Mr. Jack O'Connell

State Superintendent of Public Instruction

California Department of Education

1430 N Street

Sacramento, California 95814

Dear Superintendent O'Connell:

This **Final Audit Report** (Control Number ED-OIG/A06-C0033) presents
the results of our audit of the Migrant Education Program at the
California Department of Education (California). The objectives of our
audit were to determine whether California and its sub-grantees (1)
established and implemented appropriate procedures to identify and
target services to migratory children who are failing or most at risk of
failing to meet state standards and whose education has been interrupted
during the regular school year, and (2) established procedures to report
to the Department the number of "Priority for Service" migratory
children in California. Our audit focused on the period July 1, 2000,
through July 31, 2002.

A draft of this report was provided to the California Department of
Education. In its response, California did not completely agree with our
findings, but generally agreed with our recommendations. California's
comments are summarized in the section that follows the Recommendations.
A copy of the complete response is enclosed with this report.

The Elementary and Secondary Education Act (ESEA) of 1965, as amended,
authorizes federal funding of programs of education for migratory
children. In fiscal year 2001, over \$371.3 million was authorized for
the education of migratory children. California received approximately
\$120.9 million in Migrant Education Program funds. A migratory child is
a child who is, or whose parent, spouse, or guardian is, a migratory
agricultural worker, including a migratory dairy worker or a migratory
fisher. The No Child Left Behind Act of 2001 and the Improving America's
Schools Act of 1994 further specify that children who are failing, or
most at risk of failing, to meet the State\'s challenging content
standards and challenging student performance standards, and whose
education has been interrupted during the regular school year shall
receive "Priority for Services." Priority for Services means students
who meet both criteria will receive Migrant Education Program funded
services before services are provided to other migratory children.
Guidance from the Department provides that if "the state does not have
assessment data on a particular migrant child (e.g., the child was not
present in the district when the assessment was administered), then the
state might use other relevant information, like the degree to which the
child is subject to multiple risk factors (e.g., being overage or behind
grade level, eligible for free/reduced price lunch, limited English
proficient) to determine the child's need for services." The Department
also establishes that "the state, in collaboration with local operating
agencies, is free to determine what constitutes 'educational
interruption' under Section 1304 (d)."

Table C-6 of the Consolidated State Performance Report, which is
submitted to the Department's Office of Migrant Education for every
award year, requires that States indicate the "count of students served
who have a priority for services under Section 1304 (d) of the ESEA
(those whose schooling has been interrupted and who are failing or
\[most\] at risk of failing to meet state standards)."

On November 26, 2002, the Department issued final regulations for the No
Child Left Behind Act of 2001 governing the Migrant Education Program
to, among other changes, require that each State Education Agency
determine the effectiveness of its program, particularly for those
students who have Priority for Services. These regulations are in
response to *The* *President's Management Agenda* for Fiscal Year 2002
and the Department of Education's *Blueprint For Management Excellence*
released October 30, 2001. One of the expected long-term results in
*The* *President's Management Agenda* is better control over resources
used and accountability for results by program managers. The
Department's *Blueprint* describes one of the Department's commitments
to management improvement as achieving an "Accountability for Results"
culture. Through the *Blueprint,* the recipients of Department funds
will be held responsible for their performance in relation to the goals
and objectives.

California did not comply with Section 1304(d) of the Elementary and
Secondary Education Act of 1965, as amended. Specifically, California
did not establish and implement appropriate procedures to identify and
target Priority for 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. As a result, the U.S.
Department of Education has no assurance that California used the
\$120.9 million in Migrant Education Program funds it received for
Fiscal Year 2001 for Priority for Services migratory children before
providing services to other migratory children; and, California was
unable to report an accurate number of Priority for Services migratory
children served in the Consolidated State Performance Report to the
Department's Office of Migrant Education.

California did not allocate migrant funds to its sub-grantees based on
identified Priority for Services migratory children to be served.
Instead, California provided migrant education funds to its sub-grantees
based on several components: 1) number of A-1 enrollments (regular
migrant school year population); 2) migrant students who have moved
within one year; 3) migrant children age 3-4; 4) migrant children age 19
--21; 5) migrant students who are overage for their grade; and 6)
migrant students attending summer/intersession school.

California overstated the number of Priority for Services migratory
children in its Fiscal Year 2001 Consolidated State Performance Report
because it also used these same components to report migratory children
served. California reported to the Department that there were 209,261
Priority for Service migratory students, or 81 percent of the total
migratory student population in California.

We visited three sub-grantees and found that none of the three had
procedures in place to properly identify and target migratory children
for Priority for Services. One sub-grantee only used the failing to meet
state standards as criteria to identify Priority for Services migratory
students. Another used the failing to meet state standards or the
interruption of education criteria but did not use both criteria
together as required to identify Priority for Service students. The
third sub-grantee did not identify Priority for Services migratory
students and relied on the individual school districts in the region to
identify the Priority for Service students. This sub-grantee did not
monitor the school districts to ensure Priority for Services migratory
children were properly identified. The three sub-grantees received
nearly \$15.4 million for migrant education.

