Los Angeles Unified School District
Office of the Inspector General
Audit Unit
Internal Audit Report
Performance Audit of the Management of
Insurance Requirements for Civic Center
Permits and Special Events
OA 17-1094 June 7, 2017 August 3, 2015
About the Office of the Inspector General
The Office of the Inspector General reports directly to the Board of Education.
We conduct independent audits, reviews and investigations of District
operations, contracts and vendors in order to:
Find ways to improve processes, programs, functions and activities.
Provide information that supports effective decision making.
Identify real or potential misuse of District resources.
Prevent and detect waste, fraud and abuse within the District.
Through our work, we strive to encourage a culture of accountability,
transparency, collaboration and excellence and to assist the Board and the
Superintendent in their efforts to provide a high quality education for the
students and parents of the Los Angeles Unified School District.
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EXECUTIVE SUMMARY
We have conducted an audit of the Risk Finance and Insurance Branch (RFIB) with regard to its
management of insurance requirements for Civic Center Permits and Special Events. The
objectives of the audit were to determine whether: (i) controls over requests to use District
facilities were adequate to ensure that all applications are approved and accounted for; (ii) the
insurance approval and recordkeeping processes for the use of District facilities were adequate;
and (iii) the review of insurance requirements for the use of District facilities was effective.
Based on our audit, we found that controls over requests to use District facilities were not
adequate to ensure that the RFIB accounts for and approves all applications. The insurance
approval and recordkeeping processes used by the RFIB did not provide adequate assurance that
the risks inherent in permitted activities are effectively assessed. The review of insurance
requirements for applications conducted by the RFIB was not properly monitored to ensure that
adequate insurance existed for each event.
We found that:
1. The application process for the use of District facilities requires re-examination and
reassessment. In order to properly assess the risks related to a facility’s use by internal and
external requestors, the RFIB needs to have a complete understanding and knowledge of all
the activities occurring on District premises. Presently, three departments (Civic Center
Permit Office, Leasing and Space Utilization Unit, and RFIB) can each accept and process
applications and maintain their own individual records. The Division of Risk Management
and Insurance Services has not created a centralized database for the different departments
involved in the process to share new application requests and all supporting documents.
2. The recordkeeping method of the Insurance Section of the RFIB is inadequate. The manner
in which the data is stored does not allow for efficient report generation. A centralized
database system, which would share documentation internally and with other departments
that process applications for the use of District facilities, does not exist.
3. The RFIB does not follow or record the results of events held at District facilities. In
instances when an event’s insurance requirements were not met and the event was not
approved by the Insurance Section, staff did not keep a record in the RFIB on whether the
event was approved by the Leasing and Space Utilization Unit or the Civic Center Permit
Office and/or whether the event was actually held. Claims associated with particular events
were not recorded and tracked to facilitate future risk analysis. A macro-level review of
claims information was not performed due to the categorization of claims by cause and not
by type of event.
4. The review of insurance requirements requires strengthening and improvement. Almost
every application we reviewed had deficiencies related to insurance requirements. Some of
the deficiencies included missing Certificates of Insurance, missing waivers, and insufficient
insurance coverage.
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Recommendations
We provided the Risk Finance and Insurance Branch with 12 recommendations. Some of the
more significant recommendations included the following:
1. The Insurance Section of the RFIB should create a formal process to ensure that it received
any new requests for the use of a District facility from the Civic Center Permit Office or the
Leasing and Space Utilization Unit. When received, such requests should be properly
documented in a database or log and followed up on to document the result of the
application.
2. The RFIB, the Civic Center Permit Office and the Leasing and Space Utilization Unit should
collaborate on creating a centralized computer system that tracks and retains applications and
supporting records for requests to use District facilities.
3. The Risk Finance and Insurance Branch should, on a periodic basis, randomly select
approved applications for review to ensure that all insurance requirements were met. Any
deficiencies should be identified and communicated to staff to improve future review and
assessment decisions.
Division of Risk Management and Insurance Services Response
The Division of Risk Management and Insurance Services agreed with all 12 recommendations.
They stated that they either have taken or would take corrective actions. The department’s full
response is attached as Exhibit A of this report.
INTRODUCTION
Every year, the District receives thousands of requests from third parties and District schools to
use its facilities and grounds for recreational, educational, and fundraising activities. These
activities pose risks to the District for expected and unexpected injuries and liabilities.
The primary responsibility of the Risk Finance and Insurance Branch (RFIB) is the
administration of the District’s self-insurance property and casualty insurance programs. For
each program, the RFIB1 sets the minimum insurance requirements that an applicant needs to
have in order to conduct its activities on a District facility. If a claim occurs relating to any one
of the permitted activities, the District is able to transfer risks and liabilities to the activities’
owner and remain intact financially. The RFIB is tasked to review every request for the use of a
District facility for insurance requirements to aid in the management of asset protection and risk
minimization.
According to the Civic Center Act2, “There is a civic center at each and every public school
facility and grounds within the state…”3 The Civic Center Act further states, “The governing
1 The Risk Finance and Insurance Branch is one branch under the Division of Risk Management and Insurance
Services. 2 California Education Code Section 38130-38139
3 Ibid Section 38131(a)
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board of any school district may grant the use of school facilities or grounds as a civic center
upon the terms and conditions the board deems proper…”4 Chapter 6 of the LAUSD’s Board of
Education rules provide guidance to District management for the use of school facilities for non-
school purposes.5 Appendix 4 provides pertinent Board Rules regarding the use of school
facilities for non-school purposes.
There are three departments where an applicant can apply for the use of District facilities and
applications can be processed, these are: (i) The Civic Center Permit Office, (ii) the Leasing and
Space Utilization Unit, and (iii) the Risk Finance and Insurance Branch.
SCOPE AND OBJECTIVE
The objectives of the audit were to determine whether: (i) controls over requests to use District
facilities were adequate to ensure that all applications are approved and accounted for; (ii) the
insurance approval and recordkeeping processes for the use of District facilities were adequate;
and (iii) the review of insurance requirements for the use of District facilities was effective.
We conducted this performance audit in accordance with Generally Accepted Government
Auditing Standards (GAGAS). Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives. The audit
covered the period from March 1, 2015 through June 30, 2016.
We conducted the audit from June 2016 to November 2016.
METHODOLOGY
To accomplish our audit objectives, we (i) reviewed relevant LAUSD policies and procedures;
(ii) reviewed applicable State laws and regulations; (iii) conducted necessary inquiries with key
personnel of the Risk Finance and Insurance Branch, the Civic Center Permit Office, and the
Leasing and Space Utilization Unit to obtain an understanding of the current processes and
internal controls related to the (1) Application process, (2) Approval process, (3) Recordkeeping
process, and (4) Monitoring process; (iv) judgmentally selected applications in all three areas
(Civic Center Permits, School Sponsored Special Events, and Third Party Special Events) to
perform testing to determine if policies and procedures were adhered to; (v) obtained and
reviewed supporting documents of selected application packages to determine if insurance
requirements were met according to District policies; (vi) conducted research to compare the
District’s facilities-use application process with that of other California school districts; (vii)
performed fraud inquiries; and (viii) identified weaknesses.
4 Ibid Section 38131(b)
5 Rules of the Board of Education, Administrative Guide, Los Angeles Unified School District, by Jefferson Crain,
Executive Officer of the Board, September 8, 2014
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EVALUATION OF INTERNAL CONTROLS
In accordance with Government Auditing Standards, we obtained an understanding of internal
control that is significant within the context of the audit objectives. We assessed whether
internal control was properly designed and implemented. For those controls that were deemed
significant, we obtained sufficient, appropriate evidence to support our assessment about the
effectiveness of those controls.
We are required to report deficiencies in internal control that are significant within the context of
the audit objectives. A deficiency in internal control exists when the design or operation of a
control does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct (i) impairments of effectiveness or efficiency
of operations, (ii) misstatements in financial or performance information; or (iii) noncompliance
with provisions of laws, regulations, contracts, or grant agreements on a timely basis. Based on
our audit, we found deficiencies in internal control that are significant to the objectives of this
audit. Those deficiencies are reported in the Results of Audit section.
RESULTS OF AUDIT
Controls over Requests to Use District Facilities
The Insurance Section within the Risk Finance and Insurance Branch (RFIB) does not have
controls in place to ensure that all requests for events occurring at District facilities (schools and
offices) are accounted for, approved, and adequately insured.
The RFIB is tasked to review every request for a District facility’s use in order to determine their
insurance requirements to aid the District in effectively protecting its assets and minimizing risk.
The Division of Risk Management and Insurance Services (DRMIS) publishes “GUIDELINES
FOR SPECIAL EVENTS.” According to the Guidelines, “all non-LAUSD groups must obtain
either a civic center permit or license agreement in order to use District property.” The guidelines
require the Principal and/or the Local District Superintendent’s designee to refer any non-
LAUSD group to the Civic Center Office or Leasing and Asset Management (Real Estate). It
also states that liability insurance is required for civic center permits and short-term license
agreements.
