BA STATE OF MICHIGAN DEPARTMENT OF EDUCATION GRETCHEN WHITMER SHEILA A. ALLES Governor en INTERIM STATE SUPERINTENDENT June 3, 2019 Mr. Rich Franklin, Superintendent Barry ISD. 535 W. Woodlawn Ave. Hastings, MI 49058 Dear Mr. Franklin: ‘An on-site fiscal monitoring review was conducted on Barry ISDs’ Great Start Readiness Program (GSRP), Great Start Collaboratives (GSC), Early On, Early Childhood Special Education (ECSE), and Race to the Top (RTT) funds. The enclosed report outlines the results of this review and indicates further action is required. Barry ISD can appeal OGS findings. The appeal must be requested in writing within fourteen (14) calendar days of this letter. The ISD will then have sixteen (16) calendar days to submit additional documentation and a request for further review which shall state: (a) the action of MDE which is questioned, (b) the issues upon which MDE's action is challenged, (c) all pertinent facts related thereto. All such letters of appeal should be directed to Becky Pennington, Financial Manager, Office of Great Start, P.O, Box 30008, Lansing, MI 48909. Should you have any questions, please contact April M. Terry, Senior Auditor, Administrative and Fiscal Unit, at (517) 241-2344 or terrya3@michigan.gov. ey GL Wd Mit rena ‘Administrative and Fiscal Unit Office of Great Start Enclosure CC: Elizabeth Matteson, President of Barry ISD Board of Education Richard Lower, Director Renee DeMars-Johnson, Director Heather Lucas, Education Consultant Rachel Pritchard, Department Specialist [STATE BOARD OF EDUCATION CASANORA E. ULDRICH - PRESIDENT + PAMELA PUGH - VICE PRESIDENT MICHELLE FECTEAU ~ SECRETARY » TOM MCMILLIN - TREASURER, TIFFANY ©. TILLEY —NASBE DELEGATE « JUDITH PRITCHETT. LUPE RAMOS: MONTICNY + NIKKI SNYDER 608 WEST ALLEGAN STREET + P.O. BOX 30008 + LANSING, MICHIGAN 48900 ‘wonnmichigan govinda + 839-859-678Michigan Department of Education Office of Great Start On-Site Fiscal Review Report District Name: Barry ISD | District Code: 08000 Date of Review: April 10-11, 2019 Overview The Michigan Department of Education (MDE), Office of Great Start (GS) conducted a fiscal monitoring review of the Great Start Readiness Program (GSRP), Great Start Collaboratives (GSC), Early On, Early Childhood Special Education (ECSE), and Race to the Top (RTT). For this grantee, OGS reviewed program expenditures paid during Fiscal Year (FY) 2017-18 and 2018-19 to date. O65 fiscal monitoring review included the following areas: + Policies and Procedures (including internal controls) Budget General Expenditures Payroll Expenditures Purchased Services Equipment Capital Outlay Cash Management Final Expenditure Report (FER) Verification REVIEW SUMMARY Policies and Procedures The Office of Great Start Administrative and Fiscal Unit (OGS/AFU) reviewed policies and procedures to ensure that proper internal controls are in place, implemented, and properly monitored by the grantee according to the Uniform Guidance. OGS/AFU reviewed policies and procedures for cash management, payroll, procurement, travel, record retention, conflict of interest, and credit card uses by ISD employees. Adequate internal controls do not exist in this are Summary of policies and procedures review: + OGS/AFU reviewed several sets of written documents that represented the grantee’s policies and procedures but observed a disconnect and noncompliance between actual business practices and rules and regulations. + The grantee’s policies and procedures are insufficient and lack detail regarding internal controls and contract management standards to ensure all funds are expended according to regulations. These weaknesses affect cash management, payroll, procurement, record retention, conflict of interest, and credit card use by employees which was observed in other review categories throughout this fiscal monitoring review,District Name: Barry ISD Date of Review: April 10-11, 2019 Page: 2 The ISD must implement the following changes: + Barty ISD must develop a comprehensive set of written policies and procedures which are in alignment with their business practices. These written policies and procedures must be written and implemented in compliance with grant rules and regulations and approved by the governing body before implementation. Budget The OGS/AFU completed a comparison of the approved budget and the grantee’s actual expenditures during 2017-18 and 2018-19 to date. Adequate internal controls do not exist in this area, Summary of budget review of GSRP funds: * OGS/AFU reviewed the grantee’s budget and actual expenditures and performed a comparison, OGS/AFU was not able to reconcile the grantee’s approved budget to actual expenditures. Expenditures in the general ledger for GSRP in FY 2018 were understated by $53,722.93. In 2017-18 the grantee did not use account coding consistently when entering transactions into their accounting system. » OGS/AFU noted in 2017-18 GSRP - Basic Programs: Supplies and Materials: expenditures were overstated in the general ledger by $31,510.47 which is a variance of 378.73%. * OGS/AFU noted in 2017-18 GSRP ~ Support Services: Salaries: expenditures were overstated in the general ledger by $3,079.31 which is a variance of 7.54%. » OGS/AFU noted In 2017-18 GSRP - Support Services: Benefits: expenditures were overstated in the general ledger by $2,785.23 which is a variance of 10.40%. ‘Summary of budget review of GSC funds: + OGS/AFU reviewed the grantee’s budget and actual expenditures and performed a comparison. OGS/AFU was not able to reconcile the grantee’s approved budget to actual expenditures. Expenditures in the general ledger for GSC in 2017-18 were understated by $116,649.87. In 2017-18 the grantee did not use account coding consistently when entering transactions into their accounting system. + OGS/AFU noted in 2017-18 GSC - Support Services - Pupil: Salaries: expenditures were overstated in the general ledger by $7,581.61 which is a variance of 48.26%. + OGS/AFU noted in 2017-18 GSC - Support Services - Pupil: Benefits: expenditures were overstated in the general ledger by $3,557.72 which is a variance of 70.84%. + OGS/AFU noted in 2017-18 GSC - Support Services - Pupil: Other Expenses: expenditures were overstated in the general ledger by $153.00. + OGS/AFU noted in 2017-18 GSC ~ Support Services - Business: Purchased Services: expenditures were overstated in the general ledger by $1.38.