SCHOOL BOARD OF MADISON COUNTYLocal Government

Finding: The District incorrectly calculated the Federal indirect cost rate, resulting in excessive indirect costs charged to the Title I grant and questioned costs totaling $71,563. Criteria: Title 2, Part 200, Code of Federal Regulations, provides principles for determining allowable costs, including indirect costs that may be allocated to a Federal award program. Indirect costs are costs that are incurred for a common or joint purpose, are not readily identified with a particular final cost objective without effort disproportionate to the results achieved and are calculated by multiplying allowed costs by an approved indirect cost rate. The Florida Department of Education (FDOE) Indirect Cost Plan Instructions specify that certain expenditures, such transfers, debt service, and food services, are to be excluded from the indirect cost rate calculation and that other expenditures should remain in the calculation such as charter school expenditures. Condition: During the 2024-25 fiscal year, the District charged the Title I program $117,750 based on the District-calculated and FDOE-approved indirect cost rate of 8.69 percent. However, our examination of District records supporting the District-calculated indirect cost rate disclosed that the calculated amounts incorrectly omitted consideration of charter school expenditures. Cause: District personnel misunderstood how to properly calculate the indirect cost rate. Effect: The District indirect cost rate of 8.69 percent exceeded the correct rate of 3.35 percent by 5.34 percent, resulting in excessive indirect costs charged to the Title I grant and questioned costs totaling $71,563. Recommendation: The District should enhance procedures to ensure that the amounts used in the indirect cost rate calculation are accurate and comply with FDOE instructions. Such enhancements should include appropriate training for those responsible for calculating the indirect cost rate. District Response: The District recognizes and understands the incorrect calculation of the Federal indirect cost rate applicable to the 2024-25 fiscal year and has prepared subsequent indirect rate calculations for the fiscal years 2025-26 and 2026-27 that included other expenditures (i.e. charter school expenditure) that were incorrectly omitted in the rate for the 2024-25 fiscal year.

FINDING - The District did not comply with Federal regulations by maintaining property records to identify the location of equipment funded by the ESF Program, resulting in questioned costs totaling $2,186,066. CRITERIA - Title 2, Section 200.313(d)(1) and (2), Code of Federal Regulations (CFR), requires that property records for equipment be maintained that include various details, such as a descriptions of the property; an identification number; the source of funding for the property (including the Federal award identification number); the location, use, and condition of the property; and any ultimate disposition data including the date of disposal and sales price of the property. Additionally, a physical inventory of the property must be conducted and the results must be reconciled with the property records at least once every 2 years. Title 2, Section 200.1, CFR, defines equipment as tangible personal property, including information technology systems, having a useful life of more than 1 year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization threshold established by the District or $5,000. According to Board Policy 7450 - Property Inventory, the Superintendent must maintain an adequate and accurate record of all tangible personal property with a value or cost of $1,500 or more. CONDITION - During the 2020-21 through 2023-24 fiscal years, District ESF Program expenditures totaled $14,293,633, including $2,186,066 for capitalized equipment with a value or cost of $1,500 or more. Although we requested, District personnel could not provide any property records that identified the equipment identification number, source of funding, condition, location, or otherwise properly account for the items. Moreover, the District did not conduct physical inventory procedures during the 2022-23 or 2023-24 fiscal years. CAUSE - According to District personnel, due to staff turnover, the property records were not consistently maintained and the physical inventory was not recently conducted. EFFECT - Without effective accountability over equipment purchased with Federal funds, including the maintenance of appropriate property records and periodic physical inventories, there is an increased risk that the equipment may be used for unauthorized purposes. Absent required property records, ESF Program moneys for equipment acquisitions totaling $2,186,066 represent questioned costs. RECOMMENDATION - The District should establish effective accountability over equipment purchased with Federal funds. Such accountability should include the maintenance of required property records based on Federal equipment acquisitions, the conduct of a physical inventory of the equipment, and a reconciliation of the inventory results with the property records at least once every 2 years. In addition, for any unlocated ESF Program equipment items, the District should restore to the FDOE the related questioned costs and contact applicable law enforcement agencies regarding necessary actions to help recover the unlocated equipment. DISTRICT RESPONSE - The District has designated a team from the finance department and operations/maintenance to review and update procedures to account appropriately for the equipment/inventory. These procedures will include a comprehensive inventory count no less than every two years that will be reconciled to records maintained within the District's financial management software.

