Audit 398824

34 C.F.R. § 299.5(a) states, [a local educational agency (LEA)] receiving funds under an applicable program listed in paragraph (b) of this section may receive its full allocation of funds only if the [state educational agency (SEA)] finds that either the combined fiscal effort per student or the aggregate expenditures of State and local funds with respect to the provision of free public education in the LEA for the preceding fiscal year was not less than 90 percent of the combined fiscal effort per student or the aggregate expenditures for the second preceding fiscal year. 34 C.F.R. § 299.5(b) states, in part, this subpart is applicable to Title I, Part A. 34 C.F.R. § 299.5(d) states, in part, in determining an LEA's compliance with paragraph (a) of this section, the SEA shall consider only the LEA's expenditures from State and local funds for free public education. These include expenditures for administration, instruction, attendance and health services, pupil transportation services, operation and maintenance of plant, fixed charges, and net expenditures to cover deficits for food services and student body activities. The SEA may not consider any expenditures for community services, capital outlay, debt service, supplemental expenses made as a result of a Presidentially declared disaster, or any expenditures made from funds provided by the Federal Government. In Ohio, the Ohio Department of Education and Workforce (ODEW) prepares the calculation of combined fiscal effort per student using information provided by the LEA. ODEW’s ESEA Maintenance of Effort Handbook states, in part, the [ODEW] Office of Federal Programs (OFP) uses the education management information system (EMIS) Final Student Reporting Period S for both Traditional and Community Schools (student FTE) and EMIS Period H (fiscal) data reported by LEAs for the Maintenance of Effort (MOE) determination. For the fiscal data, LEAs either extract the required data for the appropriate period from their accounting system, and the information is automatically loaded into EMIS or they manually upload a file into the EMIS system to complete the Period H report. EMIS data submitted by LEAs is pulled into the Maintenance of Effort (MOE) module which calculates MOE using two methods – per pupil expenditures and aggregate expenditures. Fiscal year 2025 allocations are affected by the MOE calculation performed in fiscal year 2024 which compares fiscal year 2024 data to fiscal year 2023 data. Pursuant to Ohio Rev. Code § 3301.0714, schools must enter cost accounting data into EMIS. Due to a lack of controls over accurate year-end reporting to ODEW relating to Maintenance of Effort, the fiscal year 2023 expenditure data uploaded to the MOE module did not agree to expenditures per the School District’s accounting system, because the School District incorrectly uploaded fiscal year 2022 expenditure data for fiscal year 2023. This resulted in an overall variance of $243,572 when comparing the total expenditures for all funds on the Period H report to the total expenditures for all funds from the underlying USAS accounting system. Variances between functions ranged from $650,549 to ($303,515). As a result, ODEW used inaccurate expenditure information to calculate MOE. We have modified our opinion on AL # 84.010 Title I Grants to Local Education Agencies, with respect to this matter. Failure to submit accurate expenditure information to ODEW could result in a failure to maintain fiscal effort in which case ODEW would be required to reduce the School District’s Title I allocation. We recommend the School District implement controls to ensure accurate reporting of the information required for Maintenance of Effort to ODEW.