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CALIFORNIA COMMUNITY
COLLEGES CHANCELLOR’S OFFICE
Review Report
REVIEW OF WORKFORCE AND ECONOMIC
DEVELOPMENT DIVISION
GRANT-FUNDED PROGRAMS
July 1, 2013, through September 30, 2015
BETTY T. YEE California State Controller
November 2016
BETTY T. YEE California State Controller
November 10, 2016
The Board of Governors of the California Community Colleges
1102 Q Street
Sacramento, CA 95811
Dear Board of Governors:
The State Controller’s Office reviewed the California Community Colleges Chancellor’s
Office’s (CCCCO) Workforce and Economic Development Division (WEDD) grant-funded
programs for the period of July 1, 2013, through September 30, 2015. The CCCCO management
is responsible for maintaining a system of internal control over WEDD grant-funded programs,
and for ensuring compliance with state and federal requirements.
Our review identified significant deficiencies in the CCCCO’s internal controls over the WEDD
grant-funded programs. If not mitigated, these control deficiencies leave the CCCCO at risk of
continued inefficient use of grant funds and missed opportunities to use those funds for other
needs, and of receiving claims for unallowable expenditures and unreliable reports of outcome-
based data.
We found that the CCCCO lacks the monitoring and oversight of WEDD grant-funded program
grantees to ensure compliance with state and federal requirements. This control deficiency
contributed to inefficient use of grant funds. Of the 347 WEDD grants in fiscal year
(FY) 2013-14 and FY 2014-15, 150 have unspent balances totaling more than $30 million as of
May 2016. The control deficiency also contributed to grantees claiming $430,286 in unallowable
and questioned expenditures, making questionable expenditure transfers totaling $287,196 to
other funds, and reporting unreliable outcome-based data.
The CCCCO also lacks adequate controls to ensure that grant expenditures are allowable,
adequately supported, and properly recorded. Of the eight employees reviewed, we found five
whose salaries were transferred to or from Perkins 1B funds without adequate justification or
supporting documentation. Accordingly, we questioned $82,395 in salaries transferred to Perkins
1B funds and $13,390 in salaries transferred from Perkins 1B funds to another fund. In addition,
26 of 47 in-state airfare expenditures we reviewed, totaling $9,104, lacked documentation to
support that the expenditures were incurred while working on the grant objectives. Of the 26
expenditures, five were improperly reported as in-state airfare expenditures.
The Board of Governors -2- November 10, 2016
If you have any questions, please contact Andrew Finlayson, Chief, State Agency Audits Bureau
by phone at (916) 324-6310.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD, CPA
Chief, Division of Audits
JVB/rg
Attachment
cc: Erik E. Skinner, Interim Chancellor
California Community Colleges Chancellor’s Office
Van Ton-Quinlivan, Vice Chancellor, Workforce and Economic Development
California Community Colleges Chancellor’s Office
Pamela D. Walker, Vice Chancellor, Educational Services
California Community Colleges Chancellor’s Office
Debra Jones, Director, Workforce and Adult Education
California Community Colleges Chancellor’s Office
Javier Romero, Grant Unit Manager
California Community Colleges Chancellor’s Office
Review of Workforce and Economic
California Community Colleges Chancellor’s Office Development Division Grant-Funded Programs
Contents
Review Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Review Authority ............................................................................................................... 3
Objectives, Scope, and Methodology ............................................................................... 3
Conclusion .......................................................................................................................... 4
Views of Responsible Officials .......................................................................................... 5
Restricted Use .................................................................................................................... 5
Findings and Recommendations ........................................................................................... 6
Attachment A—California Community Colleges Chancellor’s Office’s Response to
Draft Review Report
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Review Report The State Controller’s Office (SCO) reviewed the California Community
Colleges Chancellor’s Office’s (CCCCO) Workforce and Economic
Development Division (WEDD) grant-funded programs for the period of
July 1, 2013, through September 30, 2015. The CCCCO management is
responsible for maintaining a system of internal control over WEDD
grant-funded programs, and for ensuring compliance with state and federal
requirements.
