ovens. The district did not provide supporting documentation to show that it considered other vendors before awarding contracts to EnLight Energy Efficient Lighting and Myers Restaurant Supply. Therefore, we found that the district sole-sourced these Proposition 39 contracts, totaling $56,822. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” Projected energy savings not identified and/or no signed contracts We reviewed the district’s contract with Emcor/Mesa Energy Systems and determined that the contract does not identify the projected energy savings. In addition, the district was unable to provide a copy of its contract with EnLight Energy Efficient Lighting, Inc. Therefore, we were unable to determine whether the contract included project specifications, costs, or energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” -A2- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Final project completion reports submitted after the deadline The district’s final report was submitted on January 30, 2019, 22 months after the reported project completion date of March 30, 2017. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. Recommendation We recommend that the CDE take appropriate action in response to funds paid to the district that did not meet the sole-source requirement. No additional recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit findings via email on March 10, 2020. Ronan Collver, Superintendent, responded via email on April 13, 2020. The district’s response to the sole-source finding is as follows: It is my understanding that the Brisbane School District contracted with Ecology Action to handle all of our Prop 39 tasks. I understand that no RFQ [request for quotation] was put out for EnLight Energy Efficient Lighting or Myers Restaurant for kitchen ovens which did not comply with the requirements of Prop 39. It was the District’s understanding that Ecology Action would be handling all aspects of the sub-contracts. I believe the intent of Prop 39 was to assist the economy by putting people to work and at the same time improve energy efficiency in California schools. I would hate to see the District penalized $56,822 as the District did not have the intention to give business to one entity above another. A school district of this size would suffer greatly over this large sum of money. I understand that the “letter of the law” may not have been completed correctly, however, I see no evidence that the “intent of the law” was violated. The district’s response to the projected energy savings and/or signed contracts finding is as follows: I counted [on] Ecology Action to complete these tasks. The district’s response to the final project report finding is as follows: I recall [that] there was much confusion [about] the final report and we were constantly in contact with Roy Yasny from the Efficiency Division, California Energy Commission…. We accept that the report was not completed in a timely manner. -A3- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program SCO Comment Our findings and recommendation remain unchanged. Although we recognize that the district participated in the program to the best of its ability, the scope of our audit is to ensure compliance with state statutes and regulations. These requirements state, in part, that districts cannot use a sole-source process to award funds for energy management, planning, or implementation services, and that districts must identify projected energy savings in the awarded contracts. -A4- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Cajon Valley Union School District Proposition 39 Program Background The CEC approved Cajon Valley Union School District’s EEP for $3,927,181. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Anza Elementary $ 17,219 Interior lighting retrofit $ 12,152 Avocado Elementary 75,918 Interior lighting retrofit 21,146 Blossom Valley Elementary 20,334 Interior lighting retrofit 21,945 Bostonia Elementary 705,815 Interior lighting retrofit, HVAC system 59,067 Cajon Valley Community Day 2,366 Interior lighting retrofit 3,682 Cajon Valley Middle 70,872 Interior lighting retrofit 20,180 Chase Avenue Elementary 19,561 Interior lighting retrofit 19,859 Crest Elementary 12,853 Interior lighting retrofit 7,097 District Office 29,565 Interior lighting retrofit 57,695 Emerald Middle 12,833 Interior lighting retrofit 21,920 Flying Hills Elementary 15,253 Interior lighting retrofit 19,220 Fuerte Elementary 14,120 Interior lighting retrofit 21,139 Greenfield Middle 29,709 Interior lighting retrofit 29,770 Hillsdale Middle 26,676 Interior lighting retrofit 37,864 Jamancha Elementary 18,678 Interior lighting retrofit 17,476 Johnson Elementary 11,997 Interior lighting retrofit 34,427 Los Coches Creek Middle 21,830 Interior lighting retrofit 15,530 Madison Avenue Elementary 21,214 Interior lighting retrofit 13,589 Magnolia Elementary 12,162 Interior lighting retrofit 9,739 Meridian Elementary 16,721 Interior lighting retrofit 18,081 Montgomery Middle 2,673,946 Interior lighting retrofit, HVAC system 138,452 Naranca Elementary 17,435 Interior lighting retrofit 23,785 Rancho San Diego Elementary 16,321 Interior lighting retrofit 12,797 Rios Elementary 12,295 Interior lighting retrofit 14,687 Sevick Special Education 19,530 Interior lighting retrofit 10,541 Vista Grande Elementary 17,102 Interior lighting retrofit 11,721 W.D. Hall Elementary 14,856 Interior lighting retrofit 21,849 Total $ 3,927,181 $ 695,410 With these energy efficiency measures, the district reported a combined SIR of 3.16 and the creation of 21.99 direct job-years. We audited the Proposition 39 program costs to ensure compliance with Audit Results the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with West Coast Air Conditioning Co., Inc., and Precision Electric Company, and determined that the contracts do not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” -A5- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 9, 2020. Sharon Dobbins, Director, Long-Range Planning, responded on March 9, 2020. The response letter is included as Attachment A. The district’s response to the finding is as follows: The Cajon Valley Union School District conducted a thorough ASHRAE [American Society of Heating, Refrigerating and Air-Conditioning Engineers] level 2 audit of all its sites in order to assess potential energy- saving measures and determine the most efficient use of its Prop 39 funding. The projected energy savings was calculated and included in the District’s Prop 39 Energy Expenditure Plan approved by the California Energy Commission. We were not aware of the code requiring [that] each individual project’s contract language specifically include projected energy savings. This is a technicality that has no effect on the projects, cost, or actual energy savings. The District’s efficient use of its allocated Proposition 39 funding has resulted in ongoing energy reduction and cost savings, as intended. SCO Comment Our finding remains unchanged. -A6- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Corona-Norco Unified School District Proposition 39 Program Background The CEC approved Corona-Norco Unified School District’s EEP for $8,588,274. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Auburndale Intermediate $ 14,673 Exterior lighting retrofit and lighting controls $ 3,425 Benjamin Franklin Elementary 49,547 Exterior lighting retrofit 6,796 Cesar Chavez Academy 22,498 Exterior lighting retrofit 5,155 Citrus Hills Intermediate 80,501 Interior/exterior lighting retrofit and lighting controls 14,510 Clara Barton Elementary 26,094 Exterior lighting retrofit and lighting controls 5,746 Corona Fundamental Intermediate 4 ,024,339 HVAC system, HVAC controls, Interior/exterior lighting retrofit 39,410 Corona High 70,251 Exterior lighting retrofit 17,392 Corona Ranch Elementary 70,314 Exterior lighting retrofit 8,551 Coronita Elementary 17,485 Exterior lighting retrofit and lighting controls 4,174 Dr. Augustine Ramirez Intermediate 29,702 Exterior lighting retrofit 9,116 Dr. Bernice Jameson Todd Elementary 32,116 Exterior lighting retrofit 7,972 Eastvale Elementary 31,261 Exterior lighting retrofit and lighting controls 6,797 El Cerrito Middle 69,033 Interior/exterior lighting retrofit 17,129 Eleanor Roosevelt High 231,641 Exterior lighting retrofit 41,799 Foothill Elementary 37,201 Exterior lighting retrofit 10,315 Georage Washington Elementary 25,326 Exterior lighting retrofit 4,615 Highland Elementary 19,718 Exterior lighting retrofit and lighting controls 4,803 Home Gardens Academy 21,695 Exterior lighting retrofit 5,357 Jefferson Elementary 14,080 Exterior lighting retrofit and lighting controls 4,805 John F. Kennedy High 56,951 Exterior