**UNITED STATES DEPARTMENT OF EDUCATION**

**OFFICE OF INSPECTOR GENERAL**

32 OLD SLIP, 26^th^ FLOOR

FINANCIAL SQUARE

NEW YORK, NEW YORK 10005

PHONE (646) 428-3860 FAX (646) 428-3868

April 11, 2006

> **Control Number ED-OIG/A02-F0005**

Dr. Betty J. Sternberg

Commissioner

State Department of Education

165 Capital Avenue

Hartford, CT 06106

Dear Commissioner Sternberg:

This **Final Audit Report**, entitled *New Haven School District's
Administration of Title I, Part A Summer and After School Programs,*
presents the results of our audit. The objective of the audit was to
determine whether the New Haven Public Schools (New Haven) properly
administered summer and after school programs funded with Elementary and
Secondary Education Act (ESEA), Title I, Part A (Title I) funds, in
accordance with Federal laws and regulations. Our review covered the
period July 1, 2001, through June 30, 2004.

In its comments to the draft report, the State of Connecticut Department
of Education (State) strongly requested our reconsideration of the audit
finding and recommendations. The State enclosed a detailed response
prepared by New Haven school officials. The State did not concur with
the finding and all four of the recommendations. Because of the
voluminous number of attachments included in the State's comments to the
draft report, we have not included them in this report. Copies of the
attachments are available on request. We summarized the State's comments
at the end of the finding and included them as **Attachment B** to the
report.

BACKGROUND

The Title I program is authorized under ESEA, as amended by the
Improving America's Schools Act of 1994, Public Law 103-382, and the No
Child Left Behind Act of 2001, Public Law 107-110. Title I is the
largest elementary and secondary education program, which supplements
State and local funding for low-achieving children, especially in
high-poverty schools. Part A of Title I provides financial assistance
through State Education Agencies to local educational agencies (LEAs) to
ensure that all children have a fair, equal, and significant opportunity
to obtain a high-quality education and reach, at a minimum, proficiency
on challenging State academic achievement standards and State academic
assessments. Title I funds may be used by LEAs for schoolwide or for
targeted assistance programs. Under a schoolwide program, an LEA may
consolidate and use Title I funds with other Federal, State, and local
funds in order to upgrade the entire educational program of a school if
not less than 40 percent of the children enrolled in the school are from
low-income families. All of New Haven's eligible Title I schools
operated schoolwide programs during our audit period.

New Haven is a school district serving 20,694 students in 49 schools.
Approximately 67 percent of New Haven's students qualified as
economically disadvantaged. New Haven received Title I funding from the
State totaling \$11.50 million for the grant period July 1, 2001,
through June 30, 2003, \$14.70 million for the grant period July 1, 2002
through, June 30,2004, and \$14.56 million for the grant period July 1,
2003 through, June 30, 2005. The approved grant applications for these
periods stated that a portion of the Title I funds were to be used for
eligible summer and after school programs.[^1]

New Haven operated summer and after school programs during the July 1,
2001, through June 30, 2004 period. For this period, New Haven's Title I
summer program expenditures totaled \$3.78 million, and its after school
program totaled \$1.03 million.[^2] The following table provides the
summer and after school program expenditures by school year (000s
omitted).

+----------------+-----------+-------------+------------+------------+
| **Table        |           |             |            |            |
| 1Summer and    |           |             |            |            |
| After School   |           |             |            |            |
| Program        |           |             |            |            |
| Expenditures   |           |             |            |            |
| by School      |           |             |            |            |
| Year**         |           |             |            |            |
+----------------+-----------+-------------+------------+------------+
| ##             | **2001 -  | **2002 -    | **2003 -   | **Totals** |
|                | 2002**    | 2003**      | 2004**     |            |
| ## Program     |           |             |            |            |
+----------------+-----------+-------------+------------+------------+
| Summer         | \$1,185   | \$1,396     | \$1,202    | \$3,783    |
+----------------+-----------+-------------+------------+------------+
| After School   | 343       | 352         | 334        | 1,029      |
+----------------+-----------+-------------+------------+------------+
| **Totals**     | **        | **\$1,748** | *          | *          |
|                | \$1,528** |             | *\$1,536** | *\$4,812** |
+----------------+-----------+-------------+------------+------------+

Examples of the summer programs included: Grades 3 through 6
Mandatory,[^3] West Rock Hot Shot Basketball Camp, Superintendent's
Executive CMT[^4] Camp (SECSC), and the Summer Tutorial and Enrichment
program.

According to the State, the after school program provided a bridge
between formal learning in school and informal learning in community
-based organizations. Program curriculums and activities provided
opportunities for stimulating curiosity and instilling the love of
learning to lay the foundation for future successful learning in school
and in life.

AUDIT RESULTS

New Haven generally accounted for and used Title I funds for its after
school programs in accordance with applicable laws and regulations. For
summer programs, we found that New Haven did not properly administer the
\$3.78 million of Title I funds it expended, in accordance with Federal
laws and regulations.

# FINDING -- The New Haven School District did not properly administer \$3.78 Million in Title I summer program funds

New Haven improperly expended \$3.78 million in Title I funds on
ineligible summer programs. Our review of the summer programs disclosed
that New Haven supplanted funds from non-Federal sources. In addition,
15 of New Haven's 21 summer programs either did not include
documentation to support challenging academic instruction, were held in
ineligible schools, or lacked proper documentation. (See **Attachment
A** for ineligible summer programs). The City of New Haven's accounting
system, the official accounting system for New Haven, identified
expenditures in the aggregate and could not identify individual
expenditures for its 21 summer programs. Accordingly, we questioned the
entire \$3.78 million in Title I summer programs expenditures during the
July 1, 2001, through June 30, 2004, period.

####### Supplanted Funds from Non-Federal Sources

New Haven expended Title I funds to supplant, rather than supplement,
State funds for the Grades 3 through 6 Mandatory summer program and the
Summer Studies program. Although New Haven's accounting system did not
break out expenditures for each summer program, New Haven budgeted
\$1.58 million for the Grades 3 through 6 Mandatory summer program and
\$198,817 for the Summer Studies program, for a total of \$1.78 million.
The Summer Studies program was for salaries of the Grades 3 through 6
Mandatory program paraprofessionals. The Director of Instruction for the
summer programs stated that the Grades 3 through 6 Mandatory summer
program was a State-required program. This program was for children who
were at risk of failing and had to attend summer school. If the students
failed to attend summer school, the New Haven Board of Education would
not promote the student to the next grade. Since New Haven was a
priority school district, as defined by the State, and Grades 3 through
6 Mandatory summer program was a State-required program, State funding
should have been used instead of Federal funds. As a result we are
questioning the total amount of \$1.78 million.

Section 1120A(b)(1) of the ESEA requires a State educational agency or
local education agency to use Title I funds received to supplement and
not supplant the funds that would, in the absence of such Federal funds,
be made available from non-Federal sources for the education of pupils
participating in programs assisted under Title I.

Connecticut Statute, Title 10, Chapter 172, (2005), has provisions for
priority school districts to fund summer programs for poor performing
students. Section 10-265*l*, provides requirements for additional
instruction for poor performing students in priority school districts:

> Each local and regional board of education for priority school
> district . . . shall, within available appropriations, require the
> schools under its jurisdiction to provide additional instruction,
> unless the school principal determines that such instruction is not
> necessary based on the recommendations of the student's teacher, (1)
> for the 2000--2001 school year, and each school year thereafter, to
> each student who fails to meet the state-wide standard for remedial
> assistance on the reading component of the fourth grade mastery
> examination . . . \[,\] on the sixth grade mastery examination . . . .
> The instruction shall be designed to address the student's
> deficiencies and may include tutoring, an after school or school
> vacation program, or a weekend school program . . . .

