Dear Faculty:
ACE invites you to attend the
November 4 Board of Trustees meeting at Mission College at 7 p.m.
ACE is making a presentation that
explains our issues with the District regarding the 50% law. Attached as well as
provided below is the text of a letter from ACE attorney, Robert Bezemek, to the District and to the State
Chancellor's office in which we allege 50% law violations by our District.
The effect of the District's
handling of the 50% law has a direct impact on your compensation so please come
to hear our presentation and support ACE.
Here is the letter:
October 6, 2004
Via Facsimile and First Class Mail
Fax No.: (916) 322-4783
Dr. Mark Drummond, Chancellor
California Community Colleges
Chancellor's Office
1102 "Q" Street
Sacramento, CA 95814-6511
Systems Office
California Community Colleges
Chancellor's Office
1102 "Q" Street
Sacramento, CA 95814-6511
Re: Minimum Conditions
Complaint-Violation of Education Code Section
84362 (50% Law) - Association of College Educators and West
Valley-Mission Community College District
Dear Chancellor Drummond and
Systems Office:
This office represents the
Association of College Educations of the West Valley-Mission Community College
District ("ACE"). ACE is
the certified, exclusive representative of the faculty of the District.
ACE hereby files this minimum conditions complaint against
the West Valley-Mission Community College District. ACE has amassed evidence only too abundant that the District
has persistently disregarded the 50% law, to the detriment of faculty and
students. The financial analysis
related herein was performed principally by ACE budget analyst Randy Castello.
The substance of the complaint:
Violation of Education Code Section 84362.
ACE alleges that the District has
systematically and continually misled the Chancellor's office concerning the
District's compliance with Education Code Section 84362. In this regard, the District has
misrepresented the figures it has reported as the "Current Expense of
Education," and the amount of funds it has expended for instructors'
salaries, and has committed other material misrepresentations. ACE asserts that the District has
concealed its violations of the law.
This complaint identifies
misrepresentations which were made beginning October 10, 2001, and continue to
date. ACE had brought the
District's misrepresentations to its attention, but the District has failed and
refused, and continues to fail and refuse, to correct its misrepresentations,
and to implement the requirements of § 84362.
Had the District correctly
reported its expenditures, it would not have met the 50% requirement of
Education Code Section 84362, for the 2000-2001, 2001-2002 and 2002-2003 school
years.
In support of this Complaint ACE
submits the enclosed memorandum.
ACE personnel are available to discuss the matters set forth herein and
in the memorandum.
ACE Reserves the Right to Sue to
Enforce Section 84362.
ACE recognizes that neither the recently adopted guidelines
of the Chancellors Office nor the regulations of the Board of Governors require
that it file this Complaint prior to seeking redress in the courts. However, ACE has determined that it
would be beneficial to seek the intervention of the Chancellor's Office given
that the Legislature has authorized the Board of Governors to have oversight
responsibilities concerning community college districts' compliance with the
50% law. In filing this Complaint,
ACE recognizes that it is free to initiate legal action in court to compel the
District's compliance with the 50% law, and to remedy prior non-compliance
through, inter alia, back pay and benefits. ACE recognizes that the Chancellor's Office recently adopted
guidelines for minimum conditions complaints which provide that the Systems Office "does not intend
that its investigative process be exhausted before a party may pursue judicial
review."
ACE's complaint is timely. Although new guidelines of the Chancellor's suggest when
complaints ordinarily are to be filed, this case pre-dates such guidelines, and
it involves continuing conduct, including the concealment by the District of
serious violations of the 50% law.
ACE has discovered, after a detailed investigation, that the
District is violating, and has been violating the requirements of Education
Code Section 84362 for three years.
ACE initiated its investigation during the 2002-2003 school year by
requesting that the District provide ACE with a copy of the general ledger for
the past 8 years. ACE assumed that
all expenditures had been correctly accounted for in terms of object codes and
activity codes, for those years that had been audited.
