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California State Auditor Report Number : 2016-110

Trade Apprenticeship Programs
The State Needs to Better Oversee Apprenticeship Programs, Such as the Air Conditioning Trade Association’s
Sheet Metal Program

November 15, 2016 2016-110

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the State’s oversight of its apprenticeship programs, in particular, the
Air Conditioning Trade Association (ACTA).

This report concludes that the State needs to better oversee apprenticeship programs such as ACTA. Although the Division of Apprenticeship Standards (apprenticeship division) of the Department of Industrial Relations has primary responsibility for overseeing apprenticeship programs, it has not been adequately performing its duties. For example, the apprenticeship division is not consistently conducting audits, as required by state law, and it is not using its audit authority to ensure that apprenticeship programs are spending state funds appropriately. Furthermore, inadequate oversight by the California Community Colleges Chancellor’s Office (Chancellor’s Office) and the Central Unified School District (Central Unified)—the K–12 local educational agency that has the fiscal contract with ACTA—resulted in ACTA receiving an estimated $51,000 in unallowable reimbursements in fiscal years 2010–11 through 2014–15. Finally, the U.S. Department of Labor (U.S. Labor) completed a civil investigation of ACTA in December 2014 and determined that between 2005 and 2012 ACTA misused $800,000 in apprenticeship training funds. The apprenticeship division currently does not have a process in place to learn if the federal government has investigated certain apprenticeship programs.

We recommend that the apprenticeship division resume conducting program audits by December 2016. We also recommend that Central Unified work with the Chancellor’s Office to determine how to best recover the unallowable amounts it reimbursed to ACTA. Finally, we recommend that the apprenticeship division periodically contact the U.S. Labor to inquire about recent investigations of apprenticeship programs and determine whether it should conduct its own audits to ensure apprenticeship programs are using state funds appropriately.

Respectfully submitted,

State Auditor

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