####### No Documentation to Support Challenging Academic Instruction

We noted that 3 of the 21 summer programs had no documentation to
support challenging academic instruction. According to the Director of
the West Rock Hot Shot Basketball Camp, the academic portion of the
basketball camp was geared toward the CMT. A review of the application
submitted to the Director of Instruction, disclosed that the West Rock
Hot Shot Basketball Camp was a free four-week camp open to all students.
According to the application, the daily six and one-half hour schedule
for academics included only 30 minutes for time-out reading and a
computer literacy program during the camp's lunch period. The remaining
time was spent on basketball games, drill sessions, and a camp
competition. We concluded that the West Rock Hot Shot Basketball Camp
documentation did not meet the academic content requirements of the
ESEA.

According to the ESEA, § 1111(b)(1)(A), "Each State plan shall
demonstrate that the State has adopted challenging academic content
standards and challenging student academic achievement standards that
will be used by the State, its local educational agencies, and its
schools to carry out this part . . . ."

Section, 1114(b)(1) of the ESEA states---

> A schoolwide program shall . . . (ii) use effective methods and
> instructional strategies that are based on scientifically based
> research that (I) strengthen the core academic program in the school;
> (II) increase the amount and quality of learning time, such as
> providing an extended school year and before- and after-school and
> summer programs and opportunities, and help provide an enriched and
> accelerated curriculum; and (III) include strategies for meeting the
> educational needs of historically underserved populations; \[and\] . .
> . include strategies to address the needs of all children in the
> school, but particularly the needs of low-achieving children and those
> at risk of not meeting the State student academic achievement
> standards who are members of the target population of any program that
> is included in the schoolwide program.

####### 

####### Ineligible Schools

New Haven held five of its summer programs at ineligible schools.
According to the documents provided by the Director of the
Superintendent's Executive CMT Summer Camp, 9 of the 31 schools
participating in this summer program were not eligible to receive Title
I funding.

Section 1113 of the ESEA, Part (1) states, "A local education agency
shall use funds received under this part only in eligible school
attendance areas." Part (2)(A) states,

"the term 'school attendance area' means, in relation to a particular
school, the geographical area in which the children who normally served
by that school reside."

####### Lack of Proper Documentation

New Haven officials were unable to provide proper documentation for 11
of 21 summer programs during our audit period. For example, the summer
Tutorial and Enrichment program had no documentation to determine if it
was eligible for Title I funding. The Superintendent of Schools stated
that he had no documentation for this summer program. He could not
provide attendance records, academic curricula, and test results.

According to 34 C.F.R. § 76.731, "A . . . subgrantee shall keep records
to show its compliance with program requirements."

Connecticut Statute, Title 10, Chapter 172 (2005), has provisions for
priority school districts to fund summer programs for poor performing
students. According to Title 10, Chapter 172, § 10-265*m*, the State
requires each local and regional board of education for a priority
school district to submit a plan for the expenditure of grant funds for
summer school programs. This plan shall include, criteria for student
participation in the program, criteria for teacher selection that
emphasize the skills needed for teaching the summer program, and
criteria for establishment of the curriculum for the summer program.

New Haven officials addressed the after school and summer programs in
their Priority School District Consolidated Application. However, they
could not provide the documentation required by the State to determine
if the 11 programs were eligible for Federal or State funding.

The problems with the summer programs occurred because New Haven
officials did not properly monitor Title I expenditures. They also
lacked an understanding in identifying summer programs eligible to be
funded with Title I funds. As a result, New Haven improperly expended
\$3.78 million[^5] of Title I funds to pay for ineligible summer
programs during the July 1, 2001, through June 30, 2004 period.

####### 

####### Recommendations

We recommend that the Assistant Secretary for Elementary and Secondary
Education, instruct the Connecticut Department of Education to:

1.1 Assure that New Haven's accounting system identifies all
expenditures associated with each Title I summer program.

1.2 Require New Haven to identify and return Title I funds that it used
to supplant State funding for the Grades 3 through 6 Mandatory program.

1.3 Require New Haven to identify Title I expenditures associated with
ineligible summer programs and return those funds to the U.S. Department
of Education, or return the entire \$3.78 million of Title I funds used
to pay for summer programs.

1.4 Properly monitor New Haven's Title I expenditures to assure that the
summer programs are eligible for Title I funds and that expenditures are
properly documented in accordance with Federal and State laws.

**State Comments:**

The State disagreed with the finding and all four of the
recommendations. The State contended that the audit methodology was
seriously flawed and that the auditors failed to review the voluminous
documentation and accounting records supporting the summer programs at
issue. The State claimed that the draft report erroneously relied on
budgeted figures rather than actual expenditures. The State commented
that the draft report failed to take schoolwide flexibility into account
and that each of the four rationales used to support the finding were
inaccurate. Specifically, the State claimed that the audit incorrectly
applied or misinterpreted: (1) summer program documentation
requirements, (2) the "supplement not supplant provision" of NCLB, (3)
the "lacking challenging academic instruction," and (4) the Title I
eligibility of summer program sites.

####### OIG Response

We considered the State's response to the finding, but our position
remains the same. The State did not provide sufficient and relevant
documentation to support its position that the audit methodology was
flawed. In fact, the State's comments and voluminous attachments had no
relevance to the audit methodology and did not address the finding
within the scope of the audit.

The State had concerns with the audit methodology, including the failure
to consider and review the abundance of available documentation that New
Haven officials had provided. However, the documentation that New Haven
provided during the audit did not adequately or fully support the Title
I program requirements. New Haven did not provide any documentation to
support program compliance for 10 of 21 summer programs listed in
Attachment A. The documentation for an eleventh program was inadequate
because it did not address the program during the period audited.

The State contended that the audit did not consider the extensive
official school district records of summer program expenditures
maintained by New Haven, which carefully identified expenditures on a
program-by-program basis. However, our review of all summer program
transactions provided by the City of New Haven and New Haven disclosed
that New Haven was unable to determine expenditures on a
program-by-program basis although we requested this information. For
example, New Haven's Title I Programs Statement of Expenditure Report
for School Year 2001-2002 listed expenditures by program. But, this
report listed the summer program expenditures in totals only by object
code, i.e. other personnel, equipment, and field trips. Despite our
requests for expenditures by summer program activity, neither New Haven
nor the State provided it.

An example of inadequate documentation concerned the Latino Youth
program. During the audit, the New Haven Superintendent stated that the
Latino Youth program was on the verge of financial collapse and that he
provided it Title I funding to keep this program operating. He also
stated that he had no documentation for this program. In the State's
response, the State provided an example of financial documentation for
the Latino Youth program. This documentation consisted of a vendor's
invoice for \$10,000 for 70 students served, the City of New Haven's
payment, and an agreement between the New Haven Board of Education and
Latino Youth Development. However, this documentation lacked specific
pertinent details regarding the eligibility of the students, a listing
of the students attending the schools, and the scope of services
provided.

Another example of inadequate documentation concerned the
Superintendent's CMT Camp. In response to questions regarding school
eligibility, the director of the program provided a list of students
that attended this camp. This list included the student name, grade
level, teacher name, activity, and school name. However, the school name
was not the school the student attended, but the summer program itself.
By not listing the school, there was no way to determine if the students
attended an eligible Title I school. The State's response did not
provide any documentation for this example cited in the report.

