All federal and state grant expenditures of Marshfield Clinic Health System, Inc. and subsidiaries (the System) are included in the scope of the audit. The audit was performed in accordance with the provisions of the OMB Uniform Guidance Compliance Supplement (Compliance Supplement) and the State Single Audit Guidance (SSAG) as issued by the State of Wisconsin Department of Administration and State Single Audit Committee. Compliance testing of the requirements, as described in the Compliance Supplement, was performed for major programs selected for testing. The Schedule of Expenditures of Federal and State Awards (Schedule) includes federal and state grants to the System that had activity during the year ended December 31, 2024. Federal and state expenditures include grants, contracts, and similar agreements entered into directly between the System and agencies and departments of the federal government and all awards to the System by other governmental entities and not-for-profit organizations pursuant to federal grants, contracts, and similar agreements. The Schedule includes the following expenditure information: • Major and nonmajor federal programs • Primary federal funding agency • Direct award agreements between the System and federal granting agencies • Pass-through federal award agreements between the System and nonfederal granting agencies • Direct award agreements between the System and state granting agencies • Pass-through state award agreements between the System and nonstate granting agencies • Cost reimbursed research contracts Expenditures consist of direct costs and facilities and administrative costs. Direct costs are those that can be easily identified with an individual federally sponsored project. The salary of a principal investigator of a sponsored research project and the materials consumed by the project are examples of direct costs. Unlike direct costs, facilities and administrative costs cannot be easily identified with an individual sponsored project. Facilities and administrative costs are the costs of services and resources that benefit many sponsored projects as well as nonsponsored projects and activities. Expenses incurred for administration, library, building maintenance, and building and equipment depreciation are examples of facilities and administrative costs. There were no noncash expenditures or federally provided insurance related to the System’s federal or state award programs during the year ended December 31, 2024.
The Schedule has been prepared on the accrual basis of accounting. The Schedule includes federal and state grants, and contracts entered into by the System that had activity during the year ended December 31, 2024 and should be read in conjunction with the System’s consolidated financial statements. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the State Single Audit Guidance as issued by the State of Wisconsin Department of Administration and State Single Audit Committee. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The System and federal agencies use a facilities and administrative cost rate to charge facilities and administrative costs to individual sponsored projects. The rate is the result of a number of complex cost allocation procedures that the System uses to allocate its facilities and administrative costs to both sponsored and nonsponsored activities. The costs allocated to sponsored projects are divided by the direct costs of sponsored projects to arrive at a rate. The U.S. Department of Health and Human Services (DHHS) must approve the rate before the System can use it to charge facilities and administrative costs to federally sponsored projects. Under Uniform Guidance and SSAG, tests of compliance with laws and regulations related to specific program requirements are required for each federal and state award program that is considered a major program for the System. Because the Schedule presents only a selected portion of the operations of the System, it is not intended to and does not present the financial position, changes in net assets or cash flows of the System.
The System has elected not to use the 10% de minimis indirect cost rate allowed under Uniform Guidance and SSAG.
There were no audits of the System’s federal or state award programs performed by other organizations or grantor agencies during the year ended December 31, 2024.
All federal and state financial assistance programs are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agencies for costs disallowed under the terms of the programs. Management believes disallowances, if any, will not be material.
A subsidiary with a loan under the Community Facilities Loans and Grant program was acquired by the System on February 1, 2022. Expenditures relating to this program are reported in the Schedule as the balance as of January 1, 2024, plus any advances made from January 1, 2024 through December 31, 2024. No advances were made during 2024. The outstanding balance at December 31, 2024 was approximately $15,200,000. The loan agreements require the System to maintain certain reserve accounts. The Debt Service Reserve Account is required to be funded with an initial funding of $500,000 and annual contributions of $200,000 until the balance reaches $1,500,000. At December 31, 2024, the balance was $1,100,000. There is also a requirement to establish a Repair, Replacement and Improvement reserve in the amount of $20,000 per year. At December 31, 2024, the balance was $80,000. These accounts are included in assets whose use is limited or restricted on the consolidated balance sheet of the System’s consolidated financial statements. The loan agreements also require the System satisfy certain measures of financial performance starting with the year ended December 31, 2022. Scheduled principal and interest payments on this long-term debt are as follows: Long-Term Debt Year Ending December 31, Principal Interest Total 2025 $ 555,722 $ 322,740 $878,462 2026 567,531 310,931 878,462 2027 579,591 298,871 878,462 2028 591,908 286,554 878,462 2029 604,486 273,976 878,462 Thereafter 12,300,762 2,450,672 14,751,434 Total $ 15,200,000 $ 3,943,744 $ 19,143,744
The categorization of expenditures by program included in the schedule of expenditures of federal and state awards is based upon the grant documents. Changes in the categorization of expenditures occur based upon revisions to the Assistance Listing, which is issued in June and December of each year. The schedule of expenditures of federal awards for the year ended December 31, 2024 reflects Assistance Listing changes through May 2024.
The System’s settlement of DHS cost reimbursement awards presented for the year ended December 31, 2024 are summarized below. Certain awards summarized below may not agree to the amounts in the Schedule based on the difference of timing of reporting to DHS and the recognition of expenses on the Schedule. The indirect costs represent facilities and administrative costs allocated to the program based on a predetermined indirect cost rate negotiated with the U.S. Department of Health and Human Services. Grant Enrollment, Application and Reporting (GEARS) System Award Title Award Amount Award Period Period of award within audit period Expenditures reported to GEARS for payment Salary and wages Other expenses Indirect costs Total allowable costs 533187 State Opioid Response $ 439,057 9/30/23-9/29/24 1/1/24-9/29/24 $ 418,328 $ 53,789 $ 294,818 $ 69,721 $ 418,328 533526 State Opioid Response $ 815,530 9/30/24-9/29/25 9/30/24-12/31/24 2,942 2,452 - 490 2,942 533516 Community Based Opioid Prevention-AWY $ 203,883 7/1/24-6/30/25 7/1/24-12/31/24 3,460 2,884 - 576 3,460 533016 Alliance WI Youth $ 241,838 7/1/23-6/30/24 1/1/24-6/30/24 132,433 69,336 41,071 22,026 132,433 553016 Alliance WI Youth $ 241,838 7/1/24-6/30/25 7/1/24-12/31/24 85,604 67,667 3,669 14,268 85,604 155795 DHS APE Tech Partners $ 125,000 7/1/23-6/30/24 1/1/24-6/30/24 55,168 1 55,167 - 55,168 128010 Congenital Disorders Metabolic $ 37,546 7/1/23-6/30/24 1/1/24-6/30/24 15,649 13,041 - 2,608 15,649 128010 Congenital Disorders Metabolic $ 37,546 7/1/24-6/30/25 7/1/24-12/31/24 12,237 10,197 - 2,040 12,237 128011 Congenital Disorders Special Dietary $ 136,725 7/1/23-6/30/24 1/1/24-6/30/24 68,280 - 56,899 11,381 68,280 128011 Congenital Disorders Special Dietary $ 123,000 7/1/24-6/30/25 7/1/24-12/31/24 29,220 - 24,350 4,870 29,220 $ 823,321 $ 219,367 $ 475,974 $ 127,980 $ 823,321