The Department of Education, Office of Fiscal Accountability and Compliance has completed a
fiscal audit of the No Child Left Behind (NCLB) Title I Grant of the Lakewood Board of
Education. The review covered the period September 1, 2011 through August 31, 2012. The
resulting report is enclosed.
The Department of Education, Office of Fiscal Accountability and Compliance has completed a
fiscal audit of the No Child Left Behind (NCLB) Title I Grant of the Lakewood Board of
Education. The review covered the period September 1, 2011 through August 31, 2012. The
resulting report is enclosed.
The Department of Education, Office of Fiscal Accountability and Compliance has completed a
fiscal audit of the No Child Left Behind (NCLB) Title I Grant of the Lakewood Board of
Education. The review covered the period September 1, 2011 through August 31, 2012. The
resulting report is enclosed.
Lakewood Board of Education 200 Ramsey Ave. Lakewood, NJ 08701
Dear Mr. Zlatkin:
The Department of Education, Office of Fiscal Accountability and Compliance has completed a fiscal audit of the No Child Left Behind (NCLB) Title I Grant of the Lakewood Board of Education. The review covered the period September 1, 2011 through August 31, 2012. The resulting report is enclosed.
Utilizing the process outlined in the attached Procedures for LEA/Agency Response, Corrective Action Plan and Appeal Process, the Lakewood board is required, pursuant to N.J.A.C. 6A:23A-5.6, to publicly review and discuss the findings in this report at a public board meeting no later than 30 days after receipt of the report. Within 30 days of the public meeting, the board must adopt a resolution certifying that the findings were discussed in a public meeting and approving a corrective action plan which addresses the issues raised in the undisputed findings and/or an appeal of any findings in dispute. A copy of the resolution and the approved corrective action plan and/or appeal must be sent to this office within 10 days of adoption by the board. Direct your response to my attention.
Also, pursuant to N.J.A.C. 6A:23A-5.6(c), you must post the findings of the report and the boards corrective action plan on your school districts website.
By copy of this report, your auditor is requested to comment on all areas of noncompliance and recommendations in the next certified audit submitted to the New Jersey Department of Education. If you have any questions, please contact Lisa D. McCormick at (609) 292-7742.
Sincerely,
Robert J. Cicchino, Director Office of Fiscal Accountability and Compliance
RJC/LDM/tc: Lakewood Cover Letter
Distribution
David Corso Susan Martz Robert Bumpus Michael Yaple Glenn Forney Michael Azzara Anne Corwell Karen Campbell Vanessa Davenport Lisa D. McCormick Thomas Dowd Andrea Sunderville Joanna Shinn Stephen M. Eells Laura A. Winters Thomas A. DAmbola Tobree Mostel Neva Musella Dieter P. Lerch, CPA
STATE OF NEW JERSEY DEPARTMENT OF EDUCATION OFFICE OF FISCAL ACCOUNTABILITY AND COMPLIANCE PO BOX 500 TRENTON, NJ 08625-0500
TOTAL $8,727,354.00 $0.00 $0.00 $132,259.00 $8,859,613.00 LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
Page 1 of 18 INTRODUCTION
The Office of Fiscal Accountability and Compliance (OFAC) conducted a fiscal audit of the districts FY 2011-2012 NCLB, Title I, Part A Program to determine whether the funds were spent in accordance with applicable law, regulations, and cost principles.
The scope of work performed included, but was not necessarily limited to: a) an examination of various documents - the grant application, board meeting minutes, payroll records, time and activity reports, teacher certifications, employment contracts, purchase orders, invoices, cancelled checks, Title I Unified Plans, budget reports and corresponding account analyses; b) reconciliation of disbursements to the Final Report; c) the selection of samples from payroll and non-payroll transactions; and d) the performance of related expenditure testing.
During the sample selection process, the OFAC was informed that a contract issued to a nonpublic service provider in the amount of $2,641,323 for instructional services to students was under review by a federal agency. Consequently, the aforementioned contract was excluded from the scope of work performed by this office. The OFAC reserves its right to examine and evaluate the document in the future to determine whether the associated disbursements constitute allowable program costs pending disposition by the federal agency.
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS, FURTHER ACTION REQUIRED OR RECOMMENDATIONS
Page 2 of 18 1. The LEA improperly included unexpended FY 2011-2012 Title I, Part A and SIA Part A funds of $1,298,832.50 and $29,914.53 on corresponding Final Expenditure Reports (FERs).
