Lake Washington School District No. 414

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: ECF222118678, ECF222116693, ECF202104494 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $3,511,093 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 $3,511,093 in ECF Program funds to purchase laptops and Wi-Fi hotspots for students and school staff. 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 eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used 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. Description of Condition Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment and services 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 equipment and services provided to students and school staff. The District purchased laptops and Wi-Fi hotspots and requested reimbursement for purchases totaling $3,511,093. However, the District did not maintain sufficient documentation showing it provided each laptop and Wi- Fi hotspot paid with program funds to a student or employee with unmet need. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need Although employees in the District?s finance and information technology departments knew the program was federally funded, they did not adequately document unmet need for staff and student devices for which the district requested reimbursement. Further, they did not know about the requirement to request reimbursement only for staff and students with a documented unmet need. Management and staff thought determining the need for additional laptops and Wi-Fi hotspots to support remote learning based on inventory needs was sufficient to satisfy unmet need. No additional procedures were performed to ensure the District only requested reimbursement for specific students who had unmet need. 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 and services to students and school staff 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 and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students? and staff?s 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. 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 and services provided to students and staff with unmet need and maintain documentation demonstrating compliance. District?s Response The Lake Washington School District does not concur with the audit finding and the $3.5 million in questioned costs issued by the Washington State Auditor?s office. A component of the ECF funding is to only seek funding for eligible equipment provided to students to engage in remote learning. From the Federal Communications Commission Order FCC-CIRC21-963-043021, question 77. ?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 District was aware of the requirement to request reimbursement for actual unmet need. Based on the FCC guidance we expended all funds for allowable costs, and costs were reasonable and necessary for students and staff with unmet need. Our approved application amount was $3.7 million, and we claimed $3.5 million. We determined the need based on the current student enrollment, the availability of adequate devices in inventory to support remote learning, and the reported needs from a family survey. The educational challenges and complexities during the unprecedented global health crisis uncovered many reasons why district issued devices were the only devices sufficient to appropriately support the new remote form of our required public education for students. These include: consistent access to curriculum and supplemental resources through district licenses; providing access to accessibility tools not available to deploy on personal devices; required student web filtering and threat protection of malicious content; content monitoring for timely intervention and support of students? social and emotional health which was significantly impacted by the pandemic; the ability to securely and automatically authenticate student accounts for Microsoft Teams classrooms; the ability to conduct state required testing not allowed on personal devices; and the ability for technology staff to provide direct technical support through remote access. While Lake Washington School District was attempting to ensure all students and staff had adequate support for remote learning activities amid a global health crisis, the District determined that staff and students needed district devices that were sufficient to consistently facilitate remote education and support, thereby identifying the unmet needs to justify the ECF applications. All devices and equipment were checked out by name and ID through our district inventory system. The district did not claim funding for any devices that were undistributed. The District met all inventory and audit requirements for compliance stated in FCC bulletin/order #21-58. In summary, the funding and assistance to meet student needs during the pandemic was essential and necessary in all respects. The District did not take lightly our obligation to follow the established rules and guidance available to us and acted in good faith in accordance with the provided FTC requirements for ECF funding. Based on the information outlined above, we feel strongly that we have fully complied with and accomplished that obligation. We have accounted for all our devices and have fulfilled the responsibility of determining the unmet needs of our students. 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 requirements for time-and-effort documentation. CFDA Number and Title: 84.027 ? Special Education ? Grants to States 84.173 ? Special Education ? Preschool Grants 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: 307151, 366541, 385466 Questioned Cost Amount: $0 Background The objective of the Special Education program is to ensure all children with disabilities receive special education and related services to meet their needs. The program has specifically designed instruction that addresses the unique needs of an eligible student. During fiscal year 2021, the District spent $6,616,020 in Special Education program funds, which included $3,855,101 for payroll costs. 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 program controls. The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as federal regulations and the Office of Superintendent of Public Instruction (OSPI) require. Depending on the number and types of activities an employee performs, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet. Description of Condition The District?s internal controls were ineffective for ensuring it obtained and signed semiannual and monthly personnel activity reports timely for 24 employees working in the Special Education program for the second half of the 2020-2021 school year. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The District had processes in place to obtain time-and-effort documentation for the program. However, the Special Education Department experienced turnover in a key position responsible for monitoring time-and-effort documentation. As a result, the District did not obtain and sign the June semiannual certification reports and monthly personnel activity reports timely. Effect of Condition and Questioned Costs The District?s noncompliance with grant requirements could jeopardize future federal funding, and it could be required to return federal funds to the grantor. Without proper time-and-effort records, the District cannot ensure grantors that $1,372,573 for payroll costs charged to the program were accurate or valid. 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 establish and follow internal controls to ensure it complies with federal and OSPI requirements for time-and-effort reporting. Specifically, we recommend the District obtain and sign time-and-effort documentation timely for employees charging salaries and benefits to the Special Education program. District?s Response We concur some of the time and effort documents for the second half of the 2020 2021 school year were turned in late. We are implementing additional internal controls to prevent this from happening in the future. 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 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.