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VICTOR VALLEY COMMUNITYCOLLEGE DISTRICTAudit ReportMINIMUM CONDITIONS FOR STATE AID PROGRAMEducation Code sections 66010.2, 66010.7, 66721.5, 66731,66732, 66736, 66738, 66740, 66742, 70902, 78015, and 78016as added and/or amended by various legislation, and Title 5,California Code of Regulations, section 53203, et seq.July 1, 2001, through June 30, 2012BETTY T. YEECalifornia State ControllerJune 2019
BETTY T. YEECalifornia State ControllerJune 3, 2019Daniel Walden, Ph.D., Superintendent/PresidentVictor Valley Community College District18422 Bear Valley RoadVictorville, CA 92395Dear Dr. Walden:The State Controller’s Office (SCO) audited the costs claimed by Victor Valley CommunityCollege District for the legislatively mandated Minimum Conditions for State Aid Program forthe period of July 1, 2001, through June 30, 2012.The district claimed 37,609,330 for the mandated program. Our audit found that 318,538 isallowable and 37,290,792 is unallowable. The costs are unallowable because the districtclaimed unallowable salaries and benefits, overstated materials and supplies costs, and overstatedindirect costs. The State paid the district 5,796,321.Following issuance of this audit report, the SCO’s Local Government Programs and ServicesDivision will notify the district of the adjustment to its claims via a system-generated letter foreach fiscal year in the audit period.If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, bytelephone at (916) 327-3138.Sincerely,Original signed byJIM L. SPANO, CPAChief, Division of AuditsJLS/as
Daniel Walden, Ph.D.,Superintendent/President-2-cc: Dennis Henderson, President, Board of TrusteesVictor Valley Community College DistrictJohn Nahlen, Interim Vice-President, Administrative ServicesVictor Valley Community College DistrictShawntee Milton, Director, Fiscal ServicesVictor Valley Community College DistrictChristian Osmeña, Vice ChancellorCollege Finance and Facilities PlanningCalifornia Community Colleges Chancellor’s OfficeFrances Parmelee, Assistant Vice ChancellorCollege Finance and Facilities PlanningCalifornia Community Colleges Chancellor’s OfficeWrenna Finche, Director of Fiscal Standards and AccountabilityCollege Finance and Facilities PlanningCalifornia Community Colleges Chancellor’s OfficeChris Ferguson, Assistant Program Budget ManagerEducation Systems UnitCalifornia Department of FinanceKeith Nezaam, Staff Finance Budget AnalystEducation Systems UnitCalifornia Department of FinanceEvelyn Calderon-Yee, Bureau ChiefLocal Government Programs and Services DivisionState Controller’s OfficeJune 3, 2019
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramContentsAudit ReportSummary .1Background .1Objective, Scope, and Methodology .2Conclusion .3Follow-up on Prior Audit Findings .3Views of Responsible Officials .3Restricted Use .4Schedule—Summary of Program Costs .5Findings and Recommendations . 11
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramAudit ReportSummaryThe State Controller’s Office (SCO) audited the costs claimed by VictorValley Community College District for the legislatively mandatedMinimum Conditions for State Aid Program for the period of July 1, 2001,through June 30, 2012.The district claimed 37,609,330 for the mandated program. Our auditfound that 318,538 is allowable and 37,290,792 is unallowable. Thecosts are unallowable because the district claimed unallowable salaries andbenefits, overstated materials and supplies costs, and overstated indirectcosts. The State paid the district 5,796,321.BackgroundEducation Code sections 66010.2, 66010.7, 66721.5, 66731, 66732,66736, 66738, 66740, 66742, 70902, 78015, and 78016, and Title 5,California Code of Regulations, section 53203, et seq. address thestandards for the formation and basic operation of the CaliforniaCommunity Colleges.The sections were added and/or amended by: Chapter 973, Statutes of 1988Chapters 1188 and 1198, Statutes of 1991Chapter 365, Statutes of 1998Chapter 187, Statutes of 2000On May 26, 2011, the Commission on State Mandates (Commission)adopted a statement of decision finding that the test claim statutes andregulations impose a partially reimbursable state-mandated program uponcommunity college districts within the meaning of article XIII B, section 6of the California Constitution and Government Code (GC) section 17514.The Commission separated the reimbursable activities into the followingseven program areas: Participation in district and college governanceTransfer centers in community collegesVocational educationStandards of scholarshipCurriculumDegrees and certificatesOpen coursesThe program’s parameters and guidelines establish the state mandate anddefine the reimbursable criteria. The Commission adopted the parametersand guidelines on April 19, 2013. In compliance with GC section 17558,the SCO issues claiming instructions to assist community college districtsin claiming mandated program reimbursable costs.-1-
