A state audit report found that Montana’s Office of Public Instruction is at risk of mishandling federal money in four different programs due to a lack of internal controls and monitoring within the agency.
A bulk of the issues in the report surrounded federal COVID relief funds for schools (ESSER), but there were also problems with child nutrition programs, support for low income students (Title I) and Individuals with Disabilities Education Act (IDEA).
Another internal issue identified in the report was the high rate of turnover among OPI staff, as about half of positions at the agency were vacant or turned over during the audit period. The Legislative Audit Division stated in its report that staff often did not understand what they were being asked to do and did not fulfill information requests.
“The volume of recommendations combined with difficulties we experienced getting timely information during the audit led us to consider OPI’s overall internal control structure,” the report stated.
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“A lot of different guidance has come from the federal government regarding anything dealing with ESSER I, ESSER II, ESSER III, so it has been challenging to try and navigate that understanding of the allowable uses," Superintendent of Public Instruction Elsie Arntzen said at a meeting on Wednesday. "But everything that we do, we communicate quite frequently with all of our (schools) and our after-school programs.”
The Legislative Audit Division acknowledged that the COVID pandemic posed challenges for OPI as it adjusted to work-from-home and new responsibilities from the federal government to distribute COVID relief funds.
In total, the report posed 13 recommendations for the OPI based on the review of the two fiscal years that ended June 30, 2021. OPI agreed with all but one recommendation, and has already made progress on implementing at least nine recommendations related to federal compliance.
Some of the recommendations highlighted in the most recent report with OPI were similar issues identified in the prior audit, according to Jessica Curtis, a financial compliance audit supervisor for the Legislative Audit Division.
Sen. Mary McNally considered OPI’s initial written response to the report to be “inadequate, pretty general, vague.” OPI presented an updated response to committee members ahead of Wednesday’s meeting with more details about progress it has made toward compliance.
“I was very concerned with some of the internal control issues and they seem to be chronic,” McNally said. "I mean, I know it’s exacerbated by everything that happened during COVID, but they also were there before COVID."
She also requested an update about staff vacancies at OPI.
Jay Phillips, the Chief Financial Officer at OPI, indicated that some progress had been made on filling vacancies, but they are still having some challenges. He cited issues such as record low unemployment rates in Montana, and the competitive job market as some fast-food restaurants are offering wages far above their usual rates.
“I mean, trying to be competitive at the state level at time for some positions is challenging, but absolutely, we’ve been having great efforts in recruitment,” Phillips said.
The most recent audit period proved challenging for a majority of state agencies, and OPI was no exception. In fiscal years 2020 and 2021, OPI received a total of $184.2 million and $239.3 million respectively from federal resources.
During their review, auditors found that 16 of the 60 requests they made were unsupported because they did not contain enough detail on whether schools were spending COVID relief funds on allowed items. The audit identified $460,154 in questioned costs related to federal COVID relief funds, but auditors believe that amount could be higher.
“We encourage OPI to strengthen internal controls, especially to document all internal controls because we can’t give the office credit for something we can’t see,” Curtis said.
Rep. Denise Hayman, the chair of the Legislative Audit Committee, asked Curtis if auditors were contacted by any schools that may not have received funding. She replied that she was not aware of any situation through the fraud hotline and that the Legislative Audit Division does not survey schools during the auditing process.
Phillips assured the committee that federal funds have not been withheld from schools.