oversight

The University of Illinois at Chicago's (UIC) Gaining Early Awareness and Readiness for Undergraduate Programs project.

Published by the Department of Education, Office of Inspector General on 2004-01-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                           UNITED STATES DEPARTMENT OF EDUCATION 

                                                OFFICE OF INSPECTOR GENERAL 

                                                                     REGION V 

                                                             III NORTH CANAL. SUITE 940 

                                                               CHICAGO. ILLINOIS 60606 


                                                                   FAX: (312) 353·0244
    Audit                                                                                                                                      Investigation
(312) 886-6503                                                                                                                                (312) 353-7891
                                                                                                                   JAN 142004
                                                                                      Control Number ED-OIG/A05-D0017

                 Dr. Sylvia Manning, Chancellor
                 University of Illinois at Chicago
                 601 South Morgan, MC 102
                 Chicago,IL 60607-7128

                 Dear Dr. Manning:

                 This Final Audit Report presents the results of our audit of the University of Illinois at
                 Chicago's (UIC) Gaining Early Awareness and Readiness for Undergraduate Programs
                 (GEAR UP) project. The objectives of our audit were to detennine if, for the period
                 September 1, 1999, through August 31 , 2002, UIC' s (1) GEAR UP project served the
                 1,130 participants it was funded to serve and (2) partnership matched federal
                 contributions with non-federal contributions for each year of the grant in accordance with
                 the percentages stated in its application.

                 Our audit disclosed that mc did not comply with the terms of its agreement with the U.S.
                 Department of Education (Department). mc failed to show that its GEAR UP project
                 provided services to 1,130 participants from its cohort1 during each of the first three years
                 of the grant (September 1, 1999, through August 31,2002). In addition, mc and its
                 partnership failed to provide $990,847 in required non-federal matching contributions for
                 the first three years of the grant. Therefore, we recommend that the Chief Financial
                 Officer (CFO), Office of the Chief Financial Officer, in conjunction with the Assistant
                 Secretary, Office of Postsecondary Education (OPE), require mc to refund all
                 $1,018,212 received during the first three years of the grant and take afpropriate action
                 pursuant to 34 C.F.R. § 74.62 to protect future GEAR UP grant funds.

                 We provided mc with a draft of this report. mc agreed that the individual files of some
                 of the students for whom the GEAR UP project provided services were incomplete and
                 did not include all of the documents necessary to show services received by participants.
                 mc also agreed that it did not secure all of the matching funds for the first three years of
                 the GEAR UP grant. As a result of information provided during the audit, mc has
                 instituted action to document all services provided to each participant in the individual
                 student files.




                 134 C.F.R. § 694.3(a) defmes a cohort as one entire grade level of participants.
                 2VIC' s GEAR UP project was scheduled to receive $370,768 in federal funds for the 2003-2004 grant
                 year. However, the Department elected not to fund VIC's project for a fifth year.


                        Our mission is to promote the efficiency, effectiveness, and integrity of the Department's programs and operations.
However, UIC asserts that the GEAR UP project did provide the services proposed in the
grant application to the participants. UIC also asserts that, under grant regulations, it has
the entire life of the grant to secure all the matching funds. UIC stated that GEAR UP
and the UIC staff continue to aggressively pursue new matching partners that will yield a
significant match over the entire life of the grant. Therefore, UIC does not concur with
the recommendation to return to the Department the $1,018,212 in federal funds it
received for the first three years of the grant. UIC’s comments are summarized in the
body of the report and included in their entirety as an attachment.

                                                AUDIT RESULTS

Finding No. 1 	 UIC Did Not Show That it Provided Services to 1,130 Eligible
                Participants

UIC's GEAR UP project did not have evidence showing it provided services to the 1,130
eligible participants it was funded to serve during the period September 1, 1999, through
August 31, 2002. Pursuant to 34 C.F.R. §§ 694.3 and 75.732,3 a GEAR UP project must
provide services to participants from one entire grade level (cohort) beginning not later
than the 7th grade and ensure that services are provided to those participants through the
12th grade. A grantee must “keep records of significant project experiences and results”
and use the records to “determine progress in accomplishing project objectives.”

Because UIC could not show that it provided the required services to participants from its
cohort, low-income participants in UIC’s cohort may not have received all the services or
information necessary to enter and succeed in postsecondary education. UIC did not
provide services to all of the participants it was funded to serve because of (1)
nonexistent procedures for providing services to participants from its cohort, (2)
inadequate non-federal matching contributions, and (3) inadequate staffing levels on the
project. The CFO, in conjunction with the Assistant Secretary, OPE, should require UIC
to refund the $1,018,212 of federal funds it received for the first three grant years and
take appropriate action pursuant to 34 C.F.R. § 74.62 to protect future GEAR UP grant
funds.

Failure to Deliver Services to Eligible Participants
Although UIC agreed to serve 1,130 participants from its cohort each year, the list of
GEAR UP participants UIC provided us showed only 862 and 887 participants for the
1999-2000 and 2000-2001 grant years, respectively, and 1,281 participants for the 2001-
2002 grant year. During the audit, we randomly selected and reviewed 20, 20, and 60
participants’ files from the 1999-2000, 2000-2001, and 2001-2002 grant years,
respectively, for evidence of (1) participant eligibility, and (2) services that UIC stated it
would provide to all GEAR UP participants.




