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  An OIG Perspective on Improving Accountability and Integrity in ESEA
  Programs

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## PERSPECTIVE PAPER

![](media/image1.pct)

**ED-OIG/S09H0007**

**October 2007**

+-------------------------+----------------------+---------------------+
| Our mission is to       |                      | U.S Department of   |
| promote the efficiency, |                      | Education           |
| effectiveness, and      |                      |                     |
| integrity of the        |                      | Office of Inspector |
| Department\'s programs  |                      | General             |
| and operations.         |                      |                     |
|                         |                      | Sacramento,         |
|                         |                      | California          |
+-------------------------+----------------------+---------------------+

NOTICE

> Statements that managerial practices need improvements, as well as
> other conclusions and suggestions, in this product represent the
> opinions of the Office of Inspector General.
>
> In accordance with the Freedom of Information Act (5 U.S.C. § 552),
> reports issued by the Office of Inspector General are available to
> members of the press and general public to the extent information
> contained therein is not subject to exemptions in the Act.

TABLE OF CONTENTS

####### 

####### Page

[**EXECUTIVE SUMMARY 1**](#__RefHeading___Toc171396661)

[AN OIG PERSPECTIVE ON IMPROVING ACCOUNTABILITY AND INTEGRITY IN ESEA
PROGRAMS 3](#__RefHeading___Toc171396662)

[ISSUE AREA NO. 1 -- Essential, Clear, and Consistent Requirements
4](#__RefHeading___Toc171396663)

[ISSUE AREA NO. 2 -- Data Quality 8](#OLE_LINK6)

[ISSUE AREA NO. 3 -- Monitoring/Oversight
15](#__RefHeading___Toc171396665)

[ISSUE AREA NO. 4 -- Improprieties in State and Local Programs
18](#__RefHeading___Toc171396666)

[ISSUE AREA NO. 5 -- Program-Specific Issues
23](#__RefHeading___Toc171396667)

[COMPENDIUM OF OIG PRODUCTS RELATED TO THE ESEA
26](#__RefHeading___Toc171396668)

**List of Abbreviations**

AFGR Averaged freshman graduation rate

ATF Bureau of Alcohol, Tobacco, and Firearms

AYP Adequate yearly progress

CCLC 21^st^ Century Community Learning Centers

Department U.S. Department of Education

EDEN Education Data Exchange Network

Ed-Flex Education Flexibility Partnership Act of 1999

EDGAR Education Department General Administrative Regulations

ESEA Elementary and Secondary Education Act of 1965

FY Fiscal year

GAO U.S. Government Accountability Office

GEPA General Education Provisions Act

GFSA Gun-Free Schools Act of 1994

IASA Improving America's Schools Act of 1994

IDEA Individuals with Disabilities Education Act

IPA Independent Public Accountant

LEA Local educational agency

MOE Maintenance of effort

MEP Migrant Education Program

NAEP National Assessment of Educational Progress

NCLB No Child Left Behind Act of 2001

OIE Office of Indian Education

OIG Office of Inspector General

OMB Office of Management and Budget

OME Office of Migrant Education

PBDMI Performance-Based Data Management Initiative

PDS Persistently dangerous schools

PCSP Public Charter Schools Program

SBRR Scientifically based reading research

SEA State educational agency

SES Supplemental educational services

USCO Unsafe School Choice Option

[]{#__RefHeading___Toc171396661 .anchor}EXECUTIVE SUMMARY

The No Child Left Behind Act of 2001 (NCLB), which reauthorized the
Elementary and Secondary Education Act of 1965 (ESEA), strengthened the
flexibility and accountability that were embodied in the Improving
America's Schools Act of 1994 (IASA). It called for more choices for
parents of children from disadvantaged backgrounds and an emphasis on
demonstrated teaching methods. The ESEA is once again due for
reauthorization. This paper provides the Office of Inspector General's
(OIG) perspective on the issues that the\
U.S. Department of Education (Department) and Congress should consider
during the current ESEA reauthorization process.

Based on our work on programs and topics related to the ESEA over the
last seven years, we have identified the following emerging issue areas
and offer suggestions to help improve accountability and integrity in
ESEA programs:

-   [Essential, Clear, and Consistent Requirements]{.underline}.
    Essential requirements should be written in statute and regulation
    to ensure compliance; the law should be written clearly to ensure
    uniform interpretation by users at all levels; and the
    appropriateness of variation in fiscal requirements across programs
    should be determined to facilitate compliance and alleviate
    confusion. We suggest that the Department and Congress consider (1)
    using common sense tests to evaluate what requirements are needed
    and their clarity; (2) ensuring essential requirements are written
    in statute and regulation; and (3) determining whether identified
    inconsistencies in fiscal requirements are appropriate.

-   [Data Quality]{.underline}. Valid and reliable data are imperative
    because academic assessments and accountability data are critical to
    the implementation of the ESEA. Our work identified weaknesses in
    State controls over the collection and reporting of performance data
    on persistently dangerous schools, graduation and dropout rates,
    schools in need of improvement, and the scoring of State
    assessments. We suggest that the Department and Congress
    consider (1) requiring management certifications on data validity
    and reliability at the Federal, State, and local levels; (2)
    ensuring data quality terms are defined and used consistently; (3)
    requiring internal controls for the collection and reporting of
    quality data; and (4) taking specified steps to ensure funding
    decisions are based on accurate child counts.

-   [Monitoring/Oversight]{.underline}. The ESEA needs to ensure
    compliance monitoring and enforcement of essential requirements.
    More and improved monitoring and oversight of ESEA programs are
    needed as our work continues to identify weaknesses in Departmental
    monitoring of State educational agencies (SEAs), and SEA monitoring
    of local educational agencies (LEAs). We suggest that the Department
    and Congress consider setting expectations for monitoring at all
    levels.

-   [Improprieties in State and Local Programs]{.underline}. Our work
    has found severe breakdowns of internal controls in State and local
    programs that involved millions of dollars in Federal education
    funds. We identified a need to avoid conflicts of interest and
    ensure transparency when making funding decisions, noted the
    availability of regulatory authority to increase oversight of
    high-risk entities, and identified some ways to help expose
    improprieties in State and local education programs. We suggest that
    the Department 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.

-   [Program-Specific Issues]{.underline}. Our reviews of several ESEA
    programs have led to suggestions for Departmental and congressional
    consideration for the reauthorized ESEA. We suggest that the
    Department and Congress consider incorporating our proposals related
    to gun-free schools, persistently dangerous schools, supplemental
    educational services, and Reading First.

The Department may or may not agree with our perspective and
suggestions. We have recognized in the perspective paper positive
actions that the Department has taken in relation to the identified
issue areas.

In the final section of this perspective paper, we have included a
[Compendium of OIG Products](#__RefHeading___Toc171396668) summarizing
our work and suggestions for reauthorization of the ESEA in the
following\
11 program or topic areas: gun-free schools; Unsafe School Choice Option
(USCO)/persistently dangerous schools; public school choice and
supplemental educational services (SES); Reading First; schoolwide
programs; migrant education; charter schools; 21^st^ Century Community
Learning Centers; assessment and accountability data; Departmental, SEA,
and LEA oversight; and Title I fiscal requirements.

Both the Department and Congress have been working on the ESEA
reauthorization. Departmental activities to date include issuing
*Building on Results: A Blueprint for Strengthening the No Child Left
Behind Act* in January 2007 to outline the Secretary's priorities for
reauthorization and drafting legislative language for specific ESEA
programs. The Congress has held hearings and begun the process of
drafting legislative proposals. This perspective paper is intended to
inform the reauthorization process by providing the OIG's perspective on
improving accountability and integrity in ESEA programs. The OIG has and
will continue to provide comments, when requested, on specific
Departmental or congressional legislative proposals.

[]{#__RefHeading___Toc171396662 .anchor}AN OIG PERSPECTIVE ON IMPROVING
ACCOUNTABILITY AND INTEGRITY IN ESEA PROGRAMS

In anticipation of the previous reauthorization of the ESEA, we issued
[*An OIG Perspective on the Reauthorization of the Elementary and
Secondary Education
Act*](http://www.ed.gov/about/offices/list/oig/auditreports/s1480010.pdf)
(ED-OIG/S1480010, February 1999) to provide the Department and Congress
our insights for making the law more "user friendly" to better achieve
the flexibility and accountability provided in the Improving America's
Schools Act of 1994. When enacted in January 2002, the NCLB reauthorized
the ESEA and strengthened the flexibility and accountability that were
embodied in the IASA. The NCLB called for stronger accountability for
results; greater flexibility for States, school districts, and schools
in their use of Federal funds; more choices for parents of children from
disadvantaged backgrounds; and an emphasis on teaching methods that have
been demonstrated to work.

During the last seven years, the OIG completed a substantial body of
work on a variety of programs and topics related to the ESEA. We also
participated in the U.S. Comptroller General's Domestic Working Group
and ESEA-related conferences; collaborated with the\
U.S. Government Accountability Office (GAO), as well as State and local
audit agencies on the key topic of State assessments and accountability;
and worked with the Department on a number of oversight and program
issues, including grant monitoring, high-risk grantees, and the Migrant
Education Program. We performed audits, inspections, and investigations
at SEAs, LEAs, schools, and contractors' offices in most of the States
and insular areas, as illustrated by the map on the next page.

The ESEA is once again undergoing reauthorization. Based on our
experience with the administration of ESEA programs over the last seven
years, we have identified five emerging issue areas that the OIG
believes the reauthorized ESEA should strive to address to improve
accountability and integrity in ESEA programs. In our 1999 perspective
paper, we identified the following three issue areas, which our more
recent work indicates are still relevant for the next ESEA
reauthorization:

-   Essential and clear requirements, with an added need for consistent
    requirements across programs;

-   Data quality; and

-   Monitoring and oversight.

In this paper, we have added the following two issue areas:

-   Improprieties in State and local programs; and

-   Program-specific issues.

**Locations Where OIG Has Performed Work Related to the ESEA**

![](media/image2.pct){width="0.5in" height="0.27165354330708663in"}

[]{#__RefHeading___Toc171396663 .anchor}ISSUE AREA NO. 1 -- Essential,
Clear, and Consistent Requirements

In our 1999 perspective paper, we wrote that the ESEA should be written
in "plain language" to ensure uniform interpretation by users at all
levels---from the Federal to the school level. Additionally, the ESEA
should be guided by common sense and include only the essential
requirements to achieve the desired program results. In the paper, we
provided two common sense tests to aid the Department and Congress in
determining (1) what requirements should be included in the reauthorized
ESEA and (2) whether the law is written clearly. (We have included these
two tests with minor modifications in this section's Suggestions for
Consideration.)

In January 2007, the Office of Management and Budget (OMB) issued a
bulletin titled *Agency Good Guidance Practices* that included
principles that we believe are applicable to the issue of essential,
clear, and consistent requirements. To assist its offices in meeting the
Bulletin's requirements, the Department issued a *Guide for the
Development and Issuance of Significant Guidance Documents* in July
2007. The Guide identifies several general principles the Department is
to follow when developing guidance. Specifically, the principles are to:
(1) avoid guidance documents that are inconsistent, incompatible, or
duplicative of other issued guidance; (2) tailor guidance to impose the
least burden on the intended users; (3) use language that is simple and
easy to understand to minimize the potential for uncertainty and
litigation arising from uncertainty; and (4) base guidance decisions on
the best reasonably obtainable scientific, technical, economic, or other
information on the need for and consequences of the guidance documents.

