August 4, 2004

### Dr. Mike Moses

### General Superintendent

### Dallas Independent School District

3700 Ross Avenue

Dallas, Texas 75204-5491

Dear Dr. Moses:

### This **Final** **Audit Report** (ED-OIG/A06-D0023) presents the results of our audit of the Dallas Independent School District's (DISD) administration of the Bilingual Education -- Systemwide Improvement Grant for the period September 1, 1999, through August 31, 2003.[^1] Our objectives were to determine whether DISD: (1) delivered the services and products specified in the approved grant application, and (2) properly accounted for and used bilingual grant funds in accordance with the Elementary and Secondary Education Act of 1965, as amended by the Improving America's Schools Act of 1994 (IASA); Education Department General Administrative Regulations (EDGAR); grant terms; and the cost principles in Office of Management and Budget (OMB) Circular A-87.

We provided a draft of this report to DISD. In its response to our draft
report, DISD officials did not agree with our finding and only concurred
with a portion of Recommendation 2. DISD officials provided additional
support, not previously provided during the audit, and we reduced the
amount of unallowable costs to \$1,353,875 and unsupported costs to
\$434,978. We have summarized DISD's comments after the Subsequent
Events section in this report. A copy of DISD's response is included as
Attachment B to this report.

Title VII, Part A, Subpart 1, Section 7115, of the IASA, as amended,
authorizes the Bilingual Education -- Systemwide Improvement Grant
(grant).[^2] The grant enables Local Education Agencies (LEAs), in
collaboration with a non-profit organization, to offer bilingual
education to enhance the academic achievements of bilingual students for
up to five years. LEAs interested in the grant are required to compete
by submitting an application to the Department.

DISD submitted a grant application to the Department for a project
titled "Building Capacity for a Better Future." This project addressed
the linguistic and academic needs of DISD's large Limited English
Proficient (LEP) student population and their families. The grant's
intent was to: (1) improve LEP students' process thinking skills,
language acquisition, and capacity to learn academic content by
primarily providing training to participating teachers called "pilot
teachers," as well as interested parents; and (2) develop technical
assistance centers called "model classrooms" in schools throughout the
school district. By the end of the fifth year of the grant, pilot
teachers and model classrooms would be located throughout the district
and, once Federal grant funding ended, these grant services would remain
available to LEP students with little cost to DISD.

The application identified the National Children's Educational Reform
Foundation, Inc. (NCERF) as a provider of contractual services and
educational supplies. Specifically, NCERF was identified as the
contractor tasked to train the pilot teachers and parents, and develop
the model classrooms in conjunction with DISD. Additionally, the
teaching strategies and training materials to be used under the grant
were developed by NCERF.

The Office of English Language Acquisition, Language Enhancement, and
Academic Achievement for Limited English Proficient Students (OELA)
awarded DISD a five-year Bilingual Education -- Systemwide Improvement
Grant (T291R990026) to implement the "Building Capacity for a Better
Future" project. The grant period was from September 1, 1999, through
August 31, 2004, for a total grant amount of \$2,616,158. The award
amounts, by budget period, were---

> 9/1/99---8/31/00 \$ 522,066
>
> 9/1/00---8/31/01 \$ 523,523
>
> 9/1/01---8/31/02 \$ 523,523
>
> 9/1/02---8/31/03 \$ 523,523
>
> 9/1/03---8/31/04 [\$ 523,523]{.underline}
>
> Total \$2,616,158

The grant was awarded to DISD on August 31, 1999, and DISD had the
fiduciary responsibility for the administration of the grant. According
to the grant application, NCERF would receive \$300,000 annually for
providing contractual services and educational supplies to DISD.
Disagreements between DISD and NCERF regarding this amount delayed the
start of the grant for almost one year. From August 18, 2000, through
July 22, 2003, DISD received \$2,004,362 of \$2,092,635, which was the
awarded amount for the first four years of the grant. DISD paid
\$1,245,825 of the \$2,004,362 to NCERF during this period.

DISD materially failed to deliver the services and products specified in
the approved grant application and did not properly account for and use
bilingual grant funds in accordance with applicable regulations, grant
terms, and cost principles. Specifically, DISD demonstrated weak
management controls and delivered only 18.17 percent of the approved
grant services and products for the four-year grant period, September 1,
1999, through August 31, 2003. We recommend that the Department recover
\$1,788,853, which consists of \$970,557 for non-performance of grant
services, \$383,318 for unallowable costs, and \$434,978 for
unsupportable costs, due to DISD's material failure to deliver grant
services and products.

**Grant Services and Products Were Not Delivered**

DISD was awarded a five-year grant, which was scheduled to start
September 1, 1999. In the approved February 1999 Grant Application, DISD
identified the grant services and products that would be delivered
annually as:

-   60 pilot teachers trained;

-   100 parents trained;

-   Five model classrooms developed; and

-   All DISD's sub-districts[^3] would have pilot teachers and model
    classrooms by the end of the five-year grant.

EDGAR, *Sec. 75.700,* provides that---

A grantee shall comply with applicable statutes, regulations, and
approved applications, and shall use Federal funds in accordance with
those statutes, regulations, and applications.

Further, 34 C.F.R. § 80.40(a) states, "Grantees are responsible for
managing the day-to-day operations of grant and subgrant supported
activities. . . . to assure compliance with applicable Federal
requirement and that performance goals are being achieved."

DISD did not deliver the grant services and products that were
identified in the approved grant application. Initial disagreements
between DISD and NCERF resulted in no grant services or approved
products being provided for the first year of the grant. When the
disagreements were finally resolved, with the aid of OELA officials,
NCERF modified its May 2000 and December 2000 contracts with DISD,
reducing the number of pilot teachers trained for the first two years of
the grant from 120 pilot teachers (60 teachers per year) to 30 pilot
teachers for the two-year period. Even with the modification, only 20
pilot teachers were trained during the first two years. The third and
fourth year of the grant required 60 teachers to be trained each year,
per the approved grant application. However, only 8 and 21[^4] new pilot
teachers were trained for the third and fourth years, respectively. In
total, only 49 pilot teachers were trained in four years instead of the
150 teachers required by the grant and contract modifications.

During the first four years of the grant, at least 400 parents should
have been trained. However, no parents were trained the first year, and
for years two through four, only one four-day training session was
conducted for parents whose children were being taught by a pilot
teacher. We found that 46 parents who had a child in a pilot teacher
classroom attended all four days of the training in 2000, 34 parents in
2001, and 30 parents in 2002. In total, only 110 parents were trained
instead of the 400 parents that were proposed in the grant application.

Five model classrooms should have been established each year of the
grant, for a total of 20 model classrooms in the four-year period
reviewed. Grant funds were awarded to provide training materials and
educational supplies to develop model classrooms or technical assistance
centers in schools throughout the school district for pilot teachers,
school administrators, parents, and children. However, DISD officials
were unable to demonstrate that any of the model classrooms had been
established.

Finally, the grant application stated that pilot teachers and model
classrooms would be located in all sub-districts with LEP students.
Because all eight sub-districts have LEP students, pilot teachers and
model classrooms should have been located in all eight sub-districts.
However, grant services and products were only delivered to one
sub-district, and were never delivered to the other seven sub-districts.

Even though no training occurred during the first year of the grant,
DISD received grant funds for that year as if services and products were
delivered. In total, DISD received over \$2 million in the four-year
grant period to deliver the grant services and products summarized in
the table below. We used a weighted average calculation that gives equal
weight to each grant service and product. We calculated that the
Department received only 18.17 percent of the grant services and
products identified in the application as shown in the following table.

+------------------------+----------+------------+--------------------+
| **Grant**              | **Mo     | ####       | **Percentage of    |
|                        | dified** |  Services/ | Services/**        |
| **Services/**          |          |            |                    |
|                        | **Ser    | **         | **Products         |
| ######## Products      | vices/** | Products** | Delivered**        |
|                        |          |            |                    |
|                        | **Pr     | **D        |                    |
|                        | oducts** | elivered** |                    |
+------------------------+----------+------------+--------------------+
|                        |          |            | #######            |
+------------------------+----------+------------+--------------------+
| #####                  | **150**  | **49**     | **32.67**          |
| ####  Teachers Trained |          |            |                    |
+------------------------+----------+------------+--------------------+
|                        |          |            |                    |
+------------------------+----------+------------+--------------------+
| Parents Trained        | **400**  | **110**    | **27.50**          |
+------------------------+----------+------------+--------------------+
| Model Classrooms       | **20**   | **0**      | **0.00**           |
+------------------------+----------+------------+--------------------+
| Sub-districts with     | **8**    | **1**      | **12.50**          |
+------------------------+----------+------------+--------------------+
| Teachers/Classrooms    |          |            |                    |
+------------------------+----------+------------+--------------------+
|                        |          |            |                    |
+------------------------+----------+------------+--------------------+
| ###                    |          |            | **18.17%**         |
| # Weighted Average of  |          |            |                    |
| Grant Deliverables Met |          |            |                    |
+------------------------+----------+------------+--------------------+

#### Unallowable and Unsupported Expenditures

DISD also did not properly account for the grant funds in accordance
with all applicable regulations, grant terms, and cost principles. OMB
Circular A-87, *Cost Principles for State,* *Local,* *and Indian Tribal
Governments,* *Attachment A, Paragraph C.1* (1997) provides that---

> To be allowable under Federal awards, costs must . . . Be necessary
> and reasonable for proper and efficient performance and administration
> of Federal awards . . . Be allocable to Federal awards . . . Be
> adequately documented.

Also, OMB Circular A-87, Attachment B, Paragraph 11.h (3) (1997)
provides that---

Where employees are expected to work solely on a single Federal award or
cost objective, charges for their salaries \[including fringe benefits\]
and wages will be supported by periodic certifications that the
employees worked solely on that program for the period covered by the
certification. These certifications will be prepared at least
semi-annually and will be signed by the employee or supervisory
official.

DISD charged the grant for \$383,318 in unallowable costs. The
unallowable amount included payments to NCERF of \$213,501 for
contractual services and \$135,723 for educational supplies that
exceeded the annual amounts authorized by the grant application. These
two amounts also included payments in the first year of the grant when
no grant services or approved products were provided. The unallowable
costs also included payments of \$5,471 for payroll expenses for the
first year of the grant when no services were provided, and \$10,957 to
NCERF for math backpacks and day care services that were not authorized
by the bilingual grant. Additionally, \$17,666 was paid for stipends to
parents who did not have a child in the bilingual program or who
attended the math institute that was not authorized by the grant, and to
teachers who were not pilot teachers in the bilingual program.

Additionally, DISD charged the grant for \$434,978 in unsupported costs.
The unsupported amount consists of \$6,729 in operating costs, \$135,073
in unidentified grant charges for which DISD was unable to provide
adequate documentation or receipts, and \$293,176 in payroll costs for
the three employees that worked solely on the grant over the four-year
grant period. DISD did not require the three employees to attest in
written certifications that they worked solely on the bilingual grant.
DISD obtained an exemption from requiring the certifications for several
other Federal grants, but not for this bilingual grant.

Details of the non-delivery, unallowable, and unsupported costs are
discussed in Attachment A.

We recommend that the Director of OELA, in accordance with the
provisions set forth in

34 C.F.R. § 80.43(a) instruct DISD to---

1.  Refund to the Department unallowable costs of \$970,557 due to
    DISD's material failure to deliver grant services and products; and

2.  Refund to the Department unallowable costs of \$383,318, and
    \$434,978 in unsupported costs, or provide sufficient documentation
    to support that amount.

If any of the costs questioned in Recommendation #2 are allowed, the
amount allowed should be reduced by 81.83 percent due to non-delivery of
grant services, and the same amount should be added to the costs
questioned in Recommendation #1.

On September 25, 2003, OELA issued a letter to DISD discontinuing the
grant's final year of funding of \$523,523 because of DISD's "Failure to
Achieve Substantial Progress." OELA cited 34 C.F.R. § 75.253(a)(2)(i)
that states a grantee, in order to be eligible for a continuation award,
must, among other things, have "\[m\]ade substantial progress toward
meeting the objectives in its approved application." OELA issued its
first letter on September 17, 2003, to DISD expressing concerns over our
preliminary audit results. OELA determined that DISD's response, dated
September 23, 2003, "substantiated the accuracy of the OIG's information
with respect to the project's performance in meeting the teacher and
parent training objectives" and "provided no additional information with
regard to model classroom development or other information that might
help clarify whether the project has achieved substantial progress or
any reason for its failure to do so." OELA concluded, based on our
preliminary audit results and DISD's September 23, 2003 letter, that the
grant "is not eligible for, and will not receive, a continuation award
for its final budget period."

DISD did not concur with our finding and only concurred with a portion
of Recommendation 2. DISD stated in its response, "\[w\]e base our
disagreement on errors of fact and/or interpretation made in the report
that affect the conclusions drawn, and also on documentation discovered
since the auditors concluded their fieldwork." DISD stated, "\[w\]hen
all relevant facts are assessed, they point to these conclusions: (1)
the district can support the overwhelming majority of the expenditures;
(2) all the expenditures were spent in furtherance of the programs
outlined in the grant; and (3) all of the expenditures were appropriate
under the terms of the grant as modified."

DISD further stated that the analysis of the overall delivery of grant
services and products is seriously flawed because it overlooks changes
in the grant program that were approved by the Office of Bilingual
Education and Minority Languages Affairs (OBEMLA)[^5] and ignores the
importance OBEMLA placed on DISD's use of services and products provided
by NCERF. Specifically, OBEMLA:

-   Required DISD to maintain NCERF at the center of the grant program;

-   Approved several aspects of the May 15, 2000, contract between NCERF
    and DISD;

-   Approved initial invoices submitted by NCERF which DISD had
    questioned; and,

-   Accepted the May 15, 2000, contract between NCERF and DISD as a
    modification of the grant. The contract included an increase in the
    amount paid to NCERF from \$190,000 to \$300,000.

DISD also disputed, "that only 17.67 percent of grant services and
products were delivered in accordance with the grant application." DISD
contends that it delivered a higher percentage of grant deliverables.
DISD states that teachers trained should be viewed as "units trained,
not new teachers trained each year," and "parent training should be
viewed as units trained not individual parents;" therefore, during the
grant period 147 teachers and 341 parents were trained. DISD also
stated, "twelve classrooms were actually implemented" and contends that
the report double counts the model classroom deliverable when it asserts
that all DISD sub-districts would have model classrooms by the end of
the five-year grant. Further, DISD stated the report entirely omitted
the 227 students that attended the five-day camp held in three of the
four years of the grant.

DISD stated that \$370,470 of unallowable costs consists of \$223,670.76
paid to NCERF in 1999-2000 for planning and preparation activities and
educational supplies were clearly incurred with the knowledge and
approval of OBEMLA and should not be questioned. Unallowable costs of
\$146,798.80 (in the report this amount is \$131,024.19) for services
and supplies above the contracted amount included payments to NCERF in
2000-2001 and 2001-2002 to provide additional training days and
technical support intended to foster a deeper understanding of the
training approach needed for successful implementation of the grant. The
remaining unallowable costs included stipends for parents and childcare
expenses for low-income parents that could not participate in parent
activities if childcare were not provided.

Lastly, DISD stated that \$293,176 in payroll costs, of the \$511,253 in
unsupported costs, was appropriate, justified, and requested that
questioned cost not be subject to recovery. DISD agreed that the
required semi-annual certifications were not obtained and corrective
action has been taken to ensure program managers do not repeat this
mistake. DISD concurred that the \$1,912 in other expenses was not
supported. Additional support, not previously provided to the auditors,
was provided for \$215,227 of the \$216,165 in unidentified expenses.

We reviewed DISD's response and while we have not changed our finding,
we did accept additional supporting documentation resulting in
modifications to our recommendations.

We disagree with DISD that our analysis of the overall delivery of grant
services and products was seriously flawed. In its grant application
submitted to the Department, DISD identified specific grant services and
products that it would deliver each year with the aid of its contractor,
NCERF, if funded by the Department. In its application, DISD proposed to
the Department that in return for over \$500,000 in Federal funds each
year, it would deliver:

-   60 pilot teachers trained (decreased to 30 teachers total for the
    first two years only);

-   100 parents trained;

-   five model classrooms developed; and

-   expansion of these services throughout DISD so that at the end of
    the five-year grant, all eight sub-districts would have pilot
    teachers and model classrooms.

Since DISD received grant funding for four years, DISD should have
delivered four years of these grant services and products, which did not
occur.

The Department awarded the bilingual grant to DISD on August 31, 1999,
based on a competitive process that included reviewing and evaluating
not only the grant objectives, but also the contractor's credentials and
qualifications and how it was best qualified to fulfill the grant
objectives. After the grant was awarded, DISD requested to remove NCERF
from the grant and proposed to fulfill the grant objectives in house.
OELA denied this request because it could not legally permit DISD to
substitute with a significantly different project, since the grant was
awarded largely on NCERF's qualifications and credentials. In a letter
dated March 30, 2000, OELA notified DISD of its decision stating, "to
protect the integrity of that process, \[we\] must ensure that
applications selected for funding carry out the project that were
reviewed in that competition."

In that same letter (issued seven months after the grant should have
been implemented), OELA requested DISD and NCERF "to make one final
effort to determine whether they can agree upon an appropriate means to
implement this project" or the "Department will have no choice but to
take the necessary steps to end the funding of this grant." DISD and
NCERF, both choosing to receive grant funding, reached an agreement in
the May 15, 2000, contract. OELA approved the contract on June 22, 2000.
DISD contends that the May 2000 contract increased the amount paid to
NCERF from \$190,000 to \$300,000. However, that statement is not
accurate. The initial grant application called for NCERF to receive
\$300,000 yearly (\$195,000 in contractual services, \$10,000 for an
independent evaluator, and \$95,000 for educational supplies). The May
2000 contract was amended again in December 2000 and called for NCERF to
receive a total of \$300,000 per year (\$205,000 for contractual
services and \$95,000 for educational supplies). What did change in the
modification to the initial grant application was that the first two
years of the grant were collapsed into one year and the number of pilot
teachers trained in the collapsed year was decreased to 30, instead of
the original 120 teachers. Even with this modification, only 20 pilot
teachers were trained during the collapsed first two years.

DISD, as the grantee, had the fiduciary responsibility to ensure that
Federal funds were used for the purposes for which they were awarded and
that all payments to NCERF complied with applicable statutes,
regulations, and the approved grant application. This responsibility
included ensuring NCERF delivered the grant services and products
identified in the application each year.

During our review, we did not question the decision to collapse the
first two years and to reduce the pilot teachers trained from 120 to 30
because of the initial disagreements that occurred between DISD and
NCERF. However, once DISD and NCERF signed a contract and started
implementation of the grant, the agreed-upon grant services and products
should have been delivered. We realize that sometimes projects are slow
to start and grant services and products delivered might be reduced
during the first year of implementation, but improve the next year. If
improvement on the products and services delivered had occurred in the
second and subsequent years, we would have taken that into account and
given DISD credit. However, we saw no such improvement. Instead, we
found that DISD and NCERF received Federal funds each year, but trained
fewer teachers and parents than were required and developed no model
classrooms.

