GAO Report On Consolidated Financial Statements

The U.S. General Accountability Office (GAO) released a report disclosing significant internal control weaknesses in the federal government’s preparation of its consolidated financial statements. Specifically, GAO found the federal government did not correct prior weaknesses (70 out of 143 recommendations GAO previously made remained unaddressed) and had new weaknesses, prompting GAO to issue 11 new recommendations. In the past, such weaknesses have lead GAO to disclaim an opinion on the financial statements.


Most of the internal control weaknesses GAO identified relate to a failure to reconcile financial information within the federal government. For example, GAO found discrepancies in how the government reports budget deficits, how it reconciles the information on its consolidated financial statement to the financial statements of individual federal agencies, and how it reports unexpended funds.
While this report does not have a direct impact on U.S. Department of Education programs, some of GAO’s recommendations deal with the way federal agencies estimate and report unexpended balances to the U.S. Department of Treasury. Because unexpended funds at the state and local level impact the U.S. Department of Education’s overall unexpended balance, there may be increased pressure on the U.S. Department of Education to track and report grant balances. This, in turn, could lead to pressure on state and local governments to obligate and draw down grant funds. It may also prompt the U.S. Department of Education to further crack down on late liquidation requests since late draw downs presumably require the Department to revise its estimate of unexpended balances report to the U.S. Department of Treasury, which could cause discrepancies on the consolidated financial statement.
The full report is available at: http://www.gao.gov/new.items/d07805.pdf.
Author: SLK

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Assistant Secretary Hager To Resign

John H. Hager, Assistant Secretary for Special Education at the U.S. Department of Education (ED), was elected over the weekend as the new party chairman for the Virginia Republican State Central Committee. Hager, who will have to resign his post at ED, replaces Ed Gillespie, who resigned last month to work as a White House adviser. At this point, ED has not named Hager’s replacement.

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House Panel Discusses WIA Reauthorization

Yesterday, the House Education and Labor Subcommittee on Higher Education, Lifelong Learning, and Competitiveness held a hearing on reauthorization of the Workforce Investment Act (WIA), which consolidates, coordinates, and improves employment, training, literacy, and vocational rehabilitation programs. This is the second in a series of hearings on WIA reauthorization, though no specific legislation is pending, and the committee has not scheduled any markups. Although no time table is currently set, committee staff have confirmed that no legislation will hit the floor until later this fall, if at all.


Witnesses at the hearing included:
• Beth Butler - disability and accommodations consultant, Wachovia Corp., Charlotte, NC;
• John Twomey - Executive Director, New York Association of Training and Employment Professionals, representing National Workforce Association;
• Mason A. Petit - Washington State Employment Security, representing American Federation of State, County and Municipal Employees, AFL-CIO, Spokane, WA;
• Charles Ware - Chairman, National Association of State Workforce Board Chairs , representing National Governors Association , Cheyenne, WY;
• Joe Carbone - Director, Workplace Inc., Bridgeport, CT; and
• Kathleen Randolph - President, Partners for Workforce Solutions Inc.
Discussion was relatively short, but focused on ways to increase services available at the One-Stop career centers. John Twomey made a point to mention that One-Stops are reducing duplication and increasing cost efficiency of the Federal workforce investment and partner programs. Twomey recommended that One-Stops be authorized in a separate, new title of WIA, to reinforce the fact that One-Stops are the primary infrastructure through which to access services in a comprehensive workforce investment system. As is the case in nearly every other reauthorization debate, all panelists agreed that additional funding for various WIA programs is necessary.
Although holding two WIA hearings in less than a month seems encouraging, reauthorization is still not a guarantee for this year. To date, the Senate has not moved forward with any preliminary hearings, and the House has only just begun consideration. Meanwhile, both chambers are engrossed in higher education reconciliation and reauthorization programs, twelve appropriation bills for fiscal year 2008 (FY08), and behind the scenes talks on reauthorizing the No Child Left Behind Act (NCLB). Another barrier is the month-long August recess that begins in just over a week. When Congress comes back in September, both chambers will have less than a month t deal with all twelve appropriations bills for FY08. This packed schedule does not leave much time for working on the long overdue WIA reauthorization.

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House Committees Work on SCHIP Expansion

Following action in the Senate last week, the House Ways and Means Committee approved a tax increase on tobacco yesterday to pay for the expansion of a State Children’s Health Insurance Program (SCHIP). The Committee voted 24-17 to approve H.R. 3162, which would reauthorize and expand SCHIP, due to expire on Sept. 30. The House Energy and Commerce Committee held a separate markup on other elements of the legislation the same day, though no votes were recorded. Republicans attempted to bog down both markups with procedural maneuvers as a way to protest the majority’s legislation.