Our review identified significant deficiencies in the CCCCO’s internal
controls over the WEDD grant-funded programs. If not mitigated, these
control deficiencies leave the CCCCO at risk of continued inefficient use
of grant funds and missed opportunities to use those funds for other needs,
and of receiving claims for unallowable expenditures and unreliable
reports of outcome-based data.
We found that the CCCCO lacks the monitoring and oversight of WEDD
grant-funded program grantees to ensure compliance of with state and
federal requirements. This control deficiency contributed to inefficient use
of grant funds. Of the 347 WEDD grants in fiscal year (FY) 2013-14 and
FY 2014-15, 150 have unspent balances totaling more than $30 million as
of May 2016. The control deficiency also contributed to grantees claiming
$430,286 in unallowable and questioned expenditures, making
questionable expenditture transfers totaling $287,196 to other funds, and
reporting unreliable outcome-based data.
The CCCCO also lacks adequate controls to ensure that grant expenditures
are allowable, adequately supported, and properly recorded. Of the eight
employees reviewed, we found five whose salaries were transferred to or
from Perkins 1B funds without adequate justification or supporting
documentation. Accordingly, we questioned $82,395 in salaries
transferred to Perkins 1B funds and $13,390 in salaries transferred from
Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfare
expenditures we reviewed, totaling $9,104, lacked documentation to
support that the expenditures were incurred while working on the grant
objectives. Of the 26 expenditures, five were improperly reported as in-
state airfare expenditures.
The California Community Colleges form the largest postsecondary
educational system in the world. The California Community Colleges
serve more than two million students annually. The system consists of
72 semi-autonomous community college districts encompassing
113 colleges, 78 approved off-campus centers, and 24 separately reported
district offices.
The CCCCO has general responsibility for leadership and coordination, as
well as specific functions such as serving as the fiscal agent for
appointment of state funds, approving educational programs proposed by
the colleges, and reviewing plans for construction projects. The CCCCO
also provides services to the colleges such as maintaining a comprehensive
information system; coordinating, following and sponsoring legislation;
Summary
Background
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and providing assistance in the areas of student, program and fiscal
services.
The CCCCO WEDD is responsible for supporting instruction, managing
grants to community colleges, providing technical assistance, and
implementing various special programs. The division is composed of three
units: Career Technical Education, Economic and Workforce
Development, and Nursing and Allied Health. The division staff
coordinates jobs and career opportunities for community college graduates
to advance California’s economic growth and global competitiveness.
Among the activities of the CCCCO, the programs of the WEDD bridge
the skills and jobs mismatch and prepare California’s workforce for 21st
century careers. The WEDD serves as administrator for several streams of
state and federal funds, including the Carl D. Perkins Career and Technical
Education Act of 2006, Economic and Workforce Development Program,
and Career Technical Education Pathways Program.
The WEDD collaborates with employers, organized labor, local
communities, community colleges, and other education parties through
programming supported by these funds to close the skills gap and foster
successful student completion.
Carl D. Perkins Career and Technical Education Act of 2006
The Carl D. Perkins Career and Technical Education Act of 2006 is the
principal source of federal funding to states for the improvement of
secondary and postsecondary career and technical education programs.
Ten percent of Perkins funds awarded to the CCCCO are used for state
leadership activities; these funds are referred to as Perkins 1B funds. Five
percent of Perkins funds may be used by the CCCCO for state
administrative activities; these funds are referred to as indirect funds.
Award grants and project funds go to community college districts
accomplishing the goals and objectives of the program.
