KALAMAZOO VALLEY COMMUNITY COLLEGEHigher Education

Assistance Listing Number, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes - 2024-002 Criteria - If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance, but before he or she has attended 60 percent of the scheduled length of the semester, the school must perform a return of Title IV funds (R2T4) calculation. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. A school must return unearned funds for which it is responsible no later than 45 days from the determination of a student's withdrawal (30 days if never attended) (34 CFR 668.220)(1)). When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV aid earned by the student as of the student's withdrawal date. Condition - Out of 60 students tested for return to Title IV, we identified 4 students whose calculations were performed outside of the required time frame. Questioned Costs - N/A If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The College did not review students who unofficially withdrew from the College during the summer 2024 semester. Out of our sample of 60 students who withdrew from the College during the fiscal year, 3 students did not have a return of Title IV funds calculation performed timely because of the lack of controls identified in the prior year requiring the College to amend previous returns. In total, the College amended 37 returns from the fall and summer 2024 semester. In addition, 1 student in the 2025 spring semester was not completed timely. Cause and Effect - The College experienced turnover in the financial aid department and, throughout the transition, historical procedures and controls were not followed. As a result, the controls to properly identify, calculate, and return Title IV funds for withdrawals were not operating effectively. Recommendation - The College should implement procedures and controls to review all the students who may need calculations completed and to verify that the information used in the Title IV calculations is accurate. Views of Responsible Officials and Planned Corrective Actions - The College will work with its Director of Financial Aid to ensure the semester end procedures include stepsto identify those students who unofficially withdrew. Once the students are identified,individuals with appropriate skills and knowledge will be able to determine if a return of Title IV calculation is necessary and appropriately return any funds, as necessary.

Assistance Listing Number, Federal Agency, and Program Name - 84.268, U.S. Department of Education, Student Financial Assistance Program - Federal Direct Student Loan Program Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Significant deficiency Repeat Finding - Yes - 2024-001 Criteria - Before a direct disbursement loan disbursement, the institution must notify a student of the amount of funds that the student or their parent can expect to receive under each Title IV, HEA program, and how and when those funds will be disbursed. If those funds include direct loan program funds, the notice must indicate which funds are from subsidized loans, which are from unsubsidized loans, and which are from PLUS loans. After the direct loan disbursement, the institution must provide timely notification to the student of the (1) date and amount of the disbursement, (2) student/parent’s right to cancel, and (3) procedure and time by which the student or parent must notify the institution that he or she wishes to cancel (34 CFR 668.165). Condition - The College did not provide notifications to certain students related to direct loan disbursements. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - There were 2 students in a sample of 40 students receiving direct loans who did not receive a notification. Cause and Effect - A control was lacking to ensure the notifications were sent to all students receiving direct loans. Recommendation - We recommend a control be implemented to ensure notifications are sent to all students receiving direct loans. Views of Responsible Officials and Corrective Action Plan - The Director of Financial Aid will work with our information technology department to ensure the criteria used for triggering the notification emails is correct and capturing all the necessary students. Additionally, an exception report will be created to identify students who have not been sent the notification email for the financial aid department to review and then send the appropriate notification. The department procedures will be updated to reflect these changes in process.

Assistance Listing Number, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268) and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Significant deficiency Repeat Finding - Yes - 2024-003 Criteria - Institutions submit direct loan and Pell Grant origination records and disbursement records to the Common Origination and Disbursement (COD) system. (34 CFR 690.83) Condition - The College did not have appropriate segregation of duties in place to ensure the reporting to COD is being reviewed by an individual separate from the process of preparing the reconciliations. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - None Identification of How Questioned Costs Were Computed - None Context - The College did not have appropriate controls in place due to turnover in 2024 over preparing the reconciliation from the College’s records to the COD system. In 2025, the reconciliation was performed monthly; however, they did not have the appropriate segregation of duties over the review of the reconciliation. Cause and Effect - The College experienced turnover in the financial aid department and, throughout the transition, historical procedures and controls were not followed. As a result, the control was not operating effectively to review reconciliations between Banner and COD. Recommendation - The College should implement appropriate review controls over the reconciliation of the amount of Pell Grants and direct loans reported to COD to ensure it agrees to what has been disbursed to students. Views of Responsible Officials and Planned Corrective Actions - The College will modify its process and update its documented procedures to include an appropriate review of the reconciliation by an individual separate from the process of preparing the reconciliations.