Section 84362 is generally
referred to as the "50% law," and requires that community college
districts spend 50% of the "current expense of education" on faculty
salaries. As a consequence of its violations, the District has failed to expend
50% of the "current expense of education" for "salaries of
classroom instructors" as required by Section 84362.
Efforts at Direct Resolution with
the District Have Been Unsuccessful:
ACE initially brought its concerns over CCFS-311 reporting
errors to the District's attention in spring, 2003. The District assured ACE it would review the matter and
respond. The District has
neglected to do so, and as a consequence, this complaint is filed.
The purpose of the 50% law is to
assure that districts focus on increasing faculty salaries, reduce class size,
and rein-in non-instructional costs. The 50% Law is a descendant of a 60% law
adopted in 1851, in California's first legislative session after statehood. Ever since its adoption, the
Legislature has reaffirmed the central purpose of the law by rejecting attempts
at repeal. Thus, the District is under a mandatory duty to comply with the law.
The problem is that the District has been evading the law.
The District's failure to comply
with the 50% law is a matter of the utmost seriousness to ACE, the faculty and
the District. Had the District complied with the law each year, then much would
be different: faculty would be receiving higher salaries, and/or more faculty
would have been employed, or fewer would have been let go last year.
As things stand, the District has
an accumulated "debt" from recent 50% law violations that now
approximates $5 million. ACE wants
the District to voluntarily remedy its violations, and embark on a plan to
assure full compliance with the law.
In this letter ACE outlines the
violations that it has uncovered.
I. Summary of Violations of the 50% Law
The District failed to pay 50% of
the Current Expense of Education ("CEE") for salaries of classroom
instructors (sometimes referred to as "faculty salaries" herein)
during three consecutive school years: 2000-2001, 2001-2002 and 2002-2003.
The District's continued failure
to fulfill the mandate of Section 84362 has resulted in a cumulative
under-appropriation of about $5 million.
The District's actions constitute a continuing violation.
To remedy these failures, the
District is obliged to expend at least 50% of the "current expense of
education" along with expending the "deficit" of about
$5,000,000 during the current school year. Despite significant deficiencies, the District has never
reported its under-expenditures, has misrepresented its compliance to the
Chancellor's Office, and has never sought an exemption for its under-expenditures. It is doubtful the District would have
qualified for an exemption even had it applied.
The District's violations of the
law have occurred in respect to several provisions. These are discussed below.
A. The District Failed to Expend
the Requisite Monies on Faculty Salaries Due to Specific Violations of the Law
The District's underpayment of
salaries is the direct result of identifiable violations of Section 84362,
which are discussed by fiscal year:
2002-2003 Fiscal Year
Expenditures during the 2002-2003
year are reported during 2003-2004, and deficiencies should be added to
Instructor Salaries during the 2004-2005 school year. The District reported on December 9, 2003 that it had
spent 51.12% of the CEE in 2002-2003, but according to ACE's analysis the
actual figure was approximately 49.27%. Thus, there was a substantial
deficiency. But no
deficiency was reported to the State for the 2002-2003, no exemption was
requested, and the District has shown no inclination to add its deficiency to
Instructor Salaries in 2004-2005.
In other words, the figures reported by the District amount to a
misrepresentation.
The District's 2002-2003
"error" resulted when it subtracted the entire amount of $2, 487, 320
in lottery proceeds received from the State from the current expense of
education even though these monies were transferred to the General Fund and
most of them were then expended for CEE expenses. The District then inconsistently failed to concurrently
subtract those lottery fund monies that were expended for instructional
salaries (we estimate these at $1,
225, 478.16), from the instructional side. The District's action violated the law by (1) the
inconsistency in its deletion of all lottery fund expenditures from the CEE but
not concurrently deducting Instructional Salary expenditures from
"lottery" funds; and, (2) because lottery monies transferred to the
General Fund and spent for purposes which are defined as within the CEE must be
recorded as part of the CEE on the CCFS-311 form. In deleting the expended lottery monies just from the
CEE side, but including them as Instructor Salaries expenditures on the
Instructional side, the District inflated the IA/CEE percentage.
