SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Cheney School District No. 360 September 1, 2024 through August 31, 2025 2025-001 The District did not have adequate internal controls and did not comply with federal Title I assessment system security and eligibility requirements. Assistance Listing Number and Title: 84.010, Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: AD-9221, AD-10006, AD-10146 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and live in areas with high concentrations of children from low-income families. During the 2024-25 school year, the District spent $1,579,285 in Title I program funds. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Assessment system security States, in consultation with school districts, must establish and maintain an assessment system that is valid, reliable and consistent with relevant professional and technical standards. States must have formal, well-documented policies and procedures to maintain test security and ensure districts implement them for all standardized tests. The Office of the Superintendent of Public Instruction (OSPI) provides templates for all districts to document their Test Security and Building Plans for each assessment they administer. OSPI also provides detailed guidance and manuals on test security. Eligibility Title I requires participating districts to allocate more funds to schools with higher poverty percentages. Districts must annually rank schools from highest to lowest poverty concentrations based on the total number of students from low-income families attending the school or residing in the area. Schools with the highest poverty concentrations must be allocated more Title I funding based on per-pupil expenditure. The rankings are included in the Title I application, and districts must maintain documentation supporting their rankings. Additionally, districts must serve schools with poverty rates more than 75% before serving any schools with poverty rates less than 75% or provide comparable supplemental funds from other state or local sources that are spent on programs that meet the intent and purpose of Title I. Funds expended from such other sources must equal or exceed the amount that would be provided under Title I. Description of Condition Assessment system security The District’s internal controls were inadequate for ensuring compliance with assessment system security requirements. For each school building the District prepares separate Test Security and Building Plans for the Washington Comprehensive Assessments Program standardized tests and for the fall and spring World-Class Instructional Design and Assessment (WIDA) Screener. We reviewed five school buildings and found the District did not prepare five out of 15 Test Security and Building Plans, as OSPI requires. Eligibility The District’s internal controls were inadequate for ensuring compliance with eligibility requirements. Specifically, the District incorrectly ranked and allocated Title I funding to schools within the same grade span based on the highest low-income meal count rather than the highest poverty concentration, as required. Additionally, the District’s internal controls were ineffective for ensuring it allocated Title I funds, or comparable supplemental funds, to two schools with poverty rates more than 75% as federal regulations and OSPI require. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Assessment system security The District experienced a transition in the assessment staff responsible for preparing the Test Security and Building Plans. District staff are aware of the requirement to have written Test Security and Building Plans for each assessment but overlooked preparing them for the fall WIDA Screener performed at each elementary school. Eligibility Staff responsible for ranking and allocating Title I funds misunderstood guidance and ranked schools based on highest free and reduced meal counts, instead of the percentage of students receiving free and reduced meals, as required. Staff were also not aware they must serve schools with poverty rates more than 75% and only allocated Title I funds to the District’s elementary schools, which had poverty rates less than 75%. Additionally, because OSPI approved the District’s Title I application, staff thought the District met Title I requirements for ranking and allocating funds. Effect of Condition Assessment system security Without documented Test Security and Building Plans, the District cannot demonstrate it implemented and complied with OSPI’s assessment system security requirements for the standardized tests it administered at each elementary school in the 2024-25 school year. Eligibility Because the District allocated Title I funds incorrectly, the amount of services provided at schools with higher percentages of low-income students might have been unfairly limited. The District did not comply with eligibility requirements and did not correctly allocate Title I funds from the highest to lowest poverty concentrations for three out of five elementary school buildings, as federal regulations require. Additionally, the District cannot demonstrate it complied with program requirements to allocate Title I or comparable funds to two schools with poverty rates more than 75%, as required. Recommendation Assessment system security We recommend the District improve its internal controls and follow its established policies and procedures to comply with OSPI’s assessment system security requirements. Specifically, the District should establish written Test Security and Building Plans for all standardized tests it will administer. Eligibility We recommend the District strengthen internal controls and provide additional guidance to staff responsible for ranking and allocating Title I funds to ensure they understand program requirements. Additionally, the District should review and confirm it accurately ranks and allocates Title I funds to school buildings based on highest poverty concentrations and ensure it serves all schools with more than 75% poverty rate with Title I funds, or comparable funding sources, as required. District’s Response Assessment system security The District acknowledges that a lack of documented Test Security and Building Plans for the 2024-2025, due to turn over in staff and responsibilities for the documentations in school year caused us to be unable to demonstrate compliance. The District is committed to strengthening internal controls and ensuring full compliance with all federal program requirements moving forward. Eligibility The District acknowledges that schools were ranked using total low-income student counts rather than poverty percentages, which resulted in incorrect ranking and allocation methodology within grade spans. During the application process where ranking and allocation methods are utilized, the Districts plan to continue to focus on the elementary grade spans were approved by OSPI. The District has already begun corrective actions to address these concerns and the corrective action is fully outlined in the corrective action plan. Additionally, the District is committed to strengthening internal controls and ensuring full compliance with all federal program requirements moving forward. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards. Title 34 CFR, Part 200, Title 1 – Improving the Academic Achievement of the Disadvantaged, Subpart A – Improving Basic Programs Operated by the Local Educational Agencies, Section 78 – Allocation of funds to school attendance areas and schools. 20 U.S Code 6313(a)(3), Elementary and Secondary Education Act (ESEA) section 1113(a)(3), Eligible school attendance areas, Ranking order, describes requirements to annually ranked, without regard to grade span, eligible school attendance areas based on low-income families exceeding 75% and to serve those school attendance areas in rank order. 20 U.S Code 6321(c), Elementary and Secondary Education Act (ESEA) section 1118(c), Fiscal requirements, Comparability of services, describes requirements for providing comparable services to schools that are not receiving Title I funds. OSPI Title I, Part A Fiscal Requirements and Guidance provides detailed guidance for ranking and allocating Title I funds.