In its response, DISD disputed that only 17.67 percent of grant services
and products were delivered and stated that 147 pilot teachers and 341
parents were trained, and 12 model classrooms were developed. DISD also
stated that the report entirely omitted the 227 students that attended
the five-day camp held in three of the four years of the grant. We
concluded after reviewing all additional documentation including
training sign-in sheets and supplemental pay forms provided by DISD,
that DISD and NCERF trained an additional three pilot teachers for a
total of 49 pilot teachers trained in four years of the grant. DISD did
not provide any additional documentation to support its statements that
341 parents were trained and 12 model classrooms were developed.
Although DISD claimed that 12 classrooms were actually implemented, DISD
was unable to produce even one classroom when the auditors requested to
visit one. Additionally, DISD contractually limited NCERF's services to
a total of four schools, all in the same sub-district, which was not
approved by OELA officials. This limitation prevented the expansion of
the bilingual grant services throughout DISD, as proposed in the
approved grant application.

Further, the report did not omit the 227 students that attended the
five-day camp held in three of the four years. We allowed the expenses
associated with the five-day camp, but we did not count these camps as
teacher or parent training sessions. These camps were not shown on the
grant application as deliverables nor as teacher and parent training
activities. These camps were designed to benefit the LEP students.
Although teachers and parents participated in these camps, they needed
to have been trained before attending. In the grant application, DISD
stated, "A Think-campreneur will be provided to LEP students each
summer. The camp will engage students in a variety of brain-based
thinking and learning activities to improve their thinking skills;
develop math, language and other content skills; and develop workforce
readiness

skills . . .. The Think-campreneur will thus provide additional
opportunities for 'model classroom' teachers and Parent Coaches to use
the mediated learning and think-coaching strategies that they developed
during Think-coach and Think-parents are powerful training. . .."

We disagree that teachers trained should be viewed as "units trained,
not new teachers trained each year," and "parent training should be
viewed as units trained not individual parents." In the grant
application, DISD stated the intent of the grant is to improve the
linguistic and academic needs of LEP students. To accomplish this, DISD
proposed that NCERF would train teachers of LEP students, as well as
parents of LEP students, so that the parents could help the LEP students
at home. DISD also proposed development of model classrooms to provide
technical assistance to these teachers and students. Finally, DISD
proposed that the training would be expanded to teachers and the parents
of the students in other sub-districts, resulting in all DISD
sub-districts having pilot teachers and model classrooms by the end of
the grant for the use of future LEP students. To ensure the grant was
successful, DISD needed to (1) train different teachers and different
parents each year, (2) establish model classrooms throughout all
sub-districts, and (3) disseminate the grant services through all
sub-districts. The Department did not award this grant to train the same
teachers and parents each year; to only have the grant services
available in four schools in one sub-district, and to not have any model
classrooms developed. The Department awarded the grant to be used as
specified in the grant application, which did not occur.

We also disagree with DISD that the \$223,671 of the \$370,470 in
unallowable costs paid to NCERF in 1999-2000 for planning and
preparation activities and educational supplies should not be
questioned. In its grant application, DISD stated that 60 pilot teachers
and 100 parents would be trained and five model classrooms would be
developed by the end of the first year. There was no mention in the
grant application that DISD needed a year for planning and preparation
activities. If DISD and NCERF needed a year of discussions and
preparation, then DISD was premature in submitting a grant application
to the Department. Because of the competitive process and limited
funding, not all applicants are awarded a grant. By applying for a grant
they were not ready to implement, DISD and NCERF potentially prevented
another applicant from receiving this grant funding. In addition, DISD,
as the fiduciary agent, paid \$118,200 in invoices at the end of the
grant year and was well aware that these grant services were not
provided by NCERF. Also, since no training was provided and no model
classrooms were established that first year, educational supplies of
\$100,000 and additional payroll costs of \$5,471 were not needed and,
therefore, were unallowable.

We reviewed all additional supporting documentation provided by DISD for
the \$146,798 (in the report this amount is \$131,024) in unallowable
costs for services and supplies above the contracted amount, including
payments to NCERF to provide additional training days and technical
support. DISD was unable to support that additional training was
provided. Even if the additional training days had been supported, we
disagree with DISD that an additional \$81,801 should be paid to NCERF
since it failed to provide the training and technical support to all
agreed-upon teachers and parents and still received the full amount
allotted by the grant. We also disagree that \$35,723 in additional
educational supplies was necessary for the grant since \$100,000 in
supplies were purchased the first year of the grant, and no training was
conducted. Those supplies should have been used in the subsequent years
when some training did occur and the grant not double billed for
supplies that were already purchased. For the remaining \$13,500 that
exceeded the contracted amount, DISD did not provide any additional
supporting documentation.

We reviewed additional support for the \$15,775 in parent stipends and
childcare expenses. Originally, we considered \$4,817 of the \$15,775,
to be unallowable day care service expenses because DISD could not
justify that the day care services were provided for grant activities.
In its response, DISD provided additional documentation (purchase
orders) to support that day care expenses were paid; however, DISD did
not have sign-in sheets or time sheets to support the amount paid.
Therefore, we now consider the \$4,817 as unsupportable costs. DISD did
not provide any additional support for the remaining \$10,957. Stipends
and daycare expenses related to a math institute were not allowed
because the math institute was not a part of the bilingual grant.

DISD concurred that the \$1,912 in other expenses was not supported.

We disagree with DISD that the \$293,176 in payroll of the \$511,253 in
unsupported costs was appropriate, justified, and that the questioned
cost should not be subject to recovery. We acknowledge that the failure
to obtain the required semi-annual certifications appeared to be from a
misunderstanding regarding an Ed-Flex statewide administrative waiver
and DISD said it has taken corrective action to ensure its program
managers will not repeat this mistake. However, these certifications are
mandatory and we are still questioning all \$293,176.

Finally, we reviewed all additional supporting documentation provided by
DISD for the unidentified grant costs. DISD claimed that it provided
additional support for \$215,227 of the \$216,165 unidentified grant
costs shown in the draft report. However, we determined only \$63,426 of
the grant costs to be adequately supported by the new documentation. We
determined \$17,666 of the \$215,227 to be unallowable because the new
support documentation disclosed that the amount was for stipends paid to
parents who attended the math institute or who did not have a child in
the program, and teachers who were not pilot teachers. Stipends related
to the math institute were not allowed because the math institute was
not part of the bilingual grant. DISD did not provide any additional
support for the remaining amount of \$135,073.

Our audit objectives were to determine whether DISD (1) delivered the
services and products specified in the approved grant application, and
(2) properly accounted for and used the Bilingual Education - Systemwide
Improvement Grant funds in accordance with the:

-   ESEA of 1965, as amended by the IASA of 1994;

-   34 C.F.R. Parts 75 and 80;

-   Bilingual Education - Systemwide Improvement Grant terms; and

-   Cost principles in OMB Circular A-87.

To accomplish our objectives, we---

-   Reviewed applicable Federal law and regulations;

```{=html}
<!-- -->
```
-   Reviewed the State of Texas' Audit Report for the year ended August
    31, 2002;

```{=html}
<!-- -->
```
-   Reviewed DISD's Bilingual Education - Systemwide Improvement Grant
    Application and Budget Narratives;

-   Reviewed Bilingual Education - Systemwide Improvement Grant
    Performance Reports for the 2000/01 year, the 2001/02 year, and the
    2002/03 year;

-   Reviewed the May 2000 contract and the December 2000 contract
    amendments between DISD and NCERF;

-   Reviewed DISD's payroll records, accounting transactions, and
    invoices and other documentation supporting: (1) all expenditures
    charged to and (2) all services and products delivered by the grant
    from September 1, 1999, through August 31, 2003;

-   Reviewed NCERF's payroll records, accounting transactions, and
    invoices and other documentation maintained by NCERF: (1) to justify
    the contractual services fees paid to NCERF by the grant, and (2) to
    support all services and products delivered by NCERF from September
    1, 1999, through August 31, 2003; and

-   Interviewed NCERF's President and CEO and various DISD officials.

To achieve our audit objectives, we relied primarily on written
documentation from DISD and NCERF to support grant expenditures and
deliverables. DISD officials provided computer-processed data only to
support grant stipends paid to teachers and parents. We verified the
completeness of this data by comparing source records to
computer-processed data, and verified the authenticity by comparing
computer-processed data to source documents. However, after performing
these limited data reliability tests, we noted several discrepancies
that cast doubt on the data's validity. We concluded that the data was
not sufficiently reliable to be used in meeting the audit's objectives.
However, when this computer-processed data is viewed in context with
other available evidence, we believe the opinions, conclusions, and
recommendations relating to grant stipends paid to teachers and parents
in this report are valid.

Our review covered September 1, 1999, through August 31, 2003, which are
the four completed years of the five-year grant period. We conducted our
fieldwork at DISD's Administration Building, Dallas, Texas from August
4, 2003, through August 15, 2003; and at NCERF's office in Danbury,
Connecticut from September 9, 2003, through September 17, 2003. We
discussed the preliminary results of our audit with DISD officials on
August 15, 2003. An exit conference was held with DISD officials on
January 21, 2004.

Our audit was performed in accordance with generally accepted government
auditing standards appropriate to the scope of audit described above.

As part of our audit, we reviewed all costs charged to the grant, and
performance data relating to grant deliverables for the four-year grant
period. Therefore, it was not considered necessary to assess DISD's
management controls over the bilingual grant. However, our review
disclosed weak management controls, which adversely affected DISD's
ability to administer the bilingual grant, and resulted in significant
non-compliance with Federal regulations, grant terms, and cost
principles. Those weaknesses and their effects are discussed in the
AUDIT RESULTS section of this report.

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

[]{.mark}

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 U.S. Department of Education official, who
will consider them before taking final Departmental action on this
audit:

Jack Martin

> Chief Financial Operating Officer

Office of the Chief Financial Officer

U.S. Department of Education

400 Maryland Avenue, S.W., Room 4E313

> Washington, DC 20202

Maria Hernandez Ferrier

Deputy Under Secretary and Director of the Office of English Language

Acquisition, Language Enhancement, and Academic Achievement for

Limited English Proficient Students

U.S. Department of Education

400 Maryland Avenue, S.W., Room PCP-10087

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 greatly 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.

If you have any questions or wish to discuss the contents of this
report, please contact me, at 214-880-3031. Please refer to the control
number in all correspondence related to this report.

> Sincerely,

**/Signed/**

Sherri L. Demmel

> Regional Inspector General
>
> for Audit

Attachment A - Schedule of Questioned Costs

Attachment B - DISD\'s Response

**BILINGUAL EDUCATION -- SYSTEMWIDE**

**IMPROVEMENT GRANT**

## SCHEDULE OF QUESTIONED COSTS

## SEPTEMBER 1, 1999, THROUGH AUGUST 31, 2003

+----------------+----------------+----------------+------------------+
| **[Category]   | # [N           | *              | # [Unsuppor      |
| {.underline}** | on-Performance | *[Unallowable] | ted]{.underline} |
|                |  of Grant Cost | {.underline}** |                  |
|                | s]{.underline} |                | # [Co            |
|                |                | **[Costs]      | sts]{.underline} |
|                |                | {.underline}** |                  |
+----------------+----------------+----------------+------------------+
|                |                |                |                  |
+----------------+----------------+----------------+------------------+
| N              | \$970,557^1^   |                |                  |
| on-Performance |                |                |                  |
| of Grant       |                |                |                  |
+----------------+----------------+----------------+------------------+
| Contractual    |                | \$213,501^2^   |                  |
| Services       |                |                |                  |
+----------------+----------------+----------------+------------------+
| Educational    |                | \$135,723^3^   |                  |
| Supplies       |                |                |                  |
+----------------+----------------+----------------+------------------+
| Payroll        |                | \$ 5,471^4^    | \$293,176^4^     |
+----------------+----------------+----------------+------------------+
| Other          |                | \$ 10,957^5^   | \$ 6,729^5^      |
| Operating      |                |                |                  |
+----------------+----------------+----------------+------------------+
| Unidentified   |                | \$ 17,666^6^   | \$135,073^6^     |
| Grant Costs    |                |                |                  |
+----------------+----------------+----------------+------------------+
| ### **Total**  | **\$970,557**  | **\$383,318**  | **\$434,978**    |
+----------------+----------------+----------------+------------------+

**[Non-Performance of Grant:]{.underline}**

**1 \--** \$970,557 \-- We calculated the unduplicated questioned costs
for the non-delivery of grant deliverables as follows:

-   Grant Drawdowns from Sept 1, 1999 -- Aug 31, 2003 \$2,004,361.54

-   Total Unallowable (\$ 383,318.00)

-   [Total Unsupportable (\$ 434,978.00)]{.underline}

-   Total \$1,186,065.54

-   [81.83% for Non-Delivery of Grant x 81.83%]{.underline}

-   **Total Unduplicated Costs [\$ 970,557]{.underline}**

If any of the costs questioned in Recommendation #2 are allowed, the
amount allowed should be reduced by 81.83% due to non-delivery of grant
services, and the same amount should be added to the costs questioned in
Recommendation #1.

**[Contractual Services:]{.underline}**

**2** \-- \$213,501

> ***[1999/2000]{.underline}*** \-- \$118,200 \-- Questioned full amount
> for the year because contractual services were not performed by NCERF
> during the year.
>
> ***[2000/2001]{.underline}*** \-- \$81,801 \-- Questioned amount above
> the contracted amount of \$205,000.
>
> ***[2001/2002]{.underline}*** \-- \$13,500 \-- Questioned amount above
> the contracted amount of \$205,000.
>
> ***[2002/2003]{.underline}*** \-- \$0 \-- No questioned costs for this
> year.

According to *OMB Circular A-87, Attachment A, Paragraph C, Subparagraph
1.j.* (1997), to be allowable, costs must be adequately documented.
Also, *OMB Circular A-87, Attachment A, Paragraph C, Subparagraph 1.d.*
(1997) states the grant must "\[c\]onform to any limitations or
exclusions set forth in these principles, Federal laws, terms and
conditions of the Federal award, or other governing regulations as to
types or amounts of cost items."

According to the signed contracts between NCERF and DISD, NCERF would be
paid \$205,000 for consultant services for each year of the grant.
However, there are instances in which NCERF was paid more than the
contracted amount.

**[Educational Supplies:]{.underline}**

**3** \-- \$135,723

> ***[1999/2000]{.underline}*** \-- \$100,000 \-- Questioned full amount
> for the year because no grant services were performed that required
> the purchase of educational supplies during the year.
>
> ***[2000/2001]{.underline}*** \-- \$35,723 \-- Questioned full amount
> above the contracted amount of \$95,000; also questioned costs not
> allowed by grant.
>
> ***[2001/2002]{.underline}*** \-- \$0 \-- No questioned costs for this
> year.
>
> ***[2002/2003]{.underline}*** \-- \$0 \-- No questioned costs for this
> year.

According to the signed contracts between NCERF and DISD, NCERF would be
paid \$95,000 for supplies for each year of the grant. There are
instances in which NCERF was paid more than the contracted amount and
the grant funds were used to pay for supplies for a math program that
was not authorized by this grant.

**[Payroll:]{.underline}**

**4** \-- \$ 5,471 \-- Unallowable

\$293,176 \-- Unsupportable

> ***[1999/2000]{.underline}*** \-- \$5,471 \-- Questioned full amount
> for the year because no grant services or products were delivered
> during the year.
>
> ***[2000/2001]{.underline}*** \-- \$126,443 \-- DISD failed to obtain
> the required semi-annual certifications for full-time employees of the
> grant.
>
> ***[2001/2002]{.underline}*** \-- \$110,006 \-- DISD failed to obtain
> the required semi-annual certifications for full-time employees of the
> grant.
>
> ***[2002/2003]{.underline}*** \-- \$56,727 \-- DISD failed to obtain
> the required semi-annual certifications for full-time employees of the
> grant.

According to *OMB Circular A-87, Attachment B, Paragraph 11.h(3)*
(1997), "Where employees are expected to work solely on a single Federal
award or cost objective, charges for their salaries \[including fringe
benefits\] and wages will be supported by periodic certifications that
the employees worked solely on that program for the period covered by
the certification. These certifications will be prepared at least
semi-annually and will be signed by the employee or supervisory official
. . . ." DISD did not obtain the certifications; therefore, we
questioned the full amount of payroll for the first year as unallowable
costs and for the last three years as unsupportable.

**[Other Operating:]{.underline}**

**5** \-- \$10,957 \-- Unallowable Costs

\$ 6,729 \-- Unsupportable Costs

> ***[1999/2000]{.underline}*** \-- \$0 \-- No questioned costs for this
> year.
>
> ***[2000/2001]{.underline}*** \-- \$7,631 \-- Expenses not allowed by
> the grant including stipends paid to parents and catering services for
> math training; and questioned costs of \$6,729. (\$4,817 in day care
> services that was unsupportable because DISD failed to obtain the
> necessary documentation, and \$1,912 that DISD agreed in its response
> was unsupported).
>
> [***2001/2002***]{.underline} \-- \$1,800 \-- Questioned full amount
> because expense not allowed by grant.
>
> ***[2002/2003]{.underline}*** \-- \$1,526 \-- Questioned full amount
> because expense not allowed by grant.

DISD failed to obtain the necessary receipts to support the costs paid
for by the grant. DISD also used grant funds to pay for costs not
allowed by the grant (i.e., daycare services and math backpacks).

**[Unidentified Grant Charges:]{.underline}**

**6** \-- \$135,073 -- Unsupported Costs

\$ 17,666 -- Unallowable Costs

We originally reported the unidentified grant charges as \$216,165. In
DISD's response to the audit, DISD provided additional information to
support some of the costs we were unable to previously identify. After
review, we adjusted the report to state that DISD provided support for
\$63,426, \$135,073 is unsupported, and the remaining amount of \$17,666
is unallowable.

**[Summary:]{.underline}** The total unduplicated questioned costs are
calculated as follows:

Non-Performance of Grant Deliverables (Recommendation #1): \$ 970,557

Unallowable Costs (Recommendation #2): \$ 383,318

[Unsupportable Costs (Recommendation #2): \$ 434,978]{.underline}

**Total Unduplicated Questioned Costs [\$1,788,853]{.underline}**

> ![](media/image1.png){width="0.6166666666666667in"
> height="0.6430555555555556in"}**Dallas Independent School District**

May 18, 2004

Ms. Sherrie L. Demmel

Regional Inspector General for Audit U.S. Department of Education Office
of the Inspector General 1999 Bryan Street, Suite 2630 Dallas, TX
75201-6817

RE: Control Number ED-OIG/A06-D0023 Dear Ms. Demmel:

The Dallas Independent School District (\"the district\") submits this
response to the draft audit report concerning administration of the
Bilingual Education Systemwide Improvement Grant. We have thoroughly
reviewed the many allegations contained in the draft report including
the issues regarding documentation and procedures. While we do not agree
with all of these points, where appropriate we are taking steps to
address these issues. Overall, however, we respectfully and strongly
disagree with the fundamental conclusions reached in the draft.

We base our disagreement on errors of fact and/or interpretation made in
the report that affect the conclusions drawn, and also on documentation
discovered since the auditors concluded their fieldwork. In support of
our response, the district has attached a number of exhibits and other
documents more specifically described in the response. When all relevant
facts are assessed, they point to these conclusions: (1) the district
can support the overwhelming majority of the expenditures; (2) all the
expenditures were spent in furtherance of the programs outlined in the
grant; and (3) all of the expenditures were appropriate under the terms
of the grant as modified.

We submit that the analysis of the overall delivery of grant services
and products is seriously flawed because it overlooks changes in the
grant program that were approved by the Office of Bilingual Education
and Minority Languages Affairs (\"OBEMLA\"). It also ignores the
importance OBEMLA placed on the district\'s use of services and products
provided by the National Children\'s Education Reform Foundation
(\"NCERF\"). Review of the initial steps in the implementation of the
grant demonstrates the erroneous premises on which the audit\'s
conclusions are based.

