2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $827,737 Background: The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $968,430 in ECF Program funds to purchase Chromebooks and broadband services for students. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Allowable activities and costs ECF Program recipients must only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing).Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District?s internal controls were ineffective for ensuring it requested reimbursement only for eligible equipment provided to students with a documented unmet need. Specifically, the District purchased Chromebooks, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $823,737. However, the District did not maintain documentation showing it provided each Chromebook paid with program funds to a student with unmet need. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need Although employees in the District?s Finance Department knew that another department received an ECF Program award, they were unaware of all its regulations. Specifically, District staff did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose ? unmet need Because the District did not have documentation supporting whether it provided eligible equipment to students with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students? actual unmet need means that most costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District?s expenditures are allowable, we are questioning all unsupported costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Recommendation We recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF Program awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students with unmet need, and maintain documentation demonstrating compliance with this requirement. District?s Response The COVID-19 pandemic was unprecedented and the need to get learning devices and connectivity to all K-12 students was an extensive and challenging undertaking by the Battle Ground School District. Congress recognized the learning challenges students faced by the pandemic and passed the American Rescue Plan in March of 2021 to include the Emergency Connectivity Fund (ECF), a $7.171 billion program that helps schools and libraries provide the tools and services students and communities needs for remote learning during the COVID-19 emergency period. During the pandemic the District was required to expand its chromebook device program from the current 7,300 students in grades 6-12 to 12,300 students in grades K-12, providing every student to meet their needs with equitable access to learning and meeting the required modes of learning styles including remote and hybrid learning. All District chromebooks are installed with Go Guardian, a software devoted to proprietary teaching and learning tools that allow for direct teacher control and CIPA required Internet web filtering. Now that schools have returned to traditional learning students in grades K-5 are provided devices under a check out program to support their needs of continuing learning remotely.The new ECF grant was administered under the Federal Communications Commission (FCC) using the Universal Service Administrative Company (USAC). The District contracted with a consultant to assist with getting our ECF application completed and submitted for reimbursements. We relied heavily on the consultants expertise to keep us apprised on all compliance. During the ECF grant period, with certification of funding through June 30, 2022, the District lacked 2,900 devices for students with a need, applied for ECF funding for 1,900 devices and sourced the rest with local funds. The District barcodes and inventories all chromebook devices. During the inventoried distribution of ECF funded chromebooks about half were distributed directly to students with need and the other half were distributed to school libraries and classrooms to be used for students who have a need to check out for remote learning. A small portion remained in a warehouse waiting for a distribution swap out of devices to students no longer receiving Google updates and considered obsolete. Based on the guidance below, we have spent all funds for allowable costs, that those costs were reasonable and necessary and for students with unmet needs. Districts were able to determine whether students had unmet needs, and for our district this meant addressing instances where students may share a home device with others, the device was too old or slow to function properly, student owned devices did not have the appropriate security in place to protect students during learning, and operationally the district could not access personally owned devices to provide the thousands of technical, problem solve technical questions, keep students safe and issues students faced during remote learning. Based on these experiences, unmet need was defined broadly, but within allowed parameters and inventory records were kept. Devices for remote learning could also be used at school. During the pandemic in Washington State we experienced times when classrooms, schools and or districts were closed by health department and state regulations because of outbreaks. Districts had to be prepared to support remote learning each day with constantly changing guidance on who was allowed to be in person. Since receiving the audit finding, we became aware of the following guidance from the Federal Communications Commission, titled ?Emergency Connectivity Fund Common Misconceptions?, ?Misconception #2: If schools have returned to in-class instruction for the upcoming school year, they are not eligible to participate. Answer: This is false. Equipment and services provided to students or school staff who would otherwise lack sufficient access to connected devices, and/or broadband internet access connection while off campus are eligible for Emergency Connectivity Fund Support.? From the Federal Communications Commission Order FCC-CIRC21-93-043021, question 77: ?We think schools are in the best position to determine whether their students and staff have devices and broadband services sufficient to meet their remote learning needs, and we recognize that they are making such decisions in the midst of a pandemic. We, therefore, will not impose any specific metrics or process requirements on those determinations.? And from question 53: ?...we are sensitive to the need to provide some flexibility during this uncertain time. If those connected devices were purchased for the purpose of providing students...with devices for off- campus use consistent with the rules we adopt today, we will not prohibit such on-campus use.? The district used devices to support students in a manner we feel is consistent with the guidelines established by the FCC. Devices for remote learning could also be used at school. During the pandemic in Washington State we experienced times when classrooms, schools and or districts were closed by health department and state regulations because of outbreaks. Districts had to be prepared to support remote learning each day with constantly changing guidance on who was allowed to be in person. Further, we are not familiar with any specific guidance stipulating the time frame allowable for distribution of devices to students, specifically those that were being distributed to students during the audit period to replace obsolete devices that were still in student possession from the hectic period of time where we pivoted to remote learning within days. The ?lack of metrics? and the ?flexibility? allowed by the FCC indicates we were following the guidelines. We appreciate the auditor?s work and diligence. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the grant requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. 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. Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.