lighting retrofit 13,456 John Stallings Elementary 7 ,097 Exterior lighting retrofit 1,771 Lee V. Pollard High 103,910 Exterior lighting retrofit 11,895 Letha Raney Intermediate 16,559 Exterior lighting retrofit and lighting controls 3,902 Lincoln Alternative Elementary 4 ,089 Exterior lighting retrofit 1,214 Norco Elementary 9 ,664 Exterior lighting retrofit and lighting controls 2,540 Norco High 1 ,320,861 HVAC system, interior/exterior lighting retrofit, and lighting controls 44,035 Norco Intermediate 3 ,439 Exterior lighting retrofit 1,216 Orange Elementary 22,772 Exterior lighting retrofit 6,211 Orange Grove High 78,207 Exterior lighting retrofit and lighting controls 13,037 Parkridge Elementary 22,410 Exterior lighting retrofit and lighting controls 5,609 Prado View Elementary 41,532 Exterior lighting retrofit 10,173 River Heights Intermediate 107,779 Interior/exterior lighting retrofit 22,105 Riverview Elementary 19,014 Exterior lighting retrofit and lighting controls 4,843 Rosa Parks Elementary 32,684 Interior/exterior lighting retrofit 8,318 Santiago High 1 ,644,279 Interior/exterior lighting retrofit, HVAC controls, HVAC system, and lighting controls 81,506 Sierra Vista Elementary 15,190 Exterior lighting retrofit and lighting controls 2,952 Susan B. Anthony Elementary 11,894 Exterior lighting retrofit 3,549 Temascal Valley Elementary 33,781 Exterior lighting retrofit 8,696 Vicentia Elementary 29,970 Exterior lighting retrofit and lighting controls 6,785 Victress Bower School for Exceptional Students 5 ,240 Exterior lighting retrofit 2,129 Woodrow Wilson Elementary 61,356 Exterior lighting retrofit 7,308 William McKinley Elementary 52,121 Exterior lighting retrofit and lighting controls 10,341 Total $ 8,588,274 $ 491,458 With these energy efficiency measures, the district reported a combined SIR of 1.16 and the creation of 48.09 direct job-years. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: -A7- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Final project completion reports submitted after the deadline The district’s final report was submitted on January 25, 2019, 16 months after the reported project completion date of September 4, 2017. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 5, 2020. Michael Wood, Energy Manager, Support Services, responded via email on March 16, 2020. The district’s response to the finding is as follows: The final report was submitted a little late [because] some of the data needed from SoCalGas took a lot longer to receive than expected. SCO Comment Our finding remains unchanged. -A8- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Fort Bragg Unified School District Proposition 39 Program Background The CEC approved Fort Bragg Unified School District’s EEP for $586,437, consisting of $15,364 for energy management services and $571,073 for program implementation. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Coastal Adult $ 3,166 Interior/exterior lighting retrofit $ 175 Dana Gray Elementary 82,853 Interior/exterior lighting retrofit and LED exit signs 10,038 District Office 13,881 Interior/exterior lighting retrofit 1,218 Fort Bragg High 241,370 Interior/exterior lighting retrofit 22,865 Fort Bragg Middle 141,593 Interior/exterior lighting retrofit 13,519 Lighthouse Community Day 6 ,933 Interior/exterior lighting retrofit 6 47 Noyo High (Continuation) 13,312 Interior/exterior lighting retrofit 9 82 Redwood Elementary 64,158 Interior/exterior lighting retrofit 3,962 Shelter Cove 3 ,807 Interior/exterior lighting retrofit 3 62 Total $ 571,073 $ 5 3,768 With these energy efficiency measures, the district reported a combined SIR of 1.94 and the creation of 3.20 direct job-years. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Indoor Environmental Services (IES) and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 10, 2020. Barry Silva, Director of Facilities, Maintenance and Operations, responded by letter dated March 11, 2020, and via email on March 11, 2020. The district’s response letter is included as Attachment B. -A9- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program The district’s response to the finding is as follows: The District included the projected energy savings as an attachment to the Board Resolution that was approved by the Board. Additionally, energy savings calculations were performed with the help of the on-line Energy Saving Calculators developed by California Energy Commission (CEC). These on-line calculators are offered by CEC as a part of [the] Proposition 39 program. The projected savings were then submitted as part of the process and approved by the CEC. All documents were approved as part of the project. We think the District acted within the spirit and guidelines of the program. We will include projected savings in future contracts moving forward. SCO Comment Our finding remains unchanged. Although we recognize that the district participated in the program to the best of its ability, the scope of our audit is to ensure compliance with state statutes and regulations, which require that the projected energy savings be identified in the awarded contract. -A10- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Grizzly ChalleNGe Charter School (San Luis Obispo County Office of Education) Proposition 39 Program Background The CEC approved Grizzly ChalleNGe Charter School’s EEP for $249,680. The charter school used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Grizzly ChalleNGe Charter $ 249,680 Interior/exterior lighting retrofit, and HVAC system and controls $ 13,183 $ 249,680 $ 13,183 With these energy efficiency measures, the charter school reported a combined SIR of 1.11 and the creation of 1.40 direct job-years. In addition, the charter school received $11,577 in planning funds directly from the CDE, which it used for screening and audits, and program assistance. Audit Results We audited the Proposition 39 program costs and found that all costs reported were in compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. Charter School’s Response We informed San Luis Obispo County Office of Education via email on March 2, 2020, that all costs reported for Grizzly ChalleNGe Charter School were in compliance with the program guidelines. We did not receive a response from San Luis Obispo County Office of Education. -A11- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Lemoore Union High School District Proposition 39 Program Background The CEC approved Lemoore Union High School District’s EEP for $546,344, consisting of $14,821 for energy management services and $531,523 for program implementation. The district used its program implementation funds for the following efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings District Office, Maintenance $ 46,960 Exterior lighting retrofit, HVAC system $ 3,140 Jamison (Donald C.) High (Continuation) 1 0,542 Exterior lighting retrofit 5 04 Lemoore High 474,021 Exterior lighting retrofit, HVAC systems 39,995 $ 531,523 $ 4 3,639 With these energy efficiency measures, the district reported a combined SIR of 1.53 and the creation of 2.98 direct job-years. In addition, the district received $22,297 in planning funds directly from the CDE, which it used for screening and audits. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Projected energy savings identified and/or no signed contracts We reviewed the district’s contract with IES and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Final project completion reports submitted after the deadline The district’s final report was submitted on March 1, 2019, 16 months after the reported project completion date of October 31, 2017. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. -A12- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the two audit findings on March 18, 2020. Mark Howard, Director, Business Services, responded via email on March 18, 2020. The district’s response to the projected energy savings and/or signed contracts finding is as follows: The District acknowledges this missing information in the contract. However, a Project Financial Analysis was provided by the contractor and reviewed prior to the Governing Board’s award of the contract. Although the projected energy savings was not included in the contract, it was included as a document in the board packet along with the contract on November 10, 2016. The intent of PRC section 26206(d) was fulfilled. The district’s response to the final project report finding is as follows: The District acknowledges that the final report was submitted after the deadline. The District was relying on the contractor to file this report on time. The contractor has been informed of the late report and assures us it will not happen again. The late submittal of the report has resulted in no change or error to the final reporting data or the project outcomes. SCO Comment Our findings remain unchanged. -A13- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program McSwain Union Elementary School District Proposition 39 Program Background The CEC approved McSwain Union Elementary School District’s EEP for $253,487. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings McSwain Elementary $ 253,487 Interior/exterior lighting retrofit and HVAC heat pumps $ 14,085 $ 253,487 $ 14,085 With these energy efficiency measures, the district reported a combined SIR of 1.15 and the creation of 1.42 direct job-years. In addition, the district received $19,800 in planning funds directly from the CDE, which it used for program assistance. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs The district contracted Terra Verde Renewable Partners ($21,269) for consulting services, Lozano Smith, LLP ($10,222) for legal services, and Pacific Gas & Electric (PG&E) ($15,459) for the interior lighting project. The district did not provide supporting documentation to show that it considered other vendors before awarding contracts to Terra Verde Renewable Partners, Lozano Smith, LLP., and PG&E. Therefore, we found that the district sole-sourced these Proposition 39 contracts, totaling $46,950. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with T.A. General Electric, Inc. and Emcor (Mesa) Energy Systems, Inc., and determined that the contracts do not identify the projected energy savings. In addition, the district did not have signed contracts with Terra Verde Renewable Partners or Lozano Smith, LLP. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” -A14- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Recommendation We recommend that the CDE take appropriate action in response to funds paid to the district that did not meet the sole-source requirement. No additional recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the two audit findings via email on March 10, 2020. Mike Crass, Interim Superintendent, responded via email on April 8, 2020. The district did not respond to the projected energy savings and/or signed contracts finding. The district’s response to the sole-source finding is as follows: At the time the Proposition 39 funding was received and the project planning began, the district’s Superintendent was Stan Mollart. Mr. Mollart had been the superintendent for over 15 years and was very familiar [with, and followed, Public Resources Code (PRC)]. At the time of your audit we were unable to find any documentation to show that the district had requested bids for legal or consulting services; however, we believe that Mr. Mollart had in fact made an effort to adhere to PRC section 26235(c). Unfortunately, not only is Mr. Mollart not with the district any longer, he has since passed away, and we are unable to find documentation to show that our district followed Public Resource Code section 26235(c). We are requesting that your agency reconsider the audit issues related to services with Terra Verde and Lozano Smith. The district does acknowledge that the funds paid to PG&E were sole-sourced. This was not done by the district with disregard to PRC section [26235(c)]; unfortunately, PG&E is our only energy provider in our area that had the opportunity that was provided to us. SCO Comment Our findings and recommendation remain unchanged. Although we recognize that the district participated in the program to the best of its ability, the scope of our audit is to ensure compliance with state statutes and regulations. These requirements state, in part, that districts cannot use a sole-source process to award funds for energy management, planning, or implementation services and that districts must identify projected energy savings in the awarded contracts. -A15- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Nestor Language Academy Charter School (South Bay Union School District) Proposition 39 Program Background The CEC approved Nestor Language Academy Charter School’s EEP for $290,230. The charter school used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Nestor Language Academy Charter $ 290,230 HVAC, plug loads, interior/exterior lighting retrofit, and lighting controls $ 3 2,173 $ 290,230 $ 3 2,173 With these energy efficiency measures, the charter school reported a combined SIR of 1.85 and the creation of 1.63 direct job-years. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Projected energy savings not identified and/or no signed contracts We reviewed the charter school’s contract with Balfour Beatty Construction, LLC and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Final project completion reports submitted after the deadline The charter school’s final report was submitted on July 27, 2018, 16 months after the reported project completion date of March 30, 2017. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. We also identified the following observation: Unused planning funds We found that the charter school applied unused planning funds to program implementation. However, these funds were not included in its approved EEP. As a result, the charter school received funding that exceeded its approved EEP by $2,413. We informed the CDE of our observation via email on April 17, 2020. -A16- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Recommendation We recommend that the CDE take appropriate action in response to the unused planning funds identified. No additional recommendation is applicable, as the Proposition 39 program has ended. Charter School’s Response We informed the charter school of the audit findings and observation via email on March 10, 2020. Bradley Wilkinson, Director Fiscal Services/Purchasing, South Bay Union School District, responded by letter dated March 18, 2020. The district’s response letter is included as Attachment C. The charter school’s response to the projected energy savings and/or signed contracts finding is as follows: We concur that the contract with Balfour Beatty Construction did not include the projected energy savings. In order to not allow this to happen again we have made internal notes and communicated [these] results [to] our projects and facilities team. The charter school’s response to the final project report finding is as follows: We recognize that the report was submitted July 27, 2018, which is 16 months after the completion date of March 30, 2017. Upon review of this finding, we [requested an explanation from our consultant for] the late submittal; however…we did not receive [an explanation]. The charter school’s response to the unused planning funds observation is as follows: Fiscal Services reviewed this with [the auditor], and provided all backup and documentation to show funds received/spent on the project vs. what was approved. We are not entirely sure why more funds were received than approved for; however, all funds were spent in accordance [with] the plan. -A17- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Norwalk-La Mirada Unified School District Proposition 39 Program The CEC approved Norwalk-La Mirada Unified School District’s EEP for Background $4,258,041, consisting of $325,000 for energy management services, $25,000 for training, and $3,908,041 for program implementation. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings District Office/Maintenance & Operations $ 254,967 HVAC controls $ 3 8,375 Escalona Elementary 299,711 HVAC controls 3,839 Eastwood Elementary 1 HVAC controls 6,922 Gardenhill Elementary 349,743 HVAC controls 6,194 John H. Glenn High 1 ,217,463 Exterior lighting retrofit and HVAC controls 47,933 La Mirada High 1 ,171,232 HVAC controls and exterior lighting retrofit 51,031 Nettie L. Waite Middle 379,112 HVAC controls 8,906 Norwalk High 166,938 Exterior lighting retrofit 11,101 Nutrition 68,873 HVAC controls 1,048 Ramona Head Start/State Preschool 1 HVAC controls 6,391 Total $ 3,908,041 $ 1 81,740 With these energy efficiency measures, the district reported a combined SIR of 1.03 and the creation of 21.89 direct job-years. In addition, the district received $289,023 in planning funds directly from the CDE, which it used for screening and audits. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs The district contracted Bowie, Arneson, Wiles & Giannone Attorneys at Law ($16,331) and Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law ($4,113) for legal services. The district did not provide supporting documentation to show that it considered other agencies before awarding contracts to Arneson, Wiles & Giannone Attorneys at Law and Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law. Therefore, we found that the district sole-sourced these Proposition 39 contracts, totaling $20,444. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” -A18- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Projected energy savings not identified and/or no signed contracts We reviewed the district’s documentation and determined that no contract was prepared for services provided by Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law. Due to the scope of the work provided to the district, the projected energy savings is not required. However, as no contract was prepared, the project specifications and contracted costs remain unknown. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Proposition 39 funds applied to ineligible expenditures The district used Proposition 39 funds to pay Sunbelt Controls, Inc. $1,980 and California’s Coalition $274, for conferences and seminars; and School Energy Coalition $780 for dues and memberships. We found that a total of $3,034 of these services were not related to the approved project costs in the district’s EEP. The district self-certified in its EEP that “The LEA commits to use the funds for the eligible energy project(s) approved in its energy expenditure plan.” The CEC’s Proposition 39 Program Implementation Guidelines state, “LEAs can only use Proposition 39 funding for the eligible energy projects approved in their energy expenditure plans.” District’s Response We informed the district of the audit findings and observation via email on March 10, 2020. Estuardo A. Santillan, Assistant Superintendent, Business Services, responded via email on April 13, 2020, stating that SCO may move forward with the audit exceptions and finalize the audit. -A19- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Panama-Buena Vista Union School District Proposition 39 Program The CEC approved Panama-Buena Vista Union School District’s EEP for Background $3,406,613, consisting of $286,774 for energy management services, $57,354 for training, and $3,062,485 for program implementation. The district used its program implementation funds for the following energy efficiency and renewable energy generation measures: Proposition 39 Energy Efficiency and Reported Share Used Renewable Energy Annual Cost School Site at School Site Generation Measures Savings Interior/exterior lighting retrofit District Office, Special Services, and MOT $ 1 ,601,469 and photovoltaic (solar) panels $ 147,729 Interior/exterior lighting retrofit Ronald Reagan Elementary 1,461,016 and photovoltaic (solar) panels 118,033 $ 3 ,062,485 $ 265,762 With these energy efficiency and renewable energy generation measures, the district reported a combined SIR of 1.40 and the creation of 13.54 direct job-years. In addition, the district received $124,191 in planning funds directly from the CDE, which it used for screening and audits. We audited the Proposition 39 program costs to ensure compliance with Audit Results the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contract with IES and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 5, 2020. Glenn Imke, CPA, Assistant Superintendent, Business Services, responded via email on March 16, 2020. -A20- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program The district’s response to the finding is as follows: The project contract was agreed to in conjunction with the Energy Expenditure Plan approved by the California Energy Commission. The EEP contains detailed energy savings information regarding the project including measure by measure cost and anticipated utility cost savings in addition to site by site energy savings. Since completion of the projects, the District has performed energy savings verifications demonstrating energy savings success and has operated within the program guidelines to achieve projected energy efficiency. SCO Comment Our finding remains unchanged. -A21- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Penn Valley Union Elementary School District Proposition 39 Program Background The CEC approved Penn Valley Union Elementary School District’s EEP for $270,717, consisting of $13,578 for energy management services and $257,139 for program implementation. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Ready Springs Elementary $ 128,358 HVAC system and controls $ 5,957 Williams Ranch Elementary 128,781 HVAC system and controls 6,090 $ 257,139 $ 1 2,047 With these energy efficiency measures, the district reported a combined SIR of 1.02 and the creation of 1.44 direct job-years. In addition, the district received $105,292 in planning funds directly from the CDE, which it used for screening and audits, and program assistance. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contract with IES and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 2, 2020. We did not receive a response from the district. -A22- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Ralph A. Gates Elementary School (Saddleback Valley Unified School District) Proposition 39 Program Background The CEC approved Ralph A. Gates Elementary School’s EEP for $262,577, consisting of $218,663 for program implementation and $43,914 for energy management services. The charter school1 used its program implementation funds for the following energy efficiency measure: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Ralph A. Gates Elementary $ 218,663 Lighting Interior/Exterior fixture retrofit, HVAC packaged/split system AC/Heat Pump/VRF $ 1 3,585 $ 218,663 $ 1 3,585 With these energy efficiency measures, the charter school reported a combined SIR of 1.25 and the creation of 1.22 direct job-years. We audited the Proposition 39 program costs to ensure compliance with Audit Results the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs The charter school contracted with Climatec Building Technologies Group (Phase III) for Energy Conservation services. The charter school did not provide any documentation to show that it considered other vendors before awarding the contract to Climatec Building Technologies for $2,886,662. However, CEC approved only $262,577 for Ralph A. Gates Elementary. Therefore, because we audited only the amount approved by CEC in the charter school’s final project completion report, we found that the charter school sole-sourced a total of $262,577 of the Proposition 39 funds. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” Projected energy savings not identified and/or no signed contracts We reviewed the charter school’s contract with Climatec Building Technologies (Phase III), and determined that the signed contract agreement did not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” 1 As of July 1, 2018, Ralph A Gates Elementary School became an LEA within Saddleback Valley USD. The school was a charter school when the CEC approved its EEP, when the energy project was underway, and when the project was completed in 2016. -A23- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Final project completion reports submitted after the deadline The charter school’s final report was submitted on May 4, 2018, 20 months after the reported project completion date of September 30, 2016. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. Recommendation We recommend that the CDE take appropriate action in response to funds paid to the charter school that did not meet the sole-source requirement. No additional recommendation is applicable, as the Proposition 39 program has ended. Charter School’s Response We informed the charter school of the audit findings via email on March 27, 2020. Susan Cortum, Director, Fiscal Services, Saddleback Valley Unified School District, responded by letter dated April 15, 2020. The district’s response letter is included as Attachment D. The charter school’s response to the sole-source finding is as follows: It is the district’s position that the formal bid process is not required in selecting a vendor to perform projects funded by Proposition 39. The district is able to use a “best value” selection process which is the method the district used when selecting Climatec, Inc. Attachment 1 outlines the process used to select Climatec, Inc. The charter school’s response to the projected energy savings and/or signed contracts finding is as follows: Climatec, Inc. contracts include the scope of work, which outlines current equipment and replacements with various energy usage comparisons. The contracts do not specifically state projected fiscal savings; however, the new, more efficient equipment implies energy savings [that] will result in a reduced fiscal impact to the district. The district believes the contracts (Attachment 3) provide the required projected energy savings for the Proposition 39 projects. The charter school’s response