Economic and Workforce Development Program
Senate Bill (SB) 1402 reauthorized the CCCCO’s Workforce
Development Program with the Legislature’s intent to encourage
continued coordination between schools that maintain kindergarten and
grades 1 to 12, inclusive, and higher education systems to advance career
technical education to perform the following:
Advance California’s economic growth and global competitiveness;
Advance California’s economic and jobs recovery;
Use labor market information to identify industries’ needs;
Share labor market information with other state agencies; and
Work with industry representatives to assist incumbent workers in the
State to become more competitive in the labor market, increase
competency, and identify career pathways to economic self-
sufficiency.
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Career Technical Education Pathways Program
SB 1070 requires the CCCCO and the Superintendent of Public Instruction
to assist economic and workforce regional development centers and
consortia, community colleges, middle schools, high schools, and regional
occupational centers and programs to improve linkages and career
technical education pathways between high schools and community
colleges to accomplish specified objectives. This assistance would be
required to be provided in the form of contracts and competitive grants
administered jointly by the CCCCO and the Superintendent for programs
and initiatives that demonstrate a plan for close collaboration among
regional institutions and entities to jointly accomplish specified goals.
Authority for this review is provided by Government Code section 12410,
which states, “The Controller shall superintend the fiscal concerns of the
state. The Controller shall audit all claims against the state, and may audit
the disbursement of any state money, for correctness, legality, and for
sufficient provisions of law for payment.”
The objectives of the review were to determine whether:
• The CCCCO maintained adequate internal controls to ensure that the
WEDD grant funds were expended in accordance with federal and
state laws and regulations;
• The CCCCO has complied with applicable federal and state
competitive bidding and award requirements;
• Data presented in the CCCCO’s legislative report related to WEDD
grant-funded programs are valid and accurate;
• The grantees’ hiring process and payroll transactions for WEDD
grant-funded employees adheres to applicable federal and state laws
and regulations; and
• The WEDD grant-funded program costs claimed by CCCCO and
grantees within the review period are reasonable, allocable, and
allowable in accordance with federal and state laws and regulations.
The original review period was February 1, 2014, through September 30,
2015. On November 10, 2015, we changed the review period to July 1,
2013, through September 30, 2015. The change was deemed necessary to
address the review objectives.
We limited our review scope to active programs administered by the
WEDD and funded through SB 1070, SB 1402, and Perkins 1B funds
during the review period.
Objectives, Scope,
and Methodology
Review Authority
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To meet the review objectives, we performed the following:
Reviewed grant agreements and federal and state laws and regulations
to determine the requirements for bidding and award of grants and
allowable expenditures for WEDD grant-funded programs
Obtained and reviewed the CCCCO written policies and procedures
related to bidding and award of grants, program expenditures
accounting, and grant management
Conducted interviews with the CCCCO and grantee employees
On a sample basis, examined WEDD grant-funded program records
and source documents maintained by the CCCCO and grantees to
substantiate claimed costs, and determined compliance with
applicable federal and state laws and regulations
Obtained and reviewed the CCCCO’s legislative report related to
WEDD grant-funded programs and, on a sample basis, examined data
for validity and accuracy
Obtained and reviewed the grantee’s written policies and procedures
for personnel and payroll transactions related to WEDD grant-funded
employees and, on a sample basis, examined payroll transactions to
substantiate claimed costs and determine compliance with applicable
federal and state laws and regulations
Our review identified significant deficiencies in the CCCCO’s internal
controls over the WEDD grant-funded programs. If not mitigated, these
control deficiencies leave the CCCCO at risk of continued inefficient use
of grant funds and missed opportunities to use those funds for other needs,
and of receiving claims for unallowable expenditures and unreliable
reports of outcome-based data.
We found that the CCCCO lacks the monitoring and oversight of WEDD
grant-funded program grantees to ensure compliance with state and federal
requirements. This control deficiency contributed to inefficient use of
grant funds. Of the 347 WEDD grants in FY 2013-14 and FY 2014-15,
150 have unspent balances totaling more than $30 million as of May 2016.
