The California Department of Education (department) is responsible for administering both federal- and statesubsidized child care and development programs. To carry out this responsibility, the department contracts with various public and local agencies that in turn provide child care and development services to eligible families in California. Our review focused on the department's administration of child care and development program funds, its contracting policies and procedures, and the oversight of child care contractors during fiscal years 199192 through 199394. Specifically, we noted the following key concerns:
In addition, the department did not allocate all of the Federal Child Care and Development Block Grant (FBG) funds it received. In April 1995, the department estimated that, as of June 30, 1995, $70 million of the FBG would remain available for allocation; however, this estimate does not include an additional $28.6 million. Furthermore, the department's plan to spend the funds is flawed. Specifically, the plan calls for increasing funding allocations to existing contractors but fails to specify how these contractors will use the increased allocations. And finally, the plan does not address the need to identify additional contractors that could provide child care and development services.
To maximize the provision of child care and development services, the department should take the following steps:
Further, if the department identifies contractors whose allocations exceed need, it should identify other contractors that can use the excess funds to provide services to eligible families. If necessary, the department should issue a request for applications to identify additional contractors that wish to provide child care and development services.
To ensure that it consistently processes appeals of contract awards, the department should take the following steps:
To improve its process for monitoring contractors, the department should ensure that the Office of External Audits assigns sufficient staff to review all the submitted audit reports between November and February of each fiscal year. In addition, the department should consistently recommend adverse actions against contractors who submit late audit reports.
In its response to our audit report, the department stated that it did not agree with some of our findings, conclusions, and recommendations. For example, the department does not concur with our finding that its three-year plan is flawed, does not concur with our conclusion that it did not maximize its efforts to provide child care and development services, and does not plan to identify additional contractors. However, the department stated that it agreed with other findings, conclusions, and recommendations. For example, the department agreed that the risk of bias would have been reduced had application readers not been the assigned consultant for the county, that it was a good idea to include appeal provisions in requests for applications, and that it should periodically evaluate contractors' performance by reviewing their spending patterns.