lakewood final report

May 19, 2014

Mr. Isaac Zlatkin, Board President

Lakewood Board of Education

200 Ramsey Ave.

Lakewood, NJ 08701

Dear Mr. Zlatkin:

The Department of Education, Office of Fiscal Accountability and Compliance has completed a

fiscal audit of the No Child Left Behind (NCLB) Title I Grant of the Lakewood Board of

Education. The review covered the period September 1, 2011 through August 31, 2012. The

resulting report is enclosed.

Utilizing the process outlined in the attached Procedures for LEA/Agency Response, Corrective Action Plan and Appeal Process, the Lakewood board is required, pursuant to N.J.A.C. 6A:23A-5.6, to publicly review and discuss the findings in this report at a public board meeting

no later than 30 days after receipt of the report. Within 30 days of the public meeting, the board

must adopt a resolution certifying that the findings were discussed in a public meeting and

approving a corrective action plan which addresses the issues raised in the undisputed findings

and/or an appeal of any findings in dispute. A copy of the resolution and the approved corrective

action plan and/or appeal must be sent to this office within 10 days of adoption by the board.

Direct your response to my attention.

Also, pursuant to N.J.A.C. 6A:23A-5.6(c), you must post the findings of the report and the

boards corrective action plan on your school districts website.

By copy of this report, your auditor is requested to comment on all areas of noncompliance and

recommendations in the next certified audit submitted to the New Jersey Department of

Education. If you have any questions, please contact Lisa D. McCormick at (609) 292-7742.

Sincerely,

Robert J. Cicchino, Director

Office of Fiscal Accountability and Compliance

RJC/LDM/tc: Lakewood Cover Letter

Distribution

David Corso

Susan Martz

Robert Bumpus

Michael Yaple

Glenn Forney

Michael Azzara

Anne Corwell

Karen Campbell

Vanessa Davenport

Lisa D. McCormick

Thomas Dowd

Andrea Sunderville

Joanna Shinn

Stephen M. Eells

Laura A. Winters

Thomas A. DAmbola Tobree Mostel

Neva Musella

Dieter P. Lerch, CPA

STATE OF NEW JERSEY

DEPARTMENT OF EDUCATION

OFFICE OF FISCAL ACCOUNTABILITY AND COMPLIANCE

PO BOX 500

TRENTON, NJ 08625-0500

LAKEWOOD BOARD OF EDUCATION

200 RAMSEY AVENUE

LAKEWOOD, NJ 08701

PHONE: (732) 364-2400

REPORT ON EXAMINATION

NCLB TITLE I AUDIT

OPERATIONS DURING THE PERIOD

SEPTEMBER 1, 2011 TO AUGUST 31, 2012

District: Lakewood

County: Ocean

AUTHORIZED REPRESENTATIVE: Thomas A. DAmbola, School Business Administrator

DIRECTOR OF PROGRAM: Tobree Mostel, Director of Grants

PERSONS CONTACTED (Name & Title):

Thomas A. DAmbola, School Business Administrator Neva Musella, Title I Grant Coordinator

FUNDING SOURCES

PROGRAM

YEAR

N C L B

TOTAL PART A C/O S I A SIA C/O

APPROVED FUNDING

2011-2012 $8,727,354.00 $0.00 $8,727,354.00

2010-2011 $0.00 $132,259.00 $132,259.00

TOTAL $8,727,354.00 $0.00 $0.00 $132,259.00 $8,859,613.00


NCLB TITLE I AUDIT

FISCAL YEAR 2011-2012

Page 1 of 18

INTRODUCTION

The Office of Fiscal Accountability and Compliance (OFAC) conducted a fiscal audit of the

districts FY 2011-2012 NCLB, Title I, Part A Program to determine whether the funds were spent in accordance with applicable law, regulations, and cost principles.

The scope of work performed included, but was not necessarily limited to: a) an examination of

various documents - the grant application, board meeting minutes, payroll records, time and

activity reports, teacher certifications, employment contracts, purchase orders, invoices,

cancelled checks, Title I Unified Plans, budget reports and corresponding account analyses; b)

reconciliation of disbursements to the Final Report; c) the selection of samples from payroll and

non-payroll transactions; and d) the performance of related expenditure testing.

During the sample selection process, the OFAC was informed that a contract issued to a

nonpublic service provider in the amount of $2,641,323 for instructional services to students was

under review by a federal agency. Consequently, the aforementioned contract was excluded

from the scope of work performed by this office. The OFAC reserves its right to examine and

evaluate the document in the future to determine whether the associated disbursements constitute

allowable program costs pending disposition by the federal agency.


NCLB TITLE I AUDIT


PUBLIC SCHOOL EXPENDITURES -

FINDINGS, FURTHER ACTION REQUIRED OR RECOMMENDATIONS

Page 2 of 18

1. The LEA improperly included unexpended FY 2011-2012 Title I, Part A and SIA Part A funds of $1,298,832.50 and $29,914.53 on corresponding Final Expenditure Reports

(FERs).

