Finding 47865 (2022-001)

Level of Effort - Maintenance of effort- Significant Deficiency in Internal Control over Compliance Title I Grants to Local Educational Agencies AL#84.010A Passed through Texas Education Agency 21610101108908 22610101108908 Criteria: Per Texas Education Agency(TEA)guidance on ESEA Section 8521, when the district (LEA) is awarded ESSA Funds, LEA's are required to comply with Level of Effort - Maintenance of Effort(MOE) on which the District must maintain a minimum of 90%of its expenditures for public education from state and local funds from one year to the next. Per 2cfr 200.303, non-federal entities should establish and maintain effective internal control over compliance, such as monitoring expenditures on the state and local funds throughout the year. Condition: Preliminary calculation of the MOE compliance using 2021-2022 fiscal year data to be finalized subsequent to year end, shows that the LEA will not pass four compliance tests to comply with MOE. Cause: District continued to have a decrease in student enrollment and had a significant number of staff change of funding source. District also received alternative sources of revenues that made the district expend more with those other grants causing the noncompliance in MOE. Effect: Per section 8521(b)(1), ESEA, If the LEA fails to meet MOE compliance requirements and if the LEA failed to meet the MOE requirement in one or more of the five immediately preceding fiscal years, the District could receive notification form TEA indicating that a reduction of the amount of funds allocated under ESEA-covered programs in exact proportion to the LEA'S failure to meet the requirements would occur. No noncompliance in MOE has been noted in the five years preceding the fiscal year. Actual effect of noncompliance will be dependent on the District's MOE compliance in the subsequent years. Perspective: Previous five-year annual Moe reports and the report available as of the date of testing based on 2020-2021 fiscal year data shows the District has been and is in compliance with MOE requirements. However, preliminary calculations using 2021-2022 fiscal year data show the District will not comply with MOE requirements when final report become available. Questioned Costs: $0 Auditors' Recommendation: CRI recommends monitoring of enrollment projections and coordinating meetings with human resources and payroll departments to identify timely impact when staff funding changes occur. CRI also recommends quarterly reviews of actual expenditures compared to budget to ensure that MOE tests will be met by the year-end. Management Reponse: Management agrees with the finding. See corrective action plan on page 181.