The first year of the grant as awarded was September 1, 1999 through
August 31, 2000. However, as OBEMLA was aware, implementation of the
grant was delayed because of the district\'s efforts to arrive at a
contract with NCERF. OBEMLA officials were deeply and directly involved
in that process and in fact directed its outcome. Four important things
happened during that process which were critical to subsequent
administration of the grant.

First, OBEMLA required the district to maintain NCERF at the center of
the grant program. For example, in a letter received May 2, 2000, Arthur
M. Love, Acting Director, OBEMLA, instructed Dr. Rosita Apodaca, Deputy
Superintendent, Teaching and Learning Division, as follows: \"\...this
grant cannot be implemented, consistent with the scope and purpose of
the approved application, without using the programmatic approach,
materials and services of NCERF.\" (See Exhibit 1 attached to this
response). The Deputy Director of OBEMLA instructed the district to
reach an agreement with NCERF on a scope of services and warned that if
progress toward an agreement were not made, \"\[t\]he department will
have no choice but to take the necessary steps to end the funding of
this grant.\" The Deputy also noted that \"\[t\]he department will have
final authority to approve any modification to this project that the
parties agree upon.\" Acting pursuant to these

**Mike Moses, Ed.D.** *• General Superintendent\
3700 Ross Avenue • Dallas, Texas 75204-5491 • Telephone (972) 925-3700*

directives from OBEMLA and desirous of providing critically important
assistance to the students to be served, the district did enter an
agreement with NCERF effective May 15, 2000.

Second, OBEMLA specifically approved several aspects of the May 15,
2000, contract between NCERF and the district that the audit now
ignores. The contract required the district to pay NCERF \$100,000 by
May 15^th^ and make additional payments of \$30,000 each on June 30^t^h,
July 31^st^, and August 31^st^. In a letter dated June 22, 2000, from
John Ovard, Midwest Cluster Coordinator for OBEMLA, and James H.
Lockhart, Education Specialist, OBEMLA, addressed to Dr. James Hughey,
Acting Deputy Superintendent, OBEMLA stated that \"the advance payment
provisions set out in the May 15, 2000, contract between DISD and the
Foundation are not prohibited by the applicable Department
regulations.\" (See Exhibit 2 attached to this response).

Third, OBEMLA specifically approved initial invoices submitted by NCERF
which the district had questioned: \"invoices shared by the Foundation
with OBEMLA appear to be proper and demonstrate planning and other
activities carried out by the Foundation consistent with its efforts to
achieve a working relationship with DISD pursuant to joint
implementation of this grant.\" *(June 22, 2000 letter, exhibit 2)*
Thus, OBEMLA gave the district the green light to proceed despite
whatever reservations the district might have had. In reliance on this
green light, the district issued a check to the Foundation in the amount
of \$168,399.91 for two invoices.

Fourth, and most important, OBEMLA accepted the May 15, 2000, contract
between NCERF and the district as a modification of the grant. The June
OBEMLA letter approves of the modifications to the approved application
for this grant that are set out in the May 15, 2000, contract between
DISD and the Foundation. \"Those modifications fall within the scope and
purpose of the approved application for this grant.\" *(June 22, 2000
letter, exhibit 2)* In other words, OBEMLA accepted that the goods and
services to be provided in the first year of the grant and in succeeding
years would be measured against the terms of the contract, which OBEMLA
recognized as differing from the original grant application.

The contract between NCERF and the district was amended effective
December 8, 2000, to increase the amount to be paid to NCERF from
\$190,000 per year to \$300,000 per year. Thus, the evaluation of the
grant administration for the second, third, and fourth years must be
measured against the requirements of the amended contract rather than
the grant application alone.

There were two recommendations in the report. We will address the three
elements of the recommendations separately: Failure to deliver grant
services, unallowable costs, and unsupported costs:

**Recommendation.** Refund to the Department unallowable costs of
\$924,268 due to DISD\'s material failure to deliver grant services and
products. **NON-CONCUR.**

The Dallas Independent School District disputes that only 17.67 percent
of grant services and products were delivered in accordance with the
grant application. The basis of our disagreement is that the report does
not adequately represent the critical role of NCERF in the delivery of
these services, does not correctly recognize the services actually
delivered, and fails to include approved services and products delivered
in the first year of the grant (1999-2000).

> • In a letter received May 2, 2000 (Exhibit 1), Arthur M. Love, Acting
> Director, Office of Bilingual Education and Minority Languages Affairs
> (OBEMLA), instructed Dr. Rosita Apodaca, DISD Deputy Superintendent
> for Teaching and Learning as follows: \"The educational program,
> techniques, materials, and services of NCERF are a critical part of
> the application DISD submitted for the Title VII funds and represented
> a central basis for the OBEMLA\'s selection of DISD\'s application for
> funding.\" He added: *\"\...this grant cannot be implemented,
> consistent with the scope and purpose of the approved application,
> without using the programmatic approach, materials and services of*
>
> 2
>
> *NCERF.\"* Mr. Love directed the district to reach an agreement with
> NCERF by May 15, 2000, or relinquish the grant. According to the draft
> audit report, the district received \$2,004,362 of the awarded amount.
> Of this total, \$1,245,825, or 62.2 percent, was paid to NCERF in
> accordance with the provisions of the OBEMLA directed and approved
> contract. In light of USDE\'s insistence that only by using NCERF
> could the terms of the grant be satisfied, the threshold of any
> analysis of failure to deliver goods and services must be at least
> that 62.2 percent --- not 17.67 percent. The payments to NCERF were
> made in good faith and covered goods and services within the terms of
> the contract, and thus the grant.

• This grant was pursued and implemented under Title VII of the
Improving America\'s Schools Act of 1994. Section 7115 states, in part,
that the purpose of implementing districtwide bilingual instructional
educational programs is to improve, reform, and upgrade relevant
programs and operations. The report seems to view the implementation of
this systemic reform and improvement as an assembly line process with a
rigidly predictable schedule of delivery for products and services.
Nothing could be further from the truth. Implementing far-reaching
systemic reforms through new and untried programs means that while
overall progress and ultimate success is expected, it is also expected
that there will be bumps in the road, set-backs experienced, and
redirections necessitated by ongoing project and data reviews or changed
circumstances. All of these occurred during the implementation of the
Bilingual Systemwide Improvement Grant.

> The report asserts that only 17.67 percent of grant services and
> products were delivered. In actual fact, a much higher percentage was
> delivered. We have provided in the appendix the actual deliverables,
> which are summarized below.
>
> Teachers trained. These should be viewed as units trained, not new
> teachers trained each year. The USDE, in providing guidance for
> professional development, directs that such training is to be
> \"sustained, intensive, and classroom-focused, and not one-day or
> short-term workshops.\" This sustained, intensive training is exactly
> what was accomplished during this project. The following summarizes
> teachers trained:

+-----------------------------+-----------------------+---------------+
| > Year                      | > Expected            | > Delivered   |
+-----------------------------+-----------------------+---------------+
| > 2000-2001                 | 30 Teachers           | 50 Teachers   |
+-----------------------------+-----------------------+---------------+
| > 2001-2002                 | 60 Teachers           | 54 Teachers   |
+-----------------------------+-----------------------+---------------+
| > 2002-2003                 | 60 Teachers           | 43 Teachers   |
+-----------------------------+-----------------------+---------------+

> Parents trained. Similar to teachers trained, parent training should
> be viewed as units trained not individual parents. Had the project
> required that parents receive an \"introduction\" or \"orientation,\"
> a one-time session would have been appropriate. Since the goal of the
> project was to enlist the parents as partners in the academic success
> of their children, sustained and intensive training was not only
> appropriate, but required.
>
> [Year]{.underline} [Expected]{.underline}

2000-2001 100 Parents

[Delivered]{.underline}

148 Parents

2001-2002 100 Parents

2002-2003 100 Parents

106 Parents

87 Parents

> Model classrooms. Subsequent to audit fieldwork, DISD staff visited
> with participating campuses and staff members. We were able to
> ascertain through these interviews that twelve classrooms were
> actually implemented as summarized below.

+----------------------------------+--------------------------+--------+
| > Year                           | Expected                 | Del    |
|                                  |                          | ivered |
+----------------------------------+--------------------------+--------+
| > 2000-2001                      | > 5                      | 7      |
+----------------------------------+--------------------------+--------+
| > 2001-2002                      | > 5                      | 7      |
+----------------------------------+--------------------------+--------+
| > 2002-2003                      | > 5                      | 12     |
+----------------------------------+--------------------------+--------+

> Other services and products. The report asserts that all DISD
> sub-districts would have model classrooms by the end of the five-year
> grant. This approach is seriously flawed as it, in essence, double
> counts the model classroom deliverable in the analysis. Further, the
> report entirely omitted the Think Campreneur student camps held each
> year of the grant. DISD provided five days of camp each summer to 82
> students in 2000-2001, 90 students In 2001-2002, and 55 students In
> 2002-2003. This important service was not considered.

• In counting teachers and parents trained and model classrooms, the
report encumbers the first year of the grant with an expectation of full
delivery of services. This is a serious factual error. The actions of
DISD were in compliance with the legislation and taken with clear
direction and oversight of OBEMLA.

> Title VII of the Improving America\'s Schools Act of 1994, Section
> 7115(b)(3) specifically provides that grants may be used exclusively
> during the first twelve months for activities preparatory to the
> delivery of services. Ample documentation of these planning activities
> was provided during fieldwork to substantiate that the planning took
> place.
>
> .:. Implementation of the grant was delayed after the award because of
> the District\'s efforts to arrive at a satisfactory contract with
> NCERF that reflected what the new administration believed to be a more
> appropriate role for the NCERF. The District\'s efforts in that regard
> were impeded by the attitude of officials in the OBEMLA. For example,
> in a letter dated March 30, 2000 (see Exhibit 3), to Dr. Apodaca, Bouy
> Te, Deputy Director of OBEMLA, wrote: \"the Foundation, because of the
> extent of its involvement and the critical role described for it in
> the application submitted by DISD, cannot be removed as a participant
> in this project without altering its basic scope and purpose.\" The
> Deputy Director directed the district and the Foundation to reach an
> agreement on a scope of services and warned that if progress toward an
> agreement were not made, \"\[t\]he department will have no choice but
> to take the necessary steps to end the funding of this grant.\" The
> Deputy also noted that \"\[t\]he department will have final authority
> to approve any modification to this project that the parties agree
> upon.\" On April 11, 2000 (referenced in exhibit 1), OBEMLA proposed
> that the district and
>
> 4

NCERF reach an agreement whereby the district would spend \$190,000 of
its yearly grant award of \$522,000, to purchase goods and services from
NCERF. In a letter received May 2, 2000 ( see exhibit 1), Arthur M.
Love, Acting Director, OBEMLA, instructed Dr. Apodaca as follows: \"The
educational program, techniques, materials, and services of the
Foundation are a critical part of the application DISD submitted for the
Title VII funds and represented a central basis for the OBEMLA\'s
selection of DISD\'s application for funding.\" He added: \"\...this
grant cannot be implemented, consistent with the scope and purpose of
the approved application, without using the programmatic approach,
materials and services of the Foundation.\" Mr. Love directed the
district to reach an agreement with NCERF by May 15^th^ or relinquish
the grant. Acting pursuant to these directives from OBEMLA and desirous
of providing critically important assistance to the students to be
served. the district did enter an agreement with NCERF, effective May
15, 2000. That agreement required the district to pay NCERF \$100,000 by
May 15^th^ and make additional payments of \$30.000 each on June 30^th^,
July 31^st^, and August 31^st^. NCERF submitted invoices to the
district, some of which the district questioned. The district also
questioned the requirement of advance payment. In response to the
district\'s questions, OBEMLA responded with a letter dated June 22,
2000, (see exhibit 2), from John Ovard, Midwest Cluster Coordinator for
OBEMLA, and James H. Lockhart, Education Specialist, OBEMLA, which was
addressed to Dr. James Hughey, Acting Deputy Superintendent. In that
letter OBEMLA announced three important conclusions:

\"First, \"OBEMLA approves the modifications to the approved application
for this grant that are set out in the May 15, 2000, contract between
DISD and the Foundation. Those modifications fall within the scope and
purpose of the approved application for this grant\...\"

Second, \"the advance payment provisions set out in the May 15, 2000,
contract between DISD and the Foundation are not prohibited by the
applicable Department regulations.\"

Third, (relating to the questioned invoices), \"invoices shared by the
Foundation with OBEMLA appear to be proper and demonstrate *planning and
other activities* carried out by the Foundation consistent with its
efforts to achieve a working relationship with DISD pursuant to joint
implementation of this grant.\"

Thus, OBEMLA accepted that the goods and services to be provided in the
first year of the grant and in succeeding years would be measured
against the terms of the contract with NCERF, which OBEMLA recognized as
differing from the original grant application. OBEMLA gave the district
approval to proceed despite whatever reservations the district might
have had, and in reliance on this approval, the district issued a check
to NCERF in the amount of \$168,399.91 for two invoices for planning and
other activities. Hence, the draft report not giving the district credit
for the admittedly truncated initial year and recommending reclaim of
funds used to pay NCERF in the first year of the grant that were made
virtually at the direction, and certainly with the approval, of OBEMLA,
is surprising and contrary to the record.

> **5**

Unallowable costs consisted of: \$223,670.76 in costs incurred in the
first year of the grant, \$146,798.80 for services and supplies above
the contracted amount, and \$15,774.61 for unallowed other expense.

-   The report characterizes as unallowable the following costs incurred
    in 1999-2000: contractual services of \$118,199.91 paid to NCERF,
    educational supplies of \$100,000, and payroll of \$5,470.85. As
    noted in preceding paragraphs, these payments to NCERF for planning
    and preparation activities and educational supplies were clearly
    incurred with the knowledge and approval of OBEMLA. The sums should
    not be questioned or subject to reclaim.

```{=html}
<!-- -->
```
-   Services and supplies above the contracted amount as cited in the
    report included payments to NCERF in 2000-2001 for contracted
    services of \$81,801 and educational supplies of \$35,723.19 and in
    2001-2002 for contracted services of \$13,500. The contracted
    services provided additional training days and technical support
    intended to foster a deeper understanding of the new approach. As
    stated in the original application, training for the program will
    \"\...focus *on leadership, team-building, collaborative skills,
    brain-based learning, the how-to\'s of becoming a Think-coach,
    workforce readiness skills, and the process of facilitating more
    effective thinking and learning on the part of LEP children and
    youth. It will also train teachers in how to create integrated
    curricula, how to create interactive and adaptive learning
    environments (model classrooms) and how to work collaboratively with
    other teachers.\"* Successful implementation of this list of
    pedagogy and processes was dependent on procuring additional
    training. The educational materials supported this additional
    effort. Neither the grant provisions nor OMB Circular A-87 prohibit
    procuring goods and services that further the purposes of the grant.
    Complete supporting documentation of properly executed contracts and
    all invoices were provided during fieldwork, but were apparently
    discounted or overlooked.

```{=html}
<!-- -->
```
-   The other expenses cited by the report as not allowable included
    stipends for parents and childcare expenses. As explained during
    fieldwork, the parents of children served by the program are low
    income, and could not participate in parent activities if childcare
    were not provided. The grant paid stipends to some parents that
    provided childcare and for snacks and supplies for the children. We
    reference Section A, Point 10c of the Grant Application.
    \"Additional training stipends for administrators, teachers and
    parents related to Think Campreneur, parent outreach and other
    project activities.\" In addition, Childcare expense is allowable
    under OMB Circular A-87, when parents are participating in
    activities that accomplish the objectives of the grant program.
    Further, the budget approved by OBEMLA included stipends for
    parents.

**Recommendation.** Refund to the Department unsupported costs of
\$511,253. **Partially Concur.**

Unsupported costs consisted of \$293,176.11 in payroll, \$1,912 in other
expense, and \$216,165.15 in unidentified expense.

-   We agree that semi-annual certifications were not accomplished by
    the three employees who were 100 percent funded by the grant. This
    was a mistake on the part of program managers in that they thought
    that this program was covered by the Ed-Flex state wide
    administrative waiver of this certification. A closer reading of the
    law while researching this response found that the Ed-Flex waiver
    applied to Title VII, Part C, while this grant was funded under
    Title VII, Part A. We are taking corrective measures to assure that
    this error is not duplicated elsewhere in the district. We are
    examining all employees 100 percent funded by any federal source to
    ensure that they are either covered by the Ed‑

> 6
>
> Flex state-wide administrative waiver or are appropriately
> accomplishing the semi-annual certification. In addition, we are
> reviewing time and effort procedures district-wide to ensure our
> compliance with this portion of A-87. However, we note that the report
> does not assert that the three employees\' activities were anything
> but appropriate and justified. Therefore, we request that, in light of
> our corrective actions taken and planned, that this questioned cost of
> \$293,176.11 not be subject to reclaim.

-   Other expense. We concur.

```{=html}
<!-- -->
```
-   The report questioned unidentified expense of \$216,165.15. In the
    appendix, we provide summaries of additional documentation to
    support the amount of \$215,227.43. We believe this additional
    documentation was discovered subsequent to audit fieldwork. The
    documentation referenced in the appendix is included with this
    response and consists of copies of payroll, invoices, and receipts
    not viewed by the auditors.

In summary, while the report pointed out areas where we can improve our
management procedures and compliance with grant provisions, we dispute
that the Dallas Independent School District materially failed to deliver
grant services and the dollar amounts of the reclaims contained in the
recommendation. If you have any further questions, please contact Mr.
Douglas Ochandarena, Division Manager, Grants Acquisition and
Management. Additionally, we understand that as part of this inquiry,
the primary contractor, NCERF, was also audited. We respectfully request
to know the status of that audit, if questioned costs are also being
recommended for reclaim from them, and to receive a copy of that audit
report when finalized.

Attachments Sincerely,

Mike Moses DO

cc: Carmyn Neely Jack Elrod

> Douglas Ochandarena
>
> Re: [Bilingual. Education Systemwide Improvement Grant]{.underline}
> ![](media/image2.png){width="1.0902777777777777in"
> height="1.0263888888888888in"}![](media/image3.png){width="1.573611111111111in"
> height="0.5201388888888889in"}
>
> PR/Award No. T291R990026

Dear Dr. Apodaca:

We are in receipt of a letter from Ms. Emily Den dated April 17, 2000 to
Dr. John Ovard, Midwestern Cluster Coordinator for the Office of
Bilingual Education and Minority Languages Affairs (OBEMLA), concerning
the above-referenced grant. We hope that \_ the Dallas Independent
School District (DISD) and the National Children\'s Educational \'
Reform Foundation (NCERF) will successfully complete the process, within
the next few days, of reaching a mutually acceptable agreement regarding
this grant

Ms. Den\'s letter raises concerns regarding the Office of Bilingual
Education and Minority Languages Affairs\' (OBEMLA\'s) April 11^th^
proposal that the DISD and NCERF attempt to work out an agreement for
implementation of this grant under which DISD would utilize
approximately \$190,000 of its yearly Title VII grant award of \$522,000
to purchase services and materials from NCERF. Specifically, her letter
states:

During our telephone conversation with you and James Lockhart on April
13, 2000, Dr. Rosita Apodaca and I provided you with . . . \[DISD\'s\]
.. . response to your April 11th proposal of allocating \$190,000.00 per
year of the grant funds to \... \[NCERF\]. I expressed our concern that
the figure appeared arbitrary and random because we were unable to
figure out what the money would be paying for.