The control deficiency also contributed to grantees claiming $430,286 in
unallowable and questioned expenditures, making questionable
expenditure tranfers totaling $287,196 to other funds, and reporting
unreliable outcome-based data.
The CCCCO also lacks adequate controls to ensure that grant expenditures
are allowable, adequately supported, and properly recorded. Of the eight
employees reviewed, we found five whose salaries were transferred to or
from Perkins 1B funds without adequate justification or supporting
documentation. Accordingly, we questioned $82,395 in salaries
transferred to Perkins 1B funds and $13,390 in salaries transferred from
Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfare
expenditures we reviewed, totaling $9,104, lacked documentation to
support that the expenditures were incurred while working on the grant
objectives. Of the 26 expenditures, five were improperly reported as in-
state airfare expenditures.
Conclusion
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We issued a draft review report on October 4, 2016. Erik E. Skinner,
Interim Chancellor, responded by letter dated October 14, 2016
(Attachment A). The CCCCO agrees that corrective actions are necessary
to improve internal controls, efficiency on the use of funds, documentation
of costs claimed, and reliability of outcome-based data. However, the
CCCCO disagrees on the unallowable and questioned expenditures in
Finding 1, indicating that these expenditures were incurred for the grant
purpose. We believe that the basis of CCCCO’s disagreement with the
finding is incorrect or unsupported. Accordingly, we maintain our original
view on the conclusions, findings, and recommendations we made
regarding this review. Our full comments to the CCCCO’s responses to
each finding are included in the Findings and Recommendations section.
This report is solely for the information and use of the Board of Governors
of the California Community Colleges, the CCCCO 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, CPA
Chief, Division of Audits
November 10, 2016
Views of
Responsible
Officials
Restricted Use
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Findings and Recommendations
The CCCCO lacks the monitoring and oversight of WEDD grant-funded
program grantees to ensure compliance with state and federal
requirements. This control deficiency contributed to inefficient use of
grant funds. Of the 347 WEDD grants in FY 2013-14 and FY 2014-15 that
we reviewed, 150 have unspent balances totaling more than $30 million as
of May 2016. The control deficiency also contributed to grantees claiming
$430,286 in unallowable and questioned expenditures, making
questionable expenditure transfers totaling $287,196 to other funds, and
reporting unreliable outcome-based data. If not mitigated, this control
deficiency leaves the CCCCO at risk of continued inefficient use of grant
funds and missed opportunities to use those funds for other needs; and of
receiving claims for unallowable expenditures and unreliable reports of
outcome-based data.
Inefficient use of WEDD grant funds
The CCCCO awarded 214 and 133 WEDD grants funded by SB 1070,
SB 1402, and Perkins 1B funds, or a combination thereof, FY 2013-14 and
FY 2014-15, respectively. State and federal laws and regulations require
the CCCCO to provide monitoring and oversight of the grantees’ use of
these grant funds. The CCCCO assigns a project monitor for each grant.
The project monitor determines whether the grantees meet the grant
objectives and evaluates whether the funding amount needs adjustment.
The CCCCO requires grantees to submit quarterly reports that contain a
summary of expenditures for a quarter. After the close of grant awards,
grantees also submit a final report that include the cumulative expenditure
history for each grantee’s award.
The project monitors’ evaluation of grants indicated that there were no
instances in which a grantee failed to meet the grant objectives. However,
we noted the CCCCO’s practice to extend the grant period beyond one
year to allow grantees to expend remaining funds even though the project
monitor determined that the grant objectives were already met. In addition
to the grant-period extension, grantees normally received additional grants
in the subsequent year for multi-year grants without modifying the funding
amounts. State laws require the CCCCO to consider past performance of
grantees prior to awarding additional funds.