The bill proposes a $50 billion increase for SCHIP, levying a 39-cent-per-pack tax on "small cigarettes," in order to pay for the expansion. Republicans offered an amendment that would cut out the tax increase, but it was defeated 16-23. Democrats later acknowledged that the bill would have to be altered before it is sent to the floor in order to adhere to budget-neutral "pay-as-you-go" rules. The preliminary Congressional Budget Office analysis found the Ways and Means bill to be short about $76 billion in offsets.
The Senate Finance Committee passed a SCHIP expansion last week, and Senate Majority Leader Harry Reid (D-NV) has stated that the bill will be on the Senate floor on Monday, giving the Senate time to pass the measure before the month-long August recess. The Senate bill expands the program by $35 billion over five years, far short of the $50 billion proposed in the House. The Finance Committee’s proposal faces contentious debate on the Senate floor. More liberal members of the majority feel the expansion is too mild. Sen. John Kerry (D-MA) has pledged to bring an amendment to the floor that will increase the expansion to the $50 billion agreed to in the budget resolution. On the other side of the spectrum, fiscal conservatives feel the expansion is too extreme.
Even if the House were to bring H.R. 3162 to the floor next week, a conference between the two versions would not take place until Congress returns in September. President Bush, who proposed only a $5 billion increase, has already promised to veto the bill, unless Congress draws back the funding increase. Democratic leaders may have to spend the August recess negotiating the expansion, working to make sure they have the votes, not only to pass the bill, but to override the threatened veto. Between SCHIP and appropriations, this recess could prove to be a very busy vacation for members of Congress.
Resources:
Autumn Campbell, “House GOP Lawmakers Stall Work on Children’s Health Insurance Plan,” Congress Now, July 26, 2007.
Author: SAS

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Reid To Introduce GRADUATES Act

For the better part of this legislative session, Congress’ education committees have been dominated by work on higher education programs or reauthorizing the No Child Left Behind Act (NCLB). Meanwhile, however, the matter of American competitiveness continues to garner some attention, though remains out of the spotlight. Next week, Senate Majority Leader Harry Reid (D-NV) and Sen. Mark Pryor (D-AR) plan to introduce the Getting Retention and Diplomas Up Among Today’s Enrolled Students (GRADUATES) Act.


The GRADUATES Act attempts to take strides toward making sure secondary school students are better prepared to move on to postsecondary education or to enter the workforce. At a time when a high school diploma is considered the minimum qualification necessary to support a good job and family well-being, this bill is intended to help curb the 30% dropout rate across the country. Preparing well-educated and well-trained individuals to enter the workforce is considered the cornerstone of any plan to keep America competitive in the global market. The bill would:
• Provide grants to partnerships between state educational agencies or local educational agencies with institutes of higher education, community based organizations, non-profit organizations, businesses, or school development organizations to create innovative models of reform in our nation’s secondary schools;
• Create evidence-based, systemic and replicable models of reform in secondary schools that improve student achievement and prepare students to succeed in post-secondary education and the 21st century workforce;
• Provide for tight research, evaluation and accountability to ensure that while the legislation would support a wide-range of strategies, federal funding would only be sustained for programs with proven improvement in student achievement; the Secretary would distribute “best practices” based on the research and evaluation;
• Support a variety of strategies for innovation in secondary schools such as multiple pathways, personalization, early college and dual enrollment, career academies, improved transitions and alignment, expanded learning time, post-secondary and work-based learning opportunities, increased autonomy and flexibility at the school level, improved learning opportunities in rural schools, and increasing rigor at all levels of secondary education aligned with post-secondary education and the workforce; and
• Authorize $500 million in competitive grants for five years.
No timetable exists for when the bill will go for markup in the Senate Health, Education, Labor and Pensions (HELP) Committee. Meanwhile the House and Senate are ready to go to conference on H.R. 2272, the 21st Century Competitiveness Act, a bill that focuses on Science, Technology, Engineering, and Mathematics (STEM) programs. The Senate version would double the National Science Foundation’s (NSF) budget, from $5.6 billion in fiscal 2006 to $11.2 billion by fiscal 2011. The NSF contributes about 20% of all federal money awarded for basic research at U.S. universities. The House version of the bill reauthorizes the NSF at a total of $21 billion through fiscal year 2010. It would also reauthorize the National Institute of Standards and Technology for the first time in more than a decade at a total of $2.5 billion through fiscal year 2010.

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House Passes Farm Bill

Today, the House passed, H.R. 2419, the 2007 Farm Bill, which reauthorized various agricultural programs through 2012. After voting on multiple amendments, the House passed the bill by a vote of 231-191. Republicans failed to pass a motion to recommit the bill back to the House Agriculture Committee, which would have sent the legislation back to the beginning of the legislative process. Instead, Democratic leaders were able to keep their rank and file members in line, passing the bill and taking the first major step towards reauthorizing the nation’s agricultural programs.