The State's response states that " . . . the Draft erroneously relies on
the amounts budgeted rather than the actual expenditures spent on the
summer programs at issue." However, New Haven did not provide
documentation of actual Title I expenditures by program activity as
requested during the audit. In fact, the Manager of Finance
Administration stated that New Haven was not able to provide this level
of detail for the scope of our audit at the time of our audit. Our
review of all transactions associated with the summer and after school
programs disclosed that it was not possible to determine what the
program funds were actually spent on. New Haven's financial accounting
system did not report expenditures by program; it only reported summary
expenditures by account number. Since specific expenditures were not
available for the summer program activities, we were forced to use
budgeted amounts to illustrate the budgeted cost of specific summer
program activities cited in the report. However, the total expenditures
of \$3.78 million that we cite in our report is not a budget amount, but
is the total amount of actual expenditures for the summer program
recorded in New Haven's accounting system.

The State claimed that the audit incorrectly applied NCLB's "supplement
not supplant" provision in the analysis of New Haven's summer programs
funding. We agree with the State's comment that a portion of the Grades
3-6 Mandatory and Summer Studies programs were funded and mandated by
the State. In essence, grades 3 and 5 of these programs were eligible
for Title I funding. However, New Haven Title I funds were used for the
entire grades 3-6 Mandatory and Summer Studies programs without
excluding grades 4 and 6. The State did not provide evidence or support
that New Haven actually expended its State appropriation. Since New
Haven was unable to break out the expenditure for grades 4 and 6 from
these grades 3 through 6 programs, we took exception to the entire
amounts.

The State challenged the finding on ineligible schools by stating that
the audit failed to take schoolwide flexibility into account. The State
cited student enrollment as a determining factor. However, New Haven did
not provide adequate student enrollment documentation to ensure that
students attending five summer programs were eligible to participate in
Title I programs. Without this documentation, it was not possible to
determine Title I eligibility. In addition, these five summer programs
were held at schools that did not meet Title I demographics requirements
based on New Haven's Title I ranking for schools and allocation of
funds.

[]{.mark}

The State took exception to the lack of documentation to support
challenging academic instruction at 3 of 21 summer programs. The State
provided new documentation for the New Haven Hot-Shot Camp (NHHSC) and
Ikennas Kitchen, two of the three programs questioned in the report. The
NHHSC documentation stated that its participants would spend fifty
percent of their time on non-fiction reading (academic instruction) and
the remaining fifty percent on basketball. During the audit, New Haven
asserted that NHHSC's program showed only one of six hours on academics
and the remaining five hours on basketball. The Director stated that
NHHSC was modified for school year 2004-2005 which is beyond the scope
of our review. The State also submitted new documentation for a summer
program called Ikennas Kitchen. However, this documentation was
inconsistent with New Haven's summer program application for school year
2003-2004. This application listed daily sports activities including
tennis, nature walks, biking, and golf. It is our position that these
two programs clearly lacked the necessary documentation to support
challenging academic instruction.

OTHER MATTERS

The City of New Haven issued duplicate payroll checks. We reviewed 413
payroll checks for personnel working at New Haven's summer basketball
programs during the July 1, 2001, through June 30, 2004 period and found
54 (13 percent), had duplicate check numbers. This occurred because the
City of New Haven's accounting system lacked an internal control to
prevent the issuance of payroll checks with duplicate check numbers.
Specifically, the same check numbers were issued for both electronic
direct deposits and manually prepared checks. Consequently, the
potential misuse of funds

exists since duplicate check numbers are difficult to properly
reconcile. Although we found no monetary loss, we brought this matter to
the attention of the Supervisor for Payroll and Pensions for the City of
New Haven.

OBJECTIVE, SCOPE, AND METHODOLOGY

The objective of the audit was to determine whether New Haven properly
administered summer and after school programs funded Title I funds, in
accordance with Federal laws and regulations for the July 1, 2001,
through June 30, 2004 period.

To achieve the audit objective, we evaluated the procedures and
practices used by the New Haven Board of Education to oversee summer and
after school programs. We also reviewed data obtained from the City of
New Haven's financial system and the Board of Education's Business
Office. We interviewed officials from the offices of the Superintendent,
Business Manager, Summer Program Coordinators, and Summer Program
Directors. We also interviewed State Department of Education officials
responsible for the oversight of New Haven. We examined OMB Circular
A-133 Single Audit Reports for the years ended June 30, 2001, through
June 30, 2004, and reviewed the work performed by the independent public
accountant who prepared the Single Audit Reports.

To test New Haven's summer and after school program expenditures, we
judgmentally selected 52 of 234 vendor transactions totaling \$371,794,
of \$455,066 for the July 1, 2001, through June 30, 2004 period. This
represented 82 percent of the total costs associated with these
programs. We verified that all 413 checks paid to personnel associated
with New Haven's two summer basketball programs had been endorsed by the
payee. To determine the validity of other program payroll payments, we
randomly selected 20 of 303 transactions associated with the after
school program and 25 of 5,423 summer program transactions.

To ensure the accuracy and completeness of the data, we compared New
Haven's detailed Title I after school and summer program expenditures
for the July 1, 2001, through June 30, 2004 period, to expenditures
reported to the State for this period. These records were in agreement.

We conducted fieldwork at the Board of Education offices in New Haven
and at the State Department of Education, from December 8, 2004, through
September 13, 2005.

We conducted the audit in accordance with generally accepted government
auditing standards appropriate to the scope of the audit described
above.

ADMINISTRATIVE MATTERS

Statements that managerial practices need improvements, as well as other
conclusions and recommendations in this report, represent the opinions
of the Office of Inspector General. Determinations of corrective action
to be taken will be made by the appropriate Department of Education
officials.

If you have any additional comments or information that you believe may
have a bearing on the resolution of this audit, you should send them
directly to the following Education Department official, who will
consider them before taking final Departmental action on this audit:

> Dr. Henry L. Johnson

Assistant Secretary

Office of Elementary and Secondary Education

U.S. Department of Education

FB6, Room 3W315

400 Maryland Avenue, SW

Washington, DC 20202

It is the policy of the U. S. Department of Education to expedite the
resolution of audits by initiating timely action on the findings and
recommendations contained therein. Therefore, receipt of your comments
within 30 days would be appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. §552),
reports issued by the Office of Inspector General are available to
members of the press and general public to the extent information
contained therein is not subject to exemptions in the Act.

> Sincerely,
>
> /s/
>
> Daniel P. Schultz
>
> Regional Inspector General for Audit

Attachment(s)

