Discretionary Grants: Education Needs to Improve Its Oversight of Grants Monitoring
Published: 2017-04-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2015, Education awarded more than $4 billion to over 7,000 grantees through some 80 discretionary grant programs. Over the past decade, GAO and Education's Inspector General identified various grants management and oversight challenges, including effectively monitoring grantee performance. GAO was asked to examine Education's oversight of its discretionary grants.
This report examines the extent to which Education: (1) consistently applied its discretionary grant monitoring policies, and (2) identified and shared across the department information about the performance of discretionary grantees. GAO reviewed the grant monitoring practices of three of Education's seven principal offices, which together awarded more than 80 percent of discretionary grant funds in fiscal year 2015, according to GAO's review of Education data, the most recent data available. Additionally, GAO reviewed a randomly selected, nongeneralizable sample of 75 official grant files; analyzed federal and Education grants policies and procedures; and interviewed Education grant officials and nine randomly selected grantees.
section_title: What GAO Found
paragraphs: U.S. Department of Education (Education) grant staff did not consistently document in the official grant files key required monitoring activities, according to GAO's review of a nongeneralizable sample of 75 discretionary grants. As a result, about $21 million in discretionary grant funds lacked correct documentation of grantee performance in the official grant files GAO reviewed. Specifically, compared to Education's requirements for these files, almost all—69 of 75—were incomplete in terms of certain key documents (i.e., grant award notifications, post-award conference records, and annual performance reports) that should have been contained in them (see figure). Further, the three principal offices GAO reviewed—the Offices of Postsecondary Education, Elementary and Secondary Education, and Innovation and Improvement—have not established detailed written procedures for the supervisory review of official grant files, contrary to federal internal control standards, which call for entities to provide reasonable assurance that internal control objectives, such as grant monitoring, are achieved and clearly documented. By developing and implementing detailed supervisory review procedures for official grant files, Education would be better positioned to ensure the proper stewardship of its discretionary grants.
Education spent about $700,000 to develop features within the Post-Award Monitoring (PAM) Module of its grants management system that allow staff to, for example, identify and share performance information to a central location, but it has not developed guidance on its effective use by grant staff working across programs and offices. Education described several ways staff share performance information, but according to a review of official grant files and interviews with Education officials, GAO found that staff rarely used PAM to disseminate information about grantee performance, such as notable results achieved in specific grant projects. Additionally, while Education officials said they offer staff training on PAM, they have not developed guidance to clarify use of features related to grantee performance. Federal internal control standards call for pertinent information, such as grantee performance information, to be identified, captured, and distributed in a form and time frame that permits people to perform their duties efficiently. Absent guidance on how to effectively use PAM Module features to share information about grantee performance, Education will likely not be able to achieve the full potential benefits of its grants management system.
section_title: What GAO Recommends
paragraphs: GAO recommends Education establish and implement detailed written supervisory review procedures for official grant files and develop guidance for grant staff on using the PAM Module to share information. Education substantially agreed with both recommendations and described the procedures and training it will provide to implement them.

section_title: Letter
paragraphs: The U.S. Department of Education (Education) awards discretionary  grants under a number of different statutory authorities for various  purposes, such as to support projects to improve student achievement or  to expand access to higher education for low-income and first generation  students. In the last 10 years, the number and size of Education’s  discretionary grant awards have increased considerably. In fiscal year  2015, Education obligated more than $4 billion in awards for over 80  discretionary grant programs and awarded more than 7,000 discretionary  grants across the United States. As the number and size of Education’s  grant awards have increased, GAO and Education’s Office of Inspector  General (OIG) have reported on Education’s grants management and  oversight challenges, including challenges related to effectively  monitoring grantee performance, improving risk management, and  sharing information about grantee performance across Education.
In light of these challenges, you asked us to review Education’s oversight  of its discretionary grant programs and grantees.
This report examines (1) the extent to which Education consistently  applied its discretionary grants policies and procedures for monitoring  grantees; and (2) the extent to which Education systematically identified  and shared across the department information about the performance of  discretionary grantees. In addition, we reviewed the ways in which  Education hires and trains grant staff, which is included in appendix I.
To address these objectives, we reviewed three of Education’s seven  principal offices that award discretionary grants—the Offices of  Postsecondary Education (OPE), Elementary and Secondary Education  (OESE), and Innovation and Improvement (OII). We selected these  offices because they collectively awarded about 87 percent of Education’s  discretionary grant funds awarded in fiscal year 2015—about $3.8 billion  out of approximately $4.3 billion—according to our review of the most  recently available Education data.
