enroll and be successful in college transfer level mathematics.

A. Bridging the Gap Initiative Project Goals

• To double the number of students who, upon graduation from high school, will enroll and be successful in college transfer level mathematics.

• To redefine and implement new math pathways (grades 6-16) in a Linked

Learning context.

B. Project Overview Proposed Partnership The Peralta Community College District (PCCD), in partnership with Oakland Unified School District, Berkeley Unified School District, and California State University East Bay, have formed a partnership (a subset of our broader East Bay Career Pathways Consortium and our East Bay Linked Learning Hub of Excellence) to further integrate and expand our policies and practices to create successful student secondary to postsecondary transitions. As part of a commitment to ensure all students in Oakland and Berkeley graduate from college, the Mayors of both cities are currently leading efforts to establish “College Promise” initiatives that will align with and support the proposed pilot project. Background Our proposed pilot project will build on the work our high schools and community colleges have been doing for two years – with the assistance of the California Community College Linked Learning Initiative (CCCLLI) and the Career Pathways Trust (CPT) – to address some of the well known inter-segmental barriers between our systems: mathematics assessment, mathematics placement, early outreach and counseling, early exposure to college level work aligned to a career pathway rooted in rigorous academics, and a meaningful sequence of work-based learning related to a student’s pathway. Additionally, the pilot project will build on extensive work within OUSD and BUSD to upgrade to Common Core State Standards, including new Board Policy in both districts outlining course sequences for secondary mathematics. During the past year, our region has made tremendous strides in each area: Assessment and Placement: This year, PCCD launched an Improved Placement Initiative and is participating in the statewide Multiple Measures Assessment Pilot (MMAP) as part of the Common Assessment Initiative. Last year, Peralta English and math faculty from all four of the Peralta Colleges collaborated and agreed to adopt the MMAP framework for placement based on GPA and transcript data. In addition, PCCD now has student transcript data sharing agreements with our partner K12 Districts enabling the District to provide Peralta Counselors easy access to the recommended placement information.

Early Outreach and Integrated Counseling: The Peralta Colleges are adding Outreach Specialists embedded in their counseling departments and OUSD has added counselors at high schools. Last year, teams from each high school partnered with each of the Peralta Colleges to bring graduating seniors to the campuses, tour CTE and other classrooms, and meet faculty and students. Peralta counselors and Outreach Specialists visited the high schools to conduct information, assessment, and initial placements based on student transcript data. Early College Credit: Also this year, PCCD and Oakland Unified School District negotiated and adopted an 18-month pilot MOU to facilitate and scale the number of opportunities for students to earn early college credit via dual enrollment. This semester, Peralta instructors are teaching more than 15 college courses at Oakland high school campuses. Next semester, we anticipate that number quadrupling. In the next few months, PCCD will be negotiating with all of the K12 Districts in our region to form College and Career Access Pathways (CCAP0 partnership agreements per AB 288) that build off of the pilot with OUSD. Work-based Learning: Our region is building significant capacity to increase the number of employers connected with students and educators in a variety of levels, K-14. Workforce Coordinators at the college campuses, Work-based Learning Specialists at the high schools and ROP’s, Workforce Development Board staff, local Chambers of Commerce, community-based organizations and others are hiring staff so that there is greater capacity for offering work-based learning opportunities. These new personnel will help prepare students for the world of work, collaborate with each other to scale the quantity and quality of employers connecting with both students and faculty, and support our local CTE pathway action teams to refine the sequence of work-based learning in each pathway K-14. The East Bay Hub of Excellence, hosted at the Oakland Metropolitan Chamber of Commerce, is just now hiring staff to help convene and facilitate this broad set of interests and align them on behalf of students. Transition To Common Core State Standards (CCSS): Over the past 4 years, OUSD and BUSD have made significant strides to provide development and learning opportunities for teachers, TK-12, and to upgrade systems to support students to reach and exceed the higher demands of the Common Core Standards. To date, the work has included professional development for teachers, a curriculum overhaul, and new assessments. In addition, the districts have worked on Board Policy outlining the math course sequencing, grades 6-12, to include significant math content increases at the middle grades, and a strategy to align resources to ensure all students have access to the math content tested at the end of 11th grade, through the Smarter Balanced Assessment Consortium (SBAC), to determine readiness for college and career.

New Opportunities

Recent developments at the state level have created new opportunities for our region to further integrate and expand our efforts:

1. The recent announcement by the CSU Office of the Chancellor’s General Education Advisory Committee that CSU “authorizes temporary recognition of statistics pathways curriculum in satisfaction of the Quantitative Reasoning requirement for transfer admission and completion of lower-division coursework in general education.”

2. The passage of AB 288 (Holden) which specifies that regional partnership agreements “shall certify that any remedial course taught by community college faculty at a partnering high school campus shall be offered only to high school students who do not meet their grade level standard in math, English, or both on an interim assessment in grade 10 or 11, as determined by the partnering school district, and shall involve a collaborative effort between high school and community college faculty to deliver an innovative remediation course as an intervention in the student’s junior or senior year to ensure the student is prepared for college-level work upon graduation.”

The CSU announcement opens up an exciting opportunity to bring CSU East Bay into our K-14 Linked Learning pathway work, particularly in the context of the idea that there may be many college and career pathways and, in particular, “many math pathways.” The CSU (and University of California) decision to allow for a “statistics pathway” opens the door for secondary and community college partners to explore differentiated pathways, rather than a singular mathematics progression. AB 288 strengthens our ability to integrate academic content standards, aligned with college and career opportunities, to ensure that all students experience rigorous academics that maximize articulation between high school and postsecondary without the need for remediation. AB 288 offers a unique opportunity to accelerate completion of credentials, certificates, and degrees. Our partnership is proposing to build on both the CSU and AB 288 developments to focus in on rethinking math pathways grades 6-16, with a particular emphasis on the use of the 12th grade to address any need for remediation or acceleration in math in the context of students’ many college and career pathway options. Description of Proposed Pilot Project Our partnership reflected on the Bridging the Gap Framework and spent quite a bit of time on the pros and cons of choosing different “slices” of the Framework on which to focus. In our region, we are fortunate in that we have CCCLLI, CPT, and other resources to support our work across the Framework and the spectrum of student momentum. Our goal was to identify an area for this project that is firmly embedded and which supports all of the other work we are doing to: build robust Linked Learning pathways K-14, accelerate access to college, explore transition curricula and opportunities for early college credit, enhance our Improved Placement Initiative and

provide more student supports during the transition process. We also recognize that extending the partnership and framework to include the 4-year institutions is critical and we look forward to jumping on that opportunity in the context of this project. In the end, our Partnership chose to propose work focused on grade 6-16 math pathways because we feel it will lift up and strengthen all of our other efforts and relationships while pushing us to revise our policies and practices in some key ways that will yield positive impacts across the Framework. Our math-focused project allows for deep learning and informed action in an area that is a particular pain point for our students, as revealed by data cited below. We feel that work done on this “slice” of our inter-segmental work will inform all that is simultaneously happening in various other slices: ELA and ELL, science, civic engagement, career and technical education, work-based learning, etc.). In our experience working in a complex time of major education and system change at every level, the best course is one that builds on and supports efforts that are already underway, while pushing the envelope and furthering the existing efforts in new ways. Our regional partnership proposes to dramatically increase the number of students who, upon graduation from high school, will enroll and be successful in college transfer level mathematics. Today, approximately 62% of students enrolling in the Peralta Colleges need some form of remediation in math. At CSU East Bay, 54% of incoming students require remediation in math. While Peralta’s Improved Placement Initiative will improve the accuracy of math and English placements through the use of transcript data in addition to the use of the Compass Assessment Test, preliminary analysis of that transcript data as applied to the MMAP placement rules suggests that only 25-35% of OUSD high school students enrolling in the Peralta Colleges next year will be eligible to see a positive impact from this Initiative. The remaining students have GPAs or course records that fall below the requirements of the placement rules. Berkeley City College (BCC) and College of Alameda (COA) participated in the California Acceleration Project to re-evaluate how the Colleges can accelerate the math remediation sequence, recognizing that only 17% of students who begin their Peralta experience in remedial math courses ever complete a degree or certificate, let alone transfer to CSU or UC. And only 11% of students who begin a Basic Skills math course successfully complete a transfer level math course. At California State University East Bay (CSUEB), one of the CSU system’s most diverse campuses, 54% of the Fall 2013 entering freshmen required at least one quarter of developmental (remedial) math. Of the 54% of freshmen taking remedial math, roughly one-third require the first course in a three-course sequence covering pre-Algebra, and roughly one-third of these students do not pass the course on the first try in the fall quarter (CSUEB Institutional Data, 2013). The number of first-time freshman students at CSUEB requiring developmental math, as well as developmental English, has significant implications for both first- and second-year students’ persistence and

retention, and for students’ preparation for the workforce. Students who fail to pass the developmental math sequence are subject to removal from the university once opportunities for remediation have been exhausted. To suggest, however, that the “remediation” problem will be solved by improving assessment, placement, and remediation strategy at the college-level alone misses the power and promise of inter-segmental work. This pilot project proposes to understand more deeply the secondary math course sequence context so that K-16 we can take advantage of the true opportunities that linked learning pathways afford. During our planning process, our regional partnership will study and develop strategy to:

1. Build a robust partnership so that high school, community college, and CSU East Bay math faculty and administrators are in dialogue about math pathways, including how our high school preparation and developmental math sequences can and should align and how our math assessments should be understood and embedded in the educational segments sending students to take those assessments.

2. Look at our student-level data more closely to understand together the shortcomings in existing (de facto) math pathways, and the possible math pathway alternatives and their implications for students.

3. Define equity-focused outcomes for our students: figure out what math-related opportunities, experiences and results we are actively trying to change for students, particularly students historically ill-served by our educational system.

4. Evaluate new 12th grade options in math, refine and implement new options, with a goal of offering remedial college credit bearing math courses as one of several options.

5. Seek alignment with Linked Learning pathways, capitalizing on AB 288 and the CSU announcement with respect to statistics pathways to evaluate and offer more contextualized math courses in the 11th and 12th grades.

6. Align our “Language of Math” so that all three of our educational segments are sharing the same math vocabulary. We anticipate learning from a WestEd-led cross-walk analysis of college-readiness assessments: SBAC, ELM, and the community college assessment.

7. Conduct an early pilot between BCC and Berkeley High School to start framing these questions while looking at real-time data. This coming spring, Berkeley City College will offer Math 206 at Berkeley High School and is currently redesigning their intake process to supplement the District’s Improved Placement Initiative: if a high school 12th grader successfully completes Math 206, he or she can automatically enroll in Math 13 (college level math) without having to take the assessment test. As a result, we will be able to review the impact of the modified math pathway on students, their transition to community college, the role of counselors in assisting students both before and after their senior year experience during our planning phase and adjust our implementation phase accordingly.

8. Explore options for students to migrate from one math pathway to another and back again so that students can change their mind about being on a STEM pathway.

9. Explore offering CSU developmental math courses at the community colleges. 10. Build “embedded transitions” such that the community college Common

Assessment and CSU’s Entry Level Math Assessment are embedded in the curriculum and teacher practices at each level. High school students, parents, and teachers will be aware of and exposed to each assessment and the consequences of the assessment on college and career pathways, not just their math pathway.

11. Strengthen student supports in high school and community college by providing clear guidance and professional development for counselors and other support providers in terms of a student’s math choices and their implications for assessments, ability to transition to the next segment, and career options. Build student agency and positive math identity through the course selection process. Reframe issues of “course placement” to be “course options” so that students are the empowered actor rather than the passive subject of improved systems. We need to figure out how the inclusion of student choice in the multiple measures approach will interrupt historic patterns of self-selected tracking of students of color and women out of STEM-related fields.

12. Explore opportunities for creating and even sharing a pool of math teachers. Our partners recognize that most of the remedial math courses at the community colleges are taught by part-time math faculty with little to no training in pedagogy and that all of CSU East Bay’s developmental math courses are taught by graduate students. The secondary institutions also have difficulty finding and retaining teachers that are both highly skilled in high school pedagogy and mathematics. We will strive to find solutions to this problem together and to coordinate recruitment, hiring, and professional development for teachers and faculty across the segments. A related goal is establishing a pipeline of potential math teachers from CSU East Bay to the K12’s and community colleges.

13. Explore possible changes to Peralta’s minimum qualifications for teaching developmental math. Faculty teaching lower level courses may not require a master’s degree in mathematics. This would be discussed with OUSD, BUSD, CSU East Bay as well as our faculty union and shared governance committees.

14. Anticipate programmatic and professional development implications 2-3 years out, as the proposed work begins to shift what students and faculty see as highest need.

Target Population Our target population is those high school students who, given their progression through the 11th grad11e, are at risk of not graduating or graduating without the math preparation necessary to continue in their linked learning pathway through to a certificate, diploma, or transition to a 4-year university or college. Ability to collect and share data

PCCD has data sharing agreements in place with both Oakland and Berkeley Unified School Districts. Our ability to collect and share student data related to our target population is greatly enhanced, as is the community of practice our region has built among institutional research directors across educational segments. Under the auspices of the CPT activities in our region, our IR Directors are in frequent contact and have demonstrated a willingness to work together to solve problems, innovate solutions, and improve practices. Under the auspices of this Initiative, CSU East Bay would be added to the data sharing agreements.

C. Partnership Capacity Lead Organization The Peralta Community College District will lead this effort. Math faculty and administrators from all of the Peralta Colleges, Oakland and Berkeley Unified School Districts, as well as the CSU East Bay Math Department Chair and the Institute for STEM Education, met to shape this proposal and made this decision on the basis of BCC’s and COA’s participation in the California Acceleration Project, their faculty’s development of new pre-stats curriculum, and their field-testing of an accelerated remedial math sequence over the past few years. Berkeley City College and Berkeley High School will be piloting this pre-stats class (Math 206) this spring. Our partnership will be using this pilot to evaluate some of our early thinking about math pathways. The Peralta Colleges have led our regional CCCLLI work in collaboration with OUSD, and, for the past two years, have served as the fiscal agent and lead on the work of the East Bay Career Pathways Consortium. All of the proposed partners, with the exception of CSU East Bay, are active participants in that effort and have made great strides together in terms of creating student momentum in the Bridging the Gap framework. The Peralta Colleges will serve as the fiscal agent and, as such, the employer of record for the Project Director whose assistance will benefit all of the partners by working with each partner as well as across partners.

D. Alignment and Leverage As described in the Project Overview Background section, this proposal will align with, leverage, and build upon many past and present student success initiatives in our region, including the California Career Pathways Trust, The California Community College Linked Learning Initiative, the Linked Learning District Initiative, extensive CCSS mathematics development work at the K-12 level, and recent work at CSU East Bay in rethinking their developmental math sequence. The proposed project explicitly aligns with institutional effectiveness strategies, including:

OUSD Superintendent’s Strategic Plan, Pathways to Excellence, which aims to engage every high school student in a linked learning college and career pathway by 2020, so that all students graduate college, career and community ready. This plan won community investment in the form of a parcel tax, which guarantees focused funding for high school improvement (through the linked learning approach) until 2026. Additionally, OUSD is deeply engaged in improving its various STEM pathways, with tremendous investment and support from both philanthropy and industry (e.g. Atlantic Philanthropy, Bechtel Foundation, Intel Foundation, SAP, CISCO, Chevron), and all of these pathways must have a strong math infrastructure, or students will not be prepared for STEM careers. BUSD and BCC are partners with the City of Berkeley in Berkeley 2020, a workforce and economic development vision and plan for Berkeley residents. In addition, they are both active partners with Mayor Tom Bates in crafting a “Berkeley College Promise.” BCC’s early work sharing counselors with Berkeley High and piloting an ICT pathway program under the auspices of the CCCLLI project with Skyline High School in 2013 led to a grant from SAP and a deepening of that partnership which is leading to tremendous gains for students as they transition from secondary to post-secondary. PCCD recently updated the District’s Strategic Plan which emphasizes and reinforces our implementation of each College’s Students Success Plan, Equity Plan, and so many of our current strategic initiatives which support these: CCCLLI, Career Pathways Trust, AB 104 Adult Education reform, etc. The District recently launched an Office of Student Success and Equity at the District level which will be assisting and integrating efforts at the campuses in establishing Centers for Your Educational Success (CYES) which will integrate and provide additional students supports to students aligned with each campus’ equity goals. The Peralta Colleges are, like many community colleges, launching new efforts to synthesize their development of career pathways with the priorities and initiatives identified in their Equity Plans. One recurring theme in this work is the need for improved student supports in early outreach, improved transitions to college, and a supporting environment through college. As the work we have done on college and career pathways development evolves and as counselors and English and math teachers engage in and see the impact of our Improved Placement Initiative, more attention is being focused on those issues - like those identified in this proposal - where students experience the greatest barriers. East Bay Linked Learning Hub of Excellence The proposed partners, along with our East Bay Career Pathways Consortium colleagues, are members of the East Bay Linked Learning Hub of Excellence and share the vision for that organization (hosted at the Oakland Metropolitan Chamber of Commerce) that it will serve to help scale and improve Linked Learning across the region. Already, OUSD serves as a mentor district to other districts in the

region. Chamber staff and incoming Hub staff have committed to helping the proposed partners disseminate their learning from the proposed pilot. Policies and practices that the proposed partners change as a result of this pilot will be shared across the East Bay region. Cal State East Bay (CSUEB) Adding to the emerging articulation between OUSD, BUSD, and Peralta Community Colleges, CSUEB has invested significant resources in an effort to increase students’ success in developmental math classes. Specifically, faculty from CSUEB’s Math Department have designed and are researching student outcomes associated with a new three-course (one year)sequence in which each course serves as a prerequisite for the next course in the sequence. This program is titled Changing Remedial Math (ChaRM):

• MATH 805 Introduction to Algebra: fractions, signed numbers, percentages, introduction to geometry, simplifying algebraic expressions, solving linear equations, straight lines.

• MATH 806 Elementary Algebra: Operations with integers, exponents, order of operations, solving linear equations, operations with polynomials, operations with rational expressions, complex fractions, slopes and intercepts, solving and graphing inequalities.

• MATH 807 Intermediate Algebra: Operations with algebraic expressions, exponents and radicals; linear and quadratic equations; systems of equations and inequalities; linear and quadratic functions and their graphs; elementary conic sections; word problems.

The entry point for each student is based on his or her Entry Level Math (ELM) Exam score. The grading for the remedial math courses is A, B, C, or no credit. Once students pass Math 807, the remedial math flag is lifted and they are free to take college-level classes for credit.

• The courses differ from those previously offered at CSUEB in the following seven ways: Small Class Size: Course enrollments are limited to 20 students

• Group work: Working in groups is the norm, to allow discussion, exploration, and investigation.

• Learning Progressions: Instructors have developed workbooks that are used in-lieu of traditional textbooks. This has allowed the professors to organize learning material into distinct units that address key math concepts and skills.

• Hands on, Inquiry-Based Teaching and ‘Conceptual Hooks’ for Mathematical Understanding: Instructors use concrete materials, such as two-color chips for integers, algebra tiles for expressions and equations, to introduce topics to students to help students understand and internalize the underlying

math concepts. Then instructors transition to a semi-concrete portrayal of the concrete material by using appropriate diagrams, and finally, move to the abstract. The unfolding of each new concept is handled by having students do explorations, looking for patterns on their own so that a “rule” is something they discover, rather than being told by the teacher.

• Use of Technology to Personalize Instruction: Students’ homework is conducted online during the week. The online program is ALEKS, a web-based adaptive program that uses "artificial intelligence" to learn and adjusts its math questions based on individual student performance. Students must master a skill set before moving on to the next skill set.

• Teaching for Mastery and Assessments: At the outset of the courses, students sign a contract agreeing to work with their classmates to master the course material. There are three exams over the quarter, each one covering approximately two Units. In order to pass the course, students must receive at least 70% on EACH exam. Thus, no content knowledge falls through the cracks.

CSUEB recognizes that the knowledge and background of the instructor and his/her familiarity with the curriculum is a key component of the mathematics program. It also recognizes that Master’s Degree students are often employed as lecturers to teach developmental mathematics. Thus, in addition to redesigning the developmental math courses, CSUEB has developed a one-unit Robust Teaching Associate teacher training course (Math 6005) for ChaRM instructors. The course for ChaRM instructors includes: 1) day-long orientation prior to the start of the course, 2) weekly meetings (70 minutes) to discuss math concepts found in next week’s course material, what was successful and what needs improvement, technical difficulties, and class management issues, 3) creation of a feedback loop to continually improve course materials and structure, and 4) overall support to TAs. Preliminary data suggests that the redesigned math courses have enhanced CSUEB students’ math development. During the planning phase of this proposal, partners will explore this approach as one possibility for coursework that could be offered jointly across institutions. Conclusion Our Partnership is dedicated to the work described in this proposal. We have committed to doing it, regardless of funding. Our concern is that without funding, our efforts might be delayed and more students will have to wait to see the tremendous positive impact of the work we are proposing to do together. We continue to be so grateful for the support and guidance of the James Irvine Foundation, Career Ladders Project, and the many partners supported by the James Irvine Foundation who find a way to meaningfully engage with and support our public systems for the benefit of our students. We hope to be able to work with you and our colleagues around the state on this project.

East Bay Math Pathway Partnership List of key proposed project personnel Peralta Community College District Tram Vo Kumamoto, Vice President of Instruction, Berkeley City College Kelly Pernell, Math Department Chair, Berkeley City College Daniel Najjar, Adjunct Math Faculty, Berkeley City College Vanson Nguyen, Math Department Chair, College of Alameda Kathy Williamson, Math Department Chair, Laney College Tae Soon Park, Math Department Chair, Merritt College Denise Richardson, Dean of Math and Science, Laney College Char Perlas, Dean of Applied Sciences, College of Alameda Karen Engel, Director of Economic & Workforce Development, Educational Services, Peralta Community College District Michael Orkin, Vice Chancellor, Educational Services Oakland Unified School District Phil Tucher, Director of Mathematics Barbara Shreve, Secondary Mathematics Coordinator Preston Thomas, Executive Director, College and Career Readiness Gretchen Livesey, Director, Linked Learning Berkeley Unified School District Erin Schweng, Assistant Principal, Berkeley High School Pat Sadler, Director of Special Projects, Berkeley Unified School District Donald Evans, Superintendent, Berkeley Unified School District California State University, East Bay Julie Glass, Chair, Mathematics Department Stephanie Couch, Interim Associate Vice President of Research and Director, Institute for STEM Education Bruce Simon, Associate Director, Gateways East Bay STEM Network East Bay Linked Learning Hub of Excellence (support to the Partnership) Barbara Leslie, President and CEO, Oakland Metropolitan Chamber of Commerce Rebecca Lacocque, Director, East Bay Career Pathways Consortium Linked Learning Specialist, TBD Each of the proposed partners is an established, public education institution dedicated to providing effective, quality instruction to all students and to working together to overcome institutional barriers to student success.

Regional Hub of Excellence: East Bay Linked Learning Hub of ExcellenceAmount Requested: $150,000

Expense CategoryAmount Requested

from IrvineComplete Project

BudgetSalaries

CSU East Bay Math Department Chair Julie Glass $27,621 $27,621OUSD Director of Mathematics $0 $25,000

OUSD Secondary Mathematics Coordinator $0 $25,000BUSD Assistant Principal, Berkeley High School $0 $6,000

BUSD Special Projects Director $0 $6,000Benefits

Benefits for CSU East Bay employees $518 $518Benefits for Peralta faculty(s) $2,527 $3,370

Benefits for high school faculty $2,356 $5,700Consultant(s)

Project Director (consultant) $42,000 $50,000Meeting/Convening Expenses

Friday night collaborations - food $4,000 $6,000Friday night collaborations - facilities $0 $5,000

Stipends/Release TimeAdditional release time for Peralta math faculty chairs (4x$12K) $48,000 $48,000

Stipends for Peralta additional math faculty $2,000 $10,000Stipends for high school math faculty (10x$1.6K) $10,000 $16,000

Stipends for institutional researchers at partner institutions $0 $10,000Travel/TransportationMileage to cover transportation to meetings (20 meetings x 10 people @0.58/mi x 10 miles) $1,160 $2,000Subtotal $140,182 $246,209Indirect Costs (10%) $9,818 $11,943TOTAL $150,000 $258,152

Peralta Community College District

Board of Trustees

Profiles & Area Descriptions

Bill Withrow– Area 1

Bill Withrow has a B.S. in Business from the University of Colorado and MBA in Finance from Harvard University. He

served for twenty-four years on active duty in the U.S. Navy, retiring with the rank of Captain, Supply Corps he also

worked as a financial professional for the past twenty years, retiring from Wells Fargo and Company. He served as

Mayor of Alameda and Alameda as a Councilmember. As Chair of the Board of Trustees of the Robert Lippert Founda-

tion, he helped to provide college scholarships to Alameda students and Alameda charities. Term began

11/02/2004. Current term ending 11/2016.

Meredith Brown, President— Area 2

Meredith Brown has over 20 years of experience in complex litigation and representing public agencies. She received

her Bachelor of Science from Cornell University and her Juris Doctor Degree from Boston University School of Law. Ms.

Brown served as a clerk for United States Magistrate Joyce London Alexander, First Circuit in Boston, Massachu-

setts. Her community involvement includes service as a delegate to the 2008 Democratic National Convention, and

leadership with the Alameda County Democratic Lawyers Club, Montclair Soccer Club, National Women Political Cau-

cus – Alameda County North, and a volunteer Judge Pro Tem for Alameda County. Term began 12/11/2012. Current

term ending 11/2016.

Linda Handy— Area 3

Linda Handy has a long resume of community service and college administration experience. She has a M.S. in Organi-

zational Development and Analysis from the Weatherhead School of Management at Case Western Reserve University.

She is a Laney College alumna and a former president of the Oakland Coalition of Congregations. She represents part

of the Laurel district as well as the San Antonio, Fruitvale, Brookdale, Fairfax and Maxwell Park districts in Oak-

land. Term began 11/05/2002. Current term ending 11/2018.

Nicky González Yuen— Area 4

Nicky González Yuen earned both a Ph.D. and JD degree from the University of California, Berkeley and a B.A., summa

cum laude, in political science from Carleton College, Northfield, Minn. He has been a teacher at De Anza Community

College for 15 years where he teaches courses in US politics, Grassroots Political Activism and Race and Gender. A

former Congressional Fellow for the late Senator Paul Wellstone (D-MN), Nicky González Yuen also brings to the Peral-

ta Board a long history of organizing for voting rights, educational access, peace, justice and civil rights and environ-

mental sustainability. Term began 11/02/2004. Current term ending 11/2016.

William Riley, Vice President— Area 5

William Riley was first elected to the Board of Trustees in 1998 and represents an area that includes Oakland’s

Rockridge District and the City of Piedmont. He has served as President of the Board twice and also as Vice President.

He is a Merritt College alumnus and has served in public education over 30 years, including the Oakland, East Palo Al-

to/Ravenswood and San Ramon School Districts. He earned an Ed.D., in Educational Policy and a B.A. in Sociology

and Physical Education from the University of San Francisco and an M.A. in Educational Administration from San Fran-

cisco State University. Term began 11/03/1998. Current term ending 11/2018

Cy Gulassa — Area 6

Area 6

A graduate of UC Berkeley with a M.A. in English, Cy Gulassa has taught at institutions such as Frostburg State Univer-

sity in Maryland and the Philadelphia College of Art, as well as teaching English at De Anza College for 30 years. He

served as president of the Foothil-De Anza District Faculty Association for fifteen years and founded the Bay Facul-

ty Association. He lectures on community college reform and governance issues, and has published over 150 articles.

In 1994, he was named Faculty Member of the Year and was honored by State Assembly and Senate resolutions and a

commendation from President Clinton. Term began 11/02/2004. Current term ending 11/2016.

Julina Bonilla — Area 7

Julina Bonilla is a community college graduate and received her B. A. from U. C. Berkeley. She is a former Oakland ele-

mentary teacher and eventually moved into workforce development providing education and job training to young adults

in Northern California. Her community work and active memberships include: Board Vice President of Tradeswomen

Inc., National Women’s Political Caucus-AN, and she served as a member of the Oakland Workforce Investment Board

and co-chair of the Oakland Youth Council. Today, she is the Program Director of the West Oakland Job Resource Cen-

ter. Term began 12/09/2014. Current term ending 11/2018.

Adrien Abuyen, Co-Student Trustee

Adrien Abuyen, co-student trustee, representing students from all four campuses, has been active in the College of Ala-

meda (COA) community. Term began 6/1/2015. Current term ending 5/31/2016.

Justin Hyche, Co-Student Trustee

Justin Hyche, co-student trustee, representing students from all four campuses, has been active in the Berkeley City Col-

lege (BCC) community. Term began 6/1/2015. Current term ending 5/31/2016.

2015-16 2014-15 2014-15

Final Budget Final Adopted Budget

Estimated Actuals 2013-14 Actuals % Change $ Change

Revenue8199 Other Federal Revenue -$ -$ -$ 10,816$ 0.00% -$ Federal Revenue -$ -$ -$ 10,816$ 0.00% -$ 8611 State General 55,320,523$ 50,471,783$ 45,118,320$ 53,065,413$ 9.61% 4,848,740$ 8613 2% Enrollment Fees 140,262$ 151,497$ 295,412$ 277,404$ 0.00% (11,235)$ 8618 Apprenticeship 16,486$ 32,198$ 27,477$ 32,327$ 0.00% (15,712)$ 8619 State Prior Year -$ -$ 766,433$ (812,511)$ 0.00% -$ 8630 Education Protection Acct. 18,940,304$ 13,285,340$ 19,477,070$ 14,425,273$ 42.57% 5,654,964$ 8661 Part-time Parity Pay 408,873$ 408,873$ 408,873$ 408,873$ 0.00% -$ 8672 Homeowners Prop Tax 170,871$ 170,871$ 168,246$ -$ 0.00% -$ 8681 State Lottery Proceeds 2,510,189$ 2,372,580$ 2,673,205$ 2,486,121$ 5.80% 137,609$ 8682 State Mandated Cost 545,993$ 503,771$ 1,293,620$ 510,428$ 8.38% 42,222$ 8699 Other State Revenue 11,179,006$ -$ -$ 4,045$ 0.00% 11,179,006$ State Revenue 89,232,507$ 67,396,913$ 70,228,656$ 70,397,373$ 32.40% 21,835,594$ 8811 Tax Secured Roll 16,954,902$ 16,381,988$ 18,208,197$ 16,573,866$ 3.50% 572,914$ 8812 Tax Supplement Roll 208,317$ 208,317$ 257,701$ 346,945$ 0.00% -$ 8813 Tax Unsecured 1,135,660$ 1,135,660$ 1,099,718$ 1,052,466$ 0.00% -$ 8814 PY Tax Secured Roll -$ -$ (139,077)$ (427,773)$ 0.00% -$ 8815 PY Tax Supplemental Roll -$ -$ (1,072)$ (9,129)$ 0.00% -$ 8816 PY Tax Unsecured RL -$ -$ (346,869)$ 3,440$ 0.00% -$ 8818 ERAF 10,748,806$ 10,748,806$ 14,197,660$ 8,500,437$ 0.00% -$ 8851 Facility & Athletic Field Rentl -$ -$ 978$ 0.00% -$ 8861 Interest/Investment Inc -$ -$ (42,632)$ (38,017)$ 0.00% -$ 8874 Enrollment 6,423,060$ 8,644,557$ 7,430,064$ 6,279,473$ 0.00% (2,221,497)$ 8877 Instruct Matl Fees & Sales -$ -$ 50$ -$ 0.00% -$ 8879 Student Records 65,000$ 65,000$ 95,223$ 97,075$ 0.00% -$ 8880 Tuition Out of St 3,855,542$ 1,800,864$ 3,479,983$ 2,283,175$ 114.09% 2,054,678$ 8881 Parking Servcs -$ -$ -$ 390$ 0.00% -$ 8882 F-1 VisaTuition 4,701,220$ 3,825,323$ 4,852,905$ 4,726,999$ 22.90% 875,897$ 8883 Student Center -$ -$ -$ -$ 0.00% -$ 8884 Student AC Transit 1,021,000$ 1,249,934$ 921,585$ 921,249$ 0.00% (228,934)$ 8886 Application Fee 5,600$ 5,600$ 46,452$ 35,344$ 0.00% -$ 8887 Capital Outlay Fee -$ -$ -$ 92,831$ 0.00% -$ 8893 AC Transit-Student Bus Passes -$ -$ 14,472$ (1,620)$ 0.00% -$ 8895 St Drop Fees 5,000$ 5,300$ 5,270$ 5,680$ 0.00% (300)$ 8896 Student Health Fees 1,055,788$ 1,108,706$ 1,094,348$ 1,112,264$ 0.00% (52,918)$ 8897 Indirect Income -$ 845,569$ 146,906$ 260,030$ 0.00% (845,569)$ 8899 Miscellaneous 431,378$ 656,459$ 140,934$ 640,686$ 0.00% (225,081)$ Local Revenue 46,611,273$ 46,682,083$ 51,462,796$ 42,455,811$ 0.00% (70,810)$ 8982 Interfund Transfers-In 243,785$ -$ -$ -$ 0.00% 243,785$ 8983 Intrafund Transfers-In 12,756,929$ 13,128,094$ 10,915,411$ 11,188,145$ 0.00% (371,165)$ Trans Res Revenue 13,000,714$ 13,128,094$ 10,915,411$ 11,188,145$ 0.00% (127,380)$

Revenue Total 148,844,494$ 127,207,090$ 132,606,863$ 124,052,145$ 17.01% 21,637,404$

Expenses1101 Instructor 24,988,857$ 21,217,148$ 20,254,652$ 18,138,900$ 17.78% 3,771,709$ 1102 Instructor -Subs -$ 136,542$ -$ 113,285$ 0.00% (136,542)$ Full Time Academic 24,988,857$ 21,353,690$ 20,254,652$ 18,252,185$ 17.02% 3,635,167$ 1201 Administrators 5,374,168$ 4,864,416$ 4,803,073$ 4,214,079$ 10.48% 509,752$ Academic Admin 5,374,168$ 4,864,416$ 4,803,073$ 4,214,079$ 10.48% 509,752$ 1202 Department Chair 290,577$ 998,623$ 1,086,645$ 1,091,575$ 0.00% (708,046)$ 1203 Counselors 2,720,000$ 2,599,622$ 2,254,163$ -$ 4.63% 120,378$ 1204 Librarians 1,149,875$ 1,126,596$ 905,241$ -$ 2.07% 23,279$ 1205 Faculty-Reassign 1,339,585$ 787,116$ 1,032,804$ 710,984$ 70.19% 552,469$ 1206 Nurse 252,822$ 167,874$ 118,625$ 106,900$ 50.60% 84,948$ 1209 Counselors/Librarian-Lts -$ -$ -$ -$ 0.00% -$ 1210 Librarians-Lts -$ -$ -$ 55,229$ 0.00% -$ Other Faculty 5,752,859$ 5,679,831$ 5,397,478$ 1,964,688$ 1.29% 73,028$ 1351 Instructor-PTime & Ext-Se 9,103,384$ 6,786,415$ 10,407,276$ 12,237,944$ 34.14% 2,316,969$ 1352 Instructor-Sub-Daily/Sick 750$ -$ 91,189$ 66,521$ 0.00% 750$ 1353 Instructor - Retiree -$ -$ 801,100$ 595,281$ 0.00% -$ 1356 Instructor-Pt-Office Hour -$ -$ 463,770$ 406,830$ 0.00% -$ 1357 Instructor-Parity 408,873$ 408,873$ 317,264$ 507,144$ 0.00% -$ 1452 Department Chairs 20,234$ 17,242$ 67,614$ 48,917$ 17.35% 2,992$ 1453 Counselors 413,237$ 400,434$ 154,397$ 393,087$ 3.20% 12,803$ 1454 Librarians 74,233$ 126,799$ 276,539$ 233,936$ 0.00% (52,566)$ 1455 Coaches 145,724$ 89,576$ 132,865$ 104,835$ 62.68% 56,148$ 1456 Other Non-Teaching 325,815$ 272,756$ 365,678$ 293,372$ 19.45% 53,059$ 1457 Non-Teaching Retirees 4,019$ 4,019$ 131,486$ 65,966$ 0.00% -$ 1458 Partity Pay for Non Teaching Fac -$ -$ 60,325$ 65,002$ 0.00% -$ 1459 Staff Developing Training Fac 110,905$ 120,000$ 1,000$ -$ 0.00% (9,095)$

Final vs. Final Budget

Peralta Community College DistrictUnrestricted General Fund Detail

2015-16 Final Budget

2015-16 2014-15 2014-15






Part Time Academic 10,607,174$ 8,226,114$ 13,270,503$ 15,018,835$ 28.95% 2,381,060$ 2101 Administrators 4,313,920$ 3,960,810$ 3,901,502$ 3,586,324$ 8.92% 353,110$ 2102 Clerical Tech & Sup Staff 18,369,067$ 17,338,711$ 16,057,812$ 15,150,499$ 5.94% 1,030,356$ 2201 Instructional Aides 1,431,705$ 1,326,582$ 1,212,569$ 1,123,136$ 7.92% 105,123$ 2351 Trustee Members - Board 84,344$ 84,180$ 87,263$ 88,438$ 0.19% 164$ 2352 Cler Tech & Sup Stf 591,652$ 449,365$ 1,304,132$ 900,482$ 31.66% 142,287$ 2353 Student Employee Asst. 319,011$ 345,830$ 449,466$ 469,245$ 0.00% (26,819)$ 2354 Overtime 142,761$ 114,544$ 353,797$ 236,248$ 24.63% 28,217$ 2357 Classified Retirees 31,037$ 8,000$ 117,555$ 163,838$ 287.96% 23,037$ 2359 Inst. Aides - (non-classroom) 7,000$ -$ -$ -$ #DIV/0! 7,000$ 2451 Instructional Aides 466,838$ 413,614$ 345,349$ 480,952$ 12.87% 53,224$ 2452 Inst. Aides - Student 367,847$ 417,733$ 445,249$ 395,800$ 0.00% (49,886)$ 2453 Inst. Aides-O/T/Perm 3,500$ 5,500$ -$ -$ 0.00% (2,000)$ Classified Salary 26,128,682$ 24,464,869$ 24,274,694$ 22,594,962$ 6.80% 1,663,813$ 3110 STRS - Academic 3,626,162$ 2,812,854$ 3,035,306$ 2,660,442$ 28.91% 813,308$ 3140 STRS Cash Balance 369,463$ 260,649$ 242,854$ 286,215$ 41.75% 108,814$ 3220 PERS 2,968,691$ 2,669,954$ 2,767,927$ 2,508,428$ 11.19% 298,737$ 3310 OASDHI (FICA) -$ -$ 526$ -$ 0.00% -$ 3320 OASDHI Classified 1,549,878$ 1,403,960$ 1,508,777$ 1,411,943$ 10.39% 145,918$ 3340 Medicare - Academic 654,084$ 555,860$ 576,993$ 593,230$ 17.67% 98,224$ 3350 Medicare - Classified 363,041$ 331,407$ 377,625$ 328,630$ 9.55% 31,634$ 3411 Medical -Academic 7,385,050$ 6,686,584$ 8,915,956$ 7,735,833$ 10.45% 698,466$ 3412 Dental - Academic 467,821$ 455,669$ 393,438$ 396,542$ 2.67% 12,152$ 3415 Life Ins. -Academic 87,176$ 78,975$ 82,702$ 72,532$ 10.38% 8,201$ 3421 Medical -Classified 6,781,265$ 6,301,365$ 5,681,741$ 5,238,692$ 7.62% 479,900$ 3422 Dental -Classified 468,376$ 479,558$ 404,778$ 462,741$ 0.00% (11,182)$ 3425 Life Insurance-Class 64,283$ 61,427$ 75,543$ 69,303$ 4.65% 2,856$ 3431 Medical reimbursement (120,000)$ (120,000)$ (88,375)$ (93,554)$ 0.00% -$ 3432 Dental reimbursement (2,000)$ (2,000)$ -$ (954)$ 0.00% -$ 3435 Life ins. reimbursement -$ (300)$ (228)$ (105)$ 0.00% 300$ 3510 Unemployment Ins.-Aca 39,619$ 23,386$ 26,108$ 21,700$ 69.41% 16,233$ 3520 Unemployment Ins -Class 17,732$ 12,059$ 16,997$ 11,680$ 47.04% 5,673$ 3610 Work Comp-Academic 679,848$ 535,653$ 564,800$ 535,284$ 26.92% 144,195$ 3620 Work Comp-Classfd 342,170$ 299,480$ 300,881$ 272,384$ 14.25% 42,690$ 3712 OPEB Instructional 3,868,500$ 2,830,530$ 4,076,195$ 3,698,071$ 36.67% 1,037,970$ 3720 Apple Ret. 1,847$ 2,487$ 39,245$ 29,740$ 0.00% (640)$ 3722 OPEB Classified 1,946,305$ 1,783,377$ 2,007,215$ 1,880,726$ 9.14% 162,928$ 3912 Retiree Benefits 8,835,784$ 11,135,146$ 7,560,474$ 8,756,303$ 0.00% (2,299,362)$ Fringe Benefits 40,395,095$ 38,598,080$ 38,567,478$ 36,875,806$ 4.66% 1,797,015$ 4101 Classroom-Books 5,000$ 5,000$ 7,282$ 7,023$ 0.00% -$ 4102 Book for Student Program 8,000$ -$ 998$ -$ 0.00% 8,000$ 4103 Office Professional Refer/ 283$ -$ -$ -$ 0.00% 283$ 4301 Instructional Supplies 83,890$ 87,489$ 90,858$ 38,296$ 0.00% (3,599)$ 4303 Subs Periodicals 18,064$ 34,962$ 19,095$ 16,270$ 0.00% (16,898)$ 4304 Supplies-office 705,939$ 598,307$ 685,770$ 601,024$ 17.99% 107,632$ 4305 Fuel - gasoline/petroleum 16,550$ 16,550$ 16,568$ 14,385$ 0.00% -$ 4306 Computer software/site lic.-cl 34,406$ 39,714$ 56,307$ 11,059$ 0.00% (5,308)$ 4307 Computer software/site lic.-ad 47,500$ 47,000$ 32,273$ 28,053$ 1.06% 500$ 5102 Guest Speakers Lectures-Non 16,510$ 5,320$ 1,525$ 450$ 210.34% 11,190$ 5103 Legal 320,543$ 340,946$ 358,665$ 119,943$ 0.00% (20,403)$ 5104 Audit 147,227$ 142,447$ 181,730$ 173,826$ 3.36% 4,780$ 5105 Independent Contractor/Consult 5,652,966$ 5,007,426$ 6,245,159$ 5,817,322$ 12.89% 645,540$ 5106 Events/Programs-Outside Prod 131,626$ 67,576$ 68,120$ 31,865$ 94.78% 64,050$ 5107 Election Cost 7,500$ 76,758$ 186,908$ -$ 0.00% (69,258)$ 5109 Legal Settlements 30,000$ 5,000$ 75,516$ 53,529$ 500.00% 25,000$ 5110 Instructor Events-Personal Svs 6,000$ 8,880$ 4,994$ 10,142$ 0.00% (2,880)$ 5202 Travel Non-Local 276,344$ 175,680$ 188,652$ 156,513$ 57.30% 100,664$ 5203 Travel Local 65,913$ 35,751$ 19,807$ 10,553$ 84.37% 30,162$ 5204 Student Transportation 2,900$ 3,244$ 3,977$ 1,985$ 0.00% (344)$ 5205 Conference/Seminar Reg 160,260$ 95,897$ 139,975$ 76,376$ 67.12% 64,363$ 5206 Internal Training- Staff Dev 36,550$ 11,550$ 11,679$ 8,653$ 216.45% 25,000$ 5301 Dues and Membership 339,155$ 359,338$ 314,028$ 279,213$ 0.00% (20,183)$ 5407 Student Accident Insurance 215,760$ 114,847$ 125,680$ 106,231$ 87.87% 100,913$ 5501 Garbage and Trash 307,164$ 281,681$ 213,074$ 230,388$ 9.05% 25,483$ 5502 Gas 372,731$ 566,113$ 458,730$ 521,639$ 0.00% (193,382)$ 5503 Light and Power (Electricity) 2,271,958$ 2,006,089$ 2,166,865$ 1,878,415$ 13.25% 265,869$ 5504 Sewer Use 199,376$ 163,050$ 135,976$ 81,939$ 22.28% 36,326$ 5505 Telephone Services 369,147$ 514,466$ 370,752$ 245,098$ 0.00% (145,319)$ 5506 Main Water System 418,805$ 370,306$ 397,944$ 417,525$ 13.10% 48,499$ 5507 Pest Control 42,414$ 43,533$ 39,457$ 39,985$ 0.00% (1,119)$ 5602 Facility/Building Leases - Ann 592,500$ 537,806$ 542,459$ 516,120$ 10.17% 54,694$ 5603 Facility/Building Rentals-Mont 50,650$ 25,494$ 47,360$ 40,040$ 98.67% 25,156$