**Attachment A**

## Ineligible Title I Summer Programs

+------------+-----------+-------+--------+-----------+----+--------+
| **         | **No      | **    | **     | **Lack**  | *  | *      |
| Ineligible | Docu      | Ineli | Suppla |           | *N | *Total |
| summer     | mentation | gible | nted** | **of      | ot | Bu     |
| Programs** | to        | Scho  |        | Proper    | es | dgeted |
|            | support   | ols** | *      | Docume    | ** | Costs- |
|            | Ch        |       | *Funds | ntation** |    | 2001   |
|            | allenging |       | from   |           |    | Thru   |
|            | Academic  |       | Non-F  |           |    | 2004** |
|            | Inst      |       | ederal |           |    |        |
|            | ruction** |       | Sou    |           |    |        |
|            |           |       | rces** |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| CT Shoot   |           | X     |        | X         | 3  | \$1    |
| Out        |           |       |        |           | ,4 | 24,752 |
| Basketball |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Grades 3-6 |           |       | X      |           | 2  | \$1,5  |
| Mandatory  |           |       |        |           |    | 80,981 |
+------------+-----------+-------+--------+-----------+----+--------+
| Grades K-5 |           | X     |        |           | 3  | \$8    |
| Scien      |           |       |        |           |    | 57,570 |
| ce/Reading |           |       |        |           |    |        |
| Acdmy      |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Early      |           |       |        | X         | 4  | \      |
| Child-hood |           |       |        |           |    | $3,811 |
| Mentoring  |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Farnam     |           |       |        | X         | 4  | \$     |
|            |           |       |        |           |    | 10,000 |
| House      |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Ikennas    | X         |       |        | X         | 1  | \$     |
| Kitchen    |           |       |        |           | ,4 | 45,979 |
+------------+-----------+-------+--------+-----------+----+--------+
| Latino     |           |       |        | X         | 4  | \$     |
|            |           |       |        |           |    | 19,292 |
| Youth      |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Ne         |           | X     |        | X         | 3  | \$     |
| ighborhood |           |       |        |           | ,4 | 25,000 |
| Place      |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Solar      |           |       |        | X         | 4  | \$     |
| Youth      |           |       |        |           |    | 15,000 |
| Steward    |           |       |        |           |    |        |
| Program    |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Summer     |           |       | X      | X         | 2  | \$1    |
| Studies    |           |       |        |           | ,4 | 98,817 |
+------------+-----------+-------+--------+-----------+----+--------+
| Summer     |           |       |        | X         | 4  | \$     |
| Tuto-rial  |           |       |        |           |    | 27,000 |
| &          |           |       |        |           |    |        |
| Enrichment |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| Supe       |           | X     |        |           | 3  | \$2    |
| rintendent |           |       |        |           |    | 12,451 |
| Exce. CMT  |           |       |        |           |    |        |
| Camp       |           |       |        |           |    |        |
+------------+-----------+-------+--------+-----------+----+--------+
| West Rock  | X         |       |        |           | 1  | \$1    |
| Hot Shots  |           |       |        |           |    | 07,137 |
+------------+-----------+-------+--------+-----------+----+--------+
| Varick     |           | X     |        | X         | 3  | \$     |
| Teen Life  |           |       |        |           | ,4 | 21,383 |
+------------+-----------+-------+--------+-----------+----+--------+
| Summer     | X         |       |        | X         | 1  | \      |
| Band Camp  |           |       |        |           | ,4 | $3,876 |
+------------+-----------+-------+--------+-----------+----+--------+
| **Total**  |           |       |        |           |    | **\    |
|            |           |       |        |           |    | $3,253 |
|            |           |       |        |           |    | ,049** |
+------------+-----------+-------+--------+-----------+----+--------+

[Notes:]{.underline}

1\. Little academic instruction was provided.

2\. This is a State-funded program for grades four and six. Supplanting
is the use of funds received from non-Federal sources for the education
of pupils participating in programs assisted under Title I.

3\. These summer programs were held at ineligible schools to receive
Title I funds.

4\. The New Haven Superintendent had inadequate supporting documentation
for the Title I eligibility of these programs.

**Attachment B**

**Auditee Response**

February 27, 2006

Mr. Daniel P. Schultz

Regional Inspector General for Audit

Office of Inspector General

U.S. Department of Education

32 Old Slip, 26^th^ Floor

Financial Square

New York, NY 10005

RE: Office of Inspector General Draft Audit Report---

Audit Control Number ED-OIG/A05-B0004

Dear Mr. Schultz:

Thank you for the opportunity to comment on the above referenced draft
audit report. Because the subject of that report dealt with the
operation of specific New Haven Board of Education educational programs,
we sought the assistance of their administrative staff in responding to
your proposed findings. I am enclosing a detailed response which was
forwarded to us by New Haven school officials.

Our review of their response finds compelling assertions involving the
failure to review all available documentation, erroneous reliance upon
budgeted rather than actual expenditures, school-wide flexibility,
eligibility of summer program sites and supplement versus supplant. For
the record, the argument put forth by New Haven on the issue of
supplement versus supplant is consistent with our interpretation of
state law on the use of state funds for summer programs. Additionally,
specific information about the educational merit of various programs
should satisfy your concerns as to their educational content and
eligibility for federal funding.

We are deeply concerned about the educational impact of any financial
disallowance that might result from the recommendations in your final
audit report. After discussion and review, our sense is that the New
Haven Board of Education is in substantial compliance with the Title 1
requirements and the audit does not show any harm to any identifiable
federal interest. It would indeed be a regrettable situation if New
Haven schoolchildren were denied federal funding for these important
programs.

We strongly request your reconsideration of the audit findings and
recommendations.

If you would like to discuss these matters or if we can be of further
assistance, please feel free to contact me.

> Sincerely,

/s/

> Mark. A. Stapleton, Director
>
> Division of Legal and Governmental Affairs

cc: Betty J. Sternberg, Commissioner

Brian Mahoney, CFO

Raymond Inzero, Chief of Internal Audit

Enclosure

**New Haven Public Schools**

**Response to Draft Audit Report: ED-OIG/A02-F0005**

Submitted to:

Daniel P. Schultz

Regional Inspector General for Audit

U.S. Department of Education

Office of Inspector General

32 Old Slip, 26th Floor

Financial Square

New York, NY 10005

The Draft Audit Report ED-OIG/A02 F0005 ("Draft"), issued January 30,
2006, erroneously concludes that the New Haven School District
(properly, the New Haven Public Schools, "NHPS") did not properly
administer funds expended for summer programs over the 2001-2002,
2002-2003, and 2003-2004 fiscal years.[^6] Additionally, the Draft makes
four recommendations in response to this erroneous finding. By this
response, NHPS respectfully requests that the finding and
recommendations stated in the Draft be reconsidered and that the
recommendations on recovery of funds be withdrawn as unsupported

NHPS respectfully submits that the audit methodology used was seriously
flawed. First and foremost, it appears the auditors failed to review the
voluminous documentation and accounting records supporting the summer
programs at issue. Notwithstanding the erroneous statement in the Draft
that there was no documentation available, there is an
abundance---literally binders---of such documentation available. Second,
the Draft erroneously relies on the amounts budgeted rather than the
actual expenditures spent on the summer programs at issue. The
correction for this flaw alone reduces the claim by over \$635,000.[^7]
Third, the audit, although recognizing that "All of New Haven's eligible
Title I schools operated schoolwide programs during our audit period,"
fails to take into account any sense of schoolwide flexibility.

Beyond these major flaws in audit methodology, which by their
independent merit seriously call into question any accuracy of the audit
finding, each of the four rationales detailed as supportive of the audit
finding are seriously flawed as well. From misunderstandings of the
legal requirements of "supplement not supplant" to a misconception of
what constitutes an eligible site for a summer program, the Draft
consistently misapplies applicable legal principles as well as
established United States Department of Education ("ED") policy. This
response first addresses the overarching flaws in audit methodology in
this case and then addresses the inaccuracy of each of the rationales
supplied for the Draft's finding.

I.  **OVERARCHING FLAWS IN AUDIT METHODOLOGY**

There are three major overarching flaws in audit methodology. These
flaws by themselves, before even considering the errors in legal
rationale behind the finding, seriously call into question the accuracy
of the finding.

