Report 2021-614 All Recommendation Responses

Report 2021-614: California Department of Education: It Needs to Provide Better Oversight to Ensure That Local Educational Agencies Promptly and Effectively Use Federal COVID‑19 Funds (Release Date: October 2021)

Recommendation #1 To: Education, Department of

To ensure that LEAs submit required spending data so that it can effectively oversee their use of ESSER and GEER funds, Education should continue to track the number of LEAs that fail to submit their quarterly spending reports and perform targeted outreach to these LEAs.

Education continues to track LEAs that fail to submit spending reports and provides targeted outreach as needed. Additionally, Education recently took the following steps in advance of the most recent reporting period (Winter 2021):

o On November 29, 2021, Education notified all LEAs of the Winter 2021 Reporting Cycle, including the due date.

o On December 2, 2021, Education notified LEAs who failed to report during the Fall 2021 Reporting Cycle that they must do so for the Winter 2021 Reporting Cycle.

o On December 6, 2021, Education also notified LEAs that did not fully complete all reports for the Fall 2021 Reporting Cycle that they must be completed for the Winter 2021 Reporting Cycle.

o Education completed follow-up telephone calls to the LEAs who submitted incomplete documentation or were identified as non-reporters, reminding them of the requirement to report and that failure to do so would result in a loss of their next quarterly apportionment of funding. LEAs were also informed that any expenditures that were not reported in Fall 2021 should be incorporated into their Winter 2021 report to ensure complete reporting from the beginning of the performance period to the end of the reporting period.

o Education worked with the California County Superintendents Educational Services Association - External Services Subcommittee (ESSCO) to communicate with LEAs and ensure they report on time.

California State Auditor's Assessment of Status: Fully Implemented

Recommendation #2 To: Education, Department of

To ensure that LEAs submit required spending data so that it can effectively oversee their use of ESSER and GEER funds, Education should seek additional resources and staffing as necessary to ensure that all LEAs submit required spending reports.

Education hired two additional limited term staff, who began working in June 2021, to assist with administering various emergency relief funds, including existing efforts to encourage LEAs to complete required reports. The addition of these two new staff have already proven effective towards CDE's effort to reduce the number of LEAs that failed to report in Summer 2021 as compared to Spring 2021. Education has sought to make these positions permanent, which is reflected in the Governor's budget.

California State Auditor's Assessment of Status: Fully Implemented

Recommendation #3 To: Education, Department of

To ensure that LEAs effectively use their ESSER and GEER funds before the spending deadlines to mitigate the effects of the pandemic on students, Education should develop a robust process for tracking LEAs' spending of these funds. As part of this process, Education should regularly assess LEAs' spending data to identify those that may be in jeopardy of not spending all of their allocations before the deadlines. This assessment should include projecting LEAs' future spending based on their spending patterns.

Education has fully implemented the CSA's recommendation to create a robust process for tracking LEAs' spending of ESSER and GEER funds to identify those LEAs that may be in jeopardy of not fully expending funds by the deadlines. Education used this robust process to regularly assess LEAs obligation and expenditure of ESSER I and GEER I funds and will continue to use this process to regularly assess ESSER II, GEER II, and ESSER III funds to ensure they are fully obligated by the applicable deadlines. Additionally, Education's assessment includes projecting LEAs future spending based on previous spending patterns.

To date, LEAs have reported obligating/expending 99.82% of GEER I and 99.99% of ESSER I funds.

Based on this information, Education considers this recommendation fully implemented and no further updates will be provided.

California State Auditor's Assessment of Status: Pending

Education did not provide any documentation to support that it has fully implemented our recommendation.

Education continues to assess and communicate with LEAs on spending data after each Quarterly Reporting period. Once the Spring 2022 Reporting Cycle ends, Education will reach out to LEAs with a remaining ESSER I and/or GEER I balance to provide guidance on strategizing future spending of funds to the fullest extent possible. Additionally, Education continues to provide technical assistance and updates to LEAs on the latest guidance from the U.S. Department of Education regarding allowable uses of funds; Education continues to share best practices that highlight how other LEAs are using funding for the benefit of their students in their FAQ section on their website at https://www.cde.ca.gov/fg/cr/esserfaqs.asp.

