Audit 395150

Special Tests and Provisions – Annual Report Card, High School Graduation Rate Finding Number: 2025-001 Assistance Listing Number and Title: AL # 84.010 Title I Grants to Local Educational Agencies Federal Award Identification Number / Year: 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Special Tests and Provisions Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 20 USC 6311(h)(2)(C) states the State educational agency shall ensure that each local educational agency collects appropriate data and includes in the local educational agency’s annual report the information described in paragraph (1)(C), disaggregated in the same manner as required under such paragraph. 20 USC 6311(h)(1)(C)(iii)(II) provides, each State report card shall include high school graduation rates, including four-year adjusted cohort graduation rates and, at the State’s discretion, extended-year adjusted cohort graduation rates for all students and disaggregated by each of the subgroups of students, as defined in 20 USC 6311(c)(2), homeless status, and status as a child in foster care. 20 USC 7801(25)(C) states, in part, the term “transferred out” means that a student, as confirmed by the high school or local educational agency has transferred to (I) another school from which the student is expected to receive a regular high school diploma; or (II) another educational program from which the student is expected to receive a regular high school diploma or an alternate diploma. The confirmation of a student’s transfer to another school or educational program requires documentation of such transfer from the receiving school or program in which the student enrolled. A student who was enrolled in a high school, but for whom there is no confirmation of the student having transferred out, shall remain in the adjusted cohort. Due to deficiencies in internal policies and procedures, the District erroneously withdrew four out of seven students (57%) from their FY25 Graduation Cohort Report without the required documentation. Failure to have the appropriate controls in place may result in reporting students incorrectly on the cohort reports. The District should maintain the appropriate documentation to support withdrawals and also to review the graduation cohort reports for errors.

Procurement and Suspension and Debarment Finding Number: 2025-002 Assistance Listing Number and Title: AL # 84.027 Special Education Cluster Federal Award Identification Number / Year: 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Procurement and Suspension and Debarment Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.320(a) through 2 CFR § 200.320(c) which describes three types of procurement methods: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. • Informal procurement methods for small purchases. These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in § 200.1. Recipients and subrecipients may also establish a lower threshold. • Formal procurement methods. Formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. • Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. Additionally, District Policy: PROCUREMENT - FEDERAL GRANTS/FUNDS, describes both formal and informal procurement methods, including noncompetitive procurement. The District did not have the proper internal controls in place to identify and select the proper procurement method for two out of two procurements (100%) entered into by the District using Special Education Cluster (IDEA) funds. The District erroneously identified two procurements totaling $24,000 as single source, a type of noncompetitive procurement. Given the facts and circumstances surrounding these procurements, small purchase procurement method should have been utilized. Due to the deficient internal control structure, the appropriate procurement method was not utilized for two procurements in the Special Education Cluster (IDEA) program during fiscal year 2025. Failing to have the appropriate controls in place may result in noncompliance with federal requirements. Prior to entering into covered transactions, the District should follow its policies and procedures to ensure the correct procurement method is used.

Procurement and Suspension and Debarment Finding Number: 2025-003 Assistance Listing Number and Title: AL # 84.027 Special Education Cluster Federal Award Identification Number / Year: 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Procurement and Suspension and Debarment Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR 180.305 which states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220. All nonprocurement transactions as defined in 2 CFR § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. Additionally, District Policy: PROCUREMENT - FEDERAL GRANTS/FUNDS, states that for contracts over $25,000, the District shall confirm that the vendor is not debarred or suspended by either checking the Federal government's System for Award Management, which maintains a list of such debarred or suspended vendors at www.sam.gov ; collecting a certification from the vendor; or adding a clause or condition to the covered transaction with that vendor. The District did not have the proper internal controls in place to verify that all entities, with whom the District had entered into covered transactions, had not been suspended or debarred. During testing of the Special Education Cluster, we noted the District entered into one of four contracts with vendors for more than $25,000, and there was no evidence the District checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verifications were not completed for two covered transactions during Fiscal Year 2025. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to entering into covered transactions, the District should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.