Finding Text
Federal Program Information:
Funding Agency: U.S. Department of Education
Title: Education Stabilization Fund
Federal Assistance Listing: 84.425D
Passthrough: State of New Mexico Public Education Department
Award Year: 2023
Criteria: New Mexico Public Education Department award letter requirements for capital expenditures and construction projects for
funds allocated to Fund 24308 on page 3.
You must receive written prior approval for purchase of equipment with a unit cost equal to or in excess of $5,000. Failure to
do so will result in denial of reimbursement for the cost of such an item. Attach an approved Federal Grant Equipment Form to
your BAR if you will include budget in object code 57331 “Fixed Assets (more than $5,000).” Attach the approved form to your
application if you submit an initial 2021-22 OBMS budget. The approved Federal Grant Equipment Form must also be uploaded
with your request for reimbursement (RFR) containing such expenses.
You must receive written prior approval for construction projects. Approval is documented in the SharePoint application and
on a Federal Grant Equipment Form. Any approved construction projects must comply with applicable Uniform Guidance
requirements, as well as the Department’s regulations regarding construction. See 34 CFR § 76.600. As is the case with all
construction contracts using laborers and mechanics financed by federal education funds, and LEA that uses ESSER funds for
construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the
construction contracts that all contractors or subcontractors must pay wages that are not less than those established for the
locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.)
Condition: During our testing of single audit disbursements and with regards to requirements of the Compliance Supplement for
equipment/real property management and special tests and provisions, we identified that the District had not obtained the Federal
Grant Equipment Form for the project. We reviewed three separate construction projects which used these funds.
The District had included the upgrades to its heating and ventilation and the repair of a roof in its grant application, which was
approved by the New Mexico Public Education Department, but it had not obtained and completed the Federal Grant Equipment
Form. While we have been instructed that these forms were required on all projects as well as individual construction projects and
have obtained in other district audits, the District had been told by an individual at the State that construction projects did not need
the form.
However, the following bullet point was in the award letters for the funds:
You must receive written prior approval for construction projects. Approval is documented in the
SharePoint application and on a Federal Grant Equipment Form. Any approved construction projects must
comply with applicable Uniform Guidance requirements, as well as the Department’s regulations regarding
construction. See 34 CFR § 76.600. As is the case with all construction contracts using laborers and
mechanics financed by federal education funds, an LEA that uses ESSER funds for construction contracts
over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the
construction contracts that all contractors or subcontractors must pay wages that are not less than those
established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.)
Additionally, the District did not meet the requirement for the Davis-Bacon prevailing wage requirement. The District had not
included the prevailing wage requirements in the contracts nor did the District obtain the weekly certified payroll reports from two
of the three projects. The District made no improvements in this area as compared to the prior year with no amendments to contracts, obtaining of Federal
Grant Equipment Forms, or obtaining of weekly wage certifications from construction or maintenance vendors.
Questioned Costs: None. The State of New Mexico Public Education Department (PED) had approved the grant application of
the District prior to obtaining the contract for updating the security, fire, and ventilation systems in the schools and the roof
replacement. As such, it had approved the construction project via approval of the grant application. Additionally, the PED has
been approving the requests for reimbursement which include details of the expenditures which indicate the PED is still approving
the ongoing costs of these upgrades with these funds, which are appropriate use of the funds.
However, the boiler project was an emergency issue which used these funds with no amendment to the application nor was there a
Federal Grant Equipment Form authorization obtained.
Cause: District personnel had obtained approval for their grant application from the PED and did not pay attention to the bullet
points in the award letter requiring them to complete the federal grant equipment form as well. Additionally, the District did not pay
attention to the bullet point in the award letter requiring them to include language in the contract with regards to prevailing wages.
The District did obtain the weekly certifications for the roofing project.
Effect: The District is not in compliance with Federal and PED regulations related to the grant and could put funding in jeopardy or
require the District to reimburse the program for improper grant distributions. The fact that the grant was approved by the PED and
that the contractor is aware of prevailing wage requirements on construction projects for school districts does not relieve the District
of following Federal, State, and grant requirements.
Auditor’s Recommendation: We recommend that the District establish a policy and implement internal control procedures regarding
the review of all grant award letters to ensure that the District is aware of all requirements that are imposed on the District with
accepting the funds. We also recommend that the District work with the contractor to obtain weekly wage certifications going back
from the beginning of the project forward to be able to demonstrate that the appropriate wages were paid during the full time-frame
of the project.
Responsible Official’s Plan:
Specific corrective action plan for finding:
District will a policy and implement internal control procedures regarding the review of all grant award letters to ensure
that the District is aware of all requirements that are imposed on the District with accepting the funds.
Timeline for completion of corrective action plan:
December 2023
Employee position(s) responsible for meeting the timeline:
Federal Programs Director and Federal Programs Clerk