Effective July 1, 2025, the San Diego Workforce Partnership (SDWP) will strengthen its internal controls to ensure compliance with the WIOA Youth Out‑of‑School Youth (OSY) expenditure requirement. SDWP recognizes that the 75 percent minimum Out of School Youth (OSY) expenditure requirement was not met during the audit period. This resulted from insufficient monitoring controls, the absence of a systematic process to track spending progress, and the failure to pursue and obtain an approved waiver to reduce the requirement to the allowable 50 percent minimum. To address this finding, SDWP is implementing an enhanced expenditure tracking and monitoring system that will include: • A monthly OSY expenditure report that reconciles budget‑to‑actual spending and highlights progress toward the requirement. • A review process requiring the Programs Manager to validate monthly OSY compliance reports. • Quarterly financial compliance reviews conducted by the CFO to ensure timely corrective action if spending trends indicate potential noncompliance. • An annual review process will be established to determine whether submission of a waiver is applicable, including the preparation and formal review of any required waiver documentation. The WIOA Out of School Youth Waiver Application for FY25–26 has been completed and will be incorporated into this annual review process moving forward. The Accounting Manager will be responsible for maintaining the tracking system, performing monthly reviews, and coordinating with program staff to ensure expenditures align with federal requirements. The Chief Financial Officer (CFO) will provide oversight, verify compliance during quarterly reviews, and ensure that policies and procedures are adhered to.