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Office of Inspector General’s (OIG) Management and 

Performance Challenges for Fiscal Year 2024 

New Framework for Assessing Fiscal Year 2024 Management Challenges Reporting

We developed a new framework for evaluating the Department’s activities in response 

to individual challenges as shown in Table 4 below. We also improved communication 

throughout the year regarding the activities performed by the Department to address each 

management challenge.

Table 4. Framework for Assessing Department Progress in Addressing Challenge Areas 

Description of Response to the Challenge Score

New challenge, not rated N/A

A comprehensive plan has not been developed in response to the challenge, or a plan has 

been developed but it requires significant improvement to increase the likelihood that its risk 

management practices and internal controls would provide reasonable assurance of effectively 

mitigating the challenge.

Level 1—Beginning Progress

A comprehensive plan has been developed in response to the challenge, however, some 

improvement is needed to increase the likelihood that its risk management practices and internal 

controls would provide reasonable assurance of effectively mitigating the challenge.

Level 2—Limited Progress

A comprehensive plan has been developed in response to the challenge. The plan includes 

risk management practices and internal controls that would provide reasonable assurance of 

effectively mitigating the challenge. However, the plan has not been substantially implemented 

or the plan has been substantially implemented but limited or no results have been demonstrated. 

Level 3—Established Progress

A comprehensive plan has been developed in response to the challenge. The plan includes 

risk management practices and internal controls that would provide reasonable assurance of 

effectively mitigating the challenge. The plan has been substantially implemented and partial 

results have been demonstrated.

Level 4—Significant Progress

A comprehensive plan has been developed in response to the challenge. The plan includes 

risk management practices and internal controls that would provide reasonable assurance of 

effectively mitigating the challenge. The plan has been implemented and substantial results have 

been demonstrated, but continued efforts are needed to fully mitigate the challenge.

Level 5—Demonstrated Progress
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In applying this framework, challenge areas that receive an assessment of “Level 

5—Demonstrated Progress” in consecutive years will be considered for removal or 

modification in subsequent management challenges reporting. 

Our implementation of the assessment framework for fiscal year FY 2024 reporting 

was limited by several factors. Most of the information provided by the Department 

on its progress occurred during August 2023, which included presentations made by 

Department leadership for each FY 2023 management challenge. These presentations 

focused on the Department’s priority corrective actions, rationale for identifying priority 

corrective actions, current implementation status, and expected implementation status by 

the end of FY 2023. 

We reviewed the information provided by the Department to gain an understanding of 

its approach to address the underlying causes associated with each management challenge. 

We assessed whether the action items identified by the Department collectively provided 

a reasonable framework to address and reduce major risks relating to each challenge. We 

also considered the identified implementation status and any related outcomes that would 

support achievement of results within each challenge. 

Our approach for FY 2024 reporting considered the initiatives and outcomes specifically 

identified by the Department and information in some readily assessable documentation 

such as strategic plans, annual reports, policies, templates, and training materials. Our 

work to validate the information presented by the Department was limited because of the 

timing of its presentations in relation to management challenge reporting requirements. 

Our validation efforts predominately focused on follow-up with the Department to 

obtain additional information supporting implementation status and the impact of 

judgmentally selected action items. 

For FY 2024, we included a brief narrative and a related progress score using the 

framework identified in Table 4 above. The outcomes of audit and investigative activity 

were factors in the identification of challenge areas and were considered as part of 

the assessment of the Department’s progress. The overall progress score considers 

the Department’s activities in response to the individual challenges. This includes 

the effectiveness of the Department’s efforts to identify root causes, develop and 

implement corrective actions, and assess the results of its efforts. Additional details on 

the Department’s activities and their responsiveness to the individual challenge areas are 

included under “Progress in Meeting the Challenge” that appears near the end of each 

management challenge section.
FY 2023 AGENCY FINANCIAL REPORT 160 U.S. DEPARTMENT OF EDUCATION

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Management Challenge 1—Implementing Pandemic Relief Laws 

for Elementary and Secondary Education

The U.S. Department of Education (Department) was provided with more than $200 

billion under three major pandemic relief laws to assist states, public and nonpublic 

schools, and school districts in meeting their needs and the needs of students impacted 

by the pandemic. This included the Coronavirus Aid, Relief, and Economic Security Act

(CARES Act), enacted in March 2020; the Coronavirus Response and Relief Supplemental 

Appropriations Act, 2021 (CRRSA), enacted in December 2020; and the American Rescue 

Plan Act (ARP), enacted in March 2021. With respect to elementary and secondary 

education, these laws established new emergency relief programs that included the 

Elementary and Secondary School Emergency Relief (ESSER) program, the Governor’s 

Emergency Education Relief (GEER) program, and the Emergency Assistance to 

Nonpublic Schools (EANS) program.5

FY 2024 Assessment: Level 5—Demonstrated Progress

We found that the Department developed a 

comprehensive plan and implemented activities 

that achieved several positive outcomes. The 

Office of Elementary and Secondary Education 

(OESE) took significant actions to improve 

technical assistance, monitoring, and data 

quality that were responsive to this challenge. 

While progress has been demonstrated, the Department needs to continue its 

implementation efforts given the large amount of funding for these programs, the number 

of entities receiving funds, and the ongoing need to administer other programs in its 

elementary and secondary education grants portfolio.

Why This Is a Challenge 

The implementation of the pandemic relief laws for elementary and secondary education 

poses challenges for the Department as it must effectively oversee and monitor new grant 

programs and ensure that quality data are reported. In addition to its pandemic reliefrelated oversight responsibilities, the Department must also oversee more than 100 other 

grant programs.

Oversight and Monitoring

The pandemic relief laws provided funding for state and local agencies, nonpublic schools, 

and other education-related entities to prevent, prepare for, and respond to the impact 

of the coronavirus on our nation’s students. This included $190 billion for ESSER, $5.5 

billion for EANS, and $4.3 billion for GEER. Collectively, these programs were intended 

to support a wide range of activities that included purchasing and using technology for 

online learning, implementing summer learning and supplemental after-school programs, 

providing childcare and early childhood education, and protecting education-related jobs.

The pandemic relief programs continue to involve large outlays of Federal funds. For FY 

2022, the Department reported pandemic-related grant expenses of $78.3 billion, an 

amount several times more than its largest traditional grant programs. The Department, 

5 Our FY 2023 Management Challenges report identified “Implementing Pandemic Relief Laws” as a challenge for the 

Department. In developing our FY 2024 report, we separated this challenge into two distinct areas; this challenge 

relating to elementary and secondary education and a second challenge relating to higher education (see Management 

Challenge 2).
FY 2023 AGENCY FINANCIAL REPORT 161 U.S. DEPARTMENT OF EDUCATION

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its grant recipients and subrecipients, and other program participants must design and 

implement effective controls that collectively help ensure that pandemic relief program 

funds are used as intended and that the envisioned benefits are achieved. 

Data Quality

The pandemic relief laws included reporting provisions that were intended to provide 

transparency regarding the use of funds. The Department considered certain quarterly 

reporting requirements to be met through monthly reporting made under the 

Federal Funding Accountability and Transparency Act of 2006. The Department also 

developed and implemented data collection tools to facilitate annual reporting by 

grantees. Administering the programs funded by the pandemic relief laws requires the 

Department to collect, analyze, and report on data for many purposes, such as evaluating 

programmatic performance, assessing fiscal compliance, and informing management 

decisions. For this reason, the Department, its grant recipients and subrecipients, and 

other program participants must have effective systems, processes, and procedures in place 

to ensure that the reported data are accurate and complete. 

Recent Work Performed by the Office of Inspector General

Audit, Inspection, and Quick Response Activities

With respect to the Department’s implementation of pandemic relief laws for elementary 

and secondary education, the Office of Inspector General (OIG) has issued reports 

relating to ESSER, GEER, data quality and reporting, and Department operations. A 

summary of major audit, inspection, and quick response6

 activity within each area is 

shown in Table 5.

Table 5. OIG’s Recent Reports Relating to Implementing Pandemic Relief Laws for Elementary and Secondary Education

Area Summary of Major Audit, Inspection, and Quick Response Activity

ESSER We found that a grantee did not have an adequate review and approval process to ensure that subrecipients’ mandatory ESSER plans 

met all applicable requirements. We also found that the grantee could strengthen its monitoring of subrecipients to provide additional 

assurance that ESSER funds are used for allowable purposes and followed applicable regulations.

We also performed a nationwide survey of LEAs about their experiences in using ESSER funds to purchase educational technology. We 

found that LEAs generally reported using ESSER funds to purchase hardware, software, connectivity, or related products or services to 

continue instruction remotely during the coronavirus. Our report further identified challenges and benefits of ESSER-funded technology 

that were identified by LEAs.

GEER We identified concerns with multiple grantees’ subaward processes, multiple grantees’ subgrantee monitoring processes, a grantee’s 

use of funds for expenses that did not appear to be education related, and a grantee’s compliance with Federal cash management terms 

and conditions. 

Department 

Operations

We found the Department had allocated nearly 100 percent of its pandemic assistance program administration funds and that it was 

on track to obligate all its program administration funds prior to the dates the funds are set to expire. We also determined that the 

Department provided its initial spend plan within the specified timeframe to Congress, but it did not provide updates every 60 days 

as required.

6 Quick response activities are narrow in focus and generally used in areas that include communicating urgent risks, 

sharing significant information, communicating interim assessments, and summarizing lessons learned. 
FY 2023 AGENCY FINANCIAL REPORT 162 U.S. DEPARTMENT OF EDUCATION

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Investigation Activity

The OIG’s recent investigative activity within this area is shown in Table 6.

Table 6. OIG’s Recent Investigative Activity Relating to Pandemic Relief Funding for Elementary and Secondary Education

Area Related Investigative Activity

Program Participants Pursuant to an OIG investigation, a school district voluntarily returned ESSER funds that were used in a non-bid contract. 

Ongoing and Planned Work

Our ongoing work in this area includes reviews of a state educational agency’s (SEA) 

oversight and use of ESSER funds and reviews of two SEAs’ oversight of EANS funds. 

Our planned projects within this area for FY 2024 include additional reviews of SEAs’ 

oversight and local educational agencies’ (LEA) use of ESSER funds and SEAs’ oversight 

of EANS funds.

Progress in Meeting the Challenge 

We assessed the Department’s actions in response to this challenge at Level 5, or 

“Demonstrated Progress.” OESE developed a comprehensive plan and implemented 

activities that produced several positive outcomes. Plans to address this Management 

Challenge included activities to provide effective technical assistance, advance grantee 

monitoring, improve data quality, and enhance its operational ability to support grantees. 

Its implementation of related action items resulted in demonstrated progress towards 

addressing this management challenge. 

Technical Assistance

OESE’s plans for technical assistance included issuing guidance and providing interactive 

opportunities to exchange information. OESE’s related results included issuing multiple 

forms of guidance to assist recipients in their implementation of the ESSER, GEER, and 

EANS programs. This included publishing Dear Colleague Letters, Frequently Asked 

Questions, and announcements in areas such as reporting resources and expectations and 

maintenance of equity requirements. The Department also published information on 

promising practices for SEAs and LEAs to use in addressing the impact of the pandemic 

on their students. 

