TEXARKANA ARKANSAS SCHOOL DISTRICTLocal Government

U.S. DEPARTMENT OF EDUCATION MAGNET SCHOOLS ASSISTANCE - AL NUMBER 84.165A AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Cash Management Criteria or specific requirement: 2 CFR § 200.305 requires that for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. In addition, interest earned on federal funds up to $500 per year may be retained by the non-Federal entity for administrative expenses. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be returned annually to the Department of Health and Human Services Payment Management System. Condition: On March 21, 2025, the District made a drawdown of Magnet Schools Assistance Program (MSAP) funds totaling $804,310, which consisted of reimbursements of $62,794 and advance payment of $741,516. From March 21, 2025 through June 30, 2025, the District incurred expenditures of $321,608 while also drawing down additional funds of $87,216 and $99,155 on April 30, 2025, and May 30, 2025, respectively. This resulted in significant time elapsing between the drawdown of funds and the disbursement of the funds by the District. At June 30, 2025, the District had $606,279 of excess federal award funds on hand. Cause: Lack of internal controls in place surrounding the drawdown of funds. Effect or potential effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement can result in program non-compliance and loss of program funds. In addition, excess drawdowns can lead to interest earned on federal advance payments, which mut be returned in excess of $500 per year. Questioned costs: None Context: An examination of three of six cash drawdowns and supporting documentation revealed excess funds drawn, because the District did not adjust future draws or return excess funds. Identification as a repeat finding: No Recommendation: The District should implement internal control processes and monitoring for MSAP cash drawdowns and ensure drawdowns are timed with the District's immediate cash requirements. Views of responsible officials: The District has implemented an internal control process that requires the review and approval of detailed expenditure reports and G5 drawdown amounts prior to submission. The review process includes the Director of the Magnet Program, Finance Coordinator, Executive Director of School Leadership, and the Business Manager to ensure accuracy, compliance, and proper authorization before completion.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 4605 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Equipment and Real Property Management Criteria or specific requirement: Proper records should be maintained for equipment acquired with federal awards as specified in 2 CFR section 200.313. Specifically, the property records must include a serial number or other identification number. Condition: We were unable to verify 3 of 24 Education Stabilization Fund equipment items selected for sighting because serial numbers were not included in the property records, and the equipment items did not have any other identification numbers attached. The cost of the items was $4,428. Cause: Lack of internal controls over capital asset subsidiary records. Effect or potential effect: The District's capital asset subsidiary records were not accurate. Context: Observation of 24 equipment items recorded on equipment subsidiary records at an initial cost of $61,408 from a total population of 242 items at an initial cost of $1,894,302. Identification as a repeat finding: No Recommendation: The District should maintain proper records for equipment acquired with federal awards. Views of responsible officials: The district will develop written fixed/capital asset procedures that will require that all equipment over the capitalization threshold must include serial numbers in property records and be affixed with a unique asset identification tag. We will conduct a full physical inventory of equipment. As part of this process we will record serial numbers for all applicable items, affix asset tags to all untagged equipment, and record proper disposal of assets. We will provide staff training for all relevant staff on asset management procedures and responsibilities.

U.S. DEPARTMENT OF EDUCATION MAGNET SCHOOLS ASSISTANCE - AL NUMBER 84.165A AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-002. Equipment and Real Property Management Criteria or specific requirement: Proper records should be maintained for equipment acquired with federal awards as specified in 2 CFR section 200.313. Additionally, the District should ensure that disposition of such equipment is in accordance with federal requirements, including the federal awarding agency is appropriately compensated for its share of any property sold or converted to non-federal use. Condition: The District could not account for 2 of 25 Magnet School Assistance equipment items purchased in previous years costing $3,383. Cause: Lack of internal controls over capital asset subsidiary records. Effect or potential effect: The District's capital asset subsidiary records were not accurate. Context: Observation of 25 equipment items recorded on equipment subsidiary records at an initial cost of $52,900 from a total population of 1038 items at an initial cost of $3,111,161. Identification as a repeat finding: No Recommendation: The District should maintain proper records for equipment acquired with federal awards. Views of responsible officials: The district will develop written fixed/capital asset procedures that will require that all equipment over the capitalization threshold must include serial numbers in property records and be affixed with a unique asset identification tag. We will conduct a full physical inventory of equipment. As part of this process we will record serial numbers for all applicable items, affix asset tags to all untagged equipment, and record proper disposal of assets. We will provide staff training for all relevant staff on asset management procedures and responsibilities.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425 PASS-THROUGH NUMBER 4605 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-001.Special Tests and Provisions Criteria or specific requirement (including statutory, regulatory, or other citation): 29 CFR 5.5 (Wage Rate Requirements) requires all contractors and subcontractors performing construction contracts in excess of $2,000, financed by federal assistance funds, to pay laborers and mechanics employed by the contractor or subcontractor not less than the prevailing wage rates established by the Department of Labor for the locality of the project. Non-federal entities shall include in the applicable construction contracts a provision that the contractor or subcontractor comply with those requirements. Such requirements include the submission of weekly certified payrolls for each week in which any contract work is performed, to the non-federal entities. Condition: The District paid $385,755, $336,016, $2,440,820, and $242,812 for the Arkansas Middle School Canopy, Arkansas Middle School Outdoor Classroom, North Heights HVAC, and PreK Restroom Remodel, respectively, from the Education Stabilization Fund without weekly certified payrolls being submitted to the District. Cause: Lack of internal controls and management oversight. Effect or potential effect: The District did not comply with Wage Rate Requirements. Context: A total of four contracts for facility repairs and improvements were paid from the Education Stabilization Fund. All were examined. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District has made several attempts to secure weekly certified payrolls for construction projects on-going since July 2023 once notified of this deficiency for the 2022-2023 audit. We will continue to request certified payrolls for the months prior to April 2024 and will request the payroll information for current and future construction projects from this point forward. Documentation of attempts to collect the information will be maintained. This will be monitored by the Comptroller and Business Manager for the District.

