CalSTRS issues revised final audit; LBUSD ordered to correct special-pay reporting

The California State Teachers' Retirement System issued the revised final audit report for LBUSD (project code EA25-11; reporting unit 30076), covering special-pay reporting compliance for FY 2022-23 and FY 2023-24 under Education Code section 22206. The audit, conducted by Chief Auditor Cheryl Cervantes Dietz, reviewed five sampled 2%-at-60 CalSTRS members. The single retained finding states that LBUSD over-reported compensation for the February 15, 2024 LaBUFA MOU 1.25 percent off-salary-schedule payment: LBUSD calculated the payment on each employee's 2023-24 base salary plus additional stipends, while the MOU and applicable code base the calculation on base salary alone. The district was ordered to coordinate with the Orange County Department of Education and the CalSTRS Employer Services Audits Resolution Team on corrections via Form F496, to provide a list of all affected members within sixty days, and to recover overpaid amounts under Education Code section 24616.2; penalties and interest may be assessed. A second finding from the June 2025 original final report — concerning the professional growth stipend's classification as special pay — was removed in this revised version after LBUSD's written response of March 17, 2025. The CalSTRS audit is separate from the Bishop and Olafson health-and-welfare benefits audit.

Citations (1)

1. Laguna Beach Unified School District — CalSTRS Audit Report (EA25-11, Revised Final) primary California State Teachers' Retirement System — Audit Services
   California State Teachers' Retirement System — Audit Services · 2025-11-04

   Audit Services acknowledges the Employer's response as it relates to Finding 2. The special pay does not meet the definition of salary. However, based on further analysis the finding was removed as we determined that the professional growth stipend met the definition of special pay as a performance benchmark; as it had an objective and measurable condition approved in a publicly available written contractual agreement.

   Revised final audit report, language explaining the removal of original-final Finding 2 regarding the LBUSD professional growth stipend. The retained Finding 1 (over-reported limited-term payment) requires LBUSD corrective action via OCDE and the CalSTRS Employer Services Audits Resolution Team.

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