Report 2022-110R Recommendation 6 Responses
Report 2022-110R: Charter School Facility Grant Program and Conduit Financing Program: The Programs Are Generally Achieving Their Purpose of Increasing Charter Schools' Access to Facility Funding (Release Date: February 2023)
Recommendation #6 To: Treasurer, State
To ensure that applicants meet a key program eligibility requirement, CSFA should require Facility Grant Program applicants to provide documentation that they are not operating as or by a for-profit organization. It should also adopt and begin following procedures to verify an applicant's compliance with this requirement.
6-Month Agency Response
Since our 60-day response to the State Auditor, CSFA has implemented a document-based vetting process for the 2023-24 funding round. It includes tax-status document review, follow-up, and additional verification (when needed) to ensure that applicants are not operating as or by a for-profit organization. CSFA will continue to work with the Department of Finance on securing funding to perform this determination as prescribed.
- Completion Date: August 2023
- Response Date: August 2023
California State Auditor's Assessment of 6-Month Status: Partially Implemented
The document-based vetting process CSFA developed implements the part of our recommendation to adopt procedures to verify applicants are not operating as or by a for-profit organization. The CSFA explained to us that it is in the midst of evaluating applicants for the 2023-24 funding round and has not yet begun vetting applicants' compliance with this requirement. We look forward to assessing CSFA's progress on this recommendation at the 1-year response in February 2023.
- Auditee did not substantiate its claim of full implementation
- Auditee did not address all aspects of the recommendation
60-Day Agency Response
CSFA will implement a document-based vetting process for the 2023-24 funding round. It would include document review, follow-up, and additional verification when needed. CSFA believes an independent verification from official third-party sources to be a best practice. On average there are approximately 400 applicants for each funding round. Therefore, there could be up to 400 FTE hours that need to be committed to each funding round, accounting for 20% of a FTE's annual hours. This support can be achieved with one or two Staff Services Analysts to ensure no delay or interruption in funding. As stated in the Audit, this provision should become obsolete in 2026, barring any legislative changes.
In addition, CSFA is in the final phases of developing policies and procedures for monitoring compliance associated with the proposed independent verification. CSFA expects these policies and procedures to be completed prior to the 6-month reporting period. CSFA is also permitted to review prior rounds for compliance and will consider this action if additional resources are available and staff levels permit.
- Estimated Completion Date: 10/1/2023
- Response Date: April 2023
California State Auditor's Assessment of 60-Day Status: Pending
As we noted in our audit report, CSFA did not express concerns about its ability to implement our three recommendations with existing personnel and resources when we discussed them in advance of its formal response to our draft audit report. Notwithstanding CSFA's ability to implement this recommendation with existing personnel and resources, which we did not audit, CSFA should require applicants to submit documents that demonstrate their eligibility for Facility Grant Program funding.
Agency responses received are posted verbatim.