Santa Clara County Grand Jury • 2008-2009

2008-2009 Santa Clara County Civil Grand Jury Report Santa Clara County Schools Inventory Practices $300m+ Taxpayer

Published: June 09, 2009 17 pages
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Findings and Recommendations 11 findings

F1
Community colleges and K-12 boards of trustees are responsible for inventory control. However, after interviewing ALL board of trustee presidents it was evident they were unaware of their obligations under the law. • All K-8 and K-12 and Community College Districts
Related Recommendations (1)
R1
Trustees should review and be knowledgeable of Education Code §35168 for K–12 and Education Code §81600 for community colleges to ensure complete implementation. • All K-8 and K-12 and Community College District Boards of Trustees
F2
No trustees or superintendents/chancellors have been trained in inventory control. Inventory control training for board members and superintendents is not mandated by the State, resulting in a lack of familiarity and inconsistent application of inventory requirements by many districts. • All K-8 and K-12 and community college districts 5
Related Recommendations (1)
R2
All Santa Clara County school board trustees and superintendents/chancellors should be required to review and understand Education Code §35168 and §81600 and BAM requirements for inventory control. For K-12 districts, the COE should take the lead in providing comprehensive training on inventory control, in conjunction with the release of the new inventory tracking module within Quintessential Software Systems spearheaded by the COE. For community colleges, the CC Board should investigate additional training in the area of inventory control offered through organizations such as the American Association of Community Colleges and the Community College League of California. • All K-8 and K-12 and Community College District Boards of Trustees • COE Board of Trustees
F3
All district superintendents, chancellors and district staff report incomplete inventory information to their boards. This results in lack of knowledge about the value and size of their inventory. • All K-8 and K-12 and community college districts
Related Recommendations (1)
R3
All Boards of Trustees should require a presentation on the results of their districts’ biennial inventory, including total value, variances resulting from reconciliation between past and current inventories and a proposed plan to resolve discrepancies. • All K-8 and K-12 & Community College District Boards of Trustees
F4
With the exception of Santa Clara Unified and Los Gatos Unified School Districts, all K- 12 districts fail to understand the need to reconcile inventories from previous years to the latest inventory update. Without reconciliation, the opportunity to: identify lost, missing or stolen items, take preventive measures, and obtain timely reimbursement may be lost. • All K-8 and K-12 Boards of Trustees (except Santa Clara Unified and Los Gatos Unified) 6
Related Recommendations (1)
R4
All K-12 school districts should reconcile the most current, full inventory with prior inventories, to identify missing items and potential losses/thefts. The results will enable the districts to implement safeguards to prevent future losses. • All K-8 and K-12 Boards of Trustees (except Santa Clara Unified and Los Gatos Unified)
F5
Many K-12 Districts are not following requirements for inventory control as stated in Education Code §35168, and/or their own policies and procedures. A) The following districts do not have an inventory listing or the inventory list that they do have is extremely deficient: • Cambrian School District • Lakeside School District B) The following districts lack Board Policy or Administrative Regulations regarding inventory, and/or they failed to delegate inventory responsibility: • East Side Union High School District • Gilroy Unified School District • Los Altos Unified School District • Montebello School District • Mountain View Whisman School District • Palo Alto Unified School District • Saratoga Union School District C) The following districts are not tracking all items valued above $500 as required by Education Code §35168: • Cambrian School District • Gilroy School District • Los Altos School District • Palo Alto Unified School District 7 D) The following districts do not conduct Inventory on a biennial basis as required by Education Code: (Note: A rolling inventory is not considered a physical inventory as defined by code) • Cambrian School District • Cupertino Union School District • East Side Union School District • Evergreen School District • Fremont Union High School District • Gilroy School District • Los Altos School District • Los Gatos/Saratoga High School District • Morgan Hill Unified School District • Mountain View/Los Altos Union High School District • Palo Alto Unified School District
Related Recommendations (1)
R5
A) The Boards of Trustees for the districts listed in Finding 5A should conduct a full inventory or improve their existing inventory listing. B) Board Policies/Administrative Regulations should be implemented by the Boards of Trustees in all districts listed in Finding 5B, assigning inventory control responsibilities and training to the superintendent, business manager, or appropriate designee. All districts should ensure that their policies remain current and in compliance. CSBA provides a good template for Board Policies in the area of Inventory Control conforming to Education Code §35168. These districts should provide training for staff responsible for inventory. C) The Boards of Trustees for districts listed in Finding 5C should fully implement the tracking requirements for equipment with current market value above $500 for K-12. These districts should provide training for staff responsible for inventory. D) The Boards of Trustees for districts listed in Finding 5D should conduct inventory at least biennially and track all parameters as specified in Education Code §35168. These districts should provide training for staff responsible for inventory. 8
F6
Some school districts observed by the GJ had a demonstrated understanding of the need for inventory control. Best practices include documenting and following a process, conforming to the Education Code requirements, and performing reconciliation to prior inventories. The following districts are to be commended on their best practices: • Fremont Union School District • Los Gatos Unified School District • Moreland School District • Orchard School District • Santa Clara Unified School District