Essential requirements and clarity of the law, as addressed in our 1999
paper, continue to be relevant issues for the current ESEA
reauthorization. In addition, inconsistent fiscal requirements across
programs may unnecessarily contribute to the administrative burden
placed on SEAs and LEAs.

## Essential Requirements Should be Written in Statute and Regulation  {#essential-requirements-should-be-written-in-statute-and-regulation .RptSubcaption}

Although the ESEA contains numerous requirements that the Department,
SEAs, LEAs, and other grantees must adhere to,[^1] the Department has
published substantial guidance to clarify the law and regulation, and to
provide technical assistance and information about best practices in
program implementation.

Whereas regulation is legally enforceable, guidance cannot impose a
legally binding requirement. Except for explicit statutory and
regulatory requirements, State and local recipients are free to
implement the activities addressed in guidance based on their own
reasonable interpretation of the law and regulation. Unless requirements
are expressly written in statute or regulation, including definition of
key terms, State and local entities may adopt the guidance as they see
fit.

For example, neither the ESEA nor regulation define several terms, such
as a "move" and "temporary employment," which are associated with
determining a child's eligibility to participate in the Migrant
Education Program (MEP). The Department issued draft\
non-regulatory guidance in 2003 to clarify that a return home from a
vacation is not a qualifying move. Yet, our work on migrant child counts
identified children who were incorrectly considered eligible because
their "moves" were actually a return home from a vacation or family
visit during summer or holiday period. Recognizing the lack of uniform
implementation of the MEP eligibility requirements and the legally
non-binding nature of its guidance, the Department proposed regulations
in May 2007 that would clarify and expand the eligibility definitions,
including adding a definition for "move" that explicitly excludes travel
or moves during or after a vacation or holiday.

**Need for Requirements to Be Written Clearly**

Clarity of the law also affects the ability of States and school
districts to carry out the purposes of statutory provisions.

Guidance is sometimes needed to clarify technical points of the law. The
comparability requirement under Title I, Part A (Improving Basic
Programs Operated by LEAs) of the ESEA provides such an example. At the
2007 National Title I Conference, a Departmental presentation on Title I
fiscal requirements noted there was confusion about the frequency for
completing different aspects of the comparability requirement, which
necessitated clarification in guidance. Under the ESEA § 1120A(c)(1)(A),
an LEA may receive Title I funds only if it uses State and local funds
to provide services in Title I schools that are comparable to the
services provided in non-Title I schools. The statute requires the LEA
to maintain and update records *biennially* to document its compliance
with the comparability requirement, but does not expressly require the
LEA to perform comparability calculations *annually*. The Department's
non-regulatory guidance on Title I, Part A fiscal issues (published in
May 2006) clarifies that, since demonstrating comparability is a
prerequisite for receiving Title I funds, which are allocated annually,
comparability is an annual requirement.

In our February 2007 report on the Department's administration of the
Reading First program,[^2]

we noted that the current ESEA may not clearly communicate the intent
expressed by Congress concerning the effectiveness of reading programs.
The 2006 Labor-HHS-Education appropriations bill (Public Law 109-103),
dated July 2005, stated that funds available under the Reading First
program were intended to be used to "encourage and support the use of
reading programs with the strongest possible scientific evidence of
effectiveness." The ESEA specifies that an acceptable use of Reading
First funds subgranted to LEAs is for selecting and implementing a
learning system or program of reading instruction based on
scientifically based reading research (SBRR) that includes the essential
components of reading instruction. While the current ESEA provides
definitions of "SBRR" and "essential components of reading instruction,"
the law does not contain language on scientific evidence of
effectiveness for evaluating reading programs. The reauthorization of
the ESEA provides the Congress the opportunity to clarify whether
reading programs should be funded on the basis of program effectiveness.

## Appropriateness of Variation in Fiscal Requirements Across Programs Should be Determined  {#appropriateness-of-variation-in-fiscal-requirements-across-programs-should-be-determined .RptSubcaption}

States and LEAs often face a myriad of fiscal requirements that
sometimes vary across programs, which may make it difficult to comply
and cause confusion. The ESEA reauthorization provides an opportunity
for the Department and Congress to determine whether the variation in
requirements is still appropriate.

-   [Administrative Cost Caps]{.underline}. Administrative cost caps are
    not consistently set across\
    ESEA programs.  Depending on the program, the amount an LEA can
    charge against grant funds for program administration varies or is
    not specified in statute.  For example,\
    Title III (Language Instruction for Limited English Proficient and
    Immigrant Students) and Title IV, Part A (Safe and Drug-Free Schools
    and Communities) each stipulate a\
    2 percent cap on administrative costs, while Title I, Part B
    (Reading First) caps LEA expenditures for planning and
    administration at 3.5 percent.  Other programs, including Title I,
    Part A, do not specify an administrative cost cap for LEAs. To be
    considered allowable in these cases, LEA expenditures for
    administrative costs must meet requirements that they be "necessary
    and reasonable," in accordance with OMB\
    Circular A-87.  Inconsistent administrative cost caps across the
    various ESEA programs may make it more difficult for SEAs to
    effectively monitor LEA compliance and result in LEA confusion about
    the amount of administrative costs chargeable to a specific grant.
    In addition, Independent Public Accountants (IPAs) and other
    government audit agencies who conduct annual audits under the Single
    Audit Act may not make appropriate decisions on whether LEA charges
    for administrative costs are in compliance with legal requirements. 

-   [Carryover Funds]{.underline}. The amount of funds that an LEA may
    carry over for use in the succeeding year is also inconsistent
    across some ESEA programs. In general, the General Education
    Provisions Act (GEPA) allows a State or LEA subgrantee, which does
    not obligate all its grant funds by the end of the fiscal year for
    which Congress appropriated the funds, to obligate the remaining
    funding during a carryover period of one additional year, unless
    otherwise specified in other provisions of law. The ESEA sets
    different carryover limits for a few programs. For example, § 1127
    allows an LEA to carry over no more than 15 percent of its Title I,
    Part A allocation, and permits the SEA to waive the percentage
    limitation once every three years if certain conditions are met. For
    the Safe and Drug-Free Schools and Communities program, §
    4114(a)(3)(B) limits carryover of Title IV, Part A funds to not more
    than 25 percent of the LEA's allocation, unless the LEA demonstrates
    good cause and obtains SEA approval to exceed the limit.

In our audits of many key ESEA provisions, we found instances of
non-compliance, inconsistent implementation, reliance on non-binding
guidance, and the need for enhanced guidance. These audits involved
gun-free schools, persistently dangerous schools, public school choice
and supplemental educational services, schoolwide programs, migrant
education, charter schools, and consolidated State performance reports.
The audits are summarized in the [Compendium of OIG
Products](#__RefHeading___Toc171396668) at the end of this perspective
paper.

## Suggestions for Consideration {#suggestions-for-consideration .RptSubcaption}

1.  **Use common sense tests to evaluate needed requirements.** Our
    recommendation in the 1999 perspective paper to use two common sense
    tests continues to be applicable. One test would help determine what
    requirements should be included in the reauthorized ESEA. Examples
    of the types of questions the test could ask, where appropriate,
    include:

-   Is the requirement essential for program effectiveness or financial
    integrity?

-   Is the requirement supported by research or data?

-   Does the requirement create an unnecessary administrative burden?

-   Will compliance be monitored by Federal, State, and local reviewers?

-   Will actions be taken if grantees fail to comply?

> Having established the essential requirements, the second test would
> help to determine whether the requirement is written clearly. Examples
> of the types of questions, where appropriate, include:

-   Can the requirement be understood without the need for extensive
    legal interpretation, guidance, or technical assistance to
    implement?

-   Is the requirement's language consistent with the language used for
    similar requirements in other sections of the ESEA?

-   Can the requirement be included in a cross-cutting section of the
    ESEA?

> The questions above are not all inclusive. Other factors may need to
> be considered depending on the program area.

1.  **Ensure essential requirements are written in statute and
    regulation.** To better ensure compliance with the letter as well as
    the intent of the law, the essential requirements should be
    expressly written in statute or regulation, including the definition
    of key terms. Where existing guidance does not sufficiently ensure
    that the law will be carried out as Congress intended, clarifying
    information should be put into law or regulation.

2.  **Determine whether inconsistencies in fiscal requirements are
    appropriate.** To help eliminate confusion and relieve some of the
    administrative burden for SEAs and LEAs, fiscal requirements should
    be consistently defined across ESEA programs, where appropriate.

[]{#OLE_LINK6 .anchor}

ISSUE AREA NO. 2 -- Data Quality

In our 1999 perspective paper, we advised of the need for all levels
(local, State, and Federal) to provide valid and reliable data, and
recommended that management certifications on data validity and
reliability should be considered that were similar to the management
certification requirement for Department program managers.[^3]
Additionally, the paper highlighted the need to ensure the validity and
reliability of data provided at the State and local levels for use in
determining student achievement and program effectiveness.

Data quality terms used in the ESEA are not currently defined in the
ESEA, GEPA, or Departmental guidelines. For example, §§ 1111(b)(2)(C)
and (D) of the ESEA require States to define adequate yearly progress
(AYP) in a manner that is statistically valid and reliable, and ensure
that other academic indicators, including graduation rates, are valid
and reliable. However, the statute does not define "valid" or
"reliable." In contrast, Departmental guidelines define data quality
using terms, such as utility, objectivity, and integrity to refer to the
data's usefulness, accuracy, reliability, unbiased nature, and
security.[^4] Given the variety of terminology used to describe the
quality of data, the Department, States, and others may interpret the
terms inconsistently.  Our work has identified problems with the quality
of State-reported data, as noted in the following section. We believe
that defining the data quality terms used in the ESEA would facilitate
the reporting of quality data. As used in this paper and GAO's
publication titled *Assessing the Reliability of Computer-Processed
Data*, validity refers to whether the data actually represent what is
being measured, and reliability means that the data are accurate and
complete.

The need for quality data continues to be an ongoing and even more
critical issue under the NCLB. In 2002, we completed a joint project of
the U.S. Comptroller General's Domestic Working Group where we
collaborated with four other audit agencies (GAO, Texas State Auditor's
Office, Pennsylvania Department of the Auditor General, and Philadelphia
Controller's Office) to assess the quality of Title I accountability
data gathered at the LEA, SEA, and Departmental levels.[^5] Data issues
identified from the joint project are described in more detail in the
sections below. In 2004, GAO reported that over half of the States and
school districts interviewed cited being hampered by poor and unreliable
student data when implementing student proficiency requirements.[^6]

The ESEA ties funding directly to student achievement and accountability
and requires States to report on performance in many areas. The utility
of this reporting, and ultimately funding decisions, depends on the
collection of reliable data. Without reliable data, the Department
cannot make effective decisions on its programs or, in some cases, know
if the funds it disburses are indeed reaching the intended recipients.
We have performed several nationwide audits of Title I programs and
concluded that management controls must be strengthened at the local,
State, and Federal levels to ensure that data are valid and reliable.

