Santa Cruz County Grand Jury • 2007-2008

Window Dressing or Effective Oversight? Citizen Oversight Committee, Measure D Bonds Cabrillo Community College District

16 pages

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⚠️ Aviso de traducción: Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Note: Missing finding numbers detected: F10, F11, F12, F13, F14, F15, F16, F17, F18, F19, F20, F21, F22, F23, F24, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F35, F36, F37, F38, F40, F41, F42, F43, F44, F45, F46, F47, F48, F49, F50, F51, F52, F53, F54, F55, F56, F57, F58, F59, F60, F61, F62, F63, F64, F65, F66, F67, F68, F69, F70, F71, F72, F73, F74, F75, F76, F77, F78, F79, F80, F81, F82, F83, F84, F85, F86, F87, F88, F89, F90, F91, F92, F93, F94, F95, F96, F97, F98, F99, F100, F101, F102, F103, F104, F105, F106, F107, F108, F109, F110, F111, F112, F113, F114, F115, F116, F117, F118, F119, F120, F121, F122, F123, F124, F125, F126, F127, F128, F129, F130, F131, F132, F133, F134, F135, F136, F137, F138, F139, F140, F141, F142, F143, F144, F145, F146, F147, F148, F149, F150, F151, F152, F153, F154, F155, F156, F157, F158, F159, F160, F161, F162, F163, F164, F165, F166, F167, F168, F169, F170, F171, F172, F173, F174, F175, F176, F177, F178, F179, F180, F181, F182, F183, F184, F185, 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Findings and Recommendations 11 findings

The specific project list which defines for the voters what they are voting on is not clear and consistent in the District Master Plan, voter pamphlet, COC Annual Report and the performance audits. Response: The Cabrillo Community College Governing Board DISAGREES. Cabrillo College has consistently met all of the reporting and compliance requirements for school bond funds. The purposes of each of the reports, 1) District Facility Master Plan, 2) COC Annual Report and 3) Proposition 39 performance audit differ from the purpose of the voter pamphlet. • The District Facility Master Plan (FMP) is a comprehensive document that sets forth a long term vision for the facility needs of the college. It includes projects funded not only by local bond funds, but also funds provided by the state capital outlay program, redevelopment agencies, and local contributions. Twice a year, the FMP is submitted to the Governing Board at a public meeting for approval and to the COC for review. This report provides a detailed summary of projects recently completed, projects under construction, and projects approved for future construction. This semi-annual report also provides recommendations for changes to FMP projects; scope, budget or schedule. In addition, a monthly FMP Project Status Report is submitted to the Governing Board and to members of the COC for their review. This report provides monthly updates on the status of major active FMP projects. • In compliance with Proposition 39, the voter pamphlet is a brief summary of portions of the Facility Master Plan which are authorized projects to be funded with Measure D funds. • The COC Annual Report contains a summary of the “results of its (COC) activities” for the prior year. (Ed. Code 15280) and a statement regarding whether the District is in compliance with state law in accounting for and expending public bond funds. Window Dressing or Effective Oversight? - 6 • The Proposition 39 Annual Performance Audit reflects only a description of the projects on which bond money was spent as authorized by Measure D and a conclusion as to whether or not bond funds were used for teacher or administrator salaries.

Related Recommendations (1)

For bond measures, the district should develop a clearly numbered specific facilities project list for the voter pamphlet and use that specific list in future tracking and reporting. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The District Facility Master Plan is a detailed and comprehensive report, expanding on the COC Annual Report. This report is submitted as an action item to the Governing Board and Citizens’ Oversight Committee twice a year approving changes in scope, budget and/or scheduling. It tracks all of the Measure D projects to date and includes other projects funded by other sources as well. In addition, the FMP is submitted monthly to the Governing Board and Citizens’ Oversight committee for review and discussion on the status of active projects.