FINDING 1—
Inadequate
monitoring and
oversight of
grantees to ensure
their compliance
with state and
federal
requirements
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The table below shows the number of grants that were extended beyond
one year:
Quarter In Which Expenditures Were
Last Reported
Number of Grants Per
Fiscal Year
2013-14 2014-15
5 31 17
6 38 63
7 86 2
8 23 1
Total number of grants with reported
expenditures after one year 178 83
_______________________
Source: CCCCO’s online reporting system
Of the 214 FY 2013-14 grants, 178 (83%) reported expenditures for the
period after one year (quarters 5 to 8). Of the 133 FY 2014-15 grants, 83
(62%) reported expenditures for the period after one year. For example,
23 FY 2013-14 grants reported expenditures for the eighth quarter, or two
years after the beginning of the grant period.
Further, even though grants were extended, we also identified many grants
that had unspent funds at May 2016, as summarized in the following table:
For Grants Awarded For The
Fiscal Year
2013-14 2014-15
Number of grants with unspent
funds as of May 2016:
Grants with final report 51 44
Grants without final report 12 43
Total 63 87
Unspent funds as of May 2016:
Grants with final report $1,352,670 $ 4,524,746
Grants without final report 6,144,078 18,946,245
Total $7,496,748 $23,470,991
_______________________
Source: CCCCO’s online reporting system
We found 63 of the FY 2013-14 grants and 87 of the FY 2014-15 grants
with unspent balances of over $7 million and $23 million, respectively.
Unspent grant funds reduce the number of awards issued to beneficiaries
and therefore limit the program’s potential effectiveness. The systemic
extension of grant periods and unspent grant funds indicate both
inefficiencies in the CCCCO’s use of the funds as well as deficiencies in
the CCCCO’s monitoring and oversight of the program. If not mitigated,
this could lead to continued inefficient use of resources and missed
opportunities to use those funds for other needs.
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Unallowable and questioned grantee expenditures
Of the 214 and 133 grants awarded in FY 2013-14 and FY 2014-15,
respectively, we selected 16 for review to determine whether the grantees
claimed expenditures that were allowable and adequately documented,
and performed activities to meet the grant objectives. While we
determined that the CCCCO assigns a project monitor to review quarterly
reports and determine whether the grantee meets the grant objectives, we
found that the CCCCO lacks monitoring and review of expenditures
reported by grantees.
We found that the grantees charged $66,694 in questioned salaries and
other charges to WEDD grants we reviewed. For the 16 grants we
reviewed, we noted 55 individuals whose salaries were charged, in whole
or in part, to at least one of the grants during the review period. Of the 55
individuals, we found eight whose salaries and other charges were charged
to the grants using questionable practices, as shown in the following table:
Issues
Number of
Individuals
Affected
Questioned
Amount
Distribution of salaries to grants
was approved three to five
months after the expenditures
were incurred
3 $16,9721
Timesheet was signed by the
employee and approved by the
supervisor between one to six
months after the pay period
1 38,006
Salaries charged to the grant
without approval
3 11,692
Individual was reimbursed for
conference expenses but no
salaries and benefits were
charged
1 24
Total 8 $66,694
We also found that, in 14 of the 16 grants we reviewed, the grantees
transferred salaries and benefits between grant funds, using adjusting
journal entries, without adequate supporting documentation. Federal
regulations require documentation of time and effort of employees paid
from grant funds. The grantees could not provide time and effort
documentation for those individuals whose salaries were transferred.
Accordingly, we questioned $358,370 in salaries and benefits transferred
to WEDD grants funded by SB 1070, SB 1402, and Perkins 1B funds; and
$287,196 in salaries and benefits transferred from WEDD grants funded
by SB 1070, SB 1402, and Perkins 1B funds to other funds. These
questionable transactions occurred because the CCCCO did not provide
adequate monitoring and oversight to ensure compliance with state and
federal requirements.