A.  **THE AUDITORS FAILED TO CONSIDER AN ABUNDANCE OF AVAILABLE
    DOCUMENTATION, BOTH FINANCIAL AND PROGRAMMATIC, REGARDING THE NHPS
    SUMMER PROGRAMS**

There is an abundance of documentation regarding the NHPS summer
programs, both programmatic and financial, that the auditors clearly
failed to review. The Draft states that the City of New Haven's
accounting system was unable to identify expenditures for each specific
summer program activity. Draft, p. 6. Although the City's system may
only track the total funds the City issued to NHPS for its summer
programs as a whole, NHPS maintains extensive official school district
records of its summer program expenditures which carefully identify
expenditures on a program by program basis. As an example of the
financial documentation available through NHPS, we are providing
financial documents relating to one of the challenged summer programs,
Latino Youth. See Attachment A.[^8] In addition to the financial
documentation that the Draft fails to consider, an abundance of
programmatic documentation regarding each of the summer programs is
available through NHPS as well.[^9] The Draft totally misquotes district
officials, including the NHPS superintendent, in regards to statements
about summer program documentation. The auditors clearly must have
misunderstood what NHPS representatives may have said regarding this
issue. Again, why the auditors failed to seek and review this
documentation is unclear and calls into question the methodology
employed to conduct this audit and to draft the finding and
recommendations.

Simply correcting this flaw in audit methodology and considering NHPS'
financial expenditure documentation for its summer programs immediately
drops the finding amount from \$3.78M to less than \$2.62M.[^10]

B.  **THE DRAFT ERRONEOUSLY RELIES ON BUDGETED FIGURES RATHER THAN
    ACTUAL EXPENDITURES**

A second major flaw in the methodology employed to conduct this audit is
the failure to use expended as opposed to budgeted figures in
determining liability per program. Again, we suspect that the auditors
relied on city level documentation which may only have supplied the
auditors with the total funds expended to NHPS for its summer programs.
However, NHPS maintains reliable dependable official records of its
expenditures per program. Why this information was not gathered and
employed in considering the finding and recommendations is unclear and
reflects a major flaw in the audit.

The Draft itself recognizes that expenditures are the appropriate
figures to consider in issuing a finding. For example, in addition to
mistakenly criticizing NHPS for failing to properly monitor Title I
expenditures, the Draft goes on to directly explain that the auditors
used New Haven's budgeted amounts only because they could not identify
expenditures for each specific summer program activity. Draft, fn 4, p.
6. Again, why the auditors did not seek this information from NHPS, who
had the documentation readily available, is unclear. In simply
correcting this error, the total amounts spent on the programs at issue
drops from \$3,253,049 to \$2,617,575.[^11]

C.  **THE DRAFT FAILS TO TAKE SCHOOLWIDE FLEXIBILITY INTO ACCOUNT**

As discussed in more relevant detail below, the Draft wholly fails to
take into account the flexibility offered to schoolwide schools and
their programs in disallowing NHPS summer programs.[^12] In addition to
the obvious errors in assessing liability that this failure of legal
understanding creates, this highlights greater concerns of the audit
methodology as a whole. The failure to take into account such an
important and highly encouraged flexibility program in conducting an
audit of a district where even the Draft recognizes all Title I schools
operated schoolwide programs is highly suspect.

In light of the recent Final Audit Report titled *The U.S. Department of
Education's Activities Relating to Consolidating Funds in Schoolwide
Programs Provisions*, it is especially surprising that the Draft seems
to disregard schoolwide flexibility. Final Audit Report ED-OIG/A07F0014,
issued Dec. 29, 2005. Therein, one finding criticized ED for not
encouraging schools and LEAs to exercise the schoolwide flexibility
available to them. Ironically, here we have an LEA that was exercising
this flexibility, yet, beyond failing to encourage the practice, the
Draft appears to wholly fail to take this flexibility into account.

II. **EACH OF THE FOUR RATIONALES SUPPLIED TO SUPPORT THE DRAFT'S
    FINDING ARE INACCURATE AND MUST BE REJECTED**

As stated above, in addition to the major flaws in audit methodology
which invalidate the finding, all four of the rationales stated in
support of the finding are severely flawed as well. The response now
proceeds to explain the fatal errors to each of the four stated
rationales for the finding in the order they were addressed in the
Draft: (A) the Supplement not Supplant Requirement; (B) the Federal
Challenge of Summer Program Curriculum; (C) the Eligibility of Summer
Program Sites; and, (D) Summer Program Documentation.

A.  **SUPPLEMENT NOT SUPPLANT**

The Draft incorrectly applies NCLB's "supplement not supplant" provision
in its analysis of New Haven's funding of its summer programs. The Draft
mistakenly reasons that any use of ESEA funds expended on a local summer
program that is required by a State automatically constitutes a
supplanting violation. This is absolutely incorrect. The Draft
misapplied both the law and the facts in using this rationale to reach
its finding.

The summer programs at issue under this rationale are the Grades 3-6
Mandatory Summer Program ("Grades 3-6") and the Summer Studies
program.[^13] As stated in the Draft, the Summer Studies program was for
the salaries of the Grades 3-6 program paraprofessionals. The Draft,
however, misunderstands the mandatory nature of Grades 3-6 summer
program. The Draft seems to assume the exact summer program, Grades 3-6,
that NHPS ran was a wholly mandated and wholly state and locally funded
"as is" summer program. This is far from the true nature of the program.

Only a portion of NHPS's Grades 3-6 program is funded and mandated by
the Connecticut State Department of Education ("State"). Connecticut
State law in relevant part provides:

> Each local...board of education for a priority school
> district...shall, *within available appropriations*, require the
> schools under its jurisdiction to provide additional instruction...to
> each student who fails to meet the state-wide standard for remedial
> assistance on the reading component of the *fourth grade* mastery
> examination...and...to each student who fails to meet the state-wide
> standard for remedial assistance on the *sixth grade* mastery
> examination....The instruction shall be designed to address the
> student's deficiencies and *may include* tutoring, an after school or
> school vacation program, or a weekend school program that is funded in
> accordance with section 10-265m.

Connecticut Statute, Title 10, Chapter 172, Section 10-265l (emphasis
added).[^14] The NHPS Grades 3-6 program goes well beyond the statutory
requirement and well beyond the funding provided.

First, any mandate on NHPS as a priority school to provide additional
instruction applies only to students failing to meet standards for
remedial assistance on the fourth and sixth grade mastery examinations.
The NHPS Program goes beyond this and provides additional instruction to
not only fourth and sixth graders but also third and fifth graders as
well. The State does not mandate summer school for this group of
students whatsoever.

Second, and most importantly, the mandate of this law extends only to
available funding, requiring NHPS to offer additional instruction only
"within available appropriations." Pursuant to Section 10-265m, the
State appropriates grants for its "priority schools" to offer this
additional instruction as required under Section 10-265l. Further,
priority schools are to use these grants to provide this additional
instruction, which may include not only summer programs but also
academic term weekend programs such as Saturday school. Most
significantly, this mandate only extends to the extent of the state
appropriation. Anything provided by New Haven beyond the appropriation
is simply not mandated by law and is therefore not supplanting.

As a priority school, NHPS uses its entire Section 10-265m appropriation
for its Section 10-265l programs. In addition to providing these
programs within its available state appropriation, and thus fulfilling
the state requirement, NHPS further supplements, *not* supplants, its
Grades 3-6 program with federal Title I funds. There is simply no
supplanting violation. The Draft seems to assume that NHPS was using
federal funds, instead of state funds, to run a mandatory state program.
This clearly is not the case. NHPS used its state appropriation to
"within available appropriations...provide additional instruction." NHPS
then went further than required by state law, using federal funds to
supplement the state-required and state supported program. There was no
requirement to do this and certainly no funding to do it. Accordingly,
there simply is no supplanting violation.