Pursuant to a September 11, 2012 broadcast memorandum issued by the Office of Grants Management (OGM) 1 , LEAs were required to submit one final expenditure report for each title in which FY 2012 NCLB funds were accepted and expended on allowable programs, services and/or activities.(emphasis added) A reconciliation of the districts FY 2011-2012 general ledgers maintained for Title I, Part A and SIA Part A to corresponding FERs disclosed that expenditures for several line items were overstated/(understated), as summarized below:
Title I, Part A SIA Part A Expenditure Category General Ledger Final Report Difference Expenditure Category General Ledger Final Report Difference 100-100 $12,700.00 $14,604.00 $1,904.00 200-100 $28,186.46 $37,186.00 $ 8,999.54 200-200 55,854.20 75,527.00 19,672.80 200-200 2,847.50 3,819.00 971.50 200-300 5,065,784.61 6,412,163.00 1,346,378.39 200-300 24,220.00 28,220.00 4,000.00 200-500 25,658.22 28,058.00 2,399.78 200-500 19,523.00 38,000.00 18,477.00 200-600 210,607.73 210,638.00 30.27 200-600 5,053.97 9,616.00 4,562.03 Admin 288,821.28 210,173.00 (78,648.28) Subtotal $1,298,832.50 Subtotal $29,914.53
Total $1,328,747.03
Despite multiple inquiries concerning the variances shown, district personnel failed to produce spreadsheets or other records which demonstrate how the amounts reported on the FERs were computed. The OFAC arrived at figures reported on the LEAs Title I, Part A FER, with exception of the Administrative line item, by recording appropriations from the Title I, Part A Budget Report, net of applicable adjustments and subtracting amounts used to establish FY 2012-2013 carryover 2 . This raised concern as the calculated expenditures included amounts that were not actually disbursed (emphasis added).
LEAs were required to liquidate all FY 2012 NCLB funds by October 15, 2012 in accordance with the aforementioned broadcast memorandum. Further inspection disclosed the district reduced appropriations in its P2-231 accounts by balances of purchase order amounts not liquidated by November 30, 2012. The LEA posted various adjustments to combine unexpended
1 This memorandum pertained to FY 2012 No Child Left Behind (NCLB) Final Expenditure Reports and was issued by Anne Corwell, Director of the OGM. 2 The LEA posted aggregate appropriations of $972,290.63 on September 30, 2013 via adjustment #126 to establish FY 2012-2013 carryover. This figure differs slightly from the reported carryover of $972,295.00. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS, FURTHER ACTION REQUIRED OR RECOMMENDATIONS
Page 3 of 18 funds from its P2-231 accounts with carryover of $972,290.63 in 20-234 account numbers; refer to the table below:
The combined total of $2,235,763.27 ($1,263,472.64 + $972,290.63) represents 25.62% of the districts FY 2011-2012 Title I, Part A award of $8,727,354.00. The aforementioned percentage exceeds the carryover limit of 15%, which would have necessitated the LEA to request the NJDOE to waive the restriction or forfeit all unexpended funds not authorized for carryover. Pursuant to section 1127(b) of NCLB, the NJDOE may waive the percentage limitation once every three years if the state determines the request is reasonable and necessary or supplemental appropriations become available. However, the LEA improperly reported carryover of $972,295.00 in lieu of the actual $2,235,763.27 4 balance of unencumbered funds on its Title I, Part A FER.
This apparent lack of adherence to legislative, regulatory and departmental requirements governing carryover and unexpended funds is not an isolated case. Although the Step 4, Title I Eligibility page of the LEAs NCLB Consolidated Grant Application disclosed no indication that funds from FY 2010-2011 were transferred into or added to the FY 2011-2012 Title I, Part A award, the district provided records which indicate otherwise. Specifically, a FY 2010-2011 Carryover Budget Report showed appropriations of $849,259.63 (established during FY 2011- 2012) and a residual balance $119,589.20.
The NCLB New Jersey Consolidated Formula Subgrant Fiscal Year 2011 Reference Manual (FY2011 Reference Manual) specified LEAs that have not obligated or spent all of the funds generated on the basis of the number of either public or nonpublic schoolchildren by the end of the current school year may carry over these funds into the next year, provided that the amount carried over does not exceed 15 percent (15%) of the LEAs total Title I, Part A, allocation. . . To carry over more than 15% of Title I, Part A funds, a district must apply for a waiver as a
3 This figure accounts for most of the Title I, Part A overstatements of $1,298,832.50. The remaining difference of $35,359.86 is explained by unspent funds that were accounted for as expenditures on the Title I, Part A FR which originated from: a purchase order adjustment of $19,676.76; corresponding balances of $4,175.15 in P2-231 and $11,513.43 in 20-233 accounts; and an immaterial variance of $(5.48). 4 On June 1 2013, the district reduced the total amount appropriated in its 20-234 account by $168,214.81 via adjustment numbers 397 and 491. From Fund-Program (Adjustment Nbr.) to 20-234 Amount P2 -231 (#130) $ 300,000.00 P2-231 (#182) 277,338.56 P2-231 (#183) 430,000.00 P2-231 (#184) 256,134.08 Total $1,263,472.64 3
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS, FURTHER ACTION REQUIRED OR RECOMMENDATIONS
Page 4 of 18 component of its Final Report using the [Electronic Web-Enabled Grant] EWEG system. The NJDOE will conduct a desk audit and review the districts waiver request.
