CMAT FISCAL CRISIS Bi MANAGEMENT ASSISTANCE TEAM California School Information Services FISCAL CRISIS MANAGEMENT ASSISTANCE TEAM A3139 STUDY AGREEMENT November 15, 2017 The Fiscal Crisis and Management Assistance Team (FCMAT), hereinafter referred to as the team, and the San Diego County Superintendent of Schools, on behalf of the San Diego County Of?ce of Education hereinafter referred to as the COE, mutually agree as follows: 1. BASIS OF AGREEMENT The team provides a variety of services to local educational agencies (LEAs). Pursuant to the provisions of Education Code (EC) Section 1241.5 a county superintendent of schools may review or audit the expenditures and internal controls of any school in his or her county if he or she has reason to believe that fraud, misappropriation of funds, or other illegal ?scal practices have occurred that merit examination. The extraordinary audits conducted by the county superintendent shall be focused on the alleged fraud, misappropriation of funds, or other illegal ?scal practices and shall be conducted in a timely and ef?cient manner. All work shall be performed in accordance with the terms and conditions of this agreement. 2. SCOPE OF THE WORK A. Scope and Obiectives of the Study The COE has requested FCMAT to assign professionals to conduct an AB 139 Extraordinary Audit. This audit will be conducted pursuant to Education Code Section 1241.5 The COE has developed information regarding possible fraud, misappropriation of funds or other illegal practices at the San Ysidro School District and is requesting that CMAT review employee compensation (all payroll related expenses) and any additional payments made outside of payroll (including, but not limited to, salary, expense allowances, housing allowances, insurance buy-outs, off-schedule payments, retro payments, vacation payments, deferred compensation payments, termination payments, commercial warrant reimbursements, revolving cash reimbursements and petty cash reimbursements), and relevant internal controls related to former superintendent Julio Fonseca and former interim superintendent/deputy superintendent Jose Arturo Sanchez?Macias (collectively the ?Scope of Work?). The primary focus of this review is to determine, based on the testing performed, whether (I) the district?s reporting and monitoring of payroll and other payment transactions related to employee compensation (all payroll related expenses) and payments made outside of payroll (including, but not limited to, salary, expense allowances, housing allowances, insurance buy-outs, off-schedule payments, retro payments, vacation payments, deferred compensation payments, termination payments, commercial warrant reimbursements, revolving cash reimbursements and petty cash reimbursements) have adequate management and internal controls, and (2) based on that assessment, whether ?-aud, misappropriation of ?inds or other illegal ?scal practices may have occurred. Management controls include the processes for planning, organizing, directing, and controlling program operations, including systems for measuring, reporting, and monitoring performance. Speci?c audit objectives will include evaluating the establishment, implementation and effectiveness of policies, procedures and internal control activities through the review of ?nancial transactions recorded by the district relating to the Scope of Work. The team will review and test recorded transactions for ?scal years 2015-16 through 2017-18 to date, to determine if fraud, misappropriation of funds or other illegal activities may have occurred. Testing for this review will be based on a sample of transactions and records for this period. Testing and review results are intended to provide reasonable but not absolute assurance regarding the accuracy of the district?s ?nancial transactions and activity to accomplish the following: 1. Provide reasonable assurance to management that the internal control system is established, implemented and monitored. 2. Prevent internal control activities from being overridden by management. 3. Help identify and correct inef?cient processes. 4. Ensure that employees are aware of the proper internal control expectations. Services and Products to be Provided 1. Orientation Meeting - The team will conduct an orientation session at the district to brief management and supervisory personnel on the team?s procedures and the purpose and schedule of the study. 2. On-site Review - The team will conduct an on-site review at the district of?ce and at school sites if necessary; and will continue to review pertinent documents off-site. 3. Progress Reports - The team will inform the COE of material issues as the review is performed. 4. Exit Meeting The team will hold an exit meeting at the conclusion of the on-site review to inform the COE of any signi?cant ?ndings to that point. 5. Draft Report - When appropriate, electronic copies of a preliminary draft report will be delivered to the administration for review and comment on a schedule determined by the team. 6. Final Report - Electronic copies of the ?nal report will be delivered to the COE and/or district following completion of the review. Printed copies are available from the FCMAT of?ce upon request. 