OESE, in partnership with the Office of Acquisition, Grants, and Risk Management’s 

Grants Management Policy Division, held a Federal Funding and Transparency Act

(FFATA) webinar that covered required reporting. In addition, OESE held a Grantee 

Learning Series, consisting of five webinars for recipients and subrecipients of its 

pandemic relief programs that covered topics such as technical assistance, grant 

administration, monitoring, performance reporting, Maintenance of Effort and 

Maintenance of Equity. According to information provided by the Department, a total 

of 470 participants attended the live webinars. The Department further noted that the 

sessions were recorded and made available on its website for asynchronous viewing. 

OESE reported that it created state mailboxes to help ensure the delivery of timely 

technical assistance and held monthly calls to address questions from grantees and provide 

additional assistance. The Department noted that the monthly ‘check in’ calls are intended 

to take place with individual grantees and be facilitated through a common agenda. We 

reviewed a sample agenda and found it included standard questions that covered areas 

such as subaward processes, monitoring activities (to include a section for monitoring 
FY 2023 AGENCY FINANCIAL REPORT 163 U.S. DEPARTMENT OF EDUCATION

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and anticipated document review processes), and whether the grantee required technical 

assistance in areas such as allowable uses of funds and reporting requirements.

The Department stated that its Grants Management Policy Division established a 

computer-based grants administration training for grantees that included a course 

dedicated to FFATA reporting requirements in support of pandemic relief programs. 

The Department further stated that this training was a vital component to support its 

technical assistance efforts.

Monitoring

OESE’s monitoring plans included the use of targeted, comprehensive, and consolidated 

monitoring.7

 OESE’s related efforts included performing focused biannual reviews of 

grantees as a form of targeted monitoring, conducting additional formal monitoring, 

publishing resources for grantees, and communicating regularly with grantees on relevant 

subject matter.

OESE stated that biannual reviews are intended to be less intensive for both the program 

office and the grantee than OESE’s formal monitoring activities. It added that the 

subject matter for biannual reviews is based on emerging issues and where a review of 

compliance is critical to assess what support, if any, a grantee may need to be successful. 

OESE stated that is currently conducting targeted reviews of ESSER grantees that are 

focused on subrecipient oversight and each grantee’s use of data, and other information, 

to continuously improve it and its subrecipients’ uses of ESSER funds spent to address 

learning loss.

OESE issues determination letters, rather than reports, at the conclusion of its biannual 

reviews that identify any areas of required corrective action. According to OESE, its FY 

2023 biannual reviews focused on the awarding of GEER funds and grantee monitoring 

of subrecipients and required seven states to complete corrective actions. We reviewed 

one of the determination letters issued in FY 2023 and found OESE required the grantee 

to provide the Department with a description of the processes used to award funds and 

review requests for funds for allowability, along with a subrecipient monitoring plan

OESE stated that grantees are identified for formal monitoring through a risk assessment 

process involving a review of fiscal data, drawdown patterns, timeliness and quality 

of performance reporting, and audit information. As of September 30, 2023, OESE’s 

formal monitoring resulted in reports to 16 States that included coverage of one or more 

pandemic relief programs. Ten of these reports included findings related to pandemic 

relief programs that required corrective action. We reviewed these reports and noted that 

the findings included areas related to grantees’ processes to identify internal risk, processes 

to evaluate internal controls, development of subrecipient monitoring plans, fiscal 

management policies, and cash management. OESE stated that it will conduct formal 

monitoring reviews of 11 additional locations in 2024. 

As part of its overall monitoring plan, OESE also published tools that included grantee 

and subrecipient self-assessment protocols for the ESSER and GEER programs and a 

grantee self-assessment for the EANS program. Additionally, as a part of its monitoring 

plan for FY 2023, OESE implemented standardized monthly calls with grantees that 

7 Targeted monitoring focuses on specific areas of compliance with Federal requirements, such as maintenance of effort. 

Comprehensive monitoring consists of a full programmatic and fiscal review focused on the grantee’s implementation 

of the pandemic relief programs. Consolidated monitoring is a cross-program review of the grantee’s implementation of 

its K–12 formula grants for both pandemic relief funding and Elementary and Secondary Education Act of 1965 formula 

grant programs administered by OESE.
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covered programmatic and fiscal topics. OESE stated that these engagements were 

important opportunities to provide technical assistance to grantees, as well as identify 

issues related to program compliance that may result in determining that a grantee 

requires more formal, intensive monitoring.

Data Quality

OESE and its partners in other Department offices, most notably the Office of the 

Chief Data Officer within the Office of Planning, Evaluation and Policy Development, 

developed plans to improve data quality that included targeted efforts to identify data 

abnormalities, provide support to grantees, and work collaboratively with other Federal 

stakeholders. OESE’s results included specific focus on addressing data quality issues for 

information reported to USAspending.gov and addressing grantee access issues to the 

FFATA reporting system, where data are input or uploaded. 

OESE stated that it dedicated staff resources to identify data issues and work with grantees 

to correct and address access issues. It further stated that it has also worked with Office 

of Management and Budget (OMB), the Executive Office of the President, and the 

General Services Administration (GSA) to enhance support of the FFATA site, which 

GSA manages. 

We noted that OESE started outreach to grantees regarding FFATA in 2020, when 

it published information on CARES Act quarterly reporting requirements. OESE 

has continued to provide information and assistance since that time. This included 

communicating on reporting requirements; conducting multiple webinars on FFATA 

reporting; and providing resources in conjunction with the Office of the Chief Data 

Officer that include videos, instructions, and fact sheets to assist grantees in ESSER, 

GEER, and EANS reporting. OESE stated that it also provides one-on-one technical 

assistance to grantees when needed to resolve identified issues. We reviewed OESE’s 

communications with one state regarding reporting training opportunities and data 

quality issues identified in its ESSER, GEER, and EANS reporting. These issues included 

subrecipients being included twice, negative value subawards, blank subaward amounts, 

and subaward dates occurring before the grant award date.

The Department also stated that it has reduced the number of states reporting 

overallocations as well as “0” allocations and is working to address inaccurate FFATA 

reporting findings in 18 states. 

Operational Ability to Support Grantees

The Department’s Grants Management Policy Division regularly communicates on subject 

areas and training opportunities that can help build the Department’s internal capacity to 

oversee grants. This includes, but is not limited to, the following.

• “Table Talk” sessions that are designed to allow grants professionals to share experiences 

and address questions in areas such as grants administration, effective communication 

and monitoring efforts, and technical assistance.

• “Monitoring Moments” courses that are intended to provide Department staff with 

greater insight into the strategies and tools that can support grantees in achieving their 

goals and objectives.
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• Other targeted subject matter such as single audits and assessing grantee risk, budget 

reviews, and costs analyses.

The Grants Management Policy Division also communicated on updates to policy, 

templates, and tools that could be used in grantee oversight, such as its Large Available 

Balances report. 

In addition to the above, the Office of Acquisition, Grants, and Risk Management’s Risk 

Management Services Division conducts “Grant Risk Management Meetings” that are 

structured to provide information on risk concentrations and other issues based on a 

review of financial risk indicators and other relevant information.

In our work relating to the Department’s use of pandemic assistance program 

administration funds, we noted that OESE had used a portion of these funds for 23 

additional full-time equivalent personnel to help perform oversight activities. These 

personnel worked on items related to GEER, ESSER, and other pandemic recoveryrelated OESE grants. At the time of our review, OESE planned to use additional funds for 

19 more full-time equivalents in subsequent years.

What the Department Needs to Do 

As noted above, the Department has demonstrated progress toward addressing this 

challenge, and should continue its efforts and tracking its outcomes. 
FY 2023 AGENCY FINANCIAL REPORT 166 U.S. DEPARTMENT OF EDUCATION

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Management Challenge 2—Implementing Pandemic Relief Laws 

for Higher Education

With respect to higher education, the pandemic relief laws established and provided more 

than $76 billion for a new emergency relief program, the Higher Education Emergency 

Relief (HEER) program, and included multiple provisions intended to provide 

postsecondary students and borrowers with emergency relief. 

FY 2024 Assessment: Level 3—Established Progress

Our assessment within this challenge area 

considered the Department’s plans to 

implement the HEER program and provisions 

intended to provide relief to students and 

borrowers. We found that the Department 

developed plans and implemented activities that 

demonstrated some results. The Department 

needs to continue its efforts given the amount of funding provided for the HEER 

program, significance of the student financial assistance program requirements, and the 

overall value of the Federal student loan portfolio.

Why This Is a Challenge 

Implementation of the pandemic relief laws for higher education poses challenges for the 

Department as it must effectively oversee and monitor the HEER program, implement 

additional student financial assistance program requirements, and ensure that quality data 

are reported. In addition to these responsibilities, the Department must oversee existing 

higher education grant programs, Federal student loan programs, and the Federal student 

loan portfolio that now surpasses $1.6 trillion. 

HEER Program and Funding 

HEER funds were awarded to institutions of higher education (IHE) to respond to the 

coronavirus and prepare for future pandemic emergencies. HEER funds can be used to 

assist students with expenses related to the disruption of campus operations due to the 

pandemic, such as tuition, food, housing, healthcare, childcare, technology, and course 

materials; and to help IHEs, including Historically Black Colleges and Universities 

and Minority Serving Institutions, cover costs associated with significant changes to 

the delivery of instruction due to the pandemic, reimburse themselves for lost revenue 

resulting from the pandemic, and defray other expenses, such as those for faculty and staff 

trainings, payroll, campus safety measures and protocols, and student support activities. 

The pandemic relief laws provided more than $76 billion for the HEER program.

The HEER program must be effectively implemented and monitored by the Department 

to ensure that the legislation is followed, and that postsecondary institutions and students 

receive support in response to the pandemic. 

Student Financial Assistance Program Requirements and Flexibilities

The CARES Act included student financial assistance provisions intended to provide 

emergency relief to borrowers and to allow institutions to meet student needs more easily. 

These provisions included borrower and teacher assistance provisions, waivers of student 

financial assistance refunds and loan cancellations, and adjustments to lifetime Federal Pell 

Grant (Pell) usage. The actions taken by the Department included pausing eligible Federal 

student loan payments and setting the interest rate on those loans at 0 percent, effective 
FY 2023 AGENCY FINANCIAL REPORT 167 U.S. DEPARTMENT OF EDUCATION

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March 13, 2020. The initial pause in student loan repayments was extended through 

multiple executive actions and ended with the passage of the Fiscal Responsibility Act of 

2023, with payments restarting in October 2023.

The Department had to provide guidance to and rely on postsecondary institutions, 

contracted servicers, collection agencies, guaranty agencies, and accrediting agencies to 

effectively implement student financial assistance program requirements and flexibilities. 

While the pandemic relief laws provided more than $161 million to the Department 

for student aid administration, the Department may be challenged to provide adequate 

oversight of existing programs while it resumes collections on Federal student loans and 

implements additional plans to provide debt relief to eligible borrowers. 

