2022-001 The District did not have adequate internal controls for ensuring
compliance with allowable activities and costs, equipment, and
restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID-19 Emergency
Connectivity Fund Program
Federal Grantor Name: Federal Communications
Commission
Federal Award/Contract Number: N/A
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number:
N/A
Known Questioned Cost Amount: $474,486
Prior Year Audit Finding: N/A
Background
The Emergency Connectivity Fund (ECF) Program provides funding to meet the
needs of students and school staff who would otherwise lack access to connected
devices and broadband connections sufficient to engage in remote learning. This is
referred to as “unmet need.” In fiscal year 2022, the District spent $474,486 in ECF
Program funds to purchase 526 laptops and 1,591 mobile hotspots for students.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding grant requirements and monitoring the effectiveness of established
controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for the eligible devices and
services provided to students and staff with unmet need. Recipients are prohibited
from seeking reimbursement for eligible equipment and services purchased for use
solely at the school or held for future use (i.e., warehousing).
Equipment
The Federal Communications Commission (FCC) requires ECF Program recipients
to maintain inventories of the devices and services they have purchased with
program funds. The FCC also requires the inventories to include specific elements,
such as the type of equipment or service provided, equipment make/model and
serial number, name of the students or employees provided the equipment or
service, dates they used the equipment or service, and more.
Restricted purpose – unmet need
When submitting applications to the FCC, schools only had to provide an estimate
of their students’ and staff’s unmet need. However, at the time of reimbursement,
the District could only request program funds for eligible equipment and services
provided to students and school staff with actual unmet need.
Restricted purpose – per-location and per-user limitations
The FCC imposed per-location and per-user limitations to maximize the use of
limited funds. Under the program, eligible schools could only be reimbursed for
one connected device and mobile hotspot per student or school employee with
unmet need, and no more than one fixed broadband connection per location, such
as a student’s or employee’s residence.
Description of Condition
Allowable activities and costs
The District estimated unmet need for eligible equipment when it applied for ECF
Program funds. However, our audit found the District's internal controls were
ineffective for ensuring it documented the determination of actual unmet need and
only requested reimbursement for eligible equipment provided to students.
Specifically, the District purchased laptops and mobile hotspots based on its
estimate of unmet need, and it requested reimbursement for these purchases totaling
$474,486. However, the District did not maintain documentation showing it
provided each laptop and mobile hotspot paid with program funds to a student with
unmet need.
Equipment
Although the District maintains asset inventories, our audit found its internal
controls were ineffective for ensuring it identified and tracked specific equipment
charged to the ECF Program, and it could not demonstrate compliance with federal
requirements.
Restricted purpose – per-location and per-user limitations
Our audit found the District’s internal controls were ineffective for demonstrating
it complied with the FCC’s per-user limitations. Specifically, the District did not
maintain documentation showing it monitored or had a tracking process in place to
ensure it only provided one device per user.
We consider these deficiencies in internal controls to be material weaknesses that
led to material noncompliance.
Cause of Condition
Allowable activities and costs
District officials did not know about the requirement to request reimbursement only
for actual unmet need, and thought the estimate of unmet need provided during the
application process was sufficient to comply with this requirement.
Equipment
Staff did not know the District needed to identify specific pieces of equipment as
federally funded at the time it requested reimbursement.
Restricted purpose – per-location and per-user limitations
Staff did not know the District needed to maintain documentation showing it only
provided one device per student.
Effect of Condition and Questioned Costs
Allowable activities and costs
Because the District did not have documentation supporting whether it provided
eligible equipment to students with actual unmet need, it cannot demonstrate
compliance with the program’s requirements. Given the nature of the program and
circumstances, it is likely that at least some of the equipment the District charged
to the award addressed unmet needs. However, the lack of a documented
assessment of students’ actual unmet need means that all costs are unsupported.
Since we do not have a reasonable basis for estimating how much of the District’s
expenditures are allowable, we are questioning all unsupported costs.
Federal regulations require the State Auditor’s Office to report known questioned
costs that are greater than $25,000 for each type of compliance requirement. We
question costs when we find the District does not have adequate documentation to
support expenditures.
Equipment
Without maintaining proper asset inventory records that identify equipment paid
with ECF Program funds, as the FCC requires, the District cannot demonstrate
compliance with this requirement, and cannot effectively track the use of federally
funded equipment.