7. Follow-Up Support If requested, the team will meet with the COE and/or district to discuss the ?ndings and recommendations of the report. PROJECT PERSONNEL The FCMAT study team may also include: A. 0 Be Determined CMAT Sta?' B. 0 Be Determined CAM Consultant Other equally quali?ed staff or consultants will be substituted in the event one of the above individuals is unable to participate in the study. PROJECT COSTS The cost for studies requested pursuant to EC 42127.8 (1) shall be: A. $950 per day for each staff team member while on site, conducting ?eldwork at other locations, presenting reports, or participating in meetings. The cost of independent FCMAT consultants will be billed at their actual daily rate for all work performed. B. All out-of-pocket expenses, including travel, meals and lodging. Based on the elements noted in Section 2A, the total estimated cost of the study will be $26,000. C. Any change to the scope will affect the estimate of total cost. Payments for FCMAT services may be reimbursed ?om funds pursuant to EC 1241.5 set aside for this purpose. Other payments, when deemed necessary, are payable to Kern County Superintendent of Schools - Administrative Agent located at 1300 17th Street, City Centre, Bakers?eld, CA 93301. RESPONSIBILITIES OF THE COE DISTRICT A. The district will provide of?ce and conference room space during on-site reviews. B. The district will provide the following if requested: 1. Policies, regulations and prior reports addressing the study request 2. Current or proposed organizational charts 3 3. Current and two (2) prior years? audit reports 4. Any documents requested on a supplemental list. Documents requested on the supplemental list should be provided to FCMAT only in electronic format; if only hard copies are available, they should be scanned by the district and sent to FCMAT in an electronic format 5. Documents should be provided in advance of ?eldwork; any delay in the receipt of the requested documents may affect the start date and/or completion date of the project. Upon approval of the signed study agreement, access will be provided to online SharePoint document repository where the district shall upload all requested documents. C. The COE and/or district?s administration will review a preliminary dra? copy of the study. Any comments regarding the accuracy of the data presented in the report or the practicability of the recommendations will be reviewed with the team prior to completion of the ?nal report. Pursuant to EC representatives of FCMAT will have limited contact with pupils. The district shall take appropriate steps to comply with EC PROJECT SCHEDULE The following schedule outlines the planned completion dates for different phases of the study and will be established upon the receipt of a signed study agreement: Orientation: To be determined Staff Interviews: To be determined Exit Meeting: To be determined Preliminary Report Submitted To be determined Final Report Submitted To be determined TERMINATION AND COMPLETION OF WORK FCMAT will begin work as soon as it has assembled an available and appropriate study team consisting of FCMAT staff and independent consultants, taking into consideration other jobs FCMAT has previously undertaken and assignments from the state. The team will work expeditiously to complete its work and deliver its report, subject to the cooperation of the district and any other parties from which, in the team?s judgment, it must obtain information. Once the team has completed its ?eldwork, it will proceed to prepare a preliminary dra? report and a ?nal report. Prior to completion of ?eldwork, the COE may terminate its request for service and will be responsible for all costs incurred by CMAT to the date of termination under Section 4 (Project Costs). If the COE does not provide written notice of termination prior to completion of fieldwork, the team will complete its work and deliver its report and the COE will be responsible for the full costs. The COE understands and agrees that FCMAT is a state agency and all FCMAT reports are published on the FCMAT website and made available to interested parties in state government. In the absence of extraordinary FCMAT will not withhold preparation, publication and distribution of a report once ?eldwork has been completed, and the COE shall not request that it do so. 10. ll. INDEPENDENT CONTRACTOR FCMAT is an independent contractor and is not an employee or engaged in any manner with the COE. The manner in which services are rendered shall be within its sole control and discretion. FCMAT representatives are not authorized to speak for, represent, or obligate the COE in any manner without prior express written authorization from an of?cer of the COE. INSURANCE During the term of this agreement, FCMAT shall maintain liability insurance of not less than $1 million unless otherwise agreed upon in writing by the COE, automobile liability insurance in the amount required under California state law, and workers compensation as required under California state law. FCMAT shall provide certi?cates of insurance, with San Diego County Of?ce of Education named as additional insured, indicating applicable insurance coverages upon request. HOLD HARMLESS CMAT shall hold the COE, its board, of?cers, agents and employees harmless from all suits, claims and liabilities resulting from negligent acts or omissions of its board, of?cers, agents and employees undertaken under this agreement. Conversely, the district shall hold FCMAT, its board, of?cers, agents and employees harmless from all suits, claims and liabilities resulting from negligent acts or omissions of its board, of?cers, agents and employees undertaken under this agreement. CONTACT PERSON Brent Watson (858) 292-3537 I bm?atsonmigsdcoenet . ?w 17 Paul Gothold, Superintendent Date San Diego County Superintendent of Schools San Diego County Of?ce of Education MM 7,723 November 15, 2017 Michael H. Fine Date Chief Executive Of?cer Fiscal Crisis Management Assistance Team