oversight

Dallas Independent School District's (DISD) administration of the Bilingual Education - Systemwide Improvement Grant for the period September 1, 1999, through August 31, 2003.

Published by the Department of Education, Office of Inspector General on 2004-08-04.

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

                        UNITED STATES DEPA"RTMENT OF EDUCATION 

                                         OFFICE OF INSPECTOR GENERAL 

                                   1999 BRYAN STREET, HARWOOD CENTER, SUITE 2630 

                                              DALLAS, TEXAS 75201-6817 

                                        PHONE: (214) 880-3031 FAX: (214) 880-2492 




                                                     AUG - 4 2004
Dr. Mike Moses
General Superintendent
Dallas Independent School District
3700 Ross A venue
Dallas, Texas 75204-5491

Dear Dr. Moses:

This Final Audit Report (ED-OIG/A06-D0023) presents the results of our audit of the Dallas
Independent School District's (DISD) administration of the Bilingual Education - Systemwide
Improvement Grant for the period September I, 1999, through August 31,2003. 1 Our objectives
were to detennine whether DISD: (1) delivered the services and products specified in the
approved grant application, and (2) properly accounted for and used bilingual grant funds in
accordance with the Elementary and Secondary Education Act of 1965, as amended by the
Improving America's Schools Act of 1994 (IASA); Education Department General
Administrative Regulations (EDGAR); grant tenns; and the cost principles in Office of
Management and Budget (OMB) Circular A-87.

We provided a draft of this report to DISD. In its response to our draft report, DISD officials did
not agree with our finding and only concurred with a portion of Recommendation 2. DISD
officials provided additional support, not previously provided during the audit, and we reduced
the amount of unallowable costs to $1,353,875 and unsupported costs to $434,978. We have
summarized DISD's comments after the Subsequent Events section in this report. A copy of
DISD's response is included as Attachment B to this report.




Title VII, Part A, Subpart I, Section 7115, of the IASA, as amended, authorizes the Bilingual
Education - Systemwide Improvement Grant (grant).2 The grant enables Local Education
Agencies (LEAs), in collaboration with a non-profit organization, to offer bilingual education to
enhance the academic achievements of bilingual students for up to five years. LEAs interested in
the grant are required to compete by submitting an application to the Department.



1 DISD did not receive the fifth year of funding when the grant was discontinued on September 25. 2003. The
discontinuation is discussed in more detail in the Subsequent Events section of this report.
2 The No Child Left ~ehind Act of 2001 (NCLB) was implemented during our audit period; however. NCLB was
not applicable to this grant.


       Our mission is to promote the efficiency, effectiveness, and integrity o/the Department's programs and operations
ED-OIG/A06-D0023                                                                      Page 2 of 14


DISD submitted a grant application to the Department for a project titled “Building Capacity for
a Better Future.” This project addressed the linguistic and academic needs of DISD’s large
Limited English Proficient (LEP) student population and their families. The grant’s intent was
to: (1) improve LEP students’ process thinking skills, language acquisition, and capacity to learn
academic content by primarily providing training to participating teachers called “pilot teachers,”
as well as interested parents; and (2) develop technical assistance centers called “model
classrooms” in schools throughout the school district. By the end of the fifth year of the grant,
pilot teachers and model classrooms would be located throughout the district and, once Federal
grant funding ended, these grant services would remain available to LEP students with little cost
to DISD.

The application identified the National Children’s Educational Reform Foundation, Inc.
(NCERF) as a provider of contractual services and educational supplies. Specifically, NCERF
was identified as the contractor tasked to train the pilot teachers and parents, and develop the
model classrooms in conjunction with DISD. Additionally, the teaching strategies and training
materials to be used under the grant were developed by NCERF.

The Office of English Language Acquisition, Language Enhancement, and Academic
Achievement for Limited English Proficient Students (OELA) awarded DISD a five-year
Bilingual Education – Systemwide Improvement Grant (T291R990026) to implement the
“Building Capacity for a Better Future” project. The grant period was from September 1, 1999,
through August 31, 2004, for a total grant amount of $2,616,158. The award amounts, by budget
period, were—

                          9/1/99—8/31/00          $ 522,066
                          9/1/00—8/31/01          $ 523,523
                          9/1/01—8/31/02          $ 523,523
                          9/1/02—8/31/03          $ 523,523
                          9/1/03—8/31/04          $ 523,523
                                 Total            $2,616,158

The grant was awarded to DISD on August 31, 1999, and DISD had the fiduciary responsibility
for the administration of the grant. According to the grant application, NCERF would receive
$300,000 annually for providing contractual services and educational supplies to DISD.
Disagreements between DISD and NCERF regarding this amount delayed the start of the grant
for almost one year. From August 18, 2000, through July 22, 2003, DISD received $2,004,362
of $2,092,635, which was the awarded amount for the first four years of the grant. DISD paid
$1,245,825 of the $2,004,362 to NCERF during this period.



                                     AUDIT RESULTS


DISD materially failed to deliver the services and products specified in the approved grant
application and did not properly account for and use bilingual grant funds in accordance with
ED-OIG/A06-D0023 	                                                                                    Page 3 of 14


applicable regulations, grant terms, and cost principles. Specifically, DISD demonstrated weak
management controls and delivered only 18.17 percent of the approved grant services and
products for the four-year grant period, September 1, 1999, through August 31, 2003. We
recommend that the Department recover $1,788,853, which consists of $970,557 for non-
performance of grant services, $383,318 for unallowable costs, and $434,978 for unsupportable
costs, due to DISD’s material failure to deliver grant services and products.

Grant Services and Products Were Not Delivered

DISD was awarded a five-year grant, which was scheduled to start September 1, 1999. In the
approved February 1999 Grant Application, DISD identified the grant services and products that
would be delivered annually as:

    •	   60 pilot teachers trained;
    •	   100 parents trained;
    •	   Five model classrooms developed; and
    •	   All DISD’s sub-districts3 would have pilot teachers and model classrooms by the end of
         the five-year grant.

EDGAR, Sec. 75.700, provides that—

     A grantee shall comply with applicable statutes, regulations, and approved applications, and
     shall use Federal funds in accordance with those statutes, regulations, and applications.

Further, 34 C.F.R. § 80.40(a) states, “Grantees are responsible for managing the day-to-day
operations of grant and subgrant supported activities. . . . to assure compliance with applicable
Federal requirement and that performance goals are being achieved.”

DISD did not deliver the grant services and products that were identified in the approved grant
application. Initial disagreements between DISD and NCERF resulted in no grant services or
approved products being provided for the first year of the grant. When the disagreements were
finally resolved, with the aid of OELA officials, NCERF modified its May 2000 and December
2000 contracts with DISD, reducing the number of pilot teachers trained for the first two years of
the grant from 120 pilot teachers (60 teachers per year) to 30 pilot teachers for the two-year
period. Even with the modification, only 20 pilot teachers were trained during the first two
years. The third and fourth year of the grant required 60 teachers to be trained each year, per the
approved grant application. However, only 8 and 214 new pilot teachers were trained for the
third and fourth years, respectively. In total, only 49 pilot teachers were trained in four years
instead of the 150 teachers required by the grant and contract modifications.



3
  At the time the grant application was written, DISD had nine sub-districts; however, DISD has since restructured 

to eight sub-districts. 

4
  Each teacher was counted only once; teachers that repeated the training sessions were not included in the count of 

pilot teachers trained in the third and fourth years. 

ED-OIG/A06-D0023                                                                        Page 4 of 14


During the first four years of the grant, at least 400 parents should have been trained. However,
no parents were trained the first year, and for years two through four, only one four-day training
session was conducted for parents whose children were being taught by a pilot teacher. We
found that 46 parents who had a child in a pilot teacher classroom attended all four days of the
training in 2000, 34 parents in 2001, and 30 parents in 2002. In total, only 110 parents were
trained instead of the 400 parents that were proposed in the grant application.

Five model classrooms should have been established each year of the grant, for a total of 20
model classrooms in the four-year period reviewed. Grant funds were awarded to provide
training materials and educational supplies to develop model classrooms or technical assistance
centers in schools throughout the school district for pilot teachers, school administrators, parents,
and children. However, DISD officials were unable to demonstrate that any of the model
classrooms had been established.

Finally, the grant application stated that pilot teachers and model classrooms would be located in
all sub-districts with LEP students. Because all eight sub-districts have LEP students, pilot
teachers and model classrooms should have been located in all eight sub-districts. However,
grant services and products were only delivered to one sub-district, and were never delivered to
the other seven sub-districts.

Even though no training occurred during the first year of the grant, DISD received grant funds
for that year as if services and products were delivered. In total, DISD received over $2 million
in the four-year grant period to deliver the grant services and products summarized in the table
below. We used a weighted average calculation that gives equal weight to each grant service and
product. We calculated that the Department received only 18.17 percent of the grant services
and products identified in the application as shown in the following table.


          Grant                        Modified Services/          Percentage of
          Services/                    Services/ Products          Services/
          Products                     Products Delivered          Products Delivered

          Teachers Trained                 150            49                32.67

          Parents Trained                  400           110                27.50

          Model Classrooms                  20             0                 0.00

          Sub-districts with                 8             1                12.50
          Teachers/Classrooms

          Weighted Average of Grant Deliverables Met                       18.17%
ED-OIG/A06-D0023                                                                       Page 5 of 14



Unallowable and Unsupported Expenditures

DISD also did not properly account for the grant funds in accordance with all applicable
regulations, grant terms, and cost principles. OMB Circular A-87, Cost Principles for State,
Local, and Indian Tribal Governments, Attachment A, Paragraph C.1 (1997) provides that—

    To be allowable under Federal awards, costs must . . . Be necessary and reasonable for
    proper and efficient performance and administration of Federal awards . . . Be allocable
    to Federal awards . . . Be adequately documented.

Also, OMB Circular A-87, Attachment B, Paragraph 11.h (3) (1997) provides that—

    Where employees are expected to work solely on a single Federal award or cost objective,
    charges for their salaries [including fringe benefits] and wages will be supported by periodic
    certifications that the employees worked solely on that program for the period covered by the
    certification. These certifications will be prepared at least semi-annually and will be signed
    by the employee or supervisory official.

DISD charged the grant for $383,318 in unallowable costs. The unallowable amount included
payments to NCERF of $213,501 for contractual services and $135,723 for educational supplies
that exceeded the annual amounts authorized by the grant application. These two amounts also
included payments in the first year of the grant when no grant services or approved products
were provided. The unallowable costs also included payments of $5,471 for payroll expenses for
the first year of the grant when no services were provided, and $10,957 to NCERF for math
backpacks and day care services that were not authorized by the bilingual grant. Additionally,
$17,666 was paid for stipends to parents who did not have a child in the bilingual program or
who attended the math institute that was not authorized by the grant, and to teachers who were
not pilot teachers in the bilingual program.

Additionally, DISD charged the grant for $434,978 in unsupported costs. The unsupported
amount consists of $6,729 in operating costs, $135,073 in unidentified grant charges for which
DISD was unable to provide adequate documentation or receipts, and $293,176 in payroll costs
for the three employees that worked solely on the grant over the four-year grant period. DISD
did not require the three employees to attest in written certifications that they worked solely on
the bilingual grant. DISD obtained an exemption from requiring the certifications for several
other Federal grants, but not for this bilingual grant.

Details of the non-delivery, unallowable, and unsupported costs are discussed in Attachment A.
ED-OIG/A06-D0023 	                                                                     Page 6 of 14


                                  RECOMMENDATIONS

We recommend that the Director of OELA, in accordance with the provisions set forth in
34 C.F.R. § 80.43(a) instruct DISD to—

   1. 	 Refund to the Department unallowable costs of $970,557 due to DISD’s material failure
        to deliver grant services and products; and

   2. 	 Refund to the Department unallowable costs of $383,318, and $434,978 in unsupported
        costs, or provide sufficient documentation to support that amount.

If any of the costs questioned in Recommendation #2 are allowed, the amount allowed should be
reduced by 81.83 percent due to non-delivery of grant services, and the same amount should be
added to the costs questioned in Recommendation #1.


                                    SUBSEQUENT EVENTS


On September 25, 2003, OELA issued a letter to DISD discontinuing the grant’s final year of
funding of $523,523 because of DISD’s “Failure to Achieve Substantial Progress.” OELA cited
34 C.F.R. § 75.253(a)(2)(i) that states a grantee, in order to be eligible for a continuation award,
must, among other things, have “[m]ade substantial progress toward meeting the objectives in its
approved application.” OELA issued its first letter on September 17, 2003, to DISD expressing
concerns over our preliminary audit results. OELA determined that DISD’s response, dated
September 23, 2003, “substantiated the accuracy of the OIG’s information with respect to the
project’s performance in meeting the teacher and parent training objectives” and “provided no
additional information with regard to model classroom development or other information that
might help clarify whether the project has achieved substantial progress or any reason for its
failure to do so.” OELA concluded, based on our preliminary audit results and DISD’s
September 23, 2003 letter, that the grant “is not eligible for, and will not receive, a continuation
award for its final budget period.”


                                     DISD’S RESPONSE

DISD did not concur with our finding and only concurred with a portion of Recommendation 2.
DISD stated in its response, “[w]e base our disagreement on errors of fact and/or interpretation
made in the report that affect the conclusions drawn, and also on documentation discovered since
the auditors concluded their fieldwork.” DISD stated, “[w]hen all relevant facts are assessed,
they point to these conclusions: (1) the district can support the overwhelming majority of the
expenditures; (2) all the expenditures were spent in furtherance of the programs outlined in the
grant; and (3) all of the expenditures were appropriate under the terms of the grant as modified.”
ED-OIG/A06-D0023 	                                                                        Page 7 of 14


DISD further stated that the analysis of the overall delivery of grant services and products is
seriously flawed because it overlooks changes in the grant program that were approved by the
Office of Bilingual Education and Minority Languages Affairs (OBEMLA)5 and ignores the
importance OBEMLA placed on DISD’s use of services and products provided by NCERF.
Specifically, OBEMLA:

    • 	 Required DISD to maintain NCERF at the center of the grant program;
    • 	 Approved several aspects of the May 15, 2000, contract between NCERF and DISD;
    • 	 Approved initial invoices submitted by NCERF which DISD had questioned; and,
    • 	 Accepted the May 15, 2000, contract between NCERF and DISD as a modification of the
        grant. The contract included an increase in the amount paid to NCERF from $190,000 to
        $300,000.

