Mead School District No. 354

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Mead School District No. 354 September 1, 2018 through August 31, 2019 2019-001 The District did not have adequate internal controls to ensure compliance with time-and-effort and eligibility requirements for its Title I program. CFDA Number and Title: 84.010 ? Title I Grants to Local Education Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 203161 Questioned Cost Amount: $0 Description of Condition The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2019, the District spent $1,214,939 in Title I program funds, of which $1,013,661 was for gross pay and benefits. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. Allowable costs The District is responsible for ensuring it supports all Title I payroll charged to the grant with adequate time-and-effort records, as required by federal regulations and the grantor. Depending on the number and types of activities an employee performs, time-and-effort records can be a semi-annual certification or a monthly personnel activity report, such as a detailed timesheet. Our audit found the District did not obtain monthly personnel activity reports for all employees working part time in the program for fiscal year 2019. The District?s controls were not effective to ensure employees working part time in the program completed monthly personnel activity reports for the entire fiscal year. We consider this internal control deficiency to be a material weakness. This issue was reported as a finding in the prior audit as finding 2018-001. Eligibility Federal regulations require the District to allocate Title I grant funds to each attendance area or school in rank order based on the total number of children from low-income families residing in the area or attending the school. A school attendance area or school is generally eligible to participate if the percentage of children from low-income families is at least as high as the percentage of children from low-income families in the District as a whole or at least 35 percent. The District must serve areas or schools with over 75 percent students from low income families in rank order first. Then it may serve areas or schools with rate of low-income families between 35 percent (or the District poverty average, whichever is lower) and 75 percent in rank order. If the District elects to serve schools with a rate of low-income families that is less than 35 percent, it must allocate to all its participating schools an amount per child from a low-income family that equals at least 125 percent of the District?s Title I allocation per child from a low-income family. The District had an average poverty rate of 30 percent. The District?s controls were not effective at ensuring it complied with eligibility requirements of the Title I program. The District chose to serve one school with a rate of low-income families of 26 percent and did not allocate any Title I funds to another school with a low-income rate of 33 percent We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable costs The District staff responsible for monitoring time-and-effort reporting for this program lacked the necessary training and did not have a clear understanding of time-and-effort requirements. Eligibility District staff did not select the school below 35 percent with a higher poverty rate because they believed the District received a waiver from OSPI for the 2018-19 school year while it made boundary changes for a new school. The District and OSPI could not provide any support for the waiver. We determined OSPI would not have approved allocating funds to a school with a poverty rate lower than another. Effect of Condition and Questioned Costs Allowable costs Without proper time-and-effort records, the District did not comply with the requirement and it cannot assure federal grantors that payroll costs of $16,882 charged to the program were accurate or valid. Based on our testing, 56 percent of payroll records lacked sufficient time-and-effort records. However, the District provided alternative documentation that adequately showed the costs it charged to the program were allowable. Therefore, we are not questioning these costs. Eligibility Because the District allocated Title I funds incorrectly, the amount of services provided at schools with higher percentages of low-income students might have been unfairly limited. The District did not allocate Title I Program funding to Farwell Elementary, which resulted in an underfunding of $213,065 for the school. The District selected the next school building in the rank order with a lower percentage of low-income families than that of Farwell Elementary. Recommendations Allowable costs We recommend the District strengthen internal controls and dedicate resources to ensure staff responsible for compliance with federal requirements have the necessary training to understand when time-and-effort records are required. Eligibility We recommend the District comply with Title I program requirements, review its allocations of Title I program funding to ensure they are accurate, and obtain appropriate documentation when allocating funds to school buildings out of rank order. District?s Response The District concurs with the auditors that we did not have adequate internal controls to ensure compliance with time-and-effort and eligibility requirements. To ensure compliance in the future, the District Business Office with internally audit time-and-effort compliance for all federal grant programs twice a year. The Business Office will also review the grant application and supporting documentation to ensure the appropriate rank order is in compliance with federal guidelines. Auditor?s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Section 303 ? Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants Title 34 CFR, Part 200, sections 200.77 and 200.78 establish the requirements for reservation of funds by a Local Education Agency (LEA) and allocation of funds to school attendance areas and schools, respectively.

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