Raton Public School District No. 11Local Government

Criteria: APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS (D) Davis-Bacon Act, as amended (40 U.S.C. 3141–3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141–3144, and 3146–3148) as supplemented by Department of Labor regulations (29 CFR Part 5, ‘‘Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction’’). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland ‘‘AntiKickback’’ Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, ‘‘Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States’’). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141–3144, and 3146–3148) as supplemented by Department of Labor regulations (29 CFR Part 5, ‘‘Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction’’). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland ‘‘AntiKickback’’ Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, ‘‘Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States’’). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. Condition: During our review of the requirements of Special Tests provisions of the Compliance Supplement and the District’s implementation of controls related to compliance with these provisions for the Education Stabilization Fund, we identified the following issues:  The District did not include the required language relating to the Davis-Bacon Act or the Copeland “AntiKickback” Act and prevailing wage guidance in its proposal.  The District did not ensure the vendor was paying prevailing wages. In reviewing the vendor’s weekly wage certification reports we noted some employees were being paid only $11.50/hour while the prevailing wage for an unskilled laborer is $18.75 for a base rate and $7.52 fringe rate. Questioned Costs: Unknown Cause: District personnel were unaware of requirement to include language in contracts regarding the Davis- Bacon Act or the Copeland “AntiKickback” Act with companies providing construction or maintenance work for the District when Federal funds are being used to pay for those services. State personnel told the District incorrectly Davis-Bacon did not apply unless the value of the contract was greater than $60,000 per project or on Native American lands even though the grant guidance puts the level at $2,000. Effect: The District is not in compliance with Federal requirements when using grant funds to pay for construction or maintenance projects in excess of $2,000. Noncompliance with these provisions could cause reimbursement of these funds to be questioned or require the District to reimburse the granting agency for any costs incurred under these projects. Additionally, companies providing these services may not know they are subject to particular wage rate determinations for the project which may cause them to bid or quote amounts which do not provide for payment of required wages to the employees participating on those projects. Auditor’s Recommendation: We recommend that the District establish a practice of including the required language for the Davis-Bacon Act and the Copeland “AntiKickback” Act in contracts with all companies which provide construction or maintenance projects to the District. When companies are selected that have Cooperative Educational Services agreements, the District should require an additional contract be signed by the company which includes these provisions. Additionally, we recommend that District personnel be trained in identifying which funds fall under Federal regulations versus State regulations so that when purchase orders are created and contracts are entered into that these individuals know they are including the proper requirements. Responsible Official’s Plan:  Specific corrective action plan for finding: District personnel will obtain additional training in procurement requirements regarding the Federal Davis Bacon Act.  Timeline for completion of corrective action plan: December 2023  Employee position(s) responsible for meeting the timeline: Business Manager

FA 2019-001 ? Procurement and Suspension and Debarment (Significant Deficiency) Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: USDA National School Lunch USDA School Breakfast Program CFDA Number: 10.555 and 10.553 Passthrough: New Mexico Public Education Department (21000) Award Year: 2019 Criteria: Uniform Grant Guidance and 2 CFR Part 200 Subpart C and D: Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, sub awards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. ? When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with ?200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section ?200.326 Contract provisions. All other non-Federal entities, including sub recipients of a state, will follow ??200.318 General procurement standards through 200.326 Contract provisions. (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (H) Debarment and Suspension (Executive Orders 12549 and 12689)?A contract award (see 2 CFR 180.220) must not be made to parties listed on the government-wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), ?Debarment and Suspension.? https://www.sam.gov/portal/public/SAM/ SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Condition: During our testing of single audit disbursements, we identified multiple vendors which would meet the requirement of verifying that the vendors were not suspended or debarred or otherwise excluded from receiving the contract which was funded through Federal dollars. These vendors received more than $25,000 in payments from the District from Federal grant sources. These vendors are not currently suspended or debarred from receiving Federal contracts; however, the District did not have proper internal controls in place to verify this prior to the purchase. Questioned Costs: None Cause: District personnel did not verify that vendors which meet the $25,000 thresholds are not suspended, debarred, or otherwise excluded from participating in contracts funded through Federal awards due to a misunderstanding of staff personnel regarding this requirement. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. Auditor?s Recommendation: We recommend that the District establish a policy and implement procedures regarding large purchases related to Federal grants to ensure that no vendors who are suspended, debarred, or otherwise excluded from participating in transactions funded through Federal grants are used. As identified above, there are several methods in which the District can verify vendors are not suspended or debarred. The District may have the vendor provide an annual certification that it is not currently suspended, debarred, or otherwise prevented from receiving Federal dollars. In other occasions in which a single purchase is going to be made, the purchasing procedures should include looking up the vendor on the GSA website, printing a copy of the verification, and placing it in the file with the purchase order. The District has options, and it should establish what method is the least intrusive but also effective in complying with the requirements of the Uniform Grant Guidance. Responsible Official?s Plan: ? Specific corrective action plan for finding: Raton Public Schools will implement internal controls and procedures in procurements using Federal grants to include having the vendor provide a certification that it is not suspended or debarred, as well as a valid search using the GSA website as needed. ? Timeline for completion of corrective action plan: Update to internal controls policy is currently being evaluated and updated for Board of Education approval. ? Employee position(s) responsible for meeting the timeline: Business Manager

FA 2019-002 ? Improper Cost Allocation (Significant Deficiency) Federal Program Information: Funding Agency: U.S. Department of Education Title: USDA National School Lunch Program USDA School Breakfast Program CFDA Number: 10.555 and 10.553 Passthrough: New Mexico Department of Education (21000) Award Year: 2019 Criteria: 2 CFR Chapter I, and Chapter II, Parts 200, 215, 220, 225, and 230 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ? 200.405 Allocable costs (a) A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart (b) All activities which benefit from the non-Federal entity's indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs. (c) Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non-Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. (d) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c) of this section, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved when no longer needed for the purpose for which it was originally required. See also ??200.310 Insurance coverage through 200.316 Property trust relationship and 200.439 Equipment and other capital expenditures. Condition: The District paid an employee out of two separate funds and is not doing their time and effort to verify funds are being charged their proper proportional rate. Additionally, the food service provider contracted by the District was not charging the correct management fee on meals served. The fee per contract was $0.091 but charged $0.113 in October 2018, an overcharge of $553.08, and charged $0.093 in February 2019, an overcharge of $70.27. Questioned Costs: Immaterial Cause: The District did not completer their time and effort reporting as required. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program. Auditor?s Recommendation: The District should ensure that it is not expending funds in a greater proportion than the cost pertaining to the federal programs and completing all required reports. Responsible official?s view: ? Specific corrective action plan for finding: Raton Public Schools will provide each employee who is paid from a Federal grant the proper time and effort report. The reports will be kept in secure location and presented to the employee before the end of each semester. ? Timeline for completion of corrective action plan: Fall 2019 ? Employee position(s) responsible for meeting the timeline: Business Manager