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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Jacqueline M. Nowicki (617) 788-0580 or NowickiJ@gao.gov. 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.

Summary: 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. 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. 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.