DISD also disputed, “that only 17.67 percent of grant services and products were delivered in
accordance with the grant application.” DISD contends that it delivered a higher percentage of
grant deliverables. DISD states that teachers trained should be viewed as “units trained, not new
teachers trained each year,” and “parent training should be viewed as units trained not individual
parents;” therefore, during the grant period 147 teachers and 341 parents were trained. DISD
also stated, “twelve classrooms were actually implemented” and contends that the report double
counts the model classroom deliverable when it asserts that all DISD sub-districts would have
model classrooms by the end of the five-year grant. Further, DISD stated the report entirely
omitted the 227 students that attended the five-day camp held in three of the four years of the
grant.

DISD stated that $370,470 of unallowable costs consists of $223,670.76 paid to NCERF in 1999-
2000 for planning and preparation activities and educational supplies were clearly incurred with
the knowledge and approval of OBEMLA and should not be questioned. Unallowable costs of
$146,798.80 (in the report this amount is $131,024.19) for services and supplies above the
contracted amount included payments to NCERF in 2000-2001 and 2001-2002 to provide
additional training days and technical support intended to foster a deeper understanding of the
training approach needed for successful implementation of the grant. The remaining
unallowable costs included stipends for parents and childcare expenses for low-income parents
that could not participate in parent activities if childcare were not provided.

Lastly, DISD stated that $293,176 in payroll costs, of the $511,253 in unsupported costs, was
appropriate, justified, and requested that questioned cost not be subject to recovery. DISD
agreed that the required semi-annual certifications were not obtained and corrective action has
been taken to ensure program managers do not repeat this mistake. DISD concurred that the
$1,912 in other expenses was not supported. Additional support, not previously provided to the
auditors, was provided for $215,227 of the $216,165 in unidentified expenses.




5
 OBEMLA is currently the Office of English Language Acquisition, Language Enhancement, and Academic
Achievement for Limited English Proficient Students (OELA).
ED-OIG/A06-D0023 	                                                                      Page 8 of 14



                                     OIG’S RESPONSE

We reviewed DISD’s response and while we have not changed our finding, we did accept
additional supporting documentation resulting in modifications to our recommendations.

We disagree with DISD that our analysis of the overall delivery of grant services and products
was seriously flawed. In its grant application submitted to the Department, DISD identified
specific grant services and products that it would deliver each year with the aid of its contractor,
NCERF, if funded by the Department. In its application, DISD proposed to the Department that
in return for over $500,000 in Federal funds each year, it would deliver:

    •	   60 pilot teachers trained (decreased to 30 teachers total for the first two years only);
    •	   100 parents trained;
    •	   five model classrooms developed; and
    •	   expansion of these services throughout DISD so that at the end of the five-year grant, all
         eight sub-districts would have pilot teachers and model classrooms.

Since DISD received grant funding for four years, DISD should have delivered four years of
these grant services and products, which did not occur.

The Department awarded the bilingual grant to DISD on August 31, 1999, based on a
competitive process that included reviewing and evaluating not only the grant objectives, but
also the contractor’s credentials and qualifications and how it was best qualified to fulfill the
grant objectives. After the grant was awarded, DISD requested to remove NCERF from the
grant and proposed to fulfill the grant objectives in house. OELA denied this request because it
could not legally permit DISD to substitute with a significantly different project, since the grant
was awarded largely on NCERF’s qualifications and credentials. In a letter dated March 30,
2000, OELA notified DISD of its decision stating, “to protect the integrity of that process, [we]
must ensure that applications selected for funding carry out the project that were reviewed in that
competition.”

In that same letter (issued seven months after the grant should have been implemented), OELA
requested DISD and NCERF “to make one final effort to determine whether they can agree upon
an appropriate means to implement this project” or the “Department will have no choice but to
take the necessary steps to end the funding of this grant.” DISD and NCERF, both choosing to
receive grant funding, reached an agreement in the May 15, 2000, contract. OELA approved the
contract on June 22, 2000. DISD contends that the May 2000 contract increased the amount paid
to NCERF from $190,000 to $300,000. However, that statement is not accurate. The initial
grant application called for NCERF to receive $300,000 yearly ($195,000 in contractual services,
$10,000 for an independent evaluator, and $95,000 for educational supplies). The May 2000
contract was amended again in December 2000 and called for NCERF to receive a total of
$300,000 per year ($205,000 for contractual services and $95,000 for educational supplies).
What did change in the modification to the initial grant application was that the first two years of
the grant were collapsed into one year and the number of pilot teachers trained in the collapsed
ED-OIG/A06-D0023                                                                      Page 9 of 14


year was decreased to 30, instead of the original 120 teachers. Even with this modification, only
20 pilot teachers were trained during the collapsed first two years.

DISD, as the grantee, had the fiduciary responsibility to ensure that Federal funds were used for
the purposes for which they were awarded and that all payments to NCERF complied with
applicable statutes, regulations, and the approved grant application. This responsibility included
ensuring NCERF delivered the grant services and products identified in the application each
year.

During our review, we did not question the decision to collapse the first two years and to reduce
the pilot teachers trained from 120 to 30 because of the initial disagreements that occurred
between DISD and NCERF. However, once DISD and NCERF signed a contract and started
implementation of the grant, the agreed-upon grant services and products should have been
delivered. We realize that sometimes projects are slow to start and grant services and products
delivered might be reduced during the first year of implementation, but improve the next year. If
improvement on the products and services delivered had occurred in the second and subsequent
years, we would have taken that into account and given DISD credit. However, we saw no such
improvement. Instead, we found that DISD and NCERF received Federal funds each year, but
trained fewer teachers and parents than were required and developed no model classrooms.

In its response, DISD disputed that only 17.67 percent of grant services and products were
delivered and stated that 147 pilot teachers and 341 parents were trained, and 12 model
classrooms were developed. DISD also stated that the report entirely omitted the 227 students
that attended the five-day camp held in three of the four years of the grant. We concluded after
reviewing all additional documentation including training sign-in sheets and supplemental pay
forms provided by DISD, that DISD and NCERF trained an additional three pilot teachers for a
total of 49 pilot teachers trained in four years of the grant. DISD did not provide any additional
documentation to support its statements that 341 parents were trained and 12 model classrooms
were developed. Although DISD claimed that 12 classrooms were actually implemented, DISD
was unable to produce even one classroom when the auditors requested to visit one.
Additionally, DISD contractually limited NCERF’s services to a total of four schools, all in the
same sub-district, which was not approved by OELA officials. This limitation prevented the
expansion of the bilingual grant services throughout DISD, as proposed in the approved grant
application.

Further, the report did not omit the 227 students that attended the five-day camp held in three of
the four years. We allowed the expenses associated with the five-day camp, but we did not count
these camps as teacher or parent training sessions. These camps were not shown on the grant
application as deliverables nor as teacher and parent training activities. These camps were
designed to benefit the LEP students. Although teachers and parents participated in these camps,
they needed to have been trained before attending. In the grant application, DISD stated, “A
Think-campreneur will be provided to LEP students each summer. The camp will engage
students in a variety of brain-based thinking and learning activities to improve their thinking
skills; develop math, language and other content skills; and develop workforce readiness
ED-OIG/A06-D0023                                                                      Page 10 of 14


skills . . .. The Think-campreneur will thus provide additional opportunities for ‘model
classroom’ teachers and Parent Coaches to use the mediated learning and think-coaching
strategies that they developed during Think-coach and Think-parents are powerful training. . ..”

We disagree that teachers trained should be viewed as “units trained, not new teachers trained
each year,” and “parent training should be viewed as units trained not individual parents.” In the
grant application, DISD stated the intent of the grant is to improve the linguistic and academic
needs of LEP students. To accomplish this, DISD proposed that NCERF would train teachers of
LEP students, as well as parents of LEP students, so that the parents could help the LEP students
at home. DISD also proposed development of model classrooms to provide technical assistance
to these teachers and students. Finally, DISD proposed that the training would be expanded to
teachers and the parents of the students in other sub-districts, resulting in all DISD sub-districts
having pilot teachers and model classrooms by the end of the grant for the use of future LEP
students. To ensure the grant was successful, DISD needed to (1) train different teachers and
different parents each year, (2) establish model classrooms throughout all sub-districts, and (3)
disseminate the grant services through all sub-districts. The Department did not award this grant
to train the same teachers and parents each year; to only have the grant services available in four
schools in one sub-district, and to not have any model classrooms developed. The Department
awarded the grant to be used as specified in the grant application, which did not occur.

We also disagree with DISD that the $223,671 of the $370,470 in unallowable costs paid to
NCERF in 1999-2000 for planning and preparation activities and educational supplies should not
be questioned. In its grant application, DISD stated that 60 pilot teachers and 100 parents would
be trained and five model classrooms would be developed by the end of the first year. There was
no mention in the grant application that DISD needed a year for planning and preparation
activities. If DISD and NCERF needed a year of discussions and preparation, then DISD was
premature in submitting a grant application to the Department. Because of the competitive
process and limited funding, not all applicants are awarded a grant. By applying for a grant they
were not ready to implement, DISD and NCERF potentially prevented another applicant from
receiving this grant funding. In addition, DISD, as the fiduciary agent, paid $118,200 in invoices
at the end of the grant year and was well aware that these grant services were not provided by
NCERF. Also, since no training was provided and no model classrooms were established that
first year, educational supplies of $100,000 and additional payroll costs of $5,471 were not
needed and, therefore, were unallowable.

We reviewed all additional supporting documentation provided by DISD for the $146,798 (in the
report this amount is $131,024) in unallowable costs for services and supplies above the
contracted amount, including payments to NCERF to provide additional training days and
technical support. DISD was unable to support that additional training was provided. Even if
the additional training days had been supported, we disagree with DISD that an additional
$81,801 should be paid to NCERF since it failed to provide the training and technical support to
all agreed-upon teachers and parents and still received the full amount allotted by the grant. We
also disagree that $35,723 in additional educational supplies was necessary for the grant since
$100,000 in supplies were purchased the first year of the grant, and no training was conducted.
Those supplies should have been used in the subsequent years when some training did occur and
the grant not double billed for supplies that were already purchased. For the remaining $13,500
ED-OIG/A06-D0023                                                                    Page 11 of 14


that exceeded the contracted amount, DISD did not provide any additional supporting
documentation.

We reviewed additional support for the $15,775 in parent stipends and childcare expenses.
Originally, we considered $4,817 of the $15,775, to be unallowable day care service expenses
because DISD could not justify that the day care services were provided for grant activities. In
its response, DISD provided additional documentation (purchase orders) to support that day care
expenses were paid; however, DISD did not have sign-in sheets or time sheets to support the
amount paid. Therefore, we now consider the $4,817 as unsupportable costs. DISD did not
provide any additional support for the remaining $10,957. Stipends and daycare expenses
related to a math institute were not allowed because the math institute was not a part of the
bilingual grant.

DISD concurred that the $1,912 in other expenses was not supported.

We disagree with DISD that the $293,176 in payroll of the $511,253 in unsupported costs was
appropriate, justified, and that the questioned cost should not be subject to recovery. We
acknowledge that the failure to obtain the required semi-annual certifications appeared to be
from a misunderstanding regarding an Ed-Flex statewide administrative waiver and DISD said it
has taken corrective action to ensure its program managers will not repeat this mistake.
However, these certifications are mandatory and we are still questioning all $293,176.

Finally, we reviewed all additional supporting documentation provided by DISD for the
unidentified grant costs. DISD claimed that it provided additional support for $215,227 of the
$216,165 unidentified grant costs shown in the draft report. However, we determined only
$63,426 of the grant costs to be adequately supported by the new documentation. We
determined $17,666 of the $215,227 to be unallowable because the new support documentation
disclosed that the amount was for stipends paid to parents who attended the math institute or who
did not have a child in the program, and teachers who were not pilot teachers. Stipends related to
the math institute were not allowed because the math institute was not part of the bilingual grant.
DISD did not provide any additional support for the remaining amount of $135,073.


                      OBJECTIVES, SCOPE, AND METHODOLOGY


Our audit objectives were to determine whether DISD (1) delivered the services and products
specified in the approved grant application, and (2) properly accounted for and used the
Bilingual Education - Systemwide Improvement Grant funds in accordance with the:

    •   ESEA of 1965, as amended by the IASA of 1994;
    •   34 C.F.R. Parts 75 and 80;
    •   Bilingual Education - Systemwide Improvement Grant terms; and
    •   Cost principles in OMB Circular A-87.

To accomplish our objectives, we—
ED-OIG/A06-D0023 	                                                                  Page 12 of 14



   • 	 Reviewed applicable Federal law and regulations;
   • 	 Reviewed the State of Texas’ Audit Report for the year ended August 31, 2002;
   • 	 Reviewed DISD’s Bilingual Education - Systemwide Improvement Grant Application
       and Budget Narratives;
   • 	 Reviewed Bilingual Education - Systemwide Improvement Grant Performance Reports
       for the 2000/01 year, the 2001/02 year, and the 2002/03 year;
   • 	 Reviewed the May 2000 contract and the December 2000 contract amendments between
       DISD and NCERF;
   • 	 Reviewed DISD’s payroll records, accounting transactions, and invoices and other
       documentation supporting: (1) all expenditures charged to and (2) all services and
       products delivered by the grant from September 1, 1999, through August 31, 2003;
   • 	 Reviewed NCERF’s payroll records, accounting transactions, and invoices and other
       documentation maintained by NCERF: (1) to justify the contractual services fees paid to
       NCERF by the grant, and (2) to support all services and products delivered by NCERF
       from September 1, 1999, through August 31, 2003; and
   • 	 Interviewed NCERF’s President and CEO and various DISD officials.

To achieve our audit objectives, we relied primarily on written documentation from DISD and
NCERF to support grant expenditures and deliverables. DISD officials provided computer-
processed data only to support grant stipends paid to teachers and parents. We verified the
completeness of this data by comparing source records to computer-processed data, and verified
the authenticity by comparing computer-processed data to source documents. However, after
performing these limited data reliability tests, we noted several discrepancies that cast doubt on
the data’s validity. We concluded that the data was not sufficiently reliable to be used in meeting
the audit’s objectives. However, when this computer-processed data is viewed in context with
other available evidence, we believe the opinions, conclusions, and recommendations relating to
grant stipends paid to teachers and parents in this report are valid.