## Weaknesses in State Controls Over Collection and Reporting of Performance Data {#weaknesses-in-state-controls-over-collection-and-reporting-of-performance-data .RptSubcaption}

States must annually collect and report various performance data to the
Department and others within their State. Data that must be reported to
the Department in the consolidated State performance report include the
number of persistently dangerous schools, graduation and dropout rates,
assessment results, and the number of schools identified as in need of
improvement. In several nationwide reviews by the OIG, GAO, and others,
we collectively found issues of noncompliance with data collection and
reporting requirements, and lack of effective controls to ensure data
quality.[^7]

-   [Persistently Dangerous Schools]{.underline} (PDS). Our work on
    State and local compliance with the Unsafe School Choice Option in
    five States disclosed issues of non-compliance and inaccurate
    reporting of PDS-related data at the local level due to the lack of
    SEA oversight. Reporting practices varied significantly across
    districts in the States reviewed, and some USCO incidents went
    unreported. As a result of the inconsistent reporting, the data used
    to determine PDS may not have been sufficiently reliable to provide
    accurate and equitable PDS determinations across districts in each
    State.

> In October 2006, the Secretary convened the Secretary's Safe and
> Drug-Free Schools and Communities Advisory Committee and held a
> hearing to gain input from the education community on possible changes
> to improve the USCO provisions. We provided testimony on our findings
> at the hearing and, in August 2007, issued a separate perspective
> paper on this topic.

-   [Graduation and Dropout Rates]{.underline}. In our 2006 reviews of
    the data that four States used to report graduation and dropout
    rates, we found that the data were not always accurate, consistent
    throughout the State, complete, and verifiable. For example, we
    found in some States that student enrollment status was incorrectly
    classified, a student group was not included in calculations,
    reportable dropouts were not reported, and inadequate or no
    documentation was available to verify data accuracy. We also
    questioned the validity of the data when calculations of the
    graduation or dropout rates did not meet required definitions, which
    resulted in the reviewed States reporting graduation or dropout
    rates that were overstated.

> In its September 2005 report on graduation rates,[^8] GAO concluded
> that a factor affecting the accuracy of graduation rates was whether
> States verified student data, with fewer than half of the States in
> the nation conducting audits of data used to calculate graduation
> rates. GAO noted that data inaccuracies could substantially raise or
> lower a school's graduation rate. Moreover, data accuracy was critical
> to ensure consistency across States since the Department planned to
> provide a nationwide, comprehensive perspective by calculating interim
> graduation rate estimates based on data that States reported to the
> National Center for Education Statistics. The Department subsequently
> published averaged freshman graduation rate (AFGR) data for school
> years 2001-2002 and\
> 2002-2003 in October 2005, and for 2002-2003 and 2003-2004 in June
> 2007. Both reports identified data quality as a data limitation due to
> the variation in the degree of
>
> rigor with which States and school districts verify their data. In
> June 2007, the Department also published a report on dropout rates,
> which included 2005 AFGR data.[^9]

-   [Schools in Need of Improvement]{.underline}. Under the auspices of
    the U.S. Comptroller General's Domestic Working Group, the 2002
    joint audit also found that some States did not report accurate,
    complete, or timely school improvement data to the Department. SEA
    noncompliance with Title I statutory and reporting requirements
    resulted in misreported or underreported data on the schools
    identified as in need of improvement. States lacked systematic
    procedures and controls for developing and reporting reliable data.
    We also identified improvements in data quality controls needed at
    the Department, including using its State monitoring visits to
    assess data quality and distributing its current data quality
    standards to States.

> In addition to issuing its *Information Quality Guidelines* in
> February 2003, the Department added procedures for its State
> monitoring visits, as well as suggested audit procedures in the OMB
> Circular A-133 Compliance Supplement for non-Federal auditors, to
> assess the validity and reliability of school improvement data at the
> SEA and LEA.

Tasked by OMB to eliminate unnecessary and burdensome collection and
reporting of student achievement data, the Department launched its
Performance-Based Data Management Initiative (PBDMI) in fiscal year (FY)
2003. The PBDMI was deemed critical to the success of several of the
Department's programs and operations, including the implementation of
the ESEA, as amended by the NCLB. In separate reports on the PBDMI
published in 2005, the OIG and GAO reported that the Department had made
progress but needed to improve system implementation and project
management controls to accomplish project goals, including a strategy to
help States provide quality data.[^10] When completed in September 2005,
the PBDMI resulted in the development of the Education Data Exchange
Network (EDEN), which is a centralized, coordinated repository of
State-reported elementary and secondary educational data. Under its more
recent ED*Facts* initiative, the Department has collaborated with SEAs
and other industry partners to centralize the State-reported data in
EDEN with other data within the Department, such as financial grant
information, to enable better analysis and use of the data in policy
development, planning, and program management at the Federal, State, and
local levels.

## Need for Controls over Scoring of State Assessments  {#need-for-controls-over-scoring-of-state-assessments .RptSubcaption}

The 2002 joint audit report also disclosed that the monitoring methods
States used to ensure the accuracy of test contractors' scoring and
reporting did not always provide adequate assurance of accurate and
complete scoring results. In a 2004 Management Information Report,[^11]
we noted that the Department had issued *Information Quality
Guidelines*, but had not issued specific guidance on internal controls
for scoring assessments. The ESEA provides that State assessments shall
be used for purposes for which such assessments are valid and reliable,
and be consistent with relevant, nationally recognized professional and
technical standards. We opined that, for the assessment to be reliable,
the data should be accurate and that sound business practices require an
appropriate level of internal controls over the scoring of the
assessments conducted in response to the ESEA. These controls would vary
by the type of assessment, scoring method (electronic or manual), and
question (multiple-choice or constructed response); and should cover the
receipt and control, data quality, scoring, and analysis processes.
While it had implemented some activities in response to our 2004 report,
we subsequently advised the Department of the continued need to ensure
reliable scoring of tests used by States to make determinations of
student progress under the ESEA, and encouraged the Department to take a
stronger leadership role in this area.

In April 2006, the Department issued non-regulatory guidance titled
*Improving Data Quality for Title I Standards, Assessments, and
Accountability Reporting* to address data quality issues associated with
the annual Report Card required of all States, LEAs, and schools
receiving\
Title I, Part A funds. The guidelines focus on the collection and
reporting of information on academic assessments, AYP results, and
teachers' qualifications, and were tailored to address recommendations
in our Management Information Report related to the scoring of
assessments and GAO recommendations regarding student data.[^12]

Given the high stakes involved for schools that do not demonstrate AYP
on academic assessments, the OIG plans to conduct more work on the need
for controls over the scoring of State assessments.

## System Needed to Verify Accuracy of Data Used to Determine Funding  {#system-needed-to-verify-accuracy-of-data-used-to-determine-funding .RptSubcaption}

Some ESEA programs allocate funds to grantees based on a count of
eligible program participants. Our work in a few program areas found
that Federal funds may have been expended on, or received for,
ineligible children because of incorrect child counts. For example, our
work on migrant child counts in a number of States found that a
significant number of students were misidentified as eligible for the
Migrant Education Program because recruiters either misinterpreted the
eligibility requirements, or intentionally falsified documents to count
ineligible students. We found 75 to 100 percent of the sample students
reviewed were ineligible to participate in the program and, as a result,
MEP funds may have inappropriately been used to provide services to
ineligible children. We identified eligibility issues related to
children of workers at processing plants, where the work did not appear
to be either temporary or seasonal, as required by law. We also
identified children who were incorrectly considered eligible based on
"moves" that were actually vacations or family visits during holiday or
summer periods when school was not in session.

The Department's Office of Migrant Education (OME) had been increasingly
concerned that States were not implementing quality control procedures
sufficient to ensure that the migrant child counts annually reported to
OME were correct. Preliminary data indicated that ineligible children
were recruited, counted, and served, and the defective determinations
appeared attributable to errors, fraud, or abuses in the program. As a
result, in July 2004, OME strongly recommended that each State
re-interview parents and guardians to assess the accuracy of the
2003-2004 migrant child count reported to the Department. Additionally,
OMB added suggested audit procedures in the March 2006 OMB Circular
A-133 Compliance Supplement for\
non-Federal auditors to determine whether the SEA and participating LEAs
carried out quality control processes for ensuring proper determination
and verification of the eligibility of each child in the annually
reported count of eligible children. The Department also published a
Notice of Proposed Rulemaking on this matter in May 2007.

**Continued Need for Management Certifications on Data Quality**

Neither the ESEA nor GEPA requires management certifications regarding
the quality of data that is provided by and used at the local, State,
and Federal levels. The Department's past strategic plans had recognized
the need for quality data. To help meet the objective of being a
performance-driven agency, the 1998-2002 and 2001-2005 strategic plans
included a performance indicator for all Department program managers to
assert or confirm that the data used to measure their programs'
performance are valid, reliable, and timely. However, while emphasizing
the use of data to inform program management and performance, the\
2002-2007 and 2007-2012 plans do not include an assertion from its
managers similar to prior plans regarding the quality of program
performance data.

The Department requires management certification as to the accuracy of
State-submitted data. When States submit data to the Department's EDEN
system and for their annual Consolidated State Performance Report, the
Department requires an authorizing State official, such as the chief
State school officer, to certify that the reported data are accurate.
For migrant child counts, the official must also certify that the data
are true, reliable, and valid. The Department has also instituted data
validation and verification steps and requires States to address their
data issues before it will officially accept a State's data in the EDEN
system.

The Department has issued, or participated in the development of,
guidance to improve data quality at the State and local levels. In
particular, its April 2006 non-regulatory guidance regarding States'
annual Report Card includes as good practice an action step for schools,
LEAs, and States to validate and certify the accuracy of the data before
transmittal to, respectively, the LEA, State, and Federal government.
The Department also worked with a task force of local, State, and
Federal experts to develop a resource document, which was published in
July 2007 and titled *Forum Curriculum for Improving Education Data: A
Resource for Local Education Agencies*. While the document provides
information for LEAs to use with school and district staff to improve
data quality, it does not address the use of management certification as
to the quality of the data.

Because assessment and accountability data are so critical to the
implementation of the ESEA, the need for valid and reliable data are
imperative. While the Department requires management certification on
the accuracy of State-submitted data, we believe that adding a
requirement for management certification as to the validity
[and]{.underline} reliability (accuracy and completeness) of the
submitted data from high-level officials, such as SEA and LEA
superintendents, in statute would promote accountability and further
highlight the importance of the data at all levels. Department managers
would use these management certifications to confirm that the data used
to measure their programs' performance are valid and reliable.

**Suggestions for Consideration**

1.  **Require management certifications on data validity and
    reliability.** Our 1999 perspective paper's recommendation calling
    for management certification of data validity and reliability at the
    local, State, and Federal levels continues to be applicable. To help
    ensure data quality, the GEPA should be amended to require a
    management certification as to the validity and reliability of
    submitted data, along with an assurance that the systems maintaining
    the data have been determined to have sufficient controls to ensure
    that the data submitted are valid and reliable. For SEAs and LEAs, a
    high-level official, such as the superintendent, should be required
    to certify that LEA data submitted to the SEA and SEA data to the
    Department are valid and reliable. The Department should use these
    management certifications to confirm that the data used to measure
    its programs' performance are valid and reliable.

