Audit 350149

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Highline School District No. 401 September 1, 2022 through August 31, 2023 2023-001 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: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-0144521 COVID-19, 84.425W-0459544 COVID-19, 84.425W-0459014 COVID-19, 84.425U-0140657 COVID-19, 84.425U-0145305 COVID-19, 84.425U-0140072 COVID-19, 84.425U-0140021 COVID-19, 84.425U-0140020 COVID-19, 84.425D-N/A COVID-19, 84.425D-0120523 COVID-19, 84.425D-0138183 COVID-19, 84.425D-0137204 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition During the 2022–23 school year, the District spent $5,160,728 for payments to one contractor to update the heating, ventilation and air conditioning (HVAC) system in four schools to improve air quality and circulation to prevent the spread of COVID-19. Our audit found that 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 contractor and subcontractors to confirm it 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 District staff were aware of state prevailing wage requirements. However, District staff did not collect certified payroll reports because they mistakenly believed they were only required to review the certified payroll in the Washington State Department of Labor and Industries (L&I) website to confirm the contractors and subcontractors submitted weekly certified payroll reports. However, they did not know that this process, while sufficient for state requirements, did not meet federal requirements. 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 be liable for paying any additional wages if the contractor and its subcontractors did not pay prevailing wage rates to laborers working on the contract. During the audit period, the District was required to collect certified payroll reports from one contractor and 24 subcontractors. The audit selected the prime contractor and one subcontractor for testing. We found that the District did not obtain any of the weekly certified payroll reports for the contractor and subcontractor we tested. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal prevailing wage rate requirements. This should include obtaining the federal certified payroll reports, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response The District stewards public resources carefully and takes pride in developing and maintaining strong internal controls. The District made adjustments in response to this finding to ensure compliance for Federally funded construction projects. Going forward, the District will also ensure staff are appropriately trained on these requirements. The context of this finding is that the District had established internal controls to check for compliance with state prevailing wage requirements. Until 2021-22, the District very rarely utilized Federal funds for public works contracts, and thus the unique and complex nature of these Federal resources and the requirements around their use were unanticipated. When made aware of this oversight during the 2021-22 audit, the District took steps to review certified payroll documents from the beginning of the project to the current period, and to verify that contractors were in compliance with Federal prevailing wage rules. However, by the time the District took those steps, several months of the next fiscal year (2022-23) had already passed, resulting in the District being out of compliance that year, as well. Many other districts throughout the state received near identical prevailing wage findings from the State Auditor’s Office in the 2021-22 year. However, only a handful of districts, Highline among them, received a second prevailing wage finding in 2022-23, despite every district that was issued an earlier finding facing the same catch-22 conditions described above. Another important point to consider is that the underlying intent of this regulation is to ensure workers are not paid less than Federal prevailing wage. The state of Washington’s prevailing wages are significantly higher than Federal, and the District is in compliance with state prevailing wage regulations. Though the District does not refute being out of compliance in this narrow area, the District is certain that workers on these Federal publics works projects were paid well above Federal prevailing wage. The District respects and values the work of the State Auditor’s Office in conducting their annual audit. Given that numerous districts across the state were provided with one-time federal ESSER dollars to mitigate the impacts of a global pandemic, and that Federal funds are rarely used by districts in Washington to support public works projects, all districts and the State Auditor’s Office would have benefited from clearer guidance and consideration from Federal granting authorities. 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. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).