Ms. Den\'s letter goes on to state that DISD believes that it can
appropriately spend

\$162,190.50 on NCERF services and materials, but will purchase up to
\$190,000 of NCERF services and materials, on an annual basis, \"to
maintain the integrity of

OBEMLA\'s reading process and OBEMLA^\'^s approval of the group
application.\"

I would like to take this opportunity to clarify the purpose of the
April 11^t^h proposal and

place it in the broader contest of OBEMLA\'s legal obligation to ensure
the proper , . . implementation of Title VII grants that ate selected
for funding. The educational program, techniques, materials, and
services of NCERF area critical part of the

application DISD submitted for Title VII funds and represented a central
basis for

OBEMLA\'s selection of DISD\'s application for funding. Although I
understand that this

400 MARYLAND AVE., S.W. WASHINGTON, D.C. 20202\
*Our mission is to ensure equal! access to education and to promote
educational excellence throughout the Nation.*

Page 2 -- Dr. Apodaca, Deputy Superintendent

application was submitted by a prior administration of DISD, and the
current leadership of your school system is not convinced of the
educational value of the materials and services that NCERF is to provide
in carrying out this grant, OBEMLA cannot legally permit DISD to
substitute a significantly different project for that which was
competitively selected for funding. That is why this grant cannot be
implemented, consistent with the scope and purpose of the approved
application, without using the programmatic approach, materials and
services of NCERF OBEMLA is responsible for protecting the integrity of
the competitive process under which applications are selected for
funding. If Title VII recipients are free, in implementing their
projects, to dispense with critical elements of their approved
applications, the competitive selection process will be undermined and
lose all credibility because the projects that are carried out will not
resemble the proposals that were evaluated in the competitive process.

Although successful applicants for Title VII funding are required to
carry out the scope and purpose of their approved applications, they are
not bound to conform to every detail of their proposals. Recipients, as
long as they remain within the scope and purpose of their approved
application, can deviate from the specific terms of their project
proposals. OBEMLA has, for some time, been urging DISD and NCERF to try
and come to an agreement under which the role of NCERF in the
implementation of this grant was modified. Our goal was, and remains, an
agreement that satisfies DISD\'s concerns about the quality of the
specific materials and services to be provided by NCERF but stays within
the scope and purpose of the approved application. As of April 11^th^,
these efforts had not been successful. OBEMLA, in an effort to get
discussions moving, suggested a framework for a final agreement under
which DISD would utilize approximately \$190,000 of grant funds per year
to purchase NCERF materials and services.

OBEMLA was not, in arriving at this figure, arbitrary and random.
Rather, the figure represents a substantial reduction in NCERF\'s
participation in this grant in an effort to address DISD\'s concerns
about the level of NCERF involvement in the grant, while retaining
enough funding for NCERF materials and services to make it possible for
the scope and purpose of the approved application to be carried out. It
is difficult to see how reducing NCERF\'s role below this level would,
in view of the critical role given in the proposal to materials and
services that can only be provided by NCERF, make it possible for DISD
to implement a project that is consistent with the scope and purpose of
the approved application.

> Moreover, the discussion of the proposed purchases from NCERF in the
> letter reflects a basic misunderstanding of our programmatic and legal
> concerns. Our April 11^th^ proposal is not intended to force DISD to
> purchase a random set of NCERF materials and services until it reaches
> an annual goal of \$190,000. Such a course of action would not result
> in an appropriate use of grant funds, a quality educational program
> for DISD\'s limited English proficient (LEP) children, or even a
> project that is consistent with the scope and purpose of the approved
> application. Instead, the purpose of our April 11^th^ proposal is to
> provide DISD and NCERF a framework within which to work out the
> details of the \'-specific services and materials that NCERF will need
> to provide in order to allow the fundamental educational program
> described in DISD\'s own application to be carried out.

Page 3 --- Dr. Apodaca, Deputy Superintendent

> It is that fundamental educational program, not the \$190,000 per year
> figure, which is critical. The \$190,000 per year figure is just a
> means to that end.
>
> If DISD and NCERF work together to select the NCERF services and
> materials most suited to DISD\'s~,~ approved application, we believe
> it is possible for the parties to reach an agreement on how to
> implement this grant that honors the scope and purpose of the approved
> application and provides a quality education program. This can only
> occur if DISD and NCERF immediately begin direct discussions with one
> another. These direct discussions will provide the parties with an
> opportunity to iron out their differences and begin to develop the
> trusting working relationship that is critical to successful
> implementation of this grant\'. In addition, it will allow DISD to
> raise any questions it has about the materials and services NCERF can
> offer in the context of this grant directly with NCERF. This will
> allow DISD to make a fully informed judgment on the educational value
> of NCERF\'s services and materials. Any agreement between the parties,
> of course is subject to review and approval by OBEMLA based on the
> standards described in this letter.

DISD is required to submit a performance report by May 15, 2000 on its
progress in

implementing this grant during the past year. Unless DISD and NCERF have
reached an\
agreement on how to implement this grant by that time, OBEMLA will not
be in a position to continue funding for this grant for a second year.
For that reason, it is critical for DISD and NCERF to begin discussions
immediately. Our hope is that those discussions will result in an
agreement that meets DISD\'s needs and is consistent with the scope and
purpose of the approved application. However, if, as a result of those
discussions, DISD concludes that the educational services and materials
NCERF can offer, consistent with the approved grant, are not appropriate
to the district\'s current needs, we believe that the appropriate course
of action is for DISD to relinquish this grant, but no later than May
15, 2000.

> In the long run, the interests of Dallas\'s LEP children will not be
> served by a Title VII project to which DISD is not fully committed.
>
> If you have any further. questions on this matter, please do not
> hesitate to contact either Mr. Lockhart, Dr. Ovard or myself. Thank
> you in advance for your prompt response.
>
> ![](media/image4.png){width="1.8298611111111112in"
> height="0.7666666666666667in"}
>
> Arthur M. Love Acting Director
>
> cc: Waldemar Rojas, General Superintendent, DISD
>
> Emily Den, Special Assistant to the Superintendent
>
> Jaime Sandoval, Director, Multi-Language Enrichment Program W. Jay De
> Vecchio, Esq., Crowell & Moring, LLP
>
> Susan Tierno, CEO/Executive Director, NCERF
>
> **Exhibit 2**![](media/image5.png){width="1.2666666666666666in"
> height="0.2in"}![](media/image6.png){width="1.0368055555555555in"
> height="1.0263888888888888in"}

James Hughey

Acting Deputy Superintendent Dallas Independent School District 3700
Ross Avenue

Dallas, TX 75204

Re: Title VII, Bilingual Education Systemwide Grant \# T291R9990026

Dear Dr. Hughey:

The purpose of this letter is to follow-up on the agreements reached
during the conference call of June 21, 2000 concerning the
above-referenced grant to the Dallas Independent School District (DISD).
Participating in that conference call were representatives from the U.S.
Department of Education^\'^s Office of Bilingual Education and Minority
Languages Affairs (OBEMLA), DISD, and the National Children\'s
Educational Reform Foundation the Foundation).

During the course of the conference call we discussed a May 15, 2000
contract entered into between DISD and the Foundation. The purpose of
that contract was to implement certain changes to the approved
application for the above-referenced grant. OBEMLA is fully aware of the
terms and conditions of the above-referenced grant, the \"partnership\"
arrangement between DISD and the Foundation for purposes of implementing
this grant, and the written justifications for reimbursements submitted
so far by the Foundation. Although DISD is the recipient of the grant,
and the fiscal agent for that award, the Foundation is a critical
partner to the successful implementation of this grant. In order to
assist DISD and the Foundation in getting. grant activities started,
OBEMLA wants to take this opportunity to communicate the following
points,

First, OBEMLA approves of the modifications to the approved application
for this grant that are set out in the May 15, 2000 contract between
DISD and the Foundation. Those modifications fall within the scope and
purpose of the approved application for this grant and are, as a
consequence, permissible.

Second, the advance payment provisions set out in the May 15, 2000
contract between DISD and the Foundation are not prohibited by
applicable Department regulations.

Third, invokes shared by the Foundation with OBEMLA appear to be proper
and demonstrate planning and other activities carried out by the
Foundation consistent with its efforts to achieve a. working
relationship with DISD pursuant to joint implementation

of this grant.

> Finally, OBEMLA is responsible for monitoring and implementation of
> this grant and ensuring that it is carried out consistent with the
> approved modifications to that application, Department regulations,
> and Title Vii of the Elementary and Secondary Education Act, including
> Title VII\'s non-supplanting requirement, Moreover, OBEMLA is
> available to provide DISD and the Foundation with technical assistance
> and to facilitate an effective working partnership between the two
> entities,

If we may be of further assistance, please do not hesitate to contact
us.

> Yours truly,
>
> \~/ . \`•\~
>
> John Ovard, Ed.D. James H. Lockhart
>
> Midwest Cluster Coordinator Education Program Specialist
>
> OBEMLA OBEMLA
>
> U. S, Department of Education U.S. Department of Education
>
> CC: Waldemar Rojas, General Superintendent, DISD
>
> Emily Den, Office of Legal Services, DISD
>
> Jaime Sandoval, Director, Multi-Language Enrichment, DISD Evangelina
> Cortez, Principal/ Project Director
>
> Susan Tierno, CEO, National Children\'s Educational Reform Foundaton
>
> W, Jay DcVecchio, Esq., General Counsel, NCERF, Inc.
>
> Ronald Petracca, Office of General Counsel, ED.

UNITED STATES DEPARTMENT OF
EDUCATION![](media/image7.png){width="0.9701388888888889in"
height="0.9763888888888889in"}![](media/image8.png){width="1.3736111111111111in"
height="0.7534722222222222in"}

**OFFICE OF BILINGUAL EDUCATION AND**

MINORITY LANGUAGES AFFAIRS

> March 30, 2000
>
> Re: Systemwide Grant \# T291 R990026

Dr. Rosita Apodaca

Deputy Superintendent

Teaching and Learning Division Dallas Independent School District 3700
Ross Avenue

Dallas, Texas 75204-5491

Dear Dr. Apodaca:

On Monday. March 27, 2000, representatives of the Department of
Education\--: Buoy Te, Deputy Director, OBEMLA; John Ovard, Midwest
Cluster Coordinator, OBEMLA; James Lockhart, Education Program
Specialist, OBEMLA, and Ronald Petracca, Office of the General, met with
Susan Tierno, CEO/ Executive Director and W. Jay DeVecchio, Attorney, of
the National Children\'s Educational Reform Foundation (Foundation) to
discuss the above referenced Title Vll grant. This grant, which has been
awarded to the Dallas Independent School District (DISD), involves the
Foundation as a partner. The grant provides a total budget of
\$2,500,000 over a five-year period.

Since the invited representatives of the Dallas Independent School
District (DISD)

did *not attend the meeting, Dr. Ovard, Mr. Lockhart, and Mr. Petracca
held a* telephone *conference* call with Rosita Apodaca, DISD\'s Deputy
Superintendent, and Emily Den, Special Assistant to DISD\'s General
Superintendent, later that same day. The purpose of this letter is to
summarize the points made by the representatives of the Department of
Education during the meeting and subsequent telephone conference call,
and the steps that must be taken if funding of the above-referenced
grant is to continue.

Representatives from the Department of Education explained that the
above-referenced project was selected for funding through a competitive
review process. The Department, to protect the integrity of that
process, must ensure that applications selected for funding early out
the project that were reviewed in that competition. Although applicants
selected for funding have *some flexibility to modify the way in which
they* implement *their projects, they cannot change the* basic scope and
purpose of those projects. In this instance, the Foundation, because of
the extent

**600 INDEPENDENCE AVE. S.W WASHINGTON. D.C. 20202\
Our mission is to ensu**^r^***e* *equal access to education and to*
promote educational *excellence* throughout** the *Nation.*

of its involvement and the critical role described for it in the
application submitted by DISD, cannot be removed as a participant in
this project without altering its basic scope and purpose.

*At this point,* DISD *has* informed *the* Department *that it has
concerns about the* role *the Foundation*

is going to play in the implementation of this Title VII Systemwide
grant. Thus far, these concerns have prevented any substantial activity
to implement the grant, which was awarded last Spring (1999) and was to
commence implementation at the beginning of the current (1999-2000)
school year. Moreover, DISD and the Foundation have not, to date,
established a basis for a mutual agreement to resolve these concerns.

The Department of Education representative indicated at the meeting and
during the telephone conference call that they will allow DISD and the
foundation to make one final effort to determine whether they can agree
upon an appropriate means to implement this project. In making that
effort, the following course of action will be followed:

1.  The Foundation will submit a set of proposed modifications

> to the budget(s) for the consideration of the Dallas school Officials.
> (ATTACHED)

2.  The Dallas ISD officials and the Foundation must reach an agreement
    on one of the proposed modifications (or a mutually agreed-upon

> alternative) by [April 10, 2000,]{.underline}

3.  [OBEMLA must receive notice of this agreement and its
    substance]{.underline} [by April 10, 2000.]{.underline}

4.  The Office of Bilingual Education and Minority Languages

> Affairs will provide monitoring and technical assistance to the Dallas
> ISD pursuant to the implementation of the grant, and the achievement
> of
>
> substantial progress,

The Department will have final authority to approve any modifications to
this project

that the parties agree upon. In making that determination , the
Department will be required to ascertain that the proposed modifications
do not alter the basic purpose and scope of the approved application. As
noted above, that means, among other things, that

the Foundation must continue to have a role in the implementation of
this project

All parties to the grant are requested to review this letter and to
submit written confirmation, on or before the deadline date of April 10,
2000, of their intention to comply with the above listed provisions. If
by this date, DISD and the Foundation have not informed the Department
of the specific agreement they have reached to implement the project,
the Department will have no choice but to take the necessary steps to
end the funding of this grant.

> Thank you for your willingness to seek to achieve a viable resolution
> of this matter. We sincerely hope that your agreement will serve the
> best educational interest of the children of the Dallas Independent
> School District.
>
> ![](media/image9.png){width="1.1368055555555556in"
> height="0.6631944444444444in"}
>
> Bouy Te. Deputy Director
>
> CC: Arthur M. Love, Acting Director
>
> John Ovard, Midwest Cluster Coordinator Jim Lockhart, Education
> Program Specialist Ron Petracca. Counsel
>
> Foundation

Option A

The Foundation is willing to offer the following option as it pertains
to the rights of our budget over the course of the five years. A total
of about 4.285% budget reduction of \$63,500.00 will take place in Years
4 and 5. The resulting overall budget cut will be \$1,493,650.00

Years 1,2,3:

1.  Years 1,2,3 will remain the same for the contractual budget. The
    program design will remain in tact from First grade through 6th
    grade.

2.  The Leadership/model school will be scaled back to 3 elementary
    school sites per year thus allowing plenty of service time and hours
    for the complete model to be implemented into the schools.

3.  The materials will be tailored and selected for the Leadership
    sites/model schools and their pilot classrooms.

4.  All of the programs of each component will be integrated on a
    smaller scale.

5.  The Technical Assistance will be implemented..

6.  The Foundation will handle all of the Evaluation and work together
    with the schools and evaluation Department to complete the necessary
    steps in Evaluation.

Years 4 and 5:

1.  The Foundation will service only 2 Middle School sites in Year 4. In
    Year 5, the foundation will service 2 High Schools.

2.  The Foundation will complete all Evaluation reporting for the
    purposes of DOE.

3.  The Contractual Services Budget will remain the same.

4.  The Foundation will scale back its monthly Technical Assistance days
    as efforts -to build the trainers to perform the TA will have been
    done in Years 1,2,3.

5.  The materials reduction, will demonstrate a reduction of about 4.28%
    and will be the only cost factor cuts in Years 4 and 5.

-   Materials Year 4 will be cut to \$63,250.00

```{=html}
<!-- -->
```
-   Materials Year 5 will be cut to \$63,250.00

> Foundation
>
> Option B
>
> The Foundation is willing to offer the following option as it pertains
> to the rights of our budget over the course of the five years. A total
> of 5.12% budget reduction of \$77,000.00 will take place in Years 4
> and 5 resulting in a total budget for the Foundation over the course
> of the 5 years of \$**1,492,300.00.**
>
> Years 1,2,3:
>
> 1 Years 1,2,3 will remain the same for the contractual budget. The
> program design will remain intact from First grade through 6^th^
> grade.

2.  The Leadership/model school will be scaled back to 3 elementary
    school sites per year thus allowing plenty of service time and hours
    for the complete model to be implemented into the schools.

3.  The materials will be tailored and selected for the Leadership
    sites/model schools and their pilot classrooms.

4.  All of the programs of each component will be integrated on a
    smaller scale.

5.  The Technical Assistance will be implemented.

6.  The Foundation will handle all of the Evaluation and work together
    with the schools and evaluation Department to complete the necessary
    steps in Evaluation.

> Years 4 and 5:

1.  The Foundation will service only 1 Middle School sites in Year 4.

> In Year 5, the. Foundation will service 1 High School.

2.  The Foundation will complete all Evaluation documentation for
    reporting purposes.

3.  The Contractual Services Budget will remain the same.

4.  The Foundation will scale back its monthly Technical Assistance days
    since efforts to build capacity with the trainers will have been
    done in Years 1,2,3.

5.  The materials reduction will demonstrate a reduction of 5.12% and
    will be the only cost factor cuts in Years 4 and 5:

```{=html}
<!-- -->
```
a.  Materials Year 4 will be cut to \$38,500.00

b.  Materials Year 5 will be cut to \$38,500.00

> Foundation Partnership
>
> Option C
>
> The Foundation Partnership is willing to offer the following option as
> it pertains to the rights of our budget over the course of the five
> years. A total of 5.6% or about \$84,500.00, or \$16,900.00 a year
> will take place in Years 1,2,3, 4 and 5 resulting in a total budget
> for the Foundation over the course of the 5 years of \$1,415,000.00.
>
> Years 1,2,3,4,5:

1.  Years 1,2,3, 4,5 will remain the same for the contractual budget.
    The program design will remain intact from First grade through 6^th^
    grade.

2.  The Leadership/model school will be scaled back to 3 elementary
    school sites per year thus allowing plenty of service time and hours
    for the complete model to be implemented into the schools.

3.  The materials will be tailored and selected for the Leadership
    sites/model schools and their pilot classrooms.

4.  All of the programs of each component will be integrated on a
    smaller scale.

5.  The Technical Assistance will be implemented.

6.  The Foundation will handle all of the Evaluation and work together
    with the schools and evaluation Department to complete the necessary
    steps for evaluation reports for the DOE/OBEMLA Evaluation.

7.  Year 4 and 5 will service 2 sites a year only.

> Materials cuts:
>
> Materials will be tailored and cut to a pricing of \$78,100.00 a year
> for sites includes shipping and handling charges of \$7,100.00.

