Finding Text
Assistance Listing Number 84.425 Education Stabilization Fund Department of Education Passed Through North Dakota Department of Public Instruction Passed Through Turtle Mountain Band of Chippewa Indians Allowable Costs/Cost Principles Criteria Under 2 CFR Part 200, Subpart E, costs must not only be allowable but also necessary and reasonable for the performance of the federal award. ESSER funds are intended to address learning loss, support safe school operations, and respond to pandemic-related impacts; however, expenditures must still adhere to federal cost principles regarding reasonableness and prudent stewardship. Condition During our review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund, we identified certain costs that were aligned with allowable programmatic activities but appeared excessive in nature. While the expenditures supported educational or COVID-19 recovery objectives, the cost of certain items exceeded what would be considered reasonable for the intended benefit. The District incurred the following expenditures to the program with the following items noted: Check 239348 Dated 8/6/2024 for $49,700 The expenditure amount for The Hunt day camp did not appear to be reasonable for the performance of the federal award. We believe the costs appear excessive for The Hunt day camp. Check 239417 Dated 8/21/2024 for $49,100 The expenditure amount for the Energy Sovereignty day camp did not appear to be reasonable for the performance of the federal award. We believe the costs appear excessive for the Energy Sovereignty day camp. Check 239161 Dated 7/16/2024 for $47,300 The expenditure amount for the STEM project did not appear to be reasonable for the performance of the federal award. We believe the costs appear excessive for the STEM day camp. Check 239873 Dated 9/19/2024 for $49,900 The expenditure amount for the Native American Literacy day camp did not appear to be reasonable for the performance of the federal award. We believe the costs appear excessive for the Native American Literacy day camp. Context In a total population exceeding 250 expenditures, forty (40) transactions were tested. Four (4) of these transactions were found with exceptions. The remaining untested population included 22 additional transactions that appear to be similar in nature. These additional transactions totaled $1,033,190.91. This appears to be a systemic issue affecting the District. Cause The condition appears to result from limited internal guidance defining what constitutes “reasonable” levels of spending for ESSER-funded activities. In some cases, urgency to deploy funds may have reduced the rigor of cost review processes. Effect Although the expenditures may have a valid programmatic purpose, the excessive nature of the costs increases the risk of being identified as waste or abuse. This may result in questioned costs, potential repayment obligations, and increased scrutiny from oversight bodies. Questioned Costs $196,000 Repeat Finding This is a repeat finding of 2024-003. Recommendation We recommend that management: • Implement enhanced cost analysis procedures, including price comparisons or cost reasonableness reviews prior to purchase • Require documentation supporting why higher-cost options are necessary • Strengthen supervisory review and approval processes for significant expenditures • Provide targeted training on federal cost principles, with emphasis on reasonableness and stewardship of ESSER funds Management’s Response See corrective action plan.