The district has narrowly interpreted (as reflected by the development and provisions in the by-laws) the requirement for COC independence. It meets the minimum membership requirements specified in the California Education Code. Response: The Cabrillo Community College Governing Board DISAGREES. COC “independence” means that the committee is not populated with persons who have conflicts of interest with the District, the implementation of Measure D, or the consultants who assist in the execution of Measure D. In all respects the establishment and empowerment of the District COC satisfies all Proposition 39 requirements. The COC satisfies the membership requirements of Education Code 15282, is totally independent, and satisfies Education Code 15278(b) which states: “The purpose of the citizens' oversight committee shall be to inform the public concerning the expenditure of bond revenues.”

Related Recommendations (1)

For future Citizen Oversight Committee annual reports, the committee should develop a specific facilities project list that translates all of the Measure D project categories to a project list and identifies those projects for which Measure D funds are planned but have not been expended to date. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The Education Code (15280) requires that “the citizens’ oversight committee shall issue regular reports on the results of its activities. A report shall be issued at least once a year.” The activities of the committee, as defined in Education Code 15278(b) are to review expenditures of bond funds, satisfy themselves that such expenditures were made for voter-approved purposes and that no money was applied to teacher or administrative salaries or other school operating expenses and then to inform the public concerning the past expenditures of those funds. The Governing Board and staff tracks all projects for which Measure D funds are planned but have not been expended to date.

The district limited the membership to the legally required seven members and did not pursue expanding the number of members to obtain relevant expertise on the oversight committee to provide more effective oversight. Response from the Cabrillo Community College Governing Board: The Cabrillo Community College Governing Board AGREES that the membership of the COC satisfies the legal requirements, and DISAGREES that the District did not pursue expanding the membership beyond the requirements of the Education Code. Expanding the membership was discussed with the District bond counsel who advised against membership expansion on the grounds it would defeat the legislative intent of Proposition 39 and dilute the voice of members who represent groups often opposed to bond taxes, i.e. taxpayers, seniors, and business persons. The expertise of the members of the COC represents the community’s interest in providing effective and knowledgeable oversight of Measure D funds as follows: • General contractor/developer with significant number of construction projects, apartments, homes, school facilities • Local business owners: insurance, food franchise • Previous experience on school oversight committees • Public School Board Member • Local Financial Institution Board Member • Community relations • Representative of very large local employer • Santa Cruz County Assessor • Technical writer, editor • Student Senate leadership and budget management – 7 Window Dressing or Effective Oversight?

Related Recommendations (1)

The independence of the oversight committee should be strengthened. The committee should be more proactive and take the following steps with the district’s concurrence and cooperation: • Review, recommend changes to the district, if any and, formally adopt the by-laws, with or without comments. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The recommendations are not consistent with the requirements of the Education Code or are currently permitted by the operation of the committee. As previously stated, the committee’s independence is assured by the membership selection requirements of the Education Code and the Ethics Policy Statement relating to the committee. Further, the Education Code contains no provision for an oversight committee to adopt its own bylaws. Currently, the committee has been advised that if the committee has any comments on the existing bylaws approved by the Board that such – 11 Window Dressing or Effective Oversight? suggestions may be made to district staff or may be presented to the Board of Trustees in public session. With respect to the selection of independent auditor and the process of preparing and delivering the audit, California Constitution directs that it is a district responsibility, not a committee responsibility. The Committee, as required by law, does receive and review, to whatever extent they determine, the audit. The recommendations offered by the Grand Jury are inconsistent with the current laws allocation of the accountability safeguards in Proposition 39 between the District and the committee. • Review and formally comment on the selection of the independent auditor prior to the appointment. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The California Constitution directs that the process of preparing and delivering the audit is the District’s responsibility. • Review and formally recommend changes to the District, if any, on the audit scope and methodology prior to the audit being conducted. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The California Constitution directs that the process of preparing and delivering the audit is the District’s responsibility. • Review and comment to the District on the final audit report and formally accept with or without comments. Response from the Cabrillo Community College Governing Board: This recommendation has been implemented.

