Des Moines Independent Community School District's Use of Elementary and Secondary School Emergency Relief Grant Funds (ED-OIG/F24CA0170)
Summary
Final flash report ED-OIG/F24CA0170 of the U.S. Department of Education Office of Inspector General, dated September 23, 2024, on Des Moines Independent Community School District's Use of Elementary and Secondary School Emergency Relief Grant Funds, with a letter from Ben C. Sanders, Regional Inspector General for Audit. The report states that of the 20 expenditures reviewed, 17 were allowable and two totaling $164,580 were unallowable advertising and public relations costs. It states that a portion ($33,326) of the remaining expenditure totaling $666,527 lacked proof of payment and identifies a cash management issue. It states that the OIG made four recommendations and that the Iowa Department of Education did not state whether it agreed or disagreed.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
- Issuer
- U.S. Department of Education, Office of Inspector General
- Document type
- Report
- Date
- 2024-09-23
Cite this document
“Des Moines Independent Community School District's Use of Elementary and Secondary School Emergency Relief Grant Funds (ED-OIG/F24CA0170).”
U.S. Department of Education, Office of Inspector General, dated 2024-09-23. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/des-moines-school-district-esser/
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U.S. Department of Education
Office of Inspector General
Des Moines Independent
Community School District’s Use
of Elementary and Secondary
School Emergency Relief Grant
Funds
September 23, 2024
ED-OIG/F24CA0170
FLASH REPORT
NOTICE
Statements that managerial practices need improvements, as well as other conclusions
and recommendations in this report, represent the opinions of the Office of Inspector
General. The appropriate Department of Education officials will determine what
corrective actions should be taken.
In accordance with Freedom of Information Act (Title 5, United States Code,
Section 552), reports that the Office of Inspector General issues are available to
members of the press and general public to the extent information they contain is not
subject to exemptions in the Act.
UNITED STATES DEPARTMENT OF EDUCATION
OFFICE OF INSPECTOR GENERAL
Audit Services
September 23, 2024
McKenzie Snow
Director
Iowa Department of Education
400 E 14th St
Des Moines, IA 50319
Dear Director Snow:
Enclosed is our final report, “Des Moines Independent Community School District’s Use of Elementary
and Secondary School Emergency Relief Grant Funds,” Control Number ED-OIG/F24CA0170. This report
incorporates the comments you provided in response to the draft report. The U.S. Department of
Education’s policy is to expedite audit resolution by timely acting on findings and recommendations.
Therefore, if you have any additional comments or information that you believe may have a bearing on
the resolution of this flash review, you should send them directly to the following Department of
Education official, who will consider them before taking final Departmental action on this review:
Adam Schott
Delegated the Authority to Perform the Functions and Duties of the Assistant Secretary
Office of Elementary and Secondary Education
U.S. Department of Education
400 Maryland Avenue, SW
Washington, D.C. 20202
We appreciate your cooperation during this review. If you have any questions, please contact me at
(916) 213-7630 or Ben.Sanders@ed.gov.
Sincerely,
/s/
Ben C. Sanders
Regional Inspector General for Audit
Enclosure
400 MARYLAND AVENUE, S.W., WASHINGTON, DC 20202-1510
Promoting the efficiency, effectiveness, and integrity of the Department’s programs and operations.
U.S. Department of Education, Office of Inspector General
Results in Brief
Des Moines Independent Community School District’s Use of
Elementary and Secondary School Emergency Relief Grant Funds
Why the OIG Performed What Did the OIG Find?
