Moreno Valley Unified School District

MORENO VALLEY UNIFIED SCHOOL DISTRICT Audit Report EMERGENCY PROCEDURES, EARTHQUAKE PROCEDURES, AND DISASTERS PROGRAM Chapter 1659, Statutes of 1984 July 1, 2000, through June 30, 2003 S W TEVE ESTLY California State Controller November 2005 S W TEVE ESTLY California State Controller November 30, 2005 Robert Crank Assistant Superintendent Business Services Moreno Valley Unified School District 25634 Alessandro Boulevard Moreno Valley, CA 92553 Dear Mr. Crank: The State Controller’s Office audited the costs claimed by the Moreno Valley Unified School District for the legislatively mandated Emergency Procedures, Earthquake Procedures, and Disasters Program (Chapter 1659, Statutes of 1984) for the period of July 1, 2000, through June 30, 2003. The district claimed $642,655 for the mandated program. Our audit disclosed that $1,116 is allowable and $641,539 is unallowable. The unallowable costs occurred because the district claimed costs that were not supported with adequate documentation. The State paid the district $286,385. The district should return $285,269 to the State. If you disagree with the audit findings, you may file an Incorrect Reduction Claim (IRC) with the Commission on State Mandates (COSM). The IRC must be filed within three years following the date that we notify you of a claim reduction. You may obtain IRC information at COSM’s Web site, at www.csm.ca.gov (Guidebook link); you may obtain IRC forms by telephone, at (916) 323-3562, or by e-mail, at csminfo@csm.ca.gov. 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/ams Robert Crank -2- November 30, 2005 cc: Estuardo A. Santillan, Business Manager Moreno Valley Unified School District David Long, Ph.D., County Superintendent of Schools Riverside 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 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 1 Conclusion.......................................................................................................................... 2 Views of Responsible Official........................................................................................... 2 Restricted Use.................................................................................................................... 2 Schedule 1—Summary of Program Costs............................................................................ 3 Findings and Recommendations........................................................................................... 4 Steve Westly • California State Controller Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the Moreno Valley Unified School District for the legislatively mandated Emergency Procedures, Earthquake Procedures, and Disasters Program (Chapter 1659, Statutes of 1984) for the period of July 1, 2000, through June 30, 2003. The last day of fieldwork was July 19, 2005. The district claimed $642,655 for the mandated program. Our audit disclosed that $1,116 is allowable and $641,539 is unallowable. The unallowable costs occurred because the district claimed costs that were not supported with adequate documentation. The State paid the district $286,385. The district should return $285,269 to the State. Background Chapter 1659, Statutes of 1984, added and amended Education Code Sections 35295, 35296, 35297, 40041.5, and 40042. The law requires each school district and county superintendent of schools to establish an earthquake emergency procedure in each school building under its jurisdiction. In addition, the law requires that school districts allow public agencies to use school buildings, grounds, and equipment for mass care and welfare shelters during disasters or other emergencies affecting public health and welfare. This law further eliminated school districts’ authority to recover direct costs from public agencies that use school facilities during local emergencies. On July 23, 1987, the Commission on State Mandates (COSM) determined that Chapter 1659, Statutes of 1984, imposed a state mandate reimbursable under Government Code Section 17561. Parameters and Guidelines establishes the state mandate and defines reimbursement criteria. COSM adopted Parameters and Guidelines on March 23, 1989 (last amended on May 29, 2003). 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 Emergency Procedures, Earthquake Scope, and Procedures, and Disasters Program for the period of July 1, 2000, Methodology through June 30, 2003. 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 Steve Westly • California State Controller 1 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program 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 Moreno Valley Unified School District claimed $642,655 for costs of the Emergency Procedures, Earthquake Procedures, and Disasters Program. Our audit disclosed that $1,116 is allowable and $641,539 is unallowable. For fiscal year (FY) 2000-01, the State paid the district $119,488. Our audit disclosed that $112 is allowable. The district should return $119,376 to the State. For FY 2001-02, the State paid the district $166,897. Our audit disclosed that $1,004 is allowable. The district should return $165,893 to the State. For FY 2002-03, the State made no payment to the district. Our audit disclosed that all of the costs claimed are unallowable. Views of We issued a draft audit report on August 31, 2005. Estuardo Santillan, Business Manager, notified us by telephone message on October 10, Responsible 2005, that the district will not submit a response to the draft audit report. Official Mr. Santillan stated that the district requested input regarding the draft audit report from the district’s consultant