Victor Valley Community College DistrictObjective, Scope,and MethodologyMinimum Conditions for State Aid ProgramThe objective of our audit was to determine whether costs claimedrepresent increased costs resulting from the legislatively mandatedMinimum Conditions for State Aid Program. Specifically, we conductedthis audit to determine whether costs claimed were supported byappropriate source documents, were not funded by another source, andwere not unreasonable and/or excessive.The audit period was July 1, 2001, through June 30, 2012.To achieve our objective, we: Reviewed the annual mandated cost claims filed by the district for theaudit period and identified the significant cost components of eachclaim as salaries and benefits, materials and supplies costs, andindirect costs. Determined whether there were any errors or unusualor unexpected variances from year to year. Reviewed the activitiesclaimed to determine whether they adhered to the SCO’s claiminginstructions and the program’s parameters and guidelines; Completed an internal control questionnaire by interviewing keydistrict staff. Discussed the claim preparation process with districtstaff to determine what information was obtained, who obtained it, andhow it was used; Reviewed all supporting time documents related to thecounseling/counseling support staff costs claimed for the audit period.The district did not provide source documents to support the actualhours worked. Instead, the district provided corroborating documentsshowing estimated staff time (in percentages) for each fiscal year ofthe audit period; Reviewed all class schedules and college catalogs to ensure that thecorrect number of pages were claimed for reimbursement under eachreimbursable activity (i.e., transfer centers, standards of scholarship,curriculum, degrees and certificates, and open courses); Traced total printing costs for the class schedules to supportingdocumentation for fiscal year (FY) 2003-04, FY 2004-05, andFY 2006-07 through FY 2010-11. We also traced total printing costsfor the college catalogs to supporting documentation for FY 2003-04; Reviewed all indirect cost rates claimed and recalculated the ratesusing the Controller’s methodology (FAM-29C) for FY 2008-09,FY 2009-10, and FY 2011-12. For the remaining fiscal years of theaudit period, we used the audited rates from the district’s EnrollmentFee Collection and Waivers Program. The district incorrectly appliedits FAM-29C rate to salaries and benefits, rather than total direct costs(salaries and benefits, and materials and supplies) for FY 2001-02through FY 2006-07; and Reviewed potential sources of offsetting revenues/reimbursements forthe audit period. We inquired with district staff and reviewed singleaudit reports (with accompanying financial statements) for othersources of funding.-2-
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramGC sections 12410, 17558.5, and 17561 provide the legal authority toconduct this audit. We conducted this performance audit in accordancewith generally accepted government auditing standards. Those standardsrequire that we plan and perform the audit to obtain sufficient, appropriateevidence to provide a reasonable basis for our findings and conclusionsbased on our audit objective. We believe that the evidence obtainedprovides a reasonable basis for our findings and conclusions based on ouraudit objective.We limited our review of the district’s internal controls to gaining anunderstanding of the transaction flow and claim preparation process asnecessary to develop appropriate auditing procedures. Our audit scope didnot assess the efficiency or effectiveness of program operations. We didnot audit the district’s financial statements.ConclusionAs a result of performing the audit procedures, we found instances ofnoncompliance with the requirements outlined in our audit objective. Wedid not find that the district claimed costs that were funded by othersources; however, we did find that the district claimed unsupported andineligible costs, as quantified in the accompanying Schedule and describedin the Findings and Recommendations section of this audit report.For the audit period, Victor Valley Community College District claimed 37,609,330 for costs of the legislatively mandated Minimum Conditionsfor State Aid Program. Our audit found that 318,538 is allowable and 37,290,792 is unallowable. The payment information is as follows: For the FY 2001-02 through FY 2003-04 claims, the State paid thedistrict 5,796,321. Our audit found that 45,229 is allowable. For the FY 2004-05 through FY 2011-12 claims, the State made nopayments to the district. Our audit found that 273,309 is allowable.The State will pay that amount, contingent upon availableappropriations.Following issuance of this audit report, the SCO’s Local GovernmentPrograms and Services Division will notify the district of the adjustmentto its claims via a system-generated letter for each fiscal year in the auditperiod.Follow-up onPrior AuditFindingsWe have not previously conducted an audit of the district’s legislativelymandated Minimum Conditions for State Aid Program.Views ofResponsibleOfficialsWe issued a draft audit report on April 8, 2019. On April 18, 2019,Shawntee Milton, Director, Fiscal Services, responded by email statingthat the district will not submit a response to the draft audit report.-3-
