oversight

Wisconsin Department of Public Instruction (DPI) and selected local education agencies (LEA.

Published by the Department of Education, Office of Inspector General on 2004-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                          UNITED STATES DEPARTMENT OF EDUCATION 

                                               OFFICE OF INSPECTOR GENERAL 

                                                                     REGION V 

                                                             III NORTH CANAL. SUITE 940 

                                                               CHICAGO. ILLINOIS 60606 


                                                                   FAX: (312) 353-0244
     Audit                                                                                                                                    Investigation
(312) 886-6503                                                                                                                               (312) 353-7891

                                                                SEP 30 2004 


                                                                                    Control Number ED-OIG/A05-E0016

             Elizabeth Bunnaster
             State Superintendent
             Wisconsin Department of Public Instruction
             125 S. Webster Street
             Madison, Wisconsin 53702

             Dear Ms. Bunnaster:

             This Final Audit Report presents the results of our audit of the Wisconsin Department
             of Public Instruction (DP!) and selected local education agencies (LEA). The objective
             of our audit was to detennine whether DPI and selected LEAs complied with the
             maintenance of effort and supplement not supplant requirements of the Elementary and
             Secondary Education Act of 1965 (ESEA), Title I, Part A program, as amended by the
             No Child Left Behind Act of2001, for the period July 1, 2003, through June 30, 2004
             (2003-2004 school year). Because there are no findings that require resolution, you are
             not required to respond to this audit report.


                                                             AUDIT RESULTS
             DPI generally complied with the law and applicable regulations governing maintenance
             of effort for the 2003-2004 school year. Using annual report data received from the
             LEAs, DPI correctly and accurately calculated maintenance of effort for the LEAs and
             took appropriate action when an LEA failed to meet the federal requirements.

                 DPI and the six selected LEAs generally complied with the federal regulations governing
                 supplement not supplant for the 2003-2004 school year. To make this detennination, we
                 reviewed all Title I expenditures for administrative personnel at DPI and the six LEAs.
                 We also reviewed expenditures for all teaching personnel at 5 of 6 LEAs and teaching
                 personnel at 15 of 151 schools at the sixth LEA.




                       Our mission Is to promote the efficiency, effectiveness, and Integrity of the Department's programs and operations.
Final Audit Report                                               ED-OIG/AOS-EOOI6

                                   OTHER MATTER 


DPI might have a major control weakness in its audit coverage. DPI relies on the work of
Certified Public Accountants (CPAs) to report LEAs' non-compliance with supplement
not supplant requirements. We reviewed the CPAs' work papers supperting their Office
ofManagement and Budget (OMB) Circular A-133 audit reports for the six selected
LEAs. Our review disclosed that four of six CFAs did not complete any supplement not
supplant testing even though the Title I program was selected as a major program for the
2002-03 year. At the exit conference, DPI officials said they would provide additional
supplement not supplant training for the CPAs. We also suggest that DPI consider
establishing a procedure to review, on a sample basis, CPAs' work related to supplement
not supplant.


                                    BACKGROUND

DPI oversees public education in Wisconsin. Wisconsin enrolls 879,361 students in 426
public school districts, 2 residential schools, Department of Corrections' and Department
ofHealth and Family Services' facilities, charter schools, and its County Children with
Disability Education Boards. DPI relies on LEAs to administer the elementary and
secondary education programs.

The Title I program is authorized under the ESEA, as amended by the No Child Left
Behind Act of2001, Public Law 107-110. According to § 1120A of the ESEA, an LEA
may receive Title I funds only if the state educational agency (SEA) determines that the
LEA has maintained the fiscal effort as required by § 9521. The SEA must determine
that either the combined fiscal effort per student or the aggregate expenditures ofthe
LEA and the State with respect to the provision of free public education by the LEA for
the preceding fiscal year was not less than 90 percent of the combined fiscal effort or
aggregate expenditures for the second preceding fiscal year. If the LEA fails to meet the
90 percent requirement for both the combined fiscal effort per student and the aggregate
expenditures in any fiscal year, the SEA must reduce the amount of funds allocated under
a Title I program in the exact proportion by which an LEA fails to meet the 90 percent
requirement.

According to § 1120A (b)(I) ofthe ESEA, SEAs and LEAs must use federal funds
received under Title I only to supplement the amount of funds available from non-federal
sources for the education of students participating in Title I. The SEA and LEA cannot
use these federal funds to supplant funds that would, in the absence of Title I funds, have
been spent on Title I students. The supplement not supplant requirement, as it applies to
a school operating a school-wide program, requires the school to use Title I, Part A funds
and other Federal education program funds included in the school-wide program only to
supplement the total amount of funds that would, in the absence ofthe Federal funds, be
made available from non-Federal sources for the school, including funds needed to
provide services that are required by law for children with disabilities and children with
limited-English proficiency.


