FINDING - District controls over ESF Program expenditures did not always ensure compliance with Federal regulations, resulting in questioned costs totaling $6,028,388.
CRITERIA - The ESF Program provides funding to prevent, prepare for, and respond to the COVID-19 pandemic, including additional compensation payments for teachers, principals, and other school personnel. United States Department of Education guidance provides that additional compensation payments for school personnel must be reasonable and necessary and consistent with Title 2, Section 200.430(f), Code of Federal Regulations. According to that Section, employee compensation must be according to an agreement entered into before the services were render or according to an established plan followed by the subrecipient so consistently as to imply, in effect, an agreement to make such payment.
CONDITION - For the 2023-24 fiscal year, the District reported ESF Program expenditures totaling $24 million, including additional compensation totaling $11.6 million to 1,511 employees, the 5 Board members, and the Superintendent.
The Board and the teachers union established a plan to award additional compensation supplements and the plan extended beyond teachers to include all employees, Board members, and the Superintendent. The plan established additional compensation amounts per individual ranging from $2,166 for COVID-19 retention and recruitment supplements up to $5,414 for COVID-19 knowledge and experience retention supplements based on years of service. The plan also only authorized two compensation supplements for each individual; however, the District inadvertently awarded four compensation supplements to each individual.
CAUSE - District personnel indicated that supplements were authorized pursuant to the Board-established plan and the FDOE-approved ESF Program documents and related amendments. Notwithstanding, the additional compensation amounts exceeded the established plan amounts because four compensation payments were awarded instead of two.
EFFECT - By awarding the four compensation supplements, the District effectively doubled the amounts established in the plan and incurred questioned costs totaling $6,082,388. Absent effective procedures to ensure that ESF Program compensation expenditures comply with the Board-established plan, the District cannot demonstrate compliance with Federal regulations, resulting in questioned costs totaling $6,028,388.
RECOMMENDATION - The District should enhance procedures to ensure compliance with Federal regulations by limiting additional compensation to the amounts established by the Board. In addition, the District should document to the FDOE to allowability of these questioned costs or contact the FDOE regarding the necessary corrective action.
DISTRICT RESPONSE - Although we disagree with the finding, moving forward, and in accordance with your recommendation, the Putnam County School District will review procedures that ensure compliance and make any necessary changes where needed.
The district believes that the board and state approved additional compensation followed the budget narrative including all amendments, specifically amendments #8 and #11 in our federal project (#540-1211A-2C001). All payments were done via an internal procedure through MOUs that are signed between the Putnam Federation of Teachers/United (PFT/United) and the School Board. The MOUs were signed on September 27, 2023, November 29, 2023, February 26, 2024, and April 3, 2024 with payments being disbursed within 30 days after each.
In fiscal year 2023-24, there were four iterations of payments made which reflected budget narratives from the original award letter, amendment 8 and amendment 11. The payments were processed using an internal procedure that ensures an agreement between the District and the PFT/United. These signed agreements align with the expectations of the Code of Federal Regulations in Title 2, Section 200.430(f) where employee compensation must be according to an agreement entered into before the services were rendered or according to an established plan followed by the subrecipient so consistently as to imply, in effect, an agreement to make such payment.
In regards to doubling the amounts established in the plan, the PCSD believes amendment #8 and the accompanying email chain with the amendment provided for two additional iterations of the compensation and thus put us within the correct number of compensation payments to PCSD employees throughout the life of the project.