Audit 311436

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.

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.

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.

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.

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.

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.

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.

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.