Cerritos Community College District (district) was established on June 10, 1955 and consists of one community college campus. The district's mission is to provide high-quality, academic instruction in a curriculum respective of the diversity of its student body. The district provides an education in which students pursue a variety of educational goals, such as attaining an associate's degree, vocational degree or certificate, enhancing job skills, or transferring to a four-year university.
Numerous concerns have been voiced by members of the Cerritos College community about the administration of various programs and activities. To address these concerns, we reviewed each of the various programs or activities in question. We examined the district's Enterprise Fund (enterprise), with much of the focus on the management of the bookstore. In addition, we reviewed the Cerritos College Foundation's (foundation) conflict-of-interest policies, its relationship with the district, and its award of contracts for services. We also investigated an alleged lack of budgetary control over a $1 million dollar amount in the fiscal year 1994-95 line item for the president's office. Furthermore, we reviewed the district's policies for shared governance to determine if they follow the Chancellor's Office guidelines. We also reviewed the district's compliance with Section 58050 of the California Code of Regulations in claiming general state apportionment. In addition, we investigated the district's use of basic skills, matriculation, and Title III grant funds.
As we discuss more fully in the Appendix to this report, for many of the activities we reviewed, we found no evidence that Cerritos College had improperly managed the activity. For example, the $1 million item that was allegedly included in the president's budget was actually $675,000 and was included in a budget area designated for planning priorities. Additionally, this amount was subsequently allocated for the support of other campus activities, including computer labs for Instructional Services, and to pay hourly employees filling vacancies in Student Services and Business Services. Similarly, we found that the district generally followed the Chancellor's Office guidelines outlining the concepts of shared governance. Furthermore, after reviewing a previous audit conducted of the district's process for claiming its state apportionment, we again found no evidence of impropriety. Finally, we concluded that the funds for matriculation, basic skills, and the Title III grant were also used appropriately.
However, we did find certain weaknesses related to the district's enterprise, its college foundation, and the filing of annual statements of economic interest, as outlined below:
· The district's enterprise has cash flow problems stemming mainly from the way the bookstore is operated. For example, the bookstore ineffectively manages thousands of dollars owed from book publishers. In addition, the bookstore has compounded its cash flow problems with several questionable donations and sponsorships.
· The bookstore's management of its book buyback process is ineffective and results in reduced profits and higher book costs for students.
· The foundation's structure allows the president of the college to exert greater influence over foundation operations than presidents of other community colleges that we surveyed.
· The foundation does not adhere to its own bylaws for electing new directors to the board. Rather than electing new directors by formal vote, the foundation uses an informal method of selection.
· Contrary to state regulations and its bylaws, the foundation has not reimbursed the district for the payroll costs of district personnel that perform foundation work.
· Some employees are required by the district's conflict-of-interest code to file annual statements of economic interest; however, better disclosure is needed from individuals required to file these statements in reporting outside income and business interests.
To address the weaknesses in the operation of the bookstore, the district should take the following steps:
· Reduce the amounts paid to book publishers by the amount of receivables (debit and credit memos) owed from those publishers.
· Obtain future book requisitions from instructors during the prior semester to better forecast the bookstore's needs for new books and to better manage its used book buybacks.
To more closely mirror other college auxiliary organizations and adhere to its own procedures and state regulations, the foundation should take the following steps:
· Revise the bylaws so that no one person, including the college president, has the authority to select directors without a vote or make the final decision over foundation activities.
· Follow its policies regarding admitting new directors to the board. As specified in the foundation bylaws, the membership committee should submit names of potential directors to the full board for a vote of approval.
· Repay the district for payroll costs incurred by the district during fiscal years 1994-95 and 1995-96 as a result of district personnel performing work for the foundation. In addition, the district should maintain accurate records of all work performed by district personnel on foundation business and periodically seek reimbursement from the foundation.
To guard against potential conflicts, the district should take the following step:
· Provide adequate instructions to those individuals holding district positions designated as required to file annual statements of economic interest on how to complete these statements.
Our report makes 15 recommendations that we feel will improve operations of the district's enterprise and foundation, and will provide better disclosure of economic interests by its designated employees. In its response, the district agrees with all but four of our recommendations. Specifically, the district disagrees with two of our recommendations regarding its use of district employees on foundation activities without seeking reimbursement. Also, the district does not agree that the bylaws for the operation of its foundation should be changed so that no one person, including the president, has the authority to select directors without a vote or make the final decision over foundation activities. Finally, the district disagrees with our recommendation that the foundation's board approve and monitor all foundation events and projects. The district contends that the event in question was really a college event and not a foundation event.