Audit 413764

Federal Program Information: Type of Finding: Compliance Areas: Funding Agency: Title: FAL Number: Passthrough: Award Period: Significant Deficiency, Other Non-compliance Cash Management, Allowable Costs and Cost Principles, and Reporting U.S. Department of Education Teacher Quality Partnership Grants 84.336S N/A 10/01/2024 – 09/30/2025 Criteria: Cash Management: Although 2 CFR 200.305(b)(1) permits the Foundation to draw down funds in advance, the entity utilizes a cost reimbursement approach for Federal funding. This practice ensures that funds are drawn only for immediate cash needs. 2 CFR 200.305(B)(1) Federal payment. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or projects costs and the proportionate share of any allowable indirect costs. Cost Principals and Reporting: The application of cost principles is governed by 2 CFR 200.400; specifically (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. Condition: During our review of cash management procedures, we identified the following issue:  The Foundation drew down funds for the Teacher Quality Partnership Grants (TQP) prior to expenditures or when expenditures were not yet anticipated to be actually disbursed. o TQP Effective Educators grant - $771,222 o TQP Southwest grant - $572,672 Questioned Costs: None. The Foundation used all the funds drawn down according to the grant directives as it closed out the grant funds. All expenditures were in compliance with the stated objectives. Cause: During the beginning of the second Donald Trump administration, President Trump issued an executive order on January 20, 2025 that established the Department of Government Efficiency (DOGE). Individuals within the Department of Education who oversaw this program encouraged the Foundation to draw down the remaining funds on both grants as they believed the grants were going to be shut down soon by DOGE, but they wanted those entities that were already committed to staffing and programs with schools to be able to complete the school year. The Foundation did draw down those funds in order to complete the commitments to the schools. Effect: The Foundation was not in compliance with 2 CFR 200.305(b)(1) and 2 CFR 200.400(b) by drawing down funds prior to actual expenditures. Auditor’s Recommendation: We recommend that the Foundation not draw down funds prior to incurring actual expenditures or until expenditures are expected in the very near future. Grant program personnel do not have the authority to waive 2 CFR requirements or grant requirements, even in unusual situations like the DOGE occurrence. Responsible official’s view:  Specific corrective action plan for the finding: Three Rivers Education Foundation’s staff will ensure that all drawdowns follow appropriate timeframes as required. TREF has already implemented this long-standing practice. The action described in this “Significant Deficiency” came about because of extenuating circumstances and advice provided from the federal government. We were assisted with disbursements by the Federal Program Officer for the TQP programs.  Timeline for completion of corrective action plan: Immediately and ongoing  Employee positions(s) responsible for meeting the timeline: Executive Director and Chief Financial Officer