2.  **Define and use data quality terms consistently.** The GEPA should
    be amended to establish standard definitions for data quality terms,
    such as valid and reliable, that are in the ESEA and other laws
    authorizing Federal education programs. Additionally, the terms
    should be used consistently throughout statute, regulation, and
    guidance. The definitions used in GAO's *Assessing the Reliability
    of Computer-Processed Data* could serve as a model.

3.  **Require internal controls for the collection and reporting of
    quality data.** In some areas, States have the flexibility to define
    terms and performance measures. To help assure quality data across
    States, the reauthorized ESEA and/or applicable regulation (e.g.,
    Education Department General Administrative Regulations (EDGAR))
    should, at all levels (Federal, State, and local):

-   Ensure that terms and performance measures are clearly defined; and

-   Require underlying control systems, such as the practices described
    in the Department's *Improving Data Quality for Title I Standards,
    Assessments, and Accountability Reporting* guidelines, be in place
    to ensure the collection and reporting of valid and reliable data
    when fulfilling the data requirements.

    1.  **Ensure funding decisions are based on accurate child counts.**
        Similar to its efforts regarding the MEP, the Department needs
        to ensure that other formula grant funds, which are awarded
        based on grantee-reported child counts, are only awarded to
        grantees with eligible program participants. To help ensure
        appropriate funding decisions, the reauthorized ESEA and/or
        applicable regulation (program-specific or EDGAR) should:

-   Include clear eligibility definitions;

-   Require management certifications by high-level officials as to the
    validity and reliability of grantee-reported data; and

-   Require procedures be in place to independently verify the accuracy
    of\
    child-count data.

[]{#__RefHeading___Toc171396665 .anchor}ISSUE AREA NO. 3 --
Monitoring/Oversight

Our 1999 perspective paper also addressed the need for the ESEA to
ensure compliance monitoring and enforcement of essential requirements.
To address the issue of weaknesses in SEA oversight of ESEA programs
identified in our review of the FY 1996 single audits, we recommended
that the Department establish the minimum standards for SEAs in
monitoring LEA administration of ESEA programs. These standards should
address compliance monitoring activities; technical assistance;
enforcement; and documentation, analysis, and reporting of results. (We
have reiterated the standards as expectations in this section's
Suggestions for Consideration.) We also recommended that the Department
consider ways to play a stronger role in ensuring ESEA program integrity
by developing an oversight system that integrates program reviews,
audits, technical assistance, grantee reporting, and evaluation studies;
takes into account results of State analyses of LEA single audit
findings; and otherwise ensures compliance with program requirements.

## Need for More and Improved Program Monitoring and Oversight  {#need-for-more-and-improved-program-monitoring-and-oversight .RptSubcaption}

Our work continues to uncover problems with program controls and
oversight of program participants, placing billions of taxpayer dollars
at risk of fraud, waste, abuse, and noncompliance.

-   [Weaknesses in Monitoring and Oversight Continue]{.underline}. We
    have continued to identify programmatic weaknesses in Departmental
    monitoring of SEAs and/or SEA monitoring and oversight of LEAs in
    nearly all our audits related to the ESEA, as noted in the
    [Compendium of OIG Products](#__RefHeading___Toc171396668) at the
    end of this perspective paper. Examples include:

    -   [Choice and Supplemental Educational Services]{.underline}. Our
        review of SEA and LEA implementation of the ESEA's public school
        choice and SES provisions found that the six SEAs reviewed did
        not adequately monitor LEA and school compliance with choice and
        SES requirements. We also found that the SEA in two States did
        not adequately monitor SES providers to ensure the quality and
        effectiveness of services to students.\
        For FY 2007, the Department selected seven States to receive a
        targeted compliance monitoring review of, and added team members
        for the full Title I review scheduled in 17 States to focus on,
        public school choice and SES. The seven targeted States were
        selected based on a data analysis designed to target States with
        the largest percentages of schools in improvement and the
        largest percentage of students not participating in choice or
        SES. The Department plans to annually select additional States
        for the focused monitoring; conduct Title I reviews of all
        States at least once during FY 2007 through FY 2009; and develop
        technical assistance papers on State approval, evaluation, and
        monitoring of SES providers. The OIG also plans to conduct
        additional work on SES providers.

    -   [Charter Schools]{.underline}. During our 2004 review of charter
        schools, we found that the Department had not established a
        program office responsible for oversight of SEA compliance with
        the ESEA requirement regarding charter schools' access to
        Federal funds. We also found that the SEAs and some of the LEAs
        in the three States reviewed did not have adequate procedures to
        ensure that new or expanding charter school LEAs and charter
        schools receive proportionate and timely access to Title I
        funds, special education funds under the Individuals with
        Disabilities Education Act (IDEA), or both. Additionally, the
        SEA did not monitor LEA compliance with the ESEA requirement in
        the two States where the LEA was responsible for providing
        charter schools access to the funds for which they were
        eligible.

> In February 2005, the Department issued a memorandum to remind its
> program offices of their responsibilities to ensure that States and
> LEAs comply with statutory and regulatory requirements when allocating
> formula grant funds to new or expanding charter schools. The
> applicable program offices also changed their monitoring protocols for
> the Title I and IDEA programs to ensure that States and LEAs are
> providing a proportionate share of program funds to charter schools in
> a timely manner.

-   [Department Has Taken Steps to Improve Departmental and SEA
    Monitoring]{.underline}. Critical to the Department's mission is the
    successful delivery and management of grant funds provided to the
    education community. The Department has placed an emphasis on
    monitoring of States to ensure compliance with the ESEA. Monitoring
    efforts include assessing the level of monitoring by SEAs to ensure
    compliance with the law and regulation. Additionally, OMB has
    revised the OMB Circular A-133 Compliance Supplement to direct
    auditors' attention to certain compliance requirements.
    Notwithstanding these efforts, a Departmental presentation at the
    2007 National Title I Conference noted issues related to SEA
    capacity to monitor grants.

> Across Departmental program offices, monitoring has entailed different
> approaches, formats, and reports. A few Departmental units have
> focused their efforts on grant monitoring. For example, the
> Department's Risk Management Team targets high-risk grantees, and some
> program offices are targeting their resources based on risk factors,
> such as audit findings. Additionally, a few program offices have
> worked with staff in the Office of Chief Financial Officer, who
> accompany the review team on site visits and
>
> focus on fiscal requirements. However, these efforts have not been
> coordinated across all ESEA programs.\
> \
> The Department has recognized that effective grant monitoring is
> critical to its accountability and fiscal responsibilities and is an
> issue that needs to be addressed. In October 2006, a Departmental
> Executive Steering Committee commissioned a Grants Pilot Project Team
> to review the efficiency and effectiveness of the Department's
> discretionary and formula grants processes. The Team concluded that
> the Department needs to take a more prioritized monitoring approach
> for all grants given the resources available for performing grant
> monitoring. Stemming from this project, the Department formed a new
> Grants Policy and Procedures Team to consider all policies, including
> monitoring requirements, and develop standards applicable for all
> discretionary and formula grants management. Additionally, the new
> Team is working to establish performance management requirements for
> grantees, and is part of a newly established Risk Management Services
> office that is responsible for identifying, and taking action to
> manage and mitigate, risks that may adversely affect the advancement
> of the Department's mission.

-   [Minimum Requirements for Monitoring Are Not Addressed in the ESEA
    or EDGAR]{.underline}. The ESEA, as amended by the NCLB, does not
    address minimum requirements for SEA monitoring of LEA
    administration of ESEA programs. EDGAR (34 C.F.R. § 80.40) requires
    grantees to monitor grant- and subgrant-supported activities to
    ensure compliance with applicable Federal requirements and that
    performance goals are being achieved, but does not address minimum
    requirements for monitoring.

> Statutory language for the Education Flexibility Partnership Act of
> 1999 (Ed-Flex) and regulations for the reauthorized IDEA, as amended
> by the Individuals with Disabilities Education Improvement Act of
> 2004, address some minimum monitoring requirements:

-   [Ed-Flex]{.underline} -- The Ed-Flex statute requires SEAs to
    annually monitor the activities of participating LEAs and schools,
    and to submit an annual report on their oversight results and the
    impact of the waivers on school and student performance.
    Departmental guidance clarifies the Ed-Flex monitoring and oversight
    requirement by stating that annual monitoring activities must
    measure performance against educational goals that are linked to
    State or local assessment systems.

-   [IDEA]{.underline} -- Regulations at 34 C.F.R. §§ 300.600 through
    300.609 and §§ 300.640 through 300.646, which were effective on
    October 13, 2006, establish requirements for State monitoring,
    enforcement, and annual reporting. The primary focus of State
    monitoring activities must be on (1) improving educational results
    and functional outcomes for all children with disabilities; and (2)
    ensuring that public agencies meet IDEA, Part B program
    requirements, with an emphasis on those requirements most closely
    related to improving educational results for children with
    disabilities. The State must monitor LEA performance using
    quantifiable indicators in program priority areas and such
    qualitative indicators as are needed to adequately measure
    performance in those areas.

**Suggestion for Consideration**

1.  **Set expectations for monitoring and develop an effective system
    for monitoring.**\
    The expectations for Federal monitoring of SEAs and other grantees,
    as well as LEA administration of the Department's grants and
    programs, should be articulated in GEPA. The expectations should
    include: (1) sufficient compliance monitoring of SEAs and LEAs; (2)
    documentation of each oversight activity and the results; (3)
    provision of appropriate technical assistance and enforcement
    measures, when necessary;\
    (4) systematic analyses of the results of SEA and LEA audits and
    other oversight activities to identify trends in findings and
    strategies for monitoring and technical assistance to reduce
    occurrence in similar programs; and (5) annual reporting of the
    results of these analyses to or within the appropriate Departmental
    program office(s). To enable the modification of monitoring
    procedures in response to changing needs and new information, the
    expectations can be as general as stated above. Alternatively, some
    programs may need more prescriptive monitoring requirements, as have
    been applied to the Ed-Flex and certain IDEA programs.

[]{#__RefHeading___Toc171396666 .anchor}ISSUE AREA NO. 4 --
Improprieties in State and Local Programs

GAO's publication titled *Standards for Internal Control in the Federal
Government* requires that agencies develop detailed policies,
procedures, and practices to fit their agency's operations and to ensure
that they are built into and are an integral part of operations.
Policies and procedures are a part of the control activities that
enforce management's directives and are an integral part of an entity's
planning, implementing, reviewing, and accountability for stewardship of
government resources and achieving effective results. Control activities
help to ensure that actions are taken to address risk. These standards
apply to the Department. In addition, EDGAR (34 C.F.R.\
§§ 75.702 and 80.20) requires States, LEAs, and other direct grantees to
have fiscal control and accounting procedures in place to ensure proper
disbursement of and accounting for Federal funds.

