GAO Report on Quality of Audits

On October 25th the General Accountability Office (GAO) released a report entitled Actions Needed to Address Persistent Audit Quality Problems in response to concerns over the quality of single audits. Single audits are annual audits entities that expend at least $500,000 in federal funds are required to obtain. The audits are conducted by independent non-federal auditors and are generally governed by OMB Circular A-133.

The GAO report analyzes a June 2007 study by the President’s Council on Integrity and Efficiency (PCIE) as part of the National Single Audit Sampling Project, coordinated by the U.S. Department of Education’s Office of Inspector General. Both the PCIE study and the GAO report indicate there are major problems with the quality of single audits and expressed concerns that audits are not being conducted in accordance with professional standards and requirements. In fact, 51% of the audit reports studied by the PCIE had deficiencies severe enough to be classified as having “limited reliability” or as being “unreliable.”

One of the most common deficiencies in single audits is the failure to adequately test for internal controls over federal compliance requirements. This report, together with recent changes to OMB Circular A-133 (reported in the June 29th Federal Update) that strengthen the requirement for single auditors to report internal control findings, is likely to lead to an even greater focus on grantee and subgrantee control over compliance with federal requirements.

The PCIE made three recommendations to address single audit quality: (1) revise and improve single audit standards, criteria, and guidance; (2) establish minimum continuing professional education (CPE) as a prerequisite for auditors to be eligible to conduct and continue to perform single audits; and (3) review and enhance disciplinary processes to address unacceptable audits and for not meeting training and CPE requirements. The GAO generally agreed with these recommendations, but recommended Congress study whether the recommendations are feasible (especially with regard to the CPE requirements) before making any changes to single audit standards. The GAO also recommended Congress consider strengthening the oversight by cognizant federal agencies, meaning grantees and subgrantees can expect even greater scrutiny of their audit reports by the U.S. Department of Education.

The GAO report is available at: http://www.gao.gov/new.items/d08213t.pdf, and the PCIE study is available at: http://www.ignet.gov/pande/audit/NatSamProjRptFINAL2.pdf.

Author: SLK

Read More...

Summary only...

OIG Issues Report on NCLB Reauthorization

The U.S. Department of Education’s Office of Inspector General (OIG) issued a report, entitled “An OIG Perspective on Improving Accountability and Integrity in ESEA [Elementary and Secondary Education Act] Programs.” Based on its audits of ESEA programs and topics related to the ESEA over the last seven years, OIG identified five main weaknesses or deficiencies that led to noncompliance:


1. Essential, Clear, and Consistent Requirements. The OIG’s report criticizes ESEA’s lack of specificity in stating how an LEA or SEA can demonstrate compliance. It notes that grantees are forced to rely on ED-issued non-regulatory guidance. In addition, OIG observes, certain requirements in NCLB are inconsistent between programs — for example, caps on administrative costs and carryover limitations vary between NCLB programs. The report points out that such inconsistent requirements cause confusion, make compliance more difficult, and may not be based on objective criteria.
2. Data Quality. Valid and reliable data are imperative because academic assessments and accountability data are critical to the implementation of the ESEA. OIG is concerned about the reliability and accuracy of data that SEAs and districts use to determine student achievement and program effectiveness as well as weak state controls over collecting and reporting performance data and scoring state assessments. OIG specifically pointed out that federal funds may have been spent improperly because of poor quality data related to counting migrant children.
3. Weak Monitoring and Oversight. OIG has identified deficiencies in ED’s monitor¬ing of SEAs and in the states’ monitoring of their districts. OIG posited that these weaknesses were particularly apparent in the school choice and SES programs as well as charter schools program.
4. Improprieties in State and Local Programs. The report points out several in¬stances of corruption, embezzlement and other misappropriation of federal funds by state and local officials. It also says conflicts of inter¬est often arise at the district and school levels and that such conflicts may lead to misuse of federal funds. OIG suggests that the ED and Congress consider taking specific actions to (1) enhance transparency in decisionmaking by deterring conflicts of interest at the State and local levels; (2) ensure States identify and provide additional oversight of high-risk subgrantees; (3) establish a reporting requirement for suspected fraud and other criminal misconduct, waste, and abuse; and (4) ensure whistleblower protection for State and local employees and contractors.
5. Program-Specific Issues. The report pointed out that OIG has identified provisions of the ESEA that have yet to be addressed. Therefore, OIG recommended that the Department and Congress consider incorporating the following: (1) Changes to the definition of “weapon” in the Safe and Drug-Free Schools and Communi¬ties Act; (2) More specificity regarding the criteria SEAs use to identify persistently dangerous schools; (3) Alternate approaches to defining SES eligibility; and (4) Clarification of whether Reading First pro¬grams must have scientific evidence of effective-ness to be eligible for funding.

