2024-009 Material Weakness in Internal Control over Compliance The Child Nutrition Cluster: 10.555 – National School Lunch Program and 10.559 – Summer Food Service Program 10.558 – Child and Adult Care Food Program Commonwealth of Pennsylvania, Department of Education Contract Number: 359-46-477-8 Condition: Based on Commonwealth of Pennsylvania, Office of the Budget, Bureau of Audits (Commonwealth), testing and calculations of the CBS Food Program's Net Cash Resources Available and their 3 months averages expenditures, the Commonwealth determined the Food Program's net cash resources exceeded their 3 months average expenditures as of June 30, 2024. The Commonwealth calculated both 3-month average operating expenditures and Net Cash Resources Available based on financial statement information provided by CBS Food Program. The Commonwealth's calculations of Net Cash Resources found that the Food Program exceeded their 3 months average expenditures by $2,354,119 as of June 30, 2024. The Pennsylvania Department of Education (PDE) has been communicating with CBS Food Program to develop plans for spending down their excess non-profit food program balance. Recommendation: CBS Food Program should work with PDE to develop a plan to appropriately utilize its resources. In the future, the Food Program should monitor cash resources to ensure they do not exceed maximum thresholds required by federal regulations. Excess food program resources can be used to improve or expand the nonprofit food service for program participants. Repeat Finding: No Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. Action taken in response to finding: Community Benefit Solutions agrees in principle with this finding; however, disputes the amount of Net Cash Resources Available in Excess of Federal Regulation. Based on the 2025 Year End Balance, CBS Food Program has $1,087,495.35 in cash and $2,106,728.79 in Certificates of Deposits which totals $3,194,224.11 in Net Cash Resources. CBS Food Program's expenditures during the 24-25 Program Year totaled $8,542,614, which results in allowable Net Cash Resources of$2,135,653.50 (three months of total expenditures). More accurately, the expected expenditures for the 25-26 Program Year are $7,167,206, results in allowable Net Cash Resources of $1,791,801.50. Accordingly, Community Benefit Solutions contends that the Net Cash Resources Available in Excess of Federal Regulations is $1,793,571. Prior to the issuance of the Draft Report, Community Benefit Solutions provided PDE with a preliminary Spend Down Proposal based on an expected $2,800,000 in excess funds. The Spend Down Proposal included, among other things, $837,000 set aside for the purpose of equipping Community Benefit Solutions' new headquarters with a commercial kitchen, refrigerator, and freezer (the "Warehouse Buildout"). PDE approved the portion of the Spend Down Plan pertaining to the Warehouse Buildout. The Board of Directors along with Community Benefit Solutions leadership and PDE will continue to coordinate and determine appropriate and allowable actions to spend down Net Cash Resources in accordance with the federal requirements. Planned completion date for corrective action plan: June 30, 2025