School Facility Program UpdateCounty School Facilities ConsortiumSeptember 25, 2012

Presenters:Lisa Silverman, Executive OfficerRick Asbell, Chief of Fiscal Services

“To enrich the lives of California’s school children as stewards of the taxpayers’ commitment to education.”

Today’s Discussion

• COE Apportionments & Funding• Priority Funding Round• Financial Hardship Review (Process Improvements)• Financial Hardship Re-Reviews• Audit Subcommittee

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COE Apportionments

$30.9 Billion

$1.0 Billion

DistrictsCOEs

Total Amount Apportioned For the School Facility Program: $31.9 Billion

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COE Funding by Region

$55.6 million*78 CRs built26 CRs modernized**

$26.0 million*60 CRs built11 CRs modernized**

$124.8 million*174 CRs built31 CRs modernized**

$49.6 million*72 CRs built3 CRs modernized**

$30.0 million*97 CRs built66 CRs modernized**

$54.8 million*108 CRs built36 CRs modernized**

$50.7 million*111 CRs built33 CRs modernized**

$127.0 million*247 CRs built120 CRs modernized**

$98.0 million*257 CRs built10 CRs modernized**

$121.4 million*263 CRs built69 CRs modernized**

$238.8 million*556 CRs built11 CRs modernized**

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TotalsFunding $976.7 mCRs built 2,023CRs modernized 416

The classrooms (CRs) modernized represent the funding used for the facilities, which may not be on the classrooms but on other facility updates.

**

Dollar figures represent all program totals.

*

Priority Funding: Background

State Allocation Board (SAB) approved regulations at the May 25, 2011 SAB Meeting to expedite funding for projects that are ready to begin construction.

• Two certification filing periods per year• January and July

• Each period has a 30-day certification submittal window• Projects on the Unfunded approvals list can participate• At the June 27, 2012 SAB Meeting, new regulatory

amendments to the Priority Funding Process were approved• Regulations are currently in the Public Comment Period with

an end date of October 22, 2012

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2013 Priority Funding Round Timelines

Once Office of Administrative Law approves regulations:

• First Filing Period:• Request Filing Period from 1/9/13 to 2/7/13• Eligible for Apportionments until 6/30/13

• Second Filing Period:• Request Filing Period from 5/8/13 to 6/6/13• Eligible for Apportionments from 7/1/13 to 12/31/13

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Priority Funding: What to Expect

Approximately $1 billion in remaining Bond Authority. In order to get these funds out into the community:

• Sale of General Obligation Bonds by the State Treasurer’s Office• Typically occurs in the Spring and in the Fall• Cash available for apportionment• September 25, 2012 Bond Sale

• Apportionment made by the State Allocation Board • Valid Priority Funding certification• Funded according to original received date

• Fund Release Authorization (Form SAB 50-05) must be submitted to the OPSC within 90 days

• If a valid form is not submitted, the project will be placed at the bottom of the Unfunded List

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Priority Funding: Current Round

$606.6 Million97 Projects

$31.0 million22 Projects

DistrictsCOEs

Total Received: $637.6 Million, 119 Projects

Filing Period Began: July 11, 2012Filing Period Ended: August 9, 2012Certifications Expire: January 8, 2013

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Financial Hardship Review – Process Improvements

Streamline the Financial Hardship (FH) Review process • Created FH Checklists to standardized documentation

requested in a FH review• Two-tier FH review process

• Phase 1 – Review of qualifying criteria for FH status (COEs automatically qualify)

• Phase 2 – Review of available funds• Reminder Letters are sent to District/COE of upcoming

deadlines for document submittal• On-Site and Conference Call outreach for District/COE is

available

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Financial Hardship Review Statistics

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2009 2009*** 2010 2010*** 2011 2011*** 2011** 2011*0

50

100

150

200

250

300

350

263253

291

237

9878

19 21

Average Review Time for Financial Hardship Packages (in days)

Total FH Reviews*** COE FH Review Times Only** FH Re-Reviews Only* COE FH Re-Reviews Only

Financial Hardship Re-ReviewAny SFP project on an unfunded list for more than 180 days must have a review conducted of a COE’s financial records to determine if additional COE funds are available as contribution to their project.

• For the September 2012 Bond Sale, the OPSC will send letters to COEs who submitted a Certification Letter to participate in Priority in Funding• Letter will ask for Financial Information based on the potential funds will be

made available from the Bond Sale to the School Facility Program • FH Re-Review must be completed prior to a project receiving an

apportionment.• FH Re-Review is only a review for additional funds. • The COE does not have to re-establish their FH status.• The OPSC will contact the COE for all documents required in an Unfunded FH

Re-Review.• After a Re-Review is complete and the COE concurs with the finding they will

be eligible to receive an apportionment.

