REYNOLDS SCHOOL DISTRICTLocal Government

Finding 2025-001: United States Department of Agriculture, Child Nutrition Cluster, Assistance Listing 10.555,10.559,10.553, 10.582. Passed through by Oregon Department of Education. Compliance requirement: Methods of procurement. Criteria: Uniform Guidance requires non‑Federal entities to maintain written procurement procedures that comply with applicable federal regulations, including methods of procurement, competition requirements, conflict‑of‑interest standards, and documentation expectations. These written procedures must be consistently followed and updated to reflect current federal requirements. Condition and Context: The District did not maintain written procurement policies as required by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Existing policy reflects state law and does not include the procurement standards outlined in 2 CFR 200.317–200.327. Cause: The District’s procurement policies are designed to be consistent with state law. Effect: Without written federal procurement policies, the District is at increased risk of noncompliance with federal procurement standards. Recommendation: The District should develop, adopt, and maintain written procurement policies that fully align with Uniform Guidance requirements. Policies should be reviewed at least annually and updated as federal regulations change. Views of Responsible Officials: The District concurs with the finding that procurement policies did not fully comply with Uniform Guidance. Policies were based on state law, and staff turnover and limited federal procurement training contributed to the deficiency. All purchases were fair and reasonable; no waste or abuse occurred. Procurement policies have been updated to align with 2 CFR 200 standards, all procurement staff have been trained on Uniform Guidance requirements, and standardized procurement checklists and templates have been implemented to ensure documentation of cost analysis and vendor selection.

United States Department of Education, Student Support and Academic Enrichment, Assistance Listing 84.424. Passed through by Oregon Department of Education. Compliance requirement: Level of effort, supplement, not supplant. Criteria: Federal dollars must be used to supplement state and local funds, and cannot be used to replace local funds that a recipient would normally spend on the same activity. Condition: During the course of our audit, we identified that middle school sports were funded using state and local (general fund) resources in the year ended June 30, 2024, but funded using Student Support and Academic Enrichment funding during the year ended June 30, 2025. Per the Department of Education cross-cutting section, this condition is presumed supplanting but can be rebutted. The District provided sufficient support to rebut the presumption of supplanting, however we were unable to identify controls in place that would prevent supplanting in this program. Context: In its budget narrative provided to the passthrough agency, Oregon Department of Education, the District identified that middle schools sports had been funded using ESSER funds in the fiscal year ended June 30, 2024. This was not the case, as middle school sports had been charged to the general fund. Cause: We were unable to identify a specific cause as the grant manager in charge of this program for the year ended June 30, 2025 was no longer employed by the District. Effect: Absent controls over supplanting using federal program funding, the District is at risk of using federal funding for activities that enhance or increase services, rather than simply freeing up local funds for other uses. Recommendation: The District should implement a pre-award and annual budget review that requires written documentation showing that state or local funds have not been used for activities proposed to be funded with federal dollars in the upcoming year. If presumed supplanting is anticipated to occur, the rebuttal should be documented in writing with the grant and budget documents to support the control and compliance for this federal program requirement. Views of Responsible Officials: The District concurs with the finding that controls to prevent supplanting were insufficient. The presumption of supplanting was rebutted, and procedures were not formalized. No federal funds were used to supplant state or local resources. The District has implemented pre-award and annual review procedures, including required documentation of state and local fund use. Staff have been trained on supplanting rules and documentation requirements, and written records supporting rebuttals are maintained in grant and budget files for audit verification.

SA-2023-001 – Significant Deficiency Federal Award Program – 84.425 Education Stabilization Fund (ESSER) Criteria - ESSER requires that for minor remodeling, renovation or construction contracts that are over $2,000and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: The District did not get certified payrolls for many contractors within the ESSER grant. Questioned Costs: None. Cause: The reason for this is that the ESSER requirements are new and many entities did not know the limit for certified payrolls was lowered to $2,000. Effect: The effect is it is possible that some contractors did not pay prevailing wage.Recommendation: We recommend that the District put in place a system where invoices for contractors are not paid until they receive certified payrolls, or some sort of system that ensures compliance. Management’s Response: The District agrees with the finding and is putting a procedure in place to ensure certified payrolls are received on contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating)of public buildings or public works. Invoices for contractors will not be paid until certified payrolls are received.

2022-001 ? Significant Deficiency ? Approvals of Reimbursement Requests Federal Program: CNC (AL#10.553, 10.555, 10.559, and 10.582) Condition: There was no evidence that a review of reimbursement requests was done by an independent individual who was not involved in the preparation process. Criteria: A second individual not involved in the reimbursement request preparation process should review the request prior to it being submitted to the granting agency. Effect: Without a secondary review, the chances are increased that a reimbursement request could be submitted for the wrong amount or at the wrong time per the grant agreement. Cause: The District did not establish a process for implementing a secondary review. Recommendations: We recommend the District establish and document procedures to make sure a second individual independent of the reimbursement request preparation process reviews each request for accuracy and timing before the request is submitted, and provides a signature or initials and date of review on the documentation. Management?s Response: The District has implemented an approval process subject to administrator approval for submission of reimbursement claims. The Grant Program Supervisor will prepare reimbursement claim documents and the Director of Finance will review and submit the reimbursement claims. A paper trail will be implemented; a copy of the email will be sufficient.