Report 97501 Summary - November 1997

California Community Colleges:

The Chancellor's Office Should Collect Additional Funds for Questionable Training Agreements

The Chancellor's Office allocates general apportionment and other state funds appropriated by the Legislature to the State's 71 community college districts (districts). In May 1996, the Bureau of State Audits (bureau) concluded that some districts inappropriately received millions of dollars in additional state support by claiming general apportionment funding through training agreements for instructional hours provided by state, local, and private entities. We recommended that the Chancellor's Office calculate and recover funds from three of the four districts in our May 1996 report where the instructional hours claimed did not satisfy the requirements of state regulations. We also recommended the Chancellor's Office recover state funds from any other districts using similar agreements to claim state funds if the instructional hours under those agreements did not satisfy state regulations.

Because of the significance of the findings and the recommendations in our May 1996 audit report, the bureau determined a follow-up audit was warranted. Our current audit examines the actions the Chancellor's Office has taken during the past 16 months to implement the original recommendations.

Overall, the Chancellor's Office has been slow to implement the recommendations made in our May 1996 report. It could potentially recover as much as $1.8 million more for ineligible claims identified in the audit. For example, although the Chancellor's Office has recovered $444,354 in apportionment funds and $25,715 in lottery revenue from San Joaquin Delta Community College District (Delta) for fiscal years 1994-95 and 1995-96, our analysis shows it should recover an additional $48,295.

In another example, although we believe the liability of San Bernardino Community College District (San Bernardino) to the State for fiscal years 1994-95 and 1995-96 could be as much as $704,189 for general apportionment and lottery funds, the Chancellor's Office has concluded that the district does not owe the State any money. The Chancellor's Office reached this conclusion despite our opinion and that of San Bernardino's independent Certified Public Accountant to the contrary.

Furthermore, while the Chancellor's Office sent a letter to Monterey Peninsula Community College District (Monterey Peninsula) in June 1996 and met with representatives of the district in September 1996, it has not yet determined the district's liability to the State. Even though Monterey Peninsula could owe the State as much as $1,095,894 for fiscal years 1994-95 and 1995-96, the Chancellor's Office delayed following up with the district until it resolved Delta's audit issues in January 1997.

On the other hand, we reviewed the current practices of the California Department of Corrections (CDC) and the California Department of Youth Authority (Youth Authority). In our May 1996 report, we found these agencies received $853,000 for invalid agreements with Delta. We determined that these two state agencies no longer obtain goods and services in return for entering into training agreements. In fact, neither the CDC nor the Youth Authority currently have training agreements with any community college district.