Audit 408397

Reference Number: 2025-001 Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Numbers: 84.027 and 84.173 Pass-Through Agency: Delaware County Intermediate Unit Award Period: July 1, 2024 through September 30, 2026 Compliance Requirement: Level of Effort Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria: The Local Educational Agency (LEA) is required to budget at least the level of state and local expenditures necessary to satisfy the Individuals with Disabilities Education Act (IDEA) maintenance of effort requirements for the fiscal year for which federal funds are requested. Condition: The District did not budget sufficient state and local expenditures in the special programs function to meet the applicable maintenance of effort requirement when establishing its budgeted allocations, as the planned per‑pupil amounts were below required thresholds and were reduced from the prior year. However, actual expenditures incurred during the year ultimately met or exceeded the required per‑pupil levels. Question Costs: None. Cause: The District intentionally lowered its budget in the special programs function due to staff turnover resulting in lower costs to provide equivalent services. Effect: The District did not comply with the IDEA maintenance of effort requirements. As a result, the District may be subject to corrective action or other remedies as determined by the Pennsylvania Department of Education and the U.S. Department of Education. Recommendation: The District should strengthen its budget development and review procedures to ensure maintenance of effort requirements are evaluated and documented at the time of the grant allocation. This includes implementing review controls to verify that budgeted per‑pupil amounts meet required thresholds prior to approval. Alternatively, we recommend that the District attempt to obtain a waiver with the grantor agency if anticipated budgeted expenditures/expenses will not meet the maintenance of effort compliance requirements. View of Responsible Officials: The District made a one-time adjustment to the special programs budget during the fiscal year and ultimately met all maintenance of effort expenditure compliance requirements. Because the issue was limited to the initial budgeting process and did not impact actual compliance with spending requirements, management believes this was an isolated occurrence that is not expected to recur.