Our audits, inspections, and investigations have found severe breakdowns
of internal controls, which were either by-passed or nonexistent,
involving millions of dollars in Federal education funds for State and
local programs. In some instances, we found fraud in education programs,
which may have been prevented if proper controls were in place and
followed. For example, high-level SEA and LEA officials, who were in
positions of authority and oversight, committed wrongdoings that
resulted in millions of dollars in misspent funds in the following
cases:

-   [Georgia SEA]{.underline}. Our investigations and the Georgia State
    Auditor revealed that the former State School Superintendent
    authorized questionable payments for technology purchases totaling
    over \$650,000 and funneled the funds into her failed 2002
    gubernatorial campaign. The Superintendent and her co-conspirators,
    including an Associate Superintendent, were successfully prosecuted
    in Federal court.

-   [Puerto Rico SEA and Contractors]{.underline}. High-level SEA
    officials, including the former Puerto Rico Department of Education
    Secretary and Associate Secretary, and contractors received Federal
    jail terms stemming from charges related to a \$4.3 million
    contractor kickback scheme. Our audit work found that the SEA lacked
    adequate controls to administer contracts, ensure proper contract
    and salary charges, prevent significant amounts of Title I funds
    from lapsing, and expend Title I funds properly. Our investigations
    have led to the conviction of payment officers in several districts
    for embezzling Title I funds by preparing and converting to their
    own use payment checks for vendors doing business with the school
    district.

-   [Long Island School Districts]{.underline}. A 2005 New York State
    Comptroller report[^13] found that the Superintendent and Assistant
    Superintendent manipulated one school district's financial
    accounting system to use over \$11 million for personal expenses.
    Additional reported issues further illustrate the breakdown of the
    entire control system in this district, including (1) the lack of
    oversight by the Board of Education, the Internal Claims Auditors,
    and the district treasurer; (2) conflicts of interest by the
    district's IPA, whose substandard performance and flawed audit
    failed to identify the fraud; and (3) weak internal controls in the
    district's financial accounting system. Our work in two other school
    districts found similar issues---weak controls over the district's
    financial accounting functions and/or IPA conflicts of
    interest---which resulted in \$6.6 million in inadequately supported
    Title I and Title II (Preparing, Training, and Recruiting High
    Quality Teachers and Principals) expenditures in one district, and
    false expenditure reports totaling over \$500,000 and criminal
    prosecution of several high-level officials in the other district.

## Need to Avoid Conflicts of Interest and Ensure Transparency in Decisionmaking {#need-to-avoid-conflicts-of-interest-and-ensure-transparency-in-decisionmaking .RptSubcaption}

Our audit and inspection work, as well as a February 2007 GAO
report,[^14] on Reading First found that the Department did not maintain
a control environment that exemplified management integrity and
accountability during its grant application process and in providing
program information and support to States and school districts. The
appearance of bias towards selected reading programs, conflicts of
interest by peer reviewers and personnel at technical assistance
centers, and failure to adhere to established policies and procedures
during the State application process could have been avoided if
appropriate controls had been in place. The Secretary agreed to
implement our recommendations, and reinforced them in an internal
memorandum to senior officers. To strengthen the management and
administration of programs throughout the Department, the Secretary also
distributed internal guidance on: (1) impartiality and prohibitions
against interpreting laws to control and direct curriculum and
instruction in accordance with the Department of Education Organization
Act, GEPA, and ESEA; and (2) the use of peer reviewers in formula grant
programs--built on the internal *Handbook for the Discretionary Grant
Process* regarding the selection of reviewers, conflict of interest, and
information provided to successful and unsuccessful applicants.

Our work has also disclosed a need for similar integrity and
accountability controls for the Department's grantees and their
sub-grantees, personnel, and vendors.

