Lawton Independent School District No. 8Local Government

Condition: Devices/Services acquired with federal funds were not assigned to appropriate population of unmet needs or tracked properly. Criteria: FCC-ECF Program is to fund devices and services must be used primarily for off-campus educational purposes and by students, school staff with otherwise unmet needs; Who would otherwise lack access to connected device and/or broadband connectivity sufficient to engage in remote learning. Also requires that one device and service per user. 47 CFR54.1715 Record retention—a) equipment and service inventory requirements. Schools, libraries and consortia shall keep asset and service inventories identified with eligible student or staff member. Cause: The District did not adequate records showing that the assign devices/services to the correct population based on application. Effect: Noncompliance with guidance Context: District had tracked the 700 devices but were unable to provide the devices were assigned initially to the proper population per the application resulting in questioned costs of $209,300. Of the services provided the records were not kept showing the initial assignment by the individual or tracked during the periods of service resulting in questioned costs of $134,763. $344,063 Repeat Finding from Prior Year: 2023-004 Recommendation We recommend devices/services be assigned to the population approved in the federal funds application. We also recommend that District implement procedures to ensure distribution of services reconciles to the original application and are retained during the initial assignment of devices/services. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools did not correctly track the distribution of devices by source of funding. The 700 devices were distributed along with other like-devices. More than 700 devices were originally distributed to the “approved population” but not necessarily the 700 devices listed as purchased by the funds. Since the initial distribution, Lawton Public Schools has implemented software tracking of devices that includes the current location and disposition of these devices. Total – Federal Communication Commission $344,063

Condition: Construction projects did not obtain certified payrolls documenting compliance with wage rate requirements. Criteria: 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted construction requires that nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (Which still may be referenced as Davis-Bacon Act). Which includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each which in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Cause: The District had a letter from the contractor certifying compliance with Davis-Bacon Act but were unaware of need to obtain certified payrolls. Effect: The expenditures may be disallowed. Context: Unable to determine labor costs included in applications for payment from the contractor. Repeat Finding from Prior Year: No Recommendation Obtain certified payrolls for construction projects funded with federal awards. Determine that contracts for construction using federal funds include the appropriate clauses to be in compliance with federal procurement guidelines. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools obtained contractor certification of Davis-Bacon Act compliance, but did not obtain certified payrolls. The district identified this issue early in FY23 and immediately changed practices and procedures regarding federal funds and Davis-Bacon Act compliance. These changes did not take effect in time to avoid the Impact Aid expenses. Procurement guidelines for construction projects funded by federal awards have been updated to include the appropriate clauses to comply with federal procurement guidelines. This expenditure occurred in FY23 but prior to the FY22 Audit completion.

Condition: Child counts entered on the Impact Aid application did not have proper supporting documentation for amounts. Criteria: Amounts entered on the application should be properly supported by survey data. Cause: Due to changes in categories of the child count on the application, the categories used in the surveys--did not match up exactly to application and therefore, child counts were underreported. Effect: Noncompliance with guidance Context: Application did not agree to child count on supporting data. Repeat Finding from Prior Year: No Recommendation We recommend child counts included on Impact Aid application agree to supporting documentation. We also recommend that child counts used on the application be reconciled and reviewed. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools selected to use its’ January 2020 application (FY21) for FY22 and FY23 as allowed by guidance. During the review of the survey data collected and the original application, it was discovered that the district under-reported numbers due to errors in the transcription of data. None of the employees responsible for the FY21 Impact Aid application are still with Lawton Public Schools. Lawton Public Schools has reviewed policies and procedures to ensure data is collected and reported accurately in its’ Impact Aid applications. Summary data, as well as survey data, are reviewed and verified by multiple staff members.

