SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Central Valley School District No. 356 September 1, 2024 through August 31, 2025 2025-001 The District did not have adequate internal controls for ensuring compliance with federal eligibility requirements. Assistance Listing Number and Title: 84.010, Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: AD-10691, AD-4479, AD-4513, AD-4664, AD-9914, AD-7259, AD-7977 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and reside in areas with high concentrations of children from low-income families. During the 2024-25 school year, the District spent $3,592,808 in Title I program funds. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Title I requires participating districts to allocate more funds to schools with higher poverty percentages. Districts must annually rank schools from highest to lowest poverty concentrations based on the total number of students from low-income families attending the school or residing in the area. Schools ranked higher must be allocated more Title I funding based on per-pupil expenditure (PPE). Districts must serve schools with poverty rates more than 75% before serving any schools less than 75% or provide comparable supplemental funds from other state or local sources that are spent on programs that meet the intent and purpose of Title I. Funds expended from such other sources must equal or exceed the amount that would be provided under Title I. Description of Condition The District’s internal controls were ineffective for ensuring it allocated Title I funds, or comparable supplemental funds, to one school with a poverty rate of more than 75% as federal regulations and OSPI require. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Staff responsible for allocating Title I funds were not aware they must serve schools with poverty rates greater than 75% and only allocated Title I funds to the District’s elementary schools, which had poverty rates less than 75%. Additionally, because OSPI approved the District’s Title I application, staff thought the District met Title I requirements for ranking and allocating funds. Effect of Condition Although the District properly ranked eligible schools, it cannot demonstrate it complied with program requirements to allocate Title I or comparable funds to schools with poverty rates more than 75%, as required. Recommendation We recommend the District strengthen internal controls and provide guidance to staff responsible for allocating Title I funds to ensure they understand program requirements. Additionally, the District should ensure it serves all schools with more than 75% poverty rate with Title I funds or comparable funding sources as required. District’s Response The District does agree that one school with a poverty rate above 75% was not served. However, OSPI reviewed and approved the District’s Title I application, including our proposed ranking and allocation methodology, and no concerns or comments were raised during that review process. Additionally, the District was able to provide alternative snapshot dates demonstrating that no individual school was truly above the 75% threshold. Once the District became aware of the issue, we proactively contacted OSPI to determine whether any corrective action was necessary for the current year. OSPI’s guidance was that no changes or corrections were required for the current year and that adjustments should instead be implemented in the following year if a school exceeded the 75% threshold. Based on that direction from OSPI, the District did not make current-year corrections. Given these circumstances, including OSPI’s prior approval of the application and subsequent guidance that no corrective action was required, the District respectfully disagrees with the State Auditor’s Office conclusion that this matter rises to the level of a Finding rather than being addressed through a Management Letter. We consider this matter to be resolved as no school going into the 2025-2026 fiscal year was above the 75% threshold. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. As identified in the finding above and acknowledged in the District’s response, the District had one school exceeding 75% poverty rate and did not have established controls to ensure it served the school with Title I or comparable supplemental funds, as federal regulations and OSPI require. Uniform Guidance requires auditors to communicate control deficiencies identified as a significant deficiency as a finding. We reaffirm our finding and will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 34 CFR, Part 200, Title 1 – Improving the Academic Achievement of the Disadvantaged, Subpart A – Improving Basic Programs Operated by the Local Educational Agencies, Section 78 – Allocation of funds to school attendance areas and schools. 20 U.S Code 6313(a)(3), Elementary and Secondary Education Act (ESEA) section 1113(a)(3), Eligible school attendance areas, Ranking order, describes requirements to annually ranked, without regard to grade span, eligible school attendance areas based on low-income families exceeding 75% and to serve those school attendance areas in rank order. 20 U.S Code 6321(c), Elementary and Secondary Education Act (ESEA) section 1118(c), Fiscal requirements, Comparability of services, describes requirements for providing comparable services to schools that are not receiving Title I funds. OSPI Title I, Part A Fiscal Requirements and Guidance provides detailed guidance for ranking and allocating Title I funds.