-   [Reading First Program at the State Level]{.underline}. Our audits
    in two States also found issues of conflict of interest by grant
    reviewers in the State's approval process for awarding Reading First
    subgrants to LEAs.[^15] For example, one of the SEAs did not ensure
    that a grant reviewer recused himself from reviewing the application
    of LEAs that selected the reading program he had authored.

```{=html}
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-   [Conflicts of Interest at District and School Levels]{.underline}.
    We have investigated cases where district and school employees, who
    have authority to obligate grant funds, have had conflicts of
    interest with the vendors with which the district or school does
    business. These conflicts have sometimes resulted in fraudulent
    activities. In one case, the\
    U.S. Attorney's Office reported the arrest of an individual who
    allegedly wrote a textbook while he was a school district official
    and subsequently caused the district to pay nearly \$4 million in
    Title III funds to purchase the textbook from his publisher. This
    scheme reportedly netted him nearly \$1 million in royalties and
    fees, in violation of State conflict of interest laws and the
    district's code of ethics. In another case, a former top SEA
    official responsible for overseeing charter schools diverted funds
    to various bank accounts that she controlled, and awarded no-bid
    contracts whose beneficiaries were friends and for which she
    received kickbacks.

## High-Risk Designation Helps to Increase Oversight {#high-risk-designation-helps-to-increase-oversight .RptSubcaption}

Designating a grantee or subgrantee as "high risk" helps to ensure
entities with serious performance and accountability issues receive more
oversight. Since enactment of the NCLB, we have identified significant
accountability and compliance issues in the Virgin Islands, Puerto Rico,
and the Pacific Outlying Areas. The Department has designated as
high-risk grantees the education departments in those insular areas as
well as the District of Columbia because of either serious recurring
deficiencies in their fiscal and programmatic administration of
Department programs, or untimely and incomplete single audit reports. We
also identified other entities, including school districts, to the
Department for consideration of high-risk status and appropriate special
conditions due to significant accountability and compliance issues in
their administration of Department programs. To help protect program
integrity, our work has highlighted the need for program managers'
increased awareness of their responsibility to oversee programs
carefully, rather than focus exclusively on technical assistance.\
\
The Department has made risk management a priority and has expended
significant resources to monitor and work with its high-risk grantees.
Its interoffice Risk Management Team undertakes projects to address
accountability and compliance issues identified by our audits,
referrals, and single audits; and works with program offices to
designate grantees as high-risk. The Department has also sent
multidisciplinary teams into key locations to review and assess\
high-risk, and potential high-risk, entities' progress in addressing
their weaknesses.

Federal regulations (EDGAR) enable the Department to consider a grantee
as high-risk in situations such as those described for the insular areas
and District of Columbia above, [and]{.underline} gives SEAs similar
authority over LEAs. Under 34 C.F.R. § 80.12, an awarding agency may
designate a grantee or subgrantee as high risk if it determines that the
grantee/subgrantee:

(1) has a history of unsatisfactory performance, or

(2) is not financially stable, or

(3) has a management system which does not meet the management standards
    set forth in this part, or

(4) has not conformed to terms and conditions of previous awards, or

(5) is otherwise not responsible; . . .

Once in high-risk status, the awarding agency may place special
conditions or restrictions on the entity's grant/subgrant, including
payment on a reimbursement basis and requirements for additional reports
and monitoring.

During our audit of the Orleans Parish School System (New Orleans),[^16]
we alerted the Department of the need to advise the Louisiana SEA to
consider placing special conditions on grants it makes to the LEA. The
SEA subsequently used the authority provided by EDGAR\
(34 C.F.R. § 80.12) to place the LEA in high-risk status for all Federal
grant programs because of problems in the LEA's financial management
system.\
\
To the extent that any of the over 14,000 school districts in the nation
receive Federal education funds in the form of subgrants, the SEA has
ultimate monitoring and oversight responsibility to ensure LEA
compliance with applicable financial accountability and program
performance requirements. Ensuring that States use the authority
provided in EDGAR to designate subgrantees as high risk would help to
safeguard Federal funds and ensure additional oversight where warranted.

## Reporting Requirements and Whistleblower Protection Would Help Expose Improprieties {#reporting-requirements-and-whistleblower-protection-would-help-expose-improprieties .RptSubcaption}

Instances of significant fraud, waste, and abuse of Federal education
funds often come to our attention by referrals from the Department and
calls to our hotline. Establishing reporting requirements and
whistleblower protection in statute could help to further expose
improprieties that may be occurring in State and local education
programs.

-   [Referral Provision]{.underline}. Neither the ESEA nor Federal
    regulation expressly requires grantees participating in
    ESEA-authorized programs to report suspicions of fraud and other
    criminal misconduct, waste, or abuse to the Department. Federal
    regulation at 34 C.F.R. § 80.40(d) states only that the grantee must
    inform the Federal agency of "significant developments," such as
    problems, delays, or adverse conditions, that will materially impair
    the ability to meet program objectives.

> In addition to fraudulent activities involving improper use of funds
> and kickbacks, the issue of grade fixing and test tampering is of
> concern. In one New Jersey school district, an SEA investigation found
> irregularities in some schools' test-score data that raised concern of
> "adult interference" in the testing situation, and a district
> investigation concluded that a district administrator participated in
> or facilitated the illicit tampering of test answer sheets at another
> school.
>
> The Department has agreed to amend EDGAR to include reporting
> requirements for fraud and criminal misconduct in connection with all
> ESEA-authorized programs. Modeled on reporting requirements for
> programs administered by the Department's Federal Student Aid office,
> the regulatory provision would require any government entity, grantee,
> or subgrantee participating in an ESEA program to refer to the OIG for
> investigation any information related to fraud or other criminal
> misconduct.

-   [Whistleblower Protection]{.underline}. Federal employees, former
    Federal employees, and applicants for Federal employment, have
    Federal protections should they disclose information about workplace
    improprieties, including a violation of law, rule, or regulation;
    gross mismanagement and waste of funds; abuse of authority; or a
    substantial danger to public health or safety. The Notification and
    Federal Employee Antidiscrimination and Retaliation Act of 2002 (No
    FEAR Act) holds Federal agencies accountable for violations of
    antidiscrimination and whistleblower protection laws. These Federal
    protections do not apply to non-Federal employees operating under
    Federal grants or employees of Federal contractors.

> Based on our audit and investigation work, we are aware of several
> examples where\
> non-Federal employees claimed to have lost their jobs for blowing the
> whistle on possible improprieties in the respective programs. We have
> concluded that these individuals, and others like them, would not have
> any Federal protection if their employer did take retaliatory action,
> such as termination or demotion, and would need to seek protection
> under State law, if available. If protections are not available at the
> State or local level regarding Federal education funds, Federal
> whistleblower protection would increase the potential for State,
> district, school, and contractor employees to come forward and provide
> information about possible fraud, especially in situations where they
> fear retaliatory action.

**Suggestions for Consideration**

1.  **Enhance transparency in decisionmaking by deterring conflicts of
    interest.** To deter conflicts of interest that may result in
    fraudulent activities at the State and local levels, the Department
    and Congress should consider including statutory language requiring
    State, district, and school employees and contractor personnel, who
    have the authority to obligate Federal education funds, be subject
    to certain provisions of the Federal bribery and conflict of
    interest provisions codified in criminal statute at 18 U.S.C. §§
    201-216. The Department and Congress should also consider statutory
    language requiring individuals with the authority to obligate
    Federal grant funds to: (1) recuse themselves from doing business
    with vendors that they or family members own or control; (2) certify
    that they will not do business with companies that they have an
    interest in; and (3) if they do conduct business with such an entity
    that is the sole source capable of providing the required service,
    require closer scrutiny of the grant activity by an independent
    person. The certification should include language warning that
    falsification is a violation of\
    18 U.S.C § 1001 and subject to criminal and/or civil sanctions.

2.  **Ensure States identify and provide additional oversight of
    high-risk subgrantees.** The Department should make sure that SEAs
    are aware of their ability to consider a subgrantee as high-risk,
    and have systems in place to identify and oversee high-risk
    entities, pursuant to Federal regulation at 34 C.F.R. § 80.12.
    Additionally, the Department and Congress should consider statutory
    language requiring States to advise the Department when the SEA has
    designated a subgrantee as high-risk and the reasons for doing so.

3.  **Establish a reporting requirement for suspected fraud and other
    criminal misconduct, waste, and abuse.** While the Department has
    agreed to add a reporting requirement in EDGAR, the Department and
    Congress should also consider including a reporting requirement in
    the GEPA. Examples of the type of information that should be
    referred include:

-   Falsification of applications for funding or of counts of eligible
    children;

-   Theft or embezzlement of Federal education program funds;

-   Misapplication or improper use of Federal education funds;

-   Bribery or kickbacks; and

-   Test or grade tampering to improve student and/or school performance
    results.

    1.  **Consider whistleblower protection for State and local
        employees and contractors.** Where State whistleblower
        protection regarding Federal funds may not be available, the
        Department and Congress should consider language in the GEPA
        and/or regulation requiring States to establish a system that
        protects non-Federal whistleblowers, as a condition to the
        receipt of Federal funds. Similar to the Federal protections,
        State and local employees and contractors should be protected
        from retaliatory actions should they disclose credible evidence
        of improprieties involving Federal education funds, including
        fraud, waste, abuse, gross mismanagement, or substantial and
        specific danger to public health or safety.

[]{#__RefHeading___Toc171396667 .anchor}ISSUE AREA NO. 5 --
Program-Specific Issues

Prior to and since the enactment of the NCLB, we reviewed several ESEA
programs that led to a number of suggestions for Departmental and
congressional consideration for the reauthorized ESEA. We summarize the
program-specific issues below and our specific suggestions in the
[Compendium of OIG Products](#__RefHeading___Toc171396668) at the end of
this perspective paper.

## Suggestions on Gun-Free Schools Requirements Not Incorporated in Law {#suggestions-on-gun-free-schools-requirements-not-incorporated-in-law .RptSubcaption}

Prior to the NCLB, we had completed a series of audits of SEA and LEA
compliance with the Gun-Free Schools Act of 1994 (GFSA) in seven States.
Based on that work, we developed a perspective paper on issues
surrounding the GFSA to assist Departmental officials and Congress in
determining if revisions to the statute were necessary.[^17] In the
paper, issued March 2001, we offered five issues for consideration in
amending the law to expand the types of weapons covered; require
information on incidents involving firearms at school; and clarify
several sections of the law.

One issue in our 2001 perspective paper concerned the types of weapons
covered by the GFSA. The statute defines a weapon as a *firearm* under
Title 18 U.S.C. § 921, which does not consider as firearms: BB guns,
pellet guns, antique firearms, and replicas of antique firearms. The
Bureau of Alcohol, Tobacco, and Firearms (ATF) is the agency responsible
for providing a definitive statement about the types of weapons that do
not qualify as a firearm under\
Title 18 U.S.C. § 921. Yet, both the Centers for Disease Control and
Prevention and the Consumer Product Safety Commission had noted that
high-velocity airguns may cause serious injury or death in some
instances. In addition, our work found that some conventional firearms
and airguns can be similar in appearance.

The NCLB reauthorized the GFSA and incorporated some of our suggested
changes. We believe that the issues that were not addressed in law are
still important and relevant, and should be considered in the ESEA
reauthorization. In particular, the law should:

-   Include as weapons covered by the statute (in addition to the ATF
    definition of a *firearm*): imitation firearms capable of projecting
    an object with deadly force, such as airguns (i.e., BB guns and
    pellet guns); antique firearms; and replicas of antique firearms;

-   Require SEAs and LEAs to collect and report information on the
    *incidents* involving firearms at schools and the resulting
    disciplinary actions (e.g., expulsion, modified expulsion, other
    action, or none); and

-   Clarify applicable sections of statute to ensure consistent use of
    terms such as *firearm*, *weapon*, and *possess*, to eliminate
    confusion.

Incorporating these proposed changes in the law would address problems
we had found in the States reviewed, and ensure correct and effective
implementation by SEAs and LEAs, including accurate counts of expulsions
under the statute. Additionally, the Department and SEAs would be able
to better assess program success and determine consistency in
enforcement of the GFSA provisions.

## Proposals to Strengthen Other Statutory Provisions {#proposals-to-strengthen-other-statutory-provisions .RptSubcaption}

Since enactment of the NCLB, our reviews of several ESEA programs have
identified other areas of statute and/or regulation that could be
strengthened to better ensure compliance with the intent of law.

-   [Unsafe School Choice Option/Persistently Dangerous
    Schools]{.underline}. Our work on SEA and LEA compliance with the
    USCO provision raised concerns that States were not using effective
    criteria to identify persistently dangerous schools. As a result,
    some State policies may not meet the intent of the statute. In a
    February 2006 memorandum to the Office of Safe and Drug Free
    Schools, we suggested several basic requirements that State USCO
    policies should meet. In our October 2006 testimony before the
    Department's Safe and Drug-Free Schools and Communities Advisory
    Committee, we identified legislative changes that may be needed to
    ensure the intent of the USCO provision is met. We also prepared a
    separate perspective paper on this topic, which detailed our
    findings and proposed corrective actions.

-   [Public School Choice and Supplemental Educational
    Services]{.underline}. Our November 2006 perspective paper on
    selected SES provisions raised questions about the SES eligibility
    criteria and suggested several alternate approaches to defining SES
    eligibility that could expand coverage to a greater number of
    low-achieving students. We also suggested that the Department
    consider changing applicable regulations and explore strategies for
    assessing the quality of LEA and school SES providers that are in
    improvement status.

-   [Reading First]{.underline}. Since the initiation of the Reading
    First legislation, there appears to be movement toward more emphasis
