Tennessee Department of Education's Administration and Oversight of Emergency Assistance to Nonpublic Schools Grant Funds (ED-OIG/A23NY0148)
Summary
Final Audit Report ED-OIG/A23NY0148 of the U.S. Department of Education Office of Inspector General, dated November 19, 2024, addressed to Governor Bill Lee and Lizzette Reynolds, Commissioner of Education, on the Tennessee Department of Education's administration and oversight of Emergency Assistance to Nonpublic Schools (EANS) grant funds. It reports that Tennessee was awarded about $146.5 million in EANS funds and that its application processes adequately assessed nonpublic schools' eligibility despite not having written procedures. It identifies oversight weaknesses: drawdowns of CRRSA EANS funds not always supported by expenditures, no fully implemented policies for recording assets purchased with EANS funds, and no prior approval for certain expenditures. It makes four recommendations, and Tennessee agreed with them.
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- Issuer
- U.S. Department of Education, Office of Inspector General
- Document type
- Report
- Date
- 2024-11-19
Cite this document
“Tennessee Department of Education's Administration and Oversight of Emergency Assistance to Nonpublic Schools Grant Funds (ED-OIG/A23NY0148).”
U.S. Department of Education, Office of Inspector General, dated 2024-11-19. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/tennessee-eans-administration-oversight/
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U.S. Department of Education
Office of Inspector General
Tennessee Department of
Education’s
Administration and
Oversight of Emergency
Assistance to Nonpublic
Schools Grant Funds
November 19, 2024
ED-OIG/ A23NY0148
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
November 19, 2024
Governor Bill Lee
State Capital, 1st Floor
600 Dr. Martin L. King, Jr. Blvd.,
Nashville, TN 37243
Lizzette Reynolds
Commissioner of Education
Tennessee Department of Education
710 James Robertson Parkway,
Nashville, TN 37243
Dear Governor Lee and Commissioner Reynolds:
Enclosed is our final report, “Tennessee Department of Education’s Administration and Oversight of
Emergency Assistance to Nonpublic Schools Grant Funds,” Control Number ED-OIG/ A23NY0148. This
report incorporates the comments you provided in response to the draft report. The U.S. Department of
Education’s policy is to expedite 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 audit, you should send them directly to the following Department of Education
official, who will consider them before taking final Departmental action on this audit:
Adam Schott
Principal Deputy Assistant Secretary 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
We appreciate your cooperation during this review. If you have any questions, please contact me at
(214) 661-9545 or Myra.Hamilton@ed.gov.
Sincerely,
/s/
Myra Hamilton
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
Tennessee Department of Education’s Administration and Oversight of
Emergency Assistance to Nonpublic Schools Grant Funds
Why the OIG Performed What Did the OIG Find?
This Work Tennessee designed and implemented application processes that adequately assessed
In response to the coronavirus nonpublic schools’ eligibility for EANS-funded services or assistance and complied with
disease 2019 pandemic (COVID-19), other applicable requirements despite not having written procedures. However, we
Congress passed three relief acts identified several weaknesses in Tennessee’s oversight of its EANS programs that could be
within a 1-year period that provided improved.
more than $275 billion for an
• Tennessee did not ensure that drawdowns of CRRSA EANS funds were always
Education Stabilization Fund to
supported by CRRSA EANS expenditures.
prevent, prepare for, and respond to
the COVID-19, including $5.5 billion • Tennessee had not fully implemented policies and procedures for maintaining a
for the Emergency Assistance to record of assets purchased with EANS funds.
Nonpublic Schools (EANS) program.
• Tennessee did not obtain prior approval for certain EANS expenditures.
The purpose of the EANS programs is
to provide services or assistance to What Is the Impact?
eligible nonpublic schools to address It is critical that Tennessee adequately conduct oversight of Federal funds to ensure that
educational disruptions caused by the funds are being expended in accordance with applicable Federal laws and regulations.
the COVID-19 emergency. Specifically, if Tennessee does not obtain sufficient supporting documentation prior to the
withdrawal of Federal funds, it may lead to inaccurate accounting of program
Effective application and oversight expenditures, potentially resulting in challenges related to cash management and
processes help ensure that EANS financial or performance reporting.
funds are appropriately allocated
and used for allowable purposes in Additionally, by not maintaining an inventory of assets purchased with EANS funds from
order to help eligible nonpublic the beginning of the grant period, Tennessee may not have maintained public control of
schools address the needs of those assets, resulting in an increased risk that some assets will not be accounted for; not
students, families, and educators. be used for purposes related to COVID-19 or other permitted Federal program activities;
The Tennessee Department of or be lost, or unused.
Education (Tennessee) was awarded Finally, because Tennessee did not obtain prior written approval from the U.S.
about $146.5 million in EANS funds. Department of Education for equipment purchases that were over the $5,000 threshold,
Tennessee may have used EANS funds to purchase equipment that could have been
Our objectives were to determine
unallowable; and there is a risk that Federal funds could be used for capital expenditure
whether Tennessee designed and
purchases.
implemented (1) application
processes that adequately assessed What Are the Next Steps?
nonpublic schools’ eligibility for We made four recommendations to address the weaknesses we identified in Tennessee’s
EANS-funded services or assistance oversight of its EANS programs. Tennessee agreed with our recommendations, and
and complied with other applicable described actions it has implemented. In addition, Tennessee provided documentation to
requirements and (2) oversight support corrective actions already taken. We summarized Tennessee’s comments and
processes to ensure that EANS- provided our responses at the end of each finding. We also provided the full text of
funded services or assistance were
Tennessee’s responses to our recommendations (See Tennessee's Comments).
used for allowable purposes.
Final Audit Report ED-OIG/A23NY0148
Table of Contents
Introduction ........................................................................................................................ 1
Finding 1. Tennessee Generally Had Adequate Outreach, Technical Assistance, and
Application Processes ......................................................................................................... 5
Finding 2. Tennessee Could Improve Its Oversight of the EANS Programs ........................ 8
Appendix A. Scope and Methodology............................................................................... 15
Appendix B. Allowable Uses of EANS Funds ..................................................................... 20
Appendix C. Acronyms and Abbreviations........................................................................ 22
Tennessee Comments ....................................................................................................... 23
Introduction
Background
On March 13, 2020, the President declared a national emergency due to the coronavirus
disease 2019 pandemic (COVID-19). In response, Congress passed three COVID-19 relief
acts within a 1-year period that provided more than $275 billion for an Education
Stabilization Fund to prevent, prepare for, and respond to COVID-19, including
$5.5 billion for the Emergency Assistance to Nonpublic Schools (EANS) program.
• The Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA),
enacted on December 27, 2020, provided $2.75 billion in funding for State
educational agencies (SEA) to provide services and assistance to non-public
schools to address educational disruptions caused by COVID-19, as part of the
Governor’s Emergency Education Relief Fund (GEER).
• The American Rescue Plan Act (ARP), enacted on March 11, 2021, provided
another $2.75 billion in funding to the EANS programs, bringing the total
amount of EANS funding to $5.5 billion.
Purpose of the EANS Programs
The purpose of the EANS programs is to provide services or assistance to eligible
nonpublic schools to address educational disruptions caused by the COVID-19
emergency. Under the CRRSA and ARP EANS programs, governors apply to the
U.S. Department of Education (Department) for formula grants for the purpose of
providing emergency services or assistance to nonpublic schools. Although a Governor
applies for EANS funds and has oversight responsibilities as the grantee, the statutes
require that the SEA administer the programs. SEAs can use up to one-half of 1 percent
of its total EANS allocation for administrative costs. SEAs can hire contractors to assist in
administering and overseeing a State’s EANS programs. Importantly, nonpublic schools
are not recipients of grant awards under the EANS programs but, instead, receive
services or assistance provided by the SEA as requested in their application, to the
extent resources are available.
SEA Administrative Responsibilities
According to CRRSA section 312(d), a SEA’s responsibilities to administer the EANS
programs include the following:
• Distributing information about the EANS programs promptly to nonpublic
schools in the State.
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• Creating an application with which any eligible nonpublic school in the State
may apply for services or assistance.
• Ensuring that eligible nonpublic schools provide the information required by
section 312(d)(3)(B) related to enrollment of students from low-income families
and a description of the emergency services requested from the SEA.
• Making an application easily available to nonpublic schools in the State as soon
as possible but no later than 30 days after receipt of the EANS funds.
• Approving or denying each nonpublic school application promptly but no later
than 30 days after the SEA receives the application from a nonpublic school.
• Determining what services or assistance the SEA will provide directly or through
local educational agencies (LEA), other public entities, or contractors to each
nonpublic school, as informed by an approved application and consultation, as
appropriate, with the nonpublic school or its representatives.
• Ensuring the control of funds for the services or assistance provided to a
nonpublic school, and title to materials, equipment, and property purchased
with EANS funds, are in a public agency and a public agency administers the
funds, services, assistance, materials, equipment, and property.
• Ensuring that all services or assistance provided, including any materials,
equipment, and any other items used to provide such services or assistance, are
limited to secular, neutral, and nonideological purposes.
• Obligating all EANS funds in an expedited and timely manner, to the extent
practicable; however, obligating all EANS funds needed for services and
assistance to non-public schools not later than 6 months after receiving the
funds.
• Administering the EANS programs in accordance with all applicable
requirements.
Additionally, on or before the date it makes its ARP EANS applications for services or
assistance available to nonpublic schools, a SEA must publish on its website (1) the
minimum percentage it will use to determine whether a nonpublic school enrolls a
significant percentage of students from low-income families, (2) the source(s) of poverty
data it will use to determine counts of students from low-income families in a nonpublic
school, and (3) the factors it will use to identify nonpublic schools as most impacted by
COVID-19.1
1
Final Requirements for ARP EANS, Federal Register, Vol. 86, No. 131, (July 13, 2021).
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Nonpublic School EANS Programs Eligibility
For purposes of the EANS programs, an eligible nonpublic school is an elementary or
secondary school that
• is a nonprofit;
• is accredited, licensed, or otherwise operates in accordance with State law;
• was in existence prior to the date COVID-19 was declared a national emergency
(March 13, 2020); and
• did not, and will not, apply for and receive a loan under the Small Business
Administration’s Paycheck Protection Program (PPP) that is made on or after
December 27, 2020. This limitation applies for as long as the nonpublic school is
a participant in the EANS programs under the CRRSA or the ARP Acts.
The ARP Act also established separate criteria that SEAs were required to use to
determine whether nonpublic schools were eligible to receive services or assistance.
Under the CRRSA Act, SEAs were required to prioritize services or assistance to
nonpublic schools that enrolled low-income students and were most impacted by the
qualifying emergency (COVID-19). The ARP Act further restricted eligibility for services
or assistance to nonpublic schools that enrolled a significant percentage of low-income
students and were most impacted by the qualifying emergency. Because the ARP Act did
not identify what constituted a significant percentage of low-income students, the
Department established through a notice of final requirements in the Federal Register
that, to be eligible for ARP EANS-funded services or assistance, the percentage of low-
income students in a nonpublic school must be at least 40 percent, unless a State
requested and received approval from the Department to use an alternate percentage
based on circumstances in the State.
