Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grant Expenditure 056/24/2026

BOARD OF STATE AND COMMUNITY CORRECTIONS Final Audit Report PROPOSITION 47 SAFE NEIGHBORHOODS AND SCHOOLS FUND GRANTS PROGRAM July 1, 2022, through June 30, 2024 M ALIA M. C OHEN C S C ALIFORNIA TATE ONTROLLER June 2026 S25-P47-0003 STATE CONTROLLER’S OFFICE | DIVISION OF AUDITS Post Office Box 942850 | Sacramento, CA 94250 Sacramento Office: 3301 C Street, Suite 700 | Sacramento, CA 95816 | 916-324-8907 Monterey Park Office: 901 Corporate Center Drive, Suite 200 | Monterey Park, CA 91754 | 323-981-6802 www.sco.ca.gov MALIA M. COHEN CALIFORNIA STATE CONTROLLER June 24, 2026 Ms. Linda Penner, Chair Mr. Aaron R. Maguire, Executive Director Board of State and Community Corrections 2590 Ventura Oaks Way, Suite 200 Sacramento, CA 95833 Dear Ms. Penner and Mr. Maguire: The State Controller’s Office conducted a performance audit of the Board of State and Community Corrections’ Proposition 47 Safe Neighborhoods and Schools Fund Grants Program for the period of July 1, 2022, through June 30, 2024. If you have any questions regarding this report, please contact Roochel Espilla, Chief, State Agency Audits Bureau by telephone at 916-323-5744. Thank you. Sincerely, Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits Attachment MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Ms. Linda Penner Mr. Aaron R. Maguire June 24, 2026 Page 2 of 2 Copy: Le-Mai Lyons, General Counsel Board of State and Community Corrections Colleen Curtin, Deputy Director Corrections Planning and Grant Programs Board of State and Community Corrections Adrienne Winuk, Assistant Deputy Director Corrections Planning and Grant Programs Board of State and Community Corrections Juanita Reynaga, Senior Management Auditor Corrections Planning and Grant Programs Board of State and Community Corrections Lee Sutter, Chief Fiscal Officer Financial Services Board of State and Community Corrections MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 CONTENTS SUMMARY 1 BACKGROUND 2 AUDIT AUTHORITY 3 OBJECTIVE, SCOPE, AND METHODOLOGY 3 CONCLUSION 6 FOLLOW-UP ON PRIOR AUDIT FINDINGS 7 VIEWS OF RESPONSIBLE OFFICIALS 7 RESTRICTED USE 8 SCHEDULE 1—SUMMARY OF GRANT AWARDS, AMOUNTS DISBURSED, AND AMOUNTS EXPENDED 9 SCHEDULE 2—ADMINISTRATIVE COSTS BY FISCAL YEAR 10 FINDING AND RECOMMENDATION 11 ATTACHMENT—BOARD OF STATE AND COMMUNITY CORRECTIONS’ RESPONSE TO DRAFT AUDIT REPORT 11 Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 SUMMARY The State Controller’s Office (SCO) conducted a performance audit of the Board of State and Community Corrections’ (BSCC) Proposition 47 Safe Neighborhoods and Schools Fund Grants Program (Proposition 47 Grants Program) for the period of July 1, 2022, through June 30, 2024. The purpose of the audit, as required by Government Code (GC) section 7599.2(c), was to determine whether Proposition 47 grant funds were disbursed and expended in accordance with program guidelines and grant requirements, and with applicable laws and regulations. Our audit determined that during the audit period, BSCC awarded 45 grants, totaling $217,687,057 ($92,779,390 in Cohort 2 grants and $124,907,667 in Cohort 3 grants), of which $94,092,032 ($81,879,755 in Cohort 2 grants and $12,212,277 in Cohort 3 grants) was disbursed to 35 awardees. We also determined that the $1,540,995 ($806,270 in fiscal year [FY] 2022-23 and $734,725 in FY 2023-24) in administrative costs that BSCC charged to the Proposition 47 Grants Program was within the five percent threshold specified in GC section 7599.2(b). Our audit found that BSCC did not implement sufficient internal controls over grantee monitoring and fiscal oversight in its administration of the Proposition 47 Grants Program during the audit period. Specifically, BSCC did not conduct a fiscal desk review or a Comprehensive Monitoring Visit (CMV) for every grant that it awarded, and it could not provide the required documentation for all of the reviews that it conducted. As a result, BSCC cannot provide reasonable assurance that the Proposition 47 grant funds were disbursed and expended in accordance with applicable laws, regulations, program guidelines, grant agreements, and as required by GC sections 7599 through 7599.2. This insufficient oversight weakens accountability and increases the risk of noncompliance or improper use of grant funds. -1- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 BACKGROUND Proposition 47 – Safe Neighborhoods and Schools Fund On November 4, 2014, California voters approved Proposition 47, which reduces penalties for certain offenders convicted of nonserious and nonviolent