Report 2017-116 Recommendation 9 Responses

Report 2017-116: Community Child Care Council of Santa Clara County: Because It Disadvantaged Some Families and Misused State Funds, It Could Benefit From Increased Monitoring by the California Department of Education (Release Date: April 2018)

Recommendation #9 To: Education, Department of

In order to rectify 4Cs' inappropriate use of state funding, Education should, by October 2018, recalculate the amount of 4Cs' reimbursable costs based on the unallowable costs we identified and recover any funds that should be repaid.

1-Year Agency Response

Education conducted a performance audit of the 4Cs to assess the agency's compliance with applicable child care and development program laws, regulations, and contract/grant requirements during the period July 1, 2015 through June 30, 2016. Education issued its final report on October 31, 2018, which identified $1,296,454 in questioned costs and 674 days in overstated child development attendance. The CSA's audit identified $11,216 in additional questioned costs for fiscal years 2014-15, 2015-16, and 2016-17.

Education billed the 4Cs based on the recalculated final contract earnings for each child development contract administered by the agency. The recalculated final contract earnings included results from the annual financial and compliance audit, the CSA's audit, and Education's audit. On November 29, 2019, the 4Cs appealed the amounts billed for the 2015-16 fiscal year to the Office of Administrative Hearings.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

To clarify, the date of 4Cs' appeal that Education references is November 29, 2018.

6-Month Agency Response

Education issued the draft audit report. 4Cs submitted a response, which included a voluminous amount of new documentation. Education is performing a detailed, objective review of the new documentation, and anticipates issuing a final report at the end of October 2018. Once the final report is issued, Education will recalculate the amount of 4C's reimbursable costs resulting from the CSA and Education's audits and take appropriate action.

California State Auditor's Assessment of 6-Month Status: Pending

Education issued its final audit report on October 31, 2018.

60-Day Agency Response

Education's audit of 4Cs is still in progress. Upon issuance of the final audit report, Education will recalculate the amount of 4C's reimbursable costs resulting from the CSA and Education's audits and take appropriate action. To recalculate the 4Cs' reimbursable costs related to the CSA's findings in this report, Education will require a breakdown of the unallowable costs by contract and fiscal year from the CSA.

California State Auditor's Assessment of 60-Day Status: Pending

We subsequently provided Education with the list of unallowable costs referenced on page 22 of our report.

All Recommendations in 2017-116

Agency responses received are posted verbatim.