OIG’s purpose in authoring the report was to inform the reauthorization process by providing its perspective on improving accountability and integrity in ESEA programs. OIG stated that it will continue to provide comments, when requested, on specific ED or Congressional legislative proposals.

You can view the report at http://www.ed.gov/about/offices/list/oig/auditreports/fy2008/s09h0007.pdf.

Author: CWP

Read More...

Summary only...

Senate Farm Bill Ready for Floor Consideration

The Senate intends to bring the 2007 Farm Bill to the floor for debate this week, finally moving forward on the largest piece of agricultural legislation in the country. Although the Senate Agriculture, Nutrition, and Forestry Committee just passed the bill through carefully-crafted compromises, the bill’s authors are worried about getting bogged down in an onslaught of amendments once the bill reaches the floor. Nutrition stakeholders should be watching both the funding for the Fresh Fruit and Vegetable Program (FFVP) expansion and the proposed amendment regarding national nutrition standards for competitive food.

The Senate bill contains an expansion for the FFVP into all fifty states, with each receiving 1% of the available funding, with additional funds allocated based on a state’s proportion of students available for free or reduced prince lunches. The bill calls for $225 million for fiscal year 2008, contingent on available funds. This is a considerable increase from the $70 million authorized in the House’s version of the bill, though the House bill does not make their spending level contingent on available funds. The final decision on funding falls to appropriators as each fiscal year begins, but the authorized levels at least give lawmakers a mark to aim for.

FFVP advocates are worried about the authorized funding levels currently in the Senate proposal. A number of agricultural and farmer advocacy groups are all lobbying members of Congress for additional funding for a variety of programs. The extra $155 million above the House’s version may prove a desirable target for shifting funding priorities. Most notably, the Farm Bureau, the nation’s largest farming advocacy group, is pushing for additional funding for various farm subsidies, and have already voiced their opposition to Senate Agriculture Committee Chairman Tom Harkin’s (D-IA) proposal of using certain subsidy cuts to fund other priorities, such as nutrition. Harkin and his supporters may have a long road ahead of them to ensure that $225 million funding level remains in the final Senate version of the Farm Bill.

Sen. Harkin is also planning to bring an amendment to the floor that would call for national nutrition standards for food sold outside of cafeterias on public school grounds. In previous years, food and snack companies have lobbied against any such standards, but recently they have offered passive resistance, or even support in certain cases, regarding Harkin’s proposal. The proposal comes from S. 771, a bill which Harkin introduced earlier this year. As the bill currently stands, the U.S. Department of Agriculture (USDA) is directed to implement the new standards through regulations and guidance. There is no definite timeline for implementation. The current language also places no restrictions on states from enacting their own standards that go beyond those regulated through the USDA.

Harkin and certain nutrition coalitions are currently working on an alternative proposal to the original bill language, which would implement the new standards through its own legislative language, rather than waiting for USDA rulemaking. However, this new negotiated language my bind states to strictly adhere to the national standards, not allowing states the flexibility to move beyond the federal levels. At the time of publication, Harkin had yet to decide which language he would bring to the Senate floor.