Data Quality 

The pandemic relief laws included HEER reporting provisions that were intended to 

provide transparency regarding the use of funds to alleviate the impact of the pandemic. 

The Department established additional reporting requirements that included providing 

information on awards made to students and submitting annual performance reports. 

Administering higher education-related pandemic relief programs, requirements, and 

flexibilities requires the Department to collect, analyze, and report on data for many 

purposes, such as providing insight into HEER expenditures; ensuring compliance; 

evaluating performance; and informing management decisions. For this reason, the 

Department and its grant recipients must have effective systems, processes, and procedures 

in place to ensure that the reported data are accurate and complete. 

Recent Work Performed by the OIG

Audit, Inspection, and Quick Response Activities

With respect to the Department’s implementation of pandemic relief laws for higher 

education, the OIG has issued reports relating to HEER, implementation of student 

financial assistance program requirements and flexibilities, data quality and reporting, and 

Federal Student Aid (FSA) operations. A summary of major audit, inspection, and quick 

response activity within each area is shown in Table 7. 
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Table 7. OIG’s Recent Reports Relating to Pandemic Relief Laws for Higher Education

Area Summary of Major Audit, Inspection, and Quick Response Activity

HEER Our work relating to the Department’s implementation and oversight of the HEER program identified $73 million in duplicate 

HEER grant awards and shared observations on closed schools that received or had access to HEER funds. We also 

found that OPE did not perform or document several activities essential to effective program oversight and did not establish 

performance goals or metrics that would provide a basis to monitor individual grantee performance or report on outcomes at 

the program level.

Our work on three postsecondary schools’ use of HEER funds found that all three schools generally used the Student Aid 

portion of their HEER funds for allowable and intended purposes, but two schools did not always use the Institutional portion 

of their funds in accordance with Federal requirements. We identified other compliance issues relating to documentation 

of eligibility requirements (one school), cash management (three schools), and competitive procurement requirements 

(one school).

Flexibilities We found that FSA had adequate processes for waiving the return to Title IV (R2T4) requirements, cancelling borrowers’ 

obligation to repay William D. Ford Federal Direct Loans (Direct Loan), and excluding Pell disbursements from Pell lifetime 

usage for impacted students. We also found that FSA also designed adequate processes for schools to report the number 

and amounts of R2T4 waivers applied. 

We identified weaknesses in FSA’s implementation of CARES Act flexibilities relating to the Teacher Education Assistance for 

College and Higher Education (TEACH) Grant that may have resulted in inappropriate denials of flexibilities to some eligible 

recipients and may have provided benefits to recipients who were not entitled to them. 

Student Financial 

Assistance Program 

Requirements

We found that FSA implemented processes that generally achieved positive results in suspending and refunding most 

involuntary collections on defaulted Department-held loans. However, it did not reprocess all refunds returned to Treasury, 

did not refund all wage garnishments and Treasury offsets collected, or develop procedures to obtain and track the U.S. 

Department of Justice’s progress on suspending and refunding involuntarily collections on defaulted Department-held loans.

Data Quality and 

Reporting

Our work on three postsecondary schools’ use of HEER funds found that one school’s reporting was not always accurate and 

publicly available. The school reported $4.1 million of scholarships awarded to students in the wrong expenditure category 

and did not post all required HEER program quarterly reports on its public website.

In work relating to HEER reporting requirements, we found that 81 of the 100 recipients included in our nonstatistical sample 

complied with HEER Institutional portion reporting requirements. However, we were unable to locate Institutional portion 

reports on the websites of the 19 other recipients. 

Department Operations We found that FSA obligated nearly 100 percent of the $161.1 million in appropriations it received for pandemic assistance 

student aid administration funds from the three major coronavirus response and relief laws. The pandemic assistance student 

aid administration funds were used for personnel compensation and benefits, information technology systems and services 

contracts, and contractual services contracts.

Investigation Activity

The OIG’s recent investigative activity within this area is shown in Table 8.

Table 8. OIG’s Recent Investigative Activity Relating to Pandemic Relief Funding for Higher Education 

Area Related Investigative Activity

Institutions OIG Investigations identified institutions that drew down funds when not entitled to them, when knowingly closing, or with 

no intent to provide them to students. OIG made a referral to OPE describing observations and suggestions to improve 

OPE’s use of Department policies, procedures, and governance in pursuing administrative recoveries associated with the 

HEER program. 

OIG Investigations made an additional referral regarding an institution that used pandemic funds to pay off a pre-existing 

school loan.

Ongoing and Planned Work

Our ongoing work in this area includes reviews of FSA’s processes to transition Federal 

student loan borrowers back into repayment and the Department’s HEER audit resolution 

activities. We have no additional planned work within this area.

Progress in Meeting the Challenge 

We assessed the Department’s actions in response to this challenge at Level 3, or 

“Established Progress.” Overall, the Department developed plans and implemented 

activities that demonstrated some results. As shown in Table 7 above, our audit and 
FY 2023 AGENCY FINANCIAL REPORT 169 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

inspection work relating to selected pandemic relief-related program requirements and 

flexibilities found that FSA’s processes were adequate or achieved positive results in some 

instances. The Department developed plans to address this Management Challenge that 

included improved oversight of HEER grantees, returning borrowers to repayment, and 

implementing other program flexibilities. 

OPE Is Enhancing its Oversight of HEER Grantees

OPE developed plans to address this challenge that included developing and 

implementing internal guidance to monitor HEER grant recipients, improving its system 

of controls to ensure better and more effective oversight, and communicating HEER 

program auditing requirements to grantees. OPE has implemented some related activities 

but did not provide information that clearly identified outcomes of these activities. 

With respect to internal guidance and internal controls, OPE finalized its HEER 

monitoring plan in March 2023. We reviewed the plan and found that it included some 

positive aspects, such as the use of a structured rubric to determine the level of potential 

risk each grant recipient could face. Risk factors considered included placement on a 

Heightened Cash Monitoring payment method; the presence of HEER program findings 

in Single Audit reports, financial audit findings, or failure to implement corrective 

actions; problems with award balances, drawdowns, or unallowable expenditures; and 

late reporting or failure to submit required reports. The monitoring plan emphasizes 

using the risk assessment to inform the type and frequency of monitoring reviews and 

support provided to a grantee to help ensure successful performance. It included some 

specific tools and techniques that could be utilized based on the type of monitoring to 

be performed such as desk reviews or on-site/virtual reviews. It references additional 

guidance, OPE’s Monitoring Plan for On-Site/Virtual Review Protocol, as the 

standard operating procedures for planning and conducting a review and preparing a 

written report. 

OPE reported that it planned to conduct enhanced monitoring of HEER grantees, 

focusing on ensuring the appropriate use of funds. OPE also reported that targeted 

monitoring is an ongoing activity and that they are beginning the grant closeout process 

for grantees found to be in compliance. 

OPE has issued multiple memoranda to grantees outlining audit requirements for public, 

private, nonprofit, and proprietary institutions. The communications stressed that audits 

are a critical component of oversight and include information on what must be audited, 

due dates, and submission processes. 

The Department added that it implemented multiple strategies to provide support and 

help ensure the quality of data collected. According to the Department, this included 

providing technical assistance, using risk-based monitoring approaches, coordinating 

with the OIG, establishing processes for regular communication with grantees, and 

implementing structured data collection processes. 

FSA’s Plans for the Return to Repayment Initiative and Other Program Flexibilities 

FSA stated that it developed return to repayment plans that included multiple activities. 

FSA specifically anticipated (1) performing borrower outreach and communications; (2) 

coordinating with contractors to hire, onboard, and train staff to perform loan servicing 

activities; (3) developing and implementing policy enhancements; (4) increasing data 

analysis and reporting; and (5) heightening oversight and monitoring of vendors. These 

activities are being implemented in FY 2024 and require unprecedented effort by FSA. 
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Other Information (Unaudited)

During discussions related to this initiative, FSA stated that the return to repayment 

effort presented a significant challenge. It further stated that potential obstacles included 

financial and human resources, competing priorities, and borrower apathy. 

FSA also stated that as it implements return to repayment it will monitor trends in 

borrower behavior and responsiveness, begin assessing borrower repayment statuses, and 

direct interventions accordingly. FSA further said it will monitor and oversee servicers to 

ensure all borrower accounts are accurate, including loan types, interest rates, payment 

counts, repayment plans, and outstanding balances. 

The Department added that it took steps to implement pandemic relief requirements 

related to the student financial assistance programs. This included suspending payments 

and interest accrual on Federal student loans, stopping wage garnishments for borrowers 

in default, and ensuring that flexibilities were applied to eligible TEACH Grant recipients. 

What the Department Needs to Do 

The Department has developed and begun to implement a plan to improve oversight of 

the HEER program. For this year, the Department should follow through on its plan 

and track the outcomes of its efforts. FSA will begin its efforts to return borrowers to 

repayment during FY 2024. Both the OIG and the GAO plan to evaluate aspects of FSA’s 

implementation of its return to repayment initiative. 
FY 2023 AGENCY FINANCIAL REPORT 171 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Management Challenge 3—Oversight and Monitoring of Student 

Financial Assistance Programs

Within the Department, FSA administers the Federal student assistance programs 

and OPE develops Federal postsecondary education policy and regulations for the 

Federal student assistance programs. OPE also administers the review process for 

accrediting agencies to ensure that the Department recognizes only agencies that are 

reliable authorities for evaluating the quality of education and training postsecondary 

institutions offer.

FSA directly manages or oversees a loan portfolio of more than $1.6 trillion, representing 

about 219.4 million student loans to more than 45 million borrowers. FSA oversees 

the disbursement of more than $27 billion in grants to more than 6 million recipients.8

FSA also oversees approximately 5,500 postsecondary institutions that participate in 

the Federal student aid programs. In FY 2022, FSA performed these functions with 

an administrative budget of about $1.9 billion and about 1,350 employees, along with 

contractors that provide outsourced business operations. From FY 2018 to FY 2022, FSA 

delivered an average of $116.7 billion in Federal student aid to an average of 10.8 million 

students. In comparing volumes from FY 2018 to 2022, the total amount of Federal 

student aid delivered declined by about 5 percent and the total number of students 

receiving aid declined by about 18 percent.9

FY 2024 Assessment: Level 3—Established Progress

The Department identified actions in response 

to this challenge for FY 2024 that focused on 

the implementation of the Unified Servicing 

and Data Solution (USDS) as a method to 

improve its oversight and monitoring of loan 

servicers. As of October 2023, USDS contracts 

had been awarded and implementation work 

was ongoing, but transitions from legacy servicers have not taken place. The Department 

described additional activities that were intended to improve oversight and monitoring 

activities relating to the student financial assistance programs in its response to our prior 

management challenge report, its FY 2022 Annual Report and its Strategic Plan, Fiscal Year 

2023–2027. Collectively these activities identified a comprehensive framework with the 

potential to mitigate this challenge. The Department provided information that identified 

outcomes relating to the activities of its Office of Enforcement but did not provide 

information on the outcomes of other activities. 