The Citizen Oversight Committee by-laws were, in effect, imposed on the committee without significant discussion or a vote by the committee members. These by-laws limited the committee’s authorized activities (only four listed activities) to less than what was communicated to the voters that is to “work with the Citizen’s Oversight Committee on prioritizing ... projects...” per the voter pamphlet. Response: The Cabrillo Community College Governing Board DISAGREES. As formulated by the Education Code, the COC is an advisory committee empowered by State law, established by the Cabrillo College Governing Board, overseen by the Governing Board and the COC is without the authority to expand its powers or establish its own bylaws. While the bylaws did not reflect the phrase from the Full Ballot Text that the “District would work with the Citizens’ Oversight Committee on prioritizing those project in the event factors beyond the District’s control require that projects be reconsidered,” such inclusion was not necessary. The District has had a successful, open dialogue with the COC regarding what projects have been selected for funding, and how those projects progress; Student Activities Center, Arts Education Classrooms, Allied Health Classrooms, Watsonville Educational Center Expansion, accessibility projects, and remodeling and renovating existing and vacated classroom, lab and office space. In fact, only one Measure D project has been deferred, the second access bridge across Soquel Drive, and the deferral of the project was discussed with the COC.

Related Recommendations (1)

Increase efforts to solicit membership in the Citizen Oversight Committee to a broader audience such as with newspaper advertisements and/or announcements inviting individuals with specific relevant expertise to apply. Response from the Cabrillo Community College Governing Board: This recommendation has been implemented. The District currently uses newspaper advertisements, as well as other forms of publicity, to attract applicants to serve on the Committee. The District will continue to seek individuals who satisfy the qualifications of membership as set forth in Education Code and if applicants also possess experience in construction projects, accounting, finance, etc., those applicants will have those experiences recognized in the selection process and, assuming they satisfy the Education Code categories, would be attractive members of the committee. Window Dressing or Effective Oversight? - 12

The independent performance audit reports by two CPAs did not express an opinion about whether or not there had been any misappropriation of funds. Response: The Cabrillo Community College Governing Board PARTIALLY AGREES. Proposition 39 does not provide any guidance as to the content of a performance audit. In the absence of performance audit standards, Cabrillo worked with their auditors prior to the audit to define a process that fulfills the intent of Proposition

Related Recommendations (1)

Revise by-laws to describe the process for resolving issues of concern to the oversight committee. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The bylaws and operating practice currently provide ways through which concerns can be expressed. First, the committee has exclusive control over the agenda of its meetings. If a concern arose, the committee would agendize the issue and discuss it at its next properly noticed public meeting. If the committee requests the District respond to a concern, the response is provided by the District at this meeting or at a subsequent meeting. If the committee is not satisfied with the answer of the staff, Section 5.8 of the bylaws states that “individual members of the committee retain the right to address the Board [of Trustees] either on behalf of the Committee or as an individual.” The Board then has the duty to respond to any concerns expressed.

The district has not defined and published an integrated construction quality control program document and a construction safety program document for the Measure D projects. Window Dressing or Effective Oversight? - 8 Response: The Cabrillo Community College Governing Board DISAGREES The District has defined quality control and safety program requirements in the contracts with the construction managers, architects, inspectors and contractors. The contractors are contractually responsible for the quality of their work as described in the contract documents, Section 2.3.4.2 (Construction Quality). The construction manager has the authority and responsibility to address defective or deficient construction or workmanship as stated in section 2.3.4.3 of the contract (Rejection of Work). The Inspector of Record also has responsibility for the quality of work on the site as required by Section 9-81130 of the Education Code. In addition the Architect of Record’s agreement with the District requires that the Architect shall “advise the District regarding defects and deficiencies observed by the Architect in the work of the contractors.” With regards to safety, the contractors are clearly responsible for safety on the job site as defined in section 4.9.1 of their General Conditions which states: The Contractor shall be solely responsible for initiating, maintaining and supervising all safety programs required by applicable law, ordinance, regulation or governmental orders in connection with the performance of the contract, or otherwise required by the type or nature of the Work. The Contractor’s safety program shall include all actions and programs necessary for compliance with California or federally statutorily mandated workplace safety programs, including without limitation, compliance with the California Drug Free Workplace Act of 1990 (California Government Code 8350 et seq.). Without limiting or relieving the Contractor of its obligations hereunder, the Contractor shall require that its Subcontractors similarly initiate and maintain all appropriate or required safety programs. With regards to safety each Contractor is defined as the “controlling employer” for purposes of the Multi-Employer Worksite Rules of the California Occupational Safety and Health Administration (California Code of Regulations 336.10). The District has implemented more frequent safety inspections as a result of concerns from the Grand Jury. The District has contracted with Safework to conduct inspections on a twice per month basis and to insure that prior safety notices have been remedied.

