Audit 35377

Federal Program Information: Funding Agency: U.S. Department of Education Title: Education Stabilization Fund Federal Assistance Listing: 84.425D Passthrough: State of New Mexico Public Education Department Award Year: 2021 Criteria: New Mexico Public Education Department award letter requirements for capital expenditures and construction projects for funds allocated to Fund 24308 on page 3. You must receive written prior approval for purchase of equipment with a unit cost equal to or in excess of $5,000. Failure to do so will result in denial of reimbursement for the cost of such an item. Attach an approved Federal Grant Equipment Form to your BAR if you will include budget in object code 57331 ?Fixed Assets (more than $5,000).? Attach the approved form to your application if you submit an initial 2021-22 OBMS budget. The approved Federal Grant Equipment Form must also be uploaded with your request for reimbursement (RFR) containing such expenses. You must receive written prior approval for construction projects. Approval is documented in the SharePoint application and on a Federal Grant Equipment Form. Any approved construction projects must comply with applicable Uniform Guidance requirements, as well as the Department?s regulations regarding construction. See 34 CFR ? 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, and LEA that uses ESSER funds for construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the construction contracts that all contractors or subcontractors must pay wages that are not less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) Condition: During our testing of single audit disbursements and with regards to requirements of the Compliance Supplement for equipment/real property management and special tests and provisions, we identified that the District had not obtained the Federal Grant Equipment Form for the project. The District had included the project in its grant application which was approved by the New Mexico Public Education Department, but it had not obtained and completed the proper form. Additionally, the District did not meet the requirement for the Davis-Bacon prevailing wage requirement. The District had not included the prevailing wage requirements in the contract nor did the District obtain the weekly certified payroll reports from the contractor. However, the contractor, Honeywell, is aware of the requirements of all state contracts requiring prevailing wages on all such contracts at school districts. Questioned Costs: None. The State of New Mexico Public Education Department (PED) had approved the grant application of the District prior to obtaining the contract for updating the security, fire, and ventilation systems in the schools. As such, it had approved the construction project via approval of the grant application. Additionally, the PED has been approving the requests for reimbursement which include details of the expenditures which indicate the PED is still approving the ongoing costs of these upgrades with these funds which are appropriate use of the funds. Cause: District personnel had obtained approval for their grant application from the PED and did not pay attention to the bullet points in the award letter requiring them to complete the federal grant equipment form as well. Additionally, the District did not pay attention to the bullet point in the award letter requiring them to include language in the contract with regards to prevailing wages, nor was the District aware of the requirements of the Uniform Guidance requirements of obtaining weekly payroll certifications. Effect: The District is not in compliance with Federal and PED regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. The fact that the grant was approved by the PED and that the contractor is aware of prevailing wage requirements on construction projects for school districts does not relieve the District of following Federal, State, and grant requirements. Auditor?s Recommendation: We recommend that the District establish a policy and implement internal control procedures regarding the review of all grant award letters to ensure that the District is aware of all requirements that are imposed on the District with accepting the funds. We also recommend that the District work with the contractor to obtain weekly wage certifications going back from the beginning of the project forward to be able to demonstrate that the appropriate wages were paid during the full time-frame of the project. Responsible Official?s Plan: ? Specific corrective action plan for finding: The District will establish a policy and implement internal control procedures regarding the review of all grant award letters to ensure that the District is aware of all requirements that are imposed on the District with accepting the funds. The District will work with the contractor to obtain weekly wage certifications going back from the beginning of the project forward to be able to demonstrate that the appropriate wages are paid during the full time-frame of the project ? Timeline for completion of corrective action plan: February 1, 2023 ? Employee position(s) responsible for meeting the timeline: Maintenance Supervisor/Business Manager

Federal Program Information: Funding Agency: U.S. Department of Education Title: Education Stabilization Fund Federal Assistance Listing: 84.425D Passthrough: State of New Mexico Public Education Department Award Year: 2021 Criteria: New Mexico Public Education Department award letter requirements for capital expenditures and construction projects for funds allocated to Fund 24308 on page 3. You must receive written prior approval for purchase of equipment with a unit cost equal to or in excess of $5,000. Failure to do so will result in denial of reimbursement for the cost of such an item. Attach an approved Federal Grant Equipment Form to your BAR if you will include budget in object code 57331 ?Fixed Assets (more than $5,000).? Attach the approved form to your application if you submit an initial 2021-22 OBMS budget. The approved Federal Grant Equipment Form must also be uploaded with your request for reimbursement (RFR) containing such expenses. You must receive written prior approval for construction projects. Approval is documented in the SharePoint application and on a Federal Grant Equipment Form. Any approved construction projects must comply with applicable Uniform Guidance requirements, as well as the Department?s regulations regarding construction. See 34 CFR ? 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, and LEA that uses ESSER funds for construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the construction contracts that all contractors or subcontractors must pay wages that are not less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) Condition: During our testing of single audit disbursements and with regards to requirements of the Compliance Supplement for equipment/real property management and special tests and provisions, we identified that the District had not obtained the Federal Grant Equipment Form for the project. The District had included the project in its grant application which was approved by the New Mexico Public Education Department, but it had not obtained and completed the proper form. Additionally, the District did not meet the requirement for the Davis-Bacon prevailing wage requirement. The District had not included the prevailing wage requirements in the contract nor did the District obtain the weekly certified payroll reports from the contractor. However, the contractor, Honeywell, is aware of the requirements of all state contracts requiring prevailing wages on all such contracts at school districts. Questioned Costs: None. The State of New Mexico Public Education Department (PED) had approved the grant application of the District prior to obtaining the contract for updating the security, fire, and ventilation systems in the schools. As such, it had approved the construction project via approval of the grant application. Additionally, the PED has been approving the requests for reimbursement which include details of the expenditures which indicate the PED is still approving the ongoing costs of these upgrades with these funds which are appropriate use of the funds. Cause: District personnel had obtained approval for their grant application from the PED and did not pay attention to the bullet points in the award letter requiring them to complete the federal grant equipment form as well. Additionally, the District did not pay attention to the bullet point in the award letter requiring them to include language in the contract with regards to prevailing wages, nor was the District aware of the requirements of the Uniform Guidance requirements of obtaining weekly payroll certifications. Effect: The District is not in compliance with Federal and PED regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. The fact that the grant was approved by the PED and that the contractor is aware of prevailing wage requirements on construction projects for school districts does not relieve the District of following Federal, State, and grant requirements. Auditor?s Recommendation: We recommend that the District establish a policy and implement internal control procedures regarding the review of all grant award letters to ensure that the District is aware of all requirements that are imposed on the District with accepting the funds. We also recommend that the District work with the contractor to obtain weekly wage certifications going back from the beginning of the project forward to be able to demonstrate that the appropriate wages were paid during the full time-frame of the project. Responsible Official?s Plan: ? Specific corrective action plan for finding: The District will establish a policy and implement internal control procedures regarding the review of all grant award letters to ensure that the District is aware of all requirements that are imposed on the District with accepting the funds. The District will work with the contractor to obtain weekly wage certifications going back from the beginning of the project forward to be able to demonstrate that the appropriate wages are paid during the full time-frame of the project ? Timeline for completion of corrective action plan: February 1, 2023 ? Employee position(s) responsible for meeting the timeline: Maintenance Supervisor/Business Manager