We have conducted a special review of the Department of Education's financial management of two federal grants from the U.S. Department of Agriculture. The two grants, totaling $600,000, had specific goals to improve the administration of the food and nutrition programs. The food and nutrition services section within the Department of Education administers the funding and operation of the child nutrition program.
In June 2003, the commissioner of Education asked the Office of the Legislative Auditor to review costs charged to these grants. The commissioner was concerned that some costs charged to these grants during fiscal years 2001 and 2002 may not have been valid. Based on preliminary information received from the department, we decided to pursue the matter further.
Our objective in conducting this special review was to answer the following questions:
The Department of Education charged costs to the Provisions 2 and 3 grant (CFDA #10.573) and the Team Nutrition 2001 grant (CFDA #10.574) that did not relate to the accomplishment of the grant objectives. For the Provisions 2 and 3 grant, the department charged $317,240 for payroll, professional/technical services, and travel costs that did not relate to the grant. For the Team Nutrition 2001 grant, the department charged $32,034 for payroll costs that did not relate to the grant. The department should have paid for these costs with existing federal nutrition program funding. The department did not account for Team Nutrition 2001 grant expenditures separately from other federal grants.
In addition, the department did not comply with certain grant provisions of the Provisions 2 and 3 grant and the Team Nutrition 2001 grant. The department did not provide state matching funds to accomplish the grants' objectives, as agreed to in the grant awards. It also did not accurately report Provisions 2 and 3 grant expenditures to the federal government in its quarterly progress reports. In addition, for the Team Nutrition 2001 grant, the department did not notify the U.S. Department of Agriculture when its use of funds deviated significantly from the grant's original budgets or when it assigned different employees to the grant than those designated in the application.