Finding Text
Criteria
Michigan Department of Education awarded the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) program to public school academies operating before fiscal year 2022. Under the program, Academies cannot allow the transfer of ESSER funding to other academies.
Condition
The Academy incurred related ESSER expenditures based on the intergovernmental agreement with Washington-Parks Academy. Pursuant to the intergovernmental agreement, approved by the relevant PSA Boards and Authorizer, the Academy received ESSER funding as a second-tier subrecipient. However, the State of Michigan deemed the incurred expenditures ineligible. Expenditure reimbursements were initially made by the State and the Academy firmly disputes that the subsequent reimbursements were unallowable because of the pre-approvals received by the Academy to be a sub-recipient of a federal award, but supports trying to resolve the relevant issues.
Context
During the year ending June 30, 2022, the Academy incurred ESSER expenses according to the previously approved intergovernmental agreement from a pass-through entity as a second-tier subrecipient, which the State subsequently disallowed.
Cause and Effect
The Academy relied on the previously approved intergovernmental agreement as authority to incur ESSER expenditures.
Recommendation
We recommend the Academy return ESSER dollars received from Washington-Parks Academy.
Management’s Response
The Academy signed a Promissory Note with Washington Parks Academy on February 8, 2024, to return all the ESSER dollars transferred to the Academy plus interest back to Washington Parks Academy over the next 60 months.