2015-16 2014-15 2014-15






5604 Equipment Lease - Annual 125,214$ 128,880$ 92,137$ 107,051$ 0.00% (3,666)$ 5605 Equipment Rentals - Mon-Mon 62,410$ 51,731$ 26,066$ 27,075$ 20.64% 10,679$ 5607 Print & Dup. Equip Leases/Rent 148,000$ 90,419$ 83,062$ 78,174$ 63.68% 57,581$ 5701 Athletics Meals and Lodging 35,466$ 25,456$ 38,413$ 26,760$ 39.32% 10,010$ 5702 Graduation Exprenses 43,000$ 25,196$ 78,101$ 25,824$ 70.66% 17,804$ 5704 Health Services 4,630$ 3,576$ 6,524$ 2,140$ 29.47% 1,054$ 5706 Misc. Student Services -$ -$ 3,106$ -$ 0.00% -$ 5708 Athletic Transportation 48,781$ 37,810$ 29,947$ 29,903$ 29.02% 10,971$ 5864 Instructional Services -$ -$ 10,855$ -$ 0.00% -$ 5865 Publishing/ Doc Publication 175,863$ 185,114$ 83,325$ 117,266$ 0.00% (9,251)$ 5866 Testing License and Material 2,265$ 1,400$ -$ 452$ 61.79% 865$ 5867 Postage 103,763$ 100,181$ 102,499$ 69,643$ 3.58% 3,582$ 5870 Cross Enrollment Waiver 935$ -$ 3,543$ 184$ 0.00% 935$ 5875 Employee Waiver 130,422$ -$ 49,998$ 47,781$ 0.00% 130,422$ 5877 Payment of Fines -OSHA & Misc 1,200$ 1,500$ 1,200$ -$ 0.00% (300)$ 5880 Radio Licensing 500$ -$ -$ -$ 0.00% 500$ 5881 Building Repairs & Services 232,531$ 130,867$ 291,129$ 253,424$ 77.68% 101,664$ 5882 Equip Repairs Maint. & Svc 198,583$ 118,470$ 65,794$ 169,422$ 67.62% 80,113$ 5883 Net Internet Fees and Subs. 47,630$ 33,177$ 23,425$ 82,472$ 43.56% 14,453$ 5884 Laundry Services 8,750$ 7,960$ 7,288$ -$ 9.92% 790$ 5885 Misc. Operational Exp. 7,652,556$ 2,340,013$ 1,810,702$ 1,234,924$ 227.03% 5,312,543$ 5886 Program TV License 18,000$ 18,000$ 18,141$ 19,870$ 0.00% -$ 5887 Advertising/Radio/TV 6,435$ 11,573$ 110,000$ 205,563$ 0.00% (5,138)$ 5888 Advertising Print/ADS 77,430$ 58,795$ 87,931$ 62,705$ 31.69% 18,635$ 5889 Grounds Maintenance 40,600$ -$ -$ -$ 0.00% 40,600$ 5890 Service Contract-Equipment 94,207$ 141,278$ 156,542$ 103,917$ 0.00% (47,071)$ 5891 Service Contract-Software-DP 506,918$ 511,432$ 623,919$ 482,989$ 0.00% (4,514)$ 5892 Service Contract-Hardware-DP 80,000$ 135,414$ 61,532$ 82,151$ 0.00% (55,414)$ 5893 Permits & Fees - Risk Mgmt 5,000$ 12,000$ 5,364$ 12,305$ 0.00% (7,000)$ 5894 Moving/Relocation Expenses -$ -$ 2,905$ -$ 0.00% -$ Books, Supplies, Services 22,804,720$ 15,958,462$ 17,081,631$ 14,775,855$ 42.90% 6,846,258$ 6120 Site Improvement -$ -$ 8,445$ -$ 0.00% -$ 6130 Special Assessments 2,693$ 8,745$ -$ -$ 0.00% (6,052)$ 6206 Building Improvement -$ 2,693$ -$ -$ 0.00% (2,693)$ 6301 College Library Books 26,000$ -$ -$ 12,812$ 0.00% 26,000$ 6303 College Library Periodicals 8,000$ 4,800$ 4,745$ 12,899$ 66.67% 3,200$ 6305 Library Textbooks -$ -$ -$ 3,093$ 0.00% -$ 6306 Library Databases -$ -$ -$ 14,788$ 0.00% -$ 6402 Inst Equipment and Furn 90,880$ 32,913$ 115,077$ 46,880$ 176.12% 57,967$ 6403 Non-Instructional Equip & Furn 138,774$ 91,269$ 140,283$ 100,237$ 52.05% 47,505$ 6404 Telephone System Purchase 2,000$ -$ 398$ -$ 0.00% 2,000$ 6406 Laptop Computers 29,244$ 3,500$ 23,774$ 20,969$ 735.54% 25,744$ 6407 PC,SERV, Other Comput,Peripher 59,103$ 32,656$ 199,029$ 115,474$ 80.99% 26,447$ Equipment Cap Outlay 356,694$ 176,576$ 491,751$ 327,152$ 102.01% 180,118$ 7110 Debt Service - Bonds 2,349,253$ -$ -$ -$ 0.00% 2,349,253$

2015-16 2014-15 2014-15






7120 Debt Interest - Bonds 5,797,337$ 6,727,397$ 6,727,392$ 5,895,949$ 0.00% (930,060)$ 7301 Interfund Transfers 3,507,655$ 1,157,655$ 1,157,655$ 1,157,665$ 203.00% 2,350,000$ 7302 Special Reserve #1 -$ -$ -$ -$ 0.00% -$ Debt Service Transfer 11,654,245$ 7,885,052$ 7,885,047$ 7,053,614$ 47.80% 3,769,193$ 7530 Tuition Reduction -$ -$ 386$ -$ 0.00% -$ 7535 OPD Payment for Academy 132,000$ -$ 198,280$ -$ 0.00% 132,000$ 7630 Book Vouchers -$ -$ 29,171$ 835$ 0.00% -$ Financial Aid 132,000$ -$ 227,837$ 835$ 0.00% -$ 7901 Reserve 1,000,000$ -$ -$ -$ 0.00% 1,000,000$ 7920 PFT Leave Banking -$ -$ -$ -$ 0.00% -$ Fund Balance 1,000,000$ -$ -$ -$ 0.00% 1,000,000$

Expense Total 149,194,494$ 127,207,090$ 132,254,144$ 121,078,011$ 17.28% 21,987,404$

Beginning Fund Balance 16,150,132$ 15,797,413$ 12,823,279$ Revenues over Expenses (350,000) 352,719 2,974,134 Ending Fund Balance 15,800,132$ 16,150,132$ 15,797,413$

PERALTA COMMUNITYCOLLEGE DISTRICT

ANNUAL FINANCIAL REPORT

JUNE 30, 2014

PERALTA COMMUNITY COLLEGE DISTRICT

TABLE OF CONTENTSJUNE 30, 2014

FINANCIAL SECTIONIndependent Auditor's Report 2Management's Discussion and Analysis 4Basic Financial Statements - Primary Government

Statement of Net Position 15Statement of Revenues, Expenses, and Changes in Net Position 16Statement of Cash Flows 17Fiduciary Funds

Statement of Net Position 19Statement of Changes in Net Position 20

Notes to Financial Statements 21

REQUIRED SUPPLEMENTARY INFORMATIONSchedule of Other Postemployment Benefits (OPEB) Funding Progress 56

SUPPLEMENTARY INFORMATIONDistrict Organization 58Schedule of Expenditures of Federal Awards 59Schedule of Expenditures of State Awards 62Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance 63Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation 64Reconciliation of Annual Financial and Budget Report (CCFS-311) WithAudited Fund Balance 67Proposition 30 Education Protection Act (EPA) Expenditure Report 68Reconciliation of Governmental Funds to the Statement of Net Position 69Note to Supplementary Information 70

INDEPENDENT AUDITOR'S REPORTSReport on Internal Control Over Financial Reporting and on Compliance and OtherMatters Based on an Audit of Financial Statements Performed in Accordance WithGovernment Auditing Standards 73Report on Compliance for Each Major Program and Report on Internal Control OverCompliance Required by OMB Circular A-133 75Report on State Compliance 78

SCHEDULE OF FINDINGS AND QUESTIONED COSTSSummary of Auditor's Results 81Financial Statement Findings and Recommendations 82Federal Award Findings and Questioned Costs 83State Awards Findings and Questioned Costs 92Summary Schedule of Prior Audit Findings 95

1

FINANCIAL SECTION

2

INDEPENDENT AUDITOR'S REPORT

Board of TrusteesPeralta Community College DistrictOakland, California

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities of Peralta CommunityCollege District (the District) as of and for the year ended June 30, 2014, and the related notes to the financialstatements, which collectively comprise the District's basic financial statements as listed in the Table of Contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatements, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the District's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we expressno such opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of the business-type activities of the District as of June 30, 2014, and the changes in net position and cashflows for the year then ended in accordance with accounting principles generally accepted in the United States ofAmerica.

8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com

Vavrinek, Trine, Day & Co., LLPCertified Public Accountants

VALUE THE D IFFERENCE

FRESN O • L AGUN A H I L LS • PALO ALTO • P LEASANTON • RAN C HO CUC AMON GA • R I v E R S I d E • SACRAMENTO

3

Emphasis of Matter - Change in Accounting Principles

As discussed in Note 17 to the financial statements, the District has elected to change its method of accounting forcost of debt issuance as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 65,Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require the Management's Discussionand Analysis on pages 4 through 14 and the Schedule of Other Postemployment Benefits (OPEB) FundingProgress on page 56 be presented to supplement the basic financial statements. Such information, although not apart of the basic financial statements, is required by the Governmental Accounting Standards Board, whoconsiders it to be an essential part of financial reporting for placing the basic financial statements in anappropriate operational, economic, or historical context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing the information andcomparing the information for consistency with management's responses to our inquiries, the basic financialstatements, and other knowledge we obtained during our audit of the basic financial statements. We do notexpress an opinion or provide any assurance on the information because the limited procedures do not provide uswith sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the District's basic financial statements. The accompanying supplementary information listed in theTable of Contents, including the Schedule of Expenditures of Federal Awards, as required by U.S. Office ofManagement and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-ProfitOrganizations, is presented for purposes of additional analysis and is not a required part of the basic financialstatements.

The accompanying supplementary information, including the Schedule of Expenditures of Federal Awards, is theresponsibility of management and was derived from and relates directly to the underlying accounting and otherrecords used to prepare the basic financial statements. Such information has been subjected to the auditingprocedures applied in the audit of the basic financial statements and certain additional procedures, includingcomparing and reconciling such information directly to the underlying accounting and other records used toprepare the basic financial statements or to the basic financial statements themselves, and other additionalprocedures in accordance with auditing standards generally accepted in the United States of America. In ouropinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to thebasic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2014, onour consideration of the District's internal control over financial reporting and on our tests of its compliance withcertain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that reportis to describe the scope of our testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Thatreport is an integral part of an audit performed in accordance with Government Auditing Standards in consideringthe District's internal control over financial reporting and compliance.

Rancho Cucamonga, CaliforniaDecember 16, 2014

4

Introduction

The following discussion and analysis provides an overview of the financial position and activities ofPeralta Community College District (the District) for the year ended June 30, 2014. The discussion has beenprepared by management and should be read in conjunction with the financial statements and notes which followthis section.

The Peralta Community College District was founded in 1964, and serves six cities in the East Bay Area,including Albany, Alameda, Berkeley, Emeryville, Oakland, and Piedmont. The colleges are Berkeley CityCollege, College of Alameda, Laney College, and Merritt College. The District has a reputation for developingeffective approaches to serving the varied interests and needs of its vibrant community. The District serves over25,000 students a semester, and is one of the top community college districts in California in transferring studentsinto the UC system. Currently, the District has about 750 full-time employees and over 1,535 part-time facultyand staff.

Selected Highlights

The District's primary funding source is based upon apportionment received from the State of California.The primary basis of this apportionment is the calculation of Full-Time Equivalent Students (FTES).During the fiscal year 2013-2014, FTES was 18,642 (including credit and noncredit FTES), as comparedto 18,264 in the fiscal year 2012-2013. This represents a two percent increase. FTES is generated at theDistrict's four colleges: Berkeley City College, College of Alameda, Laney College, and Merritt College.

-

5,000

10,000

15,000

20,000

25,000

FTES

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Full-Time Equivalent Students 19,414 20,322 22,144 19,871 18,712 18,264 18,642

Percentage Increase/(Decrease) 4.68% 8.97% -10.26% -5.83% -2.39% 2.07%


MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2014

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Unrestricted General fund revenues for the year were $115.7 million, an increase of 5.1 percent fromprior year's revenue of $110.0 million.

Medical benefit rates for both employees and retirees increased for Kaiser 9.8 percent and decreased forthe Self-Insurance plan 2.72 percent over the prior year. The District continues to provide retirees whowere hired prior to July 1, 2004, with lifetime medical benefits. For employees hired after July 1, 2004,medical benefits upon retirement are provided until age 65 or Medicare eligibility. The actuarial accruedliability at a 6.75 percent discount rate for the District as of June 30, 2014, is $174.7 million. InDecember 2005, the District issued $153 million in Other Postemployment Benefits (OPEB) Bonds. Theproceeds of the bonds have been placed in a revocable trust fund, which may be used only to pay orreimburse the District for payment of retiree health benefit costs or related debt service. In January 2006,the bond proceeds were invested in a strategic allocation that mirrors the asset allocation of CalPERS.

The District is using Measures A and E bonds to pay for various capital improvements to our educationalfacilities. They include, but are not limited to, the following:

o Investment in our technology infrastructure District-wide.o Renovate and construct classrooms and facilities to enhance the community outreach capabilities

of the District among the numerous ethnic communities living in and served by the District.o District-wide safety systems including disaster preparedness, campus security, and hazardous and

toxic waste handling.o Technological infrastructure for distance learning.o Renovation of student service buildings and facilities at Laney College, Merritt College, and

College of Alameda.o Landscape improvements at Merritt College.o Improvements in laboratories and power supplies District-wide.o Cabling and power upgrade for technology.o Construction of a six story urban campus for Berkeley City College in Berkeley.

The District is using Measure B, special parcel tax, as approved by the voters in June 2012 in thefollowing manner:

o Restore and maintain core academic programs such as Math, Science, and English.o Train students for careers.o Prepare students to transfer to four-year universities.

Statement of Net Position

The Statement of Net Position presents the assets, liabilities, and net position of the District as of the end of thefiscal year and was prepared using the accrual basis of accounting, which is similar to the accounting basis usedby most private-sector organizations. The Statement of Net Position is a point-of-time financial statement whosepurpose is to present to the reader a fiscal snapshot of the District. The Statement of Net Position presents end-of-year data concerning assets, liabilities, and net position.



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From the data presented, the reader of the Statement of Net Position is able to determine the assets available tocontinue operations of the District. The reader is also able to determine how much the District owes to vendorsand employees. Finally, the Statement of Net Position provides a picture of the assets and their availability forexpenditure by the District.

The difference between total assets and total liabilities is one indicator of the current financial condition of theDistrict; the change in net position is an indicator of whether the overall financial condition has improved orworsened during the year. Assets and liabilities are generally measured using current values. One notableexception is capital assets, which are stated at historical cost, less accumulated depreciation.

The net position is divided into three major categories. The first category, invested in capital assets, provides theequity amount in property, plant, and equipment owned by the District. The second category is expendablerestricted assets; these assets are available for expenditure by the District, but must be spent for purposes asdetermined by external entities and/or donors that have placed time or purpose restrictions on the use of the assets.The final category is unrestricted net position, which is available to the District for any lawful purpose of theDistrict.



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A summary of the Statement of Net Position as of June 30, 2014 and June 30, 2013, is presented below:

NET POSITIONAs of June 30,

(in thousands)Increase Percent

2014 *2013 (Decrease) ChangeASSETSCurrent Assets

Cash and investments 368,087$ 373,198$ (5,111)$ -1.4%Accounts receivable 29,827 35,217 (5,390) -15.3%Other current assets 442 1,100 (658) -59.8%

Total Current Assets 398,356 409,515 (11,159) -76.49%Noncurrent Assets

Capital assets (net of depreciation) 423,489 400,414 23,075 5.8%TOTAL ASSETS 821,845 809,929 23,075 5.8%

DEFERRED OUTFLOWS OF RESERVESDeferred charge on refunding 8,339 7,990 349 4.4%Interest rate SWAP 14,431 11,760 2,671 22.7%

TOTAL DEFERRED OUTFLOWS 22,770 19,750 3,020 27.08%LIABILITIESCurrent Liabilities

Accounts payable and accrued liabilities 19,170 32,663 (13,493) -41.3%Unearned revenue 3,301 3,365 (64) -1.9%Other current liabilities 36,348 31,089 5,259 16.9%Current portion of long-term obligations 14,283 13,467 816 6.1%

Total Current Liabilities 73,102 80,584 (7,482) -20.2%Noncurrent Liabilities

Bonds payable 622,984 629,535 (6,551) -1.0%Other long-term liabilities 38,140 34,130 4,010 11.7%

Long-term obligations 661,124 663,665 (2,541) -0.4%TOTAL LIABILITIES 734,226 744,249 (10,023) -20.6%

DEFERRED INFLOWS OF RESERVESSWAP liability 14,431 11,760 2,671 22.7%Interest rate SWAP 376 1,054 (678) -64.3%

TOTAL DEFERRED INFLOWS 14,807 12,814 1,993 -41.6%NET POSITION

Net investment in capital assets 85,546 72,104 13,442 18.6%Restricted for:

Debt service 15,124 13,973 1,151 8.2%Capital projects 4,969 4,108 861 21.0%Other activities 17,132 13,027 4,105 31.5%

Unrestricted (27,189) (30,596) 3,407 11.1%TOTAL NET POSITION 95,582$ 72,616$ 22,966$ 31.6%

* As restated.



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Invested inCapital Assets,Net of Related

Debt89%

Restricted forDebt Service

16%

Restricted forCapital Projects

5%

Restricted forOther Activities

18%

Unrestricted-28%

NET POSITION - JUNE 30, 2014

Approximately 89 percent of the cash balance is cash deposited in the Alameda County Treasury Pool andapproximately 11 percent is cash deposited in local financial banking institutions. All funds are investedin accordance with Board Policy, which emphasizes prudence, safety, liquidity, and return on investment.The Statement of Cash Flows contained within these financial statements provides greater detailregarding the sources and uses of cash, and the net decrease in cash during fiscal years 2013-2014 and2012-2013.

The majority of the accounts receivable balance is from Federal and State sources for apportionment,grant and entitlement programs, and student receivables. Receivables totaling approximately$14.2 million for the June 2014 apportionment and categorical deferrals, approximately $9.8 million forreimbursements from Federal and State agencies related to grant awards, and $5.8 million for studentreceivables.

Capital assets had a net increase of $23.1 million. The District had additions of $16 million related toconstruction in progress. Depreciation expense of $14.3 million was recognized during 2013-2014. Thecapital asset section of this discussion and analysis provides greater detail.

Accounts payable are amounts due as of the fiscal year end for goods and services received as of June 30,2014. Total accounts payable are $9.8 million; $4.5 million of the balance was accrued in the CapitalProjects fund, Bond fund, and Special Revenue fund related to capital outlay. Five hundred andsixty-nine thousand dollars is for amounts due to or on behalf of employees for wages and benefits.



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The District's noncurrent liabilities primarily consist of bonds payable, related to the issuance ofElection 2000 Series B, C, and D of the District General Obligation Bonds; 2005 Series A and BRefunding of the District General Obligation Bonds; Election 2006 Series A, B, and C of the DistrictGeneral Obligation Bonds; and Election 2009 and Other Postemployment Benefit Bonds. The face valueof these bonds at the time of initial sale totaled $700.1 million, and $637.3 million represents theremaining long-term debt to satisfy these obligations.

Statement of Revenues, Expenses, and Change in Net Position

The Statement of Revenues, Expenses, and Change in Net Position presents the financial results of the District'soperations, as well as its nonoperating activities. The distinction between these two activities involves theconcepts of exchange and nonexchange. Operating activities are those in which a direct payment or exchange ismade for the receipt of specified goods or services. For example, tuition fees paid by the student are consideredan exchange for instructional services. The receipt of State apportionments and property taxes, however, do notinclude this exchange relationship between the payment and receipt of specified goods or services. Theserevenues and related expenses are classified as nonoperating activities. It is because of the methodology used tocategorize between operating and nonoperating, combined with the fact that the primary source of funding thatsupports the District's instructional activities comes from State apportionment and local property taxes, results in anet operating loss for the District's operations.



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The Statement of Revenues, Expenses, and Changes in Net Position for the years ended June 30, 2014 andJune 30, 2013, is summarized below:

Statement of Revenues, Expenses, and Changes in Net Positionfor the Years Ended June 30,


2014 2013 (Decrease) ChangeOperating Revenues

Tuition and fees 16,198$ 14,557$ 1,641$ 11.3%Other revenues 1,239 1,853 (614) 100%

Total Operating Revenues 17,437 16,410 1,027 6.3%Operating Expenses

Salaries and benefits 128,421 123,037 5,384 4.4%Supplies and maintenance 24,130 25,679 (1,549) -6.0%Student financial aid 41,304 38,326 2,978 7.8%Depreciation 14,304 15,348 (1,044) -6.8%

Total Operating Expenses 208,159 202,390 5,769 2.9%Loss on Operations (190,722) (185,980) (4,742) -2.5%

Nonoperating Revenues and (Expenses)State apportionments 68,496 58,547 9,949 17.0%Grants and contracts 58,292 54,592 3,700 6.8%Property taxes 67,647 73,572 (5,925) -8.1%State revenues 6,045 5,122 923 18.0%Net investment income (671) (2,147) 1,476 -68.7%Other nonoperating revenues and transfers 11,875 10,038 1,837 18.3%

Total Nonoperating Revenues (Expenses) 211,684 199,724 11,960 6.0%Other Revenues

State and local capital income 2,004 1,127 877 77.8%Total Other Revenues 2,004 1,127 877 77.8%Net Increase in Net Position 22,966$ 14,871$ 8,095$ 54.4%



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Tuition and fees6%

Stateapportionments

30%

Grants andcontracts

25%

Property taxes29%

State revenues3%

Net investmentincome

1%

Other operatingand nonoperating

revenue6%

TOTAL REVENUES - JUNE 30, 2014

Salaries andbenefits

61%

Supplies andmaintenance

11%

Student financialaid

20%

Depreciation7%

Interest Expense1%

TOTAL EXPENSES - JUNE 30, 2014



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The primary components of tuition and fees are the $46 per unit enrollment fee that is charged to allstudents registering for classes and the additional $213 per unit fee that is charged to all non-residentstudents.

Personnel costs account for 62 percent of operating expenses in fiscal year 2014 compared to 60 percentin 2013. The balance of operating expenses is for supplies, materials, other operating expenses, financialaid, equipment, maintenance, and depreciation expense.

The principal components of the District's nonoperating revenue are: noncapital Federal and State grants,State apportionment, local property taxes, other State funding, and interest income. With the exception ofinterest income, the majority of this revenue is received to support the District's instructional activities.The amount of State general apportionment received by the District is dependent upon the number ofFTES generated and reported to the State, less amounts received from enrollment fees and local propertytaxes. Increases in either of the latter two revenue-categories lead to a corresponding decrease inapportionment.

A schedule of functional expenses is displayed below:

Supplies,Material,and Other

Salaries Operating Studentand Expenses Financial

Benefits and Services Aid Depreciation TotalInstructional activities 58,155,265$ 1,943,692$ -$ -$ 60,098,957$

Academic support 9,747,032 590,805 - - 10,337,837Student services 19,093,994 4,475,664 - - 23,569,658Plant operations and

maintenance 6,158,386 1,448,660 - - 7,607,046Planning, policymaking,

and coordination 5,429,978 2,751,873 - - 8,181,851Instructional support

services 24,720,029 8,638,261 - - 33,358,290Community services and

economic development 241,046 49,839 - - 290,885Ancillary services and

auxiliary operations 3,685,686 4,231,315 - - 7,917,001Student aid - - 41,303,971 - 41,303,971Physical property and

related acquisitions 1,189,399 - - - 1,189,399

Unallocated expense - - - 14,304,212 14,304,212Total 128,420,815$ 24,130,109$ 41,303,971$ 14,304,212$ 208,159,107$



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Statement of Cash Flows

The Statement of Cash Flows provides information about cash receipts and cash payments during the fiscal year.This Statement also helps users assess the District's ability to generate positive cash flows, meet obligations asthey come due, and the need for external financing.

The Statement of Cash Flows is divided into five parts. The first part reflects operating cash flows and shows thenet cash used by the operating activities of the District. The second part details cash received for nonoperating,noninvesting, and noncapital financing purposes. The third part shows cash flows from capital and relatedfinancing activities. It deals with the cash used for the acquisition and construction of capital and related items.The fourth part provides information from investing activities and the amount of interest received. The lastsection reconciles the net cash used by operating activities to the operating loss reflected on the Statement ofRevenues, Expenses, and Changes in Net Position.

The Statement of Cash Flows for the fiscal years ended June 30, 2014 and June 30, 2013, is summarized below:

Statement of Cash Flowsfor the Years Ended June 30,

(in thousands)2014 2013

Cash FromOperating activities (180,885)$ (160,175)$Noncapital financing activities 175,874 176,361Capital financing activities (41,212) (30,313)Investing activities (323) 9,439

Net Change in Cash (46,546) (4,688)Cash, Beginning of Year 161,327 166,015Cash, End of Year 114,781$ 161,327$

Cash receipts from operating activities are from student tuition. Use of cash is for payments toemployees, vendors, and students related to the instructional program.

State apportionment received based on the workload measures generated by the District accounts for30 percent and 39 percent of noncapital financing for fiscal years 2014 and 2013, respectively. Cashreceipts from Federal and State grants represent 25 percent in 2014 and 31 percent in 2013. Cashreceived from property taxes accounts for 29 percent in fiscal year 2014 and 25 percent in fiscal year2013 of the cash generated in this section.

The majority of the activity in the capital and related financing activities is for the purchase of capitalassets (buildings, building improvements, and equipment).

Cash from investing activities is purchase of investments and investment income for interest earned oncash in bank and cash invested through the Alameda County pool, and on investments with local bankinginstitutions. Approximately $0.3 million and $0.4 million were received from the Alameda County poolfor fiscal years 2014 and 2013.



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Other Postemployment Benefits Obligation

Governmental Accounting Standards Board (GASB) issued in 2004 Accounting Standards No. 43 and No. 45 arefor retiree health benefits. These standards apply to all public employers that pay any part of the cost of retireehealth benefits for current or future retirees. The District had an actuarial study performed in 2013 to identify thecost and amount needed to fund on an annual basis retiree health benefits. This study determined the District'sUnfunded Actuarial Accrued Liability to be $174.7 million.

Economic Factors that May Affect the Future

In contrast to recent budgets, the District enters its fiscal year 2014-2015 with optimism. This sense of optimismstems from both new revenues included in the 2014-2015 budget, parcel tax revenue, and enrollment growth(access) revenue, as well as the absence of workload reductions and threats of mid-year reductions. As a result ofefforts and difficult decisions made during the previous three years, the District is now positioned to restore thenecessary cuts needed to balance the budget and focus on restoring access and improving services to our studentsand community. Due to the passage of the parcel tax and Proposition 30 in the prior year, the District has beenable to restore 41 faculty positions, 15 classified positions, 4 dean positions, and created 1 new position at eachcollege to assist with the associated student body organizations, student clubs, and trusts. This is in addition toensuring sufficient part-time faculty budgets existed to support the colleges' course offerings to students. TheDistrict is confident that as the State's economy improves, so will the ability to continue these restoration efforts.

For fiscal year 2013-2014, it is expected that the District will be compensated for serving 18,229 full-timeequivalent students. Should the District serve only those students which it is funded for, this would equate to atwo percent increase as compared to the prior fiscal year.

As the fiscal year 2014-2015 progresses, the District is exercising diligence in monitoring all budgets andcontinues to spend within its parameters. As the budget development begins for fiscal year 2015-2016, theDistrict will carefully watch and evaluate the Governor's January budget proposal, as well as any changescontained with the May revision. Working through the shared governance structures, the 2015-2016 budget willcontain plans to ensure the institution remains financially strong and maintains the ability to carry out its coremission to educating students.

Contacting the District's Financial Management

This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with ageneral overview of the District's finances and to demonstrate the District's accountability for the money itreceives. If you have questions about this report, or need any additional financial information, contact the Districtat: Peralta Community College District, 333 East 8th Street, Oakland, California 94606.


STATEMENT OF NET POSITION - PRIMARY GOVERNMENTJUNE 30, 2014

The accompanying notes are an integral part of these financial statements.

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ASSETSCURRENT ASSETS

Cash and cash equivalents 12,315,952$Investments 8,963,103Restricted investments 346,808,208Accounts receivable 24,062,647Student receivables, net 5,764,072

Due from fiduciary funds 32,373Prepaid expenses 285,179Inventories 124,763

Total Current Assets 398,356,297NONCURRENT ASSETS

Nondepreciable capital assets 124,064,807Depreciable capital assets, net of depreciation 299,423,729

Total Noncurrent Assets 423,488,536TOTAL ASSETS 821,844,833

DEFERRED OUTFLOWS OF RESOURCESDeferred charges on refunding 8,338,755Interest rate SWAP 14,430,725

Total Deferred Outflows of Resources 22,769,480LIABILITIESCURRENT LIABILITIES

Deficit cash in county treasury 36,166,804Accounts payable 9,846,916Accrued interest payable 9,322,682

Due to fiduciary funds 181,986Unearned revenue 3,300,643General obligation bonds payable - current portion 11,615,000Other postemployment benefits bonds - current portion 2,668,235

Total Current Liabilities 73,102,266NONCURRENT LIABILITIES

Claims liability 2,795,135Load banking 1,845,676Compensated absences payable - noncurrent portion 3,583,095General obligation bonds payable - noncurrent portion 407,656,614Other postemployment benefits bonds - noncurrent portion 215,326,772Other postemployment benefits obligation - noncurrent portion 29,916,295

Total Noncurrent Liabilities 661,123,587TOTAL LIABILITIES 734,225,853

DEFERRED INFLOWS OF RESOURCESSWAP liability 14,430,725Interest rate SWAP 375,513

Total Deferred Inflows of Resources 14,806,238NET POSITION

Net investment in capital assets 85,545,696Restricted for:

Debt service 15,123,994Capital projects 4,968,459Other activities 17,132,747

Unrestricted (27,188,674)TOTAL NET POSITION 95,582,222$


STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION - PRIMARY GOVERNMENTFOR THE YEAR ENDED JUNE 30, 2014


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OPERATING REVENUESStudent Tuition and Fees 30,834,612$

Less: Scholarship discount and allowance (14,637,006)Net tuition and fees 16,197,606

Other Operating Revenues 1,238,517TOTAL OPERATING REVENUES 17,436,123

OPERATING EXPENSESSalaries 82,461,431Employee benefits 45,959,384Supplies, materials, and other operating expenses and services 24,130,109Student financial aid 41,303,971Depreciation 14,304,212

TOTAL OPERATING EXPENSES 208,159,107

OPERATING LOSS (190,722,984)

NONOPERATING REVENUES (EXPENSES)State apportionments, noncapital 68,496,627Federal grants and contracts 47,354,584State grants and contracts 10,937,761Local property taxes, levied for general purposes 34,771,675Taxes levied for other specific purposes 32,874,996State taxes and other revenues 6,045,140Interest income 3,897,849Net unrealized gain on investments 24,324,775Interest expense on capital related debt (28,893,627)Transfer to fiduciary fund (19,527)Other nonoperating revenue 11,894,082

TOTAL NONOPERATING REVENUES (EXPENSES) 211,684,335

INCOME BEFORE OTHER REVENUES 20,961,351State revenues, capital 884,111

Local revenues, capital 1,120,454TOTAL OTHER REVENUES 2,004,565

CHANGE IN NET POSITION 22,965,916NET POSITION, BEGINNING OF YEAR, AS RESTATED (see Note 17) 72,616,306NET POSITION, END OF YEAR 95,582,222$


STATEMENT OF CASH FLOWS - PRIMARY GOVERNMENTFOR THE YEAR ENDED JUNE 30, 2014


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CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and fees 13,961,725$

Other operating income 1,238,517

Payments to or on behalf of employees (126,940,727)

Payments made to students from financial aid (27,841,329)

Payments to vendors for supplies and services (41,303,971)

Net Cash Flows From Operating Activities (180,885,785)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State apportionments 68,331,753

Federal and State grants and contracts 56,258,555

Property taxes - nondebt related 34,771,675

Other State revenues 6,602,340

Other nonoperating revenues 9,909,998

Net Cash Flows From Noncapital Financing Activities 175,874,321

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIESLocal capital grants 2,004,565

Taxes levied for debt repayment 32,874,996

Accretion of bonds 8,073,406

Acquisition and construction of capital assets (40,305,900)

Principal paid on capital debt (14,349,036)

Interest paid on capital debt and leases (29,510,172)

Net Cash Flows From Capital and Related Financing Activities (41,212,141)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (28,545,447)

Investment income 28,222,624

Net Cash Flows From Investing Activities (322,823)

NET CHANGE IN CASH AND CASH EQUIVALENTS (46,546,428)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 161,327,373CASH AND CASH EQUIVALENTS, END OF YEAR 114,780,945$


STATEMENT OF CASH FLOWS - PRIMARY GOVERNMENT, CONTINUEDFOR THE YEAR ENDED JUNE 30, 2014


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RECONCILIATION OF NET OPERATING LOSS TO NET CASH FLOWS

FROM OPERATING ACTIVITIES

Operating Loss (190,722,984)$

Adjustments to Reconcile Operating Loss to Net Cash Flows From

Operating Activities:

Depreciation 14,304,212

Changes in Operating Assets and Liabilities:

Receivables, net (1,503,678)

Inventories 56,668

Prepaid expenses (212,995)

Accounts payable and accrued liabilities (5,062,154)

Unearned revenue (701,507)

Compensated absences 188,300

Load banking 13,351

Other postemployment benefits 2,755,002

Total Adjustments 9,837,199Net Cash Flows From Operating Activities (180,885,785)$

CASH AND CASH EQUIVALENTS CONSIST OF THE FOLLOWING:

Cash in banks 12,315,952$

Investment in county treasury 102,464,993Total Cash and Cash Equivalents 114,780,945$

NONCASH TRANSACTIONSOn behalf payments for benefits 2,365,474$


STATEMENT OF FIDUCIARY NET POSITIONJUNE 30, 2014


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Trust AgencyFunds Funds

ASSETSCash and cash equivalents 426,932$ 950,021$Investments 480,143 -Accounts receivable 8,133 -Due from primary government 181,986 -

Total Assets 1,097,194 950,021$

LIABILITIESAccounts payable 104,826 -$Due to primary government 32,373 -Due to student groups - 950,021

Total Liabilities 137,199 950,021$

NET POSITIONUnreserved 959,995

Total Net Position 959,995$


STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFOR THE YEAR ENDED JUNE 30, 2014


20

Trust

FundsADDITIONS

Local revenues 314,635$

DEDUCTIONSClassified salaries 61,799Employee benefits 5,565Services and operating expenditures 188,374Capital outlay 8,624

Total Deductions 264,362

OTHER FINANCING SOURCESTransfer from primary government 19,527

Total Other Financing Sources 19,527

Change in Net Position 69,800Net Position - Beginning 890,195Net Position - Ending 959,995$


NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014

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NOTE 1 - ORGANIZATION

Peralta Community College District (the District) was established in 1964 as a political subdivision of the State ofCalifornia and is a comprehensive, public, two-year institution offering educational services to residents of thesurrounding area. The District operates under a locally elected seven-member Board of Trustees form ofgovernment, which establishes the policies and procedures by which the District operates. The Board of Trusteesmust approve the annual budgets for the General Fund, special revenue funds, and capital project funds, but thesebudgets are managed at the department level. Currently, the District operates four college campuses located inAlameda, Oakland, and Berkeley, California. While the District is a political subdivision of the State ofCalifornia, it is legally separate and is independent of other State and local governments, and it is not a componentunit of the State in accordance with the provisions of Governmental Accounting Standards Board (GASB)Statement No. 61.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Entity

The District has adopted GASB Statement No. 61, Determining Whether Certain Organizations are ComponentUnits. This Statement amends GASB Statement No. 14, The Financial Reporting Entity, to provide additionalguidance to determine whether certain organizations, for which the District is not financially accountable, shouldbe reported as component units based on the nature and significance of their relationship with the District. Thethree components used to determine the presentation are: providing a "direct benefit", the "environment andability to access/influence reporting", and the "significance" criterion. As defined by accounting principlesgenerally accepted in the United States of America and established by the Governmental Accounting StandardsBoard, the financial reporting entity consists of the primary government, the District.

Peralta Community College District and the Golden West Financing Authority, as represented by the 2005General Obligation Revenue Bonds, Series B, have a financial and operational relationship that meets thereporting definition antenna of GASB Statement No. 14, The Financial Reporting Entity, for the inclusion of therelated debt. Therefore, the related debt has been included in the financial statements of the District.

The following entity does not meet the above criteria for inclusion as a component unit of the District.

Peralta Colleges Foundation, Inc.

Peralta Colleges Foundation, Inc. (the Foundation) is a legally separate, tax-exempt organization. TheFoundation acts primarily as a fundraising organization to provide grants and scholarships to students andsupport to employees, programs, and departments of the District. Although the District does not control thetiming or amount of receipts from the Foundation, the majority of resources or income thereon that theFoundation holds and invests is restricted to the activities of the District by the donors. Because the amountof receipts from the Foundation is insignificant to the District as a whole, the Foundation is not considered acomponent unit of the District with the inclusion of the statements as a discretely presented component unit.Financial statements for the Foundation can be obtained from the Foundation's Business Office at333 East 8th Street, Oakland, California 94606.



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Measurement Focus, Basis of Accounting, and Financial Statement Presentation

For financial reporting purposes, the District is considered a special-purpose government engaged only inbusiness-type activities as defined by GASB Statements No. 34 and No. 35 as amended by GASB StatementsNo. 37 and No. 38. This presentation provides a comprehensive entity-wide perspective of the District's assets,liabilities, activities, and cash flows and replaces the fund group perspective previously required. Accordingly,the District's financial statements have been presented using the economic resources measurement focus and theaccrual basis of accounting. The significant accounting policies followed by the District in preparing thesefinancial statements are in accordance with accounting principles generally accepted in the United States ofAmerica as prescribed by GASB. Additionally, the District's policies comply with the California CommunityColleges Chancellor's Office Budget and Accounting Manual. Under the accrual basis, revenues are recognizedwhen earned, and expenses are recorded when an obligation has been incurred. All material intra-agency andintra-fund transactions have been eliminated.

Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value,are classified as operating revenues. These transactions are recorded on the accrual basis when the exchangetakes place. Available means that the resources will be collected within the current fiscal year or are expected tobe collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District,operating revenues consist primarily of student fees.

Nonexchange transactions, in which the District receives value without directly giving equal value in return,include State apportionments, property taxes, Federal and State grants, entitlements, and donations. Property taxrevenue is recognized in the fiscal year received. State apportionment revenue is earned based upon criteria setforth from the Community Colleges Chancellor's Office and includes reporting of full-time equivalent students(FTES) attendance. The corresponding apportionment revenue is recognized in the period the FTES aregenerated. Revenue from Federal and State grants and entitlements are recognized in the fiscal year in which alleligibility requirements have been satisfied. Eligibility requirements may include time and/or purposerequirements.

Operating expenses are costs incurred to provide instructional services including support costs, auxiliary services,and depreciation of capital assets. All other expenses not meeting this definition are reported as nonoperating.Expenses are recorded on the accrual basis as they are incurred, when goods are received, or services arerendered.

The District reports are based on all applicable GASB pronouncements, as well as applicable FinancialAccounting Standards Board (FASB) pronouncements issued on or before November 30, 1989, unless thosepronouncements conflict or contradict GASB pronouncements. The District has not elected to apply FASBpronouncements after that date.

The financial statements are presented in accordance with the reporting model as prescribed in GASB StatementNo. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments,and GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for PublicColleges and Universities, as amended by GASB Statements No. 37 and No. 38. The business-type activitiesmodel followed by the District requires the following components of the District's financial statements:



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Management's Discussion and Analysis Basic Financial Statements for the District as a whole including:

o Statement of Net Position - Primary Governmento Statement of Revenues, Expenses, and Changes in Net Position - Primary Governmento Statement of Cash Flows - Primary Governmento Financial Statements for the Fiduciary Funds including:

o Statement of Fiduciary Net Positiono Statement of Changes in Fiduciary Net Position

Notes to the Financial Statements

Cash and Cash Equivalents

The District's cash and cash equivalents are considered to be unrestricted cash on hand, demand deposits, andshort-term unrestricted investments with original maturities of three months or less from the date of acquisition.Cash equivalents also include unrestricted cash with county treasury balances for purposes of the Statement ofCash Flows. Restricted cash and cash equivalents represent balances restricted by external sources such as grantsand contracts or specifically restricted for the repayment of capital debt.

Investments

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments andExternal Investment Pools, investments held at June 30, 2014, are stated at fair value. Fair value is estimatedbased on quoted market prices at year-end. Short-term investments have an original maturity date greater thanthree months, but less than one year at time of purchase. Long-term investments have an original maturity ofgreater than one year at the time of purchase.

Restricted Assets

Restricted assets arise when restrictions on their use change the normal understanding of the availability of theasset. Such constraints are either imposed by creditors, contributors, grantors, or laws of other governments orimposed by enabling legislation. Restricted assets represent investments required to be set aside by the Districtfor the purpose of satisfying certain requirements.

Accounts Receivable

Accounts receivable include amounts due from the Federal, State, and/or local governments or private sources, inconnection with reimbursement of allowable expenditures made pursuant to the District's grants and contracts.Accounts receivable also consist of tuition and fee charges to students and auxiliary enterprise services providedto students, faculty, and staff, the majority of each residing in the State of California. The District has performeda detail analysis of the student receivables and believes they are fully collectible.

Prepaid Expenses

Prepaid expenses represent payments made to vendors and others for services that will benefit periods beyondJune 30, 2014.



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Inventories

Inventories consist primarily of operating supplies. Inventories are stated at cost, utilizing the weighted averagemethod. The cost is recorded as an expense as the inventory is consumed.

Capital Assets and Depreciation

Capital assets are long-lived assets of the District as a whole and include land, construction in progress, buildings,leasehold improvements, and equipment. The District maintains an initial unit cost capitalization threshold of$50,000 and an estimated useful life greater than one year. Assets are recorded at historical cost, or estimatedhistorical cost, when purchased or constructed. Donated capital assets are recorded at estimated fair market valueat the date of donation. Improvements to buildings and land that significantly increase the value or extend theuseful life of the asset are capitalized; the costs of routine maintenance and repairs that do not add to the value ofthe asset or materially extend an asset's life are charged as an operating expense in the year in which the expensewas incurred. Major outlays for capital improvements are capitalized as construction in progress as the projectsare constructed.

Depreciation of capital assets is computed and recorded utilizing the straight-line method. Estimated useful livesof the various classes of depreciable capital assets are as follows: buildings, 50 years; improvements, 20 to40 years; equipment, 5 to 20 years; vehicles, 5 to 10 years.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities, and long-term obligations are reported in the entity-wide financial statements.

Debt Issuance Costs, Premiums, and Discounts

Debt premiums and discounts, as well as issuance costs related to prepaid insurance costs, are amortized over thelife of the bonds using the straight-line method.

Compensated Absences

Accumulated unpaid vacation benefits are accrued as a liability as the benefits are earned. The entirecompensated absence liability is reported on the government-wide financial statements. For governmental funds,the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such asemployee resignations and retirements that occur prior to year end that have not yet been paid with expendableavailable financial resources. These amounts are reported in the fund from which the employees who haveaccumulated leave are paid. The District also participates in "load-banking" with eligible academic employeeswhereby the employee may teach extra courses in one period in exchange for time off in another period.



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Sick leave is accumulated without limit for each employee based upon negotiated contracts. Leave with pay isprovided when employees are absent for health reasons; however, the employees do not gain a vested right toaccumulated sick leave. Employees are never paid for any sick leave balance at termination of employment orany other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District'sfinancial statements. However, retirement credit for unused sick leave is applicable to all classified employeeswho retire after January 1, 1999. At retirement, each member will receive .004 year of service credit for each dayof unused sick leave. Retirement credit for unused sick leave is applicable to all academic employees and isdetermined by dividing the number of unused sick days by the number of base service days required to completethe last school year, if employed full time.

Unearned Revenue

Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria forrecognition in the current period or when resources are received by the District prior to the incurrence ofqualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when theDistrict has a legal claim to the resources, the liability for unearned revenue is removed from the combinedbalance sheet and revenue is recognized. Unearned revenue includes (1) amounts received for tuition and feesprior to the end of the fiscal year that are related to the subsequent fiscal year and (2) amounts received fromFederal and State grants received before the eligibility requirements are met are recorded as deferred revenue.

Noncurrent Liabilities

Noncurrent liabilities include bonds payable, compensated absences, claims payable, load banking, and OPEBobligations with maturities greater than one year.

Net Position

GASB Statements No. 34 and No. 35 report equity as "Net Position" and represent the difference between assetsand liabilities. The net position is classified according to imposed restrictions or availability of assets forsatisfaction of District obligations according to the following net asset categories:

Net Investment in Capital Assets consists of capital assets, net of accumulated depreciation and outstandingprincipal balances of debt attributable to the acquisition, construction, or improvement of those assets. To theextent debt has been incurred, but not yet expended for capital assets, such accounts are not included as acomponent invested in capital assets – net of related debt.

Restricted: Net position is reported as restricted when there are limitations imposed on their use, eitherthrough enabling legislation adopted by the District, or through external restrictions imposed by creditors,grantors, or laws or regulations of other governments. The District first applies restricted resources when anexpense is incurred for purposes for which both restricted and unrestricted resources are available.

Unrestricted: Net position that is not subject to externally imposed constraints. Unrestricted net positionmay be designated for specific purposes by action of the Board of Trustees or may otherwise be limited bycontractual agreements with outside parties.



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When both restricted and unrestricted resources are available for use, it is the District's practice to use restrictedresources first and the unrestricted resources when they are needed. At June 30, 2014, the District reported$37,225,200 in restricted net position.

State Apportionments

Certain current year apportionments from the State are based on financial and statistical information of theprevious year. Any corrections due to the recalculation of the apportionment are made in February of thesubsequent year. When known and measurable, these recalculations and corrections are accrued in the year inwhich the FTES are generated.

Property

Secured property taxes attach as an enforceable lien on property as of January 1. The Alameda County Assessoris responsible for assessment of all taxable real property. Taxes are payable in two installments on November 1and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes arepayable in one installment on or before August 31. The County of Alameda bills and collects the taxes on behalfof the District. Local property tax revenues are recorded in the unrestricted General Fund when received.

The voters of the District passed a general obligation bond in 2006 for the acquisition, construction, andremodeling of certain District property. As a result of the passage of the bond, property taxes are assessed on theproperty within the District specifically for the repayment of the debt incurred. The taxes are assessed, billed, andcollected as noted above and set aside for repayment to the bond holders in the Bond Interest and RedemptionFund.

The voters of the District passed a Parcel Tax on June 5, 2012, for the general revenues of the District. The parceltax levys $48 per parcel for eight years to provide for core academic programs, training, and education of studentsattending the District and transferring to university. The taxes are assessed, billed, and collected as noted aboveand remitted to the District when collected.

Board of Governors Grants (BOGG) and Fee Waivers

Student tuition and fee revenue is reported net of allowances and fee waivers approved by the Board of Governorsthrough BOGG fee waivers in the Statement of Revenues, Expenses, and Changes in Net Position. Scholarshipdiscounts and allowances represent the difference between stated charges for enrollment fees and the amount thatis paid by students or third parties making payments on the students' behalf. To the extent that fee waivers havebeen used to satisfy tuition and fee charges, the District has recorded a scholarship discount and allowance.

Federal Financial Assistance Programs

The District participates in federally funded Pell Grants, SEOG Grants, and Federal Work-Study programs, as well asother programs funded by the Federal government. Financial aid to students is either reported as operating expensesor scholarship allowances, which reduce revenues. The amount reported as operating expense represents the portionof aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aidprovided to students in the form of reduced tuition. These programs are audited in accordance with the Single AuditAct Amendments of 1996, and the U.S. Office of Management and Budget's revised Circular A-133, Audits of States,Local Governments, and Non-Profit Organizations and the related Compliance Supplement.