Pursuant to a September 11, 2012 broadcast memorandum issued by the Office of Grants

Management (OGM)1, LEAs were required to submit one final expenditure report for each title

in which FY 2012 NCLB funds were accepted and expended on allowable programs, services

and/or activities.(emphasis added) A reconciliation of the districts FY 2011-2012 general ledgers maintained for Title I, Part A and SIA Part A to corresponding FERs disclosed that

expenditures for several line items were overstated/(understated), as summarized below:

Title I, Part A SIA Part A Expenditure

Category General

Ledger Final

Report Difference Expenditure

Category General

Ledger Final

Report Difference

100-100 $12,700.00 $14,604.00 $1,904.00

200-100 $28,186.46 $37,186.00 $ 8,999.54 200-200 55,854.20 75,527.00 19,672.80 200-200 2,847.50 3,819.00 971.50 200-300 5,065,784.61 6,412,163.00 1,346,378.39 200-300 24,220.00 28,220.00 4,000.00 200-500 25,658.22 28,058.00 2,399.78 200-500 19,523.00 38,000.00 18,477.00 200-600 210,607.73 210,638.00 30.27 200-600 5,053.97 9,616.00 4,562.03

Admin 288,821.28 210,173.00 (78,648.28)

Subtotal $1,298,832.50 Subtotal $29,914.53

Total $1,328,747.03

Despite multiple inquiries concerning the variances shown, district personnel failed to produce

spreadsheets or other records which demonstrate how the amounts reported on the FERs were

computed. The OFAC arrived at figures reported on the LEAs Title I, Part A FER, with exception of the Administrative line item, by recording appropriations from the Title I, Part A

Budget Report, net of applicable adjustments and subtracting amounts used to establish FY

2012-2013 carryover2. This raised concern as the calculated expenditures included amounts

that were not actually disbursed (emphasis added).

LEAs were required to liquidate all FY 2012 NCLB funds by October 15, 2012 in accordance

with the aforementioned broadcast memorandum. Further inspection disclosed the district

reduced appropriations in its P2-231 accounts by balances of purchase order amounts not

liquidated by November 30, 2012. The LEA posted various adjustments to combine unexpended

1 This memorandum pertained to FY 2012 No Child Left Behind (NCLB) Final Expenditure Reports and was issued

by Anne Corwell, Director of the OGM. 2 The LEA posted aggregate appropriations of $972,290.63 on September 30, 2013 via adjustment #126 to establish

FY 2012-2013 carryover. This figure differs slightly from the reported carryover of $972,295.00.


NCLB TITLE I AUDIT




Page 3 of 18

funds from its P2-231 accounts with carryover of $972,290.63 in 20-234 account numbers; refer

to the table below:

The combined total of $2,235,763.27 ($1,263,472.64 + $972,290.63) represents 25.62% of the

districts FY 2011-2012 Title I, Part A award of $8,727,354.00. The aforementioned percentage exceeds the carryover limit of 15%, which would have necessitated the LEA to request the

NJDOE to waive the restriction or forfeit all unexpended funds not authorized for carryover.

Pursuant to section 1127(b) of NCLB, the NJDOE may waive the percentage limitation once

every three years if the state determines the request is reasonable and necessary or supplemental

appropriations become available. However, the LEA improperly reported carryover of

$972,295.00 in lieu of the actual $2,235,763.274 balance of unencumbered funds on its Title I,

Part A FER.

This apparent lack of adherence to legislative, regulatory and departmental requirements

governing carryover and unexpended funds is not an isolated case. Although the Step 4, Title I

Eligibility page of the LEAs NCLB Consolidated Grant Application disclosed no indication that funds from FY 2010-2011 were transferred into or added to the FY 2011-2012 Title I, Part A

award, the district provided records which indicate otherwise. Specifically, a FY 2010-2011

Carryover Budget Report showed appropriations of $849,259.63 (established during FY 2011-

2012) and a residual balance $119,589.20.

The NCLB New Jersey Consolidated Formula Subgrant Fiscal Year 2011 Reference Manual

(FY2011 Reference Manual) specified LEAs that have not obligated or spent all of the funds generated on the basis of the number of either public or nonpublic schoolchildren by the end of

the current school year may carry over these funds into the next year, provided that the amount

carried over does not exceed 15 percent (15%) of the LEAs total Title I, Part A, allocation. . . To carry over more than 15% of Title I, Part A funds, a district must apply for a waiver as a

3 This figure accounts for most of the Title I, Part A overstatements of $1,298,832.50. The remaining difference of

$35,359.86 is explained by unspent funds that were accounted for as expenditures on the Title I, Part A FR which

originated from: a purchase order adjustment of $19,676.76; corresponding balances of $4,175.15 in P2-231 and

$11,513.43 in 20-233 accounts; and an immaterial variance of $(5.48). 4 On June 1 2013, the district reduced the total amount appropriated in its 20-234 account by $168,214.81 via

adjustment numbers 397 and 491.

From Fund-Program

(Adjustment Nbr.) to 20-234 Amount

P2 -231 (#130) $ 300,000.00

P2-231 (#182) 277,338.56

P2-231 (#183) 430,000.00

P2-231 (#184) 256,134.08

Total $1,263,472.643


NCLB TITLE I AUDIT




Page 4 of 18

component of its Final Report using the [Electronic Web-Enabled Grant] EWEG system. The

NJDOE will conduct a desk audit and review the districts waiver request.

The OGM further advised LEAs, All funds that a district cannot carry over must be released to the NJDOE to be reallocated via its September 11, 2012 broadcast memorandum. This obligation would have been satisfied through the FER process had the district reported the actual amount of

Title I, Part A and SIA Part A funds disbursed for allowable program activities and services in

the EWEG system. In particular, any funds that were over paid would have been subtracted from

unexpended balances in the EWEG system. Based on the foregoing, the district is required to

remit funds of $2,178,006.66 ($1,328,747.03 + $849,259.63) that were improperly retained for

use without the requisite approval to NJDOE (refer to the Schedule of Audit Recovery Due to

SEA at the end of this report).