Restricted purpose – per-location and per-user limitations
Because the District did not maintain adequate documentation, it cannot
demonstrate compliance with the FCC’s restrictions. Additionally, we cannot
determine whether the District only provided one device per user.
Recommendation
We recommend the District work with the granting agency to determine audit
resolution.
We further recommend the District establish and follow internal controls to ensure
staff fully understand the requirements for ECF awards. Specifically, the District
should:
• Request reimbursement only for eligible equipment provided to students
with unmet need, and maintain documentation demonstrating compliance
• Identify federally funded equipment and maintain inventories that include
all required elements to track the use of equipment paid with ECF Program
funds
• Monitor to confirm it provides no more than one device per student and
employee in compliance with the ECF Program’s requirements
District’s Response
The Renton School District does not fully concur with the audit finding in the
context and scenario in which it is given. The purpose of the ECF funds was to
address an unprecedented global health crisis where the nation’s president and the
Washington State Governor recognized “state of emergency” conditions during the
audit period. This was recognized by the Renton School District where the
governing board also adopted a resolution directing the superintendent to meet the
needs of our students by any reasonable means necessary. This context is important
to understand how it impacted the district’s operations and its ability to serve our
students during a time of uncertainty and evolving conditions.
The noted conditions of the finding are addressed individually below:
Allowable activities and costs
The district was aware of the requirement to request reimbursement for actual
unmet need, which was addressed in the Federal Communications Commission
Order FCC-CIRC21-963-043021 (question 77) to state “We think that schools are
in the best position to determine whether their students and staff have devices and
broadband services sufficient to meet their remote learning needs, and we
recognize that they are making such decisions during a pandemic. We, therefore,
will not impose any specific metrics or process requirement on those
determinations.”
The evolving educational challenges during the unprecedented crisis illustrated to
the district that the burden of using personal devices was inequitable and
unsupportable. Our students need equitable access to their education, including
consistent, secure access to district licensed curriculum & supplemental materials,
secure remote learning environments, required student web filtering in compliance
with the Children’s Internet Protection Act, and technology support from the
district during their learning. Student needs were met by issuing equipment directly
to district students and families who presented themselves as having needs.
The funding provided via ECF to support students’ needs during the pandemic was
essential and necessary. The district did not take lightly our obligation to follow
the established rules and guidance available to us. This finding is a strict
enforcement of grant language around “unmet needs” from a narrow position
where the district would only measure the need of students at a single moment in
time. We believe we have fulfilled the responsibility of determining the unmet needs
of our students. We therefore do not believe that any of the $474,486 in costs is in
question.
Equipment
The district actively tracks technology equipment using asset tagging and serial
number tracking to manage equipment usage. Again, exceptions were noted due
the complexities of the pandemic and shifting to a remote environment during that
time. The process to which the district asset tracks is in place and functioning, but
the district acknowledges that continued diligence is needed to ensure that all
assets are in full compliance with federal grant requirements.
Restricted purpose – per-location and per-user limitations
The district experiences equipment thief, damage, and loss in its normal course of
supplying thousands of pieces of equipment yearly. The district does not limit the
student’s access to technology, and therefore their education, based on these
circumstances. These circumstances can create an environment where multiple
devices are issued so a student may equitably access their education.
ECF funds were used to fund a supplemental portion of the district’s equipment
fleet and local funds supported the rest. Student access is met as it is needed, and
devices are issued, then recovered, and issued again. The basic premise of this
system conflicts with the narrow applicability of the grant language.
In conclusion
The convergence of the pandemic and the application of remote learning
dramatically impacted normal operations of the district. Given the circumstances,
district staff performed admirably and consistently with the values of our
community.
Auditor’s Remarks
The State Auditor’s Office is sympathetic to the significant challenges the District
faced during the COVID-19 pandemic, and deeply respects its commitment to
student learning despite these challenges. SAO knows that in many cases,
governments across Washington received significant pandemic-era federal funds
without also receiving clear guidance on how to use them. Then, and now, SAO
continues to advocate for clear, timely guidance from federal agencies to make sure
Washington governments are not put in a difficult position at audit time.
However, when auditing federal programs of any kind, governments must provide
documentation to substantiate that they met the award requirements. As is our
practice and audit standards require, we will review the status of this finding during
our next audit. We value our partnership with the District in striving for
transparency in public service.
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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund,
describes the ECF Program requirements.