Finding No.: 2024-020 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: The Individuals with Disabilities Education Act (IDEA) Part B requires States to maintain a specified level of financial support for special education and related services for children with disabilities as a condition of receiving Federal funds. Specifically, IDEA section 612(a)(18) and 34 CFR 300.163 require a State to demonstrate Maintenance of State Financial Support (MFS) by ensuring that the level of State financial support for special education and related services for the most recent State Fiscal Year is equal to or greater than the level provided in the preceding State Fiscal Year. The requirement may be met on either a total or per capita basis. In addition, pursuant to IDEA section 618(a)(3), the State must report State fiscal data for the applicable fiscal years and certify the accuracy of the reported amounts through the State budget office or an authorized representative. Only State‑funded amounts that are allowable under IDEA may be included in the level of effort calculation, and the categories of expenditures used must be applied consistently from year to year. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Public School System did not maintain sufficient documentation to support the completeness and accuracy of the Maintenance of State Financial Support (MFS) calculation. Specifically, locally funded personnel salary information provided by program personnel could not be reconciled to the subsidiary ledger or to the MFS amount reported in the IDEA Part B application. Ministry of Finance, Banking and Postal Services (MOFBPS) does not utilize a Special Purpose Grant code to track and summarize special education program expenditures, resulting in reliance on manually prepared personnel listings. As a result, supporting amounts could not be independently traced to underlying accounting records or distinguished by funding sources. In addition, the personnel listing provided for examination lacked sufficient detail, including information related to employee turnover (resignations, replacements, and related hire and termination dates), and did not include adequate identifiers to determine whether payroll costs were charged exclusively to State funding sources. Cause: PSS lacks adequate internal controls, formalized procedures, and documentation standards to facilitate compliance with IDEA Maintenance of State Financial Support (MFS) requirements. Specifically, management did not establish processes to maintain consistent and accurate personnel records in sufficient detail to support allowability and funding source determinations. Additionally, responsibilities for tracking employee turnover, verifying payroll charges to State funds, and reviewing the completeness and accuracy of MFS calculations were not clearly defined or consistently performed, resulting in insufficient oversight and documentation to support reported MFS amounts. Effect or Potential Effect: RepMar is in noncompliance with IDEA Part B MFS requirements. Lack of adequate documentation limits program management’s ability to verify that only allowable local funded expenditures are included in the MFS calculation and that expenditure categories are applied consistently across fiscal years. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS management should strengthen internal controls and implement formalized policies and procedures to facilitate accurate, complete, and supportable Maintenance of State Financial Support (MFS) calculations. At a minimum, PSS should: • Establish written procedures defining roles and responsibilities for preparing, reviewing, and approving the MFS calculation. • Maintain detailed personnel records, including employee identifiers, funding source designations, hire and termination dates, and documentation of employee turnover. • Implement tracking controls (e.g., SPG) to identify, summarize, and distinguish local funded special education expenditures from Federal expenditure. • Verify that only allowable State funded expenditures are included and that expenditure categories are applied consistently across fiscal years. Views of Responsible Officials: PSS response: Management concurs with the finding. At the time of the FY2024 audit, the Public School System (PSS) calculated the Maintenance of State Financial Support (MFS) using the gross salaries of locally funded Special Education administrative staff and teachers. While management believes that only allowable State-funded salary expenditures were included in the calculation, the supporting documentation and reconciliation to the underlying accounting records were not maintained in sufficient detail to fully support the reported MFS amount. The Ministry of Finance has implemented a Special Purpose Grant (SPG) code to improve the identification and reporting of all expenditures. Management will also develop and implement written procedures defining the responsibilities for preparing, reviewing, and approving the annual MFS calculation. These procedures will require the retention of supporting payroll reports, reconciliation to the accounting records, and documentation identifying the employees included in the calculation, their funding sources, and any personnel changes that occurred during the fiscal year. Beginning in FY2027, the Finance and Audit Compliance Specialist will conduct periodic compliance reviews to verify that the MFS calculation is adequately supported, reconciled to the accounting records, and prepared in accordance with IDEA requirements before submission. Any deficiencies identified during these reviews will be communicated promptly to management for corrective action. Management expects these corrective actions to be fully implemented by the end of FY2027.