We also reviewed relevant federal laws, regulations, policy, and guidance  as well as agency documentation.  For instance, we reviewed  Education’s Handbook for the Discretionary Grant Process (Handbook),  which generally establishes the internal policies and procedures for  discretionary grant management department-wide.  Additionally, we  reviewed Education guidance on its grantee risk assessment process.
Further, to obtain information on how Education officials implemented  discretionary grant monitoring policies and procedures in practice, hired  and trained grant staff, and shared information about grantee performance across offices, we interviewed officials from our three  selected principal offices, including program specialists who most directly  interact with grantees. We also interviewed officials from Education’s Risk  Management Service, Office of the Chief Financial Officer, and Office of  Human Resources, who provide guidance and support to principal offices.  We compared the information obtained through interviews to Education’s  Handbook, and also reviewed federal internal control standards  and  leading grants management practices, as appropriate.
To determine whether Education consistently applied its grants policies  and procedures for monitoring discretionary grantees, we also reviewed a  nongeneralizable sample of 75 official grant files.  To select our sample,  we first reviewed data Education provided from its G5 grants  management system (G5) about all discretionary grant awards made from  fiscal years 2010 through 2015, the most recent data available at the time  we conducted our review. The data included information specific to each  grant award, such as the recipient name, amount awarded, and the award  type. It also identified the Education office responsible for the award and if  Education awarded the funds as a cooperative agreement. Cooperative  agreements entail a substantial level of involvement between the  awarding federal agency and the recipient, and comprise a minority of  Education’s discretionary awards.  For these reasons, we excluded  cooperative agreements from our review. Second, using the G5 data, we  randomly selected grants from a pool of recipients that received new  discretionary awards made in fiscal year 2012. Doing so allowed us to  review up to 3 years of grant file monitoring documentation, where applicable. We reviewed a total of 75 official grant files—40 from OPE, 25  from OESE, and 10 from OII—that totaled about $272 million in  discretionary grant awards made by Education over the period of our  review.  Our sample is nongeneralizable and the number of grants we  reviewed from each office was in proportion to the total number of grant  awards made by each office in fiscal year 2012.
As part of this effort, we also interviewed 9 of the 75 selected grantees to  obtain their perspectives on Education’s monitoring of their grant projects.  To do so, we randomly selected 3 grantees from each of the three  principal offices in our review. We determined that the G5 data are  sufficiently reliable for the purposes of this report by reviewing  documentation about the G5 system and interviewing agency officials.  While the results of our grant file review and grantee interviews are not  generalizable, they provide insight into Education’s monitoring of  discretionary grantees.
To review each grant file in our sample, using Education’s requirements  in the Handbook for the organization and content of official grant files, we  developed a data collection instrument to assess whether the files  contained documentation that grant staff performed various grantee  monitoring activities.  Where certain key monitoring documents should  have been present for each and every grantee—for example, the  performance reports grantees are required to submit at the end of each  budget period —we determined whether those documents were present  in the official file. In other instances, Education requires in its Handbook  that grant staff document activities, such as regular telephone contacts, e- mail correspondence, and site visits, as appropriate. In these instances,  we confirmed, for example, the absence or presence of routine  correspondence in the official files. Two analysts reviewed each file, with  the second analyst verifying the first analyst’s review.
We conducted this performance audit from September 2015 to April 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Department of Education
paragraphs: Education has seven principal offices that administer discretionary grants  to entities that provide education or education-related services (see fig.  1). These principal offices generally focus on specific areas of education,  such as career, technical, and adult education; elementary and secondary  education; or postsecondary education. Each principal office has  individual program offices responsible for specific grant programs.  Program offices have directors, supervisors, and program specialists  (referred to in this report as grant staff) responsible for grant  administration.
Department-wide offices—the Risk Management Service (RMS), Office of  the Chief Financial Officer (OCFO), and Office of Human Resources  (OHR)—provide support and guidance to the principal offices. RMS, in  particular, is responsible for effectively communicating discretionary grant  policies to principal offices and providing guidance to assist them in their  efforts to adhere to those policies. Additionally, RMS offers training on  discretionary grants to staff across the department. OCFO, among other  things, resolves discretionary grant award findings resulting from single  audit reports and offers training on financial aspects of grants  administration.  OHR works with principal offices to identify staffing  needs and to post job positions, among other responsibilities.