While this explanation of the summer program state requirement and of
NHPS' funding of and exceeding the state requirement should suffice to
demonstrate no supplanting violation exists, two policy letters issued
by the United States Department of Education further support the
position that NHPS did not violate the supplement not supplant
provision. First, in responding to an inquiry regarding "ways Title I
can supplement State- and/or locally-mandated summer school programs,"
ED represented:

> ...if the school \[schoolwide program school\] receives funds from
> State and local sources to conduct the mandated summer school program,
> the school can use Title I funds along with its State and local
> resources and other Federal education program funds to extend the
> school year for all of its students.

Policy Letter dated March 26, 1998.[^15] There is no general prohibition
on using federal funds to supplement even a state-mandated summer
program. Rather, ED clarified a school may use federal education funds,
including Title I dollars, to supplement state mandated summer programs.

A second policy letter further supports this understanding of supplement
not supplant as it applies to tying federal funds to state mandated
summer programs. Therein, ED represented that where a district provides
a base level of funding for a summer program for students at risk of
failing, that district may add a layer of Title I funding to enhance the
program. Policy Letter dated August 8, 2000.[^16] Just as that district
explained, NHPS also believes it "can provide much more service...if we
can enhance the summer programs resources with Title I funds." NHPS was
able to do just that by using federal funds to supplement the summer
programs, just as the district seeking a response via that policy letter
was told it was permitted to do.

Clearly, New Haven is properly using Title I funds to supplement the
summer programs at issue and does not even approach a violation of
NCLB's "supplement not supplant" provision. Accordingly, the finding
that funds expended for the Grades 3-6 Mandatory Program and the Summer
Studies Program should be removed in its entirety from any final audit
report.

B.  **FEDERAL CHALLENGE OF SUMMER PROGRAM CURRICULUM**

The second rationale the Draft puts forth to suggest funds were not
properly administered criticizes three of New Haven's summer programs
for "lacking challenging academic instruction."[^17] Not only is this
assertion factually incorrect but also it involves the Draft in
impermissible reviews of curriculum decisions by an LEA and it is
inconsistent with schoolwide flexibility Not only is the federal
government prohibited from dictating curriculum to states and
localities, but also schoolwide flexibility permits consolidated funds
be used to support the intents and purposes of any programs consolidated
under the entire Act. Because the summer programs support the purposes
of not only Title I but also Title IV, the use of consolidated
schoolwide funds is absolutely appropriate.[^18]

1.  **[These Programs Include Academic Instruction]{.underline}**

First, the proposition that these three programs do not include
challenging academic instruction is simply incorrect and unfounded. The
academic components of each challenged program are explained below.

a.  **[Ikeanna's Kitchen]{.underline}**

Ikeanna's Kitchen, the nickname for Ikeanna's Kiducation Camp, ("IK") is
a summer program for students ages 5-13. Its program description
describes IK's philosophy: that academic, social, and physical
development should continue throughout the year. The IK program speaks
to all three of these needs. Again, as clearly stated in its program
description,

> Students are grouped flexibly according to age and appropriate levels
> of instruction. Each group is challenged with developmentally
> appropriate literacy challenges. Activities include book talks,
> phonetic exercises and discussions based on reading comprehension
> questions stemming from the research based metacognitive
> strategies....Campers journal, write in response to field trips,
> compose narrative, expository and persuasive essays, write original
> poetry inspired by summer scenery, nature walks/observations and
> science activities...on a daily basis the students participate in
> shared reading, guided reading and read alouds. Activities that foster
> oral language, vocabulary and phonetic awareness are integrated
> throughout the day.

See Attachment G, IK Program Description. IK clearly includes
challenging academic curriculum.

As disclosed in the summer program report and in synch with the program
description, in addition to the rigorous academic routine described
above, the program also included regularly scheduled events including
outdoor activities, music, and trips to beaches and state parks.
Additionally, a daily activity included student participants assisting
in preparing the daily hot lunch, hence the nickname of the program,
Ikeanna's Kitchen.

b.  **[West Rock Hot Shots]{.underline}**

The West Rock Hot Shots ("WRHS") Summer Program combines a summer
basketball camp with an academically intense summer school curriculum,
aptly named the Time Out Reading Program. Students are divided into
groups that rotate equally between the basketball court and the
classroom. The Mission and Purpose of the program is as follows:

> The program is designed "to provide a safe and fun environment for
> students of the New Haven Public School System who are interested in
> learning the game of basketball. Students who attend the camp are
> required to participate in academic enrichment activities that enhance
> reading and writing skills."

See Attachment H, WRHS Program Description. Again, one component of the
WRHS summer program is the Time-Out Reading Program. Participants are
divided into teams of 10 and meet for 2.5 hours per day (50% of the camp
day) to read non-fiction leveled text and answer open-ended questions
that are aligned with the 4^th^ Generation Connecticut Mastery Test.
One-on-one assistance is available for participants who require
individual attention.

Just as with Ikeanna's Kitchen and the rest of NHPS' summer programs,
WRHS includes challenging academic curriculum.

c.  **[Summer Band Camp]{.underline}**

NHPS budgeted funds but expended *[no]{.underline}* Title I funding on
Summer Band Camp during the years at issue. As such, any finding based
on the use of federal funds expended for this program must be
disregarded.[^19] This reflects the problems with the flawed audit
methodology of relying on budgeted rather than actual figures.

2.  **[Prohibition on ED Determining Curriculum]{.underline}**

Finally, the US ED is explicitly prohibited from determining what
constitutes "challenging academic instruction."[^20] Both Title I and
the General Education Provisions Act (GEPA) prohibit the federal
government from directing such control over a state or local educational
agency's decisions regarding instructional content and curriculum:

Sec. 1905. Prohibition against federal mandates, direction, or control.

> Nothing in this title shall be construed to authorize an officer or
> employee of the Federal Government to mandate, direct, or control a
> State, local educational agency, or school's specific instructional
> content, academic achievement standards and assessments, curriculum,
> or program of instruction.

Title I, § 1905.

> PROHIBITION AGAINST FEDERAL CONTROL OF EDUCATION. SEC. 438. No
> provision of any applicable program shall be construed to authorize
> any department, agency, officer, or employee of the United States to
> exercise any direction, supervision, or control over the curriculum,
> program of instruction, administration, or personnel of any
> educational institution, school, or school system...

GEPA § 438.

As demonstrated above, two questioned programs that NHPS funded with
Title I dollars included challenging academic instruction. For federal
auditors to judge otherwise in spite of such evidence of academic
content in the programs appears to be in direct violation of both Title
I and GEPA. Accordingly, this rationale must be eliminated as supportive
of the finding.

3.  **[Programs Also Meet Goals of the Safe and Drug-Free Schools and
    Communities Act]{.underline}**

Regardless of the academic content of these programs, NHPS is authorized
to make these expenditures in a schoolwide school under schoolwide
flexibility. "All of New Haven's eligible Title I schools operated
schoolwide programs during our audit period." Draft, p. 1. The basic
premise of "schoolwide" system under Title I is that schools may
consolidate all uses and funds from different Federal programs and are
not required to maintain separate fiscal accounting records, by program,
that identify the specific activities supported by those particular
funds "as long as the school maintains records that demonstrate that the
schoolwide program, considered as a whole, addresses the intent and
purposes of each of the Federal programs that were consolidated to
support the schoolwide program."

New Haven's summer programs support the purposes not only of Title I but
also of Title 4. Specifically, the purposes of the Title 4 Part A
program, Safe and Drug-Free Schools and Communities ("SDFSCA"), are
served by the summer programs. The purpose of Title 4 Part A is:

> ...to support programs that prevent violence in and around schools;
> that prevent the illegal use of alcohol, tobacco, and drugs; that
> involve parents and communities; and that are coordinated with related
> Federal, State, school, and community efforts and resources to foster
> a safe and drug-free learning environment that supports student
> academic achievement...