We determined, however, that there is no clear set of instructions for a School Principal and/or
the Local District Superintendent’s designee to determine if a specific event should be referred to
the Civic Center Permit Office or the Leasing and Space Utilization Unit. There is no control in
place to ensure that the RFIB is notified by other departments when a request for use of a District
facility is initially made. Furthermore, the Insurance Section does not have a formalized process
in place to regularly check with the Civic Center Permit Office or the Leasing and Space
Utilization Unit to determine whether any new applications have been received by external
stakeholders. In addition, the Insurance Section does not have access to any new applications or
the supporting records at both offices on a shared server or by any other means.
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The conditions described above occurred because there is no policy or procedure in place
requiring that the Insurance Section of the RFIB be notified when an initial request is received
from an internal or external party, and there is no procedure in place requiring the Insurance
Section to make inquiries of the other two departments on a regular basis whether any new
applications have been received. In addition, there are many access points to apply for the use of
District facilities and many different terminologies used for the same kinds of requests. There are
also more than one set of application forms and instructions. (See Appendix 1 for Details of our
observations).
As a result of the conditions described above, there is a likelihood that an event can take place at
a school or office without approval by the RFIB. There is also the likelihood that the Insurance
Section may have inadequate lead time to perform its functions within the time constraints based
on the event’s date. Without a clearly defined set of procedures, applicants may be confused with
regard to where to apply, what forms should be filled out, and which instructions should be
followed. Also, there is a heightened risk that an accident could occur at an event without
adequate insurance coverage, leaving the District liable for damages.
Recommendation
The RFIB should collaborate with the Civic Center Permit Office and the Leasing and Space
Utilization Unit to create a process of sharing information directly or through a server which
would contain all applications and requests for the use of District facilities including all related
supporting documentation. The shared server should be reviewed by the Insurance Section on a
periodic basis (daily, weekly, etc.) to allow for adequate lead time and staffing to ensure that
applications are reviewed in a timely manner.
Division of Risk Management and Insurance Services Response
The Division of Risk Management and Insurance Services (DRMIS) agreed with our
recommendation and stated that the RFIB, the Civic Center Permit Office, and the Leasing and
Space Utilization Unit had been working collaboratively together to create a “One-stop shop”
process for all Civic Center Permits, Leasing and Special Events. The workflow will include a
(1) single application, (2) one depository where the applications are submitted, (3) an internal
distribution process to the appropriate department to review and process in a timely manner, (4)
updated policies and procedures, and (5) a method to track all requests and generate management
reports.
The DRMIS also stated that the goal is the development of an online application and tracking
system, and that the team has had discussions with the Information Technology Division to
develop and create such a system. However, with limited resources both in personnel and
funding, and time constraints, the decision was made to implement the process outlined above as
a priority with a target date of July 1, 2017.
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Recommendation
The RFIB should ensure that the Civic Center Permit Office and the Leasing and Space
Utilization Unit comply with Board Rules in processing requests to use District facilities.
Board Rules require that:
a) Leasing and Space Utilization will process all requests that (1) require a charge of fair market
value fee, (2) relate to child care/day care programs, and (3) relate to religious-related
activities.
b) Civic Center Permit Office will process all requests for the use of District facilities except for
the ones that will be processed by Leasing.
Division of Risk Management and Insurance Services Response
The Division of Risk Management and Insurance Services agreed with our recommendation and
stated that although Risk Management did not have any oversight or authority over the Civic
Center Permit Office or the Leasing and Space Utilization Unit, the collaborative approach that
DRMIS has implemented would ensure compliance with the Board Rules. The Civic Center
Permit Office has agreed to process all requests that meet the requirements of the Civic Center
Act.
Recommendation
The RFIB should create a central location on the District’s website where an applicant can go to
find all necessary information. At the central location, all the necessary information and
instructions for Civic Center Permits and Special Events and the related forms should be
provided and be up-to-date.
Division of Risk Management and Insurance Services Response
The Division of Risk Management and Insurance Services agreed with our recommendation and
stated that once the final policies and procedures were finalized, the RFIB team will ensure all
the information, instructions and forms were readily accessible and remained up-to-date.
The Manual System Limits the Efficiency of Approving Applications
The current manual and recordkeeping process not only limits the efficiency of the insurance
approval operation, but also hinders management’s ability to effectively manage related risks.
General Process for Review of Insurance Requirements
The following is a description of the general process of reviewing insurance requirements for
Civic Center Permits or Special Events:
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Step 1
An e-mail is usually received by the Insurance Section of the RFIB from the Civic Center Permit
Office, the Leasing and Space Utilization Unit, or from the external applicant directly. Usually
the e-mail contains relevant information about the request, such as application forms and
insurance information.
Step 2
These emailed requests are distributed to individual Insurance Section staff for assessing
insurance requirements. Depending on the type of request, (such as Civic Center Permits,
School Sponsored Special Events, or Third Party Special Events), designated staff will perform
their respective insurance review tasks.
Step 3
Conduct preliminary review for necessary information. The Insurance Section encourages
applicants to provide all the required information at once in order to gain efficiencies. However,
in practice, the requested information often is not all included and the Insurance Section
regularly needs to follow up for additional information.
Step 4
Once the reviews are completed, an Insurance Section staff moves the application and attached
documents to a “Pending” folder located in a shared drive. Insurance staff (i) reviews supporting
documents (Certificate of Insurance and risk management related information), (ii) lists any
missing documents, and (iii) e-mails a request to the applicant with copies to the appropriate
departments.
Step 5
Once required documents are received, the following steps are carried out depending on the type
of application:
(a) For Special Events, an Insurance Section staff prepares an approval sheet, which is
forwarded to the Insurance Coordinator for signature. Once the Insurance Coordinator signs
the sheet, the applicants and the department that processes the application is notified of the
approval of the insurance requirements for the event.
(b) For Civic Center Permits, an Insurance Section staff prepares an approval sheet, however it is
not signed by the Insurance Coordinator. Once an Insurance Section staff is satisfied with
the insurance requirement review, the approval notification is sent directly to the applicants
and the Civic Center Permit Office.
Step 6
Insurance Section staff scans the application and supporting documentation and saves the file in
a shared folder titled “Complete.” The shared drive holds layers of folders containing different
types of records such as lists of events at individual schools and past event records.
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Step 7
After the application receives approval, on a weekly basis, Insurance Section staff input certain
basic information about a completed and approved application in a Microsoft Access database.
During the audit, Insurance Section staff did not know how the information was used or whether
the information in this database is used by other staff.
Depending on the type of application, the Insurance Section of the RFIB has different
operational processes and recordkeeping practices:
Civic Center Permits
For Civic Center Permits, the Insurance Section determines whether:
a) The Certificate of Insurance meets its minimum requirements, and
b) Certain required language is included in the Certificate of Insurance and properly stated.
Recordkeeping at the Civic Center Permit Office is arranged based on seasonal sports periods
such as baseball, basketball, soccer, and football.
Period A covers the four months of July, August, September, and October;
Period B covers the four months of November, December, January and February; and
Period C covers the four months of March, April, May, and June.
The Insurance Section uses an Excel spreadsheet to record all events for which Civic Center
Permits are requested. This information is accessible by all Insurance Section staff who work on
Civic Center Permits. The Insurance Section is small and depending on workload demands,
Insurance staff may be working on either Field Trips, Civic Center Permits, or Special Events.
According to Insurance Section staff, the Chief Risk Officer created a shared email folder in
March of 2016 so that relevant information can be accessed through this shared email folder.
Also, a previous period’s spreadsheet is used to form a base for the current period. The Insurance
Section uses a color-coding system to indicate the status of an application request on the
spreadsheet for recordkeeping purposes as follows:
Table 1
Color Scheme
Color Description
Green Represents approved applications with proper Certificate of
Insurance requirements.
Yellow
Represents applications pending additional information. Once
the pending information is received, the highlight will be
changed to Green.
Red Represents applications that require follow up verification.
Sometimes the insurance renewal date matched (or straddled) with the Civic Center Permit
period, while other insurance policies sometimes did not match with the permit’s period. This
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condition required the Insurance Section staff to follow up and determine whether additional
insurance was purchased.
When the periods, A, B, or C had passed, and a new period began, the previous period’s
spreadsheet would be used as a base and all highlights would be erased. Based on available
information, approximately 2,000 Civic Center Permit applications were processed in the 16-
month period from March 2015 through June 2016.
Special Events
The review of insurance requirements for Special Events can be more involved and detailed
because each Special Event has different circumstances. For example, if a Special Event is
for a barbeque, the Insurance Section needs to ensure that the requestor contacted the Fire
Department,
If a Special Event is for day-care services, the Insurance Section needs to ensure that there is
Child Molestation Insurance, and
If parking is involved, the Insurance Section needs to ensure that related insurance is
managed.
The Insurance Section complies with “LAUSD Special Events Guidelines for Insurance
Requirements.”6 Once Insurance Section staff has completed the initial review of insurance
requirements for Special Events, a second review of insurance requirements is usually performed
by the Insurance Coordinator. In addition to the Certificate of Insurance that covers the applicant
organization, there are usually additional certificates of insurance to cover any vendors or
contractors that the applicant organization engages for the event. For an event that has 100 or
more participants, there should be requirements for crowd control which indicate a need for
security guards. The Volunteer Waiver form must be completed and signed if volunteers perform
services at an event. Parking requests are often sought and additional insurance coverage is
required if valet parking is involved.