to the final project report finding is as follows: The Final Energy Expenditure Plan filed on September 11, 2018 shows a completion date of October 28, 2016; however, the project was actually completed as of November 15, 2017 (Attachment 4) which makes the final report filing within the 12-15 month requirement. The district believes the date discrepancy was a clerical error on the California Energy Commission document and is currently working with the district’s assigned California Energy Commission reviewer to correct the final report. -A24- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program SCO Comment Our findings and recommendation remain unchanged. We disagree with the charter school’s conclusions. The scope of our audit was to ensure compliance with state statutes and regulations. The charter school cites the best value criteria in Government Code (GC) sections 4210.10 through 4217.18 to support its use of sole-sourced contracts. However, PRC section 26235(c) states: A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter. A community college or LEA may use the best criteria as defined in paragraph (1) of subdivision (c) of section 20133 of Public Contract Code to award funds pursuant to this chapter. To fully comply with the best value criteria specified in PCC section 20133(c)(1) and the prohibition against sole-source contracting when using Proposition 39 funds, LEAs must engage in a two-step process. Specifically, LEAs must use a comprehensive request for quotation/request for proposal evaluation process. The charter school did not follow this process for awarding the contracts in question. The requirement that contracts identify projected energy savings is pursuant to PRC section 26206(d). In addition, the CEC’s Proposition 39 Program Implementation Guidelines, and all subsequent revisions to those guidelines, include the same requirements for Proposition 39 contracts. -A25- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Saddleback Valley Unified School District Proposition 39 Program The CEC approved Saddleback Valley Unified School District’s EEPs Background (Nos. 1164, 1440, and 2033) for $4,753,967, consisting of $344,043 for energy management services and $4,409,924 for program implementation. The district used its program implementation funds for the following energy efficiency measure: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Robinson Elementary¹ $ 241,053 Lighting interior/exterior fixture retrofit $ 17,088 Cielo Vista Elementary² 272,418 HVAC controls and lighting exterior fixture retrofit 12,742 La Madera Elementary² 91,169 Exterior/interior lighting retrofit, lighting controls 8,210 Laguna Hills High² 35,761 Pumps, Motors, Drives - Variable Frequency Drives 10,524 Lamorena Elementary² 12,039 Lighting exterior fixture retrofit 949 Mission Viejo High² 212,205 Lighting controls, lighting interior/exterior retrofit, HVAC system, 17,718 Pumps, motors, drives-variable frequency drives Olivewood Elementary² 77,102 Lighting controls, lighting interior/exterior retrofit 5,792 San Joaquin Elementary² 93,302 Lighting controls, lighting interior/exterior retrofit 11,151 Trabuco Hills High² 383,722 Lighting controls, lighting interior/exterior retrofit, pumps, motors, 28,940 drives - variable frequency drives Trabuco Mesa Elementary² 558,346 HVAC controls, HVAC system, Lighting exterior fixture retrofit 27,072 District Office³ 64,321 Lighting exterior fixture retrofit 12,303 El Toro High³ 25,738 Lighting exterior fixture retrofit 2,226 Lguna Hills High³ 25,271 Lighting exterior fixture retrofit 2,147 La Paz Intermediate³ 865,421 Lighting exterior fixture retrofit, HVAC system 12,386 Linda Vista Elementary³ 127,861 Lighting interior/exterior fixture retrofit 16,083 Valencia Elementary³ 175,966 Lighting interior/exterior fixture retrofit 21,217 Rancho Canada Elementary³ 179,387 Lighting interior/exterior fixture retrofit 17,619 Cielo Vista Elementary³ 488,388 HVAC system 19,328 Rancho Santa Margarita Intermediate³ 480,454 Lighting interior/exterior fixture retrofit 40,630 Total $ 4,409,924 $ 284,125 ¹EEP No. 1440 ²EEP No. 2033 ³EEP No. 1164 With this energy efficiency measure, the district reported a combined SIR of 1.20 and the creation of 13.62 direct job-years. In addition, the district received $1,062,261 in planning funds directly from the CDE, which it used for screening and audits, and an energy manager. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs The district contracted with Climatec Building Technologies Group ($5,414,643) for energy conservation services and energy planning; Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law ($2,838) for -A26- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program legal services; and Pacific Rim Mechanical ($588) for HVAC services. The district did not provide any documentation to show that it considered other vendors/agencies before awarding the contracts to Climatec Building Technologies, Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law, and Pacific Rim Mechanical. Therefore, we found that the district sole-sourced these Proposition 39 contracts, totaling $5,418,069. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Climatec Building Technologies, and determined that Phase III of the signed contract agreements do not identify the projected energy savings. In addition, the district did not have signed contracts for Pacific Rim Mechanical and Atkinson, Andelson, Loya, Ruud & Romo Attorneys at Law. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Final project completion reports submitted after the deadline The district’s final report was submitted on September 11, 2018, 23 months after the reported project completion date of October 28, 2016. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. We also identified the following observation: Unused planning funds We found that the district applied unused planning funds to program implementation. However, these funds were not included in its approved EEP. As a result, the district received funding that exceeded its approved EEP by $230,300. We informed the CDE of our observation via email on April 17, 2020. Recommendation We recommend that the CDE take appropriate action in response to funds paid to the district that did not meet the sole-source requirement and the unused planning funds identified in this audit. No additional recommendation is applicable, as the Proposition 39 program has ended. -A27- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program District’s Response We informed the district of the audit findings and observation via email on March 27, 2020. Susan Cortum, Director, Fiscal Services, responded by letter dated April 15, 2020. The district’s response letter is included as Attachment D. The district’s response to the sole-source finding is as follows: It is the district’s position that the formal bid process is not required in selecting a vendor to perform projects funded by Proposition 39. The district is able to use a “best value” selection process which is the method the district used when selecting Climatec, Inc. Attachment 1 outlines the process used to select Climatec, Inc. The district engages with Atkinson, Andelson, Loya, Ruud, and Romo (AALRR) for legal services. AALRR was consulted on a matter related to a Proposition 39 project and the fees for that consultation were charged to the project funded with Proposition 39 dollars. It is the district’s opinion this type of service does not require a formal bid process. The district agrees [that] the charges for Pacific Rim Mechanical were incorrectly charged to a Proposition 39 project and should be disallowed. The district’s response to the projected energy savings and/or signed contracts finding is as follows: Energy Expenditure Plans #1164, #1440, #2033 (Attachment 2) all identify projected annual energy savings. Climatec, Inc. contracts include the scope of work, which outlines current equipment and replacements with various energy usage comparisons. The contracts do not specifically state projected fiscal savings; however, the new, more efficient equipment implies energy savings [that] will result in a reduced fiscal impact to the district. The district believes the contracts (Attachment 3) provide the required projected energy savings for the Proposition 39 projects. Atkinson, Andelson, Loya, Ruud and Romo’s services are rendered via a legal services agreement annually. As stated above, the district agrees [that] the charges for Pacific Rim Mechanical were incorrectly charged to a Proposition 39 project and should be disallowed. The district’s response to the final project report finding is as follows: The Final Energy Expenditure Plan filed on September 11, 2018 