RENTON SCHOOL DISTRICT 403Local Government

2025-002 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: GT-03188, GT-03331, GT-03681, GT-03776, GT-03993, GT-04029, GT-04089, GT-04368, GT-04378 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background 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 the 2024-25 school year, the District spent $4,820,735 in Title I program funds. Federal regulations require recipients to establish, document and maintain effectiveNinternal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The District is responsible for ensuring it supports all payroll costs it charges to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed time sheet. Time-and-effort documentation must also be signed and dated after employees complete the work. Description of Condition The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and OSPI require. 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 federal time-and-effort certification requirements but overlooked the requirements in some cases and did not ensure to retain timeand- effort documentation. Effect of Condition Using a statistical sample, we found the District did not obtain adequate time-andeffort documentation for three out of 28 employees and substitutes (10.7%) tested whose payroll costs totaling $101,812 was charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to supportMcosts charged to the program. During the audit, the District obtained and provided the signed time-and-effort records to support the payroll costs it charged to the program; therefore, we are not questioning these costs. Recommendation We recommend the District implement and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed and dated timeand- effort documentation timely. District’s Response The District has revised and strengthened its internal control procedures related to time-and-effort documentation for salaries and benefits charged to the Title I program. Corrective actions were implemented to improve the identification, monitoring, collection, and retention of required certifications and personnel activity documentation in accordance with federal and OSPI requirements. To address the conditions identified, the District implemented the following: 1. Revised procedures to identify all employees and substitutes requiring semiannual certifications or personnel activity reporting, to include substitutes and subsequent corrections, at the beginning of each reporting cycle. 2. Augmentation of the centralized tracking process to monitor issuance, collection, review, and retention of required time-and-effort documentation. 3. Enhancement of formal certification follow-up procedures, including automated reminders, documented follow-up communications, and escalation procedures for outstanding certifications prior to reporting period closeout. 4. Additional training provided to applicable administrators, payroll personnel, and program staff regarding federal time-and-effort requirements, documentation standards, and retention expectations. 5. Implementation of periodic internal compliance reviews to verify supporting documentation is maintained consistently and in accordance with federal and state requirements. These corrective actions are intended to strengthen internal controls over payroll expenditures charged to federal programs and ensure timely compliance with federal and OSPI time-and-effort documentation requirements going forward. Auditor’s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the corrective action taken 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.

The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 – Education Stabilization Fund Federal Grantor Name: U .S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: O f f i c e of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, COVID-19, 84.425D-120541, COVID-19, 84.425D-140550, COVID-19, 84.425D-143115, COVID-19, 84.425D-144548, COVID-19, 84.425U-137130, COVID-19, 84.425U-138182, COVID-19, 84.425U-140667, COVID-19, 84.425W-459028, COVID-19, 84.425W-459594, Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2023, the District spent $19,090,777 of its ESF awards. This included $9,419,225 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), $9,590,729 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U) and $80,823 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP HCY) subprogram (84.425W). Federal regulations require award 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. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractor and its subcontractor to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition During the 2022–2023 school year, the District paid $5,642,979 to contractors for heating, ventilation and air conditioning upgrades to improve air quality and circulation to prevent the spread of COVID-19 in 11 school buildings. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not collect weekly certified payroll reports from the contractors and subcontractors to confirm they paid laborers proper prevailing wages. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District does not normally use federal funds on public works projects. District employees said they reviewed the Washington State Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. As a result, the District did not obtain weekly certified payroll reports from contractors and subcontractors when using federal funds for construction projects. Effect of Condition Without adequate internal controls to ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Federal regulations require the District to collect certified payroll reports from 11 contractors and 31 subcontractors during the audit period. We tested three of the contractors and six subcontractors, and found the District did not obtain any of the 196 weekly certified payroll reports. The District subsequently collected all weekly certified payroll reports. Recommendation We recommend the District establish internal controls to ensure compliance with federal prevailing wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. District’s Response The Renton School District acknowledges the finding that the district has not complied with obtaining weekly certified payroll reports from contractors and subcontractors when using federal funds for construction projects in a manner consistent with federal requirements. We understand that while our current process of reviewing the Washington State Department of Labor and Industries (L&I) website for payroll reports meets state requirements, it does not accurately fulfill federal requirements. We appreciate your patience as we work to rectify this misalignment of processes. To address this issue, we are implementing the following corrective actions: • Training: We will provide comprehensive training to our employees on federal requirements for public works projects funded by federal money. This will ensure that our staff is fully aware of the differences between state and federal requirements. • Process Revision: We will revise our internal process to include the collection of weekly certified payroll reports directly from contractors and subcontractors when federal funds are used. This will ensure we meet both state and federal compliance expectations. • Documentation: We will maintain proper documentation of these payroll reports in accordance with Federal and State document retention laws. The district is committed to ensuring full compliance with all state and federal requirements. We are confident that these actions will address the audit finding effectively. Auditor’s Remarks We appreciate the District’s commitment to resolving the issue. We will review the condition 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 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports.

