Carthage ISD

Criteria: Districts are to request reimbursement for actual meals served to students through the National School Lunch and Breakfast program. The student must be present and provided the meal.

Condition: During the period between August 2023 and September 2023, the district served congregate breakfast meals to the elementary campus. Instead of reporting the number of actual meals served to students in attendance each day the district reported the meal count and requested reimbursement based on the number of students enrolled in the classroom. No adjustment was made for student absences.

Cause: The staff person preparing the request for reimbursement NSLP Claim for Reimbursement was not properly trained as to what qualified as a reimbursable meal. There was a lack of review and internal control as well as segregation of duties over the recording of meals served through the request for reimbursement process.

Effect: The District was required to reimburse TEA $90,071.12 related to the compliance violation.

Criteria: Districts are required by the Texas Department of Agriculture to obtain prior approval for the purchase of capital assets (equipment) with a cost of $5,000 or greater.

Condition: The district failed to obtain the prior approval for the purchase of 8 equipment items. As listed below for a total of $134,020. $7,522.00 HVAC 8,900.00 Humidified Holding Cabinet 26,241.50 Heat Pump System 26,241.50 Heat Pump System 26,241.50 Heat Pump System 26,241.50 Heat Pump System 6,301.00 Ice Machine 6,301.00 Ice Machine $134,020.00

Cause: Management did not have clear job duties established as to who was responsible for obtaining the approval. The staff of the District were not properly educated on the requirements of the program. The internal controls of the district were not effectively designed and implemented to mitigate the risk of non-compliance.

Effect: The District is at risk of being required to cover the cost of assets purchased without approval from resources of the general fund or the capital projects fund. The District was not incompliance with the rules related to procurement for the National School Lunch and Breakfast Program as administered by the Texas Department of Agriculture.

Questioned Cost Identified: $134,020

Criteria: Districts are to design and implement internal controls over the collection of local revenue, in particular, the fees for student reduced and full-price meals and ala cart items, as well as adult meals purchased. These internal controls should include segregation of duties at the campus level as well as management review and approval at the central office. Districts are required to reimburse from the general fund any unpaid meals at year end where students were allowed to charge but never paid for their meal.

Condition: Upon initial review and analytical procedures performed during the planning stage of the audit we noted only $71,126 in local revenue in the food service program related to monies collected by the district at the campus level for full and reduced-priced student breakfast and lunch as well as any ala cart items and including meal served to teachers and other adults. Management’s initial response to our inquiry as to the low amount of collection was that participation was low in the food service program in general. We performed a predictive test to calculate the amount of local revenue expected based on the meal prices and the number of meals noted as served to students from the system designs report for the number of meals served for the year ended August 31, 2024. We calculated we should have collected $131,700 in local revenue, resulting in a difference of $60,582.49 of revenue booked.

We also noted the District purged from the point of sale system the negative balance of 993 students who had been allowed to accumulate $54,724 in charges during the year under audit. Students were allowed to charge their meals, and no attempt was made to collect the balances due from the students. Per management the write-off of unpaid balances annually has been in practice for multiple years the amount of write-off for the year ended August 31, 2023, was $50,272.

Cause: There is a lack of segregation of duties related to the food service program. There is a lack of review, reconciliation and management oversight at the central office level of the activity in the food service program in general. No one at any level within the district was properly monitoring the local collections of monies for the meals provided. There is a lack of knowledge of the rules and requirements of the food service program.

Effect: Some but not all local revenue for which the district is entitled is being collected and deposited into the district’s accounts. The District must reimburse the Food Service Fund $54,724, for fiscal year August 31, 2024 write-offs as well as $50,272 for August 31, 2023 write-offs.

Criteria: Schools are required to charge a minimum price for lunches. This minimum price is calculated annually using the Paid Lunch Equity (PLE) Tool provided by the USDA. School that choose to contribute non-Federal sources to the non-profit school food service account in lieu of raising paid lunch prices must calculate the appropriate amount to contribute.

Condition: The District charged $2.50 for lunch at the high school and junior high campus and $2.00 at the lower grade campuses. The PLE minimum price per meal was $2.95. The District did not charge the minimum lunch price.

Cause: The staff of the District were not properly trained on the requirement, and no administrative level staff person was assigned the responsibility to oversee this compliance.

Effect: The estimated required contribution from the general fund to the food service fund is $25,000 based on approximately 50,000 meals served without a price increase.