Recent Changes to Elementary and Secondary Education Act (ESEA)

This portion of the Compliance Supplement is intended to direct the auditor's attention to recent changes to the Elementary and Secondary Education Act programs that may influence the conduct of the audit.

Flexibility Provisions

The reauthorized ESEA, in combination with the Goals 2000: Educate America Act and the School to Work Opportunities Act, emphasizes greater flexibility in the use of Federal funds and the number of Federal process requirements in order to improve teaching and learning. This flexibility is coupled with greater State and local accountability for educational results. New areas of flexibility that the U.S. Department of Education (ED) is working to implement include the following:

Schoolwide programs. Title I, Part A of ESEA lowers the eligibility threshold for schools that want to operate schoolwide programs. (For school year 1995-96, 60 percent or more of the children enrolled in the school or residing in the school attendance area must be from low income families for the school to be a schoolwide program; for 1996-97 and beyond, the eligibility threshold is 50 percent or higher.) Eligible schools are able to use their Title I funds, as well as combine most of their Federal education funds to upgrade the entire educational program of the school and to raise academic achievement for all students. Schoolwide programs are not required to track Federal funds separately at the individual school level.

Submission of a consolidated plan to receive Federal funds. ESEA allows both States and local educational agencies (LEAs) to file single, consolidated plans that include many Federal programs supporting elementary and secondary education. States have a choice in determining which programs to include in a consolidated plan. The development of a single plan eliminates the need to develop separate, often overlapping, plans for each Federal program. A consolidated plan is designed to reduce program fragmentation and improve the use of Federal funds to support State and local reform efforts. Guidance developed by ED permits States to submit a simplified plan that focuses on those efforts and omit much of the program-specific information that otherwise would be required in a plan for each of the programs included in the consolidated plan. Submission of a consolidated plan, however, does not relieve States or LEAS of the programmatic responsibilities described in the individual program statutes or regulations nor does it authorize commingling of funds. Except in the case of a schoolwide program or consolidated administrative funds, Federal program funds must be accounted for separately for each Federal program.

Consolidation of administrative funds. State educational agencies (SEAs) and LEAs may consolidate funds received for administration of many ESEA programs and several non-ESEA programs, thus eliminating the need to maintain separate time and effort records for SEA and LEA personnel who work on more than one of those Federal programs or otherwise account for these funds on a program-by-program basis.

Availability of funds for other authorized purposes. If an LEA determines that, for any fiscal year, funds under one of several ESEA programs (not including Title I, Part A) are not needed, it may use up to five percent of the funds allocated to that program for another covered ESEA program. An LEA, an individual school, or consortium of schools (if there is no governing LEA), with the approval of the Secretary, may use up to five percent of its ESEA funds (including Title I, Part A) to implement a coordinated services project under Title XI of ESEA.

Waiver of certain program requirements. Under Title XIV of ESEA, States, LEAs, and schools may request waivers from the ED of many of the statutory and regulatory requirements of programs authorized in ESEA. Similar waiver authority exists under the Goals 2000: Educate America Act and the School to Work Opportunities Act. Also under the educational flexibility (Ed-Flex) demonstration program of Goals 2000, the Secretary has delegated to some SEAs the authority to waive certain Federal statutory or regulatory requirements affecting the State and its districts and schools. In conducting an audit, auditors should ascertain from the audited SEA and LEAs whether ED (or an SEA, if an Ed-Flex State) has granted any written waivers to the State, the LEAs, and through LEAs schools.

Prima Facie

Under statutory amendments included in IASA, determination letters that resolve audit findings and seek the recovery of funds, must "establish a prima facie case," and include an analysis of the value of the program services actually obtained in determining harm to the Federal interest and the amount to be recovered. In other words, if--despite a violation of program conditions--a grantee uses $100,000 to deliver satisfactory program services to eligible children, these services would have to be considered in determining harm to the Federal interest. "Establishing a prima facie case" essentially means that a determination letter must contain or attach enough evidence to enable a reasonable person to draw from it the inferences sought to be established--in general, that the violation cited occurred, and that funds in the amount in question were misspent. It is not sufficient for a determination merely to state the facts and law that would support the recovery of funds. Accordingly, audit reports must provide complete and convincing information on all findings in accordance with Sections 7.51-53 and 7.60 of the Government Auditing Standards (1994 Revision). In addition, the workpapers must contain sufficient information on the evidence that supports each finding in accordance with sections 4.34 - 4.38 of the Government Auditing Standards (1994 Revision). Such audit reports also should provide any available information on the value of the program services received.
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[Guidance for Audits of SEAs or LEAs]

[Cross-cutting Provisions]