2 CFR 200.430(a) states that compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits addressed in § 200.431. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with the recipient's or subrecipient's laws, rules, or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g) of this section, when applicable. In addition, District Policy #6116 - Time and Effort Reporting states, in part, that Section 200.430 of the Code of Federal Regulations requires certification of effort to document salary expenses charged directly or indirectly against Federally-sponsored projects. This process is intended to verify that compensation for employment services, including salaries and wages, is allocable and properly expended, and that any variances from the budget are reconciled. Compensation for employment services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits, which are addressed in 2 C.F.R. 200.431 Compensation-fringe benefits. Costs of compensation are allowable to the extent that they satisfy the specific requirements of these regulations, and that the total compensation for individual employees: A. is reasonable for the services rendered, conforms to the District’s established written policy, and is consistently applied to both Federal and non-Federal activities; and B. follows an appointment made in accordance with the District’s written policies and meets the requirements of Federal statute, where applicable. Semi-annual certifications and time-and-effort documentation are used to support salary amounts charged to a federal program. Semi-annual certifications are allowed when an employee’s compensation is funded by only one federal grant. The School District did not complete semi-annual certifications or time-and-effort documentation for 3 employees tested that were charged to the Special Education Cluster AL #84.027/84.173 federal program for the period of July 2024 through June 2025. Failure to complete time and effort certifications after the time worked could lead to questioned costs being issued in future audits as well as possible reductions in future federal funding. The School District should establish and implement procedures to verify that all employees charging salaries and benefits to federal grants and completing semi-annual certifications, sign/certify the time spent on the grant subsequent to the time period worked.
2 CFR 180.305 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. Furthermore, Ohio Rev. Code § 3313.843 and 3313.845 allow traditional schools to contract with Educational Service Centers (ESCs) to provide services as outlined in the agreement between the two parties. Ohio Rev. Code §3313.843(C) requires these agreements to be filed with the Ohio Department of Education and Workforce (DEW) by the first day of July of the school year for which the agreement is in effect. In addition, District Policy # 6325, Procurement - Federal Grants/Funds, states, in part, that A. Informal procurement methods for small purchases 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 a Federal award does not exceed the simplified acquisition threshold or a lower threshold established by the State. The informal procurement methods include: 1. Micro-Purchases - Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $$10,000. To the extent practicable, the District should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be made without soliciting competitive quotations if the Superintendent considers the price to be reasonable based on research, experience, purchase history, or other relevant information, and maintains documents to support its conclusion. The District shall maintain evidence of this reasonableness in the records of all purchases made by this method. 2. Small Purchases - Small purchases include the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold of $250,000. Small purchase procedures require that price or rate quotations shall be obtained from at least two (2) qualified sources unless fewer qualified sources are available. Districts are responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures which must not exceed the threshold established in the Federal Acquisition Regulations ("FAR"). When applicable, a lower simplified acquisition threshold used by the District must be authorized or not prohibited under State, local, or tribal laws or regulations. B. Formal Procurement Methods - When the value of the procurement for property or services under a Federal award exceeds the simplified acquisition threshold or a lower threshold established by the State, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement method can be used in accordance with the standards on competition in 200.319 or non-competitive procurement. The formal methods of procurement are: 1. Sealed Bids - Sealed, competitive bids shall be obtained when the purchase of, and contract for, single items of supplies, materials, or equipment which amounts to more than $250,000 and when the Board determines to build, repair, enlarge, improve, or demolish a school building/facility, the cost of which will exceed the amount to be determined and published by the Ohio Director of Commerce. 2. Noncompetitive Purchases Through Educational Service Centers (ESCs) - Under State law, the Board may enter into a contract with an educational service center ("ESC") that authorizes the ESC to make purchases for supplies, materials, equipment, and services or the delivery of services on the District’s behalf. These contracts promote operational efficiency and cost savings, and further enhance the educational experience for our students. Purchases made through such contracts are exempt from competitive bidding. The District may apply for approval from the Department of Education and Workforce ("DEW") to use a noncompetitive purchasing method to procure personnel-based services from an ESC only when the following criteria are met: a. the ESC posts a list of all services it provides, including costs of these services, on its website; b. the ESC has been designated as "high performing'' by the DEW; and c. DEW as the pass-through state entity has determined that the ESC was substantially in compliance with all audit rules and guidelines during the most recent audit conducted by the Auditor of State. The Treasurer/CFO will submit an application and any required documentation to DEW on the designated form requesting approval for use of a noncompetitive purchasing method for personnel services. Purchases will not be made until the application is approved. Notice of approval will be maintained by the Treasurer/CFO. The School District contracted with the Findlay Interpreting Services for Deaf and High Road School of Lima to provide purchased services. These services included expenditures of $100,395 and $14,339, respectively, which were paid for out of the Special Education Cluster grants and subject to the Federal procurement laws. Under 2 CFR §200.320, the School District should have followed the simplified acquisition procedures and obtained price quotes from qualified sources. It was also noted for Findlay Interpreting Services for Deaf that the School District did not check SAM.gov, did not collect a certificate, or the contract between the School District and the above-named vendor did not contain a suspension / debarment clause. Also, during the fiscal year, the School District contracted with Allen County ESC, Midwest Regional ESC, and Montgomery County ESC to provide purchased services. These services included expenditures of $51,744, $40,817, and $30,128 respectively, which were paid for out of the Special Education Cluster and subject to the Federal procurement laws. Under 2 CFR §200.320 the School District should have competitively bid the services needed or obtained the ESC waiver allowed by Ohio law and the School District’s procurement policy. The Ohio Department of Education and Workforce (ODEW) published a form that allows schools to request ODEW authorize a noncompetitive proposal for their ESC Services. This form is available on ODEW’s website and should be completed and maintained by schools moving forward. Failing to have the appropriate controls in place may result in the School District overpaying for service as well as vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the Board should obtain appropriate price quotes and non-competitive proposals and 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.