Why This Is a Challenge

The Department must provide effective oversight and monitoring of the student financial 

assistance programs to ensure that the programs are not subject to fraud, waste, and abuse. 

The Department’s responsibilities include coordinating and monitoring the activity of 

many federal, state, nonprofit, and private entities involved in Federal student aid delivery, 

within a statutory framework established by Congress and a regulatory framework 

established by the Department. These entities include postsecondary institutions, 

contracted servicers, accrediting agencies, guaranty agencies, and lenders. 

8 Information relating to the amount of the loan portfolio, number of loans and borrowers, amount of grants, and number 

of recipients are from the Federal Student Aid Annual Report FY 2022.

9 Our FY 2023 Management Challenges report identified “Oversight and Monitoring” as a challenge for the Department. 

In developing our FY 2024 report, we separated this challenge into two distinct areas—this challenge relating to 

student financial assistance programs and a second relating to grants (see Management Challenge 4).
FY 2023 AGENCY FINANCIAL REPORT 172 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Recent Work Performed by the OIG

Audit and Inspection Activities

With respect to oversight and monitoring of student financial assistance programs, the 

OIG has recently issued reports relating to areas including 90/10 revenue requirements, 

the experimental sites initiative, the Next Gen Loan Servicing Environment, and school’s 

use of professional judgement. A summary of major audit and inspection activity within 

each area is shown in Table 9. 

Table 9. OIG’s Recent Reports Relating to the Oversight and Monitoring of Student Financial Assistance Programs

Activities Reviewed Summary of Major Audit and Inspection Activity

90/10

We found that FSA had several processes for overseeing proprietary institutions’ compliance with 90/10 revenue 

requirements. However, found the Department’s reports to Congress were not always timely and complete and the 

Department did not always publish 90/10 revenue information as required to best reach the public. 

Accreditation

We determined that the Department did not comply with all regulatory requirements during a review of an accrediting 

agency’s petition for recognition renewal. We also determined that the Department implemented a process to assess 

the accrediting agency’s compliance with recognition criteria following a court remand that was permitted under 

applicable policies and regulations. We did not identify any evidence that contradicted the Department’s conclusions but 

found that its guidelines allowed for areas of reviewer subjectivity.

Experimental Sites 

Initiative We found that the Department is not complying with reporting requirements and had not published a comprehensive 

Experimental Sites Initiative report since the 2010–2011 award year report.

Next Generation Loan 

Servicing Environment We found that although FSA had processes in place for planning and managing the transition to the Next Gen loan 

servicing environment, FSA did not perform key steps within those processes or follow best practices for acquisition 

planning that could have better ensured the proper planning and managing of the transition.

Private Collection 

Agencies We found that the decision to terminate the Private Collection Agency contracts was part of an ongoing, multiyear 

Departmental strategy to overhaul student loan servicing and default collections. FSA made the decision for Business 

Process Operations vendors to handle future default collections primarily due to efficiencies and cost savings 

identified through market research, as well as the belief that doing so would improve customer service and the 

customer experience.

Professional Judgment We performed a series of audits at three schools. Overall, we found two schools did not always apply professional 

judgement in accordance with the Higher Education Act of 1965 and all three schools did not always adequately 

document the application of professional judgment.

Sales of Postsecondary 

Schools We found that the Department did not take actions sufficient to mitigate significant financial responsibility and 

administrative capability risks posed by a nonprofit company and the 13 for-profit postsecondary schools that it 

purchased. We also found that the Department did not follow several of its procedures relating to subsequent activities 

involving those schools. 
FY 2023 AGENCY FINANCIAL REPORT 173 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Investigations of Student Financial Assistance Program Participants

The OIG’s investigative recent work continues to identify fraud, waste, and abuse of 

student financial assistance program funds. This includes each of the areas in Table 10.

Table 10. OIG’s Recent Investigative Activity Relating to the Student Financial Assistance Programs

Area Related Investigative Activity

Institutions OIG investigated an owner who purchased a school to obtain Title IV aid for another school he owned that was denied Title 

IV eligibility.

School Officials OIG Investigations identified improper activities of school officials that included falsifying their eligibility to obtain Federal 

student aid for personal gain.

Program Participants OIG Investigations identified schemes where students underreported income and assets to obtain Federal student aid that 

they were not eligible to receive. 

A woman submitted fraudulent school enrollment documents and FAFSAs on behalf of her deceased husband to receive 

aid in his name.

Distance Education 

Fraud Rings

Distance education fraud rings are large, loosely affiliated groups of criminals who seek to exploit vulnerabilities in distance 

education programs. The OIG has investigated numerous instances where these groups use the identities of others (with 

or without their consent) to fraudulently obtain Federal student aid. In two separate investigations, subjects targeted 

underserved native students or homeless populations.

Collaboration with FSA OIG and FSA established a Memorandum of Understanding to collaborate where appropriate on Title IV violations and 

institutional fraud, waste, and abuse. 

Ongoing and Planned Work

Our ongoing work in this area includes three schools’ compliance with career pathways 

and ability to benefit provisions, FSA’s oversight of contractor’s acceptability review 

process for proprietary school annual audits, FSA’s transition plans for Business Process 

Operations vendors, and FSA’s Student Aid and Borrower Eligibility Reform initiative.

Additional planned projects for FY 2024 include FSA’s oversight of Section 117 foreign 

gift and contract reporting requirements, the Department’s assessment and recoupment 

of liabilities from closed colleges, and the implementation of FSA’s Unified Servicing and 

Data Solution.

Progress in Meeting the Challenge

We assessed the Department’s actions in response to this challenge at Level 3, or 

“Established Progress.” Overall, the Department communicated plans to address this 

Management Challenge that focused on USDS implementation and an oversight and 

monitoring framework that included activities such as improving contact center and loan 

servicing operations, using available monitoring tools, utilizing enforcement capabilities, 

and expanding operational capacity. Collectively these activities have the potential to 

mitigate this challenge. However, the Department did not provide significant information 

that clearly identified outcomes of these initiatives.

USDS Implementation

FSA stated that it plans to improve its oversight and monitoring of loan servicers by 

implementing USDS. FSA described USDS as a long-term strategy to replace legacy 

servicing contracts for Direct Loans and Department-held Federal Family Education Loan 

Program loans. FSA stated that USDS will enable FSA to transition from the current loan 

servicing contracts into a more stable servicing environment that ensures borrowers can 

continue to manage repayment. 
FY 2023 AGENCY FINANCIAL REPORT 174 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

FSA stated that USDS shares the goals of prior loan servicing efforts, including providing 

all federally managed borrowers with complete account management capabilities 

on StudentAid.gov, reducing the disruption of account transfers, and increasing 

accountability for servicers via clear and measurable service-level agreements.

According to FSA, the implementation of USDS will improve customer experiences, 

provide better borrower outcomes, improve cybersecurity, hold servicers to a high level of 

performance, and enable the Department to focus on impactful objectives like reducing 

delinquency and default.

FSA stated the scope of transition requires a strategic, phased approach that greatly 

enhances the likelihood of successful implementation while mitigating the risks of failure. 

FSA further stated that the USDS contract was awarded on April 24, 2023, and it plans to 

begin transitioning from legacy loan servicers to USDS in the spring of 2024. 

Monitoring and Oversight Framework 

FSA described additional activities intended to strengthen its monitoring and oversight 

capabilities in its response to our prior management challenge report, its FY 2022 Annual 

Report, and its Strategic Plan, Fiscal Year 2023–2027. Collectively these activities identified 

a comprehensive framework with the potential to mitigate this challenge. FSA’s goals 

under this framework included improving customer service and outcomes for students 

and borrowers, strengthening engagement and accountability for educational and financial 

institutions, increasing workforce and workplace capabilities, and boosting operational 

efficiencies. A summary of selected focus areas follows.

Monitoring Tools 

FSA described monitoring activities that are performed with the intention of reducing 

program risk. This framework includes Comprehensive Compliance Reviews, Title IV 

compliance audits, Title IV program reviews, and analyses of the institutions’ financial 

capability. In July 2023, FSA published a report on the most frequently occurring findings 

resolved by FSA during FY 2022. The report summarized over 5,000 compliance audit 

deficiencies and over 700 program review deficiencies. FSA intended for the information 

to be used by IHEs to improve their awareness of compliance deficiencies so they can 

take proactive measures to self-assess and prevent similar compliance deficiencies from 

occurring. 

Outreach, Training, and Technical Assistance

FSA stated that it planned to use a data-centric approach to engage in effective outreach 

and technical assistance efforts with entities participating in the Title IV programs. This 

included identifying opportunities to provide targeted support and training though 

virtual and in-person technical assistance. FSA further stated that it provides training and 

technical assistance services through the FSA Training Center and state, regional, and 

national conferences. 

Enforcement Capabilities

FSA established an Office of Enforcement in October 2021 to strengthen its oversight of 

postsecondary schools participating in the Title IV programs. FSA stated that the Office 

of Enforcement is focused on schools that pose the most risk to students and taxpayers 

and reinforces other school oversight and compliance efforts through identifying and 

addressing serious wrongdoing. 
FY 2023 AGENCY FINANCIAL REPORT 175 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

FSA stated that it has grown the Office of Enforcement to about 90 total staff since its 

inception, including 23 new hires made during FY 2023. The team includes 19 staff 

members in its Investigations Group, which specifically evaluates indicators of potential 

misconduct or high-risk conduct by postsecondary institutions and third-party servicers, 

and investigates institutions’ compliance with federal laws, regulations, and terms of 

program participation. 

The Office of Enforcement’s efforts resulted in numerous outcomes during FY 2023, 

including the items listed below. 

• Reaching settlement agreements with five law schools after an investigation revealed 

that the schools improperly disbursed Title IV funds to students enrolled in 

unaccredited Master of Laws programs. Under the agreements, schools will stop 

disbursing Federal student aid funds to students in ineligible programs and reimburse 

the amount of improperly disbursed funds to the Department.

• Denying a school’s application to continue participation in the federal student aid 

programs following an investigation that identified violations of ability-to-benefit 

regulations, fiduciary standards of conduct, and standards of administrative capacity.

• Concluding that substantial misrepresentations were made by multiple schools that 

borrowers relied upon to their detriment. This resulted in the approval of about $239 

million in relief to about 10,900 borrowers.

• Reaching decisions on borrower defense applications subject to a settlement agreement 

entered in November 2022. As of August 2023, nearly 12,000 relief decisions were 

made and more than 2,000 revise and resubmit notices were issued.

• Instituting a secret shopper program as an additional tool to monitor schools’ Title 

IV compliance. FSA stated that secret shoppers will evaluate recruitment, enrollment, 

financial aid, and institutions’ other practices to help identify potentially deceptive or 

predatory practices used to recruit and enroll students.

• Creating a website and email address for knowledgeable sources to submit tips directly 

to the Enforcement Office about potential violations of the laws and regulations 

governing the Federal student aid programs. 

