FIFE SCHOOL DISTRICT

2025-001 The District did not have adequate internal controls and did not comply with federal eligibility requirements. Assistance Listing Number and Title: 10.553 - School Breakfast Program 10.555 – National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 257WAWA3N1199 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2024-001 Background The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program and the National School Lunch Program. These programs provide free and reduced-price meals to students from low-income families. During the school year 2024-25, the District spent $1,372,623 in federal funds from the Child Nutrition Cluster. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Direct certification is the process districts use to certify categorically eligible children for free meals without further application. Washington state has an electronic system that matches data from the Department of Social and Health Services with Comprehensive Education Data and Research System data to produce a “Direct Certification List.” Districts must download the direct certification list at least monthly to ensure they serve free meals to eligible students. For students not on the Direct Certification List, the District must determine eligibility using an annual application submitted by the household of the student. The Child Nutrition Cluster also has a Provision 2 program, which is a four-year claiming option that reduces the burden of processing applications for schools with high numbers of participating low-income children to serve free meals to all students. Only the first year (base year) are schools required to make eligibility determinations. For the school year 2024-25 the District began operating Provision 2 for four out of six of its schools, and as school year 2024-25 was the base year, it needed to document eligibility. Description of Condition Our audit found the District did not have adequate internal controls to perform and monitor eligibility determinations through both the direct certification and annual application processes. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff were aware of the requirements to determine the eligibility status for students each month. Due to turnover in the program’s key staff, they did not retain documentation showing they completed direct certification downloads monthly as required nor did they retain supporting documentation showing that students served met eligibility requirements via the annual application process. Effect of Condition Using a nonstatistical sample, we found the District did not retain documentation of the direct certification downloads for three of the five months we tested. Without documentation showing it performed the direct certification downloads, the District cannot demonstrate compliance with the requirement and risks not providing free meals to eligible students and providing free meals to ineligible students. In addition, using a statistical sample, our testing found that for 11 out of 29 students tested (38%), the District did not have an approved application, direct certification list or categorical determination form to support the eligibility of these students. Without documentation demonstrating students served are eligible, the District risks noncompliance with the base year Provision 2 requirements that requires it to demonstrate the eligibility determination for students served under the program. Although the District did not retain documentation to support the eligibility of the 11 students served as required, meals served would still be free for these students under Provision 2 regulations; therefore, we are not questioning costs. Recommendation We recommend the District establish internal controls to ensure staff perform direct certification downloads monthly, retain documentation for downloads performed, retain annual applications for non-direct certification students and provide adequate oversight of the process to comply with eligibility requirements. District’s Response The District reviewed the existing internal controls for compliance with federal eligibility requirements and have added additional management oversight of existing processes to improve completeness. In addition, the district will implement process improvements to increase transparency of record retention. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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, Uniform Guidance, 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. Title 7 CFR Part 245, Section 245.6 – Application, eligibility and certification of children for free and reduced-price meals and free milk. RCW 28A.235.280(3) Free school meals—Systems to identify students, at least monthly, schools and school districts shall directly certify students for free school meals if the students qualify because of enrollment in assistance programs, including but not limited to the supplemental nutrition assistance program, the temporary assistance for needy families, and Medicaid.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Fife School District No. 417 September 1, 2023 through August 31, 2024 2024-001 The District did not have adequate internal controls for ensuring compliance with federal eligibility and paid lunch equity requirements Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program 10.559 – Summer Food Service Program for Children Federal Agency Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 207WAWA3N1099 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the School Breakfast Program, the National School Lunch Program, and the Summer Food Service Program for Children. These programs provide free and reduced-price meals to students from low-income families. The District received $1,470,852 in federal funding to administer these programs during the 2023-2024 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Eligibility Direct certification is the process districts use to certify categorically eligible children for free meals without further application. Washington state has an electronic system that matches data from the Department of Social and Health Services with Comprehensive Education Data and Research System data to produce a “Direct Certification List.” Districts must download the direct certification list at least monthly to ensure they serve free meals to eligible students. Paid Lunch Equity The USDA requires school districts participating in the National School Lunch Program to provide sufficient funds to the nonprofit school food service account for meals served to students who are ineligible for free or reduced-price meals (paid lunches). If the average paid lunch price is less than the difference between the free and paid lunch federal reimbursement rates (known as “equity”), districts must increase the prices for paid lunches or provide additional nonfederal funding to cover the cost of providing full-price lunches, or a combination of both. Each year, the USDA issues the Paid Lunch Equity (PLE) tool, which districts must complete to assist with calculations and decisions to meet this requirement. If the PLE tool calculation indicates paid lunch prices must be increased but the District decides not to increase prices, it must demonstrate it contributed the amount of nonfederal funds required as calculated in the PLE tool. Districts can demonstrate they have contributed nonfederal funds by completing the “GL 828 Restricted” tab calculation of the Office of Superintendent of Public Instruction (OSPI)’s Fund Balance Reporting tool. If the calculation shows the District has a deficiency of revenues over expenditures, this means it has contributed nonfederal funds to its food service account. If the deficit is large enough to cover the nonfederal contribution required by the PLE tool, the District is instructed to print, sign and date a copy of the GL 828 Restricted calculation as evidence it has met the requirement. Description of Condition Eligibility Our audit found the District did not have adequate internal controls to perform direct