2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, and restricted purpose 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 $2,188,531 in ECF Program funds to purchase laptops and tablet computers for students and school staff. 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 (e.g., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting 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 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 or employee?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 purchased laptops and tablet computers, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $2,188,531. However, the District did not maintain documentation showing it provided each laptop and tablet computer paid with program funds to a student or employee with unmet need. 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 or connection 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 Although employees in the District?s Finance Department knew that the District received an ECF Program award, they were not fully aware of all its grant regulations. District staff who were authorized to order eligible equipment did not review and sign the funding application or the reimbursement requests, and did not know about the required certifications stating that the District was only seeking reimbursement for eligible equipment provided to students or employees with unmet need. Further, the District relied on its consulting firm to interpret federal rules and required certifications. The District also experienced turnover in the position responsible for managing this program, and current staff could not locate any records supporting actual unmet need. Restricted purpose ? per-location and per-user limitations Staff did not know the District could not provide more than one device per student and employee. As noted earlier, the District also experienced turnover in the position responsible for managing the program. 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 and school staff 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? and staff?s 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. Restricted purpose ? per-location and per-user limitations Because the District provided more than one device per student and employee 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 and services provided to students and staff with unmet need, and maintain documentation demonstrating compliance ? Provide no more than one device per student and employee, and no more than one broadband connection per location, in compliance with the ECF Program?s requirements District?s Response Although Monroe School District has the utmost respect and appreciation for the work performed by our State Auditors, especially during these unprecedented times, we do not concur with the audit finding or the $2,118,531 in questioned costs. The primary premise of the audit finding was that the district did not have effective internal controls to appropriately document unmet need and to claim devices that met that requirement for reimbursement. The FCC, however, documented the following, ?We think that the 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 in the midst of the pandemic. We, therefore, will not impose specific metrics or process requirements on those determinations.? Monroe School District determined that it was necessary for all students, teachers, and paraeducators to have a district issued device in order to meet the increased challenges of providing safe and equitable access to education to all students during an ongoing pandemic and state of emergency. Remote learning required district students/staff to use district devices for various reasons including: ? Instruction: access to curriculum, supplemental resources, and required software through district licenses. ? Support: the ability for technology staff to provide direct technical support through remote access. ? State Requirements: meeting state testing requirements, such as SBA which cannot be completed on a personal device. ? Safety and Security: implementing web filtering to ensure safe browsing, content monitoring for timely student and staff intervention and support, and gave districts the ability to automatically authenticate student accounts to further prevent Zoom bombings. ? Equity: ensuring every student had the same level of access and provided access to accessibility tools not available on personal devices. Before the pandemic, our district's student and staff laptops were not prepped for at-home learning scenarios and thousands were aging out of their life cycle. Recognizing the unpredictable nature of the pandemic and the potential for a sudden shift back to remote learning at any time, transitioning to a one-to-one student to district issued device ratio was determined to be a critical unmet need in the Monroe School District. In addition, to maintain equitable access to education, devices that were not individually assigned were prepared and available for immediate distribution for the following: if a device were broken and needed replacing or if a student forgot their district device at home or if a rapid return to remote learning was required. In light of this, we believe that all devices ordered were utilized with the intent to meet the 'unmet needs' criteria as per our understanding and interpretation of the guidelines. 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 students 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 grant 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.