Allowable Uses of EANS Funds
The EANS programs allow a nonpublic school to receive services and assistance from the
State’s SEA or its contractors to address educational disruptions resulting from
COVID-19. These services and assistance can include supplies to sanitize and clean
school facilities, educational technology, and reasonable transportation costs, among
many others. For a full list of services and assistance covered under the EANS programs,
see Appendix B.
Tennessee Department of Education’s EANS Programs
Administration
The Tennessee Department of Education (Tennessee) was awarded $72.8 million in
CRRSA funds and $73.7 million in ARP EANS funds to provide services and assistance to
nonpublic schools affected by the pandemic. Tennessee’s Division of Choice was
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responsible for the administration and oversight of the EANS programs. It used the
processes and grants management system that Tennessee developed and has used for
its LEAs with necessary adjustments for the EANS programs. Tennessee’s grants
management system accepted EANS applications with budgets and addressed CRRSA
EANS reimbursements and other EANS requirements. Contractor payments made by
Tennessee for the nonpublic schools were made through Tennessee’s regular
procurement process. For CRRSA EANS, Tennessee made $28.6 million of CRRSA EANS
funds available (39.3 percent) to 110 nonpublic schools that it deemed eligible to
receive services and assistance and reverted all remaining funds to the Governor of
Tennessee for use for authorized purposes under the GEER program, which included
providing tutoring services to students within Tennessee’s LEAs. Tennessee made
$5.6 million of ARP EANS funds available (7.5 percent) to 21 nonpublic schools that it
deemed eligible to receive services and assistance. In an email to the Department dated
June 24, 2022, Tennessee stated that it would revert $63.1 million to the Governor for
GEER-related purposes. Tennessee had until September 30, 2024, to obligate the
remaining ARP EANS funds.
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Finding 1. Tennessee Generally Had Adequate
Outreach, Technical Assistance, and
Application Processes
Tennessee designed and implemented application processes that adequately assessed
nonpublic schools’ eligibility for CRRSA and ARP EANS-funded services or assistance and
complied with other applicable requirements, including those related to outreach for
the CRRSA and ARP EANS programs. In addition, Tennessee provided technical
assistance and guidance to the nonpublic schools that was timely and accurate.
Tennessee also established application processes that included the requirements for
both CRRSA and ARP EANS and met the timelines required for the availability of
nonpublic school applications, review and approval of the applications, and notification
to the nonpublic schools regarding their application approval status. However,
Tennessee was unable to provide written policies and procedures that it used to review
the EANS applications.
Outreach to Nonpublic Schools Regarding the CRRSA and ARP
EANS Programs
Tennessee had adequate processes to inform nonpublic schools of the EANS grants. Out
of Tennessee’s 632 nonpublic schools, 582 were eligible to receive EANS-funded services
or assistance under one or both programs given the different eligibility requirements. 2
Tennessee contacted nonpublic schools via email to ensure that they were aware of the
EANS programs and the application processes. In addition, Tennessee worked with an
advisory council to nonpublic schools to encourage its members to participate. Of the
582 nonpublic schools contacted, 135 showed interest in receiving EANS grant funds.
For CRRSA EANS, 114 nonpublic schools submitted applications and 110 applications
were approved. 3 For ARP EANS, 44 nonpublic schools attempted to complete the
application process. However, due to the stricter poverty level requirements of the ARP
EANS program, only 21 nonpublic schools successfully completed the application
process and were approved to receive ARP EANS funds.
2
For-profit and home schools were excluded from participating in Tennessee’s EANS programs.
3
The remaining four applicants began the application process but did not complete it by their own
choice.
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Technical Assistance and Guidance Provided to Nonpublic
Schools Regarding the CRRSA and ARP EANS Applications
Tennessee provided clear, accurate, and timely technical assistance and guidance to
nonpublic schools about the purpose of the CRRSA and ARP EANS programs; program
eligibility criteria, including how Tennessee planned to determine the schools most
impacted by the COVID-19 emergency; and how and when to submit their application.
Tennessee accomplished this, in part, through written policies and procedures,
operation manuals, email communications, office hours, and webinars. The technical
assistance and guidance covered various topics, including the purpose and goals of the
programs, eligibility criteria, and the parts and requirements of the application
processes. Tennessee also developed its own EANS frequently asked questions (FAQ)
guidance document.
Adequacy of Tennessee’s CRRSA and ARP EANS Application
Processes and its Compliance with Related Requirements
Tennessee had adequate processes to ensure that nonpublic school EANS applicants
were eligible to receive services or assistance under CRRSA and ARP EANS. Using its
existing process, Tennessee developed CRRSA and ARP EANS applications that captured
appropriate data to determine a nonpublic school’s eligibility. Tennessee’s application
addressed major requirements of the EANS grants by requesting overall enrollment and
low-income enrollment data from the 2019–2020 school year (grades K–12),
information on whether the nonpublic school received a PPP loan prior to
December 27, 2020, a description of how the school was impacted by COVID-19, and a
budget. The application also had an assurance that the school had not applied for a PPP
loan that was made on or after December 27, 2020. The ARP EANS application had the
same elements as the CRRSA EANS application but also requested specific student
family financial information in order to determine whether a student was from a low-
income family.