![](media/image10.png){width="0.6298611111111111in"
height="0.6736111111111112in"}

TITLE VII

YEAR

1999 - 2000

+---------------+--------------+--------------+-----------+----------+
|               |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| >             |              |              |           |          |
| **1999-2000** |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **CONTRACTUAL |              | **ACCOM      | > **S     |          |
| OBLIGATION**  |              | PLISHMENTS** | UPPORTING |          |
|               |              |              | > DOCUME  |          |
| > **So        |              |              | NTATION** |          |
| urce:Contract |              |              |           |          |
| > 05/15/2000  |              |              |           |          |
| > and         |              |              |           |          |
| >             |              |              |           |          |
|  12/08/2000** |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **TEACHER     |              | **Materials  | **Papers, |          |
| TRAINING - 5  |              | indicate     | flyers,   |          |
| days of       |              | that         | etc.**    |          |
| Academy       |              | planning**   |           |          |
| training for  |              |              |           |          |
| 30 teachers** |              | **took       |           |          |
|               |              | place.**     |           |          |
+---------------+--------------+--------------+-----------+----------+
| **PARENT      |              | **Materials  | **Papers, |          |
| TRAINING - 4  |              | indicate     | flyers,   |          |
| days of       |              | that         | etc.**    |          |
| training for  |              | planning**   |           |          |
| parents**     |              |              |           |          |
|               |              | **took       |           |          |
|               |              | place.**     |           |          |
+---------------+--------------+--------------+-----------+----------+
| **STUDENTS    |              | **Materials  | **Papers, |          |
| CAMPS -       |              | indicate     | flyers,   |          |
| Organization, |              | that         | etc.**    |          |
| planning,     |              | planning**   |           |          |
| selection and |              |              |           |          |
| materials**   |              | **took       |           |          |
|               |              | place.**     |           |          |
| **for         |              |              |           |          |
| Think-        |              |              |           |          |
| campreneur.** |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **MODEL       |              | **-0-**      | **-0‑**   |          |
| CLASSROOM     |              |              |           |          |
| PILOT         |              |              |           |          |
| TEACHERS -    |              |              |           |          |
| -0- as per    |              |              |           |          |
| 5/15/00       |              |              |           |          |
| memo**        |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| >             |              |              |           |          |
| **FINANCIAL** |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **NCERF       | **Supplies   | **Employee   | **S       | > **St   |
| Contract**    | /Materials** | Payroll**    | tipends - | ipends - |
|               |              |              | T         | > P      |
|               |              |              | eachers** | arents** |
+---------------+--------------+--------------+-----------+----------+
| *             | > **NCERF:   | **\$5,470.85 | *         | **       |
| *\$118,199.91 | > \$100,000  | (Note 3)**   | *\$0.00** | \$0.00** |
| (Note 1)**    | > (Note 2)** |              |           |          |
+---------------+--------------+--------------+-----------+----------+
|               |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **AWARD       |              |              | **\$522   |          |
| N             |              |              | ,066.00** |          |
| OTIFICATION** |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+
| **ROLL        |              |              | *         |          |
| FORWARD**     |              |              | *\$0.00** |          |
+---------------+--------------+--------------+-----------+----------+
| **AMOUNT TO   |              |              | **\$522   |          |
| BE SPENT**    |              |              | ,066.00** |          |
+---------------+--------------+--------------+-----------+----------+
| **TOTAL       |              |              | **\$223   |          |
| SPENT**       |              |              | ,670.76** |          |
+---------------+--------------+--------------+-----------+----------+
| **DRAWN       |              |              | **\$224   |          |
| DOWN**        |              |              | ,339.76** |          |
+---------------+--------------+--------------+-----------+----------+
| **VARIANCE**  |              |              | **(\$     |          |
|               |              |              | 669.00)** |          |
+---------------+--------------+--------------+-----------+----------+
| **ROLL        |              |              | **\$297   |          |
| FORWARD       |              |              | ,726.24** |          |
| (Amount to be |              |              |           |          |
| Spent minus   |              |              |           |          |
| Amount        |              |              |           |          |
| Drawdowns)**  |              |              |           |          |
+---------------+--------------+--------------+-----------+----------+

+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **NCERF CONTRACT: Note 1**                                            |
+-----------------------------------------------------------------------+
| **These epenses are comprised of twinvoices: One for \$68,399.91 for  |
| 27 days of Technical**                                                |
|                                                                       |
| **assistance and the second one for \$49,800.00 for Technical         |
| assistance, consultation and training for**                           |
|                                                                       |
| **planning. The Auditors did not accept them because no services are  |
| done in the first year;but they**                                     |
|                                                                       |
| **are authorized by the Department of Education letter dated dne 22,  |
| 2000 (3rd. to 5th paragraph),**                                       |
|                                                                       |
| **and they are epenses for planning activities and are allouble       |
| epenses by the Grant. Also see Note**                                 |
|                                                                       |
| **1 and 2 for Year 2000-2001**                                        |
|                                                                       |
| > **These epenses have all the support documentation: P1-Cs, Purchase |
| > Order, Invoices and Receipts.**                                     |
+-----------------------------------------------------------------------+
| **SUPPLIES AND MATERIALS: Note 2**                                    |
|                                                                       |
| **One invoice \# 220 from NCERF for \$100,000 for educational         |
| supplies and materials. OBEMLA**                                      |
|                                                                       |
| **approved the modifications to the application for this grant that   |
| are set out in the May 15, 2000**                                     |
|                                                                       |
| > **contract betven DISD and the Foundation. The point 2a Scope of    |
| > Services and Payment as**                                           |
|                                                                       |
| **approved for services and corresponding materials. Also see Notes 1 |
| and 2 for Year 2000-2001**                                            |
|                                                                       |
| > **These epenses have all the support documentation: Purchase Order, |
| > Invoices and Receipts.**                                            |
+-----------------------------------------------------------------------+
| **EMPLOYEE PAYROLL: Note 3**                                          |
|                                                                       |
| **The amount of \$5,470.85 does not have support documentation.**     |
+-----------------------------------------------------------------------+

+--------------------------------------------+------------+------------+
| **NCERF:**                                 |            |            |
+--------------------------------------------+------------+------------+
| > Invoice for 27 days Technical assistance | > \$       |            |
|                                            | >          |            |
|                                            |  68,399.91 |            |
+--------------------------------------------+------------+------------+
| > Invoice for Technical assistance,        | Invoices,  |            |
| > consultation and                         | P1‑        |            |
|                                            |            |            |
|                                            | Cs,        |            |
|                                            | Purchase   |            |
|                                            |            |            |
|                                            | > \$       |            |
|                                            | >          |            |
|                                            |  49,800.00 |            |
|                                            | > orders,  |            |
|                                            | > receipts |            |
+--------------------------------------------+------------+------------+
| > training for planning.                   | > \$       |            |
|                                            | >          |            |
| Invoice for materials.                     | 100,000.00 |            |
+--------------------------------------------+------------+------------+
|                                            | > \$       |            |
|                                            | > **21     |            |
|                                            | 8,199.91** |            |
+--------------------------------------------+------------+------------+
| > **SALARIES** (Amount from Auditors       | > \$       |            |
| > letters)                                 | > **       |            |
|                                            | 5,470.85** |            |
+--------------------------------------------+------------+------------+
| > **TOTAL**                                |            |            |
+--------------------------------------------+------------+------------+
|                                            | I **\$     |            |
|                                            | 22         |            |
|                                            | 3,670.76** |            |
+--------------------------------------------+------------+------------+

TITLE VII

YEAR

2000 - 2001

+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         |         |         |
|  **2000 |         |         |         |         |         |         |
| -2001** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **ACC   |         | **SUP   |         |
|  **CONT |         |         | OMPLISH |         | PORTING |         |
| RACTUAL |         |         | MENTS** |         | D       |         |
| > OBLIG |         |         |         |         | OCUMENT |         |
| ATION** |         |         |         |         | ATION** |         |
|         |         |         |         |         |         |         |
| **      |         |         |         |         |         |         |
| Source: |         |         |         |         |         |         |
| C       |         |         |         |         |         |         |
| ontract |         |         |         |         |         |         |
| 05/     |         |         |         |         |         |         |
| 15/2000 |         |         |         |         |         |         |
| and     |         |         |         |         |         |         |
| 12/08   |         |         |         |         |         |         |
| /2000** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **    |         |         | > **13  |         | **      |         |
| TEACHER |         |         | > days  |         | Sign-in |         |
| > TRA   |         |         | > of    |         | sheets  |         |
| INING - |         |         | >       |         | and     |         |
| > 5     |         |         | Academy |         | payroll |         |
| > days  |         |         | > for   |         | supt.   |         |
| > of    |         |         | > 50    |         | sh      |         |
| >       |         |         | > te    |         | eets.** |         |
| Academy |         |         | achers. |         |         |         |
| > t     |         |         | > (Note |         |         |         |
| raining |         |         | > 1)**  |         |         |         |
| > for   |         |         |         |         |         |         |
| > 30    |         |         |         |         |         |         |
| > tea   |         |         |         |         |         |         |
| chers** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         | > **12  |         | **      |         |
| *PARENT |         |         | > days  |         | Sign-in |         |
| > TRA   |         |         | > of    |         | sheets, |         |
| INING - |         |         | > t     |         | i       |         |
| > 4     |         |         | raining |         | nvoices |         |
| > days  |         |         | > for   |         | and     |         |
| > of    |         |         | > 148   |         | rece    |         |
| > t     |         |         | > p     |         | ipts.** |         |
| raining |         |         | arents. |         |         |         |
| > for   |         |         | > (Note |         |         |         |
| > 100   |         |         | > 2)**  |         |         |         |
| > pa    |         |         |         |         |         |         |
| rents** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **S   |         |         | > **5   |         | **      |         |
| TUDENTS |         |         | > days  |         | Sign-in |         |
| >       |         |         | > of    |         | sheets, |         |
| CAMPS - |         |         | > camp  |         | i       |         |
| > 5     |         |         | > for   |         | nvoices |         |
| > days  |         |         | > 82    |         | and     |         |
| >       |         |         | > stud  |         | rece    |         |
| student |         |         | ents.** |         | ipts.** |         |
| >       |         |         |         |         |         |         |
| Camp.** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **7**   |         | **Model |         |
| **MODEL |         |         |         |         | Cla     |         |
| > CL    |         |         |         |         | ssrooms |         |
| ASSROOM |         |         |         |         | were    |         |
| > PILOT |         |         |         |         | ide     |         |
| > TEA   |         |         |         |         | ntified |         |
| CHERS - |         |         |         |         | by      |         |
| > 5**   |         |         |         |         | princi  |         |
|         |         |         |         |         | pals,** |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **t     |         |
|         |         |         |         |         | eachers |         |
|         |         |         |         |         | and     |         |
|         |         |         |         |         | v       |         |
|         |         |         |         |         | erified |         |
|         |         |         |         |         | by      |         |
|         |         |         |         |         | Dalia   |         |
|         |         |         |         |         | Go      |         |
|         |         |         |         |         | nzales, |         |
|         |         |         |         |         | the**   |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **      |         |
|         |         |         |         |         | project |         |
|         |         |         |         |         | facilit |         |
|         |         |         |         |         | ator.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         |         |         |
|  **FINA |         |         |         |         |         |         |
| NCIAL** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **NCERF | *       | > **E   | **Sti   | > **Sti | **Other | **Other |
| Con     | *Suppli | mployee | pends - | pends - | Contra  | Oper    |
| tract** | es/Mate | > Pa    | Tea     | > Pa    | ctual** | ating** |
|         | rials** | yroll** | chers** | rents** |         |         |
|         |         |         |         |         | **Ser   |         |
|         |         |         |         |         | vices** |         |
+---------+---------+---------+---------+---------+---------+---------+
| **\$    | **N     | >       | **\$133 | >       | *       | **\$18  |
| 286,801 | CERF:** |  **\$81 | ,300.10 |  **\$22 | *\$14,2 | ,130.24 |
| (Note   |         | ,080.04 | (Note   | ,079.06 | 23.50** | (Note   |
| 3)**    | **      | > (Note | 6)**    | > (Note |         | 8)**    |
|         | \$127,3 | > 5)**  |         | > 7)**  |         |         |
|         | 24.63** |         |         |         |         |         |
|         |         |         |         |         |         |         |
|         | **      |         |         |         |         |         |
|         | Others: |         |         |         |         |         |
|         | \$55,3  |         |         |         |         |         |
|         | 07.76** |         |         |         |         |         |
|         |         |         |         |         |         |         |
|         | **(Note |         |         |         |         |         |
|         | 4)**    |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **AWARD |         |         |         |         | \$523,5 |         |
| >       |         |         |         |         | 23.00** |         |
| NOTIFIC |         |         |         |         |         |         |
| ATION** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
|  **ROLL |         |         |         |         | \$297,7 |         |
| > FO    |         |         |         |         | 26.24** |         |
| RWARD** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         |         |         | **      |         |
| *AMOUNT |         |         |         |         | \$821,2 |         |
| > TO BE |         |         |         |         | 49.24** |         |
| >       |         |         |         |         |         |         |
| SPENT** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **(Note |         |
| **TOTAL |         |         |         |         | 9)      |         |
| >       |         |         |         |         | \$738,2 |         |
| SPENT** |         |         |         |         | 46.33** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **DRAWN |         |         |         |         | \$738,4 |         |
| >       |         |         |         |         | 38.65** |         |
|  DOWN** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **VAR |         |         |         |         | **(\$19 |         |
| IANCE** |         |         |         |         | 2.32)** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **I     |         |
|  **ROLL |         |         |         |         | \$82,8  |         |
| >       |         |         |         |         | 10.59** |         |
| FORWARD |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
| (Amount |         |         |         |         |         |         |
| > to be |         |         |         |         |         |         |
| > Spent |         |         |         |         |         |         |
| > minus |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
|  Amount |         |         |         |         |         |         |
| > Drawd |         |         |         |         |         |         |
| owns)** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **ACCOMPLISHMENTS FOR TEACHER TRAINING: Note 1**                      |
|                                                                       |
| **Contractual Obligation specified 5 days of Academy Training for 30  |
| teachers. We provided 13 days of Academy training for 50 teachers.We  |
| think**                                                               |
|                                                                       |
| **we have covered the Contractual Obligation for both years:          |
| 1999-2000 and 2000-2001.**                                            |
+-----------------------------------------------------------------------+
| **ACCOMPLISHMENT FOR PARENT TRAINING: Note 2**                        |
|                                                                       |
| **Contractual Obligation specified 4 days of Training for parents. We |
| provided 12 days of training for 148 parents. We think we have        |
| covered the**                                                         |
|                                                                       |
| **Contractual Obligation for both years: 1999-2000 and 2000-2001.**   |
+-----------------------------------------------------------------------+
| **NCERF CONTRACT: Note 3**                                            |
+-----------------------------------------------------------------------+
| **Questioned Costs:**                                                 |
+-----------------------------------------------------------------------+
| > **The Auditors Questioned Costs in the amount of \$81,801 because   |
| > it exceeded the contracted amount of \$205,000 with NCERF.**        |
+-----------------------------------------------------------------------+
| **This amount is comprised of two invoices with NCERF: One for        |
| \$41,601.00 for additional parent training and the other invoice for  |
| \$40,200 for**                                                        |
+-----------------------------------------------------------------------+
| **technical assistance for consultation and 8 days of staff training. |
| Dallas ISD hired special consultants for additional training and      |
| technical**                                                           |
+-----------------------------------------------------------------------+
| **support to foster deeper understanding of the new approach. Please  |
| note that in the support documentation we provided to the auditors,   |
| we**                                                                  |
+-----------------------------------------------------------------------+
| **included the Service Contract Form P1-Cs signed between the         |
| Foundation and DISD for these additional amounts, Purchase Orders,    |
| Invoices and**                                                        |
+-----------------------------------------------------------------------+
| **Receipts.**                                                         |
+-----------------------------------------------------------------------+
| **SUPPLIESIMATERIALS: Note 4**                                        |
+-----------------------------------------------------------------------+
| **Questioned Costs:**                                                 |
+-----------------------------------------------------------------------+
| > **The Auditors Questioned Costs in the amount of \$35,723.19        |
| > because it exceeded the contracted amount of \$95,000 for materials |
| > with NCERF.**                                                       |
+-----------------------------------------------------------------------+
| **This amount is comprised of three invoices with NCERF: \$16,912.50, |
| \$5,412.13, and \$10,000; and one invoice for \$3,398.50 from Success |
| for All**                                                             |
+-----------------------------------------------------------------------+
| **Foundation Inc. These invoices were for Educational materials,      |
| English reading materials, Math parents packs, and Spanish reading    |
| materials.**                                                          |
+-----------------------------------------------------------------------+
| **We have all the support documentation.**                            |
+-----------------------------------------------------------------------+
| **OBEMLA approved the modifications to the Grant. The contract        |
| between DISD and the Foundation signed in May 15, 2000 says in the    |
| Point 4‑**                                                            |
+-----------------------------------------------------------------------+
| **Professional Programs, Materials and Services:**                    |
+-----------------------------------------------------------------------+
| > **\" and any program materials, seminars, academies or other        |
| > materials conforming to the type and quality of such Program        |
| > Services used in**                                                  |
+-----------------------------------------------------------------------+
| > **the Foundation\'s performance of services are hereby deemed       |
| > approved for two Demonstrations Sites, with the exception that to   |
| > the extent**                                                        |
+-----------------------------------------------------------------------+
| > **program materials include t-shirts, mug, pens, pencils and other  |
| > office supplies, English and Spanish language written materials     |
| > with**                                                              |
+-----------------------------------------------------------------------+
| > **educational value, including dictionaries where necessary, shall  |
| > be provided instead.\"**                                            |
+-----------------------------------------------------------------------+
| > **We think these expenses were approved.**                          |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **Unsupported Costs:**                                                |
+-----------------------------------------------------------------------+
| > **The Auditors considered unsupported the amount of Payroll for     |
| > \$126,442.87 for not having the semi-annual certification.**        |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| > **In their analysis, the Auditors did not include \$22,642.93 for   |
| > Substitutes and \$3,900 for Overtime. We are providing support      |
| > documentation in**                                                  |
| >                                                                     |
| > **the file.**                                                       |
+-----------------------------------------------------------------------+
| **STIPENDS - TEACHERS: Note 6**                                       |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| > **In their analysis, the Auditors did not include the amount of     |
| > \$40,161.00 for Stipends. We are providing support documentation in |
| > the file.**                                                         |
+-----------------------------------------------------------------------+
| **STIPENDS - PARENTS: Note 7**                                        |
|                                                                       |
| **Questioned Costs:**                                                 |
+-----------------------------------------------------------------------+
| **The Auditors considered \$952.78 for Childcare services provided by |
| parents as expenses not allowable for the Grant. We could explain to  |
| the**                                                                 |
|                                                                       |
| **Auditors that these parents are low income parents and they could   |
| not assist to the training if we did not provide childcare services   |
| for other**                                                           |
|                                                                       |
| **parents. Additionally the 2000-2001 Budget approved by James        |
| Lockhart USDOE/OBEMLA considers parent stipends as a whole.**         |
+-----------------------------------------------------------------------+
| **Also, the Auditors considered \$8,173.50 for Stipends for Parents   |
| working at Student Camp and during Training as expenses not allowable |
| for the**                                                             |
+-----------------------------------------------------------------------+
| **Grant. We could explain to the Auditors that these parents provided |
| services caring the children at camp and helping during Parents       |
| training, and**                                                       |
+-----------------------------------------------------------------------+
| **these services were essentials for the Program. Additionally the    |
| 2000-2001 Budget approved by James Lockhart USDOE/OBEMLA considers**  |
+-----------------------------------------------------------------------+
| **parent stipends as a whole.**                                       |
+-----------------------------------------------------------------------+
| > **The Grant Application - Section A - Point 10.c. of the Grant      |
| > permits \"Additional training stipends for administrators, teachers |
| > and parents**                                                       |
+-----------------------------------------------------------------------+
| > **related to Think-Campreneur (Students Camp), parent outreach and  |
| > other project activities\".**                                       |
+-----------------------------------------------------------------------+
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include \$ 9,278 for        |
| Stipends for parents who assisted to the trainings; \$240 for         |
| Stipends for Childcare**                                              |
+-----------------------------------------------------------------------+
| **services, and \$2,290.78 for Stipends for Parents working at        |
| Student Camp. We are providing the support documentation in the       |
| file.**                                                               |
+-----------------------------------------------------------------------+
| **OTHERS: MISCELLANEOUS : Note 8**                                    |
+-----------------------------------------------------------------------+
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include \$1,632.07 for      |
| miscellaneous expenses. We are providing support documentation in the |
| file.**                                                               |
+-----------------------------------------------------------------------+

The difference of \$80,144.72 between \$738,246.33 and the total amount
considered by the Auditors as \"Total Expended per Receipts of
\$658,101.61\" is explained in Notes 5 thru 8 under \"Expenses not
considered by the Auditors\".