Regardless of how Harkin moves forward with his own amendments, there is still no guarantee that the Senate will be successful in moving the bill through the floor debate. Outside of nutrition, there are a number of controversial provisions involving farm subsidies, commodity programs, and other issues that may keep the majority from securing the sixty votes necessary to bring the bill to a final vote. If the Senate successfully passes the bill, there is no timeline set for when the two chambers will conference on the bill. The uncertainty, along with the various appropriations issues still facing Congress point towards a possible failure to pass the Farm Bill before Congress adjourns at the end of the year.

Author: SAS

Read More...

Summary only...

HEA Extended Through March

As the President signed another extension for the Higher Education Act (HEA), the House Education and Labor Committee held a hearing on the rising cost of college. The hearing, which examined factors contributing to tuition increases as well as possible solutions to help make college more affordable, came on the heels of a report on rising college prices released last week. According to the report, tuition and fees at four-year public colleges have increased by 31 percent in the last five years, after adjustment for inflation. The report, released by the College Board, also found that tuition prices were up at public and private colleges and at two-year and four-year colleges. Through H.R. 2669, the College Cost Reduction Act, Congress has already taken steps towards making college more affordable, most notably by increasing the maximum Pell grant award. However, as Committee member Ric Keller (R-FL) pointed out, “what good is it for Congress to raise financial aid by $2,000 if colleges increase tuition by $3,000?”

Witnesses at the hearing included:
• King Alexander, President of California State University at Long Beach;
• Dr. John E. Bassett, President of Clark University in Worcester, Massachusetts; and
• Jane V. Wellman, Executive Director of the Delta Cost Project in Washington, D.C.

Panelists testified that drastic fluctuations of state appropriations contribute to the increase in costs. Mr. Alexander, in reply, noted that a stricter federal/state partnership would make it more difficult for states to shift the costs of higher education to students, and ultimately, federal tuition-based programs. Witnesses also testified about the non-educational expenses incurred by colleges, such as housing, food, and health services for students. To address price increases, witnesses recommended increasing transparency and making a wide range of data available to families, including student debt information, tuition and fee increases, and information about how colleges and universities spend money.

Prior to this week, George Miller, the Chairman of the House Committee on Education and Labor, stated that HEA reauthorization would wait until Congress addressed the reauthorization of No Child Left Behind (NCLB). That, however, has proven difficult and now the Committee may address HEA before NCLB. Chair Miller may, in fact, introduce an HEA bill as early as next week and attempt to move it through Committee and bring it to the floor prior to the Thanksgiving break, beginning on November 16th. We will monitor the action closely.

Resources:
Charles Dervarics, “Rising Tuition Raises Ire of Congress, Which Is Constantly Being Asked to Raise Student Aid,” DIVERSE: Issues in Higher Education, November 2, 2007.
House Education and Labor Committee Press Release:
http://www.house.gov/apps/list/speech/edlabor_dem/rel110107.html
Author: SAS

Read More...

Summary only...

SCHIP Round 2

The Senate passed the latest reauthorization package for the State Children’s Health Insurance Program (SCHIP) despite continued veto threats from the White House. The Senate voted 64-30 in favor of passing H.R. 3963, setting up yet another veto fight in what appears to be the season of vetoes. However, unlike the first time Congress sent SCHP to the President, Democrats are not planning to rush an override vote, opting to take a more subtle approach this time around.

The bill still increases SCHIP funding by $35 billion over five years, offset by a $.61 increase on cigarette taxes. However, the bill contains language that will phase childless adults out of the program in one year, as well as language to ensure children currently covered by private insurance companies stay with their current plans. Republicans, however, are still concerned with the cost, and the bill’s apparent attempts to shift children to “socialized” healthcare. President Bush is still promising to veto the package due to excessive spending. His Administration proposed only a $5 billion expansion earlier this year.

