Audit 23125

Section III: Federal Award Findings and Questioned Costs Material Weakness/Material Non-compliance 2022-001 Finding Internal Controls Surrounding Payroll Expenditures Program: COVID-19 ? Elementary & Secondary School Emergency Relief II (ESSER) Program Assistance Listing Number: 84.425D Compliance Requirement: Allowable Cost Repeat Finding: None Criteria: According to the U.S. Department of Education under the American Rescue Plan (ARP) Act of 2021, Public Law 117-2, enacted on March 11, 2021 ESSER funds may be used for other activities that are necessary to maintain operation of a continuity of and services, including continuing to employ existing or hiring new LEA and school staff. Specifically, it does not identify hazard payments, bonuses, or premium payments to employees as eligible use of funds. Article 4 Section 96 of the Mississippi State Constitution prohibits extra compensation (bonuses) to any public employee. According to the AG opinion no. 2020-00144 ?hazard pay? must be ?(1) contracted for between the parties or with the employee prior to the date when services are to be performed; (2) determined in accordance with objective standards of measurement; and (3) earned by personal services performed by the employees.? Condition: During our testing of payroll expenditures, it was noted that all employees received a one time $1,700 payment at the end of the fiscal year titled ?hazard pay? to recognize efforts of employees to support students? health, safety, and academic gains during the COVID pandemic. Cause: The payment did not comply with the criteria referenced. The payment was not properly board approved prior to services performed and the employees did not perform additional services or jobs to earn the payment that could be recognized and measured. Effect: This could cause payroll expenditures to be misspent according to the ESSER II federal grant and Article 4 Section 96 of the Mississippi State Constitution. Questioned Cost: $398,951 ? estimated based on 218 employees pulled from the MDES quarterly report plus applicable payroll related taxes. Recommendation: The district should comply with the ESSER II federal grant based on the eligible use of funds outlined and Article 4 Section 96 of the Mississippi State Constitution. The district should not provide hazard payments to staff with federal funds. Additional payments should be board approved prior to services performed and employees should perform additional services that can be measured to earn the payment. Response: Please refer to the Auditee?s Corrective Action Plan beginning on page 73

Section III: Federal Award Findings and Questioned Costs Material Weakness/Material Non-compliance 2022-001 Finding Internal Controls Surrounding Payroll Expenditures Program: COVID-19 ? Elementary & Secondary School Emergency Relief II (ESSER) Program Assistance Listing Number: 84.425D Compliance Requirement: Allowable Cost Repeat Finding: None Criteria: According to the U.S. Department of Education under the American Rescue Plan (ARP) Act of 2021, Public Law 117-2, enacted on March 11, 2021 ESSER funds may be used for other activities that are necessary to maintain operation of a continuity of and services, including continuing to employ existing or hiring new LEA and school staff. Specifically, it does not identify hazard payments, bonuses, or premium payments to employees as eligible use of funds. Article 4 Section 96 of the Mississippi State Constitution prohibits extra compensation (bonuses) to any public employee. According to the AG opinion no. 2020-00144 ?hazard pay? must be ?(1) contracted for between the parties or with the employee prior to the date when services are to be performed; (2) determined in accordance with objective standards of measurement; and (3) earned by personal services performed by the employees.? Condition: During our testing of payroll expenditures, it was noted that all employees received a one time $1,700 payment at the end of the fiscal year titled ?hazard pay? to recognize efforts of employees to support students? health, safety, and academic gains during the COVID pandemic. Cause: The payment did not comply with the criteria referenced. The payment was not properly board approved prior to services performed and the employees did not perform additional services or jobs to earn the payment that could be recognized and measured. Effect: This could cause payroll expenditures to be misspent according to the ESSER II federal grant and Article 4 Section 96 of the Mississippi State Constitution. Questioned Cost: $398,951 ? estimated based on 218 employees pulled from the MDES quarterly report plus applicable payroll related taxes. Recommendation: The district should comply with the ESSER II federal grant based on the eligible use of funds outlined and Article 4 Section 96 of the Mississippi State Constitution. The district should not provide hazard payments to staff with federal funds. Additional payments should be board approved prior to services performed and employees should perform additional services that can be measured to earn the payment. Response: Please refer to the Auditee?s Corrective Action Plan beginning on page 73