SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Orting School District No. 344
September 1, 2023 through August 31, 2024
2024-001 The District did not have adequate internal controls for ensuring compliance with federal eligibility and paid lunch equity requirements.
Assistance Listing Number and Title: 10.553 – School Breakfast Program
10.555 – National School Lunch Program
Federal Grantor Name: U.S Department of Agriculture (USDA)
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The District participates in the Child Nutrition Cluster, which includes the School
Breakfast Program and National School Lunch Program. These programs provide
free and reduced-price meals to students from low-income families. The District
received $678,493 in federal funding to administer these programs during the
2023- 2024 school year, including $98,651 in Supply Chain Assistance awards.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
Eligibility
Direct certification is the process districts use to certify categorically eligible
children for free meals without further application. Washington state has an
electronic system that matches data from the Department of Social and Health
Services with Comprehensive Education Data and Research System data to produce
a “Direct Certification List.” Districts must download the direct certification list at
least monthly to ensure they serve free meals to eligible students.
Paid Lunch Equity
The USDA requires school districts participating in the National School Lunch
Program to provide sufficient funds to the nonprofit school food service account
for meals served to students who are ineligible for free or reduced-price meals (paid
lunches). If the average paid lunch price is less than the difference between the free
and paid lunch federal reimbursement rates (known as “equity”), districts must
increase the prices for paid lunches or provide additional nonfederal funding to
cover the cost of providing full-price lunches, or a combination of both.
Each year, the USDA issues the Paid Lunch Equity (PLE) tool, which districts must
complete to assist with calculations and decisions to meet this requirement. If the
PLE tool calculation indicates paid lunch prices must be increased but the District
decides not to increase prices, it must demonstrate it contributed the amount of
nonfederal funds required as calculated in the PLE tool. Districts can demonstrate
they have contributed nonfederal funds by completing the “GL 828 Restricted” tab
calculation of the Office of Superintendent of Public Instruction (OSPI)’s Fund
Balance Reporting tool. If the calculation shows the District has a deficiency of
revenues over expenditures, this means it has contributed nonfederal funds to its
food service account. If the deficit is large enough to cover the nonfederal
contribution required by the PLE tool, the District is instructed to print, sign and
date a copy of the GL 828 Restricted calculation as evidence it has met the
requirement.
Description of Condition
Eligibility
The District did not have adequate internal controls to perform direct certification
downloads monthly and has no monitoring to ensure staff complete the required
process.
Paid Lunch Equity
The District did not have adequate internal controls to ensure it completed the PLE
tool accurately. Specifically, the District did not correctly follow the tool
instructions to ensure the PLE tool was completed using weighted average pricing.
The District incorrectly used totals for all meal types instead of only student lunches
for part of the tool.
We consider these deficiencies in internal controls to be significant deficiencies.
Cause of Condition
Eligibility
District staff were aware of the requirements to determine the eligibility status for
students each month, but they did not complete the direct certification downloads
monthly as required. The Director of Nutrition Services is responsible for
completing the verification; however, they did not perform two of the monthly
downloads.
Paid Lunch Equity
District staff were aware of the requirement to raise lunch prices and attempted to
raise prices to meet paid lunch equity. However, they did not understand the
District’s price changes did not meet the pricing requirement. Therefore, they did
not understand the need to document the contribution of nonfederal funds to the
food services account to meet the paid lunch equity requirements of the program.
Effect of Condition
Eligibility
The District did not have documentation to support that it performed the direct
certification downloads for two of the six months tested. Without documentation
demonstrating it performed the direct certification downloads, the District is at risk
of not providing free meals to eligible students and providing free meals to
ineligible students.
Although the District did not perform direct certification downloads as required,
our testing found it provided free meals to eligible students.
Paid Lunch Equity
The District completed the PLE tool for the 2023-2024 school year and increased
the weighted average meal price by $0.02. However, the increases were not
sufficient to raise the weighted average price to meet federal requirements. The tool
included instructions that indicated the District did not meet equity and would have
needed to either raise its lunch prices by $0.23 (capped at $0.10 for the school year)
or provide $43,271 ($19,669 with $0.10 cap) in nonfederal funding to meet equity
requirements. The District did not increase the weighted average lunch price to the
capped required amount and initially could not demonstrate that it provided
nonfederal funds to meet equity requirements.
However, during the audit the District completed the GL 828 Restricted tab of the
Fund Balance Reporting tool that showed it had a deficiency of $405,035 for the
2023-2024 school year. This demonstrated that the District contributed more funds
into the revenue account than the amount expected from the PLE tool, and the
District complied with the paid lunch equity requirement.
Recommendation
Eligibility
We recommend the District establish internal controls to ensure staff perform direct
certification downloads monthly, retain documentation for downloads performed
and provide adequate oversight of the process to comply with direct certification
requirements.
Paid Lunch Equity
We recommend the District establish internal controls to ensure staff understand
how to complete the PLE tool and provide adequate oversight to ensure it is
accurately completed to comply with equity requirements. Additionally, if the
District decides to contribute nonfederal funds, it should establish controls to
complete, sign and date the GL 828 Restricted tab of the Fund Balance Reporting
tool to demonstrate it contributed sufficient nonfederal funds to the food service
account.
District’s Response
Eligibility: The District will document the internal controls that are in place for the
monthly direct certification downloads and will print the certification download
along with saving it electronically so that the files are easy to provide for future
audits.
Paid Lunch Equity: The District will document the internal controls that are in
place for the completion of the PLE tool and ensure that the form is completed
appropriately to show the continued use of nonfederal funds that are used yearly to
fund the food service account fully. The District will also make sure to ‘print’ the
GL 828 tab of the Fund Balance Reporting tool that is done yearly no later than
November and sign it immediately after completion of the year end process to
provide for the proof that the district has and continues to contribute sufficient
nonfederal funds to the food service account.
Auditor’s Remarks
We appreciate the steps the District is taking to resolve this issue. We will review
the condition during our next audit.
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.
RCW 28A.235.280(3) Free school meals—Systems to identify students, at least
monthly, schools and school districts shall directly certify students for free school
meals if the students qualify because of enrollment in assistance programs,
including but not limited to the supplemental nutrition assistance program, the
temporary assistance for needy families, and medicaid.
RCW 28A.300.255 Meal charge policies, The office of the superintendent of public
instruction shall collect, analyze, and promote to school districts and applicable
community-based organizations best practices in local meal charge policies that are
required by the United States department of agriculture in memorandum SP 46-
2016.
Title 7 CFR Part 210, National School Lunch Program, section 14, Resource
management, Part E, describes the requirements for pricing paid lunches.