The OGM further advised LEAs, All funds that a district cannot carry over must be released to the NJDOE to be reallocated via its September 11, 2012 broadcast memorandum. This obligation would have been satisfied through the FER process had the district reported the actual amount of Title I, Part A and SIA Part A funds disbursed for allowable program activities and services in the EWEG system. In particular, any funds that were over paid would have been subtracted from unexpended balances in the EWEG system. Based on the foregoing, the district is required to remit funds of $2,178,006.66 ($1,328,747.03 + $849,259.63) that were improperly retained for use without the requisite approval to NJDOE (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Further Action Required Due to the significance of this finding, the district is required to prepare and submit: 1) a reconciliation of Title I, Part A and Carryover disbursements from applicable account analyses to the FER for the 2012-2013 and 2013-2014 project periods; 2) copies of Budget Reports and corresponding account analyses; and 3) the Expense Account Adjustment Analysis by Adjustment # Report. The FY 2012-2013 and 2013-2014 reconciliations and supporting documents requested must be furnished within 30 days from the date of this report and 15 days from submission of the FY 2014 NCLB FER to OGM, respectively.
The district is directed to email all records to the attention of Lisa D. McCormick at [email protected] in portable document and EXCEL formats even if the finding is subsequently appealed (emphasis added). By copy of this correspondence, the OFAC requests OGM to notify our office following receipt of the districts FY 2013-2014 FER.
Finally, the LEA is reminded of its responsibility to prepare FERs using actual expenditures incurred during the applicable project period (emphasis added).
2. Inadequately documented non-salary expenditures of $468,484.83 were improperly charged to the Title I, Part A grant.
Approximately one-half million dollars was spent to acquire several hundred technological/computing devices and related professional development (PD) sessions absent any mention or rationale in the LEAs Title I Unified Plans. In addition, district personnel were unable to provide: any explanation why the devices were purchased in response to multiple inquiries; furnish listings of recipients; records acknowledging the receipt/possession of these devices and/or some indication where the items are kept, refer to the table on the next page:
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 5 of 18 Line Item Purchase Order # Date Vendor Description Amount 200-300 1204046 3/31/12 Apple, Inc. 480 iPads, 10 MacBook Pro Laptops, three 8- day professional development (PD) series $ 320,902.28 200-600 1202074 10/25/11 Staples Advantage 10 wireless internet routers 1,799.90 1203284 2/1/12 Apple, Inc. 9 days of PD, split w/multiple grants & fiscal years 2,456.89 1205153 6/1/12 Apple, Inc. 280 iPads with AppleCare 131,240.00 1205155 6/1/12 STM Bags, LLC 280 iPad cases 9,123.98 1205496 6/30/12 Staples Advantage 2 Epson multimedia projectors 1,675.78 Admin 1301828 8/1/12 Hewlett-Packard 2 laptops 1,286.00 Total $468,484.83
OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented (emphasis added). A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. A cost is allocable to a particular cost objective if the goods or services are chargeable or assignable to such cost objective in accordance with relative benefits received.
The items acquired were not deemed to be necessary and reasonable for the proper and efficient performance and administration of federal awards as set forth by the requirements of OMB Circular A-87, Attachment A, Section (C)(1). As a result, the sum of $468,484.83 must be refunded to the NJDOE (refer to the Schedule of Audit Recovery Due SEA at the end of this report).
Recommendation The LEA must ensure that expenses charged to Title I are allowable and support authorized program activities.
3. Unsupported/unallowable payroll expenditures of $56,851.03 were erroneously charged to the Title I, Part A program.
During the audit, copies of payroll records and purchase orders were requested to document salary and non-salary expenditures charged to the FY 2011-2012 Title I, Part A grant. The audit disclosed unsupported/unsubstantiated payroll costs were included in line item figures recorded on the LEAs FER as summarized on the next page:
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Additionally, the LEA charged workers compensation of $52,761.03 for Andrea Adams to the Title I, Part A grant. Ms. Adams was out for nearly the entire 2011-2012 school year. The LEA should have only charged those costs attributable to her actual work performed on Title I activities to the federal program. Conversely, Jennifer Korkowski served as a replacement for Ms. Adams during part of the school year and was paid a total of $12,716.00. Based on the foregoing, Ms. Adams workers compensation of $52,761.03 less $12,716.00 or $40,045.03 constitutes unallowable program costs.
OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented. Furthermore, EDGAR, 34 CFR 76.730(e) requires the district to keep records in a manner that facilitates an effective audit. As a result, the LEA is required to return the sum of $56,851.03 ($16,816.00 + $40,035.03) to the department for questioned costs attributable to the Title I, Part A program (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must improve procedures for the payment of expenditures related to the Title I, Part A program in accordance with the requirements of OMB Circular A-87.
4. Aggregate expenditures of $22,715.00 were improperly charged to the Title I, Part A and SIA Part A programs without any indication of an academic purpose.