Our review covered September 1, 1999, through August 31, 2003, which are the four completed
years of the five-year grant period. We conducted our fieldwork at DISD’s Administration
Building, Dallas, Texas from August 4, 2003, through August 15, 2003; and at NCERF’s office
in Danbury, Connecticut from September 9, 2003, through September 17, 2003. We discussed
the preliminary results of our audit with DISD officials on August 15, 2003. An exit conference
was held with DISD officials on January 21, 2004.

Our audit was performed in accordance with generally accepted government auditing standards
appropriate to the scope of audit described above.
ED-OIG/A06-D0023                                                                    Page 13 of 14



                 STATEMENT ON MANAGEMENT CONTROLS

As part of our audit, we reviewed all costs charged to the grant, and performance data relating to
grant deliverables for the four-year grant period. Therefore, it was not considered necessary to
assess DISD’s management controls over the bilingual grant. However, our review disclosed
weak management controls, which adversely affected DISD’s ability to administer the bilingual
grant, and resulted in significant non-compliance with Federal regulations, grant terms, and cost
principles. Those weaknesses and their effects are discussed in the AUDIT RESULTS section of
this report.


                               ADMINISTRATIVE MATTERS


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

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 U.S. Department of
Education official, who will consider them before taking final Departmental action on this audit:

               Jack Martin

               Chief Financial Operating Officer 

               Office of the Chief Financial Officer 

               U.S. Department of Education           

               400 Maryland Avenue, S.W., Room 4E313 

               Washington, DC 20202 


               Maria Hernandez Ferrier
               Deputy Under Secretary and Director of the Office of English Language
               Acquisition, Language Enhancement, and Academic Achievement for
               Limited English Proficient Students
               U.S. Department of Education        

               400 Maryland Avenue, S.W., Room PCP-10087 

               Washington, DC 20202          


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 greatly appreciated.
ED-OIG/A06-D0023                                                                     Page 14 of 14


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.

If you have any questions or wish to discuss the contents of this report, please contact me, at
214-880-3031. Please refer to the control number in all correspondence related to this report.

                                                     Sincerely,


                                                     /Signed/
                                                     Sherri L. Demmel
                                                     Regional Inspector General
                                                       for Audit


Attachment A - Schedule of Questioned Costs
Attachment B - DISD's Response
                                                                             Attachment A
                                                                                        Page 1 of 3

                 BILINGUAL EDUCATION – SYSTEMWIDE 

                        IMPROVEMENT GRANT 

                   SCHEDULE OF QUESTIONED COSTS 

              SEPTEMBER 1, 1999, THROUGH AUGUST 31, 2003 


           Category              Non-               Unallowable           Unsupported
                            Performance of            Costs                  Costs
                             Grant Costs

      Non-Performance           $970,5571
      of Grant
      Contractual                                    $213,5012
      Services
      Educational                                    $135,7233
      Supplies
      Payroll                                        $ 5,4714               $293,1764
      Other Operating                                $ 10,9575              $ 6,7295
      Unidentified                                   $ 17,6666              $135,0736
      Grant Costs
      Total                     $970,557              $383,318              $434,978

Non-Performance of Grant:

1 -- $970,557 -- We calculated the unduplicated questioned costs for the non-delivery of grant 

deliverables as follows:

           o Grant Drawdowns from Sept 1, 1999 – Aug 31, 2003 $2,004,361.54
           o Total Unallowable                                         ($ 383,318.00)
           o Total Unsupportable                                       ($ 434,978.00)
           o Total                                                      $1,186,065.54
           o 81.83% for Non-Delivery of Grant                            x    81.83%
           o Total Unduplicated Costs                                   $ 970,557

If any of the costs questioned in Recommendation #2 are allowed, the amount allowed should be
reduced by 81.83% due to non-delivery of grant services, and the same amount should be added
to the costs questioned in Recommendation #1.

Contractual Services:
2 -- $213,501
        1999/2000 -- $118,200 -- Questioned full amount for the year because contractual
        services were not performed by NCERF during the year.
        2000/2001 -- $81,801 -- Questioned amount above the contracted amount of $205,000.
        2001/2002 -- $13,500 -- Questioned amount above the contracted amount of $205,000.
        2002/2003 -- $0 -- No questioned costs for this year.
                                                                               Attachment A
                                                                                        Page 2 of 3

According to OMB Circular A-87, Attachment A, Paragraph C, Subparagraph 1.j. (1997), to be
allowable, costs must be adequately documented. Also, OMB Circular A-87, Attachment A,
Paragraph C, Subparagraph 1.d. (1997) states the grant must “[c]onform to any limitations or
exclusions set forth in these principles, Federal laws, terms and conditions of the Federal award,
or other governing regulations as to types or amounts of cost items.”

According to the signed contracts between NCERF and DISD, NCERF would be paid $205,000
for consultant services for each year of the grant. However, there are instances in which NCERF
was paid more than the contracted amount.

Educational Supplies:
3 -- $135,723
        1999/2000 -- $100,000 -- Questioned full amount for the year because no grant services
        were performed that required the purchase of educational supplies during the year.
        2000/2001 -- $35,723 -- Questioned full amount above the contracted amount of $95,000;
        also questioned costs not allowed by grant.
        2001/2002 -- $0 -- No questioned costs for this year.
        2002/2003 -- $0 -- No questioned costs for this year.

According to the signed contracts between NCERF and DISD, NCERF would be paid $95,000 

for supplies for each year of the grant. There are instances in which NCERF was paid more than 

the contracted amount and the grant funds were used to pay for supplies for a math program that 

was not authorized by this grant. 


Payroll:

4 -- $ 5,471 -- Unallowable 

     $293,176 -- Unsupportable
       1999/2000 -- $5,471 -- Questioned full amount for the year because no grant services or
       products were delivered during the year.
       2000/2001 -- $126,443 -- DISD failed to obtain the required semi-annual certifications
       for full-time employees of the grant.
       2001/2002 -- $110,006 -- DISD failed to obtain the required semi-annual certifications
       for full-time employees of the grant.
       2002/2003 -- $56,727 -- DISD failed to obtain the required semi-annual certifications for
       full-time employees of the grant.

According to OMB Circular A-87, Attachment B, Paragraph 11.h(3) (1997), “Where employees
are expected to work solely on a single Federal award or cost objective, charges for their salaries
[including fringe benefits] and wages will be supported by periodic certifications that the
employees worked solely on that program for the period covered by the certification. These
certifications will be prepared at least semi-annually and will be signed by the employee or
supervisory official . . . .” DISD did not obtain the certifications; therefore, we questioned the
full amount of payroll for the first year as unallowable costs and for the last three years as
unsupportable.
                                                                             Attachment A
                                                                                      Page 3 of 3

Other Operating:

5 -- $10,957 -- Unallowable Costs 

     $ 6,729 -- Unsupportable Costs
        1999/2000 -- $0 -- No questioned costs for this year.
        2000/2001 -- $7,631 -- Expenses not allowed by the grant including stipends paid to
        parents and catering services for math training; and questioned costs of $6,729. ($4,817
        in day care services that was unsupportable because DISD failed to obtain the necessary
        documentation, and $1,912 that DISD agreed in its response was unsupported).
        2001/2002 -- $1,800 -- Questioned full amount because expense not allowed by grant.
        2002/2003 -- $1,526 -- Questioned full amount because expense not allowed by grant.

DISD failed to obtain the necessary receipts to support the costs paid for by the grant. DISD also
used grant funds to pay for costs not allowed by the grant (i.e., daycare services and math
backpacks).

Unidentified Grant Charges:
6 -- $135,073 – Unsupported Costs
     $ 17,666 – Unallowable Costs

We originally reported the unidentified grant charges as $216,165. In DISD’s response to the
audit, DISD provided additional information to support some of the costs we were unable to
previously identify. After review, we adjusted the report to state that DISD provided support for
$63,426, $135,073 is unsupported, and the remaining amount of $17,666 is unallowable.


Summary: The total unduplicated questioned costs are calculated as follows:

Non-Performance of Grant Deliverables (Recommendation #1):         $ 970,557
Unallowable Costs (Recommendation #2):                             $ 383,318
Unsupportable Costs (Recommendation #2):                           $ 434,978

       Total Unduplicated Questioned Costs                         $1,788,853
                          Dallas Independent School District 

May 18, 2004


Ms. Sherrie L. Demmel
Regional Inspector General for Audit
U.S. Department of Education
Office of the Inspector General
1999 Bryan Street, Suite 2630
Dallas, TX 75201-6817

RE: Control Number ED-OIG/A06-D0023

Dear Ms. Demmel:

The Dallas Independent School District ("the district") submits this response to the draft audit
report concerning administration of the Bilingual Education Systemwide Improvement Grant. We
have thoroughly reviewed the many allegations contained in the draft report including the issues
regarding documentation and procedures. While we do not agree with all of these pOints, where
appropriate we are taking steps to address these issues. Overall, however, we respectfully and
strongly disagree with the fundamental conclusions reached in the draft.

We base our disagreement on errors of fact and/or interpretation made in the report that affect
the conclusions drawn, and also on documentation discovered since the auditors concluded their
fieldwork. In support of our response, the district has attached a number of exhibits and other
documents more specifically described in the response. When all relevant facts are assessed,
they point to these conclusions: (1) the district can support the overwhelming majority of the
expenditures; (2) all the expenditures were spent in furtherance of the programs outlined in the
grant; and (3) all of the expenditures were appropriate under the terms of the grant as modified.

We submit that the analysis of the overall delivery of grant services and products is seriously
flawed because it overlooks changes in the grant program that were approved by the Office of
Bilingual Education and Minority Languages Affairs ("OBEMLA"). It also ignores the importance
OBEMLA placed on the district's use of services and products provided by the National Children's
Education Reform Foundation ("NCERF"). Review of the initial steps in the implementation of the
grant demonstrates the erroneous premises on which the audit's conclusions are based.

The first year of the grant as awarded was September 1, 1999 through August 31, 2000.
However, as OBEMLA was aware, implementation of the grant was delayed because of the
district's efforts to arrive at a contract with NCERF. OBEMLA officials were deeply and directly
involved in that process and in fact directed its outcome. Four important things happened during
that process which were critical to subsequent administration of the grant.

First, OBEMLA required the district to maintain NCERF at -the center of the grant program. For
example, in a letter received May 2, 2000, Arthur M. Love, Acting Director, OBEMLA, instructed
Dr. Rosita Apodaca, Deputy Superintendent, Teaching and Learning Division, as follows: ..... this
grant cannot be implemented, consistent with the scope and purpose of the approved application,
without using the programmatic approach, materials and services of NCERF." (See Exhibit 1
attached to this response). The Deputy Director of OBEMLA instructed the district to reach an
agreement with NCERF on a scope of services and warned that if progress toward an agreement
were not made, "[t]he department will have no choice but to take the necessary steps to end the
funding of this grant." The Deputy also noted that ..[t]he department will have final authority to
approve any modification to this project that the parties agree upon." Acting pursuant to these


                            Mike Moses, Ed.D. • General Superintendent 

                3700 Ross Avenue· Dallas. Texas 75204-5491 • Telephone (972) 925-3700 

                                                                                            Attachment B

directives from OBEMLA and desirous of providing critically important assistance to the students
to be served, the district did enter an agreement with NCERF effective May 15, 2000.

Second, OBEMLA specifically approved several aspects of the May 15, 2000, contract between
NCERF and the district that the audit now ignores. The contract required the district to pay
                              th
NCERF $100,000 by May 15 and make additional payments of $30,000 each on June 30th , July
31 t.
   s                  st
      and August 31 . In a letter dated June 22, 2000, from John Ovard, Midwest Cluster
Coordinator for OBEMLA, and James H. Lockhart, Education Specialist, OBEMLA, addressed to
Dr. James Hughey, Acting Deputy Superintendent, OBEMLA stated that "the advance payment
provisions set out in the May 15, 2000, contract between DISD and the Foundation are not
prohibited by the applicable Department regulations." (See Exhibit 2 attached to this response).

Third, OBEMLA specifically approved initial invoices submitted by NCERF which the district had
questioned: "invoices shared by the Foundation with OBEMLA appear to be proper and
demonstrate planning and other activities carried out by the Foundation consistent with its efforts
to achieve a working relationship with DISD pursuant to joint implementation of this grant." (June
22, 2000 letter, exhibit 2) Thus, OBEMLA gave the district the green light to proceed despite
whatever reservations the district might have had. In reliance on this green light, the district
issued a check to the Foundation in the amount of $168,399.91 for two invoices.

Fourth, and most important, OBEMLA accepted the May 15, 2000, contract between NCERF and
the district as a modification of the grant. The June OBEMLA letter approves of the modifications
to the approved application for this grant that are set out in the May 15, 2000, contract between
DISD and the Foundation. "Those modifications fall within the scope and purpose of the approved
application for this grant." (June 22, 2000 letter, exhibit 2) In other words, OBEMLA accepted that
the goods and services to be provided in the first year of the grant and in succeeding years would
be measured against the terms of the contract, which OBEMLA recognized as differing from the
original grant application.

The contract between NCERF and the district was amended effective December 8, 2000, to
increase the amount to be paid to NCERF from $190,000 per year to $300,000 per year. Thus,
the evaluation of the grant administration for the second, third, and fourth years must be
measured against the requirements of the amended contract rather than the grant application
alone.

There were two recommendations in the report. We will address the three elements of the
recommendations separately:  Failure to deliver grant services, unallowable costs, and
unsupported costs:

Recommendation. 	 Refund to the Department unallowable costs of $924,268 due to DISD's
                  material failure to deliver grant services and products. NON-CONCUR.

The Dallas Independent School District disputes that only 17.67 percent of grant services and
products were delivered in accordance with the grant application. The basis of our disagreement
is that the report does not adequately represent the critical role of NCERF in the delivery of these
services, does not correctly recognize the services actually delivered, and fails to include
approved services and products delivered in the first year of the grant (1999-2000).

        • 	 In a letter received May 2, 2000 (Exhibit 1), Arthur M. Love, Acting Director, Office of
            Bilingual Education and Minority Languages Affairs (OBEMLA), instructed Dr. Rosita
            Apodaca, DISD Deputy Superintendent for Teaching and Learning as follows: "The
            educational program, techniques, materials, and services of NCERF are a critical part of
            the application DISD submitted for the Title VII funds and represented a central basis for
            the OBEMLA's selection of DISD's application for funding." He added: " ... this grant
            cannot be implemented, consistent with the scope and purpose of the approved
            application, without using the programmatic approach, materials and services of


                                                                                                    2
                                                                                        Attachment B

    NCERF." Mr. Love directed the district to reach an agreement with NCERF by May 15,
    2000, or relinquish the grant. According to the draft audit report, the district received
    $2,004,362 of the awarded amount. Of this total, $1,245,825, or 62.2 percent, was paid
    to NCERF in accordance with the provisions of the OBEMLA directed and approved
    contract. In light of USDE's insistence that only by using NCERF could the terms of the
    grant be satisfied, the threshold of any analysis of failure to deliver goods and services
    must be at least that 62.2 percent - not 17.67 percent.                 The payments to
    NCERF were made in good faith and covered goods and services within the terms of the
    contract, and thus the grant.

• 	 This grant was pursued and implemented under Title VII of the Improving America's
    Schools Act of 1994. Section 7115 states, in part, that the purpose of implementing
    districtwide bilingual instructional educational programs is to improve, reform, and
    upgrade relevant programs and operations.               The report seems to view the
    implementation of this systemic reform and improvement as an assembly line process
    with a rigidly predictable schedule of delivery for products and services. Nothing could be
    further from the truth. Implementing far-reaching systemic reforms through new and
    untried programs means that while overall progress and ultimate success is expected, it
    is also expected that there will be bumps in the road, set-backs experienced, and
    redirections necessitated by ongoing project and data reviews or changed circumstances.
    All of these occurred during the implementation of the Bilingual Systemwide Improvement
    Grant.

    The report asserts that only 17.67 percent of grant services and products were delivered.
    In actual fact, a much higher percentage was delivered. We have provided in the
    appendix the actual deliverables, which are summarized below .

        •:. 	 Teachers trained. These should be viewed as units trained, not new teachers
              trained each year.      The USDE, in providing guidance for professional
              development, directs that such training is to be "sustained, intensive, and
              classroom-focused, and not one-day or short-term workshops." This sustained,
              intensive training is exactly what was accomplished during this project. The
              following summarizes teachers trained:

                                                 Expected 	                   Delivered

                     2000-2001                 30 Teachers                  50 Teachers

                     2001-2002                 60 Teachers                  54 Teachers

                     2002-2003                 60 Teachers                  43 Teachers



        .:. 	 Parents trained. Similar to teachers trained, parent training should be viewed as
              units trained not individual parents. Had the project required that parents receive
              an "introduction" or "orientation," a one-time session would have been
              appropriate. Since the goal of the project was to enlist the parents as partners in
              the academic success of their children, sustained and intensive training was not
              only appropriate, but required.

                                                 Expected 	                   Delivered

                     2000-2001                  100 Parents 	                148 Parents




                                                                                                3
                                                                                             Attachment B

                     2001-2002                   100 Parents 	                 106 Parents

                     2002-2003                   100 Parents 	                  87 Parents



        .:. 	 Model classrooms. Subsequent to audit fieldwork, DISD staff visited with
              participating campuses and staff members. We were able to ascertain through
              these interviews that twelve classrooms were actually implemented as
              summarized below.

                                                  Expected 	                     Delivered

                     2000-2001                         5	                            7

                     2001-2002                         5	                            7

                     2002-2003                         5	                           12



        .:. 	 Other services and products. The report asserts that all DISD sub-districts would
              have model classrooms by the end of the five-year grant. This approach is
              seriously flawed as it, in essence, double counts the model classroom deliverable
              in the analysis. Further, the report entirely omitted the Think Campreneur
              student camps held each year of the grant. DISD provided five days of camp
              each summer to 82 students in 2000-2001, 90 students In 2001-2002, and 55
              students In 2002-2003. This important service was not considered.

• 	 In counting teachers and parents trained and model classrooms, the report encumbers
    the first year of the grant with an expectation of full delivery of services. This is a serious
    factual error. The actions of DISD were in compliance with the legislation and taken with
    clear direction and oversight of OBEMLA.

        .:. 	 Title VII of the Improving America's Schools Act of 1994, Section 7115(b )(3)
              specifically provides that grants may be used exclusively during the first twelve
              months for activities preparatory to the delivery of services.             Ample
              documentation of these planning activities was provided during fieldwork to
              substantiate that the planning took place .

        •:. 	 Implementation of the grant was delayed after the award because of the District's
              efforts to arrive at a satisfactory contract with NCERF that reflected what the new
              administration believed to be a more appropriate role for the NCERF. The
              District's efforts in that regard were impeded by the attitude of officials in the
              OBEMLA. For example, in a letter dated March 30, 2000 (see Exhibit 3), to Dr.
              Apodaca, Bouy Te, Deputy Director of OBEMLA, wrote: "the Foundation,
              because of the extent of its involvement and the critical role described for it in the
              application submitted by DISD, cannot be removed as a participant in this project
              without altering its basic scope and purpose." The Deputy Director directed the
              district and the Foundation to reach an agreement on a scope of services and
              warned that if progress toward an agreement were not made, "[t]he department
              will have no choice but to take the necessary steps to end the funding of this
              grant." The Deputy also noted that "[t]he department will have final authority to
              approve any modification to this project that the parties agree upon." On April
              11, 2000 (referenced in exhibit 1), OBEMLA proposed that the district and



                                                                                                  4
·,

                                                                               Attachment B
     NCERF reach an agreement whereby the district would spend $190,000 of its
     yearly grant award of $522,000, to purchase goods and services from NCERF.
     In a letter received May 2, 2000 ( see exhibit 1), Arthur M. Love, Acting Director,
     OBEMLA, instructed Dr. Apodaca as follows: ''The educational program,
     techniques, materials, and services of the Foundation are a critical part of the
     application DISD submitted for the Title VII funds and represented a central basis
     for the OBEMLA's selection of DISD's application for funding." He added: ..... this
     grant cannot be implemented, consistent with the scope and purpose of the
     approved application, without using the programmatic approach, materials and
     services of the Foundation." Mr. Love directed the district to reach an agreement
     with NCERF by May 15th or relinquish the grant. Acting pursuant to these
     directives from OBEMLA and desirous of providing critically important assistance
     to the students to be served, the district did enter an agreement with NCERF,
     effective May 15, 2000. That agreement required the district to pay NCERF
     $100,000 by May 15th and make additional payments of $30,000 each on June
     30th , July 31 St. and August 31 • NCERF submitted invoices to the district, some
                                     st

     of which the district questioned. The district also questioned the requirement of
     advance payment. In response to the district's questions, OBEMLA responded
     with a letter dated June 22, 2000, (see exhibit 2), from John Ovard, Midwest
     Cluster Coordinator for OBEMLA, and James H. Lockhart, Education Specialist,
     OBEMLA, which was addressed to Dr. James Hughey, Acting Deputy
     Superintendent. In that letter OBEMLA announced three important conclusions:

          "First, "OBEMLA approves the modifications to the approved application
          for this grant that are set out in the May 15, 2000, contract between
          DISD and the Foundation. Those modifications fall within the scope
          and purpose of the approved application for this grant. .. "

          Second, "the advance payment provisions set out in the May 15, 2000,
          contract between DISD and the Foundation are not prohibited by the
          applicable Department regulations."

          Third, (relating to the questioned invoices), "invoices shared by the
          Foundation with OBEMLA appear to be proper and demonstrate
          planning and other activities carried out by the Foundation consistent
          with its efforts to achieve a working relationship with DISD pursuant to
          joint implementation of this grant."

     Thus, OBEMLA accepted that the goods and services to be provided in the first
     year of the grant and in succeeding years would be measured against the terms
     of the contract with NCERF, which OBEMLA recognized as differing from the
     original grant application. OBEMLA gave the district approval to proceed despite
     whatever reservations the district might have had, and in reliance on this
     approval, the district issued a check to NCERF in the amount of $168,399.91 for
     two invoices for planning and other activities. Hence, the draft report not giving
     the district credit for the admittedly truncated initial year and recommending
     reclaim of funds used to pay NCERF in the first year of the grant that were made
     virtually at the direction, and certainly with the approval, of OBEMLA, is
     surprising and contrary to the record.




                                                                                       5

,   ,
                                                                                                 Attachment B
        Recommendation. 	      Refund to the Department unallowable costs of $370,470. Non-Concur.

        Unallowable costs consisted of: $223,670.76 in costs incurred in the first year of the grant,
        $146,798.80 for services and supplies above the contracted amount, and $15,774.61 for
        unallowed other expense.

           • 	 The report characterizes as unallowable the following costs incurred in 1999-2000:
               contractual services of $118,199.91 paid to NCERF, educational supplies of $100,000,
               and payroll of $5,470.85. As noted in preceding paragraphs, these payments to NCERF
               for planning and preparation activities and educational supplies were clearly incurred with
               the knowledge and approval of OBEMLA. The sums should not be questioned or subject
               to reclaim.

           • 	 Services and supplies above the contracted amount as cited in the report included
               payments to NCERF in 2000-2001 for contracted services of $81,801 and educational
               supplies of $35,723.19 and in 2001-2002 for contracted services of $13,500. The
               contracted services provided additional training days and technical support intended to
               foster a deeper understanding of the new approach. As stated in the original application,
               training for the program will ".. .focus on leadership, team-building, collaborative skills,
               brain-based learning, the how-to's of becoming a Think-coach, workforce readiness skills,
               and the process of facilitating more effective thinking and learning on the part of LEP
               children and youth. It will also train teachers in how to create integrated curricula, how to
               create interactive and adaptive learning environments (model classrooms) and how to
               work collaboratively with other teachers." Successful implementation of this list of
               pedagogy and processes was dependent on procuring additional training.                   The
               educational materials supported this additional effort. Neither the grant provisions nor
               OMB Circular A-87 prohibit procuring goods and services that further the purposes of the
               grant. Complete supporting documentation of properly executed contracts and all
               invoices were provided during fieldwork, but were apparently discounted or overlooked.

            • 	 The other expenses cited by the report as not allowable included stipends for parents and
                childcare expenses. As explained during fieldwork, the parents of children served by the
                program are low income, and could not participate in parent activities if childcare were
                not provided. The grant paid stipends to some parents that provided childcare and for
                snacks and supplies for the children. We reference Section A, Point 10c of the Grant
                Application. "Additional training stipends for administrators, teachers and parents related
                to Think Campreneur, parent outreach and other project activities." In addition, Childcare
                expense is allowable under OMB Circular A-87, when parents are partiCipating in
                activities that accomplish the objectives of the grant program. Further, the budget
                approved by OBEMLA included stipends for parents.

        Recommendation. 	      Refund to the Department unsupported costs of $511,253.             Partially
                               Concur.

        Unsupported costs consisted of $293,176.11 in payroll, $1,912 in other expense, and
        $216,165.15 in unidentified expense.

            • 	 We agree that semi-annual certifications were not accomplished by the three employees
                who were 100 percent funded by the grant. This was a mistake on the part of program
                managers in that they thought that this program was covered by the Ed-Flex state wide
                administrative waiver of this certification. A closer reading of the law while researching
                this response found that the Ed-Flex waiver applied to Title VII, Part C, while this grant
                was funded under Title VII, Part A. We are taking corrective measures to assure that this
                error is not duplicated elsewhere in the district. We are examining all employees 100
                percent funded by any federal source to ensure that they are either covered by the Ed­



                                                                                                           6
'   ..   \



                                                                                                       Attachment B
                      Flex state-wide administrative waiver or are appropriately accomplishing the semi-annual
                      certification. In addition, we are reviewing time and effort procedures district-wide to
                      ensure our compliance with this portion of A-87. However, we note that the report does
                      not assert that the three employees' activities were anything but appropriate and justified.
                      Therefore, we request that, in light of our corrective actions taken and planned, that this
                      questioned cost of $293,176.11 not be subject to reclaim.

                   • 	 Other expense. We concur.

                   • 	 The report questioned unidentified expense of $216,165.15. In the appendix, we provide
                       summaries of additional documentation to support the amount of $215,227.43.         We
                       believe this additional documentation was discovered subsequent to audit fieldwork. The
                       documentation referenced in the appendix is included with this response and consists of
                       copies of payroll, invoices, and receipts not viewed by the auditors.

             In summary, while the report pointed out areas where we can improve our management
             procedures and compliance with grant provisions, we dispute that the Dallas Independent School
             District materially failed to deliver grant services and the dollar amounts of the reclaims contained
             in the recommendation.          If you have any further questions, please contact Mr. Douglas
             Ochandarena, Division Manager, Grants Acquisition and Management.                    Additionally, we
             understand that as part of this inquiry, the primary contractor, NCERF, was also audited. We
             respectfully request to know the status of that audit, if questioned costs are also being
             recommended for reclaim from them, and to receive a copy of that audit report when finalized.

             Attachments

             Sincerely,



             Mike Moses


             DO

             cc:       Carmyn Neely
                       Jack Elrod
                       Douglas Ochandarena




                                                                                                                     7





                                       i
                             .....
    4.-   ..   #0   7."'~   r-='-."


                                                                                                                             Exhibit 1

                                                                                   UNITED STATES DEPARTMENT OF EDUCATION

                                                                                                OFFICE OF BIUNGUAL EDUCATION AND
                                                                                                   MINORITY LANGUAGES AFFAIRS

                                              Dr. Rosita Apodaca                                                                                 BY:.
                                              Deputy Superintendent - Teaching and Learning Division 

                                              Dallas Independent School District 

                                              3700 Ross Avenue 

                                              Dallas, Texas 75204-5491 


                                                           Re:            Bilingual Education Systemwide Improvement Grant
,                                                                         PRlAward No. T291R990026

                                                  Dear Dr. Apodaca:

                                                  We are in receipt of a letter from Ms. Emily Den dated April 17, 2000 to Dr. John Ovard,
                                                  Midwestern Cluster Coordinator for the Office of Bilingual Education and Minority
                                                  Languages Affairs (OBEMLA), concerning the above-referenced grant. We hope that~
                                                  the Dallas Independent School District (DISD) and the National Children's Educational
                                                  Reform Foundation (NCERF) will successfully complete the process, within the next few
                                                  days, of reaching a mutually acceptable agreement regarding this grant

                                                  Ms. Den's letter raises concerns regarding the Office of Bilingual Education and Minority
                                                  Languages Affairs' (OBEMLA's) April 11 th proposal that the DISD and NCERF attempt
                                                  to work out an agreement for implementation of this grant under which DISD would
                                                  utilize approximately $190,000 ofits yearly Title VII grant award of$522,000 to
                                                  purchase services and materials from NCERF. Specifically, her letter states:

                                                  During our telephone conversation with you and James Lockhart on April
                                                  13,2000, Dr. Rosita Apodaca and I provided you with ... [DISD's] ...
                                                  response to your April 11th proposal of allocating $190,000.00 per year of
                                                  the grant funds to ... [NCERF]. I expressed our concern that the figure
                                                  appeared arbitrary and random because we were unable to figure out what
                                                  the money would be paying for.                               .