+-----------------------+-------+------+------+------+------+-------+
|                       |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
|                       |       | **Co |      |      | >    | **TO  |
|                       |       | nsid |      |      |  **N | TAL** |
|                       |       | ered |      |      | ot** |       |
|                       |       | by   |      |      | >    | **    |
|                       |       | Au   |      |      | >    | EXPEN |
|                       |       | dito |      |      | **Co | SES** |
|                       |       | rs** |      |      | nsid |       |
|                       |       |      |      |      | ered | **2   |
|                       |       |      |      |      | >    | 000-2 |
|                       |       |      |      |      | by** | 001** |
|                       |       |      |      |      |      |       |
|                       |       |      |      |      | **Au |       |
|                       |       |      |      |      | dito |       |
|                       |       |      |      |      | rs** |       |
+-----------------------+-------+------+------+------+------+-------+
|                       | > **  | >    |      | *    |      |       |
|                       | Quest |  **U |      | *Tot |      |       |
|                       | ioned | nsup |      | al** |      |       |
|                       | > Co  | port |      |      |      |       |
|                       | sts** | ed** |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
|                       |       | **S  | C    |      |      |       |
|                       |       | uppo | osts |      |      |       |
|                       |       | rted |      |      |      |       |
|                       |       | Cos  |      |      |      |       |
|                       |       | ts** |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **PAYROLL**           |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Stipends: Teachers  | >     | \$   | \$   | \$   | > \$ | \$    |
| (Note 6)**            |  **\$ | 1    | 7    | 9    | > 4  | 133,3 |
|                       | > -** | 9,73 | 3,40 | 3,13 | 0,16 | 00.10 |
|                       |       | 3.34 | 5.76 | 9.10 | 1.00 |       |
+-----------------------+-------+------+------+------+------+-------+
| **Salaries Support    | >     |      | \$   | \$   | > \$ | \$    |
| Personnel: Cyntia     |  **\$ |      | 2    | 2    | > -  | 21,5  |
| Garcia (Note 5)**     | > -** |      | 1,57 | 1,57 |      | 74.19 |
|                       |       |      | 4.19 | 4.19 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Substitutes (Note   | >     |      | **\$ | **\$ | > \$ | \$    |
| 5)**                  |  **\$ |      | -**  | -**  | > 2  | 22,6  |
|                       | > -** |      |      |      | 2,64 | 42.93 |
|                       |       |      |      |      | 2.93 |       |
+-----------------------+-------+------+------+------+------+-------+
| **Overtime (Note 5)** | >     | \$   | \$   | \$   | > \$ | \$    |
|                       |  **\$ | 1,50 | 2    | 2    | >    | 30,4  |
|                       | > -** | 0.00 | 5,06 | 6,56 | 3,90 | 68.00 |
|                       |       |      | 8.00 | 8.00 | 0.00 |       |
+-----------------------+-------+------+------+------+------+-------+
| **Benefits: for       |       |      |      |      |      |       |
| Stipends, Salaries,   |       |      |      |      |      |       |
| Substitute and        |       |      |      |      |      |       |
| Overtime**            |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **(Note 5)**        | >     | **\$ | \$   | \$   | > \$ | \$    |
|                       |  **\$ | -**  | 6,39 | 6,39 | > -  | 6,3   |
|                       | > -** |      | 4.92 | 4.92 |      | 94.92 |
+-----------------------+-------+------+------+------+------+-------+
|                       | > \$  | \$   | \$   | \$   | > \$ | \$    |
|                       | > -   | 2    | 12   | 14   | > 6  | 214,3 |
|                       |       | 1,23 | 6,44 | 7,67 | 6,70 | 80.14 |
|                       |       | 3.34 | 2.87 | 6.21 | 3.93 |       |
+-----------------------+-------+------+------+------+------+-------+
| **CONTRACTUAL NCERF** |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Invoices NCRF**     |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice 245 dated | > \$  |      | \$ - | \$   | > \$ | \$    |
| > 11/10/2000 (Note    | >     |      |      | 4    | > -  | 41,6  |
| > 3)**                |  41,6 |      |      | 1,60 |      | 01.00 |
|                       | 01.00 |      |      | 1.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice 269 dated |       | \$   | \$ - | \$   | > \$ | \$    |
| > 12/11/2000**        |       | 17   |      | 17   | > -  | 174,2 |
|                       |       | 4,25 |      | 4,25 |      | 50.00 |
|                       |       | 0.00 |      | 0.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice 281 dated |       | > \$ | \$ - | \$   | > \$ | \$    |
| > 3/30/2001**         |       | > 2  |      | 2    | > -  | 25,0  |
|                       |       | 5,00 |      | 5,00 |      | 00.00 |
|                       |       | 0.00 |      | 0.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **invoice** \#      |       | > \$ | \$ - | \$   | > \$ | \$    |
| > **289 dated         |       | >    |      | 5,75 | > -  | 5,7   |
| > 6/13/2001**         |       | 5,75 |      | 0.00 |      | 50.00 |
|                       |       | 0.00 |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice** \#      | > \$  |      | \$ - | \$   | > \$ | \$    |
| > **258 dated         | >     |      |      | 4    | > -  | 40,2  |
| > 09/18/2000 (Note    |  40,2 |      |      | 0,20 |      | 00.00 |
| > 3)**                | 00.00 |      |      | 0.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Rental Equipment,   |       | \$   |      | \$   | > \$ | \$    |
| Buses and             |       | 1    |      | 1    | > -  | 14,2  |
| facilities**          |       | 4,22 |      | 4,22 |      | 23.50 |
|                       |       | 3.50 |      | 3.50 |      |       |
+-----------------------+-------+------+------+------+------+-------+
|                       | > \$  | \$   | \$ - | \$   | > \$ | \$    |
|                       | >     | 21   |      | 30   | > -  | 301,0 |
|                       |  81,8 | 9,22 |      | 1,02 |      | 24.50 |
|                       | 01.00 | 3.50 |      | 4.50 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **SUPPLIES AND        |       |      |      |      |      |       |
| MATERIALS**           |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **NCERF:**            |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice** \#      |       | \$   | \$ - | \$   | > \$ | \$    |
| > **285 dated         |       | 9    |      | 9    | > -  | 95,0  |
| > 09/07/2002**        |       | 5,00 |      | 5,00 |      | 00.00 |
|                       |       | 0.00 |      | 0.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice** \#      | > \$  |      | \$ - | \$   | > \$ | \$    |
| > **283 dated         | >     |      |      | 1    | > -  | 16,9  |
| > 4/27/2001 (Note     |  16,9 |      |      | 6,91 |      | 12.50 |
| > 4)**                | 12.50 |      |      | 2.50 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice \# 235    | > \$  |      | \$ - | \$   | > \$ | \$    |
| > dated 10/25/2000    | > 5,4 |      |      | 5,41 | > -  | 5,4   |
| > (Note 4)**          | 12.13 |      |      | 2.13 |      | 12.13 |
+-----------------------+-------+------+------+------+------+-------+
| > **Invoice \# 278    | > \$  |      | \$ - | \$   | > \$ | \$    |
| > dated 3/4/2001      | >     |      |      | 1    | > -  | 10,0  |
| > (Note 4)**          |  10,0 |      |      | 0,00 |      | 00.00 |
|                       | 00.00 |      |      | 0.00 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Invoice from        | > \$  |      | \$   | \$   | > \$ | \$    |
| Success for All       | > 3,3 |      |      | 3,39 | > -  | 3,3   |
| Foundation Inc. (Note | 98.50 |      |      | 8.50 |      | 98.50 |
| 4)**                  |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Supplies includinq  |       | \$   | \$ - | \$   | > \$ | \$    |
| Procurement Card      |       | 5    |      | 5    | > -  | 51,9  |
| expenses**            |       | 1,90 |      | 1,90 |      | 09.26 |
|                       |       | 9.26 |      | 9.26 |      |       |
+-----------------------+-------+------+------+------+------+-------+
|                       | > \$  | \$   | \$ - | \$   | > \$ | \$    |
|                       | >     | 14   |      | 18   | > -  | 182,6 |
|                       |  35,7 | 6,90 |      | 2,63 |      | 32.39 |
|                       | 23.13 | 9.26 |      | 2.39 |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **OTHER OPERATING     |       |      |      |      |      |       |
| EXPENSES**            |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
| **Stipends for        | >     | **\$ | **\$ | **\$ | > \$ | \$    |
| parents-Training      |  **\$ | -**  | -**  | -**  | >    | 9,2   |
| (Note 7)**            | > -** |      |      |      | 9,27 | 78.00 |
|                       |       |      |      |      | 8.00 |       |
+-----------------------+-------+------+------+------+------+-------+
| **Stipends for        | > \$  | \$ - | \$   | \$   | > \$ | \$    |
| parents for Childcare | > 9   |      | 1,14 | 2,09 | > 24 | 2,3   |
| Services .** (Note 7) | 52.78 |      | 4.00 | 6.78 | 0.00 | 36.78 |
+-----------------------+-------+------+------+------+------+-------+
| **Stipends for        | > \$  | \$ - | \$ - | \$   | > \$ | \$    |
| parents working at    | > 8,1 |      |      | 8,17 | >    | 10,4  |
| camp. (Note 7)**      | 73.50 |      |      | 3.50 | 2,29 | 64.28 |
|                       |       |      |      |      | 0.78 |       |
+-----------------------+-------+------+------+------+------+-------+
| **Miscellaneous.      | > \$  | \$   | \$   | \$   | > \$ | \$    |
| (Note 8)**            | > 3,3 | 1    | 76   | 1    | >    | 18,1  |
|                       | 22.00 | 2,40 | 8.00 | 6,49 | 1,63 | 30.24 |
|                       |       | 8.17 |      | 8.17 | 2.07 |       |
+-----------------------+-------+------+------+------+------+-------+
|                       | >     | \$   | \$   | **\$ | >    | \$    |
|                       |  **\$ | 1    | 1,91 | 26,  | **\$ | 40,2  |
|                       | > 1   | 2,40 | 2.00 | 768. | >    | 09.30 |
|                       | 2,448 | 8.17 |      | 45** |  13, |       |
|                       | .28** |      |      |      | 440. |       |
|                       |       |      |      |      | 85** |       |
+-----------------------+-------+------+------+------+------+-------+
|                       |       |      |      |      |      |       |
+-----------------------+-------+------+------+------+------+-------+
|                       | >     | **\$ | **\$ | **\$ | >    | **\$  |
|                       |  **\$ | 399, | 128, | 658, | **\$ | 73    |
|                       | > 12  | 774. | 354. | 101. | >    | 8,246 |
|                       | 9,972 | 27** | 87** | 55** |  80, | .33** |
|                       | .41** |      |      |      | 144. |       |
|                       |       |      |      |      | 78** |       |
+-----------------------+-------+------+------+------+------+-------+

> TITLE VII
>
> YEAR

2001 - 2002

+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **2001  |         |         |         |         |         |         |
| -2002** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **ACC   |         | **SUP   |         |
|  **CONT |         |         | OMPLISH |         | PORTING |         |
| RACTUAL |         |         | MENTS** |         | D       |         |
| > OBLIG |         |         |         |         | OCUMENT |         |
| ATION** |         |         |         |         | ATION** |         |
|         |         |         |         |         |         |         |
| **      |         |         |         |         |         |         |
| Source: |         |         |         |         |         |         |
| Grant   |         |         |         |         |         |         |
| Appl    |         |         |         |         |         |         |
| ication |         |         |         |         |         |         |
| and     |         |         |         |         |         |         |
| C       |         |         |         |         |         |         |
| ontract |         |         |         |         |         |         |
| 12/08   |         |         |         |         |         |         |
| /2000** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **    |         |         | **13    |         | **      |         |
| TEACHER |         |         | days of |         | Payroll |         |
| > TRA   |         |         | T       |         | Suppl   |         |
| INING - |         |         | raining |         | emental |         |
| > T     |         |         | for 54  |         | Forms,  |         |
| raining |         |         | teac    |         | sign-in |         |
| > for   |         |         | hers.** |         | sh      |         |
| > 60    |         |         |         |         | eets.** |         |
| > tea   |         |         |         |         |         |         |
| chers** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         | **5     |         | **In    |         |
| *PARENT |         |         | days of |         | voices, |         |
| > TRA   |         |         | t       |         | re      |         |
| INING - |         |         | raining |         | ceipts, |         |
| > T     |         |         | for 106 |         | checks  |         |
| raining |         |         | par     |         | requis  |         |
| > for   |         |         | ents.** |         | itions, |         |
| > 100   |         |         |         |         | si      |         |
| > pa    |         |         |         |         | gn-in** |         |
| rents** |         |         |         |         |         |         |
|         |         |         |         |         | **sh    |         |
|         |         |         |         |         | eets.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **S   |         |         | **5     |         | **In    |         |
| TUDENTS |         |         | days of |         | voices, |         |
| >       |         |         | camp    |         | re      |         |
| CAMPS - |         |         | for 90  |         | ceipts, |         |
| >       |         |         | stud    |         | checks  |         |
| Student |         |         | ents.** |         | requis  |         |
| >       |         |         |         |         | itions, |         |
| Camp.** |         |         |         |         | si      |         |
|         |         |         |         |         | gn-in** |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **sh    |         |
|         |         |         |         |         | eets.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **7**   |         | **Model |         |
| **MODEL |         |         |         |         | Cla     |         |
| > CL    |         |         |         |         | ssrooms |         |
| ASSROOM |         |         |         |         | were    |         |
| > PILOT |         |         |         |         | ide     |         |
| > TEA   |         |         |         |         | ntified |         |
| CHERS - |         |         |         |         | by      |         |
| > 5**   |         |         |         |         | princi  |         |
|         |         |         |         |         | pals,** |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **t     |         |
|         |         |         |         |         | eachers |         |
|         |         |         |         |         | and     |         |
|         |         |         |         |         | v       |         |
|         |         |         |         |         | erified |         |
|         |         |         |         |         | by      |         |
|         |         |         |         |         | Dalia   |         |
|         |         |         |         |         | Go      |         |
|         |         |         |         |         | nzales, |         |
|         |         |         |         |         | the**   |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **      |         |
|         |         |         |         |         | project |         |
|         |         |         |         |         | facilit |         |
|         |         |         |         |         | ator.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| **FINA  |         |         |         |         |         |         |
| NCIAL** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **NCERF | *       | **E     | **Sti   | **Sti   | **Other | >       |
| Con     | *Suppli | mployee | pends - | pends - | Contra  | **Other |
| tract** | es/Mate | Pa      | Tea     | Pa      | ctual** | > Oper  |
|         | rials** | yroll** | chers** | rents** |         | ating** |
|         |         |         |         |         | **ser   |         |
|         |         |         |         |         | vices** |         |
+---------+---------+---------+---------+---------+---------+---------+
| **\$    | *       | **\$83  | **\     | >       | *       | >       |
| 218,500 | *NCERF: | ,912.63 | $93,590 |  **\$16 | *\$17,7 | **\$1,9 |
| (Note   | \$9     | (Note   | (Note   | ,607.00 | 27.95** | 21.49** |
| 1)**    | 5,000** | 3)**    | 4)**    | > (Note |         |         |
|         |         |         |         | > 5)**  |         |         |
|         | **      |         |         |         |         |         |
|         | Others: |         |         |         |         |         |
|         | \$20,5  |         |         |         |         |         |
|         | 27.83** |         |         |         |         |         |
|         |         |         |         |         |         |         |
|         | **(Note |         |         |         |         |         |
|         | 2)**    |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **AWARD |         |         |         |         | \$523,5 |         |
| >       |         |         |         |         | 23.00** |         |
| NOTIFIC |         |         |         |         |         |         |
| ATION** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | *       |         |
|  **ROLL |         |         |         |         | *\$82,8 |         |
| > FO    |         |         |         |         | 10.59** |         |
| RWARD** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         |         |         | **      |         |
| *AMOUNT |         |         |         |         | \$606,3 |         |
| > TO BE |         |         |         |         | 33.59** |         |
| >       |         |         |         |         |         |         |
| SPENT** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **(Note |         |
| **TOTAL |         |         |         |         | 6)      |         |
| >       |         |         |         |         | \$547,7 |         |
| SPENT** |         |         |         |         | 86.90** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **DRAWN |         |         |         |         | \$547,7 |         |
| >       |         |         |         |         | 86.90** |         |
|  DOWN** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **VAR |         |         |         |         | **\     |         |
| IANCE** |         |         |         |         | $0.00** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | *       |         |
|  **ROLL |         |         |         |         | *\$58,5 |         |
| >       |         |         |         |         | 46.69** |         |
| FORWARD |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
| (Amount |         |         |         |         |         |         |
| > to be |         |         |         |         |         |         |
| > Spent |         |         |         |         |         |         |
| > minus |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
|  Amount |         |         |         |         |         |         |
| > Drawd |         |         |         |         |         |         |
| owns)** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **NCERF CONTRACT: Note 1**                                            |
|                                                                       |
| **Questioned Costs:**                                                 |
+-----------------------------------------------------------------------+
| **The Auditors considered Questioned Costs the amount of \$13,500     |
| (three additional training days) for exceeding the contracted         |
| amount**                                                              |
|                                                                       |
| **of \$205,000 with NCERF.**                                          |
|                                                                       |
| > **DISD considered these additional training days crucial to the     |
| > basic understanding the proposed program. Page 46 of the original** |
| >                                                                     |
| > **grant application, Building Capacity for a Better Future states   |
| > that training for this program will \" focus on *leadership,        |
| > team-building,***                                                   |
| >                                                                     |
| > ***collaborative skills, brain-based learning, the how-to\'s of     |
| > becoming a Think-coach, workforce readiness skills and the* process |
| > *of***                                                              |
| >                                                                     |
| > ***facilitating* more effective *thinking and learning on the part  |
| > of LEP children and youth. It will* also *train teachers in how to  |
| > create***                                                           |
| >                                                                     |
| > ***integrated curricula, how to crate interactive and adaptive      |
| > learning environments (\"model* classrooms\") *and now to work***   |
| >                                                                     |
| > ***collaboratively with other teachers.\"***                        |
| >                                                                     |
| > **Based on the above-mentioned list of areas of pedagogy and        |
| > processes to be understood and implemented by teachers,             |
| > additional**                                                        |
|                                                                       |
| **training was indeed needed.**                                       |
+-----------------------------------------------------------------------+
| **SUPPLIES AND MATERIALS: Note 2**                                    |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include the amount of       |
| \$6,300 for catering services for Students Camp. We are providing     |
| support**                                                             |
|                                                                       |
| **documentation in the file.**                                        |
+-----------------------------------------------------------------------+
| **EMPLOYEE PAYROLL: Note 3**                                          |
|                                                                       |
| **Unsupported Costs:**                                                |
+-----------------------------------------------------------------------+
| **The Auditors considered unsupported the amount of Payroll for \$    |
| 110,006.07 for not having the semi-annual certification.**            |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include \$906.56 for        |
| Supplemental payments for support personnel. We are providing         |
| support**                                                             |
|                                                                       |
| **documentation in the file.**                                        |
+-----------------------------------------------------------------------+
| **STIPENDS - TEACHERS: Note 4**                                       |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include the amount of       |
| \$19,540 for Stipends for training. We are providing support          |
| documentation**                                                       |
|                                                                       |
| **in the file.**                                                      |
+-----------------------------------------------------------------------+

