Congress passed the D.C. School Choice Incentive Act of 2003 in January 2004, which directed the Secretary of Education to award a grant on a competitive basis for up to 5 years to an entity or entities to use to make scholarship payments to parents of eligible students to be used for This Act private school tuition, fees, and transportation expenses.created the program known as the District of Columbia Opportunity Scholarship Program (OSP), the first private kindergarten-through-grade- 12 school choice program supported by federal funds. The purpose of the Act was to provide low-income parents of students in the District, particularly parents of students who attend public schools identified as in need of improvement under the Elementary and Secondary Education Act of 1965, as amended, “with expanded opportunities for enrolling their children in higher performing schools in the District” by providing annual scholarships to attend the private elementary or secondary schools of their choice. In April 2011, Congress reauthorized OSP for 5 years under the Scholarships for Opportunity and Results Act (SOAR Act). The Act sets forth requirements for participating private schools.provides that none of the funds may be used by an eligible student to enroll in a participating private school unless the participating school 1. has and maintains a valid certificate of occupancy issued by the 2. makes readily available to all prospective students information on its 3. if operating for 5 years or less, submits to the eligible entity administering the program proof of adequate financial resources and the ability to maintain operations throughout the school year; 4. agrees to submit to site visits as determined to be necessary; 5. has financial systems, controls, policies, and procedures to ensure that funds are used according to the statute; and 6. ensures that each teacher of core subject matter in the school has a baccalaureate degree or its equivalent, regardless of whether the degree was awarded in or outside of the United States. Education’s Office of Innovation and Improvement, which is charged with the management of the program and oversight of the program administrator, awards scholarship funds to a grantee and provides programmatic guidance and technical assistance. Soon after the D.C. School Choice Incentive Act passed in 2004, Education awarded the grant to operate the OSP to the Washington Scholarship Fund, a nonprofit organization in the District of Columbia that had experience providing privately funded scholarships to low-income students. In May 2010, Washington Scholarship Fund withdrew as the grantee and Education transferred the grant for administration of OSP to the DC Children and Youth Investment Trust Corporation (the Trust), a non-profit organization. As the program administrator, the Trust recruits new students and schools, receives and processes applications, and awards scholarship funds to program participants. The Trust is also responsible for providing oversight to participating private schools. The SOAR Act, which was enacted about 11 months after the Trust assumed responsibility for administering the OSP grant, states that the grantee (the Trust) must ensure that scholarships be awarded through a random selection process if more eligible applicants seek admission to the program than the program can accommodate, or if more eligible applicants seek admission to a participating school than the school can accommodate, and the Trust has implemented this requirement through a lottery process. The groups of applicants that have a priority status as defined in the SOAR Act are (1) applicants who are currently attending a school that has been identified for improvement, corrective action, or restructuring under the Elementary and Secondary Education Act of 1965, as amended; (2) applicants who have a sibling currently participating in OSP; and (3) applicants who received an OSP scholarship award in a previous year but did not use it. At the time of our review, the lottery process was carried out by Westat, a contractor. In addition, the SOAR Act updates the responsibilities for implementing OSP for the District and Education. It directs the Secretary of Education and the Mayor of the District to revise the MOU regarding the implementation of OSP that was required pursuant to the D.C. School Choice Incentive Act. The MOU governs the program for fiscal year 2011 and all subsequent years. It is intended to help ensure the efficient and effective continued implementation of the OSP in a manner that incorporates and is consistent with the roles and responsibilities of both Education and the District. According to the MOU, Education is responsible for overseeing the Trust as a recipient of federal funds and working with the Trust to ensure that it makes improvements to various aspects of program administration. The District also has a role in the administration of OSP. The MOU states that District agencies are directly responsible for conducting required building, health, and safety inspections of participating schools when notified by the Trust. According to Education, from fiscal years 2004-2010, Congress appropriated between $13.2 and $14.8 million per year for OSP, as shown in figure 1. For fiscal year 2011, the appropriated amount increased to about $15.5 million, and in fiscal year 2012, the appropriated amount increased to $20 million. Most recently, Congress appropriated about $19 million for the program for fiscal year 2013. Since OSP’s creation, about $152 million has been appropriated in total. The SOAR Act permits 11 percent of the grant funds each year to be used for certain administrative and other purposes as follows—with the remainder of the funds going towards student scholarships: 5 percent for the program’s evaluation, The grantee (the Trust): 3 percent for administrative costs, 2 percent for parental assistance, 1 percent for student academic support services. The law provides for an increase in the amount of the scholarship for eligible students. Specifically, it provides up to $8,000 for grades K-8 and $12,000 for grades 9-12 starting in school year 2011-2012. While tuition is paid first, any leftover scholarship funds can be used to pay for school fees—including uniforms, field trips, before and after care—and transportation expenses. Id., § 3007(c). Id., § 3007(d). thresholdbenefits (known as SNAP benefits) issued within the District. The student must also be at least 5 years old by September 30th of the school year. or that receive Supplemental Nutrition Assistance Program In the 2011-2012 school year, there were 53 participating schools in OSP (see fig. 2). These schools represent a wide range of grades, sizes, sectors, and tuition levels. These schools are located throughout all eight wards of the District, with the greatest number of schools located in Ward 3. In accordance with District regulations for all private schools operating in the District, these schools must be accredited by, or be in the process of being accredited by, at least one of seven recognized accrediting organizations or any other approved accrediting body. Schools that are unaccredited must submit documentation to demonstrate satisfactory evidence of instruction. Internal control is broadly defined as a process—affected by an entity’s board of directors, management, and other personnel—designed to provide reasonable assurance that the following objectives are being achieved: (1) effectiveness and efficiency of operations, (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations. Internal controls include management and program policies, procedures, and guidance that help ensure effective and efficient use of resources; compliance with laws and regulations; prevention and detection of fraud, waste, and abuse; and the reliability of financial reporting. Effective internal control is a major part of managing any organization to achieve desired outcomes and manage risk. Standards for Internal Control in the Federal Government presents five standards that define the minimum level of quality acceptable for internal control in government and provide the basis against which internal control is to be evaluated. These standards—control environment, risk assessment, control activities, information and communication, and monitoring—apply to all aspects of an agency’s operations and should be an integral part of a system that managers use to regulate and guide an agency’s operations. The private sector also recognizes the importance of internal controls for executives to better manage their business enterprises. The Committee of Sponsoring Organizations of the Treadway Commission’s (COSO)the same five key elements stated previously, which are intended to promote efficiency, reduce risk of asset loss, and help ensure the reliability of financial reports and compliance with laws and regulations. The Trust provides program information to prospective and current OSP families through a variety of outreach activities. To reach prospective OSP families, the Trust advertises through print, radio, and bus ads, as well as in newspapers and flyers posted in neighborhood libraries, recreation centers, and local government service centers. For example, one OSP parent told us she found out about OSP through a local Spanish-language newspaper. The Trust conducts several application events throughout the District where interested families can apply for the program. The Trust also holds a participating school fair in which OSP families can obtain additional information about participating schools. In addition, the Trust works with families directly, offering frequent personal contact to assist families through the scholarship application and renewal processes, according to Trust officials. The Trust provides this assistance via phone, e-mail, and through one-on-one interactions, and employs Spanish and Amharic speakers to assist non-English speaking families.Lastly, the Trust holds events to assist current OSP families, such as a workshop for students transitioning from 8th grade to high school. Most families we spoke with were generally happy with their children’s participation in the program, citing increased safety and security at their children’s OSP schools and improved quality of education. The SOAR Act requires all OSP grantee applicants to describe how parents of eligible students will be notified of the expanded choice opportunities each year, and the Directory is a key source of information about schools in the program. The Trust publishes the Directory for each school year in both English and Spanish, and it is designed to provide families with basic information on each participating school.