                                             2
Final Audit Report 	                                                         ED-OIG/A05-EOOI6


For the 2003-2004 school year, Wisconsin was authorized $ 151,746,825 in Title I funds.
Ofthis amount, DPI allocated $145,646,915 to 39.3, LEAs. The 6 LEAs that we audited
received $63,069,890 in Title I funds. (See Table 1:)
                                                                               Table 1
      District                                 Name                                  Allocation
 6118                     Waterloo School District                                                $67,164
 3612                     Milton School District                                                $173,584
 1638                     Elkhorn Area School District                                          $286,831
 2695                     Janesville School District                                            $997,564
 0413                     Beloit School District                                               $2,046,751
 3619                     Milwaukee Public Schools                                            $59,497,996
                                                                     Total                    $63,069,890



                       OBJECTIVE, SCOPE, AND METHODOLGY

The objective of our audit was to determine whether DPI and selected LEAs complied
with maintenance of effort and supplement not supplant requirements of the ESEA, Title
I, Part A, program, as amended by the No Child Left Behind Act of2001, for the period
July 1, 2003, through June 30, 2004.

To achieve our audit objective, we

1. 	 selected a sample of6 LEAs from a universe of393 Wisconsin LEAs obtained from
     DPIofficials. To select our sample, we (1) stratified the universe into 3 strata (large,
     medium, and small) based on the amount of Title I funds received, (2) generated
     random numbers for each stratum, and (3) selected the first 2 LEAs from each
     stratum that were located in the southeast section of Wisconsin1;

2. 	 gained a limited understanding of DPI's and selected LEAs' internal control structure,
     policies, procedures, and practices applicable to maintenance of effort and
     supplement not supplant for the Title I program by (1) reviewing the latest A-133
     audit reports and related work papers, (2) interviewing DPI and LEA officials, and (3)
     interviewing Wisconsin Legislative Audit Bureau officials and the LEAs' CPAs;

3. 	 obtained DPl's maintenance of effort calculations for FY 2002, 2003, and 2004 and
     tested the calculations to ensure DPI used accurate data and the calculations were
     correctly calculated and accurate;

4. 	 reviewed the selected LEAs' accounting records to ensure the 2001, 2002, and 2003
     maintenance of effort data reported to DPI were correct and reported accurately; and


I We limited our selection of those LEAs located in the southeast section of Wisconsin because it has the
highest population.


                                                     3
Final Audit Report 	                                              ED-OIG/A05-EOOI6

5. 	 compared DPI's and the LEAs' employees' 2004 Title I salaries recorded in
     accounting and payroll records to 2002 and 2003 accounting and payroll records to
     determine if Title I funds were used to supplement not supplant state and local funds.

We also relied, in part, on computer-processed data from DPl's Oracle"database and the
State's payroll system. In addition, we relied on the LEAs' annual report and Title I
revenue and rexpenditure reports. The LEAs entered the annual report data into DPl's
Oracle database on its client-server based system. DPI used the data to calculate the
LEAs' maintenance of effort calculation. To determine whether the computer-processed
data were reliable, we first gained a limited understanding ofDPl's and the LEAs' related
computer system controls; recalculated the maintenance of effort calculation for 2002,
2003, and 2004; and identified the accounts in the Oracle database that DPI used to make
the calculations. Also, we selected a sample of data from DPI and each LEA, and applied
logic tests. We tested for (1) missing data, (2) the relationship of one data element to
another, (3) values outside of a designated range, and (4) dates outside valid time frames
or in an illogical progression. Based on our limited understanding of system controls and
our logic tests, we concluded that the computer-processed data that DPI and the six LEAs
provided were sufficiently reliable for the purposes of our audit.

We conducted our audit work from March 4, 2004, through July 23, 2004. As part of our
audit, we visited DPl's offices in Madison, Wisconsin, and all six LEAs - School
District ofJanesville, School District ofMilton, School District of Beloit, Milwaukee
Public Schools, Elkhorn Area School District, and Waterloo School District. We held an
exit conference with DPI officials on July 29, 2004.

Our audit was performed in accordance with generally accepted government auditing
standards appropriate to the scope of the audit described above.


                       STATEMENT ON INTERNAL CONTROLS

As part of our audit, we did not assess the adequacy of the internal control structure of
DPI and the six selected LEAs because such assessments were not necessary to achieve
our audit objective. Instead, we obtained an understanding ofthe processes DPI and the
LEAs used to comply with maintenance of effort and supplement not supplant
requirements and determined whether the processes were in compliance with the
applicable law and regulations. Our work did not disclose any instances of non­
compliance with applicable law and regulations. However, DPI might have a major
control weakness by relying on the work of CPAs to report LEAs' non-compliance with
supplement not supplant requirements. This weakness is discussed in the "OTHER
MATTER" section of this report.




                                              4

Final AuditReport ,                                               ED-OIG/A05-EOOI6

                           ADMINISTRATIVE MATTERS 


In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by
the Office of Inspector General are available to members of the press and general public
to the extent information contained therein is not subject to the exemptions in the Act.

We appreciate the cooperation and assistance extended by your staff during the audit. If
you have any questions, please contact me at 312-886-6503.


                                             Sincerely,


                                      ~      Richard J.~:S~-
                                                              

                                             Regional Inspector General
                                             for Audit




                                            5