property and drug crimes. It also allows some offenders to apply for reduced sentences. Proposition 47 established the Safe Neighborhoods and Schools Fund, which is funded by savings that accrue to the State from implementation of the measure. This mandate is expected to save significant state corrections dollars annually. Savings resulting from Proposition 47 are transferred from the General Fund to the Safe Neighborhoods and Schools Fund to be used in support of truancy reduction and drop-out prevention programs for public school pupils in kindergarten through grade 12, increase victim services grants, and support substance abuse and mental health treatment and diversion programs for people in the criminal justice system. Board of State and Community Corrections BSCC provides grants, data, and research for community-based organizations, government agencies, and tribes; and staff training, facility inspections, and construction financing for county jails and juvenile detention centers. BSCC grants support programs and services related to public health and safety, rental assistance, diversion and reentry, parenting, and violence reduction. BSCC is one of the three state agencies responsible for administering the Proposition 47 Grants Program. GC section 7599.2(a)(3) requires BSCC to receive 65 percent of the money in the Safe Neighborhoods and Schools Fund. Proposition 47 grants from BSCC to public agencies support treatment programs for substance-abuse disorders and mental health conditions; diversion programs for offenders; and programs to reduce recidivism. -2- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 Assembly Bill 1056 (Statutes of 2015) provided additional priorities for projects that combine mental health services, substance use treatment services, housing, housing-related job assistance, job skills training, and other community-based supportive services that will help the State meaningfully reduce recidivism. AUDIT AUTHORITY We conducted this audit in accordance with GC section 7599.2(c), which requires the SCO, every two years, to conduct an audit of the Proposition 47 Grants Program operated by BSCC to ensure that “the funds are disbursed and expended solely according to this chapter” and to report its findings to the California State Legislature. In addition, GC section 12410 provides the SCO with general authority to audit the disbursement of state money for correctness, legality, and sufficient provisions of law for payment. OBJECTIVE, SCOPE, AND METHODOLOGY Our audit objective was to determine whether BSCC disbursed and expended the Proposition 47 grant funds in accordance with program guidelines and grant requirements, and with applicable laws and regulations. The audit period was July 1, 2022, through June 30, 2024. To achieve our objective, we performed the following procedures: • We identified the Proposition 47 Grants Program background, criteria, purpose, and requirements by reviewing the FY 2022-23 and FY 2023-24 Governor’s Budgets, GC sections 7599 through 7599.2, and the California Department of Finance fund classification and basis for the Safe Neighborhoods and Schools Fund. -3- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 • We interviewed BSCC key personnel; completed internal control questionnaires; obtained documents and records; reviewed policies and procedures, guidelines, grant agreements, and grant processes; and traced transactions and activities through the system in order to gain an understanding of BSCC’s internal controls related to the Proposition 47 Grants Program; and we identified internal controls significant to our audit objective. Our consideration of internal control was for the limited purpose described in the previous paragraph and determining the auditing procedures that were appropriate under the circumstances for the purpose of providing a conclusion based on our audit objective. • We assessed the design and implementation of controls over BSCC’s processes for grant awards, grant monitoring, fiscal oversight, and administrative costs. • We verified that BSCC awarded 45 grants totaling $217,687,057 ($92,779,390 in Cohort 2 grants and $124,907,667 in Cohort 3 grants) during the audit period; $94,092,032 ($81,879,755 in Cohort 2 grants and $12,212,277 in Cohort 3 grants) was disbursed to 35 awardees as of June 30, 2024. • We selected a judgmental (non-statistical) sample of three out of 24 Cohort 3 grants awarded, totaling $13,634,390, to determine whether: o Sampled grants were approved by BSCC; o BSCC administered a fair and open grant award process; o Grant agreements specified standard contract language established by the