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On Behalf Payments

GASB Statement No. 24 requires direct on behalf payments for fringe benefits and salaries made by one entity toa third party recipient for the employees for another legally separate entity be recognized as revenues andexpenditures by the employer entity. The State of California makes direct on behalf payments to the CaliforniaState Teachers' Retirement System (CalSTRS) and the California Public Employees' Retirement Systems(CalPERS) on behalf of all community colleges in California.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Change in Accounting Principles

In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. ThisStatement establishes accounting and financial reporting standards that reclassify, as deferred outflows ofresources or deferred inflows of resources, certain items that were previously reported as assets and liabilities andrecognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assetsand liabilities.

Concepts Statement No. 4, Elements of Financial Statements, introduced and defined the elements included infinancial statements, including deferred outflows of resources and deferred inflows of resources. In addition,Concepts Statement No. 4 provides that reporting a deferred outflow of resources or a deferred inflow ofresources should be limited to those instances identified by the Board in authoritative pronouncements that areestablished after applicable due process. Prior to the issuance of this Statement, only two such pronouncementshave been issued. Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, requires thereporting of a deferred outflow of resources or a deferred inflow of resources for the changes in fair value ofhedging derivative instruments, and Statement No. 60, Accounting and Financial Reporting for ServiceConcession Arrangements, requires a deferred inflow of resources to be reported by a transferor government in aqualifying service concession arrangement. This Statement amends the financial statement element classificationof certain items previously reported as assets and liabilities to be consistent with the definitions in ConceptsStatement No. 4. This Statement also provides other financial reporting guidance related to the impact of thefinancial statement elements deferred outflows of resources and deferred inflows of resources, such as changes inthe determination of the major fund calculations and limiting the use of the term deferred in financial statementpresentations.

The District has implemented the provisions of this Statement for the year ended June 30, 2014.

As the result of implementing GASB Statement No. 65, the District has restated the beginning net position in thegovernment-wide Statement of Net Position, effectively decreasing net position as of July 1, 2013, by $7,463,935.The decrease results from no longer deferring and amortizing bond issuance costs.



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New Accounting Pronouncements

In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—anamendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting andfinancial reporting by State and local governments for pensions. It also improves information provided by Stateand local governmental employers about financial support for pensions that is provided by other entities. ThisStatement results from a comprehensive review of the effectiveness of existing standards of accounting andfinancial reporting for pensions with regard to providing decision-useful information, supporting assessments ofaccountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and LocalGovernmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate topensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafterjointly referred to as trusts) that meet certain criteria. The requirements of Statements No. 27 and No. 50 remainapplicable for pensions that are not covered by the scope of this Statement.

The scope of this Statement addresses accounting and financial reporting for pensions that are provided to theemployees of State and local governmental employers through pension plans that are administered through truststhat have the following characteristics:

Contributions from employers and non-employer contributing entities to the pension plan and earnings onthose contributions are irrevocable.

Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms.

Pension plan assets are legally protected from the creditors of employers, non-employer contributing entities,and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets also are legallyprotected from creditors of the plan members.

This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources,deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifiesthe methods and assumptions that should be used to project benefit payments, discount projected benefitpayments to their actuarial present value, and attribute that present value to periods of employee service.

Note disclosure and required supplementary information requirements about pensions also are addressed.Distinctions are made regarding the particular requirements for employers based on the number of employerswhose employees are provided with pensions through the pension plan and whether pension obligations andpension plan assets are shared. Employers are classified in one of the following categories for purposes of thisStatement:

Single employers are those whose employees are provided with defined benefit pensions through single-employer pension plans—pension plans in which pensions are provided to the employees of only oneemployer (as defined in this Statement).



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Agent employers are those whose employees are provided with defined benefit pensions through agentmultiple-employer pension plans—pension plans in which plan assets are pooled for investment purposes, butseparate accounts are maintained for each individual employer so that each employer's share of the pooledassets is legally available to pay the benefits of only its employees.

Cost-sharing employers are those whose employees are provided with defined benefit pensions through cost-sharing multiple-employer pension plans—pension plans in which the pension obligations to the employeesof more than one employer are pooled and plan assets can be used to pay the benefits of the employees of anyemployer that provides pensions through the pension plan.

In addition, this Statement details the recognition and disclosure requirements for employers with liabilities(payables) to a defined benefit pension plan and for employers whose employees are provided with definedcontribution pensions. This Statement also addresses circumstances in which a non-employer entity has a legalrequirement to make contributions directly to a pension plan.

This Statement is effective for fiscal years beginning after June 15, 2014. Early implementation is encouraged.

In November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequentto the Measurement Date—an amendment of GASB Statement No. 68. The objective of this Statement is toaddress an issue regarding application of the transition provisions of Statement No. 68, Accounting and FinancialReporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a State orlocal government employer or nonemployer contributing entity to a defined benefit pension plan after themeasurement date of the government's beginning net pension liability.

Statement No. 68 requires a State or local government employer (or nonemployer contributing entity in a specialfunding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlierthan the end of its prior fiscal year. If a State or local government employer or nonemployer contributing entitymakes a contribution to a defined benefit pension plan between the measurement date of the reported net pensionliability and the end of the government's reporting period, Statement No. 68 requires that the governmentrecognize its contribution as a deferred outflow of resources. In addition, Statement No. 68 requires recognitionof deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of aState or local government employer or nonemployer contributing entity that arise from other types of events. Attransition to Statement No. 68, if it is not practical for an employer or nonemployer contributing entity todetermine the amounts of all deferred outflows of resources and deferred inflows of resources related topensions, paragraph 137 of Statement No. 68 required that beginning balances for deferred outflows of resourcesand deferred inflows of resources not be reported.

Consequently, if it is not practical to determine the amounts of all deferred outflows of resources and deferredinflows of resources related to pensions, contributions made after the measurement date of the beginning netpension liability could not have been reported as deferred outflows of resources at transition. This could haveresulted in a significant understatement of an employer or nonemployer contributing entity's beginning netposition and expense in the initial period of implementation.



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This Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a governmentrecognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent tothe measurement date of the beginning net pension liability. Statement No. 68, as amended, continues torequire that beginning balances for other deferred outflows of resources and deferred inflows of resourcesrelated to pensions be reported at transition only if it is practical to determine all such amounts.

The provisions of this Statement are required to be applied simultaneously with the provisions of Statement No. 68.

NOTE 3 - DEPOSITS AND INVESTMENTS

Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds,notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes;securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of depositplaced with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements;medium-term corporate notes; shares of beneficial interest issued by diversified management companies,certificates of participation, obligations with first priority security; and collateralized mortgage obligations. TheDistrict's internal investment policy requires asset managers to purchase and hold investments with a rating of Bbor higher.

Investment in County Treasury - The District is considered to be an involuntary participant in an externalinvestment pool as the District is required to deposit all receipts and collections of monies with their CountyTreasurer (Education Code Section (ECS) 41001). The fair value of the District's investment in the pool isreported in the accompanying financial statements at amounts based upon the District's pro-rata share of the fairvalue provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio).The balance available for withdrawal is based on the accounting records maintained by the Alameda CountyTreasurer, which is recorded on the amortized cost basis.

Other Investments

The District maintains investments outside the Alameda County Treasurer as allowed by the District's investmentpolicy. The District relies on a third party investment firm to manage the investment portfolio. The investmentsare stated at fair value as determined by quoted market prices in The Wall Street Journal at June 30, 2014.



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General Authorizations

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in theschedules below:

Maximum Maximum Maximum

Authorized Remaining Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

Local Agency Bonds, Notes, Warrants 5 years None None

Registered State Bonds, Notes, Warrants 5 years None None

U.S. Treasury Obligations 5 years None None

U.S. Agency Securities 5 years None None

Banker's Acceptance 180 days 40% 30%

Commercial Paper 270 days 25% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements 92 days 20% of base None

Medium-Term Corporate Notes 5 years 30% None

Mutual Funds N/A 20% 10%

Money Market Mutual Funds N/A 20% 10%

Mortgage Pass-Through Securities 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Joint Powers Authority Pools N/A None None



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Summary of Deposits and Investments

Deposits and investments of the primary government as of June 30, 2014, consist of the following:

Cash on hand and in banks - unrestricted 3,550,142$

Cash in revolving - unrestricted 55,000

Cash on hand and in banks - restricted 8,710,810Total Cash and Cash Equivalents 12,315,952$

Investment in county treasury - unrestricted (27,203,701)$

Investment in county treasury - restricted 129,668,694

Investments - restricted 217,139,514Total Investments 319,604,507$

Deposits and investments of the fiduciary funds as of June 30, 2014, consist of the following:

Cash on hand and in banks 1,376,953$

Investment in county treasury 480,143$

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of aninvestment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value tochanges in market interest rates. The District does not have a formal investment policy that limits investmentmaturities as a means of managing its exposure to fair value losses arising from increasing interest rates. TheDistrict manages its exposure to interest rate risk by investing in the County pool and having the pool purchase acombination of shorter term and longer term investments and by timing cash flows from maturities so that aportion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cashflow and liquidity needed for operations.

Additionally, OPEB bond proceeds have been invested in other instruments which equate to the CalPERSinvestment strategy.



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Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuationis provided by the following schedule that shows the distribution of the District's investment by maturity:

Weighted

Average

Maturity

Investment Type Fair Value in Days

County Pool - Alameda 102,537,638$ 525

JP Morgan Prime Money Market Fund 41,451 N/A

Money Market Funds 12,409,244 N/A

U.S. Governments and Agencies 7,544,868 N/A

Mortgage Backed Securities 15,746,625 N/A

Collateralized Mortgage Obligations 4,187,197 N/A

Domestic Corporate Bonds 14,102,197 N/A

Foreign Bonds 126,350 N/A

Mutual Funds - Fixed Income 27,110,009 N/A

Common Stock - Domestic 77,860,602 N/A

Common Stock - Foreign 13,624,857 N/A

Master Limited Partnerships 87,652 N/A

Mutual Funds - Equities 44,182,138 N/A

Private Equity 116,324 N/A

319,677,152$



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Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.This is measured by the assignment of a rating by a nationally recognized statistical rating organization. TheDistrict's investment in the County pool is not required to be rated, nor has it been rated as of June 30, 2014.Presented below is the minimum rating required by the California Government Code, the District's investmentpolicy, or debt agreements, and the actual rating as of the year-end for each investment type.

TotalInvestment Type Fair Value Rating

County Pool - Alameda 102,537,638$ Not ratedJP Morgan Prime Money Market Fund 41,451 [1]Money Market Funds 12,409,244 [1]U.S. Governments and Agencies 7,544,868 [1]

Mortgage Backed Securities 15,746,625 [1]Collateralized Mortgage Obligations 4,187,197 [1]Domestic Corporate Bonds 14,102,197 [1]Foreign Bonds 126,350 [1]Mutual Funds - Fixed Income 27,110,009 [1]Common Stock - Domestic 77,860,602 [1]Common Stock - Foreign 13,624,857 [1]Master Limited Partnerships 87,652 [1]Mutual Funds - Equities 44,182,138 [1]Private Equity 116,324 [1]

319,677,152$

[1] Investment ratings range from Aaa to Caa according to Moody's Investors Service.

Custodial Credit Risk - Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The Districtdoes not have a policy for custodial credit risk for deposits. However, the California Government Code requiresthat a financial institution secure deposits made by State or local governmental units by pledging securities in anundivided collateral pool held by a depository regulated under State law (unless so waived by the governmentalunit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the totalamount deposited by the public agencies. California law also allows financial institutions to secure publicdeposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public depositsand letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of thesecured deposits. As of June 30, 2014, the District's bank balance of $10,624,988 was exposed to custodial creditrisk because it was uninsured and collateralized with securities held by the pledging financial institution's trustdepartment or agent, but not in the name of the District.



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NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable consisted primarily of intergovernmental grants, entitlements, and other local sources.

Primary

Government

Federal Government

Categorical aid 6,227,380$

State Government

Apportionment deferral 14,269,110

Categorical aid 479,617

Lottery 1,459,101

Local Sources

Other local sources 1,627,439Total 24,062,647$

Student receivables 5,764,072$



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NOTE 5 - CAPITAL ASSETS

Capital asset activity for the primary government for the fiscal year ended June 30, 2014, was as follows:

*Balance Balance

Beginning End

of Year Additions Deductions of Year

Capital Assets Not Being Depreciated

Land 11,913,296$ -$ -$ 11,913,296$

Construction in progress 96,206,895 36,628,432 20,683,816 112,151,511

Total Capital Assets Not Being Depreciated 108,120,191 36,628,432 20,683,816 124,064,807

Capital Assets Being Depreciated

Buildings 271,798,751 - - 271,798,751

Site improvements 133,793,323 21,420,333 - 155,213,656

Software and IT development 31,385,496 - - 31,385,496

Machinery and equipment 40,702,184 13,884 - 40,716,068

Total Capital Assets Being Depreciated 477,679,754 21,434,217 - 499,113,971

Total Capital Assets 585,799,945 58,062,649 20,683,816 623,178,778

Less Accumulated Depreciation

Buildings 101,096,672 5,417,263 - 106,513,935


Software and IT development 29,778,563 1,521,290 - 31,299,853

Machinery and equipment 38,909,212 1,204,233 - 40,113,445

Total Accumulated Depreciation 185,386,030 14,304,212 - 199,690,242

Net Capital Assets 400,413,915$ 43,758,437$ 20,683,816$ 423,488,536$

* As restated. See Note 17 for more information.

Depreciation expense for the year was $14,304,212.

Interest expense on capital related debt for the year ended June 30, 2014, was $34,254,957. Of this amount,$5,361,330 was capitalized.



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NOTE 6 - ACCOUNTS PAYABLE

Accounts payable consisted of the following:

Primary

Government

Accrued payroll and benefits 569,560$

Construction contractors 4,549,716

Vendors and supplies 4,727,640

Total 9,846,916$

NOTE 7 - UNEARNED REVENUE

Unearned revenue consisted of the following:

Primary

Government

Federal categorical aid 152,145$

State categorical aid 1,586,753

Enrollment fees 1,264,872

Other local 296,873Total 3,300,643$

NOTE 8 - TAX AND REVENUE ANTICIPATION NOTES PAYABLE

The District issued a Tax and Revenue Anticipation Note (TRAN) during the previous fiscal year. The TRANwas issued on March 1, 2013, which had a maturity date of December 31, 2013. See current year activity below:

Outstanding Outstanding

Beginning End

of Year Issuance Payments of Year

2013 2.00% TRANS 8,935,000$ -$ 8,935,000$ -$Total 8,935,000$ -$ 8,935,000$ -$



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NOTE 9 - INTERFUND TRANSACTIONS

Interfund Receivables and Payables (Due To/Due From)

Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affectedin the period in which transactions are executed. Interfund activity within the governmental funds and fiduciaryfunds has been eliminated respectively in the consolidation process of the basic financial statements. Balancesowing between the primary government and the fiduciary funds are not eliminated in the consolidation process.As of June 30, 2014, the amounts owed between the primary government and the fiduciary funds were $181,986and $32,373, respectively.

Interfund Operating Transfers

Operating transfers between funds of the District are used to (1) move revenues from the fund that statute orbudget requires to collect them to the fund that statute or budget requires to expend them, (2) move receiptsrestricted to debt service from the funds collecting the receipts to the debt service fund as debt service paymentsbecome due, and (3) use restricted revenues collected in the General Fund to finance various programs accountedfor in other funds in accordance with budgetary authorizations. Operating transfers within the funds of theDistrict have been eliminated in the consolidation process. Transfers between the primary government and thefiduciary funds are not eliminated in the consolidation process. During the 2014 fiscal year, the Districttransferred $19,527 to the fiduciary funds.

NOTE 10 - LONG-TERM OBLIGATIONS

Summary

The changes in the District's long-term obligations during the fiscal year 2014 consisted of the following:

Beginning (Amortization) Ending Due in

Balance Additions Accretion Deductions Balance One Year

General obligation bonds 431,953,433$ -$ -$ (12,681,819)$ 419,271,614$ 11,615,000$

2005 Taxable Limited Obligation

OPEB Bonds 147,594,369 - 8,073,406 - 155,667,775 -

2006 OPEB Bond modification and

restructuring 10,489,449 - - (72,217) 10,417,232 78,235

2011 Taxable Refunding bonds 53,505,000 - - (1,595,000) 51,910,000 2,590,000

Total Bonds Payable 643,542,251 - 8,073,406 (14,349,036) 637,266,621 14,283,235

Other liabilities

Postemployment benefits obligation 27,161,293 11,511,305 - (8,756,303) 29,916,295 -

Claims liability 2,795,135 - - - 2,795,135 -

Load banking 1,832,325 13,351 - - 1,845,676 -

Compensated absences 3,394,795 188,300 - - 3,583,095 -

Total Long-Term Obligations 678,725,799$ 11,712,956$ 8,073,406$ (23,105,339)$ 675,406,822$ 14,283,235$



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Description of Obligations

Payments on the general obligation bonds are made by the bond interest and redemption fund with local propertytax collections. Debt service payments on the Other Postemployment Benefits (OPEB) Bonds will be made fromthe Unrestricted General Fund. Workers' compensation claims liability is an estimate based on an actuarial studycompleted by a third party specialist. Actual claims paid will be made from the Self-Insurance Fund.Management is responsible to evaluate the adequacy of the change in value. The Postemployment BenefitsObligation is funded through payments for benefits and is reported within the fund the employees' salaries arecharged. The compensated absences will be paid by the fund for which the employee worked. Load bankingobligations are the responsibility of the General Fund in the year the employee utilizes the banked leave time.

Bonded Debt

General Obligation Bonds, Election 2000, Series C

In May 2004, the District issued, in the amount of $40,000,000, the Peralta Community College District GeneralObligation Bonds, Election 2000, Series C (the 2000 Series C Bonds) to finance the acquisition, construction, andrehabilitation of school facilities. The bonds mature beginning August 1, 2005 through August 1, 2034, withinterest yield rates ranging from 1.60 to 5.20 percent.

General Obligation Bonds, Election 2000, Series D

In July 2005, the District issued, in the amount of $55,700,000, the Peralta Community College District GeneralObligation Bonds, Election 2000, Series D (the 2000 Series D Bonds) to finance the acquisition, construction, andrehabilitation of school facilities. The bonds mature beginning August 1, 2006 through August 1, 2035, withinterest yield rates ranging from 2.51 to 4.18 percent.

2002 Refunding General Obligation Bonds

In October 2002, the District issued, in the amount of $7,310,000, the 2002 Refunding General Obligation Bondsto refund the Peralta Community College District, General Obligation Bonds, Election of 1992, Series A(the 1993 Bonds). The bonds mature beginning February 1, 2003 through August 1, 2014, with interest ratesranging from 2.00 to 4.00 percent.

2005 General Obligation Revenue Bonds, Series A

In June 2005, the Golden West Schools Financing Authority issued, in the amount of $7,285,000, the2005 General Obligation Revenue Bonds, Series A (Peralta Community College District Refunding) to financethe acquisition of the outstanding Peralta Community College District General Obligation Bonds, Election of1992, Series C. The bonds are repaid through tax assessments on property located within the District boundaries.The bonds mature beginning August 1, 2006 through August 1, 2021, with interest yield rates ranging from3.00 to 4.00 percent.



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2005 General Obligation Revenue Bonds, Series B

In August 2005, the Golden West Schools Financing Authority issued, in the amount of $32,975,000, the2005 General Obligation Revenue Bonds, Series B (Peralta Community College District Refunding) to financethe acquisition of the callable Peralta Community College District General Obligation Bonds, Election of 1992,(the 1992D Bonds), the callable General Obligation Bonds, Election 1992, Series E, (the 1992E Bonds), thecallable General Obligation Bonds, Election 1996, Series A, (the 1996A Bonds), and a portion of the callableGeneral Obligation Bonds, Election 2000, Series A (the 2000A Bonds) in the amount of $32,410,000. Concurrentwith the issuance of the bonds, the District issued 2005 General Obligation Refunding Bonds. The bonds arerepaid through tax assessments on property located within the District boundaries. The bonds mature beginningon August 1, 2006 through August 1, 2025, with interest rates ranging from 3.00 to 5.00 percent.

2006 General Obligation Bonds, Series A

In August 2006, the District issued $75,000,000 of General Obligation Bonds, Election of 2006, Series A. Votersauthorized $390,000,000 in June of 2006. The bonds are being issued to finance the acquisition, construction, andrehabilitation of District facilities. The bonds mature beginning August 1, 2007 through August 1, 2031, withinterest yield rates ranging from 4.00 to 5.00 percent.

2006 General Obligation Bonds, Series B

In November 2007, the District issued $100,000,000 of General Obligation Bonds, Election of 2006, Series B.The bonds are being issued to finance the acquisition, construction, and rehabilitation of District facilities. Thebonds mature beginning August 1, 2009 through August 1, 2037, with interest yield rates ranging from 5.00 to5.25 percent.

2006 General Obligation Bonds, Series C

In August 2009, the District issued $100,000,000 of General Obligation Bonds, Election of 2006, Series C. Thebonds are being issued to finance the acquisition, construction, and rehabilitation of District facilities. The bondsmature beginning August 1, 2012 through August 1, 2039, with interest yield rates ranging from 2.00 to5.50 percent.


In December 2009, the District issued, in the amount of $39,080,000, the Refunding General Obligation Bonds toadvance refund the Peralta Community College District, General Obligation Bonds, Election 2000, Series A, aportion of Series B, and 2001 Refunding General Obligation Bonds. The bonds mature beginning August 1, 2010through August 1, 2031, with interest yield rates ranging from 2.00 to 5.50 percent.


In March 2012, the District issued, in the amount of $59,005,000, the Refunding General Obligation Bonds torefund portions of the District's prior bonds. The bonds mature beginning August 1, 2012 through August 1,2034, with interest yield rates ranging from 2.00 to 5.00 percent.



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The outstanding general obligation debt is as follows:

Bonds Bonds

Issue Maturity Interest Original Outstanding Issued/ Outstanding

Series Date Date Rate Issue July 1, 2013 Amortized Redeemed June 30, 2014

2000 B 5/30/2002 8/01/2032 2.00%-5.32% 30,000,000$ 8,450,000$ -$ -$ 8,450,000$

2000 C 5/27/2004 8/01/2034 1.60%-5.20% 40,000,000 960,000 - 960,000 -

2000 D 7/21/2005 8/01/2035 2.51%-4.18% 55,700,000 24,275,000 - 1,210,000 23,065,000

Subtotal Election of 2000 31,515,000

2002 10/24/2002 8/01/2014 2.00%-4.00% 7,310,000 525,000 - 525,000 -

2005 A 6/01/2005 8/01/2021 3.00%-4.00% 7,285,000 4,375,000 - 380,000 3,995,000

2005 B 8/17/2005 8/01/2025 3.00%-5.00% 32,975,000 28,750,000 - 2,010,000 26,740,000

Subtotal 2005 Refinancings 30,735,000

2006 A 8/10/2006 8/01/2031 4.00%-5.00% 75,000,000 62,540,000 - 2,140,000 60,400,000

2006 B 11/15/2007 8/01/2037 5.00%-5.25% 100,000,000 93,165,000 - 1,930,000 91,235,000

2006 C 8/26/2009 8/01/2039 2.00%-5.50% 100,000,000 99,180,000 - 1,370,000 97,810,000


2009 12/17/2009 8/01/2031 2.00-5.50% 39,080,000 33,265,000 - 1,275,000 31,990,000

2012 3/28/2012 8/01/2034 2.00-5.00% 59,005,000 58,230,000 - - 58,230,000

Subtotal General Obligation Bonds 401,915,000

Bond Premiums 18,238,433 - 881,819 17,356,614

Total General Obligation Bonds 431,953,433$ -$ 12,681,819$ 419,271,614$

General Obligation Bond - 2000 Election

The 2000 general obligation bonds mature through 2036 as follows:

Year Ending

June 30, Principal Interest Total

2015 -$ -$ -$

2016 - - -

2017 - - -

2018 - - -

2019 - - -

2020-2024 - - -

2025-2029 - - -

2030-2034 10,540,000 5,698,213 16,238,213

2035-2036 20,975,000 4,587,912 25,562,912Total 31,515,000$ 10,286,125$ 41,801,125$



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General Obligation Revenue Bonds - 2005 Refunding

The general obligation revenue bonds mature through 2026 as follows:

Year Ending


2015 2,530,000$ 1,506,980$ 4,036,980$

2016 2,635,000 1,376,830 4,011,830

2017 2,770,000 1,239,611 4,009,611

2018 2,905,000 1,094,650 3,999,650

2019 3,060,000 943,939 4,003,939

2020-2024 13,280,000 2,416,125 15,696,125

2025-2026 3,555,000 120,319 3,675,319

Total 30,735,000$ 8,698,454$ 39,433,454$

General Obligation Bond - 2006 Series A, B, and C

The general obligation bonds mature through 2040 as follows:

Year Ending


2015 6,220,000$ 12,378,738$ 18,598,738$

2016 7,050,000 12,105,488 19,155,488

2017 6,710,000 11,771,438 18,481,438

2018 7,020,000 11,452,406 18,472,406

2019 7,335,000 11,122,263 18,457,263

2020-2024 42,715,000 49,453,294 92,168,294

2025-2029 54,740,000 37,230,475 91,970,475

2030-2034 59,600,000 22,076,638 81,676,638

2035-2039 51,570,000 8,389,750 59,959,750

2040 6,485,000 324,250 6,809,250

Total 249,445,000$ 176,304,740$ 425,749,740$



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General Obligation Bond - 2009 Refunding


Year Ending


2015 1,320,000$ 1,590,200$ 2,910,200$

2016 1,395,000 1,524,200 2,919,200

2017 1,440,000 1,479,950 2,919,950

2018 1,495,000 1,407,950 2,902,950

2019 1,555,000 1,333,200 2,888,200

2020-2024 8,405,000 5,687,075 14,092,075

2025-2029 11,750,000 2,901,113 14,651,113

2030-2032 4,630,000 484,838 5,114,838Total 31,990,000$ 16,408,526$ 48,398,526$



Year EndingJune 30, Principal Interest Total

2015 1,545,000$ 2,649,906$ 4,194,906$2016 2,915,000 2,603,556 5,518,5562017 2,970,000 2,516,106 5,486,1062018 3,085,000 2,397,306 5,482,3062019 2,600,000 2,243,056 4,843,056

2020-2024 15,030,000 9,133,031 24,163,0312025-2029 11,475,000 5,649,031 17,124,0312030-2034 16,485,000 2,525,331 19,010,331

2035 2,125,000 92,969 2,217,969Total 58,230,000$ 29,810,292$ 88,040,292$

Taxable 2005 Limited Obligation Other Postemployment Benefits Bonds

In December 2005, the District issued $153,749,832 aggregate principal amount of Taxable 2005 LimitedObligation OPEB (Other Postemployment Benefits) Bonds to fund the District's obligation to pay certain healthcare benefits for certain retired District employees and pay certain costs of issuance. The bonds consisted of$20,015,000 principal amount of fixed rate bonds, and $133,734,832 initial principal amount of ConvertibleAuction Rate Securities. The Convertible Auction Rate Securities accrete to matured principal amount of$394,225,000. Interest rates on the bonds range from 4.71 percent to 5.52 percent.



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The bonds mature through 2050 as follows:

PrincipalYear Ending (Including Accreted Accreted

June 30, Interest to Date) Interest Interest Total2015 -$ -$ -$ -$2016 - - - -2017 4,225,719 2,649,281 1,995,555 8,870,5552018 4,502,311 2,822,689 1,638,743 8,963,7432019 4,994,031 3,130,969 1,258,575 9,383,575

2020-2024 21,564,024 19,885,976 6,700,290 48,150,2902025-2029 17,629,966 27,270,034 8,970,915 53,870,9152030-2034 14,960,240 33,039,760 11,590,568 59,590,5682035-2039 15,009,131 45,440,869 12,195,203 72,645,2032040-2044 8,536,134 39,863,866 25,495,875 73,895,8752045-2049 12,121,796 63,328,204 17,413,748 92,863,748

2050 3,100,738 16,199,262 19,300,000 38,600,000

Subtotal 106,644,090 253,630,910 106,559,472 466,834,472Accumulated accretion 49,023,685 (49,023,685) - -

Total 155,667,775$ 204,607,225$ 106,559,472$ 466,834,472$

2006 Limited Obligation Other Postemployment Benefits Bonds Modification

The OPEB Bonds issued in 2005 were subject to an amendment wherein Lehman Brothers purchased threematurities (2006, 2007, and 2008 except $135,000) in 2006. This is outlined in the "Supplement to the OfficialStatement" dated as of October 25, 2006, relating to the Taxable 2005 Limited Obligation OPEB Bonds. Thepurpose of the amendment was to convert 2006, 2007, and 2008 original maturities into bonds maturingAugust 5, 2049. The vehicle used was a capital accretion type financing that the supplement indicates would fullyaccrete by August 5, 2009, and would have bonds that mature through August 1, 2049. This is a unique financingstructure that was developed to accommodate District wishes to reduce debt service in the initial years of thefinancing.



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Principal

Year Ending (Including Accreted

June 30, Interest to Date) Interest Total

2015 78,235$ 648,632$ 726,867$

2016 84,253 643,554 727,807

2017 90,271 638,101 728,372

2018 96,289 632,271 728,560

2019 102,307 626,065 728,372

2020-2024 613,840 3,023,314 3,637,154

2025-2029 842,526 2,796,885 3,639,411

2030-2034 1,149,446 2,487,896 3,637,342

2035-2039 1,570,709 2,066,633 3,637,342

2040-2044 2,154,459 1,489,466 3,643,925

2045-2049 2,930,787 700,538 3,631,325

2050 704,110 22,004 726,114Total 10,417,232$ 15,775,359$ 26,192,591$

2011 Taxable Refunding Bonds

In October 2011, the District refunded the District's outstanding 2009 Taxable OPEB Refunding Bonds. Therefunding was a current legal defeasance of the previously issued bonds. The new refunding bonds carry interestrates ranging from 3.47 percent to 6.91 percent and mature annually through August 1, 2031. The proceeds of therefunding were used to refinance all of the District's outstanding obligation 2009 Taxable OPEB Refunding Bondsand paying costs of issuing.



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Year Ending


2015 2,590,000$ 3,462,057$ 6,052,057$

2016 2,265,000 3,359,001 5,624,001

2017 - 3,257,869 3,257,869

2018 1,095,000 3,257,869 4,352,869

2019 1,270,000 3,199,506 4,469,506

2020-2024 10,250,000 14,441,276 24,691,276

2025-2029 17,335,000 10,089,195 27,424,195

2030-2032 17,105,000 2,667,420 19,772,420

Total 51,910,000$ 43,734,193$ 95,644,193$


The District's annual required contribution for the year ended June 30, 2014, was $11,228,305, and contributionsmade by the District during the year were $8,756,303. Interest on the net OPEB obligation and adjustments to theannual required contribution were $1,833,387 and $(1,550,387), respectively, which resulted in an increase to thenet OPEB obligation of $2,755,002. As of June 30, 2014, the net OPEB obligation was $29,916,295. SeeNote 12 for additional information regarding the OPEB obligation and the postemployment benefits plan.

Claims Liability

At June 30, 2014, the liability for claims liability was $2,795,135. See Note 13 for additional information.


At June 30, 2014, the liability for compensated absences was $3,583,095.

Load Banking

At June 30, 2014, the liability for load banking agreements was $1,845,676.



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NOTE 11 - INTEREST RATE SWAPS

2005 Limited Obligation Other Postemployment Benefits Bonds

Objective of the Morgan Stanley Interest Rate SWAP. The District entered into a series of six forward startingfloating-to-fixed rate interest rate swaps to manage interest rate risk associated with its 2005 Taxable LimitedObligation Other Postemployment Bonds. The OPEB Bonds included six series of bonds that were initiallyissued at a fixed rate of interest, converting to a variable rate (auction rate) on separate dates and continuing inthat mode until maturity of the individual series of bonds. In order to effectively convert the variable rate to afixed rate for each of the six series of bonds in November 2006, the District entered into separate swaptransactions with Morgan Stanley corresponding to each of the individual variable rate periods. Because the swapobligation only arises during the variable rate interest period for each series of bonds, the District does notbecome obligated to make swap payments until those periods arrive for each series of bonds. As of June 30,2014, the 2005 Series B-1 through B-6 has a fair market value of $(14,806,238). The intention of the swap was toeffectively change the variable interest rate on the bonds to a synthetic fixed-rate of 4.90 percent, 5.16 percent,5.28 percent, 5.21 percent, 5.06 percent, and 4.94 percent, respectively.

Terms. Under the swap agreement, the District pays a fixed rate of percent (as noted above) and the counterpartypays the District a floating rate option of 100 percent of London Interbank Offered Rate (LIBOR) with designatedmaturity of one month.

Credit Risk. As of June 30, 2014, the District was not exposed to credit risk because the swap had a negative fairvalue. Ongoing swap risks lay if the counterparty defaults and the District incur cost to obtain replacement swapat the same economic terms.

Basis Risk. Adverse changes in the District's or credit providers' financial strength could result in basis risk.

Termination Risk. The District or the counterparty may terminate the swap if the other party fails to performunder the terms of the contract.

Derivative Instrument Types

Hedge Effectiveness. As of June 30, 2014, derivative instrument B-1 under governmental activities no longermeets the criteria for effectiveness and, thus, is considered to be an investment derivative instrument. Accordingly,the accumulated changes in its fair value in fiscal year 2014 of $677,858 are reported within the investmentrevenue classification for the year ended June 30, 2014. The other interest rate swaps, B-2 through B-6, areconsidered to be hedging derivative instruments and are identified above as fair value hedges, change in marketvalues are shown as deferred cash out flows on the Statement of Net Position.

The District used the dollar-offset method to evaluate hedge effectiveness for the interest rate swaps and rate cap.This method evaluates effectiveness by comparing the changes in expected cash flows or fair values of thepotential hedging derivative instrument with the changes in expected cash flows or fair values of the hedgeableitem.



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Fair Values

Fair values for the District's derivative instruments were estimated using the following methods:

Interest Rate Swaps. Fair values for the interest rate swaps were estimated using the zero-coupon method, whichcalculates the future net settlement payments, assuming that current forward rates implied by the yield curvecorrectly anticipate future spot interest rates. The payments are then discounted using the spot rates implied bythe current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on theswaps.

Original Market

Trade ID Trade Date Effective Date Maturity Date Currency Notional Value Fixed Rate

AUF3X November 28, 2006 August 5, 2039 August 5, 2049 USD 134,475,000$ (375,513)$ 4.90%

AUF3W November 28, 2006 August 5, 2031 August 5, 2039 USD 86,650,000 (3,823,095) 5.16%

AUF3V November 28, 2006 August 5, 2025 August 5, 2031 USD 57,525,000 (1,823,164) 5.28%

AUF3U November 28, 2006 August 5, 2020 August 5, 2025 USD 43,175,000 (1,763,684) 5.21%

AUF3T November 28, 2006 August 5, 2015 August 5, 2020 USD 38,450,000 (2,853,529) 5.06%

AUF3S November 28, 2006 August 5, 2010 August 5, 2015 USD 33,950,000 (4,167,253) 4.94%

NOTE 12 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENT BENEFITSOBLIGATION

The District provides postemployment health care benefits for retired employees in accordance with negotiatedcontracts with the various bargaining units of the District.

Plan Description

The plan is a single-employer defined benefit healthcare plan administered by Peralta Community CollegeDistrict. The plan provides medical and dental insurance benefits and life insurance to eligible retirees and theirspouses. Eligible benefits plan features are based on retirees' retirement date and current employees most recenthire date in accordance with collective bargaining unit agreements.

Funding Policy

The contribution requirements of plan members and the District are established and may be amended by theDistrict and the District's bargaining units. The plan is currently funded on a pay-as-you-go basis. For fiscal year2013-2014, the District contributed $8,756,303 to the plan, comprised on premiums paid for medical insurance,claims expense, eligible Medicare reimbursements, and life insurance premiums for eligible plan members.



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Annual OPEB Cost and Net OPEB Obligation

The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with the payments of GASB Statement No. 45. TheARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each yearand amortize any unfunded actuarial accrued liabilities (UAAL) (or funding costs) over a period not to exceed30 years. The following table shows the components of the District's annual OPEB cost for the year, the amountactually contributed to the plan, and changes in the District's net OPEB obligation to the plan:

Annual required contribution 11,228,305$

Interest on net OPEB obligation 1,833,387

Adjustment to annual required contribution (1,550,387)

Annual OPEB Cost 11,511,305

Contributions made (8,756,303)

Increase in net OPEB obligation 2,755,002

Net OPEB obligation, beginning of year 27,161,293

Net OPEB obligation, end of year 29,916,295$

Trend Information

Trend information for the annual OPEB cost, the percentage of annual OPEB costs contributed to the plan, andthe net OPEB obligation for the past three years is as follows:

Year Ended Annual OPEB Actual Percentage Net OPEB

June 30, Costs Contribution Contributed Obligation

2012 13,005,505$ 7,893,515$ 61% 23,381,384$

2013 11,471,921 7,692,012 67% 27,161,293

2014 11,511,305 8,756,303 76% 29,916,295



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Funding Status and Funding Progress

Actuarial Accrued Liability (AAL) 174,703,920$

Actuarial Value of Plan Assets -Unfunded Actuarial Accrued Liability (UAAL) 174,703,920$

Funded Ratio (Actuarial Value of Plan Assets/AAL) -

Covered Payroll 43,077,857$UAAL as Percentage of Covered Payroll 406%

The above noted actuarial accrued liability was based on the March 2013 actuarial valuation. Actuarial valuationof an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability ofoccurrence of events far into the future. Examples include assumptions about future employment, mortality, andthe healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual requiredcontribution of the employer are subject to continual revision as actual results are compared with pastexpectations and new estimates are made about the future. The Schedule of Other Postemployment BenefitsFunding Progress, presented as required supplementary information, follows the notes to the financial statementsand presents multi-year trend information about whether the actuarial value of plan assets is increasing ordecreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understoodby the employer and the plan members) and include the types of benefits provided at the time of each valuationand the historical pattern of sharing of benefit costs between the employer and the plan members to that point.The actuarial methods and assumptions used include techniques that are designed to reduce the effects ofshort-term volatility in actuarial accrued liabilities and the actuarial values of assets, consistent with the long-termperspective of the calculations.

In the March 2013, actuarial valuation, the entity age normal method was used. The actuarial assumptionsincluded a 7.0 percent investment rate of return (net of administrative expenses), based on assets invested in theDistrict's retiree health benefits program. Healthcare cost trend rates ranged from an initial 12 percent and13 percent for Kaiser and Core Source, respectively, with an ultimate rate of 6.75 percent. The UAAL is beingamortized at a level percent of payroll method (same as CalPERS). The initial UAAL is being amortized over aclosed 30 year period. There is no actuarial value of assets because funds have not been placed in an irrevocabletrust. The District has an active investment portfolio funded through the issuance of bonds and has earmarkedfunds held in the County Treasury for funding of the OPEB obligation, but has not elected to place those assets inan irrevocable trust; therefore, there is no actuarial value of plan assets.



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NOTE 13 - RISK MANAGEMENT

Insurance Coverage

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; injuries to employees; and natural disasters. During the fiscal year ended June 30, 2014, theDistrict contracted with the Alliance of Schools for Cooperative Insurance Program (ASCIP) Joint PowersAuthority (JPA) for property and liability insurance coverage. Settled claims have not exceeded this commercialcoverage in any of the past three years. There has not been a significant reduction in coverage from the prioryear.

Claims Liabilities

The District establishes a liability for both reported and unreported events, which includes estimates of both futurepayments of losses and related claim adjustment expenses. The following represent the changes in approximateaggregate liabilities for the District from July 1, 2012 to June 30, 2014:

Workers'

Compensation

Liability Balance, July 1, 2012 2,778,000$

Net claims and changes in estimates 17,135

Liability Balance, June 30, 2013 2,795,135

Net claims and changes in estimates -Liability Balance, June 30, 2014 2,795,135$

At June 30, 2014, the Internal Service Fund had retained deficits in the amount of $1,644,809.

Employee Medical Benefits

The District has contracted with the Alameda County Schools Insurance Group (ACSIG) Joint Powers Authority(JPA) to provide employee medical and surgical benefits. The JPA is a shared risk pool comprised of schools inAlameda County. Rates are set through an annual calculation process. The District pays a monthly contribution,which is placed in a common fund from which claim payments are made for all participating districts. Claims arepaid for all participants regardless of claims flow. The Board of Trustees has a right to return monies to a districtsubsequent to the settlement of all expenses and claims if a district withdraws from the pool.

NOTE 14 - EMPLOYEE RETIREMENT SYSTEMS

Qualified employees are covered under multiple-employer retirement plans maintained by agencies of the State ofCalifornia. Certificated employees are members of CalSTRS and classified employees are members of CalPERS.



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CalSTRS

Plan Description

The District contributes to CalSTRS, a cost-sharing multiple-employer public employee retirement systemdefined benefit pension plan administered by CalSTRS. The plan provides retirement and disability benefits,annual cost-of-living adjustments, and survivor benefits to beneficiaries. As a result of the Public EmployeePension Reform Act of 2013 (PEPRA), changes have been made to the defined benefit pension plan effectiveJanuary 1, 2013. Benefit provisions are established by State statutes, as legislatively amended, within the StateTeachers' Retirement Law. CalSTRS issues a separate comprehensive annual financial report that includesfinancial statements and required supplementary information. Copies of the CalSTRS annual financial report maybe obtained from CalSTRS, 100 Waterfront Place, West Sacramento, CA 95605.

Funding Policy

Due to the implementation of the PEPRA, new members must pay at least 50 percent of the normal costs of theplan, which can fluctuate from year to year. For 2013-2014, the required contribution rate for new members is8.0 percent. "Classic" plan members are also required to contribute 8.0 percent of their salary. The District isrequired to contribute an actuarially determined rate. The actuarial methods and assumptions used fordetermining the rate are those adopted by the CalSTRS Teachers' Retirement Board. The required employercontribution rate for fiscal year 2013-2014 was 8.25 percent of annual payroll. The contribution requirements ofthe plan members are established by State statute. The District's contributions to CalSTRS for the fiscal yearsending June 30, 2014, 2013, and 2012, were $3,486,147, $3,172,810, and $3,161,222, respectively, and equal100 percent of the required contributions for each year.

CalPERS

Plan Description

The District contributes to the School Employer Pool under CalPERS, a cost-sharing multiple-employer publicemployee retirement system defined benefit pension plan administered by CalPERS. The plan providesretirement and disability benefits, annual cost-of-living adjustments, and survivor benefits to plan members andbeneficiaries. As a result of the PEPRA, changes have been made to the defined benefit pension plan effectiveJanuary 1, 2013. Benefit provisions are established by State statutes, as legislatively amended, within the PublicEmployees' Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includesfinancial statements and required supplementary information. Copies of the CalPERS' annual financial reportmay be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95811.



53

Funding Policy

As a result of the implementation of the PEPRA, new members must pay at least 50 percent of the normal costs ofthe plan, which can fluctuate from year to year. For 2013-2014, the normal cost is 11.85 percent, which rounds toa 6.0 percent contribution rate. "Classic" plan members continue to contribute 7.0 percent. The District isrequired to contribute an actuarially determined rate. The actuarial methods and assumptions used fordetermining the rate are those adopted by the CalPERS Board of Administration. The District's contribution rateto CalPERS for fiscal year 2013-2014 was 11.442 percent of covered payroll. The District's contributions toCalPERS for fiscal years ending June 30, 2014, 2013, and 2012, were $3,053,688, $2,638,078, and $2,442,569,respectively, and equaled 100 percent of the required contributions for each year.

On Behalf Payments

The State of California makes contributions to CalSTRS and CalPERS on behalf of the District. These paymentsconsist of State General Fund contributions to CalSTRS for the fiscal years ended June 30, 2014, 2013, and 2012,which amounted to $2,365,474, $2,227,750, and $2,072,446, respectively, (5.541 percent) of salaries subject toCalSTRS. Contributions are no longer appropriated in the annual Budget Act for the legislatively mandatedbenefits to CalPERS. Therefore, there is no on behalf contribution rate for CalPERS. No contributions weremade for CalPERS for the years ended June 30, 2014, 2013, and 2012. Under accounting principles generallyaccepted in the United States of America, these amounts are to be reported as revenues and expenditures. Theseamounts have been reflected in the basic financial statements as a component of nonoperating revenue andemployee benefit expense.

NOTE 15 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITIES

The District is a member of the Schools Excess Liability Fund (SELF), the Alliance of Schools for CooperativeInsurance Programs (ASCIP), the Alameda County Schools Insurance Group (ACSIG), and Golden WestFinancing Authority Joint Powers Authorities (JPAs). SELF, ASCIP, and ACSIG provide property and liabilityinsurance and health insurance. Golden West Financing Authority provides assistance related to school facilitiesfinancing. The relationship between the District and the JPAs is such that they are not component units of theDistrict for financial reporting purposes.

The JPAs have budgeting and financial reporting requirements independent of member units, and their financialstatements are not presented in these financial statements; however, transactions between the JPAs and theDistrict are included in these statements. Audited financial statements are available from the respective entities.

The District's share of year-end assets, liabilities, or fund equity has not been calculated.

During the year ended June 30, 2014, the District made payments of $38,763, $641,907, and $164,206 to theSchools Excess Liability Fund (SELF), the Alliance of Schools for Cooperative Insurance Programs (ASCIP), andthe Alameda County Schools Insurance Group (ACSIG), respectively.



54

NOTE 16 - COMMITMENT AND CONTINGENCIES

Parking Mitigation

The District has set aside funds to mitigate the impact of parking at Berkeley City College. These funds havebeen requested by the City of Berkeley as part of the development of the area surrounding Berkeley City College.At June 30, 2014, the total amount that has been deposited in a separate account owned by the District is$4,008,223. A formal agreement has not yet been finalized as to the actual mitigation project parameters. Thefunds that have been set aside are from general obligation bonds sold specifically for the construction of theBerkeley City College Campus.

Construction Commitments

The District is involved with various long-term construction and renovation projects throughout the four collegecampuses and the District Office. The projects are in various stages of completion and are funded primarilythrough the voter approved general obligation bonds.

NOTE 17 - RESTATEMENT OF PRIOR YEAR NET POSITION

The District's prior year beginning net position has been restated as of June 30, 2014.

Effective in fiscal year 2013-2014, the District was required to implement GASB Statement No. 65, ItemsPreviously Reported as Assets and Liabilities. The implementation of this standard required a change inaccounting principle and restatement of the beginning net position of the District by $7,463,935.

