oversight

Saint Paul Public Schools' Teacher Quality Enhancement Grant

Published by the Department of Education, Office of Inspector General on 2008-05-23.

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

  Saint Paul Public Schools’ Teacher Quality Enhancement 

                           Grant


                                 FINAL AUDIT REPORT





                                    ED-OIG/A05H0016

                                        May 2008 



Our mission is to promote the                          U.S. Department of Education
efficiency, effectiveness, and                         Office of Inspector General
integrity of the Department's
programs and operations.
                         NOTICE

Statements that managerial practices need improvements, as well as
other conclusions and recommendations in this report represent the
opinions of the Office of Inspector General. Determinations of
corrective action to be taken, including the recovery of funds, will be
made by the appropriate Department of Education officials in
accordance with the General Education Provisions Act.

In accordance with 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 exemptions in the Act.
                                             UNITED STATES DEPARTMENT OF EDUCATION
                                                   OFFICE OF INSPECTOR GENERAL

                                                                                                              AUDIT SERVICES
                                                                                          Chicago/Kansas City/Dallas Audit Region

                                                                     May 23, 2008

Dr. Meria Carstarphen
Superintendent of Schools
Saint Paul Public Schools
360 Colborne Street
St. Paul, Minnesota 55102

Dear Dr. Carstarphen:

Enclosed is our final audit report, Control Number ED-OIG/A05H0016, entitled Saint Paul
Public Schools’ Teacher Quality Enhancement Grant. This report incorporates the comments
you provided in response to the draft report. If you have any additional comments or
information that you believe may have a bearing on the resolution of this audit, you should send
them directly to the following Education Department officials, who will consider them before
taking final Departmental action on this audit:

                                           Lawrence A. Warder
                                           Chief Financial Officer
                                           Office of the Chief Financial Officer
                                           U.S. Department of Education
                                           400 Maryland Avenue, SW
                                           Washington, D.C. 20202

                                           Diane Auer Jones
                                           Assistant Secretary
                                           Office of Postsecondary Education
                                           U.S. Department of Education
                                           1990 K Street, N.W.
                                           Washington, D.C. 20006

It is the policy of the U. S. Department of Education to expedite the resolution of audits by
initiating timely action on the findings and recommendations contained therein. Therefore,
receipt of your comments within 30 days would be appreciated.

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 exemptions in the Act.

                                                                 Sincerely,

                                                                 /s/
                                                                 Gary D. Whitman
                                                                 Regional Inspector General
                                                                 for Audit
 The Department of Education's mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                   excellence and ensuring equal access.
                                              TABLE OF CONTENTS


                                                                                                                                 Page

EXECUTIVE SUMMARY ...........................................................................................................1


BACKGROUND ............................................................................................................................3


AUDIT RESULTS .........................................................................................................................5


    FINDING NO. 1 – The District Did Not Provide the Required Share of
                       Matching Funds for the 2005-2006 Grant Year.............................5

    FINDING NO. 2 – The District Charged Unallowable Costs to the TQE
                       Grant Program..................................................................................7

    FINDING NO. 3 – The District Did Not Develop and Implement an
                       Adequate Property Control System Over TQE
                       Equipment .......................................................................................10

OTHER MATTERS ....................................................................................................................12


OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................................13


ENCLOSURE: St. Paul Public School’s Comments ...............................................................15

Final Report
ED-OIG/A05H0016                                                                                 Page 1 of 20



                                    EXECUTIVE SUMMARY



The objectives of the audit were to determine whether Saint Paul Public Schools (District)
(1) provided the required share of matching funds, and (2) used Teacher Quality Enhancement
(TQE) grant funds only for expenses that were allowable and in compliance with the plan set
forth in the grant application. Our audit covered the period October 1, 2005, through May 31,
2007.

For the period October 1, 2005, through September 30, 2006 (2005-2006 grant year), the District
provided only $163,193 of matching funds, $159,837 less than required. The District had a
matching requirement of $323,030 for the 2005-2006 grant year and claimed match of $327,166.
The District’s records showed $327,166 of matching funds. However, the District maintained
documentation to adequately support only $163,193 of that amount (See FINDING NO. 1).

In addition, during the period October 1, 2005, through May 31, 2007, the District did not always
use TQE grant funds for expenses that were allowable and in compliance with the plan set forth
in its grant application. Specifically, the District:

•	 Charged to the TQE grant $19,232 in unallowable costs and $4,739 in inadequately
   documented costs (See FINDING NO. 2);
•	 Did not maintain adequate property control procedures for TQE equipment, resulting in one
   TQE laptop purchased for $853 to be lost (See FINDING NO. 3); and
•	 Did not use required semi-annual certifications and monthly activity reports correctly (See
   Other Matters Section).