section_title: Education’s Discretionary Grants
paragraphs: Discretionary grants refer to an award for which the awarding agency has  discretion, or choice, in deciding which applicants receive funding.   Education generally awards these types of grants through a competitive  process.  Grant project periods can vary in duration, ranging from less  than a year to 5 years.  When Education funds grants with project  periods longer than a year (referred to in this report as multiyear grants),  it generally funds the grants in annual increments called budget periods,  usually 12 months. With multiyear grants, grantees are generally eligible  to receive funding beyond the initial budget period provided certain  conditions are met; for example, Education must determine that a grantee  has made substantial progress toward the project’s goals and objectives,  and Congress must have appropriated sufficient funds, among other  conditions.  Award amounts can vary widely. For example, in 2012  Education awarded a grantee $27,315 to help subsidize fees for low- income students registering for Advanced Placement and International  Baccalaureate tests, and in the same year, Education awarded another  grantee about $5 million to support professional development for teachers  and school administrators. In fiscal year 2015, Education awarded about  $4.3 billion in discretionary grants across its seven principal offices (see  table 1).
The lifecycle of a discretionary grant has three general phases: pre- award, award, and post-award (see fig. 2). The Handbook establishes  department-wide policies and procedures for each phase. For example, in  the award phase, the Handbook describes policies for notifying grantees  about their awards.
During the post-award phase, the Handbook establishes specific  monitoring activities Education grant staff should perform, and requires  grant staff to document these activities in the official file they are to keep  for each grantee, which may be paper-based or electronic (see fig. 3). For  example, all grant files should include the following three key documents:  grant award notifications, post-award conference records, and grantee  performance reports. As we describe below, the purpose of these  documents is to record information on various key monitoring activities.
Grant award notification. According to the Handbook, Education’s  grant staff are to send all discretionary grantees a grant award  notification (referred to in this report as an award notice) that provides  details about the grant, including the amount of the award; the binding  terms and conditions of the grant, including statutory and regulatory  requirements; and any specific conditions.  For example, as a  specific condition, a grantee may be required to seek reimbursements  from Education for grant-related expenditures (referred to in the  Handbook as “cost reimbursement”), or may be prohibited from  proceeding with its project until Education receives satisfactory  evidence of acceptable performance. If Education later assigns  specific conditions, grant staff are to amend the award notice and  resend it to the grantee, according to the Handbook. Additionally, the  Handbook specifies that grant staff should save copies of award  notices, as well as amended versions, if applicable, to include in the  grantee’s official grant file.
Post-award conference records. According to the Handbook, the post- award conference is the initial discussion between Education’s grant  staff responsible for monitoring the grant and the grantee’s project  director or other authorized representative. The Handbook specifies  that this meeting should take place within 30 days of the award to  establish a mutual understanding of the specific outcomes that are  expected, and to clarify measures and targets for assessing the  project’s progress and results, among other things. This meeting may  take place in-person, via telephone or e-mail, or as part of a virtual or  in-person conference. Following the discussion, grant staff are to  document that a meeting occurred and should also save any related  notes from the discussion to the official grant file, according to the  Handbook.
Calls, site visits, technical assistance to grantees (as needed).
According to the Handbook, certain day-to-day activities that occur or  apply (as needed) to the particular circumstances of a grantee must  be documented in the official grant file. These activities include,  among other things, routine telephone or e-mail correspondence;  reports from a site visit by Education staff; and, if relevant, contracts  into which a grantee may have entered as a condition of receiving the  grant (e.g., a contract for a rigorous post-grant evaluation of a pilot  project). Grant staff can adjust the scope and frequency of these  activities using their professional judgment, according to grant staff  supervisors. When making these determinations, grant staff may  consider various factors, such as the amount awarded; past grantee  performance, if applicable; and any reported problems by the grantee  or requests for specific assistance.
Performance reports. Education requires discretionary grantees to  submit reports that describe the specific activities they performed  during a budget period. Education encourages grantees to use a  standardized form to submit these reports. Using this form, grantees  can describe work and activities completed, as well as progress made  toward their project’s goals and objectives. Recipients of multiyear  discretionary grants must generally submit these reports annually.  According to the Handbook, grant staff are to review these reports— along with other information on financial and project management  activities—to determine, among other things, if the grantee has made  substantial progress in reaching the project’s objectives and if  continuing the project is in the best interest of the federal  government. Additionally, grant staff must sign and date these  reports to indicate their review and save them to the official grant file,  according to the Handbook.