**[Questioned Costs:]{.underline}**

**The Auditors considered \$1,530 for Childcare services provided by
parents as expenses not allowable for the Grant. We could explain to the
Auditors that these parents are low income parents and they could not
assisted to the training if we did not provide childcare services by
other parents.**

> **The Grant Application - Section A - Point 10.c. of the Grant permits
> \"Additional training stipends for administrators, teachers and
> parents related to Think-Campreneur (Students Camp), parent outreach
> and other project activities\".**

**[Expenses not considered by the Auditors:]{.underline}**

**In their analysis, the Auditors did not include \$ 6,592 for Stipends
for parents who assisted to the trainings; \$1,460 for Stipends for
Childcare services, and \$7,000 for Stipends for Parents working at
Camp. These expenses are allowable by the Grant (See the Grant
Application - Section A - Point 8.a. regarding Stipends for Parent Coach
and Point 10. c. regarding Stipends for Parents related to Students
Camp). We are providing support documentation in the file.**

**TOTAL AMOUNT SPENT: Note 6**

**The difference of \$41,798.56 between \$547,786.90 and the total
amount considered by the Auditors as \"Total Expended per Receipts of**
\$505,988.34\" is explained in Notes 2 thru 5 under \"Expenses not
considered by the Auditors\"

+--------------------------+--------+--------------+-----+-----+-----+
| > **INTERNAL WORING      |        |              |     |     |     |
| > SHEET - ERENSES        |        |              |     |     |     |
| > 2001-2002**            |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
|                          |        | >            |     | *   | TO  |
|                          |        | **Considered |     | *No | TAL |
|                          |        | > by         |     | t** |     |
|                          |        | > Auditors** |     |     | **  |
|                          |        |              |     | >   | ERE |
|                          |        |              |     |  ** | NSE |
|                          |        |              |     | Con | S** |
|                          |        |              |     | sid |     |
|                          |        |              |     | ere |     |
|                          |        |              |     | d** |     |
+--------------------------+--------+--------------+-----+-----+-----+
|                          |        | > **U        |     |     |     |
|                          |        | nsupported** |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | >      | **Supported  | >   | > * | *   |
|                          |  **Oks | Costs        | **T | *by | *20 |
|                          | tioned | Costs**      | ota | > A | 01- |
|                          | > C    |              | l** | udi | 200 |
|                          | osts** |              |     | tor | 2** |
|                          |        |              |     | s** |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **(PAYROLL**             |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **Stipends: Teachers     | > **\$ | \$ 46,050.00 | \$  | >   | >   |
| (Note 4)**               | > -**  | \$ 28,000.00 | 74, |  \$ |  \$ |
|                          |        |              | 050 | >   | >   |
|                          |        |              | .00 | 19, | 93, |
|                          |        |              |     | 540 | 590 |
|                          |        |              |     | .00 | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Salaries Professional  | > **\$ | \$ - \$      | \$  | >   | >   |
| :Dalia Gonzales (Note    | > -**  | 45,829.42    | 45, |  \$ |  \$ |
| 3)**                     |        |              | 829 | > - | >   |
|                          |        |              | .42 |     | 45, |
|                          |        |              |     |     | 829 |
|                          |        |              |     |     | .42 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Salaries Support       | > **\$ | \$ - \$      | \$  | >   | >   |
| Personnel: Gloria Rosas  | > -**  | 27,308.13    | 27, |  \$ |  \$ |
| (Note 3)**               |        |              | 308 | > - | >   |
|                          |        |              | .13 |     | 27, |
|                          |        |              |     |     | 308 |
|                          |        |              |     |     | .13 |
+--------------------------+--------+--------------+-----+-----+-----+
| Substitutes              | > \$ - | \$ -         | \$  | >   | >   |
|                          |        |              | -   |  \$ |  \$ |
|                          |        |              |     | > - | > - |
+--------------------------+--------+--------------+-----+-----+-----+
| **Overtime and           | > **\$ | \$ 1,000.00  | \$  | >   | >   |
| Supplemental payments    | > -**  | \$ 2,401.82  | 3,  |  \$ |  \$ |
| for support (Note 3)**   |        |              | 401 | >   | >   |
|                          |        |              | .82 | 906 |  4, |
|                          |        |              |     | .56 | 308 |
|                          |        |              |     |     | .38 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Benefits: for          |        |              |     |     |     |
| Stipends, Salaries,      |        |              |     |     |     |
| Substitute and Overtime  |        |              |     |     |     |
| (Note**                  |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **3)**                   | > **\$ | \$ - \$      | \$  | >   | >   |
|                          | > -**  | 6,466.70     | 6,  |  \$ |  \$ |
|                          |        |              | 466 | > - | >   |
|                          |        |              | .70 |     |  6, |
|                          |        |              |     |     | 466 |
|                          |        |              |     |     | .70 |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | > \$ - | \$ 47,050.00 | \$  | >   | \$  |
|                          |        | \$           | 1   |  \$ | 1   |
|                          |        | 110,006.07   | 57, | >   | 77, |
|                          |        |              | 056 | 20, | 502 |
|                          |        |              | .07 | 446 | .63 |
|                          |        |              |     | .56 |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **\'CONTRACTUAL NCERF**  |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **Invoices NCRF**        | > **\$ | > \$         | \$  | >   | \$  |
|                          | > -**  | > 174,250.00 | 1   |  \$ | 1   |
| > **Invoice 284 dated    |        | > \$ -       | 74, | > - | 74, |
| > 09/10/2001**           |        |              | 250 |     | 250 |
|                          |        |              | .00 |     | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| > **Invoice 301 dated    | > **\$ | > \$         | \$  | >   | >   |
| > 02/25/2002**           | > -**  | > 25,000.00  | 25, |  \$ |  \$ |
|                          |        | > \$ -       | 000 | > - | >   |
|                          |        |              | .00 |     | 25, |
|                          |        |              |     |     | 000 |
|                          |        |              |     |     | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| > **Invoice 307 dated    | > **\$ | > \$         | \$  | >   | >   |
| > 06/13/2002**           | > -**  | > 5,750.00   | 5,  |  \$ |  \$ |
|                          |        | > \$ -       | 750 | > - | >   |
|                          |        |              | .00 |     |  5, |
|                          |        |              |     |     | 750 |
|                          |        |              |     |     | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| > **Invoice 296 dated    | > \$   | > \$ - \$ -  | \$  | >   | >   |
| > 03/19/2002 - Three     | > 13,  |              | 13, |  \$ |  \$ |
| > additional Coach**     | 500.00 |              | 500 | > - | >   |
| >                        |        |              | .00 |     | 13, |
| > **Training days (Note  |        |              |     |     | 500 |
| > 1)**                   |        |              |     |     | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Rental Equipment,      |        |              |     |     |     |
| Buses and facilities     |        |              |     |     |     |
| (look in analysis of**   |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **Auditors)**            | \$ -   |              | \$  | >   | >   |
|                          | \$     |              | 17, |  \$ |  \$ |
|                          | 17,    |              | 727 | > - | >   |
|                          | 727.95 |              | .95 |     | 17, |
|                          | \$ -   |              |     |     | 727 |
|                          |        |              |     |     | .95 |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | > \$   |              | \$  | >   | \$  |
|                          | > 13,  |              | 2   |  \$ | 2   |
|                          | 500.00 |              | 36, | > - | 36, |
|                          | > \$   |              | 227 |     | 227 |
|                          | > 222, |              | .95 |     | .95 |
|                          | 727.95 |              |     |     |     |
|                          | > \$ - |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **SUPPLIES AND           |        |              |     |     |     |
| MATERIALS**              |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **Invoices NCRF**        | > **\$ | \$ 95,000.00 | \$  | >   | >   |
|                          | > -**  | \$ -         | 95, |  \$ |  \$ |
| > **Invoice 285 dated    |        |              | 000 | > - | >   |
| > 09/07/2001 -           |        |              | .00 |     | 95, |
| > Materials**            |        |              |     |     | 000 |
|                          |        |              |     |     | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Supplies includinq     | > **\$ | \$ 14,227.83 | \$  | >   | >   |
| Procurement Card epenses | > -**  | \$ -         | 14, |  \$ |  \$ |
| (Note 2)**               |        |              | 227 | >   | >   |
|                          |        |              | .83 |  6, | 20, |
|                          |        |              |     | 300 | 527 |
|                          |        |              |     | .00 | .83 |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | > \$ - | \$           | \$  | >   | \$  |
|                          |        | 109,227.83   | 1   |  \$ | 1   |
|                          |        | \$ -         | 09, | >   | 15, |
|                          |        |              | 227 |  6, | 527 |
|                          |        |              | .83 | 300 | .83 |
|                          |        |              |     | .00 |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **,OTHER OPERATING       |        |              |     |     |     |
| ERENSES**                |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
| **Stipends for parents   | > \$   | \$ - \$ -    | \$  | >   | >   |
| (Training) Note 4**      | >      |              | 25  |  \$ |  \$ |
|                          |  25.00 |              | .00 | >   | >   |
|                          |        |              |     |  6, |  6, |
|                          |        |              |     | 592 | 617 |
|                          |        |              |     | .00 | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Stipends for parents   | > \$   | \$ - \$ -    | \$  | >   | >   |
| for Childcare Services . | > 1,   |              | 1,  |  \$ |  \$ |
| Note 4**                 | 530.00 |              | 530 | >   | >   |
|                          |        |              | .00 |  1, |  2, |
|                          |        |              |     | 460 | 990 |
|                          |        |              |     | .00 | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Stipends for parents   |        | **\$ - \$    | *   | >   | >   |
| working at camp. Note    |        | -**          | *\$ |  \$ |  \$ |
| 4**                      |        |              | -** | >   | >   |
|                          |        |              |     |  7, |  7, |
|                          |        |              |     | 000 | 000 |
|                          |        |              |     | .00 | .00 |
+--------------------------+--------+--------------+-----+-----+-----+
| **Miscellaneous.**       | > \$   | \$ 1,676.56  | \$  | >   | >   |
|                          | >      | \$ -         | 1,  |  \$ |  \$ |
|                          | 244.93 |              | 921 | > - | >   |
|                          |        |              | .49 |     |  1, |
|                          |        |              |     |     | 921 |
|                          |        |              |     |     | .49 |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | > \$   | \$ 1,676.56  | \$  | >   | >   |
|                          | > 1,   | \$ -         | 3,  |  \$ |  \$ |
|                          | 799.93 |              | 476 | >   | >   |
|                          |        |              | .49 | 15, | 18, |
|                          |        |              |     | 052 | 528 |
|                          |        |              |     | .00 | .49 |
+--------------------------+--------+--------------+-----+-----+-----+
|                          |        |              |     |     |     |
+--------------------------+--------+--------------+-----+-----+-----+
|                          | > **\$ | **\$         | *   | > * | *   |
|                          | >      | 380,682.34   | *\$ | *\$ | *\$ |
|                          |  15,29 | \$           | 505 | >   | 547 |
|                          | 9.93** | 110,006.07** | ,98 |  41 | ,78 |
|                          |        |              | 8.3 | ,79 | 6.9 |
|                          |        |              | 4** | 8.5 | 0** |
|                          |        |              |     | 6** |     |
+--------------------------+--------+--------------+-----+-----+-----+

TITLE VII

YEAR

2002 - 2003

+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **2002  |         |         |         |         |         |         |
| -2003** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **ACC   |         | **SUP   |         |
|  **CONT |         |         | OMPLISH |         | PORTING |         |
| RACTUAL |         |         | MENTS** |         | D       |         |
| > OBLIG |         |         |         |         | OCUMENT |         |
| ATION** |         |         |         |         | ATION** |         |
|         |         |         |         |         |         |         |
| **      |         |         |         |         |         |         |
| Source: |         |         |         |         |         |         |
| Grant   |         |         |         |         |         |         |
| Appl    |         |         |         |         |         |         |
| ication |         |         |         |         |         |         |
| and     |         |         |         |         |         |         |
| C       |         |         |         |         |         |         |
| ontract |         |         |         |         |         |         |
| 12/08   |         |         |         |         |         |         |
| /2000** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **    |         |         | **11    |         | **      |         |
| TEACHER |         |         | days of |         | Payroll |         |
| > TRA   |         |         | t       |         | Suppl   |         |
| INING - |         |         | raining |         | emental |         |
| > T     |         |         | for 43  |         | Forms,  |         |
| raining |         |         | teac    |         | sign-in |         |
| > for   |         |         | hers.** |         | sh      |         |
| > 60    |         |         |         |         | eets.** |         |
| > tea   |         |         |         |         |         |         |
| chers** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         | **5     |         | **In    |         |
| *PARENT |         |         | days of |         | voices, |         |
| > TRA   |         |         | t       |         | re      |         |
| INING - |         |         | raining |         | ceipts, |         |
| > T     |         |         | for 87  |         | checks  |         |
| raining |         |         | par     |         | requis  |         |
| > for   |         |         | ents.** |         | itions, |         |
| > 100   |         |         |         |         | si      |         |
| > pa    |         |         |         |         | gn-in** |         |
| rents** |         |         |         |         |         |         |
|         |         |         |         |         | **sh    |         |
|         |         |         |         |         | eets.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **S   |         |         | **5     |         | **In    |         |
| TUDENTS |         |         | days of |         | voices, |         |
| >       |         |         | camp    |         | re      |         |
| CAMPS - |         |         | for 55  |         | ceipts, |         |
| >       |         |         | stud    |         | checks  |         |
| Student |         |         | ents.** |         | requis  |         |
| >       |         |         |         |         | itions, |         |
|  Camp** |         |         |         |         | si      |         |
|         |         |         |         |         | gn-in** |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **sh    |         |
|         |         |         |         |         | eets.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         | **12 (5 |         | **Model |         |
| **MODEL |         |         | new     |         | Cla     |         |
| > CL    |         |         | added   |         | ssrooms |         |
| ASSROOM |         |         | to the  |         | were    |         |
| > PILOT |         |         | 7 for a |         | ide     |         |
| > TEA   |         |         | total   |         | ntified |         |
| CHERS - |         |         | of      |         | by      |         |
| > 5**   |         |         | 12)**   |         | princi  |         |
|         |         |         |         |         | pals,** |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **t     |         |
|         |         |         |         |         | eachers |         |
|         |         |         |         |         | and     |         |
|         |         |         |         |         | v       |         |
|         |         |         |         |         | erified |         |
|         |         |         |         |         | by      |         |
|         |         |         |         |         | Dalia   |         |
|         |         |         |         |         | Go      |         |
|         |         |         |         |         | nzales, |         |
|         |         |         |         |         | the**   |         |
|         |         |         |         |         |         |         |
|         |         |         |         |         | **      |         |
|         |         |         |         |         | project |         |
|         |         |         |         |         | facilit |         |
|         |         |         |         |         | ator.** |         |
+---------+---------+---------+---------+---------+---------+---------+
| **FINA  |         |         |         |         |         |         |
| NCIAL** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **NCERF | *       | > **E   | **Sti   | **Sti   | **Other | **Other |
| Con     | *Suppli | mployee | pends - | pends - | Contra  | Oper    |
| tract** | es/Mate | > Pa    | Tea     | Pa      | ctual** | ating** |
|         | rials** | yroll** | chers** | rents** |         |         |
|         |         |         |         |         | > **Ser |         |
|         |         |         |         |         | vices** |         |
+---------+---------+---------+---------+---------+---------+---------+
| **      | *       | >       | **\     | >       | > **\$8 | **\$1   |
| \$205,0 | *NCERF: | **\$110 | $85,650 |  **\$10 | 39.50** | ,878.00 |
| 00.00** | \$9     | ,304.23 | (Note   | ,392.40 |         | (Note   |
|         | 5,000** | > (Note | 3)**    | > (Note |         | 5)**    |
|         |         | > 2)**  |         | > 4)**  |         |         |
|         | **      |         |         |         |         |         |
|         | Others: |         |         |         |         |         |
|         | \$19,1  |         |         |         |         |         |
|         | 71.14** |         |         |         |         |         |
|         |         |         |         |         |         |         |
|         | **(Note |         |         |         |         |         |
|         | 1)**    |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
|         |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **AWARD |         |         |         |         | \$523,5 |         |
| >       |         |         |         |         | 23.00** |         |
| NOTIFIC |         |         |         |         |         |         |
| ATION** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | *       |         |
|  **ROLL |         |         |         |         | *\$58,5 |         |
| > FO    |         |         |         |         | 46.69** |         |
| RWARD** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > *     |         |         |         |         | **      |         |
| *AMOUNT |         |         |         |         | \$582,0 |         |
| > TO BE |         |         |         |         | 69.69** |         |
| >       |         |         |         |         |         |         |
| SPENT** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **(Note |         |
| **TOTAL |         |         |         |         | 6)      |         |
| >       |         |         |         |         | \$528,2 |         |
| SPENT** |         |         |         |         | 35.27** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **      |         |
| **DRAWN |         |         |         |         | \$582,0 |         |
| >       |         |         |         |         | 69.69** |         |
|  DOWN** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| > **VAR |         |         |         |         | **(     |         |
| IANCE** |         |         |         |         | \$53,83 |         |
|         |         |         |         |         | 4.42)** |         |
+---------+---------+---------+---------+---------+---------+---------+
| >       |         |         |         |         | **\     |         |
|  **ROLL |         |         |         |         | $0.00** |         |
| >       |         |         |         |         |         |         |
| FORWARD |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
| (Amount |         |         |         |         |         |         |
| > to be |         |         |         |         |         |         |
| > Spent |         |         |         |         |         |         |
| > minus |         |         |         |         |         |         |
| >       |         |         |         |         |         |         |
|  Amount |         |         |         |         |         |         |
| > Dra   |         |         |         |         |         |         |
| wdowns) |         |         |         |         |         |         |
| > I**   |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **SUPPLIES AND MATERIALS: Note 1**                                    |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In teir analysis, the Auditors did not include the amount of        |
| \$508.30 for Procurement Card. We are providing support**             |
|                                                                       |
| **documentation in the file.**                                        |
+-----------------------------------------------------------------------+
| **EMPLOYEE PAYROLL: Note 2**                                          |
|                                                                       |
| **Unsupported Costs:**                                                |
+-----------------------------------------------------------------------+
| **The Auditors considered unsupported the amount of Payroll for       |
| \$56,727.17 for not having the semi-annual certification.**           |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include the amount of       |
| salaries of \$26,779.98 (Professional Employees), \$22,119.48**       |
|                                                                       |
| **(Support Personnel) and \$5,139.33 for Benefits. We are providing   |
| support documentation in the file.**                                  |
+-----------------------------------------------------------------------+
| **STIPENDS - TEACHERS: Note 3**                                       |
|                                                                       |
| **Expenses not considered by the Auditors:**                          |
+-----------------------------------------------------------------------+
| **In their analysis, the Auditors did not include the amount of       |
| \$30,860 for Stipends for training. We are providing support**        |
|                                                                       |
| **documentation in the file.**                                        |
+-----------------------------------------------------------------------+

