Corrective Action Plans

Finding Number: 2023-001 Condition: The Michigan Nutrition Data (MiND) system auto calculates the number of full-paid meals after the district enters the free, reduced and total number of meals. Therefore, if the number of free or reduced meals is typed incorrectly, the difference automatically adds or subtracts to the number of fullpaid meals. While there is review and approval of amounts prior to entering meal counts into the MiND system, the district did not consider that once free and reduced meals are entered into the system, the number of full pay meals auto fills to the number required to match/balance the total meals served. This resulted in the District not identifying that two claims requests undercounted reimbursable meals which shorted the District receiving additional funding of $7,639. Planned Corrective Action: After an in-depth review of the circumstances that led to the incorrect (under count) request for meal reimbursement error, an additional review and approval procedure has been implemented. This will ensure the final meal claims data, including the MiND system auto calculated data reflects the district’s internal meal count data reporting. Contact person responsible for corrective action: John Fitzgerald, Assistant Superintendent for Business & Finance Completion Date: July 31, 2023

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE INCIDENCE OF NONCOMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER – FEDERAL ALN 10.553 AND 10.555 2023-001 Internal Control Over Compliance and Noncompliance With Federal Eligibility Requirements Finding Summary 7 CFR § 245 requires management to establish and maintain effective internal control over compliance with requirements applicable to federal program eligibility requirements. Independent School District No. 885 (the District) did not have sufficient controls in place within its child nutrition cluster federal program to ensure compliance with federal eligibility to accurately update the meal-type eligibility classification for direct-certification students whose eligibility category changed during the year. Corrective Action Plan Actions Planned – The District will review policies and procedures relating to eligibility for its child nutrition cluster federal programs to ensure the eligibility status for all students are appropriately updated in the District’s system as eligibility classification changes occur in accordance with federal program eligibility guidelines. Official Responsible – Kris Crocker, Director of Business Services. Planned Completion Date – June 30, 2024. Disagreement With or Explanation of Finding – The District agrees with this finding. Plan to Monitor – Kris Crocker, Director of Business Services, will assure appropriate internal controls and procedures are updated and in place to ensure compliance for future federal awards expenditures.

Condition: Proper segregation of duties is an important aspect of any control system. Management is responsible for the design, installation and maintenance of an appropriate system of internal control. The limited size of the District's office staff prevents the ideal segregation of functions. The following duties lack adequate segregation of duties: ► The District uses e-signatures to approve purchase orders. Two individuals have access to the e-signatures and have the ability to create new vendors, enter invoices, print checks, record journal entries and record activity on the general ledger. Both individuals also have access to the payroll system.Recommendation: The Board of Education and the Superintendent should continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportonities to improve the design of the internal control structure. Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an ► The person reviewing free and reduced food service eligibility can also enter information into the system to detennine eligibility.Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the nonnal course of their responsibilitie􀀩 as a result of the lack of segregation of duties. attempt to bring about a more effective segregation of duties. The Superintendent approves purchase orders and the Board of Education approves monthly accounts payable checks, and one of the school secretaries or the board treasurer reviews the bank reconciliations. The Board of Education and Superintendent will continue to monitor transactions of the District. Cause: Limited number of personnel. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease. opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Recommendation: The Board of Education and the Superintendent should continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportonities to improve the design of the internal control structure. Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The Superintendent approves purchase orders and the Board of Education approves monthly accounts payable checks, and one of the school secretaries or the board treasurer reviews the bank reconciliations. The Board of Education and Superintendent will continue to monitor transactions of the District.

Training was provided to staff reviewing applications. District has since joined the CEP and is streamlining the internal processes for identifying eligibility as low income.

See response and correction action plan at 2023-004. Response and correction action plan: Beginning in March 2023, the District received certification of suspension and debarment as outlined by the Office of Management and Budget and will request certification as part of the process for future bids. In spring 2023, the district joined the Area Education Agency purchasing program for the Child Nutrition Program.

The Food Bank has updated the weight and has implemented procedures to ensure products are updated annually.

The District now reviews the work performed by the individual preparing the reports before submission.

Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Contact Person: Linda Cordova, Business Manager Anticipated Completion Date: December 1, 2023 Planned Corrective Action: The food service liaison is responsible for submitting meal claims and verifying meal that counts agree with the supporting documentation. Supporting documentation will be retained in the Business Services Department.

2023-001 Net Cash Resources 10.553, 10.555, 10.559 - Child Nutrition Cluster Corrective Action Plan: The School District will review cafeteria operations throughout 2023-2024 and ensure any excess funds be used to provide additional support to the cafeteria program, including the utilization of excess funds for equipment and operational efficiencies. The School District expects to resolve this issue by June 30, 2024.

Accurate count of student meals

Corrective action Plan: The District recognizes that due to increased reimbursement during the past few years, the District has an excess of cash on hand over the permitted levels. Over the course of the 2022-23 school year, the district reviewed the program's needs to develop a strategy to utilize these funds by the food service program. To date the District has identified over thirty items for purchase by the Cafeteria Fund totaling in excess of $280,000. Along with these purchases, further equipment needs are currently being assessed in conjunction with the capital project approved by the voters in December of 2022. We expect such purchases will expend the entire amount of the excess fund balance if not more. The District expects to begin these purchases before the end of the 2023 - 2024 school year (June 30, 2023).

Finding Number 2023-002 Condition: At June 30, 2023, the District maintained fund balances in excess of three months’ average expenditures. Management Response/Plan: The District is working on a Spend Down Plan for the food service program based off guidance from Illinois State Board of Education. The District is working on replacing equipment and renovating cafeterias. Anticipated Date of completion: June 2024 Name of Contact Person: Melissa Geyman Sell

Finding Number: 2023-001 Condition: The School District did not properly review student applications to be eligible for free or reduced cost meals within the school nutrition program. As a result, one application, approved for reduced lunch, was ultimately ineligible for reduced cost meals under the school nutrition program. Planned Corrective Action: Grand Rapids Public Schools has updated to a new version of software, which should prevent the issue from occurring again. In order to confirm this, we will manually check 100% of the manual applications submitted for Fiscal Year 2023/24 before the final reimbursement request is submitted next year. Contact person responsible for corrective action: Phillip Greene Anticipated Completion Date: 10/16/2023

2023-002 Net Cash Resources - Child Nutrition Cluster (ALN # 10.553/10.555/10.559) Corrective Action Plan School District management agrees with condition, cause, and recommendation. With this overage, the district has purchased some new equipment for the cafeteria. Since the School District is CEP, there is no option to changing the revenue. The School District will continue upgrading the kitchens with the excess. Expected Correction Date: June 30, 2024

The District has responded with corrective action and has notified and informed the fixed asset appraisal company of all capitalized items purchased with federal funding. The District also implemented a review process. The Director of Business Services will review the listing sent to the fixed asset company to ensure compliance and verify the completeness of the data received from the appraisal company.

CORRECTIVE ACTION PLAN (CAP): 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. 2. Actions Planned in Response to Finding Administration will ensure sufficient backup documentation is available. 3. Official Responsible for Ensuring CAP The Superintendent is responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is immediate. 5. Official Responsible for Ensuring CAP The Board of Education will be monitoring this CAP

Finding: 2023-001 School Food Account - Net Cash Resources Child Nutrition Cluster (ALN Nos. 10.553, 10.555, and 10.559) Corrective Action Plan: The School District has a multi-tiered plan in place to address the excessive Net Cash Resources as so reported. The overall plan includes equipment replacements, increased wages for cafeteria staff, avoiding procurement of grants as well as buying more locally sourced food. During the 2022-2023 school year, as part of the 2021-2022 corrective action, the School District appropriated $380,000 from its appropriated fund balance to afford the purchase of a new refrigerated food truck, as well as to cover increased food costs and employee benefits. Equipment replacement purchases took place in the 22-23 school year; however, due to supply chain issues $202,984 in encumbrances were carried over to the 23- 24 school year as they have not yet been furnished by the vendors. The School District is in the process of finalizing a labor contract to commence in the 2023-2024 fiscal year, which will be a three year agreement. Money from this fund will be allocated towards increases to wages negotiated in that contract. The 2023-2024 School Lunch Fund budget is 47.45% higher than the 2022-2023 budget. The most notable increase to spending is within the Food Service Equipment line, to coincide with the plan to replace and cycle out aging equipment. Additional increases can be noted in the salaries, supplies, food purchases and contractual services budgetary lines. With the above in place, the School District plans to resolve the issue of excessive cash resources by the conclusion of the 2023-2024 school year.