subsections: section_title: G5 Grants Management System
paragraphs: Discretionary grant recipients and grant staff are to use Education’s G5  web-based grants management system to perform various activities  throughout the grant lifecycle. For instance, grantees are to use G5 to  withdraw funds from their grant accounts during the post-award phase,  and can also use the system to submit required performance reports. G5  is the grant staff’s primary tool for providing fiscal oversight of  discretionary grantees, according to the Handbook. For instance, using  G5, grant staff can monitor the rate at which grantees withdraw funds  from their grant accounts to ensure their spending patterns are consistent  with the project’s approved scope of work and project milestones.  Education officials told us it added a Post-Award Monitoring (PAM)  Module to G5 in 2013 that allows grant staff to enter information on the  performance of the grantees they monitor to a central location, among  other things.
section_title: Official Grant Files for About $21 Million in Selected Discretionary Grants Lacked Complete Documentation of Grantee Performance, and Education Has No Written Grant File Supervisory Review Procedures
subsections: section_title: Official Grant Files We Reviewed Did Not Consistently Contain Key Monitoring Documenation
paragraphs: The sample of official grant files we reviewed did not consistently contain  documentation of certain key required monitoring activities outlined in  Education’s Handbook. Specifically, almost all—69 of the 75 grant files  we reviewed—were incomplete; most were missing at least one award  notice, post-award conference record, or grantee performance report,  which are all key monitoring documents that should be included in the  official files, according to the Handbook. Federal internal control  standards call for the clear, prompt, and accurate documentation of  internal control and all other significant events, including monitoring  activities, and state that this documentation should be readily available for  examination.
More specifically, with respect to grantee performance reports, based on  our analysis and the requirements outlined in the Handbook, the 75  official grant files should have contained 179 performance reports. We  found 121, which is 58 less than required by the Handbook. In these 58  instances—associated with 54 of the 75 grant files we reviewed—about  $21 million in discretionary grant awards lacked complete and correct  documentation in the official grant file of the progress and results  grantees achieved.  As a result, and contrary to federal internal control  standards, we could not, using the official grant files Education provided  to us, verify the existence of documentation that would demonstrate  whether these grantees achieved the results for which they received grant  funds or made adequate progress that would warrant receiving additional  funds.
In commenting on a draft of this report, Education reiterated its reliance  on a variety of safeguards and monitoring procedures (discussed below)  to ensure it provides additional funding only to grantees that achieve  substantial progress with their grant funds and comply with applicable  regulations. Education also stated that it conducted its own review and  found all the appropriate performance reports, though some were found  outside of the official grant files or in other Education systems, and the  agency is therefore confident that no funds were at risk. We note that the  focus of our file review was on Education’s application of the  documentation requirements for official grant files included in its  Handbook. Our analysis was not designed or intended to determine whether any discretionary grant funds are “at risk” or were awarded  improperly.
Additional required monitoring documentation—describing the terms and  conditions of the grant, as well as general expectations of Education’s  grant monitoring staff—were also often not included in the official grant  files we reviewed. Specifically:
Grant Award Notifications. Per Education’s Handbook, the 75 official  grant files we reviewed should have contained 175 award notices, but  we found 132, which was 43 less than required. Because award  notices include the binding terms and conditions of the grant during  each budget period, including statutory and regulatory requirements,  as well as any specific conditions, they are important documents for  grant staff to be familiar with and to easily reference as they monitor  grantees to ensure they are in full compliance with the terms and  conditions of the award.
Post-award conference records. We found 27 of the 75 records that  should have been contained in the official grant files we reviewed—48  less than required by the Handbook. Education states in its publicly  available guidance that these discussions are the first step in building  a successful partnership between the department and the grantee to  help ensure successful project outcomes.  In the instances where we  identified that grant staff did not document in the official grant file that  these meetings occurred, we could not, therefore, verify whether grant  staff and grantees established a mutual understanding of the specific  outcomes Education expects from the grant projects, or clarified  measures and targets it will use to assess the grantees’ progress and  results.
Regarding day-to-day activities, such as telephone calls with and e-mail  correspondence to or from grantees, we generally found evidence that  these had been documented in the 75 official grant files we reviewed.
Grant staff supervisors we interviewed told us that missing documentation  from the official grant files does not mean monitoring activities did not  occur—or that grantees did not submit required documentation such as  performance reports. Grant staff supervisors said that grant staffs’ heavy  workload sometimes prevents them from saving grantee monitoring  documentation to the official grant file in a timely manner. One supervisor  noted specifically that grantees may send hard copies of their  performance reports in April each year, but that these may not be saved  to the official grant file until the following September because of  competing demands. Additionally, during the time of our review,  Education officials said they were enhancing G5 and that grant staff were  in the process of transitioning from their previous systems. During this  transition period, they said remnants of the old systems were used  alongside the new system because creating electronic documents proved  to be an onerous task, leading to the use of an official grant file and a  working file. Going forward, Education stated that there is a need to  consolidate to one official grant file within G5.
