Annual Federal Fiscal Risk Assessment

As a pass-through entity, TEA awards federal grant funds to eligible subrecipients, including local educational agencies (school districts and open-enrollment charter schools). The responsibilities of pass-through entities are outlined in Title 2 of the Code of Federal Regulations (CFR), Part 200.332(d), which requires TEA to “evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.”

To comply with this requirement, the Federal Fiscal Monitoring Division (FFM) conducts an annual risk assessment of all subrecipients, including local educational agencies, to determine their potential risk of noncompliance. Based on the outcome of the risk assessment, subrecipients are assigned a risk level of low, medium, or high.

The division updates the risk assessment model annually to ensure that risk indicators and weights reflect current risks, such as economic conditions; political conditions; regulatory changes; unreliable information; financial problems that could lead to diversion of grant funds; loss of essential personnel; loss of accreditation; rapid growth; new activities, products, or services; and organizational restructuring.

The risk assessment criteria include indicators and weights derived from multiple sources. Each subrecipient is allotted points based upon these criteria, and assigned a risk level of high, medium, or low based on the total number of points allotted.

Criteria Used in the 2022-2023 Risk Assessment

The following are the criteria used to determine the risk level of school district and charter school subrecipients for the 2022-2023 school year:

• The subrecipient did not submit a single audit report to the Federal Audit Clearinghouse within 30 days of the receipt of the auditor’s report.
• The subrecipient’s total awards from TEA fall into one of five categories.
  • $0-$749,999
  • $750,000-$1,499,999
  • $1.5M-$2,499,999
  • $2.5M-$5M
  • $5M+
• The AFR Independent Auditor’s Report contained one of the following:
  • Qualified opinion
  • Disclaimer of opinion
  • Adverse opinion
  • Going Concern comment
  • Instance of Material Noncompliance
• The subrecipient’s independent auditor’s findings related to 2 CFR Part 200, Subpart F – Audit Requirements identified one or more of the following:
  • The single audit Report on Compliance…Uniform Guidance contained a qualified opinion on a major program.
  • material weaknesses in internal controls,
  • the audit report triggered a management decision letter; and/or
  • a repeat finding from a prior year.
• The subrecipient has experienced turnover in the last three years.
• The subrecipient has been referred by other agency divisions by May 31, 2022, for significant issues.
• When the subrecipient was last monitored by FFM.
• The subrecipient did not submit an AFR to TEA by the required due date, or it did not submit an AFR.
• The subrecipient was not required to conduct a single audit under 2 CFR 200.501.

How to Access Your Risk Level

TEA has assigned all local educational agencies a risk level for the 2022-2023 school year. A letter identifying your risk assessment level has been uploaded to the GFFC Reports and Data Collections secure application. Follow these steps to access your letter:

1. Log on to TEAL.
2. Select “GFFC Reports and Data Collections.”
3. Select “Risk Assessment Level” from the report title drop-down menu.
4. Select “2022-2023” from the school year drop-down menu.

Purpose of the Annual Risk Level

The risk assessment is used to determine the likelihood that a subrecipient may fail to comply with applicable rules. If your organization is assigned a high risk level (as a result of the annual risk assessment), it does not indicate that your organization has failed to comply with applicable rules. Similarly, a low risk level does not indicate that your organization is compliant with applicable rules. Only your independent auditor or a TEA monitor can determine if your organization is compliant or noncompliant.

Since the risk assessment is conducted annually, your organization’s risk level can change from year to year. A subrecipient assigned a low risk level for 2021-2022 may be assigned a medium or high risk level in 2022-2023.

Effect of Different Risk Levels

An organization’s risk level will be used by TEA in the following ways for subrecipient monitoring:

• TEA selects subrecipients for fiscal monitoring according to their risk levels. The higher your organization’s risk level, the more likely you are to be selected for monitoring.
• Based on your risk level and the type of grant selected for monitoring, FFM’s monitoring review process may necessitate a more in-depth review.

Note: TEA’s FFM risk assessment score and resulting risk level cannot be used to justify a higher micro-purchase threshold according to 2 CFR 200.320.

Contact Information

Division of Federal Fiscal Monitoring
1701 North Congress Avenue
Austin, Texas 78701
Phone: (512) 463-9918
Email: ffm@tea.texas.gov