In describing the State’s EANS application review and approval processes, Tennessee
officials explained that they used the processes and systems that they use for LEAs
receiving Federal funds. The EANS applications were completed and submitted via
Tennessee’s grants management system. The information that was included in the
application was reviewed and approved after each nonpublic school completed its
application, the application went through a required three-level approval process. 4 In
addition to completing the application, schools were required to complete and upload
4
Prior to being reviewed by Tennessee, the application is reviewed by the nonpublic school’s director,
fiscal representative, and the school’s leader.
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an eligible EANS programs participants survey addendum that included total student
enrollment and the percentage of those students who were under the poverty level.
Tennessee’s review process included addressing EANS requirements, vendor
acceptability, expenditure allowability within EANS, and poverty threshold (ARP EANS).
As part of Tennessee’s review process, it required initial application review and approval
from the director of Tennessee’s Division of Choice followed by second-level application
review and approval from two members of the Nonpublic School Team. However, due
to turnover in key positions, Tennessee was unable to provide the policies and
procedures that it used to review the EANS applications. Tennessee made the CRRSA
and ARP EANS applications available to nonpublic schools within 30 days of its receipt of
allocations from the Department (as required by CRRSA Act section 312(d)(3)(A)(i)), and
the applications were available to them from February 2021 to April 2021 for CRRSA
EANS and December 2021 through April 2022 for ARP EANS.
We concluded that the processes Tennessee officials described to assess nonpublic
schools’ eligibility for CRRSA and ARP EANS-funded services and assistance were
generally adequate. We tested a nonstatistical, random sample of EANS applications
including five CRRSA EANS applications, five accepted ARP EANS applications, and five
rejected ARP EANS applications. We found no issues with the sampled applications. We
also checked the PPP information provided on the sampled applications against the PPP
website and did not find any discrepancies.
Despite Tennessee’s lack of written procedures for its application review and approval
processes, we are not making any recommendations for this finding because Tennessee
met all CRRSA and ARP EANS program application requirements, and because
applications are no longer being accepted.
Tennessee’s Comments
Tennessee did not provide any comments related to Finding 1.
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Finding 2. Tennessee Could Improve Its
Oversight of the EANS Programs
We found that Tennessee’s oversight of its CRRSA and ARP EANS funds, expenditures,
and inventory could be improved. During the audit, Tennessee followed its existing
policies and procedures to ensure that both CRRSA and ARP EANS funds were used for
allowable services and assistance. Tennessee provided sufficient support for a
nonstatistical, random sample of 60 CRRSA EANS expenditures, 30 reimbursements and
30 contractor expenditures; and 30 ARP EANS contractor expenditures. However, we
found that Tennessee could improve certain processes. Specifically, Tennessee should
have (1) ensured that it had identified allowable expenditures to charge to its CRRSA
EANS grant before drawing down Federal funds; (2) implemented policies and
procedures to identify, locate, or track assets purchased with EANS funds for nonpublic
schools; and (3) obtained the necessary approvals for capital expenditures with a per
unit cost of over $5,000.
Tennessee Did Not Ensure That Drawdowns of CRRSA EANS
Funds Were Always Supported by CRRSA EANS Expenditures
Tennessee did not ensure that expenditures noted as being for CRRSA EANS-funded
services or assistance were appropriately identified prior to making drawdowns from
the G5 system. Specifically, Tennessee mistakenly designated $6.57 million in CRRSA
EANS funds as CRRSA EANS expenditures but did not have any corresponding
expenditures. According to a former Tennessee official, these expenditures should have
been designated as ARP EANS expenditures. Tennessee has policies and procedures
stating that in order to initiate drawdowns from G5, the amount to be drawn down
should have a matching expenditure for the grant. This should have ensured that
Tennessee did not draw down funds that did not correlate with specific expenditures.
Due to the incorrect designation of the expenditures, it appears that Tennessee
incorrectly drew down CRRSA EANS funds for ARP EANS expenditures. During the audit,
we identified the issue when attempting to reconcile CRRSA EANS expenditures
provided by a former Tennessee official to G5 drawdowns. Tennessee officials were not
aware that this issue had occurred until we brought it to their attention. After we made
Tennessee aware of the issue, Tennessee made a journal entry adjustment returning the
funds to CRRSA EANS and drew down the correct amount from ARP EANS to cover the
expenditures.
According to the Uniform Guidance, at 2 Code of Federal Regulations (C.F.R.) section
200.302 (b)(3) through (b)(6) the financial management system of each non-Federal
entity must provide records that identify adequately the source and application of funds
for Federally funded activities. In addition, the entity needs to establish effective
controls over, and accountability for, all funds to ensure that assets are adequately
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safeguarded. This section of the Uniform Guidance further states that entities need to
establish written procedures to implement control activities to compare expenditures
with budget amounts for each Federal award.
Although Tennessee had policies and procedures for making G5 drawdowns, Tennessee
officials appear to not have ensured that the drawdowns were for CRRSA EANS
expenditures when they requested CRRSA EANS funds from G5. Ensuring the adequacy
of supporting documents is important because inaccurately accounting for program
expenditures could result in cash management and financial, or performance reporting
issues.
Tennessee Has Not Fully Implemented Policies and Procedures
for Maintaining a Record of Assets Purchased with EANS Funds
At the start of our audit, Tennessee did not have policies and procedures to identify,
locate, and track assets purchased using EANS funds. During the audit, we requested an
inventory of the assets purchased for nonpublic schools with EANS funds. Since EANS
funds are Federal funds and were used to purchase items for nonpublic schools,
Tennessee was required to maintain ownership of all tangible items and must maintain
an inventory of those items to ensure the items were being used by the nonpublic
schools for COVID-19-related or other permitted Federal program activities. As of
September 30, 2023, Tennessee did not have an inventory of the assets purchased with
CRRSA EANS funds so that it could not verify that the purchased assets were still being
used for EANS purposes or other allowable purposes under another Federal education
program, or if not, disposed of in accordance with applicable requirements. Tennessee
officials stated that no nonpublic schools had voluntarily returned assets purchased with
CRRSA EANS funds.
During the audit, Tennessee developed a formal written inventory process for its EANS
assets. Tennessee’s asset management document included procedures for acquisition,
acceptable use, inventory, management, and disposition of EANS assets. It stated that
"any item with an expected life of greater than 1 year and a pre-tax value of $250 or
more is to be tagged,” and referenced section 18003(d) of the Coronavirus Aid, Relief,
and Economic Security Act, section 313(d) of the CRRSA Act, and section 2001(e) of the
ARP Act when addressing approved uses. The document was eventually finalized and
partially implemented with asset information being requested from nonpublic schools
that received EANS-funded services or assistance; however, the process had not been
completed at the time of our audit work.
According to section E-1 of the Department’s September 2021 EANS FAQ guidance
document, to maintain control of EANS funds, SEAs must maintain records of the
equipment and supplies it has provided to each nonpublic school. To maintain control
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over the EANS funds it uses to reimburse a nonpublic school, SEAs must ensure that the
SEA or another public agency gains title to materials, equipment, and property for which
it provides reimbursement.
Further, in a January 2023 Addendum to the EANS FAQ guidance document, 5 the
Department stated that an SEA must maintain an inventory of all supplies placed in a
nonpublic school and should implement periodic checks on the use of the supplies to
determine whether the supplies are still in use and being used for allowable purposes.
Periodic checks could include emails and surveys to collect needed information.
Since Tennessee did not maintain an inventory of assets purchased with EANS funds
from the beginning, it may not have maintained public control of those assets and,
therefore, did not adhere to Federal requirements. It also may have increased the risk
that some assets will not be accounted for; not be used for purposes related to
COVID-19 or other permitted Federal program activities; or be lost, unused, or used for
unallowable purposes.
Tennessee Did Not Obtain Prior Approval for EANS
Expenditures
We found that Tennessee’s processes did not ensure that nonpublic schools’ equipment
purchases with a per unit cost over $5,000 received prior written approval from the
Department before making the purchases as required by Federal regulations. We
identified three invoices during our review of 90 EANS expenditures that had items with
a per unit cost over $5,000 6 that the Department stated did not have prior approval.
Those items included interactive boards, system software, active panel screens, and a
de-mountable wall totaling approximately $123,000.
Because Tennessee is the recipient of its EANS funds, and EANS funds cannot be
awarded to nonpublic schools, the Department must approve all EANS expenditures
over $5,000. Equipment and other capital expenditures with a unit cost of $5,000 or
more must have prior written approval of the Federal awarding agency or pass-through
entity according to 2 C.F.R. section 200.439(b). A pass-through entity is a non-Federal
entity that provides a subaward to a subrecipient to carry out part of a Federal program
(2 C.F.R. section 200.1). Under the EANS programs, an SEA is not permitted to make
subawards to nonpublic schools; therefore, Tennessee’s approval of payments would
not constitute prior written approval for the purpose of 2 C.F.R. 200.439(b). According
5
FAQ, Disposition of Equipment and Supplies, EANS Program (January 23, 2023).
6
The sample included 30 expenditures each for CRRSA EANS program reimbursements and contractor
payments, and 30 expenditures for ARP EANS program contractor payments.
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to 2 C.F.R. section 200.1, equipment is defined as tangible personal property having a
useful life of more than one year and a per unit acquisition cost that equals or exceeds
the lesser of the capitalization level established by the non-Federal entity for financial
statement purposes or $5,000.
Capital expenditures for special purpose equipment are allowable as direct costs, if
items with a unit cost of $5,000 or more have the prior written approval of the Federal
awarding agency or pass-through entity per 2 C.F.R. section 200.439(b)(2). Further,
section 312(d)(7)(A) of the CRRSA Act states that materials, equipment, and property
purchased with CRRSA EANS funds are to be owned and administered by the public
agency; therefore, title and administration of assets purchased with CRRSA EANS funds
stay with Tennessee, and it is required to obtain prior written approval from the
Department for purchasing assets greater than $5,000.
Because Tennessee did not obtain prior written approval from the Department for the
equipment purchases that were over the $5,000 threshold, Tennessee may have used
EANS funds to purchase approximately $123,000 of equipment that may have been
unallowable. Furthermore, without a process to obtain prior written approval, there is a
risk that Federal funds will be used for unallowable equipment or capital expenditure
purchases of $5,000 or more.
As noted in this finding, we identified a number of Federal requirements that Tennessee
did not adhere to and areas for improvement in grants management. We learned during
the course of our audit that the staff who originally implemented and administered
Tennessee’s EANS programs were no longer working for Tennessee and that many of
the staff we spoke to were new and had never administered a Federal program at the
State level before, making it likely that they were unaware of all Federal requirements.
Although we recognize that the EANS programs were new and complex, and that staff
may have lacked experience, Tennessee was nevertheless responsible for ensuring that
all requirements were met and that funds were used appropriately.