The Insurance Section requires at least two weeks lead time for review and approval of the
insurance requirements of Special Events. There are two types of Special Events:
1. School Sponsored Special Event: This involves a program initiated by a school principal or
sometimes by teachers at a school. The Insurance Section processes these applications from
start to finish. Schools are not required to provide a Certificate of Insurance because all
schools are covered by the District. However, if the activity involves external vendors or
professionals, a Certificate of Insurance must be provided for each vendor or professional. In
addition, depending on the nature or type of event that is held, the insurance approval process
may also involve crowd control requirements and volunteer waivers.
6 Issued by the Division of Risk Management and Insurance Services.
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School Sponsored Special Event – Recordkeeping:
The records for School Sponsored Special Events are maintained in shared drive folders within
the Insurance Section, arranged by school names. For Fiscal Year 2016, there were 243 items
listed in the Fiscal Year 2015-2016 folder. Two of the folders were titled “Not Approved –
Cancelled” and “Non-Sponsored.” The remaining folders are labeled by the school name or
school location.
For School Sponsored Special Events, the Insurance Section used a tracking list similar to the list
used for Civic Center Permits. The events were tracked by using an Excel spreadsheet using a
color coding scheme to indicate the status of the particular event. Green, Yellow, and Red were
used to indicate Approved, Pending, and Expired Certificate of Insurance (COI) applications,
respectively.
2. Third Party Special Event: This involves a request made by a third party external to the
schools. These requests are processed by the Leasing and Space Utilization Unit. Insurance
Section staff often ask applicants to provide an event flyer or itinerary because the
description on the application form may not be detailed enough or comprehensive.
Third Party Special Event - Recordkeeping
Insurance Section staff did not maintain a list of approved Third Party Special Events. Staff was
not able to provide auditors with a list of approved Third Party Special Events (processed by the
Leasing and Space Utilization unit) for a specific period. Records of Third Party Special Events
were maintained in separate folders within a shared server and were arranged by school names
and fiscal year. The folder for Special Events (Leasing) for Fiscal Year 2015-2016 contained a
list of school names and each school could have more than one event application. There were
about 434 locations (schools).
In December 2015, the Insurance Section staff started a monthly folder that contained all
completed, cancelled, non-approved, and non-responsive applications. A list of individual
applications was found within each monthly folder. We were able to decipher the information
from these monthly folders and found that there were about 1,200 applications for Special Events
(Leasing) for Fiscal Year 2015-2016. (See Appendix 2)
We noted the following conditions related to the Insurance Approval Process and Recordkeeping
Practices:
(a) The Insurance Section has not developed a manual for routine and non-routine procedures
pertaining to the assessment of insurance requirements for Civic Center Permits and Special
Events. There is a lack of consistency in the process since policies and procedures are
lacking. For example, some staff copy updated information from other staff to maintain
continuity, while some staff may not.
(b) The Insurance Section is understaffed. In order to mitigate the risk of a lack of continuity of
service, (due to staffing shortages), the Insurance Section developed an Email Box in March
2016 to improve communication and aid in continuity in case an Insurance Section staff
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member (who is the main person working on a particular case) is not available when a
question related to the case is raised. The staff copies email communications to this Email
Box whenever communicating with external parties. According to the Insurance Coordinator,
due to staff shortages, occasionally, insurance clearances were not issued before the event
date. In other words, the RFIB was occasionally not able to verify the insurance before the
event took place.
Regarding Third Party (Non-School Sponsored) Special Events:
(a) The Insurance Section staff estimated that about 95% of the time, the Leasing and Space
Utilization Unit followed the RFIB’s recommendation on whether to approve the event or
not. However, there were times when the Leasing and Space Utilization Unit acted without
the insurance approval from the RFIB.
(b) The Insurance Section staff occasionally received requests from the Claims and Liability
Section to check if a Certificate of Insurance was on file for a specific case. Typically, the
staff was given a location (school name) or the name of a sponsoring organization and asked
if there was a valid Certificate of Insurance for a specific time period on file. The staff then
searched the shared drive which contains all the approved and unapproved applications and
supporting documents based on school name and location. The staff stated that they receive
approximately five such requests every six months. Staff had experienced situations where a
valid certificate was found and where the certificate was not found.
(c) Frequently school principals would submit a School Sponsored Special Event request to the
RFIB, when in fact, the request was actually a Third Party Special Event. In such cases, the
staff would need to consult with the Leasing and Space Utilization Unit to determine if the
particular event was actually a School Sponsored Special Event or a Third Party Special
Event.
(d) The Insurance Section’s recordkeeping is inadequate for the review of insurance
requirements for Civic Center Permits and Special Events. The current storage of data does
not allow for efficient management report generation. Currently, management does not know
how significant or insignificant claims are related to Civic Center Permits and Special
Events. The management’s general impression is that liability claims related to Civic Center
Permits and Special Events are few in number, but it did not have any management reports to
offer as evidence.
It appears that an attempt was made sometime in the past to generate a database for reports and
analysis purposes, but it was never operational. According to the Insurance Coordinator, the
Insurance Section has used an internally developed program in Access created in 2006 to record
data related to the insurance requirements for Civic Center Permits and Special Events, and
Claims information. However, RFIB Management is not certain if this program can produce
meaningful reports showing statistical analysis for insurance-related needs. Management is
aware that the program can generate a Claims list, but the list is not categorized by different
types of activities such as Field Trips, Civic Center Permits, or Special Events. Instead it
categorizes claims based on causes of injury such as abduction, act of nature, animal/insect-
related, arson, athletic related, construction, stabbing, jumping, etc.
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(e) Event results were not followed up on and recorded. When an event’s insurance requirements
were not met and the event was not approved by the RFIB, there was no record at the RFIB
that documented whether the event was approved by the Leasing and Space Utilization Unit
or the Civic Center Permit Office and/or whether the event was actually held. There were
occasions where certain applications that were received by the Insurance Section were later
referred to another department. However, there was no record or evidence showing whether
the application was successfully completed.
(f) We noted the following positive condition following the appointment of the Chief Risk
Officer who has provided oversight of the RFIB. The Chief Risk Officer is very much
involved in the process to achieve an efficient and effective operation for the assessment of
insurance requirements for Civic Center Permits and Special Events.
The conditions described above occurred due to several conditions including the fact that
adequate policies and procedures were not in place, and the fact that the Insurance Section
struggled with inadequate resources and managed its operation in a manner akin to “putting out
fires.” As a result, any operational improvements such as reviewing and evaluating adequacy and
consistency of policies and procedures, reviewing and updating related web information, and
creating desk manuals was delayed.
We also noted that the RFIB received applications for events that should have been directed to
other offices due in part to the existence of multiple access points from which applicants could
apply. Also, the loss of knowledgeable employees to other organizations caused the
discontinuation of certain operational improvement initiatives such as a centralized database
system, establishment of policies and procedures, and website information updates. In addition, a
management reporting system on claims associated with events at District facilities was
unavailable due in part to a highly manualized recordkeeping system and a lack of a centralized
database capable of generating reports. Event results were also not available at the Insurance
Section because there was no feedback from other departments.
As a result of the conditions described above, there is a lack of consistency in operation due to a
lack of well-developed policies and procedures. There is also a risk that quality information is
not generated and used for management decision making and effective monitoring. In addition,
there is a heightened risk that an accident could occur at an event without adequate insurance
coverage, leaving the District responsible for damages.
Recommendation
The RFIB, the Civic Center Permit Office and the Leasing and Space Utilization Unit should
collaborate and implement a centralized computer system that tracks and retains application
requests for District facilities and supporting records.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and responded that as stated in its response to the
first recommendation, the goal was to leverage technology to create efficiencies.
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Recommendation
The RFIB should develop policies and procedures and manuals for consistency and continuity of
operation within the Insurance Section of the RFIB.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the RFIB had already drafted
internal policies and procedures for determining the risk of loss for civic center permits, leasing
and special events. Once District policies and procedures are approved, the draft internal
procedures/manuals will be reviewed for consistency and accuracy before finalizing.
Recommendation
The RFIB should provide training to Insurance Section staff to improve their ability to assess
insurance requirements.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that Risk Management, as a Division,
would be focusing on staff development to improve the skills and knowledge of staff, build
confidence and credibility, and increase efficiency.
Recommendation
For internal control purposes, the Director of the Risk Finance and Insurance Branch should, on
a periodic basis, randomly select approved applications for review to ensure that all insurance
requirements were met. Any deficiencies should be identified and communicated to staff to
improve future review and assessment decisions.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the RFIB would include periodic
audit procedures in the internal manual to ensure the reviews of insurance requirements were
accurate and consistent.
Recommendation
The RFIB should communicate with the Civic Center Permit Office to reconsider the “Period
System” to align the application process with all other requests to use District facilities.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the Civic Center Permit Office was
planning to revise the “Period System” to align the application process as indicated. Applicants
will have 30 days before the first requested use to submit an application. Approved uses will be
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for a period of 4 months from that date. This process closely aligns with the “short term” License
Agreement process. The current “Permit Period” schedule will be eliminated.
Recommendation
The Insurance Section should collect feedback information recorded in documentation, such as
“approved or not, cancelled or not, event held or not, accident or not, type and nature of accident,
payout, reimbursed or not” to facilitate analysis for future decision making, including future
insurance requirement designs.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that from a Risk Management and Loss
Control/Prevention standpoint, the information would have been valuable to collect and analyze.
However, with the current limited resources, the additional work to gather the information would
not be feasible at this time.
Recommendation
The RFIB should communicate with the Civic Center Permit Office to incorporate the cost of
computer software purchases and maintenance into the calculation of direct cost reimbursements.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the RFIB, in conjunction with the
Civic Center Permit Office and the Leasing and Space Utilization Unit, had not only been
evaluating the cost of computer software and maintenance but all costs, including labor
associated with operating and maintaining the Program.
Recommendation
The RFIB should inform the Civic Center Permit Office that it should continue and strengthen
after-school and weekend campus walk arounds by designated Civic Center Permit staff or
school security personnel, and report back any activities without permits or lease agreements.
Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the Civic Center Permit Office had
agreed to establish protocols to strengthen after-school and weekend campus walk arounds to
identify activities being conducted without a user agreement.
Recommendation
The RFIB should communicate with the Division of District Operations to update the Principal’s
Handbook regarding the use of District facilities and how requests to use District facilities should
be processed.
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Division of Risk Management and Insurance Services Response
The DRMIS agreed with our recommendation and stated that the RFIB would engage District
Operations to ensure updated information, policies and procedures on the use of District facilities
was incorporated into the Principal’s Handbook.
Inadequate Controls over Staff’s Review of Insurance Requirements
The review of insurance requirements needs to be strengthened and improved. In our
examination, we noted deficiencies such as missing Certificates of Insurance, missing waivers,
and insufficient insurance coverage.
According to the Standards for Internal Control in the Federal Government, “management
designs control activities in response to the entity’s objectives and risks to achieve an effective
internal control system. Control activities are the policies, procedures, techniques, and
mechanisms that enforce management’s directives to achieve the entity’s objectives and address
related risks.”7
“Control activities can be either preventive or detective. The main difference between preventive
and detective control activities is the timing of a control activity within an entity’s operations. A
preventive control activity prevents an entity from failing to achieve an objective or address a
risk. A detective control activity discovers when an entity is not achieving an objective or
addressing a risk before the entity’s operation has concluded and corrects the actions so that the
entity achieves the objective or addresses the risk.”8
“Control activities can be implemented in either an automated or a manual manner. Automated
control activities are either wholly or partially automated through the entity’s information
technology. Manual control activities are performed by individuals with minor use of the
entity’s information technology. Automated control activities tend to be more reliable because
they are less susceptible to human error and are typically more efficient. If the entity relies on
information technology in its operation, management designs control activities so that the
information technology continues to operate properly.”9
“Management performs ongoing monitoring of the design and operating effectiveness of the
internal control system as part of the normal course of operations. Ongoing monitoring includes
regular management and supervisory activities, comparisons, reconciliations, and other routine
actions. Ongoing monitoring may include automated tools, which can increase objectivity and
efficiency by electronically compiling evaluations of controls and transactions.”10
We randomly selected 19 applications (seven Civic Center Permits, seven Third Party Special
Events, and five School Sponsored Special Events) from completed folders in the shared drive
for the period March 1, 2015 through June 30, 2016 to review if Certificates of Insurance were
7 Standards for Internal Control in the Fed. Government, Published by the GAO, dated September 2014, page 45.
8 Standards for Internal Control in the Fed. Government, Published by the GAO, dated September 2014, page 49.
9Ibid,
10 Ibid, 65.
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on file and whether insurance-related requirements were fulfilled. The following details our
review results:
Civic Center Permits (CCP)
We obtained application lists for Period A (July 2015 – October 2015); Period B (November
2015 – February 2016); Period C (March 2015 – June 2015) and Period C (March 2016 – June
2016). We reviewed spreadsheets for these periods and found that (1) the green highlights were
not applied consistently. Some rows had partial green highlights and staff could not explain
inconsistent highlighting except that many people have worked on the spreadsheet and mistakes
may have been made, (2) yellow highlights were still in the spreadsheets for those periods that
had passed and for events that had already occurred, and (3) red highlights were present for
events that did not happen for that particular period.
Application
Identification
Approval
Result
CCP Application 1 No record*
CCP Application 2 Yes
CCP Application 3 No record*
CCP Application 4 Yes
CCP Application 5 No record*
CCP Application 6 No record*
CCP Application 7 No record*
* No record – indicates that there was no indication of approval in the retained file records.
Period A (July 2015 – October 2015) -: CCP Application 1 (Soccer Games)
This event was still highlighted in yellow on the Excel spreadsheet. The Certificate of Insurance
expiration date was recorded as 10/1/2015. However, according to the application, there were
events scheduled for October 4, 11, 18, and 25, 2015 which were not covered by the Certificate
of Insurance on file.
Period B (November 2015 – February 2016): CCP Application 2 (Free Information
Seminar)
Location change was not properly reflected on the Certificate of Insurance. Should a claim arise
out of this event, the District might have difficulty enforcing the insurance policy.
Additional Insured – The Certificate of Insurance stated that the Certificate Holder was also
named as Additional Insured. However, we were not able to determine whether there was an
endorsement, because there was none on file.
Policy Cancellation – The cancellation section stated that “should any of the above described
policies be cancelled before the expiration date thereof, notice will be delivered in accordance
with the policy provision.” The RFIB does not have the actual policy; therefore, it would not
know the details of the provisions regarding cancellation.
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CCP Application 3 (Basketball, Volleyballs, and Tennis)
(1) Information provided on the application form was not consistent. The applicant indicated on
one part of the application that all participants were 18 years of age or under (Youth Group)
and on another part of the application indicated that at least one participant was 19 years of
age or older (Adult Group). There was no indication that this inconsistency was resolved.
(2) There was no record on the application regarding who received and approved the event.
(3) This application requested to use the facility from Monday through Friday for the entire
Period (Period B – November through February), even though it stated that “any day Big
Gym is available 6:00 PM to 9:00 PM”. If no one was actively tracking the applications
related to this site, this group could have the exclusive use of the facility. According to the
CCP application instruction, “Usage of school by a single organization or activity may be
limited in order to ensure an equitable distribution of Civic Center Permits among the various
organizations and activities.” (4) The applicant organization did not have an adequate amount of Worker’s Compensation
insurance required by the District.
(5) This application did not have an Automobile Liability Waiver.
Additional Insured – The Certificate of Insurance stated that the Certificate Holder was also
named as Additional Insured. However, we were unable to determine whether there was an
endorsement since the endorsement was not on file.
Policy Cancellation – The RFIB did not have the actual policy, therefore, it would not know the
details of the provisions regarding cancellation.
CCP Application 4 (Community Meeting)
There was no record on the application regarding who received and approved the event and the
applicant was self-insured.
CCP Application 5 (Track & Field Practices and Meets)
(1) This application was still highlighted in yellow on the spreadsheet; however, the requested
event dates had already passed.
(2) There was no record on the application regarding who received and approved the event.
(3) The Certificate of Insurance did not name the District as the Certificate Holder and did not
contain an additional insured endorsement in favor of Los Angeles Unified School District
and the Board of Education of the City of Los Angeles.
(4) Policy Cancellation – The RFIB did not have the actual policy; therefore, it would not know
the details of the provisions regarding cancellation.
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Period C (March 2015 – June 2015): CCP Application 6 (Adult Basketball)
(1) This application was still highlighted in yellow indicating a pending application; however,
the period had passed.
(2) The application did not specify the date of the event requested. The Certificate of Insurance
covered one specific date (02:05PM ET 03/16/2015 to 12:01 AM ET 03/06/2016); we were
unable to verify if the Certificate of Insurance covered the date of the event. The Insurance
Units’ spreadsheet records showed that the Certificate of Insurance expired on 4/23/2015,
which did not correspond to the COI date.
(3) Policy Cancellation – The RFIB did not have the actual policy; therefore, it would not know
the details of the provisions regarding cancellation.
Period C (March 2016 – June 2016): CCP Application 7 (Free Classes)
(1) This application was marked in yellow indicating a pending application. However, the
period had passed.
(2) The spreadsheet did not show an approval date.
(3) The Commercial General Liability Certificate of Insurance was missing and not available for
review.
Third Party Special Events (TPSSE)
Approval
TPSSE Application 1 Yes
TPSSE Application 2 Yes
TPSSE Application 3 Yes
TPSSE Application 4 Yes
TPSSE Application 5 Yes
TPSSE Application 6 No Record
TPSSE Application 7 Not Approved
TPSSE Application 1 (Community Antiques and Collectibles Market by Booster Club)
(1) The Booster Club’s COI did not have the Cancellation statement.
(2) Los Angeles Unified School District was named as additional insured instead of “Los
Angeles Unified School District and the Board of Education of the City of Los Angeles” in
the endorsement document.
(3) The application package did not have a detailed itinerary and/or flyer of all planned activities
and participants.
(4) According to the retained records, there were 48 vendors. None of these 48 vendors provided
a COI.
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(5) The application indicated that there were about 300 customers. However, there was no
indication in the retained records that a detailed plan for supervision and crowd control was
provided for the RFIB review.
TPSSE Application 2 (Fall Family Festival including inflatable equipment):
(1) Inadequate insurance: LAUSD requirement for inflatable equipment vendor is as follows:
Insurance Amount
Per Occurrence Limit $ 1,000,000
Products & Completed Operations 1,000,000
Personal & Advertising Injury 1,000,000
General Aggregate Limit 2,000,000
Fire Damage (Any One Fire) 100,000
Medical Payments (Any One Person) 5,000
The Vendor’s Insurance for the event was inadequate as shown below:
Insurance Amount
Commercial Liability Limit Per Person $ 250,000
Commercial Liability Limit Per Accident 1,000,000
Commercial Liability Limit Policy Aggregate 2,000,000
(2) This application used three types of application forms: one for school sponsored, one for non-
school sponsored, and one from the Leasing and Space Utilization Unit.
(3) This application stated that “parents and volunteers will prepare” all foods. According to
OEHS, all food or beverages that have been stored or prepared in a private home may not be
offered for sale or given away. The only exception is non-potentially hazardous baked goods
or candy. This application had many recreational activities and offered many kinds of home-
made foods at the event.
TPSSE Application 3 (Booster Club Carnival):
(1) The organizer’s insurance for File Damage (any one fire) was $50,000. The District’s
requirement was $100,000.
(2) Additional Insured – Same as in CCP Application 2 for the organizer.
(3) Additional Insured – Same as in CCP Application 2 for the equipment vendor of the carnival.
(4) Policy Cancellation – Same as in CCP Application 2.
(5) The Participant’s designated area of assignment was not specified on the Crowd Control
Participants Waiver and Release of Liability form.
(6) Two of the vendors that were listed as service providers for the event did not have any
insurance information on file.
(7) A detailed itinerary and/or flyer of all planned activities and participants were not on file.
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Application 4 (PTSA Haunted House):
(1) The organizer’s Certificate of Insurance did not specify that “Los Angeles Unified School
District & the Board of Education of the City of Los Angeles” was the Certificate Holder.
(2) Additional Insured – Same as in CCP Application 2.
(3) Policy Cancellation – Same as in CCP Application 2.
Application 5 (Play Time for Preschoolers):
(1) Additional Insured – Same as in CCP Application 2.
(2) Policy Cancellation – Same as in CCP Application 2.
(3) The activity lasted for one year from 7/01/2015 to 6/30/2016. However, the Commercial
General Liability expired on 6/01/2016, and the Workers Compensation and Employers
Liability expired on 1/01/2016. Therefore, there was insufficient evidence to determine
whether the event was covered by adequate Workers Compensation and Employers Liability
insurance for the entire duration.
(4) The rental License Agreement was dated June 17, 2015. However, The Automobile Liability
Statement was dated July 30, 2014. Therefore, there was insufficient evidence to determine
whether the event was covered by adequate Automobile insurance for the entire duration.
Application 6 (Dance Lessons):
(1) This application was marked as “Approved by Eileen.” The documents on file included a
License application, the Facility Use Authorization form, a COI, an endorsement for
additional insured, and an event flyer.
(2) The Waiver of Liability, Assumption of Risk, and Indemnity Agreement was not on file.
(3) There was no Approval of Insurance Requirements from the Risk Finance and Insurance
Branch on file.
(4) There was insufficient evidence to verify that the Risk Finance and Insurance Branch
reviewed and approved the event’s insurance requirements.
Application 7 (Annual Spring Festival):
(1) This application was marked as “Non-Responsive.” The documents on file included: (1) a
License application, (2) the Facility Use Authorization form, (3) an OEHS Activity Checklist
for Carnivals and Other Events, (4) a Request for General Liability Insurance Quote, (5) the
Inter-office Memo form, (6) a Certificate of Insurance, (7) a List of Vendors for Special
Event, (8) a detailed description of activities, and (9) the event flyer.
(2) The Waiver of Liability, Assumption of Risk, and Indemnity Agreement was not on file for
the organizer.
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(3) There were four outside vendors listed. None of their Certificates of Insurance were on file,
nor were their Waivers of Liability, Assumption of Risk, and Indemnity Agreements.
(4) Volunteers were said to provide services, but no list of volunteers or their waivers were on
file.
(5) No crowd control arrangement was documented and retained on file.
(6) There was insufficient evidence to verify that the Risk Finance and Insurance Branch
reviewed and approved the event’s insurance requirements.
Application 8 (Fencing Tournament):
(1) This application was marked as “Not Approved.” The staff stated that this event was not
approved because it was a fencing activity. No additional explanation was given.
(2) There was no indication in the retained documentation if the event was cancelled or held.
School Sponsored Special Events (SSSE)
Application Signed
Approval
SSSE Application 1 Yes
SSSE Application 2 Yes
SSSE Application 3 No
SSSE Application 4 No
SSSE Application 5 Yes
Application 1 (Senior Prom):
(1) Participant’s designated area of assignment on the “CROWD CONTROL Participants
Waiver and Release of Liability” form was not filled out. According to the policy published
by the Division of Risk Management and Insurance Services entitled “LAUSD
INSURANCE GUIDELINES” (02/12), page 4, “If your event is scheduled to host a crowd of
more than 100 people, please provide a copy of your security/crowd control plan or a listing
of your cadre of volunteers and their designated areas of assignment for approval by Risk
Management.” The estimated number of participants on the application was 150.
(2) Insurance for Digishots Photography (a vendor for this event) carried an insurance coverage
for property damage for $50,000 per occurrence. However, the LAUSD INSURANCE
GUIDELINES requires $100,000 for fire damage of any one fire. (3) Insurance for Access Guard and Patrol did not have adequate automobile insurance. LAUSD
requires a Combined Single Limit of $1,000,000. The vendor only had Scheduled Autos
coverage for Bodily Injury (per person) of $100,000, Bodily Injury (per accident) of
$300,000 and Property Damage (per accident) of $50,000.
(4) Additional Insured – Same as in CCP Application 2 for all outside vendors: Digishots,
Access Guard and Patrol.
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(5) Policy Cancellation – Same as in CCP Application 2 for all outside vendors: Digishots,
Access Guard and Patrol.
Application 2 (Animal on Campus):
(1) Vendor, Reptacular Animals Corp. did not have adequate automobile liability coverage. The
vendor only had Scheduled and Non-Owned autos coverage for Bodily Injury (per person) of
$100,000, Bodily Injury (per accident) of $300,000, and Property Damage (per accident) of
$50,000.
(2) A Blanket Additional Insured endorsement was provided which did not comply with the
LAUSD requirement that specifically names “Los Angeles Unified School District and the
Board of Education of the City of Los Angeles” be contained in the endorsement.
(3) Policy Cancellation – Same as in CCP Application 2.
Application 3 (Space for Interview):
(1) This application did not have Risk Management’s approval signature; and therefore, we were
unable to verify whether the event occurred. The SSSE Unit staff did not know either,
because there was no documentation from the SSSE Unit indicating whether the event
occurred or not.
(2) This application did not have a Certificate of Insurance on file.
(3) This application was not a school sponsored activity. The SSSE Unit should have referred
this application to the Leasing and Space Utilization Unit. There was no documentation from
the SSSE Unit indicating so.
(4) The Principal used the wrong application form. Instead of using the FACILITY USE
AUTHORIZATION form from the Leasing and Space Utilization Unit, the Principal used
the REQUEST FOR APPROVAL OF SPECIAL EVENT form from the Division of Risk
Management and Insurance Services. Internally, Risk Management processed these two
forms differently and by different staff. The first form was processed by the Leasing and
Space Utilization Unit and the latter was by the SSSE Unit.
Application 4 (School-Wide Carnival Fundraising by PTA):
(1) This application did not have Risk Management’s approval signature; we were not able to
determine whether the event was conducted. SSSE Unit staff did not know either. There was
no documentation from the SSSE Unit indicating either way.
(2) This application was not a school sponsored activity. The SSSE Unit should have referred
this application to the Leasing and Space Utilization Unit for insurance approval. There was
no documentation from the SSSE Unit indicating so.
(3) The Principal used the wrong application form. Instead of using the FACILITY USE
AUTHORIZATION form from the Leasing and Space Utilization Unit, the Principal used
the REQUEST FOR APPROVAL OF SPECIAL EVENT form from the Division of Risk
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Management and Insurance Services. Internally, Risk Management processed these two
forms differently and by different staff. The first form was processed by the Leasing and
Space Utilization Unit and the latter was by the SSSE Unit.
Application 5 (College and Career Fair):
The “LIST OF VENDORS FOR SPECIAL EVENT” form was not complete. Missing
information included whether or not an organization or vendor is LAUSD insured, organization
or vendor contact information, and whether or not a school belonged to the LAUSD.
Maher Elias (dba Gourmet Genie) (Food Truck)
(1) The Public Health Permit provided by the food vendor Maher Elias (dba Gourmet Genie) was
issued to Eagle Foods, Inc.
(2) The additional insured endorsement in favor of “Los Angeles Unified School District and the
Board of Education of the City of Los Angeles” was not included.
Sabores De Mexico (Food Truck)
(1) The Certificate of Insurance listed Benjamin Martinez as the insured and there was no
mention of Sabores De Mexico on the certificate.
(2) The additional insured endorsement in favor of “Los Angeles Unified School District and the
Board of Education of the City of Los Angeles” was not included.
