Oak Park School District

Finding 2024-002 – Material Weakness & Material Noncompliance – Special Tests and Provisions related to the Education Stabilization Fund, Assistance Listing Number 84.425U, Award Number 213713/2122 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the School District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. Condition: As a result of our audit procedures, we identified that there was no prevailing wage clause in the construction contracts that the School District charged to the Education Stabilization Fund grant. Cause and Effect: The School District entered into a construction contract and paid a total of $443,281 related to the contract. The amount paid includes both labor and materials in the amount of $212,410 and $230,871, respectively. There was no prevailing wage clause within the contract, and the contractors have indicated that prevailing wage rates were not paid. The effect is noncompliance related to special tests and provisions because prevailing wages were not paid. Questioned Costs: Questioned costs cannot be determined because we do not know the related prevailing wage rates applicable to this type of work. The maximum questioned costs are $212,410 as that is the installation cost (labor charges). Recommendation: We recommend the School District take a team approach with finance and operations to expand its control over grant compliance, particularly in regard to reviewing construction contracts that are charged to grants to ensure all applicable compliance requirements are included. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.

Program Information: Child Nutrition Cluster, U.S. Department of Agriculture, passed through Michigan Department of Education, CFDA # 10.553, 10.555 and 10.559. Criteria: The School District must have controls in place to monitor the requirement that the School District limit its net cash resources to an amount that does not exceed three months? average expenditures for its non-profit school food service per requirements in 7 CFR 201.14(b). Condition: The School District did not have controls in place to follow the spend down plan in order to return to compliance. As a result, the ending fund balance for the School District?s food service program exceeded the average three months of expenditures by approximately $930,000. Questioned Costs: None. Cause and Effect: As a result of noncompliance noted as of June 30, 2021, the School District had developed a plan to enhance the food service program and return to compliance. That plan was not followed, resulting in repeated noncompliance as of June 30, 2022. Recommendation: We recommend that the School District review its net cash resources throughout the year, particularly as changes in the program occur, to verify that they are not in excess of three months of expenditures. A plan needs to be developed to ensure that funds are reinvested into the program or look at obtaining any additional waivers that may be available to them to mitigate the risk of future noncompliance. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.

Program Information: Child Nutrition Cluster, U.S. Department of Agriculture, passed through Michigan Department of Education, Assistance Listing #10.555/10.559, all project numbers. Criteria: The USDA requires that the ending balances of the food service fund does not exceed three months? average of operating expenditures. Condition: As of June 30, 2021, the District?s fund balance exceeded three months? average of operating expenditures. Questioned Costs: None. Cause and Effect: This condition appears to be the result of the additional revenue received in the fiscal year 2020 and 2021 related to COVID-19. As a result of the condition, the district did not fully comply with USDA fund balance requirements. Recommendation: We recommend the District review its budgeting of expenditures for the food service fund to ensure that fund balance is reduced to an appropriate level, and also to charge the maximum allowable indirect cost each year going forward. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.