In fact, ACE believes that most of
the lottery monies received were expended on categories that are part of the
CEE - in particular, faculty salaries. The District committed a serious
violation of the 50% law by excluding from the CEE these lottery monies. It
bears emphasis that, having excluded lottery monies it spent from the CEE, the
District inconsistently counted lottery funds as part of instructor salaries.
This led to a huge inflation of monies expended for instructional salaries, and
the deflation of monies spent for the CEE.
Had the District properly recorded
its monies, it would have expended only 49.27% of the CEE for instructor
salaries during 2002-2003, a deficiency of $483, 582.66.
As a result of this error, ACE has determined that the
District must add this amount of $483, 582.66 to instructor salaries during
2004-2005, to meet the 50% requirement. As a result, during 2004-2005 the District
must (1) pay 50% of the CEE to instructor salaries, and (2) add this $483,
582.66 to that amount, to wit: pay 50% of the CEE plus $483, 582.66 in
instructor salaries. (In addition, the District must add its prior year
"carry-over" deficits to the amount it expends on instructor salaries
this coming school year.)
Given its recent history of
non-compliance, ACE is concerned that the District will again violate Section
84362 during the 2003-2004 school year.
2001-2002 Fiscal Year
The district did not meet the 50%
law requirements for 2001-2002.
The District claimed in its supplemental filing submitted sometime after
October 24, 2002, to have paid out 51.85% but ACE believes the actual amount is
closer to 47.07%. In other words,
instead of exceeding the 50% requirement, it actually had a deficiency of $2,
508, 071, which it concealed with the misrepresentations contained within its
CCFS-311 filings.
Data for 2001-2002 is supposed to be reported during
2002-2003. Any deficiencies should
be made up during 2002-2003. The
District failed to pay 50% of the CEE for instructor salaries in 2002-2003, and
thus failed to add the deficiency to the salaries of classroom instructors paid
out during the 2003-2004 school year, a deficiency it never reported in the
first place. Thus, as of
July 1, 2004, the District violated the law again when it failed to expend the
deficiency during the 2003-2004 school year.
This 2001-2002 deficiency must now
be carried over and expended in 2004-2005.
Here is a description of how the
District violated the law for 2001-2002:
1. The District Wrongly Included
Non-Instructional Salaries as Salaries of
Classroom Instructors.
The District is entitled to
"count" the salaries of instructors and instructional aides who serve
under the direction of classroom instructors. But during 2001-2002, the
District wrongfully included the salaries of counselors. In reviewing the
District's filing with the State Chancellor's Office, ACE discovered that the
District counted "object code" 51130 as salaries of classroom instructors.
But that is the object code for full-time counselor salaries, not teaching
faculty.
This error amounted to $1,817, 841.94 being erroneously
included in "salaries of classroom instructors" on the District's
CCFS 311 form. Thus, the District misled the State Chancellor and the faculty
about the amount of money paid to classroom instructors. This was
impermissible.
As a result, the District
incorrectly inflated the "salaries of classroom instructors" by more
than $1.8 million.
2. The District Incorrectly
Deducted Capital Outlay Costs from the Current
Expense of Education.
In computing their total CEE the
District added the amounts in object codes 1000, 2000, 3000, 4000, 5000 and
only 6400 (equipment replacement) as required on the CCFS-311 form. The District then erroneously deducted
the remainder of object code 6000, meaning that the District reduced the CEE by
deducting capital expenditures that it had not previously included in its CEE computation. This meant it essentially deducted
capital expenditures twice, and thus reduced the CEE by too great an amount,
$754, 437.87. The CEE was actually
$754, 437.87 higher than reported.
3. Lottery Funds Error
The District subtracted a total of
$2, 279, 864 in lottery funds from the CEE, but did not subtract lottery monies
(reported in the amount of $964, 935.53) from the instructional side.
Once the errors are corrected, the District was deficient in
meeting the 50% figure by approximately $1, 944, 488.41.