Assistance Listing Number, Federal Agency, and Program Name - 84.268 U.S. Department of Education, Federal Direct Student Loans and 84.063 Federal Pell Grant Program Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Significant deficiency Repeat Finding - No Criteria - The enrollment reporting must be updated for changes in the data elements for the campus record and program record and submitted electronically through the batch method, spreadsheet submittal, or the NSLDS website (34 CFR 685.309). Condition - Of the 40 students selected for enrollment reporting, the College did not update the student enrollment information for 3 students accurately. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - None Context - The College's process for submitting the enrollment status change includes using the National Student Clearing House, a third party, which ultimately submits the status changes to NSLDS on behalf of the College. The submission the sample selections were submitted to the National Student Clearing house did reflect the appropriate status and effective date; however the date of the status change was not accurately transmitted by the National Student Clearing House to NSLDS based on the information provided by the College. Cause and Effect - The College did not have formal procedures to verify that the National Student Clearing House has accurately reported the data provided by the College to NSLDS, resulting in inappropriate enrollment status reported to NSLDS. Recommendation - The College should consider implementing a process to review all submissions to NSLDS to ensure the required reporting elements are submitted by the use of the third party. Views of Responsible Officials and Planned Corrective Actions - The College will modify its process and update its documented procedures to include periodically running an Enrollment Reporting Graduated/Withdrawn Report from NLSDS and review for accuracy and make timely corrections, if necessary.

Assistance Listing Number, Federal Agency, and Program Name - 84.268, U.S. Department of Education, Student Financial Assistance Program - Federal Direct Student Loan Program Federal Award Identification Number and Year - P268K242876, 2023-2024 Pass-through Entity - None Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Before a direct disbursement loan disbursement, the institution must notify a student of the amount of funds that the student or their parent can expect to receive under each title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loan program funds, the notice must indicate which funds are from subsidized loans, which are from unsubsidized loans, and which are from PLUS loans. After the direct loan disbursement, the institution must provide timely notification to the student of the (1) date and amount of the disbursement, (2) student/parent’s right to cancel, and (3) procedure and time by which the student or parent must notify the institution that he or she wishes to cancel (34 CFR 668.165). Condition - The College did not provide notifications to certain students related to direct loan disbursements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - There were 7 students in a sample of 40 students receiving direct loans which did not receive a notification. Cause and Effect - A control was lacking to ensure the notifications were sent to all students receiving direct loans. Recommendation - We recommend a control be implemented to ensure notifications are sent to all students receiving direct loans. Views of Responsible Officials and Corrective Action Plan - The director of financial aid will work with our information technology department to ensure the criteria used for triggering the notification emails is correct and capturing all the necessary students. Additionally, an exception report will be created to identify students who have not been sent the notification email for the financial aid department to review and then send the appropriate notification.

Assistance Listing Numbers, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance, but before he or she has attended 60 percent of the scheduled length of the semester, the school must perform a return of Title IV funds (R2T4) calculation. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. A school must return unearned funds for which it is responsible no later than 45 days from the determination of a student's withdrawal (30 days if never attended) (34 CFR 668.220)(1)). When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV aid earned by the student as of the student's withdrawal date. Condition - Out of 60 students tested for return to Title IV, we identified 24 students whose calculations were performed incorrectly. Questioned Costs $13,459 Identification of How Questioned Costs Were Computed The $13,459 of questioned costs was determined by calculating the total aid required to be returned for the 24 students out of our total sample of 60 students, which had total aid disbursed of $191,516. Context - The College did not review students who unofficially withdrew from the College during the winter and summer semesters. Out of our sample of 60 students who withdrew from the College during the fiscal year, 20 students did not have a return of Title IV funds calculation performed. In addition to the students who did not have a calculation performed, the School did not properly calculate 4 students return to Title IV calculations. In each instance, the calculation included the initial amount of the aid the student was entitled to and not the actual amount of aid disbursed. Cause and Effect - The College experienced turnover in the financial aid department and throughout the transition, historical procedures and controls were not followed. As a result, the controls to properly identify, calculate, and return Title IV funds for withdrawals were not operating effectively. Recommendation - The College should implement procedures and controls to review all the students who may need calculations completed and to vierify that the information used in the Title IV calculations is accurate. Views of Responsible Officials and Planned Corrective Actions - The College will work with its director of financial aid to ensure the semester end procedures include steps to identify those students who unofficially withdrew. Once the students are identified, individuals with the appropriate skills and knowledge will be able to determine if a return of Title IV calculation is necessary and appropriately return any funds, as necessary.

