2025-002 - Excess Drawdown of Federal Funds (Significant Deficiency and Other Matters) Federal Program Information: Type of Finding: Compliance Areas: Funding Agency: Title: FAL Number: Passthrough: Award Period: Significant Deficiency, Other Non-compliance Cash Management, Allowable Costs and Cost Reporting U.S. Department of Education Teacher Quality Partnership Grants 84.336S NIA 10/01/2024- 09/30/2025 Principles, and Criteria: Cash Management Although 2 CFR 200.305(b)(l ) permits the Foundation to draw down funds in advance, the entity utilizes a cost reimbursement approach for Federal funding. This practice ensures that funds are drawn only for immediate cash needs . 2 CFR 200.305(8)(1) Federal payment. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or projects costs and the proportionate share of any allowable indirect costs. Cost Principals and Reporting: The application of cost principles is governed by 2 CFR 200.400; specifically (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underly ing agreements, program objectives, and the terms and conditions of the Federal award. Condition: During our review of cash management procedures, we identified the following issue: • The Foundation drew down funds for the Teacher Quality Partnership Grants {TQP) prior to expenditures or when expenditures were not yet anticipated to be actu ally disbursed. o TQP Effective Educators grant - $771,222 o TQP Southwest grant - $572,672 Questioned Costs: None. The Foundation used all the funds drawn down according to the grant directives as it closed out the grant funds. All expenditures were in compliance with the stated objectives. Cause: During the beginning of the second Donald Trump administration, President Trump issued an executive order on January 20, 2025 that established the Department of Government Efficiency (DOGE). Individuals within the Employment and Training Administration (Budget and Management) of the DOL that administered our YouthBuild program and other similar programs encouraged the Foundation to draw down the funds on all grants as they believed the grants were going to be shut down soon by DOGE, but they wanted those entities that were already committed to staffing and programs to be able to complete the year. The Foundation did draw down funds in order to complete the commitments. Effect: The Foundation was not in compliance with 2 CFR200.305(b)(l) and 2 CFR200.400(b) by drawing down funds prior to actual expenditures. Auditor's Recommendation: We recommend that the Foundation not draw down funds prior to incurring actual expenditures or until expenditures are expected in the very near future. Grant program personnel do not have the authority to waive 2 CFR requirements or grant requirements, even in unusual situations like the DOGE occurrence. Responsible official's view: • Specific corrective action plan for the finding: Three Rivers Education Foundation's CEO, Dr. Linda J Coy will ensure that all drawdowns follow appropriate timeframes as required. TREF has already implemented this longstanding practice. The action described in this "Significant Deficiency" came about because of extenuating circumstances and advice provided from the federal government. We were assisted with disbursements by the Federal Program Officer for the TQP programs. • Timeline for completion of corrective action plan: The corrective plan has been implemented as per Dr. Linda J. Coy, CEO for Three Rivers Education Foundation as of September 29, 2026. • Employee positions(s) responsible for meeting the timeline: Dr. Linda J Coy, Executive Director and James L. Coy, Chief Financial Officer