According to the Step 4, Title I Eligibility Page of the districts NCLB Consolidated Application, the LBOE was approved to operate schoolwide programs at all Title I eligible schools. The audit disclosed LEA charged various items which do not appear to advance the intent and purpose of the Title I, Part A and SIA Part A programs. The following questioned costs were identified: LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 7 of 18 Program Line Item Purchase Order # Vendor Date Description Amount Title I, Part A 200-600 1202147 Honeywell 11/1/11 Web-based emergency alert system $ 12,275.00 SIA Part A 200-300 1204344 Allegheny Educational System 4/1/12 Training on laser engraver 250.00 Total $12,525.00
USDOE Non-Regulatory Guidance on Designing Schoolwide Programs Children (March 2006) indicates, in part, A schoolwide program is a comprehensive reform strategy designed to upgrade the entire educational program in a Title I school; its primary goal is to ensure that all students, particularly those who are low-achieving, demonstrate proficient and advanced levels of achievement on [s]tate academic achievement standards. It is unclear how the use of federal funds for these items advanced the educational needs of students.
In addition, district personnel indicated the partial salary of a Lakewood Middle School gym teacher was incorrectly posted to account 20-247-100-100-04-0004 on June 30, 2012 via disbursement adjustment #219. The related salary costs of $10,190.00 were subsequently charged to the Title I, SIA Part A grant in error.
The FY 2011 Reference Manual states in part that Title I, SIA Part A funds can be used to expand the programs and services being funded by Title I, Part A or can help the school address additional priority problems the school identified in its needs assessment. The aforementioned salary costs neither expands the program being funded by Part A funds, nor addresses an additional priority problem identified in its needs assessment.
Furthermore, OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented. As a result, the sum of $22,715.00 ($12,525.00 + $10,190.00) must be refunded to the department for the questioned costs identified above (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must improve procedures to ensure funds disbursed from federal funds represent allowable costs and conform to the requirements of OMB Circular A-87.
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
PUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 8 of 18 5. Expenditures of $19,200.00 incurred and charged to the Title I, SIA Part A grant were inadequately documented and/or deemed to be excessive and unnecessary for the efficient performance of the federal programs.
The audit disclosed that various inadequately documented and/or excessive and unnecessary costs were included in line item figures recorded on the LEAs FERs. In particular, the LEA, disbursed Title I, SIA Part A funds of $19,200.00 to LEAD America, a non-profit organization which helps prepare high school age students for college. The top 12 students from Lakewood High School (four freshman, sophomores and juniors) participated in a multiple day/night leadership program organized by LEAD America. The program was held at George Washington University in Washington, D.C. from June 23-27, 2012.
District personnel were unable to locate the corresponding invoice or provide a list of attendees. Notwithstanding, the costs incurred for this career and college ready activity equates to $320.00 per day (for a five day total of $1,600.00 per person) and were deemed to be excessive, particularly in this time of budgetary constraints. According to the FY 2011 Reference Manual, Title I, SIA Part A funds are allocated to schools in need of improvement to help low- performing students achieve academic proficiency and complement the use of these schools Title I Part A funds. The expenditures incurred were not considered to be necessary and reasonable to advance the statutory purpose of the Title I, SIA Part A program.
OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented (emphasis added). A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Based on the foregoing, the district must refund the sum of $19,200.00 to the department for these disallowed costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must improve procedures for the payment of expenditures related to the Title I, SIA Part A program in accordance with the requirements of OMB Circular A-87. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 9 of 18 6. Nonpublic expenditures of $1,062,220.74 charged to the Title I grant supplanted local funding sources and are therefore deemed to be unallowable program costs.
The district contracted with Tree of Knowledge, a third-party vendor to provide instructional services to nonpublic school students throughout the 2011-2012 project period. Three purchase orders were issued to cover the related costs as summarized below:
Line Item Purchase Order # Date Description Amount Admin. 1202101 12/27/11 Administrative charges for instructional services $ 16,325.49 1203882 3/1/12 Lease agreement 30,320.83 200-300 1202101 10/27/11 Instructional services 1,007,216.30 Total $1,053,862.62
The audit disclosed no indication how the services charged to the Title I, Part A grant supplemented those provided through other sources, such as Chapter 192 and 193. This serves to explain why in part the OFAC asked a district staff member to send an email to request nonpublic school officials bring their teacher schedules and information concerning their curriculum for the 2011-2012 school year to the Lakewood Board of Education (LBOE) offices for examination. Neva Musella conveyed our request for records to nonpublic school officials through an email dated August 28, 2013. The documents were not furnished for review. The OFAC asked Ms. Musella to resend the email to appropriate nonpublic personnel. A second email was sent on March 5, 2014. Only three out of 142 nonpublic school officials responded to Ms. Musellas email. As of the present date, no records have been produced for inspection.
Pursuant to section 1120 of NCLB, the LEA must provide an instructional program that meets the educational needs of nonpublic students who are failing or at risk of failing and supplements the classroom instruction provided by the private school. Educational services provided with Title I funds must be in addition to those services that the private schools provide all its children. The OFAC could not determine if the instructional services provided by the aforementioned vendor satisfied this legislative requirement due to the nonpublic school officials failure to produce the records requested for examination (emphasis added). Therefore, the expenditures summarized above are disallowed.
