Finding Text
2025-003 Lack of Written Methodology for Title I Funds (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: State of New Hampshire Department of Education Cluster/Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Passed-through Identification: 20241052, 20240071 & 20250400 Compliance Requirement: Special Tests – Supplement, Not Supplant Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Under the Elementary and Secondary Education Act (ESEA), as amended by Every Student Succeeds Act (ESSA), school districts are required to demonstrate compliance with the Supplement, Not Supplant provision for Title I funds (Section 1118[b][1]). This provision mandates that federal funds be used to supplement, and not supplant, the funds that would otherwise be made available from state and local resources. To satisfy this requirement, a school district must develop and maintain a written methodology describing how state and local funds are allocated to schools. The methodology must ensure that Title I schools receive their allocation of state and local funds without regard to the receipt of Title I funds and that the allocation process is applied consistently across all schools. In addition, the New Hampshire Department of Education provides a Supplement, Not Supplant form that districts may utilize to document their methodology for allocating state and local funds to schools and to demonstrate compliance with this requirement. Condition: During the audit, it was noted that the School District has developed a Supplement, Not Supplant procedure document intended to address the Title I requirement. However, the document does not fully meet the criteria of a written methodology as required under ESSA. Specifically, the document does not clearly describe the process or formula used to allocate state and local funds to individual schools, nor does it demonstrate that such allocations are made without consideration of Title I status. As a result, the School District does not currently have a documented methodology that clearly establishes how state and local resources are distributed among schools in a manner that supports compliance with the Supplement, Not Supplant requirement. Additionally, the School District has not completed or maintained documentation utilizing the Supplement, Not Supplant form provided by the New Hampshire Department of Education or a comparable tool to document its allocation methodology. Cause: Although the School District has taken steps to address the Supplement, Not Supplant requirement by developing a procedure document, it has not yet established a comprehensive written methodology that formalizes the process for allocating state and local funds to schools. This appears to be the result of incomplete implementation of the federal requirement and limited documentation of the School District’s budgeting and allocation practices at the school level. Effect: Without a documented methodology that clearly outlines how state and local funds are allocated to schools, the School District cannot demonstrate that Title I schools receive their state and local funding without regard to Title I status. This increases the risk that Title I funds could inadvertently be used to supplant state or local funds and may result in noncompliance with federal program requirements. Questioned Costs: Since the School District does not have a written methodology, questioned costs could not be determined. Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2024-001. Recommendation: We recommend that the School District develop and implement a comprehensive written methodology that clearly describes how state and local funds are allocated to individual schools. The methodology should demonstrate that allocations are determined without regard to Title I status and should include sufficient detail to allow an independent reviewer to understand and replicate the allocation process. While the School District has developed a Supplement, Not Supplant procedure document, it should be expanded or revised to include a clear and documented allocation methodology that meets ESSA requirements. The School District may also utilize the Supplement, Not Supplant form provided by the New Hampshire Department of Education, or a comparable format, to formally document its methodology. Additionally, the School District should provide training to key personnel involved in budgeting and federal program administration, establish periodic reviews of school-level allocations to verify compliance with the methodology, and implement monitoring controls to ensure ongoing adherence to federal regulations. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.