Further Action Required

Due to the significance of this finding, the district is required to prepare and submit: 1) a

reconciliation of Title I, Part A and Carryover disbursements from applicable account analyses to

the FER for the 2012-2013 and 2013-2014 project periods; 2) copies of Budget Reports and

corresponding account analyses; and 3) the Expense Account Adjustment Analysis by

Adjustment # Report. The FY 2012-2013 and 2013-2014 reconciliations and supporting

documents requested must be furnished within 30 days from the date of this report and 15 days

from submission of the FY 2014 NCLB FER to OGM, respectively.

The district is directed to email all records to the attention of Lisa D. McCormick at

[email protected] in portable document and EXCEL formats even if

the finding is subsequently appealed (emphasis added). By copy of this correspondence, the

OFAC requests OGM to notify our office following receipt of the districts FY 2013-2014 FER.

Finally, the LEA is reminded of its responsibility to prepare FERs using actual expenditures

incurred during the applicable project period (emphasis added).

2. Inadequately documented non-salary expenditures of $468,484.83 were improperly charged to the Title I, Part A grant.

Approximately one-half million dollars was spent to acquire several hundred

technological/computing devices and related professional development (PD) sessions absent any

mention or rationale in the LEAs Title I Unified Plans. In addition, district personnel were unable to provide: any explanation why the devices were purchased in response to multiple

inquiries; furnish listings of recipients; records acknowledging the receipt/possession of these

devices and/or some indication where the items are kept, refer to the table on the next page:


NCLB TITLE I AUDIT



FINDINGS AND RECOMMENDATIONS

Page 5 of 18

Line

Item

Purchase

Order # Date Vendor Description Amount

200-300 1204046 3/31/12 Apple, Inc. 480 iPads, 10 MacBook Pro Laptops, three 8-day professional development (PD) series

$ 320,902.28

200-600 1202074 10/25/11 Staples Advantage 10 wireless internet routers 1,799.90

1203284 2/1/12 Apple, Inc. 9 days of PD, split w/multiple grants & fiscal

years

2,456.89

1205153 6/1/12 Apple, Inc. 280 iPads with AppleCare 131,240.00

1205155 6/1/12 STM Bags, LLC 280 iPad cases 9,123.98

1205496 6/30/12 Staples Advantage 2 Epson multimedia projectors 1,675.78

Admin 1301828 8/1/12 Hewlett-Packard 2 laptops 1,286.00

Total $468,484.83

OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be necessary and

reasonable for proper and efficient performance and administration of federal awards, be

allocable to federal awards, and be adequately documented (emphasis added). A cost is

reasonable if, in its nature and amount, it does not exceed that which would be incurred by a

prudent person under the circumstances prevailing at the time the decision was made to incur the

cost. A cost is allocable to a particular cost objective if the goods or services are chargeable or

assignable to such cost objective in accordance with relative benefits received.

The items acquired were not deemed to be necessary and reasonable for the proper and efficient

performance and administration of federal awards as set forth by the requirements of OMB

Circular A-87, Attachment A, Section (C)(1). As a result, the sum of $468,484.83 must be

refunded to the NJDOE (refer to the Schedule of Audit Recovery Due SEA at the end of this

report).

Recommendation The LEA must ensure that expenses charged to Title I are allowable and support authorized

program activities.

3. Unsupported/unallowable payroll expenditures of $56,851.03 were erroneously charged to the Title I, Part A program.

During the audit, copies of payroll records and purchase orders were requested to document

salary and non-salary expenditures charged to the FY 2011-2012 Title I, Part A grant. The audit

disclosed unsupported/unsubstantiated payroll costs were included in line item figures recorded

on the LEAs FER as summarized on the next page:


NCLB TITLE I AUDIT




Page 6 of 18

Account Number Date J/E

Amount Unsupported Account Number Date J/E

Amount Unsupported

20-233-100-100-00-0000 7/13/12 $ 120.00 $ 120.00 20-231-200-100-00-0000 6/29/12 $3,837.89 $ 348.00 20-233-100-100-00-0000 8/24/12 4,760.00 4,760.00 20-233-200-100-00-0000 8/10/12 3,576.91 3,576.91 20-233-100-100-15-0000 7/13/12 240.00 240.00 20-233-200-100-00-0000 8/24/12 4,290.91 3,576.91

20-233-100-100-15-0000 7/27/12 375.00 375.00 20-233-200-105-00-0002 7/13/12 2,653.84 2,653.84 20-231-200-100-00-0000 3/9/12 163.52 163.52 20-233-200-105-00-0002 7/27/12 1,001.82 1,001.82

Subtotal $5,658.52 $5,658.52 Subtotal $15,361.37 $11,157.48

Total $16,816.00

Additionally, the LEA charged workers compensation of $52,761.03 for Andrea Adams to the Title I, Part A grant. Ms. Adams was out for nearly the entire 2011-2012 school year. The LEA

should have only charged those costs attributable to her actual work performed on Title I

activities to the federal program. Conversely, Jennifer Korkowski served as a replacement for

Ms. Adams during part of the school year and was paid a total of $12,716.00. Based on the

foregoing, Ms. Adams workers compensation of $52,761.03 less $12,716.00 or $40,045.03 constitutes unallowable program costs.



allocable to federal awards, and be adequately documented. Furthermore, EDGAR, 34 CFR

76.730(e) requires the district to keep records in a manner that facilitates an effective audit. As

a result, the LEA is required to return the sum of $56,851.03 ($16,816.00 + $40,035.03) to the

department for questioned costs attributable to the Title I, Part A program (refer to the Schedule

of Audit Recovery Due to SEA at the end of this report).

Recommendation

The LEA must improve procedures for the payment of expenditures related to the Title I, Part A

program in accordance with the requirements of OMB Circular A-87.

