Report 2017-104 Recommendations

When an audit is completed and a report is issued, auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them. Below, is a listing of each recommendation the State Auditor made in the report referenced and a link to the most recent response from the auditee addressing their progress in implementing the recommendation and the State Auditor's assessment of auditee's response based on our review of the supporting documentation.

Recommendations in Report 2017-104: Montebello Unified School District: County Superintendent Intervention Is Necessary to Address Its Weak Financial Management and Governance (Release Date: November 2017)

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Recommendations to Los Angeles County Office of Education
Number Recommendation Status
1

To ensure that Montebello takes the steps necessary to prevent state intervention and regain its positive financial certification, the county superintendent should direct Montebello to submit a corrective action plan to address the issues identified in this report including balancing its budget, amending and adhering to its hiring procedures, and establishing adequate safeguards to ensure that policies related to bond proceeds, conflicts of interest, and the approval of expenditures are implemented and followed.

2

To ensure that Montebello takes the steps necessary to prevent state intervention and regain its positive financial certification, the county superintendent should assist Montebello in developing a plan to justify its workforce size and cost in terms of its current and projected enrollment, including evaluating the necessity of current staff levels and personnel costs.

3

To ensure that Montebello takes the steps necessary to prevent state intervention and regain its positive financial certification, the county superintendent should evaluate the necessity of executive positions and adjust executives' salaries based on an analysis of the number and cost of executives in comparable districts.

4

To ensure that Montebello takes the steps necessary to prevent state intervention and regain its positive financial certification, the county superintendent should ensure that Montebello implements all of the recommendations detailed below (in the report).

Recommendations to Los Angeles Regional Adult Education Consortium
Number Recommendation Status
31

To ensure that state adult education funds are used in the most efficient and effective manner, the consortium should, within one year, complete an assessment of Montebello's ability to meet the requirements of its adult education plan to determine whether its use of state funds has been effective. If Montebello is found to be consistently ineffective, the consortium should immediately recalculate the adult program's fund allocation for the future.

32

To ensure that state adult education funds are used in the most efficient and effective manner, the consortium should, within one year, develop policies and procedures to ensure the proper collection and reporting of enrollment, attendance, and expenditure data by consortium members. Periodically review enrollment, attendance, and expenditure data to ensure their accuracy.

Recommendations to Montebello Unified School District
Number Recommendation Status
5

To improve its current financial condition and ensure future viability, Montebello should within 60 days, revise its fiscal stabilization plan and make the necessary cuts to fund its ongoing commitments.

6

To improve its current financial condition and ensure future viability, Montebello should create a robust budgeting process within 90 days using best practices of the Government Finance Officers Association to ensure Montebello's ability to meet its priorities while maintaining the required level of reserves that buffers the district from drastic cuts in times of economic instability.

7

To improve its current financial condition and ensure future viability, Montebello should within 90 days, implement an effective budget monitoring process with regular budget-to-actual comparisons. This process should include safeguards against spending in excess of budgeted expenditures and require advance board approval of such spending before it occurs. For example, Montebello should require that the budget manager perform monthly reviews of budget-to-actual figures and provide detailed explanations to the board for any variances.

8

To ensure that Montebello hires the most qualified executive and management staff, Montebello should immediately adhere to its policies for hiring classified employees, including screening candidates to ensure that they meet the minimum qualifications. Montebello should also hold provisional employees to the same standards for minimum
qualifications as its policy requires.

9

To ensure that Montebello hires qualified classified employees, the personnel commission should, within 90 days, revise its policies to require the classified director to provide it with the education and work experience of any candidates on eligibility lists for high-ranking positions. It should also require the director of the personnel commission—the classified director—to provide it with a list of all provisional appointments, including information on how those employees meet the minimum qualifications.

10

To ensure that it does not violate state law, Montebello should immediately adhere to its policies and ensure that provisional employees do not work more than the legal maximum number of days of service.

11

To ensure that Montebello hires executives who meet the minimum qualifications, it should verify that such individuals hold both an administrative and teaching credential before appointing them to a position of superintendent or assistant superintendent.