When we brought these instances of noncompliance totaling $24,824 to the District’s attention,
the District credited its TQE grant account for these costs.

We recommend that the Chief Financial Officer (CFO), in conjunction with the Assistant
Secretary for Postsecondary Education, require the District to (a) provide adequate
documentation for $159,837 in matching funds or return $100,675 to the U.S. Department of
Education (Department);1 (b) provide adequate documentation of its matching data to the CFO
and work with the Department to ensure any future match requirements are met; (c) develop
written policies and procedures to provide reasonable assurance that offices receiving federal
grants comply with matching requirements; (d) provide evidence of action taken to train District
personnel on the TQE grant program requirements, with an emphasis on OMB Circular A-87; (e)
provide evidence of action taken to enhance its fiscal control and accounting procedures for the
use of estimated charges and the transfer of funds from one department's budget to another; and
(f) provide evidence of action taken to enhance its property control procedures regarding TQE
equipment by including specific steps to be completed when TQE equipment issued to grant
participants is returned.


1
 See FINDING NO. 1 for an explanation of how we calculated the amount that should be returned to the
Department.
Final Report
ED-OIG/A05H0016                                                                    Page 2 of 20

In its comments to the draft of this report, the District concurred with our findings and
recommendations and stated that it has implemented some of the recommendations. For
recommendations implemented, we revised the recommendations as needed. The District’s
comments are summarized at the end of each finding, and the full text of the comments is
included as an enclosure. Because the attachments to the District’s comments were voluminous,
we have not included them with the enclosure (copies of the attachments are available upon
request to the extent information contained therein is not subject to exemptions in the Freedom
of Information Act).
Final Report
ED-OIG/A05H0016                                                                                      Page 3 of 20




                                                BACKGROUND



Saint Paul Public Schools was established in 1856. It is Minnesota’s second largest school
district with a student population of 42,139 and 253 schools, programs, and learning sites. The
student population hails from countries throughout the world and speaks more than 70 languages
and dialects. Approximately 42 percent of the District’s students speak a language other than
English at home and approximately 18 percent receive special education services.

The three Teacher Quality Enhancement Grant programs—State Grants, Partnership Grants, and
Teacher Recruitment Grants—authorized by Title II, Part A of the Higher Education Act of
1965, as amended (HEA)—are intended to make lasting changes in the ways teachers are
recruited, prepared, licensed, and supported. The District, along with its partner, the University
of St. Thomas (St. Paul, Minnesota), received a Partnership Grant to address the District’s
challenge of teacher shortages. The grant was intended to help the District make significant and
lasting systemic changes in the way highly-qualified teachers are recruited, prepared, and
supported to teach in the District. In its grant application, the District agreed to recruit 100 grant
participants2 for participation in its TQE grant program. The TQE grant program falls under the
supervision of the District’s Executive Director of Human Resources. The District’s TQE
Program Director is responsible for oversight and daily administration of the TQE grant
program, reports to the District’s Executive Director of Human Resources, and supervises the
TQE Program Manager. The TQE Program Manager supervises 2 TQE Coordinators who
oversee the TQE Fellows.

The Department awarded the District its TQE grant for the three-year period October 1, 2005,
through September 30, 2008. According to the District’s approved budget, the three-year federal
and non-federal contributions toward the District’s TQE grant program were to total $6,161,538.


                                                                        Non-Federal
                            Federal Award           Matching             Matching
     Grant Period              Amount               Percentage            Amount                 Total Amount
      10/1/2005 –             $ 957,394               58.75              $ 562,484                $1,519,878
       9/30/2006
      10/1/2006 –              $1,638,508               60.04             $ 983,771               $2,622,279
       9/30/2007
      10/1/2007 –               $ 705,458              186.25             $1,313,923              $2,019,381
       9/30/2008
         Totals                $3,301,360                                 $2,860,178              $6,161,538




2
    The District uses the term “Fellow” to describe a participant enrolled in the TQE program.
Final Report
ED-OIG/A05H0016                                                                      Page 4 of 20

On January 30, 2007, the Department froze the District's TQE grant funds due to concerns over
the program’s administration, resulting in the District using its own funds to continue the grant
program. Before its funds were frozen, the District had drawn down only $672,117 of its federal
award amount. Of the $672,117, the District drew down $549,838 during the 2005-2006 grant
year.
Final Report
ED-OIG/A05H0016                                                                                Page 5 of 20




                                         AUDIT RESULTS



For the 2005-2006 grant year, the District did not provide its required share of matching funds
(See FINDING NO. 1). In addition, during the period October 1, 2005, through May 31, 2007,
the District did not always use TQE grant funds for expenses that were allowable and in
compliance with the plan set forth in its grant application. Specifically, the District charged to
the TQE grant $19,231 in unallowable costs and $4,739 in inadequately documented costs (See
FINDING NO. 2) and did not maintain adequate property control procedures for TQE
equipment, resulting in the loss of one TQE laptop purchased for $853 (See FINDING NO. 3).

FINDING NO. 1 – The District Did Not Provide the Required Share of Matching
                Funds for the 2005-2006 Grant Year

The District provided only $163,193 of matching funds for the 2005-2006 grant year, $159,837
less than required. The District had a matching requirement of $323,030 for the 2005-2006 grant
year and claimed match of $327,166.3 The District’s records showed $327,166 of matching
funds recorded in the following categories: personnel ($42,462), space ($126,551), supplies
($1,239), and other ($156,914). However, the District maintained documentation to adequately
support only $163,193 of that amount.

Per its Grant Award Notification for the award period of October 1, 2005, through September 30,
2006, the District’s cost share (matching requirement) was 58.75 percent. Pursuant to 34 C.F.R.
§ 80.24(b)(6),

        Costs and third party in-kind contributions counting towards satisfying a cost
        sharing or matching requirement must be verifiable from the records of grantees
        and subgrantee or cost-type contractors. These records must show how the value
        placed on third party in-kind contributions was derived. To the extent feasible,
        volunteer services will be supported by the same methods that the organization
        uses to support the allocability of regular personnel costs.

Because the District did not meet the matching requirement, it provided a diminished program
which might not fully accomplish the goals the Office of Postsecondary Education (OPE)
intended for the TQE programs. When grantees fail to meet the matching requirement, the
Department determines the repayment amount by calculating the percentage of the grant properly
spent. The amount properly spent is based on the ratio of the total actual project funding (both
federal and non-federal) to the total amount required by law (both federal and non-federal).
Using the Department’s calculation, the District properly spent 81.69 percent ($549,838 drawn
down plus $163,193 match that was supported divided by the $549,838 drawn down plus the
$323,030 required match) of the $549,838 it drew down and, therefore, improperly spent 18.31
percent, or $100,675.

3
 The matching requirement of $323,030 is based on the District drawing down $549,838 during the 2005-2006
grant year and a match percentage of 58.75.
Final Report
ED-OIG/A05H0016                                                                        Page 6 of 20



In addition, the District might not meet the matching requirement for the remaining two grant
years if the Department elects to restore the District’s federal funding. After the Department
froze the funding, the District elected to continue its TQE grant program with its own funds. If
the freeze were lifted, the District could draw down a large amount of funds, creating a large
matching requirement. As stated in the Background section, the match percentage is high for the
second and third years of the grant.

We discussed the TQE grant’s matching requirements with District personnel and learned that
the District (1) was not aware that it had agreed to a matching requirement of 58.75 percent for
the 2005-2006 grant year, (2) did not have written policies and procedures for tracking and
documenting its matching funds, and (3) was unfamiliar with applicable regulations and cost
principles regarding allowable and unallowable sources of matching funds. From our testing of
the District’s claimed matching funds, we also determined that the District was not aware of the
types of documentation that was required to adequately support the sources and amounts of
matching funds claimed.

Recommendations:
If the Department elects to provide additional federal funds for the District’s TQE grant, we
recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require the District
to

1.1	 Provide adequate documentation to support the $159,837 in matching funds or return
     $100,675 in TQE grant funds to the Department, as appropriate;

1.2	 Provide adequate documentation of its match to the CFO for the 2006-2007 award year and
     work with the Department to ensure all matching requirements are met for any future
     awards the District receives; and

1.3	 Develop written policies and procedures to provide reasonable assurance that offices
     receiving federal grants comply with the grant’s matching requirements, including the
     maintenance of adequate documentation.

District’s Comments
The District agreed that it did not provide the matching funds for the 2005-2006 grant year as
indicated in the original project proposal. The District stated that it has asked the Department to
amend its required matching percentage.

The District further stated that

       It is important to note that although the District did not meet the matching
       requirement, the District has not provided a diminished program to the TQE
       Fellows. Since the funds were frozen in January 2007, the District has continued
       to support and fund TQE staff and fund the training of TQE fellows so that they
       may become licensed teachers prepared to teaching in our high-needs schools.
       The program has received wonderful feedback about the students who have
Final Report
ED-OIG/A05H0016                                                                       Page 7 of 20

       completed the program and are now teaching and the District is committed to
       seeing all of the TQE Fellows through their teacher training program.

OIG Response
We did not make any changes to our finding based on the District’s comments. Though the
District might not have provided a diminished program to those TQE Fellows it served, the
overall program was diminished because the District did not have all the resources necessary to
operate the program as originally proposed in the grant application.

FINDING NO. 2 – The District Charged Unallowable Costs to the TQE Grant
                Program

The District charged unallowable costs totaling $19,232 to the TQE grant program. In addition,
the District charged the grant another $4,739 for which it lacked adequate documentation to
support that the costs were allowable. We selected 84 non-personnel expenses, totaling
$209,844, charged to the TQE grant from the 272 non-personnel expenses totaling $685,156
recorded during the period October 1, 2005, through May 31, 2007. We selected expenses to
ensure adequate coverage of all non-personnel expense categories and high, medium, and low
dollar amounts. We also selected expenses appearing unusual in relation to other expenses. To
determine whether the non-personnel expenses selected for our sample were allowable and in
compliance with the plan set forth in the grant application, we reviewed supporting records such
as purchase orders, invoices, canceled checks, and other information on scanned documents
maintained by the District. The District charged $17,964 for purchases of computers, printers,
and flash drives in excess of what was necessary for the operation of the grant; $1,268 for other
costs in violation of the cost principles; and $4,739 for costs lacking adequate documentation.

Costs Were Unnecessary
The District charged $17,964 for purchases of computers, printers, and flash drives in excess of
what was necessary for the Fellows and TQE staff. During the 2005-2006 grant year, the District
purchased with TQE grant funds 104 computers and 104 printers for the Fellows and 4 TQE
staff. However, the TQE grant program recruited only 87 Fellows. Therefore, only 91
computers and 91 printers were necessary and reasonable. The remaining 13 computers and 13
printers, totaling $12,440, were unallowable because they were not necessary and reasonable.
During the 2006-2007 grant year, the District purchased an additional 5 computers, for $5,217,
that were not necessary for the TQE grant program. We conducted a physical inventory of these
5 computers and found them still in their original packing boxes. In addition, the District
purchased 100 flash drives—one for each Fellow. Again, because the District recruited only 87
Fellows, 13 of the flash drives, purchased for $307, were not necessary to operate the TQE grant
program.

Pursuant to OMB Circular A-87, Attachment A(C), Basic Guidelines,

       (1) Factors Affecting Allowability of Costs. To be allowable under Federal 

       awards, costs must meet the following general criteria: 


       a. Be necessary and reasonable for proper and efficient performance and 

       administration of Federal awards. 

Final Report
ED-OIG/A05H0016                                                                                    Page 8 of 20

        (2) Reasonable costs. 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. …In determining
        reasonableness of a given cost, consideration shall be given to:

        a. Whether the cost is a type generally recognized as ordinary and 

        necessary for the operation of the governmental unit or the performance of 

        the Federal award. 


Costs Charged in Violation of the Cost Principles
In addition to the computers, printers, and flash drives, the District charged $1,268 in other
unallowable costs to the TQE grant. The District charged the grant (1) $1,060 for food served at
TQE grant activities4 that did not include the dissemination of technical guidance or information;
(2) $122 in per diem for TQE staff paid at the incorrect rate and for travel days unrelated to the
TQE grant program; and (3) $86 surcharge for publishing that should have already been included
in the District’s indirect costs.

According to OMB Circular A-87, Attachment B, Selected Items of Cost,

        (14) Entertainment. Costs of entertainment, including amusement, diversion, and
        social activities and any costs directly associated with such costs (such as tickets
        to shows or sports events, meals, lodging, rentals, transportation, and gratuities)
        are unallowable.
        (27) Meetings and conferences. Costs of meetings and conferences, the primary
        purpose of which is the dissemination of technical information, are allowable.
        This includes costs of meals, transportation, rental of facilities, speakers' fees, and
        other items incidental to such meetings or conferences. But see Attachment B,
        section 14, Entertainment costs.
        (34) Publication and printing costs (a-b). Publication costs include the costs of
        printing…distribution, promotion, mailing, and general handling. Publication
        costs also include page charges in professional publications. If these costs are not
        identifiable with a particular cost objective, they should be allocated as indirect
        costs to all benefiting activities of the governmental unit.
        (43)(a) General. Travel costs are the expenses for transportation, lodging,
        subsistence, and related items incurred by employees who are in travel status on
        official business of the governmental unit.

Costs Lacked Adequate Documentation
The District did not provide us with purchase orders, invoices, or other documentation that
adequately documented $4,739 for two expenses charged to the TQE grant for a TQE Fellowship
Evaluation ($752) and TQE Fellows Training ($3,987).

First, the District could not support $752 of charges to the TQE grant program for a TQE
Fellowship Evaluation. The District charged $5,000 to the TQE grant program for estimated
labor costs and program costs from the Research Evaluation and Assessment Department (REA).

4
 The TQE grant activities included TQE application screening, Fellow interviews, and a dinner reception for
Fellows.
Final Report
ED-OIG/A05H0016                                                                        Page 9 of 20

The $5,000 is supported via email correspondence between a TQE staff member and the Director
of REA discussing estimated costs to train, supervise, and support the grant evaluator. When we
brought this to the District’s attention, the District credited the TQE grant account for the $5,000
and recharged the program $2,411. However, the District did not provide adequate
documentation to support $752 of the $2,411 recharged.

Second, the District could not support $3,987 charged to the TQE grant program for TQE
Fellows Training. The District transferred $5,387 from the TQE grant program to the
Technology Department for computer classes and set-up costs. However, the invoice we
received supported only $1,400 for computer classes for the Fellows. The remaining $3,987 was
for the Technology Department’s costs for the set-up and imaging of 104 computers. To support
this portion of the charge, the District could provide only an email between a TQE staff member
and a Department of Educational Technology staff member. The email did not include specific
information about the $3,987 charge. The District eventually created an invoice for the $3,987
charge, which included specific information, but the invoice was dated over a year after the
expense was recorded. Because the invoice is dated over a year after the charge was incurred,
we cannot rely on the accuracy of the invoice. Therefore, the District did not support $3,987 of
the charge for technology services.

Pursuant to 34 C.F.R § 80.20(b)(6) Source Documentation, “Accounting records must be
supported by such source documentation as canceled checks, paid bills, payrolls, time and
attendance records, contract and subgrant award documents, etc.” Also, pursuant to OMB
Circular A-87, Attachment A(C), Basic Guidelines, (1) Factors Affecting Allowability of Costs,
to be allowable under Federal awards, costs, among other requirements, must be adequately
documented.

Stronger System of Internal Control over TQE Grant Funds Needed
The District did not have a policy or procedures in place to provide reasonable assurance that
only actual costs were charged to the TQE grant. The District has only an informal policy
regarding the transfer of funds from one department's budget to another. In some cases, the only
documentation for these types of transactions is email correspondence between District
personnel.

Unallowable costs charged to a federal grant constitute a debt to the federal government and
harm the federal interest. When a grantee uses federal funds for unallowable costs, those funds
are not available to pay for items and services that could help advance the program. In addition,
without adequate documentation, we cannot determine if TQE grant funds were used to support
TQE grant activities and services and do not know if TQE grant funds were used only for
allowable purposes.

When we brought these instances of noncompliance totaling $23,971 to the District’s attention,
the District credited its TQE grant account for $19,984. Prior to issuance of the draft report, the
District did not credit its TQE grant account for the $3,987 charge for TQE Fellows Training.
Final Report
ED-OIG/A05H0016                                                                     Page 10 of 20


Recommendations:
We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require the
District to

2.1	 Provide adequate documentation for or return $3,987 to the Department;

2.2 	 Provide evidence to the Department demonstrating that it trained District personnel on the
      TQE grant program requirements with an emphasis on OMB’s Cost Principles; and

2.3 	 Provide evidence to the Department that it has enhanced its fiscal control and accounting
      procedures for the (1) use of estimated charges and (2) transfer of TQE grant funds from
      one department's budget to another.

District’s Comments
The District agreed that adequate documentation was not provided for the $3,987 in expenditures
and credited the TQE budget for this amount. In addition, the District stated it has hired a Grant
Management Coordinator to assist in training budget administrators on grant program
requirements and OMB Cost Principles. Further, the District stated it has implemented a change
to its fiscal control and accounting procedures regarding the use of estimated charges and the
transfer of funds between district departments.

OIG Response
The $3,987 is the last amount needed to credit the full amount of $23,971. The District credited
$19,984 to the TQE grant during our audit, and we confirmed that it credited an additional
$3,987 in response to the draft report. We revised recommendations 2.2 and 2.3 to request
evidence of the corrective action taken by the District.

FINDING NO. 3 – The District Did Not Develop and Implement an Adequate
                Property Control System Over TQE Equipment

The District's property control system over TQE equipment was inadequate. The District’s
property control system did not incorporate steps to (1) ensure that laptop computers
assigned to Fellows were adequately safeguarded, and (2) investigate losses of TQE
equipment. The District’s property control system does have a form that is to be completed
when equipment is lost or stolen.

Pursuant to 34 C.F.R. § 80.20(b)(3), Internal Control, “Effective control and accountability must
be maintained for all grant and subgrant cash, real and personal property, and other assets.
Grantees and subgrantees must adequately safeguard all such property and must assure that it is
used solely for authorized purposes.”

Without an adequate property control system, the District could not account for one laptop
computer that it purchased for $853 in TQE grant funds and provided to one Fellow. The Fellow
claimed to have returned the laptop computer because it was defective and received another one.
However, the District had no record of the laptop computer being returned and did not provide us
with documentation to support that a form was filled out when the laptop computer assigned to
the one Fellow was lost. In addition, the District did not provide us with documentation
Final Report
ED-OIG/A05H0016                                                                        Page 11 of 20

sufficient to support it took the necessary steps to investigate the loss of the laptop computer.
When such losses occur, TQE assets are not available for essential TQE program activities.

When we brought this matter to the District’s attention, the District credited its TQE grant
account for $853.

Recommendation:
We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require the
District to

3.1 	 Provide evidence to the Department that it has enhanced its property control procedures for
      TQE equipment so the procedures include specific steps to be completed when TQE
      equipment issued to Fellows is returned.

District’s Comments
The District agreed that its property control system over TQE equipment was inadequate. The
District stated it has implemented a new procedure to be used for all equipment purchased
through federal grant funds.

OIG Response
We revised recommendation 3.1 to request evidence of the corrective action taken by the
District.
Final Report
ED-OIG/A05H0016                                                                       Page 12 of 20




                                     OTHER MATTERS



For the fiscal years ended June 30, 2005 and 2006, the District was cited by its Independent
Public Accountant (IPA) in its A-133 Single Audit Reports for not using semi-annual
certifications and monthly activity reports, as required by OMB Circular A-87. As part of our
review of payroll expenses for the period October 1, 2005, through September 30, 2006, we
noted that two TQE staff members were included on the semi-annual certifications, but they did
not work 100 percent of their time on the TQE grant program. These two should have been
included on monthly activity reports. In addition, one other employee was included on the semi-
annual certification, which covered the period July through December 2006, even though the
employee was not paid from TQE grant funds during the period July through September 2006.
Finally, the District did not complete a semi-annual certification for one employee for the period
April through June 2006, and two of the semi-annual certifications covered the same three-month
time period (October, November, and December 2005).

To address the deficiencies noted in the A-133 Single Audit Reports, the District enhanced its
policies to require applicable employees to complete semi-annual certifications and personal
monthly activity reports. Employees began using the forms for the 2006-2007 school year. We
suggest that the CFO and OPE review the District’s A-133 Single Audit Report for the year
ended June 30, 2007, to ensure that its IPA has not cited the District again for these deficiencies.
Final Report
ED-OIG/A05H0016                                                                                   Page 13 of 20




                    OBJECTIVES, SCOPE, AND METHODOLOGY



The objectives of the audit were to determine whether the District (1) provided the required share
of matching funds, and (2) used TQE grant funds only for expenses that were allowable5 and in
compliance with the plan set forth in the grant application. Our audit covered the period October
1, 2005, through May 31, 2007.

To achieve our objectives, we performed the following procedures:

1.	 Reviewed the District’s web site and organizational charts to gain an understanding of its
    history and organization.
2.	 Obtained the District’s accounting records and identified all TQE grant funds received
    ($672,117) and expended ($1,127,153) during the period October 1, 2005, through May 31,
    2007.
3.	 Reviewed the District’s A-133 Single Audit Reports, for the years ended June 30, 2005 and
    2006.
4.	 Reviewed the District’s written policies and procedures and interviewed District officials to
    gain an understanding of the internal control system applicable to the administration of its
    TQE grant program.
5.	 Compared the amount of matching funds required to the matching funds the TQE grant office
    recorded in its matching spreadsheet for the period October 1, 2005, through May 31, 2007.
    We did not select a sample of claimed matching funds but instead traced 100 percent of the
    recorded matching funds to source documents to test for compliance with the law,
    regulations, and Cost Principles.6
6.	 Judgmentally selected a sample of 84 of 272 non-personnel expenses for the period October
    1, 2005, through May 31, 2007, and reviewed supporting documentation to determine
    whether the expenses were allowable and adequately supported.
7.	 Randomly selected 4 of 26 pay periods for the period October 1, 2005, through September
    30, 2006, and reviewed supporting documentation to determine whether the payroll expenses
    were allowable and adequately supported.
8.	 Judgmentally selected 47 of 113 TQE computers and conducted a physical inventory.7 For
    each computer selected, we compared the system tag and District property tag listed on the
    TQE asset spreadsheet the District provided to the tags on the laptops. For the laptops issued
    to Fellows, we checked each Fellow's photo identification to ensure that the Fellow was in
    possession of the computer assigned to them per the spreadsheet.


5
  OMB Circular A-87 establishes principles and standards for determining costs for federal awards carried out

through grants. Attachment A, General Principles for Determining Allowable Costs, discusses factors affecting the 

allowability of costs. To be allowable under federal awards, costs, among other requirements, must be necessary, 

reasonable, and adequately documented.

6
  The District’s financial management system did not maintain a record of matching funds. Each district office 

receiving a grant must track its own matching funds, outside the District’s financial management system.

7
  We used the non-personnel data from the Oracle system to select a sample of TQE assets for inventory testing.

Final Report
ED-OIG/A05H0016                                                                    Page 14 of 20

We also relied, in part, on payroll data from the District’s PeopleSoft system and expenditure
data from its Oracle system. We performed an assessment of the reliability of the payroll and
accounting records. We reviewed the data for completeness, accuracy, relevance, and validity by
(1) determining if the District could account for all funds drawn down; (2) reviewing the records
to ensure they included only personnel and non-personnel expenses for our audit period;
(3) reviewing personnel expenses by comparing them to documentation such as offer letters and
timesheets; and (4) reviewing non-personnel expenses by tracing them to records such as
purchase orders, invoices, canceled checks, and other information on scanned documents
maintained by the District. Based on these comparisons, we concluded that the data the District
provided for personnel and non-personnel expenses were sufficiently reliable for the purposes of
our audit.

We conducted our audit from March through October 2007 at the District’s administrative
offices in St. Paul, Minnesota, and at our offices. We discussed the results of our audit with
District officials on October 18, 2007. We performed our audit in accordance with generally
accepted government auditing standards appropriate to the scope of the audit described above.
Final Report 

ED-OIG/A05H0016                                   Page 15 of 20 





        ENCLOSURE: St. Paul Public School’s Comments
Final Report
ED-OIG/A05H0016                                                                           Page 16 of 20



                         Independent School District 625                 Office Of The Superintendent
                         360 Colborne Street                             Meria Joel Carstarphen, Ed. D.
                         Saint Paul, MN 55102-3299                       Superintendent of Schools

                         Telephone: (651) 767-8150   Fax: (651) 290-8331 • www.spps.org




February 28, 2008 




Mr. Gary D Whitman 

Regional Inspector General for Audit 

United States Department of Education 

Office of Inspector General 

500 West Madison Street, Suite 1414 

Chicago, IL 60661 



Dear Mr. Whitman: 



Attached is the response of Saint Paul Public Schools to the audit findings from the audit of the 

Saint Paul Public Schools Teacher Quality Enhancement Grant. Two attachments have been 

included to support the district's response. 


If you have any questions, please contact Chief Academic Officer Valeria Silva, the current Project

Director for the Teacher Quality Enhancement Grant. 




Sincerely, 

/s/ 

Meria Joel Carstarphen

Superintendent of Schools 




Cc: 	   Valeria Silva, Chief Academic 0fficer
        Melissa Hines, TQE Project Coordinator
Final Report
ED-OIG/A05H0016                                                         Page 17 of 20




                       Saint Paul Public Schools #625




                  Teacher Quality Enhancement Grant 

                           Audit Response





                                  February 28, 2008 





                   Dr. Meria Carstarphen, Superintendent of Schools 

                        Valeria Silva, Chief Academic Officer 

Final Report
ED-OIG/A05H0016                                                                       Page 18 of 20


Finding No. 1 - The District did not provide the required share of matching funds for the
2005-06 grant year.

Condition:
The District provided only $159,056 of the matching funds for the 2005-06 grant year, $163,973
less than required. The District had a matching requirement of $323,030 for the 2005-06 grant
year. This amount is based on the District drawing down $549,838 and a matching requirement
of 58.75%. When the grant was written, a number of in-kind costs were identified as match
costs. The District's failure to provide the originally stated matching funds are the result of a
complex series of factors, including:
    1. 	 Multiple changes in key personnel:
             •	 Rick Kreyer, the Human Resources Director involved in the writing of the grant,
                  left the District prior to the grant award.
             •	 Tom Coffey, Mr. Kreyer's replacement, had a brief tenure with the District and
                  left prior to the grant award.
             •	 Betty Holz-Bergmann, Assistant Director of Human Resources, was then named
                  the Project Director for the first year of the grant.
             •	 Ms Holz-Bergmann took a leave of absence at the end of the first grant year and
                  retired from the District in June, 2007.
    2. Documentation required for matching funds was different from the understanding of the
         District at the time the grant was written:
              •	 The A133 audit of the district by KPMG in 2005-06 cited the District for failure
                  to provide adequate time and effort reporting. The district implemented
                  procedures in fiscal year 2006-07 to correct these deficiencies however it was too
                  late for the first year of the TQE grant.
     3. 	 Failure to renegotiate the matching funds portion of the project in the initial award
          process or in succeeding budget reporting periods.
              •	 Once the grant was received, the grant budget was renegotiated.
              •	 The audit process revealed that the TQE in-kind budget was not subsequently
                  renegotiated.
              •	 This resulted in confusion about what the District committed to in terms of in-
                  kind items and amount.