This Work We determined that of the 20 expenditures that we reviewed, 17 were allowable and in
Congress passed three coronavirus accordance with applicable requirements. Two expenditures totaling $164,580 were
relief acts within a 1-year period that unallowable because they were for advertising and public relations costs prohibited under
provided more than $275 billion for the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
an Education Stabilization Fund to Federal Awards (2 Code of Federal Regulations part 200), and a portion ($33,326) of the
prevent, prepare for, and respond to remaining expenditure totaling $666,527 appeared to be allowable but Des Moines either
the coronavirus, which the President did not pay or adequately support proof of payment for that portion (the other $633,201
declared as a national emergency in of this expenditure was both allowable and supported with documentation). We also
March 2020. This included $189.5 identified a cash management issue related to the unsupported amount of $33,326
billion for Elementary and Secondary because Des Moines was reimbursed by the ESSER grant for that amount before it had an
School Emergency Relief (ESSER), immediate need for those funds.
funds intended to provide vital
Lastly, we found that Des Moines complied with key Federal procurement requirements,
support to States, local educational
including those covering the procurement methods to be followed and contract cost,
agencies, and schools to address the
price, and provisions, when procuring the goods or services associated with each ESSER
impact of the coronavirus. Support,
expenditure we reviewed.
in part, includes activities designed
to help students and educators What Is the Impact?
safely return to and sustain in- Payments made for prohibited advertising and public relations costs are considered
person instruction, and that address improper payments. Without documentation to support proof of payment of the $33,326
the educational inequities amount, we could not determine whether the payment was proper or improper, or made
exacerbated by the coronavirus at all. Improper payments can negatively impact the integrity of Federal programs, erode
pandemic and students’ social, public trust in a non-Federal entity such as a local educational agency (LEA), and waste
emotional, mental health, and taxpayer resources. With respect to cash management, it is critical that Des Moines and
academic needs. other LEAs not draw Federal funds before they have immediate need for the funds. The
Ensuring that ESSER funds are used U.S. Treasury incurs additional borrowing costs when an LEA draws Federal funds in
for allowable purposes is critical to advance of its immediate cash needs because the U.S. Treasury often borrows the cash
help address the needs of students needed to fund Federal programs and, as a result, incurs interest costs.
and educators. The Des Moines What Are the Next Steps?
Independent Community School We made four recommendations to address the unallowable and unsupported
District (Des Moines) was allocated expenditures and the cash management issue that we identified to ensure ESSER funds
approximately $142.9 million in are used, documented, and managed in accordance with applicable requirements.
ESSER funds to support 59 schools
serving about 30,700 students. The Iowa Department of Education (Iowa) did not state whether it agreed or disagreed
with our recommendations, but requested that we review comments submitted by Des
We performed this review to Moines describing corrective actions that it has taken to implement some of our
determine whether Des Moines recommendations. We summarize Iowa’s and Des Moines’ comments and provide our
expended ESSER grant funds for response at the end of the finding. We also provide the full text of Iowa’s and Des Moines’
allowable purposes in accordance comments at the end of the report (see Iowa Department of Education’s Comments).
with applicable requirements.
Flash Report ED-OIG/F24CA0170
Purpose
The objective of the flash review was to determine whether the Des Moines
Independent Community School District (Des Moines) expended Elementary and
Secondary School Emergency Relief (ESSER) 1 grant funds for allowable purposes in
accordance with applicable requirements. This flash review report presents the results
of our review.
Des Moines Independent Community School District
The Des Moines Independent Community School District in Iowa is the State’s largest
local educational agency (LEA) in a city setting, with 59 schools serving about
30,700 students. Des Moines was allocated approximately $142.9 million in ESSER
funds, and as of August 15, 2023, it had spent about $128.7 million (90 percent) of its
$142.9 million ESSER allocation to address the impacts of the coronavirus pandemic. In
its approved American Rescue Plan Act (ARP) ESSER plan, Des Moines noted that it
planned to use its ARP ESSER funds for evidence-based accelerated learning
interventions in literacy, mathematics, and social-emotional-behavioral health (including
mental health); cleaning supplies for LEA facilities; repairs and improvements in school
facilities to reduce the risk of virus transmission and exposure to environmental health
hazards; and summer learning and supplemental after-school program activities.
What We Did
We selected and reviewed 20 non-personnel ESSER expenditures (2 percent) from a
total population of 899 non-personnel expenditures for the period July 1, 2022, through
June 30, 2023 (review period). 2 We used a judgmental, risk-based process to select the
1
ESSER is one of multiple emergency relief funds comprising the Education Stabilization Fund, which
was first authorized and funded under the Coronavirus Aid, Relief, and Economic Security Act (March 27,
2020), and for which Congress later provided additional funding under the Coronavirus Response and
Relief Supplemental Appropriations Act (December 27, 2020) and the American Rescue Plan (March 11,
2021). Under ESSER, the U.S. Department of Education awarded grants to State educational agencies for
the purpose of providing local educational agencies with emergency relief funds to address the impacts
that the coronavirus pandemic had on elementary and secondary schools and their students.
2
We limited the scope of our review to non-personnel expenditures because they accounted for more
than half of all ESSER expenditures (non-personnel and personnel) during our review period; personnel
expenditures were excluded.
U.S. Department of Education
Office of Inspector General
ED-OIG/F24CA0170 1
20 expenditures, which represented $4,164,406 (24 percent) of the $17,097,073 in total
non-personnel ESSER expenditures during our review period.
We reviewed each expenditure to determine whether it was (1) connected to the
coronavirus pandemic (intended to prevent, prepare for or respond to the coronavirus
pandemic, including its impact on the social, emotional, mental health, and academic
needs of students); (2) an authorized use of ESSER funds under applicable law and
regulations; and (3) reasonable and necessary and otherwise permissible under the
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance, 2 Code of Federal Regulations (C.F.R.) part 200). We
also performed additional work, as needed, to determine whether Des Moines complied
with key Federal procurement requirements, specifically those covered under 2 C.F.R.
sections 200.320 (methods of procurement to be followed), 200.324 (contract cost and
price), and 200.327 (contract provisions), when procuring the goods or services
associated with each expenditure. We interviewed Des Moines officials to gain a basic
understanding of how they used ESSER funds, and their processes for approving and
monitoring ESSER expenditures.
An LEA can use ESSER funds for any activity deemed allowable under section 18003(d) of
the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136); section
313(d) of the Coronavirus Response and Relief Supplemental Appropriations Act (Public
Law 116-260); and section 2001(e) of ARP (Public Law 117-2). These activities generally
include any activity authorized by the Elementary and Secondary Education Act,
Individuals with Disabilities Education Act, Adult Education and Family Literacy Act, Carl
D. Perkins Career and Technical Education Act of 2006, and subtitle B of title VII of the
McKinney-Vento Homeless Assistance Act; as well as those listed in section A-3 of the
U.S. Department of Education’s Frequently Asked Questions document for the ESSER
and Governor’s Emergency Education Relief Programs (May 2021, updated on
December 7, 2022).
What We Found
We determined that of the 20 expenditures reviewed, 17 (85 percent) were allowable
and in accordance with applicable requirements, 2 (10 percent) were unallowable, and
1 (5 percent) was partially unsupported. Specifically, 17 expenditures were connected to
the coronavirus pandemic, authorized uses of ESSER funds under applicable law and
regulation, and reasonable and necessary and otherwise permissible under Uniform
Guidance; and thus allowable. Two expenditures, totaling $164,580, were unallowable
because they were advertising and public relations costs designed solely to promote the
LEA, costs that are prohibited under 2 C.F.R. section 200.421(e)(4). The remaining
expenditure for heating, ventilation, and air conditioning (HVAC) upgrades, appeared to
be allowable based on our review of the contracts provided. However, Des Moines did
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ED-OIG/F24CA0170 2
not maintain adequate documentation to support proof of payment for a portion
($33,326) of this $666,527 expenditure. In addition, we found that Des Moines complied
with the key procurement requirements covered under 2 C.F.R. sections 200.320
(methods of procurement to be followed), 200.324 (contract cost and price), and
200.327 (contract provisions) when procuring the goods or services associated with
each expenditure. See the following table for the summary results of our expenditure
testing.