Victor Valley Community College DistrictRestricted UseMinimum Conditions for State Aid ProgramThis audit report is solely for the information and use of Victor ValleyCommunity College District, the California Community CollegesChancellor’s Office, the California Department of Finance, and the SCO;it is not intended to be and should not be used by anyone other than thesespecified parties. This restriction is not intended to limit distribution of thisaudit report, which is a matter of public record and is available on the SCOwebsite at www.sco.ca.gov.Original signed byJIM L. SPANO, CPAChief, Division of AuditsJune 3, 2019-4-
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule—Summary of Program CostsJuly 1, 2001, through June 30, 2012Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2001, through June 30, 2002Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits850,640533,794110,619124,558 - 19,611)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen (14,788)(10,874)(14,480)Subtotal, Materials and supplies47,218-(47,218)Finding 21,666,829992,498-(1,666,829)(992,498)Finding 32,659,327-Total direct costsIndirect costsTotal program costs Less amount paid by the State 3 (2,659,327) (903,805)(567,156)(117,532)(132,342)Finding 1(2,659,327)Amount paid in excess of allowable costs claimed (2,659,327)July 1, 2002, through June 30, 2003Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits903,805567,156117,532132,342 -1,720,835-(1,720,835)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen (12,448)(15,174)(12,211)Subtotal, Materials and supplies48,606-(48,606)Finding 21,769,441949,901-(1,769,441)(949,901)Finding 32,719,342-Total direct costsIndirect costsTotal program costsLess amount paid by the State 3(2,719,342)Amount paid in excess of allowable costs claimed -5-(2,719,342) (2,719,342)Finding 1
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule (continued)Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2003, through June 30, 2004Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits956,970600,519124,446140,128 - 22,063)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen 5,647)(1,758)(16,942)(12,271)18,922Subtotal, Materials and supplies54,59136,895(17,696)Finding nding 3Total direct costsIndirect costsTotal program costs 2,858,92845,229Less amount paid by the State 3 (2,813,699) (1,010,135)(633,880)(131,360)(147,912)Finding 1(417,652)Amount paid in excess of allowable costs claimed (372,423)July 1, 2004, through June 30, 2005Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits1,010,135633,880131,360147,912 -1,923,287-(1,923,287)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen ,564)(14,274)(12,318)17,712Subtotal, Materials and supplies46,53630,422(16,114)Finding inding 32,847,03443,853Total direct costsIndirect costsTotal program costs Less amount paid by the State 3-Allowable costs claimed in excess of amount paid -6-43,853 (2,803,181)Finding 1
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule (continued)Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2005, through June 30, 2006Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits1,063,300667,243138,273155,698 - ,024,514)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen (15,455)(12,777)(13,601)Subtotal, Materials and supplies49,046-(49,046)Finding 22,073,560942,816-(2,073,560)(942,816)Finding 33,016,376-Total direct costsIndirect costsTotal program costsLess amount paid by the State 3 (3,016,376) (1,151,340)(722,490)(149,722)(168,590)Finding 1-Allowable costs claimed in excess of amount paid - -July 1, 2006, through June 30, 2007Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and ,192,142)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen ,889)(27,446)(22,390)28,914Subtotal, Materials and supplies86,67153,471(33,200)Finding 66)Finding 33,343,75680,848Total direct costsIndirect costsTotal program costs Less amount paid by the State 3-Allowable costs claimed in excess of amount paid -7-80,848 (3,262,908)Finding 1
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule (continued)Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2007, through June 30, 2008Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumOpen courses Subtotal, Salaries and benefits1,230,583772,217160,027180,192Less amount paid by the State (41,289)(31,219)23,169126,89059,927(66,963)Finding nding 33,864,47459,927Subtotal, Materials and suppliesTotal program costs-2,343,019Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen coursesTotal direct costsIndirect costs 3 (3,804,547) ing 1-Allowable costs claimed in excess of amount paid 59,927 -July 1, 2008, through June 30, 2009Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen courses Subtotal, Salaries and 076-(2,609,076)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen ,919)(13,433)(14,633)41,085Subtotal, Materials and 3,935,26052,599Total direct costsIndirect costsTotal program costs Less amount paid by the State 3-Allowable costs claimed in excess of amount paid -8-52,599(2,604,213)(1,278,448) (3,882,661)Finding 1Finding 2Finding 3
