Woodland Joint Unified School District

WOODLAND JOINT UNIFIED SCHOOL DISTRICT Audit Report COLLECTIVE BARGAINING PROGRAM Chapter 961, Statutes of 1975, and Chapter 1213, Statutes of 1991 July 1, 2000, through June 30, 2004 J C OHN HIANG California State Controller May 2007 J C OHN HIANG California State Controller May 18, 2007 Jacki L. Cottingim, Ph.D., Superintendent Woodland Joint Unified School District 630 Cottonwood Street Woodland, CA 95695 Dear Ms. Cottingim: The State Controller’s Office audited the costs claimed by the Woodland Joint Unified School District for the legislatively mandated Collective Bargaining Program (Chapter 961, Statutes of 1975, and Chapter 1213, Statutes of 1991) for the period of July 1, 2000, through June 30, 2004. The district claimed and was paid $890,494 for the mandated program. Our audit disclosed that $827,600 is allowable and $62,894 is unallowable. The unallowable costs occurred primarily because the district claimed unsupported costs. The State will offset $62,894 from other mandated program payments due to the district. Alternatively, the district may remit this amount to the State. If you have any questions, please contact Jim L. Spano, Chief, Compliance Audits Bureau, at (916) 323-5849. Sincerely, “Original signed by” JEFFREY V. BROWNFIELD Chief, Division of Audits JVB/jj:vb Jacki L. Cottingim -2- May 18, 2007 cc: Glenston Thompson, Interim Associate Superintendent, Business Services Woodland Joint Unified School District Kelly Morgan, Director of Fiscal Services Woodland Joint Unified School District Gerardo Castillo Supervisor of Fiscal Services/Internal Auditor Woodland Joint Unified School District Jorge O. Ayala, Ph.D., County Superintendent of Schools Yolo County Office of Education Scott Hannan, Director School Fiscal Services Division California Department of Education Arlene Matsuura, Education Fiscal Services Consultant School Fiscal Services Division California Department of Education Gerry Shelton, Director Fiscal and Administrative Services Division California Department of Education Jeannie Oropeza, Program Budget Manager Education Systems Unit Department of Finance Woodland Joint Unified School District Collective Bargaining Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 2 Conclusion.......................................................................................................................... 2 Views of Responsible Officials.......................................................................................... 3 Restricted Use.................................................................................................................... 3 Schedule 1—Summary of Program Costs............................................................................ 4 Findings and Recommendations........................................................................................... 6 Woodland Joint Unified School District Collective Bargaining Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the Woodland Joint Unified School District for the legislatively mandated Collective Bargaining Program (Chapter 961, Statutes of 1975, and Chapter 1213, Statutes of 1991) for the period of July 1, 2000, through June 30, 2004. The last day of fieldwork was April 28, 2005. The district claimed and was paid $890,494 for the mandated program. Our audit disclosed that $827,600 is allowable and $62,894 is unallowable. The unallowable costs occurred primarily because the district claimed unsupported costs. The State will offset $62,894 from other mandated program payments due to the district. Alternatively, the district may remit this amount to the State. Background In 1975, the State enacted the Rodda Act (Chapter 961, Statutes of 1975), requiring the employer and employee to meet and negotiate, thereby creating a collective bargaining atmosphere for public school employers. The legislation created the Public Employment Relations Board to issue formal interpretations and rulings regarding collective bargaining under the Act. In addition, the legislation established organizational rights of employees and representational rights of employee organizations, and recognized exclusive representatives relating to collective bargaining. On July 17, 1978, the Board of Control (now the Commission on State Mandates [COSM]) determined that the Rodda Act imposed a reimbursable state mandate upon school districts reimbursable under Government Code Section 17561. Chapter 1213, Statutes of 1991, added Government Code Section 3547.5, requiring school districts to publicly disclose major provisions of a collective bargaining effort before the agreement becomes binding. On August 20, 1998, the COSM determined that this legislation also imposed a state mandate upon school districts reimbursable under Government Code Section 17561. Costs of publicly disclosing major provisions of collective bargaining agreements that districts incurred after July 1, 1996, are allowable. Claimants are allowed to claim increased costs. For claim components G1 through G3, increased costs represent the difference between the current-year Rodda Act activities and the base-year Winton Act activities (generally, fiscal year 1974-75), as adjusted by the implicit price deflator. For components G4 through G7, increased costs represent actual costs incurred. -1- Woodland Joint Unified School District Collective Bargaining Program The seven components are as follows. G1–Determining bargaining units and exclusive representatives G2–Election of unit representatives G3–Costs of negotiations G4–Impasse proceedings G5–Collective bargaining agreement disclosure G6–Contract administration G7–Unfair labor practice costs Parameters and Guidelines establishes the state mandate and defines reimbursement criteria. COSM adopted the Parameters and Guidelines on October 22, 1980, and last amended it on January 27, 2000. In compliance with Government Code Section 17558, the SCO issues claiming instructions for mandated programs, to assist local agencies and school districts in claiming reimbursable costs. Objective, We conducted the audit to determine whether costs claimed represent increased costs resulting from the Collective Bargaining Program for the Scope, and period of July 1, 2000, through June 30, 2004. Methodology Our audit scope included, but was not limited to, determining whether costs claimed were supported by appropriate source documents, were not funded by another source, and were not unreasonable and/or excessive. We conducted the audit according to Government Auditing Standards, issued by the Comptroller General of the United States, and under the authority of Government Code Sections 12410, 17558.5, and 17561. We did not audit the district’s financial statements. We limited our audit scope to planning and performing audit procedures necessary to obtain reasonable assurance that costs claimed were allowable for reimbursement. Accordingly, we examined transactions, on a test basis, to determine whether the costs claimed were supported. We limited our review of the district’s internal controls to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Conclusion Our audit disclosed instances of noncompliance with the requirements outlined above. These instances are described in the accompanying Summary of Program Costs (Schedule 1) and in the Findings and Recommendations section of this report. For the audit period, the Woodland Joint Unified School District claimed and was paid $890,494 for costs of the Collective Bargaining Program. Our audit disclosed that $827,600 is allowable and $62,894 is unallowable. The State will offset $62,894 from other mandated program payments due to the district. Alternatively, the district may remit this amount to the State. -2- Woodland Joint Unified School District Collective Bargaining Program Views of We issued a draft audit report on January 17, 2007. Gerardo Castillo, Supervisor of Fiscal Services/Internal Auditor, responded by e-mail, Responsible dated March 26, 2007, agreeing with the audit results. Official Restricted Use This report is solely for the information and use of the Woodland Joint Unified School District, the Yolo County Office of Education, the California Department of Education, the California Department of Finance, and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. “Original signed by” JEFFREY V. BROWNFIELD Chief, Division of Audits -3- Woodland Joint Unified School District Collective Bargaining Program Schedule 1— Summary of Program Costs July 1, 2000, through June 30, 2004 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference 1 July 1, 2000, through June 30, 2001 Components G1 through G3: Salaries and benefits $ 55,404 $ 48,958 $ (6,446) Finding 1 Materials and supplies 626 626 — Contracted services 20,054 20,054 — Subtotals 76,084 69,638 (6,446) Less adjusted base year direct costs (1,930) (1,930) — Increased direct costs, G1 through G3 74,154 67,708 (6,446) Components G4 through G7: Salaries and benefits 73,450 52,773 (20,677) Finding 1 Materials and supplies 990 990 — Contracted services 293,077 290,602 (2,475) Finding 2 Increased direct costs, G4 through G7 367,517 344,365 (23,152) Total increased direct costs, G1 through G7 441,671 412,073 (29,598) Indirect costs 9,589 7,566 (2,023) Findings 1, 3, 4 Total program costs $ 451,260 419,639 $ (31,621) Less amount paid by the State (451,260) Allowable costs claimed in excess of (less than) amount paid $ (31,621) July 1, 2001, through June 30, 2002 Components G1 through G3: Salaries and benefits $ 45,980 $ 48,262 $ 2,282 Finding 1 Materials and supplies 206 206 — Contracted services 38,665 39,408 743 Finding 2 Subtotals 84,851 87,876 3,025 Less adjusted base year direct costs — (1,957) (1,957) Finding 3 Increased direct costs, G1 through G3 84,851 85,919 1,068 Components G4 through G7: Salaries and benefits 59,890 39,656 (20,234) Finding 1 Materials and supplies 131 131 — Contracted services 60,610 60,475 (135) Finding 2 Increased direct costs, G4 through G7 120,631 100,262 (20,369) Total increased direct costs, G1 through G7 205,482 186,181 (19,301) Indirect costs 5,576 4,531 (1,045) Findings 1, 3, 4 Total program costs $ 211,058 190,712 $ (20,346) Less amount paid by the State (211,058) Allowable costs claimed in excess of (less than) amount paid $ (20,346) -4- Woodland Joint Unified School District Collective Bargaining Program Schedule 1 (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference 1 July 1, 2002, through June 30, 2003 Components G1 through G3: Salaries and benefits $ 27,037 $ 21,654 $ (5,383) Finding 1 Materials and supplies 124 124 — Contracted services 28,851 28,942 91 Finding 2 Subtotals 56,012 50,720 (5,292) Less adjusted base year direct costs — (2,001) (2,001) Finding 3 Increased direct costs, G1 through G3 56,012 48,719 (7,293) Components G4 through G7: Salaries and benefits 32,590 22,292 (10,298) Finding 1 Contracted services 65,163 77,819 12,656 Finding 2 Increased direct costs, G4 through G7 97,753 100,111 2,358 Total increased direct costs, G1 through G7 153,765 148,830 (4,935) Indirect costs 2,987 2,103 (884) Findings 1, 3, 4 Total program costs $ 156,752 150,933 $ (5,819) Less amount paid by the State (156,752) Allowable costs claimed in excess of (less than) amount paid $ (5,819) July 1, 2003, through June 30, 2004 Components G1 through G3: Salaries and benefits $ 47,812 $ 44,764 $ (3,048) Finding 1 Materials and supplies 41 41 — Contracted services 3,646 3,646 — Subtotals 51,499 48,451 (3,048) Less adjusted base year direct costs — (2,074) (2,074) Finding 3 Increased direct costs, G1 through G3 51,499 46,377 (5,122) Components G4 through G7: Salaries and benefits 4,495 4,766 271 Finding 1 Contracted services 12,661 12,661 — Increased direct costs, G4 through G7 17,156 17,427 271 Total increased direct costs, G1 through G7 68,655 63,804 (4,851) Indirect costs 2,769 2,512 (257) Findings 1, 3, 4 Total program costs $ 71,424 66,316 $ (5,108) Less amount paid by the State (71,424) Allowable costs claimed in excess of (less than) amount paid $ (5,108) Summary: July 1, 2000, through June 30, 2004 Total increased costs G1 through G7 $ 869,573 $ 810,888 $ (58,685) Finding 1 Indirect costs 20,921 16,712 (4,209) Findings 1, 3, 4 Total program costs $ 890,494 827,600 $ (62,894) Less amount paid by the State (890,494) Allowable costs claimed in excess of (less than) amount paid $ (62,894) _________________________ 1 See the Findings and Recommendations section. -5- Woodland Joint Unified School District Collective Bargaining Program Findings and Recommendations FINDING 1— The district overstated employee salary and benefit costs by $63,533 for Overstated salary and the audit period. The related indirect costs total $3,896. Audit benefit costs adjustments are summarized as follows. • The district claimed costs totaling $58,021 ($26,864 for fiscal year [FY] 2000-01, $17,311 for FY 2001-02, and $13,846 for FY 2002-03) that were not adequately supported. Most of these costs were supported by estimates of employee time that employees completed at the end of the school year. In addition, a portion of the FY 2000-01 substitute costs was not traceable to any source documents. • The district claimed ineligible employee salary and benefit costs totaling $6,820 ($1,883 for FY 2000-01, $2,691 for FY 2001-02, $557 for FY 2002-03, and $1,689 for FY 2003-04). The ineligible costs include the attendance of more than five district representatives in negotiation meetings and claiming costs for a union member, overtime for administrators, and duplicate costs. • The district did not provide any support for employee salary and benefit costs totaling $5,694 ($683 for FY 2000-01, $146 for FY 2001-02, $2,911 for FY 2002-03, and $1,954 for FY 2003-04). Specifically, the district did not provide source documents, such as individual activity log sheets, meeting sign-in sheets, or other time records, to validate employee hours charged. For FY 2003-04, the district provided meeting sign-in sheets for claimed costs, but some of the employees claimed were either absent or excused from the meetings. • The district understated employees’ salary and benefit costs by $3,585 (understatements of $2,307 for FY 2000-01, $1,633 for FY 2002-03, and $382 for FY 2003-04, and an overstatement of $737 for FY 2001-02) because it used incorrect productive hourly rates. The district did not use actual employee salary and benefit information to prepare the claims; instead, it used budgeted employee salary and benefit information generated in the middle of the fiscal year to compute the productive hourly rates. • The district understated employee salary and benefit costs totaling $3,417 ($2,933 for FY 2001-02 and $484 