Primary Government

Net Position - Beginning 80,080,241$

Restatement of capital assets for implementation of GASB Statement No. 65 (7,463,935)Net Position - Beginning, as Restated 72,616,306$

55

REQUIRED SUPPLEMENTARY INFORMATION


56

SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDINGPROGRESSFOR THE YEAR ENDED JUNE 30, 2014

Actuarial

Accrued

Liability Unfunded UAAL as a

Actuarial Actuarial (AAL) - AAL Funded Percentage of

Valuation Value of Entity (UAAL) Ratio Covered Covered Payroll

Date Assets (a) Age (b) (b - a) (a / b) Payroll (c) ([b - a] / c)

12/11/2008 -$ 106,785,000$ 106,785,000$ -$ 52,887,000$ 202%

4/30/2009 - 130,503,000 130,503,000 - 40,378,023 323%

3/21/2011 - 221,198,000 221,198,000 - 42,690,375 518%

3/1/2013 - 174,703,920 174,703,920 - 43,077,857 406%

57

SUPPLEMENTARY INFORMATION


See accompanying note to supplementary information.

58

DISTRICT ORGANIZATIONJUNE 30, 2014

Peralta Community College District was established in 1964 by the electorates of six Alameda County schooldistricts: Alameda, Albany, Berkeley, Emeryville, Oakland, and Piedmont. The District consists of the followingtwo-year community colleges: College of Alameda, Laney College, Merritt College, and Berkeley City College.The District's colleges are accredited by the Accrediting Commission for Community and Junior Colleges,Western Association of Schools and Colleges, which is one of six regional associations that accredit public andprivate schools, colleges, and universities in the United States.

BOARD OF TRUSTEES

MEMBER OFFICE TERM EXPIRES

Mr. Abel Guillén President 2014

Ms. Meredith Brown Vice President 2016

Mr. Cy Gulassa Member 2016

Dr. Nicky González Yuen Member 2016

Ms. Linda Handy Member 2014

Dr. William Riley Member 2014

Mr. Bill Withrow Member 2016

Mr. Carl Oliver Student Trustee 2015

Mr. Jeramy Rolley Student Trustee 2015

ADMINISTRATION

Dr. José M. Ortiz Chancellor

Dr. Eric Gravenberg Interim President, College of Alameda

Dr. Deborah Budd President, Berkeley City College

Dr. Norma Ambriz-Galaviz President, Merritt College

Dr. Elñora Webb President, Laney College

Ms. Susan Rinne Interim Vice Chancellor, Finance and Administration

Dr. Michael Orkin Vice Chancellor, Educational Services

Dr. Sadiq Ikharo Vice Chancellor, General Services

Ms. Trudy Largent, J.D. Vice Chancellor for Human Resources

Ms. Thuy Thi Nguyen, Esq. General Counsel



59

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED JUNE 30, 2014

Pass-ThroughEntity

Federal Grantor/Pass-Through CFDA Identifying FederalGrantor/Program or Cluster Title Number Number Expenditures

U.S. DEPARTMENT OF EDUCATION

Student Financial Assistance Cluster

Federal Pell Grant Program 84.063 32,152,089$

Federal Supplemental Education Opportunity Grants 84.007 1,230,574

Federal Work Study Program 84.033 918,722

Federal Direct Student Loans 84.268 6,200,782

Total Student Financial Assistance Cluster 40,502,167

Culture as Power: Teaching Afro-Brazilian History, Politics, and Culture 84.021A 84,940Higher Educational Institutional Aid - Strengthening InstitutionsProgram, Title III 84.031A 254,263Higher Educational Institutional Aid - Strengthening InstitutionsPathways, Systems, and Services to Maximize Student Success 84.031A 189,348Higher Educational Institutional Aid - AANIPISI Initiative 84.031L 600,072Trio Support Services 84.042A 461,926Passed through the California Community College Chancellor Office

Career and Technical Education Act (CTEA) Title I, Part C 84.048 10-C01-041 745,532Career and Technical Education Act (CTEA) Transitions 84.048 11-139-340 176,100

Passed through the California Department of RehabilitationVocational Rehabilitation Cluster

State Vocational Rehabilitation Services - Workability 84.126A 28483 516,001State Vocational Rehabilitation Services - College 2 Career Program 84.126A 28146 225,740

Total Vocational Rehabilitation Cluster 741,741

TOTAL U.S. DEPARTMENT OF EDUCATION 43,756,089

U.S. DEPARTMENT OF AGRICULTURE

Passed through the California Department of Education

Child Care and Adult Food Program 10.558 1912-4A 79,335

U.S. DEPARTMENT OF LABOR

Advance Manufacturing Jobs and Innovation Program 17.268 90,284

Advance Manufacturing and Career Path 17.268 151,439

Passed through Contra Costa Community College District

Trade Adjustment Assistance Community College and Career Training 17.245 [1] 1,039,489

WIA Community Based Job Training Grants 17.269 856,209

Passed through the State of California, EDD

WIA Adult - Green Jobs 17.258 R975684 10,422

[1] Pass-Through Entity Identifying Number not available.



60

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, CONTINUEDFOR THE YEAR ENDED JUNE 30, 2014

Pass-ThroughEntity


U.S. DEPARTMENT OF LABOR, Continued

Passed through the County of Alameda

WIA Adult - One Stop Career Center 17.258 [1] 121,641$

WIA Dislocated Workers - One Stop Career Center 17.278 [1] 121,075

Total Workforce Investment Act (WIA) Cluster 253,138

Passed through the Spanish Speaking Unity Council

Program of Competitive Grants for Worker Training and

Placement in High Growth and Emerging Industry Sectors 17.275 [1] 84,293

TOTAL U.S. DEPARTMENT OF LABOR 2,474,852

NATIONAL SCIENCE FOUNDATION

Educating Technicians for Building Automation and Sustainability* 47.076 443,594

U.S. DEPARTMENT OF ENERGY

Energy Efficiency and Renewable Energy 81.086 123,115

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Regents of the UC Program 93.859 17,051Passed through the Foundation for California Community Colleges

Temporary Assistance for Needy Families - Child Development Careers 93.558 1012-24 185,664International Rescue Committee 93.556 17,408Passed through the Yosemite Community College District,

Child Development Training Consortium

Child Care and Development Block Grant - CDTC 93.575 [1] 9,715TOTAL U.S. DEPARTMENT OF HEALTH ANDHUMAN SERVICES 229,838

U.S. DEPARTMENT OF JUSTICECenter for Public Safety 16.753 8,026

U.S. DEPARTMENT OF VETERAN AFFAIRSVeterans Administration Fees 64.032 495

U.S. DEPARTMENT OF COMMERCEMANEX Program 11.619 47,048

[1] Pass-Through Entity Identifying Number not available.* Research and Development grant.



61


Pass-ThroughEntity


CORPORATION FOR NATIONAL AND COMMUNITY SERVICEAmericorp - National Service Awards 94.006 134,829$Passed through the Local Initiatives Support Corporation

Social Innovation Fund 94.019 45149-0001 25,365TOTAL CORPORATION FOR NATIONAL ANDCOMMUNITY SERVICE 160,194

TOTAL FEDERAL EXPENDITURES 47,322,586$ [2]

[2] The difference between the Schedule of Expenditures of Federal Awards and Federal revenues reported on theStatement of Revenues, Expenses, and Changes in Net Position is due to differences of $31,998 related torevenue recognition principles in various programs.



62

SCHEDULE OF EXPENDITURES OF STATE AWARDSFOR THE YEAR ENDED JUNE 30, 2014

Program Entitlements

Current Prior Total

Program Year Year Entitlement

Alameda County Department 1,024$ 305$ 1,329$

Song Brown RN Program 165,768 131,555 297,323

Instructional Equipment 225,359 - 225,359

CTE Enrollment Growth 14,537 - 14,537

Staff Diversity 8,477 48,170 56,647

CARE 362,619 - 362,619

EOPS 2,275,406 - 2,275,406

SFAA/BFAP 1,236,232 - 1,236,232

DSPS 1,961,246 - 1,961,246

Advanced Welding Course Training 20,403 - 20,403

Deputy Sector Navigator Grant 600,000 - 600,000

BayClean Prop 39 Clean Energy 1,091,554 - 1,091,554

Student Success and Support Services 1,751,509 - 1,751,509

CalWORKs 797,244 - 797,244

Nursing Capacity Grant 221,000 17,510 238,510

Lottery 3,137,203 - 3,137,203

Career Ladders Project 75,000 10,793 85,793

Faculty Entrepreneurship Program 15,000 11,298 26,298

CTE Community Collaborative 348,000 271,214 619,214

CAA/Contra Costa 340,000 - 340,000

Child Care - Department of Education 720,568 - 720,568

Child Care - Tax Bailout 370,194 - 370,194

Cal Grant B/C 1,585,698 - 1,585,698

Basic Skills 360,000 413,277 773,277

Industry Driven Regional Coll 172,788 - 172,788

Electronic Transcript Mini Grt 49,650 - 49,65017,906,479$ 904,122$ 18,810,601$

62

Accounts

Cash Receivable Unearned Total Program

Received (Payables) Revenue Transfers Revenue Expenditures

1,025$ -$ 816$ -$ 209$ 209$

131,555 - 123,061 - 8,494 8,495

225,359 - 165,929 - 59,430 59,430

59,220 (45,220) - - 14,000 14,000

56,647 - 56,647 - - -

362,619 (8,331) - - 354,288 354,288

2,275,406 (13,064) - - 2,262,342 2,262,342

1,236,233 (39,131) - - 1,197,102 1,197,101

1,961,246 (3,324) - 1,157,665 3,115,587 3,115,587

35,678 - 15,274 - 20,404 20,404

240,000 140,554 - - 380,554 380,554

- 24,960 - - 24,960 24,960

1,751,509 - 617,249 - 1,134,260 1,134,260

805,051 (54,974) - - 750,077 750,076

185,640 35,360 - - 221,000 221,000

91,481 591,636 - - 683,117 483,379

160,793 5,715 124,041 - 42,467 36,753

11,298 - 11,298 - - -

271,214 32,807 - - 304,021 304,021

134,961 139,690 - - 274,651 274,651

692,487 650 - - 693,137 693,137

370,194 - - - 370,194 370,194

1,575,553 10,145 - - 1,585,698 1,585,697

773,277 - 461,658 - 311,619 311,619

- 89,737 - - 89,737 53,505

49,650 - 10,780 - 38,870 38,87013,458,096$ 907,210$ 1,586,753$ 1,157,665$ 13,936,218$ 13,694,532$

Program Revenues



63

SCHEDULE OF WORKLOAD MEASURES FOR STATE GENERALAPPORTIONMENT ANNUAL (ACTUAL) ATTENDANCEFOR THE YEAR ENDED JUNE 30, 2014

Reported Audit Audited

Data Adjustments Data

CATEGORIES

A. Summer Intersession (Summer 2013 only)

1. Noncredit* 1 - 1

2. Credit 2,138 - 2,138

B. Summer Intersession (Summer 2014 - Prior to July 1, 2014)

1. Noncredit* - - -

2. Credit 152 - 152

C. Primary Terms (Exclusive of Summer Intersession)

1. Census Procedure Courses

(a) Weekly Census Contact Hours 13,822 - 13,822

(b) Daily Census Contact Hours 982 - 982

2. Actual Hours of Attendance Procedure Courses

(a) Noncredit* 40 - 40

(b) Credit 103 - 103

3. Independent Study/Work Experience



(c) Noncredit Independent Study/Distance Education Courses - - -

D. Total FTES 18,642 - 18,642

SUPPLEMENTAL INFORMATION (Subset of Above Information)

H. Basic Skills Courses and Immigrant Education

1. Noncredit* 41 - 41

2. Credit 901 - 901

* Including Career Development and College Preparation (CDCP) FTES.



64

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATIONFOR THE YEAR ENDED JUNE 30, 2014

Object/TOP

Codes

Reported

Data

Audit

Adjustments

Audited

Data

Reported

Data

Audit

Adjustments

Audited

Data

Academic SalariesInstructional Salaries

Contract or Regular 1100 18,252,185$ -$ 18,252,185$ 18,252,185$ -$ 18,252,185$Other 1300 13,813,720 - 13,813,720 13,813,720 - 13,813,720

Total Instructional Salaries 32,065,905 - 32,065,905 32,065,905 - 32,065,905Noninstructional Salaries

Contract or Regular 1200 - - - 6,154,090 - 6,154,090Other 1400 - - - 1,094,263 - 1,094,263

Total Noninstructional Salaries - - - 7,248,353 - 7,248,353

Total Academic Salaries 32,065,905 - 32,065,905 39,314,258 - 39,314,258

Classified SalariesNoninstructional Salaries

Regular Status 2100 - - - 17,783,496 - 17,783,496Other 2300 - - - 1,700,198 - 1,700,198

Total Noninstructional Salaries - - - 19,483,694 - 19,483,694Instructional Aides

Regular Status 2200 1,077,002 - 1,077,002 1,123,136 - 1,123,136Other 2400 815,229 - 815,229 876,752 - 876,752

Total Instructional Aides 1,892,231 - 1,892,231 1,999,888 - 1,999,888

Total Classified Salaries 1,892,231 - 1,892,231 21,483,582 - 21,483,582Employee Benefits 3000 19,219,825 - 19,219,825 36,310,475 - 36,310,475Supplies and Material 4000 - - - 679,081 - 679,081Other Operating Expenses 5000 - - - 10,425,622 - 10,425,622Equipment Replacement 6420 - - - - - -

Total Expenditures

Prior to Exclusions 53,177,961 - 53,177,961 108,213,018 - 108,213,018

ECS 84362 A ECS 84362 BInstructional Salary Cost Total CEE

AC 0100 - 5900 and AC 6110 AC 0100 - 6799



65

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATION, CONTINUEDFOR THE YEAR ENDED JUNE 30, 2014

Object/TOP

Codes

Reported

Data

Audit

Adjustments

Audited

Data

Reported

Data

Audit

Adjustments

Audited

Data

Exclusions

Activities to Exclude

Instructional Staff - Retirees' Benefits and

Retirement Incentives 5900 5,245,608$ -$ 5,245,608$ 5,245,608$ -$ 5,245,608$

Student Health Services Above Amount

Collected 6441 - - -$ - - -

Student Transportation 6491 - - - 513,180 - 513,180

Noninstructional Staff - Retirees' Benefits

and Retirement Incentives 6740 - - - 3,510,696 - 3,510,696

Objects to Exclude

Rents and Leases 5060 - - - 623,170 - 623,170

Lottery Expenditures -

Academic Salaries 1000 - - - - - -

Classified Salaries 2000 - - - - - -

Employee Benefits 3000 - - - - - -

Supplies and Materials 4000 - - - - - -

Software 4100 - - - - - -

Books, Magazines, and Periodicals 4200 - - - - - -

Instructional Supplies and Materials 4300 - - - - - -

Noninstructional Supplies and Materials 4400 - - - - - -

Total Supplies and Materials - - - - - -


AC 0100 - 5900 and AC 6110 AC 0100 - 6799



66


Object/TOP

Codes

Reported

Data

Audit

Adjustments

Audited

Data

Reported

Data

Audit

Adjustments

Audited

Data

Other Operating Expenses and Services 5000 -$ -$ -$ 2,486,121$ -$ 2,486,121$

Capital Outlay

Library Books 6000 - - - - - -

Equipment 6300 - - - - - -

Equipment - Additional 6400 - - - - - -

Equipment - Replacement 6410 - - - - - -

Total Equipment - - -

Total Capital Outlay

Other Outgo 7000 - - - - - -

Total Exclusions 5,245,608 - 5,245,608 12,378,775 - 12,378,775

Total for ECS 84362,

50 Percent Law 47,932,353$ -$ 47,932,353$ 95,834,243$ -$ 95,834,243$Percent of CEE (Instructional Salary

Cost/Total CEE) 50.02% 50.02% 100.00% 100.00%

50% of Current Expense of Education 47,917,122$ 47,917,122$

ECS 84362 A ECS 84362 B

Instructional Salary Cost Total CEE

AC 0100 - 5900 and AC 6110 AC 0100 - 6799



67

RECONCILIATION OF ANNUAL FINANCIAL AND BUDGETREPORT (CCFS-311) WITH AUDITED FUND BALANCEFOR THE YEAR ENDED JUNE 30, 2014

Summarized below is the fund balance reconciliation between the Annual Financial and Budget Report(CCFS-311) and the fund financial statements.

Self

Insurance

June 30, 2014, Annual Financial and Budget Report (CCFS-311)

Reported Fund Balance (2,816,716)$

Adjustments to Increase (Decrease) Fund Balance

Fees and contract revenue 1,171,908Audited Fund Balance (1,644,808)$



68

PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORTFOR THE YEAR ENDED JUNE 30, 2014

EPA Proceeds: 8630

Activity Classification

Activity

Code

Salaries

and Benefits

(Obj 1000-3000)

Operating

Expenses

(Obj 4000-5000)

Capital Outlay

(Obj 6000)

Instructional Activities 1000-5900 12,188,360$

Academic Administration 6010 288,869

Course and Curriculum Development 6020 73,709

Other Instructional Administration and

Instructional Governance 6090 3,399

Library 6120 241,701

Admissions and Records 6200 124,461

Counseling and Guidance 6310 66,218

Disabled Student Programs and Services (DSPS) 6420 8,825

Extended Opportunity Programs and Services (EOPS) 6430 1,179

Health Services 6440 464

Student Personnel Administration 6450 51,311

Financial Aid Administration 6460 230,970

Custodial Services 6530 349,211

Planning, Policymaking and Coordination 6600 159,789

Management Information Systems 6780 258,005

Community Uses of Facilities 6830 50

Student and Co-Curricular Activities 6960 24,985

Total Expenditures for EPA 14,071,506$ - -

Revenues Less Expenditures

Total

12,188,360

14,071,506$

-$

288,869

73,709

3,399

241,701


Object

Code Unrestricted

14,071,506$

50

24,985

8,825

1,179

464

51,311

230,970

349,211

124,461

66,218

159,789

258,005



69

RECONCILIATION OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITIONJUNE 30, 2014

Amounts Reported for Governmental Activities in the Statement of

Net Position are Different Because:

Total Fund Balance, Retained Earnings, and Due to Student Groups:

General Funds 21,801,406$

Special Revenue Funds 1,363,471

Debt Service Fund 40,215,952

Capital Projects Funds 86,297,233

Internal Service Fund (1,644,809)

Fiduciary Funds (13,505,667)

Total Fund Balance and Retained Earnings -

All District Funds 134,527,586$

Capital assets used in governmental activities are not financial resources

and, therefore, are not reported as assets in governmental funds.

The cost of capital assets is 623,178,778

Accumulated depreciation is (199,690,242)

Subtotal 423,488,536

Amounts held in trust on behalf of others (Trust and Agency Funds) (1,910,016)

In governmental funds, unmatured interest on long-term obligations is recognized

in the period when it is due. On the government-wide financial statements,

unmatured interest on long-term obligations is recognized when it is incurred. (7,609,895)

In governmental funds, expenses related to Interest Rate SWAPs are recognized

in the period in which they are due. On the government-wide financial

statements, the SWAP liability is recognized when it is incurred. (375,513)

Long-term obligations at year end consist of:

General obligation bonds payable 401,915,000

Premium on debt 17,356,614

Load banking 1,845,676

Other postemployment benefits obligation (OPEB) 29,916,295

Compensated absences 3,583,095

Subtotal (454,616,680)

Total Net Position 93,504,018$


70

NOTE TO SUPPLEMENTARY INFORMATIONJUNE 30, 2014

NOTE 1 - PURPOSE OF SCHEDULES

District Organization

This schedule provides information about the District's governing board members and administration members.

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the Districtand is presented on the modified accrual basis of accounting. The information in this schedule is presented inaccordance with the requirements of the United States Office of Management and Budget Circular A-133, Auditsof States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in thisschedule may differ from amounts presented in, or used in the preparation of, the financial statements.

Schedule of Expenditures of State Awards

The accompanying Schedule of Expenditures of State Awards includes the State grant activity of the District andis presented on the modified accrual basis of accounting. Therefore, some amounts presented in this schedulemay differ from amounts presented in, or used in the preparation of, the financial statements. The information inthis schedule is presented to comply with reporting requirements of the California State Chancellor's Office.

Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance

FTES is a measurement of the number of pupils attending classes of the District. The purpose of attendanceaccounting from a fiscal standpoint is to provide the basis on which apportionments of State funds, includingrestricted categorical funding, are made to community college districts. This schedule provides informationregarding the annual attendance measurements of students throughout the District.

Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation

ECS 84362 requires the District to expend a minimum of 50 percent of the unrestricted General Fund monies onsalaries of classroom instructors. This is reported annually to the State Chancellor's Office. This scheduleprovides a reconciliation of the amount reported to the State Chancellor's Office and the impact of any auditadjustments and/or corrections noted during the audit.

Reconciliation of Annual Financial and Budget Report (CCFS-311) With Audited Fund Balance

This schedule provides the information necessary to reconcile the fund balance of all funds reported on theForm CCFS-311 to the District's internal fund financial statements.

Proposition 30 Education Protection Act (EPA) Expenditure Report

This schedule provides the District's summary of receipts and uses of the monies received through the EPA.


71


Reconciliation of Governmental Funds to the Statement of Net Position

This schedule provides a reconciliation of the adjustments necessary to bring the District's internal fund financialstatements, prepared on a modified accrual basis, to the entity-wide full accrual basis financial statements requiredunder GASB Statements No. 34 and No. 35 business-type activities reporting model.

72

INDEPENDENT AUDITOR'S REPORTS

73

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited, in accordance with auditing standards generally accepted in the United States of America andthe standards applicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States, the basic financial statements of the business-type activities of PeraltaCommunity College District (the District) and its discretely presented component unit as of and for the year endedJune 30, 2014, and the related notes to the financial statements, which collectively comprise the District's basicfinancial statements and have issued our report thereon dated December 16, 2014.

Emphasis of Matter - Change in Accounting Principles

As discussed in Note 17 to the financial statements, the District has elected to change its method of accounting forcost of debt issuance as prescribed by GASB Statement No. 65, Items Previously Reported as Assets andLiabilities. Our opinion is not modified with respect to this matter.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's internal control overfinancial reporting (internal control) to determine the audit procedures that are appropriate in the circumstancesfor the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing anopinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on theeffectiveness of the District's internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph of thissection and was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were notidentified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identifiedcertain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol such that there is a reasonable possibility that a material misstatement of the District's financial statementswill not be prevented, or detected and corrected, on a timely basis. We consider the deficiency described in theaccompanying Schedule of Findings and Questioned Costs as item 2014-001 to be a material weakness.





74

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from materialmisstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed noinstances of noncompliance or other matters that are required to be reported under Government AuditingStandards.

We noted certain matters that we reported to management of the District in a separate letter dated December 16,2014.

Peralta Community College District's Response to the Finding

The District's response to the finding identified in our audit is described in the accompanying Schedule ofFindings and Questioned Costs. The District's response was not subjected to the auditing procedures applied inthe audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and theresults of that testing, and not to provide an opinion on the effectiveness of the District's internal control or oncompliance. This report is an integral part of an audit performed in accordance with Government AuditingStandards in considering the District's internal control and compliance. Accordingly, this communication is notsuitable for any other purpose.


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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACHMAJOR PROGRAM AND REPORT ON INTERNAL CONTROLOVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133


Report on Compliance for Each Major Federal Program

We have audited Peralta Community College District's (the District) compliance with the types of compliancerequirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and materialeffect on each of the District's major Federal programs for the year ended June 30, 2014. The District's majorFederal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule ofFindings and Questioned Costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grantsapplicable to its Federal programs.


Our responsibility is to express an opinion on compliance for each of the District's major Federal programs basedon our audit of the types of compliance requirements referred to above. We conducted our audit of compliance inaccordance with auditing standards generally accepted in the United States of America; the standards applicableto financial audits contained in Government Auditing Standards issued by the Comptroller General of theUnited States; and OMB Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations.Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the types of compliance requirements referred to above that couldhave a direct and material effect on a major Federal program occurred. An audit includes examining, on a testbasis, evidence about the District's compliance with those requirements and performing such other procedures aswe consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federalprogram. However, our audit does not provide a legal determination of the District's compliance.





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Basis for Qualified Opinion

As described in the table below and the accompanying Schedule of Findings and Questioned Costs, the Districtdid not comply with requirements regarding:

Program Name and Catalog of Finding

Compliance Requirement Federal Domestic Assistance (CFDA) Number Number

Allowable CostsU.S. Department of Labor, Trade Adjustment Assistance Community

College and Career Training (CFDA #17.245)2014-007

Equipment and Real Property

ManagementU.S. Department of Labor, Trade Adjustment Assistance Community

College and Career Training (CFDA #17.245)2014-006

Reporting - COD ReportingU.S. Department of Education (DOE), Student Financial Assistance

Cluster, Federal Pell Grant Program (CFDA #84.063)2014-002

Special Test and Provisions -

Return of Title IV

U.S. Department of Education (DOE), Student Financial Assistance

Cluster, Federal Pell Grant Program (CFDA #84.063)2014-003


Enrollment Reporting


Cluster, Federal Direct Student Loans (CFDA #84.268)2014-005


Direct Loan Reconciliations


Cluster, Federal Direct Student Loans (CFDA #84.268)2014-004

Compliance with such requirements is necessary, in our opinion, for the District to comply with the requirementsapplicable to that program.

Qualified Opinion on Major Federal Programs

In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Districtcomplied, in all material respects, with the types of compliance requirements referred to above that could have adirect and material effect on the programs for the year ended June 30, 2014.

Unmodified Opinion on Each of the Other Major Federal Programs

In our opinion, the District complied, in all material respects, with the types of compliance requirements referredto above that could have a direct and material effect on each of its major Federal programs identified in theSummary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for theyear ended June 30, 2014.

Other Matters

The District's responses to the noncompliance findings identified in our audit are described in the accompanyingSchedule of Findings and Questioned Costs. The District's responses were not subjected to the auditingprocedures applied in the audit of the financial statements and, accordingly, we express no opinion on theresponses.

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Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing our audit ofcompliance, we considered the District's internal control over compliance with the types requirements that couldhave a direct and material effect on each major Federal program to determine the auditing procedures that areappropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federalprogram and to test and report on internal control over compliance in accordance with OMB Circular A-133, butnot for the purpose of expressing an opinion on the effectiveness of internal control over compliance.Accordingly, we do not express an opinion on the effectiveness of the District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federalprogram on a timely basis. A material weakness in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance, such that there is a reasonable possibility thatmaterial noncompliance with a type of compliance requirement of a Federal program will not be prevented, ordetected and corrected, on a timely basis. A significant deficiency in internal control over compliance is adeficiency, or a combination of deficiencies, in internal control over compliance with a type of compliancerequirement of a Federal program that is less severe than a material weakness in internal control overcompliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the precedingparagraph and was not designed to identify all deficiencies in internal control over compliance that might bematerial weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies mayexist that were not identified. However, as discussed below, we identified certain deficiencies in internal controlover compliance described in the accompanying Schedule of Findings and Questioned Costs as items 2014-002through 2014-007 that we consider to be significant deficiencies.

The District's responses to the internal control over compliance findings identified in our audit are described in theaccompanying Schedule of Findings and Questioned Costs. The District's responses were not subjected to theauditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing ofinternal control over compliance and the results of that testing based on the requirements of OMB Circular A-133.Accordingly, this report is not suitable for any other purpose.


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INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE


Report on State Compliance

We have audited Peralta Community College District's (the District) compliance with the types of compliancerequirements as identified in the California Community Colleges Chancellor's Office District Audit Manual issuedin December 2013 that could have a direct and material effect on each of the District's programs as noted belowfor the year ended June 30, 2014.


Management is responsible for compliance with the requirements identified in the California CommunityColleges Chancellor's Office District Audit Manual issued in December 2013.


Our responsibility is to express an opinion on compliance of each of the District's State programs based on ouraudit of the types of compliance requirements referred to above. We conducted our audit in accordance withauditing standards generally accepted in the United States of America; the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of the United States; and thestandards and procedures identified in the California Community Colleges Chancellor's Office District AuditManual. These standards require that we plan and perform the audit to obtain reasonable assurance about whethernoncompliance with the compliance requirements referred to above could have a material effect on the applicableprograms noted below. An audit includes examining, on a test basis, evidence about the District's compliancewith those requirements and performing such procedures as we consider necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion. Our audit does not provide a legaldetermination of the District's compliance with those requirements.


As described in the accompanying Schedule of Findings and Questioned Costs, the District did not comply withrequirements regarding 474 Extended Opportunity Programs and Services (EOPS) and Cooperative AgenciesResources for Education (CARE) - 2014-008, 425 Residency Determination for Credit Courses - 2014-009, and491 Education Protection Account - 2014-010. Compliance with such requirements is necessary, in our opinion,for the District to comply with the requirements applicable to those programs.

Qualified Opinion

In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Districtcomplied, in all material respects, with the types of compliance requirements referred to above for the year endedJune 30, 2014.





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Unmodified Opinion for Each of the Other Programs

In our opinion, the District complied, in all material respects, with the compliance requirements referred to abovethat are applicable to the programs noted below that were audited for the year ended June 30, 2014, except asdescribed in the State Awards Findings and Questioned Costs section of the accompanying Schedule of Findingsand Questioned Costs.

Other Matters

In connection with the audit referred to above, we selected and tested transactions and records to determine theDistrict's compliance with State laws and regulations applicable to the following:

Section 421 Salaries of Classroom Instructors (50 Percent Law)Section 423 Apportionment for Instructional Service Agreements/ContractsSection 424 State General Apportionment Funding SystemSection 425 Residency Determination for Credit CoursesSection 426 Students Actively EnrolledSection 427 Concurrent Enrollment of K-12 Students in Community College Credit CoursesSection 430 Schedule Maintenance ProgramSection 431 Gann Limit CalculationSection 435 Open EnrollmentSection 438 Student Fees – Health Fees and Use of Health Fee FundsSection 439 Proposition 39 Clean EnergySection 474 Extended Opportunity Programs and Services (EOPS) and Cooperative Agencies Resources

for Education (CARE)Section 475 Disabled Student Programs and Services (DSPS)Section 479 To Be Arranged (TBA) HoursSection 490 Proposition 1D State Bond Funded ProjectsSection 491 Proposition 30 Education Protection Account Funds

The District reports no Instructional Service Agreements/Contracts for Apportionment Funding; therefore, thecompliance tests within this section were not applicable.

The District reports no attendance within classes subject to the TBA Hours; therefore, the compliance tests withinthis section were not applicable.

The District did not receive any monies from Proposition 1D State bond funds; therefore, the compliance testswithin this section were not applicable.

The District's responses to the findings identified in our audit are described in the accompanying Schedule ofFindings and Questioned Costs. We did not audit the District's responses and, accordingly, we express no opinionon the responses.


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SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SUMMARY OF AUDITOR'S RESULTSFOR THE YEAR ENDED JUNE 30, 2014

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FINANCIAL STATEMENTS

Unmodified

Yes

None reported

No

FEDERAL AWARDS

No

Yes

Qualified

CFDA Numbers Name of Federal Program or Cluster

84.063, 84.007, 84.033, 84.268 Student Financial Assistance Cluster

17.245

U.S. Department of Labor, Trade Adjustment Assistance

Community College and Career Training

Yes



17.245

U.S. Department of Labor, Trade Adjustment Assistance

Community College and Career Training

84.031A

Higher Educational Institutional Aid - Strengthening Institutions

Program, Title III

84.031A

Higher Educational Institutional Aid - Strengthening Institutions

Pathways, Systems, and Services to Maximize Student Success

84.031L Higher Educational Institutional Aid - AANIPISI Initiative

84.048 Career and Technical Education Act (CTEA) Title I, Part C

84.048 Career and Technical Education Act (CTEA) Transitions

84.126A State Vocational Rehabilitation Services - Workability

84.126A

State Vocational Rehabilitation Services - College 2 Career

Program

300,000$

Auditee qualified as low-risk auditee? No

STATE AWARDS

Qualified

Name of State Program

474 Extended Opportunity Programs and Services (EOPS) and

Cooperative Agencies Resources for Education (CARE)

425 Residency Determination for Credit Courses

491 Education Protection Account

Unmodified for all State programs except for the following State programs which

were qualified:

Type of auditor's report issued on compliance for State programs:

Any audit findings disclosed that are required to be reported in accordance with

Section .510(a) of OMB Circular A-133?

Identification of major Federal programs:

Dollar threshold used to distinguish between Type A and Type B programs:

Noncompliance material to financial statements noted?

Internal control over major Federal programs:

Material weaknesses identified?

Significant deficiencies identified?

Type of auditor's report issued on compliance for major Federal programs:

Unmodified for all major Federal programs except for the following Federal programs

which were qualified:

Type of auditor's report issued:

Internal control over financial reporting:




FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONSFOR THE YEAR ENDED JUNE 30, 2014

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The following finding represents a material weakness related to the financial statements that is required to bereported in accordance with Government Auditing Standards.

2014-001 DISTRICT FINANCIAL CONDITION

Criteria or Specific Requirement

The District is required to maintain operational and budgetary financial stability both at the fundlevel and the entity-wide level.

Condition

Material Weakness - On an entity-wide full accrual basis, the District's unrestricted NetPosition/deficit is $(27.2) million. This is due primarily to the growing obligation for thepostemployment health care benefits and the obligation to repay OPEB taxable bonds. The currentunfunded postemployment liability is $29.9 million. This is based on the fiscal year 2013 actuarialreport provided to the District and will grow to over $174.7 million as the obligation is amortizedover the coming 30 years. The District's total OPEB bond obligation is $218.0 million. While theDistrict has $215.0 million of investments related to the OPEB obligation, these investments are notin an irrevocable trust; therefore, under GASB Statement No. 45, these assets may not be used tooffset the District's obligation. Also, the District's Self-Insurance Fund has a deficit fund balance of$1,644,808.

Recommendation

The long-term planning for the continued financial stability of the District should continue toinclude attention to obligations that will be coming due in the future, such as the postemploymenthealth care benefits and the annual line of credit repayments, which impact the District both at theoperating fund level and the entity-wide financial statement level.

Management's Response and Corrective Action Plan

The District recognizes future liabilities related to OEPB and the Self-Insurance Fund (Workers'Compensation account). The District currently has an active investment portfolio funded throughthe issuance of bonds and has earmarked funds held in the County Treasury for funding the OPEBobligation, but has not elected to place these assets in an irrevocable trust. The District is in theprocess of working with Bond Counsel to determine the amount of funds to transfer from theinvestment portfolio to an irrevocable trust. A new actuarial report is being conducted to determinethe future value of the OPEB liability; at that time, the OPEB contribution will be adjusted toaddress future needs. In the same manner, the Workers' Compensation contribution will be adjustedto address the deficit fund balance in the Self-Insurance Fund.


FEDERAL AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2014

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The following findings represent significant deficiencies and/or instances of noncompliance including questionedcosts that are required to be reported by OMB Circular A-133.

2014-002 REPORTING - COMMON ORIGINATION AND DISBURSEMENT (COD)

CAMPUS: MERRITT COLLEGE

Federal Program Affected

U.S. Department of Education (DOE), Student Financial Assistance Cluster, Federal Pell GrantProgram (CFDA #84.063)


34 CFR Section 690.83: Submission of reports, Disbursements To or On Behalf of Students A-133Compliance Supplement: Student Financial Assistance Cluster:

Schools submit Pell origination records and disbursements records to the COD. Originationrecords can be sent well in advance of any disbursements, as early as the school chooses tosubmit them for any student the school reasonably believes will be eligible for a payment. Aschool follows up with a disbursement record for that student no more than 30 days before adisbursement is to be paid. The disbursement records reports the actual disbursement date andthe amount of the disbursement. ED processes origination and/or disbursement records andreturns acknowledgments to the school. Institutions must report student payment data within30 calendar days after the school makes a payment; or becomes aware of the need to make anadjustment to previously reported student payment data or expected student payment data.

Condition

Significant Deficiency - During our review of the requirements for disbursement to or on behalf ofstudents processed at the College, it was observed that the process dates reported in the COD fileswere more than 30 calendar days after the disbursement dates reported in the COD files in theDistrict's financial records.

Questioned Costs

None noted.

Context

The condition was identified as a result of reviewing the District's compliance requirements fordisbursements to or on behalf of students.



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Effect

The College is not in compliance with the Federal requirements described in the A-133 ComplianceSupplement.

The District can potentially face future financial sanctions or penalties from the DOE if the Districtfails to take corrective actions to remedy the condition identified.

Cause

The College did not have a control in place to ensure the proper reporting was being completedtimely.

Recommendation

It is recommended that the District implement procedures to ensure that the student data is reportedto the COD within the required 30 calendar days.


As part of its commitment to continuous improvement, the District is in process of establishing adistrict-wide Compliance Assurance Program (CAP) for its Financial Aid program. CAP will addan enhanced level of education, guidance, communication, and oversight activities to its existingmanagement oversight system. Among other planned actions under CAP, there will be moreformal, frequent communications to college financial offices, including bulletins, email, and trainingsite visits by District Financial Aid Director and the Internal Auditor. Current written policy andprocedures will be updated and selectively improved, where deemed necessary, and visually mappedby the Internal Auditor to enhance understandability. Compliance at all colleges will continue to bemonitored by the District Financial Aid Director and the Internal Auditor.

The District's Information Technology Department is currently conducting a preliminarydevelopment of a pilot application to automate the COD reporting process.

2014-003 SPECIAL TESTS AND PROVISIONS - RETURN OF TITLE IV



U.S. Department of Education (DOE), Student Financial Assistance Cluster, Federal Pell GrantProgram (CFDA #84.063)



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Institutions must review and document the student's eligibility before it disburses funds eachpayment period. When a student withdraws from an institution during a payment period, theinstitution must calculate the amount of Title IV aid earned by the student as of the student'swithdrawal date to determine if any funds need to be returned by the institution or the student.

Condition

Significant Deficiency - One student tested at the Merritt College was awarded their Pelldisbursements, but dropped before the second disbursement was paid. The College had notidentified this student as a Return of Title IV student, and no calculation was prepared to determinethe amount of funds that needed to be returned (if any).

Questioned Costs

The Return of Title IV calculation was done after the error was noted and the institutional returnamount was $259.50.

Context

There was one student out of the sixty students tested at the four campuses in which this complianceerror was noted. No additional errors were noted.

Effect

The College is not in compliance with the Federal requirements described in A-133 ComplianceSupplement 34 CFR section 668.22 (j).

Cause

The College did not have a procedure in place to identify all students who had dropped prior to thecensus date.

Recommendation

It is recommended that the District review and implement procedures to ensure that the Return ofTitle IV funds calculations are completed in a timely manner and that all funds owed are returned.



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The District has policy and procedures for College Financial Aid Supervisors to use for calculatingReturn of Title IV funds. The compliance monitoring and district guidance provided by the DistrictFinancial Aid Director will continue and be further enhanced with the establishment of the District'sCompliance Assurance Program (CAP). CAP will provide a multi-faceted approach to assistingCollege Financial Aid management and staff to achieve compliance more efficiently and effectively.The CAP strategic plan involves, among other actions, providing more communications, training,compliance tracking, and site visits by the Director of the Financial Aid Program and the InternalAuditor to help promote compliance with the Return of Title IV funds process. The basis for theCAP was developed by the Internal Auditor utilizing key controls and best management practicesthat is expected to help facilitate and promote compliance.

2014-004 SPECIAL TESTS AND PROVISIONS - DIRECT LOAN RECONCILIATIONS

CAMPUS: LANEY COLLEGE AND MERRITT COLLEGE


U.S. Department of Education (DOE), Student Financial Assistance Cluster, Federal Direct StudentLoans (CFDA #84.268)


According to the OMB Circular A-133 and 34 CFR sections 685.102(b), 685.301, and 685.303,institutions must report all loan disbursements and submit required records to the Direct LoanServicing System (DLSS) via the Common Origination and Disbursement (COD) within 30 days ofdisbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a SchoolAccount Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional atthe request of the school) Loan Detail records. The school is required to reconcile these files to theinstitution's financial records. Since up to three Direct Loan program years may be open at anygiven time, schools may receive three SAS data files each month.

Condition

Significant Deficiency - During our review of the direct loans, it was noted that the Colleges notedabove did not have adequate documentation to show that they were reconciling the SAS data fileand the Loan Detail records to the institution's financial records on a monthly basis.

Questioned Costs

No questioned costs.

Context

Laney and Merritt Colleges disbursed direct loan funds during the entire 2013-2014 fiscal year.



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Effect

Without proper monitoring of Direct Loan disbursements, the District risks noncompliance with34 CFR sections 685.102(b), 685.301, and 303.

Cause

The Colleges have not implemented policies and procedures to verify that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records.

Recommendation

It is recommended that the District implement procedures to ensure that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records. Theseprocedures must be communicated to all Colleges for implementation.


The District will continue to provide guidance and training to assist College Financial Aid Programpersonnel and management to perform the COD reconciliation process in accordance with OMB A-133 and 34 CFR sections 685.102(b), 685.301, and 685.303. The District Financial Aid ProgramOffice has updated and improved its existing COD reconciliation guidelines to better ensure easierunderstanding and ultimately improved compliance with regulations.

As stated earlier, the Compliance Assurance Program will be implemented, which will provide amulti-faceted oversight, training, and communications to the College Financial Aid Offices to betterensure compliance.

2014-005 SPECIAL TESTS AND PROVISIONS - ENROLLMENT REPORTING

CAMPUS: LANEY COLLEGE, COLLEGE OF ALAMEDA, BERKELEY CITYCOLLEGE, AND MERRITT COLLEGE


U.S. Department of Education (DOE), Student Financial Assistance Cluster, Federal Direct StudentLoans (CFDA #84.268)


According to 34 CFR sections 685.309(b) and 682.610, colleges are responsible for reporting theenrollment status, the effective date of the status, and the anticipated completion date of all DirectLoan borrowers attending its college. It is the college's responsibility to report timely and accuratedata to the NSLDS.



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Condition

Significant Deficiency - During our review over student enrollment reporting, it was noted that theDistrict IT Department did not submit any required enrollment reports (SSCR) to the NSLDS fromthe period between early September 2013 to mid-June 2014.

Questioned Costs


Context

All Colleges disbursed direct loan funds during the entire 2013-2014 fiscal year.

Effect

Without timely reporting of borrower enrollment status, the District risks noncompliance with34 CFR sections 685.309(b) and 682.610.

Cause

An error in the District's IT system was uploading incorrect data to NSLDS. Rather than continue tosubmit incorrect data, the District elected to stop all SSCR transmissions until the IT issue wasresolved.

Recommendation

It is recommended that the District review the reporting requirements with the IT Department andimplement procedures to ensure that the SSCR enrollment status files are submitted timely to theNSLDS.


Data covering the period from September 2013 to mid-June 2014 has been submitted to NSLDS.District IT is working with District A&R to determine the root cause of incorrect data and developprocedures to ensure submission of data to NSLDS is done accurately and in a timely manner.

2014-006 EQUIPMENT MANAGEMENT


U.S. Department of Labor, Trade Adjustment Assistance Community College and Career Training(CFDA #17.245)

Compliance Requirement

Equipment and Real Property Management



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The College shall follow the A-102 Common Rule for equipment acquired under Federal awards.Written policies and procedures for monitoring and tagging of Federal equipment must beestablished and maintained. The equipment listing must include serial number or otheridentification number, source, who holds title, acquisition date, cost, percentage of Federalparticipation in the cost, and location of equipment.

Condition

Significant Deficiency - The District is not following established written policies and procedures formonitoring Federal equipment. Equipment that is directly shipped to the sites rather than theDistrict's warehouse are potentially bypassing the established procedures for tagging them asFederal equipment and are not being included on the site's inventory listing of the Federal program.One item tested was delivered directly to the Berkeley campus and was not properly tagged andidentified as Federal.

Questioned Costs

None.

Context

During the current fiscal year, the District spent approximately $299,000 on capital outlay withinthis grant.

Effect

Equipment purchased through the program may not be properly safeguarded and maintained for usewithin the program.

Cause

The District has not implemented policies and procedures to ensure compliance with Federalrequirements.

Recommendation

Written procedures should be prepared that provide evidence of appropriate controls over inventory.The inventory results should be assessed by appropriate administrators to ensure that equipmentpurchased through the Federal programs is safeguarded and accounted for.



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The Internal Auditor will work with the Purchasing Department to assess the adequacy of theDistrict's internal controls over the accounting and management of equipment inventory purchasedwith Federal funds, including such key controls as policy and procedures. The Internal Auditor willreview the accounting and handling of equipment management procedures for key controls and bestpractices that ensure compliance and safeguarding of such equipment. Specifically, the InternalAuditor will review how equipment shipped directly to college sites are accounted for andcontrolled. Any weaknesses in key controls will be noted and recommendations given to remediateany control gaps.

2014-007 TIME AND EFFORT REPORTING

COLLEGE: COLLEGE OF ALAMEDA

Federal Programs Affected

U.S. Department of Labor, Trade Adjustment Assistance Community College and Career Training(CFDA #17.245)

Compliance Requirement

Allowable Costs


The requirements for allowable costs/cost principles are contained in the A-102 Common Rule,OMB Circular A-110 (2 CFR Section 215.27), program legislation, Federal awarding agencyregulations, and the terms and conditions of the award. Cost principles are contained in:

OMB Circular A-21, "Cost Principles for Educational Institutions" (2 CFR part 220) - Allinstitutions of higher education are subject to the cost principles contained in OMB Circular A-21,which incorporates the four Cost Accounting Standards Board (CASB) Standards and the DisclosureStatement (DS-2) requirements, as described in OMB Circular A-21, Sections C.10 through C.14and Appendices A and B.

Condition

Significant Deficiency - Individuals working within the program have not certified the actual timespent working within the Federal programs. Time studies have not been completed for individualswho work either full-time or part-time on the program as required by the OMB Circular. TheCollege did obtain the signed certifications after this issue was brought to their attention.

Questioned Costs

No questioned costs are noted.



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Context

A significant amount of the Federal expenditures related to these programs are derived from payrollcosts. While the salaries appear to be reasonable and necessary for the program objectives, theDistrict did not provide the required supporting documentation as outlined in the OMB CircularA-21. Further, there does not appear to be adequate policies and procedures necessary to support thatthe District has controls over compliance objectives.

Effect

Without the time studies and certifications, the program managers are not able to effectively monitorthat individuals are being appropriately charged to the Federal grant.

Cause

Procedures and controls over compliance do not clearly specify how the time certification processshould be completed or the process for the review of the certifications.

Recommendation

The College should have all individuals working on any Federal program certify their time asrequired by OMB.