2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, equipment, 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: $474,486 Prior Year Audit Finding: N/A 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 $474,486 in ECF Program funds to purchase 526 laptops and 1,591 mobile hotspots 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 may only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing). Equipment The Federal Communications Commission (FCC) requires ECF Program recipients to maintain inventories of the devices and services they have purchased with program funds. The FCC also requires the inventories to include specific elements, such as the type of equipment or service provided, equipment make/model and serial number, name of the students or employees provided the equipment or service, dates they used the equipment or service, and more. Restricted purpose – unmet need When submitting applications to the FCC, schools only had to provide an estimate of their students’ and staff’s unmet need. However, at the time of 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 mobile hotspot per student or school employee with unmet need, and no more than one fixed broadband connection per location, such as a student’s or employee’s residence. Description of Condition Allowable activities and costs 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 documented the determination of actual unmet need and only requested reimbursement for eligible equipment provided to students. Specifically, the District purchased laptops and mobile hotspots based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $474,486. However, the District did not maintain documentation showing it provided each laptop and mobile hotspot paid with program funds to a student with unmet need. Equipment Although the District maintains asset inventories, our audit found its internal controls were ineffective for ensuring it identified and tracked specific equipment charged to the ECF Program, and it could not demonstrate compliance with federal requirements. Restricted purpose – per-location and per-user limitations Our audit found the District’s internal controls were ineffective for demonstrating it complied with the FCC’s per-user limitations. Specifically, the District did not maintain documentation showing it monitored or had a tracking process in place to ensure it only provided one device per user. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Allowable activities and costs District officials did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Equipment Staff did not know the District needed to identify specific pieces of equipment as federally funded at the time it requested reimbursement. Restricted purpose – per-location and per-user limitations Staff did not know the District needed to maintain documentation showing it only provided one device per student. Effect of Condition and Questioned Costs Allowable activities and costs 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. Equipment Without maintaining proper asset inventory records that identify equipment paid with ECF Program funds, as the FCC requires, the District cannot demonstrate compliance with this requirement, and cannot effectively track the use of federally funded equipment. Restricted purpose – per-location and per-user limitations Because the District did not maintain adequate documentation, it cannot demonstrate compliance with the FCC’s restrictions. Additionally, we cannot determine whether the District only provided one device per user. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further 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 provided to students with unmet need, and maintain documentation demonstrating compliance • Identify federally funded equipment and maintain inventories that include all required elements to track the use of equipment paid with ECF Program funds • Monitor to confirm it provides no more than one device per student and employee in compliance with the ECF Program’s requirements District’s Response The Renton School District does not fully concur with the audit finding in the context and scenario in which it is given. The purpose of the ECF funds was to address an unprecedented global health crisis where the nation’s president and the Washington State Governor recognized “state of emergency” conditions during the audit period. This was recognized by the Renton School District where the governing board also adopted a resolution directing the superintendent to meet the needs of our students by any reasonable means necessary. This context is important to understand how it impacted the district’s operations and its ability to serve our students during a time of uncertainty and evolving conditions. The noted conditions of the finding are addressed individually below: Allowable activities and costs The district was aware of the requirement to request reimbursement for actual unmet need, which was addressed in the Federal Communications Commission Order FCC-CIRC21-963-043021 (question 77) to state “We think that schools are in the best position to determine whether their students and staff have devices and broadband services sufficient to meet their remote learning needs, and we recognize that they are making such decisions during a pandemic. We, therefore, will not impose any specific metrics or process requirement on those determinations.” The evolving educational challenges during the unprecedented crisis illustrated to the district that the burden of using personal devices was inequitable and unsupportable. Our students need equitable access to their education, including consistent, secure access to district licensed curriculum & supplemental materials, secure remote learning environments, required student web filtering in compliance with the Children’s Internet Protection Act, and technology support from the district during their learning. Student needs were met by issuing equipment directly to district students and families who presented themselves as having needs. The funding provided via ECF to support students’ needs during the pandemic was essential and necessary. The district did not take lightly our obligation to follow the established rules and guidance available to us. This finding is a strict enforcement of grant language around “unmet needs” from a narrow position where the district would only measure the need of students at a single moment in time. We believe we have fulfilled the responsibility of determining the unmet needs of our students. We therefore do not believe that any of the $474,486 in costs is in question. Equipment The district actively tracks technology equipment using asset tagging and serial number tracking to manage equipment usage. Again, exceptions were noted due the complexities of the pandemic and shifting to a remote environment during that time. The process to which the district asset tracks is in place and functioning, but the district acknowledges that continued diligence is needed to ensure that all assets are in full compliance with federal grant requirements. Restricted purpose – per-location and per-user limitations The district experiences equipment thief, damage, and loss in its normal course of supplying thousands of pieces of equipment yearly. The district does not limit the student’s access to technology, and therefore their education, based on these circumstances. These circumstances can create an environment where multiple devices are issued so a student may equitably access their education. ECF funds were used to fund a supplemental portion of the district’s equipment fleet and local funds supported the rest. Student access is met as it is needed, and devices are issued, then recovered, and issued again. The basic premise of this system conflicts with the narrow applicability of the grant language. In conclusion The convergence of the pandemic and the application of remote learning dramatically impacted normal operations of the district. Given the circumstances, district staff performed admirably and consistently with the values of our community. 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 award 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.