for FY 2003-04) due to mathematical errors it made during the claim preparation process. The following table shows the unallowable salary and benefit costs, and related indirect costs. Fiscal Year 2000-01 2001-02 2002-03 2003-04 Total Salaries and benefits: Components G1-G3 $ (6,446) $ 2,282 $ (5,383) $ (3,048) $ (12,595) Components G4-G7 (20,677) (20,234) (10,298) 271 (50,938) Totals (27,123) (17,952) (15,681) (2,777) (63,533) Related indirect costs (2,023) (942) (784) (147) (3,896) Audit adjustment $ (29,146) $ (18,894) $ (16,465) $ (2,924) $ (67,429) -6- Woodland Joint Unified School District Collective Bargaining Program Parameters and Guidelines requires the claimant to show the classification of the employees involved, amount of time spent, and their hourly rate. In addition, Parameters and Guidelines requires the claimant to show the cost of salaries and benefits for employer representatives participating in negotiation, the cost of substitute teachers for release time of exclusive bargaining unit representatives during negotiations, the job classifications of the bargaining unit representatives who required a substitute, and dates worked. Parameters and Guidelines state that costs for a maximum of five public school employer representatives per unit, per negotiation session, will be reimbursed. The salaries of union representatives are not reimbursable. Parameters and Guidelines states that the claimant must support the level of costs claimed and that the claimant will only be reimbursed for the increased costs incurred. Recommendation We recommend that the district develop and implement an adequate recording and reporting system to ensure that all claimed costs are eligible and properly supported. District’s Response The district agrees with the audit finding. FINDING 2— The district understated contract services by $10,880 for the audit period. Audit adjustments are summarized as follows. Understated contract services • The district understated attorney service fees by $13,355 due to mathematical errors it made during the claim preparation process ($608 in FY 2000-01, and $12,747 for FY 2002-03). The majority of the understatement occurred in FY 2002-03, when the district mistakenly claimed an hourly rate of $15 for attorney services performed instead of $135, which was the actual cost incurred and allowable per the Parameters and Guidelines. • The district overstated arbitration fees by $2,475 because it claimed 100% of an arbitration service fee for FY 2000-01 (instead of the allowable 50% portion). The following table shows the unallowable contract services costs. Fiscal Year 2000-01 2001-02 2002-03 2003-04 Total Contract services: Components G1-G3 $ — $ 743 $ 91 $ — $ 834 Components G4-G7 (2,475) (135) 12,656 — 10,046 Audit adjustment $ (2,475) $ 608 $ 12,747 $ — $ 10,880 -7- Woodland Joint Unified School District Collective Bargaining Program Parameters and Guidelines states that public school employers will be reimbursed for the increased costs incurred as a result of compliance with the mandate. Parameters and Guidelines states that only the public school employer’s portion of arbitrators’ fees for adjudicating grievances, representing 50% of costs, will be reimbursed. Recommendation We recommend that the district develop and implement an effective control and reporting system to ensure that all claimed costs are eligible and accurately reported. District’s Response The district agrees with the audit finding. FINDING 3— The district did not carry forward its FY 2000-01 base year costs for Understated base year component activities G1, G2, and G3 (determination of representatives, elections and decertification elections, and negotiations, respectively) to direct costs the subsequent claims under audit. Consequently, the district overstated salaries and benefits by $6,032 and related indirect costs by $313 during the audit period. The following table shows the audit adjustments resulting from understated base year direct costs. Fiscal Year 2001-02 2002-03 2003-04 Total Salary and benefit costs $ (1,957) $ (2,001) $ (2,074) $ (6,032) Related indirect costs (103) (100) (110) (313) Audit adjustment $ (2,060) $ (2,101) $ (2,184) $ (6,345) Parameters and Guidelines states that the determination of the “increased costs” for each of these three components requires the cost of the current year Rodda Act activities to be offset (reduced) by the cost of the base-year Winton Act activities. Winton Act base-year costs are adjusted by the Implicit Price Deflator prior to offset against the current year Rodda Act costs. Recommendation We recommend that the district establish procedures to ensure that all base-year costs are properly reported on the annual claim forms. District’s Response The district agrees with the audit finding. -8- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, California 94250-5874 http://www.sco.ca.gov S05-MCC-026