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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.

The Management of Insurance Requirements Page 1 of 38 OA 17-1094

for Civic Center Permits and Special Events

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.



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)



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



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.



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.


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.



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.


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.


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:



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.



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



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.



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



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.



(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.


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.



Recommendation

The RFIB should develop policies and procedures and manuals for consistency and continuity of

operation within the Insurance Section of the RFIB.


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.


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.


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.


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



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.


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.


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.


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.




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.



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 4 Yes




* 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.



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.



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 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.



(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.



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.


Application 5 (Play Time for Preschoolers):

(1) Additional Insured – 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.



(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 3 No

SSSE Application 4 No


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.



(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.


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



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.



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



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



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.”



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.



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



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



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



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



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


Space Utilization > License Agreements


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)



*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


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


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



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]



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

http://businessinsure.about.com/od/liabilityinsurance/a/Certificates-Of-Liability-Insurance.htm



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,



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).



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.

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