WWeesstt CCoonnttrraa CCoossttaa UUnniiffiieedd SScchhooooll DDiissttrriicctt MEASURES D (2002), J (2005) AND D (2010) PERFORMANCE AUDIT JUNE 30, 2011 March 14, 2012 TOTAL SCHOOL SOLUTIONS 4751 MANGELS BOULEVARD FAIRFIELD, CA 94534 Revised: March 14, 2012 Revised: March 14, 2012 West Contra Costa Unified School District BOARD OF EDUCATION June 30, 2011 Charles T. Ramsey President Madeline Kronenberg Clerk Antonio Medrano Member Elaine R. Merriweather Member Tony Thurmond Member ADMINISTRATION Dr. Bruce Harter, Superintendent of Schools Bill Fay, Associate Superintendent for Operations Revised: March 14, 2012 Revised: March 14, 2012 TABLE OF CONTENTS INTRODUCTION.............................................................................................................................. 1 EXECUTIVE SUMMARY ............................................................................................................... 2 INDEPENDENT PERFORMANCE AUDITOR’S REPORT ....................................................... 3 COMPOSITE BOND MEASURES FINANCIAL REPORT ........................................................ 4 COMPLIANCE WITH BALLOT LANGUAGE .......................................................................... 17 COMPLIANCE WITH STATE LAW AND REGULATIONS................................................... 25 COMPLIANCE WITH DISTRICT POLICIES AND REGULATIONS ................................... 34 DISTRICT AND PROFESSIONAL SERVICES STAFFING PLAN FOR THE BOND PROGRAM ................................................................................................. 41 PROGRAM MANAGEMENT ....................................................................................................... 45 DESIGN AND CONSTRUCTION SCHEDULES – [CASH FLOW ONLY] ............................ 50 DESIGN AND CONSTRUCTION COSTS AND BUDGETS ..................................................... 52 BIDDING AND PROCUREMENT PROCEDURES ................................................................... 58 CHANGE ORDER PROCEDURES .............................................................................................. 70 CLAIM AVOIDANCE PROCEDURES........................................................................................ 78 MEASURE J EXPENDITURES AND PAYMENT PROCEDURES ......................................... 81 BEST PRACTICES IN PROCUREMENT ................................................................................... 87 DELIVERED QUALITY ................................................................................................................ 91 SCOPE, PROCESS, AND MONITORING OF PARTICIPATION BY LOCAL FIRMS ....... 98 EFFECTIVENESS OF THE COMMUNICATION CHANNELS AMONG ALL STAKEHOLDERS WITHIN THE BOND PROGRAM...................................................... 103 REVIEW OF CITIZENS’ BOND OVERSIGHT COMMITTEE MEETING MINUTES .... 105 CITIZENS’ BOND OVERSIGHT COMMITTEE..................................................................... 109 DISTRICT PROVIDED INFORMATION ................................................................................. 112 Revised: March 14, 2012 FACILITIES PROGRAM HISTORY/STATUS .................................................................. 113 EXPENDITURE REPORTS FOR MEASURES D, J AND D (2010) ................................. 124 DISTRICT FACILITIES PROGRAM – A PERSPECTIVE .............................................. 131 STATE NEW CONSTRUCTION STATUS .......................................................................... 140 STATE MODERNIZATION STATUS ................................................................................. 141 APPENDIX A ................................................................................................................................. 143 MEASURE M BOND LANGUAGE ...................................................................................... 143 APPENDIX B ................................................................................................................................. 147 MEASURE D (2002) BOND LANGUAGE ........................................................................... 147 APPENDIX C ................................................................................................................................. 161 MEASURE J (2005) BOND LANGUAGE ............................................................................ 161 APPENDIX D ................................................................................................................................. 173 MEASURE D (2010) BOND LANGUAGE ........................................................................... 173 APPENDIX E ................................................................................................................................. 187 CITIZENS’ OVERSIGHT COMMITTEE ........................................................................... 187 APPENDIX F ................................................................................................................................. 193 GLOSSARY OF TERMS AND ACRONYMS ........................................................................... 193 Revised: March 14, 2012 INTRODUCTION On March 5, 2002, the West Contra Costa Unified School District submitted for voter approval Measure D, a bond measure to authorize the sale of $300 million in bonds to improve school facilities. The measure was approved by 71.6 percent of the voters. Because the bond measure was placed on the ballot in accordance with Proposition 39, it required 55 percent of the vote for passage. Subsequently, on November 8, 2005, the West Contra Costa Unified School District submitted for voter approval another bond measure, Measure J, to authorize the sale of $400 million in bonds to improve school facilities. Measure J was approved by 56.85 percent of the vote. Because the bond measure, like Measure D, was placed on the ballot in accordance with Proposition 39, it also required 55 percent of the vote for passage. On June 8, 2010, the West Contra Costa Unified School District submitted for voter approval another bond measure, Measure D, to authorize the sale of $380 million in bonds to improve school facilities. Measure D was approved by 62.62 percent of the vote. Because the bond measure, like Measure D (2002) and Measure J, was place on the ballot in accordance with Proposition 39, it also required 55 percent of the vote for passage. Article XIII of the California State Constitution requires an annual independent performance audit of Proposition 39 bond funds. The District engaged the firm Total School Solutions (TSS) to conduct this independent performance audit on the Measure D (2002), Measure J and Measure D (2010) to report its findings to the Board of Education and to the independent Citizens’ Bond Oversight Committee. Besides ensuring that the District uses bond proceeds from each bond measure in conformance with the provisions listed in the corresponding ballot language, the scope of the examination includes a review of design and construction schedules and cost budgets; change orders and claim avoidance procedures; compliance with state law and funding formulas; District policies and guidelines for facilities and procurement; and the effectiveness of communication channels among stakeholders, among other facilities-related issues. This annual report is designed to inform the community of the appropriate use of funds generated through the sale of bonds authorized by Measure D (2002), Measure J and Measure D (2010) and to help the District improve its overall bond program. This report covers the Measure D (2002), Measure J and Measure D (2010) funded facilities program and related activities for the period of July 1, 2010, through June 30, 2011. The annual performance audit documents the performance of the bond program and reports on improvements instituted by the District to address any audit findings from prior reports. Revised: March 14, 2012 Page 1 EXECUTIVE SUMMARY This performance audit, conducted by Total School Solutions (TSS), is the annual audit of the $300 million Measure D (2002), $400 million Measure J and $380 million Measure D (2010) bond programs. In conducting the audit, TSS reviewed and examined documentation and processes within the facilities program for the period from July 1, 2010, through June 30, 2011, and interviewed persons involved in the bond program. Representations made by District staff and consultants were used, where appropriate, to make assessments, observations and formalize conclusions and recommendations 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. For purposes of this performance audit, an observation is defined as an item of evidence found during the audit that relates to the quality of the product, process, or system. Observations may or may not require corrective action and do not rise to the level of a finding. Financial data, prepared by Seville Group, Inc. (SGI) and the District, reported in the Capital Assets Management Plan Report (CAMP), have been used during the course of this performance audit. The District’s bond program has matured significantly since the passage of Measure M on November 7, 2000, and the facilities management structure that has evolved serves the District well. 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