Finding: The District did not always maintain required documentation to support the adjustments to the high school graduation rate cohort. Criteria: Title 20, Section 7801(25), United States Code, requires that the District maintain appropriate documentation to support the removal of a student?s count from the 4-year cohort (defined as a group of students on the same schedule to graduate) used to calculate the high school graduation rate. To remove a student?s count from the cohort, the District must confirm, in writing, that the student transferred from the District, emigrated to another country, transferred to a prison or juvenile facility, or is deceased. Additionally, a student who is retained in the same grade, enrolls in a General Educational Development (GED) Program, or leaves school for any other reason may not be counted as having transferred from the District for the purpose of calculating the graduation rate and must remain in the cohort. To confirm that a student transferred out, official documentation must be obtained that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Condition: To determine whether the District maintained appropriate documentation to support the removal of 55 students from the 2021-22 fiscal year graduation rate cohort, we requested District records to support 20 selected students who were removed from the cohort. Our review disclosed that District records did not comply with the Federal documentation requirements for the removal of 5 students from the cohort. Specifically: . For 2 students, the District could not provide any documentation to support removal from the cohort. . For 1 student, the District provided parent-signed copies of school withdrawal forms that typically indicated the student?s intentions at the time of withdrawal; however, although we requested, documentation was not provided to evidence that the student eventually enrolled in another school or program. . For 2 students, the District provided parent-signed copies of school withdrawal forms that indicated intentions to transfer to other educational programs, such as GED or technical programs, which did not appear to culminate in the award of a regular high school diploma. Cause: District personnel indicated that school personnel misunderstood some of the requirements to remove students from the cohort and did not adequately document student withdrawals. In addition, monitoring procedures were not performed to ensure that appropriate records were maintained and that all students removed from the graduation rate cohort were removed for reasons allowed by Federal regulations. Effect: Without appropriate documentation supporting adjustments to the 4-year cohort and related graduation rate calculation, the District cannot demonstrate that the calculation was accurate, limiting the usefulness of the graduation rate as an academic indicator. Recommendation: The District should enhance procedures to ensure that documentation supporting adjustments to the 4-year cohort and related graduation rate calculation is obtained before adjustments are made. Such enhancements should include appropriate training and monitoring to ensure that the required documentation is maintained and supports that all students removed from the graduation rate cohort were removed for the reasons allowed by Federal regulations. District Response: The district has met with the staff responsible for handling withdrawals of students and transfer of their records to different institutions. Formal training is being developed for principals, registrars, and data entry staff about the process for withdrawing a student from school and from a cohort; using the correct withdrawal codes; maintaining proper records; following up with transfer agencies to get the appropriate documentation, and how to ensure that any new staff is provided training related to withdrawals and student records. The district will monitor regularly to ensure established protocols are met and being done correctly.

