Finding Text
FINDING 2024-002
Subject: Title I Grants to Local Educational Agencies - Earmarking
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014,
S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-005.
Condition and Context
An effective internal control system was not in place at the School Corporation to ensure compliance
with requirements related to the grant agreement and the Earmarking compliance requirement.
Title I grant applications and corresponding grant award agreements require a "reasonable amount
of funds" to be set aside for the Homelessness Reservation services; the Homelessness Reservation setaside
amounts for FY2022 and FY2023 grants were $10,000 and $5,000, respectively.
The School Corporation was unable to provide documentation showing that it met the Earmarking
compliance requirement for its Homelessness Reservation in the aforementioned grant years. Additionally,
the School Corporation did not carry over the funds to provide Title I, Part A services to students
experiencing homelessness in the subsequent school year and reserve funds from the next year's grant
award for this purpose as required. No expenditures related the Homelessness earmarking compliance
requirement were identified.
Additionally, no documented internal control activities were identified over Parent Involvement
Earmarking compliance requirements to ensure adequate expenditures were set-aside (i.e., the School
Corporation is not doing regular calculations or keeping any running totals of parental expenditures per
grant award).
The lack of internal controls was a systemic issue throughout the audit period. Noncompliance was
isolated to the Homelessness Reservation requirement for the aforementioned fiscal grant years.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
20 USC 6313(c)3 states:
"(A) In general
A local educational agency shall reserve such funds as are necessary under this part,
determined in accordance with subparagraphs (B) and (C), to provide services comparable to
those provided to children in schools funded under this part to serve—
(i) homeless children and youths, including providing educationally related support
services to children in shelters and other locations where children may live;
(ii) children in local institutions for neglected children; and
(iii) if appropriate, children in local institutions for delinquent children, and neglected or
delinquent children in community day programs.
(B) Method of determination
The share of funds determined under subparagraph (A) shall be determined—
(i) based on the total allocation received by the local educational agency; and
(ii) prior to any allowable expenditures or transfers by the local educational agency.
(C) Homeless children and youths
Funds reserved under subparagraph (A)(i) may be—
(i) determined based on a needs assessment of homeless children and youths in the local
educational agency, taking into consideration the number and needs of homeless
children and youths in the local educational agency, and which needs assessment may
be the same needs assessment as conducted under section 11433(b)(1) of title 42;
and
(ii) used to provide homeless children and youths with services not ordinarily provided to
other students under this part, including providing—
(I) funding for the liaison designated pursuant to section 11432(g)(1)(J)(ii) of title 42;
and
(II) transportation pursuant to section 11432(g)(1)(J)(iii) of such title.
34 CFR 200.77 states in part:
"Before allocating funds in accordance with § 200.78, an LEA must reserve funds as are
reasonable and necessary to—
(a) Provide services comparable to those provided to children in participating school
attendance areas and schools to serve—
(1)
(i) Homeless children and youths, including providing educationally related
support services to children in shelters and other locations where homeless
children may live.
(ii) Funds reserved under paragraph (a)(1)(i) of this section may be—
(A) Determined based on a needs assessment of homeless children and
youths in the LEA, taking into consideration the number and needs of those
children, which may be the same needs assessment as conducted under
section 723(b)(1) of the McKinney-Vento Homeless Assistance Act; and
(B) Used to provide homeless children and youths with services not ordinarily
provided to other students under this subpart, including providing—
(1) Funding for the liaison designated under section 722(g)(1)(J)(ii) of the
McKinney-Vento Homeless Assistance Act; and
(2) Transportation pursuant to section 722(g)(1)(J)(iii) of that Act;
(2) Children in local institutions for neglected children; and
(3) If appropriate—
(i) Children in local institutions for delinquent children; and
(ii) Neglected and delinquent children in community-day school programs;
(4) An LEA must determine the amount of funds reserved under paragraphs (a)(1)(i)
and (a)(2) and (3) of this section based on the total allocation received by the LEA
under subpart 2 of part A of title I of the ESEA prior to any allowable expenditures
or transfers by the LEA; . . ."
Cause
The School Corporation did not have the homeless student liaison position in place throughout the
audit period to ensure the Homelessness Reservation requirements were being met throughout the grant
period. Additionally, the Director of Business Affairs and the Title I Grant Coordinator were unaware of the
requirement to roll over unused funds to the subsequent grant award.
Effect
The lack of an effective internal control system enabled noncompliance with the grant agreement
and the Earmarking compliance requirement to occur and remain undetected. The lack of internal controls
could enable the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the program.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management strengthen its system of internal
controls to ensure Homelessness Reservation and Parental set-aside expenditures are monitored
throughout the period of performance to ensure Earmarking compliance requirements are met before
expiration of the grant.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.