Calhoun County Schools Found Noncompliant of ESSER Funding in WVDE Audit

Beginning in March 2020, the West Virginia Department of Education received nearly $1.2 Billion in ESSER (Elementary and Secondary School Emergency Relief) Funds, which was then distributed to LEA (Local Education Agencies) in support of areas impacted by COVID 19. The funds were to support the safe reopening of the schools and to recover from the effects of the 2019 Coronavirus pandemic on the academics, social, emotional and mental health of the students. The OFP (Office of Federal Programs), reported using three of their personnel to conduct cyclical monitoring of the ESSER funds for 54 counties. Out of those 54 counties, 37 LEAs were deemed noncompliant for improper purchasing procedures, using funds for unallowable activities and or exceeding indirect cost rates. 

After the WVDE reported that there were 37 LEAs which had been noncompliant; the report noted that a no risk assessment was completed by the agency to determine if more staff should be hired to maintain adequate oversight. 

Because the OFPs cyclical monitoring does not consider if vendors are registered to do business in the State, the vast majority of LEAs made federal grant purchases with unregistered vendors totaling over $2.1 Million.

The infractions varied, such as:

• Lack of public advertising for the request for bids.
• A lack of the required number of competitive bids.
• Lack of required number of written bids.
• Lack of support for sole purchase and
• Insufficient or no bid documentation being found or uploaded for OFP to review.

Among the 37 LEA’s, Calhoun County was found to be noncompliant through “Improper Purchasing Procedures” in the amount of $85,939. (Table 3)

The description had nothing notated on the table that listed Calhoun County’s issue of noncompliance. However on Table 6 (below) it states that there was no documentation submitted. 

Preliminary findings from the ESSER H/ARP cyclical monitoring reports suggested similar issues of non-adherence of purchasing guidelines with eight counties being repeat offenders.

Moreover, the report said that 9 counties (Boone, Calhoun, Hampshire, Harrison, Lewis, Mason, Preston, and Taylor) were also issued non-compliance for purchasing violations under the ESSER 1 review. It is also evident that counties are continuing to utilize vendors that are not registered with the Secretary of State. For example, from the eight counties deemed noncompliant, two monitoring reviews in a row, Boone, Greenbrier, Hampshire and Mason utilized vendors in both years that are not registered with the Secretary of State.

Although Policy 8200 designates the formal guidelines for LEA purchases, it does not explicitly comment on whether a vendor must be registered with the SOS to conduct business with a county school district. However within the appendix of Policy 8200, “vendor” is formally defined as an “individual, partnership or business authorized to conduct business in the State of West Virginia that is able to furnish the desired commodity or service.” Based on the WV State Code, an entity authorized to do business in the State involves registration with the State Tax Department.

Table 6 lists the LEAs that have been reviewed as of June 29, 2023, of the 39 reviewed, 17 have been issued non-compliance from the invoices sampled to determine allowable expenses and 15 LEA’s (Boone, Braxton, Calhoun, Grant, Greenbrier, Hampshire, Harrison, Jefferson, Logan, Lewis, Lincoln, Mason, Preston , Taylor and Upsher) are non compliant due to not following policy 8200 with cited infractions of:

• Missing or no bid documentation
• No invoices, purchase orders or requisitions provided
• No evidence of sealed bids that were publicly advertised; and
• A lack of sole-source documentation. 

Counties that are deemed non-compliant are requested to either submit documentation by a specified date to support the purchases or to ensure proper bidding requirements will be adhered to moving forward and in some instances, the OFP can request for a recovery of funds. Table 3 shows that 18 LEA’s exceeded indirect cost rate in the amount of $90,316. This amount will need to be reimbursed to the federal grant by the respective LEAs. According to a July 2023 report 134,554.08 of ESSER I funds from a total of 19 LEAs and $323,301 of ESSER II funds from 13 LEAs have been recovered.

Although 21 counties were deemed non-compliant due to at least one invoice not adhering to Policy 8200 for improper purchasing procedures, 11 of the 20 counties (Boone, Brooke, Calhoun, Doddridge, Gilmer, Greenbrier, Hampshire, Hancock, Hardy, Mineral and Preston) had multiple invoices that did not adhere to Policy 8200. Of the 21 counties listed Taylor had until August 2023 to respond, Doddridge had until June 2023 to respond, 9 LEAs (Barbour, Calhoun, Kanawha, Lewis, Mason, Mineral, Mingo, Wayne, Wetzel) stated proper bidding requirements will be followed in the future), 8 (Brooke, Gilmer, Greenbrier, Hancock, Hardy, Harrison, Jackson, Preston) provided documentation of why this occurred, and Boone responded so late the OFP “rolled it into their ESSER II/ARP monitoring.”

From the performance review eight recommendations were given: 

1. The WVDE should increase it’s monitoring and internal controls capacity by assigning more personnel to assist with cyclical monitoring. 
2. Consideration should be given by the WVDE to use the administrative portion of ESSER funds to hire additional temporary staff in the fiscal monitoring.
3. The fiscal monitoring process should be established in writing with specifics on what program monitors should examine. Such monitoring instruments should  instruct program monitors to examine if vendors are registered with the Secretary of State, list every type of purchasing violations that should be reviewed, specify key aspects of internal control that must be reviewed such as segregation of duties, the approval chain of command, the proper use of P-cards and credit cards, and other specific elements of internal control as the WVDE determines appropriate.
4. The WVDE should renew it’s communication with LEAs to re-emphasize proper purchasing procedures.
5. The WVDE should routine review purchasing practices of LEAs during non-emergency conditions to reinforce proper purchasing procedures 
6. When appropriate, the WVDE should encourage LEAs to utilize alternative procurement options designated by Policy 8200, such as educational services cooperatives and pre-existing state contracts that permit “piggybacking” to facilitate purchasing processes during states of emergency.
7. The WVDE should incorporate in Policy 8200, and in the monitoring instruments for ESSER monitoring the requirement that LEAs use vendors that are appropriately registered with the SOS and State Tax Department to be authorized to do business in West Virginia.
8. The WVDE should clearly define which section of Policy 8200 applies to LEAs for ESSER-related purchases, and for purchases made in the future under potentially similar circumstances.