for these mandated cost claims, Reynolds Consulting Group. However, he stated that the consultant was non-responsive to the district’s request. Restricted Use This report is solely for the information and use of the Moreno Valley Unified School District, the Riverside 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 Steve Westly • California State Controller 2 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program Schedule 1— Summary of Program Costs July 1, 2000, through June 30, 2003 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference 1 July 1, 2000, through June 30, 2001 Salaries and benefits $ 205,239 $ 104 $ (205,135) Finding 1 Materials and supplies 78 — (78) Finding 2 Total direct costs 205,317 104 (205,213) Indirect costs 16,200 8 (16,192) Findings 1, 2 Total program costs $ 221,517 112 $ (221,405) Less amount paid by the State (119,488) Allowable costs claimed in excess of (less than) amount paid $ (119,376) July 1, 2001, through June 30, 2002 Salaries and benefits $ 211,634 $ 963 $ (210,671) Finding 1 Materials and supplies 4,029 — (4,029) Finding 2 Total direct costs 215,663 963 (214,700) Indirect costs 9,079 41 (9,038) Findings 1, 2 Total program costs $ 224,742 1,004 $ (223,738) Less amount paid by the State (166,897) Allowable costs claimed in excess of (less than) amount paid $ (165,893) July 1, 2002, through June 30, 2003 Salaries and benefits $ 187,993 $ — $ (187,993) Finding 1 Materials and supplies — — — Total direct costs 187,993 — (187,993) Indirect costs 8,403 — (8,403) Finding 1 Total program costs $ 196,396 — $ (196,396) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ — Summary: July 1, 2000, through June 30, 2003 Salaries and benefits $ 604,866 $ 1,067 $ (603,799) Finding 1 Materials and supplies 4,107 — (4,107) Finding 2 Total direct costs 608,973 1,067 (607,906) Indirect costs 33,682 49 (33,633) Findings 1, 2 Total program costs $ 642,655 1,116 $ (641,539) Less amount paid by the State (286,385) Allowable costs claimed in excess of (less than) amount paid $ (285,269) ____________________________ 1 See the Findings and Recommendations section. Steve Westly • California State Controller 3 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program Findings and Recommendations FINDING 1— The district claimed unallowable salary and benefit costs totaling $603,799 for the audit period. The related indirect costs total $33,457. Unallowable salary The unallowable costs occurred because costs claimed were not and benefit costs, and supported with adequate source documentation. related indirect costs For the audit period, the district claimed salary and benefit costs in two ways: by individual employee and by employee classification (such as principal, vice principal, and teacher). For costs claimed by employee classification, the district claimed multiple employees as one line item. Updating System/Training Preparation The district claimed salary and benefit costs totaling $27,617 for updating the earthquake emergency system and for training preparation during the audit period. Unallowable costs totaled $26,550. The district claimed costs by individual employee in FY 2000-01 and FY 2001-02, and by both individual employee and employee classification in FY 2002-03. The district did not provide documentation supporting $18,941 of costs claimed. In addition, the district claimed $4,373 that was supported only by employee declarations. District employees did not complete the declarations contemporaneously and did not identify the date on which the employee performed the mandated activities. Furthermore, the district claimed $3,236 in costs that were not adequately documented as mandate-related. Employee Training The district claimed unallowable salary and benefit costs totaling $577,249 for employee training during the audit period. The district claimed costs by individual employee in FY 2000-01 and FY 2001-02, and by employee classification in FY 2002-03. The district claimed 1.75 hours per employee for FY 2000-01 and FY 2001-02, and 2.0 hours per employee for FY 2002-03. The district provided employee declarations signed by school representatives, which indicate that all school site employees attended 1.75 or 2.0 hours of training. Although the district claimed 2.0 hours per employee for training in FY 2002-03, all employee declarations except one identify 1.75 hours of training. The district attached school site employee rosters to the declarations to identify individual employees. The district did not provide employee declarations for all costs claimed; the remaining costs claimed were unsupported. The employee declarations are insufficient documentation to support training hours claimed. The district provided a letter dated January 8, 2005, which was addressed to school principals from the district’s consultant. Regarding training hours claimed, the letter states, in part: We are currently gathering data that is being audit[ed] for the Emergency Procedures: Earthquake Preparedness mandate for fiscal years 2000/01, 2001/02 and 2002/03 for a State audit. Our firm had Steve Westly • California State Controller 4 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program done a study, a while back, which revealed that the sites and departments trained staff at least 1.75 (one and ¾) hours a year on earthquake preparedness. . . . Enclosed please find a certification page for each year that needs to have the following: The dates of training Signature Name of site We are required to provide these certifications to the State on 01/18/05 and would appreciate this information back before that date. The consultant attached pre-printed certification