Condition: Devices/Services acquired with federal funds were not assigned to appropriate population of unmet needs. Criteria: FCC-ECF Program is to fund devices and services must be used primarily for off-campus educational purposes and by students, school staff with otherwise unmet needs; Who would otherwise lack access to connected device and/or broadband connectivity sufficient to engage in remote learning. Cause: The District did not assign devices/services to the correct population based on application. Effect: Noncompliance with guidance Context: 63 of the 800 devices were not issued to the proper population. Repeat Finding from Prior Year: 2022-010 Recommendation We recommend devices/services be assigned to the population approved in the federal funds application. We also recommend that District implement procedures to ensure distribution of services reconciles to the application. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools procedures require tracking of items with an acquisition cost of $5,000 or higher. These one-time FCC-ECF funds included specific criteria requiring specific tracking of all purchases including hotspots. These criteria were not identified until after the FY22 Audit was completed in March of 2023. The district updated procedures in April of 2023 to include the tracking of all items purchased with federal funds according to federal guidance. The implementation of these procedures occurred late if FY23 causing the finding to be repeated. Lawton Public Schools’ inventory practices have been evaluated. Inventory items being distributed or checked out are now entered into Incident IQ. The district has updated its’ in-processing of assets, additional staff have been put in place and trained to ensure items are distributed and tracked as required by federal award guidelines. In addition, these practices ensure distribution to only eligible students/staff.

2022-005 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 Education Stabilization Fund Assistance Listing: COVID-19- 84.425D & 84.425U Grant Period: Year ending June 30, 2022 Condition: Expenditures were paid without supporting invoices and proper District authority?s approval. Criteria: 2 CFR ?200.403 (g) Costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Cause: Procedures in place for proper approval and documentation were not followed. Effect: The expenditures may be disallowed. Context: A sample of 32 expenditures totaling $3,037,928 was selected for audit from a population of $9,261,024. The test found 25 items that were not in compliance with questioned costs totaling $107,000. Questioned Costs: $107,000 Recommendation Expenditures should not be paid without the proper approval and supporting invoices. The District should follow procedures regarding requiring appropriate staff with authority to approve expenditures and requiring support for expenditures. Repeat Finding from Prior Year: No Views of Responsible Officials And Planned Corrective Action: Certain one-time COVID funds required several departments to make purchases. The lack of specific and clear guidance as to which department was directly responsible resulted in questioned expenditures. District Financial procurement procedures have been updated and implemented that require all federal expenditures to be approved through Lawton Public Schools? Federal Programs office. In addition, all supporting invoices for said expenditures must be provided to and approved by Lawton Public Schools? Federal Programs office. Lawton Public Schools will reimburse the State Department of Education for the total of these questioned costs.

2022-006 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 Education Stabilization Fund Assistance Listing: COVID-19- 84.425D & 84.425U Grant Period: Year ending June 30, 2022 Condition: Payroll expenditures did not have time and effort documentation. Criteria: 2 CFR ?200.430(i)(1)(vii) Standards for Documentation of Personnel Expenses (1) Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal Award. Cause: Employees charged to program left before the semi-annual time and effort was completed according to District policy. Effect: The expenditures may be disallowed. Context: A sample of 28 expenditures totaling $378,391 was selected for audit from a population of $11,846,116. The test found 2 items that were not in compliance with questioned costs totaling $9,549. Questioned Costs: $9,549 Recommendation Time and effort documentation needs to be maintained for payroll expenditures charged to federal awards. The District needs to time and effort documentation to a monthly process if hourly employees. Repeat Finding from Prior Year: Yes; 2021-004 Views of Responsible Officials And Planned Corrective Action: This is a repeat finding from FY2021 (2021-004). The finding was identified during our 2021 audit and corrected in March of 2022. It is important to note that, the United States Department of Education?s ?Frequently Asked Questions Elementary and Secondary School Emergency Relief Programs Governor?s Emergency Education Relief Programs? dated May 26, 2021 stated on page 19 that ?An LEA must maintain time distribution records (sometimes called ?time and effort? reporting) only if an individual employee is splitting his or her time between activities that may be funded under ESSER or GEER and activities that are not allowable under the applicable program.? After the 2021 was complete and 2022 was significantly underway, the auditor indicated that time-and-effort was required and the auditor stated that SDE agreed. Therefore, the district began obtaining time-and-effort for employees paid with federal funds in March of 2022, regardless of SDE and USDE guidance stating otherwise.