Table. Summary Results of Expenditure Testing
- Allowable Unallowable Unsupported Total
Number of 17 2 1 20
Expenditures (85 percent) (10 percent) (5 percent) (100 percent)
Dollar
$3,966,500 3 $164,580 $33,326 4 $4,164,406
Amount of
(95 percent) (4 percent) (1 percent) (100 percent)
Expenditures
Unallowable Expenditures
Des Moines improperly charged $164,580 to the ARP ESSER grant for two expenditures
for advertising and public relations consultant services as part of a marketing campaign
designed explicitly to compete with other educational providers for students in the
greater Des Moines metro area. Des Moines issued a request for proposals for
marketing and advertising services in December 2021 that did not make any reference
to the coronavirus pandemic and its impact on students, including, for example,
whether such services were necessary to address chronic absenteeism in the district or
otherwise enable it to respond to the social, emotional, mental health, physical health,
safety, and academic needs of its students. The executed contract also did not note how
this use of funds would help the district prevent, prepare for, or respond to the
coronavirus pandemic. The Uniform Guidance provides for specific circumstances under
which costs for advertising and public relations are allowable, and U.S. Department of
Education guidance on the ESSER program identifies various types of outreach to
students and families as permissible uses of grant funds. However, based on our review
3
This amount includes the portion ($633,201) of the unsupported expenditure that we determined was
allowable.
4
The total dollar amount for the unsupported expenditure was $666,527. Of this amount, we
determined that $633,201 was allowable and $33,326 was unsupported.
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ED-OIG/F24CA0170 3
of all available information, we concluded that the two expenditures were related solely
to promoting Des Moines and not to meeting grant requirements or addressing program
goals.
According to 2 C.F.R. section 200.421(e)(4), the costs of advertising and public relations
designed solely to promote the non-Federal entity are unallowable. Therefore, these
expenditures, which were part of a larger $400,000 contract with a vendor, should not
have been charged to the ARP ESSER grant or any other Federal grant. At the exit
briefing in June 2024, Iowa Department of Education’s (Iowa) Administrative Consultant
for Federal Programs told us that he was unsure why Iowa approved these two
expenditures for reimbursement and noted that Iowa would look into this matter.
Although no other costs for this contract were improperly charged to the ARP ESSER
grant during our review period, there may have been improper charges to one of the
LEA’s ESSER or other Federal grants in periods not covered by our review. Improper
payments can negatively impact the integrity of Federal programs, erode public trust in
non-Federal entities such as LEAs, and waste taxpayer resources.
Unsupported Expenditure
Des Moines either did not pay or adequately support proof of payment for a portion
($33,326) of one expenditure, totaling $666,527, for HVAC upgrades. The unsupported
amount of $33,326 represents costs that Des Moines charged to the ARP ESSER grant
and was reimbursed for but did not immediately or ever pay to the vendor. According to
LEA officials, Des Moines could retain (withhold) a certain amount from the vendor in
the form of a retainage fee until the vendor completed its contractual obligations. On
September 28, 2022, Des Moines was reimbursed $33,326 for a retainage fee that it
withheld from the vendor. A Des Moines Public Schools Capital Improvement
Coordination specialist told us that as of March 29, 2024, Des Moines had not paid
$33,326 to the vendor and we therefore concluded that this cost was unsupported. The
regulations at 2 C.F.R. section 200.400(d), in part, state that the accounting practices of
the non-Federal entity must provide adequate documentation to support costs charged
to the Federal award.
Without documentation to support proof of payment of the $33,326 amount, we could
not determine whether the payment was proper or improper, or made at all. As
discussed in the following section, there was also a cash management issue related to
this retainage fee.
Cash Management Issue
Contrary to 2 C.F.R. section 200.305(b), Des Moines did not minimize the time elapsing
between receipt of ARP ESSER grant funds for the retainage fee and disbursement of
those funds to the vendor. Des Moines received ARP ESSER funds for a retainage fee of
$33,326 in late September 2022, but acknowledged that it still had not disbursed
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ED-OIG/F24CA0170 4
$33,326 to the vendor as of late March 2024 (about 18 months later). At the exit
conference, Des Moines’ Chief Financial Officer told us that the funds have been
maintained in an operating account that earns interest.