12

In order to rebuild trust with its community, Montebello should adhere to its policies for hiring certificated personnel and fill any vacant positions for executives through a competitive hiring process, including advertising the positions, screening to ensure that minimum qualifications are met, and interviewing to ensure that it hires and retains the most qualified and talented leaders.

13

To ensure that Montebello creates employee positions only when necessary, it should establish a policy within 30 days that requires a justification for why the district is creating a position. Additionally, in order to maintain transparency when creating new positions, Montebello should immediately begin to document its justifications.

14

To ensure that Montebello hires qualified certificated and classified employees, within 90 days the board should revise its policies to require the superintendent or his or her designee to provide information to the board about recruitments for high-ranking employees. The board should consider, at a minimum, the following information when approving appointments:
- The number of initial applicants.
- The number of candidates who passed the screening and interviewing steps.
- The education and work experience of the final candidate recommended by the superintendent or designee.

15

To ensure that Montebello is making hiring decisions free of bias or favoritism, within 90 days it should strengthen its hiring policies related to nepotism and conflicts of interest for classified and certificated personnel to include the following: establishing restrictions on immediate family members being involved in the screening and interviewing processes and definitions of what types of personal relationships fall under the nepotism policy, which work relationships the nepotism policy applies to, and what factors to consider when evaluating the potential impact of a personal relationship.

16

To ensure that bond funds are spent appropriately, the district should immediately ensure that its bond committee meets at least once per year.

17

To ensure that bond funds are spent appropriately, the district should immediately ensure that the bond committee member positions are filled.

18

To ensure that bond funds are spent appropriately, the district should immediately require that its contracted project manager provides detailed bond expenditure reports for all relevant bonds to the bond committee at least biannually.

19

To ensure that bond funds are spent appropriately, the district should immediately ensure that its contracted auditor delivers a timely bond audit and that Montebello addresses the auditor's concerns and recommendations.

20

To ensure that staff who make or influence district decisions are free from perceived or actual conflicts of interest, Montebello should immediately identify all positions whose incumbents make or influence district decisions and designate those not already identified in its conflict-of-interest policy.

21

To ensure that staff who make or influence district decisions are free from perceived or actual conflicts of interest, Montebello should immediately require designated employees to file statements of economic interests and adhere to its conflict-of-interest policy.

22

To ensure that staff who make or influence district decisions are free from perceived or actual conflicts of interest, Montebello should within 60 days, expand its policy to require all employees approving contracts or expenditures to be designated and file a statement of economic interests.

23

To ensure that Montebello spends its funds for allowable and reasonable purposes, it should require employees whose salaries are funded by voter-approved bond proceeds to fill out detailed timesheets to demonstrate that they work on bond-related activities. Bond proceeds should only be used to pay the portion of the salary relating to bond-funded activities that is supported by the timesheet.

24

To ensure that Montebello spends its funds for allowable and reasonable purposes, it should implement an inventory tracking system that allows it to know where its equipment is located. Montebello should also periodically review its inventory listing to ensure that equipment is being properly used.

25

To ensure that Montebello spends its funds for allowable and reasonable purposes, it should close the adult education fund's revolving fund account.

26

To ensure that Montebello spends its funds for allowable and reasonable purposes, it should require all employees to obtain approval for overtime before performing any overtime work and to submit an explanation of tasks they completed during their overtime work when they
submit their overtime timesheet for payment.

27

To ensure that Montebello spends its funds for allowable and reasonable purposes, it should follow the procedures in its purchase card manual including requiring employees to submit receipts for all purchases made with the card. If in violation of the manual, suspend or cancel the employee's card privileges and require employees to reimburse the district for improper purchases.

28

To ensure that state adult education expenditures are reasonable and justified, the board should within one year develop a policy that requires adult education classes to meet
specific minimum thresholds for class size. If classes do not meet these thresholds, the adult program must cancel the class

29

To ensure that state adult education expenditures are reasonable and justified, the board should within one year require the adult program to annually report to the consortium
and to the board on the accurate number of students in each class, number of hours taught, and cost of the class per student.

30

To improve the cash collection process, Montebello should ensure that the adult program has adequate safeguards in place to minimize the risk of misuse of funds. It should specifically, within 60 days, implement policies and procedures that align with best practices for cash collection and cash deposits that include robust safeguards such as ensuring separation of duties in the cash collection process.



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