At the same time, grant staff supervisors said there are various  safeguards in place that help prevent continuation awards from being  made to grantees that do not demonstrate substantial progress.  Specifically, they said grant staff cannot independently decide to make  continuation awards. Instead, grant staff must prepare a Continuation  Award Memo documenting that they have evaluated the project for  substantial progress during the budget period against the project’s aims  and objectives, and recommend whether Education should continue to  fund that project. These officials said grant staff are to submit this memo  to principal office management for review before a continuation award  can be made. Education refers to these steps as the slate review  process.
Education officials said that these safeguards, as well as others—such as  conducting grantee risk and performance reviews—help to ensure that no  continuation funds are provided to grantees who fail to comply with grant  requirements or who do not show substantial progress. Nonetheless,  without monitoring documentation, such as grantee performance reports,  and saving this documentation to the official grant file, Education cannot  readily produce, and we were hence unable to verify, the evidence  underpinning the grant staffs’ assessment of substantial progress, which  informs the department’s continued funding of the projects.
section_title: Grant Staff Supervisors Did Not Routinely Review All Grant Files We Selected, and Principal Offices Have Not Established Written Procedures to Help Ensure They Do
paragraphs: Grant staff supervisors with whom we spoke said they periodically review  official grant files to help ensure staff perform and document key  monitoring activities, but we found little evidence within the official grant  files we reviewed of this being done. Specifically, grant staff supervisors  in our three selected offices said they review a random sample of official  grant files twice per year—once at grant staff mid-point evaluations and  once at their annual evaluations. The number of files they review varies  depending on factors such as the number of staff they manage, the  complexity of the grant programs in their portfolio, and the number of  awards made as part of each grant program, according to grant staff  supervisors. Additionally, they said they can also review individual official  grant files at any point as needed. During our review of 75 official grant  files, we found two documented instances that showed a grant staff  supervisor reviewed a grant file for completeness in terms of ensuring all  required documentation was included in the file.
Principal offices have not established written procedures with enough  detail for grant staff supervisors to know how frequently to review official  grant files nor what, specifically, the review should entail. Grant staff  supervisors in our selected principal offices said they rely on the  Handbook to guide them as they conduct these reviews, but beyond  specifying that grant staff supervisors should routinely review official grant  files, the Handbook—issued by RMS—contains few specifics on what  these reviews should entail. For instance, it does not establish what  portion of official grant files staff supervisors should review, how often  these reviews should occur, and whether to document in the official grant  file, G5, or anywhere else that the reviews occurred. Federal internal  control standards state that entities should provide continuous  supervision to provide reasonable assurance that internal control  objectives are achieved, and that internal control activities and  transactions be clearly documented.
Because the Handbook does not include detailed, written procedures for  how grant staff supervisors should review official grant files to ensure  grant staff performs and documents required monitoring activities,  supervisors may not have a clear understanding of what these reviews  should entail, including the expected scope and frequency of review.  Thoroughly reviewing official grant files is particularly important given our  findings that key monitoring documents had not consistently been  included in the 75 official grant files we reviewed. Without these  monitoring records, Education may not be able to readily demonstrate the  results that grantees achieved, or that grantees implemented their  projects according to the terms and conditions of the award. Additionally,  absent documented monitoring records, when monitoring responsibilities  shift from one grant staff person to another—such as when employees  retire, resign, or otherwise change positions—the new grant staff person  may not have all the information required to continue effectively  monitoring those grantees. Written procedures that detail requirements  for the supervisory review of official grant files could enhance Education’s  ability to hold grant staff supervisors accountable for ensuring their grant  staff adhere to the monitoring and documentation requirements and help  the department be better positioned to ensure proper stewardship of its  federal discretionary grants.
section_title: Education Created a Way to Identify and Share Grantee Performance Information Internally, but Has Not Developed Guidance to Help Ensure Its Effective Use by Grant Staff
paragraphs: Education developed features within G5 that allow grant staff to  systematically maintain, organize, identify, and share information about  grants and grantees in a central location. In 2013, Education spent about  $700,000 to develop the G5 Post-Award Monitoring (PAM) Module,  according to officials with whom we spoke. The system consists of eight  features, or tabs, grant staff can choose to use when monitoring grantees  (see fig. 4). Two of these features, the “Issues” and “Notable Results”  tabs, allow grant staff to identify and share across the department  performance information about grantees they monitor, according to  Education officials. This could include disseminating notable results and  lessons learned from the grant projects they monitor or to alert other grant  staff of potential performance issues.
