2025-001 The District did not have adequate internal controls and did not comply with time-and-effort 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 Pass-through Award/Contract Number: GT-03443, GT-03994, GT-03780, GT-04566 Known Questioned Cost Amount: $23,589 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 academic standards and reside in areas with high concentrations of children from low-income families. During the 2024-25 school year, the District spent $2,620,964 in federal funds from Title I. 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. Time-and-Effort The District is responsible for ensuring it supports all payroll costs it charges to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report (PAR), such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after employees complete the work. 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. Description of Condition Time and Effort The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation. Internal controls also did not ensure the District only charged allowable activities to the Title I program, as federal regulations and Office of the Superintendent of Public Instruction (OSPI) require. Eligibility The District’s internal controls were inadequate for ensuring compliance with eligibility requirements. Although the District’s application properly ranked and allocated funds based on poverty concentrations, the District incorrectly ranked and allocated Title I funding to schools within the same grade span when it allocated Title I funds to schools in its budget. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Time and Effort The District did not fully understand time-and-effort requirements established by OSPI and did not dedicate the necessary time and resources to reviewing time-and-effort documentation to verify it complied with OSPI’s requirements and that only allowable activities were charged to the Title I program. Additionally, the District experienced turnover in key positions responsible for managing the program. Eligibility Finance staff and staff responsible for completing the grant application were not aware of the requirement to consider and preserve the rankings the District had calculated in the grant application when it allocated funds to school buildings in the District’s budget. Additionally, the District experienced turnover in key positions responsible for managing the program. Effect of Condition and Questioned Costs Time and Effort Using a nonstatistical sample, we found 11 out of 32 employees and substitutes (34%) tested whose salaries and benefits totaling $53,166 were not supported by time-and-effort documentation. During the audit, the District provided alternative documentation for all but three employees whose payroll costs totaling $8,874. In the same sample, we also identified seven employees whose salaries and benefits totaling $1,041 were charged to the program for time spent working on unallowable activities. Based on the projection of our sample, we identified an additional $26,647 in estimated overpayments Outside of our sample, we separately identified three employees whose salaries and benefits totaling $61,044 were not supported by time-and-effort documentation. During the audit, the District provided alternative documentation to support these costs. We also identified three employees whose salaries and benefits totaling $13,674 were charged to the program for time spent working on unallowable activities. Without adequate and timely time-and-effort documentation, the District cannot demonstrate compliance with OSPI’s documentation requirements to support costs charged to federal programs. Further, the District cannot assure federal grantors that payroll costs it charged to the program were accurate and valid. We are questioning costs totaling $23,589. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. 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 four out of five elementary school buildings and two out of three middle school buildings, as federal regulations require. Recommendation Time and Effort We recommend the District design, implement and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining time-and-effort documentation timely, and that it only charges allowable activities to the program. Eligibility We recommend the District strengthen internal controls to comply with eligibility requirements and provide additional guidance to staff responsible for ranking and allocating Title I funds to ensure they understand program requirements. District’s Response We agree with the auditor's findings and will implement the corrective action plan. 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 regular 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 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction to Bulletin 039-24, Time and Effort (T&E) Reporting establishes requirements for documenting time-and-effort, including fixed schedule systems. OSPI Title I, Part A Fiscal Requirements and Guidance provides detailed guidance for ranking and allocating Title I funds. 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. 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.