2021-001 The District?s internal controls were inadequate for ensuring compliance with federal time-and-effort documentation requirements. "See Schedule of Findings and Questioned Costs for chart/table" Background The objective of the Education Stabilization Fund (ESF) program is to prevent, prepare for, and respond to the COVID-19 pandemic. During fiscal year 2021, the District spent $9,757,450 in federal funding under its ESF awards. This included $2,324,275 from the Elementary and Secondary School Emergency Relief (ESSER) Fund subprogram award funded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (ESSER I), $6,404,340 from the ESSER subprogram award funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act (ESSER II), and $1,028,835 from the ESSER subprogram award funded by the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III). Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Office of Superintendent of Public Instruction (OSPI) require the District to have adequate time-and-effort documentation to support all payroll costs charged to its ESSER I award. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or monthly personnel activity reports, such as a detailed timesheet. Description of Condition The CARES Act allowed the District to claim lost revenue for unrealized enrollment against the ESSER I award for the 2020-2021 school year. When charging payroll costs to the ESSER I award, the District must ensure it has time-and-effort documentation to support the costs. The District?s internal controls were ineffective for ensuring compliance with requirements over time-and-effort reporting. Our audit found the District did not obtain semiannual certifications or monthly personal activity reports for 91 employees whose payroll costs were charged to the ESSER I subaward (84.425D-120158). 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 Staff did not know the District was required to have time-and-effort documentation to support payroll costs claimed under the ESSER I award. While the District did have a method for tracking allowable payroll costs charged to the program, staff did not obtain the required time-and-effort documentation timely to show compliance with award requirements. Effect of Condition and Questioned Costs The District?s noncompliance with program requirements can jeopardize future federal funding, and it can be grounds for returning federal funds to the grantor, if requested. By not keeping proper time-and-effort records, the District cannot demonstrate compliance with OSPI?s documentation requirements to support payroll costs charged to the federal program. Further, the District cannot assure federal grantors that $2,069,408 in payroll costs charged to the ESSER I subaward (84.425D-120158) were accurate or valid. During the audit, the District obtained and provided the signed time-and-effort documentation to support payroll costs it had charged to the program; therefore, we are not questioning costs. Recommendation We recommend the District design and follow controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal program. District?s Response Disagree. The Renton School District acts as a sub-recipient of federal funding for the ESSER I subaward (84.425D-120158). The Office of Superintendent of Public Instruction (OSPI) acts as the administrator/rule making agency for schools districts in Washington. In this instance, the Renton School District followed OSPI?s guidance on calculating revenue loss and submitting documentation for payment. The contents and accuracy of our submissions were accepted by OSPI as sufficient documentation for this purpose. OSPI failed to promulgate rule making or provide other guidance requiring the identification of specific corresponding expenditures for purposes of the grant. This finding is not an accurate reflection of the District?s system of internal controls as it relates to time and effort requirements for federal awards. Our system for identifying and maintaining time and effort requirements is intact and operating correctly for all other federal awards. At no time during Washington?s administration of ESSER I subaward (84.425D-120158) did OSPI require specific expenditures to be identified for revenue loss as a condition for payment/reimbursement of the grant. It was only when the audit began that specific expenditures were identified as a requirement by the audit team for direct attribution to revenue loss items. In response to the audit request, the District identified a list of qualifying expenditures that would require time and effort documents. Time and effort documentation was then provided at the same time the expenditures were recognized as qualifying expenditures to meet the request of the audit. Unfortunately, the audit team did not accept that time and effort documentation. This finding is based on an assumption of normal business operations and accounting practices. It does not take into account that the period in question involved a period of national emergency (e.g., the initial response to the COVID-19 pandemic) when the grant itself was intended to enable ?continuity of operations.? Nor does it take into account various executive orders authorizing the suspension of normal business practices to ensure the continuation of critical services to the public. To be clear, the District identified the expenditures in question when they occurred. However, the District provided time and effort documentation at the point when the expenditures were recognized as directly applicable the federal grant. The expenditures involved were only a small subset of a myriad of expenditures the District incurred to ensure ?continuity of operations? consistent with the grantor?s guidelines. Finally, it is important to note that there was no loss of federal funds involved nor any inappropriate use of federal funds. The District is committed to meeting all regulatory guidelines pertinent to the award of federal grants. Auditor?s Remarks We appreciate the District?s assistance provided throughout our audit. As noted above, OSPI established that time and effort reporting remained a continued expectation for the utilization of ESSER I federal funds. Our audit is conducted in accordance with the criteria established by the federal government and the pass-through agency, in this case OSPI. We reaffirm our finding and will review the condition 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. Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, established requirements for documenting time and effort.

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