JACKSON CITY SCHOOL DISTRICTLocal Government

7 C.F.R. § 245.6a(c)(1) states the local educational agency must verify the eligibility of children in a sample of household applications approved for free and reduced-price meal benefits for that school year. 7 C.F.R. § 245.6a(e-f) outline the procedures to be performed by the local educational agency during the verification process, as well as the required changes to be made to the eligibility determinations, as based on the results of the verification procedures. The District was required to verify six students' applications. As required, the District properly requested documentation from the six students, however, 17% of the verifications tested were not properly calculated, based on U.S. Department of Agriculture guidelines. Based on the income documentation provided, the application should have been changed from free to reduced price meals, however the District did not use the correct income amount from the provided pay stub and instead changed the application from free to paid. The District should establish and implement procedures to ensure that the required verifications are accurately completed and all necessary documentation is properly maintained.

2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the District’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the Schedule must: 1. List individual Federal programs by Federal agency. 2. For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. 3. Provide total Federal awards expended for each individual Federal program and the CFDA number or other identifying number when the CFDA information is not available. 4. Include the total amount provided to subrecipients from each Federal program. 5. For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. 6. Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The lack of effective controls over this compliance requirement resulted in the Schedule being understated $302,121. This was due to the Emergency Connectivity Grant and Coronavirus State Fiscal Recovery Funds being omitted from the Schedule in the amount of $193,280 and $138,836, respectively, an understatement in the Nutrition Cluster of $30,402 and an overstatement of the 21st Century Grant of $60,397. The audited Schedule has been adjusted to correct these items. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. The Treasurer should review reported federal expenditures to ensure accuracy of amounts reported. This will help ensure the Schedule is complete and accurate, and major federal programs are accurately identified for audit.

2 C.F.R § 200.303(a) provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.The School District has established approved rates of pay for employees through union negotiated salary schedules. The District used an incorrect rate for 3% of employees tested.  Failure to follow the approved rates of pay resulted in underpayments of employee salaries and could resulted in questioned costs if the errors had resulted in an overpayment. The Treasurer should ensure all employee salaries and benefits charged to federal grants are reported at the approved rates, in accordance with the School District’s salary schedules.

2 C.F.R. ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR 200.403 (g) which provides that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. Further, 2 C.F.R ? 200.303(a) provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The School District as established approved rates of pay for employees. Further, timesheets and/or an Elementary and Secondary School Emergency Relief (ESSER) Fund spreadsheet was used to document time and effort of personnel relating to ESSER activities. However, calculations of allowable amounts based on approved rates and timesheets/spreadsheets resulted in an estimated $74,451 in ESSER expenditures that could not be supported as related to ESSER activities. As such, the $74,451 from the Education Stabilization Fund AL # 84.425D is considered a questioned cost. Failure to maintain the appropriate time and effort documentation and properly calculate ESSER portions resulted in questioned costs and can result in reduced future federal funding or the requirement to repay the Ohio Department of Education. The Treasurer should ensure all employees charging salaries and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the School District?s policy.

2 C.F.R. ? 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. ? 200.430 which states, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities. In addition, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed.These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-Federal entity; and reasonably reflect the total activity for which the employee is compensated by the non-Federal entity.The School District approved Policy 6116- Time and Effort Reporting effective June 28, 2016 to govern the controls and records needed to demonstrate Time and Effort for federal expenditures. The School District used semi-annual certifications to meet the documentation requirements and serve as established internal control over the process. During fiscal year 2020, the School District expended $36,488 in wages and $5637 in related employee benefits from Title I Grants to Local Educational Agencies to pay for a teacher. The School District failed to identify this teacher as a Title I teacher during the fiscal year and, as such, did not obtain the required semi-annual certifications. Therefore, we consider the salaries and related benefits for these administrators in the amount of $42,125 to be a questioned cost. Failure to maintain the appropriate time and effort documentation could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of EducationThe Treasurer and Director of Special Programs should ensure all employees charging salaries and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the School District?s policy. Appropriate supporting documentation could include semi-annual certifications for employees working solely on a single cost objective or timesheets when an employee works on multiple activities.

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