Audit 42725

U.S. Department of Education Program Name: Education Stabilization Fund AL No. 84.425 MATERIAL WEAKNESS 2022-002 SPECIAL TESTS AND PROVISIONS Criteria: Per the 2022 OMB Compliance Supplement, ?All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326).? Condition: During our testing of the District?s Education Stabilization Fund, we noted the District had a contract for flooring installation that was subject to the prevailing wage rate requirements under 20 USC 1232b; however, the contractor did not pay prevailing wages for the work performed. Questioned Costs: None Context: We noted that the District?s flooring contractor did not pay prevailing wages as required by the Department of Labor for federally-financed contracts. Cause: The District understood the threshold for compliance with the prevailing wage requirements to be more a federally-financed contract exceeding $75,000 rather than federally-financed contracts exceeding $2,000. Effect: The District did not comply with the prevailing wage requirements for the Education Stabilization Fund. Recommendation: We recommend that the District acquire understanding of requirements related to expenditure of federal funds on construction and remodeling projects. Response: The District was unaware of the prevailing wage requirements for federally financed contracts in excess of $2,000. The District was under the impression that the prevailing wage requirements only applied to federally financed contracts exceeding $75,000. The District has pursued education on the federal requirements regarding prevailing wage, and will make steps moving forward to ensure compliance with the federal standards relating to prevailing wage of federally financed contracts.

U.S. Department of Education Program Name: Education Stabilization Fund AL No. 84.425 MATERIAL WEAKNESS 2022-002 SPECIAL TESTS AND PROVISIONS Criteria: Per the 2022 OMB Compliance Supplement, ?All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326).? Condition: During our testing of the District?s Education Stabilization Fund, we noted the District had a contract for flooring installation that was subject to the prevailing wage rate requirements under 20 USC 1232b; however, the contractor did not pay prevailing wages for the work performed. Questioned Costs: None Context: We noted that the District?s flooring contractor did not pay prevailing wages as required by the Department of Labor for federally-financed contracts. Cause: The District understood the threshold for compliance with the prevailing wage requirements to be more a federally-financed contract exceeding $75,000 rather than federally-financed contracts exceeding $2,000. Effect: The District did not comply with the prevailing wage requirements for the Education Stabilization Fund. Recommendation: We recommend that the District acquire understanding of requirements related to expenditure of federal funds on construction and remodeling projects. Response: The District was unaware of the prevailing wage requirements for federally financed contracts in excess of $2,000. The District was under the impression that the prevailing wage requirements only applied to federally financed contracts exceeding $75,000. The District has pursued education on the federal requirements regarding prevailing wage, and will make steps moving forward to ensure compliance with the federal standards relating to prevailing wage of federally financed contracts.