Morenci Area SchoolsLocal Government

Finding 2021-001 Federal Program: Child Nutrition Cluster CFDA #: 10.553, 10.555 and 10.559 Federal Agency: U.S. Department of Agriculture Pass-through entity: Michigan Department of Education Pass-through number: 201960, 201970, 210904 Criteria: The District?s fund balance in the food service fund is required to be less than three months of food service expenditures. Condition: Morenci Area Schools currently has more than the allowable fund balance in the non-profit food service fund. At year-end, the maximum allowable fund balance was $137,650, and the actual fund balance was $348,768. As a result, the District will be required to develop a spending plan to reduce the balance to an acceptable level during 2021-2022 school year. The plan must be submitted to the Michigan Department of Education prior to implementation. Context: The District has received a significant increase in federal funding in the food service fund since the start of the pandemic resulting in excess fund balance. Question Costs: None Cause: The District participated in the unanticipated closure meal reimbursements from July through June 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.