North Carolina Department of Public Instruction (NC DPI) didn’t accurately report or didn’t report at all millions in federal funding from American Rescue Plan pandemic recovery funds, according to a Statewide Single Audit released by the North Carolina Office of the State Auditor last Thursday.

The first finding revealed that NC DPI didn’t submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund – Elementary School Emergency Relief (ESSER), Supporting Effective Instruction (SEI), and Title I Grants to Local Educational Agencies (Title I) programs. 

Auditors reviewed all the subawards for the ESSER and SEI programs that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. Specifically:

  • 394 ESSER subawards totaling $85.8 million were not reported. 
  • 140 SEI subawards totaling $63.0 million were not reported. 

During the audit period, the NC DPI made 240 Title I subawards totaling $527.9 million. Auditors tested a sample of 36 Title I subawards that were reported to the FSRS and found errors in all of the subawards. Specifically:  

  • 10 subawards totaling $1.5 million were not reported at all.
  • 26 subawards totaling $89.4 million were reported 34-146 days late, lacked sufficient project descriptions on how the funds were utilized, and did not agree with supporting documentation by a total of $1.3 million. In addition, seven subawards totaling $39.2 million were reported twice. 

According to NC DPI management: 

  • Due to continued technical difficulties experienced with entering subawards into FSRS, NC DPI did not attempt to report any subawards for the ESSER and SEI programs.
  • Due to technical difficulties experienced with entering the Title I subawards into FSRS, and a lack of designated staff with experience, NC DPI did not complete all entries into the system and duplicated others. 

The FFATA1 requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS no later than the end of the month following the month in which the obligation was made.

Auditors said this finding was previously reported in the 2022 Statewide Single Audit. 

They recommended that NC DPI management prioritize seeking solutions from the federal oversight agency on technical difficulties and ensure staff are properly trained and available to complete FFATA reporting as required. 

Catherine Truitt, State Superintendent of NC DPI, replied that they concur with the findings and are striving to meet FFATA reporting requirements, but they are struggling with system limitations. She said they are seeking support from the US Department of Education to aid in a more complete reporting within the FFATA system. 

A second finding in the audit showed that NC DPI didn’t accurately report Education Stabilization Fund – Elementary and Secondary School Emergency Relief (ESSER) data to the US Department of Education. During the annual reporting period, 2 272 public school units (PSUs) incurred $1.5 billion in expenditures related to the program. 

Auditors reviewed the expenditures reported in the ESSER Annual Report for a sample of 60 PSU’s and found the following errors: 

  • 20 PSUs (33%) were included with inaccurate expenditure amounts, resulting in total errors of $69 million. 
  • 29 PSUs (48%) were included without the required information, including the number of full-time equivalent (FTE) positions funded and/or the criteria used to allocate funds. 

Inaccurate reporting of ESSER data prevents the Department of Ed from monitoring the state’s progress on preventing, preparing for, and responding to coronavirus impacts on education. Additionally, any subsequent use of the data for public transparency could provide citizens with an inaccurate view of ESSER program spending.

NCDPI management told auditors that the ESSER Annual Report was prepared using data from several sources and was not reconciled to ensure accuracy. 

Federal regulations require that the NC DPI submit an annual report describing how the state and subrecipients used the awarded funds.

Auditors recommended that NC DPI management should prioritize developing and implementing detailed review procedures over the ESSER Annual Report data to ensure accuracy and should also monitor the procedures to ensure corrective action takes place. 

Truitt responded, again agreeing with the finding. She said that the data inaccuracies noted had been corrected and were submitted via email to the Department of Ed on Dec. 12. The Department of Ed told NC DPI that the data should be corrected during the upcoming correction window, scheduled for July 29, 2024, through Aug. 15, 2024. They will upload the corrected files into the submission portal during the correction period. 

She also said they have strengthened the reporting process by creating a cross-divisional team to gather, compile, and report required data and are implementing an internal data quality review prior to report submission. Truitt said her department believes implementation of these corrective actions will address the deficiencies noted.

The Statewide Single Audit also addressed deficiencies with the North Carolina Department of Commerce (NC Commerce) and North Carolina Department of Health and Human Services (NCDHHS).