KELLOGG COMMUNITY COLLEGEHigher Education

Assistance Listing, 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. The institution must return, in the order specified in paragraph (i) of this section, the lesser of (i) The total amount of unearned title IV assistance to be returned as calculated under paragraph (e)(4) of this section; or (ii) An amount equal to the total institutional charges incurred by the student for the payment period or period of enrollment multiplied by the percentage of title IV grant or loan assistance that has not been earned by the student (34 CFR 668.220)(g)(1) Condition Out of 40 students tested for return to Title IV, we identified 2 students whose calculation were performed outside of the required timeframe. Questioned Costs N/A Identification of How Questioned Costs Were Computed N/A Context The College did not include institutional charges on returns during the fall 2024 semester and resulted in calculations that were not accurate. Management identified 40 students with inaccurate returns and corrected those returns, however 34 were completed outside of the allowable timeframe for completing the returns. Cause and Effect The College did not have appropriate controls in place to review the accuracy of the inputs used in performing the calculations. As a result, the College did not initially perform accurate calculations which caused revisions that were not timely. Recommendation The College should implement procedures and controls to review all inputs used in the Title IV calculations is accurate. Views of Responsible Officials and Corrective Action Plan Once the report identifying students who have completely withdrawn from their classes is ran, the calculations are done (currently by the Dean) The completed report is given to the FA Specialist to review and send the letters. The specialist then gives the report to the Assistant Director who then prints off a Return of Title IV summary report showing the calculations and charges for final review. Had this last step been done previously, it would have been identified that the Institutional Charges were missing and not requiring corrections.

Assistance Listing, Federal Agency, and Program Name Student Financial Assistance Cluster 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 The institution shall recalculate a Federal Pell Grant award for the entire award year if the student's expected family contribution changes at any time during the award year. The change may result from (i) The correction of a clerical or arithmetic error under § 690.14; or submission of inaccurate information (ii) A correction based on information required as a result of verification under 34 CFR part 668, subpart E. CFR 34 690.80. Condition Out of 22 students tested for Pell eligibility we identified one student whose student aid index (formerly known as expected family contribution) was changed, however the additional award was never disbursed to the student. Questioned Costs $892 Identification of How Questioned Costs Were Computed The $892 of questioned costs were determined by calculating the total pell required based on the final adjusted student aid index compared to the aid disbursed to the student. Context The College did not have appropriate controls in place to identify students who received a new student aid index information after the initial disbursement of Pell. Out of our sample of 22 students tested for eligibility, one student received a correction that increased the students award, however it was not disbursed. Cause and Effect The College did not have appropriate controls in place to review the changes to the student aid index. As a result, the College did not award and disburse the appropriate amount to the student. Recommendation The College should implement procedures and controls to review all students who received revisions to the Institutional Student Information Record or the department of educations electronic data exchange through its central processor. Views of Responsible Officials and Planned Corrective Actions System generated ISIR’s and corrections will be reviewed for changes and then given to the Director for weekly review to ensure the updates and awards are accurate and complete.

CFDA Number, Federal Agency, and Program Name - Student Financial Aid Cluster (SEOG - 84.007, Pell 84.063, and Federal Direct Loans - 84.268) Federal Award Identification Number and Year - 2020 - 84.007, 84.063, and 84.268 Pass -hrough Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The College has 60 days from the date the College determines an enrollment status change to report to NSLDS. The enrollment reporting must be updated for changes in the data elements for the campus record and the program record, and submitted electronically through the batch method, spreadsheet submittal, or the NSLDS website (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). Condition - Of the 25 students selected for enrollment reporting testing, the College did not properly update student enrollment information for 17 students in an accurate or timely manner. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Out of a sample of 25 students, we noted 17 that were not accurately or timely reported as follows - 6 of 17 were not properly reported as unofficially withdrawn when the student financial aid department had determined they were; 10 of 17 received degrees after final semester reporting, but it was not reported until the beginning of the next semester; and 1 of 17 officially withdrew, and it was not reported timely due to an error with the data upload. Cause and Effect - The College inputs the required information for graduates and withdrawals within the Datatel Colleague (the "system") and utilizes the system to report the appropriate enrollment information. During 2020, the College did not utilize final reports to process the final enrollment reporting file, which led to the delayed reporting to NSLDS. Recommendation - The College should consider implementing a process to submit a final enrollment file upon completion of processing semester graduates, adopting a policy on consistent reporting of unofficial withdrawals, and reviewing procedures to verify that the information uploaded and reported is complete, accurate and timely. Views of Responsible Officials and Corrective Action Plan - The College will implement controls including on (1) official withdraws, (2) unofficial withdraws, (3) graduate enrollment status updates. The College will begin sending an additional enrollment file to National Student Clearinghouse within 21 days of the end of each semester after the Financial Aid Office contacts the Registrar?s Office that final calculations are complete. The College will also send a graduates-only file to National Student Clearinghouse within 30 days of the end of each semester.