    on the scientific evidence of reading programs' effectiveness rather
    than merely the inclusion of the five essential components of
    reading currently in statute. In our February 2007 audit report and
    April 2007 congressional testimony on the Department's
    administration of the Reading First program, we suggested that the
    Department and Congress clarify whether reading programs need to
    have scientific evidence of effectiveness in order to be eligible
    for program funding.\
    \
    In April 2007, legislation was introduced in the House of
    Representatives to improve the Reading First program. The proposed
    bill would require the Department and its contractors to screen
    Reading First peer reviewers for potential conflicts of interest,
    among other provisions related to the peer review process and
    curriculum prohibitions. In May 2007, a Senate report recommended
    that Congress should adopt new restrictions to safeguard against
    financial conflicts of interest among Federal employees,
    contractors, and subcontractors associated with elementary and
    secondary education programs funded under the ESEA.[^18]

We also have ongoing work in the areas of the Title I comparability
requirement and graduation and drop-out rates. These efforts may also
address issues for the Department and Congress to consider during the
ESEA reauthorization.

**Suggestions for Consideration**

1.  **Incorporate suggested changes to gun-free schools requirements.**
    The Department and Congress should incorporate our previously
    reported suggestions regarding the\
    gun-free schools requirements in the reauthorized ESEA and other
    appropriate statutes, particularly with respect to the inclusion of
    imitation firearms capable of projecting an object with deadly
    force, such as airguns.

2.  **Consider other program-specific proposals to strengthen statutory
    provisions.** The Department and Congress should consider
    incorporating our proposed changes to statutory and regulatory
    provisions regarding persistently dangerous schools, supplemental
    educational services, and Reading First.

[]{#__RefHeading___Toc171396668 .anchor}COMPENDIUM OF OIG PRODUCTS
RELATED TO THE ESEA

We have conducted audits, inspection, and investigations involving key
aspects of the ESEA, as amended by the IASA in 1994 and the NCLB in
2001. This compendium summarizes this work by 11 program or topic areas.
In instances where our products made suggestions for reauthorization of
the ESEA, they have been included. The Compendium also provides
electronic links to OIG products that are posted on our website at
<http://www.ed.gov/about/offices/list/oig/reports.html>. For each
program or topic area, we have summarized the issue areas, which have
emerged from our work, in the table below.

  -------------------------------------- -------------------------------------- ------------------------ ----------------------------------- ------------------------------------------- -----------------------------------------
  **Program or Topic Area**              **Issue Area**                                                                                                                                  

                                         [**Essential, Clear, and Consistent    [**Data                  [**Monitoring/                      [**Improprieties in State & Local           [**Program-Specific
                                         Requirements**](#PlainLanguageTheme)   Quality**](#OLE_LINK6)   Oversight**](#PlainLanguageTheme)   Programs**](#__RefHeading___Toc171396666)   Issues**](#__RefHeading___Toc171396667)

  [Gun-Free Schools](#GunFreeSchools)    X                                      X                        X                                                                               X

  [Unsafe School Choice                  X                                      X                        X                                                                               X
  Option/Persistently Dangerous                                                                                                                                                          
  Schools](#USCO)                                                                                                                                                                        

  [Public School Choice &                X                                                               X                                                                               X
  SES](#ChoiceSES)                                                                                                                                                                       

  [Reading First](#ReadingFirst)                                                                         X                                   X                                           X

  [Schoolwide                            X                                                               X                                                                               
  Programs](#SchoolwidePrograms)                                                                                                                                                         

  [Migrant Education](#MigrantEducation) X                                      X                        X                                   X                                           X

  [Charter Schools](#CharterSchools)     X                                                               X                                   X                                           

  [21^st^ Century Community Learning     X                                                               X                                                                               
  Centers](#CCLC)                                                                                                                                                                        

  [Assessment and Accountability         X                                      X                        X                                                                               
  Data](#AssessmentAccountabilityData)                                                                                                                                                   

  [Departmental, SEA, and LEA            X                                                               X                                   X                                           
  Oversight](#Oversight)                                                                                                                                                                 

  [Title I Fiscal                                                               X                        X                                                                               
  Requirements](#TitleIfiscal)                                                                                                                                                           
  -------------------------------------- -------------------------------------- ------------------------ ----------------------------------- ------------------------------------------- -----------------------------------------

After we issue an audit report, the Department responds to our
recommendations by either submitting a corrective action plan or issuing
a program determination letter to the grantee specifying required
corrective actions. Thus, recommendations for the Department contained
in the OIG products listed in the Compendium may have been fully or
partially implemented since the reports' issuance.

[]{#GunFreeSchools .anchor}**[Gun-Free Schools]{.underline}**

> ***[Overview]{.underline}***
>
> As originally enacted in 1994, the Gun Free Schools Act (GFSA)
> required States to have in effect a law requiring LEAs to expel from
> school for at least one year any student who brings a firearm to
> school. It allowed the LEA's chief administrative officer to modify
> the expulsion requirement on a case-by-case basis. The GFSA required
> LEAs to comply with the State law, provide an assurance of compliance,
> annually report expulsion information to the SEA, and implement a
> policy requiring referral to a criminal justice or juvenile
> delinquency system of any student who brings a firearm to school. In
> addition, it also required SEAs to report to the Department
> information on firearm expulsions every year.\
> \
> In 2000 and 2001, we conducted a series of audits in 7 States and 43
> LEAs to determine whether SEAs and LEAs were in compliance with
> provisions of the GFSA. We interviewed more than 1,500 officials from
> the Department, SEAs, LEAs, and school administrators, teachers,
> counselors, students, parental organization representatives, and law
> enforcement officials. Based on our work, we identified a number of
> cross-cutting issues and made a number of recommendations for the
> Department to help ensure States and districts comply with the GFSA.
> We also identified legislative changes that were needed to clarify and
> strengthen the law.
>
> ***[Suggestions for Reauthorization of the ESEA]{.underline}***
>
> Determine if the GFSA should be amended to:

(1) Include air guns (i.e., BB guns and pellet guns), antique firearms,
    and replicas of antique firearms;

(2) Specifically require SEAs and LEAs to report on incidents of
    students found to have brought firearms to school and the resulting
    disciplinary action; and

(3) Clarify items in specified sections of the statute to ensure SEAs
    and LEAs correctly implement the GFSA.

> The NCLB incorporated some of the technical clarifications we had
> suggested, and the Department subsequently issued\
> non-regulatory guidance calling for SEAs and LEAs to include
> information in their annual compliance reports on incidents of
> students bringing firearms to school. However, the guidance did not
> require information on resulting disciplinary actions.

[]{#USCO .anchor}**[Unsafe School Choice Option/\
Persistently Dangerous Schools]{.underline}**

> ***[Overview]{.underline}***
>
> The issue of safe schools is one the OIG has been examining since
> 1999, and the Unsafe School Choice Option (USCO) specifically since
> 2004. USCO requires States receiving ESEA funds to establish and
> implement a policy requiring that a student attending a persistently
> dangerous public school, or who becomes the victim of a violent
> criminal offense on school grounds, be provided the opportunity to
> transfer to a safe school within the district. As a condition of
> receiving ESEA funds, each State must certify in writing to the
> Department that the State is in compliance with these requirements. In
> 2002, the Department issued its *Unsafe School Choice Option Draft
> Non-Regulatory Guidance*, which provided the framework for developing
> and implementing a USCO policy (the final guidance was issued in May
> 2004). Full compliance with USCO was expected as of\
> July 1, 2003.\
> \
> We conducted five State audits to assess State and local compliance
> with the USCO provisions, and additional nationwide research on
> States' criteria for determining PDS. Based on our findings, we made a
> number of suggestions and proposals for the Department to help ensure
> States and districts comply with the provisions of the law. In October
> 2006, we testified before a Departmental Advisory Committee meeting,
> which was convened to gain input from the education community on
> strategies to improve USCO policy. At the meeting, we identified
> legislative changes that may be needed to ensure that the intent of
> the USCO provision is met. We also prepared a perspective paper on the
> topic, detailing our findings and proposing corrective actions for the
> Department and Congress to consider during the ESEA reauthorization
> process.
>
> ***[Suggestions for Reauthorization of the ESEA]{.underline}***
>
> Strengthen the USCO provisions by ensuring that:

(1) All violent incidents, consistent with State code, are factored into
    the PDS determination, without the use of disciplinary action
    qualifiers;

(2) Benchmarks for determining PDS are set at reasonable levels that are
    supported by objective and reliable data; and

(3) The PDS are identified based on the most current year of data.

[]{#ChoiceSES .anchor}**[Public School Choice and]{.underline}**

**[Supplemental Educational Services]{.underline}**

> ***[Overview]{.underline}***
>
> The ESEA, as amended by the NCLB, requires LEAs to offer all students
> attending schools in improvement status the option to transfer to
> another public school that is not in improvement status (public school
> choice). If a Title I school fails to make AYP after its first year in
> improvement status, the LEA must also offer SES to all enrolled
> low-income students. SES consists of tutoring, remediation, and other
> educational interventions that are in addition to instruction provided
> during the school day. State-approved SES providers must offer
> services tailored to help participating students meet academic
> standards. LEAs must continue to offer school choice and SES until the
> school exits improvement status by making AYP for two consecutive
> years.
>
> We completed a body of work related to school choice and SES,
> including audits of five SES providers operating in one State and
> their relationship with the LEA, as well as reviews of SEA and LEA
> implementation of school choice and SES requirements in six other
> States and multiple LEAs. Based on our findings, we made a number of
> recommendations and proposals for the Department to help ensure States
> and districts comply with the provisions of the law. We also
> identified issues for Congress to consider during ESEA reauthorization
> relating to SES eligibility.
>
> ***[Suggestions for Reauthorization of the ESEA]{.underline}***
>
> Determine whether the focus of SES eligibility should be based on
> academic proficiency rather than family income and consider amending
> the ESEA to:

(1) Limit eligibility for SES to only those students that are both
    economically disadvantaged and academically underachieving;

(2) Make SES available to all low-achieving students attending Title I
    schools in improvement status; or

(3) Offer SES to all low-income students as well as\
    low-achieving students that do not meet the income criteria.

[]{#ReadingFirst .anchor}**[Reading First]{.underline}**

> ***[Overview]{.underline}***
>
> The ESEA, as amended by the NCLB, established the Reading First
> program aimed at helping every child in every State become a
> successful reader by the end of third grade. The program was designed
> to develop, implement, and provide professional development for
> teachers using scientifically based reading research (SBRR) programs,
> and to ensure accountability through ongoing, valid, and reliable
> screening, diagnostic, and classroom-based assessment. The Department
> allots monies to SEAs based on the proportion of low-income children
> who reside within the State. SEAs submit grant applications to the
> Department to receive the funds, and award subgrants to LEAs on a
> competitive basis.
>
> We conducted reviews on various aspects of the program: (1) the
> Department's grant application process; (2) the Department's
> administration of selected aspects of the Reading First program; (3) a
> Department contractor's administration of technical assistance
> contracts; and (4) State compliance with the Reading First provisions
> in three States where we sought to determine whether the SEA developed
> and used criteria for selecting the SBRR programs and approved LEA
> applications in accordance with laws, regulations, and guidance. We
> also reviewed SEA administration and the use of Reading First program
> funds in one State, where we had no adverse findings.
>
> ***[Suggestions for Reauthorization of the ESEA]{.underline}***

(1) Clarify whether reading programs need to have scientific evidence of
    effectiveness in order to be eligible for funding under Reading
    First; and

(2) Clarify conflict of interest requirements in federally funded
    programs.

[]{#SchoolwidePrograms .anchor}**[Schoolwide Programs]{.underline}**

> ***[Overview]{.underline}***
>
> The IASA included a provision allowing LEAs to use Title I funds in
> combination with other Federal, State, and local funds to upgrade the
> entire educational program in an eligible school. The NCLB expanded
> school eligibility for schoolwide programs by lowering the poverty
> threshold from 50 percent to 40 percent of enrolled children needing
> to be from low-income families, and further required SEAs to modify or
> eliminate State fiscal and accounting barriers so that schoolwide
> programs can easily consolidate funds from other Federal, State, and
> local sources.
>
> Since 2000, we have conducted a series of reviews related to
> schoolwide programs. First, we reported the results of interviews with
> officials from 15 SEAs, 16 LEAs, and 13 schools about combining funds