Related Recommendations (1)

Revise by-laws to include the committee’s role in prioritizing projects for delays or cancellations as described in Measure D. Response from the Cabrillo Community College Governing Board: This recommendation has not been implemented, but will be implemented during the spring 2008 semester.

One inspector of record did not agree that he had responsibility for what was called “quality control” by the construction manager. Response from The Cabrillo Community College Governing Board: The Cabrillo Community College Governing Board AGREES that the inspector of record may not have agreed to having responsibility for quality control, but DISAGREES with the inspector of record’s opinion. As mentioned in item 6 the inspector of record is responsible for the document completion on the site as is required by Section 81130 of the Education Code as follows: “(a) The Department of General Services under the police power of the state shall supervise the design and construction of any school building or the reconstruction or alteration of, or addition to, any school building, if not exempted under Section – 9 Window Dressing or Effective Oversight? 81133, to ensure that plans and specifications comply with the rules and regulations adopted pursuant to this article and building standards published in Title 24 of the California Code of Regulations, and to ensure that the work of construction has been performed in accordance with the approved plans and specifications, for the protection of life and property.” The District is not aware of any other inspector on site (of which there are currently five) who agrees with the opinion of the one cited. Conclusions

Related Recommendations (1)

The district should document the roles and responsibilities of the district, the construction manager, the contractors and the inspector of record for construction quality control and safety. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented on existing work due to the fact this is addressed in current contract language. On future projects, District will revise contract language as necessary to provide additional clarif[ication] regarding roles.

The oversight of the Measure D Bond projects is more than “window dressing,” but it can be improved. Window Dressing or Effective Oversight? - 10

Related Recommendations (1)

In the future, the auditor should use a more specific facilities project list. Response from the Cabrillo Community College Governing Board: This recommendation has been implemented.

F9 Page 13

In future audits, the processes and a sufficient number of invoices should be tested to allow the auditor to render an opinion with a high and defined level of confidence that there has been no misappropriation of funds. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The performance audit report requires that the accountant not issue an opinion, either positive or negative.

Related Recommendations (1)

F39

The critical component is to design a process that compares the amounts spent to the purposes specified in the bond language the voters approved. This type of report requires that the accountant not issue an opinion, either positive or negative. The auditors have reported in the performance audits the following for Cabrillo: “Our review of the expenditures for the period July 1, 2005 through June 30, 2006, did not reveal any items that were paid from the general obligation bond funds that did not comply with the purpose of the Bonds as approved by the registered voters of the District on March 2, 2004.” The financial audit reports include a summary of what projects were funded with bond monies and state a conclusion whether bond money was or was not used for teacher or administrative salaries or other school operating expenses.

