As a pass-through entity, the Texas Education Agency (TEA) awards federal grant funds to eligible subrecipients, including local educational agencies (school districts and open-enrollment charter schools—LEAs). The responsibilities of pass-through entities are given in Title 2 of the Code of Federal Regulations, Part 200.332, 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, TEA’s Federal Fiscal Monitoring Division conducts an annual federal fiscal risk assessment of all subrecipients, including LEAs, to determine their potential risk of noncompliance. The specific criteria used in the risk assessment are published on the division’s web page. Based upon the outcome of the risk assessment, subrecipients are assigned a risk level of low, medium, or high.