4. Aggregate expenditures of $22,715.00 were improperly charged to the Title I, Part A and SIA Part A programs without any indication of an academic purpose.

According to the Step 4, Title I Eligibility Page of the districts NCLB Consolidated Application, the LBOE was approved to operate schoolwide programs at all Title I eligible schools. The audit

disclosed LEA charged various items which do not appear to advance the intent and purpose of

the Title I, Part A and SIA Part A programs. The following questioned costs were identified:


NCLB TITLE I AUDIT




Page 7 of 18

Program Line

Item Purchase

Order # Vendor Date Description Amount Title I, Part A

200-600 1202147 Honeywell 11/1/11 Web-based emergency alert system

$ 12,275.00

SIA Part A 200-300 1204344 Allegheny Educational System 4/1/12 Training on laser engraver 250.00

Total $12,525.00

USDOE Non-Regulatory Guidance on Designing Schoolwide Programs Children (March 2006)

indicates, in part, A schoolwide program is a comprehensive reform strategy designed to upgrade the entire educational program in a Title I school; its primary goal is to ensure that all

students, particularly those who are low-achieving, demonstrate proficient and advanced levels

of achievement on [s]tate academic achievement standards. It is unclear how the use of federal funds for these items advanced the educational needs of students.

In addition, district personnel indicated the partial salary of a Lakewood Middle School gym

teacher was incorrectly posted to account 20-247-100-100-04-0004 on June 30, 2012 via

disbursement adjustment #219. The related salary costs of $10,190.00 were subsequently

charged to the Title I, SIA Part A grant in error.

The FY 2011 Reference Manual states in part that Title I, SIA Part A funds can be used to expand the programs and services being funded by Title I, Part A or can help the school address

additional priority problems the school identified in its needs assessment. The aforementioned salary costs neither expands the program being funded by Part A funds, nor addresses an

additional priority problem identified in its needs assessment.

Furthermore, OMB Circular A-87, Attachment A, Section (C)(1) provides that costs must be

necessary and reasonable for proper and efficient performance and administration of federal

awards, be allocable to federal awards, and be adequately documented. As a result, the sum of

$22,715.00 ($12,525.00 + $10,190.00) must be refunded to the department for the questioned

costs identified above (refer to the Schedule of Audit Recovery Due to SEA at the end of this

report).

Recommendation The LEA must improve procedures to ensure funds disbursed from federal funds represent

allowable costs and conform to the requirements of OMB Circular A-87.


NCLB TITLE I AUDIT




Page 8 of 18

5. Expenditures of $19,200.00 incurred and charged to the Title I, SIA Part A grant were inadequately documented and/or deemed to be excessive and unnecessary for the

efficient performance of the federal programs.

The audit disclosed that various inadequately documented and/or excessive and unnecessary

costs were included in line item figures recorded on the LEAs FERs. In particular, the LEA, disbursed Title I, SIA Part A funds of $19,200.00 to LEAD America, a non-profit organization

which helps prepare high school age students for college. The top 12 students from Lakewood

High School (four freshman, sophomores and juniors) participated in a multiple day/night

leadership program organized by LEAD America. The program was held at George Washington

University in Washington, D.C. from June 23-27, 2012.

District personnel were unable to locate the corresponding invoice or provide a list of attendees.

Notwithstanding, the costs incurred for this career and college ready activity equates to $320.00

per day (for a five day total of $1,600.00 per person) and were deemed to be excessive,

particularly in this time of budgetary constraints. According to the FY 2011 Reference Manual,

Title I, SIA Part A funds are allocated to schools in need of improvement to help low-performing students achieve academic proficiency and complement the use of these schools Title I Part A funds. The expenditures incurred were not considered to be necessary and reasonable to advance the statutory purpose of the Title I, SIA Part A program.






cost. Based on the foregoing, the district must refund the sum of $19,200.00 to the department

for these disallowed costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this

report).

Recommendation

The LEA must improve procedures for the payment of expenditures related to the Title I, SIA

Part A program in accordance with the requirements of OMB Circular A-87.


NCLB TITLE I AUDIT


NONPUBLIC SCHOOL EXPENDITURES -


Page 9 of 18

6. Nonpublic expenditures of $1,062,220.74 charged to the Title I grant supplanted local funding sources and are therefore deemed to be unallowable program costs.

The district contracted with Tree of Knowledge, a third-party vendor to provide instructional

services to nonpublic school students throughout the 2011-2012 project period. Three purchase

orders were issued to cover the related costs as summarized below:

Line

Item Purchase

Order # Date Description Amount Admin. 1202101 12/27/11 Administrative charges for instructional services $ 16,325.49

1203882 3/1/12 Lease agreement 30,320.83 200-300 1202101 10/27/11 Instructional services 1,007,216.30

Total $1,053,862.62

The audit disclosed no indication how the services charged to the Title I, Part A grant

supplemented those provided through other sources, such as Chapter 192 and 193. This serves to

explain why in part the OFAC asked a district staff member to send an email to request

nonpublic school officials bring their teacher schedules and information concerning their

curriculum for the 2011-2012 school year to the Lakewood Board of Education (LBOE) offices

for examination. Neva Musella conveyed our request for records to nonpublic school officials

through an email dated August 28, 2013. The documents were not furnished for review. The

OFAC asked Ms. Musella to resend the email to appropriate nonpublic personnel. A second

email was sent on March 5, 2014. Only three out of 142 nonpublic school officials responded to

Ms. Musellas email. As of the present date, no records have been produced for inspection.

Pursuant to section 1120 of NCLB, the LEA must provide an instructional program that meets

the educational needs of nonpublic students who are failing or at risk of failing and supplements

the classroom instruction provided by the private school. Educational services provided with

Title I funds must be in addition to those services that the private schools provide all its children.