                                       ..Ms. Den's-letter goes on to state that DISD believes that it can appropriately spend
                                        , $162;190.50 on NCERF servi~es and materials, but                               will
                                                                                                   purchase-up to $190,000 of
                                       ~. NCERF services and materials, 0.0 an cmhual basis, "to maintain thei.ntegrity.of .
                                      . '~ OBEMLA's reading process and.OBEM.LA's approval of the group application." .
                                              ,        .         .   ..   '                 .                                                ,



                                          .... I ~~l:lld iik~ to take thi·s opportunity to clarify the purposeofth~ k'pril'{1 th pr~pos~i and ..,
                                              .: pl~~e'·i.t jn the.proader contr~t of O~EM~A.-'s. legal obligatipn to ensur~ ~1l?-e propel)' \ ~ '., ~ ;~.::..: . ••'
                                  :   I   •   ~ implementation ofT.itle VII,gnints that '~te selected for f\mding. The educational --"' ..
                                             ,·iprdgr'a~~.techniques.,m~terials, a~~;~~~j~es.?:fNCERF ar~'a critical P~_~.r~,~                                 ....::\.
                                               ?applibat\on DISD submitted(~r .TitJ~ ."I~;funds·and r.epresent~d: a cer.~al bas,s. for .":. .
                                             .·:OaEMLA's selection.ofDISD's application for fundmg. Although I understand that thls
                                                                     ......... ,..,.. 



                                                                               .. . . .   4.00 MARYLAND AVE., S.W. WASHINGTON, D.C. 20202
                                                                                ' . . :- ~~ ...... ,.
                                                                              '.~ ,~ ....
                                                                                                      to
                                                           Our mission is ta ensure e\jual cicceSs ed~~tion and to promote educational exceUence throughout the Nation.
           Page 2 - Dr. Apodaca, Deputy Superintendent
                                                                                           Attachment B
           application was submitted by a prior administration ofDISD, and the current leadership
           of your school system is not convinced of the educational value of the materials and
           services that NCERF is to provide in carrying out this grant, OBEMLA cannot legally
           permit DISD to substitute a significantly different project for that which was
           competitively selected for funding. That is why this grant cannot be implemented,
           consistent with the scope and purpose of the approved application, without using the
           programmatic approach, materials and services of NCERF. OBEMLA is responsible for
           protecting the integrity of the competitive proc~ss under which applications are selected
           for funding. If Title VII recipients are free, in implementing their projects, to dispense
           with critical elements of their approved applications, the competitive selection process
           will be undernlined and lose all credibility because the projects that are carried out will
           not resemble the proposals that were evaluated in the competitive process.

           Although successful applicants for Title VII funding are required to carry out the scope
           and purpose of their approved applications, they are not bound to confornl to every detail
           of their proposals. Recipients, as long as they remain within the scope and purpose of .
           their approved application, can deviate from the specific terms of their project proposals.
           OBEMLA has, for some time, been urging DISD and NCERF to try and come to an
           agreement under which the role ofNCERF in the implementation of this grant was
           modified. Our goal was, and remains, an agreement that satisfies DISD's concerns about
           the quality of the specific materials and services to be provided by NCERF but stays
           within the scope and purpose of the approved application. As of April 11 th, these efforts
           had not been successful. OBEMLA, in an effort to get discussions moving, suggested a
           framework for a final agreement under which DISD would utilize approximately
           $190,000 of grant funds per year to purchase NCERF materials and services.

           OBEMLA was not, in aniving at this figure, arbitrary and random. Rather, the figure
           represents a substantial reduction in NCERF's participation in this grant in an effort to
           address DISD's concerns about the level of NCERF involvement in the grant, while
           retaining enough funding for NCERF materials and services to make it possible for the
           scope and purpose of the approved application to be carried out. It is difficult to see how
           reducing NCERF's role below this level would, in view of the critical role given in the
           proposal to materials and services that can only be provided by NCERF, make it possible
           for DISD to implement a project that is consistent with the sCQpe and purpose of the
           approved application.

           ~1'oreover, the discussion of the proposed purchases from NCERF in the letter reflects a
           basic misunderstanding of our programmatic and legal concerns. Our April!1 th proposal
           is not intended to force DISD to purchase a random set ofNCERF materials and services
           until it reaches an annual goal of$190,000. Such a course of action would not result in
           an appropriate use of grant funds, a quality educational program for DISD's limited
           English proficient (LEP) children, or even a project that is consistent with the scope and
           purpose of the approved application. Instead, the purpose of our April 11 th proposal is to
           provideDISD and NCERF a framework within which to work out the details of the "­
           specific services and materials that NCERF will need to provide in order to allow the
            fundamental educational program described 'in DISD's own application to be carried out.




--,---------------------.~---------------------------------------------------
    ·
    ,)
         ,




              Page 3 - Dr. Apodaca, Deputy Superintendent
                                                                                                                           Attachment B

             " It is that fundamental educational program, not the $190,000 per year figure, which is
               critical. The $190,000 per year figure is just a means to that end.

               IfDISD and NCERF work together to select the NCERF services and materials most
              suited to DISD's. approved application, we believe it is possible for the parties to reach an
              agreement on how to implement this grant that honors the scope and purpose of the
              approved, application and provides a quality education program. This can only occur if
              DISDand NCERF immediately begin direct discussions with one another. These direct
              discussions will provide the parties with an opportunity to iron out their differences and
              begin to develop the trusting working relationship that is critical to successful
              implementation of this grant. In addition, it will allow DISD to raise any questions it has
              about the materials and services NCERF can offer in the context of this grant directly
              with NCERF. This will allow DISD to make a fully in fonn ed judgment on the
              educational value ofNCERF's services and materials. Any agreement between the
              parties, of course is subject to review and approval by OBEMLAbased on the standards
              described in this letter.                                                                   '

              ~~!:!'r-e·il·~~1)mi+'far··erfo·~'·ance:·fir''Oit,
              1I!~
               __              -    __ _"R.,___,_:cm.___ . .
                     QIiIi;iiii£i-'ilE1tq~!lO ':i..          o'-:Ma'm15*r2000/6fiYits'
                                                         ~ _lt_.~,_~                                                       rom'~s~w
                                                                 ............ 'J.,iJ";..... ,••• ~,_.......~............,,,,p_ol'~,~~ _
               ~ur~P"!y!g~tltis.r~g,illlsi.p'!sJiy.s-r. Unless DISD and NCERF have reached an
               agreement on how to implement this grant by that time, OBEMLA will not be in a
               position to continue funding for this grant for a second year. For that reason, it is critical
               for DISD and NCERF to begin discussions immediately. Our hope is that those                .
               discussions will result in an agreement that meets DISD's needs and is consistent with the
               scope and purpose of the approved application. However, if, as a result of those
               discussions, DISD concludes that the educational services and materials NCERF can
               offer, consistent with the approved grant, are not appropriate to the district's current
               needs, we believe that the appropriate course of action is for DISD to relinquish this
               grant, but no later than May 15,2000.

               In the long run, the interests of Dallas's LEP children will not be served by a Title VII
               project to which DISD is not fully committed.

               If you have any further questions on this matter, please do not hesitate to contact either
               Mr. Lockhart, Dr. Ovard or myself. Thank you in advance for-your pr pt response.




                                                                            Arth     . Love
                                                                            Acting Director

               cc: 	      Waldemar Rojas, General Superintendent, DISD
                          Emily Den, Special Assistant to the Superintendent
                          Jaime Sandoval, Director, Multi-Language Enrichment Program
                          W. Jay De Vecchio, Esq., Crowell & Moring, LLP
                          Susan Tiemo,CEOlExecutive Director, NCERF




-----r-----------------'--____ ______---------­
                                          ~
 ,..,     ""." ,
        ~,'   


 ~,      • .1UoN-;2E.-0e    r'lI-I'"   1 \ :;,,::.:.   .' .

.•.     ,.~····~·----··-···········-···········r··---~-···· .---                                                      I   ._ . . . . . . .   """".~   





         DS/23/20D0       14:42         2e~40161Ga                                OBE~LA              Exhibit 2                  PAGE           02



                                                                                                                  Attachment B
                                               UNITED StATES DEt'ARTMENT OF EDUCATION.
                                                               omCE: OF etLrNQUAL e-oU¢ATlON ANI) 

                                                                 MINORlT'l LANGUAGES AP'FAlRS 



                    Dr. James Hughey
                    Acting Deputy Superintendent                                                             June 22, 2000
                    DaUas Independent School District
                    3700 R.oss Avenue
                    Dallas, TX 75204

                    Re:      Title VII, Bilingual Education Systemwide Grant # T291R9990026

                    Dear Dr. Hughey:
                     The purpose ofthls letteris to follow-up on the agreements reached during the 

                     conference call of June 21,2000 concernIng the above-referenced pnt to the Dallas 

                   , Independen.t School District (DISD). Participating in that conference call were
                     representatives from the U.S. Department ofEducatioil's Office ofBilingual Education
                     and ~nority Languages Affairs (OBE:MLA), DISD. and the National Children's
                     Educational Reform Foundation (the Foundation).

                    During the course ofthe conference call we discussed a MayJ.S. 2000 contract entered
                    into between DISD and the Foundation. The P\lrpose of that contract was to implement
                    certain changes to the approved applica.tion for the above-referenced grant. OBBMLA is
                    fully aware of the terms and conditions ofthe above-referenced grant, the "partrtership"
                    arrangement between DISD and the Foundation for purposes of'implemcnting this gtant,
                    and the wtittenjustifications for reimbursements submitted so far by the Foundation.
                    Although DISD is the recipient ofthe grant. and the fiscal ~gent for that award the,          J

                    Foundation is e. critica.l partner to the successful implementation of this 8iclnt. In order to
                    assist nISo and the Foundation in gettingsrant activities $tart~J OBEMLA wa.t\ts to
                    take this opportunity to communicate the following points,

                    First, OBEMLA approves ofth~ modifications to tho approved applicatidn for this grant
                    that are set out in the May 1S. 2000 contract between DISD and the F~urtdation. Those
                    modifications tall within the scope and purpose of the approved application for this grant
                    and are-;-asaconsequence, permiuible.                                                      '

                    Second. the advance payment provi$ions set out in the May ,IS. 2000 contract botween 

                    DISD and the Foundation are not prohibited by applicable Department regulations. 


                    Third> invoices shared by the Foundation with OBE:MLA appear to be proper and
                    demonstrate plaMing and other aetivities carried out by the Foundation consistent with
                    its efforts to aehi~ve a. worldng relationshIp with DlSD pursuant to joint implcmontatIon
                    ofthis grant.
·lI
       ,._TU·H"26-.~a      MO,H   11: 24   "

 .' £:6/23,12e£>0    '14: 42      2a24a16169                     oae:MLA

                                                                                               Attachment B

                .                                                      . '
               Finally, OBBMLA ls responsiblo for monitoring and implementation ofthiJ grant and
               ensurina that it is earrled out consistent with the apptoved modifications to that
               applioation. Department tegule.tions. and Title VII ofthe Elementary and Seconda.ry
               Educat10n Act, including Title WI, non..supplanting requirement. Moreover, OBBMLA
               is available to provide DISD and the foundation with technical assistanco and to .
               facilitate an eff'ective working partnership between the two entities.
                Ifwe may be of further assistance, please do not hesitate to contact us,


                                                  Yours truly.



                                                                    cv. ..¥~.s--
                                                                    ~Lockh~~                              .
                John Ovard. Ed.D.
                :Midwest Cluster Coordinator                               Education Program Specialist       .
                    OBEML,A                                                 OBEMLA
                    U.S. Depa.rt.rr\ent ofEducation                         U.S. Department ofEduoation




                     cc: Waldemar R.ojaS. General Superintendent, DISD
                          Bmily Den. Office of Legal Services. DISD 

                          Jaime Sandoval, Director, Mult1.LanguageEnrichment, DISD 

                          Evanselina Corte%, Prinoipal! Project Director 

                           Susan Tierno, CEO, Nuional Children's Educatio1'lal Reform Foundaton" .
                           W. 'Jay DcVceQbio, Esq., aerteta,l Counsel, NeW, Inc. 

                            Ronald Petracca, Office ofOcneral COl.l~l, ED. 

                2858737 
                  '--"----O-SE-M:-----:--------------­


                    UNITED STATES DEPARTMENT OF EDUCATION
                                 OFFICE OF SlLlNO'lIAI. EOUCAT10N At-n:>
                                                                                                  Ex:~~t ~-' ­   I
                                     M1NORIiY I..ANGUACES AFFAIRS                                                I
                                                                                                                 I




                                              March 30, 2000



                                                       Re: Systemwide Grant # T291 R990026


Dr. Rosita Apodaca
Deputy Superintendent
Teaching and Learnlng Division
Dailas Independent School District
3700 Ross Avenue
Dallas, Texas 75204-5491

Dear Dr. Apodaca:

On Monday. March 27, 2000, representatives of the Department of Education--: Buoy Te, Deputy
Director. OBEMLA; John Ovard, Midwest Cluster Coordinator. OBEMLA; James Lockhart.
Education Program Specialist. OBEMLA. and Ronald Petracca. Office of the General, met with
Susan Tierno, CEDI Executive Director and W. Jay DeVecchio, Attorney. of the National Children's
Educational Reform Foundation (Foundation) to discllss the above referenced Title VII grant. This
grant, which has been awarded to the Dallas Independent School District (OISO), involves the
Foundation as a partner. The grant provides a total budget of $2,500.000 over a five-year periog.

