Report 2016-129 Recommendation 4 Responses

Report 2016-129: K-12 High Speed Network: Improved Budgeting, Greater Transparency, and Increased Oversight Are Needed to Ensure That the Network Is Providing Reliable Services at the Lowest Cost to the State (Release Date: May 2017)

Recommendation #4 To: Imperial County Office of Education

To help ensure that the K12HSN program maintains the necessary amount of state funds in reserve, ICOE should prepare a formal methodology for a proposed equipment reserve that is based on the actual likelihood of equipment failure and the costs associated with replacing that equipment.

6-Month Agency Response

ICOE convened the Network Implementation Committee (NIC) in September to evaluate an appropriate level of reserves based on current warranty coverage, expected use of life, and equipment cost trends. The NIC recommended that K12HSN designate an amount in the unused funds to cover at minimum the most expensive piece of hardware running on the network and add some buffers to cover other circuit related expenses. These designated funds will be used to protect against catastrophic events, where an entire node might fail and the equipment is not covered by warranties or regular support agreements. Based on input from the NIC, the 2018-19 budget documents designate a reserve of $500,000 for equipment replacement, which will be evaluated on an annual basis ongoing during budget preparation.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

ICOE confirmed for us that, after considering the equipment reserve issue with network stakeholders as referenced in its response, the K12HSN program established a methodology wherein it set the dollar amount of the reserve equal to 125 percent of the piece of network equipment that would be most expensive to replace. As such, the network would be covered in the unlikely event that such a piece of equipment that is not covered by warranty fails unexpectedly. ICOE intends to apply this methodology to each year's budget, meaning that the size of the reserve would fluctuate some from year to year based on the market price of the equipment in question.

60-Day Agency Response

The Network Implementation Committee (NIC), which was formed in 2005 by soliciting participation from technology directors or chief technology officers from each of the 11 regions of the state, is being called upon to re-engage in the K12HSN work in a more active way. While the group has met quarterly by videoconference since about 2008, the K12HSN staff will be convening the group, including new members, in face-to-face meetings to assist in these efforts. The first session has been scheduled for September 8, 2017 in San Diego, California and meeting invitations are being sent to the updated list of NIC members. A draft agenda for that meeting is attached.

California State Auditor's Assessment of 60-Day Status: Pending

ICOE provided an agenda for the September 2017 meeting that includes a discussion item addressing strategic planning for an appropriate equipment reserve. We will review the results of this effort as part of our evaluation of the recommendation's implementation status in November 2017.

All Recommendations in 2016-129

Agency responses received are posted verbatim.