Charles Mix County

Non-compliance with Federal Reimbursement Rates Finding No. 2020-001: CFDA Title: Highway Planning and Construction CFDA Number: 20.205 Pass-Through Entity: South Dakota Department of Transportation Pass-Through Identifying Number: ER6165(03)-07FD Award Year: 2019 Federal Agency: US Department of Transportation Type of Finding: Compliance Category of Finding: Allowable Costs/Cost Principles Criteria: 23 CFR Part 668 regarding the Emergency Relief Program states: The Federal share payable on account of any repair or reconstruction provided for by funds made available under 23 U.S.C. 125 of this title on account of any project on a Federal-aid highway system, including the Interstate System, shall not exceed the Federal share payable on a project on such system as provided in 23 U.S.C. 120; except that the Federal share payable for eligible emergency repairs to minimize damage, protect facilities, or restore essential traffic accomplished within 180 days after the actual occurrence of the natural disaster or catastrophic failure may amount to 100 percent of the costs thereof. 23 CFR Section 120 regarding the federal share payable states: ?(b) OTHER PROJECTS-Except as otherwise provided in this title, the Federal share payable on account of any project or activity carried out under this title (other than a project subject to subsection (a)) shall be (1) 80 percent of the cost thereof, except that in the case of any State containing nontaxable Indian lands, individual and tribal, and public domain lands (both reserved and unreserved) exclusive of national forests and national parks and monuments, exceeding 5 percent of the total area of all lands therein, the Federal share, for purposes of this chapter, shall be increased by a percentage of the remaining cost equal to the percentage that the area of all such lands in such State, is of its total area;? The South Dakota Department of Transportation (SDDOT) has indicated to us that the reimbursement rate related to project costs not accomplished within 180 days after the actual occurrence of the natural disaster or catastrophic failure is 81.95%. Condition: SDDOT Project ER6165(03)-07FD, funded by Emergency Relief Program funds, was not completed within 180 days after the actual occurrence of the natural disaster or catastrophic failure. The costs incurred after the expiration of 180 days were reimbursed at 100%, rather than at 81.95%, by the SDDOT resulting in the County being over-reimbursed by $51,052.53. Context: During the spring of 2019, the County sustained damage to the Federal Aid Highway System due to a natural disaster. This qualified the County to be eligible for Emergency Relief Funds for restoration of the damages caused. The beginning date of the 180-day period was March 16, 2019. In order for project costs to be reimbursed at a 100% rate, the costs must have been incurred by September 12, 2019 to be reimbursed at 100%. Our testing of all of the invoices related to the project revealed that the project was not fully completed by September 12, 2019, as work was being completed and invoices submitted related to the project in the months of October 2019, November 2019, and December 2019. Since the project was not completed within the 180-day period, project costs incurred after the 180 days should not have been reimbursed at a 100% rate, but at a rate of 81.95%. In addition, based on our consultation with the SDDOT, one invoice was included for reimbursement that was not related to the emergency relief project. The aggregate of the issues noted resulted in an over-reimbursement and questioned costs in the amount of $51,052.53. Effect: The County and the SDDOT incorrectly applied a reimbursement rate of 100% to costs incurred after 180 days, which should have been reimbursed at a rate of 81.95%. As a result, the County was over-reimbursed by the SDDOT in the amount of $51,052.53, which resulted in questioned costs related to the Emergency Relief Program in the same amount. Cause: County personnel involved in the emergency relief project are no longer at the County. As such, we are unable to determine the cause, other than the new County personnel were not made aware of the emergency relief project requirements. Questioned Cost: $51,052.53 Recommendation: We recommend that the County consult with the SDDOT to resolve the over-reimbursement. We recommend that County personnel assure that they are informed on the requirements related to the emergency relief project requirements.