‘Gross Mismanagement’ Found at U.S. Department of Education

Published April 1, 2001

For an agency whose very existence was questioned by many Republicans during its first 20 years, the U.S. Department of Education embarks on its third decade with a record budget–up 18 percent last year–and with President Bush promising it increased responsibilities and another 11 percent increase in his first budget–more than any other federal agency.

Yet recent investigations find the Department without auditable financial statements, suspected of wasting billions of taxpayer dollars, and failing to hold most states accountable for meeting federal Title I funding requirements.

Under Bush’s education plan, the Department’s budget would rise to $44.5 billion, with increased responsibilities for ensuring states impose annual testing of students in grades 3-8 and for taking corrective action on persistently failing schools. Additional responsibilities include ensuring states deliver on the educational results they pledge to achieve in return for receiving federal grant money.

Establishing an effective accountability system for student testing is challenge enough for incoming Education Secretary Roderick Paige, but his more immediate challenge is to address charges of financial mismanagement at the agency that arose under the previous administration.

Representative Peter Hoekstra (R-Michigan) has frequently cited incidents of mismanagement in the department, and a recent investigation by an independent federal watchdog agency echoes his concerns.

A department employee, John Gard, alleged the Education Department failed to properly account for billions of grant dollars because of inadequate controls and incomplete audit trails. After an investigation, the Office of Special Counsel confirmed Gard’s charges that the department “failed to account for billions of taxpayer dollars” and said the agency “was plagued by mismanagement issues.”

Special Counsel Elaine Kaplan said Gard’s allegations “established a substantial likelihood that violations of law, gross mismanagement, a gross waste of funds, and abuse of authority had occurred,” although her report stopped short of saying the funds had been wasted. She noted a General Accounting Office review also had found the department’s “financial management system deficiencies, inadequate systems of funds control, and manual internal control weaknesses [created] an increased risk of fraud, waste, and mismanagement.”

Although the department had taken steps to address many of these concerns, Kaplan said the charge of “gross mismanagement” remained applicable, and that department officials had created a “substantial risk of significant adverse impact upon the agency’s ability to accomplish its mission.”

In one instance, the department almost issued an $800 million loan to one lucky student. But another $500 million in undisbursed grants is unaccounted for, and there is a $6 billion discrepancy between what the U.S. Treasury says has been spent and what the Education Department can account for.

“I hope this will give Secretary Paige a blueprint of what the problems are and a road map with which to correct them,” Hoekstra told the Associated Press.

In another indication of the challenge ahead for Paige in implementing the President’s plan to hold states and schools more accountable, outgoing Assistant Education Secretary Michael Cohen on January 19 revealed that only 17 states had fully met the five-year deadline to comply with new Title I requirements that went into effect on July 1, 1995. Title I, which provides funds to educate poor children, is by far the largest federal education program, reaching 92 percent of the nation’s school districts and 48,000 schools.

States were given five years to create a system for holding schools and school districts responsible for student performance, through the establishment of learning standards and a test system to measure student learning against the standards. If states aren’t in compliance with the Title I requirements, they aren’t eligible for participation in the EdFlex program, which allows states more flexibility in the use of federal education dollars.

Reasons for noncompliance include: failure to set up a test at the high school level; failure to break down test scores by race, gender, and income; and failure to include certain groups of students in the statewide testing program–for example, students with learning disabilities and those with limited proficiency in English.

“The step-by-step process of putting together assessments aligned with state-level and federal-level requirements is pretty time consuming,” said David Griffith, a National Association of School Boards of Education spokesperson, speaking to Stateline.org.

States in compliance with the Title I requirements are: Delaware, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, North Carolina, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Virginia, Washington, and Wyoming.

A few days before Cohen’s statement was issued, The Hartford Courant reported that hundreds of children in Hartford and other Connecticut cities were not taking the standard version of the Connecticut Mastery Test, in conflict with state and federal law. Although new federal rules require testing of 80 percent of students in special education, only 20 percent were tested in Hartford. Districts that fail to meet the test requirements next year could lose state funds or have their scores adjusted down.

For more information . . .

Former Assistant Education Secretary Michael Cohen’s January 19 memo to Chief State School Officers is available from the U.S. Department of Education’s Web site at http://ed.gov/offices/OESE/saa/chiefmcjan.html.

Or use PolicyBot, The Heartland Institute’s free online research service, to request the documents in Adobe Acrobat’s PDF format. Point your browser to http://www.heartland.org and click on PolicyBot to request document #2183103.