Based on our review of official grant files, staff consistently used some,  but not all, of the voluntary PAM Module features when monitoring  grantees. Specifically, in our review of 61 electronic grant files,  we  found grant staff consistently used four tabs, including the “Finances” and  “Award Details” tabs, but they rarely used others, such as the  “Objectives,” “Issues,” and “Notable Results” tabs (see table 2).  With the  “Issues” tab in particular, grant staff noted performance issues in 7 of the  61 electronic grant files we reviewed. In 4 of these 7 grant files, staff  indicated that grantees had large available balances remaining at the end  of the budget period, which could indicate non-performance or financial  mismanagement, according to the Handbook. The remaining 3 files cited  other potential performance challenges, including noncompliance with  specific conditions Education had imposed on a grantee, a decision to  place a grantee on cost reimbursement, and frequent changes in key  grant project personnel.  In none of the 61 electronic official grant files  we reviewed did grant staff enter information in the PAM Module about  notable results of specific grant projects they monitored.
Education does not require staff to use the PAM Module to share  information about grantees, and noted that the PAM Module is one of  several means available to its staff to capture and share grantee  information. Education officials stated that due to the lack of consistency  in program statutes and regulations regarding grant administration,  offices’ varying workloads and resources, and their differing rates of  transition to electronic record-keeping, the PAM Module tabs are  interpreted and implemented in ways that make sense for each office.  That said, RMS officials told us that the information grant staff enter in the  “Issues” and “Notable Results” tabs could be useful to inform their  grantee risk assessment process, but also said it is up to principal offices  to clarify whether their staff should use these features as they monitor  grantees.
One potential benefit of the PAM Module is that it allows RMS to collect  data on grantee performance from a central location, according to RMS  officials. Currently, they said grantee performance information is primarily  contained in annual performance reports, which staff generally saves to  individual grant files in a portable document format (PDF). As a result,  RMS cannot easily access or aggregate the information to potentially  identify wider performance issues or possible best practices, according to  officials with whom we spoke. In particular, RMS officials said they would  like to use grantee performance information to inform their Entity Risk  Review process. Developed in 2010, Entity Risk Review is an analysis  tool RMS officials use to provide program offices with information about  the risks associated with continuing grantees and applicants. As part of  this process, RMS consolidates information, such as details about past  grantee performance, if applicable; financial information about the grantee  organization; and relevant single audit findings to develop a risk profile for  continuing grantees and applicants relative to three risk categories— administrative, financial, and internal controls, which is then shared with  principal and program offices, according to RMS officials.
However, RMS has not taken steps to help ensure that the information  grant staff enters in the PAM Module about grantee performance will be  useable. Specifically, since the PAM Module was implemented in 2013,  RMS officials said grant staff have been inconsistently interpreting key  terminology like “issues” and “notable results.” While RMS officials said  they offer grant staff training on the PAM Module, due to competing  priorities, they have not developed guidance to clarify what information  grant staff should enter into the PAM Module related to the “Issues” and  “Notable Results” tabs, specifically, nor circumstances under which using  the PAM Module might be an effective means to share information.  Federal internal control standards state that pertinent information should  be identified, captured, and distributed in a form and time frame that  permits people to perform their duties efficiently.  Without guidance to  help grant staff enter consistent information about grantee performance  across Education’s principal and program offices, RMS may not be able  to realize the full potential of its grants management system.
Additionally, according to RMS officials, not all offices use the PAM  Module because some program offices have not yet fully transitioned  from paper-based to electronic grant files. RMS officials said Education is  currently moving toward fully electronic grant administration, but it has not  established a time frame for when it will complete this transition. Of the  three principal offices we reviewed, OPE and OESE officials said they  use electronic grant files, whereas OII officials said they still mainly use  paper-based files, though they are transitioning to electronic. An OII grant  staff member we interviewed noted that the PAM Module may be a good  vehicle to share information about grantee performance, but also said OII  staff were not familiar with it given their current reliance on paper files.