California State Auditor's Assessment of Status: Pending

Although Education's response does not directly address our recommendation, it provided additional documentation upon our request. However, the documentation that Education provided does not demonstrate efforts to project unspent ESSER and GEER funds by LEAs. Specifically, Education did not separately project unspent funds by LEAs specifically for ESSER and GEER programs. Rather, the documentation it provided only showed projected spending for ESSER I. Further, when projecting each LEA's spending rate, it combined the spending for ESSER I and the Learning Loss Mitigation Funds that had a spending deadline of June 2021. As we state in the report, because of the earlier spending deadlines, LEAs prioritized spending their allocations from the State general fund and the Coronavirus Relief Fund over ESSER and GEER funds. By including the spending for the Learning Loss Mitigation Funds and excluding spending from ESSER II, ESSER III, and GEER in its projections for the latest two quarters, Education overstates LEAs' ability to spend ESSER and GEER funds before their spending deadlines. As we recommended in the report, we believe that it is more appropriate for Education to track and project spending for each individual program to identify LEAs that may be at risk of not spending all funds for that program.

As previously noted, Education began assessing LEAs spending data of the funds at issue in the Fall of 2020, after each reporting period; analyzing both the aggregate and individual spending of each LEA by fund to determine trends in spending and remaining balances. On November 16, 2021, Education sent emails to every LEA with a remaining ESSER I and/or GEER I balance, which notified them that Education would be committed to helping them with spending down funds. Education will continue to monitor the use of funds, and will provide technical assistance to LEAs, as it did with all of the other Federal stimulus money to ensure that LEAs fully expend the funds. It should be noted that LEAs expended 99.75% of Coronavirus Relief Funds, which clearly demonstrates the LEAs ability to appropriately expend funds during the period of availability.

Education confirms that it has completed projections following each reporting period and will continue to do so for future reporting periods. Education adopted a projection methodology that takes into consideration the uniqueness of each funding source, expiration deadlines, and allowable uses to develop complete projections. Education will continue to utilize the practice of combined funding projections made based on total spending, which provides the most complete picture of LEAs' total relief fund spending potential. All relevant spending must be considered in order to make meaningful determinations regarding an LEAs ability to fully expend their funds.

California State Auditor's Assessment of Status: Pending

The documents that Education provided do not demonstrate efforts to project unspent ESSER and GEER funds by LEAs. Specifically, Education did not separately project unspent funds by LEAs specifically for ESSER and GEER programs. The documents show that Education used the spending data for the summer 2021 quarter to project that 443 LEAs will have $223 million in unspent ESSER and GEER funds combined as of September 30, 2022. Further, for projections of unspent funds for the two subsequent quarters, it combined the spending for ESSER and the Learning Loss Mitigation Funds that had a spending deadline of June 2021. As we state in the report, because of the earlier spending deadlines, LEAs prioritized spending their allocations from the State general fund and the Coronavirus Relief Fund over ESSER and GEER funds. By including the spending for the Learning Loss Mitigation Funds and excluding spending from GEER in its projections for the latest two quarters, Education overstates LEAs' ability to spend ESSER and GEER funds before their spending deadlines. As we recommend in the report, we believe that it is more appropriate for Education to track and project spending for each individual program to identify LEAs that may be at risk of not spending all funds for that program.

Recommendation #4 To: Education, Department of

To ensure that LEAs effectively use their ESSER and GEER funds before the spending deadlines to mitigate the effects of the pandemic on students, Education should develop a robust process for tracking LEAs' spending of these funds. As part of this process, Education should follow up with identified LEAs to determine whether they have plans for spending all of their funds before the deadlines and whether these plans are reasonable.

As previously noted, Education continues to be committed to ensuring that LEAs spend ESSER and GEER funds by the identified deadlines. To demonstrate this commitment, Education reached out by email to every LEA with an ESSER I or GEER I balance, beginning in Fall 2021, and at the end of each subsequent quarter, offered support in strategizing how to correctly and effectively spend the funds, and provided an abundance of key resources to assist in guiding LEAs. Additionally, Education encouraged LEAs to attend all available trainings, which guided them on proper planning and utilization of ESSER and GEER funds.