The new bill also includes language that would keep the Department of Health and Human Services (HHS) from implementing restrictions on Medicaid payments until January of 2010. This provision is in direct response to efforts by the Center for Medicare and Medicaid Services (CMS) to place restrictions on Medicaid payments to schools for administrative and transportation costs related to services provided to students under the Individuals with Disabilities Education Act (IDEA). Congress attached a 6 month moratorium on these restrictions in the conference report of the last SCHIP bill, but that proposal died when the House failed to override the President’s veto.

Thursday, November 1, the House Oversight and Government Reform Committee held a hearing on the proposed changes to Medicaid payments. Advocates from various education and health organizations presented their concerns regarding CMS’ efforts to members of Congress. Dennis Smith, Director of the Center for Medicaid and State Operations at CMS attempted to defend his agency’s regulatory efforts, but was met with much skepticism. Members of the Committee, including Chairman Henry Waxman (D-CA), viewed CMS’ actions as disrespectful to Congress’ role of oversight and their authority over governmental programs.

Democrats in the House are still 15 votes shy of a veto-proof majority for the SCHIP bill, but have laid plans to bring as much political pressure to their opposition as they can before bringing the bill to the floor for an override vote. Last time, Democrats rushed the House vote, against Republican protests, and suffered for it. This time the Democratic leadership plans to hold off on an override vote long enough to actively campaign for the additional votes necessary. As such, it is not clear when the final override vote will happen, so Congress may end up having more December votes than they anticipated.

Resources:
Drew Armstrong, “SCHIP Clears Again; Talks Continue With Would-Be Supporters in House,” CQ Today, November 1, 2007.
Stephen Langel, “Democrats Stepping Back After Latest SCHIP Defeat,” Congress Now, November 1, 2007.
Mark W. Sherman, “Lawmakers, CMS Official Spar Over School Medicaid Dollars,” Education Daily, November 2, 2007.
Author: SAS

Read More...

Summary only...

Secretary of Education Amends ACG and SMART Grant Regulations

The Secretary of Education recently amended the regulations for the Academic Competitiveness Grant (ACG) and National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) programs. The purpose of the amendments is to reduce administrative burden for program participants and to clarify program requirements. The new regulations are effective as of July 1, 2008. The amendments were announced on Monday in the Federal Register. 72 Fed. Reg. 61248 (Oct. 29, 2007).

