Finding Text
FINDING 2024-003
Subject: Title I Grants to Local Educational Agencies - Special
Tests and Provisions - Supplement Not Supplant
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014,
S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Supplement Not Supplant
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-005.
Condition and Context
A Local Educational Agency (i.e., School Corporation) may use Part A, Title I funds only to
supplement the funds that would, in the absence of the Part A funds, be made available from state and
local sources for the education of students participating in a Part A program. Compliance is demonstrated
through written procedures which are used to allocate state and local funds to each Title I school while
ensuring that the school(s) receives all the state and local funds it would otherwise receive if not receiving
Part A funds.
The School Corporation had a Title I Services policy [#2261] in place that stated the following: "Title
I funds will be used only to augment, not to replace, State and local funds. The Corporation will document
its compliance with the supplement not supplant provisions by using a written methodology that ensures
State and local funds are allocated to each school on the same basis, regardless of whether a school
receives Title I funding." The written methodology referred to in the School Corporation's policy is to be a
part of each Title I application.
During the audit period, there were three Title I applications. One of the three applicable grant year
applications included information in the supplement, not supplant section. The other two applications were
blank for this section. For the one application, the 2022 grant year application, with information in the
supplement, not supplant section, the methodology documented indicated that the Director of Business
Affairs was to use Form 9 data on a per pupil expenditure basis as to ensure schools received all the state
and local funds they would otherwise receive if not receiving Part A funds. Documentation of the
calculations and the per pupil expenditure comparisons were not provided for audit.
Additionally, the Indiana Department of Education (IDOE) monitors compliance with this requirement
using Comparability Reports, which compare Full-Time Equivalent (FTE) staff positions for Title I
schools to FTE staff positions for non-Title I schools within the School Corporation. Although the IDOE
determined that FTE staff positions were comparable in the 2022, 2023, and 2024 Comparability reports,
the School Corporation was unable to provide supporting documentation for the FTE staff numbers reported
to the IDOE.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
20 USC 6321(b) states in part:
"Federal funds to supplement, not supplant, non-Federal funds
(1) In general
A State educational agency or local educational agency shall use Federal funds received under
this part only to supplement the funds that would, in the absence of such Federal funds, be
made available from State and local sources for the education of students participating in
programs assisted under this part, and not to supplant such funds.
(2) Compliance
To demonstrate compliance with paragraph (1), a local educational agency shall demonstrate
that the methodology used to allocate State and local funds to each school receiving assistance
under this part ensures that such school receives all of the State and local funds it would
otherwise receive if it were not receiving assistance under this part . . ."
Cause
Management had not developed a consistent, testable methodology related to this requirement as
required by the School Corporation's policy. Additionally, the School Corporation officials did not retain
staff listings for audit to support the FTE staff figures reported to the IDOE on the School Corporation's
Comparability Reports related to the grant. The School Corporation's new Title I Director had not verified
that a documented methodology was in place, and compliance with the requirement was being monitored.
Effect
A school within the School Corporation may not have received all the state and local funds it should
have received. Continued noncompliance could result in the loss of future federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation adopt and document an acceptable methodology
to allocate state and local funds to schools. In addition, we recommended the calculation of such
methodology and any other supporting documentation be retained for audit.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.