Furthermore, Education contacted LEAs with unspent ESSER I and GEER I balances to discuss expenditure plans and future spending deadlines. Education also sent instructions to all LEAs on upcoming reporting and obligation deadlines.

To date, LEAs have reported obligating/expending 99.82% of GEER I and 99.99% of ESSER I funds.

Lastly, Education's subrecipient monitoring and management of ESSER and GEER funds are in compliance with Title 2 Code of Federal Regulations Part 200, as evidenced by our recent United States Department of Education Performance Review. Therefore, Education has implemented the recommendation and will not be providing any additional updates.

California State Auditor's Assessment of Status: Pending

Education did not provide documentation to support that it has fully implemented this recommendation.

As previously noted, Education is committed to ensuring that LEAs spend this funding before or by the identified deadlines. To demonstrate this commitment, Education has reached out to every LEA with an ESSER I or GEER I balance, offered support in strategizing how to correctly and effectively spend the funds, and provided an abundance of key resources to assist in guiding LEAs. Additionally, Education encouraged LEAs to attend the WestED trainings, which guided them on proper planning and utilization of ESSER and GEER funds. LEAs have also communicated to Education that these funds have been obligated and that they will meet the upcoming September 30th deadline.

Currently, Education has determined that it is not feasible to review every LEA spending plan, since the U.S. Department of Education (ED) has signaled that there will be exceptions provided to LEAs on a per project basis, allowing them an extended liquidation period of up to an additional 18 months (https://aasa.org/uploadedFiles/AASA_Blog_The_Total_Child(1)/AASA%20Response%20Letter%205_13_22.pdf); however, ED has yet to release a formal process or any guidance for this process. Additionally, for LEAs experiencing common supply-chain issues, it is difficult to determine whether a plan for spending funds is reasonable.

Once ED provides guidance on the process for requesting an extended liquidation period, Education will follow-up with LEAs that have any remaining funding to reassess where they are in spending funds and to provide any necessary guidance and technical assistance.

California State Auditor's Assessment of Status: Pending

Education continues to assess and communicate with LEAs on spending data after each Quarterly Reporting period. Once the Spring 2022 Reporting Cycle ends, Education will reach out to LEAs with a remaining ESSER I and/or GEER I balance to provide guidance on strategizing future spending of funds to the fullest extent possible. Additionally, Education continues to provide technical assistance and updates to LEAs on the latest guidance from the U.S. Department of Education regarding allowable uses of funds; Education also continues to share best practices that highlight how other LEAs are using funding for the benefit of their students in their FAQ section on their website at https://www.cde.ca.gov/fg/cr/esserfaqs.asp.

Furthermore, Education has partnered with WestEd to offer an interactive series of virtual training sessions focused on strategically using one-time federal relief funds in combination with ongoing resources to accelerate equitable learning opportunities and support. The training sessions focus on strategies for leveraging and investing one-time funding in human resources, including navigating staffing shortages, and planning for staffing with declining enrollment. Best practices are also provided during the training, along with the following:

- resources and strategies for communicating to education partners and community stakeholders;

- opportunities to connect with colleagues from across the state to gain practical knowledge; and

- strategies for future planning.

The first sessions were offered on February 16, 18, and 23, 2022. The second and third sessions in the series will be offered starting in April 2022.

California State Auditor's Assessment of Status: Pending

Although we are encouraged that Education has taken some steps to provide guidance to LEAs, Education's response does not address our recommendation to work with LEAs to determine whether they have plans for spending all of their funds before the deadlines and whether these plans are reasonable. As we stated in our report, our interviews with some LEAs indicated that early planning by their management to prioritize and spend funds was the main reason for their higher spending. As such, we believe it is important for Education to identify LEAs that may be at risk of not spending all their funds before the deadlines and work with those LEAs to determine that they have adequate plans to spend all funds before the deadlines.