Recommendations:
If the Department elects to provide additional federal funds for the District's TQE grant, we
recommend that the CFO, in conjunction with OPE, require the District to
  1.1 	 Provide adequate documentation to support the $163,973 in matching funds or return 

        $279,103 in TQE grant funds to the Department, as appropriate; 

  1.2 	 Provide adequate documentation of its match to OPE n a quarterly basis and work 

        with OPE to ensure all matching requirements are met; and 

  1.3 	 Develop written policies and procedures to provide reasonable assurance that offices 

        receiving federal grants comply with the grant's matching requirements, including the 

        maintenance of adequate documentation. 

Final Report
ED-OIG/A05H0016                                                                     Page 19 of 20

Response:
District agrees with the finding that the District did not provide the match funds as indicated in
the original funded project proposal for the for the 2005-2006 grant year. This resulted from a
failure to renegotiate the matching funds portion of the project even after the grant budget was
renegotiated. The District has submitted an amendment to the original proposal as it relates to
the matching funds for each year to more closely correlate to the amended budget and the federal
match requirements that were stated in the grant application. It is worth noting that based on the
draft audit report, the District provided $159,056 in matching funds for the 2005-2006 grant
year. If the district had committed to the federal match requirement of 25% in year one, the
District would have exceeded the match requirement (25% of $549,838 = $137,459.50). If the
amendment is denied the District will provide adequate documentation, or where that is not
available, return the $279,103 in TQE grant funds to the Department.


Finding No. 2 - The District Charged Unallowable Costs to the TQE Grant Program

Condition:

The District charged $17,964 for purchases of computers, printers, and flash drives in excess 

of what was necessary for the operation of the grant; $1,268 for other costs in violation of the

cost principles; and $4,739 for costs lacking adequate documentation. 


Recommendations:

We recommend that the CFO, in conjunction with OPE, require the District to 


 2.1    Provide adequate documentation for or return $3,987 to the Department;

 2.2   Ensure District personnel are trained on the TQE grant program requirements with an
emphasis on OMB's Cost Principles; and

 2.3    Enhance its fiscal control and accounting procedures regarding the (1) use of estimated
charges and (2) transfer of TQE grant funds from one department's budget to another.

Response:
The District agrees that adequate documentation was not provided for the $3,987 in expenditures
and did credit the TQE budget in October 2007 for this expenditure. A copy of the district's
activity report for the month of October 2007 is attached to this audit response. The District has
hired a Grant Management Coordinator to assist in training budget administrators on all aspects
of budget management, including grant program requirements and OMB Cost Principles.
Training sessions have begun on a limited basis and materials are being refined to make sure that
they encompass all requirements according to OMB Cost Principles.

The District has implemented a change in our fiscal control and accounting procedures regarding
the use of estimated charges and the transfer of funds between district departments. We have
communicated this change to all accounting personnel and have required them to insist on
detailed invoices reflecting actual charges whenever transfers are made.
Final Report
ED-OIG/A05H0016                                                                    Page 20 of 20


Finding No. 3 - The District did not develop and implement an adequate property control
system over TQE equipment.

Condition:
The District's property control system did not incorporate steps to (1) ensure that laptop
computers assigned to Fellows were adequately safeguarded and (2) investigate losses of TQE
equipment. The District could not account for one laptop computer that it purchased for $853 in
TQE grant funds and provided to one fellow. The Fellow claimed to have returned it, however
the District had no record of it being returned nor any documentation to support the steps to
investigate the loss of the laptop computer.

Recommendations:

We recommend that the CFO, in conjunction with OPE, require the District to 


3.1     Enhance its property control procedures for TQE equipment to include specific steps
to be completed when TQE equipment issued to Fellows is returned.

Response:
The District agrees that the property control system over TQE equipment is inadequate. The
district has implemented a new procedure to be used with all equipment purchased through
federal grant funds. The process will include tagging the equipment upon purchase and
establishing a record that includes location of equipment, person equipment assigned to, use of
equipment, condition of equipment and date of return, disposal or sale. These procedures
include a physical inventory to be taken every two years by the Property Control Manager. As a
part of these new procedures, any loss, damage or theft will be investigated.




Closing Comments
In closing, we would like to respond to the serious allegation that "the District provided a
diminished program which might not fulfill the needs of its participants or accomplish the goals
OPE intended for TQE programs." It is important to note that although the District did not meet
the matching requirement, the District has not provided a diminished program to the TQE
Fellows. Since the funds were frozen in January 2007, the District has continued to support and
fund TQE staff and fund the training of TQE Fellows so that they may become licensed teachers
prepared to teaching in our high-needs schools. The program has received wonderful feedback
about the students who have completed the program and are now teaching and the District is
committed to seeing all of the TQE Fellows through their teacher training program.