> in schoolwide programs. In 2004 and 2005, we conducted additional
> reviews of SEA administration of consolidating funds, involving 11
> SEAs and 76 LEAs, to determine whether (1) the SEAs had encouraged
> schools to consolidate funds in their schoolwide programs, (2) the
> SEAs had modified or eliminated State fiscal and accounting barriers
> to consolidating funds, and (3) schools were consolidating funds. We
> also reviewed the Department's efforts in assisting the SEAs in
> consolidating funds. More recently, we reviewed SEA, LEA, and school
> implementation of schoolwide plans in two States.

[]{#MigrantEducation .anchor}**[Migrant Education]{.underline}**

> ***[Overview]{.underline}***
>
> The Migrant Education Program (MEP) provides funds to States to
> support high-quality educational programs for migrant children, help
> reduce the educational disruption and other problems from repeated
> moves, and ensure that migrant children benefit from State and local
> system reforms. Federal regulations define an eligible migratory child
> as a child who is, or whose parent, spouse, or guardian is, a
> migratory agricultural worker (including a migratory dairy worker) or
> a migratory fisher, and, who, in the preceding 36 months, has moved
> from one school district to another to obtain temporary or seasonal
> employment in agricultural or fishing work. Funds are allocated to
> SEAs, based on each State's per pupil expenditure for education and
> counts of eligible migratory children, aged 3 through 21, residing
> within the State. Under the MEP's "priority for services" provision,
> States are to identify and target services to migratory children who
> are failing, or most at risk of failing, to meet State standards and
> whose education was interrupted during the regular school year.
>
> From 2003 to 2006, we conducted a series of audits on two key aspects
> of the MEP: (1) SEA and subgrantee compliance with the priority for
> services provision in four States; and (2) SEA controls for ensuring
> the accurate count of children eligible to participate in the MEP in
> five States. We have also reviewed allegations of inflated migrant
> student counts in other States. Based on our findings, we made a
> number of recommendations and proposals for corrective action. We also
> conducted a review of a local migrant education outreach program in
> one State, focusing on adherence to student eligibility rules and
> lobbying activities, where we had no adverse findings.
>
> .

[]{#CharterSchools .anchor}**[Charter Schools]{.underline}**

> ***[Overview]{.underline}***
>
> Charter schools are public schools of choice that operate with freedom
> from many of the regulations that apply to traditional public schools.
> Section 5206 of the ESEA requires the Department and States to take
> measures to ensure that every charter school receives the Federal
> funds for which it is eligible no later than five months after the
> school first opens or expands enrollment. The statute covers the
> Department's major formula grant programs, including ESEA Title I and
> IDEA Part B, as well as discretionary grant programs such as the
> Public Charter Schools Program (PCSP). State laws significantly
> influence the development of charter schools and vary from State to
> State. When a State considers charter schools to be LEAs, the SEA must
> treat the schools like other LEAs in the State when allocating funds
> under Federal programs; where a State considers charter schools to be
> public schools within an LEA, the LEA must treat charter schools like
> other public schools within that LEA.
>
> In 2003 and 2004, we completed a series of reviews to assess charter
> schools' (1) access to Title I and IDEA funds in three States, as well
> as Departmental actions to ensure charter schools' access to these
> funds; and (2) use of Title I, IDEA, and PCSP funds in two States. Our
> work revealed a number of weaknesses in these areas, to which we made
> a number of recommendations to help the Department ensure that SEAs
> and LEAs comply with the ESEA funding provisions for charter schools,
> as well as help ensure charter schools expend their funds in
> accordance with applicable laws, regulations, and guidance. In
> addition to our audit work, we have investigated cases involving fraud
> in a number of charter schools.

[]{#CCLC .anchor}**[21^st^ Century Community Learning
Centers]{.underline}**

> ***[Overview]{.underline}***
>
> Under the IASA, the 21st Century Community Learning Centers (CCLC)
> program provided three-year grants to rural and inner city schools or
> consortia of schools to enable them to plan, implement, or expand
> projects that benefit the educational, health, social services,
> cultural, and recreational needs of the community. The grant enabled
> schools to stay open longer and set up community learning centers. The
> Department administered a nationwide competition and directly awarded
> program funds to local grantees. Under the NCLB, the Department
> allocates funds to SEAs by formula, the SEA awards grants to eligible
> organizations and local programs on a competitive basis, and the SEA
> is responsible for ensuring all statutory requirements are met.
>
> Between 2000 and 2005, we completed a series of audits to determine
> whether CCLC grantees accounted for and used CCLC funds in accordance
> with applicable law, regulations, and grant terms. In total, we
> reviewed 12 grantees, including\
> 9 grantees at the request of the Department due to persistent problems
> identified through its program oversight efforts. Based on our work,
> we identified a number of common issues and risk areas associated with
> grantees' administration of CCLC grants, and made a number of
> proposals and recommendations for the Department to help ensure CCLC
> grantee compliance.

[]{#AssessmentAccountabilityData .anchor}**[Assessment and
Accountability Data]{.underline}**

> ***[Overview]{.underline}***
>
> The ESEA requires States receiving Title I, Part A funds to implement
> a statewide accountability system, including creating academic
> standards, testing students' progress toward the standards, and
> holding schools, districts, and themselves accountable for making AYP
> toward meeting the State standards. The NCLB placed more emphasis on
> accountability for results and increases the importance of data.
> Performance must be publicly reported in district and State report
> cards, and schools are subject to increasingly rigorous consequences
> if they continually fail to make AYP. In addition to student
> assessments, the State accountability system must include a high
> school graduation rate indicator when determining AYP. States must
> also annually collect and report various assessment and accountability
> data to the Department.
>
> Since 2002, we have completed a considerable body of work to assess
> the quality of data collection and reporting for specific ESEA
> requirements. In 2002, we completed a joint project of the U.S.
> Comptroller General's Domestic Working Group by reviewing school
> improvement data in one State, and Departmental controls to ensure the
> quality of this data from all States. In 2003 and 2004, we reviewed
> Departmental controls over scoring the National Assessment of
> Educational Progress (Nation's Report Card or NAEP) and, based on that
> work, conducted a study to provide information for the Department on
> controls over the scoring of State assessments. In 2005, we reviewed
> the Department's implementation of its Performance-Based Data
> Management Initiative designed to streamline data collection and
> project management processes, and the inclusion of migrant and limited
> English proficient students in one State's assessment and
> accountability system. Most recently, we examined data that four
> States had reported to the Department on their graduation and dropout
> rates. While the specific subject areas varied, each of these audits
> produced similar results: issues of non-compliance with elements of
> data collection and reporting; a lack of effective internal controls
> to ensure data reliability; and the need for enhanced guidance and
> direction from the Department.

[]{#Oversight .anchor}**[Departmental, SEA, and LEA
Oversight]{.underline}**

> ***[Overview]{.underline}***
>
> We have conducted a substantial body of work assessing Departmental,
> SEA, and LEA oversight of ESEA program funds. We reviewed Departmental
> monitoring procedures over grantees' drawdown of excessive cash and
> adherence to matching fund requirements of applicable programs. We
> also reviewed SEA monitoring in several States where we examined their
> procedures for ensuring LEAs administered ESEA program funds properly,
> or LEAs adhered to the requirement for a single audit. In four States
> (including a number of LEAs in Louisiana and on Long Island, New
> York), we looked at LEAs' use of Title I and/or Title II expenditures,
> Title I parental involvement funds, or Title I summer and after-school
> program funds. We similarly reviewed Departmental grantees' use of
> Early Reading First and Migrant Even Start grant funds at a pre-school
> in California, and the Title II Teaching American History Grant at an
> LEA in Texas. We also examined LEA administration of Title I, Part A
> set-aside programs in two school districts. Additionally, we reviewed
> the administration of Federal grants or contracts by three insular
> area grantees, which the Department had designated as\
> high-risk because of either serious and recurring deficiencies in
> their fiscal and programmatic administration of Department programs,
> or untimely and incomplete single audit reports.\
> In total, we identified over \$100 million in questioned and
> unsupported costs across our audits on this topic.
>
> Based on our work, we made a number of recommendations and proposals
> to the Department to improve oversight of its operations and
> accountability by its program offices, grantees, and their subgrantees
> and contractors, as well as strengthen the stewardship of Federal
> funds at the Federal, State, and local levels. In addition to our
> audit work, we investigated a number of cases involving fraud, waste,
> and abuse in several locations.

**[Departmental, SEA, and LEA Oversight]{.underline} (continued)**

[]{#TitleIfiscal .anchor}**[Title I Fiscal Requirements]{.underline}**

> ***[Overview]{.underline}***
>
> The Title I, Part A program is authorized under the ESEA, as amended
> by the NCLB, and provides financial assistance through SEAs to LEAs
> and schools with high numbers or percentages of poor children to help
> ensure that all children meet State academic standards. In allocating
> Title I funds to schools, LEAs are subject to several restrictions to
> ensure that the funds are targeted to schools with the highest
> percentages of children from low-income families. To ensure that Title
> I funds provide services beyond the regular services that
> participating children normally receive, LEAs must meet three fiscal
> requirements related to the expenditure of State and local funds. The
> LEA must: (1) maintain fiscal effort with State and local funds from
> one year to the next, which means that the LEA cannot reduce its own
> spending for public education and replace those funds with Federal
> funds (maintenance of effort (MOE)); (2) ensure that Title I schools
> receive their fair share of State and local resources by using State
> and local funds to provide services in Title I schools that are at
> least comparable to services provided in non-Title I schools
> (comparability); and (3) use Title I funds to supplement, not supplant
> regular non-Federal funds, which ensures that Title I services are in
> addition to regular services and do not replace services that an LEA
> would ordinarily provide to all its students (supplement/not
> supplant).
>
> Since 2003, we have completed several reviews to assess SEA and LEA
> compliance with these fiscal requirements. We examined LEA allocations
> of Title I, Part A funds to schools in three States, as well as the
> SEA allocation to LEAs in one of the States. We also reviewed SEA
> controls to ensure LEAs in three other States complied with the
> comparability requirement. Additionally, we assessed SEA and LEA
> compliance with MOE and supplement/not supplant requirements in two
> States, where we had no adverse findings.
>
> []{#PlainLanguageTheme .anchor}

[^1]: Title I, Part A of the ESEA alone contains 588 compliance
    requirements for SEAs and LEAs. [*Compliance Requirements within
    Title I, Part A of the No Child Left Behind
    Act*](http://www.ed.gov/about/offices/list/oig/auditreports/s06e0027.pdf)
    (ED-OIG/S06E0027, March 29, 2006).

[^2]: [*The Department's Administration of Selected Aspects of the
    Reading First
    Program*](http://www.ed.gov/about/offices/list/oig/auditreports/a03g0006.pdf)
    (ED-OIG/A03G0006, February 22, 2007).

[^3]: In its 1998-2002 Strategic Plan, the Department had set as an
    objective that, by 2000, all its managers would assert that the data
    used for measuring their programs' performance were valid and
    reliable, or had plans for improvement.

[^4]: *U.S. Department of Education Information Quality Guidelines*,
    February 2003 (for information the Department disseminates);
    *Improving Data Quality for Title I Standards, Assessments, and
    Accountability Reporting*, April 2006 (non-regulatory guidance for
    States, LEAs, and schools).

[^5]: [*A Joint Audit Report on the Status of State Student Assessment
    Systems and the Quality of Title I School Accountability
    Data*](http://www.ed.gov/about/offices/list/oig/auditreports/s14c0001.pdf)
    (ED-OIG/S14C0001, August 2002).

[^6]: *No Child Left Behind Act: Improvements Needed in Education's
    Process for Tracking States' Implementation of Key Provisions*
    (GAO-04-734, September 2004).

[^7]: A list of OIG products that address data quality issues appears in
    the [Compendium of OIG Products](#__RefHeading___Toc171396668) at
    the end of this perspective paper.

[^8]: *No Child Left Behind Act: Education Could Do More to Help States
    Better Define Graduation Rates and Improve Knowledge about
    Intervention Strategies* (GAO-85-897, September 2005).

[^9]: Seastrom, M., Hoffman, L., Chapman, C., and Stillwell, R. (2005).
    *The Averaged Freshman Graduation Rate for Public High Schools From
    the Common Core of Data: School Years 2001-02 and 2002-03* (NCES
    2006-601).\
    U.S. Department of Education. National Center for Education
    Statistics, Washington, D.C.; Seastrom, M., Hoffman, L., Chapman,
    C., and Stillwell, R. (2007). *The Averaged Freshman Graduation Rate
    for Public High Schools from the Common Core of Data: School Years
    2002-03 and 2003-04* (NCES 2006-606rev), U.S. Department of
    Education, National Center for Education Statistics, Washington,
    D.C.; Laird, J., DeBell, M., Kienzl, G., and Chapman, C. (2007).
    *Dropout Rates in the United States: 2005* (NCES 2007-059). U.S.
    Department of Education, National Center for Education Statistics,
    Washington, D.C.

[^10]: [*Audit of the Department's Performance Based Data Management
    Initiative*](http://www.ed.gov/about/offices/list/oig/auditreports/a11e0003.pdf)
    (ED-OIG/A11E0003,\
    September 29, 2005); *Education's Data Management Initiative:
    Significant Progress Made, but Better Planning Needed to Accomplish
    Project Goals* (GAO-06-6, October 2005).

[^11]: [*Best Practices for Management Controls Over Scoring of the
    State Assessments Required under the
    NCLB*](http://www.ed.gov/about/offices/list/oig/auditreports/x05d0016.pdf)\
    (ED-OIG/X05D0016, February 3, 2004).

[^12]: *No Child Left Behind Act: Improvements Needed in Education's
    Process for Tracking States' Implementation of Key Provisions*
    (GAO-04-734, September 2004).

[^13]: *Roslyn Union Free School District Anatomy of a Scandal*, Office
    of the New York State Comptroller (2005M-21, March 2005).

[^14]: A list of OIG products related to the [Reading
    First](#ReadingFirst) program appears in the [Compendium of OIG
    Products](#__RefHeading___Toc171396668) at the end of this
    perspective paper; *Reading First: States Report Improvements in
    Reading Instruction, but Additional Procedures Would Clarify
    Education's Role in Ensuring Proper Implementation by States*
    (GAO-07-161,\
    February 2007).

[^15]: Our State reports related to the [Reading First](#ReadingFirst)
    program are listed in the [Compendium of OIG
    Products](#__RefHeading___Toc171396668) at the end of this
    perspective paper.

[^16]: [*Title I Funds Administered by Orleans Parish School
    Board*](http://www.ed.gov/about/offices/list/oig/auditreports/a06e0008.pdf)
    (ED-OIG/A06E0008, February 16, 2005).

[^17]: [*An OIG Perspective on the Gun-Free Schools Act of
    1994*](http://www.ed.gov/about/offices/list/oig/auditreports/s03a0018.pdf)
    (ED-OIG/S03A0018, March 2001).

[^18]: *The Chairman's Report on the Conflicts of Interest Found in the
    Implementation of the Reading First Program at Three Regional
    Technical Assistance Centers*, U.S. Senate Health, Education, Labor,
    and Pension Committee\
    (May 9, 2007).