Education has been proactive in working with LEAs to provide support in spending their funding. Specifically, Education has undertaken the following: 1) On October 28, 2021 and November 4, 2021, Education and Brustein and Manasevit PLLC conducted a 2-day ESSER Funding Workshop, which was available to all LEAs, and the resources are available to all LEAs that were unable to attend. During the workshop, LEAs were provided information regarding funding and examples of allowable expenditures; questions were answered and Education's contact information was offered during the workshop to allow for more targeted, direct support of spending; 2) On November 3, 2021, Education presented at the Safe Schools for All Statewide Collaborative hosted by the California Department of Public Health to provide examples of allowable uses of these funds, particularly for capital expenditures; and 3) On January 4, 2022, Education led an ESSER/GEER Strategy Session Workshop to provide LEAs with information on allowable uses of funds, facilitated a Q and A session, and provided examples of best practices on how funds have been used successfully by other LEAs.

Additionally, Education conducted outreach to LEAs with unspent funds, regardless of their projected end balances, reminding them of the timelines and offering support with questions on allowability. On November 16, 2021, Education sent e-mails with this information to the LEAs with a balance of ESSER I and/or GEER I funds. Education also provides information to LEAs on any new guidance from the U.S. Department of Education as it becomes available.

Best practices for spending remaining funds has also been posted on Education's Federal Stimulus FAQ web page.

California State Auditor's Assessment of Status: Pending

Although we are encouraged that Education has taken some steps to provide guidance to LEAs, Education's response does not address our recommendation to work with LEAs to determine whether they have plans for spending all of their funds before the deadlines and whether these plans are reasonable. As we stated in our report, our interviews with some LEAs indicated that early planning by their management to prioritize and spend funds was the main reason for their higher spending. As such, we believe it is important for Education to work with LEAs to determine that they have adequate plans to spend all funds before the deadlines.

Recommendation #5 To: Education, Department of

To ensure that LEAs effectively use their ESSER and GEER funds before the spending deadlines to mitigate the effects of the pandemic on students, Education should develop a robust process for tracking LEAs' spending of these funds. As part of this process, Education should identify the best practices that have enabled some LEAs to spend their ESSER and GEER funds quickly and effectively. It should communicate those practices to all LEAs to help them maximize their use of these funds.

Education continues to provide technical assistance, best practices, and guidance to LEAs, assisting them with spending their relief funding. As previously mentioned, Education presented more than 30 webinars to provide best practices and answer questions regarding allowable uses of the funds. Education also provides technical assistance to individual LEAs through its EDReliefFunds e-mail and regularly updates Federal Stimulus FAQs web page.

Additionally, Education has undertaken the following: 1) On October 28, 2021 and November 4, 2021, Education and Brustein and Manasevit PLLC provided a 2-day ESSER Funding Workshop, which was available to all LEAs, and the resources are available to all LEAs that were unable to attend. During the workshop, LEAs were provided information regarding funding, best practices, and examples of allowable expenditures; questions were answered and Education's contact information was offered during the workshop to allow for more targeted, direct support in fund spending; 2) On November 3, 2021, Education presented at the Safe Schools for All Statewide Collaborative hosted by the California Department of Public Health to provide examples of allowable uses of these funds, particularly for capital expenditures; and 3) On January 4, 2022, Education led an ESSER/GEER Strategy Session Workshop to provide LEAs with information on allowable uses, facilitated a Q and A session, and provided examples of best practices on how funds have been used successfully by other LEAs. In addition, best practices for spending remaining funds has also been posted on Education's Federal Stimulus FAQ web page.

As Education previously stated, there is no requirement to expend funds quickly; per the federal requirement, a state cannot take any action that decreases the amount of time an LEA has to spend the funds to which it is entitled.

California State Auditor's Assessment of Status: Fully Implemented

Recommendation #6 To: Education, Department of

To sufficiently monitor LEAs' use of ESSER and GEER funds, Education should establish a policy that specifies, at a minimum, the number of LEAs it will select for monitoring reviews to obtain adequate assurance that LEAs are spending funds in accordance with requirements. Further, Education should follow the new policy to ensure that it selects the appropriate number of LEAs to monitor.

Education continues to not concur with the CSA's recommendation to create a new policy identifying a minimum number of LEAs for monitoring reviews. Instead, Education will continue to conduct its 50 federal stimulus monitoring reviews during 2021-22, as planned, and utilize its annual risk assessment to best direct its monitoring resources in the future.

