Arizona

Finding 6: ADE charged indirect costs to State Leadership.

Relevant sections of law and regulation: Sections 221, 222, 223, and 241(a) of AEFLA (Pub. L. 105-220)

Discussion: ADE has charged unrestricted, indirect costs to both State Administration and State Leadership funds, at the rate they negotiated with their cognizant agency, U.S. Department of Education. The team saw evidence of indirect charges on their budget balance reports, for State FYs2012, 2013, and 2014. AEFLA grantees may charge a restricted indirect cost rate against State Administration, but not State Leadership.

The budget balance reports provided on-site revealed potential overspending on AEFLA State Administration, resulting from indirect cost expenditures if the indirect costs were applied appropriately under State Administration. Specifically, based on ADE’s award amount for FFY 2011, its State Administration cap was $637,729.65. However, it charged $67,757.71 in indirect costs under State Administration; $130,053.29 under State Leadership; and, $19,196.64 under EL/Civics State Leadership, using its ED negotiated indirect cost rate. If the additional indirect costs charged under State Leadership had been correctly included only under State Administration, ADE would have exceeded its cap on State Administration costs, by $149,249.93 ($130,053.29 + $19,196.64).

DAEL may pursue recovery of past overcharges to State Administration, as a result of failure to report any indirect cost charges on federal financial reports. However, DAEL is not inclined to pursue repayment, provided that ADE commits to timely completion of the required actions above.

Finding 5: English Literacy/Civics (EL/C) programs of instruction expenditures were not sufficiently tracked to ensure that funds were used to provide integrated English literacy and civics education services to immigrants and other limited English proficient populations.

Relevant sections of law and regulation: 34 CFR §§ 80.20 and 80.40; Sections 222 and 241(a) of AEFLA (Pub. L. 105-220); Department of Education Appropriations Act, 2009 (Public Law 111-8, approved March 11, 2009); Department of Education Appropriations Act, 2010 (Public Law 111-17, approved December 16, 2009); Full-Year Continuing Appropriations Act, 2011 (Public Law 112-10, approved April 15, 2011); 2 CFR Part 225, Appendix B (subsection 8.h)

Discussion: Between July 1, 2009 and July 1, 2012, the state did not track the distribution of EL/Civics funds to local providers to ensure that those funds were used to provide integrated English Literacy and Civics education services to immigrants and other limited English proficient populations. While each of the respective Financial Status Reports (FSRs) submitted by the state during the timeframe above indicated that the state had met the requirement to expend 82.5% of the EL/Civics funds on Programs of Instruction, the state was not able to document how much of the funds had been distributed and to which providers. State staff reported that all AEFLA funded providers were required to integrate civics education into adult education services. However, ADE staff was not able to document how much money at which local providers had been used to provide integrated English Literacy and Civics education services to immigrants and other limited English proficient populations.

DAEL may pursue recovery of FY 2009 – 2011 EL/Civics funds, as a result of failure to track the distribution and expenditures of the funds. However, DAEL is not inclined to pursue repayment, provided that ADE commits to timely completion of the required actions above.

Finding 4: ADE did not compete English Literacy (EL)/Civics funds.

Relevant sections of law and regulation: Section 203 and 231 of AEFLA (P.L. 105-220)

Discussion: ADE conducted a grant competition for AEFLA funds, in 2009. However, EL/Civics funds were not competed separately as a part of that competition. As part of the 2009 competition for AEFLA funds, the state set a requirement that all AEFLA funded providers must provide integrated EL/Civics instruction. Through discussions with administrative staff, the monitoring team learned that since July 1, 2012, ADE has limited the distribution of EL/ Civics funds to two local providers. However, in awarding these funds to those two providers, the monitoring team learned that ADE never conducted a competition, according to the provisions outlined in section 231 of AEFLA.

Finding 3: ADE does not adequately monitor local providers’ adherence to the state’s assessment policy.

Relevant sections of law and regulation: Section 212 of AEFLA, 20 U.S.C. § 9212; 34 CFR Part 462, Subpart D; and the NRS Implementation Guidelines (OMB Control Number 1830-0027)

Discussion: ADE’s policy for program year 2013-2014 specifies that providers may use, and administer multiple “progress tests” during a fiscal year; however, “progress test timeframes must be adhered to,” and “exceptions to progress test timeframes should be limited and rare,” “documented on a progress Assessment Exception Form,” and “kept with student records.”

The team observed that local providers understood the policy, but had not properly applied the provisions for testing exceptions. Among some local providers, testing exceptions appeared to be granted on a more frequent basis than can be characterized as “limited and rare.” The “Assessment Exception Forms” that were reviewed by the monitoring team were incomplete, often missing approval signatures. ADE did not provide evidence that information to correct misunderstandings, or misperceptions of the exception policy, was made available to local providers.

Finding 2: ADE did not ensure that local providers retained records in accordance with federal regulations.

Relevant sections of law and regulation: EDGAR 34 CFR 76.730 - 731; 80.42

Discussion: EDGAR requires that a state and a subgrantee keep records to show compliance with program requirements. Through discussions with state staff and local providers, the monitoring team learned that records retention regulations, particularly those that would substantiate appropriate implementation of ADE’s assessment policy, were not being maintained consistently among subgrantees. In some programs, records were kept through the current instructional term, and then destroyed. In one local program, assessment records were retained for no more than a semester, by individual teachers.

Finding 1: ADE has not developed or implemented appropriate procedures to conduct follow-up surveys on required outcome measures.

Relevant sections of law and regulation: Section 212 of AEFLA, 20 U.S.C. § 9212; and the National Reporting System (NRS) Implementation Guidelines (OMB Control Number 1830-0027)

Discussion: ADE collects follow-up data through student surveys, in order to report on outcome measures for the NRS. The state was unable to demonstrate that it had complied with NRS Implementation Guidelines conducting follow-up surveys. NRS Implementation Guidelines require that states using survey methodology provide staff with a standard survey questionnaire and that staff conducting the survey must follow a uniform set of procedures to collect data in a valid and reliable manner. NRS Implementation Guidelines also require that staff conducting the survey must be trained in its administration. At the time of the visit, the monitoring team found no evidence that the state provided either a standard survey or a uniform set of procedures to collect data in a valid and reliable manner. During site visits and during the focus group, local providers reported using phone, correspondence, email, and social media. The team observed little consistency among providers. Interviews with ADE staff and review of documents provided at the time of the visit revealed no evidence of a standard survey, or uniform set of procedures.

For FFYs 2005 and 2006 the State has used, as a part of its required match, activities not consistent with the purpose of AEFLA.

ADE has incorrectly categorized certain State administrative expenditures as State leadership expenditures and has incorrectly categorized certain indirect costs as direct costs.

ADE has not aligned State administrative and State leadership functions properly.

ADE conducted a competition to award AEFLA grant funds that did not comply fully with AEFLA’s guarantee of direct and equitable access to funds and use by the State of the same grant announcement and application process for all eligible local providers.