Report 94109 Summary - August 1994

A Review of the Department of Education's Cost and Development of the California Learning Assessment System

Results in Brief

With the enactment of Chapter 760, Statutes of 1991 (SB 662), the Legislature directed the State Board of Education and the Department of Education (department) to develop and implement a system to assess students. This system should have, as its primary purpose, the improvement of instruction in California's public schools. In response to this legislative mandate, the department began to develop a more comprehensive, statewide assessment system with various components including the California Learning Assessment System (CLAS) exam. As required by SB 662, the department developed four exams to address the specific content areas of reading, written expression, mathematics, science, and history-social science. The department combined the content areas of reading and written expression into one exam, commonly referred to as the English-language arts exam.

To support the development and implementation of the CLAS exam, SB 662 included an appropriation of approximately $9.3 million to the department for fiscal year 1991-92. For fiscal years 1992-93 and 199394, the Legislature appropriated additional funding of approximately $14.8 million and $25.9 million, respectively. However, in the budget act for fiscal year 1994-95, the governor eliminated additional funding for the CLAS with the intention that the funds be set aside until legislation is enacted to reform the testing process. The 1994-95 budget bill also renamed the CLAS to the California Comprehensive Testing Program.

The purpose of this audit was to review the department's process for developing items for the CLAS exam. In addition, we conducted this audit to determine whether the department complied with state laws and regulations when it awarded contracts for developing and implementing the CLAS exam. Finally, we conducted the audit to report on the nature and amount of funds expended for the CLAS exam from January 1992 through May 1994 and to determine the appropriateness of the expenditures. During our review we noted the following:

  • The department used various groups to develop the CLAS exam, including advisory committees, development teams, and review panels. This development framework was similar to the process followed by the department in earlier exams. The development teams primarily consisted of teachers and other specialists who were responsible for generating and developing the exam items. The assessment advisory committees and balanced treatment review panels, that included educators, administrators, and public members, provided input to the development teams for consideration. In addition, the development teams received input from teachers and students who participated in various field tests that the department conducted throughout the state. Although the department tried to create committees and teams that reflect the diversity of the California population, it did not have specific written procedures that it used to select members for each of the various groups involved in the exam development process. As a result, the review panels and teams that it established were not always representative of California's population.

  • The department used its contract with Far West Laboratory for Educational Research and Development (Far West) to circumvent the State's civil service system. From May 1992 through May 1994, the department obtained the services of 28 employees who were not civil service employees but who worked at the department and were in some cases supervised by state employees. The department paid these employees through its contract with Far West. Because the department is circumventing the State's civil service laws by obtaining contract employees through its contract with Far West when it could be hiring civil service employees, individuals who have passed state civil service examinations do not have the opportunity to compete for the positions. In addition, from May 1992 through May 1994, the department paid administrative fees totaling more than $318,000 to Far West and a personnel agency that paid the employees.

  • The department is not exercising adequate control over its contract expenses for the CLAS exam. For example, it paid travel costs to Far West and the county offices of education (COE) for Sacramento and Los Angeles that exceeded the maximum reimbursement rates allowable by state rules, resulting in approximately $14,000 in excess expenditures. In addition, the department did not require contractors to submit written progress reports to support the monthly invoices, incorrectly calculated retention amounts, and issued a duplicate payment for one invoice. As a result, the department cannot assure that all of its expenditures for the CLAS are appropriate and reasonable.

  • The department appropriately used a competitive bidding process to award the CLAS contracts to three private companies and three COEs. The COEs in turn used subcontractors to perform a variety of services to the department. The COEs did not use a competitive bidding process to select their subcontractors; however, we could not identify specific provisions in the codes requiring COEs to use competitive bidding to award their contracts. Although the department awarded the contracts appropriately, for 13 contracts and 3 interagency agreements that we reviewed, the contractor performed work or provided services before approval of the contract. By failing to obtain approval before contract work began, the department exposed the State to potential monetary liability for work performed if the contract had not been approved.


If the program funding is restored, the department should develop and follow standard written procedures to ensure that the methods used to recruit and select new members to the advisory committees, development teams, and Community Review Panels are fair and consistent for all four content areas and that the committees and teams represent the diversity of the California population.

To ensure that it does not circumvent the State's civil service system, the department should take the following actions:

  • Discontinue using a fiscal agent to obtain contract employees;

  • Submit a budget change proposal (BCP) to the Department of Finance requesting civil service positions be funded with existing resources; and

  • Recruit and hire civil service employees for the clerical, consultant, research associate, and production specialist positions.

To ensure that its expenditures for contracts are appropriate and reasonable, the department should take the following actions:

  • Review invoices that it has already paid and recover all travel costs that exceeded the State's reimbursement rates;

  • Review all future invoices before payment to ensure that payments for travel costs do not exceed the State's reimbursement rates;

  • Require its contractors to submit written progress reports along with invoices for payment; and

  • Strengthen its controls to ensure it withholds the correct amounts from progress payments and that duplicate payments are not made.

To ensure that the department does not expose the State to potential monetary liability for work performed if the contract or interagency agreement is not approved, the department should ensure that its contractors do not perform work or provide services before the department obtains approval for its contracts.

Agency Comments

The department disagrees with some of the conclusions in our report. For example, the department disagrees with our findings related to selecting members of the development teams and balanced treatment review panels. However, the department did agree with our recommendation to formalize its standard procedures in writing. Additionally, the department disagrees that its use of the Far West contract circumvented the State's civil service system. Rather, the department contends that the contract supplements the department's civil service staff. Further, the department disagreed that it exposed the State to potential monetary liability when its contractors started work before the contracts were approved by the Department of General Services. Finally, the department agreed to review the travel costs for all contracts to ensure compliance with State rules and request written progress reports prior to contract payment