California Department of General Services, such as scope of work, budgets, terms and conditions, and services to be provided; o Grant agreements were in compliance with program requirements, BSCC’s policies and procedures, guidelines, and established criteria; and -4- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 o BSCC implemented adequate fiscal monitoring and oversight over the grantees’ Proposition 47 grant expenditures. • We verified that BSCC expended a total of $94,092,032 ($81,879,755 in Cohort 2 grants and $12,212,277 in Cohort 3 grants); and performed audit tests to determine whether BSCC’s internal controls for Proposition 47 grant expenditures and disbursements were adequate and were being followed by program staff. • We verified that BSCC charged $1,540,995 in administrative costs to the Proposition 47 Grants Program during the audit period. • We selected a sample of transactions using judgmental (non-statistical) sampling and: o Traced the transactions to supporting documentation, and performed analytical procedures and budgetary analyses; and o Tested compliance with applicable laws, regulations, policies and procedures, and program requirements. Our audit procedures included interviewing appropriate personnel and inspecting documents, records, and grant agreements. We chose judgmental sampling because it allows us to achieve our objectives for tests of compliance in an efficient and effective manner, and because we do not intend to project the results to the intended (total) population. • We verified the accuracy of the Proposition 47 Grants Program financial information reported by BSCC such as: o Agency fund reconciliation reports submitted to SCO; o Proposition 47 Grants Program disbursement and activity reports; -5- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 o General ledger activity reports, detail ledger reports, and trial balance reports; and o Budget detail expense reports. • We assessed the reliability of computer-processed data for BSCC’s Proposition 47 Grants Program by interviewing BSCC officials knowledgeable about the data; reviewing existing information about the data and the system that produced it; and tracing data to source documents, based on judgmental sampling. We determined that the data was sufficiently reliable for the purposes of this report. Our audit of BSCC's Proposition 47 Grants Program was limited to ensuring that funds were disbursed and expended solely according to statutory requirements, pursuant to GC section 7599.2(c). We limited our audit scope to planning and performing audit procedures necessary to achieve our audit objective. We did not examine the information-system controls or the economy, efficiency, or effectiveness of the Proposition 47 Grants Program. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence we obtained provides a reasonable basis for our findings and conclusions based on our audit objective. CONCLUSION We found that BSCC did not implement sufficient internal controls over grantee monitoring and fiscal oversight in its administration of the Proposition 47 Grants Program during the audit period. Specifically, BSCC did not conduct a fiscal desk review or a CMV for every grant that it awarded, and it could not provide the required documentation for all of the reviews that it conducted. As a result, BSCC cannot provide reasonable assurance that the Proposition 47 grant funds were disbursed and expended in accordance with applicable laws, -6- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 regulations, program guidelines, grant agreements, and as required by GC sections 7599 through 7599.2. This insufficient oversight weakens accountability and increases the risk of noncompliance or improper use of grant funds (see the Finding). However, BSCC charged administrative costs that were within the five percent threshold specified in GC section 7599.2(b). FOLLOW-UP ON PRIOR AUDIT FINDINGS Our prior audit report on BSCC for the period of July 1, 2016, through June 30, 2017, issued on December 14, 2018, disclosed no findings. VIEWS OF RESPONSIBLE OFFICIALS We issued a draft report on February 6, 2026. BSCC’s representative responded by letter dated February 17, 2026. BSCC generally agreed with the audit finding and provided additional context. Our comments on BSCC’s response are included in the Finding and Recommendation section. This final audit report includes BSCC’s response as an attachment. -7- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 RESTRICTED USE This report is solely for the information and use of BSCC and the SCO; it is not intended to be, and should not be, used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record and is available on the SCO website at www.sco.ca.gov. Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits June 24, 2026 -8- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 SCHEDULE 1—SUMMARY OF GRANT AWARDS, AMOUNTS DISBURSED, AND AMOUNTS EXPENDED July 1, 2022, through June 30, 2024 The following table summarizes the grant awards and the amounts disbursed and expended during the audit period (monetary amounts are rounded to the nearest whole dollar): Fiscal Amount Amount Amount Amount Year Awarded Disbursed Expended Allowable FY 2022-23 $92,779,390 $81,879,755 $81,879,755 $81,879,755 FY 2023-24 124,907,667 12,212,277 12,212,277 12,212,277 Total $217,687,057 $94,092,032 $94,092,032 $94,092,032 -9- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 SCHEDULE 2—ADMINISTRATIVE COSTS BY FISCAL YEAR July 1, 2022, through June 30, 2023 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $472,092 $472,092 Fringe benefits 235,314 235,314 Travel 9,032 9,032 Equipment 5,756 5,756 Consulting and professional services 3,020 3,020 Training 350 350 General expenses 237 237 Printing 25 25 Total direct costs 725,826 725,826 Total indirect costs 80,444 80,444 Total administrative costs $806,270 $806,270 July 1, 2023, through June 30, 2024 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $478,343 $478,343 Fringe benefits 244,206 244,206 Equipment 6,172 6,172 Travel 5,372 5,372 Consulting and professional services 400 400 General expenses 232 232 Total direct costs 734,725 734,725 Total indirect costs 0 0 Total administrative costs $734,725 $734,725 -10- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 FINDING AND RECOMMENDATION Finding—Insufficient Internal Controls Over Grantee Monitoring and Fiscal Oversight for the Proposition 47 Grants Program Our audit found that BSCC did not implement sufficient internal control over grantee monitoring and fiscal oversight in its administration of the Proposition 47 Grants Program during the audit period. Specifically, BSCC did not conduct a fiscal desk review or a CMV for every grant that it awarded, and it could not provide the required documentation for all of the reviews that it conducted. The circumstances are as follows: • Cohort 2 included 21 grantees with a grant term of August 15, 2019, through May 15, 2023. o CMVs were performed for only nine of the 21 grantees during the grant term, leaving 12 without the required monitoring coverage. o Of the nine CMV reports prepared, only one included preparer and reviewer signatures, which are key internal control elements that provide evidence of both the completion and independent review of monitoring activities. o Only one fiscal desk review was performed for each grantee during the four-year grant term. This did not meet BSCC’s requirements of at least two reviews within the first 24 months and one annually thereafter, which are necessary to ensure adequate and sufficient fiscal oversight. • Cohort 3 included 24 grantees with a grant term of September 1, 2022, through June 1, 2026. o CMVs were performed for only three of the 24 grantees during the audit period. -11- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 o Of these, only one CMV report was available for review, and the report lacked preparer and reviewer signatures. o No fiscal desk reviews were conducted for any of the 24 grantees during the audit period or within the initial 24 months of the grant term, as required under BSCC’s monitoring framework. BSCC management indicated that limited staffing and resource constraints, combined with challenges with recruitment and hiring, constrained its ability to conduct required CMVs and fiscal desk reviews and resulted in increased workloads for existing staff. Therefore, we determined that BSCC did not provide reasonable assurance that Proposition 47 grant funds were disbursed and expended in accordance with applicable laws, regulations, program guidelines, grant requirements, and as required by GC sections 7599 through 7599.2. The lack of sufficient internal controls undermines accountability and increases the risk of noncompliance, misuse, or improper use of funds. Criteria Section 17.A, “Comprehensive Monitoring Visit,” of the BSCC Grant Administration Guide (July 2020) states, in part: Purpose A Comprehensive Monitoring Visit (CMV) is an on-site assessment of the administrative, fiscal, and programmatic components of a BSCC-funded project. The resulting Comprehensive Monitoring Visit Report (CMVR) provides a detailed review of the project and identifies, in limited scope, areas in which the project is and is not in compliance with the terms of the program, laws, and