forms to the letter. The forms identified the number of hours to be claimed and included a statement that the declaration was applicable to all site employees. Therefore, employees did not complete the certifications contemporaneously. The district did not provide any additional documentation to support the declarations submitted. In addition, the district did not provide any documentation to support the “original study” referenced in the consultant’s letter. Furthermore, Parameters and Guidelines does not allow districts an option to claim salary and benefit costs based on a time study. Employee training costs claimed included costs for 231 office/clerical staff and 341 other classified staff, totaling 572 employees. The district used a different wage rate for office/clerical staff versus other classified staff. During our audit fieldwork, the district identified the 572 employees but did not identify each employee’s classification. Of these 572 employees, the district did not provide supporting documentation for 379 employees; the remaining 193 employees were supported only by employee declarations. Because the district did not identify each employee’s classification, we are unable to separately identify costs claimed that are unsupported and costs claimed that are supported only by employee declarations for these employee classifications. The following table summarizes the audit adjustment. Fiscal Year 2000-01 2001-02 2002-03 Total Updating system/training preparation: Unsupported $ — $ (2,246) $ (16,695) $ (18,941) Supported by employee declaration (1,935) (1,988) (450) (4,373) Not mandate-related — (3,236) — (3,236) Subtotal (1,935) (7,470) (17,145) (26,550) Employee training: Unsupported (142,900) (112,210) (93,941) (349,051) Supported by employee declaration (60,300) (90,991) (49,341) (200,632) Unsupported or supported by employee declaration — — (27,566) (27,566) Subtotal (203,200) (203,201) (170,848) (577,249) Total salary and benefit costs (205,135) (210,671) (187,993) (603,799) Related indirect costs (16,185) (8,869) (8,403) (33,457) Audit adjustment $ (221,320) $ (219,540) $ (196,396) $ (637,256) Steve Westly • California State Controller 5 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program Parameters and Guidelines requires the district to claim salary and benefit costs by reporting the name, job classification, and productive hourly rate of each employee who implements the reimbursable activities. Districts must describe the specific reimbursable activities performed and report the hours devoted to each reimbursable activity. For each training class claimed, districts must identify the course title, subject, purpose, date, and location. If the training encompasses subjects broader than the reimbursable activities, only the pro rata portion may be claimed. In addition, Parameters and Guidelines states: To be eligible for mandated cost reimbursement for any fiscal year, only actual costs may be claimed. Actual costs are those costs actually incurred to implement the mandated activities. Actual costs must be traceable and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the reimbursable activities. A source document is a document created at or near the same time the actual cost was incurred for the event or activity in question. Source documents may include, but are not limited to, employee time records or time logs, sign-in sheets, invoices, and receipts. . . . Evidence corroborating the source documents may include [declarations]. . . . However, corroborating documents cannot be substituted for source documents. Recommendation We recommend that the district maintain adequate documentation to support costs claimed in accordance with Parameters and Guidelines. FINDING 2— The district claimed unallowable materials and supplies costs totaling $4,107 for the audit period. The related indirect costs total $176. Unallowable materials and supplies Unallowable costs total $78 for FY 2000-01. The district provided two employee declarations that identify “travel/supplies/printing/postage” expenses. The district provided no other documentation to validate that the costs were incurred or mandate-related. Unallowable costs total $4,029 for FY 2001-02. The district provided three employee declarations that identify “travel/supplies/printing/ postage” expenses totaling $128. The district also submitted a summary sheet that identifies $3,901 of materials, supplies, and mileage costs. Of these costs, $239 is dated outside the audit period. For the remaining costs, the district provided no other documentation to validate the costs were incurred or mandate-related. Parameters and Guidelines states: To be eligible for mandated cost reimbursement for any fiscal year, only actual costs may be claimed. Actual costs are those costs actually incurred to implement the mandated activities. Actual costs must be traceable and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the reimbursable activities. . . . Steve Westly • California State Controller 6 Moreno Valley Unified School District Emergency Procedures, Earthquake Procedures, and Disasters Program The following table summarizes the audit adjustment. Fiscal Year 2000-01 2001-02 Total Materials and supplies costs $ (78) $ (4,029) $ (4,107) Related indirect costs (7) (169) (176) Audit adjustment $ (85) $ (4,198) $ (4,283) Recommendation We recommend that the district maintain adequate documentation to support costs claimed in accordance with Parameters and Guidelines. Steve Westly • California State Controller 7 State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, California 94250-5874 http://www.sco.ca.gov S05-MCC-027