Redondo Beach Unified School District

FINDING #2023-001: EDUCATION STABILZATION FUNDS – INDIRECT COSTS (50000) Federal Programs Affected: Program Name: Expanded Learning Opportunities (ELO) Grant ESSER II State Reserve Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Program Name: Expanded Learning Opportunities (ELO) Grant GEER II Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Program Name: Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve Learning Loss Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: The United States Department of Education has approved a delegation agreement with the California Department of Education (CDE) that authorizes the CDE to establish indirect cost rates for California local education agencies (LEAs). The CDE has been delegated authority to calculate and approve indirect cost rates annually for LEAs. For the Education Stabilization Fund (ESF) Program, Education Code Section 38101(c) limits school district indirect costs to the lesser of the District’s individual CDE approved indirect cost rate or the statewide average indirect rate. For ESF programs included under the Expanded Learning Opportunities (ELO) Grant and ESSER III: Learning Loss, indirect costs are not allowable. Condition: During our compliance procedures related to activities allowed or unallowed, we noted that the District charged unallowable indirect costs totaling $43,747. Cause: The condition identified appears to be due to a correction with the indirect cost requirements for each of the affected federal grants posted on the CDE website that the district was not aware of. Effect: The District charged unallowed expenditures to the program. Context: The condition was identified through recalculation of the indirect costs charged to the federal programs. Questioned Costs: $43,747, the amount of indirect costs charged to the program. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District implements a review process for indirect costs, which should include review of relevant grant agreements and relevant federal guidance. Views of Responsible Officials: See Corrective Action Plan on page 81.

It was determined at the end of the 2022-2023 school year that $43,747 of indirect costs were charged to the Education Stabilization Fund in error. Prior to the start of the 2022-2023 school year, the CDE posted a correction in their guidelines for some funding sources regarding indirect costs. We will be correcting the action as updated in our books and will implement an annual review process for funding sources to ensure that we are able to implement all guidelines.