Putnam County District School BoardLocal Government

FINDING - District controls over ESF Program expenditures did not always ensure compliance with Federal regulations, resulting in questioned costs totaling $6,028,388. CRITERIA - The ESF Program provides funding to prevent, prepare for, and respond to the COVID-19 pandemic, including additional compensation payments for teachers, principals, and other school personnel. United States Department of Education guidance provides that additional compensation payments for school personnel must be reasonable and necessary and consistent with Title 2, Section 200.430(f), Code of Federal Regulations. According to that Section, employee compensation must be according to an agreement entered into before the services were render or according to an established plan followed by the subrecipient so consistently as to imply, in effect, an agreement to make such payment. CONDITION - For the 2023-24 fiscal year, the District reported ESF Program expenditures totaling $24 million, including additional compensation totaling $11.6 million to 1,511 employees, the 5 Board members, and the Superintendent. The Board and the teachers union established a plan to award additional compensation supplements and the plan extended beyond teachers to include all employees, Board members, and the Superintendent. The plan established additional compensation amounts per individual ranging from $2,166 for COVID-19 retention and recruitment supplements up to $5,414 for COVID-19 knowledge and experience retention supplements based on years of service. The plan also only authorized two compensation supplements for each individual; however, the District inadvertently awarded four compensation supplements to each individual. CAUSE - District personnel indicated that supplements were authorized pursuant to the Board-established plan and the FDOE-approved ESF Program documents and related amendments. Notwithstanding, the additional compensation amounts exceeded the established plan amounts because four compensation payments were awarded instead of two. EFFECT - By awarding the four compensation supplements, the District effectively doubled the amounts established in the plan and incurred questioned costs totaling $6,082,388. Absent effective procedures to ensure that ESF Program compensation expenditures comply with the Board-established plan, the District cannot demonstrate compliance with Federal regulations, resulting in questioned costs totaling $6,028,388. RECOMMENDATION - The District should enhance procedures to ensure compliance with Federal regulations by limiting additional compensation to the amounts established by the Board. In addition, the District should document to the FDOE to allowability of these questioned costs or contact the FDOE regarding the necessary corrective action. DISTRICT RESPONSE - Although we disagree with the finding, moving forward, and in accordance with your recommendation, the Putnam County School District will review procedures that ensure compliance and make any necessary changes where needed. The district believes that the board and state approved additional compensation followed the budget narrative including all amendments, specifically amendments #8 and #11 in our federal project (#540-1211A-2C001). All payments were done via an internal procedure through MOUs that are signed between the Putnam Federation of Teachers/United (PFT/United) and the School Board. The MOUs were signed on September 27, 2023, November 29, 2023, February 26, 2024, and April 3, 2024 with payments being disbursed within 30 days after each. In fiscal year 2023-24, there were four iterations of payments made which reflected budget narratives from the original award letter, amendment 8 and amendment 11. The payments were processed using an internal procedure that ensures an agreement between the District and the PFT/United. These signed agreements align with the expectations of the Code of Federal Regulations in Title 2, Section 200.430(f) where employee compensation must be according to an agreement entered into before the services were rendered or according to an established plan followed by the subrecipient so consistently as to imply, in effect, an agreement to make such payment. In regards to doubling the amounts established in the plan, the PCSD believes amendment #8 and the accompanying email chain with the amendment provided for two additional iterations of the compensation and thus put us within the correct number of compensation payments to PCSD employees throughout the life of the project.

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 $416,064. Criteria - The ES Fund provides Federal funds for school facility repairs and improvements. Title 29, Section 5.5, Code of Federal Regulations (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 - For the 2022-23 fiscal year, the District expended ES Fund moneys totaling $27,893,976, including $416,604 for construction contracts related to heating, ventilation, air-conditioning replacements and remodeling renovations. We noted that the purchase orders, requests for proposals, and contracts for those services did not contain clauses that required compliance with the Davis-Bacon Act provisions and the contractors did not submit weekly certified payrolls to the District. Cause - District personnel indicated that they were not aware that the Davis-Bacon Act applied to all of these Federally funded projects and, due to an oversight, did not include the appropriate wage rate clauses in the applicable procurement documents. 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 certified payrolls from the contractors demonstrating that the prevailing wage rates were paid for the services, resulting in questioned costs totaling $416,064. Recommendation - The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such enhancements should ensure that applicable Federally funded facility contracts 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's procedures will be enhanced to ensure compliance with the Davis-Bacon Act requiremets. The District has updated our policies and procedures to include the Davis-Bacon Act language and will require the Davis-Bacon provision clause in future contracts for federally funded contracted services. The wage rate clause will be required along with requiring weekly payrolls to be submitted to ensure the federal wage rates are followed.

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