The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, procurement and restricted purposes requirements. "See Schedule of Findings and Questioned Costs for chart/table" 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 $809,553 in ECF Program funds to lease 5,174 laptops and an additional $162,146 to purchase 442 laptops 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 must only seek reimbursement for the eligible devices provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving reimbursement for eligible equipment purchased for use solely at the school or held for future use (i.e., warehousing). Procurement When using ECF Program funds to purchase eligible equipment, the Federal Communications Commission (FCC) requires recipients to comply with all applicable state or local procurement laws by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. State law and District policy allow for the purchase of goods and services from contracts awarded by another government or group of governments via an interlocal agreement or contract, a process often referred to as ?piggybacking.? If entering into such an agreement, the District must confirm the awarding entity followed all procurement laws and regulations applicable to the awarding entity when selecting the service provider. 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, they could only request program funds for eligible equipment 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 Wi-Fi hotspot per student or school employee with unmet need, and no more than one fixed broadband connection per location, such as a student?s residence. Description of Condition Allowable activities and costs/restricted purpose ? unmet need 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 requested reimbursement only for eligible equipment provided to students and school staff with a documented unmet need. Specifically, the District leased and purchased 5,616 laptops based on its estimate of unmet need, and it requested reimbursement for these expenses totaling $971,697. However, the District did not maintain documentation showing it provided each laptop paid with program funds to a student with unmet need. Procurement Our audit found the District?s internal controls were ineffective for ensuring it followed state law and its own policy when procuring equipment that it charged to the ECF Program. The District paid one service provider $162,146 for laptops. However, the District did not maintain documentation showing it verified the awarding entity was a government or group of governments that met the most restrictive procurement practices applicable to that entity, nor that the District obtained the price as negotiated by the awarding entity. 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-location and 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 and location. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need District staff 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. Procurement The District experienced turnover in the position responsible for managing this program and procuring the laptops. Further, current staff could not locate procurement records to show the District checked the awarding entity was a government or group of governments that met the most restrictive practices applicable to the awarding entity, nor any records to support that it paid the price as negotiated by the awarding entity. Restricted purpose ? per-location and per-user limitations Staff said they did not know the District could not provide more than one device per student and; therefore, did not establish a process to ensure each student would only receive one computer purchased with ECF Program funds. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose ? unmet need 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. Procurement Without maintaining documentation showing the District verified the awarding entity met the most restrictive practices applicable to that agency, nor obtained the price as negotiated by the awarding entity, the District cannot demonstrate it complied with procurement requirements. Restricted purpose ? per-location and per-user limitations Because the District provided more than one device per student and received reimbursement for them, it did not comply with the FCC?s requirement. As noted in the allowable activities and costs section above, we are questioning the costs for these devices. 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 ? Comply with state law and its own policy when procuring goods and services paid with ECF Program funds, and keep documentation supporting the procurement methods it used ? Monitor to confirm it provides no more than one device per student in compliance with the ECF Program?s requirements District?s Response In general, the Snohomish School District disagrees with your finding. In FCC 21-58, released May 11, 2021, paragraphs 52 and 53 refer to schools seeking reimbursement for computers not used ?solely? in schools and libraries. Paragraph 52 also states that the FCC ?construe the statute in light of that primary purpose (off-campus connectivity), while not precluding the likely reality of the need for some use of the eligible equipment, and perhaps incidental use of mobile services at school and library locations as well, as long as the eligible equipment and services were purchased to provide off-campus access? (emphasis added). The Snohomish School District used ECF funds to obtain computers to be used at home by students and staff. Determining the unmet needs of our students while there was lack of connectivity was a barrier to the assessment itself. To us, "unmet need" was any student who required a device but did not possess one. Consequently, we provided a device to any student who requested one. We estimated our unmet need at the 5,616 computers ordered. We also believe the FCC should have done a better job of providing detailed guidance for administering the EFC grant. The original FCC 21-58 guidance was vague in some areas and we did our best to document our procedures. For example, paragraph 18 states ?we will not dictate specific data collection requirements.? We feel we did a thorough job of tracking the units purchased with the ECF funds. The FCC provided supplemental FAQ documents, which we were to use as further guidance and clarification. However, these FAQ?s were published after we had completed our application and should have been more timely and included in the original FCC 21-28 document. We agree that not every laptop was individually allocated to staff members or students. A portion of these laptops was instead designated to carts for daily usage within our school environment. This strategic decision allowed us to continually update software and configurations, ensuring each device's readiness for potential off-site use. Before the pandemic, our school's student and staff laptops were not prepped for at-home learning scenarios. However, recognizing the unpredictable nature of the pandemic and the potential for a sudden shift back to remote learning, we diligently worked to prepare all devices for seamless transition from classroom to home use. In order to validate this readiness and keep the devices updated, we leveraged daily use within schools. The devices that were not individually assigned were effectively used as 'cart laptops,' prepared and available for immediate distribution if a rapid return to remote learning was required. It's crucial to note that these devices weren't merely "spares." Each school location had an additional inventory for that purpose. Instead, these 'cart laptops' were part of our agile strategy to ensure uninterrupted learning, ready to meet the 'unmet needs' of students at any given moment. The finding states that the district did not maintain documentation showing it provided each laptop to a student with unmet need. We disagree with that statement. We maintained a spreadsheet showing every laptop purchased with ECF funds, showing the lease or PO number, the laptop model and serial number, and the student or staff member it was assigned to. For laptops that were not assigned to a specific student, we have records showing the make and model of the laptop, the serial number, and the school and cart to which the laptop was assigned. The finding also states that we did not document that one service provider was a government or group of governments. We disagree with that statement as well. That service provider was OETC, a cooperative that the district has used since 2008. OECT represents a consortium of governments and has since their inception, including K-12 schools, educational service districts, higher education, government agencies, and libraries. As a non-profit consortium of governments, OETC leverages the buying power of educational entities to procure quality technology at competitive prices, making it a reliable and widely used source across educational institutions. We used OETC alongside other recognized state contracts to ensure we adhered to responsible purchasing practices even in challenging circumstances. In light of this, we believe that all laptops ordered, barring those instances where a student received more than one, were utilized with the intent to meet the 'unmet needs' criteria as per our understanding and interpretation of the guidelines. We, therefore, maintain that our approach was both prudent and compliant with the spirit of the guidelines and the finding is thus not warranted. 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.