MEASURE G PERFORMANCE AUDIT PERIOD ENDED JUNE 30, 2013

Transcription

1 MEASURE G PERFORMANCE AUDIT PERIOD ENDED JUNE 30, 2013 TOTAL SCHOOL SOLUTIONS 4751 MANGELS BOULEVARD FAIRFIELD, CA 94534

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3 Bakersfield City School District BOARD OF EDUCATION June 30, 2013 Lillian Tafoya Andrae Gonzales Pam Baugher Bill McDougle Dr. Fred L. Haynes President President Pro Tem Clerk Clerk Pro Tem Member CITIZENS OVERSIGHT COMMITTEE Edgar Pankey, Chairperson ADMINISTRATION Dr. Robert J. Arias, Superintendent Steve McClain, Chief Business Official

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5 TABLE OF CONTENTS INTRODUCTION...1 EXECUTIVE SUMMARY...2 INDEPENDENT PERFORMANCE AUDITOR S REPORT...5 COMPLIANCE WITH BALLOT LANGUAGE...6 DISTRICT FACILITIES PROGRAM FINANCIAL REPORT...7 COMPLIANCE WITH STATE LAW, GUIDELINES, AND DISTRICT POLICY...13 CITIZENS BOND OVERSIGHT COMMITTEE...19 STATE SCHOOL FACILITY PROGRAM...22 PROJECT/CONSTRUCTION MANAGEMENT...32 DESIGN AND CONSTRUCTION COSTS AND SCHEDULES...41 MEASURE G EXPENDITURES REPORT...46 CHANGE ORDERS, CLAIM PROCEDURES, AND RESULTS...49 PAYMENT PROCEDURES...63 EFFECTIVENESS OF THE PUBLIC OUTREACH PROGRAM AND COMMUNICATION CHANNELS AMONG ALL STAKEHOLDERS WITHIN THE BOND PROGRAM...67 FACILITIES PROGRAM HISTORY/STATUS...70 FINANCIAL INFORMATION...74 APPENDIX A...77 BOND MEASURE G RESOLUTION AND TEXT...79 APPENDIX B...87 CITIZENS OVERSIGHT COMMITTEE...89

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7 INTRODUCTION On November 7, 2006, the Bakersfield City School District (the District ) submitted for voter approval Measure G, a bond measure to authorize the sale of $100 million in bonds to improve school facilities. This measure was submitted to voters under the terms and conditions of Proposition 39 (Article XIII of the California State Constitution), which requires a 55 percent affirmative vote for passage. Measure G passed with 63.8 percent vote. Because the bond measure was passed pursuant to Proposition 39, the District was required to establish a citizens oversight committee and conduct two independent audits. The first audit is a financial audit similar to a district s annual financial audit. The second audit is a performance audit, which evaluates the effectiveness, economy and efficiencies of the bond facilities program. The District engaged Total School Solutions (TSS) to conduct the annual independent performance audit for Measure G and report findings to the Board of Education and the independent Citizens Bond Oversight Committee. This report is the annual performance audit of the Bakersfield City School District s bond-funded facilities program from July 1, 2012 through June 30, Besides ensuring that the District uses bond proceeds in conformance with the provisions listed in the Measure G ballot language, the scope of this examination includes a review of design and construction schedules and cost budgets; change orders and claim procedures; compliance with law, District policies, and guidelines on facilities and procurement; and the effectiveness of the public outreach program and communication channels among the stakeholders; and other facilities-related areas. In accordance with the California State Constitution, the District intends to have a performance audit completed annually until all Measure G funds have been expended. These reports are designed to meet the requirements of Article XIII of the California State Constitution; inform the community of the appropriate use of funds generated through the sale of bonds authorized by Measure G; and help the District improve its overall bond program. Page 1

8 EXECUTIVE SUMMARY This performance audit, conducted by Total School Solutions (TSS), is the seventh annual audit of the $100 million Measure G bond program. TSS, in conducting the audit, reviewed numerous documents produced by the District staff and consultants and interviewed persons involved in the bond program. Representations made by the District staff and consultants were used, where appropriate, to make assessments and formalize conclusions, which are documented in this report. Each audit component was evaluated separately and collectively based on the materiality of each activity and its impact on the total bond program. Since passage of the $100 million Measure G bond on November 7, 2006, Measure G expenditures have been the following: Fiscal Year Annual Cumulative Percent of Authorization $322,735 $322, % $4,739,542 $5,062, % $6,037,474 $11,099, % $13,861,322 $24,961, % $9,667,193 $34,628, % $1,111,847 $35,740, % $24,573,436 $60,313, % As of June 30, 2013, $44.1 million remained unspent in the Building Fund (bond proceeds) and Other Capital Outlay Funds (state funding, developer fees, deferred maintenance, special reserve), and $35.3 million of Measure G bonds were issued on July 12, State funds received for Measure G projects, out of $57 million anticipated, currently total $26.7 million. As of June 30, 2013, the District had two new construction applications (Douglas K. Fletcher Elementary and Paul L. Cato Middle) submitted and approved for funding under the State School Facility Program, totaling $26.4 million, which brings the total approved State funding to $53.1 million. The District manages its facilities program in a cost effective manner, using in-house personnel (four full-time equivalent positions), augmented with additional services by consultants as needed. The District internally manages modernization and miscellaneous projects utilizing the traditional general contractor approach to construction. An outside firm is managing the construction of the new Douglas K. Fletcher Elementary and Paul L. Cato Middle schools, utilizing a multi-prime approach to construction. This approach should result in project/construction management costs below industry standards. Page 2

9 A seven-member Citizens Bond Oversight Committee (CBOC) was appointed by the Board on August 22, 2006, to provide oversight of the Measure G bond program, as required by law. During , the Committee held four meetings to review facilities projects. A CBOC website, as required by law, exists, and pertinent information is provided, including bylaws, meeting agendas/minutes, facilities project updates and financial/performance audits. The Committee presented its Annual Report, at the January 22, 2013 Board of Education meeting. As of June 30, 2013, the status of Measure G projects is shown in the following table: MEASURE G SCOPE OF WORK Status June 30, 2013 Projects/Schools Total Completed Under Planning Future Number Construction New Elementary School New Middle School 1 1 Modernization Replacement of Modular Buildings Security Fencing Security Doors Security Cameras As of June 30, 2013, the new Douglas K. Fletcher Elementary School and Paul L. Cato Middle School were under construction and scheduled for completion in March The modernization of six schools has been completed. A contract for the modernization of Compton Junior High School was awarded in May The Voorhies Elementary School modernization project was in design at year end. As noted in the above table, significant progress has been made in the replacement of modular buildings and security measures. The performance audit identified commendations to the District for various aspects of its facilities program, many of which were repeated from prior audit reports, such as keeping State eligibility current; maintaining readily accessed and current information on the CBOC website; cost-effective facilities management; updating sources and uses of funds; preparing expenditure reports and project status reports for all Measure G projects; maintaining well organized project files; good communication processes to keep the community and District stakeholders informed about Measure G. It should be noted that this work has been performed to meet the requirements of a performance audit in accordance with Article XIII of the Constitution of the State of California and the performance audit standards presented in the Generally Accepted Government Auditing Standards (GAGAS) which govern performance audit requirements. Further, TSS notes for the District s information the following new legislation that will be in effect for future performance audits. Page 3

10 On August 12, 2013, Governor Brown signed Senate Bill (SB) 581, effective January 1, 2014, relating to school bonds and accountability. SB 581 requires that the governing board of a school district or community college district provide its Citizens Oversight Committee with responses, within three months, to any finding, recommendation, or concern addressed in the annual independent performance audit and financial audit. Additionally, SB 581 requires that performance and financial audits be submitted to the Citizens Oversight Committee at the same time as they are submitted to the school district, which is not later than March 31 each year. On August 27, 2013, Governor Brown signed Senate Bill (SB) 584, effective January 1, 2015, requiring the State Controller, in consultation with the State Allocation Board (SAB), the Department of Finance, and the State Department of Education (CDE), to submit content to be included in the audit guide, Standards and Procedures for Audits of California K-12 Local Education Agencies, beginning in the fiscal year, that is related to specific content for financial and performance audits required for school facility projects. TSS concludes that the District operates its Measure G bond program effectively, efficiently and economically. Page 4

11 INDEPENDENT PERFORMANCE AUDITOR S REPORT We have conducted a performance audit of the Measure G bond program of the Bakersfield City School District, as of and for the fiscal year ended June 30, The information provided herein is the responsibility of the District s management. Total School Solutions responsibility is to express an opinion on the pertinent issues included in the scope of this performance audit. In our opinion, the Measure G funds are being expensed in accordance with Resolution No. XVIII passed by the Board of Education on July 25, It is also our opinion that, for the period ending June 30, 2013, the expenditures of the funds generated through Measure G bonds were only for the projects listed in Appendix A, Exhibit A in this report. We have also determined that the representations made to the public regarding the availability of State funds were true and reasonable and that management s estimates were reasonable and complied with the best practices in modernization and new construction of school facilities. This performance audit was conducted in accordance with the District s defined scope of a performance audit of the school facilities program. The District is also required to request and obtain an independent financial audit of Measure G bond funds. The financial auditor is responsible for evaluating conformance with generally accepted accounting principles and auditing standards pertinent to the financial statement. The financial auditor also evaluates and expresses an opinion on such matters as the District s internal controls, controls over financial reporting, and its compliance with laws and regulations. Our opinion and accompanying report should be read in conjunction with the independent financial auditor s report when considering the results of our performance audit and forming opinions about the District s bond program. In compliance with the requirements of GAGAS 8.30, the following unmodified GAGAS compliance statement is included in this section of the auditor s report to attest that the performance audit was performed in accordance with GAGAS: We conducted this performance audit in accordance with the generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. This report is intended solely for the use of the management, the Board of Education, and the independent Citizens Bond Oversight Committee of the Bakersfield City School District, which have taken responsibility for the sufficiency of the scope of work deemed appropriate for this performance audit. Total School Solutions November 15, 2013 Page 5

12 COMPLIANCE WITH BALLOT LANGUAGE On July 25, 2006, the Board of Education of the Bakersfield City School District approved the placement of a $100 million bond measure (Measure G) on the ballot with the adoption of Resolution No. XVIII. The full text of the ballot measure is presented in Appendix A. The following excerpt is abbreviated language of the bond proposition as it appears in the ballot: To improve the quality of education, shall Bakersfield City School District be authorized to upgrade restrooms and plumbing systems, renovate electrical systems to improve student access to computers/technology, acquire and construct classrooms and new schools to reduce overcrowding, make health, safety, and security improvements, improve facilities and qualify the District for up to $57,000,000 in State grants by issuing $100,000,000 in bonds within legal limits, with a citizens oversight committee, annual audits, and NO money for administrator salaries? Measure G, a Proposition 39 general obligation bond measure, required an affirmative vote of 55 percent of voters. The measure was passed by the voters on November 7, 2006, with 63.8 percent of the vote. As required by Proposition 39 and the State Constitution, the District established an independent citizens oversight committee to provide the requisite oversight and commissioned annual financial and performance audits. As of June 30, 2013, the District had issued $69,286,619 of bonds and expended $60,313,549 of bond funds, which includes issued bonds and interest earnings. Total Measure G expenditures as of June 30, 2013, are 60.3 percent of the $100 million authorization. All of the expenditures of Measure G funds were for projects within the scope of the ballot language. TSS finds the Bakersfield City School District in compliance with the Measure G ballot language. Page 6

13 DISTRICT FACILITIES PROGRAM FINANCIAL REPORT Objective The objective of this section is to report on the financial activities of the District s bond program, including analyses of the District s compliance with bond language and legal limitations regarding the issuance of bonds under the terms of the voter-approved measure and monitoring the bond proceeds after issuance. Scope and Methodology While the scope of the performance audit is limited to Measure G, it is useful to review the District s entire facilities program and other sources of funds to place Measure G into context. In addition to Measure G funds, the District has received funds from developer fees, the State School Facility Program, the State Deferred Maintenance Program, and various other sources. To meet the above objective, the following aspects of the bonds were analyzed and documented: Accounting of Bond Funds Capital Debt Measure G Bond Issuance July 12, 2012 Proposition 39 Bond Sale Limitations Qualified School Construction Bonds (QSCB) Risk Assessment The methodology applied included collecting data and evidence from various Districts and outside sources to compile financial data for each of the aspects of the bonds identified above, including: District Board Meeting Agendas and Minutes District Financial Audits District Bond Measure Audits District Unaudited Actuals Reports for District Financial Reports Background The District s Measure G bond program began with its passage on November 7, 2006, a $100 million Proposition 39 (55% vote) bond measure. Financial and performance audit reports prepared since passage document bond program activity. Page 7

14 Accounting of Bond Funds The table below presents the financial summary of the District s facilities program for fiscal years through As of June 30, 2013, the District s combined facilities funds had an ending balance of $44.1 million. For more detailed data by fund, refer to the Capital Outlay Funds tables for fiscal years through in the District Provided Information section in this report. Revenues and Expenditures for Facilities Program (Consolidation of Funds) Fiscal Year Ending June 30, 2009 Fiscal Year Ending June 30, 2010 Fiscal Year Ending June 30, 2011 Fiscal Year Ending June 30, 2012 Fiscal Year Ending June 30, 2013 Beginning Balance $71,533,110 $65,311,476 $53,050,967 $43,268,099 $40,943,727 Revenues 4,016,593 4,036,194 5,222,883 11,907,964 10,159,081 Expenditures 14,209,598 17,251,467 15,005,751 14,232,336 40,232,542 Sources/Transfers 3,971, , ,196,619 Uses ,660 Net Change (6,221,634) (12,260,509) (9,782,868) (2,324,372) 3,139,498 Ending Balance $65,311,476 $53,050,967 $43,268,099 $40,943,727 $44,083,225 The Building Fund (Fund 21) is used to account for the District s Measure G bonds as well as funds from previous bond issues and other sources such as sale of land. The cash flows for the Building Fund since the passage of Measure G appear in the table below. Building Fund Revenues and Expenditures for Building Fund Fiscal Year Ending June 30, 2009 Fiscal Year Ending June 30, 2010 Fiscal Year Ending June 30, 2011 Fiscal Year Ending June 30, 2012 Fiscal Year Ending June 30, 2013 Beginning Balance $33,339,696 $27,335,124 $13,294,276 $3,626,553 2,069,935 Revenues 891, ,606 82,600 24,505 16,445 Expenditures 6,896,520 14,343,454 9,750,323 1,581,123 23,968,563 Sources/Transfers ,196,619 1 Uses ,660 2 Net Change ($6,004,572) ($14,040,848) (9,667,723) (1,556,618) 9,260,841 Ending Balance $27,335,124 $13,294,276 $3,626,553 $2,069,935 $11,330,776 1 Sale of Measure G bonds, 2012 Series B, C and D on July 12, Measure G bonds, 2012 Series B Discount. Accounting for Measure G only is maintained by the District and is reported separately in the Measure G Financial Audit Report. For through , Measure G bond activity was the following: Page 8

15 Measure G Building Fund Fiscal Year Ending June 30, Fiscal Year Ending June 30, Fiscal Year Ending June 30, Fiscal Year Ending June 30, Fiscal Year Ending June 30, Beginning Balance $31,065,741 $25,858,191 $12,281,314 $2,686,903 $1,594,306 Revenues 829, ,445 72,782 19,250 16,180 Expenditures 6,037,474 13,861,322 9,667,193 1,111,847 23,589,776 Sources/Transfers ,196,619 Uses ,660 Net Change ($5,207,550) ($13,576,877) ($9,594,411) ($1,092,597) $9,639,363 Ending Balance $25,858,191 $12,281,314 $2,686,903 $1,594,306 $11,233,669 1 Source: Measure G Financial Audit, Brown Armstrong Accountancy Corporation. From the above financial data, Measure G and non-measure G activity can be calculated. Building Fund ending balances were the following: Ending Balances Activity Fiscal Year Ending June 30, 2009 Fiscal Year Ending June 30, 2010 Fiscal Year Ending June 30, 2011 Fiscal Year Ending June 30, 2012 Fiscal Year Ending June 30, 2013 Measure G $25,858,191 $12,281,314 $2,686,903 $1,594,306 $11,233,669 Other 1,476,933 1,012, , ,629 97,107 Total $27,335,124 $13,294,276 $3,626,553 $2,069,935 $11,330,776 Page 9

16 Capital Debt The District s outstanding debt is presented in the table below. This table includes prior bonds, Measure G bond funds (including bond premium), certificates of participation, and capital leases. Capital Debt GO Bonds Original Issue Amount Maturity Fiscal Year Ending June 30, 2010 Fiscal Year Ending June 30, 2011 Fiscal Year Ending June 30, 2012 Fiscal Year Ending June 30, Refunding $17,573, $7,596,874 $6,123,434 $4,569,999 $2,927, Refunding 10,901, ,251,978 4,841,832 3,403,196 1,812, Series A (Measure G) 1 34,000, ,750,000 31,910,000 31,470,000 30,810, Series A (Bond Premium) 1,837, ,610,741 1,535,237 1,459,733 1,384, Series B 4,910, (QSCB) 13,140, ,020, Series C 16,146, ,146, Series D 1,090, ,090,000 Total $48,209,593 $44,410,503 $40,902,928 $72,190,872 1 Passed on November 7, 2006, Measure G authorized the sale of General Obligation bonds totaling $100,000, , Series A bonds in the amount of $34,000,000 were issued on February 22, Detailed financial data for each issue, including bond premiums, is provided in the District s audit report. Bond premiums are cash payments by the purchasers of bonds, and do not reduce the Measure G bond authorization amount. Measure G Bond Issue July 12, 2012 On July 12, 2012, Measure G bonds in the aggregate amount of $35,286, were issued as Series B, C and D, as follows: Series Bond Type Original Issue Discount and Net Proceeds Other Costs B 1 QSCB $18,050, ($983,660.40) $17,066, C 2 Tax Exempt 16,146, (502,866.19) 15,643, D 3 Taxable 1,090, (1,090,000.00) 0 Total $35,286, ($2,576,526.59) $32,710, Series B QSCB bonds are federally taxable and, according to a Piper Jaffray reports, carry a true interest cost of percent. (The interest costs are linked to Series D bonds which are discussed below.) The bonds have maturity dates of May 1, 2026 ($4,910,000) and May 1, 2033 ($13,140,000). The bonds had an issuance discount of ($983,660.40). 2 Series C bonds are traditional federal tax exempt bonds and, according to a Piper Jaffray report, carry a true interest cost of percent. The bonds have maturity dates of May 1, 2037, May 1, 2042 and May 1, 2047, with a conversion date of May 1, 2033 applying to each maturity date. Total transaction costs for Series C was $502, Series D bonds are federally taxable bonds that were issued to prefund Series B (QSCB) early interest payments to keep the tax rate below $30/$100,000 A/V and to prefund Series D bond interest. Subsequent Series B interest payments will be covered with federal subsidy payments. Series D bonds will be repaid over five years beginning May 1, The total allocation of the bond proceeds was as follows: Prefund QSCB interest $1,031, Prefund taxable bond interest 54, Transaction Costs 3, Total $1,090, Page 10

17 Proposition 39 Bond Sale Limitations Proposition 39, passed by California voters on November 7, 2000; Assembly Bill 1908, which became law on June 27, 2000; and Assembly Bill 2659, which became law on September 22, 2000, established limitations on bonds that may be issued. The first limitation is the bonding capacity of the District, which is based on 1.25 percent of assessed valuation (A/V), which may be increased through a waiver request to the State Board of Education. The second limitation is a maximum tax rate of $30.00 per $100,000 of A/V for each bond measure, which may not be increased by filing a waiver request. These two provisions are more fully described in Education Code Section 15268: The total amount of bonds issued shall not exceed 1.25 percent of the taxable property of the district as shown by the last equalized assessment of the county or counties in which the district is located. However, as noted above, the 1.25 percent limitation may be waived by the California Board of Education if a school district demonstrates sufficient justification for a waiver. Education Code Section further adds: The bonds may only be issued if the tax rate levied to meet the requirements of Section 18 of Article XVI of the California Constitution in the case of indebtedness incurred by a school district pursuant to this chapter, at a single election, would not exceed thirty dollars ($30) per one hundred thousand dollars ($100,000) of taxable property. Qualified School Construction Bonds (QSCB) The District was approved for an allocation of $30,822,000 of Federal Direct Subsidy Qualified School Construction Bonds, which would allow the District to borrow funds under the authorization of Measure G at minimal interest rates. The District elected to issue $18,050,000 of QSCB bonds as Series B on July 12, Risk Assessment GAGAS 7.30 stipulates that the auditor should gather and assess information to identify risks of fraud. To meet this standard, TSS reviewed District documentation and interviewed key personnel, including the Board President, the Citizens Oversight Committee President, the Superintendent, and the Chief Business Official. In response to questions, regarding knowledge of any actual occurrence of fraud, awareness of allegations of fraud, and awareness of any suspected occurrence of fraud, all responses were in the negative. Further, in the course of the examination of documents, TSS identified no evidence of fraud. Observation The issuance of $34 million of Measure G bonds, Series A, on February 22, 2007 and the issuance of $35.3 million Measure G bonds, Series B, C and D, on July 12, 2012 leaves a remaining bond authority of $30.7 million. Page 11

18 Findings There are no findings in this section. Conclusion The Building Fund had a balance of $11.3 million as of June 30, 2013, and a combined balance of all facilities funds (Funds 14, 21, 25, 35 and 40) of $44.1 million, allowing for the continuing construction of two new schools Douglas K. Fletcher Elementary School and Paul L. Cato Middle School prior to the receipt of $26.4 million of State matching funds. Page 12

19 Objective COMPLIANCE WITH STATE LAW, GUIDELINES, AND DISTRICT POLICY The objective of this section is to assess the overall compliance with some of the pertinent legal, District policy and regulatory requirements governing a school district facilities program. TSS has developed this assessment of compliance to analyze the functionality of the District s bond facilities program. It should not be viewed or relied upon as a legal opinion or a complete analysis of all state law and regulations. Scope and Methodology To meet the objective, the following aspects of state law, District policy and regulations were analyzed and documented: State Law Regarding Construction Bidding and Contracting Prevailing Wage Law/Labor Compliance Program District Board Policies and Administrative Regulations In addition to the compliance issues addressed in this section, other sections in this performance audit report further address specific state law and regulations. TSS examined standard bid documents, project manuals, applicable State of California laws and regulations, District policies, reports and other relevant documentation related to the District s bond program. Interviews with key District staff were also held to obtain additional information on District practices. Background There are numerous legal and regulatory requirements associated with Proposition 39 bond measures, a school district facilities program and the delivery of California public school construction projects. Various codes and regulations govern these processes. This review assesses the overall compliance with standards resulting from these legal and regulatory requirements. TSS has developed this assessment of compliance to analyze the functionality of the District s bond facilities program. It should not be viewed or relied upon as a legal opinion. This section does not include a review of compliance with the California Building Code or other related requirements. TSS has reviewed the following two distinct categories of requirements: (1) compliance with state law and regulations and (2) compliance with Board Policies and Administrative Regulations. Page 13

20 State Law Regarding Construction Bidding and Contracting Many requirements for the construction of public schools appear in different California Codes, accompanied by regulations from various agencies. The Bakersfield City School District complies with these requirements through the District s bidding and contract documents. To verify that the District s bid documents conformed to law and regulations, the following projects that were formally bid were reviewed: McKinley Elementary School Project No Site Improvements for Modulars Low Bid: BMY Construction, Inc., $656,000 Pioneer Drive Elementary School Project No Site Improvements for Modulars Low Bid: JTS Construction, $824,000 Mount Vernon Elementary School Project No Kitchen Addition Low Bid: Omega Construction, Inc., $336,000 Compton Junior High School Project No, 1896 Modernization Project Low Bid: Klassen Corporation, $7,079,428 The analysis of the above bids is documented in the Bidding and Procurement Procedures section of this report. The following items, which are required to appear in the bid documents, indicate the appropriate section included in the District s document selected for review. Division of the State Architect (DSA) approval for individual project/plans and specifications, if subject to DSA review and approval. Preamble and Section 02 (Exhibit 1-02): Notice to Bidders. The Notice to Bidders includes the required notification for project identity; date, time, and place of bid opening; contractor s license requirements for type and whether it is current; bid bond and certified bid security check requirements; payment bond requirements; performance bond requirements; substitution of securities information; definition of prevailing wage requirements; statement establishing blind bid process; and a reservation of the right to reject all bids. Section 06 (Exhibit 1-02): Bid Bond. A bid bond is present in the package and demanded of the contractor on a form prepared by the District, as required. Section 07(Exhibit 1-02): Non-collusion Affidavit. A non-collusion affidavit form is provided and demanded of the contractor. Section 19 (Exhibit 1-02): Escrow Agreement for Security Deposits in Lieu of Retention. This item is included as an option, as required. Section 13 (Exhibit 1-02): Performance Bond. A performance bond for 100 percent of the contract price, on a form prepared by the District, is demanded of the contractor and included in the bid package. Page 14

21 Section 12 (Exhibit 1-02): Payment Bond. A payment bond for 100 percent of the contract price, on a form prepared by the District, is demanded of the contractor and included in the bid package. Section 14 (Exhibit 1-02): Workers Compensation Certification. The contractor is required to certify compliance with the state workers compensation regulations. Section 18 (Exhibit 1-02): Prevailing Wage and Related Labor Requirements Certification. The contractor is required to certify compliance. Section 21 (Exhibit 1-02): Drug-Free Workplace Certification. The contractor is required to provide drug-free workplace certification. Section 08 (Exhibit 1-02): Hazardous Materials Certification. The contractor is obligated to provide certification that no hazardous materials were to be furnished, installed, or incorporated in any way into the project. Section 17 (Exhibit 1-02): Lead-Based Paint Certification. The contractor is required to certify compliance with lead-based materials regulations. Section 16 (Exhibit 1-02): Criminal Background Investigation/Fingerprinting Certification. The contractor is required to select a method of compliance and to certify compliance with criminal background investigation/fingerprinting requirements. State law does not require the items listed below; however, they are required for state funding and are included in the District s bid documents: Section 18 (Exhibit 1-02): Prevailing Wage and Related Labor Requirements Certification. The contractors are required to certify compliance with the State Public Works Contract requirements. Attachment (Exhibit 1-02): Disabled Veteran Business Enterprise (DVBE) Participation Certification. The contractor is required to certify compliance with the DVBE requirements as set forth in the State s School Facilities Program. The following items are recommended best practices. They are not required by state law or for state funding but are included in the District s bid documents. Section 02 (Exhibit 1-02): Instruction to Bidders Section 02, Paragraph 12 (Exhibit 1-02): Notice of Award Notice to Proceed Section 09s (Exhibit 1-02): Agreement Escrow of Bid Documentation: (District requires purchase of plans and specifications or, alternatively, they are available for download at the District s website at no cost.) The District s bid documents for the sample projects were fully compliant with State laws and regulations. Page 15

22 Prevailing Wage Law/Labor Compliance Program In California, contractors and subcontractors on public works projects must comply with the California Prevailing Wage Law (Labor Code 1720 et seq.). This law stipulates that workers must be paid the prevailing hourly wages and fringe benefits, as specified by the State Department of Industrial Relations, for the region where a construction project is located. Traditionally, a school district ensures that the Prevailing Wage Law is complied with by requiring contractors and subcontractors to maintain certified payroll records for each worker. In 2002, enactment of AB 1506 created the Labor Compliance Program (LCP), which added a requirement for school district construction projects that received state funding from Proposition 47 (2002) and Proposition 55 (2004). AB 1506 was intended to ensure that contractors and subcontractors complied with the prevailing wage law. Under AB 1506, a school district must provide assurances in writing that it or a third-party contractor will enforce the required LCP, transmit that information to the State Allocation Board (SAB), and take all appropriate measures throughout the construction project to verify compliance. In November 2007, Proposition 1D passed without the requirement of a LCP. Subsequent legislation that would have reinstated LCP (SB 18, 2007) for Proposition 1D funding was vetoed by the Governor. On February 20, 2009, SBX2 9 was signed into law. It reestablished the LCP for school district facility construction projects that receive state bond funds. The previous LCP program required school districts to provide LCP services directly or through third-party providers. SBX2 9 requires the Department of Industrial Relations (DIR) to directly enforce prevailing wage requirements. School districts that have an approved in-house LCP at the time the new regulations are established may apply for an exemption from the new fee. If a school district contracts with a third-party LCP provider, such services may not be eligible for this exemption. In 2011, AB 436 was signed into law which created a Compliance Monitoring Unit (CMU) within the Department of Industrial Relations (DIR). On January 1, 2012, the CMU began operations to monitor and enforce prevailing wage requirements on public works projects for contracts awarded after January 1, 2012, that receive State bond funding and on other projects that are legally required to use the CMU. Contracts awarded prior to January 1, 2012 remain subject to prior monitoring and enforcement rules. Regardless of whether a school district is required to have a LCP for state-funded projects, it must fully comply with the prevailing wage law. To ensure compliance with the law, a school district should develop and implement policies and procedures to be applied to all construction projects, regardless of the source of funding and the party that bears responsibility for LCP enforcement. Page 16

23 The District currently contracts with a third-party provider for labor compliance services to review contractor certified payrolls and ensure that construction projects comply with the District s Labor Compliance Program, the prevailing wage law, and, if required, the SAB Labor Compliance Program. In light of enactment of SBX2 9, the District should review its options for meeting legal requirements on new projects. Board Policies (BPs and Administrative Regulations (ARs) The Board of Education has adopted BPs and ARs that are organized in a Master Index on the Board of Education website, and represent typical school district policies and regulations. Most of the BPs and ARs include references to other authorities, such as the Education Code, Government Code, Health and Safety Code, Labor Code, Public Contract Code and Code of Regulations (Titles 2, 5, 14 and 24). By reference, other authorities cited become part of the BPs and ARs. District Policy Series Facilities The District has adopted the following Board Policies (BP) and Administrative Regulations (AR) for its facilities program: BP/AR Description Date of Adoption BP Utilization of School Plants 2/26/80 Date of Revisions AR Utilization of School Plants 2/26/80 11/26/91 BP Maintenance and Operations Adopted 11/26/91 AR Maintenance and Operations Approved 11/26/91 BP Use of School Facilities Adopted 6/26/12 12/18/01 AR Use of School Facilities 12/17/74 6/26/12 BP Property Records Appraisals Adopted AR Property Records Appraisals Approved BP Illegal Entry Damage Theft Adopted AR Illegal Entry Damage Theft Approved BP Keys Adopted 12/18/01 AR Keys Approved 11/26/91 BP Architectural and Engineering Services 6/24/08 AR Architectural and Engineering Services 6/24/08 BP Site Selection and Development 6/24/08 AR Site Selection and Development 6/24/08 BP Facilities Financing 6/24/08 BP Developer Fees 6/24/08 AR Developer Fees 6/24/08 Page 17

24 Observation As reported in prior audit reports, the District has made significant progress in updating its Series 800 (Facilities) policies and regulations. The District has subscribed to the California School Boards Association s policy update service. Since keeping policies current is an ongoing process, periodic reviews and revisions constitute best practices. Conclusion The District is in compliance with the State laws, Board policies and regulations analyzed in this section. Page 18