Recommendations
We recommend that the Assistant Secretary for the Office of Elementary and Secondary
Education require Tennessee, in consultation with the Governor of Tennessee, to—
2.1 Review its policies and procedures for drawing down Department grant funds to
pay for corresponding grant expenditures and determine whether any updates
are necessary to ensure funds drawn down from one grant (for example, CRRSA
EANS) are not being used to pay for expenditures under another grant (for
example, ARP EANS).
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2.2 Ensure that Tennessee officials responsible for making, reviewing, and
approving G5 drawdowns receive sufficient training on Federal rules and
regulations and State policies and procedures related to drawing down funds
from G5 and documenting the process correctly.
2.3 Ensure full implementation of procedures that will identify, locate, and track
assets purchased with EANS funds at nonpublic schools and verify that those
assets were still being used for purposes related to COVID-19 or for allowable
purposes under another Federal education program in which the nonpublic
school participates. If assets purchased with EANS funds are no longer being
used for purposes related to COVID-19 or for allowable purposes under another
Federal education program in which the nonpublic school participates, retrieve
them for use in other allowable activities or dispose of them in accordance with
State laws and procedures. If assets purchased with EANS funds cannot be
identified and located, determine any liabilities owed to the Department and
return funds if required.
2.4 Retroactively obtain prior written approval from the Department for the three
equipment expenditures or return the approximately $123,000 expended for
those equipment purchases and perform a review of the remaining equipment
expenditures to determine whether there are additional purchases that require
prior written approval. Tennessee should also incorporate into its grants
management policies and procedures a step to determine for any Department
grants whether it is required to obtain prior approval from the Department for
certain expenditures, or whether Tennessee can provide prior approval for
subrecipients.
Tennessee’s Comments
Tennessee agreed with the finding and recommendations and provided additional
documentation to support its response.7 Tennessee also provided comments regarding
the language used to describe its drawdowns of EANS funds from G5.
For Recommendation 2.1, Tennessee stated that Tennessee officials responsible for
making G5 drawdowns reviewed existing policies and procedures, and that these
policies and procedures are sufficient for the process under which funds are drawn from
G5. Tennessee also provided a description of its process and supplied corresponding
documents related to how it processes invoices and draws down funds from G5.
7
Some of the documentation that was provided with the response had already been provided during
the audit and used to develop our findings and recommendations.
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For Recommendation 2.2, Tennessee referred to the same documents noted in
response to Recommendation 2.1 and stated that Tennessee officials responsible for
making G5 drawdowns received sufficient training on Federal rules and regulations and
State policies and procedures related to drawing down funds from G5 through
Tennessee’s Department of Finance and Administration grants accounting webpage.
Further, Tennessee officials will attend the Education Department General
Administrative Regulations training hosted by Tennessee in February 2025.
For Recommendation 2.3, Tennessee stated that it has fully implemented an asset
management process for EANS funds, and provided documents related to its inventory
process and communications with nonpublic schools as well as examples of school
inventories that it has received. Tennessee stated that staff follow procedures for the
loss or disposition of assets and investigate all inconsistencies in the inventory
documentation.
For Recommendation 2.4, Tennessee stated that it identified the approximately
$123,000 expended for equipment purchases identified in the finding and identified
other equipment purchases defined as tangible personal property. Tennessee submitted
a list of the EANS purchases, over the $5,000 threshold, to the Department on
October 1, 2024, requesting retroactive prior approval.
OIG Response
Tennessee’s responses to Recommendations 2.1 and 2.2 are partially responsive to the
recommendations. For Tennessee’s comments regarding Recommendation 2.1, we
acknowledge that Tennessee had existing policies and procedures regarding its process
for drawing down Federal funds. However, the documentation that Tennessee provided
did not include a process for ensuring that the correct G5 account funds were identified
for drawdown. For Tennessee’s comments regarding Recommendation 2.2, we
acknowledge Tennessee’s past and planned training activities; however, as noted above,
Tennessee should include in its policies and procedures a process to ensure that the
correct G5 account funds are identified for drawdown and provide training on this
process for its staff.
Tennessee’s comments regarding Recommendation 2.3 are mostly responsive if
implemented as stated in the documentation provided. It does not appear that the
information collected from nonpublic schools addressed whether the assets were being
used for a COVID-19-related purpose or for an allowable purpose under another Federal
education program in which the nonpublic school participated. Tennessee’s comments
regarding Recommendation 2.4 are partially responsive if implemented as stated in the
documentation provided. However, Tennessee’s comments and documentation do not
address incorporating into Tennessee’s grants management policies and procedures a
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step to determine for any Department grants whether it is required to obtain prior
approval from the Department for certain expenditures, or whether Tennessee can
provide prior approval for subrecipients.
We did not verify whether Tennessee took the corrective actions it described because
Tennessee implemented or will be implementing these actions after the end of our
audit work. Therefore, we did not make any changes to the recommendations.
However, we did make some changes to the language in the finding based on
Tennessee’s comments.
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Appendix A. Scope and Methodology
Our audit covered Tennessee’s processes for reviewing and approving nonpublic
schools’ applications and overseeing nonpublic schools’ use of EANS funds for the
period March 13, 2020, through October 27, 2023.