The OFAC could not determine if the instructional services provided by the aforementioned

vendor satisfied this legislative requirement due to the nonpublic school officials failure to produce the records requested for examination (emphasis added). Therefore, the expenditures

summarized above are disallowed.

It was also noted that the LEA disbursed Title I, Part A funds to place advertisements for

nonpublic consultation meetings, a parenting course and employment opportunities for teachers

in various publications, refer to the following table:


NCLB TITLE I AUDIT




Page 10 of 18

Line

Item Purchase

Order # Date Vendor Amount Purchase

Order # Date Vendor Amount 200-500 1301777 8/1/12 Yated Ne-Eman $ 240.00 1301780 8/1/12 Hamodia $ 400.00

1301779 8/1/12 The Voice of Lakewood 70.00 200-600 1203790 8/1/12 The Voice of Lakewood 31.27 1204956 6/1/12 The Voice of Lakewood 125.00

1204955 6/1/12 The Lakewood Shopper 200.00 1204957 6/1/12 Gannett NJ Media 391.85

Subtotal $ 541.27 Subtotal $ 916.85

Total $1,458.12

The classified teaching position ad stated, in part, the Lakewood Board of Education is searching for staff to work in nonpublic schools. The advertisement did not mention Title I at all and appeared to benefit the entire nonpublic school population. The parenting course

announcement essentially opened the event to all parents within the community. The nonpublic

consultation meeting ad stated Lakewood Board of Education NCLB Title I, IDEA, Chapter 192, 193 & 226 will hold a general consultation meeting. This meeting covered topics relevant to Title I, other federal funds and state financial assistance and would have occurred regardless

of whether the LEA received Title I funds.

Further, Leopold Slomivc presented, "Dealing and Coping w/Struggling Students" workshops to

11 teachers (less than 20 in total) at the United Talmudical School. However, related documents

show there were at least 45 different participants. Chaya Decklebaum was hired to work with 37

teachers at Bais Tova School to enhance the curriculum of the entire school.

Line

Item Purchase

Order # Vendor Date Description Amount 200-300 1301630 Leopold Slomivc 7/30/12 Workshops for teachers $ 4,400.00

1301630 Chaya Deckelbaum 8/1/12 Curriculum development 2,500.00

Total $ 6,900.00

United States Department of Education (USDOE) Non-Regulatory Guidance Title I Private

Services to Eligible Private School Children (March 2003) states The professional development activities for private school teachers should address how those teachers can serve Title I students

better, such as by providing information on research-based reading and mathematics instruction.

It is inappropriate to use these funds to upgrade the instructional program in the regular

classroom of the private school.

Section 1120A(b) of NCLB requires an LEA use Title I funds only to supplement the level of

funds that would, in the absence of Title I funds, be made available from non-federal sources for

the education of students participating in Title I programs. This supplement not supplant

provision bars the district from expending funds generated by private school students on

classroom instruction nonpublic school personnel are obligated to provide its children. Based on


NCLB TITLE I AUDIT




Page 11 of 18

the foregoing, the sum of $1,062,220.74 ($1,053,862.62 + $1,458.12 + $6,900.00) must be

refunded to the department for these disallowed costs (refer to the Schedule of Audit Recovery

Due to SEA at the end of this report).

Recommendation

The LEA must ensure Title I program expenditures supplement, not supplant, state and local

funds.

7. Adequate documentation was not provided which demonstrates nonpublic expenditures of $83,892.72 allocated to the Title I, Part A program represent allowable costs.

During the audit, copies of payroll records and purchase orders were requested to document

salary and non-salary expenditures charged to the FY 2011-2012 Title I, Part A grant. The audit

disclosed that various inadequately documented or unsupported costs were included in line item

figures recorded on the LEAs FERs as summarized below:

Several purchase orders were issued on January 1, 2012 on behalf of nonpublic schools to cover the registration costs for individuals to attend an annual conference offered by the;

Torah Umesorah, National Society for Hebrew Day Schools; refer to the table below:

Line Item

Purchase

Order # Nonpublic School Amount Purchase

Order # Nonpublic School Amount 200-300 1202940 Yeshiva Toras Aron $ 9,600.00 1202955 Yeshiva Masoras Avos $ 4,000.00

1202941 Yeshiva Tiferes Torah 4,150.00 1202956 Yeshiva Yishrei Lev 2,611.72

1202942 Lakewood Cheder 15,500.00 1202958 Yeshiva Kol Torah 2,700.00

1202943 Talmud Torah Orh Elchonon 1,350.00 1202959 Bais Reuven Kaminatz 3,150.00

1202944 Tashbar 3,594.00 1202960 Yeshiva Bais Hatorah 3,600.00

1202947 Yeshiva Shagas Aryeh 3,060.00 1202961 Yeshiva Toras Manachem 1,477.00

1202948 Yeshiva Orchos Chaim 9,800.00 1202962 Talmud Torah Bais Avrohom 3,600.00

200-500 1203340 Cheder Bnei Torah 4,950.00

Subtotal $52,004.00 Subtotal $21,138.72

Total $73,142.72

Approximately 200 nonpublic teachers attended the conference on February 17-18, 2012

which cost $450.00 per person. Registration fees for roughly 140 people were charged to

the Title I grant. District personnel were unable to locate a copy of the actual agenda and

list of participants requested for inspection. A staff member indicated such listings were

too difficult to maintain due to the numerous additions and deletions of attendees.


NCLB TITLE I AUDIT




Page 12 of 18

Social services were provided to nonpublic students by Esther Gersten, a licensed social worker. In addition, one student underwent a psychiatric evaluation by Sabine Hack,

M.D. in New York. Contemporaneous records evidencing funds were not reasonably

available from other public or private sources to provide such services, the students eligibility for Title I comprehensive services, and the students served were not provided:

Line Item

Purchase

Order # Date Vendor Amount 200-300 1204348 4/1/12 Esther Gersten $ 3,200.00

1302407 9/1/12 4,800.00

1302409 9/1/12 1,800.00 200-300 1205480 6/30/12 Sabine Hack 950.00

Total $10,750.00

Psychiatric services are deemed to be outside the scope of comprehensive services set

forth by Section 1115(c)(e) of NCLB and would otherwise be disallowed.



allocable to federal awards, and be adequately documented. As a result, the sum of $83,892.72

($73,142.72 + $10,750.00) must be refunded to the NJDOE for these questioned costs (refer to

the Schedule of Audit Recovery Due to SEA at the end of this report).

Recommendation The LEA must improve procedures for the payment of expenditures related to the Title I


8. Nonpublic expenditures totaling $27,770.86 were improperly charged to the Title I, Part A program without any indication of an academic purpose.

The LEA expended Title I funds for various supplies which are summarized on the next page.

The items purchased do not appear to advance the intent and purpose of the Title I, Part A

program.

A variety of arts and craft items were purchased primarily in the spring and summer of 2012 for

Bais Tova School, a nonpublic school. The items included, but are not limited to: numerous

cases of colored paper, 180 packages of velcro dots, tissue paper, glitter, buttons, oaktag, plastic

baby dolls, sequins, foam shapes, beads, table cloths, floral tape, stickers, and popsicle sticks.

Following is a summary of the related purchase orders:


NCLB TITLE I AUDIT




Page 13 of 18

Line Item

Purchase

Order # Vendor Date Amount Purchase

Order # Vendor Date Amount

200-300 1201704 W.B. Mason Co Inc. 10/1/11 $ 579.80 1205476 The Craft Shop of NY 6/30/12 $ 1,561.27 1201705 The Craft Shop of NY 10/1/11 2,274.45 1205483 Hygloss Products, Inc. 6/30/12 2,023.86

1201707 XPEDX 10/1/11 1,351.04 1205484 Gramco School Supplies 6/30/12 2,224.33 1205269 Roselle Paper Co 6/21/12 2,633.84 1301608 Hygloss Products, Inc. 7/30/12 1,547.10 1205268 Crafts N More 6/30/12 3,011.18 1301693 The Craft Shop of NY 8/1/12 1,970.78

1205448 Oriental Trading Co 6/30/12 2,017.92 1301706 Hygloss Products, Inc. 8/1/12 990.87 1205475 The Craft Shop of NY 6/30/12 3,920.17 1301748 The Craft Shop of NY 8/1/12 1,664.25

Subtotal $15,788.40 Subtotal $11,982.46

Total $27,770.86

Section 1120 of NCLB requires LEAs to provide eligible children attending private elementary and secondary schools, their teachers, and their families with Title I services or other benefits

that are equitable to those provided to eligible public schoolchildren, their teachers, and their

families.

USDOE Non-Regulatory Guidance on Title I Private Services to Eligible Private School

Children (March 2003) clarifies, Simply providing the private school with instructional materials and supplies is NOT an option available to the LEA because it is neither a proper Title

I program implemented by the LEA nor meets the equitability requirement.(emphasis added). Any supplies, materials or equipment purchased with Title I funds should be provided for the

sole use of the Title I-funded staff to support the Title I services being provided. The acquisition

of arts and craft supplies for nonpublic schools is not deemed to be an allowable use of Title I

funds. Consequently, the district is required to remit the sum of $27,770.86 to the NJDOE for

these questioned costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this

report).

Recommendation The LEA must ensure that expenses charged to Title I are allowable and support authorized

program activities.

9. Nonpublic expenditures of $19,953.57 incurred and charged to the Title I, Part A grant were inadequately documented and/or deemed to be excessive and unnecessary for the

efficient performance of the federal programs.

The audit disclosed that various inadequately documented and/or excessive and unnecessary

costs were included in line item figures recorded on the LEAs FERs. Following is a summary of the questioned costs identified:


NCLB TITLE I AUDIT




Page 14 of 18

Title I, Part A - Consulting Fees

An invoice submitted by Michelle Doyle, a consultant indicated her time was split/billed equally between Title I and IDEA, therefore only $1,612.62 or 50% of $3,225.24 of purchase

order #1202597 should have been allocated to Title I.

Purchase order #1203808 in the amount of $5,287.20 was issued on March 1, 2012 to cover fees for Bowman and Company to review invoices submitted to the district by Tree of

Knowledge (TOK) for instructional services. The Lakewood Board of Educations approval of this charge stated payment for this service was the responsibility of TOK.

David Rubel provided consultation services related to Title I, IDEA, and Chapter 192/193 funding for nonpublic beneficiaries. Mr. Rubel was paid, in part, to research ways to help the

nonpublic students obtain more funds through Medicaid, among other things. It is unclear

how much time was devoted specifically to the Title I program from the description of

services rendered. However, the entire amount of purchase order #1205470 for $7,550.00

was improperly charged to Title I.

The LEA disbursed payments of $5,503.75 to Elie Wizman for consultation services with district attorneys, Mr. Rubel and a nonpublic school official from the IGUD organization

regarding Title I and IDEA. However, the entire amount of purchase order # 1205471 was

improperly allocated to Title I. Further, the hourly rate paid of $175.00 for over 30 hours of

inadequately described meeting/conversations was deemed to be excessive.






cost. Based on the foregoing, the district must refund the sum of $19,953.57 to the department

for these disallowed costs (refer to the Schedule of Audit Recovery Due to SEA at the end of this

report).