25 CITIZENS BOND OVERSIGHT COMMITTEE Objective The objective of this section is to assess compliance by the Citizens Bond Oversight Committee (CBOC) with State law and the Committee s bylaws Scope and Methodology To meet the objective, the CBOC s activities related to Education Code Sections and its Board-adopted bylaws were reviewed. TSS examined Board agendas and minutes, the CBOC s website, reports and other relevant documentation. Interviews with a CBOC member, a Board member and key District staff were also held to obtain additional information. Background California Education Code Sections established the duties of a school district and its duly formed citizens oversight committee with respect to Proposition 39 bond measures. This code requires that the governing board establish and appoint members to an independent citizens bond oversight committee within 60 days of the date on which the election results are certified. On July 10, 2012, the Governor approved AB 199 which amended Education Code Section to extend a citizens oversight committee member to three two-year consecutive terms. The Bakersfield City School District Board of Education was proactive in establishing a citizens bond oversight committee and adopting bylaws on August 22, 2006, contingent upon passage of Measure G. The District created a Citizens Bond Oversight Committee with initial membership representation from the following seven groups: Business Community Senior Citizens Organization Taxpayers Organization Parent or Guardian of child enrolled in the District Parent of Guardian of child enrolled in the District, plus Active in a Parent-Teacher Organization Two additional members As of June 30, 2013, the Committee had seven members. Page 19

26 Committee Bylaws The Committee s bylaws, originally adopted on August 22, 2006, were amended on July 27, 2010 to clarify the Committee Members permitted terms of services. The clarification adds the following statement to Section 8(d), Membership Term: Notwithstanding the foregoing, those members who have served two consecutive terms, with the first term consisting of one (1) year and the second term consisting of two (2) years, may serve a third consecutive term lasting no longer than one (1) year. The added language is consistent with the intent of Proposition 39 that members may serve no more than four consecutive years, and allows for staggered membership terms. However, it is noted for future decisions related to member terms on the CBOC that on July 10, 2012, the Governor signed AB 1199 which amended Education Code Section to extend the term of a citizens oversight committee member to three two-year consecutive terms. Committee Meetings During the first performance audit period ( ), the committee met twice (December 7, 2006 and March 21, 2007) to organize the committee and to receive an orientation from the District s bond counsel with respect to the committee s duties to inform taxpayers on expenditures for the bond-funded facilities, funded projects, and the financial and performance audits through its annual report. During subsequent performance audit periods, the Committee met four times annually. During the current performance audit period ( ), the seven-member Committee met four times, as follows: Quorum Agendas Minutes Site CBOC Meeting Dates Members in Attendance 1 Tour July 19, /7 Yes Yes Yes No October 18, /7 Yes Yes Yes Yes January 10, /7 Yes Yes Yes No April 25, /7 Yes Yes Yes Yes 1 Three Committee Members did not attend two of the four scheduled meetings. After the October 18, 2012 and April 25, 2013 meetings, the Committee made site visits to Douglas K. Fletcher Elementary School and Paul L. Cato Middle School. Committee Website The Committee has a website, as required by Education Code Section 15280(b), with access via the District s website. The Committee s website includes information on members of the Citizens Bond Oversight Committee, bylaws, meeting minutes, facilities projects, expenditure reports and financial and performance audit reports. Page 20

27 Annual Committee Reports During the past several years, including the current audit period, the Committee has prepared written annual reports which were publicly presented at Board meetings. Those reports include: Annual Report January Annual Report January Annual Report January Annual Report January Annual Report February Annual Report January 2013 Along with the annual reports, the Committee reported to the Board its activities and the status of Measure G projects. The annual reports can be referenced at Commendation The Citizens Bond Oversight Committee and the District are commended for faithful service in keeping the community informed about Measure G, maintaining their respective websites with current meeting and project information, and fully complying with law and established bylaws. Conclusion The Citizens Bond Oversight Committee is fully compliant with the law and the Committee s bylaws. Page 21

28 STATE SCHOOL FACILITY PROGRAM Objective The objective of this section is to determine if the District s Measure G bond language to qualify for state funding for its facilities projects is being met as stated. Scope and Methodology To meet the objective, District activities regarding establishing eligibility under the State School Facility Program and filing applications for funding were reviewed. District reports and information from state regulatory agencies were referenced. Interviews were also held with key District staff members. Background Board Resolution No. XVIII, dated July 25, 2006, calls for the District to access state school facilities funds in conjunction with Measure G: To improve the quality of education, shall Bakersfield City School District be authorized to qualify the District for up to $57,000,000 in State grants by issuing $100,000,000 in bonds within legal limits? Measure G included the following bond projects, with anticipated state funding: Two new elementary schools One new middle school Modernization of outdated school facilities Construction of new school facilities Based on Resolution XVIII, state funding was an integral part of the Measure G bond program. State School Facility Programs Used The District has filed facilities applications under the following programs: 50 New Construction 57 Modernization 61 Emergency Repair Program As of June 30, 2013, the District had received the state grants summarized in the table below from projects prior to Measure G and for Measure G projects. (The financial data presented in these tables comes from the Office of Public School Construction/State Allocation Board [OPSC/SAB] website, which maintains current project status for all school districts). As required in the ballot language and as part of the facilities master plan, the District plans to submit OPSC applications for the projects funded under Measure G. Page 22

29 State Program Pre-Measure G Projects SAB# State Grant Amounts District Match New Construction 50/001 50/014 1 $7,330,102 $7,330,102 Modernization 57/001-57/ ,685,115 1,833,822 Totals $13,015,217 $9,163,924 State Program Measure G Projects New Construction 50/015-50/025 3 $12,514,608 $12,514,608 Modernization 57/010-57/ ,168,457 9,445,637 Totals $26,683,065 $21,960,245 Grand Totals $39,698,282 $31,124,169 1 These thirteen schools were funded by the state prior to the passage of Measure G. An application for Thorner Elementary (SAB 50/009) was revoked. 2 These five schools were funded by the state prior to the passage of Measure G. 3 These eleven new construction projects were Measure G projects. 4 These six schools were Measure G projects. State New Construction Status New construction eligibility was submitted to the Office of Public School Construction/State Allocation Board (OPSC/SAB) on February 26, 1999, based on the CBEDS enrollment data from the to school years. Based on that data, the SAB approved baseline eligibility for new construction on June 23, 1999, as presented in the table below. New Construction Baseline Eligibility ( CBEDS) District Eligibility Non- K Severe Baseline Eligibility 2,188 1, Severe Following the establishment of the baseline new construction eligibility discussed above, the District continued to update its eligibility annually based on the CBEDS data, as presented in the table below. Page 23

30 SAB Enrollment Certification/Projection SDC SDC Number of New Base Years K Total Non-Severe Severe Dwelling Units ,239 5, ,597 N/A ,027 5, , ,619 5, , ,842 5, , ,988 6, ,030 4, ,577 5, ,234 4, ,395 5, ,080 7, ,679 6, ,110 15, ,711 6, ,178 16, ,925 6, ,778 14, ,707 6, ,263 14, ,599 6, ,474 14, ,132 7, ,429 14, ,709 7, ,263 14,212 As demonstrated above, the District s certified enrollment projection reflects enrollment growth which, in turn, results in an increase in new construction eligibility. The District augments its enrollment projections by utilizing the new dwelling unit method. The number of planned residential housing units has decreased in recent years. Prior to the passage of Measure G, the District completed new school projects with a combined capacity of 1,205 students, for which it received $7,330,102 in funding (50 percent state funding). New construction projects funded with Measure G and State match monies include construction at eleven schools, for which the District received $12,514,608. (See table for detail.) Based on the increased eligibility from the SAB form filed for years , and the reduction in eligibility due to funded projects, the District had the following net estimated eligibility: New Construction Eligibility (January 7, 2013) District K Non-Severe Severe Baseline Eligibility 2,188 1, SAB Approvals/Adjustments 5,069 2, Remaining Eligibility 1 7,257 3, Based on the OPSC/SAB website as of January 7, Page 24

31 On April 16, 2013, the District filed an updated form SAB for the years , which are not reflected in the remaining eligibility stated above. Also, on May 22, 2013, the District s applications for Fletcher Elementary (725 K-6 students) and Cato Middle (1, students and 52 Non-Severe SDC students) were approved by the SAB, which will reduce the remaining eligibility by the number of students in these applications. Land Acquisition/New Elementary School/New Middle School On January 27, 2009, the Board approved an agreement for the acquisition of 45.0 gross acres of partially improved land for a new elementary school and middle school. The site is located west of State Route 184 in the City of Bakersfield. The purchase price was $4,420,000. The District closed escrow on September 30, On May 22, 2007, the District approved an agreement with Ordiz-Melby Architects, Inc., for the architectural services for the new elementary school. On June 26, 2007, the District approved an agreement with Lundgren Management to provide construction management services for the new elementary school. With the purchase of the new 45.0 acre site, the District began planning a new elementary and middle school concurrently on the shared site. On November 24, 2009, the District approved an agreement with Lundgren Management to provide construction management services for both schools and on December 8, 2009, the District approved an agreement with Ordiz-Melby Architects, Inc. to provide architectural services for both schools. These two new schools Douglas K. Fletcher Elementary and Paul L. Cato Middle were under construction as of June 30, The District filed applications (forms SAB 50-04) for State funding for the new school site acquisition and construction as required regulations of various entities (DSA, CDE, DTSC, and CEQA) were met. As reported in the following Measure G New Growth Projects table, those applications were approved by the SAB on May 22, 2013 and placed on the SAB Unfunded Approvals list. The District s share of the match projects will come from Measure G. Page 25

32 Measure G New Growth Projects as of June 30, 2013 Existing School Grade SAB# 1 (50/ ) SAB Eligibility Approval (50 03) 2 Eligibility Enrollment SAB Project Approval (50 04) SAB Fund Release (50 05) SAB Grant Amount (%) 3 District Match Amount (%) Status Hort Elementary K /24/ /24/08 08/12/10 $282,848 $282,848 Complete 8/12/13 Wayside Elementary K /28/ /28/10 06/10/10 $1,397,326 $1,397,326 Closed 4/11/13 Pauly Elementary K /15/ /15/10 01/25/11 $1,211,931 $1,211,931 Complete 1/25/12 Evergreen Elementary K /15/ /15/10 01/25/11 $1,625,204 $1,625,204 Complete 1/25/12 Munsey Elementary K /15/ /14/11 01/30/12 $1,182,752 $1,182,752 Complete 1/11/13 College Heights Elementary K /15/ /14/11 01/30/12 $1,849,259 $1,849,259 Complete 1/11/13 Garza Elementary K /15/ /14/11 01/30/12 $2,178,055 $2,178,055 Complete 1/11/13 Frank West Elementary K /15/ /27/12 08/28/12 $777,655 $777,655 PM Complete 4 Frank West Elementary K /15/ /27/12 8/28/12 $117,344 $117,344 PM Complete 4 McKinley Elementary K /15/ /27/12 10/02/12 $757,413 $757,413 Pioneer Dr. Elementary K /15/ /27/12 10/02/12 $1,134,821 $1,134,821 Cato Middle Fletcher Elementary 6-8 NS K-5 NS /22/ /22/13 1, /22/13 05/22/13 $15,929,910 (Unfunded) $10,494,192 (Unfunded) Application Complete5 Application Complete5 $15,929,910 Application Complete 6 (Funded) $10,494,192 Application Complete 7 (Funded) Total $38,938,710 $38,938,710 1 A project number is assigned when form SAB is filed, which requires DSA-stamped plans and California Department of Education (CDE) approval. 2 SAB eligibility is based on Forms SAB (Enrollment Certification/Projection), SAB (Classroom Inventory), and SAB (Eligibility Determination) Updated forms SAB with current CBEDS enrollments must be submitted when SAB project applications are filed. 3 The state grant amount is 50 percent of the total state new construction budget, unless facility or financial hardship applications have been filed and approved. 4 PM Complete Application has been processed by OPSC/SAB. (Source: OPSC Website, project tracking) 5 Application has been received by OPSC/SAB and a project number (50/xxx) has been assigned. (Source: OPSC Website, project tracking) 6 Application includes site acquisition ($1,389,291) and high performance ($455,911) State funds. 7 Application includes site acquisition ($828,099) and high performance ($445,013) State funds. 8 NS means Non-Severe SDC students. Page 26

33 State Modernization Status Eligibility for a modernization project is established when Form SAB is filed with the state, and the State Allocation Board (SAB) approves the application. A school district designs and submits a project to the Division of State Architect (DSA) and the California Department of Education (CDE). The district awaits both agencies approvals before filing Form SAB 50-04, which establishes funding for a project. If financially advantageous, a district may file a revised SAB to reflect the most recent enrollment data. Once the bidding process for a project is complete, the district files form SAB to request a release of the state share of modernization funds for the project. The District completed the SAB 50 03, SAB 50 04, and SAB processes for five pre- Measure G modernization school projects, for which the District received State funds totaling $5,685,115. Four of the funded projects were approved and funded under the previous 80/20 program, and therefore received 80 percent State funding. One project received a 60 percent State funding match, which has been the State match since April 29, The District completed modernization of six of the eight Measure G modernization projects, for which it has received State funds totaling $14,168,457. The District filed eligibility forms (SAB 50-03) for ten schools, which were received by OPSC/SAB on May 10, 2012, as follows: SAB# (57/ ) School K SDC (NS) SDC (S) 000 Casa Loma Evergreen Fremont Hort Jefferson Owens Primary Pauly Voorhies Wayside Sierra Middle Totals 3, Evergreen and Pauly in the tables above have been funded by the SAB. The table above and the three tables below outline the current status of modernization of schools in the District: Measure G Projects and Potential Future Projects. Page 27

34 Measure G Modernization Projects: Existing Schools as of June 30, 2013 Existing Schools Elementary Schools Grade SAB# 1 (57/) SAB Eligibility Approval (50 03) Eligibility Enrollment SAB Project Approval (50 04) SAB Fund Release (50 05) 2 Eissler K /16/ /23/08 06/06/08 Evergreen K /26/ /22/13 06/12/13 Nichols K /26/ /28/08 06/06/08 Pauly K /26/ /22/13 06/12/13 Voorhies (Adjusted) K Junior High/Middle Schools 02/28/11 (Submitted) NS, 9 S 4 Chipman /16/ /23/08 06/06/08 SAB Grant District Match Amount (%) 3 Amount (%) 1,343,816 (60%) 2,376,071 (60%) 1,565,403 (60%) 2,102,650 (60%) 2,396,363 (60%) 895,877 (40%) 1,584,047 (40%) 1,043,602 (40%) 1,401,767 (40%) Status Closed 5/11/12 PM Complete Closed 5/31/12 PM Complete 1,597,575 (40%) Closed 5/31/12 Compton /26/ NS, 4S 4 Curran /10/ /14/11 02/28/12 4,384,154 (60%) 2,922,769 (40%) Complete 1/11/13 Total $14,168,457 $9,445,637 1 A 000 indicates that the District filed form SAB to establish eligibility. A project number is assigned when form SAB is filed, which requires DSA-stamped plans and CDE approval. 2 This column presents actual fund releases. For SAB approved grant amounts, see SAB Grant Amount column. 3 The State grant amount is 60 percent of the total State modernization budget for project applications (SAB 50 04) filed after April 29, 2002, unless facility or financial hardship applications have been filed. (Applications filed before April 29, 2002, receive 80 percent in State matching funds.) State funding is released to the District after the project has gone to bid, a construction contract has been awarded, and form SAB has been filed. The District must provide its matching share of the project budget. This column shows the SAB approved grant amount. 4 NS means Non-Severe SDC students and S mean Severe SDC students Page 28

35 Potential Future Modernization Projects: Existing Schools as of June 30, 2013 Existing Schools Elementary Schools Grade SAB# 1 (57/) SAB Eligibility Approval (50 03) Chavez K-6 New School Not eligible Downtown K-8 New School Not eligible Eligibility Enrollment Franklin K /26/03 25 Frank West (Adjusted) K /30/ Garza K-5 Hills K-5 Longfellow K /26/ Horace Mann K /26/ McKinley K /26/ Mount Vernon K /26/ Munsey K /26/ Noble K /26/ Owens Intermediate /26/ William Penn K /26/03 75 Pioneer K /30/ Roosevelt K /26/ Williams K /30/ SAB Project Approval (50 04) SAB Fund Release (50 05) 2 SAB Grant Amount (%) 3 District Match Amount (%) Status Page 29

36 Existing Schools Junior High/Middle Schools Grade SAB# 1 (57/) SAB Eligibility Approval (50 03) Eligibility Enrollment Emerson /26/ Sequoia 6-8 Walter Stiern 6-8 Washington 6-8 SAB Project Approval (50 04) SAB Fund Release (50 05) 2 SAB Grant Amount (%) 3 District Match Amount (%) Total $-0- $-0- Status 1 A 000 indicates that the District filed form SAB to establish eligibility. A project number is assigned when form SAB is filed, which requires DSA-stamped plans and CDE approval. 2 This column presents actual fund releases. For SAB approved grant amounts, see SAB Grant Amount column. 3 The State grant amount is 60 percent of the total state modernization budget for project applications (SAB 50 04) filed after April 29, 2002, unless facility or financial hardship applications have been filed. (Applications filed before April 29, 2002, receive 80 percent in State matching funds.) State funding is released to the District after the project has gone to bid, a construction contract has been awarded, and form SAB has been filed. The District must provide its matching share of the project budget. This column shows the SAB approved grant amount. Page 30

37 Observations As of June 30, 2013, the District had received $26.7 million of State funds for eleven new construction projects and six modernization projects, and has been approved for the funding of Fletch/Cato for $26.4 million (unfunded), bringing the total State approved funding to $53.1. The District has established new construction eligibility for 7,257 K-6 grade students, 3, grade students, 242 non-severe SDC students and 272 severe SDC students, based on enrollments through The District has established updated modernization eligibility for eight additional schools. Conclusion As noted above, the District has numerous growth and modernization applications to be financed with Measure G and State grants. With actions taken to establish new construction eligibility and the filing of growth and modernization applications, the District has approved State match funds totaling $53,107,167 as of June 30, The District is on course to receive up to $57,000,000 in State grants for its Measure G projects, as stated in its Measure G bond language. Page 31

38 PROJECT/CONSTRUCTION MANAGEMENT Objective To gather data and verify the efficiency and effectiveness of the District s approach to project and construction management in the delivery and construction of bond funded projects. Scope and Methodology The scope of this audit section covers the organization and management of planning, design and construction activities relating to the implementation of Measure G bond program projects for the period from July 1, 2012 through June 30, TSS audit staff reviewed documents and conducted interviews with District staff members, members of the Citizens Bond Oversight Committee and the Board of Education. As part of the process, TSS obtained copies and reviewed professional and consultant agreements, Board agendas and minutes, and facilities project files for bond funded projects. Background In the selection of architects and engineers for the Measure G bond program, the District requested proposals from qualified architectural firms to provide services on the four groups of projects identified in the program. Twenty-five firms were selected for interview. Six architectural firms were selected by the Board of Education on April 24, 2007, and assigned to various Measure G projects as follows: Ordiz-Melby Architects, Inc. 2 BFGC Architecture Flewelling & Moody Harley Ellis Devereaux 1 Renfro & Cunningham, Inc 3 Integrated Designs by SOMAM, Inc. New Elementary School and Middle School 2 Chipman Modernization Compton Modernization Miscellaneous Trailer Replacement Miscellaneous Trailer Replacement Miscellaneous Trailer Replacement Curran Eissler Evergreen Future Projects Future Projects Future Projects Modernization Modernization Modernization Voorhies Modernization Nichols Modernization Pauly Modernization Miscellaneous Trailer Replacement Future Projects 1 Harley Ellis Devereaux Architects have not performed projects for the District as of June 30, On December 8, 2009, the District approved an agreement with Ordiz-Melby Architects, Inc. to provide architectural services for both a new elementary school and a new middle school. Construction of both new schools started in On June 22, 2010, the District approved an agreement with Cunningham Group Architecture, P.A. (formerly Renfro & Cunningham, Inc.) to provide architectural services for four permanent modular classrooms and one restroom at McKinley Elementary School. The agreement also covers future projects such as additional permanent modular classrooms, modernization and Deferred Maintenance projects. Page 32

39 During the design phase for the two new schools, the District created a design advisory committee composed of various District administrative and instructional staff. The committee was organized to provide educational and programmatic input, and work with the project architects, Ordiz-Melby Architects, Inc., through the design process. On September 28, 2010, the design team presented the design of the new schools and obtained approval of the Board of Education. Specifications for the new design were prepared with community input inspired by the District s goals, objectives and policies and then submitted to the California Department of Education (CDE) for final design approval and construction of the schools. In the implementation of the facilities construction program, the District utilizes a combination of two approaches to project and construction management; (1) a traditional method and (2) the use of an outside firm, in the delivery of Measure G bond program projects. Modernization Projects. The District utilizes the traditional method of project and construction management for modernization projects, including modular classroom replacements, security improvements and miscellaneous minor projects. The method involves the following participants: Owner Representative (District staff see below) General Contractor Architect/Engineer of Record (AOR) Inspector of Record (IOR) Consultants (specialists, as needed, such as civil engineer, geotechnical engineer, labor compliance consultant, etc.) In this approach, the Facilities Director and Supervisor of Facilities & Planning work together on project management and planning with the architects and consultants. They also provide field construction management to projects under construction and coordinate the services of the general contractor, Architect of Record (AOR), Inspector of Record (IOR) and various consultants. Both employees attend the weekly construction meetings to oversee the progress of the construction work. In some cases, staff members also served as lead managers on multiprime construction contracts. Overall, the following table lists District staff that provide project and construction management for modernization, modular classroom replacements, security improvements and miscellaneous minor projects under the Measure G bond program; Staff Position 1 Full-time Equivalent (FTE) 2 Facilities Director 1.0 Assistant Director of Maintenance 0.5 Supervisor of Facilities & Planning 1.0 Accounting Technician 1.0 Secretary 0.5 Total All staff salaries are paid out of the General Fund. 2 A 1.0 Full-time Equivalent or 1.0 FTE means an employee who works a standard 40 hour week ranging from 4 days a week for 10 hours a day to 5 days a week for 8 hours a day. Page 33

40 New Construction Projects. The District utilizes the outside firm approach for new construction projects. The method involves the hiring a third-party project/construction management (PM/CM) firm to manage and coordinate the activities of the consultants and contractors in construction projects. In this approach, the PM/CM coordinates the activities of the architects and the general contractors in a traditional design-bid-build contract. In multiprime contracts, the PM/CM firm performs the role of the general contractor and District representative. The PM/CM firm, as the general contractor, manages, schedules and supervises the work of trade contractors, such as plumbing, carpentry, electrical, and others, who are in contract directly with the District. As the District representative, also coordinates the services of the Architect of Record (AOR), the Inspector of Record (IOR) and other consultants involved in the project at the same time. The Paul L. Cato Middle School and Douglas K. Fletcher Elementary School construction project utilizes the multi-prime contract project delivery approach through the PM/CM firm, Lundgren Management. To complete the construction team, the District issued requests for proposals, received bids for services, and contracted with consultants necessary for administering the new construction project. These services include the following: Inspector of Record (IOR) Geotechnical Engineer Surveyor Materials testing and special inspection services Environmental Consultant Commissioning Agent Others A master schedule which identifies all the critical milestones, schedules and timelines for the various phases of bidding, construction and occupancy, was prepared for the simultaneous construction of two school campuses in one contiguous site. The new schools were named Paul L. Cato Middle School and Douglas K. Fletcher Elementary School by the Board of Education on November 22, The service of a commissioning agent was engaged by the District for the construction of Douglas K. Fletcher Elementary School and Paul L Cato Middle School. Commissioning activities include functional tests on installed equipment, acoustical tests in representative classrooms, the multi-purpose room and other spaces. The intent of these tests is to verify and confirm that energy savings measures are implemented and operating correctly in the installed equipment and systems such as the HVAC system, lighting and control system, water system, insulation system, etc. Page 34

41 Observation On April 23, 2013, the Board of Education approved the list of consultants to be considered to provide technical and professional services in the implementation of modernization, new construction and other projects of the District. The Request for Qualification (RFQ) was published in The Bakersfield Californian calling for proposals from architects, civil engineers, surveyors, geotechnical engineers, electrical engineers, mechanical engineers, environmental planners, and testing and special inspection services. District staff evaluated twenty-eight proposals and selected twenty-three professional services firms who will be assigned future construction projects based on their expertise and experience. Conclusion Results of the examination of documents and information relating to project and construction management activities indicate that the District utilizes an efficient and effective approach to project and construction management in the delivery and construction of bond funded projects. The District utilizes in-house staff to accomplish modernization, security improvements and other minor projects, while on major projects, such as the construction of new schools, the District utilizes the services of construction management consultants. The District s selection process for professional services firms complied with the requirements of California Government Code Section which states that the selection for professional services firms shall be on the basis of demonstrated competence and professional qualifications. It also complies with the requirements of California Education Code Section which states that applicant Districts for state funding must certify to the State Allocation Board (SAB) that the services of professional services firms for their projects were obtained pursuant to California Government Code Section Page 35

42 DESIGN AND CONSTRUCTION BUDGETS Objective To gather data and verify the adequacy of the District s efforts in adhering to the approved design and construction budgets for Measure G bond funded projects. Scope and Methodology The scope of this audit section covers the program administration, design and construction activity of the District relating to the Measure G bond program for the period from July 1, 2012 through June 30, TSS audit staff reviewed files and documents and conducted interviews with appropriate District staff members, members of the Citizens Bond Oversight Committee and the Board of Education. Copies of various reports and records of actual project expenditures on all bond funded projects were examined and reviewed in comparison with the Board of Education approved bond program budgets. Background Information The District conducted an extensive assessment of the condition and capacity of the existing schools, studied future enrollment projections, evaluated projections of residential, commercial and industrial developments in the area to determine the need to upgrade existing schools and construct new schools prior to the Board of Education s approval to place Measure G on the November 2006 ballot. The resulting report entitled, Facilities Plan, dated June 14, 2006 was used as the basis for the development of the Bond Project List and placement of the Measure G Bond on the ballot. The bond was passed on November 7, 2006 to provide the District the funds needed to accomplish the projects described in the Bond Project List. In summary, the list called for; Construction of two new elementary schools and a middle school; Modernization of eight schools; Installation of security improvements to forty-two school sites; and Replacement of 216 non-conforming classroom buildings with DSA approved permanent modular classrooms. Budgets for the program were developed and outlined in the Facilities Plan. To ensure that there are sufficient funds to complete projects described in the Bond Project List, the District plans to utilize available funds previously set aside for facilities projects and all other anticipated funds from the State School Facilities Program grants and Developer Fees collections in addition to Measure G funds. Page 36

43 To coordinate the availability of funds from the sale or issuance of Measure G Bonds (Fund 21), from the collection of Developer Fees (Fund 25), and from the receipt of state matching funds (Fund 35) from the State Facilities Program (SFP), with the schedules of project design and construction activities, District staff developed and maintained a Facilities Cash Flow Analysis document. The document has served the District well in ensuring that funds budgeted for the planned construction projects are available when they are needed. This tool has also provided the District the flexibility of making necessary adjustments to the established budgets based on the changes in the availability and amounts of funds. The original project budgets and cash flow analysis from the start of the program through the end of fiscal year are shown in the following table entitled, Facilities Program Sources and Uses. The revised budget as of October 7, 2013 shows an increase in the available funds and the projected expenditures for the program. The current budget now leaves a fund balance of $28,637,170 available for cost escalations, contingencies and future expenditure adjustments. Details of the original expenditure budgets and budget adjustments from the start of the program through the end of fiscal year at the project level is shown in the following table entitled, Facilities Program Budgets. Page 37

44 FACILITIES PROGRAM SOURCES AND USES SOURCES AND USES Original Budget June 14, Revised Budget Oct. 22, Revised Budget June 30, Revised Budget Aug. 2, Revised Budget Aug. 3, Revised Budget Aug. 24, Revised Budget Oct. 07, Sources District Funds (Available Balances) Building Fund (21) $2,607,022 $5,011,477 $7,133,149 $6,906,031 $6,739,031 $7,062,931 $6,476,738 Capital Facilities Fund (25) 54,992,647 30,121,781 31,158,389 18,053,910 17,370,452 15,249,049 15,724,185 School Facilities Fund (35) 4,334,058 3,114,656 3,759,628 12,580,118 12,740,118 12,935,787 12,887,701 Special Reserve (Fund 40) 18,382,357 State Match New Const. 39,724,203 23,824,755 30,659,335 31,773,813 31,773,813 31,773,813 31,773,813 State Match Modernization 17,623,822 18,811,151 22,399,205 19,172,870 19,172,870 19,172,870 19,172,870 Measure G Bond 100,000, ,000, ,000, ,000, ,000, ,000,000 97,423,473 Total Sources $219,281,752 $180,883,820 $195,109,706 $188,486,742 $187,796,284 $186,194,450 $201,841,137 Uses New School Construction $101,211,527 $100,032,539 $100,032,539 $100,032,539 $100,032,539 $91,804,381 $95,151,486 Modernization 82,848,080 36,602,625 35,292,269 27,951,060 27,546,502 34,935,000 37,210,407 Security Improvements 6,741,000 7,249,376 7,249,376 7,249,376 7,249,376 7,249,376 $6,862,240 Modular Classroom Replacements 28,481,145 36,999,280 35,693,519 28,449,178 28,509,265 30,205,102 33,564,585 Bond Expenses 389, , , , ,249 Total Uses $219,281,752 $180,883,820 $178,657,102 $164,097,402 $163,752,931 $164,609,108 $173,203,967 Balance 7 $0 $0 $16,452,604 $24,389,340 $24,043,353 $21,585,342 $28,637,170 1 Source: Facilities Plan, June 14, Source: District Facilities Cash Flow Analysis, updated August 3, Source: District Facilities Cash Flow Analysis, updated October 22, Source: District Facilities Cash Flow Analysis, updated August 24, Source: District Facilities Cash Flow Analysis, updated June 30, Source: District Facilities Cash Flow Analysis, updated October 07, Source: District Facilities Cash Flow Analysis, updated August 2, Balance uncommitted is available for contingencies, cost escalations, budget adjustments and/or scope increases. Page 38

45 PROJECTS Original Budget June 14, FACILITIES PROGRAM BUDGETS Revised Budget Oct. 22, Revised Budget June 30, Revised Budget Aug. 2, Revised Budget Aug. 3, Revised Budget Aug. 24, Revised Budget Oct. 07, New School Construction Fletcher Elementary School $23,502,783 $26,868,392 $26,868,392 $26,868,392 $26,868,392 $25,330,964 $24,905,704 Cato Middle School 35,862,675 40,675,824 40,675,824 40,675,824 40,675,824 33,985,094 37,757,459 New K-6 (with enhanced Special Ed) 41,846,069 32,488,323 32,488,323 32,488,323 32,488,323 32,488,323 32,488,323 Total $101,211,527 $100,032,539 $100,032,539 $100,032,539 $100,032,539 $91,804,381 $95,151,486 Modernization Chipman Junior High $9,520,220 $4,454,385 $4,454,385 $4,454,385 $4,454,385 $4,325,172 $4,329,950 Compton Junior High 9,789,501 6,753,169 6,753,169 5,504,227 2,926,335 5,710,492 7,894,817 Curran Middle School 12,675,293 7,016,698 5,648,323 4,902,956 5,244,391 5,239,582 5,239,582 Eissler Elem. School 6,451,330 2,354,223 2,377,531 2,454,925 2,454,925 2,405,294 2,405,294 Evergreen Elem. School 7,995,876 4,076,356 4,076,356 2,963,546 3,090,857 3,438,769 3,424,425 Pauly Elem. School 15,022,394 2,625,703 2,660,414 2,745,618 2,695,777 2,695,777 5,255,159 Nichols Elem. School 11,401,088 4,215,240 4,215,240 3,269,350 4,923,393 5,158,396 2,695,777 Voorhies Elem. School 9,992,378 5,106,851 5,106,851 1,656,053 1,756,439 5,961,518 5,965,403 Total $82,848,080 $36,602,625 $35,292,269 $27,951,060 $27,546,502 $34,935,000 $37,210,407 Security Improvements New fencing, video surveillance, security system, and door hardware upgrades to 42 school sites $6,741,000 $7,249,376 $7,249,376 $7,249,376 $7,249,376 $7,249,376 $6,862,240 Modular Classroom Replacements Modular classrooms to be replaced at school sites $28,481,145 $36,999,280 $35,693,519 $28,449,178 $28,509,265 $30,205,102 $33,564,585 Bond Expenses $389,399 $415,249 $415,249 $415,249 $415,249 Total Uses $219,281,752 $180,883,820 $178,657,102 $164,097,402 $163,752,931 $164,609,108 $173,203,967 1 Source: Facilities Plan, June 14, Source: District Facilities Cash Flow Analysis, updated October 22, Source: District Facilities Cash Flow Analysis, updated June 30, Source: District Facilities Cash Flow Analysis, updated August 2, Source: District Facilities Cash Flow Analysis, updated August 3, Source: District Facilities Cash Flow Analysis, updated August 24, Source: District Facilities Cash Flow Analysis, updated October 07, 2013 Page 39

46 Observation On July 12, 2012, the District sold/issued $35,286, in 2006 Election General Obligation Bonds in order to provide adequate funds for the construction of Douglas K. Fletcher Elementary School, Paul L. Cato Middle School and the on-going school modernizations, security improvements and modular classroom replacement projects under the bond program. Conclusion Results of the examination of design and construction documents indicate that the District expended adequate effort in developing a program budget for the implementation of projects identified in the Measure G bond project list. The District has likewise expended the necessary efforts to effectively monitor and manage the expenditures on bond funded construction projects to remain within the approved budgets. Page 40

47 DESIGN AND CONSTRUCTION COSTS AND SCHEDULES Objective To gather data and verify adequacy of the District s efforts in meeting the approved design and construction schedules for the Measure G bond funded projects. Scope and Methodology The scope of this audit section covers the program administration, design and construction activities of the District relating to the Measure G bond program for the period from July 1, 2012 through June 30, TSS audit staff reviewed files and documents and conducted interviews with appropriate District staff members, members of the Citizens Bond Oversight Committee and the Board of Education. Copies of various reports and records of actual project expenditures and the status of all bond funded projects in various stages of planning, design and construction were reviewed in comparison with the Board of Education approved bond program schedules. Background The Measure G Bond construction program calls for the construction of school facilities projects described in the Bond Project List attached as Exhibit A to the ballot measure. Based on this list, the District developed and approved a program schedule which provided timelines that identified the school years in which the projects were scheduled for planning, design and construction. The overall status of the various Measure G Projects as of the end of fiscal year , the seventh year of the program, is summarized in the following table: MEASURE G SCOPE OF WORK Status June 30, 2013 Total Number Under Construction Planning Future Projects/Schools Completed New Elementary School New Middle School 1 1 Modernization Replacement of Modular Buildings Security Fencing Security Doors Security Cameras Source: Status of Modernizations, DSA Buildings and Security Projects, July 11, 2013 Citizens Oversight Committee Meeting Page 41

48 Status of New School Construction Projects On January 27, 2009, the Board of Education approved an agreement for the acquisition of 45.0 acres of partially improved land located west of State Route 184 northeast of the City of Bakersfield. The site was acquired to house the new Douglas K. Fletcher Elementary School and the new Paul L. Cato Middle School planned for construction under the Measure G Bond program. An agreement with Lundgren Management to provide pre-construction and construction management services for the construction of the new schools was approved by the District on November 24, Likewise, an agreement for architectural design services with Ordiz-Melby Architects was approved on December 8, Krazan & Associates, a site development engineering firm, conducted environmental tests and assessments on the property. Street improvement plans proposed by the District together with the installation of site utilities and improvements to the sewer and storm drain systems to be provided by the seller (K. Hovnanian) were approved by the City of Bakersfield. On November 22, 2011, the Board of Education approved the selection of final names for the new schools as recommended by the naming committee to be Dr. Douglas K. Fletcher Elementary School and Paul L. Cato Middle School. The Department of State Architects (DSA) and California Department of Education (CDE) approved the plans for the new elementary school and middle school during fiscal year These schools, which are being constructed on one contiguous site, were bid using the multipleprime contract project delivery method during the period from January through May According to the bond program schedule, the remaining new school construction project to be built, which is an elementary school with an enhanced Special Education facility, is scheduled for construction in the future as shown in the table titled, Costs and Schedules for Measure G Bond Program. Status of Modernization Projects The bond program includes modernization projects in eight (8) school sites. As of the end of fiscal year , the modernization of Chipman Junior High School, Curran Middle School, Eissler, Evergreen, Nichols and Pauly Elementary School are complete. The contract for the modernization project at Compton Junior High School was bid and awarded in May Design of modernization plans for the remaining school, Voorhies Elementary School, is in progress. The actual expenditures, schedules and status of modernization projects are shown in the table titled, Costs and Schedules for Measure G Bond Program. Page 42

49 Status of Security Improvement Projects New security system improvements at forty-two school sites, which include the installation of security wrought iron or chain link fencing, security hardware (campus access control doors/equipment) and security cameras (video surveillance systems), were virtually complete as of the end of fiscal year The installation of security fencing and campus access control hardware at the three remaining school sites, McKinley Elementary, Voorhies Elementary and Compton Junior High School, are included in the on-going site improvement and modernization projects. Status of Modular Classroom Replacement Projects The plan for the removal of non-compliant Department of Housing (DOH) trailer type classrooms and restrooms and replacement with DSA approved permanent modular classroom and restroom buildings include 141 modular buildings located at 19 school sites. As of the end of fiscal year , the installation of 100 DSA approved permanent modular classrooms at eleven school sites had been completed. The installation of twelve modular buildings at Pioneer and McKinley schools was completed in the early months of year Design and DSA approval for the installation of ten classrooms and one restroom modular at Sequoia Elementary School are complete and scheduled to be bid in October As of June 30, 2013, the overall status and schedule of replacements for the school sites included in the program is shown in the table below. No. of Sites Schools 1 No. of DOH Modulars 1 Status/ Replacement Schedule 2 Hort, Wayside 12 Completed in Pauly, Evergreen 21 Completed in Munsey 9 Completed in Fremont 6 Completed in Garza 20 Completed in Frank West 7 Completed in College Heights 13 Completed in McKinley 4 Completed in Pioneer 8 Completed in Sequoia 10 Scheduled Bid in October Voorhies, Jefferson 11 Planning 2 Franklin, Hills Roosevelt Casa Loma Eissler Source: Revised Modular Replacement Schedule. Page 43

50 COSTS AND SCHEDULES FOR MEASURE G BOND PROGRAM MEASURE G BOND PROJECTS New Schools Construction Expenditures Fiscal Year Cumulative Expenditures Thru June 30, Schedule of Completion Project Status 2 Fletcher Elementary School and Cato Middle School (shared site) $22,120,690 $26,703, Under Construction. (Projected Completion: March 2014). New Elementary School (with Enhanced Special Ed) TBD Future Sub-Total $22,120,690 $26,703,408 Modernization. Chipman Junior High 0 $1,933, % Complete Compton Junior High 0 164, Awarded 05/28/2013 Curran Middle School 0 5,208, % Complete Eissler Elem. School 0 1,065, % Complete Evergreen Elem. School 0 1,347, % Complete Nichols Elem. School 0 1,091, % Complete Pauly Elem. School 0 134, % Complete Voorhies Elem. School 3,885 3,885 TBD Bid Date - TBD Sub-Total $3,885 $10,949,587 Security Improvements at 42 Schools. Fencing (31 sites) Completed : 29 Security doors (19 sites) Completed : 18 Security Cameras (42 sites) Completed 42 Sub-Total $497,433 $6,095,712 Modular Classroom Replacements Replace Temporary Classrooms with Permanent Modular Classrooms Sub-Total $428,452 $14,846,726 General Expenses $1,522,976 $1,718, Total Projects $24,573,436 $60,313,549 1 Source: Bakersfield City School District 2006 General Obligation Bond Expenditure Report, fiscal year Source: Status of Modernization, DSA Buildings and Security Projects, July 11, Completed Projects: Hort, McKinley, Wayside, Pauly, Evergreen, Munsey, Fremont, Garza, College Heights, Pioneer Drive and Frank West Ready to Bid: Sequoia Middle School Page 44

51 Reports To keep the Board of Education and the CBOC well-informed of bond expenditures, the status of design and construction and the schedules of bond funded construction projects, District staff provides the Board and the CBOC with the following quarterly reports. Status of New Schools, Modernizations, DSA Buildings and Security Projects. This report provides the summary of completed projects, the status of construction projects active during the current year, and the schedules for the construction of all remaining facilities projects under the bond program. Measure G Funds Quarterly Expenditure Reports. This report provides quarterly, year to date and cumulative total expenditures of bond funds by project. Conclusion Results of the examination of design and construction documents indicate that the District expended adequate effort in the creation of program schedules for the design and construction of the projects identified in the Measure G bond project list. The District has likewise expended adequate efforts to ensure adherence to these established schedules. Page 45

52 MEASURE G EXPENDITURES REPORT Objective To gather data and verify that bond funds were expended on authorized bond projects only in accordance with the bond language and in compliance with the requirements of Proposition 39. Scope and Methodology The scope of this audit section covers all construction projects and expenditures incurred during the period from July 1, 2012 through June 30, Copies of the Financial Activity Reports and the bond expenditure reports were reviewed. Direct comparisons were made between the projects constructed and the projects that were specifically listed in the Bond Project List, Exhibit A of the bond measure to determine whether or not the projects constructed were in the approved list. Background The District accounts for Measure G bond funds in Fund 21, Building Fund. District staff submits a summary of bond fund expenditures together with a report on the status of construction projects to the Citizens Bond Oversight Committee on a quarterly basis for their review and verification. On an annual basis, District staff submits to the Board of Education for information, a financial and project status report on Measure G Bond Funds. As of June 30, 2013, fifty-nine percent of the total authorized Measure G bond funds had been expended. The table below shows a summary of all bond fund expenditures from the start of the bond facilities construction program in fiscal year through fiscal year Measure G Bond Issuance and Expenditures as of June 30, 2013 Total bond authorization $100,000,000 Total bond issues as of June 30, 2013: Series A, February 22, $34,000,000 Series B, C & D, July 12, $35,286,619 Total..... $69,286,619 Expenditures through June 30, 2013 $60,313,549 (60.3 percent of total authorization) 1 On February 22, 2007, the District issued 2007 Series A, $34,000,000 in 2006 General Obligation Bonds at a premium of $1,875,005 and issuance cost of $752, On July 12, 2012, the District issued $35,286, in 2006 General Obligation Bonds as follows: 2012 Series B = $18,050,000 in Qualified School Construction Bonds), 2012 Series C = $16,146, in 2006 General Obligation Bonds, and 2012 Series D = $1,090,000 in 2006 General Obligation Bonds Page 46

53 Measure G Expenditures Report Projects Fiscal Year and Fiscal Year Fiscal Year Total General Bond Expenses $158,690 $36,450 $1,522,976 $1,718,116 Security Improvements $4,930,888 $667,391 $497,433 $6,095,712 Modernization Chipman Junior High School $1,933,677 $0 $0 $1,933,677 Compton Junior High School 164, $164,444 Curran Middle School 5,208, $5,208,609 Eissler Elementary School 1,065, $1,065,472 Evergreen Elementary School 1,328,351 18,720 0 $1,347,071 Nichols Elementary School 1,091, $1,091,486 Pauly Elementary School 134, $134,943 Voorhies Elementary School 0 0 3,885 3,885 Sub-Total $10,926,982 $18,720 $3,885 $10,949,587 Modular Classroom Replacements College Heights Elementary $2,349,786 $266,902 $0 $2,616,688 Evergreen Elementary School 2,618, ,618,843 Frank West Elementary School 85, ,686 Fremont Elementary School 1,449,850 62, ,512,046 Garza Elementary School 3,300,176 16, ,316,562 Hills Elementary School Jefferson Elementary School 21, ,120 McKinley Elementary School 56,073 1, , ,035 Munsey Elementary School 1,734, ,734,144 Pauly Elementary School 1,832, ,832,614 Pioneer Drive Elementary 132,984 3, ,036 Wayside Elementary School 485, ,902 Sub-Total $14,067,438 $350,836 $428,452 $14,846,726 New Schools Construction $4,544,268 $38,450 $22,120,690 $26,703,408 Total $34,628,266 $1,111,847 $24,573,436 $60,313,549 1 Source: BCSD 2006 General Obligation Bond Expenditure Report, July 1, 2011 June 30, Source: BCSD 2006 General Obligation Bond Expenditure Report, July 1, 2012 June 30, Page 47

54 Reports Actual expenditures on Measure G Bond funded projects are reported to the Board of Education in a quarterly report entitled, BCSD 2006 Measure G Bond Funds Expenditure Report. This report provides the actual expenditures incurred on Measure G bond funded projects for the quarterly reporting period, the cumulative totals for the year, and the overall total expenditures from the start of the program through the current reporting period. Copies of these reports are also presented to the Citizens Bond Oversight Committee (CBOC) for oversight and information. These reports keep the Board of Education well-informed with data that enables them to provide direction to District staff for the bond program. Observation The BCSD 2006 Measure G Bond funds Expenditure Report for fiscal year was submitted to the Board of Education during the regular meeting held on July 23, The report was submitted together with the report, Status of New Schools, Modernization, DSA Buildings and Security Projects, which was presented to the CBOC on July 23, Conclusion Results of the examination of expenditure reports for the period from July 1, 2012 through June 30, 2013, indicate that all expenditures of bond funds were for projects included in the bond project list and in accordance with the bond language. Page 48

55 CHANGE ORDERS, CLAIM PROCEDURES, AND RESULTS Objective To gather data and review change order documents to verify that the processing of change orders and claims for bond funded construction projects comply with the requirements of the Public Contract Code, laws and other regulations. Scope and Methodology The scope of the verification process in this audit section covers change orders generated by the construction team and approved by the Board of Education during the period from July 1, 2012 through June 30, In the process of this examination, TSS obtained relevant documents and conducted interviews with staff. An analysis of change orders was prepared to determine the cost of change orders for each construction project and to determine if any of these change orders exceeded the limitations prescribed under the public contracting code. Information from the Board of Education meeting agendas and minutes, and facilities documents related to change orders was also used in preparing this analysis. Background Change Orders. Public Contracting Code Section (a) and (b) states that the governing board of the district may authorize the contractor to proceed with the performance of changes or alterations of a contract (change orders), without the formality of securing bids, if the cost so agreed upon does not exceed the greater of the following: (1) The amount specified in Section ($15,000) or (force account) whichever is applicable to the original contract (2) Ten percent of the original contract price As stated, the threshold for change orders is 10 percent of the original contract amount. To verify the District s compliance with this requirement, TSS recommended that the District obtain a legal opinion on the application of this statute. The District s legal counsel s opinion indicated that the statutory 10 percent change order limit applies to individual change orders and not on the aggregate total of change orders for a project. The commonly observed percentage of change orders on modernization projects in most school districts generally ranges from two percent to five percent of the original contract amount. A higher contingency is expected for renovations or to accommodate difficult site conditions. Change order percentages on new construction projects tend to be three percent to four percent of the original contract price. Typically, change orders for modernization projects cannot be avoided because of the age of the buildings, inaccuracy of as-built records, or other unknown conditions; all of which contribute to the need for authorizing change orders for additional work. Page 49

56 Most change orders are initiated by a Request for Information (RFI), which is a request for clarification in the drawings or specifications. An RFI is reviewed and responded to by the architect and/or project engineers. If it is determined that additional work or a reduction/deletion in work is necessary, the contractor submits a Proposed Change Order (PCO) for the additional cost, a reduction in cost, and/or time extension based on the determination. The facilities project manager reviews the proposal with the inspector, architect of record, and/or the District representative. If accepted, a change directive is issued. The increase or decrease in contract price may be determined at the District s discretion through the acceptance of a PCO flat fee, utilizing unit prices in the original bid, or through the use of a time-and-materials methodology as agreed upon by the District and the contractor. In some cases, this process may go through several cycles due to a disagreement over price. Due to the urgent nature of school construction work, issues are sometimes resolved verbally during the weekly construction meetings, where the architect, facilities project manager, inspector, and contractor s job superintendent are present. Decisions are formalized in the meeting minutes and followed up with a change directive to authorize the work and eventual payment. The District is not liable for the cost of any extra work, substitutions, changes, additions, omissions, or deviations from the drawings and specifications unless it authorizes the work and the change, including costs. The change must be approved in writing through a change order or through a construction change directive. Claim Avoidance. In construction projects, the key to the avoidance of unnecessary claims against the District for additional payments or contract time extensions by contractors are; (a) diligent review and timely responses to RFIs and expedient processing of PCOs by the District s construction team (AOR, CM and PM), and (b) subsequent prompt approval or authorization of these change orders by District staff. To expeditiously authorize change orders and minimize delays, Education Code through allows governing boards of school districts to pass resolutions that delegate the authority to approve change orders to responsible District staff. Such resolutions should define the limits of delegation in terms of change order costs and types they are authorized to approve. Change orders exceeding the limit of delegated authority shall be approved by the Board prior to the execution of the work. On April 28, 2009, the Board of Education approved a resolution which authorizes the Chief Business Official of the District to approve construction project change orders of up to $100,000 and to present all approved change orders to the Board thereafter for ratification. This action reduced the turnaround time for the approval of change orders and minimized construction delays, especially on items and issues that impact the completion of a project. Claims also occur between the subcontractors and their general contractors. These claims come in the form of a Stop Payment Notice (SPN) a notice issued by subcontractors to force the District to withhold funds from the general contractors when the subcontractor has not been paid. District involvement in the SPN is in the withholding of sufficient amounts of monies due to the general contractors or Retention. The District releases the Retention money when the general contractor is relieved and/or released from all SPNs issued against it. Relief from and/or release of the SPN is achieved by the general contractor through; (a) payment of amounts past due to the contractor, (b) issuing a bond against the amount due, and (c) requesting the District to pay subcontractors out of the monies held in Retention. Page 50

57 Retention on Contract Payments. Senate Bill (SB) 293, which was signed into law on October 9, 2011, restricts retention amounts in public construction contracts to not exceed five percent (5%) of the total contract price. The five percent limit, which applies to all contracts entered into on or after January 1, 2012, is found in Public Contract Code Section As an exception under Section 7201(b)(4), the code allows a higher percentage of retention based on a finding by the governing board that the project is substantially complex and therefore requires a higher retention amount than the prescribed five percent. On December 13, 2011, the Board adopted a resolution requiring a 10 percent progress payment retention on the Douglas Fletcher Elementary School and Paul L. Cato Middle School construction project, which has an estimated cost in excess of $50 million, as an exception under this provision. Notice of Completion (NOC). Changes to the California Civil Code, Section 9204(a), regarding the filing of NOCs and Stop Notices took effect on July 1, These changes now allow the owner (District) to record the Notice of Completion (NOC), with the county recorder, up to 15 days after completion of the project, which is longer than the currently specified 10 days. Additionally, Completion is now defined as the date of the owner s acceptance of the project. If the owner records the NOC on time, the subcontractor must give a Stop Payment Notice (SPN) to the owner within 30 days of the recording. If the owner does not record the NOC on time, a subcontractor may file a SPN within 90 days. Change Orders - Measure G Projects Fiscal Year Change orders costing over $100,000 are approved by the Board of Education while change orders costing $100,000 and less are approved at the staff level and submitted to the Board of Education for ratification and approval. Change orders were initiated by the construction team, reviewed by District staff and consultants and submitted to the Board of Education approval process. A summary of change orders processed and approved for active construction projects during the current audit period are shown in the following table, Change Orders Measure G Bond Projects Fiscal Year Page 51

58 School Site Project Description/Contractor Contract Amount/Award Date Change Order No./(Date) Amount % of Original Contract Amount Pauly Elementary School Modernization Project/ $4,142,240 CO #1 4 $289, % JTS Construction (01/25/2011) (08/23/ /11/2012) D.K. Fletcher Elementary School and Paul Cato Middle School Bid Package ES/MS-01/ Earthwork and Grading/Crew, Inc. Bid Package ES/MS-02/ Underground Site Utilities/ JPI Development Group, Inc. Bid Package ES/MS-03/Site Concrete/JTS Construction Bid Package ES/MS-04/Fencing and Gates/Fencecorp, Inc. Bid Package ES/MS-05/On-Site Asphalt Paving/Burtch Construction, Inc. Bid Package ES/MS-06/Landscape and Irrigation/Kern Sprinkler, Inc. $1,474,350 (01/24/2012) $1,300,000 (03/27/2013) $2,317,000 (03/27/2012) $1,193,525 (03/27/2012) $1,193,525 (03/27/2012) $1,210,905 (03/27/2012) CO #1 2 (12/11/ /22/2013) CO #1 (01/22/2013) CO #1 3 (01/22/ /25/2013) $11, % 4, % $70, % Bid Package ES/MS-07/Playground Equipment/Omega Construction Bid Package ES/MS-08/Structural Concrete/Santa Clarita Concrete Bid Package ES/MS- 09/Masonry/Industrial Masonry Bid Package ES/MS-10/Structural Steel- Metal Fab/KCB Towers $280,000 (03/27/2012) $3,559,336 (03/27/2013) $1,369,000 (03/27/2012 $2,462,665 (03/27/2012) CO #1 (01/22/2013) CO 31 2 (12/11/ /28/2013 CO #1 2 (02/26/ /28/2013) CO #1-2 (12/11/ /25/2013) $13, % $8, % $100, % $1, % Bid Package ES/MS-11/Rough Carpentry-Insulation/Tomahawk Builders Bid Package ES/MS-12 (Arch. Woodwork/Cabinets) Stolo Cabinets Bid Package ES/MS-13/Roofing, Waterproofing/Graham Prewett, Inc. $4,880,000 (03/27/2012) $1,462,600 (05/29/2012) $2,233,000 (03/27/2012) CO #1-4 (12/11/ /25/2013) CO #1 3 (01/22/ /25/2013) CO #1 3 (12/11/ /25/2013) $46, % $21, % $87, % Bid Package ES/MS-14/Door, Frames & Hardware/T.R. Mulligan, Inc. $792,000 (03/27/2012) CO #1 (05/28/2013) $6, % Bid Package ES/MS-15/Windows, Glass, Glazing/Kern Glass & Aluminum, Inc. $381,950 (03/27/2012) Bid Package ES/MS-16/Lath, Plaster & Drywall/Nevell Group, Inc. $4,382,790 (03/27/2012) CO #1 (03/19/2013) ($31,875) -0.73% Bid Package ES/MS-17/Ceramic Tile/Visalia Ceramic Tiles, Inc. Bid Package ES/MS-18/Accoustical Ceilings & Walls/Western Building Materials Bid Package ES/MS- 19/(Flooring)/Metro Floors, Inc. Bid Package ES/MS-20/Painting/Wm B. Saleh, Co., Inc. $385,473 (03/27/2012) $708,500 (03/27/2012) $568,500 (05/29/2012) $341,798 (03/27/2012) CO #1 3 (04/23/ /25/2013) CO #1 4 (12/11/ /25/2013) $82, % ($950) -0.28% Page 52

59 School Site D.K. Fletcher Elementary School and Paul Cato Middle School Project Description/Contractor Bid Package ES/MS-21/Arch. & Misc Specialties/JTS Construction, Inc. Contract Amount/Award Date $699,300 (03/27/2012) Change Order No./(Date) Amount % of Original Contract Amount Bid Package ES/MS-22/Fire Protection/RLH Fire Protection, Inc. $587,950 (03/27/2012) Bid Package ES/MS-23/Building Plumbing/Taft Plumbing Company, Inc. $1,404,127 (03/27/2012) CO #1 4 (12/11/ /28/2013) $12, % Bid Package ES/MS-24/HVAC & Controls/Journey Air Conditioning Bid Package ES/MS- 25/Electrical/RDM Electric Company $3,195,846 (03/27/2012) $5,075,000 (03/27/2012) CO #1 2 (01/22/ /25/2013) CO # 1 3 (04/23/ /25/2013) $4, % $30, % Bid Package ES/MS-26/Food Service Equipment/Kamran Company, Inc. $466,900 (03/27/2012) CO # 1 (04/23/2013) $32, % Bid Package ES/MS-27/Off-Site Improvement & Utilities/Griffith Company, Inc. $2,503,200 (07/24/2012) CO #1-4 (01/22/ /19/2013 $232, % Bid Package ES/MS-28/Structural Cabling/Low Voltage/Quinton Systems, Inc. $456,428 (02/21/2012) McKinley Elementary School Site Improvements for Four (4) Permanent Classrooms and One (1) Permanent Restroom/BMY Construction $656,000 (08/28/2012) CO #1 (05/28/2013) l $25, % Pioneer Drive Elementary School Mount Vernon Elementary School Compton Junior High School Site Improvements for Eight (8) Permanent Classrooms and One (1) Permanent Restroom/BMY Construction Kitchen Addition Modernization $824,500 (08/28/2012) $336,000 (04/23/2013) $7,079,428 (05/28/2013) CO #1 (05/28/2013) ($30,984) -3.76% Page 53

60 Observations The Douglas K. Fletcher Elementary School/Paul L. Cato Middle School new construction project generated seven (7) overall project change orders comprised of 46 individual contract change orders, while the modernization project at Pauly Elementary School and the Permanent Modular Classroom (PMC) projects at McKinley and Pioneer Drive Elementary Schools generated one change order each during the fiscal year Justifications for the requested changes include unforeseen conditions, additional work to mitigate design adjustments and other field conditions. During the current audit period, twenty-two active construction contracts generated forty-nine individual change orders which ranged from 0.03 to 9.59 percent of the original contract amount. None of these individual change orders exceeded the threshold of 10 percent of the original contract amount set by Public Contracting Code a.1 and b. Review of available change order support documents indicate that these changes were reviewed by the construction team, authorized by staff and approved/ratified by the Board of Education. There were no claims from contractors, subcontractors and/or vendors against the District during the current audit period. During the review of Board agenda items, TSS did not find agenda items submitted to the Board of Education for approval to officially accept and issue Notices of Completion (NOC) for projects completed during the current audit period. However, the report submitted to the Citizens Oversight Committee (COC) entitled, Status of New Schools, Modernizations, DSA Buildings and Security Projects, dated July 11, 2013, shows three (3) projects; (a) Pauly Elementary School Modernization project, (b) McKinley Elementary School PMC project and (c) Pioneer Drive Elementary School PMC project, which were completed during the current audit period. Conclusion Results of the examination of change orders and other related documents indicate that the District is in compliance with the requirements of Public Contract Code Section a and b which sets the threshold for change orders at 10 percent of the contract amount. Page 54

61 Recommendation As a best practice, TSS recommends that District staff submit to the Board of Education a summary of all Notices of Completion (NOC) recorded. California Civil Code, Section 9200(a), states that the completion of a work of improvement occurs at the acceptance of the work by the public entity. It should be noted that the recording of a NOC, which must be recorded with the County Recorder within 15 days after completion, triggers the time period for the filing of Stop Payment Notices (SPN) for subcontractors who seek payment by District, from the general contractor s retention funds, for unpaid construction work on the projects. Recording of the NOC also accelerates the deadline for the filing Stop Notices and protects the District from a long drawn process of resolving SPNs between general contractors and subcontractors. District Response After acceptance of the work of improvement, District staff will sign, verify and record a Notice of Completion with the County Recorder within 15 days. A summary of all Notices of Completion recorded will be submitted to the Board of Education on a regular basis. Page 55

62 BIDDING AND PROCUREMENT PROCEDURES Objective To gather data and verify that District bidding and awarding of bond funded construction projects comply with the requirements of the Public Contracting Code, and other relevant laws and regulations. Scope and Methodology The scope of this audit section covers the activities of the District relating to the bidding and awarding of construction contracts for projects funded under the Measure G bond program for the period from July 1, 2012 through June 30, TSS conducted a series of interviews with the District Superintendent, Chief Business Official, the Director of Facilities, the President of the Board of Education and the Chairperson of the Citizens Bond Oversight Committee (CBOC). TSS also reviewed Board agenda items, facilities files, and bidding and procurement records, in the process of this examination. Background Formal Public Bids. Public Contract Code, Section 20111, known as the formal bid process requires competitive bidding for public projects, subject to the limits imposed by the California State Controller s Office, through official advertisement in a newspaper of general circulation. Section likewise requires competitive bidding on purchases or lease of equipment, materials or supplies; services, not including construction services, or special services and advice in accounting, financial, legal or administrative matters; and repairs, including maintenance work that is not a public project. In the formal bid process, contracts shall be let to the lowest responsible bidder who shall give such security as the Board of Education requires, or else all bids shall be rejected. Alternative Informal Bids. Public Contract Code Section , known as the California Uniform Public Construction Cost Accounting Act (CUPCCAA) or the Act, allows public agencies, who elect by resolution to become subject to these accounting procedures, to increase the threshold for projects that may be performed without competitive bidding to $30,000 or less, and to use informal bidding procedures for projects $175,000 or less, and to use formal bidding procedures for projects over $175,000. On May 28, 2002, the Board of Education elected, by resolution, to become subject to the requirements of the CUPCCAA. Under CUPCCAA, the District is required to create and maintain a list of qualified contractors by category of work. Each year the District is required to publicly invite licensed contractors to submit their name for inclusion on the list. Additionally, in compliance with CUPCCAA requirements, the District notifies seven construction trade journals and plan rooms within the area of all upcoming formal and informal bids for projects with estimated costs of $30,000 and above. Currently, the District has the following journals and plan rooms in the required notification list; Central California Builders Exchange, Construction Bid Board, Hi-Desert Plan Room, McGraw-Hill Construction Dodge, Kern Page 56

63 County Builders Exchange, The Plan Room and Tulare and Kings Counties Builders Exchange. Competitive Negotiation. Public Contract Code Section allows the District to bid and award contracts for the procurement of computers, technology and related electronic equipment through competitive negotiation which allows the district to consider, in addition to price, factors such as vendor financing, performance reliability, standardization, life-cycle costs, delivery timetables, support logistics, the broadest possible range of competing products and materials available, fitness of purchase, manufacturer's warranties, and similar factors in the award of contracts for technology, telecommunications, related equipment, software, and services. The process requires sending a Request for Proposal (RFP) to qualified vendors, publication of the notice to vendors in a newspaper, technical evaluation of bids received based on price and all other factors and the selection for the award of contract. If the District does not award the contract to the lowest bidder, the district shall make a finding setting forth the basis for the award. Bids are received at the District office or address of the specified architectural firm. Once bids are opened, they are verified for compliance and completeness. Architects verify licenses, bonds, insurance, and fingerprinting before the facilities department prepares a recommendation for award. At a subsequent Board meeting, the recommendation of award is placed on the agenda for action. The Director of Facilities prepares the Board agenda information for the award of bid. The Notice of Award is issued after the bid is approved by the Board of Education. The District successfully used this approach for the acquisition of various technology and telecommunications equipment and related software and services for E-Rate funded projects and new schools. Last year, the Board of Education approved procurement contracts for Sony Video Surveillance Cameras through this process. Piggyback Contracts. The piggyback contracting method is a commonly used and acceptable method of purchasing property or equipment such as relocatable classrooms. The term piggyback is associated with the Public Contract Code (PCC) Section 20118, which allows public entities to acquire personal property by participating in an existing contract of another public entity. In this method, school districts lease or purchase personal property by issuing a contract directly to the vendor who has an existing contract with a public corporation or agency for the lease or purchase of personal property and then make payments to the vendor under the same terms that are available to the public corporation or agency holding the original contract. The main advantage of this method is savings in time and cost usually expended in (a) preparing the plans, specifications and bid documents, and (b) conducting the formal bid process for the procurement of district needs. These processes could take more than a year to accomplish and could cost the district substantially in architectural and engineering fees. Whereas, to do a piggyback contract, the district simply obtains formal quotations or proposals from vendors who will use prices from active contracts with other public agencies that carry piggyback clauses. Page 57

64 Bid Participation and Results The table below exhibits the bid results for contracts bid and awarded through the formal public bid process in accordance with Public Contract Code Section 20111, for fiscal year Bids/Contracts Awarded through the Formal Bid Process, Fiscal Year Site Project Description Bid Opening Date No. of Bidders Base Bid (High) Base Bid (Low) Variances Between Bids BOE Approval of Award Contractor Contract Amount Douglas K. Fletcher Elementary School and Paul Cato Middle School Bid Package ES/MS-27/ Off-Site Improvement & Utilities 07/10/ $3,000,000 $2,503,200 $496,800 O7/24,2013 Griffith Company $2,503,200 McKinley Elementary School Site Improvements for Four (4) Permanent Classrooms and One ( 1) Permanent Restroom 08/20/ $821,000 $656,000 $165,000 05/28/2013 BMY Construction Group $656,000 Pioneer Drive Elementary School Mt. Vernon Elementary School. Compton Junior High School Site Improvements for Eight (8) Permanent Classrooms and One (1) Permanent Restroom. 08/20/ $880,000 $824,500 $55,500 08/28/2012 JTS Construction $824,500 Kitchen Addition 03/15/ $375,112 $336,000 $39,112 04/23/2013 Omega Construction $336,000 Modernization 05/05/ $7,784,400 $7,079,428 $704,972 05/28/2013 Klassen Corp. $7,079,428 Page 58

65 Samples of Formal Bids (PCC 20111) During this audit period, four of the construction projects shown in the preceding table, were selected for testing as part of the bidding and procurement review. Project No. 5034; Site Improvements for Four (4) Permanent Modular Classrooms and One (1) Permanent Modular Restroom at McKinley Elementary School The scope of work for this bid package is to provide labor, materials, equipment and supervision for site improvements and utilities for the construction of the new permanent modular classrooms. The Notice to Contractors Calling for Bids was advertised in The Bakersfield Californian on July 21, In compliance with PCC 22037, the publication of the notice was made at least 14 days prior to the opening of sealed bids. A mandatory job walk was held on August 1, Bids were opened on August 20, Following is a tabulation of the four bids received for this project: Contractor Base Bid Additive/ Deductive Total Bid BMY Construction, Inc. $656,000 N/A $656,000 JTS Construction $676,500 N/A $676,500 Omega Construction $664,000 N/A $664,000 Schreder Construction $821,000 N/A $821,000 Note: The Notice to Contractors Calling for Bids for this project specified that the lowest responsive responsible bidder shall be the lowest bid price on the base contract without consideration of the prices on the additive or deductive bid. District staff and consultants reviewed the bid documents and recommended to the Board of Education that the contract be awarded to the lowest responsive responsible bidder, BMY Construction on August 28, Submittal of the required securities to the District, which include Performance Bonds, Labor and Material Bonds, Certificates of Insurances and a signed Contract Agreement were accomplished by the contractor on September 12, After review and acceptance of the required securities, the District signed the contract in the amount of $656,000. The Notice to Proceed (NTP) was issued on September 13, 2012 with a contractual project duration of 120 consecutive calendar days from the date of notice. Project No. 3862; Site Improvements for Eight (8) Permanent Modular Classrooms and One (1) Permanent Modular Restroom at Pioneer Drive Elementary School The scope of work for this bid package is to provide labor, materials, equipment and supervision for site improvements and utilities for the construction of the new permanent modular classrooms. Page 59

66 The Notice to Contractors Calling for Bids was advertised in The Bakersfield Californian on July 21, In compliance with PCC 22037, the publication of the notice was made at least 14 days prior to the opening of sealed bids. A mandatory job walk was held on August 1, Bids were opened on August 20, Following is a tabulation of the five bids received for this project: Contractor Base Bid Additive/ Deductive Total Bid JTS Construction $824,500 N/A $824,500 Don Kinzel Construction $851,600 N/A $851,600 BMY Construction $871,000 N/A $871,000 Omega Construction $880,000 N/A $880,000 Schreder Construction Withdrew Bid N/A Note: The Notice to Contractors Calling for Bids for this project specified that the lowest responsive responsible bidder shall be the lowest bid price on the base contract without consideration of the prices on the additive or deductive bid. District staff and consultants reviewed the bid documents and recommended to the Board of Education that the contract be awarded to the lowest responsive responsible bidder, JTS Construction, on August 28, Submittal of the required securities to the District, which include Performance Bonds, Labor and Material Bonds, Certificates of Insurances and a signed Contract Agreement were accomplished by the contractor on September 7, After review and acceptance of the securities, the District signed the contract in the amount of $824,000. The Notice to Proceed (NTP) was issued on September 11, 2012 with a contractual project duration of 120 consecutive calendar days from the date of notice. Project No. 3990; Kitchen Addition at Mount Vernon Elementary School The scope of work for this bid package is to provide labor, materials, equipment and supervision for the demolition of the old walk-in cold storage units and the construction of a new building which houses cold and dry storage facilities. The Notice to Contractors Calling for Bids was advertised in The Bakersfield Californian on February 7, In compliance with PCC 22037, the publication of the notice was made at least 14 days prior to the opening of sealed bids. A mandatory job walk was held on February 19, Bids were opened on March 15, Following is a tabulation of the four bids received for this project: Contractor Base Bid Additive/ Total Deductive Bid Omega Construction, Inc. $336,000 N/A $336,000 Marko Construction, Inc. $360,000 N/A $360,000 Superior Construction, Inc. $366,500 N/A $366,500 Lumedi Construction, Inc. $375,112 N/A $375,112 Note: The Notice to Contractors Calling for Bids for this project specified that the lowest responsive responsible bidder shall be the lowest bid price on the base contract without consideration of the prices on the additive or deductive bid. Page 60

67 District staff and consultants reviewed the bid documents and recommended to the Board of Education that the contract be awarded to the lowest responsive responsible bidder, Industrial Masonry, Inc. on April 23, Submittal of the required securities to the District, which include Performance Bonds, Labor and Material Bonds, Certificates of Insurances and a signed Contract Agreement were accomplished by the contractor on May 10, After review and acceptance of the securities, the District signed the contract in the amount of $336,000. The Notice to Proceed (NTP) was issued on May 22, 2013 with a contractual project duration of 180 consecutive calendar days from the date of notice. Project No. 1896; Modernization Project at Compton Junior High School The scope of work for this bid package is to provide labor, materials, equipment and supervision for the modernization and upgrades of finishes, building and equipment systems of the school. The Notice to Contractors Calling for Bids was advertised in The Bakersfield Californian on April 8, In compliance with PCC 22037, the publication of the notice was made at least 14 days prior to the opening of sealed bids. A mandatory pre-bid job walk was held on April 16, Bids were opened on May 8, Following is a tabulation of the four bids received for this project: Contractor Base Bid Additive/ Deductive Total Bid Klassen Corporation $7,079,428 N/A $7,079,428 S.C Anderson, Inc. $7,098,000 N/A $7,098,000 Webb Brothers Construction $7,347,538 N/A $7,347,538 JTS Construction $7,784,400 N/A $7,784,400 Note: The Notice to Contractors Calling for Bids for this project specified that the lowest responsive responsible bidder shall be the lowest bid price on the base contract without consideration of the prices on the additive or deductive bid. District staff and consultants reviewed the bid documents and recommended to the Board of Education that the contract be awarded to the lowest responsive responsible bidder, Klassen Corporation, on May 28, Submittal of the required securities to the District, which include Performance Bonds, Labor and Material Bonds, Certificates of Insurances and a signed Contract Agreement were accomplished by the contractor on June 3, After review and acceptance of the securities, the District signed the contract in the amount of $7,079,428. The Notice to Proceed (NTP) was issued on June 20, Page 61

68 Observations The District utilized the formal public bid process and the traditional single prime contract delivery method for all five major construction projects bid and awarded during fiscal year Staff submitted to the Board of Education for ratification and approval 272 contracts for various routine maintenance work and minor public projects awarded through the informal bid process under the CUPCCAA. All contracts awarded under CUPCCAA during the current audit period were submitted to the Board of Education for ratification. On July 23, 2013, the Board authorized staff to utilize piggyback contacts, under the Oro Grande School District master purchasing contract, for future purchases of relocatable classrooms to meet the relocatable classroom needs of the District. Likewise, the Board approved piggyback contracts, under the Biggs Unified School District master contract, for the supply of four modular classrooms to McKinley Elementary School and eight modular classrooms to Pioneer Elementary Schools, during the current period. Conclusion Results of the examination of bidding and contract documents indicate that the District is in compliance with the requirements of Public Contract Code Section (Formal Public Bids), Public Contract Code Sections California Uniform Public Construction Cost Accounting Act (CUPCCAA; Alternative Informal Bid process), Public Contract Code Section (Piggyback Contracts) and Public Contract Code Section , (Competitive Negotiation process), in the bidding and awarding of contracts for bond funded construction projects. Page 62

69 PAYMENT PROCEDURES Objective The objective of this section is to assess the District s compliance with State law and District policy regarding making payments to vendors. Scope and Methodology To meet the objective, purchase orders, vendor invoices, the District s review and approval process, and time for making timely payments were analyzed. In the process of this examination, numerous purchasing and payment documents pertaining to expenditures funded through Measure G were reviewed for compliance. The review consisted of the following: Verification that expenditures charged to the Measure G Bond were authorized as Measure G projects; Compliance with the District s Purchasing and Payment policies and procedures; Verification that back up documentation, including authorized signatures, were present on payment requests; and Vendor payment timelines. Background When the Board of Education approves a construction contract, a requisition is initiated for the full contract amount and coded to the appropriate budget account by the Facilities Accounting Technician. The requisition and contract are then routed to the Purchasing Department. The purchasing department assigns the purchase order number. Adequate funds must be available for the purchase order to be released. The funds are encumbered for the full amount of the purchase order and as payments are made, the encumbrance is reduced by the amount expended. Copies of the purchase order are then routed to the Facilities Department and to Accounts Payable. In construction contracts, the application for payment (i.e. Application and Certification of Payment, AIA Document G702 Form) is first reviewed in the field by the architect and inspector of record who are responsible for certifying the percentage and cost of work completed. For the new elementary/middle schools (Fletcher/Cato), the construction manager also reviews and approves the invoice. After field review and certification, the application for payment is then sent to the facilities office for processing. Facilities staff reviews the payment application for accuracy of costs, the inclusion of change orders and availability of appropriate backup documentation and required authorized signatures. Staff then approves the application for payment. Payment applications approved by the Facilities Department are then forwarded to the Accounts Payable office for processing and payment. The Accounts Payable Accounting Technician reviews the purchase order and payment request ensuring that all required approvals are present and the payment amount is correct. Accounts Payable batches are processed daily and warrants are issued daily by the county office. Page 63

70 For the first payment on a payment application, the county office requires the District to submit a copy of the signed contract, proof of publication, payment bond, performance bond, and the Board minutes showing approval of the contract. The Facilities Department is responsible for providing the county office with these documents. Prompt Payment Act By law, school districts are required to make progress payments to their contractors in a timely manner. Public Contract Code Section states that failure to make a progress payment within 30 days of an undisputed and properly submitted payment request is subject to a 10 percent interest fee on unpaid amounts. The Code of Civil Procedure Section (a) requires a district to review a payment application as soon as practicable, but not more than seven days after receipt. Sample Twenty-five invoices totaling $2,690,152.90, paid with Measure G funds, were reviewed in the course of this examination. The invoices represent 11 percent of the total bond expenditures in The review consisted of verification that expenditures charged to the Measure G Bond were authorized as Measure G projects that authorized approvals (i.e., owner, architect, inspector and construction manager) were obtained, that the invoiced amounts are in agreement with the actual amount paid; and that payment to vendors or service providers were made within the prescribed time period. The sample of payments included numerous approved Measure G projects. Out of the twentyfive invoices reviewed, twenty were for contractors and professional services at the new elementary/middle schools (Fletcher/Cato); two were for fencing projects, one was for security cameras, one was for modular classrooms and one was for labor compliance services. The District s payment process is well-structured, and date-stamps are made at each step upon receipt of an invoice, when approved, and when received at Accounts Payable. While these procedures are thorough there are occasionally delays which impact the timely payment of invoices. A vendor may delay submittal of an invoice after its preparation, thereby distorting the time from the invoice date to its receipt at the District. An invoice can sit in an in-basket at the District before being stamped as received, especially if the person at the desk is absent for a period of time. An invoice may be received for which there was no pre-issued purchase order, thereby delaying payment. All of the above occurrences were observed in a review of the sample of 20 invoices, as documented below: Payments Made Within 30 Days of Invoice Date Twenty-two of the 25 invoices (88 percent) were timely paid within 30 days of the invoice date. The analysis of these payments indicates the following: Event Range Days Average Elapsed Days Invoice Date to Receipt Receipt to Accounts Payable Accounts Payable to Warrant Total Receipt at Accounts Payable to Warrant 17.5 Page 64

71 Impacting the number of days lapsed between the date of contractor s invoice and receipt at the District are the required approvals by the Construction Manager, the Architect-of-Record and the DSA Inspector a normal payment approval procedure. Payments Made After 30 Days Three invoices out of the 25 reviewed were paid after 30 days from the invoice date, ranging from 33 days to 128 days. Because these three invoices experienced delays, they have been analyzed individually as noted below. Invoice 1 A $1, invoice from a vendor was dated June 9, 2012, but was not stamped as received at the District until September 28, 2012, 111 days later, and a purchase order was not prepared until October 10, After receipt at the District, the invoice was paid 17 days later, reflecting appropriate internal processing. While the reasons for the delay are not known, the absence of a purchase order and the need to verify the approval of services could be factors. Invoice 2 A $59, invoice for construction management services was dated January 31, 2013, but was not stamped in at the District until March 14, 2013, 42 days later, and a purchase order was not prepared until March 19, There was no evidence of the invoice being questioned or disputed, as it was approved and paid as submitted. Invoice 3 A $ invoice for sweeping services was dated January 31, 2013, and stamped in at the District on February 28, 2013, 28 days later. A job order for the services was made on January 30, After receipt at the District, the invoice was timely paid in five days. Observations All of the invoices reviewed were authorized expenditures under Measure G. All of the invoices showed evidence of being appropriately reviewed and approved and date-stamped at each step of the payment process. Eighty-eight percent of the invoices were paid within thirty days of the date of invoice, reflecting improvements in the payment process over the past several years. Three invoices were paid over thirty days from receipt of the invoice at the District due to delays at various points in the payment process, as documented in details above. The District continues to have invoices for which purchase orders were issued after receipt of the invoices, as documented in prior performance audit reports. Page 65

72 Recommendation It is again recommended that the District implement and maintain the practice of generating purchase orders as soon as work, services or equipment is authorized for all bond expenditures, noting improvements made annually over the past several years. District Response The District will continue to monitor this area and make improvements as needed. Page 66