The Internal Auditor has been working with the District Grants Administrator to complete a positiveimprovement project by completing a district-wide Compliance Assurance Program for GrantsManagement (CAP). CAP puts in place multifaceted key controls designed to promote compliancewith regulatory requirements. This CAP program is intended to strategically strengthen existingcompliance monitoring and guidance efforts by putting the following key controls and complianceoversight processes in place:

(1) More formal training and tracking of training for grant project directors,(2) Enhanced public communications,(3) New problem solving protocol,(4) Periodic compliance status reviews by District Grants Administrator,(5) Improved documentation and dissemination of instructions,(6) Added level of campus management oversight to ensure compliance,(7) Site training and guidance visits to colleges by District Grants Administrator and Internal

Auditor, and(8) Periodic reviews by the Internal Auditor.

Additional Compliance Assurance actions planned also include website reporting of complianceinstructions and relevant news bulletins, deadline reminders, etc. Planned use of a training and grantdatabase developed by the Internal Auditor to help track key grant information and compliancestatus.


STATE AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2014

92

The following findings represent instances of noncompliance and/or questioned costs relating to State programlaws and regulations.

2014-008 CARE ADVISORY COMMITTEE MEETING

Programs Affected

CARE


Education Code Section 79150-79155CARE Program GuidelinesInformation System's Data Element Dictionary (data elements SE01-SE10)

Condition

Significant Deficiency - Required CARE advisory committee meetings at College of Alameda washeld only one time during the year. The CARE Program guidelines note the advisory committeesare to meet at least twice during each academic year.

Questioned Costs

None.

Effect

The advisory committees may not be able to properly manage and oversee the CARE Program andbudget by not meeting as noted in the guidance.

Cause

The College did not ensure all scheduled meetings were held.

Recommendation

We recommend that the CARE Program director ensure the advisory committee is in place andmeets as required by the program guidance.


EOPS and CARE advisory committee meetings are combined at College of Alameda. EOPSguidelines require one advisory committee meeting each year. However, CARE guidelines requiretwo advisory committee meetings each year. Only one combined advisory committee meeting washeld in 2013-2014. This oversight has been corrected, and two combined advisory committeemeetings have been scheduled for 2014-2015.



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2014-009 425 RESIDENCY DETERMINATION FOR CREDIT COURSES


Each district must act to ensure that only the attendance of California residents is claimed forState support of credit classes.

Condition

Significant Deficiency - The residence verification process used by the District during the year wasnot being followed at the Colleges. The Colleges utilize the CCC Applied software to assist in theverification procedures. Every student identified with a #2 automatically is assessed as anonresident and charged nonresident fees. For students identified with a #2, in order to be assessedas a California resident, proof of residency needs to be obtained and maintained. Out of a sample of40 students, four errors were noted. The students were identified as a #2, but were assessed asCalifornia residents. Therefore, they were paying fees as a California resident rather than anonresident.

Questioned Costs

The nonresident fees for these four students that should have been assessed were $7,348.

Effect

Students that did not meet the definition of residency were included in the originally submittedAnnual CCFS-320 Attendance Report as California residency in error.

Cause

The District did not have a control in place to ensure that when a staff changes residency status forany student, proof of that change needs to be kept.

Recommendation

The District should actively monitor all staff at the Colleges who can change a student's residencyand make sure they are maintaining proof of the change.


The District A&R created a query that identifies students who applied for admission and weredetermined to be nonresidents, but then were changed to California residents. Each College will beprovided with a list of students whose residency classification changed within the semester, and theywill be required to submit documentation to District A&R supporting the residency change. TheDistrict A&R will ensure that the Colleges submit the documentation to the District for appropriaterecordkeeping.



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2014-010 491 EDUCATION PROTECTION ACCOUNT


Districts are not allowed to spend funds on administrative costs.

Condition

Significant Deficiency - Education Protection Account funds were spent on administrative salaries.

Questioned Costs

The administrative salaries that were spent using Education Protection Account funds totaled to theamount of $439,520.

Effect

The Education Protection Account had un-allowed expenditures.

Cause

The District did not have controls in place to ensure that the District was in compliance regardingthe spending of Education Protection Account funds.

Recommendation

The District should actively monitor all expenditures regarding Education Protection Account fundsto ensure purchases fall within the guidelines of allowable cost.


In the future, funds received through the Education Protection Account will not include thedepartment chair costs, as these were the costs considered as administrative salaries in this finding.


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGSFOR THE YEAR ENDED JUNE 30, 2014

95

Except as specified in previous sections of this report, summarized below is the current status of all audit findingsreported in the prior year's Schedule of Findings and Questioned Costs.

FINANCIAL STATEMENT FINDINGS

2013-001 FINANCIAL RECONCILIATION PROCESS


The accounting system used to record the financial affairs of any community college district shall bein accordance with the definitions, instructions, and procedures published in the CaliforniaCommunity Colleges Budget and Accounting Manual (BAM). Colleges are also required to presenttheir financial statements in accordance with generally accepted accounting principles (GAAP).

Condition

Material Weakness - Many errors were made within the closing process of the District's financialrecords during the current fiscal year. Material adjustments and reclassifications were required toconform to the BAM. Errors were found in several accounts including, but not limited to:

Suspense Accounts:

The District has a number of suspense accounts associated with their receivables and liabilities. Thepurposes of a suspense account is to be used as a temporary recording of information as theaccounting could not be determined or does not appear reasonable at the time that the transaction isrecorded. When the proper account is determined, the amount should be removed from the suspenseaccount to the proper account. Suspense accounts should be cleared out regularly; they are fortemporary use only. The District is not properly reconciling these accounts. These suspenseaccounts have balances at year end that are not reconciled.

Student Accounts Receivable:

The student accounts receivable account balance as of year end had activity accounted for in thestudent accounts receivable account, as well as their deferred revenue account for activity related tothe following fiscal year. These amounts were not reconciled.

Campus Accounts:

Several of the District's cash accounts being held at the campus locations were not being activelymonitored during the year. Reconciliations were not performed during the year, and the accountsshowed several errors. There appears to be a lack of oversight over the various cash accounts heldat the individual campuses.

Cash Accounts:

Bank reconciliations for all bank accounts are not being obtained by the District Office on a monthlybasis.



96

Effect

Many material adjustments to the general ledger were proposed as a result of the audit procedures.These adjustments were accepted by management to ensure the financial statements were presentedfairly.

Cause

The oversight controls over the closing process appear not have been adhered to, resulting inadjustments and a material weakness.

Recommendation

The District needs to develop a closing procedure calendar at year end to ensure that all informationis prepared, reviewed, and reconciled. The number of suspense accounts used should be examined,and the accounts should be cleared out on a monthly basis. The District should ensure monthlyreview of campus accounts to ensure that all information is being accounted for completely andaccurately.

Current Status

Implemented.

2013-002 DEFERRED COMPENSATION FUND


The Fiduciary Funds Group is used to account for assets held by the District in a trustee or agencycapacity for individuals, private organizations, other governmental units, and or/other funds.Fiduciary funds are accounted for on the full-accrual basis.

Condition

Material Weakness - The District is not correctly accounting for the activity within the DeferredCompensation Fund. Long-term debt and investment account balances were not accuratelyaccounted for within the fund. All associated debt related transactions were not accuratelyaccounted for within the fund including refunding and posting prior year transactions. Thebeginning balance did not agree to prior year ending balance per audited financial statements. TheDistrict continues to show debt balances and investment balances for debt that has been refunded inprior years.

Effect

Material adjustments were proposed as a result of the audit procedures. These adjustments wereaccepted by management to ensure the financial statements were fairly stated.



97

Cause

The District does not have an individual responsible for accounting for all the transactions withinthe fund. There was no review process over the accounting for the fund during the year.

Recommendation

The District should assign the responsibility of posting and reconciling all Deferred CompensationFund activity. This should include the investment and debt activities. All postings should bereviewed on a regular basis by an individual other than the preparer who has knowledge of theactivities accounted for within the fund.

Current Status

Implemented.

2013-003 ANNUAL FINANCIAL AND BUDGET REPORT


The Annual Financial and Budget Report (CCSF-311) is used primarily as an "internal" financialreport for use within the Community College System for comparing financial results acrossCalifornia community college districts. Districts are required to submit four quarterly reports to theState Chancellor's Office including the final CCSF-311.

Condition

Significant Deficiency - The District's CCSF-311 report was not completed accurately. There wereseveral differences from the District's general ledger to the CCSF-311.

Effect

The District was required to re-submit their CCFS-311 report to correct the inaccuracies throughoutthe report.

Cause

The District did not have an adequate review procedure over the submitting of the CCFS-311 report.

Recommendation

The District should ensure that once the CCFS-311 report is completed, an individual other than thepreparer reviews the report by agreeing the information to the general ledger prior to submittal. Theindividual should verify for consistencies throughout the report, as well as classifications.



98

Current Status

Implemented.

FEDERAL AWARDS FINDINGS



U.S. Department of Education (DOE), Higher Educational Aid - Strengthening InstitutionsPathways, Systems, and Services to Maximize Student Success (CFDA #84.031A)Career and Technical Education Act (CTEA) Title I, Part C (CFDA #84.048)U.S. Department of Labor (DOL), Program of Competitive Grants for Worker Training andPlacement in High Growth and Emerging Industry Sectors (CFDA #17.275)



OMB Circular A-21, "Cost Principles for Educational Institutions" (2 CFR part 220) - Allinstitutions of higher education are subject to the cost principles contained in OMB Circular A-21.

Condition

Significant Deficiency - Individuals working within the program did not timely or accurately certifythe actual time spent working within the Federal programs. Time studies were completedincorrectly for individuals who work either full-time or part-time on the program as required byOMB.

Questioned Costs

No questioned costs are noted; the District was able to provide support showing the employees wereworking on the Federal program.

Context

A significant amount of the Federal expenditures related to these programs are derived from payrollcosts. Further, there does not appear to be adequate policies and procedures to ensure that thecertifications are completed accurately, reviewed, and submitted timely.



99

Effect

Without the accurate time studies and certifications, the District is not able to effectively monitorpayroll charges applied to applicable grants, as well as to ensure compliance with the appropriateOMB Circular requirements.

Cause

Time certifications were not completed or reviewed in a timely manner.

Recommendation

The District should have all individuals working on any Federal program certify their time asrequired by OMB in a timely manner and be reviewed by an appropriate individual.

Current Status

Implemented.



U.S. Department of Education (DOE), Carl D. Perkins - Career and Technical Education Act(CTEA) Title I, Part C (CFDA #84.048)


OMB Circular A-110, Subpart C, Section 34 (3) and (4) requires a physical inventory of equipmentpurchased with Federal grant dollars every two years and requires a system of internal controls toadequately safeguard the equipment and prevent loss or damage to the equipment.

Condition

Significant Deficiency - While the District does conduct physical inventories every two years, it hasnot maintained an inventory control system that specifically identifies equipment purchased withFederal funds to satisfy the compliance criteria noted above.

Questioned Costs

None.

Context

During the current fiscal year, the District spent approximately $124,000 from the CTEA Title I,Part C funding on capital outlay.



100

Effect


Cause


Recommendation


Current Status

Implemented.

2013-006 COMMON ORIGINATION AND DISBURSEMENT (COD) REPORTING



Student Financial Assistance Cluster - U.S. Department of Education (DOE), Federal Pell GrantProgram (CFDA #84.063), and Federal Direct Student Loans (CFDA #84.268)






101

Condition

During our review of the requirements for disbursement to or on behalf of students processed at theDistrict, it was observed that the process dates reported in the COD files were more than 30 calendardays after the disbursement dates reported in the COD files in the District's financial records.

Questioned Costs

None noted.

Context


Effect

The District is not in compliance with the Federal requirements described in the A-133 ComplianceSupplement.

The District can potentially face future financial sanctions or penalties from DOE if the District failsto take corrective actions to remedy the condition identified.

Recommendation


Current Status

Not implemented. See current year finding 2014-002.

2013-007 SPECIAL TESTS AND PROVISIONS – RETURN TO TITLE IV


Program

U.S. Department of Education (ED), Student Financial Assistance Cluster (CFDA #84.007, #84.268,#84.033, and #84.063)


CFDA #84.007, #84.268, #84.033, and #84.063



102


A-133 Compliance Supplement, 34 CFR Section 668.22(j):

Return of Title IV funds are required to be deposited or transferred into the Student FinancialAssistance (SFA) account or electronic funds transfer initiated to ED as soon as possible, but nolater than 45 days after the date the institution determines that the student withdrew. Returns bycheck are late if the check is issued more than 45 days after the institution determined the studentwithdrew, or the date on the cancelled check shows the check was endorsed more than 60 days afterthe date the institution determined that the student withdrew.

Condition

Significant Deficiency - During our review of the requirements for Return of Title IV funds, wewere not able to determine when Merritt College had returned the required funds.

Questioned Costs

Total questioned costs are $1,362. Merritt College was unable to provide documentation provingthat the funds were returned within the required time frame.

Context

There were four students out of a population of thirty-five where the campus was not able to providesupporting documentation that the funds were returned within the 45 day requirement.

Effect

The District is not in compliance with the Federal requirements described in A-133 ComplianceSupplement 34 CFR section 668.22(j).

Cause

The District has not implemented policies and procedures to monitor the Return of Title IV funds.

Recommendation

It is recommended that the District implement procedures to ensure that the Return of Title IV fundsoccurs within 45 days from the date the District determines the student withdrew from all classes.In addition, the District needs to ensure that all amounts owed are returned.

Current Status




103


CAMPUS: LANEY COLLEGE, COLLEGE OF ALAMEDA, AND MERRITT COLLEGE

Program

U.S. Department of Education (DOE), Student Financial Assistance Cluster (CFDA #84.007,#84.268, #84.033, and #84.063)


U.S. Department of Education (DOE), Federal Direct Student Loans, CFDA #84.268


According to the OMB Circular A-133 and 34CFR sections 685.102(b), 685.301, and 685.303,Institutions must report all loan disbursements and submit required records to the Direct LoanServicing System (DLSS) via the Common Origination and Disbursement (COD) within 30 days ofdisbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a SchoolAccount Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional atthe request of the school) Loan Detail records. The school is required to reconcile these files to theinstitution's financial records. Since up to three Direct Loan program years may be open at anygiven time, schools may receive three SAS data files each month.

Condition

Significant Deficiency - During our review of the direct loans, it was noted that the District did nothave adequate documentation to show that they were reconciling the SAS data file and the LoanDetail records to the institution's financial records on a monthly basis.

Questioned Costs


Context

The District disbursed direct loan funds during the entire 2012-2013 fiscal year.

Effect


Cause

The District has not implemented policies and procedures to verify that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records.



104

Recommendation

It is recommended that the District implement procedures to ensure that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records.

Current Status


2013-009 FINANCIAL REPORTING


National Science Foundation, Educating Technicians for Building Automation and Sustainability(CFDA #47.076)


The District is required to report to the oversight agency, on a quarterly basis, the activity for theNational Science Foundation, Educating Technicians for Building Automation and Sustainability.

Condition

Significant Deficiency - The District did not submit their fourth quarter report to the awardingagency for the program.

Questioned Costs

None.

Context

Financial reporting to the awarding agency is a requirement and is the basis of review by the agency.

Effect

Allocations of Federal funds through the oversight agency may be impacted when reports areincomplete, inaccurate, or untimely.

Cause

The District's controls over reporting for this program were not operating effectively.

Recommendation

Controls should be implemented to ensure all reports are completed for the program.



105

Current Status

Implemented.

STATE AWARDS FINDINGS




Condition

Significant Deficiency - The residence verification process used by the District during the year wasnot being followed at the Colleges. Students who had a questionable residency were not beingfollowed up by the College personnel and were automatically recorded as resident rather thannonresidents. From our tested sample of 25 students, four were noted as requiring specificverification of their residency status with actually verifying the status. Also, testing for resident andnonresident students participating in organized competitive sports could not be accomplished as theywere not able to provide Athletics Form 1. Therefore, the residency status of the students could notbe verified to the form as required by the compliance guide; however, the status of the students as toresidency/nonresidency was verified to the CCCApply system without exception.

Questioned Costs

None. Further testing was subsequently performed which noted the District had taken the necessarysteps to verify the residency status of the students, had adjusted the Resident and Nonresident FTESwhere necessary, and had assessed fees as necessary to the nonresident students. All studentsmarked with a #2 in the CCCApply system were subsequently reviewed by the District personneland adjusted where necessary in the Annual CCFS-320 Attendance Report provided to the StateChancellor's Office. Enrollment fees associated with these students were subsequently properlyassessed. As the District subsequently took the necessary steps to correct the deficiency andproperly report these students and associated fees, this is considered a control deficiency over thecompliance requirement. Additionally, the Athletics Form 1 was held with the Athletic coaches andnot within the Admissions and Records Office. For those Athletic students selected for testing, theAthletics Form 1 was subsequently received with no exceptions noted in the residency designation.

Effect

Students that did not meet the definition of residency were included in the originally submittedSecond Period CCFS-320 Attendance Report as California residency in error; therefore, the Districtadjusted the status of the students for proper reporting on the Annual CCFS-320 Attendance Reportto properly reflect those students who were recorded as residents and assess the proper enrollmentfees.



106

Cause

The District did not have a control in place to ensure that all students marked #2 in the system werebeing properly verified as residents. Additionally, the Admissions and Records Office was notrequiring the Athletics Form 1 to be maintained with the student enrollment records.

Recommendation

The District should actively verify all students coded as #2 in the CCCApply system. For those notverified, the residency status should be nonresident until the student provides proof of residency;then they can be changed back. Athletics Form 1 should be retained within the Admissions andRecords Office for the student athletes.

Current Status


2013-011 427 CONCURRENT ENROLLMENT FOR K-12 STUDENTS IN COMMUNITY COLLEGECREDIT


A community college district may claim FTES for the attendance of K-12 pupils who take coursesoffered by the district under this concurrent enrollment arrangement only if it complies with thefollowing criteria:

Education Code Sections 48800-48802, 76000-76002, and 84752.

CCR, Title 5, Sections 51004, 51006, 51021, 53410, 55002, 55100, 58100-58108, 58050,

58051(a) (1), 58051.5, 58052, 58056(a), 58058, 58060, and 59300 et seq.

Legal Opinions M 98-17 and M 02-20 issued by the Chancellor's Office, California

Community Colleges.

Legal Advisory 05-01, "Questions and Answers Re. Concurrent Enrollment" - issued

January 5, 2005 by the Chancellor's Office, California Community Colleges.

Condition

Significant Deficiency - Errors in accounting for concurrently enrolled students were noted asfollows:

Out of 25 students tested, four concurrent enrollment forms could not be located at MerrittCollege. Therefore, it was impossible to identify if the District was in compliance with therequirements of the form.



107

Questioned Costs

A total of 457.65 FTES were generated by concurrently enrolled students. Based on the error rate intesting, 73.22 FTES are at risk of being noncompliant due to the District not properly maintainingthe concurrent enrollment forms. The District has reported 205.77 FTES over the funding cap.

Effect

The FTES generated for concurrently enrolled high school students is improperly identified. TheDistrict is at risk of noncompliance with the Education Codes related to concurrently enrolledstudents.

Cause

The District implemented a procedure to ensure enrollment forms for concurrently enrolled studentswere maintained, but it does not appear the procedure is operating effectively.

Recommendation

The District should implement a process within Admissions and Records that will ensure documentssupporting the special admit status are maintained and stored. Students without the necessaryconcurrent enrollment form on file should not be included in the FTES reported by the District.

Current Status

Implemented.

2013-012 CALWORKS - REPORTING


Reports of expenditures within the CalWORKs program are required to be submitted to the StateChancellor's Office by September 30 following year end.

Condition

Significant Deficiency - Alameda College did not submit their year-end expenditure report prior tothe September 30 deadline.

Questioned Costs

There are no questioned costs associated with this finding. The filing of the expenditure report doesnot contain a funding condition.



108

Effect

The District did not meet the State requirements for submitting the expenditure report by therequired date for one campus.

Cause

The District's control over reviewing and submitting the reports was not operating effectively.

Recommendation

The District should implement a control procedure to review and reconcile all amounts reported onthe CalWORKs expenditure report and verify that the reports are submitted in a timely manner.

Current Status

Implemented.

2013-013 DISABLED STUDENT PROGRAMS AND SERVICES (DSPS)


Education Code Section 56006 DSPS Implementing Guidelines

Condition

The District currently serves a total of 1,927 students through the DSPS program. The District hasnot complied with the above guidance regarding record maintenance and retention at the followingColleges:

Laney College:

Two out of fifteen students selected for testing did not have a student file available.

Twelve out of fifteen students selected for testing did not have a Student Educational Plan signed bythe counselor.

Two out of fifteen students selected for testing did not have academic accommodations to describethe service provided. Laney College served a total of 587 students during the 2012-2013 year.Based upon the error rate, 470 student files are at risk of not retaining the proper documentationrequired by the DSPS program guidelines.

Merritt College:

Twelve out of fifteen students selected for testing did not have a Student Educational Plan on file.Merritt College served a total of 421 students during the 2012-2013 year. Based upon the error rate,336 student files are at risk of not retaining the proper documentation required by the DSPS programguidelines.



109

Questioned Costs

To be determined by the State Chancellor's Office and the DSPS program.

Effect

Each College is at risk of not supporting the students served with proper documentation in the actualstudent files.

Cause

Student files are not being reviewed and updated on a regular basis to determine whether allnecessary documentation is included within the student file.

Recommendation

The District should implement a process to ensure the individual College DSPS offices arereviewing and maintaining the student files in accordance with DSPS guidelines. For instance,implementing the use of a checklist and going through each student's file to verify completeness ofthe file each semester the student is served.

Current Status

Implemented.



110

2013-014 EXTENDED OPPORTUNITY PROGRAMS AND SERVICES (EOPS)


Education Code Section 56204 EOPS Implementing Guidelines

Condition

The District currently serves a total of 1,761 students through the EOPS program. The District hasnot complied with the above guidance related to the Student Educational Plan at the followingColleges:

Laney College:

Two out of fifteen students did not have a Student Educational Plan on file. Laney College served atotal of 600 Students through the EOPS program during the 2012-2013 year. Based on the errorrate, 80 Laney College students are at risk of not complying with the Education Plan requirements.

Merritt College:

Six out of fifteen students did not have any documented contact or active participation with the EOPSprogram. One out of the six exceptions did not have a Student Educational Plan on file. MerrittCollege served 484 students through the EOPS program during the 2012-2013 year. Based on theerror rate, 194 Merritt College students are at risk of not complying with the Education Planrequirements.

Questioned Costs

To be determined by the State Chancellor's Office and the EOPS program.

Effect

The above Colleges have potential served students who do not meet the requirements of eligibilityfor the EOPS program as the Colleges are not complying with the EOPS program guidelines that arerequired by the State Chancellor's Office.

Cause

Student files are not being adequately reviewed to ensure that all necessary information is included.

Recommendation

The District should implement consistent procedures to ensure the student files are maintained inaccordance with program guidelines. The implementation and use of a checklist and going througheach student's file to verify completeness of the file toward the end of the semester will assist theprogram directors in ensuring compliance.



111

Current Status

Implemented.


In planning and performing our audit of the financial statements of Peralta Community College District(the District) for the year ended June 30, 2014, we considered its internal control structure in order to determineour auditing procedures for the purpose of expressing our opinion on the financial statements and not to provideassurance on the internal control structure.

However, during our audit, we noted matters that are opportunities for strengthening internal controls andoperating efficiency. The following items represent conditions noted by our audit that we consider importantenough to bring to your attention. This letter does not affect our report dated December 16, 2014, on the financialstatements of the District.

Out of State Travel

Observation

The District's procedure for the approval of out of state travel is not following the board policy. The auditor noted

five out of five tested were all approved by the board after the travel had occurred. Out of state travel is required

by board policy to be approved prior to the travel.

Recommendation

The District should implement a procedure to ensure that all out of state travel is being board approved prior tothe travel being completed. The District should implement a control to verify that all expenses are in accordancewith board policies.


Board Policy 7400 states that "out of state and international travel also require advance approval of the Board ofTrustees. The Chancellor is delegated the authority to approve out of state and international travel if theChancellor determines that the trip is imperative and could not have been anticipated sufficiently in advance forBoard prior approval. All travel must be ratified by the Board of Trustees." The District used this as thecompliance measure. However, this should be the exception not the rule followed by the employees requestingout-of-state travel. The District will include this information in their annual purchasing and accounts payableworkshop at each of the Colleges, in addition to having a discussion in Cabinet and at the Director of Businessand Administration meetings.

Revolving Reconciliations

Observation

The revolving cash bank reconciliations are not being performed and reviewed in a timely manner.

Reconciliations tested showed no evidence of a review procedure over the revolving cash reconciliations.





Board of TrusteesPeralta Community College DistrictPage 2 of 3

Recommendation

The District should implement a monthly procedure to ensure that all reconciliations are completed in a timelymanner, and there is evidence of a review by someone other than the preparer.


The revolving cash account is reconciled monthly; however, the transactions are not posted to the District GeneralLedger. The Director of Fiscal Services will work with the responsible employee in resolving the postings ofthese transactions.

Trust Accounts

Observation

The auditor noted that at several campuses, trust accounts selected for testing had no trust agreements maintained.

According to the California Community Colleges Budget and Accounting Manual (BAM), agency funds are

appropriate when there is a formal written agreement granting the district discretionary authority. There also

should be contractual or regulatory conditions outlined restricting the use of the funds or require the district to

exercise a management role or report the results of operations in its financial statements.

Recommendation

The District should perform an analysis to ensure that all trust agreements are current and meet the BAMrequirements.


The District will work with the Director of Business and Administrative Services at the College to update trustagreements and cash controls. The District will include this item at the Director of Business and Administrationmeetings.

Associated Students

Observation

Merritt College

The bank reconciliations of the Associated Students and the Trust Funds are not being performed and reviewed ina timely manner.

During the review of receipting for the Associate Students' account, it was noted that multiple receipts were notdeposited in a timely manner.

During review of receipting for the food service account, it was noted that multiple receipts were not deposited ina timely manner. The site does not have a consistent receipting process for food service receipts.

There is no review process in place over the receipting of funds that are processed through the bursar's office.

Board of TrusteesPeralta Community College DistrictPage 3 of 3

Berkeley City College

The Associated Students' bank reconciliations are not being performed and reviewed in a timely manner.

The site is not maintaining records of club account balances within the Associated Students. All club revenue andexpenses are recorded in the general ledger, but available club funds are unknown and not being tracked.

Alameda College Trusts

The auditor noted that control deficiencies from the prior year have not been implemented. The College still has

no control designed where trust receipts collected are reviewed by an independent individual prior to deposit to

the bank.

Recommendation

The Colleges should implement procedures and controls to ensure that all bank reconciliations are completed andreviewed in a timely manner. All collections of funds should have efficient controls that ensure that the moniesare being receipted and deposited in a timely manner. These controls should have segregation of duties anddocumentation of the receipting process.


The District will work with the Director of Business and Administrative Services at the Colleges to updatepolicies and procedure manual for cash controls. Bank reconciliations will be reviewed and followed up with bythe Director of Fiscal Services. The District will include this item at the Director of Business and Administrationmeetings.

We appreciate the time and assistance the staff of the District Business Office provided during our audit. We willfollow up on each of the areas noted above during the early stage of our fieldwork for the 2014-2015 fiscal year.

This report is intended solely for the information and use of the Board of Trustees, management, and otherswithin the District and is not intended to be and should not be used by anyone other than these specified parties.


PERALTA COMMUNITYCOLLEGE DISTRICT

ANNUAL FINANCIAL REPORT

JUNE 30, 2013


TABLE OF CONTENTSJUNE 30, 2013

FINANCIAL SECTIONIndependent Auditors' Report 2Management's Discussion and Analysis 4Basic Financial Statements - Primary Government

Statement of Net Position 15Statement of Revenues, Expenses, and Changes in Net Position 16Statement of Cash Flows 17Fiduciary Funds

Statement of Net Position 19Statement of Changes in Net Position 20

Notes to Financial Statements 21

REQUIRED SUPPLEMENTARY INFORMATIONSchedule of Other Postemployment Benefits (OPEB) Funding Progress 55

SUPPLEMENTARY INFORMATIONDistrict Organization 57Schedule of Expenditures of Federal Awards 58Schedule of Expenditures of State Awards 61Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance 62Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation 63Reconciliation of Annual Financial and Budget Report (CCFS-311) WithAudited Fund Balance 66Proposition 30 Education Protection Act (EPA) Expenditure Report 67Reconciliation of Governmental Funds to the Statement of Net Position 68Note to Supplementary Information 69

INDEPENDENT AUDITORS' REPORTSReport on Internal Control Over Financial Reporting and on Compliance and OtherMatters Based on an Audit of Financial Statements Performed in Accordance WithGovernment Auditing Standards 72Report on Compliance for Each Major Program and Report on Internal Control OverCompliance Required by OMB Circular A-133 74Report on State Compliance 78

SCHEDULE OF FINDINGS AND QUESTIONED COSTSSummary of Auditors' Results 81Financial Statement Findings and Recommendations 82Federal Award Findings and Questioned Costs 86State Awards Findings and Questioned Costs 95Summary Schedule of Prior Audit Findings 101

1

FINANCIAL SECTION

2

INDEPENDENT AUDITORS' REPORT


Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities of Peralta CommunityCollege District (the District) as of and for the year ended June 30, 2013, and the related notes to the financialstatements, which collectively comprise the District's basic financial statements as listed in the Table of Contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatements, whether due to fraud or error.


Our responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the District's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we expressno such opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of the business-type activities of the District as of June 30, 2013, and the changes in net position and cashflows for the year then ended in accordance with accounting principles generally accepted in the United States ofAmerica.





3

Changes in Accounting Principles

As discussed in the Notes to the basic financial statements, the accompanying financial statements reflect certainchanges required as a result of the implementation of GASB Statement No. 62 for the year ended June 30, 2013.These changes require a restatement of the beginning net position of the District as discussed in Note 18. Ouropinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require the Management's Discussionand Analysis on pages 4 through 14 and the Schedule of Other Postemployment Benefits (OPEB) FundingProgress on page 55 be presented to supplement the basic financial statements. Such information, although not apart of the basic financial statements, is required by the Governmental Accounting Standards Board, whoconsiders it to be an essential part of financial reporting for placing the basic financial statements in anappropriate operational, economic, or historical context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing the information andcomparing the information for consistency with management's responses to our inquiries, the basic financialstatements, and other knowledge we obtained during our audit of the basic financial statements. We do notexpress an opinion or provide any assurance on the information because the limited procedures do not provide uswith sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the District's basic financial statements. The supplementary information listed in the Table of Contents,including the Schedule of Expenditures of Federal Awards, as required by U.S. Office of Management andBudget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presentedfor purposes of additional analysis and is not a required part of the basic financial statements.

The supplementary information, including the Schedule of Expenditures of Federal Awards, is the responsibilityof management and was derived from and relates directly to the underlying accounting and other records used toprepare the basic financial statements. Such information has been subjected to the auditing procedures applied inthe audit of the basic financial statements and certain additional procedures, including comparing and reconcilingsuch information directly to the underlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additional procedures in accordance withauditing standards generally accepted in the United States of America. In our opinion, the supplementaryinformation is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 5, 2013, onour consideration of the District's internal control over financial reporting and on our tests of its compliance withcertain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that reportis to describe the scope of our testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Thatreport is an integral part of an audit performed in accordance with Government Auditing Standards in consideringthe District's internal control over financial reporting and compliance.


4

Introduction

The following discussion and analysis provides an overview of the financial position and activities ofPeralta Community College District (the District) for the year ended June 30, 2013. The discussion has beenprepared by management and should be read in conjunction with the financial statements and notes which followthis section.

The Peralta Community College District was founded in 1964, and serves six cities in the East Bay Area,including Albany, Alameda, Berkeley, Emeryville, Oakland, and Piedmont. The colleges are Berkeley CityCollege, College of Alameda, Laney College, and Merritt College. The District has a reputation for developingeffective approaches to serving the varied interests and needs of its vibrant community. The District serves over25,000 students a semester, and is one of the top community college districts in California in transferring studentsinto the UC system. Currently, the District has about 750 full-time employees and over 1,535 part-time facultyand staff.

Selected Highlights

The District's primary funding source is based upon apportionment received from the State of California.The primary basis of this apportionment is the calculation of Full-Time Equivalent Students (FTES).During the fiscal year 2012-2013, FTES was 18,264 (including credit and noncredit FTES), as comparedto 18,712 in the fiscal year 2011-2012. This represents a 2.39 percent decrease. FTES is generated at theDistrict's four colleges: Berkeley City College, College of Alameda, Laney College, and Merritt College.

-

5,000

10,000

15,000

20,000

25,000

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

FTES

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Full-Time Equivalent Students 19,414 20,322 22,144 19,871 18,712 18,264

Percentage Increase/(Decrease) 4.68% 8.97% -10.26% -5.83% -2.39%



5

Unrestricted General fund revenues for the year were $110.0 million, an increase of two percent fromprior year's revenue of $108.1 million.

Medical benefits for both employees and retirees decreased three percent over the prior year. The Districtcontinues to provide retirees who were hired prior to July 1, 2004, with lifetime medical benefits. Foremployees hired after July 1, 2004, medical benefits upon retirement are provided until age 65 orMedicare eligibility. The actuarial accrued liability at a seven percent discount rate for the District as ofJune 30, 2013, is $174.7 million. In December 2005, the District issued $153 million in OtherPostemployment Benefits (OPEB) Bonds. The proceeds of the bonds have been placed in a revocabletrust fund, which may be used only to pay or reimburse the District for payment of retiree health benefitcosts or related debt service. In January 2006, the bond proceeds were invested in a strategic allocationthat mirrors the asset allocation of CalPERS.

The District is using Measures A and E bonds to pay for various capital improvements to our educationalfacilities. They include, but are not limited to, the following:

o Investment in our technology infrastructure District-wide.o Renovate and construct classrooms and facilities to enhance the community outreach capabilities

of the District among the numerous ethnic communities living in and served by the District.o District-wide safety systems including disaster preparedness, campus security, and hazardous and

toxic waste handling.o Technological infrastructure for distance learning.o Renovation of student service buildings and facilities at Laney College, Merritt College, and

College of Alameda.o Landscape improvements at Merritt College.o Improvements in laboratories and power supplies District-wide.o Cabling and power upgrade for technology.o Construction of a six story urban campus for Berkeley City College in Berkeley.

The District is using Measure B, special parcel tax, as approved by the voters in June 2012 in thefollowing manner:

o Restore and maintain core academic programs such as Math, Science, and English.o Train students for careers.o Prepare students to transfer to four-year universities.

Statement of Net Position

The Statement of Net Position presents the assets, liabilities, and net position of the District as of the end of thefiscal year and was prepared using the accrual basis of accounting, which is similar to the accounting basis usedby most private-sector organizations. The Statement of Net Position is a point-of-time financial statement whosepurpose is to present to the reader a fiscal snapshot of the District. The Statement of Net Position presents end-of-year data concerning assets, liabilities, and net position.



6

From the data presented, the reader of the Statement of Net Position is able to determine the assets available tocontinue operations of the District. The reader is also able to determine how much the District owes to vendorsand employees. Finally, the Statement of Net Position provides a picture of the assets and their availability forexpenditure by the District.

The difference between total assets and total liabilities is one indicator of the current financial condition of theDistrict; the change in net position is an indicator of whether the overall financial condition has improved orworsened during the year. Assets and liabilities are generally measured using current values. One notableexception is capital assets, which are stated at historical cost, less accumulated depreciation.

The net position is divided into three major categories. The first category, invested in capital assets, provides theequity amount in property, plant, and equipment owned by the District. The second category is expendablerestricted assets; these assets are available for expenditure by the District, but must be spent for purposes asdetermined by external entities and/or donors that have placed time or purpose restrictions on the use of the assets.The final category is unrestricted net position, which is available to the District for any lawful purpose of theDistrict.



7

A summary of the Statement of Net Position as of June 30, 2013 and June 30, 2012, is presented below:

NET POSITIONAs of June 30,


2013 2012 (Decrease) ChangeASSETSCurrent Assets

Cash and investments 384,958$ 363,512$ 21,446$ 5.9%Accounts receivable 35,217 40,700 (5,483) -13.5%Other current assets 1,100 2,648 (1,548) -58.5%

Total Current Assets 421,275 406,860 14,415 3.5%Noncurrent Assets

Deferred costs on issuance 15,454 16,294 (840) -5.2%Capital assets (net of depreciation) 400,414 384,728 15,686 4.1%

Total Noncurrent Assets 415,868 401,022 14,846 3.7%TOTAL ASSETS 837,143 807,882 29,261 3.6%

LIABILITIESCurrent Liabilities

Accounts payable and accrued liabilities 32,663 24,317 8,346 34.3%Deferred revenue 3,365 4,927 (1,562) -31.7%Other current liabilities 31,089 35,600 (4,511) -12.7%Current portion of long-term obligations 13,467 11,447 2,020 17.6%

Total Current Liabilities 80,584 76,291 4,293 5.6%Noncurrent Liabilities

Bonds payable 629,535 635,635 (6,100) -1.0%Other long-term liabilities 35,184 30,747 4,437 14.4%

Long-term obligations 664,719 666,382 (1,663) -0.2%TOTAL LIABILITIES 745,303 742,673 2,630 0.4%

DEFERRED INFLOWS OF RESERVES

Interest rate SWAPs 11,760 - 11,760 100.0%NET POSITION

Net investment in capital assets 79,568 80,252 (684) -0.9%Restricted for:

Debt service 13,973 10,257 3,716 36.2%Capital projects 4,108 511 3,597 703.9%Other activities 13,027 8,454 4,573 54.1%

Unrestricted (30,596) (34,265) 3,669 10.7%TOTAL NET POSITION 80,080$ 65,209$ 14,871$ 22.8%



8

Invested inCapital Assets,Net of Related

Debt -129%

Restricted forDebt Service -

20%

Restricted forCapital Projects -

1%

Restricted forOther Activities -

16%

Unrestricted -(66%)

NET POSITION - JUNE 30, 2013

Approximately 89 percent of the cash balance is cash deposited in the Alameda County Treasury Pool andapproximately 11 percent is cash deposited in local financial banking institutions. All funds are investedin accordance with Board Policy, which emphasizes prudence, safety, liquidity, and return on investment.The Statement of Cash Flows contained within these financial statements provides greater detailregarding the sources and uses of cash, and the net decrease in cash during fiscal years 2012-2013 and2011-2012.

The majority of the accounts receivable balance is from Federal and State sources for apportionment,grant and entitlement programs, and student receivables. Receivables totaling approximately$18.3 million for the June 2013 apportionment and categorical deferrals, approximately $6.1 million forreimbursements from Federal and State agencies related to grant awards, and $4.3 million for studentreceivables.

Capital assets had a net increase of $15.7 million. The District had additions of $29.9 million related toconstruction in progress. Depreciation expense of $15.3 million was recognized during 2012-2013. Thecapital asset section of this discussion and analysis provides greater detail.

Accounts payable are amounts due as of the fiscal year end for goods and services received as of June 30,2013. Total accounts payable are $22.7 million; $8.0 million of the balance was accrued in the CapitalProjects fund, Bond fund, and Special Revenue fund related to capital outlay. Two million dollars is foramounts due to or on behalf of employees for wages and benefits.



9

The District's noncurrent liabilities primarily consist of bonds payable, related to the issuance of Series B,C, and D of the District General Obligation Bonds; Election 2000 Series A and B of the District GeneralObligation Bonds; Election 2005 Series A, B, and C of the District General Obligation Bonds; Election2006 District General Obligation Bonds; and Election 2009 and Other Postemployment Benefit Bonds.The face value of these bonds at the time of initial sale totaled $683 million and $431.4 million representsthe remaining long-term debt to satisfy these obligations.

Statement of Revenues, Expenses, and Change in Net Position

The Statement of Revenues, Expenses, and Change in Net Position presents the financial results of the District'soperations, as well as its nonoperating activities. The distinction between these two activities involves theconcepts of exchange and nonexchange. Operating activities are those in which a direct payment or exchange ismade for the receipt of specified goods or services. For example, tuition fees paid by the student are consideredan exchange for instructional services. The receipt of State apportionments and property taxes, however, do notinclude this exchange relationship between the payment and receipt of specified goods or services. Theserevenues and related expenses are classified as nonoperating activities. It is because of the methodology used tocategorize between operating and nonoperating, combined with the fact that the primary source of funding thatsupports the District's instructional activities comes from State apportionment and local property taxes, results in anet operating loss for the District's operations.



10

The Statement of Revenues, Expenses, and Changes in Net Position for the years ended June 30, 2013 andJune 30, 2012, is summarized below:

Statement of Revenues, Expenses, and Changes in Net Positionfor the Years Ended June 30,


2013 2012* (Decrease) ChangeOperating Revenues

Tuition and fees 14,557$ 13,709$ 848$ 6.2%Other revenues 1,853 1,636 217 100%

Total Operating Revenues 16,410 15,345 1,065 6.9%Operating Expenses

Salaries and benefits 123,037 117,759 5,278 4.5%Supplies and maintenance 25,679 26,570 (891) -3.4%Student financial aid 38,326 36,458 1,868 5.1%Depreciation 15,348 15,530 (182) -1.2%

Total Operating Expenses 202,390 196,317 6,073 3.1%Loss on Operations (185,980) (180,972) (5,008) -2.8%

Nonoperating Revenues and (Expenses)State apportionments 58,547 67,695 (9,148) -13.5%Grants and contracts 54,592 52,727 1,865 3.5%Property taxes 73,572 53,788 19,784 36.8%State revenues 5,122 4,874 248 5.1%Net investment income (2,147) (32,904) 30,757 -93.5%Other nonoperating revenues and transfers 10,038 13,344 (3,306) -24.8%

Total Nonoperating Revenues (Expenses) 199,724 159,524 40,200 25.2%Other Revenues

State and local capital income 1,127 1,402 (275) -19.6%Total Other Revenues 1,127 1,402 (275) -19.6%Net Increase (Decrease) in Net Position 14,871$ (20,046)$ 34,917$ 174.2%

* As restated.



11

Tuition and fees8%

Stateapportionments

38%

Grants andcontracts

30%

Property taxes31%

State revenues4%

Net investmentincome(19%)

Other operatingand nonoperating

revenue8%

TOTAL REVENUES - JUNE 30, 2013

Salaries andbenefits

60%

Supplies andmaintenance

13%

Student financialaid

19%

Depreciation7%

Interest expense1%

TOTAL EXPENSES - JUNE 30, 2013



12

The primary components of tuition and fees are the $46 per unit enrollment fee that is charged to allstudents registering for classes and the additional $190 per unit fee that is charged to all non-residentstudents.

Personnel costs account for 61 percent of operating expenses in fiscal year 2013 compared to 51 percentin 2012. The balance of operating expenses is for supplies, materials, other operating expenses, financialaid, equipment, maintenance, and depreciation expense.

The principal components of the District's nonoperating revenue are: noncapital Federal and State grants,State apportionment, local property taxes, other State funding, and interest income. With the exception ofinterest income, the majority of this revenue is received to support the District's instructional activities.The amount of State general apportionment received by the District is dependent upon the number ofFTES generated and reported to the State, less amounts received from enrollment fees and local propertytaxes. Increases in either of the latter two revenue-categories lead to a corresponding decrease inapportionment.

A schedule of functional expenses is displayed below:

Supplies,Material,and Other

Salaries Operating Studentand Expenses Financial

Benefits and Services Aid Depreciation TotalInstructional activities 60,735,434$ 1,971,839$ -$ -$ 62,707,273$

Academic support 6,560,053 500,144 - - 7,060,197Student services 11,255,670 2,321,967 - - 13,577,637Plant operations and

maintenance 29,948,066 14,782,601 - - 44,730,667Instructional support

services 10,428,586 185,383 - - 10,613,969Community services and

economic development 258,655 49,140 - - 307,795Ancillary services and

auxiliary operations 2,870,090 3,421,551 - - 6,291,641Student aid - - 38,326,487 - 38,326,487Physical property and

related acquisitions 980,196 2,445,928 - - 3,426,124Unallocated expense - - - 15,347,535 15,347,535

Total 123,036,750$ 25,678,553$ 38,326,487$ 15,347,535$ 202,389,325$



13

Statement of Cash Flows

The Statement of Cash Flows provides information about cash receipts and cash payments during the fiscal year.This Statement also helps users assess the District's ability to generate positive cash flows, meet obligations asthey come due, and the need for external financing.

The Statement of Cash Flows is divided into five parts. The first part reflects operating cash flows and shows thenet cash used by the operating activities of the District. The second part details cash received for nonoperating,noninvesting, and noncapital financing purposes. The third part shows cash flows from capital and relatedfinancing activities. It deals with the cash used for the acquisition and construction of capital and related items.The fourth part provides information from investing activities and the amount of interest received. The lastsection reconciles the net cash used by operating activities to the operating loss reflected on the Statement ofRevenues, Expenses, and Changes in Net Position.

The Statement of Cash Flows for the fiscal years ended June 30, 2013 and June 30, 2012, is summarized below:

Statement of Cash Flowsfor the Years Ended June 30,

(in thousands)2013 2012

Cash FromOperating activities (160,175)$ (161,680)$Noncapital financing activities 176,361 166,093Capital financing activities (30,313) (26,369)Investing activities 9,439 (15,786)

Net Change in Cash (4,688) (37,742)Cash, Beginning of Year 166,015 203,757Cash, End of Year 161,327$ 166,015$

Cash receipts from operating activities are from student tuition. Use of cash is for payments toemployees, vendors, and students related to the instructional program.

State apportionment received based on the workload measures generated by the District accounts for39 percent and 31 percent of noncapital financing for both fiscal years 2013 and 2012, respectively. Cashreceipts from Federal and State grants represent 31 percent in 2013 and 33 percent in 2012. Cashreceived from property taxes accounts for 25 percent in fiscal year 2013 and 23 percent in fiscal year2012 of the cash generated in this section.

The majority of the activity in the capital and related financing activities is for the purchase of capitalassets (buildings, building improvements, and equipment).

Cash from investing activities is purchase of investments and investment income for interest earned oncash in bank and cash invested through the Alameda County pool, and on investments with local bankinginstitutions. Approximately $0.4 million and $0.8 million were received from the Alameda County poolfor fiscal years 2013 and 2012.



14


Governmental Accounting Standards Board (GASB) issued in 2004 Accounting Standards No. 43 and No. 45 arefor retiree health benefits. These standards apply to all public employers that pay any part of the cost of retireehealth benefits for current or future retirees. The District had an actuarial study performed in 2013 to identify thecost and amount needed to fund on an annual basis retiree health benefits. This study determined the District'sUnfunded Actuarial Accrued Liability to be $174 million.