No recommendations for this finding

F2004 Page 1

The investigation reviewed the performance of the oversight committee, including its reports to the public. The investigation did not reveal any misappropriation of funds or any violations of the law or regulations in the creation and operation of the committee. However, it did reveal several areas where the district and the committee could improve oversight and provide greater transparency to the public in the expenditure of the bond funds. Definitions COC Citizen Oversight Committee. Independent Audit An audit by a Certified Public Accountant of the financial statement of the District’s Measure D Bond Fund and a performance audit to assure that funds have only been expended on voter approved projects. Measure D Funds The $118.5 million Measure D Bond Funds passed by the County voters in March 2004 to use for construction, rehabilitation and leasing of school facilities. Background Legislation Proposition 39, an initiative constitutional amendment and statute, was passed by state voters in November of 2000. It amended the California Constitution and resulted in a revision to the California Education Code. It provided for a 55% vote to pass local bond measures, in lieu of the standard 2/3 vote requirement, if specific accountability requirements were incorporated in the bond measure. These “accountability requirements” (Article XIIIA Sec 1 (b) (3) of the California Constitution) for school bond measures are summarized as follows: • Must require that funds can only be spent for construction, rehabilitation, and/or leasing of facilities including furnishings and equipment. • Must contain a list of specific school facilities projects to be funded. – 1 Window Dressing or Effective Oversight? • Must require an independent annual performance audit to ensure that funds have only been spent for the projects listed in the measure. • Must require an independent annual financial audit until funds have been spent. In addition, California Education Code Sections 15278-15282 directs that the bond measure require the formation of an independent Citizen Oversight Committee. Its purpose is to inform the public as to the district’s compliance with the above accountability requirements. The scope of its activities is divided into two categories, required and optional, as follows: Required Optional 1. Ensure that the district conforms to 1. Receive and review performance accountability requirements. audits.

No recommendations for this finding

Additional Recommendations 1

These recommendations are not explicitly linked to specific findings.

R10

In future audits, the auditor should report on the number of invoices examined and the total invoices processed for the Measure D fund. – 13 Window Dressing or Effective Oversight? Response from the Cabrillo Community College Governing Board: This recommendation has not been implemented, but will be implemented for the June 2008 audit. Responses Requested Entity Findings Recommendations Respond Within Cabrillo Community 1 - 7 1 - 10 90 Days College Governing October 1, 2007 Board

Conclusions 8

CL1 Page 10

The oversight committee could be more effective if it were to have members with expertise covering more of the relevant Measure D program activities.
CL2 Page 10

The oversight of the Measure D Bond projects is more than “window dressing,” but it can be improved. Window Dressing or Effective Oversight? Page 1 - 10 Recommendations 1. For bond measures, the district should develop a clearly numbered specific facilities project list for the voter pamphlet and use that specific list in future tracking and reporting. Response from the Cabrillo Community College Governing Board: This recommendation will not be implemented. The District Facility Master Plan is a detailed and comprehensive report, expanding on the COC Annual Report. This report is submitted as an action item to the Governing Board and Citizens’ Oversight Committee twice a year approving changes in scope, budget and/or scheduling. It tracks all of the Measure D projects to date and includes other projects funded by other sources as well. In addition, the FMP is submitted monthly to the Governing Board and Citizens’ Oversight committee for review and discussion on the status of active projects.
CL3 Page 10

Greater transparency can and should be achieved in tracking projects. In order for the oversight committee, auditors, district staff and the public to track the specific projects throughout the life of the Measure D program, it is necessary for the district to define and maintain a consistent, detailed specific list in all the public documents.
CL4 Page 10

The oversight committee would be more credible and effective if it were to function with more independence and a broader scope of authorized activities.
CL5 Page 10

The oversight committee should be given the opportunity to review, discuss, propose and then formally adopt its own by-laws.
CL6 Page 10

The performance audits are not adequate to establish, with credibility, that there have been no misappropriations of funds.
CL7 Page 10

Some projects have had significant quality control problems. One inspector of record was released from the program by the district in part due to disagreements over the inspector’s role in quality control. With regard to construction safety, there have not been major safety incidents to date. In both these areas, however, a more defined and rigorous approach to management is needed.
CL8 Page 10

The members of the COC are sincere and civic minded. They deserve our thanks for being willing to serve. Furthermore, the district staff was found to be cooperative and competent in their dealings with the Grand Jury.

No Responses Found 1

Government entities assigned to respond to this report. No response documents have been linked in our database.

Cabrillo Community College District School District