73 EFFECTIVENESS OF THE PUBLIC OUTREACH PROGRAM AND COMMUNICATION CHANNELS AMONG ALL STAKEHOLDERS WITHIN THE BOND PROGRAM Objective The objective of this section is to determine the effectiveness of the District s communication of Measure G plans and progress to all stakeholders. Scope and Methodology To meet the objective, all avenues of communication, including public presentations at Board meetings, CBOC activities, District website postings, newsletters and billboards were considered. TSS interviewed the Board President, the CBOC President, the Superintendent and the Chief Business Official. TSS also reviewed the District s website, the Citizens Oversight Committee s website, and the District s newsletters. The purpose of the interviews and the review of the websites and published information are to examine the processes and systems used to convey information about the bond program to interested parties. These processes serve as a measurement of the effectiveness of disseminating information to parties involved and interested in the bond program and its operations. These processes and information also indicate the effectiveness of communicating to the school site communities and the community at large. Background Public outreach is a key component for any successful bond program. It is vital to keep the community informed during each phase of the program. Outreach to the community regarding the status of projects, including priorities, project timelines and updates are important for the District to undertake consistently in their ongoing efforts to manage information and expectations about the bond program. District Communication Activities The District utilizes the following methods to convey information in regards to the Measure G Bond Program: The Direct Connection A Message to the Community is a newsletter the District publishes several times a year. The August publication is mailed to the homes of all BCSD students and the other editions are sent home from school with students. The publication is in both English and Spanish. While primarily focusing on the educational programs, Measure G is at times discussed, including a reference to the District s bond website ( where detailed bond information can be found. Publications of the Direct Connection for the past several years include: February 2010 Measure G Bond Update May 2010 Page 67

74 August 2010 February 2011 May 2011 August 2011 August 2012 February 2013 Bond Funded Facility Improvements May 2013 August 2013 The Community Connection is a quarterly newsletter that is ed to over three hundred local businesses. The newsletter provides updates on the Bond Program and District events and happenings. The homepage on the District s website includes a Bond Update; this link takes you directly to the Citizens Bond Oversight Committee site. The CBOC webpage includes community updates, pictures and descriptions of bond projects at various sites, committee member contact information, CBOC meeting minutes, bond expenditure reports, the bond financial and performance audits, CBOC by-laws and the date, time and location of the next meeting. Bond updates and information are topics of discussion at monthly Board Meetings. The school newsletters provide facilities project updates within the school community. Billboards have been placed at schools being constructed or modernized to provide information to the school community. Commendations The commendations presented here were included in prior performance audit reports. They are repeated here as they continue to demonstrate the District s commitment to keeping the community informed about Measure G and related activities. The newsletters are excellent tools that are being used to communicate to both the school communities and local business communities on the status of the Bond Program. The District is commended for keeping both the District and CBOC webpages maintained and updated with current information. Staff members are regularly in attendance at CBOC meetings and information provided was current. CBOC members reported that the community appears content with the management of the Measure G bond program. Board member comments were positive about the progress of the facilities projects and complimentary to the Citizens Oversight Committee and District staff. Page 68

75 DISTRICT PROVIDED INFORMATION This information was compiled by TSS staff from a District source and/or provided by District staff for informational purposes only. The information included here has not been audited. Page 69

76 FACILITIES PROGRAM HISTORY/STATUS To assist the community in understanding the District s facilities program and the chronology of events and decisions that resulted in changes in scopes and costs for projects, this report documents facilities-related events since July 1, Chronology of Facilities Board Agenda; July 1, 2012 through June 30, 2013 DATE ACTION AMOUNT July 24, 2012 (Item # G3) July 24, 2012 (Item # G4) July 24, 2012 (Item # K17) July 24, 2012 (Item # K27) August 28, 2012 (Item # H2) August 28, 2012 (Item # H3) August 28, 2012 (Item # L20) August 28, 2012 (Item # L21) September 25, 2012 (Item # H3) October 23, 2012 (Item # H2) October 23, 2012 (Item # L3) October 23, 2012 (Item # L6) October 23, 2012 (Item # L14) October 23, 2012 (Item # L17) October 23, 2012 (Item # L18) November 20, 2012 (Item # H2) Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Actual Cost Information for the Sale of District General Obligation Bonds Sale and Disposal of Surplus/Obsolete District Property Request to Award Offsite Utilities Contract (Re-bid Package ES/MS-27) to Griffith Company, for the Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School District 2006 Measure G Bond Funds - Financial Report and Projects Status Report Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Request to Award Contract for the project, "McKinley Elementary School - Site Improvements for Four Permanent Modular Classrooms and One Permanent Modular Restroom" Request to Award Contract for the project, "Pioneer Drive Elementary School - Site Improvement for Eight Permanent Modular Classrooms and One Permanent Modular Restroom" Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Facilities Renovation and Repair Contract (CRPM-2021) for the District's California State Preschool Program Authorization to Participate - Biggs Unified School District Cooperative Bid - Awarded to American Modular Systems Master Electricity Supply Agreement Authorization to Purchase Four Existing Modular Buildings from Community Action Partnership of Kern Resolution in Support of Applications for Eligibility Determination, Funding Applications, High Performance Incentive Grant Funding Requests, and Authorization to Sign Applications and Associated Documents Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act $2,503, $656, $824, $49, $104, Page 70

77 DATE ACTION AMOUNT November 20, 2012 (Item # L14) December 11, 2012 (Item # H5) December 11, 2012 (Item # H6) December 11, 2012 (Item # H7) January 22, 2013 (Item # H1) January 22, 2013 (Item # H3) January 22, 2013 (Item # H4) January 22, 2013 (Item # K5) January 22, 2013 (Item # K6) February 26, 2013 (Item # H3) February 26, 2013 (Item # H4) February 26, 2013 (Item # L16) February 26, 2013 (Item # L23) March 13, 2013 (Item # A2) March 19, 2013 (Item # H3) March 19, 2013 (Item # H4) March 19, 2013 (Item # H5) April 23, 2013 (Item # H3) Sale and Disposal of Surplus/Obsolete District Property Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Change Order No. 4 in the amount of $44, from JTS Construction for the Pauly Elementary School Modernization Combined Change Order No. 1 for Several Multiple-prime Contractors in the total amount of $91, for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Annual Report of the Measure G Citizen's Oversight Committee Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Combined Change Order No. 2 for Several Multiple-prime Contractors in the total amount of $63, for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Proposition 39 General Obligation Bonds Measure G Financial Audit Fiscal Year Ended June 30, 2012 Proposition 39 General Obligation Bonds Measure G Performance Audit Fiscal Year Ended June 30, 2012 Change Orders totaling $ previously approved by staff for several multiple-prime contractors for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Sale and Disposal of Surplus/Obsolete District Property Agreement for Consulting Services with Dolinka Group to prepare a School Facilities Needs Analysis $44, $91, $63, $252, $7, Visit the Construction Site for the Douglas K. Fletcher Elementary and Paul L. Cato Middle Schools location at 9801 Highland Knolls Drive Annual Audit Contract $49, Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Change Orders totaling $79,156.35, Previously Approved by Staff, for Several Multiple-prime Contractors for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act $79, Page 71

78 DATE ACTION AMOUNT April 23, 2013 (Item # H4) April 23, 2013 (Item # L18) April 23, 2013 (Item # L22) April 23, 2013 (Item # L23) May 28, 2013 (Item # H5) May 28, 2013 (Item # H6) May 28, 2013 (Item # H7) May 28, 2013 (Item # H8) May 28, 2013 (Item # H9) May 28, 2013 (Item # H10) May 28, 2013 (Item # L6) May 28, 2013 (Item # L8) May 28, 2013 (Item # L12) May 28, 2013 (Item # L14) May 28, 2013 (Item # L15) June 25, 2013 (Item # H3) June 25, 2013 (Item # H5) Change Orders Totaling $91,789.07, Previously Approved by Staff, for Several Multiple-prime Contractors for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Sale and Disposal of Surplus/Obsolete District Property Consultant Services Firms Selected for New Construction, Modernization, or Miscellaneous Projects Request to Award Contract to Omega Construction for the Project, "Mount Vernon Elementary School - Kitchen Addition" Public Hearing on the Adoption of the Resolution Establishing Level 2/3 School Facilities Fees (Developer Fees) Adoption of Resolutions Establishing Level 2/3 School Facilities Fees (Developer Fees) Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Change Order No. 1 for a Total Deduction of $30, from JTS Construction for the project, "Pioneer Elementary School - Eight Permanent Modular Classrooms and One Permanent Modular Restroom" Change Order No. 1 Totaling $25,790.00, from BMY Construction Group for the Project, "McKinley Elementary School - Four Permanent Modular Classrooms and One Permanent Modular Restroom" Change Orders Totaling $65,542.13, Previously Approved by Staff, for Several Multiple-prime Contractors for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School Contract for Services with School Facility Consultants for the School Year Sale and Disposal of Surplus/Obsolete District Property in accordance with California Education Code Section and Board Policy Five Year Plan - Deferred Maintenance Program Request to Award Contract to Klassen Corporation for the Project, "Compton Junior High School Modernization" Authorization to Lease Relocatable Modular Classrooms from Mobile Modular Utilizing Kern High School District Cooperative Bid #2423 Ratification of Contracts Processed Under the California Uniform Public Construction Cost Accounting Act Change Orders Totaling $91,206.62, Previously Approved by Staff, for Several Multiple-prime Contractors for the Dr. Douglas K. Fletcher Elementary School and the Paul L. Cato Middle School $91, $336, $30, $25, $65, $7,079, $91, Page 72

79 DATE ACTION AMOUNT June 25, 2013 (Item # I2) June 25, 2013 (Item # L25) June 25, 2013 (Item # L26) June 25, 2013 (Item # L35) Update School Name to "Rafer Johnson School" for the School Site at 1001 Tenth Street, Bakersfield Approval of Bid Extension - IVS Computer Technology for Smart Boards Extension of the Chawanakee Unified School District Bid for Portable Classrooms - Awarded to Class Leasing Sale and Disposal of Surplus/Obsolete District Property in accordance with California Education Code and Board Policy Page 73

80 FINANCIAL INFORMATION The District s accounting funds used for facilities revenues and expenditures are the following: Fund Description 1 14 Deferred Maintenance 21 Building (Land Sales and General Obligation Bonds) 25 Capital Facilities (Developer Fees) 35 School Facilities (State Match Monies) 40 Special Reserve Fund Capital Outlay 1 Refer to the following tables for a detailed accounting of funds and for an explanation of the use of the funds. CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Fiscal Year Ending June 30, 2007 Deferred Maintenance Fund 1 Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Total Beginning Balance $2,030,681 $2,649,276 $6,047,949 $4,575,271 $11,903,589 $27,206,766 Revenues 1,156, ,138 3,797, , ,606 6,800,707 Expenditures 2,681, ,689 35,608 1,240, ,506,109 Sources/Transfers 1,063,631 34,000, ,332 1,500,000 37,303,963 Net Change (460,922) 34,183,449 3,761,944 39,484 2,074,606 39,598,561 Ending Balance $1,569,759 $36,832,725 $9,809,893 $4,614,755 $13,978,195 $66,805,327 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Fiscal Year Ending June 30, 2008 Deferred Maintenance Fund 1 Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Total Beginning Balance $1,569,759 $36,832,725 $9,809,893 $4,614,755 $13,978,195 $66,805,327 Revenues 1,114,166 1,630,064 1,842,062 5,506, ,568 10,767,719 Expenditures 2,139,304 5,123, ,170 1,827, ,406 9,389,480 Sources/Transfers 1,108, ,300 1,500,000 3,349,544 Net Change 83,106 (3,493,029) 1,666,892 4,420,652 2,050,162 4,727,783 Ending Balance $1,652,865 $33,339,696 $11,476,785 $9,035,407 $16,028,357 $71,533,110 Page 74

81 Fiscal Year Ending June 30, 2009 Deferred Maintenance Fund 1 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Beginning Balance $1,652,865 $33,339,696 $11,476,785 $9,035,407 $16,028,357 $71,533,110 Revenues 122, ,948 1,800, ,547 1,018,224 4,016,593 Expenditures 2,048,240 6,896,520 19,970 4,736, ,444 14,209,598 Sources/Transfers 1,731, ,243 1,500,000 3,971,371 Net Change (194,946) (6,004,572) 1,780,738 (3,812,634) 2,009,780 (6,221,633) Ending Balance $1,457,919 $27,335,124 $13,257,523 $5,222,773 $18,038,137 $65,311,476 Total Fiscal Year Ending June 30, 2010 Deferred Maintenance Fund 1 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Beginning Balance $1,457,919 $27,335,124 $13,257,523 $5,222,773 $18,038,137 $65,311,476 Revenues 13, ,606 1,953,674 1,492, ,047 4,036,194 Expenditures 1,167,745 14,343,454 24,903 1,715, ,251,467 Sources/Transfers 954,764 0 (8,929,904) 8,929, ,764 Net Change (199,043) (14,040,848) (7,001,133) 8,707, ,047 (12,260,509) Ending Balance $1,258,876 $13,294,276 $6,256,390 $13,930,241 $18,311,184 $53,050,967 Total Fiscal Year Ending June 30, 2011 Deferred Maintenance Fund 1 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Beginning Balance $1,258,876 $13,294,276 $6,256,390 $13,930,241 $18,311,184 $53,050,967 Revenues 966,630 82, ,509 3,251, ,161 5,222,883 Expenditures 1,031,298 9,750,323 12,617 4,024, ,269 15,005,751 Sources/Transfers Net Change (64,668) (9,667,723) 735,892 (772,261) (14,108) (9,782,868) Ending Balance $1,194,208 $3,626,553 $6,992,282 $13,157,980 $18,297,076 $43,268,099 Total Page 75

82 Fiscal Year Ending June 30, 2011 Deferred Maintenance Fund 1 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Beginning Balance $1,194,208 $3,626,553 $6,992,282 $13,157,980 $18,297,076 $43,268,099 Revenues 957,817 24,505 1,088,458 9,711, ,755 11,907,964 Expenditures 1,829,876 1,581,123 30,174 6,696,187 4,094,976 14,232,336 Sources/Transfers Net Change (872,059) (1,556,618) 1,058,284 3,015,242 (3,969,221) (2,324,372) Ending Balance $322,149 $2,069,935 $8,050,566 $16,173,222 $14,327,855 $40,943,727 Total Fiscal Year Ending June 30, 2012 Deferred Maintenance Fund 1 CAPITAL OUTLAY FUNDS FISCAL YEAR (AUDITED) Building Fund 2 Capital Facilities Fund 3 School Facilities Fund 4 Special Reserve Fund Capital Outlay 5 Beginning Balance $322,149 $2,069,935 $8,050,566 $16,173,222 $14,327,855 $40,943,727 Revenues 952,853 16,445 1,948,434 7,183,302 58,047 10,159,081 Expenditures 896,655 23,968,563 4,222,174 3,537,600 7,607,550 40,232,542 Sources/Transfers 0 34,196, ,196,619 Uses 0 983, ,660 Net Change 56,198 9,260,841 (2,273,740) 3,645,702 (7,549,503) 3,139,498 Ending Balance $378,347 $11,330,776 $5,776,826 $19,818,924 $6,778,352 $44,083,225 Total 1 The Deferred Maintenance Fund (14) is used for projects identified in the District s Five-Year Deferred Maintenance Plan. Typically, funding comes from a District-match contribution (transfer from the General Fund) and a state-match contribution. Beginning with the fiscal year, the requirement for districts to contribute matching funds has been suspended through June 30, The Building Fund (21) is used to account for revenues and expenditures from General Obligation bond proceeds (Measure G) on acquisition or construction of facilities and from land sales. Measure G, Series A for $34,000,000 was issued on February 22, 2007, and Series B, C and D for $35,286,619 were issued on June 12, The Capital Facilities Fund (25) is used to account for developer fees. 4 The School Facilities Fund (35) is used to account for proceeds received from the State Allocation Board for modernization and new construction projects. Other sources include transfers from the General Fund and Capital Facilities Fund. During , there was an audit adjustment of $594,539 related to Refer to District financial statement for detail. 5 The Special Reserve Fund (40) for Capital Outlay Projects is used to fund facility projects. Other sources include a transfer from the General Fund. Page 76

83 APPENDIX A BOND MEASURE G RESOLUTION AND TEXT Page 77

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85 BOND MEASURE G RESOLUTION AND TEXT Page 79

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87 Page 81