section_title: Conclusions
paragraphs: The Department of Education’s more than 80 discretionary grant  programs are one of the foundational tools for achieving its mission of  increasing student achievement. However, Education’s ability to  adequately assess the results of its grant monitoring activities,  demonstrate good stewardship of its limited resources, and show results  grantees achieved—using its billions in discretionary grant funds—may  be diminished when it does not routinely ensure that its grant staff review  and document in the official grant files the results grantees achieve with  federal funds. During our review of 75 official grant files, we could not  locate documentation describing the results grantees had achieved with  about $21 million in discretionary grant awards—about 8 percent of the  award funds associated with our nongeneralizable sample of 75 files.  When these documents are not included in the official grant files,  Education cannot readily demonstrate—in the manner called for by  federal internal control standards and its own Handbook—that grant funds  were expended according to the terms and conditions of the award,  including any specific conditions, or what grantees achieved with the  funds. Absent detailed written procedures for the supervisory review of  official grant files, these issues may persist. By describing in detail what it  expects grant staff supervisors to do, Education would be better  positioned to ensure proper and consistent stewardship of its  discretionary grant funds.
Education invested time and resources to develop features in G5 that  allow grant staff to routinely identify and share information about grantee  performance as part of their monitoring efforts. As Education continues to  move toward agency-wide adoption of its electronic G5 grants  administration system, using a centralized approach, such as G5’s PAM  Module, to gather this information could provide Education opportunities  to share information about grantee performance across programs and  offices. If grant staff consistently noted performance issues in the PAM  Module, such as whether a particular grantee was placed on cost  reimbursement, RMS would have a central, easily accessible location  from which to incorporate this information into its grantee risk assessment  process. By doing so, all program offices would benefit by having the  most current information on the risks associated with specific grantees  before making new or continuation awards. This is particularly true given  that some entities may receive discretionary grants from more than one of  Education’s principal offices. However, RMS has not developed guidance  on the types of information grant staff should enter into the PAM Module  related to the “Issues” and “Notable Results” tabs, specifically, nor  circumstances under which using the PAM Module might be an effective  means to share information. Such guidance may better position  Education to achieve the full potential benefits of its grants management  system.
section_title: Recommendations for Executive Action
paragraphs: To enhance its oversight of discretionary grantee performance, the  Secretary of Education should direct RMS to work with principal offices,  as appropriate, to:
Establish and implement detailed written supervisory review  procedures for official grant files to provide reasonable assurance that  grant staff perform and document key monitoring activities.
Develop guidance for grant staff on using the PAM Module to share  information on grantee performance. Such guidance could clarify  expectations about when staff should use the “Issues” and “Notable  Results” tabs while monitoring grantees once the transition to  electronic grant files is complete, and clarify the types of information  staff should enter about grantee performance.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to Education for review and comment.  Their written comments are reproduced in appendix II. In its comments,  Education substantially agreed with both of our recommendations and  provided additional technical comments and clarifications, which we have  incorporated, as appropriate. Among other things, Education reported that  it will (1) establish a standard operating procedure for grant file reviews,  including a protocol for the review of these files to ensure that monitoring  efforts are documented appropriately; and (2) reinforce through grant  administration trainings the importance of sharing grantee performance  information agency-wide, including in the PAM Module.
In commenting on our finding about the extent to which grant staff  consistently applied discretionary grant monitoring policies, Education  focused much of its attention on the 58 performance reports we  determined were missing from the official grant files we reviewed, and  which were associated with about $21 million in discretionary grant  awards. Education stated that in every case, it found the performance  reports and acknowledged that, contrary to its policies, some were found  outside of the official grant files, such as in other Education systems.  Hence, Education stated that it believes no federal funds were at risk, in  part because it was able to locate the documentation necessary for  continuation awards. Because our review focused on the required  contents of the official grant file, per Education’s requirements contained  in its Handbook for the Discretionary Grant Process, we would not have  found documentation Education kept elsewhere. We have clarified our  report to note that our analyses pertain to the contents of the official grant  files we reviewed, and we make no judgment as to whether federal funds  were “at risk” or improperly awarded. Education also provided more  details on the safeguards described in the draft report that are meant to  ensure funding is only provided to grantees that have achieved  substantial progress and have complied with applicable regulations; we  included these details in the final report, as appropriate.
