Prosser School District No. 116 September 1, 2020 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, 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: 202101054 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $192,674 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 $192,674 in ECF Program funds to purchase 600 laptops for students and 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 must only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving 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 and services 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 and school staff with a documented unmet need. Specifically, the District purchased laptops, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $192,674. However, the District did not maintain documentation showing it provided each laptop paid with program funds to a student 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-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. 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 another department received an ECF Program award, they said they did not know the program was federally funded and, therefore, unaware of all its regulations. Further, staff did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate that the District provided during the application process was sufficient to comply with this requirement. Additionally, the staff responsible for distributing the laptops to students did not know about the unmet need requirement. Restricted purpose ? per-location and per-user limitations Staff said they did not know the District needed to maintain documentation showing it only provided one device and/or connection per student and employee. 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 staffs? 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 did not maintain 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 and staff with unmet need, and maintain documentation demonstrating compliance ? 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 Prosser School District does not concur with the audit finding being issued by the State Auditor?s Office. The District was acutely aware of the requirement for the Emergency Connectivity Fund to be used to fill an ?unmet need? to keep students engaged and continue their learning progression during the COVID-19 pandemic, which presented unique and challenging circumstances that had to be addressed immediately. During a meeting with State Auditor?s Office, the District indicated that their interpretation of ?unmet need? did not deviate from their ECF initial application. Therefore, if ?unmet need? was established at the time of the grant application, it should be reasonably assumed that if reimbursement was only requested for that same interpretation of ?unmet need?, it would be an allowable cost. Per the Federal Communications Commission Order FCC-CIRC21-93-043021, question 77: ?We think 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 a pandemic. We, therefore, will not impose any specific metrics or process requirements on those determinations.? And from question 53: ??we are sensitive to the need to provide some flexibility during this uncertain time. If those connected devices were purchased for the purpose of providing students?with devices for off-campus use consistent with the rules we adopt today, we will not prohibit such on-campus use.? The SAO?s definition of ?unmet need?, as referenced in the ?Background? section of this report, further clarifies that ?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?. The District took reasonable measures to gauge the ?need? from the students and staff prior to the initial and subsequent ECF funding requests. Given the smaller size of District and surrounding community, with a Technology Department averaging 2.5 FTE during this time, it was easy for the Program Coordinator to keep a pulse on the overall need of the District. The need being that all students and staff had access to ?connected devices and broadband connections sufficient to engage in remote learning.? The initial priority was to get one device in each home (regardless of the number of students), then to get one device for each student, which took multiple funding cycles to achieve. Even if a student had a personal device, the District justified unmet need due to the fact that personal devices could not be managed by the district (tech support, security measures, etc.) which would have further hindered the student/ teachers? abilities to sufficiently engage in remote learning. Although the District did not mandate a 1:1 Chromebook initiative, students were expected to utilize their Chromebooks and were never given the opportunity to check out a secondary device. Unfortunately, the software system widely used for checking out Chromebooks is limited to current data, which prevented the District from providing historical data to prove the compliance with the FCC guidelines. It is important to note that the expectation to maintain historical software data, rather than dynamic software data, was not addressed by the State Auditor?s Office until the end of the 2022-2023 school year, and was not an initial requirement of the EFC program. Therefore the audit conducted for the 2022-2023 school year will likely end in a similar audit finding. It should also be noted that due to District turnover, the staff within the Finance Department, who were questioned about the Emergency Connectivity Funding (ECF) Program, were not responsible for submitting the reimbursement claim, nor tracking the ?unmet need? requirement during this audit period and therefore, should not be reflected in the finding. Further, the staff who may not have understood the ECF funding type during the specific audit cycle are knowledgeable about both state and federal funding and will take the appropriate steps to ensure future grant submissions, reporting, and funding requests are handled in accordance with the associated funding source. Lastly, the statement that staff who were distributing the devices did not know about the unmet need requirement, may be partially true, only in the fact that they did not know they needed to document the unmet need at the time of distribution. If ECF is utilized for the distribution of future devices or services, the District will ensure to add questions for the students and staff to justify the need for such device/s prior to distribution. 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.