Finding Text
Criteria or Specific Requirement: Tier I day care homes are those operated by providers whose own household meets the income standards for free or reduced price meals, or those located in low-income areas. A low-income area is one where at least 50% of the children are eligible for free or reduced price school meals. Sponsoring organizations may use school enrollment data or census data to determine if a home is located in a low-income area.
Condition: During our testing, we noted the City incorrectly determined two-day care homes as tier II instead of tier I.
Questioned Costs: None.
Context: Two out of the 35 samples tested for day care home tier determinations were based on school enrollment data that was superseded as of the date the determination was performed.
Cause: The program staff that performed the tier determination on May 11, 2023, and May 12, 2023, was new at the time and was unaware of when the school enrollment data was revised by the California Department of Education (CDE). The FY 21-22 school enrollment data was utilized instead of the FY 22-23 school enrollment data, which was available as of April 4, 2023, on CDE's website.
Effect: The two-day care home providers received less reimbursements than they were eligible for and the City reported less federal expenditures than they would have using the correct tier pricing.
Recommendation: We recommend the City implement controls and procedures to ensure the most current school enrollment data at the time the tier determination is performed is utilized as the basis of the determination.
View of Responsible Officials: There is no disagreement with the audit finding.