Since the invited .representatjves of the Dallas Independent Schoo! District (DISD)
did not attend the meeting, Dr. Ovard, Mr. Lockhart, and Mr. PetraCca held a telephone conference
call willi Rosita Apodaca. DISD's Deputy Superintendent, and Emily Den, Special Assistant to
DISD's General Superintendent, later that same day. The purpose of this letter is to summarize tl1e
points made by the representatives of the Department of Education during the meeting and
subsequent telephone conference call, and the steps that must be taken if funding of the above­
referenced grant is to continue.

Representatives from the Department of Education explained that the above-referenced
project was selected for funding through a competitive review process. The Department.
to protect the integrity of that process. must ensure that applications selected Jar funding carl}' out
the project that were reviewed in that comp~tition. Although applicants selected far funding have
some ftexibility to modify the way in which they implement their projects, th~y cannot change the
basic scope and purpose of those projects. In this instance, the Foundation, because of the extent


                          600 Jl'IoeP1'.:~::>g~ct AVF.•. S.W WASHtI'lCTON. D.C.   :zo:z()~
      ,.1:'   ;;J3,!31/2aea     13: 16      21358737                              1.Jl:lI:.ML.A



                                                                                                                   Attachment B

                          of its involvement and the critical role described for it in the application submitted by DISD, cannot
                          be removed as a participant in this project without altering its basic scope and purpose.
                          At this point. OISD has informed the Department that it has concerns about the role the Foundation
                          is going to. play in the implementation of this Title VII Systemwide grant. Thus far, these concerns
                          have prevented any substantial activity to implement the grant, which was awarded last Spring
                          (1999) and was to commence implementation at the beginning of the current (1999-2000) school
                          year. Moreover, OISD and the Foundation have not, to date, established a basis for a mutual
                          agreement to resolve these concerns.

                          The Department of Education representative indicated at the meeting and during the telephone
                          conference call that they will allow DISD and the foundation to make one final effort to determine
...                       whether they can agree upon an appropriate means to implement this project. In making that effort,
                          the following course of action will be followed:

                                              1. 	 The FoundatIon will submit a set of proposed modIfIcation!!;
                                                   to thsbudget(s) for the consideration qf the Dallas school
                                                   Officials. (ATTACHED)

                                              2. 	 The Dallas ISO officials and the Foundation must reach an agreement on
                                                   one of the proposed modification.! (or a mutuallY agreed-upon
                                                   alternative) by April 10,2000.

                                              3. 	 OBEMLA must receive notice of this agreement and Its substance
                                                   by April 10, 2000.

                                              4. 	 The ortico of Bilingual Education and Minority Languages
                                                   Affairs will provIde monitoring and technical assistance to tha Dallas ISO
                                                   pursuant to the implementation of the grant, and the achievement of
                                                   substantial progress.

                          The Department will have final authority to approve any modifications to this project
                          that the parties agree upon. In making that determination, the Department will be required to
                          ascertain that the proposed modifications do not alter the basic purpose and scope of the approved
                          application. As noted above, that means, among other things, that
                          the Foundation must continue to have a role in the implementation of this prolecl

                              All parties to the grant are requested to review this letter and to submit written confirmation, on or
                              before the deadline date of April 10, 2000. of their intention to comply with the above listed
                              provisions. If by this date, DISD and the Foundation have not informed the Department of the
                              specific agreement they have reached to implement the project, the Department will have no
                              choice but to take the necessary steps to end the funding of this grant.
                                                                                                                              --




                                                .I

               2eS9737                               OBE~'LA



                                                                                        Attachment B

Than~ you for your willingness to see\<. to achieve a viable resolution of this matter. We sincerely
hope that your agreement will serve the best educational interest of the children of the Dallas
Independent School District.


                                                   Yours truly,

                                                    f((fjflj
                                                   Bouy Te.
                                                   Oeputy Director


CC: Arthur M. Love. Acting Director
    John Ovard, Midwest Cluster Coordinator
    Jim Lockhart, Education Program Specialist
     Ron Petracca. Counsel




                   ., I 

                   21358737 	                        OeE:MLA                                    1--,_   .__ , ._.




                                                                                 Attachment B

                                    Foundation 

                                     Option A 

    The r:oundation is willing to offer the following option as it pertains to the rights of our
    btldget over the cOUrse of the five years. A total of aboUt 4.285% budge't reduction of
    $63,500.00 will take place in Ye.ars 4 and 5. The resulting overall budget CI.\t will be
    $1,493,650.00

"
    Years 1,2,3:
        1. 	 Years 1,2,3 will remain the same for the contractual budget. The progral11. design
             will ramaln in tact from First grade through 6th grade.
        2. 	 The Leadership/model school will be scal~d back tD 3 eleme.ntary school sitC$
             per year thus allowing plenty of servic:e time and hours for the complete model to
             be: implemented into the schools.
        3. 	 The materials ..",ill be tailoNd and selected for the Leadership sites/model schools
             and th~ir pilot ciasscooms.
        4. 	 All of the programs of each component will be integrated on Do smaller scale.,
        5. 	 The Technical Assistance will be implementecL.
        6. 	 Th~ Foundation will handle all of the Evaluation and work together with the
             ~chool~ and evaluation Department to complete the necessary steps in. Evaluation.




    Years 4 and 5:
        1. 	 The FO\.lndatioll will service only 2 Middle: School sites in Year 4. In Year 5, the
              17 oundalion will service 2 Higb Schools.
                                            an
        2. 	 The Foundation will complete. Evaluation reporting for the purposes of DOE.
        3. 	 The: Contractual Services B\ldge1: will r~main the same.
        4. 	 The: FO\lIldation will scale back its monthly Technic"at Assistance days as efforls
             "'to build the trainers to perform the TA will have been done in Years 1.2,3.
        S. 	 The materials reduction, win demonstrate a 'reduction of aboul4.28 cl/o and will be
              the only cost factor cuts in Years 4 and S.
                   • 	 Materials Year 4 will b~ cut to $63,250.00
                   • 	 Materials Ye.ar 5 will be cuno 563,250.00


                                                                                           '­




                    .I 

e3~31J2eae   13:15     21358737



                                                                                        Attachment B

                                          Foundation 

                                           Option B 

        The Foundation is wH:ing to offer the follo'wving option. as it pertains [0 the rights of our
        budget over the course of the five years. A total of 5.12 % budget reduction· of
        S77,000.00 will take place 1n Years 4 and 5 resulting in a total budget for the Foundation
        over the course of the 5 years of$1,492,300.00.


        Years .1,2,3:
                1. 	 Years 1.2,3 will remain the same for the contractual budget. The program
                     design will remain intact from First gl'ade through 6th grade.
                2. 	 The Leadership/model school will be scaled back to 3 element.ar), school _
                     !ites per year thus allowing plenty of s~rvice time and hours for the compkte
                     model to be irnplem~nted into tbe schools. .
                3. 	 The. materials will be taUored and sel'ected for the: Leadership sites/model.
                     sch.ools and their pilot classrooms.
                4. 	 All of the pcograms of each component will be integrated on a smaller scate.
                S. 	 The Technical A.ssistance will be implemented,
                6. 	 The Foundation will handle all of the Evaluation and work rogelherwith the
                     schools and evahlation Depa.rlm~nt to complete 'the neceSS2IY s!eps in
                     Evaluation.

        ""{ears 4 and 5:
             1. 	 The Fo\.mdation will service only 1 Middle School sites in Year 4. 

                  In Year 5, the Foundation v.-ill service 1 High School. 

             2. 	 ThE: Foundation will complete all Evaluation documentation for repo~ing 

                  purposes. 

             3. 	 The Contractual Services B\ldget will remain the same.
             4. 	 The: Foundation will scale back its monlhly Technical Assistance days since 

                  efforts to bl.\ild capacity with the trainc:rs will have been done in Years 1,2,3. 

             5. 	 The materials reduction will demonstrate 3. reduction of 5.12 % and will be the. 

                  only cost factor cuts in Years 4 and 5: 

                      a. 	 Materials Year 4 will be cut to $38,500.00
                      b. 	 Materials Year 5 will be cUt to $38,500,00




                           .I 

    r
                        2eJ58'l31
    '.




                                                                                           Attachment B

                            Foundation Partnership
                                  Option C
         The Foundation Partnership is willing to offer the following option as it pertains to the
         rights 'of our budget o'Ver the course of the five years. A total of 5.6% or about
         $84,500.00, or S16,900.00 a year will ta.ke place in Yeats 1,2,3,4 and 5 resulting in a
         tOlal budget fol' the Foundation over the course of the 5 years of 51,415,000.00.


,
         Yea rs 1,2,3,4,5:
                 1. 	 Years \,2)3,4.5 will remain the same for the contractual bu.dget. The program
                      design will temain intact from First gJ'<,.cie. through 6t!'> grade.         .
                 2. 	 The Leadership/model school will be scaled back to 3 elementary sthool
                      sites per year thus allowing plenty of service lime and hours for the complete
                      model to be implemented into the schools.                                     ­
                 3. 	 The materials will be tailored and selected for the Leadership sites/model
                      schools and their pilot classrooms.
                 4. 	 A II or the programs of each component will be integrated on a smaller scale.
                 S. 	 The Technical Assistance wili be implemented.
                 6. 	 The Foundation will handle: ".\1 of the Evaluation and work together with the
                      schools and evaluation Department to complete the necessary steps for
                      evaluation reports for the DOE/OBEMLA Evaluation.
                 7. 	 Year 4 and 5 will service 2 sit~.s a year only.




         l\1aterials cuts:
         Materials will \x tl\i1ored and cut to a pricing of 578,100.00 a year for sites includes
         shipping and handling charges of $7,100.00.




                                                                                                    --
    .. 


                                 D

                    Dallas Independent School District


                  DISD 

              Audit Response 



           APPENDIX 



           Title VII -Bilingual Education Systemwide Grant 

                            #T291R9990026 





'----------~-------------
\
 ---­
                   Attachment B




    TITLE VII 


          YEAR 


    1999 - 2000 





            1





i     ­
                                                                                                                                                              ,<' . 





                          TITLE VII, BILINGUAL EDUCATION SYSTEMWIDE GRANT # T291 R9990026
                                                                   1999-2000
              CONTRACTUAL OBLIGATION
                                                                     ACCOMPLISHMENTS                    SUPPORTING DOCUMENTATION
        Source:Contract 05/15/2000 and 1210812000
                                                                   Materials indicate that planning
TEACHER TRAINING - 5 days of Academy training for 30 teachers                                                       Papers, flyers, etc.
                                                                              took place.
                                                                   Materials indicate that planning
PARENT TRAINING ­    4 days of training for parents                                                                 Papers, flyers, etc.
                                                                              took place.
STUDENTS CAMPS - Organization, planning, selection and materials   Materials indicate that planning
                                                                                                                    Papers, flyers, etc.
for Think-campreneur.                                                         took place.

MODEL CLASSROOM PILOT TEACHERS - -0- as per 5/15/00 memo                         -0­                                        -0­

                                                                   FINANCIAL

        NCERF Contract                    Supplies/Materials              Employee Payroll            Stipends - Teachers            Stipends - Parents


     $118,199.91 (Note 1)            NCERF: $100,000 (Note 2)           $5,470.85 (Note 3)                  $0.00                           $0.00


AWARD NOTIFICATION                                                                                                                           $522,066.~~
ROLL FORWARD                                                                                                                                        $0.00'
AMOUNT TO BE SPENT                                                                                                                           $522,066.0(]
TOTAL SPENT                                                                                                                                  $223,670.7e
DRAWN DOWN                                                                                                                                   $224,339.7e
VARIANCE                                                                                                                                       ($669.00)
ROLL FORWARD (Amount to be Spent minus Amount Drawdowns)                                                                                     $297,726.24
    - ­                                                                                                                           - - - ­                 -




                                                                         2

                                          1999-2000 NOTES

NCERF CONTRACT: Note 1

 These elDenses are comprised of twinvoices: One for $68,399.91 for 27 days of Technical
 assistance and the second one for $49,800.00 for Technical assistance, consultation and training for
 planning. The Auditors did not accept them because no services we done in the first year;but they
 we authorized by the Department of Education letter dated tine 22, 2000 (3rd. to 5th paragraph),
 and they are elDenses for planning activities and are alloable elDenses by the Grant. Also see Note
 1 and 2 for Year 2000-2001

 These elDenses have all the support documentation: P1-Cs, Purchase Order, Invoices and Receipts.

SUPPLIES AND MATERIALS: Note 2

 One invoice # 220 from NCERF for $100,000 for educational supplies and materials. OBEMLA
 approved the modifications to the application for this grant that are set out in the May 15, 2000
 contract beteen DISD and the Foundation. The point 2a Scope of Services and Payment 11&
 approved for services and corresponding materials. Also see Notes 1 and 2 for Year 2000-2001

 These elDenses have all the support documentation: Purchase Order, Invoices and Receipts.

EMPLOYEE PAYROLL: Note 3

 The amount of $5,470.85 does not have support documentation.




                                                    3

                                                                                             ,   '




                                                                                         .




         INTERNAL WORKING SHEET - EXPENSES FOR YEAR 1999-2000


NCERF:


 Invoice for 27 days Technical assistance              $    68,399.91
                                                                       Invoices, P1­
                                                                       Cs, Purchase
 Invoice for Technical assistance, consultation and         49,800.00 orders, receipts
 training for planning. 

                                                       $

 Invoice for materials.                                $ 100,000.00 

                                                       $ 218,199.91

SALARIES (Amount from Auditors letters)                $     5,470.85


TOTAL                                                 1$   223,670.761




                                            4

                Attachment B




TITLE VII 


   YEAR 


2000 - 2001 





     5

                                                                                                                                                                          ·. 



                                TITLE VII, BILINGUAL EDUCATION SYSTEMWIDE GRANT # T291 R9990026
                                                                           2000-2001
              CONTRACTUAL OBLIGATION
                                                                                 ACCOMPLISHMENTS                           SUPPORTING DOCUMENTATION
        Source: Contract 05/15/2000 and 12/08/2000

TEACHER TRAINING - 5 days of Academy training for 30 teachers           13 days of Academy for 50 teachers. (Note 1)        Sign-in sheets and payroll supl. sheets.

PARENT TRAINING ­     4 days oftraining for 100 parents                 12 days oftraining for 148 parents. (Note 2)         Sign-in sheets, invoices and receipts.

STUDENTS CAMPS - 5 days student Camp.                                         5 days of camp for 82 students.                Sign-in sheets, invoices and receipts.