Economic Factors that May Affect the Future

In contrast to recent budgets, the District enters its fiscal year 2013-2014 with optimism. This sense of optimismstems from both new revenues included in the 2013-2014 budget, parcel tax revenue, and enrollment growth(access) revenue, as well as the absence of workload reductions and threats of mid-year reductions. As a result ofefforts and difficult decisions made during the previous three years, the District is now positioned to restore thenecessary cuts needed to balance the budget and focus on restoring access and improving services to our studentsand community. Due to the passage of the parcel tax and Proposition 30 in the prior year, the District has beenable to restore 41 faculty positions, 15 classified positions, 4 dean positions, and created 1 new position at eachcollege to assist with the associated student body organizations, student clubs, and trusts. This is in addition toensuring sufficient part-time faculty budgets existed to support the colleges' course offerings to students. TheDistrict is confident that as the State's economy improves, so will the ability to continue these restoration efforts.

For fiscal year 2013-2014, it is expected that the District will be compensated for serving 18,229 full-timeequivalent students. Should the District serve only those students which it is funded for, this would equate to a1.63 percent increase as compared to the prior fiscal year. In November of 2013, the Legislative Analyst Officereleased a report projecting that the State will end its 2013-2014 fiscal year with a $2.2 billion operating surplusand further projects an operating surplus of $3.2 billion during the 2013-2014 fiscal year.

As the fiscal year 2013-2014 progresses, the District is exercising diligence in monitoring all budgets andcontinues to spend within its parameters. As the budget development begins for fiscal year 2014-2015, theDistrict will carefully watch and evaluate the Governor's January budget proposal, as well as any changescontained with the May revision. Working through the shared governance structures, the 2014-2015 budget willcontain plans to ensure the institution remains financially strong and maintains the ability to carry out its coremission to educating students.

Contacting the District's Financial Management

This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with ageneral overview of the District's finances and to demonstrate the District's accountability for the money itreceives. If you have questions about this report, or need any additional financial information, contact the Districtat: Peralta Community College District, 333 East 8th Street, Oakland, California 94606.


STATEMENT OF NET POSITION - PRIMARY GOVERNMENTJUNE 30, 2013


15

ASSETSCURRENT ASSETS

Cash and cash equivalents 17,779,411$Investments 1,481,952Restricted investments 353,936,214Interest rate SWAP 11,759,892Accounts receivable 30,956,166Student receivables, net 4,260,394

Due from fiduciary funds 7,966Prepaid expenses 72,184Deferred costs on issuance - current portion 348,372Deferred costs on refunding - current portion 490,515Inventories 181,431

Total Current Assets 421,274,497NONCURRENT ASSETS

Deferred costs on issuance - noncurrent portion 7,115,563Deferred costs on refunding - noncurrent portion 8,338,755Nondepreciable capital assets 108,120,191Depreciable capital assets, net of depreciation 292,293,724

Total Capital Assets 400,413,915Total Noncurrent Assets 415,868,233TOTAL ASSETS 837,142,730

LIABILITIESCURRENT LIABILITIES

Deficit cash in county treasury 21,095,819Accounts payable 22,724,390TRANs payable 8,935,000Accrued interest payable 9,939,227

Due to other funds 4,400Deferred revenue 3,364,591SWAP liability 1,053,371General obligation bonds payable - current portion 11,800,000Other postemployment benefits bonds - current portion 1,667,217

Total Current Liabilities 80,584,015NONCURRENT LIABILITIES

Claims liability 2,795,135Load banking 1,832,325Compensated absences payable - noncurrent portion 3,394,795General obligation bonds payable - noncurrent portion 419,613,433Other postemployment benefits bonds - noncurrent portion 209,921,601Other postemployment benefits obligation - noncurrent portion 27,161,293

Total Noncurrent Liabilities 664,718,582TOTAL LIABILITIES 745,302,597

DEFERRED INFLOWS OF RESOURCESInterest rate SWAPs 11,759,892

NET POSITIONNet investment in capital assets 79,568,087Restricted for:

Debt service 13,973,122Capital projects 4,108,301Other activities 13,027,195

Unrestricted (30,596,464)TOTAL NET POSITION 80,080,241$


STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION - PRIMARY GOVERNMENTFOR THE YEAR ENDED JUNE 30, 2013


16

OPERATING REVENUESStudent Tuition and Fees 31,661,555$

Less: Scholarship discount and allowance (17,104,985)Net tuition and fees 14,556,570

Other Operating Revenues 1,853,103TOTAL OPERATING REVENUES 16,409,673

OPERATING EXPENSESSalaries 75,402,147Employee benefits 47,634,603Supplies, materials, and other operating expenses and services 25,678,553Student financial aid 38,326,487Depreciation 15,347,535

TOTAL OPERATING EXPENSES 202,389,325

OPERATING LOSS (185,979,652)

NONOPERATING REVENUES (EXPENSES)State apportionments, noncapital 58,547,385Federal grants and contracts 44,861,988State grants and contracts 9,729,712Local property taxes, levied for general purposes 42,288,630Taxes levied for other specific purposes 31,283,589State taxes and other revenues 5,121,810Interest income 7,956,199Net unrealized gain on investments 16,719,358Interest expense on capital related debt (26,822,810)Investment income on capital asset-related debt, net 31,442Transfer to agency fund (511,316)Other nonoperating revenue 10,517,415

TOTAL NONOPERATING REVENUES (EXPENSES) 199,723,402

INCOME BEFORE OTHER REVENUES 13,743,750

Local revenues, capital 1,127,185

CHANGE IN NET POSITION 14,870,935NET POSITION, BEGINNING OF YEAR, AS RESTATED (see Note 18) 65,209,306NET POSITION, END OF YEAR 80,080,241$


STATEMENT OF CASH FLOWS - PRIMARY GOVERNMENTFOR THE YEAR ENDED JUNE 30, 2013


17

CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and fees 14,558,090$

Other operating income 1,853,103

Payments to or on behalf of employees (119,109,655)

Payments made to students from financial aid (19,149,842)

Payments to vendors for supplies and services (38,326,487)

Net Cash Flows From Operating Activities (160,174,791)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State apportionments 68,884,079

Federal and State grants and contracts 54,006,712

Property taxes - nondebt related 44,589,884

Other State revenues 5,615,233

Other nonoperating revenues 3,265,608

Net Cash Flows From Noncapital Financing Activities 176,361,516

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIESLocal capital grants 1,127,185

Taxes levied for debt repayment 31,283,589

Accretion of bonds 7,654,407

Acquisition and construction of capital assets (28,897,252)

Principal paid on capital debt (11,734,036)

Deferred costs of issuance 162,318

Interest paid on capital debt and leases (29,909,603)

Net Cash Flows From Capital and Related Financing Activities (30,313,392)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (15,268,210)

Investment income 24,706,999

Net Cash Flows From Investing Activities 9,438,789

NET CHANGE IN CASH AND CASH EQUIVALENTS (4,687,878)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 166,015,251CASH AND CASH EQUIVALENTS, END OF YEAR 161,327,373$


STATEMENT OF CASH FLOWS - PRIMARY GOVERNMENT, CONTINUEDFOR THE YEAR ENDED JUNE 30, 2013


18

RECONCILIATION OF NET OPERATING LOSS TO NET CASH FLOWS

FROM OPERATING ACTIVITIES

Operating Loss (185,979,652)$

Adjustments to Reconcile Operating Loss to Net Cash Flows From

Operating Activities:

Depreciation 15,347,535

Changes in Operating Assets and Liabilities:

Receivables, net 575,252

Inventories (44,378)

Prepaid expenses 1,600,037

Accounts payable and accrued liabilities 4,969,164

Deferred revenue (1,079,010)

Compensated absences 544,679

Claims liability 17,135

Load banking 94,538

Other postemployment benefits 3,779,909

Total Adjustments 25,804,861Net Cash Flows From Operating Activities (160,174,791)$

CASH AND CASH EQUIVALENTS CONSIST OF THE FOLLOWING:

Cash in banks 17,779,411$

Investment in county treasury 143,547,962Total Cash and Cash Equivalents 161,327,373$

NONCASH TRANSACTIONSOn behalf payments for benefits 2,227,750$


STATEMENT OF FIDUCIARY NET POSITIONJUNE 30, 2013


19

Trust AgencyFunds Funds

ASSETSCash and cash equivalents 484,148$ 1,088,265$Investments 620,621 -Accounts receivable 194 -Due from other funds 4,400 -

Fixed assets 2,555 -Total Assets 1,111,918 1,088,265$

LIABILITIESAccounts payable 202,612 -$Due to other funds 7,966 -Due to student groups 11,145 1,088,265

Total Liabilities 221,723 1,088,265$

NET POSITIONUnreserved 890,195

Total Net Position 890,195$


STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFOR THE YEAR ENDED JUNE 30, 2013


20

Trust

FundsADDITIONS

Local revenues 222,158$

DEDUCTIONSClassified salaries 36,756Employee benefits 1,480Services and operating expenditures 120,571Capital outlay 47,844

Total Deductions 206,651

OTHER FINANCING SOURCESOperating transfers in 511,316

Total Other Financing Sources 511,316

Change in Net Position 526,823Net Position - Beginning 363,372Net Position - Ending 890,195$



21

NOTE 1 - ORGANIZATION

Peralta Community College District (the District) was established in 1964 as a political subdivision of the State ofCalifornia and is a comprehensive, public, two-year institution offering educational services to residents of thesurrounding area. The District operates under a locally elected seven-member Board of Trustees form ofgovernment, which establishes the policies and procedures by which the District operates. The Board of Trusteesmust approve the annual budgets for the General Fund, special revenue funds, and capital project funds, but thesebudgets are managed at the department level. Currently, the District operates four college campuses located inAlameda, Oakland, and Berkeley, California. While the District is a political subdivision of the State ofCalifornia, it is legally separate and is independent of other State and local governments, and it is not a componentunit of the State in accordance with the provisions of Governmental Accounting Standards Board (GASB)Statement No. 61.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Entity

The District has adopted GASB Statement No. 61, Determining Whether Certain Organizations are ComponentUnits. This Statement amends GASB Statement No. 14, The Financial Reporting Entity, to provide additionalguidance to determine whether certain organizations, for which the District is not financially accountable, shouldbe reported as component units based on the nature and significance of their relationship with the District. Thethree components used to determine the presentation are: providing a "direct benefit", the "environment andability to access/influence reporting", and the "significance" criterion. As defined by accounting principlesgenerally accepted in the United States of America and established by the Governmental Accounting StandardsBoard, the financial reporting entity consists of the primary government, the District.

Peralta Community College District and the Golden West Financing Authority, as represented by the 2005General Obligation Revenue Bonds, Series B, have a financial and operational relationship that meets thereporting definition antenna of GASB Statement No. 14, The Financial Reporting Entity, for the inclusion of therelated debt. Therefore, the related debt has been included in the financial statements of the District.

The following entity does not meet the above criteria for inclusion as a component unit of the District.

Peralta Colleges Foundation, Inc.

Peralta Colleges Foundation, Inc. (the Foundation) is a legally separate, tax-exempt organization. TheFoundation acts primarily as a fundraising organization to provide grants and scholarships to students andsupport to employees, programs, and departments of the District. Although the District does not control thetiming or amount of receipts from the Foundation, the majority of resources or income thereon that theFoundation holds and invests is restricted to the activities of the District by the donors. Because the amountof receipts from the Foundation is insignificant to the District as a whole, the Foundation is not considered acomponent unit of the District with the inclusion of the statements as a discretely presented component unit.Financial statements for the Foundation can be obtained from the Foundation's Business Office at333 East 8th Street, Oakland, California 94606.



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Measurement Focus, Basis of Accounting, and Financial Statement Presentation

For financial reporting purposes, the District is considered a special-purpose government engaged only inbusiness-type activities as defined by GASB Statements No. 34 and No. 35 as amended by GASB StatementsNo. 37 and No. 38. This presentation provides a comprehensive entity-wide perspective of the District's assets,liabilities, activities, and cash flows and replaces the fund group perspective previously required. Accordingly,the District's financial statements have been presented using the economic resources measurement focus and theaccrual basis of accounting. The significant accounting policies followed by the District in preparing thesefinancial statements are in accordance with accounting principles generally accepted in the United States ofAmerica as prescribed by GASB. Additionally, the District's policies comply with the California CommunityColleges Chancellor's Office Budget and Accounting Manual. Under the accrual basis, revenues are recognizedwhen earned, and expenses are recorded when an obligation has been incurred. All material intra-agency andintra-fund transactions have been eliminated.

Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value,are classified as operating revenues. These transactions are recorded on the accrual basis when the exchangetakes place. Available means that the resources will be collected within the current fiscal year or are expected tobe collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District,operating revenues consist primarily of student fees.

Nonexchange transactions, in which the District receives value without directly giving equal value in return,include State apportionments, property taxes, Federal and State grants, entitlements, and donations. Property taxrevenue is recognized in the fiscal year received. State apportionment revenue is earned based upon criteria setforth from the Community Colleges Chancellor's Office and includes reporting of full-time equivalent students(FTES) attendance. The corresponding apportionment revenue is recognized in the period the FTES aregenerated. Revenue from Federal and State grants and entitlements are recognized in the fiscal year in which alleligibility requirements have been satisfied. Eligibility requirements may include time and/or purposerequirements.

Operating expenses are costs incurred to provide instructional services including support costs, auxiliary services,and depreciation of capital assets. All other expenses not meeting this definition are reported as nonoperating.Expenses are recorded on the accrual basis as they are incurred, when goods are received, or services arerendered.

The District reports are based on all applicable GASB pronouncements, as well as applicable FinancialAccounting Standards Board (FASB) pronouncements issued on or before November 30, 1989, unless thosepronouncements conflict or contradict GASB pronouncements. The District has not elected to apply FASBpronouncements after that date.

The financial statements are presented in accordance with the reporting model as prescribed in GASB StatementNo. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments,and GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for PublicColleges and Universities, as amended by GASB Statements No. 37 and No. 38. The business-type activitiesmodel followed by the District requires the following components of the District's financial statements:



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Management's Discussion and Analysis Basic Financial Statements for the District as a whole including:

o Statement of Net Position - Primary Governmento Statement of Revenues, Expenses, and Changes in Net Position - Primary Governmento Statement of Cash Flows - Primary Governmento Financial Statements for the Fiduciary Funds including:

o Statement of Fiduciary Net Positiono Statement of Changes in Fiduciary Net Position

Notes to the Financial Statements

Cash and Cash Equivalents

The District's cash and cash equivalents are considered to be unrestricted cash on hand, demand deposits, andshort-term unrestricted investments with original maturities of three months or less from the date of acquisition.Cash equivalents also include unrestricted cash with county treasury balances for purposes of the Statement ofCash Flows. Restricted cash and cash equivalents represent balances restricted by external sources such as grantsand contracts or specifically restricted for the repayment of capital debt.

Investments

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments andExternal Investment Pools, investments held at June 30, 2013, are stated at fair value. Fair value is estimatedbased on quoted market prices at year-end. Short-term investments have an original maturity date greater thanthree months, but less than one year at time of purchase. Long-term investments have an original maturity ofgreater than one year at the time of purchase.

Restricted Assets

Restricted assets arise when restrictions on their use change the normal understanding of the availability of theasset. Such constraints are either imposed by creditors, contributors, grantors, or laws of other governments orimposed by enabling legislation. Restricted assets represent investments required to be set aside by the Districtfor the purpose of satisfying certain requirements.

Accounts Receivable

Accounts receivable include amounts due from the Federal, State, and/or local governments or private sources, inconnection with reimbursement of allowable expenditures made pursuant to the District's grants and contracts.Accounts receivable also consist of tuition and fee charges to students and auxiliary enterprise services providedto students, faculty, and staff, the majority of each residing in the State of California.

Prepaid Expenses

Prepaid expenses represent payments made to vendors and others for services that will benefit periods beyondJune 30, 2013.



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Inventories

Inventories consist primarily of operating supplies. Inventories are stated at cost, utilizing the weighted averagemethod. The cost is recorded as an expense as the inventory is consumed.

Capital Assets and Depreciation

Capital assets are long-lived assets of the District as a whole and include land, construction in progress, buildings,leasehold improvements, and equipment. The District maintains an initial unit cost capitalization threshold of$49,999 and an estimated useful life greater than one year. Assets are recorded at historical cost, or estimatedhistorical cost, when purchased or constructed. Donated capital assets are recorded at estimated fair market valueat the date of donation. Improvements to buildings and land that significantly increase the value or extend theuseful life of the asset are capitalized; the costs of routine maintenance and repairs that do not add to the value ofthe asset or materially extend an asset's life are charged as an operating expense in the year in which the expensewas incurred. Major outlays for capital improvements are capitalized as construction in progress as the projectsare constructed.

Depreciation of capital assets is computed and recorded utilizing the straight-line method. Estimated useful livesof the various classes of depreciable capital assets are as follows: buildings, 50 years; improvements, 20 to40 years; equipment, 5 to 20 years; vehicles, 5 to 10 years.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities, and long-term obligations are reported in the entity-wide financial statements.

Deferred Issuance Costs, Refunding Costs, Premiums, and Discounts

Bond premiums and discounts, as well as issuance costs and refunding costs, are deferred and amortized over thelife of the bonds using the straight-line method.


Accumulated unpaid vacation benefits are accrued as a liability as the benefits are earned. The entirecompensated absence liability is reported on the government-wide financial statements. For governmental funds,the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such asemployee resignations and retirements that occur prior to year end that have not yet been paid with expendableavailable financial resources. These amounts are reported in the fund from which the employees who haveaccumulated leave are paid. The District also participates in "load-banking" with eligible academic employeeswhereby the employee may teach extra courses in one period in exchange for time off in another period.



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Sick leave is accumulated without limit for each employee based upon negotiated contracts. Leave with pay isprovided when employees are absent for health reasons; however, the employees do not gain a vested right toaccumulated sick leave. Employees are never paid for any sick leave balance at termination of employment orany other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District'sfinancial statements. However, retirement credit for unused sick leave is applicable to all classified employeeswho retire after January 1, 1999. At retirement, each member will receive .004 year of service credit for each dayof unused sick leave. Retirement credit for unused sick leave is applicable to all academic employees and isdetermined by dividing the number of unused sick days by the number of base service days required to completethe last school year, if employed full time.

Deferred Revenue

Deferred revenue arises when potential revenue does not meet both the "measurable" and "available" criteria forrecognition in the current period or when resources are received by the District prior to the incurrence ofqualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when theDistrict has a legal claim to the resources, the liability for deferred revenue is removed from the combined balancesheet and revenue is recognized. Deferred revenues include (1) amounts received for tuition and fees prior to theend of the fiscal year that are related to the subsequent fiscal year and (2) amounts received from Federal andState grants received before the eligibility requirements are met are recorded as deferred revenue.


Noncurrent liabilities include bonds payable, compensated absences, claims payable, load banking, and OPEBobligations with maturities greater than one year.

Net Position

GASB Statements No. 34 and No. 35 report equity as "Net Position" and represent the difference between assetsand liabilities. The net position is classified according to imposed restrictions or availability of assets forsatisfaction of District obligations according to the following net asset categories:

Net Investment in Capital Assets consists of capital assets, net of accumulated depreciation and outstandingprincipal balances of debt attributable to the acquisition, construction, or improvement of those assets. To theextent debt has been incurred, but not yet expended for capital assets, such accounts are not included as acomponent invested in capital assets – net of related debt.

Restricted: Net position is reported as restricted when there are limitations imposed on their use, eitherthrough enabling legislation adopted by the District, or through external restrictions imposed by creditors,grantors, or laws or regulations of other governments. The District first applies restricted resources when anexpense is incurred for purposes for which both restricted and unrestricted resources are available.

Unrestricted: Net position that is not subject to externally imposed constraints. Unrestricted net positionmay be designated for specific purposes by action of the Board of Trustees or may otherwise be limited bycontractual agreements with outside parties.



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When both restricted and unrestricted resources are available for use, it is the District's practice to use restrictedresources first and the unrestricted resources when they are needed. At June 30, 2013, the District reported$31,108,618 in restricted net position.

State Apportionments

Certain current year apportionments from the State are based on financial and statistical information of theprevious year. Any corrections due to the recalculation of the apportionment are made in February of thesubsequent year. When known and measurable, these recalculations and corrections are accrued in the year inwhich the FTES are generated.

Property

Secured property taxes attach as an enforceable lien on property as of January 1. The Alameda County Assessoris responsible for assessment of all taxable real property. Taxes are payable in two installments on November 1and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes arepayable in one installment on or before August 31. The County of Alameda bills and collects the taxes on behalfof the District. Local property tax revenues are recorded in the unrestricted General Fund when received.

The voters of the District passed a general obligation bond in 2006 for the acquisition, construction, andremodeling of certain District property. As a result of the passage of the bond, property taxes are assessed on theproperty within the District specifically for the repayment of the debt incurred. The taxes are assessed, billed, andcollected as noted above and set aside for repayment to the bond holders in the Bond Interest and RedemptionFund.

The voters of the District passed a Parcel Tax on June 5, 2012, for the general revenues of the District. The parceltax levys $48 per parcel for eight years to provide for core academic programs, training, and education of studentsattending the District and transferring to university. The taxes are assessed, billed, and collected as noted aboveand remitted to the District when collected.

Board of Governors Grants (BOGG) and Fee Waivers

Student tuition and fee revenue is reported net of allowances and fee waivers approved by the Board of Governorsthrough BOGG fee waivers in the Statement of Revenues, Expenses, and Changes in Net Position. Scholarshipdiscounts and allowances represent the difference between stated charges for enrollment fees and the amount thatis paid by students or third parties making payments on the students' behalf. To the extent that fee waivers havebeen used to satisfy tuition and fee charges, the District has recorded a scholarship discount and allowance.

Federal Financial Assistance Programs

The District participates in federally funded Pell Grants, SEOG Grants, and Federal Work-Study programs, as well asother programs funded by the Federal government. Financial aid to students is either reported as operating expensesor scholarship allowances, which reduce revenues. The amount reported as operating expense represents the portionof aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aidprovided to students in the form of reduced tuition. These programs are audited in accordance with the Single AuditAct Amendments of 1996, and the U.S. Office of Management and Budget's revised Circular A-133, Audits of States,Local Governments, and Non-Profit Organizations and the related Compliance Supplement.



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On Behalf Payments

GASB Statement No. 24 requires direct on behalf payments for fringe benefits and salaries made by one entity toa third party recipient for the employees for another legally separate entity be recognized as revenues andexpenditures by the employer entity. The State of California makes direct on behalf payments to the CaliforniaState Teachers' Retirement System (CalSTRS) and the California Public Employees' Retirement Systems(CalPERS) on behalf of all community colleges in California.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Changes in Accounting Principles

In March 2012, GASB issued Statement No. 62, Codification of Accounting and Financial Reporting GuidanceContained in Pre November 30, 1989 FASB and AICPA Pronouncements. GASB Statement No. 62 establishesstandards of financial accounting and reporting for capitalizing interest cost as a part of the historical cost ofacquiring certain assets. For the purposes of applying this Statement, interest cost includes interest recognized onobligations having explicit interest rates and interest imputed on certain types of payables, as well as interestrelated to capital leases.

The District has implemented the provisions of this Statement for the year ended June 30, 2013. See Note 18 formore information.

In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources,Deferred Inflows of Resources, and Net Position. This Statement provides financial reporting guidance fordeferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements ofFinancial Statements, introduced and defined those elements as a consumption of net assets by the governmentthat is applicable to a future reporting period, and an acquisition of net assets by the government that is applicableto a future reporting period, respectively. Previous financial reporting standards do not include guidance forreporting those financial statement elements, which are distinct from assets and liabilities.

Concepts Statement No. 4 also identifies net position as the residual of all other elements presented in a statementof financial position. This Statement amends the net asset reporting requirements in Statement No. 34, BasicFinancial Statements—and Management's Discussion and Analysis—for State and Local Governments, and otherpronouncements by incorporating deferred outflows of resources and deferred inflows of resources into thedefinitions of the required components of the residual measure and by renaming that measure as net position,rather than net assets.

The District has implemented the provisions of this Statement for the year ended June 30, 2013.



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New Accounting Pronouncements

In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. ThisStatement establishes accounting and financial reporting standards that reclassify, as deferred outflows ofresources or deferred inflows of resources, certain items that were previously reported as assets and liabilities andrecognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assetsand liabilities.

Concepts Statement No. 4, Elements of Financial Statements, introduced and defined the elements included infinancial statements, including deferred outflows of resources and deferred inflows of resources. In addition,Concepts Statement No. 4 provides that reporting a deferred outflow of resources or a deferred inflow ofresources should be limited to those instances identified by the Board in authoritative pronouncements that areestablished after applicable due process. Prior to the issuance of this Statement, only two such pronouncementshave been issued. Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, requires thereporting of a deferred outflow of resources or a deferred inflow of resources for the changes in fair value ofhedging derivative instruments, and Statement No. 60, Accounting and Financial Reporting for ServiceConcession Arrangements, requires a deferred inflow of resources to be reported by a transferor government in aqualifying service concession arrangement. This Statement amends the financial statement element classificationof certain items previously reported as assets and liabilities to be consistent with the definitions in ConceptsStatement No. 4. This Statement also provides other financial reporting guidance related to the impact of thefinancial statement elements deferred outflows of resources and deferred inflows of resources, such as changes inthe determination of the major fund calculations and limiting the use of the term deferred in financial statementpresentations.

The provisions of this Statement are effective for financial statements for periods beginning after December 15,2012. Early implementation is encouraged.

In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—anamendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting andfinancial reporting by state and local governments for pensions. It also improves information provided by stateand local governmental employers about financial support for pensions that is provided by other entities. ThisStatement results from a comprehensive review of the effectiveness of existing standards of accounting andfinancial reporting for pensions with regard to providing decision-useful information, supporting assessments ofaccountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and LocalGovernmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate topensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafterjointly referred to as trusts) that meet certain criteria. The requirements of Statements No. 27 and No. 50 remainapplicable for pensions that are not covered by the scope of this Statement.

The scope of this Statement addresses accounting and financial reporting for pensions that are provided to theemployees of state and local governmental employers through pension plans that are administered through truststhat have the following characteristics:

Contributions from employers and non-employer contributing entities to the pension plan and earnings onthose contributions are irrevocable.



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Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms.

Pension plan assets are legally protected from the creditors of employers, non-employer contributing entities,and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets also are legallyprotected from creditors of the plan members.

This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources,deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifiesthe methods and assumptions that should be used to project benefit payments, discount projected benefitpayments to their actuarial present value, and attribute that present value to periods of employee service.

Note disclosure and required supplementary information requirements about pensions also are addressed.Distinctions are made regarding the particular requirements for employers based on the number of employerswhose employees are provided with pensions through the pension plan and whether pension obligations andpension plan assets are shared. Employers are classified in one of the following categories for purposes of thisStatement:

Single employers are those whose employees are provided with defined benefit pensions through single-employer pension plans—pension plans in which pensions are provided to the employees of only oneemployer (as defined in this Statement).

Agent employers are those whose employees are provided with defined benefit pensions through agentmultiple-employer pension plans—pension plans in which plan assets are pooled for investment purposes, butseparate accounts are maintained for each individual employer so that each employer's share of the pooledassets is legally available to pay the benefits of only its employees.

Cost-sharing employers are those whose employees are provided with defined benefit pensions through cost-sharing multiple-employer pension plans—pension plans in which the pension obligations to the employeesof more than one employer are pooled and plan assets can be used to pay the benefits of the employees of anyemployer that provides pensions through the pension plan.

In addition, this Statement details the recognition and disclosure requirements for employers with liabilities(payables) to a defined benefit pension plan and for employers whose employees are provided with definedcontribution pensions. This Statement also addresses circumstances in which a non-employer entity has a legalrequirement to make contributions directly to a pension plan.

This Statement is effective for fiscal years beginning after June 15, 2014. Early implementation is encouraged.



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NOTE 3 - DEPOSITS AND INVESTMENTS

Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds,notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes;securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of depositplaced with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements;medium-term corporate notes; shares of beneficial interest issued by diversified management companies,certificates of participation, obligations with first priority security; and collateralized mortgage obligations. TheDistrict's internal investment policy requires asset managers to purchase and hold investments with a rating of Bbor higher.

Investment in County Treasury - The District is considered to be an involuntary participant in an externalinvestment pool as the District is required to deposit all receipts and collections of monies with their CountyTreasurer (Education Code Section (ECS) 41001). The fair value of the District's investment in the pool isreported in the accompanying financial statements at amounts based upon the District's pro-rata share of the fairvalue provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio).The balance available for withdrawal is based on the accounting records maintained by the Alameda CountyTreasurer, which is recorded on the amortized cost basis.

Other Investments

The District maintains investments outside the Alameda County Treasurer as allowed by the District's investmentpolicy. The District relies on a third party investment firm to manage the investment portfolio. The investmentsare stated at fair value as determined by quoted market prices in The Wall Street Journal at June 30, 2013.



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General Authorizations

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in theschedules below:

Maximum Maximum Maximum

Authorized Remaining Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

Local Agency Bonds, Notes, Warrants 5 years None None

Registered State Bonds, Notes, Warrants 5 years None None

U.S. Treasury Obligations 5 years None None

U.S. Agency Securities 5 years None None

Banker's Acceptance 180 days 40% 30%

Commercial Paper 270 days 25% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements 92 days 20% of base None

Medium-Term Corporate Notes 5 years 30% None

Mutual Funds N/A 20% 10%

Money Market Mutual Funds N/A 20% 10%

Mortgage Pass-Through Securities 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Joint Powers Authority Pools N/A None None

Summary of Deposits and Investments

Deposits and investments of the primary government as of June 30, 2013, consist of the following:

Cash on hand and in banks - unrestricted 7,998,435$

Cash in revolving - unrestricted 55,000

Cash on hand and in banks - restricted 9,725,976Total Cash and Cash Equivalents 17,779,411$

Investment in county treasury - unrestricted (21,095,819)$

Investment in county treasury - restricted 164,643,781

Investments - restricted 190,774,385Total Investments 334,322,347$



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Deposits and investments of the fiduciary funds as of June 30, 2013, consist of the following:

Cash on hand and in banks 1,572,413$

Investment in county treasury 620,621$

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of aninvestment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value tochanges in market interest rates. The District manages its exposure to interest rate risk by investing in the Countypool and having the pool purchase a combination of shorter term and longer term investments and by timing cashflows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over timeas necessary to provide the cash flow and liquidity needed for operations.

Additionally, OPEB bond proceeds have been invested in other instruments which equate to the CalPERSinvestment strategy.

Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuationis provided by the following schedule that shows the distribution of the District's investment by maturity:

Weighted

Average

Maturity

Investment Type Fair Value in Days

County Pool - Alameda 143,650,876$ 525

JP Morgan Prime Money Market Fund 98,240 N/A

Money Market Funds 3,324,329 N/A

U.S. Governments and Agencies 15,182,816 N/A

Mortgage Backed Securities 14,106,024 N/A

Collateralized Mortgage Obligations 3,347,728 N/A

Municipal Bonds 66,952 N/A

Domestic Corporate Bonds 13,061,243 N/A

Mutual Funds - Fixed Income 15,857,166 N/A

Common Stock - Domestic 82,310,097 N/A

Common Stock - Foreign 11,540,691 N/A

Master Limited Partnerships 61,085 N/A

Mutual Funds - Equities 22,796,896 N/A

Exchange Traded Funds - Equity 9,021,118 N/A

334,425,261$



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Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.This is measured by the assignment of a rating by a nationally recognized statistical rating organization. TheDistrict's investment in the County pool is not required to be rated, nor has it been rated as of June 30, 2013.Presented below is the minimum rating required by the California Government Code, the District's investmentpolicy, or debt agreements, and the actual rating as of the year-end for each investment type.

TotalInvestment Type Fair Value Rating

County Pool - Alameda 143,650,876$ Not RatedJP Morgan Prime Money Market Fund 98,240 [1]Money Market Funds 3,324,329 [1]U.S. Governments and Agencies 15,182,816 [1]

Mortgage Backed Securities 14,106,024 [1]Collateralized Mortgage Obligations 3,347,728 [1]Municipal Bonds 66,952 [1]Domestic Corporate Bonds 13,061,243 [1]Mutual Funds - Fixed Income 15,857,166 [1]Common Stock - Domestic 82,310,097 [1]Common Stock - Foreign 11,540,691 [1]Master Limited Partnerships 61,085 [1]Mutual Funds - Equities 22,796,896 [1]Exchange Traded Funds - Equity 9,021,118 [1]

334,425,261$

[1] Investment ratings range from Aaa to Caa according to Moody's Investors Service.

Custodial Credit Risk - Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The Districtdoes not have a policy for custodial credit risk for deposits. However, the California Government Code requiresthat a financial institution secure deposits made by State or local governmental units by pledging securities in anundivided collateral pool held by a depository regulated under State law (unless so waived by the governmentalunit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the totalamount deposited by the public agencies. California law also allows financial institutions to secure publicdeposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public depositsand letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of thesecured deposits. As of June 30, 2013, the District's bank balance of $7,203,796 was exposed to custodial creditrisk because it was uninsured and collateralized with securities held by the pledging financial institution's trustdepartment or agent, but not in the name of the District.



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NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable consisted primarily of intergovernmental grants, entitlements, and other local sources.

Primary

Government

Federal Government

Categorical aid 4,166,272$

State Government

Apportionment deferral 18,274,903

Categorical aid 848,860

Lottery 1,037,159

Local Sources

Other local sources 6,628,972Total 30,956,166$

Student receivables, net 4,260,394$

NOTE 5 - DEFERRED COSTS ON ISSUANCE AND REFUNDING

The following table summarizes certain costs related to bond issuances that are required to be amortized over thelife of the bonds issued. Amortization is calculated using the straight-line method.

Unamortized issuance costs are as follows:

Other Postemployment Benefits Bonds 2005 Issuances 2,697,175$

Other Postemployment Benefits Bonds 2011 Refunding 659,191

General Obligation Bonds 2000, Series D 273,649

General Obligation Bonds 2005, Refunding 314,155

General Obligation Bonds 2006, Series A 777,094

General Obligation Bonds 2006, Series B 1,047,915

General Obligation Bonds 2006, Series C 789,600

General Obligation Bonds 2009, Refunding 467,070

General Obligation Bonds 2012, Refunding 438,086Total 7,463,935$

Deferred costs on issuance - current portion 348,372$

Deferred costs on issuance - noncurrent portion 7,115,563Total 7,463,935$



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Unamortized costs on refunding are as follows:

Other Postemployment Benefits Bonds 2009, Refunding - current portion 490,515$

Other Postemployment Benefits Bonds 2009, Refunding - noncurrent portion 8,338,755Total 8,829,270$

NOTE 6 - CAPITAL ASSETS

Capital asset activity for the primary government for the fiscal year ended June 30, 2013, was as follows:

*Balance Balance

Beginning End

of Year Additions Deductions of Year

Capital Assets Not Being Depreciated

Land 11,913,296$ -$ -$ 11,913,296$

Construction in progress 105,202,939 29,923,146 38,919,190 96,206,895

Total Capital Assets Not Being Depreciated 117,116,235 29,923,146 38,919,190 108,120,191

Capital Assets Being Depreciated

Buildings 271,798,751 - - 271,798,751


Software and IT development 31,276,496 109,000 - 31,385,496

Machinery and equipment 40,702,184 - - 40,702,184

Total Capital Assets Being Depreciated 437,650,566 40,029,188 - 477,679,754

Total Capital Assets 554,766,801 69,952,334 38,919,190 585,799,945

Less Accumulated Depreciation

Buildings 95,679,409 5,417,263 - 101,096,672


Software and IT development 26,759,340 3,019,223 - 29,778,563

Machinery and equipment 36,411,986 2,497,226 - 38,909,212

Total Accumulated Depreciation 170,038,495 15,347,535 - 185,386,030

Net Capital Assets 384,728,306$ 54,604,799$ 38,919,190$ 400,413,915$

* As restated. See Note 18 for more information.

Depreciation expense for the year was $15,347,535.

Interest expense on capital related debt for the year ended June 30, 2013, was $32,432,857. Of this amount,$5,610,047 was capitalized.



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NOTE 7 - ACCOUNTS PAYABLE

Accounts payable consisted of the following:

Primary

Government

Apportionment 4,170,667$

Accrued payroll and benefits 2,046,125

Construction contractors 8,016,783

Vendors and supplies 8,490,815

Total 22,724,390$

NOTE 8 - DEFERRED REVENUE

Deferred revenue consisted of the following:

Primary

Government

Federal categorical aid 160,340$

State categorical aid 886,612

Enrollment fees 1,997,075

Other local 320,564Total 3,364,591$

NOTE 9 - TAX AND REVENUE ANTICIPATION NOTES PAYABLE

The District issued two Tax and Revenue Anticipation Notes (TRANS) during the current fiscal year. One wasissued on August 8, 2012, which matured on June 28, 2013. The District issued another TRAN on March 1,2013, which has a maturity date of December 31, 2013. See current year activity below:

Outstanding Outstanding

Beginning End

of Year Additions Deletions of Year

2012 2.00% TRANS -$ 22,000,000$ 22,000,000$ -$

2013 2.00% TRANS - 8,935,000 - 8,935,000Total -$ 30,935,000$ 22,000,000$ 8,935,000$



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NOTE 10 - INTERFUND TRANSACTIONS

Interfund Receivables and Payables (Due To/Due From)

Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affectedin the period in which transactions are executed. Interfund activity within the governmental funds and fiduciaryfunds has been eliminated respectively in the consolidation process of the basic financial statements. Balancesowing between the primary government and the fiduciary funds are not eliminated in the consolidation process.As of June 30, 2013, the amounts owed between the primary government and the fiduciary funds were $4,400 and$7,966, respectively.

Interfund Operating Transfers

Operating transfers between funds of the District are used to (1) move revenues from the fund that statute orbudget requires to collect them to the fund that statute or budget requires to expend them, (2) move receiptsrestricted to debt service from the funds collecting the receipts to the debt service fund as debt service paymentsbecome due, and (3) use restricted revenues collected in the General Fund to finance various programs accountedfor in other funds in accordance with budgetary authorizations. Operating transfers within the funds of theDistrict have been eliminated in the consolidation process. Transfers between the primary government and thefiduciary funds are not eliminated in the consolidation process. During the 2013 fiscal year, the Districttransferred $511,316 between the primary government and the fiduciary funds.

NOTE 11 - LONG-TERM OBLIGATIONS

Summary

The changes in the District's long-term obligations during the fiscal year 2013 consisted of the following:

Beginning (Amortization) Ending Due in

Balance Additions Accretion Deductions Balance One Year

General obligation bonds 443,075,253$ -$ -$ (11,661,820)$ 431,413,433$ 11,800,000$

2005 Taxable Limited Obligation

OPEB Bonds 139,939,962 - 7,654,407 - 147,594,369 -

2006 OPEB Bond modification and

restructuring 10,561,665 - - (72,216) 10,489,449 72,217

2011 Taxable Refunding bonds 53,505,000 - - - 53,505,000 1,595,000

Total Bonds Payable 647,081,880 - 7,654,407 (11,734,036) 643,002,251 13,467,217

Other liabilities

Postemployment benefits obligation 23,381,384 11,471,921 - (7,692,012) 27,161,293 -

Claims liability 2,778,000 17,135 - - 2,795,135 -

Load banking 1,737,787 94,538 - - 1,832,325 -

Compensated absences 2,850,116 544,679 - - 3,394,795 -

Total Long-Term Obligations 677,829,167$ 12,128,273$ 7,654,407$ (19,426,048)$ 678,185,799$ 13,467,217$



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Description of Obligations

Payments on the general obligation bonds are made by the bond interest and redemption fund with local propertytax collections. Debt service payments on the Other Postemployment Benefits (OPEB) Bonds will be made fromthe Unrestricted General Fund. Workers' compensation claims liability is an estimate based on an actuarial studycompleted by a third party specialist. Actual claims paid will be made from the Self-Insurance Fund.Management is responsible to evaluate the adequacy of the change in value. The Postemployment BenefitsObligation is funded through payments for benefits and is reported within the fund the employees' salaries arecharged. The compensated absences will be paid by the fund for which the employee worked. Load bankingobligations are the responsibility of the General Fund in the year the employee utilizes the banked leave time.

Bonded Debt

General Obligation Bonds, Election 2000, Series C

In May 2004, the District issued, in the amount of $40,000,000, the Peralta Community College District GeneralObligation Bonds, Election 2000, Series C (the 2000 Series C Bonds) to finance the acquisition, construction, andrehabilitation of school facilities. The bonds mature beginning August 1, 2005 through August 1, 2034, withinterest yield rates ranging from 1.60 to 5.20 percent.

General Obligation Bonds, Election 2000, Series D

In July 2005, the District issued, in the amount of $55,700,000, the Peralta Community College District GeneralObligation Bonds, Election 2000, Series D (the 2000 Series D Bonds) to finance the acquisition, construction, andrehabilitation of school facilities. The bonds mature beginning August 1, 2006 through August 1, 2035, withinterest yield rates ranging from 2.51 to 4.18 percent.


In October 2002, the District issued, in the amount of $7,310,000, the 2002 Refunding General Obligation Bondsto refund the Peralta Community College District, General Obligation Bonds, Election of 1992, Series A(the 1993 Bonds). The bonds mature beginning February 1, 2003 through August 1, 2014, with interest ratesranging from 2.00 to 4.00 percent.

2005 General Obligation Revenue Bonds, Series A

In June 2005, the Golden West Schools Financing Authority issued, in the amount of $7,285,000, the2005 General Obligation Revenue Bonds, Series A (Peralta Community College District Refunding) to financethe acquisition of the outstanding Peralta Community College District General Obligation Bonds, Election of1992, Series C. The bonds are repaid through tax assessments on property located within the District boundaries.The bonds mature beginning August 1, 2006 through August 1, 2021, with interest yield rates ranging from3.00 to 4.00 percent.



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2005 General Obligation Revenue Bonds, Series B

In August 2005, the Golden West Schools Financing Authority issued, in the amount of $32,975,000, the2005 General Obligation Revenue Bonds, Series B (Peralta Community College District Refunding) to financethe acquisition of the callable Peralta Community College District General Obligation Bonds, Election of 1992,(the 1992D Bonds), the callable General Obligation Bonds, Election 1992, Series E, (the 1992E Bonds), thecallable General Obligation Bonds, Election 1996, Series A, (the 1996A Bonds), and a portion of the callableGeneral Obligation Bonds, Election 2000, Series A (the 2000A Bonds) in the amount of $32,410,000. Concurrentwith the issuance of the bonds, the District issued 2005 General Obligation Refunding Bonds. The bonds arerepaid through tax assessments on property located within the District boundaries. The bonds mature beginningon August 1, 2006 through August 1, 2025, with interest rates ranging from 3.00 to 5.00 percent.

2006 General Obligation Bonds, Series A

In August 2006, the District issued $75,000,000 of General Obligation Bonds, Election of 2006, Series A. Votersauthorized $390,000,000 in June of 2006. The bonds are being issued to finance the acquisition, construction, andrehabilitation of District facilities. The bonds mature beginning August 1, 2007 through August 1, 2031, withinterest yield rates ranging from 4.00 to 5.00 percent.

2006 General Obligation Bonds, Series B

In November 2007, the District issued $100,000,000 of General Obligation Bonds, Election of 2006, Series B.The bonds are being issued to finance the acquisition, construction, and rehabilitation of District facilities. Thebonds mature beginning August 1, 2009 through August 1, 2037, with interest yield rates ranging from 5.00 to5.25 percent.

2006 General Obligation Bonds, Series C

In August 2009, the District issued $100,000,000 of General Obligation Bonds, Election of 2006, Series C. Thebonds are being issued to finance the acquisition, construction, and rehabilitation of District facilities. The bondsmature beginning August 1, 2012 through August 1, 2039, with interest yield rates ranging from 2.00 to5.50 percent.


In December 2009, the District issued, in the amount of $39,080,000, the Refunding General Obligation Bonds toadvance refund the Peralta Community College District, General Obligation Bonds, Election 2000, Series A, aportion of Series B, and 2001 Refunding General Obligation Bonds. The bonds mature beginning August 1, 2010through August 1, 2031, with interest yield rates ranging from 2.00 to 5.50 percent.



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In March 2012, the District issued, in the amount of $59,005,000, the Refunding General Obligation Bonds torefund portions of the District's prior bonds. Funds have been placed in an irrevocable escrow account for thefuture redemption of these bonds. At June 30, 2012, the balance of these funds on the escrow account was$63,442,590. As the advance refunding has met the requirements of an in-substance defeasance, the debtobligations of $160,240,000 for the bonds have been removed as long-term obligations of the District. The bondsmature beginning August 1, 2012 through August 1, 2034, with interest yield rates ranging from 2.00 to5.00 percent.