In commenting on our finding about identifying and sharing grantee  performance information agency-wide, Education agreed that sharing  such information throughout a grant’s lifecycle would be beneficial and  that a broader approach to such sharing would enhance steps it has  taken. Education also stated that the report does not provide a complete  assessment regarding system training and resources for staff use of the  PAM Module, and that its Office of the Chief Information Officer had  developed, in consultation with RMS and others, a user guide for the  PAM Module that provides multiple “guidance tips.” RMS officials also  confirmed, as stated in our draft report, that they had not developed  guidance clarifying how staff were to use the tabs we discuss—“Notable  Results” and “Issues.” Though we were unable to obtain a copy of the  user guide after several requests during the course of our review, we are  pleased that Education reports that one exists. As stated in our report,  establishing a common understanding of when to use these tabs and the  kinds of information to enter in them could help to ensure that the  information staff enter in the PAM Module about grantee performance will  be usable by RMS or other Education offices. We also recognize that staff  need flexibility to interpret grantee performance terminology within the  context of the particular grant programs they oversee. Because the intent  of the related recommendation on developing guidance is meant to  increase Education’s ability to share and use grantee performance  information, we have clarified the report language and recommendation  accordingly.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Secretary of Education, and  other interested parties. In addition, the report will be available at no  charge on GAO’s web site at http://www.gao.gov.
If you or your staff should have any questions about this report, please  contact me at (617) 788-0580 or nowickij@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in app. III.
section_title: Appendix I: Education’s Grant Staff Hiring Processes and Training
paragraphs: As part of our review, we discussed Education’s processes for hiring and  training staff with Office of Human Resources (OHR) and principal office  officials. Education last issued a hiring plan in 2009 that outlined specific  hiring goals and related initiatives, including attracting more diverse  candidates using special initiatives, as appropriate, such as the Office of  Personnel Management’s Pathways Program, to hire entry level staff. The  Pathways Program is a streamlined developmental program meant to  encourage careers in federal service by offering meaningful training and  career development for students and recent graduates.  These programs  can reduce the time it takes to recruit and hire staff, according to OHR  officials. OHR officials said they are currently reviewing the effectiveness  of Education’s strategy to recruit, hire, and retain staff—including grant  staff—and plan to issue an updated hiring plan in late 2017. As part of  this review, OHR officials said they will assess Education’s efforts to  recruit diverse candidates, and review the job series that comprise the  department’s grant workforce to ensure job descriptions match the duties  currently being performed by staff in those roles.
Education’s current job series for grant staff identifies specific skills grant  staff need to manage discretionary grants, and Education offers training  aimed at helping staff perform these duties effectively. The skills needed  to manage discretionary grants according to Education officials include,  for example, (1) knowledge of education theories, principles, processes,  and practices; (2) proficiency in application of fact-finding and  investigative techniques; (3) analytical ability; (4) oral and written  communication; (5) development of presentations and reports; and (6)  knowledge of specific program and grant information. Education officials  said they aim to hire staff with these skills and then train them on the  specifics of grants management through mentoring and on-boarding  programs, as well as on-the-job and optional training.
Officials from our three selected principal offices said they all have  established mentoring or on-boarding programs for new grant staff. In  fiscal year 2012, Education began offering an optional foundational  curriculum of grant management courses that, upon completion, lead to a  grant management certificate, according to RMS officials. These officials said the curriculum consists of eight courses (delivered over 15  nonconsecutive days) covering topics such as grants monitoring, financial  principles, ethics, and administrative requirements, among other things.  They said the program is offered each year to cohorts of about 35 grant  staff from across the department, and that since its inception, 228 of the  department’s roughly 656 grant staff members had completed it. Grant  staff can also choose to take a variety of other training opportunities that  are offered department-wide or by principal offices on topics such as cost  analysis and budget review.
According to RMS officials, only certain grant staff are required to receive  grant specific training, which is delivered in the form of an annual briefing.  Specifically, this briefing is intended for those employees holding a  discretionary grant license from RMS, which allows them to obligate and  award grant funds. RMS officials said the annual briefing is designed to  provide license holders an update on legislative and regulatory  developments that affect the agency’s grant administration policies. The  briefing also offers license holders an opportunity to share best practices,  common concerns, and recommendations on how to improve the grant  process.
section_title: Appendix II: Comments from the U.S. Department of Education
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Jacqueline M. Nowicki (617) 788-0580 or NowickiJ@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Bill MacBlane (Assistant  Director), Justin Dunleavy (Analyst-In-Charge), Robin Marion, and Flavia  Bleahu made key contributions to this report. Also contributing to this  report were James Bennett, Deborah Bland, Mindy Bowman, Amber  Yancey-Carroll, David Chrisinger, Sarah Cornetto, Aimee Elivert, Kelsey  Kennedy, Amy Moran Lowe, Monica Savoy, and Amy Sweet.