                                                                                                                        Model Classrooms were identified by principals,
MODEL CLASSROOM PILOT TEACHERS - 5                                                            7                          teachers and verified by Dalia Gonzales, the
                                                                                                                                      project facilitator.

                                                                           FINANCIAL
                                                                                                                          Other Contractual
   NCERF Contract         Supplies/Materials       Employee Payroll     Stipends - Teachers        Stipends - Parents                               Other Operating
                                                                                                                              Services

                             NCERF:
                           $127,324.63
  $286,801 (Note 3)                              $81,080.04 (Note 5)   $133,300.10 (Note 6)       $22,079.06 (Note 7)       $14,223.50           $18,130.24 (Note 8)
                        Others: $55,307.76
                               (Note 4)


AWARD NOTIFICATION
                                                                                                                                                        $523,523.00
ROLL FORWARD                                                                                                                                             $297,726.24
AMOUNT TO BE SPENT
                                                                                                                                                        $821,249.24
TOTAL SPENT                                                                                                                                      (Note 9) $738,246.33

DRAWN DOWN
                                                                                                                                                        $738,438.65
VARIANCE
                                                                                                                                                            ($192.32)
ROLL FORWARD (Amount to be Spent minus Amount Drawdowns)
 ~-
                                                                                                                                                         $82810.59




                                                                                6

                                                               2000-2001 NOTES


ACCOMPLISHMENTS FOR TEACHER TRAINING: Note 1
 Contractual Obligation specified 5 days of Academy Training for 30 teachers. We provided 13 days of Academy training for 50 teachers. We think
 we have covered the Contractual Obligation for both years: 1999-2000 and 2000-2001.

ACCOMPLISHMENT FOR PARENT TRAINING: Note 2
 Contractual Obligation specified 4 days of Training for parents. We provided 12 days of training for 148 parents. We think we have covered the
 Contractual Obligation for both years: 1999-2000 and 2000-2001.

NCERF CONTRACT: Note 3
Questioned Costs:

 The Auditors Questioned Costs in the amount of $81,801 because it exceeded the contracted amount of $205,000 with NCERF.
 This amount is comprised of two invoices with NCERF: One for $41,601.00 for additional parent training and the other invoice for $40,200 for
 technical assistance for consultation and 8 days of staff training. Dallas ISO hired special consultants for additional training and technical
 support to foster deeper understanding of the new approach. Please note that in the support documentation we provided to the auditors, we
 included the Service Contract Form P1-Cs signed between the Foundation and DlSD for these additional amounts, Purchase Orders, Invoices and
 Receipts.

SUPPLIES/MATERIALS: Note 4
Questioned Costs:

 The Auditors Questioned Costs in the amount of $35,723.19 because it exceeded the contracted amount of $95,000 for materials with NCERF.
 This amount is comprised of three invoices with NCERF: $16,912.50, $5,412.13, and $10,000; and one invoice for $3,398.50 from Success for All
 Foundation Inc. These invoices were for Educational materials, English reading materials, Math parents packs, and Spanish reading materials.
 We have all the support documentation.
 OBEMLA approved the modifications to the Grant. The contract between DISD and the Foundation signed in May 15, 2000 says in the Point 4­
 Professional Programs, Materials and Services:
   ......... and any program materials, seminars, academies or other materials conforming to the type and quality of such Program Services used in
   the Foundation's performance of services are hereby deemed approved for two Demonstrations Sites, with the exception that to the extent
   program materials include t-shirts, mug, pens, pencils and other office supplies, English and Spanish language written materials with
   educational value, including dictionaries where necessary, shall be provided instead."

 We think these expenses were approved.



                                                                        7

EMPLOYEE PAYROLL: Note 5
Unsupported Costs:

  The Auditors considered unsupported the amount of Payroll for $126,442.87 for not having the semi-annual certification.

Expenses not considered by the Auditors:
  In their analysis, the Auditors did not include $22,642.93 for Substitutes and $3,900 for Overtime. We are providing support documentation in
  the file.

STIPENDS - TEACHERS: Note 6
Expenses not considered by the Auditors:

  In their analysis, the Auditors did not include the amount of $40,161.00 for Stipends. We are providing support documentation in the file.

STIPENDS - PARENTS: Note 7
Questioned Costs:

 The Auditors considered $952.78 for Childcare services provided by parents as expenses not allowable for the Grant. We could explain to the
 Auditors that these parents are low income parents and they could not assist to the training if we did not provide childcare services for other
 parents. Additionally the 2000-2001 Budget approved by James Lockhart USDOE/OBEMLA considers parent stipends as a whole.

 Also, the Auditors considered $8,173.50 for Stipends for Parents working at Student Camp and during Training as expenses not allowable for the
 Grant. We could explain to the Auditors that these parents provided services caring the children at camp and helping during Parents training, an~
 these services were essentials for the Program. Additionally the 2000-2001 Budget approved by James Lockhart USDOE/OBEMLA considers
 parent stipends as a whole.
    The Grant Application - Section A - Point 10.c. of the Grant permits "Additional training stipends for administrators, teachers and parents
    related to Think-Campreneur (Students Camp), parent outreach and other project activities".
Expenses not considered by the Auditors:

 In their analysis, the Auditors did not include $ 9,278 for Stipends for parents who assisted to the trainings; $240 for Stipends for Childcare
 services, and $2,290.78 for Stipends for Parents working at Student Camp. We are providing the support documentation in the file.

OTHERS: MISCELLANEOUS: Note 8
Expenses not considered by the Auditors:

 In their analysis, the Auditors did not include $1,632.07 for miscellaneous expenses. We are providing support documentation in the file.



                                                                          8

TOTAL AMOUNT SPENT: Note 9
 The difference of $80,144.72 between $738,246.33 and the total amount considered by the Auditors as "Total Expended per Receipts of
 $658,101.61" is explained in Notes 5 thru 8 under "Expenses not considered by the Auditors".




                                                                      9

I                                                     INTERNAL WORKING SHEET - EXPENSES 2000-2001
                                                                                         Considered by Auditors                                   Not              IUIAL
                                                                                                           Unsupported                       Considered by        EXPENSES
                                                            Questioned Costs     Supported Costs              Costs            Total           Auditors           2000-2001
PAYROLL
Stipends: Teachers (Note 6)                                 $              -     $         19,733.34   $       73,405.76   $    93,139.10    $    40,161.00   $      133,300.10
Salaries Support Personnel: Cyntia Garcia (Note 5)          $              -                           $       21,574.19   $    21,574.19    $          -     $       21,574.19
Substitutes (Note 5)                                        $              -                           $             -     $           -     $    22,642.93   $       22,642.93
Overtime (Note 5)                                           $              -     $          1,500.00   $       25,068.00   $    26,568.00    $     3,900.00   $       30,468.00
Benefits: for Stipends, Salaries, Substitute and Overtime
(Note 5)                                                    $              -     $               -     $        6,394.92   $      6,394.92   $          -     $        6,394.92
                                                            $              -     $         21,233.34   $      126,442.87   $   147,676.21    $    66,703.93   $      214,380.14


CONTRACTUAL NCERF
Invoices NCRF
     Invoice 245 dated 11/10/2000 (Note 3)                  $        41,601.00                         $             -     $    41,601.00    $          -     $       41,601.00
     Invoice 269 dated 12111/2000                                                $        174,250.00   $             -     $   174,250.00    $          -     $      174,250.00
     Invoice 281 dated 3/30/2001                                                     $     25,000.00   $             -     $    25,000.00    $          -     $      25,000.00
     Invoice # 289 dated 6/13/2001                                                   $      5,750.00   $             -     $     5,750.00    $          -     $        5,750.00
     Invoice # 258 dated 09/18/2000 (Note 3)                    $    40,200.00                         $             -     $    40,200.00    $          -     $      40,200.00
Rental Eguipmen!. Buses and facilities                                           $         14,223.50                       $    14,223.50    $          -     $       14,223.50
                                                            $        81,801.00   $        219,223.50   $             -     $   301,024.50    $          -     $     301,024.50

SUPPLIES AND MATERIALS
    NCERF:
     Invoice # 285 dated 09/07/2002                                              $         95,000.00   $             -     $    95,000.00 $             -     $      95,000.00
     Invoice # 283 dated 4/27/2001 (Note 4)                 $        16,912.50                         $             -     $    16,912.50 $             -     $      16,912.50
     Invoice # 235 dated 10/25/2000 (Note 4)                $         5,412.13                         $             -     $     5,412.13 $             -     $       5,412.13
     Invoice # 278 dated 3/4/2001 (Note 4)                  $        10,000.00                         $             -     $    10,000.00 $             -     $      10,000.00
    Invoice from Success for All Foundation Inc.INote 4}    $         3,398.50                         $             -     $     3,398.50 $             -     $       3,398.50
Supplies including Procurement Card expenses                                     $         51,909.26   $             -     $    51,909.26 $             -     $      51,909.26
                                                            $        35,723.13   $        146,909.26   $             -     $   182,632.39 $             -     $     182,632.39

    OTHER OPERATING EXPENSES
    Stipends for parents-Training (Note 7)                  $              -     $               -     $             -   $             -  $        9,278.00   $       9,278.00
Stipends for parents for Child care Services. INote 7}      $           952.78   $               -     $        1,144.00 $       2,096.78 $         240.00  $         2,336.78
    Stipends for parents working at camp. INote 7}          $         8,173.50   $               -     $             - $         8,173.50 $        2,290.78 $        10,464.28
    Miscellaneous. INote 8}                                 $         3,322.00   $         12,408.17   $          768.00 $      16,498.17 $        1,632.07 $        18,130.24
                                                            $        12,448.28   $         12,408.17   $        1,912.00 $      26,768.45 $       13,440.85 $        40,209.30

                                                            $       129,972.41   $        399,774.27   $      128,354.87   $   658,101.55    $    80,144.78   $     738,246.33




                                                                                          10 

                         Attachment B




           TITLE VII 


             YEAR 


          2001 - 2002 





                 11 





'------,--,--­   ,-----~-
                                  TITLE VII, BILINGUAL EDUCATION SYSTEMWIDE GRANT # T291 R9990026
                                                                         2001-2002
              CONTRACTUAL OBLIGATION
                                                                               ACCOMPLISHMENTS                             SUPPORTING DOCUMENTATION
    Source: Grant Application and Contract 12/08/2000
TEACHER TRAINING - Training for 60 teachers                                13 days of Training for 54 teachers.          Payroll Supplemental Forms, sign-in sheets.

                                                                                                                        Invoices, receipts, checks requisitions, sign-in
PARENT TRAINING ­     Training for 100 parents                              5 days of training for 106 parents.
                                                                                                                                            sheets.
                                                                                                                        Invoices, receipts, checks requisitions, sign-in
STUDENTS CAMPS - Student Camp.                                               5 days of camp for 90 students.
                                                                                                                                            sheets.
                                                                                                                       Model Classrooms were identified by principals,
MODEL CLASSROOM PILOT TEACHERS - 5                                                           7                          teachers and verified by Dalia Gonzales, the
                                                                                                                                     project facilitator.

                                                                          FINANCIAL
                                                                                                                         Other Contractual
   NCERF Contract         Supplies/Materials      Employee Payroll     Stipends - Teachers        Stipends - Parents                               Other Operating
                                                                                                                             services

                         NCERF: $95,000
  $218,500 (Note 1)     Others: $20,527.83       $83,912.63 (Note 3)    $93,590 (Note 4)         $16,607.00 (Note 5)       $17,727.95                $1,921.49
                                  (Note 2)



AWARD NOTIFICATION                                                                                                                                      $523,523.00
ROLL FORWARD                                                                                                                                             $82,810.59
AMOUNT TO BE SPENT                                                                                                                                      $606,333.59
TOTAL SPENT                                                                                                                                     (Note 6) $547,786.90
DRAWN DOWN                                                                                                                                              $547,786.90
VARIANCE                                                                                                                                                        $0.00
ROLL FORWARD (Amount to be Spent minus Amount Drawdowns)
                              -
                                                                                                                                                         $58,546.69




                                                                              12 

                                                            2001-2002 NOTES

NCERF CONTRACT: Note 1
Questioned Costs:
 The Auditors considered Questioned Costs the amount of $13,500 (three additional training days) for exceeding the contracted amount
 of $205,000 with NCERF.
     DISD considered these additional training days crucial to the basic understanding the proposed program. Page 46 of the original
    grant application, Building Capacity for a Better Future states that training for this program will " focus on leadership, team-building,
    collaborative skills, brain-based learning, the how-to's of becoming a Think-coach, workforce readiness skills and the process of
    facilitating more effective thinking and learning on the part of LEP children and youth. It will also train teachers in how to create
    integrated curricula, how to crate interactive and adaptive learning environments ("model classrooms") and now to work
    collaboratively with other teachers. "
  Based on the above-mentioned list of areas of pedagogy and processes to be understood and implemented by teachers, additional
 training was indeed needed.

SUPPLIES AND MATERIALS: Note 2
Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include the amount of $6,300 for catering services for Students Camp. We are providing support
 documentation in the file.

EMPLOYEE PAYROLL: Note 3
Unsupported Costs:

 The Auditors considered unsupported the amount of Payroll for $ 110,006.07 for not having the semi-annual certification.

Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include $906.56 for Supplemental payments for support personnel. We are providing support
 documentation in the file.

STIPENDS - TEACHERS: Note 4
Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include the amount of $19,540 for Stipends for training. We are providing support documentation
 in the file.


                                                                     13 

STIPENDS - PARENTS: Note 5
Questioned Costs:
 The Auditors considered $1,530 for Childcare services provided by parents as expenses not allowable for the Grant. We could explain to
 the Auditors that these parents are low income parents and they could not assisted to the training if we did not provide childcare
 services by other parents.
    The Grant Application - Section A - Point 10.c. of the Grant permits "Additional training stipends for administrators, teachers and
    parents related to Think-Campreneur (Students Camp), parent outreach and other project activities".
Expenses not considered by the Auditors:

 In their analysis, the Auditors did not include $ 6,592 for Stipends for parents who assisted to the trainings; $1,460 for Stipends for 

 Childcare services, and $7,000 for Stipends for Parents working at Camp. These expenses are allowable by the Grant (See the Grant 

 Application - Section A - Point 8.a. regarding Stipends for Parent Coach and Point 10. c. regarding Stipends for Parents related to 

 Students Camp). We are providing support documentation in the file. 