It was also noted that the LEA disbursed Title I, Part A funds to place advertisements for nonpublic consultation meetings, a parenting course and employment opportunities for teachers in various publications, refer to the following table:
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 10 of 18 Line Item Purchase Order # Date Vendor Amount Purchase Order # Date Vendor Amount 200-500 1301777 8/1/12 Yated Ne-Eman $ 240.00 1301780 8/1/12 Hamodia $ 400.00 1301779 8/1/12 The Voice of Lakewood 70.00 200-600 1203790 8/1/12 The Voice of Lakewood 31.27 1204956 6/1/12 The Voice of Lakewood 125.00 1204955 6/1/12 The Lakewood Shopper 200.00 1204957 6/1/12 Gannett NJ Media 391.85 Subtotal $ 541.27 Subtotal $ 916.85 Total $1,458.12 The classified teaching position ad stated, in part, the Lakewood Board of Education is searching for staff to work in nonpublic schools. The advertisement did not mention Title I at all and appeared to benefit the entire nonpublic school population. The parenting course announcement essentially opened the event to all parents within the community. The nonpublic consultation meeting ad stated Lakewood Board of Education NCLB Title I, IDEA, Chapter 192, 193 & 226 will hold a general consultation meeting. This meeting covered topics relevant to Title I, other federal funds and state financial assistance and would have occurred regardless of whether the LEA received Title I funds.
Further, Leopold Slomivc presented, "Dealing and Coping w/Struggling Students" workshops to 11 teachers (less than 20 in total) at the United Talmudical School. However, related documents show there were at least 45 different participants. Chaya Decklebaum was hired to work with 37 teachers at Bais Tova School to enhance the curriculum of the entire school.
Line Item Purchase Order # Vendor Date Description Amount 200-300 1301630 Leopold Slomivc 7/30/12 Workshops for teachers $ 4,400.00 1301630 Chaya Deckelbaum 8/1/12 Curriculum development 2,500.00 Total $ 6,900.00
United States Department of Education (USDOE) Non-Regulatory Guidance Title I Private Services to Eligible Private School Children (March 2003) states The professional development activities for private school teachers should address how those teachers can serve Title I students better, such as by providing information on research-based reading and mathematics instruction. It is inappropriate to use these funds to upgrade the instructional program in the regular classroom of the private school.
Section 1120A(b) of NCLB requires an LEA use Title I funds only to supplement the level of funds that would, in the absence of Title I funds, be made available from non-federal sources for the education of students participating in Title I programs. This supplement not supplant provision bars the district from expending funds generated by private school students on classroom instruction nonpublic school personnel are obligated to provide its children. Based on LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 11 of 18 the foregoing, the sum of $1,062,220.74 ($1,053,862.62 + $1,458.12 + $6,900.00) must be refunded to the department for these disallowed costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must ensure Title I program expenditures supplement, not supplant, state and local funds.
7. Adequate documentation was not provided which demonstrates nonpublic expenditures of $83,892.72 allocated to the Title I, Part A program represent allowable costs.
During the audit, copies of payroll records and purchase orders were requested to document salary and non-salary expenditures charged to the FY 2011-2012 Title I, Part A grant. The audit disclosed that various inadequately documented or unsupported costs were included in line item figures recorded on the LEAs FERs as summarized below:
Several purchase orders were issued on January 1, 2012 on behalf of nonpublic schools to cover the registration costs for individuals to attend an annual conference offered by the; Torah Umesorah, National Society for Hebrew Day Schools; refer to the table below:
Approximately 200 nonpublic teachers attended the conference on February 17-18, 2012 which cost $450.00 per person. Registration fees for roughly 140 people were charged to the Title I grant. District personnel were unable to locate a copy of the actual agenda and list of participants requested for inspection. A staff member indicated such listings were too difficult to maintain due to the numerous additions and deletions of attendees. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 12 of 18 Social services were provided to nonpublic students by Esther Gersten, a licensed social worker. In addition, one student underwent a psychiatric evaluation by Sabine Hack, M.D. in New York. Contemporaneous records evidencing funds were not reasonably available from other public or private sources to provide such services, the students eligibility for Title I comprehensive services, and the students served were not provided:
Line Item Purchase Order # Date Vendor Amount 200-300 1204348 4/1/12 Esther Gersten $ 3,200.00 1302407 9/1/12 4,800.00 1302409 9/1/12 1,800.00 200-300 1205480 6/30/12 Sabine Hack 950.00 Total $10,750.00
Psychiatric services are deemed to be outside the scope of comprehensive services set forth by Section 1115(c)(e) of NCLB and would otherwise be disallowed.
OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented. As a result, the sum of $83,892.72 ($73,142.72 + $10,750.00) must be refunded to the NJDOE for these questioned costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must improve procedures for the payment of expenditures related to the Title I program in accordance with the requirements of OMB Circular A-87.
8. Nonpublic expenditures totaling $27,770.86 were improperly charged to the Title I, Part A program without any indication of an academic purpose.
The LEA expended Title I funds for various supplies which are summarized on the next page. The items purchased do not appear to advance the intent and purpose of the Title I, Part A program.