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Financial Hardship Webinars

Webinars to assist FH Districts and COEs• May 2011

• Overview of the FH review process• Walk through of the Phase 1 and Phase 2 review process• Discussed key documents needed: FH project worksheet, FH

Fund Worksheets, and a worksheet breaking out RDA funds received by individual area

• October 2011 • Background on FH Re-Reviews and Priority in Funding Rounds• Documents needed• Review of Available Funds• FH Re-Review Findings Letter

• Both webinars are available on the OPSC website.

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Financial Hardship TeamFor Assistance contact:

Steve Inman, Supervisor • 916-375-4576 or steve.inman@dgs.ca.gov

Maria Gamino• 916-375-2031 or maria.gamino@dgs.ca.gov

John Leininger• 916-375-4610 or john.leininger@dgs.ca.gov

Jacqueline Shepherd• 916-376-5119 or jacqueline.shepherd@dgs.ca.gov

Audrey Sims-Davis• 916-376-3989 or audrey.simsdavis@dgs.ca.gov

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Audit Subcommittee

Last meeting on August 27, 2012 to discuss:• Status Update from the Audit Work Group (AWG)

• Review proposed process for SFP Review and Audits• Shorten Time to Closeout a Project• Certifications are Verified sooner• Ensure Increased Accountability

• Seek Input and Direction from the Audit Subcommittee

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• Shorten the Lifecycle of a Project—(Application submittal to Closeout)• Propose Regulation change to commence Final Review of a project from 2

years to 1 year• Explore a new “Trigger” for the Completion of a Project

• Verify Certifications Earlier in the Lifecycle of a Project• Consolidated Incremental Compliance Check at 18 months

• Verify Certain Application for Funding Certifications (SAB Form 50-04)• Verify Certain Fund Release Authorization Certifications (SAB Form 50-05) • Substantial Progress Check

• Ensure Increased Accountability• Use of External Entity to Perform Audits

• Yearly 50-06 Reports would be verified for internal controls and sampling of expenditures on 50-06

• Additional Audit Scope to be determined by Education Audit Appeals Panel Audit Guide/Regulations

Review of Proposed Process

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Review of Proposed Process

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Proposed Process for SFP Review and AuditsConsolidated Incremental Compliance Check

Assumptions:Consolidated Incremental Compliance Check occurs 18 months after Fund Release (will require statute and regulation change).First 50-06 Report would be due 18 months after Fund Release and subsequent 50-06 Reports would be due each year thereafter (will require statute and regulation change).An External Audit will be triggered by the first 50-06 Report and subsequent 50-06 Reports but not the Final 50-06 Report (will require statute and regulation change) .

SFP Expenditure Review (OPSC)Incremental Compliance and Substantial Progress Checks(OPSC) Adjudicating Authority

50-04 Submittal

0 to 18 Months18 Months to Year 6

Consolidated Incremental Compliance Check*Performed 18 months after Fund Release*First 50-06 Report due 18 months after Fund Release

Verification would include: *Appropriate 50-04 Certifications*Appropriate 50-05 Certifications*Substantial Progress

First 50-06 triggers an External Audit

District Requests Fund Release

(within 90 days of Apportionment)

(Day 0)

Trigger for Completion of Project (TBD):* Requirement to submit Final Expenditure Report* Project is added to Review Workload

(Propose a change to Regulation that review must commence within 1 year of being added to Review Workload)

Review Begins

OPSC reviews final 50-06 report (OPSC will not duplicate the work of External Entity for previous 50-06 reports)

(50-04 and 50-05 Certifications that could not be verified due to lack of information from district in earlier check will be verified here )

(50-04 and 50-05 Certifications that can only be checked at close out may be checked here)

Review is Completed and District Advised of Findings(Normally completed within 6 months unless District disagrees with Findings—may result in an appeal before the SAB)

State Allocation Board

Submittal of additional 50-06 Reports by the District

Additional 50-06 Reports to be verified through an External Audit (except final 50-06)

External Audit (External Entity)

The External Audit’s scope would be defined by the Education Audit Appeals Panel Audit Guide/Regulations. Scope could include review of internal controls and sampling of expenditures on submitted 50-06.

Education Audit Appeals Panel

State Agency Full Scope Audit may be requested by the State

Allocation Board or Education Audit Appeals Panel anytime for a

District or one of it’s projects.

Are there preliminary findings that require repayment of funds?

OPSC will continue to verify the following at time of Fund Release Request :

*Construction Contracts*Labor Compliance

1 & 2

3 & 4

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District agrees with preliminary

findings?No No

Yes

Final Report is published by

External Entity Yes

Audit Subcommittee referred the following issues back to the AWG for further discussion:

• 12 months vs. 18 months for Incremental Compliance Check• Identify “Important” 50-04 and 50-05 Certifications that would be

verified by OPSC• “Trigger” for the Completion of a Project• External Audits

• Evaluate the Use of Proposition 39 Audits

Next Steps

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Questions?

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