Finding Text
2024-004 Inaccurate Maintenance of Effort Worksheets (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Number(s): 84.027, 84.173, 84.027X, 84.173X Passed-through Identification: 20220039, 20221010, 20221035, 20221036, 20221037, 20230209, 20230211, 20230212, 20230214, 20230215, 20230231, 20230232, 2024188, 20240189, 20240190, 20240191, 20240191, 20240199, 20240308 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Under 34 CFR 300.203, school districts receiving federal Individuals with Disabilities Education Act (IDEA) funds must meet the Maintenance of Effort (MOE) requirement. MOE consists of two components: • Eligibility (Budgeted MOE): The district must budget at least the same amount of local or state and local funds for special education in the current fiscal year as it did in the prior fiscal year. • Compliance (Actual MOE): At year-end, the district must demonstrate that actual local or state and local expenditures for special education were at least equal to the prior year’s level. Additionally, the State of New Hampshire’s MOE worksheet is used to determine compliance with both requirements and must be completed separately for each school district within a School Administrative Unit (SAU). Each worksheet must use financial data that reflects only special education-related expenditures within the general fund. Condition: During our audit, we noted that the School Administrative Unit (SAU) did not properly complete the compliance (actual) section of the required State of New Hampshire MOE worksheet for fiscal year 2024 for any of its member districts. Specifically, none of the individual district worksheets included fiscal year 2024 actual expenditures. In addition, no revisions were subsequently provided to the State of New Hampshire Department of Education to correct these errors. We also observed inconsistencies across the district submissions, as some worksheets contained no data while others incorrectly included fiscal year 2025 budgeted amounts in the column designated for fiscal year 2024 actual expenditures. As a result, the MOE calculations for compliance were incomplete and inaccurate for each district, preventing a proper determination of whether the districts met the required level of effort. Effect: Because the worksheets for each district were submitted without the required fiscal year 2024 actual expenditures and included inconsistent or inaccurate data, the SAU did not ensure that its member districts accurately demonstrated compliance with the MOE requirement. This incomplete and misleading reporting could lead to noncompliance with federal and state regulations and, if found to be out of compliance, could result in financial consequences such as the repayment of federal IDEA funds or adjustments to future allocations for one or more districts. Cause: Insufficient review and oversight at the SAU level resulted in the omission of fiscal year 2024 actual expenditure data and the submission of incomplete and inconsistent MOE worksheets for the individual districts. Questioned Costs: $1,641,307 Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the SAU strengthen its internal procedures for completing the MOE worksheets to ensure that accurate and complete special education expenditure data is entered for each member district for both budgeted and actual years. Staff responsible for MOE reporting should receive training on the requirements, and a secondary review should be implemented at the SAU level before submission. If necessary, the SAU should work with the New Hampshire Department of Education to correct and resubmit the worksheets for each district using the proper fiscal year 2024 actual expenditures. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.