regulations. Each grant project will receive a CMV at least once during the applicable grant cycle. . . . -12- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 Section 17.G, “Desk Reviews – Fiscal Oversight,” of the BSCC Grant Administration Guide states, in part: The desk review is an assessment of the fiscal components of a grant project funded through a BSCC RFA [Request for Applications] or RFP [Request for Proposals] process. Fiscal desk reviews are completed by CPGP [Corrections Planning and Grant Programs] Program Analysts. Upon completion of a fiscal desk review, the Grantee will be provided with an email or letter informing them of the outcome. In the event a fiscal desk review identifies a concern, the Field Representative and Manager will be informed and will provide directions for resolution. The record of each outcome will be filed in the grant project file. 1. Desk Review Frequency Each grant project will receive multiple fiscal desk reviews during the grant cycle. At a minimum, two desk reviews per year will occur in the first 24 months of the grant cycle. A minimum of one desk review per year will occur in subsequent years as applicable. A fiscal desk review may be completed at any time at the request of a Field Representative or Management. . . . GC section 13401(a)(2) states: Fraud and errors in state programs are more likely to occur from a lack of effective systems of internal control in state agencies when active monitoring measures are not maintained to ensure that controls are functioning properly. GC section 13401(b)(1) states, “Each state agency must maintain effective systems of internal control as an integral part of its management practices.” -13- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 Recommendation We recommend that BSCC strengthen its internal controls over grantee monitoring and fiscal oversight as follows: • Establish and maintain a centralized tracking system to monitor the completion of CMVs and desk reviews for all grantees within the required timeframes; • Ensure that all CMV reports are properly completed and reviewed, with preparer and reviewer signatures (or electronic approvals) documented before finalization; • Review current resource allocations, staffing levels, and staffing competencies to ensure BSCC has sufficient capacity to conduct timely monitoring activities, effectively train staff to use its existing monitoring tools, and address workload demands; and • Review and conduct periodic monitoring and fiscal oversight practices to assess whether requirements are being met and whether controls remain effective. BSCC’s Response Regarding the overall finding, BSCC stated: BSCC generally agrees with the audit findings, but it is important to overlay some of the context behind these findings. As explained below, BSCC disagrees with the characterization of one of the audit findings for Cohort 3. Regarding the limited CMVs and fiscal desk reviews for Cohort 2 grants, BSCC stated: BSCC schedules CMVs to take place in the second or third year of a grant cycle, after the grantee has had the chance to fully implement its project. The COVID-19 pandemic hit in March 2020, only seven months into the 42-month grant cycle, and before BSCC would normally initiate the CMV process. From March 2020 through the start of 2022, BSCC Field Representatives were unable to conduct in-person monitoring visits due to -14- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 local and state COVID protocols. This negatively impacted BSCC’s ability to stay on track with CMVs during the Proposition 47 Cohort 2 grant cycle. Regarding the limited CMVs and fiscal desk reviews for Cohort 3 grants, BSCC stated: In late 2023, BSCC experienced a significant backlog in unpaid grantee invoices due to high caseloads and insufficient staff resources. In response, BSCC temporarily paused desk reviews to make the invoice review and approval process a priority. At that time, BSCC staff focused its limited resources on its non-governmental organization grantees, which tend to be higher risk due to their limited infrastructure or capacity. Because Proposition 47 grantees are all governmental agencies, they tend to have better fiscal controls in place and are subject to independent audits, making them lower risk for experiencing financial reporting problems. Since the time of the audit, CPGP has hired additional staff, right-sized caseloads, and developed a plan to stagger desk reviews across our grant programs. Desk reviews are now being conducted on every grant program. BSCC acknowledges the challenges described above and has taken steps to address them . . . There