2000-2001 Expenditures
The District expenditures during
2000-2001 were supposed to be accurately reported in 2001-2002, and any
deficiency should have been added to the amount expended for instructor
salaries and paid out during 2002-2003.
The District filed a CCFS-311 form dated October 10, 2001, which
attested to meeting the 50% mark.
It claimed on or after October 10, 2001 to be at 52.91% (See
Supplemental Data for 2000-2001)
This was a misrepresentation.
ACE believes the figure to be less than 50%.
ACE has determined there was a deficiency during 2000-2001,
but it was not identified on October 10, 2001, or after, and it was not paid
out during 2002-2003 as was required./ Thus, as of July 1, 2003 the District
was in violation of the law by not adding the 2000-2001 deficiency to classroom
instructor salaries for 2002-2003.
And the District has not carried
over the 2000-2001 deficiency and paid it out in subsequent years (i.e.
2003-2004 et seq.) as is legally required. Here is how the District violated the 50% law in 2000-2001:
1. The District incorrectly
calculated instructor benefits.
The error the District made in
2000-2001 is the same error that allegedly occurred two decades ago when the
Marin Community College District was sued for violating the 50%
law.
Instead of determining the amount
of funds expended for classroom instructor benefits, the West Valley-Mission
District "estimated" the amount. The District computed the relationship between instructional
salaries and benefits and found that benefits were 19.17% on instructional
salaries. Rather than determine
actual benefits expenditures, the District multiplied the 19.17% by all
salaries, not just instructional salaries. It then reported the amount of employee benefits for
instructional salary costs as $8, 358, 842 under EDP #429 out of a benefit
total of $9, 327, 820 on the Supplemental Data page of the CCFS-311 form. In other words, the amount reported on
the 311 form is an estimate, not the actual amount expended. ACE contends that the $8, 358,
842 amount is overstated by approximately $3.7 million. Presumably the District's auditors
missed this.
The District reported that it paid
out 52.91% of the CEE for instructor salaries. But the actual amount was less,
although the exact amount has yet to be determined.
2. The District Excluded All Expenditures from Lottery Monies
from the
CEE.
The District mistake is the same as described above. The District excluded from the CEE all
monies that it expended for CEE purposes, because those monies derived from
lottery funds (although they were placed in the General Fund). ACE believes the amount creditable to
the CEE was approximately $1, 024, 066.46. ACE believes that these monies were spent on items
properly within the CEE. Thus, the
District artificially deflated the CEE.
Although the District subtracted a
total of $2, 050, 155 in lottery funds from the CEE it did not subtract lottery
funds of $1, 024, 066.46 paid for instructor salaries from the instructional
side. Thus, the District inflated
the Instructional Side of the CEE.
If the funds were deducted from the CEE, then they had to be deducted
from the Instructional Side. If
the funds should have been included in the CEE, they should have been included
on the Instructional side to the extent they went for Instructor salaries. The District action thus resulted in an
unjustified, enlarged percent of CEE paid for instructional salaries.
If lottery funds can be legally
excluded from the CEE, regardless of the category of expenditure, then the
District would have done the right thing as far as the denominator (CEE); but
if so, the District erred by not reducing the numerator (instructional
salaries). By inflating the
numerator, or deflating the CEE, the District misrepresented its percent of
instructional salaries.
B. The District Never Sought An Exemption Nor Would
It Have Qualified
for An Exemption.
The District has not sought an
exemption from the requirements of Section 84362 for the years at issue. Even had it sought an exemption, it
would not have qualified. State law allows exemption in cases of "serious
hardship" based on specific criteria.
The Regulations of the State Board
of Governors define "serious hardship" as follows:
1. Inability to discharge financial liabilities due to
compliance. (5 CCR § 59204(c) (1)).
2. Infusion of new monies
resulting in an inability to comply. (5 CCR § 59204(c) (2))
3. Unanticipated, unbudgeted and necessary expenditures which
resulted in the deficiency. (5 CCR § 59204(c) (3)).