• Issuing at least five enforcement bulletins to help ensure a consistent understanding 

among participating institutions. The bulletins served to raised awareness of potential 

violations of the HEA, the Office of Enforcement’s role in reviewing allegations, 

and corrective measures that could be applied. The subject matter of the bulletins 

included allegations of misrepresentations by school personnel in the recruitment 

of military-connected students, the Office of Enforcement’s use of secret shoppers 

to evaluate school’s compliance with Title IV regulations, and how the attempted 

use of nondisclosure agreements to prevent school personnel from communicating 

with the Department on its administration of the Title IV programs violates 

cooperation requirements.

FSA stated that, from October 2022 until late August 2023, its Administrative Actions 

and Appeals Services Group completed 43 administrative actions. This included 18 fine 

actions, 7 recertification denials, 4 debarments, 3 suspension actions, and 2 program 

participation agreement revocations.

FSA also made substantial improvements to borrower defense loan discharge website 

in response to user feedback. The changes improved the overall layout and provided 
FY 2023 AGENCY FINANCIAL REPORT 176 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

critical information on the misconduct that qualifies for debt relief, what borrowers 

should include in their claims, and what happens after a borrower submits an application 

for relief.

Operational Capacity

FSA described goals relating to its workforce; data analytics and information management; 

and systems, structure, and operations. FSA also planned improve its hiring processes 

to better recruit needed talent, strategically align skills to organizational mission 

requirements, and analyze human capital systems and processes.

What the Department Needs to Do

As the Department implements USDS this year, it will be important that it ensures it 

realizes and can demonstrate improvement to customer service, borrower outcomes, 

cybersecurity, and servicer performance. It will also be important for the Department 

to continue its efforts to improve its monitoring, oversight, and technical assistance 

of participants in the Title IV programs and to track and report on the results of 

those efforts. 
FY 2023 AGENCY FINANCIAL REPORT 177 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Management Challenge 4—Oversight and Monitoring 

of Grantees

The Department is responsible for administering education programs that Congress 

authorized and the President signed into law. This responsibility includes awarding 

program funds to a wide range of eligible recipients, including LEAs, SEAs, IHEs, 

individuals, nonprofits, and other organizations and monitoring their progress in meeting 

program objectives. The Department also ensures that programs are administered fairly 

and that grants are executed in conformance with both authorizing statutes and laws 

prohibiting discrimination in federally funded activities, collects data and conducts 

research on education, and helps to focus attention on education issues of national 

importance. The funding for many grant programs flows through primary recipients, 

such as SEAs, to subrecipients, such as LEAs or other entities. The primary recipients 

must oversee and monitor the subrecipients’ activities to ensure compliance with 

Federal requirements.

FY 2024 Assessment: Level 3—Established Progress

For FY 2024 we assessed the Department’s 

actions in response to this challenge at Level 3, 

or “Established Progress.” Overall, the 

Department developed plans to address this 

Management Challenge that included 

improving its training and technical assistance, 

supporting equitable access, broadening 

consolidated monitoring efforts, and incorporating lessons learned into planning 

programmatic monitoring activities for FY 2024. Collectively these activities have the 

potential to mitigate this challenge. However, the Department did not provide significant 

information that clearly identified outcomes of these initiatives.

Why This Is a Challenge

The Department administers more than 100 grant programs that annually serve about 55 

million elementary and secondary students attending 98,000 public schools and 30,000 

private schools, as well as about 9 million postsecondary students attending 5,500 colleges 

and universities. Many of these programs also serve other types of students, extending 

from early learning through adult education. The Department awards discretionary grants 

using competitive processes and priorities, and formula grants using formulas established 

by Congress. In all cases, the Department’s activities are governed by the program 

authorizing legislation and implementing regulations. 

One of the key programs that the Department administers is Title I, Part A, which 

provides supplemental education funding, especially in communities of concentrated 

poverty, for local programs that provide educational opportunities and additional 

academic support to help students in schools with high rates of poverty meet challenging 

state academic standards. In FY 2023, this program provided about $18.3 billion to 

serve an estimated 25 million students in nearly 90 percent of school districts and nearly 

60 percent of all public schools. Another key program is Individuals with Disabilities 

Education Act, Part B Grants to states, which provided more than $14.2 billion in 

FY 2023 to help states and school districts meet the special educational needs of an 

estimated 7.5 million students with disabilities.

Effective monitoring and oversight are essential to ensure that grantees meet grant 

requirements and achieve program goals and objectives. Our recent audits related to 
FY 2023 AGENCY FINANCIAL REPORT 178 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

several grant programs identified weaknesses in grantee oversight and monitoring that 

included concerns with SEA and LEA controls and Department oversight processes.

Audit, Inspection and Quick Response Activities

Our recent reports related to the Department’s oversight and monitoring processes 

over several grant programs identified internal control weaknesses and opportunities 

for improvement. These weaknesses could limit the Department’s ability to ensure that 

grantees demonstrated progress towards meeting programmatic objectives and properly 

safeguarded and used Federal education funds. A summary of major audit, inspection, and 

quick response activity within each area is shown in Table 11. 

Table 11. OIG’s Recent Reports Relating to the Department’s Oversight and Monitoring of Federal Education 

Grant Programs

Activities Reviewed Summary of Major Audit, Inspection, and Quick Response Activity

Charter Schools We completed a series of work on charter school programs. We found that the Department designed processes to 

provide reasonable assurance that grantees reported reliable information and spent grant funds only on allowable 

activities and in accordance with program requirements, but the Charter School Program office did not always implement 

those processes as designed. We also found that the Department did not track and report on whether charter schools 

opened by grant recipients and expanded with Federal funds remained open after the grant performance period ended. 

Finally, we found that grant recipients did not always open or expand the number of charter schools committed to in their 

approved grant applications.

Disaster Recovery We found that the Department designed policies and procedures that should have provided reasonable assurance 

that it awarded and monitored disaster recovery program funds in accordance with applicable guidance. However, we 

found that the Department did not implement all processes and risk mitigation strategies as designed. As a result, the 

Department inappropriately awarded funds to some of the grantees whose applications we reviewed.

Every Student Succeeds Act We found that the Department has provided inadequate oversight of grantee performance and funds awarded under 

the Student Support and Academic Enrichment program. Specifically, we found that the Department has conducted only 

limited formal monitoring activities; has not ensured that SEAs are meeting all reporting requirements; and did not always 

develop, finalize, and implement monitoring plans to monitor grantees’ performance and use of funds. 

Our work on state plans required under the Every Student Succeeds Act found that the Department designed processes 

that would provide reasonable assurance of identifying and resolving potential instances of state plans’ noncompliance 

with applicable requirements and complying with Department policy. However, the Department did not always implement 

these processes as designed. 

Individuals with Disabilities 

Education Act

We found that the Office of Special Education Programs provided general guidance and technical assistance for 

SEAs, to assist them in implementing significant disproportionality regulatory requirements. It also performed ongoing 

monitoring of SEAs’ compliance with Individuals with Disabilities Education Act requirements and program results. 

However, it had not performed a risk assessment to determine if the change in the regulation affects the control activities 

that it has established for monitoring significant disproportionality, particularly regarding data reliability.

Our recent reports relating to grantee implementation of Federal education grant 

programs identified weaknesses that could impact the effectiveness of the entities reviewed 

and their ability to achieve intended programmatic results. This included work related to 

the programs and activities identified in Table 12. 
FY 2023 AGENCY FINANCIAL REPORT 179 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Table 12. OIG’s Recent Reports Relating to Grantee Implementation of Federal Education Grant Programs

Activities Reviewed Summary of Major Audit, Inspection, and Quick Response Activity

Charter Schools We issued two audit reports that found both nonprofit charter management organizations reviewed did not fully comply 

with Federal grant reporting requirements and did not charge only adequately documented and allowable expenditures to 

their grants. 

Disaster Recovery We issued 11 reports relating to disaster recovery funding authorized under the Bipartisan Budget Act of 2018. 

Our work at SEAs relating to internal controls over the Immediate Aid to Restart School Operations (Restart) program 

identified weaknesses in programmatic monitoring processes, processes to assess fraud risks, internal controls over 

procurement, and segregation of duties. Our work relating to SEAs relating to Restart allocations and uses of funds 

also identified instances of noncompliance that included charging unallowable personnel expenditures to the program. 

We also identified opportunities to improve recordkeeping and processes for ensuring that LEAs use program funds for 

allowable and intended purposes.

Our work at SEAs relating to the Temporary Emergency Impact Aid for Displaced Students (EIA) program found that all 

four SEAs reviewed did not ensure that the displaced student count data provided to the Department were accurate and 

complete or that LEAs accounted for EIA program funds received for students reported as children with disabilities in 

accordance with Federal requirements. We also found that three SEAs did not ensure that LEAs used EIA program funds 

to pay salaries only for employees who supported schools with displaced students. 

We issued a Flash Report on the risk of a SEA’s unallowable use of EIA program funds. We found that the SEA may have 

charged up to $1.3 million in payroll costs to the EIA program for employees who were not employed by the SEA during 

the accrual periods applicable to the payments.

We also found that a postsecondary school used approximately $1.8 million in Emergency Assistance to Institutions of 

Higher Education program funds for lost tuition revenue and to purchase certain equipment that was not allowable in 

accordance with Federal requirements. 

Individuals with Disabilities 

Education Act

We issued two audit reports relating to SEAs’ and selected LEAs’ development and implementation of individualized 

education programs (IEP) for children with disabilities who attend virtual charter schools. We found that both SEAs 

generally had sufficient internal controls to ensure that LEAs developed IEPs in accordance with federal and state 

requirements for children with disabilities who attend virtual charter schools and that these students were provided with 

the services described in their IEPs. However, we identified weaknesses at selected LEAs that included insufficient 

written procedures for IEP development and documenting the delivery of services, not ensuring that they maintained IEPs 

that included all the required information describing the services that students needed, and not maintaining sufficient 

documentation to support that all special education services that were outlined in IEPs were provided.

Investigations of Federal Education Grant Program Participants

The OIG’s recent investigative work continues to identify fraud relating to Federal 

education grant programs. This includes the areas identified in Table 13.

Table 13. OIG’s Recent Investigative Activity Relating to Federal Education Grant Programs

Area Related Investigative Activity

LEA Officials OIG investigated a former school district bookkeeper who misapplied school income to the benefit of herself 

and relatives. 

Grantees OIG Investigations identified a nonprofit executive who diverted funds intended for youth scholarships by using program 

credit and bank cards to make personal purchases for himself and relatives. 

Another OIG investigation identified a Chief Executive Officer of a nonprofit organization that provides educational and 

anti-poverty programs paid for unauthorized expenses and misapplied funds towards a relative’s tutoring expenses.

Charter School Officials An OIG investigation identified a charter school owner who personally enriched herself by making payments from a 

school account to an educational company she owned to fund personal purchases. 