Finding: 2023-002 Net Cash Resources Condition: At June 30, 2023, net cash resources in the school lunch fund exceeded the allowable limit of cash by $572,746. Corrective Action Plan: The School District is committed and will be diligent in preparing meals with high quality products. Regular cooked meals with expanded menu choices will be prepared which will result in an increase in expenses. There has been unpredictability with the increase of certain goods, and we expect this to continue into the 2023-2024 fiscal year as well. The School District also participates in the Community Eligibility Provision (CEP) which provides free breakfast and lunch to every student within the district. Salaries for School Lunch employees have also been increasing year after year due to the increase of minimum wage in New York State. The minimum wage is expected to increase to $15 per hour. The School District does have a practice of transferring BOCES aid gained from the cost of the BOCES management contract to the School Lunch Fund; the aid will not be transferred in upcoming years. The School District has devised a NYSED approved plan to expend the excess funds in the School Lunch Fund through appropriating a substantial amount of fund balance to be planned for and used for the cafeteria and kitchen capital project. If needed, we will examine other avenues to ensure we do not exceed the allowable limit of cash at year end.

To allocate direct cafeteria overhead costs and plan capital equipment purchases for cafeteria equipment to enhance delivery of student meals which will ensure reduction of net cash resources so as to not exceed three months of expenditures. In addition to the current mechanisms in place to utilize net cash resources, a formula was obtained and will be used to ensure the correct amount is spent. During the 22-23 school year, the district received additional covid related funding which also contributed to excess net cash resources.

The position of Child Nutrition Liason was vacant for 50% of FY23. As of October 23, this position is now filled. The Child nutrition Liason will ensure all applications are thoroughly reviewed before submisison of approval or denial. The Office of Child Nutrition will implement a new process for storing all applications for retrieval access.

The District will reduce net cash resources by investing in capital equiment where necessary and allocating direct cost overhead expenditures.

The district will provide a clear segregation of duties between the preparer and the approver by documenting written approval prior to submission of the student counts through the CNPWeb.

The district has already implemented the corrective action plan by submitting the PLE for the 2023-24 school year. The district will continue to submit the PLE on an annual basis.

Finding: 2023-002 School Food Account - Net Cash Resources (ALN #10.553/10.555/10.559) Corrective Action Plan: The School District has begun taking action to address this issue, as follows: Equipment Improvement - School Food Service Director, Joe Kilmer, Food Service Manager, Ann Overhiser, and the School Business Administrator have plans to improve and replace cafeteria equipment. The replacement plan will be completed in conjunction with the School District’s upcoming Capital Project. This work was originally expected to be included in a prior project but due to scheduling issues, is now included in the upcoming project which is expected to be completed by June 30, 2025. Retained Balance for Pending Settlements - Wages will increase into 2023 and beyond. The minimum wage in New York State is expected to continue to rise over the next several years according to legislation. The rate will rise to $15 per hour by the end of 2023. Annual increases will continue until the rate reaches $16 per hour in 2026. Annual increases will be published by the Commissioner of Labor and based on a number of economic factors. Due to the critical labor shortage, the School District recently increased hourly wages for food service helpers and cooks in order to attract additional workers to maintain operations. Enhanced Meals - The Food Service Director and Food Service Manager continue to take steps to improve food options. They include making improvements to center of the plate options and improving local food options as well. In addition, the School District plans to spend a portion of the School Lunch excess cash on cafeteria equipment as a part of its upcoming Capital Project which is expected to be completed by June 30, 2025. Anticipated Correction Date: June 30, 2024

Finding Number: 2023-005 Approval Of Expense Transactions Corrective Action Plan: A process was put in place in May 2023 to ensure that all principal approvals are documented in writing or electronic approval in the system which can be date stamped by the system. Payroll will not be run, nor grants submitted, until proper approval is received. Personnel Responsible for Corrective Action: Nachum Golodner, Academica Director of Accounting Anticipated Completion Date: June 30, 2024