Finding 1222929 (2024-002)

2024-002 Maintenance of Effort (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Numbers: 84.027 & 84.173 Passed-through Identification: 20221079, 20230594, 20240499 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 34 CFR 300.203, a Local Educational Agency (LEA) must budget and expend, for the education of children with disabilities, at least the same amount of local or state and local funds as it did in the most recent fiscal year for which the LEA met the Maintenance of Effort (MOE) requirement. Compliance is demonstrated through both a budget-based test (eligibility) and an expenditure-based test (compliance). Additionally, the State of New Hampshire requires LEAs to complete an annual MOE worksheet that includes both budgeted and actual expenditures related to special education which is used to determine compliance with both requirements and must be completed using financial data that reflects only special education-related expenditures within the general fund. Condition: During our audit of the School District’s compliance with the MOE requirement, we noted that the School District completed and submitted the required MOE worksheet to the State. However, the School District only included special education salary costs in the worksheet, despite being required to report all special education expenditures (e.g., contracted services, supplies, tuition, transportation, etc.). The School District indicated it reported only salary amounts because that was the expenditure category charged to the IDEA grant during the year. As a result, the data used for MOE reporting did not accurately reflect the School District’s financial commitment to special education. Effect: The MOE worksheet submitted to the State was incomplete, as it excluded non-salary special education expenditures, resulting in reported amounts that did not accurately reflect the School District’s total financial support for special education. Cause: The error was caused by a misunderstanding of the MOE reporting requirements, specifically the requirement to include all special education expenditures regardless of funding source. This was compounded by insufficient training and the absence of a formal review process to ensure the completeness and accuracy of the data reported in the MOE worksheet. Questioned Costs: No questioned costs were identified, as the issue relates to incomplete reporting for Maintenance of Effort purposes rather than unallowable or unsupported expenditures. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District ensure all special education-related expenditures, regardless of funding source, are included in the MOE worksheet, as required by federal regulations. To support accurate reporting, the School District should provide targeted training to personnel responsible for completing the worksheet, with a focus on understanding the requirement to report all special education expenditures, not just those charged to the IDEA grant. Additionally, the School District should implement an internal review process to verify the completeness and accuracy of the financial data used for MOE reporting. If any inaccuracies are identified, the School District should work with the New Hampshire Department of Education to correct and resubmit the worksheet using the appropriate financial figures. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.