2022-007 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 Education Stabilization Fund Assistance Listing: COVID-19- 84.425D & 84.425U Grant Period: Year ending June 30, 2022 Condition: Allowable costs/cost principles of indirect costs was overclaimed. Criteria: 34 CFR 76.569a Indirect costs= (restricted indirect cost rate) x (total direct costs of the grant minus capital outlays, subgrants, and other distorting or unallowable items as specified in the grantee?s indirect cost rate agreement). Cause: Failure to properly exclude construction activities from direct costs before the indirect costs were claimed. Effect: Indirect costs reimbursements were in excess of allowable amounts and may have to be returned. Context: Total expenditures, net of indirect cost and equipment capital expenditures, claimed were $23,578,870. Total construction capital expenditures claimed in this total were $2,341,866. The approved indirect cost rate was 2.74%. Total claimed indirect costs were $630,897. After excluding construction capital expenditures, overclaimed indirect cost found not to be in compliance was $49,003. Questioned Costs: $49,003 Repeat Finding from Prior Year: Yes; 2021-005 Recommendation Indirect costs should be claimed in accordance with allowable cost principles. Construction capital expenditures should be excluded from costs included in indirect cost claims. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools utilized the Oklahoma State Department of Education?s guidance and charged indirect costs for ?capital expenditures? and received reimbursement for those direct costs. The auditor has identified $49,003 as unallowable. Lawton Public Schools will reimburse the State Department of Education for the total of these unallowable costs regardless of SDE?s guidance stating otherwise.

2022-008 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 Education Stabilization Fund Assistance Listing: COVID-19- 84.425D & 84.425U Grant Period: Year ending June 30, 2022 Condition: Property acquired with federal funds were not tracked in property records. Criteria: 2 CFR 200.313(d)(1) requires property records must be maintained that include a description of the property, serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, the cost of the property, percentage of the federal project costs under which property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Cause: Failure to identify construction in progress as capital outlay for property. Effect: The expenditures may be disallowed. Context: A sample of $2,908,079 was selected for audit from a population of $3,035,125. The test found $2,341,866 was not in compliance. Questioned Costs: $2,341,866 Repeat Finding from Prior Year: Yes; 2021-006 Recommendation We recommend that property be properly tracked. We also recommend reconciliations procedures be implemented of property paid with federal funds and federal property listing. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools failed to identify ?Construction in Progress? paid for with federal funds as federal. Procedures will be updated to ensure ?Construction in Progress? paid with federal funds is identified and recorded as federal immediately rather than at the completion of the construction. While this finding is identified as a repeat finding from FY2021 (2021-006), the prior year was in reference to fixed assets while this year?s finding is in reference to ?Construction in Progress?.

2022-009 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 Education Stabilization Fund Assistance Listing: COVID-19- 84.425D & 84.425U Grant Period: Year ending June 30, 2022 Condition: Construction projects did not obtain certified payrolls documenting compliance with wage rate requirements. Criteria: 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted construction requires that nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (Which still may be referenced as Davis-Bacon Act). Which includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each which in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Cause: The District had a letter from the contractor certifying compliance with Davis-Bacon Act but were unaware of need to obtain certified payrolls. Effect: The expenditures may be disallowed. Context: Unable to determine labor costs included in applications for payment from the contractor. Repeat Finding from Prior Year: No Recommendation Obtain certified payrolls for construction projects funded with federal awards. Determine that contracts for construction using federal funds include the appropriate clauses to be in compliance with federal procurement guidelines. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools obtained contractor certification of Davis-Bacon Act compliance, but did not obtain certified payrolls. The district identified this issue early in FY23 and immediately changed funding sources for the project. District construction bidding procedures for federally funded construction have been updated to include verbiage required by the Davis-Bacon Act.