To achieve our objectives, we reviewed and gained an understanding of the following
laws, regulations, and guidance relevant to CRRSA and ARP EANS:
• CRRSA (Public Law 116-260, December 27, 2020), section 312 “Governor’s
Emergency Education Relief Fund”;
• ARP (Public Law 117-2, March 11, 2021), section 2002, “Emergency Assistance
to Non-Public Schools”;
• ARP Federal Register July 13, 2021;
• 34 C.F.R. section 76.707 When Obligations are Made;
• 31 C.F.R. Part 205 Rules and Procedures for Efficient Federal-State Funds
Transfers;
• Department guidance, including the Certification and Agreement for Funding
EANS Program under CRRSA; ARP EANS Webinar (February 24, 2022); FAQ,
EANS Program as authorized by CRRSA and ARP (Updated September 17, 2021);
Addendum to FAQ, Disposition of Equipment and Supplies, EANS Program
(January 23, 2023); the Department’s EANS Monitoring Protocol; Final
Requirements for ARP EANS Federal Register Vol. 86, No. 131 (July 13, 2021);
and the Department’s letter to States on ARP EANS and the Use of
Proportionality to Determine Nonpublic School Eligibility (July 29, 2022);
• Tennessee’s Grant Award Notification for the CRRSA and ARP EANS programs;
• Government Accountability Office’s Standards for Control in the Federal
Government (September 2014);
• 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards; and
• 34 C.F.R. Part 76, State Administered Programs.
We gained an understanding of Tennessee ’s application and oversight processes
through interviews with key Tennessee officials who had knowledge of or were
responsible for establishing, administering, or overseeing the CRRSA and ARP EANS
programs. To assess the reliability of the testimonial evidence, we compared
information obtained from interviews with records related to Tennessee’s application
and oversight activities when provided by the interviewees. We concluded that the
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testimonial evidence we obtained was sufficiently reliable within the context of our
audit objectives.
We assessed the adequacy of Tennessee’s application and nonpublic school eligibility
determination processes by (1) reviewing the applications that Tennessee developed for
the CRRSA and ARP EANS programs to determine whether they contained data fields
that would allow Tennessee to properly assess a school’s eligibility and prioritize schools
as required by law, (2) assessing the timeliness of Tennessee’s dissemination of EANS
programs information and related applications, and (3) testing a sample of nonpublic
schools’ applications to determine whether Tennessee properly determined the schools’
eligibility.
We also gained an understanding and assessed the adequacy of Tennessee’s oversight
processes through reviews of relevant documents and records. We reviewed documents
identifying Tennessee’s officers and staff who had a role in establishing, administering,
or overseeing the CRRSA and ARP EANS programs. We reviewed and evaluated the
guidance and technical assistance (such as Tennessee’s FAQ document, webinars, and
emails) that Tennessee provided to nonpublic schools regarding use of CRRSA and ARP
EANS funds. We also reviewed the informal procedure documents developed by
reviewers to further our understanding of how Tennessee reviewed and approved EANS
payment requests for services and assistance.
We assessed the implementation of Tennessee’s oversight processes by testing samples
of CRRSA and ARP EANS expenditures to determine whether they complied with
applicable requirements. Specifically, we reviewed each expenditure to determine
whether it was (a) connected to the pandemic, (b) authorized under applicable law and
regulations, (c) reasonable and necessary in accordance with the Uniform Guidance, and
(d) sufficiently supported. We also determined whether purchased equipment and
supplies in the samples were properly approved and inventoried, if applicable.
Lastly, we reviewed Tennessee’s drawdowns from the Department’s G5 grants
management system to determine whether Tennessee complied with cash management
requirements.
Sampling Methodology
To determine whether Tennessee designed and implemented application processes that
adequately assessed nonpublic schools’ eligibility for EANS-funded services or assistance
and complied with other applicable requirements, we selected a nonstatistical, random
samples of applications for both CRRSA and ARP EANS—a total of 10 approved
applications and 5 rejected applications from the universe of 154 nonpublic schools that
applied for both programs. Specifically, we sampled 5 (5 percent) of the 110 nonpublic
schools that completed the application process for the CRRSA EANS program. For ARP
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EANS, we sampled 10 (23 percent) of the 44 nonpublic schools that applied. This
consisted of 5 (24 percent) of the 21 nonpublic schools that applied and were deemed
eligible and 5 (22 percent) of the 23 nonpublic schools that applied and had their
applications rejected.
To determine whether Tennessee’s oversight processes ensured that EANS funds were
used for allowable purposes and that Tennessee maintained public control of the assets
acquired with those funds, we selected a nonstatistical, random samples of nonpublic
schools’ expenditures of CRRSA and ARP EANS funds. We sampled a total of
90 (7 percent) of the 1,253 expenditures that were charged to EANS programs. For the
CRRSA EANS program, we sampled 30 (12 percent) of the 258 expenditures that were
reimbursement payments to nonpublic schools and 30 (5 percent) of the
645 expenditures that were direct payments to vendors. For the ARP EANS program, we
sampled 30 (9 percent) of the 350 expenditures that were direct payments to vendors.
To determine whether Tennessee complied with cash management requirements, we
attempted to reconcile Tennessee’s G5 drawdowns to its CRRSA and ARP EANS
expenditures. Although we could not reconcile them as of a specific date during the
grant period, we were able to reconcile CRRSA EANS in total at the end of the grant
period and ARP EANS to a sufficient extent for us to be comfortable that we were
testing the entire ARP EANS amount. We did not test any expenditures that appeared to
be for GEER-related purposes.
The results of our testing apply only to the samples selected and cannot be projected.
Internal Controls
We obtained an understanding of all five areas of internal control (control environment,
risk assessment, control activities, information and communication, and monitoring) as
they related to Tennessee’s processes for ensuring that nonpublic schools were eligible
and used CRRSA and ARP EANS funds in accordance with applicable requirements. We
limited our internal control work to the two areas we deemed significant to the audit
objective: risk assessment and control activities.
