Buchanan Community Schools

Child Nutrition Cluster - Program Income CFDA No. 10.555, 10.559, Grant No. 55030/200900/210904 Condition and Criteria: The USDA requires that the ending balance of the non-profit school food service fund does not exceed three months' average of operating expenses. If an excess fund balance should occur, the School Food Authority ("SFA") will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval. As a result, this allows the SFA to use those excess funds to further improve the school meals program operations. The school food service account is a non-profit account, which means that the excess funds cannot be used to profit the general fund. It must be used for a specific purpose in the School Meals Program. At year end, the District's fund equity in the Food Service Fund exceeded the allowable three months of expenditures threshold. Effect: The District's ending fund equity exceeded the three months' average operating expenses, creating a Program Income finding. Cause: Due to the excess dollars received as part of the Extended Summer Food Service Program, the District was not able to plan for, and subsequently spend down, the excess dollars by year end. Findings and Questioned Costs - Major Federal Award Programs Audit (Continued) 2021-002 Child Nutrition Cluster - Program Income (Continued) Context: The District's fund equity of $468,859 at fiscal year-end exceeded the allowable three months' average operating expenses threshold by $188,805. We would like to note that the District did obtain a waiver from the State for $126,730 of this excess, leaving only $62,075 in unapproved excess fund balance. Questioned Costs: None Auditor's Recommendation: We recommend that the District develop a spend down plan to ensure that the ending fund equity at June 30, 2022 does not exceed three months' average operating expenses. Views of Responsible Officials and Planned Corrective Actions: The District intends to utilize fund balance, and spend down the excess throughout the 2021-2022 school year.

Condition and Criteria: The USDA requries that the ending balance of the non-profit school food service fund does not exceed three months' average of operating expenses. If an excess fund balance should occur, the School Food Authority ("SFA) will be required to develop a spending plan for reducing the balance to an acceptable level during the following shcool year. The plan must be submitted to MDE, Office of school Support Services, for prior approval. As a result, this allows the SFA to use those excess funds to further improve the school meals program operations. The school food service account is a non-profit account, which means that the excess funds cannot be used to profit the general fund. It must be used for a specific purpose in the School Meals Program. At year end, the District's fund equity in the Food Service Fund exceeded the allowable three months of expenditures threshold. Effect: The District's ending fund equity exceeded the three months' average operating expenses, creating a Program Income finding. Cause: Due to the excess dollars received as part of the Unanticipated School Closure program, the District was not able to plan for, and subsequently spend down, the excess dollars by year end. Context: The District's fund equity of $349,981 at fiscal year-end exceeded the allowable three months average operating expenses threshold by $61,349. We would like to note that the District did obtain a waiver form the State for $35,000 of this excess, leaving only $26,349 in un approved excess fund balance. Questioned Costs: None Auditor's Recommendation: We recommend that the District develop a spend down plan to ensure that the ending fund equity at June 30, 2021 does not exceed three months' average operating expenses. Views of Responsible Officials and Planned Corrective Actions: The District intends to utilize fund balance, and spend down the excess throughout the 2020-2021 school year.

Finding: 2019-001 ? CFDA Number, Federal Agency, and Program Name ? 10.553, 10.555, 10.556, 10.559 Child Nutrition Cluster, U.S. Department of Agriculture Federal Award Identification Number and Year ? 180900/190900, 181900/191900, 181960/191960, 181970/191970, 181980/191980, 2018-2019 Finding Type ? Noncompliance with laws and regulations Criteria ? The USDA requires that the ending balance of the non-profit school food service fund does not exceed three months? average of operating expenses. If an excess fund balance should occur, the School Food Authority (?SFA?) will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval. As a result, this allows the SFA to use those excess funds to further improve the school meals program operations. The school food service account is a non-profit account which means that the excess funds cannot be used to profit the general fund. It must be used for a specific purpose in the School Meals Program. Condition ? The District?s fund equity in the Food Service Fund exceeded the allowable three-months of expenditures threshold. Questioned Costs ? None. Context ? The District?s fund equity of $335,978 at fiscal year-end exceeded the allowable three-months of expenditures threshold by $74,845. Cause and Effect ? During the 2019 fiscal year, the District?s revenues exceeded expenditures, such that, when added to the opening fund balance, the final fund balance caused the fund to be in non-compliance. Without proper monitoring, the District could see an adverse effect of funding from federal sources. Recommendation ? The District has already reviewed the circumstances surrounding this occurrence and is cognizant of the corrective action. Views of Responsible Officials and Planned Corrective Actions ? The District intends to utilize fund balance with the purchase of new capital assets for the food service fund which include a food service virtual server, coolers, a desk top computer, hot transport units to support the summer food service program deliveries and an increase in indirect costs to the District since the District is well below the allowable amount. We will keep an eye on the fund balance throughout the 2019-2020 school year to ensure the fund balance does not exceed the state limits.

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