Ongoing and Planned Work

Ongoing work in this area includes reviews of a SEA’s use of Restart program funds; 

selected SEAs’ implementation of their statewide accountability systems; selected SEAs’ 

oversight of Prevention and Intervention Programs for Children and Youth who are 

Neglected, Delinquent, or At-Risk; the Rehabilitation Services Administration’s oversight 

of the State Vocational Rehabilitation Services program; and the Department’s approval of 

alternate assessment waivers and extensions. 
FY 2023 AGENCY FINANCIAL REPORT 180 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Planned projects for FY 2024 include the Department’s oversight of the School-Based 

Mental Health Services program, the Department’s oversight of the Stronger Connections 

Grant program, the Department’s Risk Assessment and Monitoring of the Student Service 

Programs, and Department’s oversight of statewide accountability systems. 

Progress in Meeting the Challenge

We assessed the Department’s actions in response to this challenge at Level 3, or “Established 

Progress.” Overall, the Department developed plans to address this Management Challenge 

that included improving its training and technical assistance, supporting equitable access, 

broadening consolidated monitoring efforts, and incorporating lessons learned into planning 

programmatic monitoring activities for FY 2024. Collectively, these activities have the 

potential to mitigate this challenge. However, the Department did not provide significant 

information that clearly identified outcomes of these initiatives.

Training and Technical Assistance

As noted in Management Challenge 1, the Department’s Grants Management Policy 

Division regularly communicates on subject areas and training opportunities that can 

help build the Department’s internal capacity to oversee grants. This included “Table 

Talk” sessions, “Monitoring Moments” courses, “Grant Risk Management Meetings,” 

and other targeted training subject matter. In its response to this challenge for FY 2023, 

the Department stressed plans to provide data driven training and technical assistance for 

Department staff and grantees. The Department stated that its overall expectations were 

to continue to build capacity and knowledge sharing on monitoring within the grants 

administration community internally and externally. 

Supporting Equitable Access 

The Department noted that it updated the General Education Provisions Act, Section 427 

form for state plans and applications, which is used by grant applicants to describe the steps 

that they propose to take to ensure equitable access to and participation in their Federal grant 

project. The Department stated that the updated form would improve its ability to identify 

and address barriers to equitable access. It specifically expected to improve state-administered 

grantees’ oversight of subgrantees’ compliance with applicable requirements, reduce barriers to 

participation by beneficiaries, and learn how subgrantees are addressing barriers. 

Consolidated Monitoring

OESE stated that it has broadened its consolidated monitoring efforts for formula grants, 

expanded the number of states to be monitored from two to four, and begun transitioning 

from virtual to on-site reviews. 

Incorporating Lessons Learned

The Department stated that given operational constraints, it is important to learn from 

grantees and identify both what is working and what is not working with respect to 

the Department’s programs. It further stated that it has begun to identify key topics for 

discussion with program offices and expects to support those offices in an effort to include 

relevant topics in programmatic monitoring for FY 2024.

What the Department Needs to Do

It will be important for the Department to develop measures to track the outcomes of its 

various efforts to improve monitoring and oversight. 
FY 2023 AGENCY FINANCIAL REPORT 181 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Management Challenge 5—Data Quality and Reporting 

The Department collects, analyzes, and reports on data for many purposes that include 

enhancing the public’s ability to access high-value education-related information, 

reporting on programmatic performance, informing management decisions, and 

improving education in the United States. The Department collects data from numerous 

sources, including states, which compile information relating to about 13,000 public 

school districts and 99,000 public schools; about 5,700 postsecondary institutions, 

including colleges, universities, and institutions offering technical and vocational 

education at or beyond the high school level; and surveys of private schools, public 

elementary and secondary schools, students, teachers, and principals. 

FY 2024 Assessment: Level 4—Significant Progress

For FY 2024 we assessed the Department’s 

actions in response to this challenge at Level 4, 

or “Significant Progress.” Overall, the 

Department identified root causes of the 

challenge and developed responsive activities 

through the design and implementation of data 

quality-related policies, training, and strategies. 

We found that this represented a comprehensive plan and that the planned activities have 

the potential to mitigate this challenge. The Department has partially implemented 

aspects of the plan and demonstrated some results that showed a positive effect on 

improving the quality of key data.

Why This Is a Challenge

The Department, its grantees, and its subrecipients must have effective controls to ensure 

that reported data are accurate and complete. The Department relies on program data to 

evaluate program performance and inform management decisions. 

Audits, Inspections, and Quick Response Activities 

Our recent audit work identified a variety of weaknesses in the quality of reported 

data and recommended improvements at the Department and at SEAs and LEAs. This 

included the following areas, as shown in Table 14.
FY 2023 AGENCY FINANCIAL REPORT 182 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Table 14. OIG’s Recent Data Quality-Related Reports

Area Reviewed Summary of Major Audit, Inspection, and Quick Response Activity

90/10 We found that FSA had several processes for overseeing proprietary institutions’ compliance with 90/10 revenue 

requirements. However, we found the Department’s reports to Congress were not always timely and complete and the 

Department did not always publish 90/10 revenue information as required to best reach the public. 

Charter Schools We found that the Charter School Program office’s processes did not result in grant recipients reporting clear, 

reliable, and timely information. Their processes also did not result in the Charter School Program office receiving all 

the information needed to assess grant recipients’ performance or evaluate the overall effectiveness of the Charter 

School Program.

We found that two grant recipients did not include complete and accurate information for all performance measures on 

which they were required to report in their annual performance reports. We also found that both grant recipients did not 

always retain records that supported the performance measures that they reported to the Department. 

Clery Act We found that two postsecondary institutions did not have effective controls to ensure they reported complete and 

accurate Clery Act crime statistics. We concluded that both schools’ Clery Act crime statistics were not complete 

and accurate and, as a result, neither school provided reliable information to current and prospective students, their 

families, and other members of the campus community for making decisions about personal safety and security.

Digital Accountability 

and Transparency Act

(DATA Act) 

An independent public accountant, with OIG oversight, determined that the Department submitted data of excellent 

quality based on guidance provided by the Council of Inspectors General on Integrity and Efficiency. It also determined 

that the Department implemented and used the governmentwide financial data standards established under the DATA 

Act. However, it found that Department did not submit certain data completely, accurately, or timely, and identified 

internal control deficiencies over the Department’s DATA Act submissions.

Disaster Recovery We found that four SEAs did not ensure that the displaced student count data provided to the Department under 

the EIA program were accurate and complete. This included instances when students who did not change schools 

or did not transfer from a disaster area were included in displaced student counts, students withdrew from the 

school prior to the disaster or enrolled after the reporting date, and displaced student counts were not supported by 

adequate documentation.

Experimental Sites Initiative We found that the Department is not complying with reporting requirements and had not published a comprehensive 

Experimental Sites Initiative report since the 2010–2011 award year report. This created a situation where the success 

or failure of the experiments conducted under the ESI has not been reported to those in Congress and the Department 

who could use the information to enhance higher education policy to better serve students.

Pandemic Relief We found that grantees and subgrantees were not consistently reporting expenditures in the Federal Audit 

Clearinghouse. This included instances where grantees and subgrantees did not identify subprograms that their 

expenditures were awarded under. We also identified widespread variations of information used by other grantees and 

subgrantees to identify subprograms that their expenditures were awarded under. 

In our work relating to HEER reporting requirements, we were unable to locate Institutional portion reports on the 

websites for 19 percent of the recipients included in our nonstatistical sample. We also found that 22 percent of the 

recipients in our sample that reported expenditures in the ‘Other Uses’ category did not follow Department instructions 

or did not provide sufficient detail.

Ongoing and Planned Work

Ongoing work in this area includes selected SEAs’ implementation of their statewide 

accountability systems, selected SEAs’ oversight of EANS funds, and SEAs’ oversight 

of spending and educational outcomes of the Prevention and Intervention Program for 

Children and Youth Who Are Neglected, Delinquent, or At Risk. 

Our planned work for FY 2024 includes FSA’s oversight of section 117 foreign gift and 

contract reporting requirements and the Department’s oversight of Stronger Connections 

Grant reporting. Additional work will be performed based on the results of ongoing 

reviews and programmatic and grantee related risk assessments.

Progress in Meeting the Challenge

We assessed the Department’s actions in response to this challenge at Level 4, or 

“Significant Progress.” Overall, the Department identified root causes of the challenge and 
FY 2023 AGENCY FINANCIAL REPORT 183 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

identified responsive activities through the design and implementation of data qualityrelated policies, training, and strategies. We found that this represented a comprehensive 

plan and that the planned activities have the potential to mitigate this challenge. The 

Department has partially implemented aspects of the plan and demonstrated some results 

that showed a positive effect on improving the quality of key data. 

Data Quality Policies

The Department’s priority corrective actions included updating and reissuing its 

Information Quality Guidelines in FY 2023. We reviewed the Information Quality 

Guidelines and found it requires significant activities in advance of data collection, 

including preparation of a data quality plan. The Information Quality Guidelines further 

require that plans address major aspects of data quality, such as utility, objectivity, and 

integrity. The data quality plans are required to identify primary uses and requirements 

for data collection, specify key data quality measures and targets, and address security 

and privacy controls. The Department has published a Data Quality Plan Template to 

help ensure that the quality of a data asset is planned for, documented, and addressed 

throughout the data management lifecycle. We reviewed the template and found it 

included fields that required respondents to identify aspects including the purpose of 

the data; data quality dimensions, measures, and targets; how related data standards are 

documented; and data quality assessments and timelines.

The Department prepared additional guidance to assist its offices in data quality efforts. 

This included a Data Quality Playbook which outlines strategies to consider in planning 

data collections associated with grant programs’ processes. We reviewed the document and 

found that it included specific elements relating to understanding limitations, identifying 

standards, providing technical assistance, and addressing data quality errors. We also 

noted the Department issued a Data Quality Planning and Implementation Checklist. We 

reviewed that document and found it included reflection questions on areas such as data 

collection, data quality, and internal data control and governance. 

The Department stated that it has applied this framework to data quality in its 2023 data 

collection for the Education Stabilization Fund (ESF) and plans to apply this to new data 

collections starting in 2024 when it implements its Data Quality Policy. The Department 

also reported outcomes that showed its ESF data collection improved. According to the 

Department, the number of ESSER-related business rules (which identify systematic 

errors and warnings to prevent incorrect or incomplete data reporting by grantees) was 

increased by 25 percent. Also, the Department stated that a total of 283 data quality issues 

were flagged across all states, compared to 183 data quality issues in the prior year.

Data Quality Training, Technical Assistance, and Shared Resources 

The Department has also developed training on data quality and has plans to train grants 

personnel and eventually all staff on data quality practices. The Department specifically 

created training for its grant staff that is accessible through an online portal with subject 

matter that includes the Data Quality Playbook, Data Quality Projects, Data Quality 

Management, and the Data Quality Template. The Department’s plans also included 

developing basic-level training for all Department staff that would provide information 

on data quality concepts, principles, tools, techniques, and best practices. Collectively, the 

training would serve to enhance operational capabilities and increase knowledge in this 

critical area.