We concluded that these conditions occurred because California (1)
relied upon its sub-grantees' assurances that they were properly
identifying Priority for Services migratory children, and did not
perform independent monitoring of the sub-grantees to ensure services
were provided; (2) did not provide clear guidance to the sub-grantees as
to the definition of "at risk of failing" State standards and "whose
education has been interrupted during the regular school year"; and (3)
did not require the schools, school districts, or sub-grantees to report
the number of Priority for Services migratory students for 2000 and
2001. We also determined that the sub-grantees did not maintain the
detailed information on the number of Priority for Services migratory
children.

We recommend that the Assistant Secretary for the Office of Elementary
and Secondary Education require California to:

1.  Monitor sub-grantees to ensure funds are used for Priority for
    Services migratory children before funds are used for other
    migratory children.

2.  Provide a clear definition to all sub-grantees of what constitutes
    "at risk of failing" State standards and "whose education has been
    interrupted during the regular school year."

3.  Establish procedures to identify and report to the Department the
    number of Priority for Services migratory children served in
    California schools.

California officials indicated that they did not completely agree with
our findings, but generally agreed with our recommendations. They stated
that they (1) incorporated monitoring tests in their 2003/2004
Coordinated Compliance Review Program to ensure Priority for Services
requirements are met; (2) will provide subgrantees another more accurate
and detailed definition of Priority for Services migratory children,
consistent with the state's interpretation; and (3) will use the
academic service data it currently receives from the regional offices to
develop a reporting process that identifies students meeting the federal
criteria for Priority for Services.

The objectives of our audit were to determine whether California and its
sub-grantees (1) established and implemented appropriate procedures to
identify and target services to migratory children who are failing or
most at risk of failing to meet state standards and whose education has
been interrupted during the regular school year, and (2) established
procedures to report to the Department the number of Priority for
Services migratory children in California.

To accomplish our objectives, we:

-   Reviewed California's and its sub-grantees' policies and procedures
    for providing services to migratory children.

-   Interviewed California and sub-grantee officials regarding their
    procedures for providing Priority for Services to migratory
    children.

-   Reviewed the California State Single Audit Report for 2001.

-   Reviewed applicable laws, regulations, and other guidance.

-   Reviewed the sub-grantees' documentation regarding the Priority for
    Services provided to migratory children.

-   Reviewed California's and its sub-grantees' decision-making process
    for allocating migrant education funds.

We obtained computer-processed data from California that we used for
background information. Because we did not use the data for projection
or to make any determinations, we did not perform reliability
assessments on the data.

Our audit of California's Migrant Education Program covered the period
July 1, 2000, through July 31, 2002. We performed fieldwork from
September 9-12, 2002, at the State offices in Sacramento, and at three
sub-grantees' offices from September 13-25, 2002. We selected one of the
largest sub-grantees in California at the request of the Office of
Migrant Education. We selected two other sub-grantees at our discretion.
The sub-grantees visited were Region 2 Butte County, Yuba City,
California; Region 22 Santa Maria Bonita School District; and Region 11
Pajaro Valley Unified School District. We held an exit conference with
California officials on November 19, 2002. Our work was performed in
accordance with generally accepted government auditing standards
appropriate to the scope of the audit described above.

As part of our review, we assessed the system of management controls,
policies, procedures, and practices applicable to California's
administration of the Priority for Services portion of the Migrant
Education Program. Our assessment was performed to determine whether
California had management controls established to ensure Priority for
Services migratory children received services before services were
provided to other migratory children.

Because of inherent limitations, a study and evaluation made for the
limited purpose described above would not necessarily disclose all
material weaknesses in the management controls. Our assessment disclosed
that California had neither developed and implemented procedures nor
established a monitoring system for sub-grantees to identify, target,
and count migratory children to be served first through the Migrant
Education Program. As a result, we concluded that California did not
have sufficient management controls to ensure that sub-grantees complied
with the requirements of Section 1304(d) of the Elementary and Secondary
Education Act of 1965, as amended. The AUDIT RESULTS section of the
report provides details on our finding.

If you have any additional comments or information that you believe may
have a bearing on the resolution of this audit, you should send them
directly to the following U.S. Department of Education official, who
will consider them before taking final Departmental action on the audit:

> Eugene Hickok, Acting Assistant Secretary
>
> U.S. Department of Education

Office of Elementary and Secondary Education

400 Maryland Avenue, SW

Room 3W315, FB6 Building

Washington, D.C. 20202

Office of Management and Budget Circular A-50 directs Federal agencies
to expedite the resolution of audits by initiating timely action on the
findings and recommendations contained therein. Therefore, we request
receipt of your comments within 30 days.

In accordance with the Freedom of Information Act (5 U.S.C. §552),
reports issued by the Office of Inspector General are available, if
requested, to members of the press and general public to the extent
information contained therein is not subject to the exemptions in the
Act.

If you have any questions or wish to discuss the contents of this
report, please contact me at 214-880-3031. Please refer to the control
number in all correspondence related to this report.

Sincerely,

Sherri L. Demmel

Regional Inspector General

for Audit

Attachment