2022-010 Federal Agency: Federal Communication Commission Pass Thru Entity: Universal Service Administrative Company Program: COVID-19 Emergency Connectivity Fund Program Assistance Listing: 32.009 Grant Period: Year ending June 30, 2022 Condition: Devices/Services acquired with federal funds were not tracked to appropriate population of unmet needs. Criteria: FCC-ECF Program is to fund devices and services must be used primarily for off-campus educational purposes and by students, school staff with otherwise unmet needs; Who would otherwise lack access to connected device and/or broadband connectivity sufficient to engage in remote learning. Also requires that on device and service per user. 47 CFR 54.1715 Records retention?a) equipment and service inventory requirements. Schools, libraries and consortia shall keep asset and service inventories identified with the eligible student or staff member. Cause: The District failed to properly track the devices/services to the eligible population. Effect: The expenditures may be disallowed. Context: All expenditures related to the purchasing of devices or services were tested. 3900 Devices were purchased, and 1,877 devices were found not to be in compliance resulting in questioned costs of $557,333. Services provided of 5 months were not tracked and resulted in $90,531 of questioned costs. Questioned Costs: $647,864 Repeat Finding from Prior Year: No Recommendation Assets acquired with federal funds need to be tracked following the guidelines of the award. The District needs to develop procedures to identify devices/services are distributed to eligible students/staff as required by program. Views of Responsible Officials And Planned Corrective Action: Lawton Public Schools procedures require tracking of items with an acquisition cost of $5,000 or higher. These one-time FCC-ECF funds included specific criteria requiring specific tracking of all purchases including hotspots. These criteria were not identified immediately by the district. The district has updated procedures to include the tracking of all of these items even though they do not have an acquisition cost of $5,000 or higher.

Condition: Expenditures charged to program did not follow the allowable costs principles of direct costs. Equipment purchased did not have prior approval nor time and effort kept on employees paid with federal funds. Criteria: 2 CFR 200.439 Equipment and other capital expenditures require to have prior approval of the federal awarding agency or pass-through entity. 2 CFR 200.430(i)(1)(vii) standards for documentation of personnel expenses 1) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. (vii) support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one federal award. Context: 25 out of 40 expenditures did not comply with Uniform Guidance standards of allowable cost/cost principles. . Questioned Costs: $294,369 of known costs which did not have prior approval of equipment ($58,661) or time and effort support ($235,708). The percentage of noncompliance was then taken to the remaining untested population to arrive at a projected cost of $9,666,399. Cause: Claimed expenditures were reclassed at year end which included employees that did not have proper support of time and effort documentation for amounts paid and equipment purchases that did not have prior approval of pass thru entity. Effect: Potential disallowed expenditures and noncompliance with Uniform Guidance. Recommendation: We recommend that expenditures charged to federal programs follow allowable cost principles within Uniform Guidance. We also recommend that employee cost charged to federal programs be supported with appropriate time and effort documentation. We also recommend prior approval of pass thru entity be obtained for equipment to be purchased. Views of Responsible Officials And Planned Corrective Action: Two categories are identified in this finding: prior approval for equipment purchases and time-and-effort for payroll. The equipment finding identifies $58,661 as not having prior approval. The district had verbal approval from State Department of Education (SDE), submitted its claim with supporting documentation, and the SDE reviewed and paid the claim. In terms of prior approval, the SDE changed funding/expenditure requirements multiple times during FY21 as ESSR funds were allocated multiple times across the fiscal year. Per written SDE guidance, the district is acquiring written permission to make purchases on items over $5,000 that are not on SDE?s pre-approved list for remaining ESSR/ARP funds. The district was instructed in August of 2020 during an SDE training that time and effort was not required for employees paid with federal dollars in Lawton, a Schoolwide Title I district/school. The training documents provided stated: ?There are some instances in which schools are not required to maintain individual Time Distribution Records for employees paid with federal funds. 2 CFR 200, Appendix XI of August 2020 stipulates that in the following cases employees need not complete Time Distribution Records 2 CFR 200, Appendix XI, 4-84.000? In a Schoolwide Title I school that uses the schoolwide consolidation of funds, employees paid with federal funds working on the schoolwide program are not required to complete Time Distribution Records B.1.b.(1).? In addition, the United States Department of Education?s ?Frequently Asked Questions Elementary and Secondary School Emergency Relief Programs Governor?s Emergency Education Relief Programs? dated May 26, 2021 states on page 19 that ?An LEA must maintain time distribution records (sometimes called ?time and effort? reporting) only if an individual employee is splitting his or her time between activities that may be funded under ESSER or GEER and activities that are not allowable under the applicable program.? After the year was complete, the auditor indicated that time-and-effort was required and the auditor stated that SDE agreed. Therefore, the district is obtaining time-and-effort for employees paid with federal funds in FY22, regardless of SDE and USDE guidance stating otherwise.