A variety of arts and craft items were purchased primarily in the spring and summer of 2012 for Bais Tova School, a nonpublic school. The items included, but are not limited to: numerous cases of colored paper, 180 packages of velcro dots, tissue paper, glitter, buttons, oaktag, plastic baby dolls, sequins, foam shapes, beads, table cloths, floral tape, stickers, and popsicle sticks. Following is a summary of the related purchase orders:
LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 13 of 18 Line Item Purchase Order # Vendor Date Amount Purchase Order # Vendor Date Amount 200-300 1201704 W.B. Mason Co Inc. 10/1/11 $ 579.80 1205476 The Craft Shop of NY 6/30/12 $ 1,561.27 1201705 The Craft Shop of NY 10/1/11 2,274.45 1205483 Hygloss Products, Inc. 6/30/12 2,023.86 1201707 XPEDX 10/1/11 1,351.04 1205484 Gramco School Supplies 6/30/12 2,224.33 1205269 Roselle Paper Co 6/21/12 2,633.84 1301608 Hygloss Products, Inc. 7/30/12 1,547.10 1205268 Crafts N More 6/30/12 3,011.18 1301693 The Craft Shop of NY 8/1/12 1,970.78 1205448 Oriental Trading Co 6/30/12 2,017.92 1301706 Hygloss Products, Inc. 8/1/12 990.87 1205475 The Craft Shop of NY 6/30/12 3,920.17 1301748 The Craft Shop of NY 8/1/12 1,664.25 Subtotal $15,788.40 Subtotal $11,982.46 Total $27,770.86
Section 1120 of NCLB requires LEAs to provide eligible children attending private elementary and secondary schools, their teachers, and their families with Title I services or other benefits that are equitable to those provided to eligible public schoolchildren, their teachers, and their families.
USDOE Non-Regulatory Guidance on Title I Private Services to Eligible Private School Children (March 2003) clarifies, Simply providing the private school with instructional materials and supplies is NOT an option available to the LEA because it is neither a proper Title I program implemented by the LEA nor meets the equitability requirement.(emphasis added). Any supplies, materials or equipment purchased with Title I funds should be provided for the sole use of the Title I-funded staff to support the Title I services being provided. The acquisition of arts and craft supplies for nonpublic schools is not deemed to be an allowable use of Title I funds. Consequently, the district is required to remit the sum of $27,770.86 to the NJDOE for these questioned costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must ensure that expenses charged to Title I are allowable and support authorized program activities.
9. Nonpublic expenditures of $19,953.57 incurred and charged to the Title I, Part A grant were inadequately documented and/or deemed to be excessive and unnecessary for the efficient performance of the federal programs.
The audit disclosed that various inadequately documented and/or excessive and unnecessary costs were included in line item figures recorded on the LEAs FERs. Following is a summary of the questioned costs identified: LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONPUBLIC SCHOOL EXPENDITURES - FINDINGS AND RECOMMENDATIONS
Page 14 of 18 Title I, Part A - Consulting Fees An invoice submitted by Michelle Doyle, a consultant indicated her time was split/billed equally between Title I and IDEA, therefore only $1,612.62 or 50% of $3,225.24 of purchase order #1202597 should have been allocated to Title I.
Purchase order #1203808 in the amount of $5,287.20 was issued on March 1, 2012 to cover fees for Bowman and Company to review invoices submitted to the district by Tree of Knowledge (TOK) for instructional services. The Lakewood Board of Educations approval of this charge stated payment for this service was the responsibility of TOK.
David Rubel provided consultation services related to Title I, IDEA, and Chapter 192/193 funding for nonpublic beneficiaries. Mr. Rubel was paid, in part, to research ways to help the nonpublic students obtain more funds through Medicaid, among other things. It is unclear how much time was devoted specifically to the Title I program from the description of services rendered. However, the entire amount of purchase order #1205470 for $7,550.00 was improperly charged to Title I.
The LEA disbursed payments of $5,503.75 to Elie Wizman for consultation services with district attorneys, Mr. Rubel and a nonpublic school official from the IGUD organization regarding Title I and IDEA. However, the entire amount of purchase order # 1205471 was improperly allocated to Title I. Further, the hourly rate paid of $175.00 for over 30 hours of inadequately described meeting/conversations was deemed to be excessive.
OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and reasonable for proper and efficient performance and administration of federal awards, be allocable to federal awards, and be adequately documented (emphasis added). A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Based on the foregoing, the district must refund the sum of $19,953.57 to the department for these disallowed costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this report).
Recommendation The LEA must improve procedures for the payment of expenditures related to the Title I, Part A program in accordance with the requirements of OMB Circular A-87. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONMONETARY FINDINGS AND RECOMMENDATIONS
Page 15 of 18 10. On various occasions, the LEA failed to issue purchase orders prior to services being rendered (confirming order).
Various purchase orders, particularly those issued on behalf of nonpublic (NP) schools, were issued after the services were performed and/or invoices were received. Examples include, but are not limited to the following:
Line Number Purchase Order # Vendor Date Description Amount 200-300 1202602 Speech and Auditory Services 12/1/11 NP professional development (PD) $ 189.00 1203560 American Friends of YMS 2/27/12 NP PD on 2/9/12 825.00 1203718 Shani Loketch 3/1/12 NP PD during 10-11 grant period 3,800.00 1204274 Mary Courtney 4/1/12 NP PD from Sept. 11-Feb. 12 7,500.00 1204348 Esther Gersten 4/1/12 Therapy for one student 3,000.00 1301607 Pearl Blau Learning 7/30/12 NP PD throughout 11-12 school year 2,925.00 1301970 Zissel Munk 8/1/12 NP parent workshop on 3/27/12 2,100.00
N.J.S.A 18A:18A-2(v) indicates, in part, Purchase order" means a document issued by the purchasing agent authorizing a purchase transaction with a vendor to provide or perform goods or services to the board of education (emphasis added). Therefore, a properly executed PO must be issued prior to services being rendered.
Recommendation The LEA must implement a process to ensure purchase orders are issued before the receipt of goods and services from vendors.
11. Expenditures should have been allocated to the 2010-2011 project period.
A review of the general ledger revealed the district charged costs for the following purchase orders to the FY 2011-2012 Title I, Part A grant:
Line Number Purchase Order # Vendor Date Description Amount 200-300 1203718 Shani Loketch 3/1/12 NP PD during the 2010-2011 grant period 3,800.00 200-600 1301626 The Chronicle of Philanthropy 7/30/12 Annual Subscription to Chronicle of Philanthropy 52.50
Although no benefit was derived from these expenditures during the 2011-2012 project period which began on September 1, 2011, the associated costs were reported on the districts 2011- 2012 FER. These expenses incurred for purchase order #1203718 and 1301626 were allocable to FY 2010-2011 and FY 2012-2013 Title I grants, respectively. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONMONETARY FINDINGS AND RECOMMENDATIONS
Page 16 of 18 Recommendation The district must implement procedures to ensure program costs are charged to the appropriate grant year.
12. The LEA did not liquidate a Title I purchase order in a timely manner.
The audit revealed purchase order #1301777 in the amount of $240.00 was obligated during FY 2011-2012, but was not liquidated until January 23, 2013. The payment was disbursed months following the liquidation deadline of October 15, 2012 established by OGM pursuant to the broadcast memorandum mentioned in Finding One.
Recommendation The LEA must ensure that charges incurred during the grant year are liquidated in a timely manner as prescribed by departmental guidelines.
13. Title I funded personnel did not prepare detailed time and activity reports in a manner consistent with the requirements of OMB Circular A-87.
The LEA furnished copies of time and activity reports for Title I funded personnel, with the exception of one employee. However, the reports provided disclosed no indication of the amount time charged to the federal program and were not signed by a supervisor.
In particular, fully funded Title I personnel must prepare and sign periodic time and activity reports, at least twice a year and have them signed by a supervisor to support their time chargeable to the Title I program in accordance with EDGAR, 34 CFR 80.(b)(6) and OMB Circular A-87, Attachment B, Section 8(h)(3). Split funded Title I personnel are required to complete and sign monthly time and activity reports pursuant to EDGAR, 34 CFR 80.(b)(6) and OMB Circular A-87, Attachment B, Section 8(h)(4) (emphasis added).
USDOE Non-Regulatory Guidance on Title I Fiscal Issues: Maintenance of Effort; Comparability; Supplement, Not Supplant; Carryover; Consolidating Funds in Schoolwide Programs; and Grantback Requirements (February 2008) states that if schools do not consolidate funds, then they must follow the requirements for personal activity reports. The LEA did not consolidate funds for schoolwide schools.
In order to avoid potential audit findings and the recovery of funds, the LEA is directed to refer to a broadcast memorandum dated December 18, 2012 issued by the Office of Title I regarding Time and Effort Reporting for Title I Funded Staff (emphasis added). The memorandum can be accessed from NJDOEs website at: http://education.state.nj.us/broadcasts/ 2012/DEC/18/8643/Time%and%Activity%Reporting.pdf. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
NONMONETARY FINDINGS AND RECOMMENDATIONS
Page 17 of 18 Anytime a change of funding source occurs, the event must be recorded in the board of education meeting minutes. A revised certification must be prepared and signed by the appropriate parties. The LEA must be aware that the supplanting of local funds is in violation of NCLB statutes and subject to SEA recovery.
Recommendation The LEA must develop procedures to ensure that Title I funded personnel prepare time and activity reports which conform to the requirements of EDGAR, 34 CFR 80.(b)(6) and OMB Circular A-87, Attachment B, Sections 8(h)(3) and 8(h)(4).
14. Appointments of Title I, Part A personnel, including their related salary and funding percentages, were not recorded in the board of education meeting minutes.
The funding percentages and appointments of all instructional personnel charged to the Title I, Part A grant were not included in the board of education meeting minutes provided for our examination.
Federal regulations pursuant to OMB Circular A-87 and New Jersey Department of Education guidelines require LEAs to document all program related costs. To achieve compliance with these requirements, the designation of all Title I employees, both Part A and Carryover (if applicable), and their salaries, assigned school and funding percentage must be documented in the board minutes to provide a public record of approval for these expenditures.
Recommendation The LEA must ensure all Title I employee appointments, including their salaries and funding percentages, are recorded in the board of education meeting minutes documenting proper authorization of these expenditures.
15. Certain records were not maintained in accordance with departmental and federal guidelines.
A review of the districts FY 2011-2012 general ledger disclosed program codes 247 and 249 were used to account for certain SIA Part A expenditures. The Uniform Chart of Accounts for New Jersey School Districts (Chart of Accounts), as required by N.J.A.C. 6A:23-2.2(g), designates program codes 231-239 for NCLB Title I, Part A; Improving Basic Programs and SIA, Part D, Neglected Delinquent or at Risk expenditures.
Recommendation To facilitate an effective audit, the LEA must revise its coding system to conform to the departments prescribed Chart of Accounts and ensure the proper recording of all financial transactions. LAKEWOOD BOARD OF EDUCATION NCLB TITLE I AUDIT FISCAL YEAR 2011-2012
SCHEDULE OF RECOVERY DUE TO SEA
Page 18 of 18 Audit Finding Recovery
Number One $2,178,006.66
Number Two 468,484.83
Number Three 56,851.03
Number Four 22,715.00
Number Five 19,200.00
Number Six 1,062,220.74
Number Seven 83,892.72
Number Eight 27,770.86
Number Nine 19,953.57
Total Recovery Due to SEA $3,939,095.41
The check is to be made payable to Treasurer, State of New Jersey and mailed with the corrective action plan.
Robert J. Cicchino, Director Office of Fiscal Accountability and Compliance State of New Jersey Department of Education PO Box 500 Trenton, NJ 08625-0500
Submitted by: Approved by:
_______________________________________ _______________________________________ Lisa D. McCormick, Manager Robert J. Cicchino, Director Office of Fiscal Accountability and Compliance Office of Fiscal Accountability and Compliance
Auditor Joanna Shinn
Rev. 8/2009 State of New Jersey Department of Education Office of Fiscal Accountability and Compliance
PROCEDURES FOR LEA/AGENCY AUDIT RESPONSE CORRECTIVE ACTION PLAN AND APPEAL PROCESS
Resolution:
Pursuant to N.J.A.C. 6A:23A-5.6, within 30 days of receipt of the report, the school board must discuss the findings of the report at a public meeting of the board. Within 30 days of the public meeting, the board must adopt a resolution certifying that the findings were discussed in a public board meeting and approving a corrective action plan to address issues raised in the undisputed findings and/or appeal of any findings in dispute. Within 10 days of adoption of the resolution by the board, such resolution together with the approved corrective action plan and/or appeal must be submitted to the Office of Fiscal Accountability and Compliance. The findings of the Office of Fiscal Accountability and Compliances report and the boards corrective action plan must be posted on the districts website.
Corrective Action Plan:
The corrective action plan is to be used when the board is in agreement with any of the audit findings. To contest a finding the appeal process must be used. After the appeal is settled a corrective action plan must be filed for any finding upheld during the appeal process.
The corrective action plan must be prepared by completing the attached form. The school must submit the following information:
Recommendation number Corrective action (approved by the board) Method of implementation Person responsible for implementation Completion date of implementation
If the corrective action plan is acceptable, a letter will be sent to the board indicating that it has been accepted.
If the corrective action plan is not acceptable, a letter will be sent to the board indicating whether further clarification is required or further action is necessary.
Rev. 8/2009 - 2 -
Appeal Process:
The appeal process is used to contest audit findings.
Within 10 days of the boards adoption of the resolution approving an appeal of the findings of the report, a written request by the board to review the aggrieved findings, recommendations or questioned costs must be submitted to the director, Office of Fiscal Accountability and Compliance. The notice of appeal must indicate the findings to be appealed.
The appeal itself may be written or a hearing may be scheduled so that the board can present its case. In either instance, documentation must be presented supporting the appeal. The director, Office of Fiscal Accountability and Compliance will issue a written decision.
If the decision is unsatisfactory to the board it may, within 10 calendar days, file a notice of appeal to the Chief of Staff.
If the final determination made by the Chief of Staff is still unsatisfactory to the board, it may access the formal appeal process described in N.J.A.C. 6A:3-1.3.
Rev. 8/2009 NEW JERSEY DEPARTMENT OF EDUCATION OFFICE OF FISCAL ACCOUNTABILITY AND COMPLIANCE CORRECTIVE ACTION PLAN
NAME OF SCHOOL DISTRICT _______________________________ COUNTY _____________________________
TYPE OF EXAMINATION ____________________________________
DATE OF BOARD MEETING _________________________________
CONTACT PERSON ________________________________________
TELEPHONE NUMBER ______________________________________
CORRECTIVE
PERSON
COMPLETION RECOMMENDATION ACTION REQUIRED METHOD OF RESPONSIBLE FOR DATE OF NUMBER BY THE BOARD IMPLEMENTATION IMPLEMENTATION IMPLEMENTATION
CHIEF SCHOOL ADMINISTATOR DATE BOARD SECRETARY/SCHOOL BUSINESS ADMINISTRATOR DATE