Finding: District controls did not always ensure compliance with the Davis-Bacon Act for Federally funded construction projects exceeding $2,000, resulting in questioned costs totaling $1,465,428. Criteria: The ESSER Fund provides Federal funds for school facility repairs and improvements to reduce the risk of virus transmission and exposure to environmental health hazards and to support student health needs. Title 29, Section 5.5, CFR (Davis-Bacon Act), requires the District to include prevailing wage rate clauses in any construction contract exceeding $2,000 that is financed either wholly or in part by Federal funds and ensure that contractors pay workers the prevailing wage rates established by the United States Department of Labor. This includes a requirement for the contractor to submit to the District weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). The United States Department of Labor established ?prevailing wages? by geographic area and interprets the Davis-Bacon Act to apply to construction, alteration, or repair of a public building or public work. Condition: During the 2021-22 fiscal year, the Board entered into nine construction contracts totaling $1,810,203 with one contractor for heating, ventilation, and air-conditioning (HVAC) repairs and upgrades at five District schools. As of June 30, 2022, the District had expended ESSER funds totaling $1,465,428. In response to our inquiry, District personnel indicated that the contractor did not submit to the District weekly certified payrolls demonstrating prevailing wage rates were paid. In addition, we noted that the purchase orders, requests for proposal, bid specifications, and contracts for the projects did not contain clauses that required compliance with the Davis-Bacon Act provisions. Cause: District personnel were not aware that the Davis-Bacon Act applied to these projects and, therefore, did not include the appropriate wage rate clauses in the applicable procurement documents. In addition, according to District personnel, District procedures did not require them to verify that the contractor submitted weekly certified payrolls demonstrating prevailing wage rates were paid. Effect: Absent the required contract clauses and weekly certified payrolls, there is an increased risk that construction contractors paid with Federal moneys will not pay workers the prevailing wage rates established by the United States Department of Labor. Although we requested, the District did not provide the certified payrolls from the contractor demonstrating that the prevailing wage rates were paid for the projects. Consequently, the District incurred questioned costs totaling $1,465,428. Recommendation: The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such procedures should ensure that applicable Federally funded construction contracts contain the prevailing wage rate clauses and require submittal of weekly certified payrolls and that District personnel verify the payrolls were received. In addition, the District should document to the FDOE the allowability of the questioned costs or contact the FDOE regarding necessary corrective action. District Response: The district has met virtually and in person with all staff involved in these transactions and the contractor who facilitated the renovation projects. Discussions with CEOs, attorneys, and others responsible for maintaining payroll records have been held. System of Award Management (SAM) Wage determination documents have been sent to the vendor and the vendor is in the process of revising purchasing agreements/contracts to include language related to Davis-Bacon Act. The vendor has agreed to provide the wage determinations and updated documents as soon as possible. The district will not expend any further federal dollars on construction projects unless there is a completed contract with all the required Davis-Bacon Act clauses and requires the vendor to provide weekly wage statements to the district as they work on the project. The district is working with legal and other larger school districts to develop its own contract document that contains all the required Davis-Bacon language. That document will be used in the future for any federally funded construction projects. The Finance Department will ensure that no contracts are approved without the correct language and requirements in them and will revise the purchasing documents to include references to Davis-Bacon Act.

The District did not always comply with Federal regulations by properly allocating Title I Program funds to eligible schools. Criteria: Title 34, Section 200.78, Code of Federal Regulations, requires the District to allocate Title I schoolwide program funds to schools identified as eligible and selected to participate, in rank order, on the basis of the total number of children from low-income families in each school. The District is not required to allocate the same per-pupil amount (PPA) to each participating school provided that it allocates higher PPAs to schools with higher concentrations of poverty than to schools with lower concentrations of poverty. Condition: The District annually applies for Title I Program funding and the application includes a budget and an eligibility survey to document the amounts budgeted per school. During the 2020-21 fiscal year, the District operated five elementary, middle, and high schools and Title I Program funds totaling $1,611,010 were expended at those schools. As part of our procedures, we requested for examination District records supporting the District?s budget allocation amounts to the respective schools. Copies of the final budget allocations recorded in the District accounting records were provided; however, our examination of those documents disclosed that the ranking of two of the District?s five Title I schools did not agree with the ranking based on the percent of students from low-income families. Specifically, one school had a poverty concentration of 83.97 percent but was allocated and received $10,151 less per pupil funding than a school with a lower poverty concentration of 69.75 percent. Additionally, another school had a poverty concentration of 60.82 percent but was allocated and received $25,608 less per pupil funding than a school with lower poverty concentration of 55.25 percent. Cause: The District had not established effective procedures for monitoring Title I budgets at participating schools. Effect: The District did not comply with Federal regulations by appropriately allocating Title I Program resources to participating schools in rank order, on the basis of the total number of children from low-income families in each school. As a result, two District schools were underallocated $35,759 and educational services were not funded at the required levels. In response to our inquiries, District personnel concurred with the calculated questioned costs. Recommendation: The District should establish procedures for ensuring and documenting that Title I Program resources are properly allocated to schools. In addition, the District should provide documentation to the FDOE supporting the allowability of the questioned costs totaling $35,759 or restore this amount to the Title I Program. District Response: The District will establish monitoring procedures for the Title I Program so that funds are properly allocated to the schools in rank order. The District will periodically monitor the Title I budgets to ensure the rank order is maintained. The District will consult with FDOE regarding resolution of questioned costs.