1 This amount is net of $23,462 that was transferred from a WEDD grant fund to another fund.
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The following table summarizes the questioned salaries and benefits
charged to WEDD grant funds using journal entries without adequate
supporting documentation:
Grant Funding Source
Number of
Journal
Entries
Cost
Transferred In
Cost
Transferred
Out
1 SB 1402 9 $92,509 $12,326
2 SB 1402, SB 1070 20 81,434 102,437
3 SB 1402, SB 1070 13 38,849 93,301
4 SB 1402 3 36,349 -
5 SB 1402 3 22,589 11,295
6 Perkins 1B 1 22,502 -
7 SB 1402, SB 1070 8 18,856 7,172
8 SB 1402 4 17,542 22,502
9 SB 1402 2 17,518 4,695
10 SB 1402 8 8,692 18,928
11 SB 1402 1 1,385 -
12 Perkins 1B 2 145 5,104
13 SB 1402 2 - 2,792
14 Perkins 1B 2 - 6,644
Total 78 $358,370 $287,196
_______________________
Source: Grantees’ accounting records
For example, the grantee for one grant did not charge salaries during the
grant year until six days before the funding was to expire. The grantee
made a journal entry to transfer $22,502 in salaries and benefits to a
Perkins 1B-funded grant from another grant. The supporting
documentation provided to us did not identify the individual whose
salaries were moved, the pay period affected, or any evidence that the
individual performed any duties to meet the Perkins 1B-funded grant
objective.
Further, we found that the grantee for one grant claimed $5,222 in
unallowable costs for salaries and benefits. The grant includes a share of
$100,000 in SB 1070 funds, which did not approve the use of funds to pay
for salaries and benefits. While the grantee’s quarterly report did not show
charges for salaries and benefits, we found that the grantee claimed
expenditures under other operating expenditures and services. We
determined through examination of accounting records that the
expenditures included $5,222 in salaries and benefits. The grantee’s
classification of these salaries and benefits as “other operating
expenditures and services” avoided the grant’s limitations on
expenditures.
Unreliable and unsupported outcome-based data
The grantees’ quarterly reports also include outcome-based data, which
the CCCCO uses in its annual report to the Governor and the Legislature,
as required by SB 1402 and SB 1070. While we determined that the
CCCCO assigns a project monitor to review quarterly reports and
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determine whether the grantee meets the grant objectives, we found that
the CCCCO lacks monitoring and review of outcome-based data reported
by grantees.
We found that the grantees for 13 grants reported unreliable and
unsupported outcome-based data. Of the 16 grants we reviewed, 13
required the grantees to submit outcome-based data, which the CCCCO
uses in its annual report to the Governor and the Legislature. The CCCCO
lacks written guidance in collecting and reporting of the outcome-based
data, including defining the data categories. The grantees for 13 grants
completed their reports based on their own interpretation of the data
categories. The grantees also could not provide documentation to support
the reported data. The lack of written guidance resulted in the CCCCO
receiving unreliable and unsupported outcome-based data in its annual
reports to the Governor and the Legislature. Also, the CCCCO is at risk of
using unreliable data in carrying out its grant oversight responsibilities and
in making future funding decisions.
Recommendation
We recommend that the CCCCO monitor WEDD grant funds, and
evaluate funding needs to meet grant objectives based on prior-year
performance, and adjust subsequent years’ funding accordingly.
The CCCCO also should provide adequate monitoring and controls over
expenditures that grantees reported to ensure that the expenditures are
allowable and adequately documented.
In addition, the CCCCO should provide adequate monitoring and controls
over outcome-based data that grantees submit electronically to ensure that
the data is reliable and accurate.
CCCCO’s Response
On page 6, the report states that 150 grants in FY 2013-14 /2014-15 had
unspent balances of over $30 million. As the result of an improved “close
out” process, that number has been reduced to approximately $8 million,
and should reduce by another $2.6 million during the allowable
encumbrance period. This equates to approximately 4 percent of total
funding in these 150 grants. Additional steps to pro-actively monitor
expenditures will redirect funds from underperforming grants in the
future.