The Department stated that it initiated activities in FY 2023 to provide data quality 

technical assistance that included consultations on the development of data quality plans 
FY 2023 AGENCY FINANCIAL REPORT 184 U.S. DEPARTMENT OF EDUCATION

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and other support as needed. The Department also planned to develop rubrics that could 

be applied to assess data quality plans, provide a feedback mechanism on opportunities 

for improvement, and identify best practices that could be shared as a resource across the 

Department. Finally, the Department planned to develop and maintain additional data 

quality responses that will be accessible through a shared location. 

Data Quality Strategies

The Department described additional data quality strategies that included updating 

collection forms; developing reporting templates, data dictionaries, and business rule 

guides; dedicating time for grantee contact to address data quality questions; and 

operating a help desk with contractor support. Successful implementation of these items 

would provide an additional opportunity to improve the quality of collected data. 

Measurement and Desired Outcomes

In developing and implementing the plan, the Department demonstrated application 

of risk management principles and designed internal controls that should ensure the 

sustainability of its actions. The Department has plans to continue to implement its 

changes in FY 2024. The Department stated that outcomes would be assessed, in part, 

against goals relating to the Department’s Fiscal Years 2022–2026 Strategic Plan. It also 

identified additional desired outcomes that included reduction in the number and scope 

of data quality-related audit findings, more efficient use of resources in supporting data 

collection, and increased confidence in and use of data to inform decision making. 

What the Department Needs to Do

It will be important for the Department to fully implement its enterprise-wide initiatives 

and to demonstrate results of these efforts. 
FY 2023 AGENCY FINANCIAL REPORT 185 U.S. DEPARTMENT OF EDUCATION

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Management Challenge 6—Improper Payments

“Improper payments” are payments the government makes to the wrong person, in 

the wrong amount, or for the wrong reason. Although not all improper payments are 

fraudulent or represent a loss to the government, all improper payments degrade the 

integrity of government programs and compromise citizens’ trust in government. To 

reduce instances of improper payments, agencies must properly identify the cause of the 

improper payment, implement effective mitigation strategies to address the cause, and 

regularly assess the effectiveness of those strategies, refining them, as necessary.

The Payment Integrity Information Act of 2019 (PIIA) repealed and replaced several 

improper payments statutes and consolidated those laws’ requirements. PIIA requires 

Federal agencies to reduce improper payments and to report annually on their efforts. 

PIIA also requires each agency’s Inspector General to determine the agency’s compliance 

with the statute for each fiscal year. 

FY 2024 Assessment: Level 3—Established Progress

For FY 2024, we assessed the Department’s 

actions in response to this challenge at Level 3, 

or “Established Progress.” Overall, the 

Department has developed a plan with the 

potential to mitigate major elements of this 

challenge. The plan included activities intended 

to help develop reliable estimates and reduce its 

estimates to less than 10 percent for each program where a rate is published and issuance 

of guidance intended to improve its payment integrity efforts. However, the Department 

did not provide significant information that clearly identified outcomes of its initiatives.

Why This Is a Challenge

The Department must ensure that the billions of dollars entrusted to it reach the 

intended recipients. In FY 2022, the Department identified the Federal Pell grant, Direct 

Loan, Title I, ESF, and Special Education Grants to States for Education of Children 

with Disabilities (Special Education) programs as being susceptible to significant 

improper payments.

We found that the Department published unreliable improper payment estimates for 

the Title I, Special Education, ESF, Pell, and Direct Loan programs for FY 2022. It is 

important for the Department to develop reliable estimates so that it can identify the root 

causes and take actions to prevent and reduce improper payments.

Audit Activity

The OIG’s review of the Department’s compliance with improper payment reporting 

requirements for FY 2022 found that the Department did not comply with PIIA because 

it did not meet one of the six compliance requirements. Specifically, the Department 

reported improper payment estimates for the Title I, Special Education, and ESF 

programs that exceeded 10 percent. As shown in Table 15, our recent improper payment 

audits identified opportunities for improvement in multiple areas.
FY 2023 AGENCY FINANCIAL REPORT 186 U.S. DEPARTMENT OF EDUCATION

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Table 15. Results of Recent OIG Statutorily Required Improper Payment Audits

FY of 

Department’s 

Reporting

Complied with 

Reporting 

Requirements

Identified Concerns

2022 No The Department did not comply with the PIIA because it did not meet one of its six compliance requirements. 

Specifically, the Department reported improper payment and unknown payment estimates for the Title I, Special 

Education, and ESF programs that exceeded 10 percent. The Department also published unreliable improper 

payment and unknown payment estimates for the Title I, Special Education, ESF, Pell, and Direct Loan programs. 

Specifically, for the Title I and Special Education programs, the improper payment and unknown payment 

estimates were based on inaccurate sampling populations. Further, for the Title I, Special Education, and 

ESF programs, the Department’s testing results were inaccurate. Finally, the improper payment sampling and 

estimation plan for the Pell and Direct Loan programs included nonrandom student-level sampling.

2021 No The Department did not comply with the PIIA because it did not meet one of its six compliance requirements. 

Specifically, the Department reported improper payment and unknown payment estimates for the Title I program 

that exceeded 10 percent. The Department also published unreliable improper payment estimates for the Title 

I, Pell, and Direct Loan programs. We found that the Department’s improper payment sampling and estimation 

plan for the Title I program was not adequate for SEAs that use certain advance payment processes. We also 

found that the Department’s sampling and estimation plans for the Pell and Direct Loan programs were unreliable 

because they included nonrandom student-level sampling. 

2020 No The Department did not comply with the PIIA because it did not meet two of the six compliance requirements. 

Specifically, the Department did not demonstrate improvement in reducing improper payments in the Direct Loan 

Program and reported improper payment rates that exceed 10 percent for the EIA and Restart programs. The 

Department also published unreliable improper payment estimates for the Pell, Direct Loan, EIA, Restart, and 

Emergency Assistance to Institutions of Higher Education programs. We found that the development of these 

estimates included the use of nonrandom samples, unsuitable sample weighting, or inaccurate and incomplete 

population sampling frames. 

We also found that the Department’s improper payment risk assessment process needed strengthening. 

Specifically, the risk assessment performed for one program did not adequately support the Department’s 

conclusion regarding its level of improper payment risk and the risk assessment the Department conducted on its 

contracts management activity was incomplete. 

Ongoing and Planned Work

Planned projects include our annual review of the Department’s compliance with 

the improper payment reporting requirements and its efforts to prevent and reduce 

improper payments. 

Progress in Meeting the Challenge

We assessed the Department’s actions in response to this challenge at Level 3, or 

“Established Progress.” Overall, the Department has developed a plan with the potential 

to mitigate major elements of this challenge. The plan included activities intended to help 

develop reliable estimates and reduce its estimates to less than 10 percent for each program 

where a rate is published and the issuance of guidance intended to improve its payment 

integrity efforts. However, the Department did not provide significant information that 

clearly identified outcomes of its initiatives.

Direct Loan and Pell Programs

The Department’s plans included strategies to help produce appropriate estimates in 

accordance with PIIA requirements. This specifically focused on activities that would 

resolve differences between the OIG and FSA regarding the methodology used to develop 

improper payment estimates for the Direct Loan and Pell programs. Specifically, the 

Department noted that differences continue to exist between the OIG’s conclusion that 

random sampling is required for a statistically valid sample for use in improper payment 

estimates and FSA statisticians’ conclusion that sampling of Single Audit Act compliance 

audits of public and private, nonprofit institutions nationwide, which do not always use 

random sampling, provide quality data for statistically valid results. 
FY 2023 AGENCY FINANCIAL REPORT 187 U.S. DEPARTMENT OF EDUCATION

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In response, the Department noted that PIIA provides OMB the authority to approve 

agencies’ improper payment estimation methodologies as appropriate given program 

characteristics and resources. The Department stated that it is seeking OMB approval to 

have its methodology approved as statistically valid. 

The Department also stated that it continues to seek approval for changes to Single 

Audit Act guidance that would ensure that statistically valid data are provided by nonFederal auditors to support the Department’s estimates. Either approach, if approved and 

effectively implemented, could address the reliability issues with the Direct Loan and Pell 

program improper payment estimates that our recent reports have identified. 

Title I, Special Education, and ESF Programs 

The Department’s plans also included strategies to help ensure it can develop reliable 

estimates for its Title I, Special Education, and ESF programs. The Department stated 

that it initiated efforts to address weaknesses identified in previous audits. This would 

help ensure timely reporting of information provided by grantees that the Department 

uses in the development of improper payment estimates. The Department specifically 

stated that it categorized a large number and volume of payment samples as unknown 

payments because of difficulties in obtaining appropriate documentation from grantees. 

The Department further noted that this was a significant reason why it reported improper 

payment estimates exceeding 10 percent for each of these three programs and for the 

Department’s overall noncompliance with PIIA. The Department stated that it is revising 

processes to provide more time for all grantees to respond to documentation requests, 

considering different approaches to test payments for a large grantee because of its 

advanced payment processes, providing technical assistance, and consulting with OMB on 

categorizing certain sampled payments. Collectively, these activities have the potential to 

mitigate this challenge. 

Successful implementation of the actions identified for each of these programs, along 

with the effective execution of its sampling and estimation plans, could address this 

management challenge. We will audit the Department’s compliance with PIIA in FY 

2024, to include an assessment of the effectiveness and outcomes of its corrective actions. 

We note that the Department is repeating its previously unsuccessful attempts to address 

sampling issues with its Direct Loan and Pell grant programs. Should these efforts not 

succeed, we encourage the Department to consider other alternatives to addressing our 

findings as laid out in the 2022 PIIA report.

Payment Integrity Policy 

The Department issued a new directive on payment integrity during FY 2023. We 

reviewed the directive and found it provides a framework that can help improve payment 

integrity in the Department’s programs and administrative payment activities if effectively 

implemented. The directive specifically identified pre-payment controls that can help 

prevent improper payments from occurring. This included activities to help ensure that 

potential grantees understand critical payment integrity elements such as allowable use 

of funds, internal controls, payment documentation requirements, financial and cash 

management, cost principles, and traceability. Other identified pre-payment controls 

focused on Department staff using available Federal information systems to verify 

eligibility of a vendor, grantee, loan recipient, or beneficiary to receive Federal payments. 

The directive also identified potentially beneficial during-payment and post-payment 

control activities. This included monitoring payments against approved budgets, applying 

special terms and conditions, and reviewing grant management system reports relating to 
FY 2023 AGENCY FINANCIAL REPORT 188 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

large available balances and excessive drawdowns. The directive also required Department 

offices to establish and maintain effective internal controls over payments. Finally, it 

required development of a structured and systematic approach to recognize areas where 

the potential for improper payments may arise and to subsequently address the risk, 

as appropriate.

What the Department Needs to Do 

Successful implementation of the Department’s planned actions should address this 

management challenge. The Department stated that because of its efforts the improper 

payment rate estimates for the Title I, Special Education, and ESF programs will 

significantly improve for FY23 reporting. We will audit the Department’s Improper 

Payment initiatives, as required, again in 2024.
FY 2023 AGENCY FINANCIAL REPORT 189 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Management Challenge 7—Information Technology Security

The Federal Information Security Modernization Act of 2014 (FISMA) requires the OIG 

to assess the effectiveness of the agency’s information security program. FISMA mandates 

that this evaluation includes (1) testing of the effectiveness of information security 

policies, procedures, and practices of a representative subset of the agency’s information 

systems; and (2) an assessment of the effectiveness of the information security policies, 

procedures, and practices of the agency. 