(3) The Health Permit document was missing.
Paradise Fine Cookies & Ice Cream/Austyn’s Gourmet Burgers (Food Trucks)
(1) The application stated that these two vendors were under the same business license and the
same owner. However, the Certificate of Insurance stated that Paradise Worldwide, Inc. was
the named insured. There was no evidence on file that Paradise Fine Cookies & Ice Cream
and Austyn’s Gourmet Burgers were members of Paradise Worldwide, Inc.
(2) The additional insured endorsement was not included.
(3) Only Paradise Cookies Inc. had a Business Certificate on file. The Business Certificate for
Austyn’s Burger was not available for review.
Valeria Market (Food Sale)
(1) The insurance for Product/Completed operations aggregate was stated on its COI as
$1,000,000, each occurrence was $500,000, and the General Aggregate was $1,000,000. The
District’s minimum requirement is $2,000,000 for Product/Completed operations aggregate,
$1,000,000 for each occurrence, and $2,000,000 for General Aggregate.
(2) The additional insured endorsement was not included.
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Pizza & Co, LLC
The following were missing: (a.) Waiver of Liability, (b.) Assumption of Risk, (c.) Indemnity
Agreement, (d.) Additional Insured Endorsement, (e.) Certificate Holder not specified as
LAUSD, (f.) Public Health Permit, and (g.) Business Certificate or Seller’s Permit.
Andy Gump, Inc. (Portable Restroom)
The following were missing: (a.) Waiver of Liability, (b.) Assumption of Risk, and (c.)
Indemnity Agreement.
In summary, we found that almost every application we reviewed had deficiencies, some more
and some less, in their insurance requirements such as missing Certificates of Insurance and/or
waivers and insufficient insurance coverage. We believe that it was inefficient for the Leasing
and Space Utilization Unit and the Civic Center Permit Office to process the applications before
basic insurance requirements were met. The Insurance Section did not insist that the copy of the
endorsement for additional insured be included as part of the insurance requirements.
The cancellation section of the Certificate of Insurance states that should any of the above
described policies be cancelled before the expiration date, notice will be delivered in accordance
with the policy provision. We were unable to verify what the policy provisions dictated.
The conditions described above occurred because: (1) there was a lack of clear and coherent
policies and procedures, (2) there were no monitoring activities to ensure policies and procedures
are strictly followed, (3) the staff’s knowledge of insurance requirements was limited, and (4)
staff shortage and turnover created a situation where there was no continuity of processing
applications. New staff also needs to be trained.
As a result of the conditions described above, there was a potential risk that insurance
requirements were not met. Payouts for claims associated with these events may not have been
reimbursed by the applicants and could have become an additional burden to the District.
REPORT DISTRIBUTION
This report is intended solely for the information and use of the Division of Risk Management
and Insurance Services and is not intended to be and should not be used for any other purpose.
This report may not be released in full or in part, to any entity outside LAUSD or to any internal
department without the prior approval of the Office of the Inspector General.
AUDIT TEAM
This audit was conducted by the Office of the Inspector’s General Audit Unit team:
Katharine Monishi, Audit Manager
Wan Yu Liu, Principal Auditor
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Appendix 1
Operational Background
Observations:
Observation 1 – Unclear Instructions
The Division of Risk Management and Insurance Services publishes “GUIDELINES FOR
SPECIAL EVENTS”. According to Item 4 of the Guidelines: “All non-LAUSD groups must
also obtain either a civic center permit or license agreement in order to use District property.
The Principal and/or the Local District Superintendent’s designee should refer any non-LAUSD
group to the Civic Center Office at (818) 904-2164 or Leasing and Asset Management (Real
Estate) at (213) 241-6785. Liability insurance is required for civic center permits and short-term
license agreements”.
There is a lack of clear instructions for the Principal and/or the Local District Superintendent’s
designee to determine if a specific event should be referred to the Civic Center Permit Office or
the Leasing and Space Utilization Unit.
Observation 2 – Inconsistent Instructions
There are inconsistencies in the policies published by the Division of Risk Management and
Insurance Services.
The Division of Risk Management and Insurance Services publishes the following bulletins:
“LIABILITY NOTICE TO: BOOSTER CLUBS, PARENT/TEACHER ORGANIZATIONS,
STUDENT BODY GROUPS,” and
“LAUSD INSURANCE GUIDELINES.”
In the former publication, the policy states, “The Division of Risk Management and Insurance
Services (DRMIS) has set minimum insurance requirements for sponsors of special events,”
which is one set of Commercial General Liability Insurance. However, in the latter publication,
insurance requirements are categorized into different types of activities, which may or may not
have the same requirements:
Short-Term license agreements through the Leasing & Space Utilization Unit
Parking Lot Use
Concerts (Non-Instructional Times)
Live Animal on LAUSD Property & Field Trips
Health Fairs (Sponsored by Non-LAUSD Entities)
Athletic Sports/Tournaments
School Carnivals or Fires Including any Participating Food Vendors
Inflatable Equipment
Fireworks
Aquatic Activity/Swimming Pool
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Boating Activity
Filming on LAUSD Property (No Students Involved), Filming on LAUSD (Students
Involved)
Professional Service Contracts – Basic Insurance Requirements May Vary Depending on
Contract Requirements and Actual Scope of Work
Purchasing Contracts – Basic Insurance Requirements May Vary Depending on Contract
Terms and Actual Scope of Work
We noted that the forms for outside parties to verify waiver of liability, assumption of risks, and
indemnification are different depending on the department that an applicant applies to.
The insurance requirements from the Civic Center Permit Office specify that the Certificate
Holder portion of the insurance certificate must be “Beyond the Bell Branch, 333 South Beaudry
Ave., 29th
Fl., Los Angeles, CA 90017, Ref: School Name”. However, according to the staff at
the Risk Finance and Insurance Branch (RFIB), their package does not require the specification
of the school site.
Observation 3 – Multiple Website Portals to Request for Permits and Event Approvals
There are many places on District websites to obtain information, instructions, and applications
for both Civic Center Permits and Special Event approvals. An applicant can apply to any of the
following departments:
(1) Civic Center Permit Office of the Beyond the Bell Branch,
(2) Leasing and Space Utilization of the Division of District Operations, or
(3) Risk Management office directly.
The information, instructions, and applications are not always the same. Some of the instructions
are outdated. Many website references for insurance requirements refer to an Insurance
Coordinator/Manager who has left the District for more than a year.
Observation 4 – No clear distinction between a Civic Center Permit and Special Event
Approval
For Civic Center Permits, the District website states:
“The major function of the Civic Center Permit Office is the issuance of permits to
allow for the use of school facilities in conformance with the California Education
Code and the Board of Education rules, which require that each and every public
school facility be made available as a civic center to members of the community and
non-profit organizations for supervised recreational activities, meetings and public
discussion, without disruption to regular school activities.”
To qualify for a permit, the website also states, “Activity must be not-for-profit and open to the
public.”
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For Special Events, the District website states:
“Many School Booster Clubs, PTOs and Student Body Groups regularly sponsor
extracurricular activities, special events and/or fundraisers that pose liability risks to
LAUSD owned property, its employees, students and the sponsoring organization. If
the event or the sponsoring organization is improperly insured and there are
allegations of negligence that result in liability claims, the members of the sponsoring
organization could find that their personal assets are at risk. Additionally, as the
owner of the property, the District may also incur expenses related to defense of a
liability claim.”
The description for Civic Center Permits and Special Events are not mutually exclusive. In other
words, an applicant can take either route to obtain either a Civic Center Permit or Special Event
approval. We conducted a close review of both Civic Center Permits and Special Events, and
found that the same type of organizations requested either a Civic Center Permit or Special Event
approval. (See Table 2 below in Appendix 1) The Leasing and Space Utilization Unit processed
similar kinds of events that the Civic Center Permit Office processed. (See Table 3 below in
Appendix 1) Staff stated that fees are not charged for Civic Center Permit activities, while fees
are charged for Special Event activities. However, we found that some of the Special Event
activities that we reviewed were not charged fees either. (See Table 4 below in Appendix 1)
Civic Center Permits are processed by the Civic Center Permit Office within the Division of
District Operations and it has its own application package. Applications for Special Events are
directed first to the School Principal or the Local District Superintendent (or their designees) and
then to the the Leasing and Space Utilization Unit for processing. Again, the Leasing and Space
Utilization Unit has its own application forms for applicants requesting use of District facilities.
Observation 5 – No mention of the Difference between School Sponsored Special Events and
Third Party Special Events on the District website
The District website does not make a distinction between School Sponsored Special Events and
Third Party (non-school sponsored) Special Events. Yet, internally, staff processes these two
types of Special Events differently. The applications and approval forms used for these two
types of Special Events are different.
Internally, applications for Special Events are differentiated between School Sponsored Special
Events and Third Party Special Events. Within the RFIB, there are different operational
processes for these two types of applications.
For a School Sponsored Special Event application, an applicant should apply directly through the
RFIB and use the form “Request for Approval of Special Event.” These types of special event
applications are not processed by the Leasing and Space Utilization Unit. However, the form
does not specify that it is for school sponsored activities only. Several times, applicants used this
form to apply for Third Party Special Events causing additional processing time and confusion.