There are a number of changes to the applicable higher education regulations, 34 CFR Part 691, as a result of the regulations, some very minor, while others more substantial. Among the changes are the following:
• Requiring an institution in which a student is currently enrolled to determine the student’s academic year progression based on the student’s attendance in all ACG and National SMART Grant eligible programs only at that institution.
• Adding a new provision to require that when determining the appropriate academic year for a transfer student, the institution to which the student transferred must count both (a) the number of credit or clock hours earned by the student at prior institutions that are accepted for the student, and (b) an estimated number of weeks of instructional time completed by the student.
• Adding a new provision requiring three alternative methods to determine the weeks of instructional time for a student’s academic year progression, and to provide that an institution choosing to use one of these alternative methods must do so for all students enrolled in the eligible program.
• Clarifying that when determining academic year progression for a student, an institution may not assign any weeks of instructional time to certain credit or clock hours accepted toward a student’s eligible program if those credit or clock hours were earned from Advanced Placement (AP) programs, International Baccalaureate (IB) programs, testing out, life experience, other similarly earned credits or credits earned while not enrolled as a regular student in an ACG or National SMART Grant eligible program, or coursework that is not at the postsecondary level, such as remedial coursework
• Clarifying that an institution must assign weeks of instructional time to determine National SMART Grant eligibility for periods in which a student was enrolled in an ACG-eligible program before declaring, or certifying his or her intent to declare, an eligible major.
• Clarifying that, for purposes of eligibility for ACG and National SMART Grants, an institution that assesses grade point average (GPA) on a numeric scale other than a 4.0 scale must ensure that its minimum GPA requirement meets the same numeric standard as a cumulative GPA of 3.0 or higher on a 4.0 scale.
• Clarifying that institutions are required to calculate a student’s GPA for determining second-year ACG eligibility as follows:
o For a student who transfers to an institution that accepts into the student’s ACG eligible program at least the credit or clock hours for one academic year, but for less than two academic years, the institution must calculate the student’s GPA using the grades from all coursework accepted into the student’s ACG eligible program.
o For a student who transfers to an institution that accepts less than the credit or clock hours for an academic year into the student’s ACG eligible program, the institution must calculate the student’s GPA by combining the grades from all coursework accepted into the student’s ACG eligible program with the grades for coursework earned at the current institution through the payment period in which the student completes the credit or clock hours for his or her first academic year.
• Adding a new provision to require that, for a transfer student who transfers from one institution to another institution at which the student is eligible for a National SMART Grant, the subsequent institution determines that student’s eligibility for the first payment period using one of two methods, depending on whether it incorporates the grades from the student’s previous coursework that it accepts on transfer into the student’s GPA at the subsequent institution.
• Extending eligibility for a first-academic-year ACG to any student who enrolls as a regular student in an ACG eligible program while in high school provided that the student is beyond the age of compulsory school attendance.
• Requiring an institution to document a student’s eligible major and progress in the eligible program and major by maintaining documentation, such as the following:
o Documentation of the declared major, including written declaration of intent to declare an eligible major provided by the student; and
o Written documentation showing that the student is progressing in coursework leading to a degree in the student’s intended or declared eligible major; and
o Written documentation that the student is enrolling in the courses necessary to complete a degree in the intended or declared eligible major.
• Providing a process for institutions of higher education to request additional majors to be added to the list of eligible majors for National SMART Grants.

The Federal Register notice stated that there were no significant differences between the Department of Education’s original Notice of Public Rulemaking and the final regulations resulting from public comment or legislative action.
You can view the Federal Register notice at http://www.ed.gov/legislation/FedRegister/finrule/2007-4/102907a.html.

Author: CWP

Read More...

Summary only...

Congress Ready to Send “Mini-Bus” Appropriations to President

Thursday, November 1, Congressional conferees voted to send the Labor-HHS-Education appropriations bill for fiscal year 2008 (FY08) to the President as part of a “mini-bus” package that includes the Veterans Affairs and Military (VA-Mil) construction bill. The package originally included the Department of Defense appropriations as well, but was dropped due to controversial Iraq provisions. The conference report is ready for floor consideration, though it is unclear if the proposal will make through the Senate.

The conference report includes $150.7 billion in discretionary spending for the three departments (Labor-HHS-Education) and several independent agencies, notably the Social Security Administration. A number of discretionary programs received increases this year in both bills, including Title I, special education, and Pell grants. The final conference report also includes a $25 million increase for career and technical education. Total spending in the Labor-HHS-Education portion of the bill is $608.3 billion, including entitlements such as Medicare and Medicaid. The conference report’s discretionary total for Labor-HHS-Education is $1 billion less than in the House-passed bill and $841 million more than in the Senate version. It is $9.8 billion more than Bush requested.

The VA-Mil and the Labor-HHS-Education bills were combined as way of further politicizing the appropriations fight between Congressional Democrats and the White House. Republicans in Congress are criticizing the majority for attempting to use veterans funding as a political tool against the President. Forty-four Senate Republicans sent a joint letter to House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) condemning the decision to package the two bills together. Some Senators are already planning to take further action against the mini-bus package.

Sen. Kay Bailey Hutchison (R-TX) stated her intention to bring a point of order against the conference report, which she claims violates Senate Rule XXVIII. The new Senate rule is intended to prevent “airdropping” earmarks into conference reports. Sen. Hutchison claims that since conferees were only appointed to work on the Labor-HHS-Education bill, adding the VA-Mil bill constitutes an earmark, since it authorizes funding for projects not originally in either version of the Labor-HHS-Education legislation. Under Senate rules, the Chair must decide to accept the point of order to preclude further action on the bill in violation of Senate rules, which is unlikely.

