MILLINGTON COMMUNITY SCHOOLS

Federal Program: Child Nutrition Cluster ALN #: 10.553 and 10.555 Federal Agency: U.S. Department of Agriculture Pass-through entity: Michigan Department of Education Pass-through number: 220910, 221960, 231960, 221970, 231970 Criteria: According to Federal guidelines, all free and reduced priced meals claimed for reimbursement will be served only to eligible students based on direct certifications and applications submitted by families, which are reviewed and approved by District personnel, according to annually adjusted income thresholds. Condition: During our auditing testing, we noted instances where free or reduced students did not have a current application on file with the District. Typically, the software used by the District would give a 30 day grace period for not having an application and then change the student in the system to being full pay, until an application was submitted. At the start of the year, the District switched software and the software did not automatically change the students to full pay status. This only affected one school building in the District, as the other buildings in the District were under the Community Eligibility Provision (CEP). CEP buildings do not have to use the normal free and reduced application process. Cause: The District failed to follow up on free and reduced students who did not submit new applications for the current year. The District did not have proper internal controls over eligibility. Effect: As a result, the District provided free or reduced priced meals to students who may not have been eligible to receive them. Questioned Costs: $2,295 - actual; $19,279- estimated amount when extrapolated Recommendation: We recommend that the District put in place controls to ensure that there is a process to verify the free and reduced students submit applications or be switched to full pay status in their software. District’s Response: The District concurs with the facts of this finding and will put procedures in place to verify that free and reduced students all have applications on file and properly qualify for that status.

Federal Program: Child Nutrition Cluster ALN #: 10.553 and 10.555 Federal Agency: U.S. Department of Agriculture Pass-through entity: Michigan Department of Education Pass-through number: 220910, 221960, 231960, 221970, 231970 Criteria: In order to comply with Michigan Department of Education and United States Department of Agriculture, the District is required to review the lesser of 3% or 3,000 students who receive benefits for free or reduced lunch. If inadequate information is provided, the student must be moved to paid lunch. Condition: The two families selected for verification did not respond to the District’s request for verification, and should have been changed in the system to full-pay as required. The change was not processed through the system as the District intended. Additionally, the letter to one of the families could not be located. Cause: This appears to be the result of an oversight by program management, who believed that the system change had been made and the lack of a secondary review of the free and reduced rosters after the verification process was complete. In addition, this appears to be the result of an oversight by program management in recognizing the importance of retaining proper documentation to support the verification process. The District did not have proper internal controls over this special test and provisions. Effect: The District provided free or reduced meals to individuals that did not meet the eligibility requirements of the program. Questioned Costs: No costs are required to be questioned as a result of this finding inasmuch as actual instances of noncompliance were under the threshold for reporting. Recommendation: We recommend that the District put in place controls to ensure all steps of verification are completed by program management, including a secondary review of the free and reduced rosters after the verification process has been completed. District’s Response: The District concurs with the facts of this finding and will implement a review process to ensure students selected for the verification process are changed to the proper status of free, reduced, or full-pay. Additionally, the District will retain the proper documentation to support the verification process.

Finding 2021-003 ? Considered a significant deficiency Federal Program: Child Nutrition Cluster CFDA #: 10.555 and 10.559 Federal Agency: U.S. Department of Agriculture Pass-through entity: Michigan Department of Education Pass-through number: 200902, 210904, 200900 Criteria: The District?s fund balance in the food service fund is required to be less than three months of food service expenditures. Condition: The District currently has more than the allowable fund balance in the non-profit food service fund. As a result, the District will be required to develop a spending plan to reduce the balance to an acceptable level during the 2021-2022 school year. The plan must be submitted to the Michigan Department of Education prior to implementation. Excess fund balance cannot be transferred to the general fund. Questioned Costs: None Cause: The District participated in the unanticipated closure meal reimbursement program causing a larger than normal increase in the food service fund balance. Effect: At June 30, 2021, the District?s food service fund balance was greater than three months of expenditures. Recommendation: The District should implement a budget, as well as the required corrective action plan, for the 2021-2022 school year that will adequately reduce the food service fund balance. District?s Response: The District concurs with the facts of this finding and is implementing procedures to prevent this in the future.