California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grant Expenditure

CALIFORNIA DEPARTMENT OF EDUCATION Final Audit Report PROPOSITION 47 SAFE NEIGHBORHOODS AND SCHOOLS FUND GRANTS PROGRAM July 1, 2018, through June 30, 2024 M ALIA M. C OHEN C S C ALIFORNIA TATE ONTROLLER June 2026 S25-P47-0002 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 30, 2026 The Honorable Tony Thurmond State Superintendent of Public Instruction California Department of Education 1430 N Street Sacramento, CA 95814 Dear Superintendent Thurmond: The State Controller’s Office conducted a performance audit of the California Department of Education’s Proposition 47 Safe Neighborhoods and Schools Fund Grants Program for the period of July 1, 2018, 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 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 Superintendent Tony Thurmond June 30, 2026 Page 2 of 2 Copy: David Schapira, Chief of Staff California Department of Education Ingrid Roberson, Ed.D., Chief Deputy Superintendent of Public Instruction California Department of Education Erika Torres, Ed.D., Deputy Superintendent of Public Instruction Student Success and Career Readiness Branch California Department of Education Allegra Alessandri, Education Administrator Career and College Transition Division California Department of Education Hamed Razawi, Education Administrator Career and College Transition Division California Department of Education Teri Alves, Education Programs Consultant Career and College Transition Division California Department of Education Alice Lee, Director Audits and Investigations Division California Department of Education Kelly Levario, External Audits Coordinator Audits and Investigations Division California Department of Education 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 | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 CONTENTS SUMMARY 1 BACKGROUND 1 AUDIT AUTHORITY 2 OBJECTIVE, SCOPE, AND METHODOLOGY 3 CONCLUSION 6 FOLLOW-UP ON PRIOR AUDIT FINDINGS 6 VIEWS OF RESPONSIBLE OFFICIALS 6 RESTRICTED USE 7 SCHEDULE 1—SUMMARY OF GRANT AWARDS, AMOUNTS DISBURSED, AND AMOUNTS EXPENDED 8 SCHEDULE 2—ADMINISTRATIVE COSTS BY FISCAL YEAR 9 APPENDIX—SUMMARY OF PRIOR AUDIT FINDINGS 11 Office of the State Controller | California Department of Education 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 California Department of Education’s (CDE) Proposition 47 Safe Neighborhoods and Schools Fund Grants Program (Proposition 47 Grants Program) for the period of July 1, 2018, 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, CDE awarded 155 grants, totaling $159,970,059, of which $138,973,486 was disbursed to 155 awardees. We also determined that the $3,822,984 ($384,036 in fiscal year [FY] 2018-19, $365,879 in FY 2019-20, $604,647 in FY 2020-21, $968,174 in FY 2021-22, $659,004 in FY 2022-23, and $841,244 in FY 2023-24) in administrative costs that CDE charged to the Proposition 47 Grants Program was within the five percent threshold specified in GC section 7599.2(b). Our audit found that CDE disbursed and expended Proposition 47 grant funds in accordance with program guidelines and grant requirements, and with applicable laws and regulations. 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 non-serious 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 -1- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 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. California Department of Education CDE administers public education in California. It is responsible for enforcing education law and regulations, and for continually improving elementary and secondary school programs, adult education, and preschool and childcare programs. CDE grants support programs for schools, teachers, and students and their families. CDE is one of the three state agencies responsible for administering the Proposition 47 Grants Program. GC section 7599.2 (a)(1) requires CDE to receive 25 percent of the money in the Safe Neighborhoods and Schools Fund. CDE’s Proposition 47 grants to public agencies support programs and services that improve educational achievement for students in kindergarten through grade 12 public schools by reducing truancy; and by supporting students who are victims of crime, or who are at risk of leaving school before completing the minimum requirements for a diploma. 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 CDE to ensure that “the funds are disbursed and expended solely according to this chapter” and to report its findings to the Legislature. In addition, GC section 12410 provides the SCO with -2- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 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 CDE disbursed and expended Proposition 47 grant funds in accordance with program guidelines and grant requirements, and with applicable laws and regulations. The audit period was July 1, 2018, 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 2018-19 through 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. • We interviewed CDE 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 CDE’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 CDE’s processes for grant awards, grant