Monitoring and Risk Assessment

The Montana Office of Public Instruction (OPI) monitors a risk assessment process to ensure that entities who receive federal funds have an opportunity to annually review key data points related to their fiscal and program practices. While ensuring compliance with CFR §200.332(b), this framework provides a transparent process that gives meaningful feedback to sub-recipients to promote helpful conversations around fiscal processes and improvements.

The framework uses a formula of risk data analysis to determine overall low, medium, or high- risk determinations for sub-recipients of federal funds. The OPI will provide scores to all districts, while providing essential support for any identified as high-risk, with helpful information for any identified as medium risk.

In compliance with 2 CFR 200.332(b), the OPI assesses subrecipients to identify those at greater risk of noncompliance with federal laws, regulations and grant award provisions. OPI uses the risk assessment when evaluating the entity’s applications for competitive and continuing federal formula awards to determine whether specific conditions and/or additional monitoring will be applied to the entity’s federal awards.

Under CFR §200.332(b) the Uniform Grant Guidance describes the requirements of a pass-through entity (OPI) to complete a Risk Assessment on sub-recipients. The guidance permits OPI the authority to develop a risk assessment to meet the state’s needs.

All subgrantees that receive funds through OPI as a pass-through agency are subject to a Risk Assessment.

The purpose of this assessment framework is to outline a process that is three-fold:

• To create a mechanism for determining and subgrantees who are at risk of not meeting federal program requirements.
• To use the results from this mechanism to identify high-risk sub-recipients.
• To put the high-risk sub-recipients into corrective action and support improvement fiscal practices.

The OPI uses a formula to determine the risk level of sub-recipients that receive federal funds. This formula is based on information from all federal programs that a school district participates in and uses the following criteria:

• Program assurances (y)
• Adherence to program timelines and due dates
• Regular drawdown of funds
• Meeting program assurances as outlined in federal applications
• Fiscal performance, including completion of third-party audits (z)
• Academic performance (x)

Formula: x + 3y + 3z = r (risk)
Scale: 19–21 = high risk, 12–18 = medium risk, 7–11 = low risk

Program and fiscal grant managers submit a 1, 2, or 3 rating based on their program rubrics and the sub-recipient’s performance for each program assurance. These ratings are combined to create a single 1, 2, or 3 score for program assurances, which is then used in the risk formula along with the fiscal audit and academic performance data points.

Risk levels convert risk scores into Low, Medium, and High categories. Risk level is calculated individually for each entity to provide an accurate depiction of potential risk. The intent is to support transparency and accountability and to help reduce potential vulnerabilities. The Montana Office of Public Education (OPI) uses these results to provide technical support and encourage discussion about performance improvement.

The OPI may apply special conditions, restrictions, or monitoring procedures to federal competitive and formula grants awarded to high-risk subgrantees. These special conditions and restrictions correspond to the risk condition identified for a particular subgrantee and may include the following actions under 2 CFR § 200.207:

1. Payment on a reimbursement basis rather than an advance basis.
2. Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance within a given funding period.
3. Additional financial and/or program reports with more detail.
4. Additional project monitoring.
5. Requiring the subgrantee to obtain additional technical or management assistance.
6. Requiring additional prior approvals.

Before imposing special conditions or restrictions, the OPI will notify the subgrantee in writing of the following items under 2 CFR § 200.207:

1. The nature of the special conditions or restrictions.
2. The reason for imposing the special conditions or restrictions.
3. The corrective actions that must be taken before the special conditions or restrictions will be removed, and the time allowed for completing those corrective actions.
4. The method by which a subgrantee may request reconsideration of the conditions or restrictions imposed.

Montana State and Federal Grants Handbook

In section 600, under, High-Risk Appeal Process in the Montana State and Federal Handbook it states, Schools have the right to appeal a high-risk designation if they feel the designation was made in error or if they feel they have corrected the issues which led to the High-Risk designation.

Please see the specifics in the handbook starting on page 92.