2022-001 The District?s internal controls were inadequate for ensuring compliance with federal Title I requirements for eligibility and assessment system security. Assistance Listing Number and Title: 84.010 ? Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 203417 Known Questioned Cost Amount: $0 Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During the 2021?2022 school year, the District spent $1,644,588 in Title I program funds. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Eligibility Title I requires participating districts to allocate more funds to schools with higher poverty percentages. Districts must rank schools from highest to lowest poverty concentrations based on the total number of students from low-income families attending the school or residing in the area. A district with more than 1,000 students may choose to use a ?feeder pattern? poverty rate calculation for middle and/or high schools when determining Title I ranking and allocations. The feeder pattern is the enrollment pattern of students in a district from one school to the next during their education. The feeder pattern poverty rate calculation uses the number of elementary school students from low-income families to estimate the number of students from low-income families at middle and high schools based on enrollment patterns. This allows middle and high schools to have a more accurate poverty level calculation, since some eligible middle and high school students may not be signed up for free and/or reduced-priced meals. The rankings are included in the Title I application, and districts must maintain documentation supporting their rankings. Assessment System Security States, in consultation with school districts, must establish and maintain an assessment system that is valid, reliable and consistent with relevant professional and technical standards. States must have formal, well-documented policies and procedures to maintain test security and ensure that districts implement them for all standardized tests. The Office of Superintendent of Public Instruction (OSPI) provides templates for all districts to document their Test Security and Building Plans for each assessment they administer. OSPI also provides detailed guidance and manuals on test security. Description of Condition Eligibility The District?s internal controls were inadequate for ensuring compliance with eligibility requirements. The District used poverty rates to rank and allocate Title I funds to school buildings. The District chose to use the feeder method for middle and high schools. This method bases the poverty rates off the poverty percentages for school buildings that feed into those schools. However, staff incorrectly calculated poverty rates from community eligibility provision (CEP) elementary feeder schools when determining high school poverty percentages. CEP schools are those that can serve free and reduced-price lunch to all students without collecting applications because of the high concentration of students from low-income families. To account for the lack of application data at CEP schools, the District should have calculated the poverty rate by multiplying the number of direct certification students by a 1.6 multiplier. In addition, the District used middle school building poverty rates rather than feeder rates when determining middle school poverty levels. Assessment Security System The District did not have adequate controls for ensuring it complied with assessment system security requirements. Specifically, the District did not have written Test Security and Building Plans in place for two of the 18 schools we reviewed that administered the Washington-Access to Instruction and Measurement (WA-AIM), Smarted Balanced, World-Class Instructional Design and Assessment (WIDA), and Washington Comprehensive Assessment of Science (WCAS) standardized tests, as OSPI requires. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. These issues were reported as a finding in the prior audit as finding 2021-002. Cause of Condition Eligibility In the prior audit, we made a recommendation regarding this topic due to District staff misunderstanding OSPI?s guidance over eligibility determinations. Due to the timing of the recommendation, the District was not able to correct the issues identified for the current audit, as the eligibility determinations were made and submitted as part of the Title I application before the start of 2021?2022 school year. Assessment System Security The District had turnover in the key roles responsible for creating the Test Security and Building Plans. Due to this turnover, District staff were unable to find support to evidence that the District had Test Security and Building Plans in place for two of the 18 schools we reviewed. Effect of Condition Eligibility Because the District allocated Title I funds incorrectly, the amount of services provided at schools with higher percentages of low-income students might have been unfairly limited. The District did not comply with eligibility requirements and did not allocate Title I funds from the highest to lowest school buildings, as federal regulations require. The District overallocated $23,280 to one middle school building that had a lower poverty rate than one other middle school building with a higher poverty rate. Assessment System Security Without a documented plan for two of the 18 schools we reviewed, the District cannot demonstrate it implemented and complied with OSPI?s assessment system security requirements for any of the four standardized tests it administered in the 2021?2022 school year. Recommendation Eligibility We recommend the District strengthen internal controls and perform additional research when necessary to ensure staff understand the guidance received and confirm it is complete and accurate before ranking and allocating Title I funding to school buildings. Assessment System Security We recommend the District improve its internal controls and establish policies and procedures to comply with OSPI?s assessment system security requirements. Specifically, the District should establish written test security building plans for all standardized tests it will administer. District?s Response Title I, Part A: Ranking and Allocation The Olympia School District will utilize the Title I, Part A guide released by OSPI annually and reference the School Low-Income counts (page 52) to ensure that the District is using the correct low-income codes that should be included based on the form selected in the grant application. The District will have the Executive Director of Teaching and Learning, the Program Manager, and OSPI Title I, Part A Program contact confirm that student data is accurate prior to submitting the 2023 2024 grant. Assessment System Security Prior to the 2022 school year, Assessment Services was part of the Teaching and Learning Department. Moving forward, OSD will move responsibility of Assessment Services back to this department. Part of this transition will include the Executive Director of Teaching and Learning and Assessment Director developing written test security building plans for all standardized tests administered in OSD Additionally, these same directors will work closely with OSPI?s Assessment Operations Department to ensure compliance with each state assessment?s training and documentation requirements. Auditor?s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District?s corrective action during our next audit. 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 34 CFR, Part 200, Title I ? Improving the Academic Achievement of the Disadvantaged, Section 78 ? Allocation of funds to school attendance areas and schools. Title 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards.