Federal Reports

We issued a special report on a specific issue of concern in California that we identified during the course of our nationwide review. We determined that the California Department of Education instructed LEAs that had not previously met the MOE compliance requirement with local-only special education expenditures that they may use local-only special education expenditure information from an improper base year to demonstrate compliance with the LEA MOE requirement. We found two actual instances in which the California Department of Education allowed LEAs to demonstrate MOE compliance by using improper expenditure information. These two LEAs spent less than they should have on special education programs and were not penalized for doing so. It is possible that additional LEAs in California incorrectly represented that they complied with the MOE compliance requirement by also using an improper base year. Based on our findings, we made a number of recommendations, including that the Department revise its regulations as needed to ensure that LEAs are not permitted to reduce the amount of local funds spent on educating children with disabilities below levels required by IDEA, and determine the amount the California Department of Education is required to remit to the Department as a result of the LEAs using an improper year to meet the actual MOE compliance requirement. The Department partially agreed with our concerns, and said it would consider regulatory change and subsequently published a Notice of Proposed Rulemaking on LEA MOE in September 2013.

We performed our audit work at the Michigan Department of Education, Detroit Public Schools (Detroit), Cesar Chavez Academy, and the School District of the City of Inkster. We found that although the Michigan Department of Education performed some internal control activities and on-site monitoring related to administering statewide tests, it could improve controls over preventing, detecting, and taking corrective actions if it finds indicators of inaccurate, unreliable, or incomplete test results. Specifically, we found that Michigan Department of Education did not always monitor schools that it identified as high-risk, did not effectively use contractor-provided reviews of test results and forensic analysis to identify schools with possible administration irregularities, and did not ensure that its contractor provided timely reports on missing test materials. We recommended that Michigan (1) place schools that it identifies as high-risk for possible violations of test administration procedures on the next year’s targeted monitoring list, (2) use test results and erasure analyses to identify schools with possible test administration irregularities, and (3) ensure that its contracts are amended to include specific requirements for contractors to report missing test materials. At Detroit, we found that its building security allowed unauthorized access to test materials, that it did not retain records of its onsite monitoring visits to schools, and did not test all students in a continuous manner, which may render the tests invalid. We recommended that Detroit correct these weaknesses by (1) adequately securing test materials, (2) retaining monitoring visit reports, and (3) testing students in a continuous session and reporting any deviations from required test administration procedures.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements