West Valley'mission Community College District Fil John E.hendrickson, Chancellor D

Prior to October, 2008, there did not exist astatewide standardized procedure for the accurate accounting and verification of HBAs. District Responseto Finding 1 Agree. General instructions have been developed and distributed bythe Office of the Chancellor, California Community College System (State Chancellor) for the reporting of enrollment for purposes of receipt of state apportionment income. OnJanuary 26,2009, the State Chancellor sent specific instructions for reporting Hours byArrangement. OnJune 10, 2009, asecond memorandum was sent. Those documents are attached. The District isfully compliant with instructions for reporting enrollment for purposes of receipt of state apportionment income. Finding2 At Mission College, there had not been consistent review of HBAsover time to ensure all faculty and staff were clear asto their implementation. West Valley conducted acomprehensive review of HBApractices and accounting in 2005, which resulted in its documentation of courses that carry HBAs. There were several different terms employed within the District to refer to HBAs,making it difficult to decipher the number of hours offered. Board ofTntstees JACK LUCAS,Ed.D" President· CHRISCONSTAr.'TIN, VicePresident· ADRIENNE GREY' ROBERTT.OWENS, BUCKPOLK' CHRISTOPHER STAMPOLIS' CHAD WALSH BUilding Silicon Va!lev's Future ... One Student at a Time. WEST VALLEYCOLLEGE, SARATOGA' MISSION COLLEGE, SANTA CLARA District Response to Finding 2 Agree. Inthe past, documentation of HBAenrollment reporting was inconsistent and in some casesnot done. These discrepancies have been corrected.

The required yearly financial audits did not include anadequate inspection and evaluation of the district's system of internal control over its financial reporting with regard to reported enrollment in HBAsper class. The audit did not employ asufficiently rigorous examination of FTESaccounting used to calculate apportionment. The level of depth in the audit was insufficient to uncover the long-term and ongoing deficiencies in the method of determining HBAsand the FTESthat were claimed on the basis of that determination. District Response to Finding 3 Agree. The District contracts for an annual Financial Audit performed by an independent audit firm pursuant to requirements of state law and Audit Manual instructions promulgated bythe State Chancellor and State Department of Finance. Audit Manual instructions provide for asampling of enrollment reporting accuracy and documentation. PastAudits did not reveal aproblem with HBA enrollment reporting. The Resolution Agreement between the District and the State Chancellor obligated the District to perform special focused independent audits of HBA enrollment reporting. Special audits will bedone.

Asa result of incomplete HBAdocumentation, the District isrequired to repay the state $5,644,227. District Response to Finding 4 Agree. The Resolution Agreement requires that the District repay the State in the amount of $5,644,227. The District has repaid $5,150,739 to date. The balance of $493,488 will be paid to the State over the next two years pursuant to terms of the Resolution Agreement.

Asof the date of this report, Mission College haseliminated all unscheduled HBAs. West Valley College hascontinued offering supplemental hours of instruction utilizing procedures in compliance with Title 5 of the California Education Code. The West Valley-Mission Community College District now utilizes a multi-page form allfaculty must complete before making supplemental instructional hours part of their courses. The Grand Jury believes that the District isnow providing adequate documentation of supplemental hours, and careful accounting of FTES. District Responseto Finding5 Agree. The District isnow providing proper documentation of HBAenrollment.