Finding Text
2024-003 50000 – COVID-19 - Education Stabilization Fund – Activities Allowed or Unallowed and
Allowable Costs/Cost Principles (Material Weakness in Internal Control Over Compliance,
Material Noncompliance)
Federal Agency: U.S. Department of Education
Pass-Through Entity: California Department of Education
Program Name: COVID-19 - Education Stabilization Fund
Federal Financial Assistance Listing: 84.425U
Compliance Requirements: A/B - Allowed or Unallowed & Allowable Costs/Cost Principles
Type of Finding: Material Weakness and Material Noncompliance
Criteria or Specific Requirements
Title 2, Code of Federal Regulations, Part 200.431(h)(1) states that for post-retirement health
plans financed on a pay-as-you-go method, allowable costs are limited to those representing
actual payments to retirees or their beneficiaries.
Condition
The District used program funds to make a contribution of $1,500,000 to a trust held for
postemployment benefits which is financed using the pay-as-you-go method. Additionally, the
District charged indirect costs of $48,789 in direct relation to the unallowable direct costs
charged.
Cause
The District appears to have been unaware of this requirement.
Effect
The District is not in compliance with the provisions of Title 2, Code of Federal Regulations,
Part 200.431(h)(1).
Questioned Costs
The condition identified above resulted in known questioned costs of $1,548,789. Context/Sampling
The condition was identified through review of post-retirement health plan trust contributions.
We reviewed 100% of such contributions.
Repeat Finding
No.
Recommendation
The District should implement controls to ensure that all expenditures charged to federal
programs are allowable.