On page 6, the report states that $430,286 of the reported expenditures
were “unallowable.” These expenditures are in fact “allowable”
according to existing laws and regulations. In our view, a more accurate
representation of the issue is that grantees need to better document
changes in their final workplans/budgets from their original submission.
We agree with the need for improved documentation and will institute
changes to address this issue.
As part of Finding#1, the report questioned the reliability of our
outcome-based data. WEDD launched in 2016 an ambitious new data
tool called the LaunchBoard that automates data feeds from existing
reliable data bases in order to avoid introducing human error. This new
data tool has brought national acclaim to California within the
Workforce Data Quality Campaign movement. We are confident that,
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going forward, outcome-based data will be reliable and standardized.
…on page 6 of your report, you affirm “…there were no instances in
which a grantee failed to meet the grant objectives.”
See Attachment A for the CCCCO’s full response.
SCO Comment
The finding remains unchanged; however, we have clarified a statement
on page 6.
As stated in the finding, the CCCCO lacks the monitoring and oversight
of WEDD grant-funded program grantees to ensure compliance with state
and federal requirements, which contributed to the following:
Inefficient use of WEDD grant funds, as showed by over $30 million
in unspent balances
Unallowable and questioned grantee expenditures totaling $430,286
Unreliable and unsupported outcome-based data
The CCCCO asserted that, subsequent to the period covered by our review,
it has implemented an improved “close out” process and reduced the
amount of unspent balances. We have not reviewed and cannot comment
on the validity of these asserted measures as these were implemented
subsequent to the review period and after the review was conducted.
Our review found $430,286 in unallowable and questioned grantee
expenditures. These expenditures include $5,222 in salaries and benefits
claimed by the grantee as “other operating expenditures and services.” The
grant did not approve the use of funds for salaries and benefits; therefore,
the salaries and benefits claimed by the grantee are unallowable.
The expenditures also include $425,064 in questioned salaries, benefits
and other charges, including $358,370 that was transferred to WEDD grant
funds, which were not supported by necessary documentation of
individuals’ actual time and effort. The grantees did not provide alternative
means for us to validate that the expenditures claimed were for the time
spent while working on the grant objectives.
The CCCCO did not dispute our finding on grantees reporting unreliable
and unsupported outcome-based data. The CCCCO asserted that
subsequent to the review period, it has implemented a new data tool that
will make outcome-based data reliable and standardized. We have not
reviewed and cannot comment on the validity of these assertions as the
tool was implemented subsequent to the review period.
We modified our statement on page 6 to clarify that the project monitors’
evaluation of grants, and not our review of the project monitors’
evaluation, indicated that there were no instances in which a grantee failed
to meet the grant objectives. Our review objectives focused on program
efficiency, compliance, and internal control. Our review did not include
assessments of program effectiveness. Therefore, we cannot conclude or
comment on the effectiveness of the programs.
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The CCCCO lacks adequate controls to ensure that grant expenditures are
allowable, adequately supported, and properly recorded. Of the eight
employees were reviewed, we found five whose salaries were transferred
to or from the Perkins 1B fund without adequate justification or supporting
documentation. Accordingly, we questioned $82,395 in salaries
transferred to Perkins 1B funds and $13,390 in salaries transferred from
Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfares
expenditures, totaling $9,104, lacked documentation to support that the
expenditures were incurred while working on the grant objectives. Of the
26 expenditures, five were improperly reported as in-state airfares
expenditures.
Questioned transfers of salaries
Between July 2013 and September 2015, the CCCCO had 81 employees
whose salaries were charged, in whole or in part, to Perkins 1B or SB 1070
funds. A total of $6,700,845 in salaries were charged during the period.
