All federal and state grant expenditures of Marshfield Clinic Health System, Inc. and subsidiaries (the System) are included in the scope of the audit except those awarded to Family Health Center of Marshfield, Inc., an entity sponsored by the System. 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 all requirements, as described in the Compliance Supplement, was performed for the grant programs noted below. The Schedule of Expenditures of Federal and State Awards (Schedule) includes all federal and state grants to the System that had activity during the year ended December 31, 2023, except those awarded to Family Health Center of Marshfield, Inc. A separate audit in accordance with OMB Uniform Guidance and SSAG is completed for Family Health Center of Marshfield, Inc. Federal and state expenditures include all 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 summarizes expenditures by the following: • 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 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, 2023.
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, 2023.
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, 2023, plus any advances made from January 1, 2023 through December 31, 2023. No advances were made during 2023. The outstanding balance at December 31, 2023 was approximately $15,659,000. 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, 2023, the balance was $900,000. There is also a requirement to establish a Repair, Replacement and Improvement reserve in the amount of $20,000 per year. At December 31, 2023, the balance was $60,000. 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: Year Ending December 31, Principal, Interest, Total 2024 $544,159 $334,300 $878,462 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 Thereafter 12,820,089 2,724,648 15,544,737 Total $15,659,000 $4,278,047 $19,937,047
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, 2023 reflects Assistance Listing changes through May 2023.
The System’s settlement of DHS cost reimbursement awards presented for the year ended December 31, 2023 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 Alliance WI PREV SOR 2 $ 439,057 9/30/22-9/29/23 1/1/23-9/29/23 $ 402,550 $ 48,410 $ 287,048 $ 67,092 $ 402,550 533016 Alliance WI YTH $ 337,838 7/1/21-6/30/22 N/A (1,950) - (1,650) (300) (1,950) 533016 Alliance WI YTH $ 231,838 7/1/22-6/30/23 1/1/23-6/30/23 131,743 73,213 36,671 21,859 131,743 533016 Alliance WI YTH $ 241,838 7/1/23-6/30/24 7/1/23-12/31/23 89,951 63,765 11,207 14,979 89,951 155795 Allied Health Professionals $ 125,000 7/1/23-6/30/24 7/1/23-12/31/23 69,832 - 69,832 - 69,832 128010 Congenital Disorders Program $ 37,546 7/1/21-6/30/22 N/A (110) (92) - (18) (110) 128010 Congenital Disorders Program $ 37,546 7/1/22-6/30/23 1/1/23-6/30/23 15,090 12,575 - 2,515 15,090 128010 Congenital Disorders Program $ 37,546 7/1/23-6/30/24 7/1/23-12/31/23 15,537 12,948 - 2,589 15,537 128011 Congenital Disorders PROD $ 136,725 7/1/22-6/30/23 1/1/23-6/30/23 55,521 - 46,267 9,254 55,521 128011 Congenital Disorders Special D $ 136,725 7/1/23-6/30/24 7/1/23-12/31/23 46,794 - 38,995 7,799 46,794 157010 WWWP GPR EDU AND MJA $ 86,447 7/1/22-6/30/23 1/1/23-6/30/23 27,498 27,498 - - 27,498 157120 WWWP-NBCCEDP $ 11,370 7/1/22-6/30/23 1/1/23-6/30/23 848 521 327 - 848 $ 853,304 $ 238,838 $ 488,697 $ 125,769 $ 853,304
The schedule of expenditures of federal and state awards has been restated to include additional federal expenditures of $4,801,975 related to the research and development cluster major program. These expenditures were inadvertently omitted from the previously issued schedule of expenditures of federal and state awards. The total research and development cluster federal expenditures as previously reported of $18,938,015 has been restated to $23,739,990. Total expenditures of federal awards of $56,622,289 as previously reported has been restated to $61,424,264.