is one finding connected to Cohort 3 with which BSCC disagrees. . . . BSCC disputes that there was “minimal monitoring coverage during the grant cycle” because other monitoring practices, including Initial Monitoring Visits [IMVs], were used. The grant cycle for Cohort 3 is September 1, 2022, through June 1, 2026, with the first six months designated for start-up and implementation . . . In the first year of a grant cycle, BSCC staff conduct [IMVs], not CMVs. IMVs are also an important component of BSCC’s monitoring and oversight process. CPGP’s internal policy provides that the purpose of the IMV is “to build relationships with the project staff, stakeholders/partners, and provide high-level evaluation of the project’s infrastructure to include support areas such as: Grantee Monitoring and Oversight; -15- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 Financial; Data; Referrals; Subcontracting; and Hiring.” In addition to the three CMVs noted in the audit report, BSCC conducted an additional 14 IMVs during the audit period, meaning that 17 of the 24 grantees were monitored during the grant cycle. . . . SCO Comment Our finding and recommendation remain unchanged. BSCC generally agreed with the finding and indicated that it has initiated corrective actions. In its response, BSCC also indicated that CMVs for 12 Cohort 3 grants were not performed due to COVID-19 protocols. This assertion does not adequately justify the absence of required oversight activities. Although pandemic-related restrictions may have limited in-person interactions, they did not eliminate the responsibility to perform monitoring procedures necessary to ensure proper administration of the program. The CMV is a critical control designed to assess administrative, fiscal and programmatic components of BSCC-funded projects. CMVs help verify compliance with applicable requirements, evaluate internal controls, and ensure that expenditures are allowable and properly supported. In the absence of physical site visits, BSCC was responsible for implementing alternative monitoring procedures—such as virtual reviews, remote document verification, and interviews—to achieve the same oversight objectives. In addition, BSCC indicated that no desk reviews were conducted for Cohort 3 grants during the audit period due to high workload and staffing limitations. This assertion is consistent with and confirms statements made during the audit, which are described in this report. However, these factors do not relieve BSCC of its responsibility to perform required monitoring procedures. Desk reviews are a fundamental component of grantee monitoring and are expected to be conducted in accordance with established requirements, regardless of resource constraints. The lack of sufficient staffing or competing priorities does not constitute a valid basis for noncompliance with BSCC’s own policies and procedures. -16- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 Furthermore, BSCC indicated that it focused its resources on non-governmental organization grantees. As described in the report, BSCC did not conduct fiscal desk reviews for any of the 24 grantees during the audit period. BSCC’s decision to limit desk reviews on non- governmental organizations based on perceived risk is not supported. Although risk-based approaches to monitoring are appropriate, they must be applied consistently to all grantees. Governmental entities are not exempt from monitoring requirements simply because they have stronger controls or are subject to independent audits. Desk reviews serve a distinct purpose and provide oversight that complements, rather than replaces, other forms of assurance such as external audits. Moreover, BSCC contended that it monitored 17 of the 24 grantees during the grant cycle because it conducted IMVs. If operating effectively, these activities may provide preliminary engagement with grantees; however, they do not replace CMVs or mitigate the risk that grant funds will not be expended in accordance with requirements We appreciate BSCC’s willingness to implement corrective actions to improve its internal controls related to grantee monitoring and fiscal oversight. -17- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 ATTACHMENT—BOARD OF STATE AND COMMUNITY CORRECTIONS’ RESPONSE TO DRAFT AUDIT REPORT -18- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 -19- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 -20- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 -21- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 -22- Office of the State Controller | Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 End of report -23-