Through the Office of the Chief Information Officer (OCIO), the Department 

monitors and evaluates the contractor-provided IT services through a service-level 

agreement framework and develops and maintains common business solutions required 

by multiple program offices. In addition to OCIO, FSA has its own chief information 

officer, whose primary responsibility is to promote the effective use of technology to 

achieve FSA’s strategic objectives through sound technology planning and investments, 

integrated technology architectures and standards, effective systems development, and 

production support.

FY 2024 Assessment: Level 4—Significant Progress

We assessed the Department’s actions in 

response to this challenge at Level 4, or 

“Significant Progress.” The Department’s 

actions and plans included activities intended to 

improve IT security and expand related 

operational capabilities. This framework 

establishes a comprehensive plan that may 

effectively mitigate key elements of the challenge. Implementation is ongoing and partial 

results have been demonstrated as shown in the results of our FISMA work.

Why This Is a Challenge

The Department’s systems house millions of sensitive records on students, their parents, 

and others, and are used to process billions of dollars in education funding. These systems 

are primarily operated and maintained by contractors and are accessed by thousands of 

authorized people (including Department employees, contractor employees, and other 

third parties such as school financial aid administrators). According to information 

on ITDashboard.gov, the Department requested more than $1 billion for FY 2024 

information technology (IT) related spending. 

Considering increased occurrences of high-profile data breaches (public and private 

sector), the importance of safeguarding the Department’s information and information 

systems cannot be understated. Protecting this complex IT infrastructure from constantly 

evolving cyber threats is an enormous responsibility and challenge. Without adequate 

management and operational and technical security controls, the Department’s systems 

and information are vulnerable to attacks. Unauthorized access could result in lost data 

confidentiality and integrity, limited system availability, and reduced system reliability. 

For the last several years, IT security audits and financial statement audits have identified 

security controls that need improvement to adequately protect the Department’s systems 

and data. 
FY 2023 AGENCY FINANCIAL REPORT 190 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Audits and Inspections Involving IT Security

Recent FISMA work has been performed under changing requirements. Specifically, the 

FY 2023 review required an assessment of 20 core and 20 supplemental reporting metrics, 

the FY 2022 review required an assessment of 20 core metrics, and the FY 2021 review 

required an assessment of 66 metrics. 

As shown in Table 16, our recent reports, performed by a contractor with OIG oversight 

or by the OIG with contractor assistance, noted that the Department and FSA have made 

progress in strengthening their information security programs. Our FY 2021 FISMA 

review concluded that the Department and FSA were not effective10 in any of the nine 

FISMA metric domains. However, in FY 2022, based on the revised metric scoring, 

the Department and FSA were found to be effective in five of the nine FISMA metric 

domains. In FY 2023, again based on the revised metric scoring, the Department and FSA 

were found to be effective in eight of the nine FISMA metric domains.

Table 16. Results of FISMA Audits and Inspections—FY 2021–2023 Metric Domain Maturity Levels

Security Function and Metric Domain FY 2021 Maturity Level FY 2022 Maturity Level FY 2023 Maturity Level

Identify: Risk Management Level 3 

Consistently Implemented

Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Identify: Supply Chain Risk Management Level 2 

Defined

Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Protect: Configuration Management Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Level 4 

Managed and Measurable

Protect: Identity and Access Management Level 2 

Defined

Level 3 

Consistently Implemented

Level 3 

Consistently Implemented

Protect: Data Protection and Privacy Level 2 

Defined

Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Protect: Security Training Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Level 4 

Managed and Measurable

Detect: Information Security 

Continuous Monitoring

Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Level 4 

Managed and Measurable

Respond: Incident Response Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Level 4 

Managed and Measurable

Recover: Contingency Planning Level 3 

Consistently Implemented

Level 4 

Managed and Measurable

Level 4 

Managed and Measurable

10 FISMA maturity ratings are defined as Level 1: Ad-Hoc, Level 2: Defined, Level 3: Consistently Implemented, Level 4: 

Managed and Measurable, and Level 5: Optimized. A maturity rating of level 3 or below is considered not effective.
FY 2023 AGENCY FINANCIAL REPORT 191 U.S. DEPARTMENT OF EDUCATION

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However, as shown in Table 17, our recent FISMA audits and inspection included a 

range of findings across the cybersecurity framework security functions and their related 

metric domains.

Table 17. Results of OIG FISMA Audits and Inspections—Cybersecurity Framework Security Functions and Metric Domains 

with New Findings

Security Function and Metric Domain FY 2021 FY 2022 FY 2023

Identify: Risk Management Audit Finding - Audit Finding

Identify: Supply Chain Risk Management Audit Finding - -

Protect: Configuration Management Audit Finding Inspection Finding Audit Finding

Protect: Identity and Access Management Audit Finding Inspection Finding Audit Finding

Protect: Data Protection and Privacy Audit Finding Inspection Finding Audit Finding

Protect: Security Training Audit Finding - -

Detect: Information Security Continuous Monitoring Audit Finding - Audit Finding

Respond: Incident Response Audit Finding Inspection Finding Audit Finding

Recover: Contingency Planning Audit Finding - -

The Department’s overall IT security program and practices were assessed to be effective 

in FY 2022 and FY 2023 based on review of the required FISMA metrics. However, 

recommendations were made in several areas where the Department and FSA could 

strengthen their controls. We noted that until the Department improves in these areas, it 

cannot ensure that its overall information security program adequately protects its systems 

and resources from compromise and loss. In addition, we note that the Department’s 

technology environment is constantly evolving, bringing new threats and cybersecurity 

requirements. As technology environments evolve, it is important that the Department 

continues to ensure that it implements the respective security controls to protect its 

information and resources. 

Recent audits of the Department’s financial statements, performed by an independent 

public accountant with OIG oversight, have repeatedly identified IT controls as a 

significant deficiency. In its FY 2022 report, the independent public accountant noted 

that FSA management demonstrated progress in implementing corrective actions to 

remediate some prior-year deficiencies. However, they reported that management had 

not fully remediated prior-year deficiencies in areas such as logical access administration, 

separated or transferred user access removal, user access reviews and recertification, and 

configuration management. 

The independent public accountant concluded that ineffective IT controls increases 

the risk of unauthorized use, disclosure, disruption, modification, or destruction of 

information and information systems that could impact the integrity and reliability of 

information processed in the associated applications. 

Ongoing and Planned Work

Planned projects in this area will continue to determine whether the Department’s and 

FSA’s overall IT security programs and practices were generally effective as they relate 

to Federal information security requirements. Planned projects for FY 2024 include the 
FY 2023 AGENCY FINANCIAL REPORT 192 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Department’s oversight and monitoring of IT inventory and the Department’s oversight 

and management of its websites.

Progress in Meeting the Challenge

We assessed the Department’s actions in response to this challenge at Level 4, or 

“Significant Progress.” The Department’s actions and plans included activities intended to 

improve IT security and expand related operational capabilities. Overall, the framework 

establishes a comprehensive plan that may effectively mitigate key elements of the 

challenge. Implementation is ongoing and partial results have been demonstrated as 

shown in the results of our FISMA work.

Improving IT Security

The Department’s Fiscal Years 2022–2026 Strategic Plan includes an IT-related objective 

and identifies implementation strategies that include strengthening its management of 

value-added technologies and evolving its cybersecurity capabilities. The Department 

also developed an Information Resources Management Strategic Plan FY 2022–2026 that 

established how the Department will use information management resources to support 

its mission. This includes goals of strengthening the Department’s ability to protect and 

safeguard data housed within its systems, optimizing its risk posture, and maturing its 

ability to identify, protect, detect, respond, and recover from cybersecurity threats. This 

plan includes objectives relating to enhancing capacity to manage cybersecurity risk, 

implementing enterprise controls to reduce risk, and maturing the Department’s Security 

Operations Centers.

The Department identified implementation of a full Zero-Trust Architecture as a priority 

corrective action in response to this challenge. The Department stated it will adopt 

modern security best practices through this objective, including improving multi-factor 

authentication and encryption for data at rest and in transit. The Department further 

stated that this program will improve its security infrastructure, increase visibility across 

the security environment, and enhance data protection. The Department reported 

progress that included onboarding a Zero-Trust Architecture program manager and 

developing a project schedule for full implementation by the end of FY 2024.

The Department continues to make progress in fully implementing its enterprise 

identity, credential, and access management program (ICAM). For instance, it instituted 

multifactor authentication deployment across the Department by integrating personal 

identity verification validation for its personnel that resulted in improved deployment 

compliance. The Department also continues to modernize and enhance its Enterprise 

ICAM solution to align with OMB Memorandum M-22-09, Moving the U.S. Government 

Toward Zero Trust Cybersecurity Principles, by integrating with the ED Cyber Data 

Lake to develop a centralized identity dashboard to improve transparency into identity 

related metrics. In addition, Enterprise ICAM has integrated Login.gov authentication 

services for external users (i.e., public) to leverage a single secure sign-on authenticator to 

Department applications.

The Department reported additional plans to establish an IT Asset Management program, 

begin a transition to a new IT system hosting contract with increased security capabilities, 

and expand the Department’s Continuous Diagnostics and Mitigation capabilities. 

The Department also reported that it completed multiple initiatives in response to recent 

FISMA work. This included amending the vulnerability and patch management process 

to facilitate more timely resolution; establishing additional controls to update, remove, or 
FY 2023 AGENCY FINANCIAL REPORT 193 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

replace obsolete or unsupported solutions and encryption protocols for operating systems; 

implementing a review process to improve management of the active directory user 

accounts and access termination; and enhancing oversight of privileged accounts. 

Expanding Operational Capacity 

The Department identified establishing and protecting dedicated lines of funding and 

personnel for the enterprise cyber and IT program as a second priority corrective action 

in response to this challenge. The Department stated that this effort would address the 

inadequate funding for IT and cybersecurity along with the staffing cuts, lack of adequate 

recruitment and retention, and lack of incentive pay flexibilities that hamper its efforts 

to compete with the Federal enterprise and private sector for cyber workforce. The Office 

of the Chief Information Officer stated that it was coordinating with the Department’s 

budget services on this effort. 

What the Department Needs to Do

As the Department continues its efforts to develop and implement an effective system 

of IT security controls, it will be important that it continues to focus on the timely and 

successful implementation of corrective actions in response to our audit work. It will 

also be important for the Department to continue its efforts to advance its Zero Trust 

Architecture capabilities, as well as fully implement its identity, credential, and access 

management strategy.
FY 2023 AGENCY FINANCIAL REPORT 194 U.S. DEPARTMENT OF EDUCATION

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www.ed.gov

The Department of Education's mission is to promote student achievement and preparation for global competitiveness by 

fostering educational excellence and ensuring equal access.