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For Third Party Special Events, the Leasing and Space Utilization Unit has its own application
forms and approval processes for Principals and Local Superintendents or their designees. The
initial form is an Interoffice Memo from the Principal to the Deputy Director of Leasing &
Space Utilization. It is then followed by a form titled “Facility Use Authorization.” These two
forms contain very similar information.
Benchmarking
We performed research related to practices that other large California school districts used to
comply with the California Education Code, Section 38130-38139, the Civic Center Act. Table
5 in Appendix 1 summarizes the results of our research.
All other school districts we reviewed have only one set of rules. Most of them have only one
application and one set of instructions. If multiple applications are offered, they are mutually
exclusive because each application deals with a specific situation.
Table 2
Types of Organizations
Code Organization
Civic
Center
Permits
Third
Party
Special
Events
School
Sponsored
Special Events
S Sports Organizations 2 2
EG Ethnic groups 2
City Cities 1
R Churches/Religious Services 1 1
C Commercial groups 1 6
B Booster Clubs 4
NP Nonprofits 7 1
PTSA PTSA 1
PTA PTA 3 1
SLD Schools/Local Districts 3
Total Number of Applications 7 24 5
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Table 3
Types of Activities
Code Activities
Civic
Center
Permits
Third Party
Special
Events
School
Sponsored
Special Events
S Sports Games/Competitions 4 4
SEM Seminars 1
M Meetings 1 1
R Religious Services 1 1
C Festivals/Carnivals 7
ECC Early Child Care Programs 1
ASP After-School Programs 2
SC Summer Camps 3
BS Beautification of School Site 1
HS Holiday shows 1
FR Fundraising Events (Walkathon, Car
Shows, Animal Shows, etc.) 4 2
P Proms 1
CD Career Days 1
Total Number of Applications 7 24 5
Table 4
Summary of Applications Reviewed by the OIG
a. Civic Center Permits
Organizer Org.
Type
Activity Act.
Type
Duration Additional
Vendor
Rental
Fee
1 America Soccer League of S. F.
Valley
S Soccer Games S Every Sunday for
4 months
No No
2 Serenity Wealth Management C Free Information
Seminar (Wealth
management)
SEM Two hours No No
3 Assyrian American Association
of Southern California
EG Basketball,
volleyball, and
tennis
S Any day Big Gym
is available from
6-9 PM for four
months
No No
4 City of Los Angeles CITY Community
meeting
M Two hours No No
5 Chatsworth Youth Sports Track S Track & Field
practice and
meets
S One month No No
6 Amigo Associates EG Gymnasium
Adult Basketball
S Two hours No No
7 Bishop Theological Seminary R Free classes R Two half days No No
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b. School Sponsored Special Events
Organizer
Org.
Type Activity Act. Type Duration
Outside
Vendor
Rental
Fee
1 School Sponsored SLD Senior Prom P One evening Yes No
2 School Sponsored SLD Animal
show on
campus
FR One and half
hours
Yes No
3 The Los Angeles-Nagoya Sister City
Affiliation’s Teacher Exchange (No
Approval from RM)
NP Interview M Two evenings N/A N/A
4 Horace Mann Panther PTA (NO
Approval from RM)
PTA Carnival
fundraiser
FR One weekend Yes N/A
5 School Sponsored (by Local District
East)
SLD Career Day CD One day Yes No
c. Third Party Special Events Organizer Org.
Type
Activity Act.
Type
Duration Vendor Admission
Charge
Rental
Fee
License
1 Gondolier Booster
Club
B Open Market FR Approximatel
y two days
per month for
6 months
Yes Yes No (Fair
Rental)
License
Application
2 Friends of the Open
School
PTA Fall Festival C One day Yes No No License
Application
3 Booster Club for
Eagle Rock HS
B Festival
(Inflatable)
C One weekend Yes Did not
specify on
application
Yes (Cost
Incurred
Only)
License
Agreement
4 Lawrence School
PTSA
PTS
A
Festival
(Haunted
House)
C Two days Yes Yes No (Direct
Cost)
License
Application
5 Spirit Child
Development Ctr.
C Play time for
preschoolers
ECC One fiscal
year, one
hour for two
days per
week
No Missing
application
form
Yes License
Agreement
6 Sky High Dance C After-school
Hip Hop
classes
ASP Fridays for
two months
No Yes Approved
by
Leasing;
No record
of License
Agreemen
t
License
Application
7 Booster Club of
Playa Del Rey
B Spring
fundraiser &
festival
C One
afternoon
Yes No N/A
(Non-
responsive
)
License
Application
8 SoCal Scholastic
Fencing League
S Fencing
tournament
S One day No No N/A
(Not
approved
by RM)
License
Application
9 Kids Kor C Summer
Camp
SC Three weeks No Yes No (Fair
Rental)
License
Application
10 Adair Spanish
Congregation of
R Religious
Service
R One evening No No No (Fair
Rental)
License
Application
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Organizer Org.
Type
Activity Act.
Type
Duration Vendor Admission
Charge
Rental
Fee
License
Jehovah Witness
11 Cheer Pros C Cheer Camp SC Two days No Yes No (Fair
Rental)
License
Application
12 Kids Protectors of
the Environment
C After School
Structured
Program
ASP One
academic
year, four
days a week,
afternoon
No Yes No (Fair
Rental)
License
Application
13 Carson High School
Booster Club
B Football
Game
S Every Friday
of October
and
November
Yes Yes No (Direct
Cost)
License
Application
14 Enrich LA NP Beautification
of school
garden area
BS One day No No No License
Application
Informatio
n Sheet
15 F. Ruth Moore
Volunteer Service
Organization Inc.
NP Christmas
Party
(Holiday
show and toy
giveaway)
HS One day No No No License
Application
16 Grand View PTA PTA Sweetheart
Dance
FR Half day Yes No No License
Application
17 Planet Bravo C Summer
Camp
SC Three weeks No Yes No (Fair
Rental)
License
Application
18 USA Swimming S Swimming
competition
S Late
afternoon
swimming,
Monday
through
Friday for
two months
No Yes No (Direct
Cost)
License
Application
19 Dancing
Classrooms Los
Angeles
NP Dance
competition
S Two days
afternoon and
evening
No No No License
Application
20 American Cancer
Society Inc.
NP Relay for Life FR Two-day
walking
event
(Fundraising)
Yes No No License
Application
21 Mar Vista PTA PTA Festival C One day
event
Yes No No License
Application
22 Community
Partners
NP Fall Festival C One day
event
Yes No No License
Application
23 Friends of Playa
Vista
NP Boo Fest
(Classroom
Booth
Festival)
C One day
event
Yes No No License
Application
24 Ricardo Alvarado
Oldies Car Club
NP Car Show FR One day
event
No No No License
Application
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Table 5
Civic Center Act Matrix with Unified School District Peers
California
School
District
Terminology Used Access Path to Request for Use of School Facilities Application Form
1 LAUSD Civic Center
Permit
Lease
Agreement
Special
Events
School
Sponsored
Special
Events
Home > Office > Facilities Services Division > Asset Management > Leasing &
Space Utilization > Civic Center Permits > Civic Center Permit Office
Home > Office > Facilities Services Division > Asset Management > Leasing &
Space Utilization > License Agreements
Home > Office > Facilities Services Division > Asset Management > Leasing &
Space Utilization > Filming Permits
Home > Office > Office of Risk Management > Risk Finance and Insurance
Services > Risk Finance > Civic Center Program > Civic Center Permit Office
Home > Office > Office of Risk Management > Risk Finance and Insurance
Services > Risk Finance > Special Events
Home > Office > Beyond The Bell > Student Auxiliary Services > Civic Center
Permit Office
Application and instruction for
Civic Center Permits
Application and instruction for
License Agreements
Application for Filming,
photography, and filming
related parking
Request for Approval of
Special Events and Guidelines
2 San Diego
Unified
Civic Center Permits Home > Doing Business with San Diego Unified School District > Facilities rentals-Civic
Center Permits
Rental Request Form
3 Long
Beach
Unified
Community Use of
School Facilities
Home > Index > Facility Planning & Management > Purchasing and Contracts >
Community Use of School Facilities
Two different applications:
1. Recreation Facilities
2. All other permits
4 Fresno
Unified
Civic Center (use of
school facilities)
Home > Community > Use of Facilities > Facilities Management & Planning > Civic
Center
Request for Use Form
5 Elk Grove
Unified
Facilities Use Home > Community > Facilities Use Non-Sports related
Sports related
Indoor facilities
Outdoor facilities
6 Corona-
Norco
Unified
Use of Facilities Home > Our Department > Facilities > Use of Facilities Application for Use of District
Facilities
7 Santa Ana
Unified
Civic Permits Home > Community > Doing Business with SAUSD > Facility Rentals > Civic Permits Online application * (See Note 1)
8 Capistrano
Unified
Civic Permits Home > Facility Use Permits > Civic Permits Online application* (See Note 1)
9 South San
Francisco
Unified
Civic Permits Home > Parent and Community Resources > Facility Use Permits > Civic Permits Online application* (See Note 1)
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*Note 1: We noted that these three school districts used similar computer system applications because
their application webpages appear identical. The following description shows the different arrangement
each school district used for their Civic Center Permits:
Santa Ana Unified
Applicants are required to select the type of group it represents:
Class 1 – SAUSD Schools Only
Class 2 – Nonprofit
Class 3 – Community Organizations
Class 4 – Commercial groups
Capistrano Unified
Applicants are required to select the type of group it represents:
Class A – Youth-Serving Nonprofit
Class B – Nonprofit
Class C – Commercial
Class D – School Affiliated/Government
In-Kind: In-Kind class A Groups only
South San Francisco Unified
Applicants are required to select the type of group it represents:
Level 1 – Education of District Students (such as School athletic teams, school clubs, parent
clubs, and school site councils.)
