Finding 578053 (2023-002)

US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425U Federal Award Number: 213713-2122 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Special Test & Provisions – Wage Rate Requirements Finding Type: Significant Deficiency & Immaterial Noncompliance Criteria: Approved construction projects must comply with applicable Uniform Guidance requirements, as well as the department’s regulations regarding construction at 34 CFR 76.600. As is the case with all remodeling or construction contracts using laborers financed by federal education funds, a Local Education Agency (LEA) that uses ESSER funds for minor remodeling, renovation, repair or construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the contracts that all contractors or subcontractors must pay wages that are no less than those established for the locality of the project (prevailing wage rates). Condition: While performing single audit procedures it was noticed that the ESSER funds were used to purchase the equipment for the building upgrades that were also split with the Sinking Fund. Per the Compliance Supplement, recipients and subrecipients that use Education Stabilization Funds for minor use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Cause: This condition appears to be the result of the district and the contractor agreeing to utilize the equipment portion of the building improvements for ESSER funding and the wages and additional equipment would be funded with sinking fund tax monies. Effect: As a result of this condition, the District did not fully comply with Davis-Bacon prevailing wage requirements. Questioned Costs: None Perspective Information: The contract did not have the proper language to comply with Davis-Bacon prevailing wage requirements. Even if the wages and equipment are split between the Sinking Fund monies and ESSER funding the language will still need to appropriately be within the contract. Recommendations: We recommend the District add an addendum to the contract that contains the proper Davis-Bacon prevailing wage requirements language. Views of Responsible Officials: The School District will work with the attorney and the contractor to add the proper language to the contract.