Recommendation

The LEA must improve procedures for the payment of expenditures related to the Title I, Part A



NCLB TITLE I AUDIT


NONMONETARY FINDINGS AND RECOMMENDATIONS

Page 15 of 18

10. On various occasions, the LEA failed to issue purchase orders prior to services being rendered (confirming order).

Various purchase orders, particularly those issued on behalf of nonpublic (NP) schools, were

issued after the services were performed and/or invoices were received. Examples include, but

are not limited to the following:

Line

Number Purchase

Order # Vendor Date Description Amount 200-300 1202602 Speech and Auditory Services 12/1/11 NP professional development (PD) $ 189.00

1203560 American Friends of YMS 2/27/12 NP PD on 2/9/12 825.00

1203718 Shani Loketch 3/1/12 NP PD during 10-11 grant period 3,800.00

1204274 Mary Courtney 4/1/12 NP PD from Sept. 11-Feb. 12 7,500.00

1204348 Esther Gersten 4/1/12 Therapy for one student 3,000.00

1301607 Pearl Blau Learning 7/30/12 NP PD throughout 11-12 school year 2,925.00

1301970 Zissel Munk 8/1/12 NP parent workshop on 3/27/12 2,100.00

N.J.S.A 18A:18A-2(v) indicates, in part, Purchase order" means a document issued by the purchasing agent authorizing a purchase transaction with a vendor to provide or perform goods

or services to the board of education (emphasis added). Therefore, a properly executed PO must

be issued prior to services being rendered.

Recommendation

The LEA must implement a process to ensure purchase orders are issued before the receipt of

goods and services from vendors.

11. Expenditures should have been allocated to the 2010-2011 project period.

A review of the general ledger revealed the district charged costs for the following purchase

orders to the FY 2011-2012 Title I, Part A grant:

Line

Number Purchase

Order # Vendor Date Description Amount 200-300 1203718 Shani Loketch 3/1/12 NP PD during the 2010-2011 grant period 3,800.00

200-600 1301626 The Chronicle of Philanthropy 7/30/12 Annual Subscription to Chronicle of Philanthropy

52.50

Although no benefit was derived from these expenditures during the 2011-2012 project period

which began on September 1, 2011, the associated costs were reported on the districts 2011-2012 FER. These expenses incurred for purchase order #1203718 and 1301626 were allocable

to FY 2010-2011 and FY 2012-2013 Title I grants, respectively.


NCLB TITLE I AUDIT



Page 16 of 18

Recommendation

The district must implement procedures to ensure program costs are charged to the appropriate

grant year.

12. The LEA did not liquidate a Title I purchase order in a timely manner.

The audit revealed purchase order #1301777 in the amount of $240.00 was obligated during FY

2011-2012, but was not liquidated until January 23, 2013. The payment was disbursed months

following the liquidation deadline of October 15, 2012 established by OGM pursuant to the

broadcast memorandum mentioned in Finding One.

Recommendation

The LEA must ensure that charges incurred during the grant year are liquidated in a timely

manner as prescribed by departmental guidelines.

13. Title I funded personnel did not prepare detailed time and activity reports in a manner consistent with the requirements of OMB Circular A-87.

The LEA furnished copies of time and activity reports for Title I funded personnel, with the

exception of one employee. However, the reports provided disclosed no indication of the

amount time charged to the federal program and were not signed by a supervisor.

In particular, fully funded Title I personnel must prepare and sign periodic time and activity

reports, at least twice a year and have them signed by a supervisor to support their time

chargeable to the Title I program in accordance with EDGAR, 34 CFR 80.(b)(6) and OMB

Circular A-87, Attachment B, Section 8(h)(3). Split funded Title I personnel are required to

complete and sign monthly time and activity reports pursuant to EDGAR, 34 CFR 80.(b)(6)

and OMB Circular A-87, Attachment B, Section 8(h)(4) (emphasis added).

USDOE Non-Regulatory Guidance on Title I Fiscal Issues: Maintenance of Effort;

Comparability; Supplement, Not Supplant; Carryover; Consolidating Funds in Schoolwide

Programs; and Grantback Requirements (February 2008) states that if schools do not consolidate funds, then they must follow the requirements for personal activity reports. The LEA did not consolidate funds for schoolwide schools.

In order to avoid potential audit findings and the recovery of funds, the LEA is directed to

refer to a broadcast memorandum dated December 18, 2012 issued by the Office of Title I

regarding Time and Effort Reporting for Title I Funded Staff (emphasis added). The memorandum can be accessed from NJDOEs website at: http://education.state.nj.us/broadcasts/ 2012/DEC/18/8643/Time%and%Activity%Reporting.pdf.


NCLB TITLE I AUDIT



Page 17 of 18

Anytime a change of funding source occurs, the event must be recorded in the board of education

meeting minutes. A revised certification must be prepared and signed by the appropriate parties.

The LEA must be aware that the supplanting of local funds is in violation of NCLB statutes and

subject to SEA recovery.

Recommendation

The LEA must develop procedures to ensure that Title I funded personnel prepare time and

activity reports which conform to the requirements of EDGAR, 34 CFR 80.(b)(6) and OMB

Circular A-87, Attachment B, Sections 8(h)(3) and 8(h)(4).

14. Appointments of Title I, Part A personnel, including their related salary and funding percentages, were not recorded in the board of education meeting minutes.