• Risk assessment—risk identification, analysis of risk, responses to risk, including
consideration of the potential for fraud.
• Control activities—design of appropriate types of control activities, design of
control activities at various levels, documentation of responsibilities through
policies, and periodic review of control activities.
As discussed in the findings, we concluded that Tennessee’s application process for
assessing nonpublic schools’ eligibility for CRRSA and ARP EANS funded services and
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assistance was generally adequate (See Finding 1), and its oversight processes for its
expenditure review and inventory system need strengthening (See Finding 2).
Use of Computer-Processed Data
We relied, in part, on computer-processed data (spreadsheets) provided by Tennessee
to select and review the CRRSA and ARP EANS nonpublic school applications that we
sampled. We obtained the computer-processed application data and the electronic
applications from Tennessee; in addition, we obtained any additional supporting
documentation. To assess the reliability and completeness of the data, we compared
the fields in the applications to the provided support, school websites and PPP website
and found that the fields from the applications we sampled matched data from the
support obtained. Some of the fields included were total student enrollment, the data
source used to determine the number of students from low-income families, and
whether the school indicated that it received a PPP loan prior to December 27, 2020.
Based on this assessment, we concluded that the data were sufficiently reliable for their
intended use.
We obtained the universes of expenditures for both CRRSA and ARP EANS for the audit
period. We used the universes to select samples of expenditures for detailed testing to
determine whether Tennessee’s oversight processes ensured that EANS funds were
used for allowable purposes. To assess the completeness of the data, we compared
total CRRSA and ARP EANS expenditures to amounts drawn down by Tennessee from
the Department’s G5 grants management system for the audit period. To assess the
reliability of the expenditure data, we traced the expenditures to supporting
documentation, such as invoices and approvals for our sample of 90 expenditures
(30 expenditures each for CRRSA EANS program reimbursements and contractor
payments, and 30 expenditures for ARP EANS contractor payments). We did not identify
any issues that affected our using the data and concluded that the data were sufficiently
reliable for their intended use.
Finally, we relied, in part on the Department’s G5 grants management system as it is the
official system of record for the Department's grants data. As a result, we considered it
to be the best available data for its intended purpose. To assess the reliability of the
data, we compared total CRRSA and ARP EANS expenditures to amounts drawn down by
Tennessee from G5 for the audit period. Tennessee needed to make an adjustment to
correct both EANS accounts, however, we did not identify any issues that affected our
using the data and concluded that the computer-processed data were sufficiently
reliable for their intended use.
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Compliance with Standards
We conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objective. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our
audit objective.
We remotely conducted our audit from September 2023 through August 2024. We
discussed the results of our audit with Tennessee officials on May 29, 2024.
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Appendix B. Allowable Uses of EANS Funds
According to section D-1 of the Department’s September 2021 EANS FAQ guidance
document, a nonpublic school may apply to receive services and assistance from the
SEA or its contractors to address educational disruptions resulting from the COVID-19
emergency. These services and assistance include:
1. Purchasing supplies to sanitize, disinfect, and clean school facilities.
2. Providing personal protective equipment.
3. Improving ventilation systems, including windows or portable air purification
systems.
4. Training and professional development for staff on sanitization, the use of
personal protective equipment, and minimizing the spread of infectious
diseases.
5. Installing physical barriers to facilitate social distancing.
6. Purchasing other materials, supplies, or equipment recommended by the
Centers for Disease Control and Prevention for reopening and operation of
school facilities to effectively maintain health and safety.
7. Expanding capacity to administer coronavirus testing to effectively monitor and
suppress the virus.
8. Purchasing educational technology (including hardware, software, connectivity,
assistive technology, and adaptive equipment) to assist students, educators, and
other staff with remote or hybrid learning.
9. Redeveloping instructional plans, including curriculum development, for remote
or hybrid learning, or to address learning loss.
10. Leasing sites or spaces to ensure safe social distancing, including guidelines and
recommendations from the Centers for Disease Control and Prevention.
11. Paying for reasonable transportation costs.
12. Initiating and maintaining education and support services or assistance for
remote or hybrid learning or to address learning loss.
Under CRRSA EANS, but not ARP EANS, reimbursement is allowed for the expenses of
any services or assistance described above that a nonpublic school incurred on or after
March 13, 2020, except for
• improvements to ventilation systems (including windows), except for portable
air purification systems, which may be reimbursed;
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• staff training and professional development on sanitization, the use of personal
protective equipment, and minimizing the spread of the COVID-19;
• redeveloping instructional plans, including curriculum development, for remote
or hybrid learning or to address learning loss;
• initiating and maintaining education and support services or assistance for
remote or hybrid learning or to address learning loss; and
• any expenses reimbursed through a loan guaranteed under the PPP (15 United
States Code 636(a)) prior to December 27, 2020.
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Appendix C. Acronyms and Abbreviations
ARP American Rescue Plan
C.F.R. Code of Federal Regulations
COVID-19 Coronavirus Disease 2019
CRRSA Coronavirus Response and Relief Supplemental
Appropriations Act
Department U.S. Department of Education
EANS Emergency Assistance to Nonpublic Schools
FAQ frequently asked questions
GEER Governor's Emergency Education Relief Funds
LEA local educational agency
PPP Paycheck Protection Program
SEA State educational agency
Tennessee Tennessee Department of Education
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Tennessee Comments
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