shows a completion date of October 28, 2016; however, the project was actually completed as of November 15, 2017 (Attachment 4), which makes the final report filing within the 12-15 month requirement. The district believes the date discrepancy was a clerical error on the California Energy Commission document and is currently working with the district’s assigned California Energy Commission reviewer to correct the final report. The district did not respond to the observation regarding unused planning funds. -A28- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program SCO Comment Our findings and recommendation remain unchanged. We disagree with the district’s conclusions. The scope of our audit was to ensure compliance with state statutes and regulations. The district cites the best value criteria in GC sections 4210.10 through 4217.18 to support its use of sole-sourced contracts. However, PRC section 26235(c) states: A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter. A community college or LEA may use the best criteria as defined in paragraph (1) of subdivision (c) of section 20133 of Public Contract Code to award funds pursuant to this chapter. To fully comply with the best value criteria specified in PCC section 20133(c)(1) and the prohibition against sole-source contracting when using Proposition 39 funds, LEAs must engage in a two-step process. Specifically, LEAs must use a comprehensive request for quotation/request for proposal evaluation process. The district did not follow this process for awarding the contracts in question. The requirement that contracts identify projected energy savings is pursuant to PRC section 26206(d). In addition, the CEC’s Proposition 39 Program Implementation Guidelines, and all subsequent revisions to those guidelines, include the same requirements for Proposition 39 contracts. -A29- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Siskiyou County Office of Education Proposition 39 Program Background The CEC approved Siskiyou County Office of Education’s (COE) EEP for $149,071, consisting of $8,000 for energy management services and $141,071 for program implementation. Siskiyou COE used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Early Childhood Center $ 53,456 HVAC system and controls $ 3,147 Main Office 8 7,615 Interior/exterior lighting retrofit 4,886 $ 141,071 $ 8,033 With these energy efficiency measures, Siskiyou COE reported a combined SIR of 1.22 and the creation of 0.79 direct job-years. We audited the Proposition 39 program costs to ensure compliance with Audit Results the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed Siskiyou COE’s contract with IES and determined that the contract does not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. COE’s Response We informed the county office of the audit finding via email on February 27, 2020. Deborah Pendley, Associate Superintendent, Business Services, responded via email on March 4, 2020. The county office’s response to the finding is as follows: IES did perform the work that provided project specifications, costs, and projected energy savings. However, they did not include that information in the contract. Unfortunately, the Siskiyou County Office of Education staff was unaware of the requirement at the time the contract was signed. SCO Comment Our finding remains unchanged. -A30- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Stockton Unified School District Proposition 39 Program Background The CEC approved Stockton Unified School District’s EEP for $2,223,853. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Adams Elementary $ 340,625 Exterior lighting retrofit, lighting controls, HVAC system and controls $ 11,209 Alexandar Hamilton Elementary 34,356 HVAC controls and lighting controls 893 August Elementary 256,622 Exterior lighting retrofit, lighting controls, HVAC system and controls 7,458 Cesar Chavez High 84,637 Interior lighting retrofit and HVAC controls 14,351 Commodore Stockton Skills 100,080 Lighting controls and exterior lighting retrofit 8,675 El Dorado Elementary 95,735 Exterior lighting retrofit, HVAC system and controls 4,483 Franklin High 82,954 HVAC controls, pumps, plug loads, and interior lighting retrofit 12,697 Hazelton Elementary 149,357 Exterior lighting retrofit, HVAC system and controls 9,010 Hoover Elementary 176,559 HVAC system and controls 10,952 Kohl Open Elementary 20,294 HVAC controls 1,337 Madison Elementary 156,045 HVAC system and controls 8,360 Monroe Elementary 22,349 HVAC controls 847 Rio Calveras Elementary 268,584 Exterior lighting retrofit, lighting controls, HVAC system and controls 12,345 Roosevelt Elementary 94,716 Exterior lighting retrofit, lighting controls, and HVAC system 3,190 Stagg Senior High 257,790 HVAC controls and plug loads 16,871 Wilhelmina Henry Elementary 83,150 Exterior lighting retrofit and HVAC controls 7,456 Total $ 2,223,853 $ 130,134 With these energy efficiency measures, the district reported a combined SIR of 1.08 and the creation of 12.45 direct job-years. In addition, the district received $200,000 in planning funds directly from the CDE, which it used for screening and audits. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issue: Final project completion reports submitted after the deadline The district’s final report was submitted on January 30, 2019, 26 months after the reported project completion date of December 1, 2016. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. Recommendation No recommendation is applicable, as the Proposition 39 program has ended. -A31- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program District’s Response We informed Stockton Unified School District of the audit finding via email on February 27, 2020. Steve Breakfield, Director, Facilities and Planning, responded via email on March 11, 2020. The district’s response to the finding is as follows: An amendment [to the Energy Expenditure Plan was required] in order to match the scope of work that was installed in the phase 1 project. This amendment was requested in June 2017 but we were not able to get it submitted until early 2018 when we got final confirmation of utility rebates on the scope of work. The amendment was approved in Spring 2018, and then an Annual Report was required to be submitted in Q3 2018. We completed this in September, at which point the Final Report opened up for us to work on. 3 months after the final report opened up, we submitted it and it was approved about 3 months later. [December 1, 2016] was selected as the final completion date based on when the construction work was done. However, given the delay in getting rebates, the full information for the project was not available until later in 2017. Annual report requirements were such that the final report did not even open up until the end of September 2018. All of this work happened with the CEC project manager being fully aware of the situation and giving approvals on amendments and reports, so this [situation] was not a surprise to them. SCO Comment Our finding remains unchanged. -A32- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program West Contra Costa Unified School District Proposition 39 Program Background The CEC approved West Contra Costa Unified School District’s EEP for $1,634,936, which consists of $120,000 for an energy manager and $1,514,936 for program implementation. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Collins Elementary $ 93,517 Interior lighting retrofit and lighting controls $ 1 1,616 Grant Elementary 107,412 Interior lighting retrofit and lighting controls 15,123 Hannah Ranch Elementary 216,972 Interior lighting retrofit and lighting controls 12,523 Lake Elementary 6 1,627 Interior lighting retrofit and lighting controls 13,228 Richmond High 1,035,408 Interior lighting retrofit and lighting controls 1 09,353 $ 1,514,936 $ 161,843 With these energy efficiency measures, the district reported a combined SIR of 1.79 and the creation of 8.48 direct job-years. In addition, the district received $195,097 in planning funds directly from the CDE, which it used for screening and audits, program assistance, and an energy manager. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Energy Conservation Options (ECO), and Energy Management Technologies (EMT) and determined that the contracts do not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Final project completion reports submitted after the deadline The district’s final report was submitted on December 21, 2017, 25 months after the reported project completion date of November 15, 2015. PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. -A33- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the two audit findings via email on March 10, 2020. Luis Freese, Associate Superintendent, Operations, responded by letter dated March 19, 2020. The district’s response letter is included as Attachment E. The district’s response to the projected energy savings and/or signed contract finding is as follows: The District agrees with the recommendation. Although the contract did not specify the expected project savings, the Final Project Report demonstrates that the projects achieved an annual savings of 950,983 kWh [kilowatt-hours]. The district’s response to the final project report finding is as follows: The District agrees with the recommendation. Currently, the District is actively tracking all completed expenditure plans to ensure that the remaining final reports will meet the filing deadline within 15 months of the project completion. -A34- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program William S. Hart Union High School District Proposition 39 Program Background The CEC approved William S. Hart Union High School District’s EEP for $3,732,185, which consists of $234,000 for energy management services and $3,498,185 for program implementation. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Reported Share Used Energy Annual Cost School Site at School Site Efficiency Measures Savings Bowman (Jereann) High (Continuation) $ 220,865 Interior/exterior lighting retrofit and HVAC system $ 7,759 Canyon High 703,461 Interior/exterior lighting retrofit 62,404 Rancho Pico Junior High 300,203 Interior/exterior lighting retrofit 23,958 Rio Norte Junior High 413,180 Interior/exterior lighting retrofit 27,942 Sierra Vista Junior High 327,064 Interior/exterior lighting retrofit 26,417 Valencia High 1,533,412 Interior/exterior lighting retrofit and HVAC 84,432 Total $ 3,498,185 $ 232,912 With these energy efficiency measures, the district reported a combined SIR of 1.31 and the creation of 19.59 direct job-years. In addition, the district received $277,781 in planning funds directly from the CDE, which it used for screening and audits. Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CEC’s Proposition 39 Program Implementation Guidelines and EEP Handbook. We identified the following audit issues: Sole-sourced project costs The district contracted K12 Energy Services, LLC ($234,000) for an energy manager, and Alliance Building Solutions ($3,498,185) for energy conservation services. The district did not provide supporting documentation to show that it considered other vendors before awarding contracts to K12 Energy Services, LLC and Alliance Building Solutions. Therefore, we found that the district sole-sourced these Proposition 39 contracts, totaling $3,732,185. PRC section 26235(c) states, in part, “A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter.” Final project completion reports submitted after the deadline The district’s final report was submitted on August 22, 2018, 16 months after the reported project completion date of March 31, 2017. -A35- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program PRC section 26240(b) states, in part: As a condition of receiving funds from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, not sooner than one year but no later than 15 months after an entity completes its first eligible project with a grant, loan, or other assistance from the Job Creation Fund or pursuant to subdivision (c) of Section 26227.2, the entity shall submit a report of its project expenditures to the Citizens Oversight Board …. Recommendation We recommend that the CDE take appropriate action in response to funds paid to the district that did not meet the sole-source requirement. No additional recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit findings via email on Mach 10, 2020. Ralph Peschek, Chief Business Officer, responded by letter through email dated March 23, 2020. The district’s response letter is included as Attachment F. The district’s response to the sole-sourced finding is as follows: Per guidance provided by the Los Angeles County Office of Education / Commercial Claims Manual; Pg.38, the District acted accordingly in utilizing PCC [section] 20118.2 in securing and Section 388 of the Public Utilities Code in selecting and contracting with a sole-source provider... The process engaged in by the District was widely accepted as the proper process at the time of implementation. Any guidance issued after the process of selection, design, and build does not negate guidance commonly being provided to LEAs [by] the State, County, and professional organizations. The district’s response to the final project report finding is as follows: The report was submitted to the CA Energy Commission on July 16, 2017. The commission required adjustments to the report that extended the submission timeline. Additionally, the information being provided [by] Southern California Edison was inaccurate and required reformatting by SCE to meet the needs of CEC. SCO Comment Our findings and recommendation remain unchanged. Although we recognize that the district participated in the program to the best of its ability, the scope of our audit is to ensure compliance with state statutes and regulations. The district uses page 38 of the Los Angeles County Office of Education’s (LACOE) Commercial Claims Manual, which cites GC sections 4217.10 through 4217.16 and Public Utilities Code section 388 to support its use of sole-source contracts. -A36- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program The manual states that districts “may request proposals from qualified persons” and “utilize the pool of qualified energy service companies established pursuant to PUC section 388 and procedures contained in that section in awarding the contract.” However, it appears that, by selecting a vendor without soliciting bids, the district may not have followed the process outlined in PUC section 388. Specifically, we noted the following guidelines in PUC section 388 (b): The Department of General Services or any other state or local agency intending to enter into an energy savings contract or a contract for an energy retrofit project may establish a pool of qualified energy service companies based on qualifications, experience, pricing, or other pertinent factors. Energy service contracts for individual projects undertaken by any state or local agency may be awarded through a competitive selection process to individuals or firms identified in the pool. The pool of qualified energy service companies and contractors shall be reestablished at least every two years or shall expire. Therefore, we believe that the district should have solicited bids from vendors selected from a “pool of qualified energy companies” rather than simply selecting a vendor from the pool. Regardless of possible interpretations of the information contained in LACOE’s Commercial Claims Manual, the district did not follow the minimum standards contained in PRC section 26235(c). We emailed the district on March 25, 2020, requesting that the district submit additional documentation showing that corrections made by SCE were submitted to CEC after August 22, 2018 (date of final report). On March 25, 2020, the district responded stating that no other documentation was available. -A37- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Chaffey Community College District Proposition 39 Program Background The California Community Colleges Chancellor’s Office (CCCCO) approved Chaffey Community College District’s Proposition 39 Funding Application (Form B) for $1,538,729. The district used its program implementation funds for the following renewable energy generation measure: Proposition 39 Year 1 Savings-to- Direct Share Used Renewable Energy Cost Investment Job-Years School Site at School Site Generation Measures Savings Ratio Created CHAFFE-1617-001 Chaffey College - Rancho Cucamonga 1 ,538,729 Photovoltaic (solar) panel installation 1 ,215,083 1.46 81.04 $ 1 ,538,729 $ 1 ,215,083 Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CCCCO’s Energy Project Guidance. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Borrego Solar Systems and determined that the contracts do not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 3, 2020. Patrick Cabildo, CPA, Internal Auditor, responded via email on March 12, 2020. The district’s response to the finding is as follows: On May 25, 2017, the Governing Board of the District adopted a resolution authorizing the execution of energy service contract 16P39 for the solar project which included Exhibit A providing a savings analysis of the project. Although the contracts did not contain the projected savings information, it was communicated throughout the district through various means and was presented to the Board in a public meeting. SCO Comment Our finding remains unchanged. -A38- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Sierra Joint Community College District Proposition 39 Program Background The CCCCO approved Sierra Joint Community College District’s Proposition 39 Funding Application (Form B) for $1,253,188. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Year 1 Savings-to- Direct Share Used Energy Cost Investment Job-Years School Site at School Site Efficiency Measures Savings Ratio Created SIERRA-1718-001 Sierra College $ 1 72,452 LRC interior LED lighting upgrade 1 72,452 $ 9 ,826 1.85 1.06 SIERRA-1718-003 Sierra College 7 62,158 Campus wide EMS upgrade 7 62,158 7 8,075 1.85 4.27 SIERRA-1718-005 Sierra College 9 6,867 Chiller replacements 9 6,867 2 2,625 1.86 0.54 SIERRA-1718-006 Sierra College – Nevada County Campus 1 81,795 NCC chiller replacement 1 81,795 2 2,947 1.85 1.02 SIERRA-1718-007 Sierra College 3 9,916 Building N and Corp Yard LED upgrade 3 9,916 7 ,277 1.86 0.22 $ 1,253,188 $140,750 Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CCCCO’s Energy Project Guidance. We identified the following audit issues: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Intech Mechanical Company, and Trane, Inc. and determined that the contracts do not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 10, 2020. Su-Lin Shum, Director of Finance, responded via email on April 13, 2020. The district’s response to the finding is as follows: For any future contracts, we will include the required energy savings directly within the contract. -A39- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program State Center Community College District Proposition 39 Program Background The CCCCO approved State Center County Community College District’s Proposition 39 Funding Application (Form B) for $1,914,406. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Year 1 Savings-to- Direct Share Used Energy Cost Investment Job-Years School Site at School Site Efficiency Measures Savings Ratio Created STATEC-1718-001 Fresno City College $ 8 76,830 Interior lighting retrofit $ 125,657 Reedley College 1 ,037,576 Interior lighting retrofit 1 12,917 1.09 21.42 $ 1 ,914,406 $2 38,574 Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CCCCO’s Energy Project Guidance. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Contra Costa Electric and determined that the contracts do not identify the projected energy savings. PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 10, 2020. Glynna Billings, Accounting Manager, responded via email on April 3, 2020. The district’s response to the finding is as follows: We agree with the auditors’ determination that the Contra Costa Electric construction contract does not include the projected energy savings for this project. The projected energy savings were identified by Newcomb Anderson McCormick, Inc., as required to obtain Prop 39 funding for this project. Post-construction installation calculations have also been performed as required. We would be happy to provide these schedules upon request. While projected energy savings were identified and confirmed as required prior to bidding, these projected energy savings were not placed in the construction contract. We will incorporate into existing procedures the requirement that all projects utilizing Clean Energy Job Creation Funds will comply with Public Resource Code section 6206(d). -A40- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Yosemite Community College District Proposition 39 Program Background The CCCCO approved Yosemite Community College District’s Proposition 39 Funding Application (Form B) for $2,695,789. The district used its program implementation funds for the following energy efficiency measures: Proposition 39 Year 1 Savings-to- Direct Share Used Energy Cost Investment Job-Years School Site at School Site Efficiency Measures Savings Ratio Created YOSEMI-1314-001 Modesto Junior College – East $ 751,700 Lighting retrofit Modesto Junior College – West 43,112 Lighting retrofit 794,812 $ 6 7,673 1.35 4.45 YOSEMI-1415-001 Columbia College – Tennis Court $ 179,590 LED Floods Columbia College 26,102 Interior lighting occupancy sensors Columbia College – Maintenance 6 ,330 High bay T5 212,022 $ 1 3,533 1.35 1.46 YOSEMI-1516-001 Modesto Junior College – East $ 114,175 Interior lighting Modesto Junior College – West 69,581 Interior lighting Modesto Junior College – Parking Lot 146,161 LED lighting Modesto Junior College 144,251 Exterior LED 474,168 $ 4 3,959 1.34 2.66 YOSEMI-1617-001 Modesto Junior College 515,970 Exterior lighting 515,970 39,924 1.35 2.89 YOSEMI-1617-002 Modesto Junior College 89,427 Exterior LED lighting 89,427 8,167 1.35 0.50 YOSEMI-1718-001 Columbia College 560,833 Various lighting fixtures 560,833 54,195 1.35 3.14 YOSEMI-1718-004 Modesto Junior College 40,609 Exterior LED lighting Columbia College 7 ,948 Exterior LED lighting 48,557 6,741 1.36 0.27 $ 2,695,789 $ 234,192 Audit Results We audited the Proposition 39 program costs to ensure compliance with the Job Creation Fund program guidelines, as well as the CCCCO’s Energy Project Guidance. We identified the following audit issue: Projected energy savings not identified and/or no signed contracts We reviewed the district’s contracts with Aircon Energy, Inc., and determined that two of the six contracts do not identify the projected energy savings. -A41- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program PRC section 26206(d) states, “All projects shall require contracts that identify the project specifications, costs, and projected energy savings.” Recommendation No recommendation is applicable, as the Proposition 39 program has ended. District’s Response We informed the district of the audit finding via email on March 19, 2020. Jeremy Salazar, Controller, responded via email on April 14, 2020. The district’s response to the finding is as follows: I would like to request that the attached items be reviewed. Although the information is not presented in the requested format, the attached documentation shows that the projected energy savings analysis was in fact reviewed prior to accepting the contract and prior to any work being performed. For year one of the program, the attached Yosemite CCD EEM Table – Preliminary Proposal dated April 10, 2013 identifies the projected energy savings to be $1,002,583. This table prepared by Aircon Energy also includes the project specifications and costs, and the information within the table was used as a deciding factor in project selection and vendor selection. For year three of the program, the attached email between Tim Nesmith of YCCD, Ben Stevens of Aircon Energy, and Lance Kincaid of Newcomb Anderson McCormick dated April 03, 2015 included an attachment. The attachment was a list of projects to be completed, and included the project specifications and cost, as well as the projected savings of $23,312.87. Since the provided information was used as a deciding factor when identifying the projects that were to be completed, as well as choosing a vendor to complete the projects, I would like to request that they be used as verification that both projects did identify the projected energy savings prior to project and vendor selection, and prior to the work being performed. With this additional verification I would also like to request that the issue be removed from the audit. SCO Comment Our finding remains unchanged. We agree that the additional documentation provided includes the projected energy savings prior to the project and vendor selection, and prior to the work being performed. However, the scope of our audit was to ensure compliance with state statutes and regulations, which require that the projected energy savings be identified in the awarded contract. -A42- Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment A— Cajon Valley Union School District’s Response to Audit Results Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment B— Fort Bragg Unified School District’s Response to Audit Results Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment C— Nestor Language Academy Charter School’s Response to Audit Results (via South Bay Union School District) Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment D— Saddleback Valley Unified School District and Ralph A Gates Elementary School’s Response to Audit Results Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment E— West Contra Costa Unified School District’s Response to Audit Results Program Audit of the California Clean Energy Jobs Act Proposition 39 Program Attachment F— William S. Hart Union High School District’s Response to Audit Results State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov S20-39M-0001