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE - AL NUMBER 93.243 PASS-THROUGH NUMBER 4605 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-002.Reporting Criteria or specific requirement: The District is required to submit a semi-annual and final financial report for each award year to the Arkansas Division of Elementary and Secondary Education (DESE). Reports should be accurate and supported with proper documentation. Condition: The final financial report submitted by the District to DESE for the Substance Abuse and Mental Health Services Project Award Year 4 Grant was not complete and did not receive final approval from DESE. Additionally, the mid-year financial report for Award Year 5 submitted by the District to DESE did not agree with the underlying accounting records for the period covered. Cause: Lack of internal controls and management oversight. Effect or potential effect: The District did not comply with the reporting requirements. Context: Examined mid-year and final financial reports. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District will contact DESE to determine if further steps are needed. The Assistant Superintendent of Student Services will facilitate this action.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID - 19 - EDUCATION STABILIZATION FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 4605 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022" 2022-001. Equipment and Real Property Management Criteria: Proper records should be maintained for equipment acquired with federal awards as specified in 2 CFR section 200.313. Additionally, the District should ensure that disposition of such equipment is in accordance with federal requirements, including the federal awarding agency is appropriately compensated for its share of any property sold or converted to non-federal use. Condition: The District could not account for three equipment items, costing $4,079, purchased from the COVID-19 - Education Stabilization Funds. Cause: Lack of internal controls over equipment subsidiary records. Effect or potential effect: The District's equipment subsidiary records were not accurate. Context: Selected 21 items with a total initial cost of $93,791 for inspection purposes from a population of 206 equipment items with a total initial cost of $4,283,051 recorded in the equipment subsidiary records for the Education Stabilization program. Recommendation: Proper records should be maintained for equipment acquired with federal awards. Views of responsible officials: District will more closely monitor the inventories of fixed assets and equipment and supplies purchased with Federal and non-Federal funding. More indepth training will be provided to campus leadership and departmental heads on the disposal process of fixed assets and items purchased under Federal funding. The District will take every precaution necessary to ensure that fixed assets and items purchased with Federal funds will be handled appropriately throughout the life-cycle and assure that proper records are maintained for equipment in accordance with Arkansas Department of Elementary and Secondary Education, as well as Federal, guidelines and procedures for program expenditures.

U.S. DEPARTMENT OF THE TREASURY PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 - CORONAVIRUS RELIEF FUND - AL NUMBER 21.019 PASS-THROUGH NUMBER 4605 AUDIT PERIOD - YEAR ENDED JUNE 30, 2021 2021-001 Allowable Costs/Cost Principles Criteria or specific requirement: United States Department of the Treasury guidance published in the Federal Register on January 15, 2021, at 86 FR 4182 and related Frequently Asked Questions establish criteria for determining allowable costs incurred by the District under this federal award. Condition: In our tests of payroll expenditures, we identified unallowable payroll costs totaling $1,828 were paid from the COVID 19 - Coronavirus Relief Fund. These costs were a result of the District incorrectly calculating salary and fringe benefits for the twenty (20) employees tested. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $1,828 were paid from the COVID 19 - Coronavirus Relief Fund. Questioned costs: The amount of questioned costs was $1,828. Context: An examination of COVID 19 - Coronavirus Relief Fund payroll expenditures for 20 employees totaling $36,858 from a population of 195 employees totaling $443,383. Our samples were statistically valid samples. Recommendation: The District should contact the Arkansas Department of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: Directives on proper calculation of grant funds have been reviewed and will be followed and verified prior to future disbursements of funds. The District will take every precaution necessary to ensure that all calculations are done in accordance with Arkansas Department of Elementary and Secondary Education, as well as Federal, guidelines and procedures for program expenditures.

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