Related Recommendations (1)
R6
Design of final inventory reports There are three major stages in taking the physical inventory: the precount, the actual count, and the recount. TERMS Equipment (definition from the California Community College Budgeting and Accounting Manual) Equipment is defined as having a purchase price of $ 200 or more and a useful life of one year or longer. The threshold for maintaining inventory in a trace inventory system and for recording the asset in the General Fixed Assets Account Group is $ 1000 and a useful life of one year or longer. Equipment purchased with funds from categorical programs, grants or contracts (e.g. VTEA) may be subject to specific additional or conflicting requirements. Consult the specific grant or contract literature or compliance requirements. “By way of example, let us classify both a personal computer and a calculator. The computer is likely to last more than one year, and if it did break down, it is most likely to be repaired. The calculator may last more than one year, but in the event the calculator stopped working, it would be replaced, not repaired.” Thus it would be declared a supply rather than equipment for the purpose of inventory requirements. Inventory (definition from the California Community College Budgeting and Accounting Manual) “A detailed list showing quantities and description of property on hand at any given time. It may also include units of measure, unit prices, and values.” Federal Register July 2005 410-1 16 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 20th day of April, 2009. Don Kawashima Foreperson 17
F7
There is a potential for abuse in K-8 and K-12 districts when those who report to superintendents approve credit card transactions and purchase orders made by their superintendent. • All K-8 and K-12 School Districts
Related Recommendations (1)
R7
To strengthen internal controls and ensure fiscal accountability, purchases made by the K-8 and K-12 Superintendents should be approved by the Boards of Trustees prior to purchase. In the event an immediate purchase is required, post-approval by the Board would ensure no conflicts of interest or abuses occur. Expenditures should be presented separately from the Board’s consent calendar to ensure proper scrutiny. Credit card statements and a listing of disbursements should be provided to the Board for approval. • All K-8 and K-12 District Boards of Trustees 9 COMMUNITY COLLEGES
F8
All community college districts delegated the responsibilities for Inventory Control to the Chancellor, Vice-Chancellor or the College Presidents. Gavilan Joint Community College District does not have a Board Policy or Administrative Regulations addressing Inventory Control. • Gavilan Joint Community College District
Related Recommendations (1)
R8
The Board of Trustees for Gavilan Joint Community College District should ensure development and implementation of Board Policy and Administration Regulations addressing Inventory Control. Foothill/De Anza College has a Board Policy and Administrative Procedures that could be utilized as a template by Gavilan if they so choose. This district should ensure that their policies remain current and in compliance and provide training for staff responsible for inventory. • Gavilan Joint Community College District Board of Trustees
F9
Three (3) of four (4) community college districts failed to conduct inventory as is specified by CSAM 410 (California School Accounting Manual) Procedures and the California Community College Budget and Accounting Manual (BAM). Districts only included items at or above $5000 in their inventory, where the requirements in CSAM and the BAM state that any items greater than $1000 should be included. • Foothill/De Anza Community College District • Gavilan Joint Community College District • West Valley/Mission Community College District
Related Recommendations (1)
R9
The Board of Trustees for Foothill/De Anza, Gavilan, and West Valley/Mission College Districts should ensure compliance with the CSAM 410 procedures and BAM guidelines by tracking inventory items greater than $1000. These districts should provide training for staff responsible for inventory. • Foothill/De Anza Community College District Board of Trustees • Gavilan Joint Community College District Board of Trustees • West Valley/Mission Community College District Board of Trustees 10
F10
The following community college districts are not conducting inventories annually or reconciling to verify the existence, current utilization, and continued need for the equipment on a biennial basis, according to procedures specified in CSAM 410 (California School Accounting Manual). • Foothill/De Anza Community College District • Gavilan Joint Community College District
Related Recommendations (1)
R10
The Boards of Trustees for Foothill/De Anza and Gavilan Joint Community College Districts should ensure inventories are conducted as specified in CSAM 410. • Foothill/De Anza Community College Board of Trustees • Gavilan Joint Community College Board of Trustees
F11
Chancellors’ purchases (both credit card and purchase orders) are approved by subordinates, mainly direct reports. While the vast majority of these direct reports expressed that their chancellors are very conservative with regard to spending, there is a potential for abuse. • Foothill/De Anza Community College District • Gavilan Joint Community College District • San Jose/Evergreen Community College District • West Valley/Mission Community College District
Related Recommendations (1)
R11
To strengthen internal controls and ensure fiscal accountability, purchases made by chancellors should be approved by the Board of Trustees. In the event an immediate purchase is required, post-approval by the Board would ensure no conflicts of interest or abuses occur. Credit card statements and a listing of disbursements should be provided to the Board for approval. Expenditures should be presented separately from the Board’s consent calendar to ensure proper scrutiny. • Foothill/De Anza Community College District Board of Trustees • Gavilan Joint Community College District Board of Trustees • San Jose/Evergreen Community College District Board of Trustees • West Valley/Mission Community College District Board of Trustees

Conclusions 17