President Bush is already threatening to veto the mini-bus, which may be exactly what Democrats are hoping for. By vetoing the total legislative package, Democrats can not only accuse the President of vetoing the largest domestic spending bill (Labor-HHS-Education), but also for vetoing funding for veterans programs, statistically a large Republican base. Although the President is issuing threats, the final votes in the House and Senate will be the deciding factor. If Congress is able to pass the conference report by veto-proof majorities, however unlikely that might be, the President just may refrain from vetoing the bill.

Resources:
Scott Cox, “Hutchison Targets Labor-HHS and MilCon Bill With Point of Order,” Congress Now, November 1, 2007.
Alex Wayne, “Measure Boosts Spending for Domestic Priorities, but Veto Threat Looms,” CQ Today, November 1, 2007.
Frank Wolfe, “Conferees Approve$60.7 Billion for Education,” Education Daily, November 2, 2007.
Author: SAS

Read More...

Summary only...

Collecting and Reporting Ethnic Data

Two week0s ago, the United States Department of Education (ED) released final guidance on maintaining, collecting and reporting ethnic data to ED. 72 Fed. Reg. 59266, (Oct. 19, 2007). The final guidance details how educational institutions and other recipients of grants and contracts from ED will:


• Collect and maintain racial ands ethnic data from students and staff;
• Aggregate racial and ethnic data when reporting those data to ED; and
• Report and aggregate those data under No Child Left Behind (NCLB).

In brief, ED will require the use of a two-part question. The first question will be whether or not the respondent is Hispanic/Latino. The second question will ask the respondent to select from five racial groups. If, in the case of an elementary or secondary school, the individual or parents do not self-identify their race or ethnicity, the regulations allow the institutional agent to use observer identification.
Once collected, the reporting to ED will be in seven categories:
1. Hispanic/Latino of any race; and, for individuals who are non-Hispanic/Latino only;
2. American Indian or Alaska Native;
3. Asian;
4. Black or African American;
5. Native Hawaiian or Other Pacific Islander;
6. White; and
7. Two or more races.

The final guidance will affect reporting under NCLB. It stipulates that state educational agencies (SEA) will continue to have discretion in determining which racial and ethnic groups will be used for accountability purposes, yet that discretion comes with conditions. If an SEA makes changes to the racial and ethnic data categories, swapping native Hawaiian or Other Pacific Islander for Asian/Pacific Islander for example, then it must submit an amendment to its Accountability Workbook. If it does not change its major racial and ethnic groups, it may be necessary to “bridge” the previous data collection groups to the new reporting groups in order to maintain reliable data over time and to facilitate uniform data gathering and maintenance practices. Bridging involves adopting a method for being able to link the new data collected using the two-part question with data collected before the publication of this guidance. For example, an SEA may ‘‘bridge’’ the ‘‘two or more races’’ category into single race categories or the new single race categories into the previous single race categories.

However an SEA chooses to reconcile its collection and reporting practices, the new final rules reminds the SEA that ED, always steward of the federal dollars, will closely scrutinize any changes. “During the Department’s routine monitoring of Title I programs, we expect to ask States … the extent to which they may relate to any changes in the demographic measurements that may have been brought about by the changes in the final guidance.” 72 Fed. Reg. 59266, (Oct. 19, 2007) at 59272. The guidance’s implementation date will begin with reporting data from the 2010–2011 school year.

Resource:
Racial and ethnic data standards; collection and reporting requirements, 72 Fed. Reg. 59266, (Oct. 19, 2007), http://www.access.gpo.gov/su_docs/fedreg/a071019c.html.
Author: DAD

Read More...

Summary only...