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule (continued)Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2009, through June 30, 2010Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen courses Subtotal, Salaries and benefits1,318,799866,990172,52541,331192,938 8,03329,643-3,871,39029,643Subtotal, Materials and suppliesTotal program costs-2,592,583Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen coursesTotal direct costsIndirect costs Less amount paid by the State 3(2,573,714)(1,268,033) (3,841,747) ing 1Finding 2Finding 3-Allowable costs claimed in excess of amount paid 29,643 -July 1, 2010, through June 30, 2011Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen courses Subtotal, Salaries and (719)(5,183)(6,056)1,97418,0656,439(11,626)Finding ding 34,122,5186,439Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen coursesSubtotal, Materials and suppliesTotal direct costsIndirect costsTotal program costsLess amount paid by the State 3-Allowable costs claimed in excess of amount paid -9-6,439 (4,116,079)Finding 1
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramSchedule (continued)Actual CostsAllowableAuditClaimedper AuditAdjustmentCost ElementsReference 1July 1, 2011, through June 30, 2012Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen courses Subtotal, Salaries and benefits1,389,062919,460199,84983,737200,164 - 2,272-(2,792,272)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen ,863)(567)(21,163)Subtotal, Materials and supplies49,884-(49,884)Finding 22,842,1561,528,769-(2,842,156)(1,528,769)Finding 34,370,925-Total direct costsIndirect costsTotal program costs Less amount paid by the State 3 (4,370,925) 374)Finding 1-Allowable costs claimed in excess of (less than) amount paid - -Summary: July 1, 2001, through June 30, 2012Direct costs2:Salaries and benefitsTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen courses Subtotal, Salaries and 7424,383,387-(24,383,387)Materials and suppliesTransfer centersStandards of scholarshipCurriculumDegrees and certificatesOpen tal, Materials and supplies586,017269,396(316,621)Finding 590,784)Finding 3Total direct costsIndirect costsTotal program costs 37,609,330318,538Less amount paid by the State 3(5,796,321)Amount paid in excess of allowable costs claimed 1See the Findings and Recommendations section.2Includes only ongoing activities.3Payment amount current as of May 23, 2019.-10-(5,477,783) (37,290,792)Finding 1
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramFindings and RecommendationsFINDING 1—Unallowable salariesand benefitsThe district claimed 24,383,387 in salaries and benefits for the auditperiod. The district claimed costs for five of the seven reimbursableactivities: transfer centers, standards of scholarship, curriculum, degreesand certificates, and open courses. We found that the entire amount isunallowable. The costs are unallowable for the following reasons: The district misinterpreted the program’s parameters and guidelinesrequirement that only actual costs may be claimed. Actual costs mustbe traceable to and supported by contemporaneous source documentsthat show the validity of such costs, and their relationship to thereimbursable activities. The district claimed costs based ondeclarations and signed certifications, which are corroboratingdocuments, not source documents. The district provided an Individual Average Time Record (IndividualCounselor Time Percentages) document, to support each counselor’stime spent on the reimbursable activities regarding transfer centers,standards of scholarship, curriculum, degrees and certificates, andopen courses. This single document identifies the percentage ofestimated staff time spent on reimbursable activities for each fiscalyear of the audit period. These time records did not provide the levelof detail needed to determine which reimbursable activities wereactually performed, or the actual hours spent on each reimbursableactivity. Most of the claimed activities related to the transfer center werespecifically excluded from reimbursement by the Commission whendeveloping the program’s parameters and guidelines. Such activitiesinclude, but are not limited to, identifying, contacting, and providingtransfer support services to underrepresented students; ensuring thatstudents receive accurate and up-to-date academic and transferinformation through coordinated transfer counseling services; andmonitoring the progress of transfer students to the point of transfer. The district provided an Annual Employee Time Record Sheet tosupport the staff time spent on publishing policies, procedures, andregulations in college publications. The total hours from each timerecord were split equally between standards of scholarship, anddegrees and certificates. In addition, the district provided a similardocument to support the staff time spent on publishing coursedescriptions in college publications. The total hours from each timerecord were split in thirds under transfer centers, curriculum, anddegrees and certificates. This document identifies the estimated stafftime spent (in hours) for each fiscal year of the audit period. Thedistrict did not provide source documentation identifying the specificactivities performed by each individual; it provided only a descriptionof either “Publish policies, procedures, and regulations in collegepublications,” or “Publish course descriptions in collegepublications.”-11-