The nutrition title of the bill authorizes $70 million for expanding the Fresh Fruit and Vegetable Program (FFVP) into 35 schools in each state. The United States Department of Agriculture (USDA) would then distribute additional funds, as necessary, to states based on population. The original proposal called for 50 schools in every state, but the $100 million was contingent on offsets. The new language guarantees the $70 million, but for a scaled back expansion. Rep. Sheila Jackson Lee (D-TX) offered an amendment that requests that food, available under the school breakfast and lunch programs, be of maximum nutritional value as a means to reduce juvenile obesity. The amendment passed by an overwhelming majority of 422-3.
While the House has finished their work, the Senate has not begun work on their Farm Bill. Senate Agriculture Chairman Tom Harkin (D-IA) says he has no plans to try and move a Senate bill through his panel before the August recess. Instead he hopes to move on a bill when Congress reconvenes in September. After the Senate passes their versio, they still have to go to conference with the House. The bill will not likely cross the President’s desk before October.
Resources:
Charlene Carter, “New Farm Bill Will Not Become Law Until This Fall,” Congress Now, July 23, 2007.
Jennifer Bendery, “Over GOP Objections, House Approves Farm Bill Rule, 222-202,” Congress Now, July 26, 2007.
Author: SAS

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Senate Passes HEA Reauthorization

By a vote of 95-0, the Senate passed S. 1642, Higher Education Amendments, reauthorizing the Higher Education Act (HEA) on Tuesday. The unanimous vote signals the only truly bipartisan support for any legislation that has made its way to the Senate floor this year. After only two days of debate, the Senate was able to pass the bill much quicker than usual. However, since the House’s has not moved forward on their own reauthorization legislation, both chambers had to pass a three-month extension of the HEA, giving the House additional time to produce their own comprehensive package.


The Senate bill, which reauthorizes higher education programs for five years, represents the first renewal of the HEA since 1998. Provisions within S. 1642 include:
• Increasing the amount of information that schools and lenders must provide to students, including up-front disclosure of loan rates and terms and data on total school costs, and would ban lenders from giving schools financial aid funds or any other perks to get on a preferred lender list;
• Directing the U.S. Secretary of Education to assess costs that drive tuition increases and examine ways to contain costs and track pricing trends, alerting schools that the government will monitor tuition increases and consider ways to curb them; and
• Requiring colleges and universities to draft codes of conduct governing relationships with lenders, shorten the application form for federal student aid, and authorize a pilot program to allow students to learn the total aid they can expect to receive up to two years in advance.
Before final passage, the Senate adopted Sen. Tom Coburn’s (R-OK) amendment, which bars colleges and universities from using federal funds or student aid money for lobbying, and would require schools to certify to the Education Secretary that they abide by those terms. Coburn’s original proposal also prohibited use of tuition money for lobbying purposes, but a secondary amendment from Sen. Kennedy, adopted by a 93-0 vote, removed that language from the underlying amendment, which the Senate accepted by a voice vote.
Shortly after passing S. 1642, the Senate passed a short HEA extension, to run through October 31, 2007 since the House has not made any progress on their own reauthorization. Although both chambers have passed H.R. 2669, a higher education reconciliation bill, there is no legislation for the House Education and Labor Committee to review. While Committee Chairman George Miller (D-CA) has not set out a timetable for reauthorization, he did promise that the House will eventually move forward with its own comprehensive package. The three-month extension seems to show that the House may not move as quickly as the Senate did, especially considering that the House will not likely have any legislation completed before the month-long August recess.
Meanwhile, both chambers can now move forward on the reconciliation package. H.R. 2669 now goes to conference, where the leadership will have to settle the major differences between the two versions. The biggest difference is that the House bill, passed last week, halves the interest rates on subsidized student loans, from 6.8% to 3.4%. This rate cut is part of House Democrats’ “Six for ’06” agenda that Chairman Miller seems unwilling to sacrifice. While Sen. Edward Kennedy (D-MA), Senate Health, Education, Labor, and Pensions Chairman, is likely to be equally stubborn on Senate provisions, such as auctioning the right to offer federally backed PLUS loans to parents, the Senate measure has factors working in its favor. The President has already made a veto threat on the House bill, while only expressing “serious concern” with the Senate proposal. The fact that the White House has offered to negotiate with Sen. Kennedy gives Senate conferees the upper hand in negotiating with the House.
Resources:
Doug Lederman, “Unanimity in the Senate,” Inside Higher Ed, July 25, 2007.
Karey Wutkowski, “Senate Backs Crackdown on Student Loan Problems,” Reuters, July 24, 2007.
Libby George, “Kennedy Gives Higher Education Package ‘Outside Chance’ of Quick Passage,” CQ Today, July 24, 2007.
Author: SAS

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