Vancouver School District No. 37Local Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Vancouver School District No. 37 September 1, 2022 through August 31, 2023 2023-001 The District’s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program 10.582 – Fresh Fruit and Vegetable Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Program, which includes the School Breakfast Program, National School Lunch Program, and Fresh Fruit and Vegetable Program. These programs provide free or reduced-price meals to students from low-income families. The District received $8,659,125 to administer these programs during the 2022–23 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. Description of Condition When using federal funds to purchase goods or services, certain types of contracts for food services can be obtained through a competitive proposal process. In this process, the government establishes evaluation factors, scores bidders based on these factors, and must award contracts to the highest scoring bidder for any given product or service. When the District solicitated for food purchases, it included yogurt and sour cream in two bid categories for dairy products and awarded contracts for these products to two vendors. Consequently, the District did not award the contract solely to the highest scoring bidder. We consider this deficiency in internal controls to be a significant deficiency. The issue was not reported as a finding in the prior audit. Cause of Condition District employees were not aware that including the same items in multiple bid categories did not meet federal procurement requirements. Effect of Condition The District did not comply with federal procurement requirements. The District purchased dairy products from two different vendors totaling $680,142, and cannot demonstrate it received goods solely from the highest scoring bidder for these contracts. Recommendation We recommend the District strengthen internal controls to ensure it follows applicable laws and requirements when using federal funds to procure goods or services. District’s Response Although the District concurs there was a duplication in two items between separate bid requests, it believes the following to be the relevant facts related to this issue: -Less than 10% of the purchases made under the $680,142 contract award were related to the duplicated items which resulted in the non-compliance. -Even the less than 10% in non-compliant purchases were still made under a competitive procurement action. The fact that the two items in question were duplicated between two separate requests for bids did not create excessive costs to the program nor were purchases made from any non-competitive vendors. - The duplication of similar products in two bid solicitations was only done to mitigate frequent supply chain challenges compromising our ability to meet our students’ needs. 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, 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 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.

Vancouver School District No. 37 September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $5,377,941 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $5,377,941 in ECF Program funds to purchase laptops for students. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Allowable activities and costs ECF Program recipients must only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Restricted purpose ? per-location and per-user limitations The FCC imposed per-location and per-user limitations to maximize the use of limited funds. Under the program, eligible schools could only be reimbursed for one connected device and Wi-Fi hot spot per student or school employee with unmet need, and no more than one fixed broadband connected per location, such as a student?s or employee?s residence. Description of Condition Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment when it applied for ECF Program funds. However, our audit found the District?s internal controls were ineffective for ensuring it requested reimbursement only for eligible equipment provided to students with a documented unmet need. Specifically, the District purchased laptops, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $5,377,941. However, the District did not maintain documentation showing it provided each laptop paid with program funds to a student with unmet need. Restricted purpose ? per-location and per-user limitations Our audit found the District?s internal controls were ineffective for demonstrating it complied with FCC?s per-location and per-user limitations. Specifically, the District did not maintain documentation showing it monitored to ensure it only provided one device or connection per user and location. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need District officials did not know about the requirement to request reimbursement only for actual unmet need, and they thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Restricted purpose ? per-location and per-user limitations District officials did not know they needed to maintain documentation showing the District only provided one device per student. Furthermore, the District?s asset tracking system could not provide reports on historical activity. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose ? unmet need Because the District did not have documentation supporting whether it provided eligible equipment to students with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students? actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District?s expenditures are allowable, we are questioning all unsupported costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Restricted purpose ? per-location and per-user limitations Because the District did not maintain documentation, it cannot demonstrate compliance with the FCC?s restrictions. Additionally, we cannot determine whether the District only provided one device or connection per user and location. Recommendation We recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should: ? Request reimbursement only for eligible equipment and services provided to students and staff with unmet need, and maintain documentation demonstrating compliance ? Monitor to confirm it provides no more than one device per student and employee, and no more than one broadband connection per location, in compliance with the ECF Program?s requirements District?s Response Vancouver Public Schools (VPS) was awarded federal grant funding, administered through Universal Services Administrative Company (USAC) on behalf of the Federal Communications Commission (FCC) in order to procure laptop computers to meet student instructional needs during the COVID 19 pandemic. Given the urgency of addressing the evolving student needs through the pandemic, USAC did their best to mobilize an application and funding system as quickly as possible. VPS engaged a consultant specializing in previous USAC-administered FCC funding ventures to navigate the rushed application and reimbursement processes. This audit finding was triggered by VPS? failure to confirm the actual final needs prior to seeking reimbursement for the 12,403 devices for which VPS was approved to purchase. Although VPS understands the State Auditor?s Office (SAO) is bound to audit to this final, FCC-published standard of need, it is unequivocally absurd to think that any district close to the size of VPS would be able to specifically establish and verify levels of need for over 12,000 students. This is particularly absurd when you consider the laptop order had to be placed late in the Spring of 2022 in order to have the devices ready to serve whatever student needs may be the following September. This meant that FCC standards would have required VPS to anticipate the instructional needs in all secondary grades and content areas in an evolving pandemic and compare those standards individually to every one of the students that may or may not have registered to start the school year at VPS in September. The absurdity of this federal expectation is confirmed when looking at the number of school districts that were issued the exact same audit finding after attempting to utilize this federal funding to meet their students? and community?s needs for equitably-available, flexible instructional tools. My understanding is that every Washington school district except perhaps two or three that were able to qualify for an exclusion to this student-specific need assessment has been issued this audit finding. Again, we appreciate that this was not apparently a standard for which SAO could apply a reasonability test. Rather they were bound to evaluate all school districts to this impractical funding criteria. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the grant requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. 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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.