Coast Unified School District*

Cayucos Elementary and Coast Unified are not in compliance with California Education Code section 17623 as they are operating without a fee splitting agreement since it expired in 2010. It is accurate that Cayucos Elementary and Coast Unified's development fee agreement, effective July 1, 2008 - June 30, 2010, has expired. Regardless of the expiration date, Coast Unified School District and Cayucos Elementary School District have continued to honor the terms of the original agreement. Coast Unified agrees to commit to negotiate a fee splitting agreement in compliance with Education Code section 17623, and is willing to consider arbitration in the event the parties cannot reach a new agreement. The fees for development projects in Cayucos might need to be paid to two

separate locations since Cayucos Elementary and Coast Unified cannot agree on having the fees collected at a single site. I partially disagree with the finding. Coast Unified will consider the County Superintendent's offer to collect the development fees at the County Office of Education, and will work with Cayucos Elementary to resolve this matter. Coast Unified's proportion of Cayucos developer fees have been expended at

locations other than Coast Union High School in breach of the fee splitting agreement between the school districts, and also it does not meet the reasonable relationship established by the Government Code section 66001(a)(3) between the imposition of the fee on a Cayucos development and the benefit within Coast Unified. I partially disagree with the finding. The fee splitting agreement does not limit expenditures to the Coast Unified High School only. In regards to expenditures related to administration facilities, the prior District administration facilities were located at the Coast High School. Attendance growth, partially resulting from development, and earthquake damage, necessitated the move of these facilities from the high school to the grammar school. Coast High School students receive a benefit from having fully-functioning administrative services, as well as offices where such students have the ability to use board room and administration facilities. The District intends to review the remaining list of its expenditures. Neither Cayucos Elementary nor Coast Unified have verified their compliance

with Government Code section 66001(d) that mandates five-year audits of the developer fee programs. I partially disagree with this finding. Coast Unified conducts an annual audit of its developer fee program. Furthermore, as part of the Grand Jury Review, staff provided all pertinent information available regarding Coast Unified's imposition of development fees. Nevertheless, the Grand Jury's analysis is well-taken, and I will ensure a more strict compliance with Government Code section 66001(d).

Despite the intent within the justification studies to demonstrate student enrollment growth, the increased enrollment projected by both districts has not been realized as Cayucos Elementary and Coast Unified school districts have both experienced stagnant or declining enrollment and under capacity of maximum enrollment. I partially disagree with this finding. When new dwelling units are constructed, they create a need either from the District having to modernize existing facilities to accommodate this growth or to build new facilities. The District's current fee justification study shows an unmet need for school facilities in excess of $15,000,000. In addition, there is a shortfall between projected developer fee revenue for each new student and the cost of housing such student in excess of $8,000. Combined, these two facts illustrate that new development results in the District continuing to face increased facilities costs necessitating the collection of developer fees.

The Education or Government Code does not provide for administrative oversight of developer fees beyond their local school board. Therefore, school districts have the authority to act independently with no oversight, especially from the County Office of Education. I agree with this finding. RESPONSE TO GRAND JURY'S RECOMMENDATIONS