4. Funds were expended under 59213(h), thus causing the
deficiency. The District could not have satisfied any of these conditions.
C. The District is Required to Add
the Amount of It's Deficiency to the
Salaries of Classroom Instructors - Adverse Consequences of District
Violations Section 84362(g)
provides, "If no application
for exemption is made ... the board of governors shall order the designated
amount or amount not exempted to be added to the amounts to be expended for
salaries of classroom instructors during the next fiscal year."
The District never filed an
exemption request. Had it done so,
it would have been denied and the monies ordered added to the monies paid to
instructor salaries.
The adverse consequences of the
District's violation have been: lower faculty salaries than should have been
paid, and/or fewer faculty employed (increased workload without increased
compensation).
D. What the District Must Do
The District should prepare and
submit to the Board of Governors corrected or amended CCFS-311 forms for the
years in question. This will quantify the existing deficiency and set the stage
for remedial action.
The District needs to embark on a plan to promptly remedy its
deficiencies. ACE is demanding
that the District address this issue in negotiations.
This District's record of
non-compliance with the 50% is shameful. After reviewing the data, the only
conclusion which can be drawn is that the faculty, and students, have paid the
price for the District's violations - too few instructors, underpaid
instructors, and too few classes.
The District should meet and negotiate with ACE to resolve the issues
raised herein, and the appropriate remedies. ACE reserves the right to initiate court action at any time,
as it deems necessary, so participation in negotiations does not waive ACE's
judicial remedies.
E. What the State Chancellor's Office is Asked to Do
ACE asks the State Chancellor to
investigate this complaint, to order audits of District compliance with the 50%
law, to meet with ACE concerning the investigation, and to order the District
to submit amended or corrected CCFS-311 forms to reflect accurate information
as set forth in this letter. ACE
also asks the Chancellor's Office to encourage the District to meet and
negotiate in good faith with ACE concerning compliance and remedial issues. ACE requests that the Chancellor's
Office meet with ACE to review the worksheets and other District documents ACE
has obtained, so that ACE can lay out the District's violations with
particularity.
Conclusion
During the 2003-2004 Fiscal Year, the District should have
added the deficiencies it had accumulated in prior years, to the salaries
expended for classroom instructors.
ACE is eager to review the next CCFS-311 Form filed by the District but
anticipates that the District will continue to fail to identify prior year
deficiencies.
As a consequence of its
violations, the District owes the faculty millions of dollars in retroactive
salary, and it must arrange for the hiring of more tenure-track and part-time
faculty to alleviate extra workload forced on faculty. In recent years, the District has
reduced the number of part-time faculty, and last year violated the 75/25
ratio, for which it was penalized more than $1 million by the Chancellor's
Office.
ACE understands that under the
Chancellor's Office's guidelines for minimum conditions complaints, the
System's Office "has no authority under Title 5 to award monetary damages
to individuals or organizations..."
However, the State presumably has the authority to order the District to
amend its CCFS-311 forms to reflect the accurate information.
ACE anticipates providing further
information to the State in regard to this complaint. ACE requests that it be fully informed of the status of the
State's investigation, that ACE be provided with all materials submitted by the
District, that the State meet with ACE regarding this matter, and that ACE be
afforded an opportunity to reply to any information supplied by the State.
Sincerely,
Robert J. Bezemek, ACE Counsel
1. All citations are to the
Education Code, unless otherwise indicated.
2. ACE rights to initiate legal action by way of a petition for
writ of ordinary mandamus under CCP § 1085 were affirmed by the Marin
County Superior Court in orders issued against the Board of Governors and the
Chancellor's Office in United Professors of Marin v. Marin Community College
District, Board of Governors, et al., Marin County Superior Court No. 95857;
and more recently in Diablo Valley Academic Senate v. Contra Costa Community
College District and Chancellor's Office, Contra Costa Superior Court No. N03-0005 (tent rule)
cc: Board of Trustees, West
Valley-Mission Community College District
Chancellor Stan Arterberry (Facsimile and
US Mail)
ACE