CFDA Number, Federal Agency, and Program Name - 84.425F, U.S. Department of Higher Education, Higher Education Emergency Relief Funds (HEERF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - The College must minimize the time elapsing between the transfer of funds from the United States Treasury to the College and the disbursement of those funds. 2 CFR Section 200.305(b). Condition - The College drew down all of the institutional portion of the HEERF funds allowed without minimizing the time between the transfer of funds and the disbursement of those funds. Questioned Costs - None Identification of How Questioned Costs Were Computed - None Context - The College drew down $995,711 despite spending none of these institutional funds as of June 30, 2020 due to ambiguity on how the funds could be spent. Cause and Effect - The College was not aware of the cash management requirements under the Uniform Guidance, which resulted in an excess of funds drawn down. Recommendation - We recommend the College implement a process to ensure that the College minimizes the time elapsing between the transfer of funds from the United State Treasury to the College and the disbursement of those funds. Views of Responsible Officials and Planned Corrective Actions - The College had charged expenses and lost revenue to the funds during the year ended June 30, 2020, and the Department of Education clarified unallowability in mid-October 2020. The College determined that they were unallowable and would have returned the funds, but charged the funds to allowable expenses in the subsequent fiscal year. The College will ensure it complies with cash management principles for future drawdowns of federal funds related to federal grants by minimizing the time spent between the funds being drawn down and spending those funds.

Criteria - The College has 45 days from the date the College determines a student?s withdrawal date to calculate a return to Title IV refund calculation for the student and return the funds. Withdrawal dates are defined as the time when the student officially withdraws or expresses notification to withdraw or, if the student does not officially withdraw, the date that the College determines the student is no longer in attendance (34 CFR Section 668.73(b)). Condition - Of the 25 students selected for return to Title IV testing, the College did not properly calculate the return the funds for four students based on the amount of student aid disbursed. Questioned Costs - $1,088. Identification of How Questioned Costs Were Computed - Of the four students, the actual amount of questioned costs identified was $1,088 and the extrapolated questioned costs was approximately $10,500. The known questioned costs was the difference between the actual refunds versus the expected return to Title IV refund for the four students. The extrapolated amount was determined by applying the actual difference divided by the total amount of refunds tested for all 25 students to determine the error rate of our sample. This error rate was then applied to the entire population of refunds performed by the College. Context - Out of a sample of 25 students, our testing identified four errors related to students that withdrew from the College requiring a return to Title IV refund calculation. The return to Title IV calculation completed by the College was mathematically inaccurate due to a system error that caused the calculation to be based on the initial amount of aid the student was entitled to and not the actual amount of aid disbursed. Cause and Effect - The College inputs the required information for the return to Title IV calculations into Datatel Colleague (the "system") and relies on the system to calculate the appropriate return of funds based on the amount of aide disbursed, semester start and end dates, and withdraw date. During 2019, the system went through three different upgrades that impacted the various screens within Student Financial Aid for the return to Title IV calculations. The updates impeded the systems ability to interpret new or update dollar amounts for eligible and disbursed student aid. Recommendation - The College should consider implementing review procedures to verify that the information used in Title IV calculations is accurate and that the system is appropriately calculating the required return of funds. Views of Responsible Officials and Corrective Action Plan - The College is working with the Information Systems department to review the impacts of the updates that occurred during fiscal year 2019 and to capture all of the students from 2018-19 with return to Title IV calculations who were eligible for Federal Direct Loans, Pell, and SEOG for possible revisions. In addition, the College is implementing additional review processes and procedures to ensure the system is properly calculating the return of funds based on the inputs.

Criteria - The College must identify reasonably forseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in unauthorized disclosure, misuse, alteration, destruction or other compromise of such information, and assess the sufficiency of any safeguards in place to control these risks. At a minimum, such risk assessment should include consideration of risks in each relevant area of the College's operations, including employee training and management; information systems, including network and software design, as well as information processing, storage, transmission, and disposal; and detecting, preventing, and responding to attacks, intrusions, or other system failures. (16 CFR Section 314.4(b)). Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with Federal laws, statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure compliance with Gramm-Leach-Bliley Act (GLBA).Condition - The College did not document required GLBA risk assessments related to student information security.Context - During our testing of compliance with GLBA, we noted no specific information technology risk assessment was documeted covering specifically identified areas under GLBA. Cause and Effect - According to the College officials, the College did not perform a comprehensive risk assessment during fiscal year 2019 beause the College's initial assessment was that the College's enterprise strategy would be sufficient to comply with the GLBA guidelines. Recommendation - We recommend the College implement and document procedures to ensure compliance with the Gramm-Leach-Bliley Act. Views of Responsible Officials and Planned Corrective Actions - The College is reviewing their current Cyber Security Policy to add the appropriate risk assessments and action items to be in accordance with standards set forth by GLBA.