§ 4002. All NHPS summer programs support this purpose. The summer
programs provide a shelter during the summer for students that is free
from drugs and alcohol and encourages academic achievement.

The entire NHPS system shares the goals and purposes of the SDFSCA in
its mission and goals. The NHPS Social Development Department provides a
comprehensive instructional and support program designed to meet the
development needs of students and their families. According to their
mission statement:

> This program strives to prevent destructive behaviors such as
> substance abuse, violence, school dropout and risky sexual activity.
> It promotes positive, and responsible attitudes and behaviors through
> classroom instruction, school and community activities, and
> collaborative planning and decision-making with parents, teachers,
> school administrators, and community leaders.

NHPS Social Development Department Mission Statement, Attachment I. The
Social Development Department recognizes the link between test scores
and other factors such as social skills, future hopes, affiliation with
delinquent peers, school safety, emotional well being, witness of
violence, and friends as models for deviance. See excerpts from power
point presentation, Attachment J. Social Development Department
materials also recognize student developmental pathways to include
cognitive, social, ethical, psychological, language, and physical. See
Developmental Pathways Handout, Attachment K. The NHPS summer programs
all support this mission and are a means to serve the purposes of the
SDFSCA.

Exercising schoolwide flexibility permits NHPS schools to consolidate
its federal funding so long as it maintains records that demonstrate
that its schoolwide programs address the intent and purposes of each of
the consolidated Federal programs. NHPS summer programs address the
intent and purposes of not only Title I but also Title IV Part A. Taking
schoolwide flexibility into account, NHPS clearly may use federal
education funds to support its summer programs.

A.  **ELIGIBILITY OF SUMMER PROGRAM SITES**

The third rationale supplied for the finding, which regards the
eligibility of schools, is also misplaced and reflects further
misunderstanding of Title I eligibility. Under the heading "Ineligible
Schools," the Draft states, "New Haven held five of its summer programs
at ineligible schools."[^21] Draft, p. 5. The Draft references Section
1113 of the ESEA and literally but mistakenly interprets that provision
to limit where services may be provided to within the geographic bounds
of a school attendance area---specifically at Title I designated
schools. Title I eligibility *generally* is based on the idea of poverty
level of an area and affects student populations served, not necessarily
the physical location where services are provided to those populations.

Many practical considerations must be taken into account in providing a
physical location for summer programs, including items such as air
conditioning and cost of opening each facility. Practicality and
efficiency dictate that Title I eligible programs for Title I eligible
student populations need not be provided solely at Title I designated
schools. Countless examples demonstrate this principle. Some examples
include: eligible schools not located within an eligible school
attendance area, preschool services, equitable services to private
school students, supplemental educational services, and
school-inside-a-school transfer option flexibility.

First, Section 1113(b)(1)(B) of the ESEA permits Title I funds to be
used at certain schools that are "not in an eligible school attendance
area." The determining factor in designating such schools is based on
student enrollment, not geographic area demographics. The Draft's
interpretation that Title I services can never be provided at locations
not physically located within an eligible school attendance area is
incorrect and in direct conflict with this provision.

Second, ED issued guidance entitled Serving Preschool Children under
Title I, Non-Regulatory Guidance on March 4, 2004. Two questions and
accompanying answers in that guidance are especially relevant to this
issue:

D-3 Where may TI preschool services be provided?

> Preschool services may be provided at any location that other Title I
> services may be provided, including public school buildings, public
> libraries, community centers, privately owned facilities (including
> facilities owned by faith-based organizations (FBOs)), the child's
> home and other appropriate settings.
>
> D-4 If appropriate facilities are not available to house a preschool
> program in the district or a school, how might preschool services be
> provided?
>
> If appropriate district or school facilities are not available for
> preschool services, the district and school should consider working
> with children in existing childcare programs such as.... In any case,
> the setting should be of sufficient quality to facilitate effective
> program implementation.

2004 Preschool Guidance, 17. Title I services may be provided at many
different locations, not solely at Title I designated schools. Moreover,
as the answer to question D-4 highlights, making sure the setting is of
sufficient quality to facilitate effective program implementation is
key.

Similarly, summer school programs need not be physically located inside
the building of a Title I designated school. Clearly, concerns NHPS took
into account, such as air conditioning during the summer, in deciding
where to host its summer programs impact the quality of location and can
impact the quality of effective program implementation. The preschool
guidance wholly supports the NHPS decision to choose locations based on
their ability to facilitate effective program implementation.

Equitable services to children attending private school provides yet
another example that the physical location where services are provided
is not the relevant question to determining eligibility. See ESEA
Section 1113(b)(2). An LEA may use the funds reserved for private school
children to: "Provide equitable services to eligible children in each
private school with the funds allocated for the children who reside in
participating public school attendance areas and who attend that private
school." Title I Services to Eligible Private School Children,
Non-Regulatory Guidance, October 17, 2003. As the statute makes clear,
Title I funding for these students is determined "without regard to
whether the public school attendance area in which such children reside"
is located within an eligible school attendance area. ESEA Section 1113
(b)(2). Students eligible to receive Title I services may receive the
benefit of those services at their private school, regardless of whether
the private school is physically located within the home school's school
attendance area---they need not be shuttled over to the physical
building of a Title I designated school in order to receive those
services. Similarly, there is no requirement that Title I funded summer
programs be held in the physical building of a Title I designated
school.

Guidance regarding supplemental educational services further supports
NHPS' position that summer programs need not be held within the physical
building of a Title I designated school.[^22] Supplemental educational
services ("SES") are sometimes, but not always, provided in the physical
building of a Title I eligible school. Like the other examples, the
physical "where" the services are being provided or held is irrelevant
to the issue of eligibility.

Finally, the school within a school transfer option also demonstrates
that physical location is not the determining factor. ED issued Public
School Choice non-regulatory guidance on February 6, 2004. Therein, ED
addressed the question of what options are available to an LEA that does
not have the physical capacity to offer transfers to all eligible
students. The guidance explains that in such a situation, "school
officials will need to employ creativity and ingenuity in creating
capacity to receive additional students." P. 15. One such creative
suggestion is "creating new, distinct schools, with separate faculty,
within the physical sites of schools identified for improvement." Id.

If the position taken in the Draft were correct, there is no way that
this school within a school transfer option could be possible. This
example from the Public School Choice guidance further demonstrates that
the physical site of a school does not define the school or a school
population. If two separate schools can exist within one physical site,
clearly the address of a building is not the determinative question of
whether or not federally funded education services may be provided at
that site.

Countless other examples, such as funding for professional development,
parent involvement, and the ability to take field trips beyond the
geographic bounds of a school attendance area, contradict the Draft's
strict interpretation of where Title I services may be provided. As all
of these examples demonstrate, where the students physically receive the
benefit of Title I dollars is not the relevant question. Accordingly,
this rationale must be disregarded as supportive of the finding.[^23]

B.  **SUMMER PROGRAM DOCUMENTATION**

The fourth and final reason stated in the Draft to support the finding,
that NHPS lacked proper documentation regarding its summer programs is
also incorrect. NHPS has binders of information regarding its summer
school programs. Clearly, the auditors clearly must not have reviewed
this information. The binders include information such as advertisement
materials, attendance records, and program reports for each summer
program. Perhaps auditors failed to ask for these materials or clearly
explain what documentation they needed from NHPS staff, but the Draft's
suggestion that such proper documentation does not exist is wholly
incorrect. In light of the auditors inability to locate existing
accounting records, reliability of such statements from NHPS staff and
administrators is questionable at best.