Assistance Listing Numbers, Federal Agency, and Program Name - Student Financial Assistance Cluster Federal Direct Student Loans Program (ALN 84.268) and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass-through Entity - None Finding Type - Significant deficiency Repeat Finding - No Criteria - Institutions submit Direct Loan and Pell Grant origination records and disbursement records to the COD system. (34 CFR 690.83) Condition - The College did not have controls in place to ensure appropriate reporting to COD. Questioned Costs - None Identification of How Questioned Costs Were Computed - None Context - The College was not performing reconciliations between Banner and COD to ensure appropriate reporting to COD for Pell Grants and Direct Loans. Cause and Effect - The College experienced turnover in the financial aid department and, throughout the transition, historical procedures and controls were not followed. As a result, the control was not operating effectively to prepare and review reconciliations between Banner and COD. Recommendation - The College should implement procedures and controls to review the amount of Pell Grant and Direct Loans reported to COD to ensure it agrees to what has been disbursed to students. Views of Responsible Officials and Planned Corrective Actions - The College has begun training additional individuals on the reconciliation process and has updated its procedures to include what documentation needs to be retained on a monthly basis to ensure accuracy between the amount the College shows as disbursed and the amount the U.S. Department of Education shows has been disbursed.

Assistance Listing, Federal Agency, and Program Name - 84.425G, U.S. Department of Education, Education Stabilization Fund - Reimagining Workforce Preparation Grants Federal Award Identification Number and Year - N/A Pass-through Entity - State of Michigan Department of Labor & Economic Opportunity Finding Type - Significant deficiency Repeat Finding - No Criteria - The College should have a subrecipient monitoring policy and defined procedures to follow when identifying and assessing subrecipients in accordance with 2 CFR section 200.332. Condition - The College does not have a subrecipient monitoring policy and did not perform risk assessment procedures before selecting the subrecipient for the grant. Questioned Costs - N/A Context - There was one subrecipient for this grant. The College was required to find a subrecipient and selected a similar organization that they collaborate with on other projects. The selected subrecipient meets with the College monthly and provides and submit quarterly reimbursement forms and performance data. This is also the College's first subrecipient agreement. Cause and Effect - The College did not have a system or process in place to select a subrecipient using a risk analysis process. As a result, the subrecipient chosen may not have been eligible or at risk of providing timely or accurate performance and financial data. Recommendation - We recommend the College develop a subrecipient policy with defined procedures in alignment with Uniform Guidance in the efect they have subrecipients in the future for this and other grants. Views of Responsible Officals and Corrective Action Plan - The College will work to develop a subrecipient monitoring policy and subrecipient monitoring procedures, which would include the performing of a risk assessment, to ensure the policies and procedures are in alignment with other College policies while also adhering to federal regulations and best practices in grant management.

Assistance Listing, Federal Agency, and Program Name - 84.425G, U.S. Department of Education, Education Stabilization Fund - Reimagining Workforce Preparation Grants Federal Award Identification Number and Year - N/A Pass-through Entity - State of Michigan Department of Labor & Economic Opportunity Finding Type - Significant deficiency Repeat Finding - N/A Criteria - In accordance with the grant agreement, the College was responsible for determining eligibility and maintaining certain documentation to support the eligibility of the participants in the program. Condition - The College provided funds to two individuals for transportation in advance of being approved for participation in the program. Questioned Costs - $125 Identification of How Questioned Costs Were Computed - The questioned costs were determined by totaling all the assistance received by the two applicants in advance of eligibility determination. Context - For 2 out of 27 students tested, there was not enough documentation or approval of eligibility to participate prior to funds being provided for transportation assistance. Cause and Effect - The requirements of the application process were not followed resulting in applicants receiving services of the grant prior to approved participation which could result in unallowable costs charged to the grant. Recommendation - We recommend additional controls be put in place to determine that all documentation is maintained to support that an applicant is eligible to participate in the program. Views of Responsible Officials and Planned Corrective Actions - The College has returned the questioned costs by transferring the expenditures out of the grant funds and reducing the next drawdown for the grant. The College will immediately suspend the practice of providing grant funds to individuals prior to their approval for participation in program. Moving forward, the College will require the Program Director to approve all applicants for eligibility prior to any training or support activities beginning. This will include a review of the application materials, eligibility documents, and any other required materials. Participants who do not meet the eligibility requirements will receive written notice of the reason for denial and will not be admitted to any programming or receive any supportive services. The College will also look to have staff members involved in grant administration receive targeted training and education on the revised grant disbursement procedures as well as general grant administration training.