Non-Federal entities other than States must minimize the time elapsing between the
transfer of funds from the U.S. Treasury or pass-through entity and the disbursement by
the non-Federal entity (2 C.F.R. section 200.305(b)). The non-Federal entity must
maintain advance payments of Federal awards in interest-bearing accounts, unless
certain conditions apply (for example, if the best reasonably available interest-bearing
account would not be expected to earn interest in excess of $500 per year on Federal
cash balances) (2 C.F.R. section 200.305(b)(8)). Interest earned amounts up to $500 per
year may be retained by the non-Federal entity for administrative expenses. Any
additional interest earned on Federal advance payments deposited in interest-bearing
accounts must be remitted annually to the Department of Health and Human Services
Payment Management System (2 C.F.R. section 200.305(b)(9)).
It is critical that Des Moines and other LEAs do not draw Federal funds before they have
immediate need for the funds. The U.S. Treasury incurs additional borrowing costs when
an LEA draws Federal funds in advance of its immediate cash needs because the U.S.
Treasury often borrows the cash needed to fund Federal programs and, as a result,
incurs interest costs.
What We Recommend
We recommend that the Assistant Secretary for the Office of Elementary and Secondary
Education require Iowa to require Des Moines to—
1. Return to the U.S. Department of Education the $164,580 that Des Moines
improperly charged to the ARP ESSER grant for LEA advertising and public relations
or reallocate the funds to other allowable costs. Identify any additional improper
charges to ESSER grants for LEA advertising and public relations, including those
made during periods not covered by our review, and if applicable, return the funds
to the U.S. Department of Education or reallocate them to other allowable costs.
2. Provide documentation to support payment of the unsupported portion of the
HVAC upgrades expenditure, return to the U.S. Department of Education the
$33,326 in ARP ESSER grant funds, or reallocate the funds to other allowable costs.
3. Calculate the interest earned (actual or imputed) on any ESSER grant funds that
were retained (withheld) and not immediately paid to vendors, and if applicable,
ensure that the correct amount of interest is returned to the Federal government in
accordance with 2 C.F.R. section 200.305(b)(9).
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ED-OIG/F24CA0170 5
4. Ensure that LEA officials responsible for making or reviewing and approving
purchases receive sufficient training on Federal rules and regulations related to
grant administration and management, particularly those addressing allowability,
documentation requirements, and cash management.
Iowa’s Comments
Iowa did not state whether it agreed or disagreed with our recommendations. Iowa
provided feedback submitted by Des Moines and requested that we review it. Des
Moines described the corrective actions it took for Recommendations 1 and 2, stating
that it reallocated the ARP ESSER funds spent on LEA advertising and public relations
($164,580) and the unsupported portion of HVAC upgrades ($57,939) 5 to payroll costs
for virtual instruction and cleaning supplies and materials, respectively (other allowable
costs). Des Moines further stated that it removed as expenses all fiscal year (FY) 2024
ARP ESSER transactions for advertising and, therefore, did not claim any advertising
costs under ARP ESSER in FY 2024.
OIG Response
Des Moines’ corrective actions, if implemented, are partially responsive to
Recommendation 1 and fully responsive to Recommendation 2. Des Moines’
reallocation of $164,580 in ARP ESSER funds spent on LEA advertising and public
relations costs to payroll costs for virtual instruction is responsive to the first part of
Recommendation 1. However, its corrective actions only partially address the second
part of Recommendation 1, which recommends that Des Moines identify any additional
improper charges to ESSER grants for LEA advertising and public relations made during
periods not covered by our review, and if applicable, return the funds to the U.S.
