Fairhaven Public School District's Use of Certain American Recovery and Reinvestment Act Funds

This is a Massachusetts State Auditor report on Fairhaven Public School District’s use of certain federal stimulus education funds during August 10, 2010 through June 30, 2011.

“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws, we have conducted an audit of certain activities of the Fairhaven Public School District (FPSD) for the period August 10, 2010 through June 30, 2011.”

The audit checked whether the district used Race to the Top and Education Jobs stimulus money for the right purposes and followed accounting and reporting rules.

“The objectives of our audit were to determine whether American Recovery and Reinvestment Act of 2009 (ARRA) funds awarded to FPSD for Race to the Top (RTT) and Education Jobs programs were used for their intended purposes and in compliance with program requirements, and to evaluate whether FPSD was complying with ARRA accounting and reporting requirements.”

The money came from federal stimulus programs, so the public needed assurance that it was protected from misuse and handled according to special rules.

“Agencies charged with administering ARRA programs have a responsibility to establish an adequate system of internal controls that will provide reasonable assurance of compliance with applicable laws, rules, and regulations and will ensure that funds are safeguarded from loss, theft, and misuse.”

For residents, this report explains how much federal education stimulus money was awarded, how much had been spent by June 30, 2011, and that two full-time-equivalent jobs were reported as retained with Education Jobs funds.

“In addition to reporting the uses of program funds, information reported to MRRO indicated that two FTE positions were retained with the Education Jobs program as of June 30, 2011.”

The district needed to document ARRA-specific controls and avoid holding more federal cash than it immediately needed.

“Without ARRA-specific internal controls that identify risks and ways to mitigate them, FPSD cannot ensure compliance with applicable laws, rules, and regulations or that ARRA funds are adequately protected from loss, theft, or misuse.”

The auditor recommended that the district create ARRA-specific internal controls, return excess federal funds when it has more than it needs, and update budgets when planned spending changes.

“FPSD should develop internal controls and risk assessments specific to ARRA as a way to address the objectives and risks of handling ARRA funds.”

The issue was not that auditors found the money was spent on unallowable costs; the significance was that weak controls and early cash advances created avoidable risk in handling public funds.

“As a result, FPSD received some ARRA funding significantly in advance of its needs, which is contrary to federal guidelines.”

“Excess cash position” means the district had federal money sitting on hand beyond its immediate needs instead of spending it promptly or returning it.

“Specifically, during our audit period FPSD received advances of $133,671, of which $43,109 remained unspent for as many as 65 days.”