CFDA Number 84.010 Program Title Title I Grants to Local Educational Agencies Compliance Requirement Eligibility Pass-Through Entity Florida Department of Education (FDOE) Federal Grant/Contract Number and Grant Year S010A190009 ? 2020 Statistically Valid Sample N/A Finding Type Nonmajor Federal Program Questioned Costs Greater Than $25,000 Questioned Costs $50,725 Prior Year Finding Not Applicable Finding The District did not always comply with Federal regulations by properly allocating Title I Program funds to eligible schools. Criteria Title 34, Section 200.78, Code of Federal Regulations (CFR), requires the District to allocate Title I schoolwide program funds to schools identified as eligible and selected to participate, in rank order, on the basis of the total number of children from low income families in each school. The District is not required to allocate the same per-pupil amount (PPA) to each participating school provided that it allocates higher PPAs to schools with higher concentrations of poverty than to schools with lower concentrations of poverty. Condition The District annually applies for Title I Program funding and the application includes a budget and an eligibility survey to document the amounts budgeted per school. During the 2019-20 fiscal year, the District operated five elementary, middle, and high schools and Title I Program funds totaling $1,640,163 were expended at those schools. As part of our procedures, we requested for examination any monitoring reports prepared by the District?s grantors that addressed matters involving the administration of Federal grant funds. In response to our request, the District provided an FDOE monitoring report, dated December 2019, which indicated that District controls were not always sufficient to ensure the proper allocation of Title I funds to eligible schools. District personnel also provided copies of the final budget allocations recorded in the District?s accounting records. Our examination of those documents disclosed that the ranking of one of the District?s five Title I schools did not agree with the ranking based on the percent of students from low income families. Specifically, a school with a higher concentration of poverty (66.5 percent) was allocated and received $50,725 less per-pupil funding than a school with a lower concentration of poverty (58.9 percent). Cause The District had not established effective procedures for monitoring Title I budgets at participating schools. Effect The District did not comply with Federal regulations by appropriately allocating Title I Program resources to participating schools in rank order, on the basis of the total number of children from low income families in each school. As a result, a District school was underallocated $50,725 and educational services were not funded at the required levels. In response to our inquiries, District personnel concurred with the calculated questioned costs. Recommendation The District should establish procedures for ensuring and documenting that Title I Program resources are properly allocated to schools. In addition, the District should provide documentation to the grantor (FDOE) supporting the allowability of the questioned costs totaling $50,725 or restore this amount to the Title I Program. District Response The District will establish monitoring procedures for the the Title 1 program so that funds are properly allocated to the schools in rank order. The District will periodically monitor the Title 1 budgets to ensure the rank order is maintained. The District will consult with FDOE regarding resolution of questioned costs.

Finding Number: 2019-002 CFDA Numbers: 10.553, 10.555, 10.559 Program Title: Child Nutrition Cluster (CNC) Compliance Requirement: Allowable Costs/Cost Principals ? Indirect Costs Pass-Through Entity: Florida Department of Agriculture and Consumer Services (FDACS) Federal Grant/Contract Number and Grant Year: Contract #18196 - 2019 Statistically Valid Sample: No Finding Type: Nonmajor Federal Program Questioned Costs Greater Than $25,000 Questioned Costs: $35,472 Prior Year Finding: Not Applicable Finding: The District charged indirect costs to the CNC for food expenditures, which is not an allowed cost objective for incurring indirect costs, resulting in questioned costs totaling $35,472. Criteria: Title 2, Part 200, Code of Federal Regulations, provides principles for determining allowable costs, including indirect costs that may be allocated to a Federal program. Indirect costs are costs that are incurred for a common or joint purpose, are not readily identified with a particular final cost objective without effort disproportionate to the results achieved and are calculated by multiplying allowed costs by an approved indirect cost rate. To require consistent indirect cost rate calculations and application of the rate to allowable CNC expenditures, the U.S. Department of Agriculture (USDA) published USDA Indirect Costs Guidance for State Agencies and School Food Authorities. The guidance provides that food expenditures are excluded when calculating the indirect cost rate and the indirect cost charges because the activities require minimal administrative support. Condition: For the 2018-19 fiscal year, the District correctly excluded food expenditures from the indirect cost rate calculation; however, the District inadvertently charged indirect costs for food expenditures to the CNC. Cause: The District was not aware of the USDA guidance that food expenditures should be excluded when calculating indirect cost charges. Effect: The District overcharged CNC for indirect costs and incurred questioned costs totaling $35,472. Recommendation: The District should enhance procedures to ensure that CNC indirect cost charges are accurately calculated and charged to the food service program. Such enhancements should include indirect cost training for personnel responsible for the CNC. In addition, the District should provide documentation to the grantor (FDACS) supporting the allowability of the questioned costs, totaling $35,472, or restore this amount to the CNC. District Response: The District agrees with this finding and has changed its procedures to ensure that CNC indirect cost charges are accurately calculated and charged to the food service program.