Therefore, no further updates will be provided for this recommendation.

California State Auditor's Assessment of Status: Will Not Implement

We believe that establishing a policy that specifies the number of LEAs to monitor each year will help Education ensure that it consistently reviews an adequate number of LEAs to gain greater assurance that LEAs use ESSER and GEER funds appropriately. This policy is especially important considering that LEAs will receive additional—and in most cases, significantly larger—allocations of ESSER and GEER funds, generally starting in fiscal year 2021-22.

Recommendation #7 To: Education, Department of

To ensure that it monitors LEAs that may be at higher risk of misinterpreting spending requirements or misusing ESSER funds, Education should, when selecting LEAs for monitoring, use the data that LEAs submit to identify those that have reported significant amounts of spending of ESSER funds in the category of Other Activities.

Education continues to not concur with the CSA's recommendation to select LEAs for monitoring that have reported large amounts of spending in the "other activities" category. Specifically, Education does not believe that reporting large amounts of expenditures in this category is a valid indicator for misuse of funds, nor is there any evidence to support that it is.

Therefore, no further updates will be provided for this recommendation.

California State Auditor's Assessment of Status: Will Not Implement

Education does not require LEAs to provide documentation to support the spending data they report. As a result, Education lacks assurance that LEAs actually use the Other Activities category for its intended purpose. As we state in the report, miscategorized spending hinders Education's and U.S. ED's ability to accurately evaluate how LEAs are spending the funds and what results to expect from such spending.

Recommendation #8 To: Education, Department of

To ensure that it monitors LEAs that may be at higher risk of misinterpreting spending requirements or misusing ESSER funds, Education should, as part of its monitoring, select and review transactions that LEAs have reported in the Other Activities category for the ESSER program to determine whether the LEAs have used these funds for purposes allowed under federal law.

Education continues to not concur with the CSA's recommendation. During its monitoring, Education selects and reviews a sample of expenditures in each of the reported categories to ensure that LEAs are spending ESSER funds appropriately. Education considers its current approach as the strongest in identifying unallowable expenditures and misuse of funds.

Therefore, no further updates will be provided for this recommendation.

California State Auditor's Assessment of Status: Will Not Implement

As we described in the report, LEAs have a number of categories to report their expenditures in; however, as of June 30, 2021, LEAs had collectively reported 40 percent, or $438 million, of their $1.1 billion in ESSER I spending in the Other Activities category. In fact, as we described in the report, some of the items and activities that one LEA we contacted—Los Angeles Unified School District—included in the Other Activities category met the criteria for other distinct spending categories, such as purchase of cleaning supplies. As we stated in the report, miscategorized spending hinders Education's and U.S. ED's ability to accurately evaluate how LEAs are spending the funds and what results to expect from such spending.

Recommendation #9 To: Education, Department of

To ensure that it monitors LEAs that may be at higher risk of misinterpreting spending requirements or misusing ESSER funds, Education should, if it finds that the LEAs it monitors have improperly categorized their spending in Other Activities, provide guidance to all LEAs to clarify the types of spending that they should include in this category.

Education continues to not concur with the CSA's recommendation that improperly categorizing spending indicates that LEAs are misusing federal stimulus funds. As previously indicated, Education will continue to monitor the reporting of ESSER and GEER expenditures and provide ongoing guidance, technical assistance and training to all LEAs on the appropriate use and reporting of ESSER and GEER funds.

Therefore, no further updates will be provided for this recommendation.

California State Auditor's Assessment of Status: Will Not Implement

As we described in the report, LEAs have a number of categories to report their expenditures in; however, as of June 30, 2021, LEAs had collectively reported 40 percent, or $438 million, of their $1.1 billion in ESSER I spending in the Other Activities category. In fact, as we described in the report, some of the items and activities that one LEA we contacted—Los Angeles Unified School District—included in the Other Activities category met the criteria for other distinct spending categories, such as purchase of cleaning supplies. As we stated in the report, miscategorized spending hinders Education's and U.S. ED's ability to accurately evaluate how LEAs are spending the funds and what results to expect from such spending.

All Recommendations in 2021-614

Agency responses received are posted verbatim.