Condition: Allowable costs/cost principles of indirect costs was overclaimed. Criteria: 2 CFR 200.414(c)(d) requires the negotiated indirect cost rate between the pass thru entity and the subrecipient. Context: During testing of indirect costs it was overclaimed and paid by pass thru entity. Indirect costs were tested in their entirety. Questioned Costs: $302,446 of indirect costs were overclaimed. Cause: Failure to monitor the indirect costs being claimed against the allowable amount. Effect: Indirect costs reimbursement received in excess of allowable amount. Recommendation: We recommend that indirect costs not be overclaimed. We also recommend that the District implement procedures to monitor indirect costs claimed are within the allowable rate approved by the State Department of Education. Views of Responsible Officials And Planned Corrective Action: Indirect costs were claimed and paid twice due to an error in the State Department of Education?s Grant Management Software. SDE was informed immediately upon the discovery of the error. SDE was refunded the overpayment and the funds were reallocated to the district?s grant for district use. The District will check each claim for proper indirect cost claim amounts.

Condition: Property purchased with federal funds were not accurately approved, tracked and maintained as property in accordance as federal regulations. Criteria: 2 CFR 200.313(a)(2) requires prior approval by the pass thru entity before encumbering property. 2 CFR 200.313(d)(1) requires property records must be maintained that include a description of the property, serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, the cost of the property, the percentage of the federal project costs in which the property was acquired, the location, use and condition of property and an ultimate disposition data including the date of disposal and sale price of the property. Context: All equipment expenditures claimed were reviewed. Three out of seven were not properly identified as fixed assets, four out of seven were not recorded in the system as federal fixed asset and four out of the seven did not have prior approval to purchase the fixed asset. Questioned Costs: $186,057 of known costs that were not properly tracked as fixed assets. Cause: Equipment was not charged to the program as purchased but was recoded without prior approval of the awarding agency. The District assumed acceptance of the claim was de facto approval. Effect: Potential disallowed expenditures and noncompliance with Uniform Guidance. Recommendation: We recommend prior approval from awarding agency be obtained for equipment to be purchased and that all such equipment, once approved, be properly tracked. We also recommend that recording of expenditures not occur without determination that expenditure will meet the requirements of Uniform Guidance. Views of Responsible Officials And Planned Corrective Action: As stated in 2021-004, SDE funding/expenditure requirements changed multiple times during FY21. In addition, funds became available in the second half of FY21. The items identified had verbal approval, were placed on the district?s claims, and were paid by SDE after review. Late year purchases were identified as federal fixed assets in the first quarter of FY22 insuring proper tracking and maintenance as federal property. Additionally, the fixed asset team will review all purchase orders and claims for object 700?s to insure all property is identified and tracked properly.

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