The outstanding general obligation debt is as follows:

Bonds Bonds

Issue Maturity Interest Original Outstanding Issued/ Outstanding

Series Date Date Rate Issue July 1, 2012 Amortized Redeemed June 30, 2013

2000 C 5/27/2004 8/01/2034 1.60%-5.20% 40,000,000 1,880,000 - 920,000 960,000

2000 D 7/21/2005 8/01/2035 2.51%-4.18% 55,700,000 33,350,000 - 1,165,000 32,185,000


2002 10/24/2002 8/01/2014 2.00%-4.00% 7,310,000 1,030,000 - 505,000 525,000

2005 A 6/01/2005 8/01/2021 3.00%-4.00% 7,285,000 4,735,000 - 360,000 4,375,000

2005 B 8/17/2005 8/01/2025 3.00%-5.00% 32,975,000 29,975,000 - 1,225,000 28,750,000

Subtotal 2005 Refinancings 33,125,000

2006 A 8/10/2006 8/01/2031 4.00%-5.00% 75,000,000 64,595,000 - 2,055,000 62,540,000

2006 B 11/15/2007 8/01/2037 5.00%-5.25% 100,000,000 95,000,000 - 1,835,000 93,165,000

2006 C 8/26/2009 8/01/2039 2.00%-5.50% 100,000,000 99,180,000 - - 99,180,000


2009 12/17/2009 8/01/2031 2.00-5.50% 39,080,000 35,205,000 - 1,940,000 33,265,000

2012 3/28/2012 8/01/2034 2.00-5.00% 59,005,000 59,005,000 - 775,000 58,230,000

Subtotal General Obligation Bonds 413,175,000

Premiums (net) 19,120,253 - 881,820 18,238,433

Total General Obligation Bonds (Net) 443,075,253$ -$ 11,661,820$ 431,413,433$



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General Obligation Bond - 2000 Election


Year Ending


2014 2,170,000$ 1,636,750$ 3,806,750$

2015 1,260,000 1,548,750 2,808,750

2016 - 1,485,750 1,485,750

2017 - 1,485,750 1,485,750

2018 - 1,485,750 1,485,750

2019-2023 - 7,428,750 7,428,750

2024-2028 6,590,000 7,110,000 13,700,000

2029-2033 13,385,000 4,508,250 17,893,250

2034-2036 9,740,000 989,750 10,729,750Total 33,145,000$ 27,679,500$ 60,824,500$



Year Ending


2014 525,000$ 18,375$ 543,375$

Total 525,000$ 18,375$ 543,375$

General Obligation Revenue Bonds - 2005 Refunding

The general obligation revenue bonds mature through 2026 as follows:

Year Ending


2014 2,390,000$ 1,629,998$ 4,019,998$

2015 2,530,000 1,506,980 4,036,980

2016 2,635,000 1,376,830 4,011,830

2017 2,770,000 1,239,611 4,009,611

2018 2,905,000 1,094,650 3,999,650

2019-2023 14,210,000 3,133,514 17,343,514

2024-2026 5,685,000 346,869 6,031,869

Total 33,125,000$ 10,328,452$ 43,453,452$



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General Obligation Bond - 2006 Series A, B, and C

The general obligation bonds mature through 2040 as follows:

Year Ending


2014 5,440,000$ 12,616,013$ 18,056,013$

2015 6,220,000 12,378,738 18,598,738

2016 7,050,000 12,105,488 19,155,488

2017 6,710,000 11,771,438 18,481,438

2018 7,020,000 11,452,406 18,472,406

2019-2023 40,620,000 51,580,644 92,200,644

2024-2028 52,110,000 39,910,725 92,020,725

2029-2033 61,630,000 25,116,925 86,746,925

2034-2038 55,425,000 11,031,125 66,456,125

2039-2040 12,660,000 1,560,000 14,220,000

Total 254,885,000$ 189,523,502$ 444,408,502$



Year Ending


2014 1,275,000$ 1,645,700$ 2,920,700$

2015 1,320,000 1,590,200 2,910,200

2016 1,395,000 1,524,200 2,919,200

2017 1,440,000 1,479,950 2,919,950

2018 1,495,000 1,407,950 2,902,950

2019-2023 7,690,000 6,053,413 13,743,413

2024-2028 12,615,000 3,569,106 16,184,106

2029-2032 6,035,000 783,706 6,818,706Total 33,265,000$ 18,054,225$ 51,319,225$



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Year EndingJune 30, Principal Interest Total

2014 -$ 2,649,906$ 2,649,906$2015 1,545,000 2,649,906 4,194,9062016 2,915,000 2,603,556 5,518,5562017 2,970,000 2,516,106 5,486,1062018 3,085,000 2,397,306 5,482,306

2019-2023 14,335,000 9,849,781 24,184,7812024-2028 11,505,000 6,224,281 17,729,2812029-2033 17,710,000 3,294,169 21,004,1692034-2035 4,165,000 275,189 4,440,189

Total 58,230,000$ 32,460,200$ 90,690,200$

Taxable 2005 Limited Obligation Other Postemployment Benefits Bonds

In December 2005, the District issued $153,749,832 aggregate principal amount of Taxable 2005 LimitedObligation OPEB (Other Postemployment Benefits) Bonds to fund the District's obligation to pay certain healthcare benefits for certain retired District employees and pay certain costs of issuance. The bonds consisted of$20,015,000 principal amount of fixed rate bonds, and $133,734,832 initial principal amount of ConvertibleAuction Rate Securities. The Convertible Auction Rate Securities accrete to matured principal amount of$394,225,000. Interest rates on the bonds range from 4.71 percent to 5.52 percent.


PrincipalYear Ending (Including Accreted Accreted

June 30, Interest to Date) Interest Interest Total2014 -$ -$ -$ -$2015 - - - -2016 - - - -2017 4,225,719 2,649,281 1,995,555 8,870,5552018 4,502,311 2,822,689 1,638,743 8,963,743

2019-2023 22,324,859 18,050,141 6,554,970 46,929,9702024-2028 18,425,477 25,799,523 8,280,645 52,505,6452029-2033 16,169,522 32,730,478 9,631,343 58,531,3432034-2038 13,693,194 41,456,806 15,057,488 70,207,4882039-2043 10,289,115 41,235,885 21,190,770 72,715,7702044-2048 11,077,506 57,872,494 20,992,253 89,942,2532049-2050 5,936,387 31,013,613 2,919,375 39,869,375

Subtotal 106,644,090 253,630,910 88,261,142 448,536,142

Accumulated accretion 40,950,279 (40,950,279) - -Total 147,594,369$ 212,680,631$ 88,261,142$ 448,536,142$



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2006 Limited Obligation Other Postemployment Benefits Bonds Modification

The OPEB Bonds issued in 2005 were subject to an amendment wherein Lehman Brothers purchased threematurities (2006, 2007, and 2008 except $135,000) in 2006. This is outlined in the "Supplement to the OfficialStatement" dated as of October 25, 2006, relating to the Taxable 2005 Limited Obligation OPEB Bonds. Thepurpose of the amendment was to convert 2006, 2007, and 2008 original maturities into bonds maturingAugust 5, 2049. The vehicle used was a capital accretion type financing that the supplement indicates would fullyaccrete by August 5, 2009, and would have bonds that mature through August 1, 2049. This is a unique financingstructure that was developed to accommodate District wishes to reduce debt service in the initial years of thefinancing.


Principal

Year Ending (Including Accreted

June 30, Interest to Date) Interest Total

2014 72,217$ 653,334$ 725,551$

2015 78,235 648,632 726,867

2016 84,253 643,554 727,807

2017 90,271 638,101 728,372

2018 96,289 632,271 728,560

2019-2023 577,732 3,060,551 3,638,283

2024-2028 794,382 2,848,039 3,642,421

2029-2033 1,077,230 2,557,480 3,634,710

2034-2038 1,474,420 2,161,794 3,636,214

2039-2043 2,022,062 1,619,982 3,642,044

2044-2048 2,756,264 878,258 3,634,522

2049-2050 1,366,094 86,696 1,452,790Total 10,489,449$ 16,428,692$ 26,918,141$

2011 Taxable Refunding Bonds

In October 2011, the District refunded the District's outstanding 2009 Taxable OPEB Refunding Bonds. Therefunding was a current legal defeasance of the previously issued bonds. The new refunding bonds carry interestrates ranging from 3.47 percent to 6.91 percent and mature annually through August 1, 2031. The proceeds of therefunding were used to refinance all of the District's outstanding obligation 2009 Taxable OPEB Refunding Bondsand paying costs of issuing.



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Year Ending


2014 1,595,000$ 3,517,404$ 5,112,404$

2015 2,590,000 3,462,057 6,052,057

2016 2,265,000 3,359,001 5,624,001

2017 - 3,257,869 3,257,869

2018 1,095,000 3,257,869 4,352,869

2019-2023 9,120,000 15,003,279 24,123,279

2024-2028 15,785,000 11,187,788 26,972,788

2029-2032 21,055,000 4,206,330 25,261,330

Total 53,505,000$ 47,251,597$ 100,756,597$


The District's annual required contribution for the year ended June 30, 2013, was $11,228,305, and contributionsmade by the District during the year were $7,692,012. Interest on the net OPEB obligation and adjustments to theannual required contribution were $1,578,243 and $(1,334,627), respectively, which resulted in an increase to thenet OPEB obligation of $3,779,909. As of June 30, 2013, the net OPEB obligation was $27,161,293. SeeNote 13 for additional information regarding the OPEB obligation and the postemployment benefits plan.

Claims Liability

At June 30, 2013, the liability for claims liability was $2,795,135. See Note 14 for additional information.


At June 30, 2013, the liability for compensated absences was $3,394,795.

Load Banking

At June 30, 2013, the liability for load banking agreements was $1,832,325.



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NOTE 12 - INTEREST RATE SWAPS

2005 Limited Obligation Other Postemployment Benefits Bonds

Objective of the Morgan Stanley Interest Rate SWAP. The District entered into a series of six forward startingfloating-to-fixed rate interest rate swaps to manage interest rate risk associated with its 2005 Taxable LimitedObligation Other Postemployment Bonds. The OPEB Bonds included six series of bonds that were initiallyissued at a fixed rate of interest, converting to a variable rate (auction rate) on separate dates and continuing inthat mode until maturity of the individual series of bonds. In order to effectively convert the variable rate to afixed rate for each of the six series of bonds in November 2006, the District entered into separate swaptransactions with Morgan Stanley corresponding to each of the individual variable rate periods. Because the swapobligation only arises during the variable rate interest period for each series of bonds, the District does notbecome obligated to make swap payments until those periods arrive for each series of bonds. As of June 30,2013, the 2005 Series B-1 through B-6 has a fair market value of $12,813,263. The intention of the swap was toeffectively change the variable interest rate on the bonds to a synthetic fixed-rate of 4.90 percent, 5.16 percent,5.28 percent, 5.21 percent, 5.06 percent, and 4.94 percent, respectively.

Terms. Under the swap agreement, the District pays a fixed rate of percent (as noted above) and the counterpartypays the District a floating rate option of 100 percent of London Interbank Offered Rate (LIBOR) with designatedmaturity of one month.

Credit Risk. As of June 30, 2013, the District was not exposed to credit risk because the swap had a negative fairvalue. Ongoing swap risks lay if the counterparty defaults and the District incur cost to obtain replacement swapat the same economic terms.

Basis Risk. Adverse changes in the District's or credit providers' financial strength could result in basis risk.

Termination Risk. The District or the counterparty may terminate the swap if the other party fails to performunder the terms of the contract.

Derivative Instrument Types

Hedge Effectiveness. As of June 30, 2013, derivative instrument B-1 under governmental activities no longermeets the criteria for effectiveness and, thus, is considered to be an investment derivative instrument.Accordingly, the accumulated changes in its fair value in fiscal year 2013 of $976,108 are reported within theinvestment revenue classification for the year ended June 30, 2013. The other interest rate swaps, B-2 through B-6, are considered to be hedging derivative instruments and are identified above as fair value hedges, change inmarket values are shown as deferred cash out flows on the Statement of Net Position.

The District used the dollar-offset method to evaluate hedge effectiveness for the interest rate swaps and rate cap.This method evaluates effectiveness by comparing the changes in expected cash flows or fair values of thepotential hedging derivative instrument with the changes in expected cash flows or fair values of the hedgeableitem.



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Fair Values

Fair values for the District's derivative instruments were estimated using the following methods:

Interest Rate Swaps. Fair values for the interest rate swaps were estimated using the zero-coupon method, whichcalculates the future net settlement payments, assuming that current forward rates implied by the yield curvecorrectly anticipate future spot interest rates. The payments are then discounted using the spot rates implied bythe current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on theswaps.

Original Market

Trade ID Trade Date Effective Date Maturity Date Currency Notional Value Fixed Rate

AUF3X November 28, 2006 August 5, 2039 August 5, 2049 USD 134,475,000$ (1,053,371)$ 4.90%

AUF3W November 28, 2006 August 5, 2031 August 5, 2039 USD 86,650,000 (3,152,758) 5.16%

AUF3V November 28, 2006 August 5, 2025 August 5, 2031 USD 57,525,000 (1,196,694) 5.28%

AUF3U November 28, 2006 August 5, 2020 August 5, 2025 USD 43,175,000 (1,314,334) 5.21%

AUF3T November 28, 2006 August 5, 2015 August 5, 2020 USD 38,450,000 (2,429,666) 5.06%

AUF3S November 28, 2006 August 5, 2010 August 5, 2015 USD 33,950,000 (3,666,440) 4.94%

NOTE 13 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENT BENEFITSOBLIGATION

The District provides postemployment health care benefits for retired employees in accordance with negotiatedcontracts with the various bargaining units of the District.

Plan Description

The plan is a single-employer defined benefit healthcare plan administered by Peralta Community CollegeDistrict. The plan provides medical and dental insurance benefits and life insurance to eligible retirees and theirspouses. Eligible benefits plan features are based on retirees' retirement date and current employees most recenthire date in accordance with collective bargaining unit agreements.

Funding Policy

The contribution requirements of plan members and the District are established and may be amended by theDistrict and the District's bargaining units. The plan is currently funded on a pay-as-you-go basis. For fiscal year2012-2013, the District contributed $7,692,012 to the plan, comprised on premiums paid for medical insurance,claims expense, eligible Medicare reimbursements, and life insurance premiums for eligible plan members.



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Annual OPEB Cost and Net OPEB Obligation

The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with the payments of GASB Statement No. 45. TheARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each yearand amortize any unfunded actuarial accrued liabilities (UAAL) (or funding costs) over a period not to exceed30 years. The following table shows the components of the District's annual OPEB cost for the year, the amountactually contributed to the plan, and changes in the District's net OPEB obligation to the plan:

Annual required contribution 11,228,305$

Interest on net OPEB obligation 1,578,243

Adjustment to annual required contribution (1,334,627)

Annual OPEB Cost 11,471,921

Contributions made (7,692,012)

Increase in net OPEB obligation 3,779,909

Net OPEB obligation, beginning of year 23,381,384

Net OPEB obligation, end of year 27,161,293$

Trend Information

Trend information for the annual OPEB cost, the percentage of annual OPEB costs contributed to the plan, andthe net OPEB obligation for the past three years is as follows:

Year Ended Annual OPEB Actual Percentage Net OPEB

June 30, Costs Contribution Contributed Obligation

2011 13,217,137$ 8,190,235$ 62% 18,269,394$

2012 13,005,505 7,893,515 61% 23,381,384

2013 11,471,921 7,692,012 67% 27,161,293



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Funding Status and Funding Progress

Actuarial Accrued Liability (AAL) 174,703,920$

Actuarial Value of Plan Assets -Unfunded Actuarial Accrued Liability (UAAL) 174,703,920$

Funded Ratio (Actuarial Value of Plan Assets/AAL) -

Covered Payroll 43,077,857$UAAL as Percentage of Covered Payroll 406%

The above noted actuarial accrued liability was based on the March 2013 actuarial valuation. Actuarial valuationof an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability ofoccurrence of events far into the future. Examples include assumptions about future employment, mortality, andthe healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual requiredcontribution of the employer are subject to continual revision as actual results are compared with pastexpectations and new estimates are made about the future. The Schedule of Other Postemployment BenefitsFunding Progress, presented as required supplementary information, follows the notes to the financial statementsand presents multi-year trend information about whether the actuarial value of plan assets is increasing ordecreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understoodby the employer and the plan members) and include the types of benefits provided at the time of each valuationand the historical pattern of sharing of benefit costs between the employer and the plan members to that point.The actuarial methods and assumptions used include techniques that are designed to reduce the effects ofshort-term volatility in actuarial accrued liabilities and the actuarial values of assets, consistent with the long-termperspective of the calculations.

In the March 2013, actuarial valuation, the entity age normal method was used. The actuarial assumptionsincluded a 7.0 percent investment rate of return (net of administrative expenses), based on assets invested in theDistrict's retiree health benefits program. Healthcare cost trend rates ranged from an initial 12 percent and13 percent for Kaiser and Core Source, respectively, with an ultimate rate of 5.0 percent. The UAAL is beingamortized at a level percent of payroll method (same as CalPERS). The initial UAAL is being amortized over aclosed 30 year period. There is no actuarial value of assets because funds have not been placed in an irrevocabletrust. The District has an active investment portfolio funded through the issuance of bonds and has earmarkedfunds held in the County Treasury for funding of the OPEB obligation, but has not elected to place those assets inan irrevocable trust; therefore, there is no actuarial value of plan assets.



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NOTE 14 - RISK MANAGEMENT

Insurance Coverage

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; injuries to employees; and natural disasters. During the fiscal year ended June 30, 2013, theDistrict contracted with the Alliance of Schools for Cooperative Insurance Program (ASCIP) Joint PowersAuthority (JPA) for property and liability insurance coverage. Settled claims have not exceeded this commercialcoverage in any of the past three years. There has not been a significant reduction in coverage from the prioryear.

Claims Liabilities

The District establishes a liability for both reported and unreported events, which includes estimates of both futurepayments of losses and related claim adjustment expenses. The following represent the changes in approximateaggregate liabilities for the District from July 1, 2011 to June 30, 2013:

Workers'

Compensation

Liability Balance, July 1, 2011 2,778,000$

Net claims and changes in estimates -

Liability Balance, June 30, 2012 2,778,000

Net claims and changes in estimates 17,135Liability Balance, June 30, 2013 2,795,135$

At June 30, 2013, the Internal Service Fund had retained deficits in the amount of $1,007,632.

Employee Medical Benefits

The District has contracted with the Alameda County Schools Insurance Group (ACSIG) Joint Powers Authority(JPA) to provide employee medical and surgical benefits. The JPA is a shared risk pool comprised of schools inAlameda County. Rates are set through an annual calculation process. The District pays a monthly contribution,which is placed in a common fund from which claim payments are made for all participating districts. Claims arepaid for all participants regardless of claims flow. The Board of Trustees has a right to return monies to a districtsubsequent to the settlement of all expenses and claims if a district withdraws from the pool.

NOTE 15 - EMPLOYEE RETIREMENT SYSTEMS

Qualified employees are covered under multiple-employer retirement plans maintained by agencies of the State ofCalifornia. Certificated employees are members of CalSTRS and classified employees are members of CalPERS.



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CalSTRS

Plan Description

The District contributes to CalSTRS, a cost-sharing multiple-employer public employee retirement systemdefined benefit pension plan administered by CalSTRS. The plan provides retirement and disability benefits,annual cost-of-living adjustments, and survivor benefits to beneficiaries. Benefit provisions are established byState statutes, as legislatively amended, within the State Teachers' Retirement Law. CalSTRS issues a separatecomprehensive annual financial report that includes financial statements and required supplementary information.Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 100 Waterfront Place,West Sacramento, CA 95605.

Funding Policy

Active members are required to contribute 8.00 percent of their salary, and the District is required to contribute anactuarially determined rate. The actuarial methods and assumptions used for determining the rate are thoseadopted by the CalSTRS Teachers' Retirement Board. The required employer contribution rate for fiscal year2012-2013 was 8.25 percent of annual payroll. The contribution requirements of the plan members areestablished by State statute. The District's contributions to CalSTRS for the fiscal years ending June 30, 2013,2012, and 2011, were $3,172,810, $3,161,222, and $3,338,029, respectively, and equal 100 percent of therequired contributions for each year.

CalPERS

Plan Description

The District contributes to the School Employer Pool under CalPERS, a cost-sharing multiple-employer publicemployee retirement system defined benefit pension plan administered by CalPERS. The plan providesretirement and disability benefits, annual cost-of-living adjustments, and survivor benefits to plan members andbeneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the PublicEmployees' Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includesfinancial statements and required supplementary information. Copies of the CalPERS' annual financial reportmay be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95811.

Funding Policy

Active plan members are required to contribute 7.00 percent of their salary (7.00 percent of monthly salary over$133.33 if the member participates in Social Security), and the District is required to contribute an actuariallydetermined rate. The actuarial methods and assumptions used for determining the rate are those adopted by theCalPERS Board of Administration. The District's contribution rate to CalPERS for fiscal year 2012-2013 was11.417 percent of covered payroll. The District's contributions to CalPERS for fiscal years ending June 30, 2013,2012, and 2011, were $2,638,078, $2,442,569, and $2,624,203, respectively, and equaled 100 percent of therequired contributions for each year.



52

On Behalf Payments

The State of California makes contributions to CalSTRS and CalPERS on behalf of the District. These paymentsconsist of State General Fund contributions to CalSTRS for the fiscal years ended June 30, 2013, 2012, and 2011,which amounted to $2,227,750, $2,072,446, and $1,538,968, respectively, (5.176 percent) of salaries subject toCalSTRS. Contributions are no longer appropriated in the annual Budget Act for the legislatively mandatedbenefits to CalPERS. Therefore, there is no on behalf contribution rate for CalPERS. No contributions weremade for CalPERS for the years ended June 30, 2013, 2012, and 2011. Under accounting principles generallyaccepted in the United States of America, these amounts are to be reported as revenues and expenditures. Theseamounts have been reflected in the basic financial statements as a component of nonoperating revenue andemployee benefit expense.

NOTE 16 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITIES

The District is a member of the Schools Excess Liability Fund (SELF), the Alliance of Schools for CooperativeInsurance Programs (ASCIP), the Alameda County Schools Insurance Group (ACSIG), and Golden WestFinancing Authority Joint Powers Authorities (JPAs). SELF, ASCIP, and ACSIG provide property and liabilityinsurance and health insurance. Golden West Financing Authority provides assistance related to school facilitiesfinancing. The relationship between the District and the JPAs is such that they are not component units of theDistrict for financial reporting purposes.

The JPAs have budgeting and financial reporting requirements independent of member units, and their financialstatements are not presented in these financial statements; however, transactions between the JPAs and theDistrict are included in these statements. Audited financial statements are available from the respective entities.

The District's share of year-end assets, liabilities, or fund equity has not been calculated.

During the year ended June 30, 2013, the District made payments of $40,029, $611,926, and $924,413 to theSchools Excess Liability Fund (SELF), the Alliance of Schools for Cooperative Insurance Programs (ASCIP), andthe Alameda County Schools Insurance Group (ACSIG), respectively.

NOTE 17 - COMMITMENT AND CONTINGENCIES

Deferral of State Apportionments and Reductions in Funding

The cash flow to the District of certified apportionment payments has been altered due to the current economiccrisis at the California State level. As a result, certain apportionments owed to the District for funding of FTES,categorical programs, and construction reimbursements which are attributable to the 2012-2013 fiscal year havebeen deferred to the 2013-2014 fiscal year. The total amount of cash payments deferred into the 2013-2014 fiscalyear was $18,021,558. As of October 2013, this amount had been received by the District. These deferrals ofapportionment are considered permanent with future funding also being subject to deferral into future years.



53

Parking Mitigation

The District has set aside funds to mitigate the impact of parking at Berkeley City College. These funds havebeen requested by the City of Berkeley as part of the development of the area surrounding Berkeley City College.At June 30, 2013, the total amount that has been deposited in a separate account owned by the District is$4,002,622. A formal agreement has not yet been finalized as to the actual mitigation project parameters. Thefunds that have been set aside are from general obligation bonds sold specifically for the construction of theBerkeley City College Campus.

Construction Commitments

The District is involved with various long-term construction and renovation projects throughout the four collegecampuses and the District Office. The projects are in various stages of completion and are funded primarilythrough the voter approved general obligation bonds.

NOTE 18 - RESTATEMENT OF PRIOR YEAR NET POSITION

The District's prior year beginning net position has been restated as of June 30, 2013.

Effective in fiscal year 2012-2013, the District was required to capitalize interest as part of the historical cost ofconstructing certain business-type activity assets. The implementation of this standard required a change inaccounting principle and restatement of the beginning net position of the District by $13,386,836.

Primary Government

Net Position - Beginning 51,822,470$

Restatement of capital assets for implementation of GASB Statement No. 62 13,386,836Net Position - Beginning, as Restated 65,209,306$

54

REQUIRED SUPPLEMENTARY INFORMATION


55

SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDINGPROGRESSFOR THE YEAR ENDED JUNE 30, 2013

Actuarial

Accrued

Liability Unfunded UAAL as a

Actuarial Actuarial (AAL) - AAL Funded Percentage of

Valuation Value of Entity (UAAL) Ratio Covered Covered Payroll

Date Assets (a) Age (b) (b - a) (a / b) Payroll (c) ([b - a] / c)

12/11/2008 -$ 106,785,000$ 106,785,000$ -$ 52,887,000$ 202%

4/30/2009 - 130,503,000 130,503,000 - 40,378,023 323%

3/21/2011 - 221,198,000 221,198,000 - 42,690,375 518%

3/1/2013 - 174,703,920 174,703,920 - 43,077,857 406%

56

SUPPLEMENTARY INFORMATION



57

DISTRICT ORGANIZATIONJUNE 30, 2013

Peralta Community College District was established in 1964 by the electorates of six Alameda County schooldistricts: Alameda, Albany, Berkeley, Emeryville, Oakland, and Piedmont. The District consists of the followingtwo-year community colleges: College of Alameda, Laney College, Merritt College, and Berkeley City College.The District's colleges are accredited by the Accrediting Commission for Community and Junior Colleges,Western Association of Schools and Colleges, which is one of six regional associations that accredit public andprivate schools, colleges, and universities in the United States.

BOARD OF TRUSTEES

MEMBER OFFICE TERM EXPIRES

Mr. Cy Gulassa President 2016

Mr. Abel Guillén Vice President 2014

Ms. Meredith Brown Member 2016

Dr. Nicky González Yuen Member 2016

Ms. Linda Handy Member 2014

Dr. William Riley Member 2014

Mr. Bill Withrow Member 2016

Ms. Wai Li Student Trustee 2014

Ms. Sharon Clegg Student Trustee 2014

ADMINISTRATION

Dr. Jośe M. Ortiz Chancellor

Dr. Jannett Jackson Interim President, College of Alameda

Dr. Deborah Budd President, Berkeley Community College

Dr. Norma Ambriz-Galaviz President, Merritt Community College

Dr. Elñora Webb President, Laney College

Mr. Ronald P. Gerhard, MBA, CPA Vice Chancellor, Finance and Administration

Dr. Michael Orkin Interim Vice Chancellor, Educational Services

Dr. Sadiq Ikharo Vice Chancellor, General Services

Ms. Trudy Largent, Esq. Vice Chancellor for Human Resources

Ms. Thuy Thi Nguyen, Esq. General Counsel



58

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED JUNE 30, 2013

Pass-ThroughEntity


U.S. DEPARTMENT OF EDUCATION

Student Financial Assistance Cluster

Pell Grants 84.063 30,398,190$

Federal Supplemental Education Opportunity Grants 84.007 1,255,878

Federal Work Study Program 84.033 963,860

Federal Direct Student Loans 84.268 5,136,052

Total Student Financial Assistance Cluster 37,753,980

Higher Educational Institutional Aid - Strengthening InstitutionsProgram, Title III 84.031A 368,153Higher Educational Institutional Aid - Strengthening InstitutionsPathways, Systems, and Services to Maximize Student Success 84.031A 348,019Higher Educational Institutional Aid - AANIPISI Initiative 84.031L 301,036Trio Support Services 84.042A 424,431Carl D. Perkins - Career and Technical Education Act (CTEA)

Career and Technical Education Act (CTEA) Title I, Part C 84.048 10-C01-041 846,377Career and Technical Education Act (CTEA) Transitions 84.048 11-139-340 161,159

Vocational Rehabilitation ClusterPassed through the California Department of Rehabilitation

State Vocational Rehabilitation Services - Workability 84.126A 27372 524,553State Vocational Rehabilitation Services - College 2 Career Program 84.126A 28146 250,000

Total Vocational Rehabilitation Cluster 774,553

TOTAL U.S. DEPARTMENT OF EDUCATION 40,977,708

U.S. DEPARTMENT OF AGRICULTURE

Passed through the California Department of Education

Child Care and Adult Food Program 10.558 1912-4A 81,666

U.S. DEPARTMENT OF LABOR

Advance Manufacturing Jobs and Innovation Program 17.268 20,882

Passed through Los Medanos College

Trade Adjustment Assistance Community College and Career Training 17.282 [1] 155,661

WIA Community Based Job Training Grants 17.269 1,303,093

Passed through San Mateo County Community College District

WIA Community Based Job Training Grants - Bay CEC 17.269 [1] 6,159

Workforce Investment Act (WIA) Cluster

Passed through Marin County Workforce Investment Board

Marin Employment Connection 17.258 [1] 2,730

Passed through the State of California, EDD

Adult - Green Jobs SFP 17.258 K183469 273,560

WIA Adult - Clean Energy Project 17.258 K076833 63,121

Passed through the City of Richmond

WIA Adult - Clean Energy Workforce Training Program 17.258 21000666 18,881

[1] Pass-Through Entity Identifying Number not available.



59


Pass-ThroughEntity


U.S. DEPARTMENT OF LABOR, Continued

Passed through the Oakland Private Industry Council

WIA Adult - Medical Device Technology 17.258 10-11-AC-LAN-MD 71,720$

Passed through the County of Alameda

WIA Adult - One Stop Career Center 17.258 900050 285,818

Total Workforce Investment Act (WIA) Cluster 715,830

Passed through the Oakland Workforce Investment Board

East Bay Green Jobs Project 17.261 [1] 54,460

Passed through the Spanish Speaking Unity Council


Placement in High Growth and Emerging Industry Sectors 17.275 [1] 355,529

TOTAL U.S. DEPARTMENT OF LABOR 2,611,614

U.S. DEPARTMENT OF STATE

Passed through the Institute of International Education

Academic Exchange Programs - Fullbright Gateway Orientation Program 19.400 [1] 43,930

NATIONAL SCIENCE FOUNDATION

Educating Technicians for Building Automation and Sustainability* 47.076 390,576

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Associate Degree in Nursing Program 98.887 278,857

Regents of the UC Program 93.859 44,688Passed through the Foundation for California Community Colleges

Temporary Assistance for Needy Families - Child Development Careers 93.558 1012-24 187,732Passed through the Yosemite Community College District,

Child Development Training Consortium

Child Care and Development Block Grant - CDTC 93.575 11-12-4170 9,919TOTAL U.S. DEPARTMENT OF HEALTH ANDHUMAN SERVICES 521,196

U.S. DEPARTMENT OF JUSTICECenter for Public Safety 16.753 74,060

U.S. DEPARTMENT OF VETERAN AFFAIRSVeterans Administration Fees 64.032 3,838

U.S. DEPARTMENT OF COMMERCEMANEX Program 11.619 12,732

[1] Pass-Through Entity Identifying Number not available.* Research and Development grant.



60


Pass-ThroughEntity


CORPORATION FOR NATIONAL AND COMMUNITY SERVICEAmericorp - National Service Awards 94.006 108,147$

Passed through the Local Initiatives Support CorporationSocial Innovation Fund 94.019 [1] 51,781

TOTAL CORPORATION FOR NATIONAL ANDCOMMUNITY SERVICE 159,928

TOTAL FEDERAL EXPENDITURES 44,877,248$ [2]

[2] The difference between the Schedule of Expenditures of Federal Awards and Federal revenues reported on theStatement of Revenues, Expenses, and Changes in Net Position is due to differences of $15,260 related torevenue recognition principles in various programs.



61

SCHEDULE OF EXPENDITURES OF STATE AWARDSFOR THE YEAR ENDED JUNE 30, 2013

Program Entitlements

Current Prior Total

Program Year Year Entitlement

Alameda County Department 720$ -$ 720$

Song Brown RN Program - 161,032 161,032

Staff Diversity 8,862 49,482 58,344

CARE 362,947 - 362,947

EOPS 1,847,146 - 1,847,146

Career Advancement - 55,107 55,107

SFAA/BFAP 1,267,245 - 1,267,245

DSPS 1,546,741 - 1,546,741

Matriculation 902,130 - 902,130

FCC Youth Empowerment YESS 22,500 - 22,500

CalWORKs 613,931 - 613,931

Nursing Capacity Grant 260,687 - 260,687

Lottery 2,821,559 - 2,821,559

Career Ladders Project - 32,551 32,551

Job Development Incentive Funds 31,063 - 31,063

Faculty Entrepreneurship Program 11,250 2,798 14,048

CTE Community Collaborative - 539,314 539,314

CAA/Contra Costa 305,000 - 305,000

Child Care - Department of Education 762,915 - 762,915

Child Care - Tax Bailout 370,194 - 370,194

Cal Grant B/C 1,425,947 - 1,425,947

WIA - Richmond Works/EastBay Works - 75,522 75,522

Basic Skills 360,000 386,062 746,062

Industry Driven Regional College 129,283 - 129,283

Electronic Transcript Mini Grant 49,650 - 49,65013,099,770$ 1,301,868$ 14,401,638$

61

Accounts

Cash Receivable Deferred Flex Total Program

Received (Payables) Revenue Transfers Revenue Expenditures

720$ -$ 305$ -$ 415$ 415$

161,032 - 131,555 - 29,477 29,476

58,344 - 48,170 - 10,174 10,174

362,947 - - - 362,947 362,947

1,848,737 (3,852) - - 1,844,885 1,844,892

55,107 - - - 55,107 55,107

1,267,245 - - - 1,267,245 1,267,245

1,549,804 - - 1,157,655 2,707,459 2,707,469

902,130 - - - 902,130 902,130

6,388 15,711 - - 22,099 22,099

613,097 (7,807) - - 605,290 605,290

218,977 (17,510) - - 201,467 201,467

117,374 460,609 - - 577,983 437,532

32,551 - 10,793 - 21,758 21,758

24,233 5,715 - - 29,948 29,948

14,048 - 11,298 - 2,750 2,750

539,314 - 271,214 - 268,100 268,100

- 288,470 - - 288,470 279,748

761,660 1,255 - - 762,915 762,915

370,194 - - - 370,194 370,194

1,421,533 4,415 - - 1,425,948 1,428,073

75,522 - - - 75,522 75,522

746,062 - 413,277 - 332,785 332,784

- 62,335 - - 62,335 62,335

- 10,350 - - 10,350 10,35011,147,019$ 819,691$ 886,612$ 1,157,655$ 12,237,753$ 12,090,720$

Program Revenues



62

SCHEDULE OF WORKLOAD MEASURES FOR STATE GENERALAPPORTIONMENT ANNUAL (ACTUAL) ATTENDANCEFOR THE YEAR ENDED JUNE 30, 2013

Reported Audit Audited

Data Adjustments Data

CATEGORIES

A. Summer Intersession (Summer 2012 only)


2. Credit 2,093 - 2,093

B. Summer Intersession (Summer 2013 - Prior to July 1, 2013)

1. Noncredit* - - -

2. Credit - - -

C. Primary Terms (Exclusive of Summer Intersession)

1. Census Procedure Courses



2. Actual Hours of Attendance Procedure Courses

(a) Noncredit* 73 - 73

(b) Credit 189 - 189

3. Independent Study/Work Experience



(c) Noncredit Independent Study/Distance Education Courses - - -

D. Total FTES 18,264 - 18,264

SUPPLEMENTAL INFORMATION (Subset of Above Information)

H. Basic Skills Courses and Immigrant Education


2. Credit 903 - 903

* Including Career Development and College Preparation (CDCP) FTES.



63

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATIONFOR THE YEAR ENDED JUNE 30, 2013

Object/TOP

Codes

Reported

Data

Audit

Adjustments

Revised

Data

Reported

Data

Audit

Adjustments

Revised

Data

Academic SalariesInstructional Salaries

Contract or Regular 1100 16,233,586$ -$ 16,233,586$ 16,233,586$ -$ 16,233,586$Other 1300 12,268,133 - 12,268,133 12,268,133 - 12,268,133

Total Instructional Salaries 28,501,719 - 28,501,719 28,501,719 - 28,501,719Noninstructional Salaries

Contract or Regular 1200 - - - 8,054,309 - 8,054,309Other 1400 - - - 1,383,058 - 1,383,058

Total Noninstructional Salaries - - - 9,437,367 - 9,437,367

Total Academic Salaries 28,501,719 - 28,501,719 37,939,086 - 37,939,086

Classified SalariesNoninstructional Salaries

Regular Status 2100 - - - 16,431,112 - 16,431,112Other 2300 - - - 1,254,646 - 1,254,646

Total Noninstructional Salaries - - - 17,685,758 - 17,685,758Instructional Aides

Regular Status 2200 1,220,772 - 1,220,772 1,220,772 - 1,220,772Other 2400 703,759 - 703,759 703,759 - 703,759

Total Instructional Aides 1,924,531 - 1,924,531 1,924,531 - 1,924,531

Total Classified Salaries 1,924,531 - 1,924,531 19,610,289 - 19,610,289Employee Benefits 3000 20,978,405 - 20,978,405 36,834,507 - 36,834,507Supplies and Material 4000 - - - 610,709 - 610,709Other Operating Expenses 5000 - - - 8,517,270 - 8,517,270Equipment Replacement 6420 - - - - - -

Total Expenditures

Prior to Exclusions 51,404,655 - 51,404,655 103,511,861 - 103,511,861


AC 0100 - 5900 and AC 6110 AC 0100 - 6799



64


Object/TOP

Codes

Reported

Data

Audit

Adjustments

Revised

Data

Reported

Data

Audit

Adjustments

Revised

Data

Exclusions

Activities to Exclude

Instructional Staff - Retirees' Benefits and

Retirement Incentives 5900 4,615,222$ -$ 4,615,222$ 4,615,222$ -$ 4,615,222$

Student Health Services Above Amount

Collected 6441 - - -$ - - -

Student Transportation 6491 - - - 766,001 - 766,001

Noninstructional Staff - Retirees' Benefits

and Retirement Incentives 6740 - - - 3,076,814 - 3,076,814

Objects to Exclude

Rents and Leases 5060 - - - - - -

Lottery Expenditures -

Academic Salaries 1000 - - - - - -

Classified Salaries 2000 - - - - - -

Employee Benefits 3000 - - - - - -

Supplies and Materials 4000 - - - - - -

Software 4100 - - - - - -

Books, Magazines, and Periodicals 4200 - - - - - -

Instructional Supplies and Materials 4300 - - - - - -

Noninstructional Supplies and Materials 4400 - - - - - -

Total Supplies and Materials - - - - - -


AC 0100 - 5900 and AC 6110 AC 0100 - 6799



65


Object/TOP

Codes

Reported

Data

Audit

Adjustments

Revised

Data

Reported

Data

Audit

Adjustments

Revised

Data

Other Operating Expenses and Services 5000 -$ -$ -$ 2,316,077$ -$ 2,316,077$

Capital Outlay

Library Books 6000 - - - - - -

Equipment 6300 - - - - - -

Equipment - Additional 6400 - - - - - -

Equipment - Replacement 6410 - - - - - -

Total Equipment - - - 2,316,077 - 2,316,077

Total Capital Outlay

Other Outgo 7000 - - - 293,220 - 293,220

Total Exclusions 4,615,222 - 4,615,222 11,067,334 - 11,067,334

Total for ECS 84362,

50 Percent Law 46,789,433$ -$ 46,789,433$ 92,444,527$ -$ 92,444,527$Percent of CEE (Instructional Salary

Cost/Total CEE) 50.61% 50.61% 100.00% 100.00%

50% of Current Expense of Education 46,222,264$ 46,222,264$

ECS 84362 A ECS 84362 B

Instructional Salary Cost Total CEE

AC 0100 - 5900 and AC 6110 AC 0100 - 6799



66

RECONCILIATION OF ANNUAL FINANCIAL AND BUDGETREPORT (CCFS-311) WITH AUDITED FUND BALANCEFOR THE YEAR ENDED JUNE 30, 2013

Summarized below are the fund balance reconciliations between the Annual Financial and Budget Report(CCFS-311) and the audited fund balance.

General Bond Interest

Fund and Redemption

June 30, 2013, Annual Financial and Budget Report (CCFS-311)

Reported Fund Balance* 16,974,689$ 55,437,066$

Adjustments to Increase (Decrease) Fund Balance

Cash on hand 121,341 -

Accounts receivable (1,093,096) -

Accounts payable (3,755,837) -

Deferred revenue (50,535) -

Due from other funds - -

Due to other funds 4,000,000 -

Principal expense - (10,780,000)

Interest expense - (19,742,994)

Difference CCFS-311 to general ledger - (1,001,723)

Net Adjustments (778,127) (31,524,717)Audited Fund Balance 16,196,562$ 23,912,349$

* As amended November 6, 2013.

66

Special Capital Revenue Bond Self

Reserve Projects Project Insurance

13,243,435$ 5,316,459$ 112,167,480$ 1,492,368$

- - - -

- (1,208,158) - -

- - (1,599,875) -

- - - -

(1,500,000) - - (2,500,000)

- - - -

- - - -

- - - -

- - - -

(1,500,000) (1,208,158) (1,599,875) (2,500,000)11,743,435$ 4,108,301$ 110,567,605$ (1,007,632)$



67

PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORTFOR THE YEAR ENDED JUNE 30, 2013

EPA Proceeds: 8630


Activity

Code

Operating

Expenses

(Obj 4000-5000)

Capital Outlay

(Obj 6000)

Instructional Activities 1000-5900

Total Expenditures for EPA - -

Revenues Less Expenditures

15,325,161$ 15,325,161$

-$

---

--

-

Salaries

and Benefits

(Obj 1000-3000) Total

15,325,161$ 15,325,161$


Object

Code Unrestricted

15,325,161$



68

RECONCILIATION OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITIONJUNE 30, 2013

Amounts Reported for Governmental Activities in the Statement of

Net Position are Different Because:

Total Fund Balance, Retained Earnings, and Due to Student Groups:

General Funds 18,372,193$

Special Revenue Funds 1,283,760

Debt Service Fund 35,655,784

Capital Projects Funds 114,675,906

Internal Service Fund (1,007,632)

Fiduciary Funds (18,102,791)

Total Fund Balance and Retained Earnings -

All District Funds 150,877,220$

Capital assets used in governmental activities are not financial resources

and, therefore, are not reported as assets in governmental funds.

The cost of capital assets is 585,799,945

Accumulated depreciation is (185,386,030)

Subtotal 400,413,915

Governmental funds report cost of issuance associated with the issuance of

debt when the debt is first issued, whereas the amounts are deferred and

amortized in the Statement of Activities.

Cost of issuance at year end (less Deferred Comp Trust Fund) amounted to: 4,107,570

Amounts held in trust on behalf of others (Trust and Agency Funds) (1,989,605)

In governmental funds, unmatured interest on long-term obligations is recognized

in the period when it is due. On the government-wide financial statements,

unmatured interest on long-term obligations is recognized when it is incurred. (8,473,642)

In governmental funds, expenses related to Interest Rate SWAPs are recognized

in the period in which they are due. On the government-wide financial

statements, the SWAP liability is recognized when it is incurred. (1,053,371)

Long-term obligations at year end consist of:

General obligation bonds payable 413,175,000

Premium on debt 18,238,433

Load banking 1,832,325

Other postemployment benefits obligation (OPEB) 27,161,293

Compensated absences 3,394,795

Subtotal (463,801,846)

Total Net Position 80,080,241$


69


NOTE 1 - PURPOSE OF SCHEDULES

District Organization

This schedule provides information about the District's governing board members and administration members.

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the Districtand is presented on the modified accrual basis of accounting. The information in this schedule is presented inaccordance with the requirements of the United States Office of Management and Budget Circular A-133, Auditsof States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in thisschedule may differ from amounts presented in, or used in the preparation of, the financial statements.

Subrecipients

On the Federal expenditures presented in the schedule, the District provided Federal awards to subrecipients asfollows:

CFDA Amount Provided

Grantor/Program Number to Subrecipients

WIA Community Based Job Training Grants 17.269 1,331,537$

Schedule of Expenditures of State Awards

The accompanying Schedule of Expenditures of State Awards includes the State grant activity of the District andis presented on the modified accrual basis of accounting. Therefore, some amounts presented in this schedulemay differ from amounts presented in, or used in the preparation of, the financial statements. The information inthis schedule is presented to comply with reporting requirements of the California State Chancellor's Office.

Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance

FTES is a measurement of the number of pupils attending classes of the District. The purpose of attendanceaccounting from a fiscal standpoint is to provide the basis on which apportionments of State funds, includingrestricted categorical funding, are made to community college districts. This schedule provides informationregarding the annual attendance measurements of students throughout the District.

Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation

ECS 84362 requires the District to expend a minimum of 50 percent of the unrestricted General Fund monies onsalaries of classroom instructors. This is reported annually to the State Chancellor's Office. This scheduleprovides a reconciliation of the amount reported to the State Chancellor's Office and the impact of any auditadjustments and/or corrections noted during the audit.


70


Reconciliation of Annual Financial and Budget Report (CCFS-311) With Audited Fund Balance

This schedule provides the information necessary to reconcile the fund balance of all funds reported on the FormCCFS-311 to the District's internal fund financial statements.

Proposition 30 Education Protection Act (EPA) Expenditure Report

This schedule provides the District's summary of receipts and uses of the monies received through the EPA.

Reconciliation of Governmental Funds to the Statement of Net Position

This schedule provides a reconciliation of the adjustments necessary to bring the District's internal fund financialstatements, prepared on a modified accrual basis, to the entity-wide full accrual basis financial statements requiredunder GASB Statements No. 34 and No. 35 business-type activities reporting model.

71

INDEPENDENT AUDITORS' REPORTS

72

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited, in accordance with auditing standards generally accepted in the United States of America andthe standards applicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States, the basic financial statements of Peralta Community College District(the District) as of and for the year ended June 30, 2013, and the related notes to the financial statements, whichcollectively comprise the District's basic financial statements and have issued our report thereon datedDecember 5, 2013.

As discussed in the Notes to the basic financial statements, the accompanying financial statements reflect certainchanges required as a result of the implementation of GASB Statement No. 62 for the year ended June 30, 2013.These changes require a restatement of the beginning net position of the District as discussed in Note 18. Ouropinion is not modified with respect to this matter.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's internal control overfinancial reporting (internal control) to determine the audit procedures that are appropriate in the circumstancesfor the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing anopinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on theeffectiveness of the District's internal control.

Our consideration of internal control was for the limited purpose described in the first paragraph of this sectionand was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were notidentified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identifiedcertain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol such that there is a reasonable possibility that a material misstatement of the District's financial statementswill not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies described in theaccompanying Schedule of Findings and Questioned Costs as items 2013-1 and 2013-2 to be materialweaknesses.





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A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe thana material weakness yet important enough to merit attention by those charged with governance. We consider thedeficiency described in the accompanying Schedule of Findings and Questioned Costs as item 2013-3 to be asignificant deficiency.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free of materialmisstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed noinstances of noncompliance or other matters that are required to be reported under Government AuditingStandards.

We noted certain matters that we reported to management of the District in a separate letter dated December 5, 2013.

Peralta Community District's Responses to the Findings

The District's responses to the findings identified in our audit are described in the accompanying Schedule ofFindings and Questioned Costs. The District's responses were not subjected to the auditing procedures applied inthe audit of the financial statements and, accordingly, we express no opinion on the responses.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and theresults of that testing, and not to provide an opinion on the effectiveness of the District's internal control or oncompliance. This report is an integral part of an audit performed in accordance with Government AuditingStandards in considering the District's internal control and compliance. Accordingly, this communication is notsuitable for any other purpose.


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INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACHMAJOR PROGRAM AND REPORT ON INTERNAL CONTROLOVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133


Report on Compliance for Each Major Federal Program

We have audited Peralta Community College District's (the District) compliance with the types of compliancerequirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and materialeffect on each of the District's major Federal programs for the year ended June 30, 2013. The District's majorFederal programs are identified in the Summary of Auditors' Results section of the accompanying Schedule ofFindings and Questioned Costs.


Management is responsible for compliance with the requirements of laws, regulations, contracts, and grantsapplicable to its Federal programs.


Our responsibility is to express an opinion on compliance for each of the District's major Federal programs basedon our audit of the types of compliance requirements referred to above. We conducted our audit of compliance inaccordance with auditing standards generally accepted in the United States of America; the standards applicableto financial audits contained in Government Auditing Standards issued by the Comptroller General of theUnited States; and OMB Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations.Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the types of compliance requirements referred to above that couldhave a direct and material effect on a major Federal program occurred. An audit includes examining, on a testbasis, evidence about the District's compliance with those requirements and performing such other procedures aswe consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federalprogram. However, our audit does not provide a legal determination of the District's compliance.





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Basis for Qualified Opinion on Major Federal Programs

As described in the table below and the accompanying Schedule of Findings and Questioned Costs, the Districtdid not comply with requirements regarding:

Program Name and Catalog of Finding

Compliance Requirement Federal Domestic Assistance (CFDA) Number Number

Allowable Costs

U.S. Department of Education (DOE), Higher Education Institutional Aid -

Strengthening Institutions Program, Title III (CFDA #84.031A), Higher

Education Institutional Aid - Strengthening Institutions Pathways,

Systems, and Services to Maximize Student Success (CFDA #84.031A),

Career and Technical Education Act (CTEA) Title I, Part C

(CFDA #84.048)

2013-4

Equipment and Real

Property Management

U.S. Department of Education (DOE), Carl D. Perkins - Career and

Technical Education Act (CTEA) Title I, Part C (CFDA #84.048)2013-5

Special Test - COD

Reporting


Cluster - U.S. Department of Education (DOE), Federal Pell Grant

Program (CFDA #84.063) and Federal Direct Student Loans

(CFDA #84.268)

2013-6

Special Test - Return to

Title IV


Cluster (CFDA #84.007, #84.268, #84.033, #84.063)2013-7

Special Test - Direct Loan

Reconciliations


Cluster (CFDA #84.007, #84.268, #84.033, #84.063)2013-8

Compliance with such requirements is necessary, in our opinion, for the District to comply with the requirementsapplicable to that program.

Qualified Opinion on Major Federal Programs

In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Districtcomplied, in all material respects, with the types of compliance requirements referred to above that could have adirect and material impact on the programs noted above for the year ended June 30, 2013.

Unmodified Opinion on Each of the Other Major Federal Programs

In our opinion, the District complied, in all material respects, with the types of compliance requirements referredto above that could have a direct and material effect on each of its major Federal programs identified in theSummary of Auditors' Results section of the accompanying Schedule of Findings and Questioned Costs for theyear ended June 30, 2013.

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Other Matters

The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported inaccordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings andQuestioned Costs as item 2013-9. Our opinion on each major Federal program is not modified with respect tothese matters.

The District's responses to the noncompliance findings identified in our audit are described in the accompanyingSchedule of Findings and Questioned Costs. The District's responses were not subjected to the auditingprocedures applied in the audit of the financial statements and, accordingly, we express no opinion on theresponses.

Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing our audit ofcompliance, we considered the District's internal control over compliance with the types requirements that couldhave a direct and material effect on each major Federal program to determine the auditing procedures that areappropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federalprogram and to test and report on internal control over compliance in accordance with OMB Circular A-133, butnot for the purpose of expressing an opinion on the effectiveness of internal control over compliance.Accordingly, we do not express an opinion on the effectiveness of the District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federalprogram on a timely basis. A material weakness in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance, such that there is a reasonable possibility thatmaterial noncompliance with a type of compliance requirement of a Federal program will not be prevented, ordetected and corrected, on a timely basis. A significant deficiency in internal control over compliance is adeficiency, or a combination of deficiencies, in internal control over compliance with a type of compliancerequirement of a Federal program that is less severe than a material weakness in internal control overcompliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraphof this section and was not designed to identify all deficiencies in internal control over compliance that might bematerial weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies mayexist that were not identified. We did not identify any deficiencies in internal control over compliance that weconsider to be material weaknesses. However, we identified certain deficiencies in internal control overcompliance described in the accompanying Schedule of Findings and Questioned Costs as items 2013-4 through2013-8 that we consider to be significant deficiencies.

The District's responses to the internal control over compliance findings identified in our audit are described in theaccompanying Schedule of Findings and Questioned Costs. The District's responses were not subjected to theauditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses.

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The purpose of this report on internal control over compliance is solely to describe the scope of our testing ofinternal control over compliance and the results of that testing based on the requirements of OMB Circular A-133.Accordingly, this report is not suitable for any other purpose.


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INDEPENDENT AUDITORS' REPORT ON STATE COMPLIANCE


Report on State Compliance

We have audited Peralta Community College District's (the District) compliance with the types of compliancerequirements as identified in the California Community Colleges Chancellor's Office District Audit Manual issuedin April 2013 that could have a direct and material effect on each of the District's programs as noted below for theyear ended June 30, 2013.


Management is responsible for compliance with the requirements identified in the California CommunityColleges Chancellor's Office District Audit Manual issued in April 2013.


Our responsibility is to express an opinion on compliance of each of the District's programs based on our audit ofthe types of compliance requirements referred to above. We conducted our audit in accordance with auditingstandards generally accepted in the United States of America and the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of the United States. Thesestandards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliancewith the compliance requirements referred to above could have a material effect on the applicable programs notedbelow. An audit includes examining, on a test basis, evidence about the District's compliance with thoserequirements and performing such procedures as we consider necessary in the circumstances. We believe that ouraudit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of theDistrict's compliance with those requirements.


As described in the accompanying Schedule of Findings and Questioned Costs, the District did not comply withrequirements regarding 425 Residency Determination for Credit Courses, 427 Concurrent Enrollment of K-12Students in Community College Credit Courses, 433 CalWORKS, 474 Extended Opportunity Programs andServices (EOPS) and Cooperative Agencies Resources for Education (CARE), and 475 Disabled StudentPrograms and Services (DSPS). Compliance with such requirements is necessary, in our opinion, for the Districtto comply with the requirements applicable to those programs.

Qualified Opinion

In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Districtcomplied, in all material respects, with the types of compliance requirements referred to above for the year endedJune 30, 2013.





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Unmodified Opinion for Each of the Other Programs

In our opinion, the District complied, in all material respects, with the compliance requirements referred to abovethat are applicable to the programs noted below that were audited for the year ended June 30, 2013, except asdescribed in the State Awards Findings and Questioned Costs section of the accompanying Schedule of Findingsand Questioned Costs.

Other Matters

In connection with the audit referred to above, we selected and tested transactions and records to determine theDistrict's compliance with State laws and regulations applicable to the following:

Section 421 Salaries of Classroom Instructors (50 Percent Law)Section 423 Apportionment for Instructional Service Agreements/ContractsSection 424 State General Apportionment Funding SystemSection 425 Residency Determination for Credit CoursesSection 426 Students Actively EnrolledSection 427 Concurrent Enrollment of K-12 Students in Community College Credit CoursesSection 431 Gann Limit CalculationSection 433 CalWORKSSection 435 Open EnrollmentSection 437 Student Fees – Instructional and Other MaterialsSection 438 Student Fees – Health Fees and Use of Health Fee FundsSection 474 Extended Opportunity Programs and Services (EOPS) and Cooperative Agencies Resources

for Education (CARE)Section 475 Disabled Student Programs and Services (DSPS)Section 479 To Be Arranged (TBA) HoursSection 490 Proposition 1D State Bond Funded ProjectsSection 491 Proposition 30 Education Protection Account Funds

The District reports no Instructional Service Agreements/Contracts for Apportionment Funding; therefore, thecompliance tests within this section were not applicable.

The District reports no attendance within classes subject to the TBA Hours; therefore, the compliance tests withinthis section were not applicable.

The District did not receive any monies from Proposition 1D State bond funds; therefore, the compliance testswithin this section were not applicable.

The District's responses to the findings identified in our audit are described in the accompanying Schedule ofFindings and Questioned Costs. We did not audit the District's responses and, accordingly, we express no opinionon the responses.


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SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SUMMARY OF AUDITORS' RESULTSFOR THE YEAR ENDED JUNE 30, 2013

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FINANCIAL STATEMENTS

Unmodified

Yes

Yes

No

FEDERAL AWARDS

No

Yes

Qualified


84.031A, 84.031L

Higher Educational Institutional Aid - Strengthening

Institutions Program, Title III


Institutions Pathways, Systems, and Services to

Maximize Student Success

Higher Educational Institutional Aid - AANIPISI Initiative


84.048 Career and Technical Education Act (CTEA), Title I, Part C

Yes



84.031A, 84.031L


Institutions Program, Title III


Institutions Pathways, Systems, and Services to

Maximize Student Success

Higher Educational Institutional Aid - AANIPISI Initiative

84.042A Trio Student Support Services

84.048 Career and Technical Education Act (CTEA), Title I, Part C

17.258 Workforce Investment Act (WIA) Cluster

17.269

WIA Community Based Job Training Grants

WIA Community Based Job Training Grants - Bay CEC

17.275


Placement in High Growth and Emerging Industry Sectors

47.076 Educating Technicians for Building Automation and Sustainability

300,000$

Auditee qualified as low-risk auditee? No

STATE AWARDS

No

Yes

Qualified

Type of auditors' report issued:

Internal control over financial reporting:



Noncompliance material to financial statements noted?

Internal control over major programs:



Type of auditors' report issued on compliance for major programs:

Unmodified for all major programs except for the following programs which were qualified:

Type of auditors' report issued on compliance for State programs:

Any audit findings disclosed that are required to be reported in accordance with

Circular A-133, Section .510(a)?

Identification of major programs:

Dollar threshold used to distinguish between Type A and Type B programs:

Internal control over State programs:





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The following findings represent significant deficiencies, material weaknesses, and/or instances of noncompliancerelated to the financial statements that are required to be reported in accordance with Government AuditingStandards.

2013-1 FINANCIAL RECONCILIATION PROCESS


The accounting system used to record the financial affairs of any community college district shall bein accordance with the definitions, instructions, and procedures published in the CaliforniaCommunity Colleges Budget and Accounting Manual (BAM). Colleges are also required to presenttheir financial statements in accordance with generally accepted accounting principles (GAAP).

Condition

Material Weakness - Many errors were made within the closing process of the District's financialrecords during the current fiscal year. Material adjustments and reclassifications were required toconform to the BAM. Errors were found in several accounts including, but not limited to:

Suspense Accounts:

The District has a number of suspense accounts associated with their receivables and liabilities. Thepurposes of a suspense account is to be used as a temporary recording of information as theaccounting could not be determined or does not appear reasonable at the time that the transaction isrecorded. When the proper account is determined, the amount should be removed from the suspenseaccount to the proper account. Suspense accounts should be cleared out regularly; they are fortemporary use only. The District is not properly reconciling these accounts. These suspenseaccounts have balances at year end that are not reconciled.

Student Accounts Receivable:

The student accounts receivable account balance as of year end had activity accounted for in thestudent accounts receivable account, as well as their deferred revenue account for activity related tothe following fiscal year. These amounts were not reconciled.

Campus Accounts:

Several of the District's cash accounts being held at the campus locations were not being activelymonitored during the year. Reconciliations were not performed during the year, and the accountsshowed several errors. There appears to be a lack of oversight over the various cash accounts held atthe individual campuses.

Cash Accounts:

Bank reconciliations for all bank accounts are not being obtained by the District Office on a monthlybasis.



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Effect

Many material adjustments to the general ledger were proposed as a result of the audit procedures.These adjustments were accepted by management to ensure the financial statements were presentedfairly.

Cause

The oversight controls over the closing process appear not have been adhered to, resulting inadjustments and a material weakness.

Recommendation

The District needs to develop a closing procedure calendar at year end to ensure that all informationis prepared, reviewed, and reconciled. The number of suspense accounts used should be examined,and the accounts should be cleared out on a monthly basis. The District should ensure monthlyreview of campus accounts to ensure that all information is being accounted for completely andaccurately.


Due to the departure of an employee in the key position within the District Office in the middle of theclosing and annual audit, the oversight controls over the closing process had some challenges. Therewere misunderstandings between the exiting person and the remaining staff as to what steps had beencompleted and which still needed to be completed. The year-end closing checklist has been modifiedto include the areas of concern, and will be jointly owned by all of the financial staff.

Suspense Accounts are used to record the liabilities for payroll related items. The account balanceswill be reconciled on a regular basis.

The year-end closing checklist has been modified to include the journal entry to adjust the StudentAccounts Receivables and Deferred Revenue accounts.

The District will require monthly cash reconciliations for all cash accounts held at the campuslocations.

All bank accounts reconciliations will be completed and held at the District Office.

2013-2 DEFERRED COMPENSATION FUND


The Fiduciary Funds Group is used to account for assets held by the District in a trustee or agencycapacity for individuals, private organizations, other governmental units, and or/other funds.Fiduciary funds are accounted for on the full-accrual basis.



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Condition

Material Weakness - The District is not correctly accounting for the activity within the DeferredCompensation Fund. Long-term debt and investment account balances were not accuratelyaccounted for within the fund. All associated debt related transactions were not accurately accountedfor within the fund including refunding and posting prior year transactions. The beginning balancedid not agree to prior year ending balance per audited financial statements. The District continues toshow debt balances and investment balances for debt that has been refunded in prior years.

Effect

Material adjustments were proposed as a result of the audit procedures. These adjustments wereaccepted by management to ensure the financial statements were fairly stated.

Cause

The District does not have an individual responsible for accounting for all the transactions within thefund. There was no review process over the accounting for the fund during the year.

Recommendation

The District should assign the responsibility of posting and reconciling all Deferred CompensationFund activity. This should include the investment and debt activities. All postings should bereviewed on a regular basis by an individual other than the preparer who has knowledge of theactivities accounted for within the fund.


The prior year transactions that were not recorded will be recorded this year as audit adjustmentsbringing the beginning and ending balances in alignment. By doing this, the activity in this fund willbe accounted for correctly. This account is reconciled on a monthly basis by one of the accountingstaff in the finance department, and reviewed by the Director of Fiscal Services.

2013-3 ANNUAL FINANCIAL AND BUDGET REPORT


The Annual Financial and Budget Report (CCSF-311) is used primarily as an "internal" financialreport for use within the Community College System for comparing financial results acrossCalifornia community college districts. Districts are required to submit four quarterly reports to theState Chancellor's Office including the final CCSF-311.

Condition

Significant Deficiency - The District's CCSF-311 report was not completed accurately. There wereseveral differences from the District's general ledger to the CCSF-311.



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Effect

The District was required to re-submit their CCFS-311 report to correct the inaccuracies throughoutthe report.

Cause

The District did not have an adequate review procedure over the submitting of the CCFS-311 report.

Recommendation

The District should ensure that once the CCFS-311 report is completed, an individual other than thepreparer reviews the report by agreeing the information to the general ledger prior to submittal. Theindividual should verify for consistencies throughout the report, as well as classifications.


The program used to extract the data for input into the State Chancellor's Office for the AnnualFinancial and Budget Report (CCSF-311) was not extracted correctly. The staff in finance hasworked with the Information Technology staff to develop a report that accurately extracts the data forfuture use. This new report was used to key the corrected information into the State Chancellor's webpage. The year-end closing schedule has been modified to include a separate review by theVice Chancellor of Finance and Administration.


FEDERAL AWARD FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2013

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The following findings represent significant deficiencies and/or instances of noncompliance including questionedcosts that are required to be reported by OMB Circular A-133.



U.S. Department of Education (DOE), Higher Educational Aid - Strengthening Institutions Pathways,Systems, and Services to Maximize Student Success (CFDA #84.031A)Career and Technical Education Act (CTEA) Title I, Part C (CFDA #84.048)U.S. Department of Labor (DOL), Program of Competitive Grants for Worker Training andPlacement in High Growth and Emerging Industry Sectors (CFDA #17.275)



OMB Circular A-21, "Cost Principles for Educational Institutions" (2 CFR part 220) - Allinstitutions of higher education are subject to the cost principles contained in OMB Circular A-21.

Condition

Significant Deficiency - Individuals working within the program did not timely or accurately certifythe actual time spent working within the Federal programs. Time studies were completed incorrectlyfor individuals who work either full-time or part-time on the program as required by OMB.

Questioned Costs

No questioned costs are noted; the District was able to provide support showing the employees wereworking on the Federal program.

Context


Effect

Without the accurate time studies and certifications, the District is not able to effectively monitorpayroll charges applied to applicable grants, as well as to ensure compliance with the appropriateOMB Circular requirements.



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Cause


Recommendation



The District revised its procedure to request time and effort certifications in a timely manner. TheDistrict will continue to work with the programs listed in this finding to ensure time and effortcertifications are completed, reviewed, and submitted timely and accurately.



U.S. Department of Education (DOE), Carl D. Perkins - Career and Technical Education Act (CTEA)Title I, Part C (CFDA #84.048)



Condition


Questioned Costs

None.

Context

During the current fiscal year, the District spent approximately $124,000 from the CTEA Title I,Part C funding on capital outlay.

Effect




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Cause


Recommendation



The District made modification to the purchasing process to allow for the tracking of all equipmentpurchases made with Federal funds. As of February 2013, the process to accurately tag and track allFederal equipment purchases with State and Federal funds was implemented. An additional asset tagis being placed on the items. These tags are tracked and maintained in the Purchasing Office of theDistrict.

2013-6 COMMON ORIGINATION AND DISBURSEMENT (COD) REPORTING



Student Financial Assistance Cluster - U.S. Department of Education (DOE), Federal Pell GrantProgram (CFDA #84.063), and Federal Direct Student Loans (CFDA #84.268)






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Condition

During our review of the requirements for disbursement to or on behalf of students processed at theDistrict, it was observed that the process dates reported in the COD files were more than 30 calendardays after the disbursement dates reported in the COD files in the District's financial records.

Questioned Costs

None noted.

Context


Effect

The District is not in compliance with the Federal requirements described in the A-133 ComplianceSupplement.

The District can potentially face future financial sanctions or penalties from DOE if the District failsto take corrective actions to remedy the condition identified.

Recommendation



The District has provided and will continue to provide the necessary training and guidance to MerrittCollege staff to ensure all Pell and Direct Loan payments are reported to COD within the 15 daytimeframe. Currently, all Pell payment records are transmitted in batches on a weekly basis using ourfinancial aid software system. Beginning in 2014-2015, the District will migrate to a new financialaid software system. With the enhanced features of our new software and the usage of TD client, alltransmissions of Pell Origination and Disbursement records will be automated and scheduled on aweekly basis. This will ensure compliance with the Department of Education. Additionally, theDistrict has hired an Internal Auditor to review and maintain compliance issues. The internal auditorwill be working with the District director in ensuring best practices and maintaining compliance.



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2013-7 SPECIAL TESTS AND PROVISIONS – RETURN TO TITLE IV


Program

U.S. Department of Education (ED), Student Financial Assistance Cluster (CFDA #84.007, #84.268,#84.033, and #84.063)


CFDA #84.007, #84.268, #84.033, and #84.063


A-133 Compliance Supplement, 34 CFR Section 668.22(j):

Return of Title IV funds are required to be deposited or transferred into the Student FinancialAssistance (SFA) account or electronic funds transfer initiated to ED as soon as possible, but no laterthan 45 days after the date the institution determines that the student withdrew. Returns by check arelate if the check is issued more than 45 days after the institution determined the student withdrew, orthe date on the cancelled check shows the check was endorsed more than 60 days after the date theinstitution determined that the student withdrew.

Condition

Significant Deficiency - During our review of the requirements for Return of Title IV funds, we werenot able to determine when Merritt College had returned the required funds.

Questioned Costs

Total questioned costs are $1,362. Merritt College was unable to provide documentation proving thatthe funds were returned within the required time frame.

Context

There were four students out of a population of thirty-five where the campus was not able to providesupporting documentation that the funds were returned within the 45 day requirement.

Effect

The District is not in compliance with the Federal requirements described in A-133 ComplianceSupplement 34 CFR section 668.22(j).

Cause

The District has not implemented policies and procedures to monitor the Return of Title IV funds.



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Recommendation

It is recommended that the District implement procedures to ensure that the Return of Title IV fundsoccurs within 45 days from the date the District determines the student withdrew from all classes. Inaddition, the District needs to ensure that all amounts owed are returned.


In response to the 2012-2013 audit finding, Merritt College will have the following policy in placefor 2013-2014 and moving forward:

1) A report is run each week that indicates students who withdrew from all coursework andhave received Federal financial aid funds from Merritt.

2) Based on the report provided, Merritt financial aid staff will determine if the student hasreceived his/her financial aid disbursement.

3) If the student has picked up the financial aid payment, the financial aid office willimmediately initiate a return to Title IV (R2T4) calculation to determine how much thestudent owes back to the institution.

4) Once the calculation is performed, the institution will back out funds from COD. Thisprocess will be completed before the 45 day requirement. According to Federalregulations, this process must be completed within 45 days. The institution is liable forthe amount the student is owed.

5) The financial aid office will contact the student via mail and phone call to notify thestudent that he/she must return the funds back to the institution.

6) The financial aid office will input a service indicator into the student PeopleSoft accountto prevent enrollment from the student until the student resolves the Federaloverpayment.

7) Once the overpayment is returned to the institution, the indicator will be lifted and thefunds will refund back into a district account.

8) The District director has provided a training guide to Merritt College financial aid stafffor R2T4 procedures.

9) The District has hired an internal auditor to review and maintain compliance issues. Theinternal auditor will be working with the District director in ensuring best practices andmaintaining compliance.


CAMPUS: LANEY COLLEGE, COLLEGE OF ALAMEDA, AND MERRITT COLLEGE

Program

U.S. Department of Education (DOE), Student Financial Assistance Cluster (CFDA #84.007,#84.268, #84.033, and #84.063)



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U.S. Department of Education (DOE), Federal Direct Student Loans, CFDA #84.268


According to the OMB Circular A-133 and 34CFR sections 685.102(b), 685.301, and 685.303,Institutions must report all loan disbursements and submit required records to the Direct LoanServicing System (DLSS) via the Common Origination and Disbursement (COD) within 30 days ofdisbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a SchoolAccount Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional atthe request of the school) Loan Detail records. The school is required to reconcile these files to theinstitution's financial records. Since up to three Direct Loan program years may be open at any giventime, schools may receive three SAS data files each month.

Condition

Significant Deficiency - During our review of the direct loans, it was noted that the District did nothave adequate documentation to show that they were reconciling the SAS data file and the LoanDetail records to the institution's financial records on a monthly basis.

Questioned Costs


Context

The District disbursed direct loan funds during the entire 2012-2013 fiscal year.

Effect


Cause

The District has not implemented policies and procedures to verify that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records.

Recommendation

It is recommended that the District implement procedures to ensure that the SAS data file and theLoan Detail records per the COD are reconciled to the institution's financial records.



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In the past, the campuses were reconciling direct loan disbursements on a weekly basis. Beginning inthe 2013-2014 award year and moving forward, the colleges are now reconciling monthly using theDirect Loan SAS report. The District has and will continue provided guidance and training todesignated staff at each of the campuses to ensure reconciliation is performed on a monthly basis tocomply with Federal regulations. Additionally, the District has hired an internal auditor to reviewand maintain compliance issues. The internal auditor will be working with the District director inensuring best practices and maintaining compliance.



National Science Foundation, Educating Technicians for Building Automation and Sustainability(CFDA #47.076)


The District is required to report to the oversight agency, on a quarterly basis, the activity for theNational Science Foundation, Educating Technicians for Building Automation and Sustainability.

Condition

Significant Deficiency - The District did not submit their fourth quarter report to the awarding agencyfor the program.

Questioned Costs

None.

Context

Financial reporting to the awarding agency is a requirement and is the basis of review by the agency.

Effect


Cause

The District's controls over reporting for this program were not operating effectively.



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Recommendation

Controls should be implemented to ensure all reports are completed for the program.


The District is reinstating a Grant Manager position to oversee the entire grant application,allocation, and reporting process. One of the position's responsibilities will be to ensure all reportsto all outside agencies are submitted in a timely manner.



95

The following findings represent instances of noncompliance and/or questioned costs relating to State programlaws and regulations.




Condition

Significant Deficiency - The residence verification process used by the District during the year wasnot being followed at the Colleges. Students who had a questionable residency were not beingfollowed up by the College personnel and were automatically recorded as resident rather thannonresidents. Also, testing for students participating in organized competitive sports could not beaccomplished as they were not able to provide Athletics Form 1. Therefore, residency could not beverified to the form as required by the compliance guide.

Questioned Costs

None. All students marked with a #2 in the CCC Applied system should be assessed nonresidentfees.

Effect

Students that did not meet the definition of residency were included in the Annual CCFS-320Attendance Report as California residency in error; therefore, the District adjusted their AnnualCCFS-320 Attendance Report to properly reflect those students who were recorded as residents andassess the proper enrollment fees.

Cause

The District did not have a control in place to ensure that all students marked #2 in the system werebeing properly verified as residents.

Recommendation

The District needs to record all students who were coded #2 in the CCC Applied system as anonresident. If the student provides proof of residency, then they can be changed back.


In April 2013, the District implemented the process to correct the default of unverified students asnonresident. The District modified the software program, changing the default status of all studentsmarked #2 as nonresident, notifying those students via email that if this status is incorrect, they musttake action with the admissions and records office of the District.



96

2013-11 427 CONCURRENT ENROLLMENT FOR K-12 STUDENTS IN COMMUNITY COLLEGECREDIT





58051(a) (1), 58051.5, 58052, 58056(a), 58058, 58060, and 59300 et seq.


Community Colleges.



Condition

Significant Deficiency - Errors in accounting for concurrently enrolled students were noted asfollows:

Out of 25 students tested, four concurrent enrollment forms could not be located at MerrittCollege. Therefore, it was impossible to identify if the District was in compliance with therequirements of the form.

The District is involved with two programs (ASTI and Gateway) in which the studentsattend the College of Alameda (ASTI) and Laney College (Gateway). They typically takemore than 12 units. The contract with the Colleges indicates that the fees above 12 unitswill be paid by the organization. The Colleges were not able to provide documentation thatthose fees were reimbursements to the Colleges.

Questioned Costs

None. The fees over 11 units for all students involved in the ASTI and GATEWAY programs needto be assessed.

Effect

The FTES generated for concurrently enrolled high school students is improperly identified. TheDistrict is at risk of noncompliance with the Education Codes related to concurrently enrolledstudents.



97

Cause

The District implemented a procedure to ensure the costs were being properly charged, but it does notappear the procedure is operating effectively.

Recommendation

The District should implement a process within Admissions and Records that will ensure documentssupporting the special admit status are maintained and stored.


The District is in the process of implementing a change in the admission of concurrently enrolledstudents. The process will include students who are in a concurrently enrolled status to re-enroll eachyear until they no longer qualify for the concurrently enrolled status.



Reports of expenditures within the CalWORKs program are required to be submitted to the StateChancellor's Office by September 30 following year end.

Condition

Significant Deficiency - Alameda College did not submit their year-end expenditure report prior tothe September 30 deadline.

Questioned Costs

There are no questioned costs associated with this finding. There were no questioned expensesduring testing.

Effect

The District did not meet the State requirements for submitting the expenditure report by the requireddate for one campus.

Cause

The District's control over reviewing and submitting the reports was not operating effectively.

Recommendation

The District should implement a control procedure to review and reconcile all amounts reported onthe CalWORKs expenditure report and verify that the reports are submitted in a timely manner.



98


The College submitted the report to the District Office in a timely manner. The report was not postmarked by the District Office by September 30th, although it was delivered for mailing prior to thatdate.

The District is reinstating a Grant Manager position to oversee the entire grant allocation andreporting process. One of the position's responsibilities will be to ensure all reports to all outsideagencies are submitted in a timely manner.

2013-13 DISABLED STUDENT PROGRAMS AND SERVICES (DSPS)


Education Code Section 56006 DSPS Implementing Guidelines

Condition

The District has not complied with the above guidance at the following Colleges:

Laney College:

Two out of fifteen students who were on the list of students served did not have a student fileavailable.

Twelve out of fifteen students did not have a Student Educational Plan signed by thecounselor.

Two out of fifteen students did not have academic accommodations to describe the serviceprovided.

Merritt College:

Twelve out of fifteen students did not have a Student Education Plan on file.

Questioned Costs

None.

Effect

Each College is at risk of claiming inactive students in the MIS report that is submitted to the State.

Cause

The listing of students served does not appear to be routinely updated. All files are not beingreviewed to ensure necessary information is maintained.



99

Recommendation

The District should implement consistent procedures to ensure the MIS list of students served isaccurate. For instance, implementing the use of a checklist and going through each student's file toverify completeness of the file toward the end of the semester.


According to the State Chancellor's Office DSPS Compliance regulations, DSPS is not mandated todo an Ed Plan. With the new Student Success Act DSPS will now be doing Student EducationalPlans (SEPs), that are not already done by General Counseling or EOPS.

Each campus will develop the Student Educational Contract (SEC), which sites the educational goals,services to support those goals, and based on the college transcript, the progress toward these goals.The SEC will be initially developed when the student first applies for DSPS services. A DSPSprofessional staff person and the student will develop the SEC.

After the initial preparation of the SEC, it will be reviewed and updated each year.

2013-14 EXTENDED OPPORTUNITY PROGRAMS AND SERVICES (EOPS)


Education Code Section 56204 EOPS Implementing Guidelines

Condition

The District has not complied with the above guidance at the following Colleges:

Laney College:

Two out of fifteen students did not have a Student Educational Plan on file.

Merritt College:

Six out of fifteen students did not have any documented contact or active participation withthe EOPS program.

One out of fifteen students did not have a Student Education Plan on file.

Questioned Costs

None.

Effect

Each College is at risk of claiming inactive students in the MIS report that is submitted to the State.



100

Cause

Student files are not being adequately reviewed to ensure that all necessary information is included.

Recommendation

The District should implement consistent procedures to ensure the MIS list of students served isaccurate. For instance, implementing the use of a checklist and going through each student's file toverify completeness of the file toward the end of the semester.


EOPS student files will be reviewed at the end of each semester for documented contact or activeparticipation with the EOPS program.

A spreadsheet will be developed to record and document EOPS program services received bythe student each semester. Services that will be identified include SEP, Book Voucher,Orientation, Book Loan Program, and any contacts made by EOPS staff.

Students with no documented contact or active participation in the program for one semesterwill be placed on probation for the following semester. Students with no documented contactor participation for two consecutive semesters will be placed on inactive status, and thestudent's MIS record will be deleted for that second term.

Prior to submitting the MIS report for the semester, the internal spreadsheet will be comparedto a downloaded MIS record report requested from the District Office to ensure the accuracyof the MIS report that is sent to the State Chancellor's Office.

Student files will be reviewed at the end of each semester to ensure that a Student Educational Plan(SEP) has been developed for each student and is in the student's file.

An updated or current SEP signed by both the counselor and the student during the semesterwill be monitored. The SEP form was revised to include a grid on the back of the SEP wherethe counselor and student will both initial that the SEP was reviewed and/or revised, the dateof the revision or review, and during which counseling appointment (1st, 2nd, or 3rd) thereview or revision occurred.

A spreadsheet will be created and maintained to document that the student has a current SEPand that it has been signed by the student and the counselor.



101

Except as specified in previous sections of this report, summarized below is the current status of all audit findingsreported in the prior year's Schedule of Findings and Questioned Costs.

FEDERAL AWARD FINDINGS



U.S. Department of Education (DOE), Higher Educational Aid - Strengthening Institutions Program,Title III (CFDA #84.031A), Higher Educational Aid - Strengthening Institutions Pathways, Systems,and Services to Maximize Student Success (CFDA #84.031A), AANIPISI Initiative(CFDA #84.031L), Career and Technical Education Act (CTEA) Title I, Part C (CFDA #84.048),Trio Support Services (CFDA #84.042A), U.S. Department of Labor (DOL), WIA Adult - GreenJobs (CFDA #17.258), WIA Adult - CA Industries With a Statewide Need (CFDA #17.258), WIAAdult - Clean Energy Project (CFDA #17.258), WIA Adult - One Stop Career Center(CFDA #17.258), WIA Adult - Medical Device Technology (CFDA #17.258), WIA Adult - GreenJobs SFP (CFDA #17.258), Workforce Investment Act Community Based Job Training Grants(CFDA #17.269), Workforce Investment Act Community Based Job Training Grants Bay CEC(CFDA #17.269)



OMB Circular A-21, "Cost Principles for Educational Institutions" (2 CFR part 220) - Allinstitutions of higher education are subject to the cost principles contained in OMB Circular A-21,which incorporates the four Cost Accounting Standards Board (CASB) Standards and the DisclosureStatement (DS-2) requirements, as described in OMB Circular A-21, Sections C.10 through C.14 andAppendices A and B.

Condition

Significant Deficiency - Individuals working within the program did not timely or accurately certifythe actual time spent working within the Federal programs. Time studies were completed incorrectlyfor individuals who work either full-time or part-time on the program as required by OMB.

Questioned Costs


Context




102

Effect

Without the accurate time studies and certifications, the District is not able to effectively monitorpayroll charges applied to applicable grants, as well as to ensure compliance with the appropriateOMB Circulars.

Cause


Recommendation


Current Status

Partially implemented. See current year finding 2013-4.

2012-2 PROCUREMENT, SUSPENSION, AND DEBARMENT


U.S. Department of Education (DOE), Career and Technical Education Act (CTEA) Title I, Part C(CFDA # 84.048), Trio Support Services (CFDA #84.042A) U.S. Department of Labor (DOL), WIAAdult - Green Jobs (CFDA #17.258), WIA Adult - CA Industries With a Statewide Need(CFDA #17.258), WIA Adult - Clean Energy Project (CFDA #17.258), WIA Adult - One StopCareer Center (CFDA #17.258), WIA Adult - Medical Device Technology (CFDA #17.258), WIAAdult - Green Jobs SFP (CFDA #17.258), Workforce Investment Act Community Based JobTraining Grants (CFDA #17.269), Workforce Investment Act Community Based Job Training GrantsBay CEC (CFDA #17.269)


Title 34 - Education, Part 80 - Uniform Administrative Requirements for Grants and CooperativeAgreements to State and Local Governments - Subpart C - Pre-Award Requirements, Section 80.35.OMB Circular A-110, Grants and Agreements with Institutions of Higher Education, Hospitals, andOther Non-Profit Organizations, Sub-Part C, Pre-Award Requirements, Section .33 Debarment andSuspension.



103

Condition

Significant Deficiency - The District's implemented internal control procedure did not workeffectively to ensure that the District was in compliance with Suspension and Debarmentrequirements.

Questioned Costs


Context

The OMB created compliance requirements in response to Executive Orders 12549 and 12689.These Executive Orders prohibit non-Federal entities from contracting with or making sub-awardsunder covered transactions to parties that are suspended or debarred or whose principals aresuspended or debarred. Though the District is not the primary contractor, it acts as the fiscal agent onbehalf of the State and is responsible for disbursing Federal awards to other governmental agenciesand vendors.

Effect

The District is not in compliance with the regulations.

Cause

While no evidence was found that indicates that any of the parties contracted with during the year forservices were suspended or debarred, the District's existing procedures failed to comply with theregulations.

Recommendation

The District must verify that entities contracted with for services are not suspended, debarred, orotherwise excluded from providing services. This verification may be accomplished by checking theExcluded Parties List System (EPLS) maintained by the General Services Administration (GSA),collecting a certification from the entity, or adding a clause or condition to the covered transactionwhich states the entity is not suspended or debarred. The information contained in the EPLS isavailable in printed and electronic formats. The printed version is published monthly. The electronicversion can be accessed on the Internet (http://epls.arnet.gov).

Current Status

Implemented.



104



U.S. Department of Labor (DOL), Workforce Investment Act Community Based Job Training Grants(CFDA #17.269)


The District is required to report to the oversight agency, on a quarterly basis, the activity for theWorkforce Investment Act Community Based Job Training Grants.

Condition

Significant Deficiency - The District did not maintain adequate documentation to support the amountsreported to the awarding agency for the Atlas program at the College of Alameda.

Questioned Costs

None.

Context

Financial reporting to the awarding agency is a requirement and is the basis of review for the agency.

Effect


Cause

The District did not have readily available financial information to support the completed quarterlyreports.

Recommendation

Reports should be reviewed to verify that they are supported by actual costs recorded in the financialsystem.

Current Status

Implemented.



105



U.S. Department of Education (DOE), Carl D. Perkins - Career and Technical Education Act (CTEA)Title I, Part C (CFDA #84.048)



Condition


Questioned Costs

None.

Context

During the current fiscal year, the District spent approximately $150,000 on capital outlay.

Effect


Cause


Recommendation


Current Status




106

STATE AWARD FINDINGS

2012-5 STUDENTS ACTIVELY ENROLLED


CCR, Title 5 Sections 58003.1, 58004, 58005, and 58051California Community College District's Contracted District Audit Manual: Section 426. Eachdistrict may only claim for apportionment purposes the attendance of students actively enrolled as ofcensus day. An internal review system must be in place to ensure that census day parameters areproperly set up to ensure attendance is properly calculated and reported.

Condition

Significant Deficiency - As noted in the prior year audit, the District was claiming apportionment forall drops occurring on census day. In order to count that apportionment within the FTES calculation,established procedures must be in place to identify and remove inactive students as of census dayfrom the rosters. There is not an identifiable procedure to affirm that instructors are activelymonitoring the attendance and active enrollment of students within their class. Personnel in theAdmissions and Records Office do not have the ability to identify the instructors that have notappropriately turned in their attendance rosters on census day. Without this information, all studentsenrolled in the class that have not dropped the course are included in the FTES calculation whether ornot they are actually attending the course.

Questioned Costs

The District removed from the Annual CCFS-320 Attendance Report contact hours related tostudents who met the criteria noted above; therefore, there are no questioned costs.

Context

Students that did not meet the definition of being actively enrolled were included in the AnnualCCFS-320 Attendance Report at the time of the Period 1 and Period 2 submissions, but wereexcluded from the annual submission.

Effect

The District adjusted their Annual CCFS-320 Attendance Report to properly reflect those studentswho were actively enrolled.



107

Recommendation

A program should be written to allow the Admissions and Records Office to identify the rosters thathave not been properly turned in by instructors. Follow up with instructors who have not compliedwith the requirements to identify students who are not enrolled should be completed by theAdmissions and Records Office.

Current Status

Implemented.

2012-6 CONCURRENT ENROLLMENT





58051(a) (1), 58051.5, 58052, 58056(a), 58058, 58060, and 59300 et seq.


Community Colleges.

Legal Advisory 05-01, "Questions and Answers Re. Concurrent Enrollment" - issuedJanuary 5, 2005 by the Chancellor's Office, California Community Colleges.

Condition

Significant Deficiency - During the testing, errors were noted within the program as follows:

Out of 25 students tested, five concurrent enrollment forms could not be located. Therefore, it wasimpossible to identify if the District was in compliance with the requirements of the form.

Questioned Costs

There are no questioned costs due to the District subtracting related contact hours from their AnnualCCFS-320 Attendance Report to correct the errors noted.

Context

The District has several thousand students that are considered to be concurrently enrolled.



108

Effect

The FTES generated for concurrent enrolled high school students is improperly identified. TheDistrict is at risk of noncompliance with the Education Codes related to concurrent enrolled students.

Recommendation

The District should implement a process within Admissions and Records that will ensure documentssupporting the special admit status are maintained and stored.

Current Status


2012-7 RESIDENCY DETERMINATION FOR CREDIT COURSES





58051(a) (1), 58051.5, 58052, 58056(a), 58058, 58060, and 59300 et seq.


Community Colleges.



Condition

Significant Deficiency - The District is currently using the CCCApply software to help in determiningif a student is a California resident or nonresident. When processed, the system indicates if thestudent is a resident (#1) or nonresident (#3). If the student comes up as a (#2), the student needs toprovide more information; the system is not able to make a determination. However, when astudent's enrollment form indicates a (#2), the District is not requesting more information from thestudent. Our sample included two students who were flagged with a (#2) but classified as residents.The site could not provide any documentation to justify the student was a resident.

Effect

The District could possibly be charging the students incorrect enrollment fees.



109

Context

The District's main control is CCCApply and can only be relied on if effective utilization of thesystem takes place.

Questioned Costs

There are no questioned costs.

Recommendation

The District should implement a procedure that effectively monitors the information provided byCCCApply to ensure that all students' residency determination is properly being reported.

Current Status




Reports of expenditures within the CalWORKs program are required to be submitted to the StateChancellor's Office by August 31 following year end.

Condition

Significant Deficiency - Three out of the four CalWORKs expenditure reports did not agree to thesupporting documentation.

Questioned Costs

There are no questioned costs associated with this finding; differences were not material to theprogram.

Recommendation

The District should implement a control procedure to review and reconcile all amounts reported onthe CalWORKs expenditure report.

Current Status


To the Board of Trustees and ManagementPeralta Community College DistrictOakland, California

In planning and performing our audit of the financial statements of Peralta Community College District(the District) as of and for the year ended June 30, 2013, in accordance with auditing standards generally acceptedin the United States of America, we considered the District's internal control over financial reporting (internalcontrol) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose ofexpressing our opinions on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness ofthe District's internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and wasnot designed to identify all deficiencies in internal control that might be material weaknesses or significantdeficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.However, as discussed below, we identified certain deficiencies in internal control that we consider to besignificant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol, such that there is a reasonable possibility that a material misstatement of the District's financial statementswill not be prevented, or detected and corrected, on a timely basis.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severethan a material weakness, yet important enough to merit attention by those charged with governance. Weconsider the following deficiencies in the District's internal control to be significant deficiencies:

College Trust Accounts

Observation

The College Business Offices maintain accounts for campus activities and student organizations that are held inTrust for the various activities. In accordance with the California Community Colleges Budget and AccountingManual (BAM), these accounts are to be supported by up-to-date, written Trust Agreements which note thepurpose for the account and the faculty advisor for the activity. At several campuses, it was noted that TrustAccounts selected for testing did not have current Trust.

Recommendation

Each College should start reviewing all Trust Accounts and determine if a current and up-to-date Trust Agreementis signed and on file. This review should be conducted periodically to ensure all activities flowing through theTrust Accounts are in accordance with criteria set out in the BAM and in the District's policies for Student TrustAccounts. For any activity that is not properly supported, the College Business Office should obtain theappropriate information regarding the faculty advisor and have the Trust Agreement signed and on file.





To the Board of Trustees and ManagementPeralta Community College DistrictPage 2

Alameda College Trusts

Observation

Several internal control deficiencies noted in the prior year management letter have not been fully implementedwithin the Alameda College Business Office related to the Trust Accounts:

1. Receipts from activities carried on through the Trust Account are not reviewed independently and verified

as to the accuracy and completeness of the deposit prior to the actual bank deposit.

2. Four out of eight Trust Account disbursements selected for audit were not appropriately approved prior to

the check being disbursed.

3. Bank account reconciliations were not consistently prepared and reviewed in a timely manner during the

year.

Recommendation

The approved policies and procedures related to the above items should be followed to ensure the appropriatelevel of internal control over receipts, disbursements, and bank reconciliations are followed consistentlythroughout the year.

Associated Students Government

Merritt College

Observation

The Merritt College Associated Students Government Account includes both the Student Account and the FoodService Account. The deposits to the bank for funds received were not made on a timely basis. Monies receivedwere held on site for up to 29 days prior to deposit to the bank. Additionally, monies received from FoodServices were not supported by a receipt.

Recommendation

All amounts received for deposit to the bank should be appropriately supported by a receipt that has beenreconciled and verified and deposited to the bank within five business days. Monies should not be retained over aweekend or extended holiday period without being appropriately deposited.

Laney College

Observation

The deposits to the bank for funds received through the food services were not made on a timely basis. Moniesreceived were held on site for up to 16 days prior to deposit to the bank.

Recommendation

All amounts received for deposit to the bank should be verified and deposited to the bank within five businessdays. Monies should not be retained over a weekend or extended holiday period without being appropriatelydeposited.

To the Board of Trustees and ManagementPeralta Community College DistrictPage 3

Berkeley City College

Observation

The Associated Students bank account reconciliations are not being performed and reviewed in a timely manner.Additionally, segregated records of student club account balances within the Associated Students records were notmaintained. All club revenue and expenses are recorded in the general ledger, but available club funds areunknown and not being tracked.

Recommendation

Bank statements should be reconciled to the general ledger as soon as is practical after receipt from the bank andat least within five business days. The accounting for club activities should include the balance available to theclub along with the appropriate revenue and expenses during the year. The club advisor should have the ability toverify the balance that has been raised, expended, and is available for future activities at least quarterly during theyear.

College of Alameda

Observation

Receipts have not been issued or logged at the time revenue is collected. Without a record of the receipt date andthe amount that has been turned in, it is not possible to verify that all amounts received are deposited to the bankintact and within five business days of receipt.

Recommendation

All deposits to the bank should be supported by a written, prenumbered receipt that includes the date received andthe initials of the individual verifying the receipt. All deposits to the bank should be deposited to the bank withinfive business days. Monies should not be retained over a weekend or extended holiday period without beingappropriately deposited.

Overall Trust and Associated Student Account Recommendation

A consolidated procedure manual for all College Business Offices to follow with approved procedures and formsfor use with the Trust and Student Accounts should be developed with the input of all College Business Offices.This procedure manual should be reviewed periodically and updated as necessary to ensure all student funds areappropriately monitored, reconciled, and safeguarded.

We appreciate the time and assistance provided to our auditors during the course of the audit. Thiscommunication is intended solely for the use of the Board of Trustees, as well as management of PeraltaCommunity College District and the College Business Offices, and is not intended to be and should not be usedby anyone other than these specified parties. We will be happy to discuss these recommendations with you inmore detail and provide assistance with the implementation of the recommendations.


ASSETS

Current Assets

Cash and investments 311,753,562$

Accounts receivable 67,640,980

Other current assets 12,183,024

Total Current Assets 391,577,566

Noncurrent Assets

Capital assets (net of depreciation) 451,003,811

TOTAL ASSETS 842,581,377

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities 54,329,614

Unearned revenue 10,240,625

Other current liabilities 7,642,305

Total Current Liabilities 72,212,544


Bonds payable 615,474,496

Other long‐term liabilities 41,954,000

Total Long‐term Obligations 657,428,496

TOTAL LIABILITIES 729,641,040

NET POSITION

Net investment in capital assets 94,601,687

Restricted 42,808,750

Unrestricted (24,470,100)

TOTAL NET POSITION 112,940,337$

STATEMENT OF FINANCIAL POSITIONAs of June 30, 2015

Unaudited

enroll and be successful in college transfer level mathematics.

Documents

Transcript of enroll and be successful in college transfer level mathematics.