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramThe following table summarizes the audit adjustment related to salariesand benefits for each fiscal year of the audit mountClaimed 762,592,5832,743,9852,792,272 - 2,743,985)(2,792,272) 24,383,387 - (24,383,387)The following table summarizes the audit adjustment related to salariesand benefits by reimbursable activity:Reimbursable tTransfer CentersStandards of ScholarshipCurriculumDegrees and CertificatesOpen Courses 12,579,5378,080,8131,657,433227,2301,838,374 - 374)Total 24,383,387 - (24,383,387)Section IV of the parameters and guidelines states, in part:To be eligible for mandated cost reimbursement for any fiscal year, onlyactual costs may be claimed. Actual costs are those costs actuallyincurred to implement the mandated activities. Actual costs must betraceable to and supported by source documents that show the validityof such costs, when they were incurred, and their relationship to thereimbursable activities. A source document is a document created at ornear the same time the actual costs was incurred for the event or activityin question. Source documents may include, but are not limited to,employee time records or time logs, sign-in sheets, invoices, andreceipts.Evidence corroborating the source documents may include, but is notlimited to, worksheets, cost allocation reports (system generated),purchase orders, contracts, agendas, and declarations. Declarations mustinclude a certification or declaration stating, “I certify (or declare) underpenalty of perjury under the laws of the State of California that theforegoing is true and correct,” and must further comply with therequirements of Code of Civil Procedure section 2015.5. Evidencecorroborating the source documents may include data relevant to thereimbursable activities otherwise in compliance with local, state, andfederal government requirements. However, corroborating documentscannot be substituted for source documents.-12-
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramRecommendationCommencing in FY 2014-15, the district elected to receive block grantfunding pursuant to GC section 17581.7, in lieu of filing annual mandatedcost claims. If the district chooses to opt out of receiving block grantfunding, we recommend that the district:FINDING 2—Overstated materialsand supplies costs Follow the mandated program claiming instructions and parametersand guidelines when preparing its reimbursement claims; and Ensure that claimed costs include only eligible costs, are based onactual costs, and are supported by contemporaneous sourcedocumentation.The district claimed 586,017 in materials and supplies costs for the auditperiod. The district claimed costs for five of the seven reimbursableactivities: transfer centers, standards of scholarship, curriculum, degreesand certificates, and open courses. We found that 269,396 is allowableand 316,621 is unallowable. The costs are unallowable because thedistrict did not adequately support its claimed costs. In addition, the districtclaimed unsupported publishing costs and non-reimbursable printing costsunder certain activities.The following table summarizes the materials and supplies auditadjustment for each fiscal year of the audit Adjustment 008-092009-102010-112011-12 0,77418,06549,884 36,89530,42253,47159,92752,59929,6436,439-Total 586,017 ,200)(66,963)4,86318,869(11,626)(49,884) (316,621)The following table summarizes the materials and supplies auditadjustment by reimbursable activity:AmountClaimedReimbursable ActivityAmountAllowableAuditAdjustmentTransfer CentersStandards of ScholarshipCurriculumDegrees and CertificatesOpen Courses 63,58322,029187,153144,370168,882 3602,789266,247 (63,583)(21,669)(187,153)(141,581)97,365Total 586,017 269,396 (316,621)-13-
Victor Valley Community College DistrictMinimum Conditions for State Aid ProgramTransfer CentersThe district claimed 63,583 in materials and supplies costs related totransfer centers. We found that the entire amount is unallowable. The costsare unallowable because the district claimed non-reimbursable printingcosts for pages related to
Victor Valley Community College District 18422 Bear Valley Road Victorville, CA 92395 Dear Dr. Walden: The State Controller's Office (SCO) audited the costs claimed by Victor Valley Community College District for the legislatively mandated Minimum Conditions for State Aid Program for the period of July 1, 2001, through June 30, 2012.