**[Questioned Costs:]{.underline}**

> **The Auditors considered \$1,526.40 for Childcare services provided
> by parents as unallowable espenses for the Grant. We could explain
> that these parents are low income parents and they could not attend
> training if we did not provide childcare services by other parents.**
>
> **Additionally, the Grant Application - Section A - Point 10.c. of the
> Grant permits \"Additional training stipends for administrators,
> teachers and parents related to Think-Campreneur (Students Camp),
> parent outreach and other project activities\".**

**[Expenses not considered by the Auditors:]{.underline}**

**In their analysis, the Auditors did not include \$4,900 for Stipends
for parents who attended trainings; and \$1,900 for Stipends for Parents
working at Camp (Coach Parents). These expenses are allowable by the
Grant. We are providing support documentation in the file.**

**OTHER OPERATING: Note 5**

**[Expenses not considered by the Auditors:]{.underline}**

**In their analysis, the Auditors did not include \$1,077.04 for
miscellaneous expenses. We are providing support documentation in the
file.**

**TOTAL AMOUNT SPENT: Note 6**

> **The difference of \$93,284.09 between \$528,235.27 and the total
> amount considered by the Auditors as \"Total Expended per** Receipts
> of \$434,951.18\" is explained in Notes 1 thru 5 under \"Expenses not
> considered by the Auditors\"

+------------------------+-------+------+------+-----+-------+-------+
|                        |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        |       | >    |      |     | > **  | >     |
|                        |       | **Co |      |     | Not** | TOTAL |
|                        |       | nsid |      |     |       |       |
|                        |       | ered |      |     |       |       |
|                        |       | > by |      |     |       |       |
|                        |       | > Au |      |     |       |       |
|                        |       | dito |      |     |       |       |
|                        |       | rs** |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        | **Qu  | > *  | **U  |     | **    | **    |
|                        | estio | *Sup | nsup |     | Consi | EXPEN |
|                        | ned** | port | port |     | dered | SES** |
|                        |       | ed** | ed** |     | by**  |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        | **Co  | > *  | *    | >   | **    | **2   |
|                        | sts** | *Cos | *Cos | **T | Audit | 002-2 |
|                        |       | ts** | ts** | ota | ors** | 003** |
|                        |       |      |      | l** |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **PAYROLL**            |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Stipends: Teachers   | >     | \$   | \$   | \$  | \$    | \$    |
| (Note 3)**             |  **\$ | 5    | 2,25 | 54, | 30,8  | 85,6  |
|                        | > -** | 2,54 | 0.00 | 790 | 60.00 | 50.00 |
|                        |       | 0.00 |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Salaries: Dalia      |       |      |      |     |       |       |
| Gonzales from          |       |      |      |     |       |       |
| September 2002 thru**  |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **February 2003. (Note | >     | **\$ | \$   | \$  | \$    | \$    |
| 2)**                   |  **\$ | -**  | 2    | 25, | 26,7  | 52,6  |
|                        | > -** |      | 5,84 | 845 | 79.98 | 25.16 |
|                        |       |      | 5.18 | .18 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Salaries: Gloria     |       |      |      |     |       |       |
| Rosas from September   |       |      |      |     |       |       |
| 2002 thru**            |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **February 2003. (Note | >     | **\$ | \$   | \$  | \$    | \$    |
| 2)**                   |  **\$ | -**  | 2    | 22, | 22,1  | 44,2  |
|                        | > -** |      | 2,13 | 132 | 19.48 | 52.12 |
|                        |       |      | 2.64 | .64 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Substitutes**        | >     | \$   | \$   | \$  | \$ -  | \$    |
|                        |  **\$ | 98   | 9    | 1,  |       | 1,0   |
|                        | > -** | 5.00 | 0.00 | 075 |       | 75.00 |
|                        |       |      |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Overtime**           | >     | \$   | \$   | \$  | \$ -  | \$    |
|                        |  **\$ | 80   | 7    | 878 |       | 8     |
|                        | > -** | 3.27 | 5.22 | .49 |       | 78.49 |
+------------------------+-------+------+------+-----+-------+-------+
| **Benefits: for        |       |      |      |     |       |       |
| Stipends, Salaries,    |       |      |      |     |       |       |
| Substitute and         |       |      |      |     |       |       |
| Overtime**             |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **(Note 2)**           | >     | **\$ | \$   | \$  | \$    | \$    |
|                        |  **\$ | -**  | 6,33 | 6,  | 5,1   | 11,4  |
|                        | > -** |      | 4.13 | 334 | 39.33 | 73.46 |
|                        |       |      |      | .13 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        | > \$  | \$   | \$   | \$  | \$    | \$    |
|                        | > -   | 5    | 5    | 1   | 84,8  | 195,9 |
|                        |       | 4,32 | 6,72 | 11, | 98.79 | 54.23 |
|                        |       | 8.27 | 7.17 | 055 |       |       |
|                        |       |      |      | .44 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **CONTRACTUAL NCERF**  |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Invoices NCRF**      |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Invoice 318 dated    | >     | \$   | \$ - | \$  | \$ -  | \$    |
| 09106/2002**           |  **\$ | 17   |      | 1   |       | 174,2 |
|                        | > -** | 4,25 |      | 74, |       | 50.00 |
|                        |       | 0.00 |      | 250 |       |       |
|                        |       |      |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Invoice 325 dated    | >     | \$   | \$ - | \$  | \$ -  | \$    |
| 03/04/2003**           |  **\$ | 2    |      | 25, |       | 25,0  |
|                        | > -** | 5,00 |      | 000 |       | 00.00 |
|                        |       | 0.00 |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Invoice 332 dated    | >     | \$   | \$ - | \$  | \$ -  | \$    |
| 07/01/2003**           |  **\$ | 5,75 |      | 5,  |       | 5,7   |
|                        | > -** | 0.00 |      | 750 |       | 50.00 |
|                        |       |      |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Rental Buses         | >     | \$   | \$ - | \$  | \$ -  | \$    |
| (invoices in Auditors  |  **\$ | 83   |      | 839 |       | 8     |
| file)**                | > -** | 9.50 |      | .50 |       | 39.50 |
+------------------------+-------+------+------+-----+-------+-------+
|                        | > \$  | \$   | \$ - | \$  | \$ -  | \$    |
|                        | > -   | 20   |      | 2   |       | 205,8 |
|                        |       | 5,83 |      | 05, |       | 39.50 |
|                        |       | 9.50 |      | 839 |       |       |
|                        |       |      |      | .50 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **SUPPLIES AND         |       |      |      |     |       |       |
| MATERIALS**            |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Invoice NCERF** \#   | >     | \$   | \$ - | \$  | \$ -  | \$    |
| **285 dated            |  **\$ | 9    |      | 95, |       | 95,0  |
| 09/07/2002 -           | > -** | 5,00 |      | 000 |       | 00.00 |
| Materials**            |       | 0.00 |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Supplies ( invoices  | >     | \$   | \$ - | \$  | \$ -  | \$    |
| in Auditors file/**    |  **\$ | 31   |      | 314 |       | 3     |
|                        | > -** | 4.84 |      | .84 |       | 14.84 |
+------------------------+-------+------+------+-----+-------+-------+
| **Procurement Card     |       |      |      |     |       |       |
| (Supplies, foods,      |       |      |      |     |       |       |
| miscellaneous)**       |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **(Note 1)**           | >     | \$   | \$ - | \$  | \$    | \$    |
|                        |  **\$ | 1    |      | 18, | 5     | 18,8  |
|                        | > -** | 8,34 |      | 348 | 08.30 | 56.30 |
|                        |       | 8.00 |      | .00 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        | > \$  | \$   | \$ - | \$  | \$    | \$    |
|                        | > -   | 11   |      | 1   | 5     | 114,1 |
|                        |       | 3,66 |      | 13, | 08.30 | 71.14 |
|                        |       | 2.84 |      | 662 |       |       |
|                        |       |      |      | .84 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **OTHER OPERATING      |       |      |      |     |       |       |
| EXPENSES**             |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **alumnus Tor parents  |       |      |      |     |       |       |
| pvuie 4J:\'xmOUnT nut  |       |      |      |     |       |       |
| sunsluereo**           |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **by Auditors, have    | >     | **\$ | **\$ | *   | \$    | \$    |
| support documentation: |  **\$ | -**  | -**  | *\$ | 6,8   | 6,8   |
| 1,900 for**            | > -** |      |      | -** | 00.00 | 00.00 |
|                        |       |      |      |     |       |       |
| **parents coach in     |       |      |      |     |       |       |
| students camp and      |       |      |      |     |       |       |
| 4,900 for parent**     |       |      |      |     |       |       |
|                        |       |      |      |     |       |       |
| **training.)**         |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Stipends for parents |       |      |      |     |       |       |
| for Childcare Services |       |      |      |     |       |       |
| (Note 4):**            |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **\$2,066 Supportable  | > \$  | \$   | \$ - | \$  | \$ -  | \$    |
| costs, \$1,352         | > 1,5 | 2,06 |      | 3,  |       | 3,5   |
| Usopportable Costs**   | 26.40 | 6.00 |      | 592 |       | 92.40 |
|                        |       |      |      | .40 |       |       |
| **and \$174.40 ?       |       |      |      |     |       |       |
| Unsupportable Costs)** |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
| **Miscellaneous (Note  | >     | \$   | \$ - | \$  | \$    | \$    |
| 5)**                   |  **\$ | 80   |      | 801 | 1,0   | 1,8   |
|                        | > -** | 1.00 |      | .00 | 77.00 | 78.00 |
+------------------------+-------+------+------+-----+-------+-------+
|                        | > \$  | \$   | \$ - | \$  | \$    | \$    |
|                        | > 1,5 | 2,86 |      | 4,  | 7,8   | 12,2  |
|                        | 26.40 | 7.00 |      | 393 | 77.00 | 70.40 |
|                        |       |      |      | .40 |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        |       |      |      |     |       |       |
+------------------------+-------+------+------+-----+-------+-------+
|                        | >     | **\$ | **\$ | *   | **\$  | **\$  |
|                        |  **\$ | 376, | 56,  | *\$ | 9     | 52    |
|                        | >     | 697. | 727. | 434 | 3,284 | 8,235 |
|                        | 1,526 | 61** | 17** | ,95 | .09** | .27** |
|                        | .40** |      |      | 1.1 |       |       |
|                        |       |      |      | 8** |       |       |
+------------------------+-------+------+------+-----+-------+-------+

**BILINGUAL EDUCATION-SYSTEMWIDE IMPROVEMENT GRANT SCHEDULE OF
QUESTIONED COSTS SEPTEMBER 1, 1999, THROUGH AUGUST 31, 2003**

**ATTACHMENT**

**Unidentified Grant Charges: Point 6\-- \$216,165.15 DO NOT CONCUR.**

Attached please find a spreadsheet with a group of expenses not
considered by the Auditors in their Analysis for the years 2000-2001,
2001-2002 and 2002-2003 for a total amount of \$ 215,227.43.

We are including the support documents in the corresponding file.

21

+-------------------------+---+-------+---+-------+---+------+----+----+
|                         |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| **DESCRIPTION**         |   | **2   |   | **2   |   | *    | T  |    |
|                         |   | 000-2 |   | 001-2 |   | *200 | OT |    |
|                         |   | 001** |   | 002** |   | 2-20 | AL |    |
|                         |   |       |   |       |   | 03** | ** |    |
|                         |   |       |   |       |   |      | EX |    |
|                         |   |       |   |       |   |      | PE |    |
|                         |   |       |   |       |   |      | NS |    |
|                         |   |       |   |       |   |      | ES |    |
|                         |   |       |   |       |   |      | ** |    |
|                         |   |       |   |       |   |      |    |    |
|                         |   |       |   |       |   |      | *  |    |
|                         |   |       |   |       |   |      | *N |    |
|                         |   |       |   |       |   |      | OT |    |
|                         |   |       |   |       |   |      | CO |    |
|                         |   |       |   |       |   |      | NS |    |
|                         |   |       |   |       |   |      | ID |    |
|                         |   |       |   |       |   |      | ER |    |
|                         |   |       |   |       |   |      | ED |    |
|                         |   |       |   |       |   |      | ** |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         |   |       |   |       |   |      | ** |    |
|                         |   |       |   |       |   |      | BY |    |
|                         |   |       |   |       |   |      | T  |    |
|                         |   |       |   |       |   |      | HE |    |
|                         |   |       |   |       |   |      | AU |    |
|                         |   |       |   |       |   |      | DI |    |
|                         |   |       |   |       |   |      | TO |    |
|                         |   |       |   |       |   |      | RS |    |
|                         |   |       |   |       |   |      | ** |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **PAYROLL**           |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Stipends Teachers** | > | 40,1  | \ | 19,5  | \ | 3    | \$ | 9  |
|                         |   | 61.00 | $ | 40.00 | $ | 0,86 |    | 0, |
|                         | * |       |   |       |   | 0.00 |    | 56 |
|                         | * |       |   |       |   |      |    | 1. |
|                         | \ |       |   |       |   |      |    | 00 |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Salaries            | > | >     | * | **-** | * | 2    | \$ | 2  |
| > Professional**        |   | **-** | * |       | * | 6,77 |    | 6, |
|                         | * |       | \ |       | \ | 9.98 |    | 77 |
|                         | * |       | $ |       | $ |      |    | 9. |
|                         | \ |       | * |       | * |      |    | 98 |
|                         | $ |       | * |       | * |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Salaries Support    | > | >     | * | **-** | * | 2    | \$ | 2  |
| > Personnel**           |   | **-** | * |       | * | 2,11 |    | 2, |
|                         | * |       | \ |       | \ | 9.48 |    | 11 |
|                         | * |       | $ |       | $ |      |    | 9. |
|                         | \ |       | * |       | * |      |    | 48 |
|                         | $ |       | * |       | * |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Substitutes**       | > | 22,6  | \ | \-    | \ | \-   | \$ | 2  |
|                         |   | 42.93 | $ |       | $ |      |    | 2, |
|                         | * |       |   |       |   |      |    | 64 |
|                         | * |       |   |       |   |      |    | 2. |
|                         | \ |       |   |       |   |      |    | 93 |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Overtime and        | > | 3,9   | \ | 9     | \ | \-   | \$ | 4, |
| > Supplemental payments |   | 00.00 | $ | 06.56 | $ |      |    | 80 |
| > for support**         | * |       |   |       |   |      |    | 6. |
|                         | * |       |   |       |   |      |    | 56 |
|                         | \ |       |   |       |   |      |    |    |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Benefits: for       | > | >     | * | **-** | * | 5,13 | \$ | 5, |
| > Stipends, Salaries,   |   | **-** | * |       | * | 9.33 |    | 13 |
| > Substitute and        | * |       | \ |       | \ |      |    | 9. |
| > Overtime**            | * |       | $ |       | $ |      |    | 33 |
|                         | \ |       | * |       | * |      |    |    |
|                         | $ |       | * |       | * |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         | > | 66,7  | \ | 20,4  | \ | 8    | \$ | 17 |
|                         |   | 03.93 | $ | 46.56 | $ | 4,89 |    | 2, |
|                         | \ |       |   |       |   | 8.79 |    | 04 |
|                         | $ |       |   |       |   |      |    | 9. |
|                         |   |       |   |       |   |      |    | 28 |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **SUPPLIES AND        |   |       |   |       |   |      |    |    |
| > MATERIALS**           |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Procurement Card    | > | >     | * | 6,3   | \ | 50   | \$ | 6, |
| > expenses and          |   | **-** | * | 00.00 | $ | 8.30 |    | 80 |
| > Catering**            | * |       | \ |       |   |      |    | 8. |
|                         | * |       | $ |       |   |      |    | 30 |
|                         | \ |       | * |       |   |      |    |    |
|                         | $ |       | * |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         | > | > \-  | \ | 6,3   | \ | 50   | \$ | 6, |
|                         |   |       | $ | 00.00 | $ | 8.30 |    | 80 |
|                         | \ |       |   |       |   |      |    | 8. |
|                         | $ |       |   |       |   |      |    | 30 |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **OTHER OPERATING     |   |       |   |       |   |      |    |    |
| > EXPENSES**            |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Stipends for        | > | 9,2   | \ | 6,5   | \ | 4,90 | \$ | 2  |
| > parents - Training**  |   | 78.00 | $ | 92.00 | $ | 0.00 |    | 0, |
|                         | * |       |   |       |   |      |    | 77 |
|                         | * |       |   |       |   |      |    | 0. |
|                         | \ |       |   |       |   |      |    | 00 |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Stipends for        | > | 2     | \ | 1,4   | \ | \-   | \$ | 1, |
| > parents - Childcare   |   | 40.00 | $ | 60.00 | $ |      |    | 70 |
| > Services**            | * |       |   |       |   |      |    | 0. |
|                         | * |       |   |       |   |      |    | 00 |
|                         | \ |       |   |       |   |      |    |    |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Stipends for        | > | 2,2   | \ | 7,0   | \ | 1,90 | \$ | 1  |
| > parents - Working at  |   | 90.78 | $ | 00.00 | $ | 0.00 |    | 1, |
| > camp**                | * |       |   |       |   |      |    | 19 |
|                         | * |       |   |       |   |      |    | 0. |
|                         | \ |       |   |       |   |      |    | 78 |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| > **Miscellaneous.**    | > | 1,6   | \ | \-    | \ | 1,07 | \$ | 2, |
|                         |   | 32.07 | $ |       | $ | 7.00 |    | 70 |
|                         | * |       |   |       |   |      |    | 9. |
|                         | * |       |   |       |   |      |    | 07 |
|                         | \ |       |   |       |   |      |    |    |
|                         | $ |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
|                         | * |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         | > | 13,4  | \ | 15,0  | \ | 7,87 | \$ | 3  |
|                         |   | 40.85 | $ | 52.00 | $ | 7.00 |    | 6, |
|                         | \ |       |   |       |   |      |    | 36 |
|                         | $ |       |   |       |   |      |    | 9. |
|                         |   |       |   |       |   |      |    | 85 |
+-------------------------+---+-------+---+-------+---+------+----+----+
|                         |   |       |   |       |   |      |    |    |
+-------------------------+---+-------+---+-------+---+------+----+----+
| TOTAL:                  | > | **8   | * | **4   | * | *    | ** | ** |
|                         |   | 0,144 | * | 1,798 | * | *93, | \$ | 21 |
|                         | \ | .78** | \ | .56** | \ | 284. | ** | 5, |
|                         | $ |       | $ |       | $ | 09** |    | 22 |
|                         |   |       | * |       | * |      |    | 7. |
|                         |   |       | * |       | * |      |    | 43 |
|                         |   |       |   |       |   |      |    | ** |
+-------------------------+---+-------+---+-------+---+------+----+----+

[^1]: DISD did not receive the fifth year of funding when the grant was
    discontinued on September 25, 2003. The discontinuation is discussed
    in more detail in the Subsequent Events section of this report.

[^2]: ^2^ The No Child Left Behind Act of 2001 (NCLB) was implemented
    during our audit period; however, NCLB was not applicable to this
    grant.

[^3]: ^3^ At the time the grant application was written, DISD had nine
    sub-districts; however, DISD has since restructured to eight
    sub-districts.

[^4]: ^4^ Each teacher was counted only once; teachers that repeated the
    training sessions were not included in the count of pilot teachers
    trained in the third and fourth years.

[^5]: ^5^ OBEMLA is currently the Office of English Language
    Acquisition, Language Enhancement, and Academic Achievement for
    Limited English Proficient Students (OELA).