Department of Education or reallocate them to other allowable costs. Although Des
Moines noted that it removed as expenses all ARP ESSER transactions for advertising in
FY 2024 (the fiscal year after the end of our audit period), it did not address in its
feedback whether it reviewed and identified any ESSER transactions for advertising and
public relations that may have occurred prior to the start of our audit period (that is, in
FYs 2021 and 2022). If it has not already done so, and to ensure that its actions are fully
responsive to Recommendation 1, Des Moines should also review expenditure data for
FYs 2021 and 2022, and take appropriate corrective action if it identifies any additional
improper charges to ESSER grants for LEA advertising and public relations. In addition,
5
This amount comprises the $33,326 in unsupported costs that we identified in this report and an
additional $24,613 in costs that were not identified as unsupported costs in this report. When evaluating
whether Des Moines’ corrective actions, if implemented, were responsive to Recommendation 2, we
limited our focus to the $33,326 in unsupported costs that we identified in this report.
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Des Moines still needs to take appropriate corrective action to address
Recommendations 3 and 4, which were not addressed in the comments it submitted.
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Appendix A. Scope and Methodology
Our review covered Des Moines’ non-personnel ESSER expenditures from July 1, 2022,
through June 30, 2023 (review period). We limited our scope to non-personnel
expenditures because they accounted for more than half of all ESSER expenditures (non-
personnel and personnel) during our review period. We limited our internal control
work to gaining a basic understanding of how Des Moines’ accounting system was used
to account for ESSER funds and how to interpret accounting codes. We conducted our
review remotely from February 2024 through June 2024. We discussed the results of
our review with Des Moines and Iowa officials on June 12, 2024.
Sampling Methodology
To determine whether Des Moines expended ESSER grant funds for allowable purposes
in accordance with applicable requirements, we used a judgmental, risk-based process
to select 20 non-personnel expenditures (2 percent) for review from a total population
of 899 non-personnel expenditures for the period July 1, 2022, through June 30, 2023.
We selected the 20 expenditures using one or a combination of high-dollar amount,
duplicate amount, high indirect cost amount, no vendor name, and unclear transaction
description. Of the 20 expenditures selected, 11 expenditures were high-dollar
transactions exceeding $100,000. The 20 expenditures represented $4,164,406
(24 percent) of the $17,097,073 in total non-personnel ESSER expenditures during our
review period. The results of our testing apply only to the expenditures reviewed and
cannot be projected to the universe of non-personnel ESSER expenditures.
Use of Computer-Processed Data
We relied, in part, on computer-processed data (LEA expenditure data) from Des
Moines’ accounting system. Des Moines provided us with a spreadsheet that contained
its ESSER expenditure data from July 1, 2022, through June 30, 2023. To assess the
completeness of the expenditure data in the spreadsheet, we compared total
expenditures in the spreadsheet to total expenditures in the four quarterly ESSER
expenditure reports that Des Moines submitted to Iowa for our review period. To assess
the reliability of the expenditure data in the spreadsheet, we reviewed supporting
documentation, such as invoices and proof of payment, for the 20 expenditures covered
by our review. We did not identify any issues and concluded that the expenditure data
in the spreadsheet were reliable for their intended use.
Compliance with Standards
We conducted our work in accordance with OIG quality control standards and the
Council of the Inspectors General on Integrity and Efficiency’s “Quality Standards for
Federal Offices of Inspector General,” which require that we conduct our work with
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integrity, objectivity, and independence. We believe that the information obtained
provides a reasonable basis for our conclusions.
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Office of Inspector General
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Appendix B. Acronyms and Abbreviations
ARP American Rescue Plan Act
C.F.R. Code of Federal Regulations
Des Moines Des Moines Independent Community School District
ESSER Elementary and Secondary School Emergency Relief
FY fiscal year
HVAC heating, ventilation, and air conditioning
Iowa Iowa Department of Education
LEA local educational agency
Uniform Guidance Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards
U.S. Department of Education
Office of Inspector General
ED-OIG/F24CA0170 10
Iowa Department of Education’s Comments
U.S. Department of Education
Office of Inspector General
ED-OIG/F24CA0170 11
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