monitoring, fiscal oversight, and administrative costs. • We verified that CDE awarded 155 grants totaling $159,970,059 during the audit period; $138,973,486 was disbursed to 155 awardees as of June 30,2024. -3- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 • We randomly selected a sample of 20 out of 155 grants awarded, totaling $19,466,279, to determine whether: o Sampled grants were approved by CDE; o CDE 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, CDE’s policies and procedures, guidelines, and established criteria; and o CDE implemented adequate fiscal monitoring and oversight over the grantees’ Proposition 47 grant expenditures. • We verified that CDE expended a total of $138,973,486 ($18,623,964 in FY 2018-19, $24,033,008 in FY 2019-20, $24,419,613 in FY 2020-21, $34,118,348 in FY 2021-22, $20,711,297 in FY 2022-23, and $17,067,256 in FY 2023-24) and performed audit tests to determine whether CDE’s internal controls for Proposition 47 grant expenditures and disbursements were adequate and were being followed by program staff. • We verified that CDE charged $3,822,984 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. -4- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 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 CDE such as: o Proposition 47 Grants Program disbursement and activity reports; 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 CDE’s Proposition 47 Grants Program by interviewing CDE 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 and random selection. We determined that the data was sufficiently reliable for the purposes of this report. Our audit of CDE’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 -5- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 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 Our audit determined that CDE disbursed and expended Proposition 47 grant funds in accordance with program guidelines and grant requirements, and with applicable laws and regulations. See Schedules 1 and 2. FOLLOW-UP ON PRIOR AUDIT FINDINGS CDE has satisfactorily resolved the findings noted in our prior audit report for the period of July 1, 2016, through June 30, 2018, issued on October 10, 2019. The implementation status of corrective actions is described in the appendix. VIEWS OF RESPONSIBLE OFFICIALS We discussed our audit results with CDE’s representatives during an exit conference. At the exit conference, CDE’s representatives agreed with the audit results. -6- Office of the State Controller | California Department of Education 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 CDE 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 30, 2026 -7- Office of the State Controller | California Department of Education 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, 2018, 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 2018-19 $18,623,964 $18,623,964 $18,623,964 $18,623,964 2019-20 24,033,009 24,033,008 24,033,008 24,033,008 2020-21 27,132,904 24,419,613 24,419,613 24,419,613 2021-22 37,909,267 34,118,348 34,118,348 34,118,348 2022-23 25,889,121 20,711,297 20,711,297 20,711,297 2023-24 26,381,794 17,067,256 17,067,256 17,067,256 Total $159,970,059 $138,973,486 $138,973,486 $138,973,486 -8- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 SCHEDULE 2—ADMINISTRATIVE COSTS BY FISCAL YEAR July 1, 2018, through June 30, 2019 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $199,506 $199,506 Consultant services 0 0 Other 184,530 184,530 Total administrative costs $384,036 $384,036 July 1, 2019, through June 30, 2020 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $186,116 $186,116 Consultant services 0 0 Other 179,763 179,763 Total administrative costs $365,879 $365,879 July 1, 2020, through June 30, 2021 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $180,637 $180,637 Consultant services 241,176 241,176 Other 182,834 182,834 Total administrative costs $604,647 $604,647 -9- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 July 1, 2021, through June 30, 2022 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $298,119 $298,119 Consultant services 369,381 369,381 Other 300,674 300,674 Total administrative costs $968,174 $968,174 July 1, 2022, through June 30, 2023 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $223,237 $223,237 Consultant services 143,068 143,068 Other 292,699 292,699 Total administrative costs $659,004 $659,004 July 1, 2023, through June 30, 2024 Program Amount Amount Cost Element Expended Allowable Direct costs: Salaries and wages $238,556 $238,556 Consultant services 263,224 263,224 Other 339,464 339,464 Total administrative costs $841,244 $841,244 -10- Office of the State Controller | California Department of Education Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Final Audit Report June 2026 APPENDIX—SUMMARY OF PRIOR AUDIT FINDINGS The following table shows the implementation status of the California Department of Education’s corrective actions related to the findings contained in our audit report dated October 10, 2019. Prior Audit Finding Status Finding 1— Implemented Ineligible administrative costs Finding 2— Implemented Inadequate fiscal monitoring control over grant expenditures End of report -11-