The funding percentages and appointments of all instructional personnel charged to the Title I,

Part A grant were not included in the board of education meeting minutes provided for our

examination.

Federal regulations pursuant to OMB Circular A-87 and New Jersey Department of Education

guidelines require LEAs to document all program related costs. To achieve compliance with these requirements, the designation of all Title I employees, both Part A and Carryover (if

applicable), and their salaries, assigned school and funding percentage must be documented in

the board minutes to provide a public record of approval for these expenditures.

Recommendation The LEA must ensure all Title I employee appointments, including their salaries and funding

percentages, are recorded in the board of education meeting minutes documenting proper

authorization of these expenditures.

15. Certain records were not maintained in accordance with departmental and federal guidelines.

A review of the districts FY 2011-2012 general ledger disclosed program codes 247 and 249 were used to account for certain SIA Part A expenditures. The Uniform Chart of Accounts for

New Jersey School Districts (Chart of Accounts), as required by N.J.A.C. 6A:23-2.2(g),

designates program codes 231-239 for NCLB Title I, Part A; Improving Basic Programs and SIA, Part D, Neglected Delinquent or at Risk expenditures.

Recommendation To facilitate an effective audit, the LEA must revise its coding system to conform to the

departments prescribed Chart of Accounts and ensure the proper recording of all financial transactions.


NCLB TITLE I AUDIT


SCHEDULE OF RECOVERY DUE TO SEA

Page 18 of 18

Audit Finding Recovery

Number One $2,178,006.66

Number Two 468,484.83

Number Three 56,851.03

Number Four 22,715.00

Number Five 19,200.00

Number Six 1,062,220.74

Number Seven 83,892.72

Number Eight 27,770.86

Number Nine 19,953.57

Total Recovery Due to SEA $3,939,095.41

The check is to be made payable to Treasurer, State of New Jersey and mailed with the corrective action plan.

Robert J. Cicchino, Director


State of New Jersey

Department of Education

PO Box 500

Trenton, NJ 08625-0500

Submitted by: Approved by:

_______________________________________ _______________________________________

Lisa D. McCormick, Manager Robert J. Cicchino, Director

Office of Fiscal Accountability and Compliance Office of Fiscal Accountability and Compliance

Auditor

Joanna Shinn

Rev. 8/2009

State of New Jersey

Department of Education


PROCEDURES FOR LEA/AGENCY

AUDIT RESPONSE CORRECTIVE ACTION PLAN AND APPEAL PROCESS

Resolution:

Pursuant to N.J.A.C. 6A:23A-5.6, within 30 days of receipt of the report, the school board must

discuss the findings of the report at a public meeting of the board. Within 30 days of the public

meeting, the board must adopt a resolution certifying that the findings were discussed in a public

board meeting and approving a corrective action plan to address issues raised in the undisputed

findings and/or appeal of any findings in dispute. Within 10 days of adoption of the resolution

by the board, such resolution together with the approved corrective action plan and/or appeal

must be submitted to the Office of Fiscal Accountability and Compliance. The findings of the

Office of Fiscal Accountability and Compliances report and the boards corrective action plan must be posted on the districts website.

Corrective Action Plan:

The corrective action plan is to be used when the board is in agreement with any of the audit

findings. To contest a finding the appeal process must be used. After the appeal is settled a

corrective action plan must be filed for any finding upheld during the appeal process.

The corrective action plan must be prepared by completing the attached form. The school must

submit the following information:

Recommendation number

Corrective action (approved by the board)

Method of implementation

Person responsible for implementation

Completion date of implementation

If the corrective action plan is acceptable, a letter will be sent to the board indicating that it has

been accepted.

If the corrective action plan is not acceptable, a letter will be sent to the board indicating whether

further clarification is required or further action is necessary.

Rev. 8/2009

- 2 -

Appeal Process:

The appeal process is used to contest audit findings.

Within 10 days of the boards adoption of the resolution approving an appeal of the findings of the report, a written request by the board to review the aggrieved findings, recommendations or questioned costs must be submitted to the director, Office of Fiscal Accountability and

Compliance. The notice of appeal must indicate the findings to be appealed.

The appeal itself may be written or a hearing may be scheduled so that the board can present its

case. In either instance, documentation must be presented supporting the appeal. The director,

Office of Fiscal Accountability and Compliance will issue a written decision.

If the decision is unsatisfactory to the board it may, within 10 calendar days, file a notice of

appeal to the Chief of Staff.

If the final determination made by the Chief of Staff is still unsatisfactory to the board, it may

access the formal appeal process described in N.J.A.C. 6A:3-1.3.

Rev. 8/2009

NEW JERSEY DEPARTMENT OF EDUCATION

OFFICE OF FISCAL ACCOUNTABILITY AND COMPLIANCE

CORRECTIVE ACTION PLAN

NAME OF SCHOOL DISTRICT _______________________________ COUNTY _____________________________

TYPE OF EXAMINATION ____________________________________

DATE OF BOARD MEETING _________________________________

CONTACT PERSON ________________________________________

TELEPHONE NUMBER ______________________________________

CORRECTIVE

PERSON

COMPLETION

RECOMMENDATION ACTION REQUIRED METHOD OF RESPONSIBLE FOR DATE OF

NUMBER BY THE BOARD IMPLEMENTATION IMPLEMENTATION IMPLEMENTATION

CHIEF SCHOOL ADMINISTATOR DATE BOARD SECRETARY/SCHOOL BUSINESS ADMINISTRATOR DATE

lakewood final report

Documents

fiscal audit

lakewood county

public board meeting

fiscal year

ramsey avenue lakewood

examination nclb title

resulting report

boards corrective action