Finding No.: 2025-005 – Matching, Level of Effort, Earmarking Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A230013, H027A250013 Criteria or specific requirement (including statutory, regulatory or other citation) #1: 34 CFR 300.163(a) states: (a) General. A State must not reduce the amount of State financial support for special education and related services for children with disabilities, or otherwise made available because of the excess costs of educating those children, below the amount of that support for the preceding fiscal year. Criteria or specific requirement (including statutory, regulatory or other citation) #2: 34 CFR 300.208 Permissive use of funds states: (a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities: (1) Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. 34 CFR 300.704(b) Other State-level activities states: (4) Funds reserved under paragraph (b)(1) of this section also may be used to carry out the following activities: (i) For support and direct services, including technical assistance, personnel preparation, and professional development and training. The approved Guam application for Federal Fiscal Year (FFY) IDEA Part B funds further provides that each outlying area may reserve for State Administration not more than 5 percent of the amount received under the program or $35,000, whichever is greater. Condition #1: GDOE’s financial support for special education and related services for children with disabilities in the current year decreased by $578,698 compared to preceding fiscal year. Condition #2: GDOE exceeded the 5% maximum spending for administration costs (earmarking requirement). Cause #1: GDOE does not have procedures to regularly monitor and track state financial support for special education and related services of participating agencies. GDOE’s current policies and procedures only require participating agencies to submit completed Documentation of Maintenance of State Financial Support form that identifies the total local funding by August 31 of each year. GDOE did not have sufficient time to resolve the resulting deficiency prior to year-end. Cause #2: GDOE did not consistently classify state, non-state administrative costs and other State-level activities in accordance with State Administration activity requirements, resulting in costs being erroneously classified as non-State administrative activities. Effect or Potential Effect: GDOE is in noncompliance with applicable level of effort and earmarking requirements. Questioned Costs #1: $578,698. The questioned costs relate to the deficiency of financial support in the current year. Questioned Costs #2: Undeterminable Context #1: We compared GDOE’s financial support for special education and related services for children with disabilities in the current fiscal year against the preceding fiscal year and noted current fiscal year’s financial support of $17,460,477 is below the amount of support for the preceding fiscal year of $18,039,175. Context #2: We identified 8,664 transactions totaling approximately $16.6 million charged to the program that are classified as non-State administrative activities. We tested 40 transactions totaling $89,602. The samples were statistically valid. Of 40 transactions tested, two transactions (or 5%) appear to be improperly classified as non-State administration costs, as follow: Item # Invoice Number Description Cost 1 FD250147 Conferences/registration fees $2,490 2 TVL50525 Hotel 654 $3,144 The expenditures do not meet the criteria for permissive use of funds and appear to meet the criteria for other State-level activities, for which GDOE does not reserve funds for. At the error rate identified of 5%, we project that total expenditures improperly classified as non-State administration costs is approximately $583,516. As a result, GDOE approximately exceeded the 5% maximum threshold for administrative costs by $600,731 (calculated as $1,539,410 approximate administrative costs less $938,679 maximum amount). Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation #1: GDOE should strengthen periodic monitoring procedures and coordination with participating state agencies to track state financial support for special education and related services throughout the fiscal year. GDOE should obtain periodic expenditure information, compare projected expenditures to the prior-year maintenance level, and communicate potential shortfalls timely to allow corrective action before fiscal year-end. Recommendation #2: GDOE should enhance monitoring of state and non-state administrative costs for appropriate evaluation throughout the fiscal year. View of Responsible Officials: GDOE agrees with the finding and provides details in its Corrective Action Plan.