Finding Text
U.S. Department of Education, Passed Through the S.C. Department of Education Program Name: American Rescue Plan – Elementary and Secondary School Education Relief Fund(ARP-ESSER) Assistance Listings #: 84.425U FAIN: S425U210019 Federal Award Date: March 24, 2021 Pass-Through Grant #: H63010497523 Period of Performance: 7/1/2022 – 9/30/2024 Liquidation Deadline: 12/31/2024 Compliance Requirement: Allowable Activities Questioned Costs: $655,285.07 Criteria: According to 2 CFR Section 200.344(c), a subrecipient of ARP-ESSER funds must liquidate all financial obligations incurred under the subaward no later than 90 calendar days after the conclusion of the period of performance of the subaward (or an earlier date as agreed upon by the pass-through entity and subrecipient). When justified, the pass-through entity may approve extensions for the recipient or subrecipient. Condition: The District did not properly liquidate ARP-ESSER funds by the liquidation deadline as set forth in 2 CFR Section 200.344(c). Grant funds were timely obligated by September 30, 2024. However, expenditures were liquidated after the liquidation deadline of December 31, 2024. The District reported expenditures for reimbursement based on the obligation of funds rather than the liquidation of funds. No extensions were granted. Therefore, the federal expenditures incurred after the liquidation deadline were unallowable activities and revert back to the S.C. Department of Education. Cause: The District failed to liquidate the grant funds by the liquidation deadline or obtain an extension for the liquidation deadline prior to claiming the expenditures for reimbursement. Effect: The District overclaimed $655,285.07 in ARP-ESSER funds which revert back to the S.C. Department of Education. Recommendation: We recommend the District be aware of all grant deadlines, including both obligation deadlines and liquidation deadlines. The District should understand clearly what steps have to be taken in order to comply with those deadlines. When it appears a deadline will not be met, the District should communicate with the grantor for a remedy, such as a liquidation deadline extension. Only grant expenditures incurred by the liquidation deadline should be claimed for reimbursement. Views of Responsible Officials and Planned Corrective Action: The District agrees with the finding. The failure to properly liquidate ARP-ESSER funds by the federal deadline was the result of insufficient monitoring of liquidation timelines, a misunderstanding among staff regarding the difference between obligation and liquidation requirements, and a lack of an established process for requesting extensions when needed. The District acknowledges that expenditures incurred and liquidated after the federal liquidation deadline were unallowable under 2 CFR § 200.344(c) and that reimbursement claims should not have included those amounts. The District has reviewed the procedures that contributed to the error and has committed to strengthening internal controls, improving staff training, and implementing systematic monitoring to ensure full compliance with all federal grant requirements going forward.