We judgmentally selected eight employees for review to determine
whether salaries charged to the funds were allowable and adequately
supported. Federal regulations require adequate documentation of
expenditures claimed to be allowable. Of the eight employees, we found
five whose salaries were transferred to or from Perkins 1B funds without
adequate justification or documentation, as summarized in the table below:
Employee
Number of
Monthly
Pay Periods
Involved
Salaries
Transferred
To
Perkins 1B
Salaries
Transferred
From
Perkins 1B
1 10 $42,165 $ -
2 1 843 -
3 5 - 13,390
4 12 19,045 -
5 10 20,342 -
Total 38 $82,395 $13,390
The salaries transferred for five employees included 38 monthly pay
periods. In 36 of the 38 monthly pay periods, the timesheets we reviewed
showed that the employees did not work on the Perkins 1B program. For
example, the timesheets for one employee from July 2013 through April
2014 showed that the employee did not work on the Perkins 1B program.
The employee separated from state service on April 30, 2014. In June
2014, the CCCCO charged $42,165, representing 50% of the employee’s
salaries from July 2013 through April 2014, to the Perkins 1B fund. The
CCCCO later provided an email indicating that the charges were based on
the review of the program activities and the work performed by the
employee. However, the CCCCO could not provide additional
documentation to support that assertion.
In the remaining two pay periods, the timesheets were revised to show the
employees’ hours worked on the Perkins 1B program. However, the
revision was neither justified nor made in a timely manner. For example,
the CCCCO charged $843 in salaries for one employee to the Perkins 1B
FINDING 2—
Questioned salaries
and travel charges
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fund to cover for the shortage in another grant fund. The employee’s
timesheet was revised five months after the pay period.
The frequent cost transfers, unjustified cost transfers, and cost transfers
made long after the original cost is incurred raise questions about the
allowability of expenditures charged to Perkins 1B funds and the
reliability of the CCCCO accounting system and internal controls.
Accordingly, we questioned $82,395 in salaries transferred to Perkins 1B
funds and $13,390 in salaries transferred from Perkins 1B funds to another
fund.
Questioned travel expenses
Between February 2014 and September 2015, the CCCCO charged
$206,481 in non-payroll-related expenditures to the Perkins 1B and
SB 1070 funds. We judgmentally selected 49 non-payroll-related
expenditure transactions totaling $21,888. We reviewed the selected
transactions to determine whether costs charged to the funds were
allowable and adequately supported. Federal regulations require adequate
documentation of expenditures claimed to be allowable. The 49
transactions included 47 in-state airfare expenditures and two for meetings
and conferences. Of the 47 in-state airfare expenditures, 26 totaling $9,104
lacked adequate supporting documentation. One transaction could not be
traced to any documentation. We traced 25 of the 26 transactions to
account statements from the financial institution. Without further
documentation, however, the CCCCO could not ensure that travel
expenditures were incurred while working on the grant objectives.
We also found that the CCCCO improperly reported five of the 26
transactions as in-state airfare expenditures. Account statements from the
financial institution indicated that these transactions pertained to out-of-
state airfares. Also, as a result of the lack of supporting documentation,
we could not determine whether the CCCCO properly reported seven other
transactions as in-state airfare expenditures.
Recommendation
The CCCCO should implement internal controls to ensure that:
Accounting staff are reporting salaries based on actual hours by grant
or activity.
Cost transfers are supported by documentation and fully explained and
justified.
Supporting documentation is maintained for expenditures charged to
the grants.
CCCCO’s Response
The Chancellor’s Office will implement improved internal controls to
ensure that grant expenditures are allowable, adequately supported, and
properly recorded. For example, new procedures will be instituted to
ensure the documentation is maintained to explain and justify cost
transfers.
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SCO Comment
The finding remains as stated. The CCCCO did not dispute the finding and
indicated that it will implement corrective actions.
Review of Workforce and Economic
California Community Colleges Chancellor’s Office Development Division Grant-Funded Programs
Attachment A—
California Community Colleges Chancellor’s Office’s
Response to Draft Review Report
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250-5874
http://www.sco.ca.gov
S16-SAA-9000