Level 2 – Non-Curricular Direct Support of District Sites (such as After school programs, Boys
& Girls club, Girl Scouts, Boy Scouts, Camp Fire.)
Level 3 – Youth Recreation (such as Youth Sports Leagues, Summer Camps.)
Level 4 – Other Nonprofit (such as Adult sports, community groups, Relay for Life, Churches,
charitable fundraising.)
Level 5 – For profit or nonprofit with admission fee (such as Local community organizations that
charge participation fees; Concerts; Trainings.)
We also reviewed two other large school districts within the United States to see how they process
requests for use of their school facilities.
Chicago Public Schools (CPS)
The request forms to use school facilities appear to be straightforward with all related information
shown at one central website: CPS Guide to Renting Property. The access path to request for use of
school facilities is as follows:
Home > Topics > Facilities > Facilities Real Estate > Temporary Usage Permit/CPS Guide to Renting
Property
Miami-Dade County Public Schools
The request forms to use school facilities appear to be straightforward as well with all related
information shown at one central website: Temporary Use of School Building Facilities of the Miami-
Dade County Public Schools – Temporary Use Agreement. The access path to request for use of school
facilities is as follows:
Home > Site Search (use of school facilities) > Application for Temporary use of School Building
Facilities of the Miami-Dade County Public Schools – Temporary Use Agreement
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Appendix 2
Calculation of Number of Special Event Applications Processed by Leasing
Folder Name Total
Items
Approved by
Leasing
Non-
Responsive Cancelled Postponed Revised Extension
December 2015 79 9 1
January 2016 64 11
February 2016 97 4
March 2016 138 16 1
April 2016 145 4 1 14 2
May 2016 127 7 14
June 2016 165 1 26
815 4 9 94 2 1 1
We estimated that there were about 1,200 applications for Special Events (from Leasing) for Fiscal Year
2015-2016. [(815-4-9-94-2-1-1)/7*12=1,207 applications]
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Appendix 3 General Information on Certificates of Insurance
11
Additional Insured Status
Some liability policies contain language that includes certain parties automatically as additional insureds
without the need for an endorsement. For example, suppose XYZ Inc.’s policy states that it covers, as an
insured, any person or organization for which XYZ Inc. has agreed in a written contract to include as an
insured, but only with respect to XYZ Inc.’s ongoing operations for that insured. A party that meets this
description should be covered automatically as an additional insured.
Certificate is Not an Endorsement
Suppose that you have been asked to provide a certificate of liability insurance to XYZ Inc. You have
also been asked to include XYZ Inc. as an additional insured under your liability policy. Your agent
issues a certificate stating that XYZ Inc. is an additional insured under your policy. However, your agent
never sends a request to your insurer asking for an additional insured endorsement. Your policy does not
contain any automatic additional insured language. No one notices the error.
Six months later XYZ Inc. is sued because of your negligence and demands coverage under your
liability policy. Will XYZ be covered as an additional insured based on the statement in the certificate?
The answer is probably not. A certificate is not an endorsement. It does not change the policy. If the
coverage described in a certificate is not contained in the policy, the coverage is unlikely to be provided.
Notice of Cancellation
Until 2009, the standard form used to issue certificates of liability insurance contained a policy
cancellation provision. This provision stated that if any of the policies listed in the certificate was
cancelled before its intended expiration date, the insurer would “endeavor” to notify the certificate
holder a specified number of days in advance.
Numerous certificate holders believed that this wording ensured they would be notified if the
policyholder’s liability policy was cancelled before its expiration date. However, many certificate
holders were not notified when policies were cancelled. Why? Insurers followed the cancellation
provisions in the policy. Under the standard liability policy, only “you” (the named insured) receive
notice if the policy is cancelled.
The current form used for certificates of liability insurance states that if any of the policies listed in the
certificate is cancelled mid-term, notice will be delivered in accordance with the policy provisions. In
other words, additional insureds will be provided notice of cancellation only if the policy states they will
be notified.
11
http://businessinsure.about.com/od/liabilityinsurance/a/Certificates-Of-Liability-Insurance.htm
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Appendix 4
Board Rules Regarding the Use of District Facilities
Chapter 6 of the Rules of The Board of Education (Rules) (dated September 8, 2014) sets out
directions for the use of school facilities for non-school purposes. The Rules specify that:
“An application must be filed by the requesting organization for each intended use to the:
A. Civic Center Permit Office, Student Auxiliary Services Branch.
B. To the Real Estate Section, Facilities Planning and Real Estate Branch, for the lease of
any facility as referenced in Board Rule 1302-C.”
1302. USE OF SCHOOL PROPERTY AS CIVIC CENTERS
The use of Los Angeles Unified School District property may be granted to members of the
public and to organization formed for recreational, educational, political, economic, artistic,
charitable, or moral activities of the this District. These persons and/or organizations may
engage in supervised recreational activities, or may meet and discuss subjects and questions
which pertain to the educational, political, economic, artistic, charitable, or moral activities of the
members of the communities. Such use shall be:
(Board Rule) 1302-A
Without charge, if the group holding the meeting or activity is a non-profit organization,
conducts a public meeting, and discusses matters of general or specific interest with the people of
the community in which they reside. Such groups shall be granted facility use without charge,
when an alternative location is not available, and when such organizations, clubs or associations
are organized to promote youth and school activities. Such groups include but are not limited to
Girl Scouts, Boy Scouts, Camp Fire Girls, Inc., etc., Parent-Teachers’ Associations, and School
Community Advisory Councils.
(Board Rule) 1302-B
Computed at direct cost, if the group holding a meeting or activity on District property charges
admission or collects a contribution or charges any fee for membership or any other charges for
other than the groups enumerated above. However, where the net receipts or not less than 75
percent of the gross receipts, whichever is greater, are expended for the welfare of the pupils of
the District or for charitable purposes, as determined by the Civic Center Permit Office prior to
the scheduled event, then a reduced direct cost fee will be levied for use of school facilities
which would include costs for custodial and/or supervising services. District costs are defined as
those generated from the costs for maintenance, supervision, and utilities, as determined by the
Board of Education. These costs will be revised effective July 1, annually by the Civic Center
Permit Office, based upon information received pertaining to cost of living, salary and utility
cost increases from offices responsible for such information in the Business Services Center,
Student Auxiliary Services Branch and Budget Division.
Managed by the Leasing Section of the Real Estate Branch:
(Board Rule) 1302-C states:
“Computed at fair rental value when the use of the school facilities or grounds is authorized for
the purpose specified in Board Rule 1301-C and D, and/or in case of entertainments,
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activities or meetings where admission fees are charged, sales completed or contributions
solicited, and where the meeting is exclusive and not open to the general public, a charge
shall be levied equal to an amount of the direct costs, as referenced in Section “B” of this
Rule, plus a charge of fair rental value as determined by the Board. Groups falling into this
category shall be referred to the Real Estate Branch for lease determination. These costs will be
received annually based upon information received pertaining to cost of living, salary and utility
cost increases form office responsible for such information in the Business Services Center,
Student Auxiliary Services and Budget Division.”
(Board Rule) 1301-C states:
“The conduct of religious services for temporary periods, on a one time renewable basis, by any
church or religious organization … provided the church or religious organization using the
school facilities or grounds be charged a fair rental value fee …”
(Board Rule) 1301-D states:
“Child care or day care programs to provide supervision and activities for children of
preschool and elementary school age as established by the Leasing Section of the Real Estate
Branch.”
Conclusion
In summary, the Board Rules cited above can be simplified as follows:
All applications to use District facilities should be processed by the Civic Center Permit Office,
Student Auxiliary Services Branch or the Leasing Section of the Facilities Planning and Real
Estate Branch:
Civic Center Permit Office – All applications except for the ones processed by the
Leasing Section.
Leasing Section – Applications where a fair rental value fee will be charged including
religious services (Board Rule 1301-C) and child care or day care programs (Board Rule
1301-D).
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APPENDIX 5
Possible Operation Flowchart
Applications
Risk Finance and Insurance Branch
Stage One: Preliminary Review for Organizer’s COI
Stage Two: Detailed Review, Assessment, and Approval for Entire Event
A Designated
unit
Preliminary
Review*
CCPO
Detailed Review and Process
Leasing
Detailed Review and Process
Principal’s
Approval
Permit
Lease
Agreement
School
Sponsored
*A designated unit could preliminarily review all requests for use of a District facility After a preliminary review, the designated unit will
determine whether a particular application will be processed by the Leasing and Space Utilization Unit, the Civic Center Permit Office, or the
Risk Finance and Insurance Branch based on the Board Rules.