HOUSTON COUNTY BOARD OF EDUCATIONLocal Government

Item 2023-001 (Originally of 2022-001) Special Tests and Provisions – Wage Rate Requirements Education Stabilization Fund (ESF) ALN# 84.425 (Repeated) U.S. Department of Education Passed through the State Department of Education Grant period – Years ended September 30, 2022 and September 30, 2023 (84.425D) Criteria – Grantees should have controls in place to ensure that contractors and subcontractors are notified of the requirement to pay prevailing wage rates to all laborers and mechanics employed on construction contracts in excess of $2,000 financed by federal assistance funds and to submit weekly certified payrolls for each week in which contract work is performed. 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.326 and 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (DOL Regulations) require the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Condition – Adequate controls were not in place to ensure that contractors and subcontractors were notified of the requirements to comply with the wage rate requirements and provided timely certified payrolls throughout the construction projects. Cause – A clause describing the Wage Rate Requirements was not added to the construction contracts. There was a lack of sufficient controls over the communication of this requirement to ensure that accurate and complete certified payrolls were provided to the Board. Effect – Lack of notification of the wage rate requirements to the contractors and subcontractors could lead to disallowed costs. We noted that payments to contractors did not have supporting documentation of certified payrolls. However, our audit disclosed no instances of unallowable costs. Questioned Costs – $1,521,784.16 Recommendation – We recommend the strengthening of controls to ensure the prevailing wage rate clauses are included in the contracts and that certified payrolls are received for each week in which construction work is performed. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper prevailing wage rate clauses are added to construction contracts and certified payrolls are received from each week in which construction work is performed.

Finding 2022-001: Type of Finding: Compliance Internal Control Impact: None Compliance Impact: Material Noncompliance CFDA Number(s) and Title(s): 84.425U Federal Awarding Agency: U.S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: S42U210001/S425U21001 Questioned Costs: $457,182 Finding: Title 29, U.S. Code of Federal Regulations, Part 5, Sub-Part A Davis Bacon and Related Acts Provisions and Procedures (the ?Davis-Bacon Act?), requires that any construction contract in excess of $2,000 that is funded wholly or in part by federal funds include prevailing wage rate clauses. The laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for locality of project (prevailing wage rates) by the Department of Labor (DOL) and the contractor or subcontractor must submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). During fiscal year 2022, the Board entered into two construction project contracts totaling $498,830.00 that did not include prevailing wage rate clauses. As of September 30, 2022, the Board had expended $457,182.00 of ESSER funds on the projects. The Board did not have controls in place to ensure the Davis-Bacon Act wage rate requirements were included in construction contracts, therefore, the two construction project contracts were awarded during the fiscal year that did not include prevailing wage rate clauses nor did the contractors submit weekly certified payrolls to the Board. As a result, the Board is not in compliance with the Davis-Bacon Act as it pertains to wage rate requirements. Recommendation: The Board should comply with Title 29, U.S. Code of Federal Regulations, Part 5, Sub-Part A Davis Bacon and Related Acts Provisions and Procedures (the ?Davis-Bacon Act?) when using COVID-19 Education Stabilization Funds (ESSER) to fund construction contracts in excess of $2,000.00 with the use of mechanics and laborers.

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