certification downloads monthly and has no monitoring to ensure the required process is completed. Paid Lunch Equity Our audit found the District did not have adequate internal controls to complete all the required fields of the PLE tool. The District also lacked controls for demonstrating it increased paid lunch prices or contributed nonfederal funds, as federal regulations and OSPI require. We consider these deficiencies in internal controls to be significant deficiencies. Cause of Condition Eligibility District staff were aware of the requirements to determine the eligibility status for students each month, but they did not complete direct certification downloads monthly as required. The Manager of Food Service is responsible for completing the verification; however, they did not perform two of the monthly downloads. Paid Lunch Equity District staff were not aware they were required to fully complete the PLE tool to determine whether the District needed to increase lunch prices, or contribute nonfederal funding. Effect of Condition Eligibility The District did not perform the direct certification downloads for two of the six months we tested. Without performing the direct certification downloads, the District risks not providing free meals to eligible students and providing free meals to ineligible students. Although the District did not perform direct certification downloads as required, our testing found it provided free meals to eligible students. Paid Lunch Equity Initially, the District only completed one of the required tabs of the PLE tool for the 2023-2024 school year. The tool included instructions that indicated the District did not meet equity and would have needed to either raise its lunch prices by $0.51 (capped at $0.10 for the school year) or provide $91,183 ($17,879 with $0.10 cap) in nonfederal funding to meet equity requirements. As a result of our audit, the District completed the remaining sections of the PLE tool. The District did not increase its lunch prices and initially could not demonstrate that it provided nonfederal funds to meet equity requirements. However, during the audit the District completed the GL 828 Restricted tab of the Fund Balance Reporting tool that showed it had a deficiency of $382,019 for the 2023-2024 school year. This demonstrated that the District contributed more funds into the revenue account than the amount expected from the PLE tool, and the District complied with the paid lunch equity requirement. Recommendation Eligibility We recommend the District establish internal controls to ensure staff perform direct certification downloads monthly and provide adequate oversight of the process to comply with direct certification requirements. Paid Lunch Equity We recommend the District establish internal controls to ensure staff understand how to complete the PLE tool and provide adequate oversight to ensure it is accurately completed to comply with equity requirements. Additionally, if the District decides to contribute nonfederal funds, it should establish controls to complete, sign and date the GL 828 Restricted tab of the Fund Balance Reporting tool to demonstrate it contributed sufficient nonfederal funds to the food service account. District’s Response The District appreciates the work performed by the State Auditor's Office andconcurs with the audit finding. The District has implemented additional internalcontrols to ensure that both the Paid Lunch Equity Tool and Federal Eligibility Verification requirements are fully and accurately completed as required. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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, Uniform Guidance, 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 AuditingStandards, section 935, Compliance Audits, paragraph 11. RCW 28A.235.280(3) Free school meals—Systems to identify students, at least monthly, schools and school districts shall directly certify students for free school meals if the students qualify because of enrollment in assistance programs, including but not limited to the supplemental nutrition assistance program, the temporary assistance for needy families, and medicaid. RCW 28A.300.255 Meal charge policies, The office of the superintendent of public instruction shall collect, analyze, and promote to school districts and applicable community-based organizations best practices in local meal charge policies that are required by the United States department of agriculture in memorandum SP 46- 2016. Title 7 CFR Part 210, National School Lunch Program, section 14, Resource management, Part E, describes the requirements for pricing paid lunches

2020-001 The District?s internal controls were inadequate for ensuring compliance with Paid Lunch Equity requirements. CFDA Number and Title: 10.553 ? School Breakfast Program 10.555 ? National School Lunch Program 10.559 ? COVID-19 ? Summer Food Service Program for Children Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 207WAWA3N1099 Questioned Cost Amount: $0 Description of Condition The District participates in the School Breakfast Program, the National School Lunch Program, and the COVID-19 Summer Food Service Program for Children. The District received $1,337,436 in federal funding to administer these programs during the 2019-2020 school year. Federal regulations require grant recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The USDA requires school districts participating in the National School Lunch Program to provide comparable financial support for lunches served to students who are ineligible for free or reduced-price meals (paid lunches). Every year, districts must use the USDA?s Paid Lunch Equity tool to determine if they need to increase prices for paid lunches. If the average price for a paid lunch is less than Page 6 Office of the Washington State Auditor sao.wa.gov the difference between the federal reimbursement rates for free and paid lunch (known as ?equity?), districts must increase their prices for paid lunches. Alternatively, districts can also provide additional financial support for non-federal sources to cover the cost of providing full-price lunches. We found the District lacked sufficient internal controls for completing all of the applicable fields of the Paid Lunch Equity tool to ensure compliance with equity requirements. We consider this internal control deficiency to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District did not know it was required to complete all of the applicable fields of the Paid Lunch Equity tool to demonstrate compliance with equity requirements. Effect of Condition Because the District lacked adequate controls for ensuring it fully completed the Paid Lunch Equity tool, the District could not demonstrate it complied with equity requirements. During the audit, the District finished filling out all of the applicable fields of the Paid Lunch Equity tool for the 2019-2020 school year. The tool showed the District did not meet equity, and that it would have needed to either raise its lunch prices by $.07 or provide $7,218 in support from non-federal sources to meet equity requirements. However, the District did not increase its lunch prices, and it could not demonstrate that it provided support from non-federal sources to meet equity requirements. Recommendation We recommend the District establish internal controls and provide adequate oversight to ensure staff understands how to fully and accurately complete the Paid Lunch Equity tool. District?s Response The District appreciates the work performed by our State Auditor's and concurs with the audit finding. The District has implemented internal controls to ensure the Paid Lunch Equity tool is fully and accurately completed as required. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regularly scheduled 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, Uniform Guidance, 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. Title 7 CFR Part 210, National School Lunch Program, section 14, Resource management, Part E, describes the requirements for pricing paid lunches.