Finding Text
Finding Reference 2024-005
Federal Agency: U.S. Department of Health and Human Services
Pass-Through Agency: P.R. Department of Family
Federal Program: Child Care and Development Block Grant (ALN 93.575)
Requirement: Earmarking (G)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
Statement of Condition: In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend no less than seventy percent (70%) to fund direct services.
Criteria: 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less that seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50.
45CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families.
Cause of Condition: The program’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts.
Effect of Condition: The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
Recommendation: We recommend the Program’s Management to request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations.
Questioned Cost: None.
Prior Year Finding: No.
Views of Responsible
Officials and Planned
Corrective Action: We concur with the audit finding. The Program budget was determined and approved by the Pass-through Grantor. We are going to discuss the condition reported with the Pass-through Grantor to obtain an explanation about the matter referenced above.
Implementation Date: March 31, 2025
Responsible Person: Mr. Hector R. Sanjurjo Rodríguez
Federal Programs Director