For example, for Ikeanna's Kitchen, a summer program discussed in great
detail above, NHPS has an abundance of documentation regarding this
program. Available documentation regarding the Ikeanna's Kitchen summer
program includes: a 3-page program description, seven pages of handouts
and activity plans, a summer program report, and attendance records.
What more the auditors could possibly expect or ask for beyond this is
unclear. At any rate, as discussed an the beginning of this response,
the auditors' failure to review such documentation is a major flaw in
their audit methodology and calls into question the quality and validity
of the Draft Audit Report.

III. **CONCLUSION**

In closing, NHPS respectfully disagrees in whole with the finding and
all four of the recommendations issued in the Draft and requests that
they be reconsidered, revised, and that the recommendations for
repayment be withdrawn before the issuance of a final audit report. From
the serious flaws in audit methodology which lead to obvious errors in
the Draft and bring question to the management of the audit as a whole
to the errors and misunderstandings of the law reflected in the four
rationales put forth to support the finding, it is clear that the
finding and recommendations should be reviewed and withdrawn.

[^1]: The State's 2003-2004 Priority School District Consolidated
    Application for State and Federal Grants, Section 3, Title I Ranking
    Schools and Allocating Funds, states that school districts may
    choose to reserve funds for other authorized activities such as
    summer school. Such reservation would reduce funds available for
    distribution to schools.

[^2]: New Haven's internal summer programs budget was \$1.03 million for
    2001-2002, \$1.09 million for 2002-2003, and \$1.40 million for
    2003-2004, for a total of \$3.52 million for the three school years.
    For the balance of expenditures, New Haven used Title I carryover
    funds from prior years to pay for its summer programs.

[^3]: Mandatory programs were for students who failed to meet the state
    standards on the Connecticut Mastery Test (CMT) and were at risk of
    not making the next grade.

[^4]: The CMT provides an accurate assessment of how well students
    statewide are reaching the standards of achievement that have been
    established by the State Board of Education in reading, writing, and
    mathematics.

[^5]: The City of New Haven\'s accounting system, the official
    accounting system for New Haven, identified expenditures of \$3.78
    million made to the summer programs as a whole, but could not
    identify expenditures for each specific summer program activity.
    Therefore, we used New Haven\'s budgeted amount of \$3.25 million
    for each activity in Attachment A.

[^6]: Actually, the Draft states, "we found that New Haven did not
    properly administer the \$3.78 million of Title I funds it
    expended." As will be discussed below, NHPS received \$3.78 million
    of Title I funds for all summer programs, *[budgeted]{.underline}*
    \$3.25 million of Title I funds for the summer programs at issue
    over the period at issue, but *[expended only]{.underline}* \$2.62
    million of Title I funds for these programs during this period.

[^7]: The budgeted amount the Draft relied upon for the programs at
    issue was \$3,253,049 while the actual amount expended on those
    programs over the period at issue was only \$2,617,575.

[^8]: Attachment A includes financial documents relating to a contract
    with the service provider for this program. Included in Attachment A
    are the purchase order, invoice, contract, the related general
    journal voucher, budget report, and general journal entry of proof.
    This is the financial document NHPS maintains for all of its summer
    program expenses.

[^9]: Programmatic documentation is discussed in more detail below in
    Section II.D.

[^10]: The Draft takes the \$3.78 million figure comes from the amount
    the official accounting system for New Haven disbursed to NHPS as a
    whole---for all summer programs, not exclusively the ones questioned
    in the Draft. Draft, p. 6. The Draft cites \$3.23 million as the
    total amount NHPS budgeted for the summer programs that the Draft
    challenges. As discussed in further detail below, the proper numbers
    to consider are expenditures, not budgeted dollars. Thus, once all
    financial documentation alone is considered, the figure drops from
    \$3.78 million to \$2,617,575, the amount NHPS actually spent on the
    questioned programs.

[^11]: Attachment B charts the expended amounts next to the budgeted
    costs as outlined on page 10 of the Draft. The expended amounts
    listed therein come from Attachment C, a chart which lists expended
    amounts for all NHPS summer programs during FY 2002, 2003, and 2004.
    This chart includes all summer programs, not just the ones
    questioned in the Draft. One additional note, considering expended
    as opposed to budgeted figures takes at least one program out of the
    discussion and finding completely. Specifically, although NHPS
    budgeted \$3,876 for Summer Band Camp, in the end, NHPS did not
    spend one penny of federal funds on this summer program.

[^12]: This issue as it specifically applies to the finding is detailed
    in Section II. B. 3.

[^13]: The Draft lists the budgeted amounts for these two programs as
    totaling \$1,779,798. The amount actually expended for these two
    programs was \$1,501,014.

[^14]: For your reference, we have included a copy of this statute as
    Attachment D.

[^15]: For your reference, a copy of this policy letter is attached as
    Attachment E.

[^16]: For your reference, a copy of this policy letter is attached as
    Attachment F.

[^17]: The three programs at issue under this rationale are: Ikeanna's
    Kitchen, West Rock Hot Shots, and Summer Band Camp. As will be
    discussed in more detail, NHPS did not expend any Title I funds on
    the Summer Band Camp for the years at issue.

[^18]: Even if this rationale were to be accepted in the Final Draft
    Report, the amount expended on these three programs is significantly
    less than the budgeted figures upon which the Draft relies. Using
    proper audit methodology of looking at expenditures and not budgeted
    amounts, the finding for these three programs alone drops from
    \$155,992 to \$128,798.

[^19]: The Draft uses the budgeted figure of \$3,876. This figure must
    be removed from the finding in whole.

[^20]: Furthermore, and perhaps more importantly, why the auditors
    decided to use "challenging academic instruction" as part of its
    criteria is puzzling as this is not a defined requirement.

[^21]: In total, the Draft's finding regarding these five programs (CT
    Shoot Out Basketball, Grades K-5 Science/Reading Academy,
    Neighborhood Place, Superintendent Exec. CMT Camp, and Varick Teen
    Life) totaled \$ 1,241,156; but, the actual amount spent on these
    programs was only \$ 909,167.

[^22]: The language of the guidance supports this position:

    > C-24. Some after-school programs are housed in public school
    > buildings. May such programs be supplemental educational service
    > providers if the school in which they are housed has been
    > identified as needing improvement, or is in corrective action or
    > restructuring?
    >
    > Programs that operate independently from the school and are not a
    > part of the school's regular program may become supplemental
    > educational service providers if they meet the SEA's criteria.
    > *The status of the school does not affect the eligibility of an
    > independent entity housed in the school*.

    ...

    > G-15. How may an LEA fairly select providers to work in school
    > buildings if there is not enough room in the schools for all
    > providers to run their programs on-site?
    >
    > ...The Department...encourages LEAs to allow providers in the
    > school building, either free of charge or for a reasonable
    > fee....However...*it may not be possible to have all providers use
    > school buildings*.

    Supplemental Educational Services, Non-Regulatory Guidance, June 13,
    2005, pp 24, 34 (emphasis added). Similar to SES, summer programs
    are independent programs apart from standard academic year school
    day. Summer programs, just as SES, need not be provided within the
    school building.

[^23]: The Draft cites this rationale in its finding as it relates to
    five programs: CT Shoot Out Basketball, Grades K-5 Science/Reading
    Academy, Neighborhood Place, Superintendent Exce. CMT Camp, and
    Varick Teen Life. The total finding amount the Draft lists for these
    programs (the budgeted amounts) is \$1,241,156. Because this
    rationale should be disregarded, Connecticut urges this amount be
    eliminated from the finding.