TOTAL AMOUNT SPENT: Note 6
 The difference of $41,798.56 between $547,786.90 and the total amount considered by the Auditors as "Total Expended per Receipts of
 $505,988.34" is explained in Notes 2 thru 5 under "Expenses not considered by the Auditors"




                                                                     14 

                                                                                                                                                                                   :'




I                                               INTERNAL WORIIIG SHEET - ERENSES 2001-2002
                                                                                                Considered bv Auditors
                                                                                                                                                          Not          TOTAL
                                                                                                                    Unsupported                       Considered     ERENSES
                                                                ~stioned   Costs        Supported Costs                Costs               Total      bv Auditors    2001-2002
IPAYROLL
Stipends: Teachers (Note 4)                                    $                   -    $            46,050.00      $   28,000.00 $        74,050.00 $ 19,540.00 $ 93,590.00
Salaries Professional :Dalia Gonzales {Note 3}                 $                   -    $                   -       $   45,829.42 $        45,829.42 $       -   $ 45,829.42
Salaries SupPOrt Personnel: Gloria Rosas (Note 3)              $                   -    $                   -       $   27,308.13 $        27,308.13 $       -   $ 27,308.13
Substitutes                                                    $                   -    $                   -                     $              - $         - $         -
Overtime and Supplemental pallments for support {Note 3}        $                  -    $             1,000.00      $    2,401.82 $         3,401.82 $     906.56   $   4,308.38
Benefits: for Stipends, Salaries, Substitute and Overtime (Note
3)                                                              $                  -    $                   - $           6,466.70 $   6,466.70 $       - $ 6,466.70
                                                               $               -        $            47,050.00 $        110,006.07 $ 157,056.07 $ 20,446.56 $ 177,502.63
ICONTRACTUAL NCERF
 Invoices NCRF
   Invoice 284 dated 09/10/2001                                 $              -            $       174,250.00      $         -       $ 174,250.00    $       -     $ 174,250.00
   Invoice 301 dated 0212512002                                 $              -            $        25,000.00      $         -       $ 25,000.00     $       -     $ 25,000.00
   Invoice 307 dated 06/13/2002                                 $              -            $         5,750.00      $         -       $   5,750.00    $       -     $ 5,750.00
   Invoice 296 dated 03/19/2002 - Three additional Coach
   Training days (Note 1)                                       $      13,500.00         $                      -   $             -   $   13,500.00   $       -     $ 13,500.00
 Rental Eguipment, Buses and facilities (look in analysis of
 Auditors)                                                     $                 $ -                 17,727.95 $                  -   $ 17,727.95     $       -     $ 17,727.95
                                                               $       13,500.00 $                  222,727.95 $              -       $ 236,227.95    $       -     $ 236,227.95
    SUPPLIES AND MATERIALS
    Invoices NCRF
      Invoice 285 dated 09/07/2001 - Materials                 $               -        $            95,000.00 $              -       $    95,000.00 $         -   $ 95,000.00
    Supplies including Procurement Card el!!!nses {Note 2}     $                   --   $            14,227.83 $                  -   $    14,227.83 $    6,300.00 $ 20,527.83
                                                               $                        $           109,227.83 $                  -   $   109,227.83 $    6,300.00 $ 115,527.83
IOTHER OPERATING ERENSES
 Stipends for parents (Training) Note 4                        $          25.00     $                       -  $                  -   $       25.00 $ 6,592.00      $ 6,617.00
 Stip!!nds for parents for Childcare Services. Note 4          $       1,530.00     $                       -  $                  -   $    1,530.00 $ 1,460.00      $ 2,990.00
 Stip!!nds for parents working at camp. Note 4                                      $                       -  $                  -   $         - $ 7,000.00        $ 7,000.00
 Miscellaneous.                                                $             244.93 $                 1,676.56 $              -       $    1,921.49 $       -       $ 1,921.49
                                                               $           1,799.93 $                 1,676.56 $              -       $    3,476.49 $ 15,052.00     $ 18,528.49

                                                               $       15,299.93        $           380,682.34      $ 110,006.07 $ 505,988.34 $ 41,798.56 $ 547,786.90




                                                                               15 

'.
                   Attachment B




     TITLE VII 


        YEAR 


     2002 - 2003 





          16 

                              TITLE VII, BILINGUAL EDUCATION SYSTEMWIDE GRANT # T291 R9990026
                                                                    2002-2003
              CONTRACTUAL OBLIGATION
                                                                          ACCOMPLISHMENTS                           SUPPORTING DOCUMENTATION
    Source: Grant Application and Contract 12/08/2000

TEACHER TRAINING - Training for 60 teachers                         11 days of training for 43 teachers.          Payroll Supplemental Forms, sign-in sheets.

                                                                                                                 Invoices, receipts, checks requisitions, sign-in
PARENT TRAINING ­   Training for 100 parents                           5 days oftraining for 87 parents.
                                                                                                                                      sheets.
                                                                                                                 Invoices, receipts, checks requisitions, sign-in
STUDENTS CAMPS - Student Camp                                           5 days of camp for 55 students.
                                                                                                                                      sheets.

MODEL CLASSROOM PILOT TEACHERS - 5                                 12 (5 new added to the 7 for a total of 12)
                                                                                                                 Model Classrooms were identified by principals,
                                                                                                                  teachers and verified by Dalia Gonzales, the
                                                                                                                               project facilitator.
                                                                                                                                                                    I

                                                                     FINANCIAL
                                                                                                                   Other Contractual
   NCERF Contract       SupplieslMaterials     Employee Payroll   Stipends - Teachers      Stipends - Parents                                Other Operating
                                                                                                                       Services


                       NCERF: $95,000
    $205,000.00       Others: $19,171.14 $110,304.23 (Note 2)      $85,650 (Note 3)      $10,392.40 (Note 4)           $839.50             $1,878.00 (Note 5)
                             (Note 1)



AWARD NOTIFICATION                                                                                                                                $523,523.00

ROLL FORWARD                                                                                                                                        $58,546.69

AMOUNT TO BE SPENT                                                                                                                                $582,069.69

TOTAL SPENT                                                                                                                            (Note 6) $528,235.27

DRAWN DOWN                                                                                                                                        $582,069.69

VARIANCE                                                                                                                                          ($53,834.42)

ROLL FORWARD (Amount to be Spent minus Amount Drawdowns)                                                                                                  $0.00




                                                                         17 

                                                      2002-2003 NOTES


SUPPLIES AND MATERIALS: Note 1
Expenses not considered by the Auditors:

 In teir analysis, the Auditors did not include the amount of $508.30 for Procurement Card. We are providing support
 documentation in the file.

EMPLOYEE PAYROLL: Note 2
Unsupported Costs:

 The Auditors considered unsupported the amount of Payroll for $56,727.17 for not having the semi-annual certification.

Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include the amount of salaries of $26,779.98 (Professional Employees), $22,119.48
 (Support Personnel) and $5,139.33 for Benefits. We are providing support documentation in the file.

STIPENDS - TEACHERS: Note 3
Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include the amount of $30,860 for Stipends for training. We are providing support
 documentation in the file.




                                                               18 

STIPENDS - PARENTS: Note 4
Questioned Costs:
 The Auditors considered $1,526.40 for Childcare services provided by parents as unallowable espenses for the Grant. We
 could explain that these parents are low income parents and they could not attend training if we did not provide childcare
 services by other parents.
    Additionally, the Grant Application - Section A - Point 10.c. of the Grant permits "Additional training stipends for
    administrators, teachers and parents related to Think-Campreneur (Students Camp), parent outreach and other project
    activities" .
Expenses not considered by the Auditors:
 In their analYSiS, the Auditors did not include $4,900 for Stipends for parents who attended trainings; and $1,900 for Stipends
 for Parents working at Camp (Coach Parents). These expenses are allowable by the Grant. We are providing support
 documentation in the file.

OTHER OPERATING: Note 5
Expenses not considered by the Auditors:
 In their analysis, the Auditors did not include $1,077.04 for miscellaneous expenses. We are providing support documentation
 in the file.

TOTAL AMOUNT SPENT: Note 6

 The difference of $93,284.09 between $528,235.27 and the total amount considered by the Auditors as "Total Expended per
 Receipts of $434,951.18" is explained in Notes 1 thru 5 under "Expenses not considered by the Auditors"




                                                              19 

                                             INTERNAL WORKING SHEET· EXPENSES 2002·2003
                                                                             Considered by Auditors
                                                                                                                                     Not                 TOTAL
                                                              Questioned         Supported     Unsupported                      Considered by          EXPENSES
                                                                Costs              Costs          Costs             Total         Auditors             2002-2003
PAYROLL
Stipends: Teachers (Note 3)                               $            -     $      52,540.00 $      2,250.00 $     54,790.00   $    30,860.00 $          85,650.00
Salaries: Dalia Gonzales from September 2002 thru
February 2003. (Note 2)                                   $            -     $             -    $   25,845.18   $   25,845.18   $    26,779.98 $          52,625.16
Salaries: Gloria Rosas from September 2002 thru
February 2003. (Note 2)                                   $            -     $              -   $   22,132.64 $     22,132.64 $      22,119.48 $          44,252.12
Substitutes                                               $            -     $           985.00 $       90.00 $      1,075.00 $            ­   $           1,075.00
Overtime                                                  $            -     $           803.27 $       75.22 $        878.49 $            ­   $             878.49
Benefits: for Stipends, Salaries, Substitute and OvertimE
(Note 2)                                                  $            -     $            -   $      6,334.13 $   6,334.13 $          5,139.33 $          11,473.46
                                                          $            -     $      54,328.27 $     56,727.17 $ 111,055.44 $         84,898.79 $         195,954.23

CONTRACTUAL NCERF
Invoices NCRF
  Invoice 318 dated 09/06/2002                            $            -     $     174,250.00 $           -     $ 174,250.00 $                 ­   $     174,250.00   I

  Invoice 325 dated 03/04/2003                            $            -     $      25,000.00 $           -     $ 25,000.00 $                  ­   $      25,000.00
  Invoice 332 dated 07/01/2003                            $            -     $       5,750.00 $           -     $   5,750.00   $               ­   $       5,750.00
Rental Buses (invoices in Auditors file)                  $            -     $         839.50 $           -     $     839.50 $                 ­   $         839.50
                                                          $            -     $     205,839.50 $           -     $ 205,839.50 $             ­       $     205,839.50

SUPPLIES AND MATERIALS

Invoice NCERF # 285 dated 09/07/2002 - Materials          $            -     $      95,000.00 $           -     $   95,000.00 $            ­       $      95,000.00
SUl!l!lies I invoices in Auditors filel                   $            -     $         314.84 $           -     $      314.84 $            ­       $         314.84
Procurement Card (Supplies, foods, miscellaneous)
(Note 1)                                                  $            -     $      18,348.00 $           -     $ 18,348.00 $           508.30 $          18,856.30
                                                          $            -     $     113,662.84 $           -     $ 113,662.84 $          508.30 $         114,171.14
OTHER OPERATING EXPENSES
                     \nuu: ..,.   "IIIUU'"   nOl
by Auditors, have support documentation: 1,900 for
parents coach in students camp and 4,900 for parent
training.)                                                $            -     $             -   $          -     $           ­   $     6,800.00 $           6,800.00
Stil!ends for I!!rents for Childcare Services (Note 4):
$2,066 Supportable costs, $1,352 Usopportable Costs
and $174.40 ? Unsupportable Costs)                        $       1,526.40 $        2,066.00 $            -     $   3,592.40 $             ­   $           3,592.40
Miscellaneous INote 5)                                    $            -   $          801.00 $            -     $     801.00 $        1,077.00 $           1,878.00
                                                          $       1,526.40 $        2,867.00 $            -     $   4,393.40 $        7,877.00 $          12,270.40

                                                          $       1,526.40   $    376,697.61   $    56,727.17   $ 434,951.18    $    93,284.09     $     528,235.27


                                                                                  20 

v
        "
    "


                                                                                      Attachment B


            BILINGUAL EDUCATION-SYSTEMWIDE IMPROVEMENT GRANT 

            SCHEDULE OF QUESTIONED COSTS 

            SEPTEMBER 1, 1999, THROUGH AUGUST 31, 2003 


            ATTACHMENT 


            Unidentified Grant Charges: 

            Point 6-- $216,165.15 

            DO NOT CONCUR. 


            Attached please find a spreadsheet with a group of expenses not considered by the Auditors in
            their Analysis for the years 2000-2001,2001-2002 and 2002-2003 for a total amount of
            $ 215,227.43.

            We are including the support documents in the corresponding file.




                                                          21 

                     UNSUPPORTED COSTS· UNIDENTIFIED GRANT CHARGES· ATTACHMENT POINT 6

                                                                                                                            TOTAL EXPENSES
                     DESCRIPTION                                2000-2001            2001·2002             2002-2003        NOT CONSIDERED
                                                                                                                            BY THE AUDITORS

PAYROLL
Stipends Teachers                                           $        40,161.00 $           19,540.00$           30,860.00 $         90,561.00
Salaries Professional                                       $               -  $                 -  $           26,779.98 $         26,779.98
Salaries Support Personnel                                  $               - $                  -  $           22,119.48 $         22,119.48
Substitutes                                                 $        22,642.93 $                -   $                 - $           22,642.93
Overtime and Supplemental payments for support              $         3,900.00 $             906.56 $                 - $            4,806.56
Benefits: for Stipends, Salaries, Substitute and Overtime   $               - $                 -   $            5,139.33 $          5,139.33
                                                            $        66,703.93 $          20,446.56 $           84,898.79 $        172,049.28


SUPPLIES AND MATERIALS
Procurement Card expenses and Catering                      $               -    $         6,300.00    $           508.30   $        6,808.30
                                                            $               -    $         6,300.00    $           508.30   $        6,808.30


OTHER OPERATING EXPENSES
Stipends for parents - Training                             $         9,278.00  $          6,592.00 $            4,900.00 $         20,770.00
Stipends for parents - Childcare Services                   $           240.00  $          1,460.00 $                  -  $          1,700.00
Stipends for parents - Working at camp                      $          2,290.78 $          7,000.00 $            1,900.00 $         11,190.78
Miscellaneous.                                              $          1,632.07 $               -   $            1,077.00 $          2,709.07
                                                            $         13,440.85 $         15,052.00 $            7,877.00 $         36,369.85


                                                  TOTAL: $            80,144.78 $         41,798.56 $           93,284.09 $        215,227.43




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