3
    All regulatory citations are as of July 1, 1999, unless otherwise noted.



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Our review disclosed that

• 	 for the 1999-2000 grant year, none of the 20 participants’ files had documentation to
    show the participants were part of UIC’s cohort and therefore eligible to participate in
    the project. Based on our review, we are 90 percent confident that UIC maintained
    evidence showing that no more than 93 of the 862 participants on its list were eligible
    to receive services during the 1999-2000 grant year.
• 	 for the 2000-2001 grant year, none of the 20 participants’ files had documentation to
    show the participants were part of UIC’s cohort and therefore eligible to participate in
    the project. Based on our review, we are 90 percent confident that UIC maintained
    evidence showing that no more than 95 of the 887 participants on its list were eligible
    to receive services during the 2000-2001 grant year.
• 	 for the 2001-2002 grant year, only 23 of the 60 participants’ files had documentation
    to show the participants were part of UIC’s cohort and therefore eligible to participate
    in the project. Based on our review, we are 90 percent confident that UIC maintained
    evidence showing that no more than 634 of the 1,281 participants on its list were
    eligible to receive services during the 2001-2002 grant year.

In response to a draft of this audit report, UIC provided us with additional documentation
(parent and participant activity sign-in sheets) showing it provided services to some of its
participants during the first three years of the project. UIC provided us with spreadsheets
detailing its review of all participant files for services provided to participants during the
first three years of the grant.

We analyzed UIC’s spreadsheets and the additional documentation that UIC provided.
Our analysis disclosed that

• 	 for the 1999-2000 grant year, UIC provided services to only 159 (about 18 percent) of
    the 862 participants it reported serving.
• 	 for the 2000-2001 grant year, UIC provided services to only 246 (about 28 percent) of
    the 887 participants it reported serving.
• 	 for the 2001-2002 grant year, UIC provided services to only 78 (about 6 percent) of
    the 1,281 participants it reported serving.

Participants Must Receive Documented Services
Pursuant to 34 C.F.R. §§ 694.2 and 694.3, the Secretary awards amounts to GEAR UP
partnerships based on the number of participants the partnership “proposes to serve that
year, as stated in the Partnership’s plan.” A partnership that chooses to use the cohort
approach in its GEAR UP project must (a) provide services to at least one entire grade
level (cohort) of participants beginning not later than the 7th grade; and (b) ensure that
services are provided to those participants through the 12th. UIC's application for the
GEAR UP project stated that it would serve a cohort of 1,130 low-income participants by
providing services such as curricula in algebra, foreign languages, science, and English
composition; after school tutoring programs; college visitations; mentoring and
shadowing programs; and cultural and educational enrichment activities.



Final Audit Report	                           3                             ED-OIG/A05D0017
Pursuant to 34 C.F.R. § 75.732, a grantee shall keep records of significant project
experiences and results. The grantee shall use the records to determine progress in
accomplishing project objectives and revise those objectives, if necessary.

Low-Income Participants Could Be Harmed
During the first three years of the grant, UIC received $1,018,212 in federal GEAR UP
funds. Because UIC did not maintain evidence that it used these funds to provide
services to participants from its cohort per the terms of its agreement with the
Department, low-income participants in UIC’s cohort may not have received all the
services or information necessary to enter and succeed in postsecondary education.

Inadequate or Nonexistent Procedures for Complying with the Terms of the Grant,
Failure to Secure Non-Federal Matching Contributions, and Staff Vacancies
UIC’s GEAR UP project did not deliver the required services to 1,130 participants from
its cohort during the first three years of the grant because (1) UIC’s procedures for
selecting program participants were inadequate, (2) UIC lacked procedures for providing
services and maintaining documentation to show services were provided to participants,
(3) UIC did not secure the required non-federal matching contributions (see Finding No.
2), and (4) UIC did not staff the GEAR UP project in an effective manner.

Per the terms of its agreement and its organizational chart, the GEAR UP project was to
have one full-time staff member in the positions of Secretary, Academic Coordinator,
Counseling Coordinator, Outreach Coordinator, and Project Director. These individuals
were responsible for such duties as the planning, coordination, and execution of all
project activities; project budget management and development; developing and
maintaining the project; maintaining all files; developing recruitment and identification
plans; organizing community services programs; coordinating college visitations and
exposure activities for GEAR UP participants; and assisting school counselors in
developing a systematic counseling system that prepares students for entry into higher
education. During the first three grant years (36 months), the following positions were
vacant:

Table I
                 Position                               Length of Time Vacant (in Months)
Academic Coordinator                                                   30
Counseling Coordinator                                                 36
Outreach Coordinator                                                    6
Project Director                                                       34

UIC's GEAR UP project did not have an Academic Coordinator for the first two and a
half years of the project and did not have a Counseling Coordinator for all three years of
the project. In addition, the GEAR UP project did not have an Outreach Coordinator


4
  In addition, the Project Director position was vacant between October 2002 and June 2003. We did not
include the length of this vacancy in Table I because the period was outside the scope of our audit.



Final Audit Report                                 4                                ED-OIG/A05D0017
until halfway through the first year of the project and did not have a Project Director until
three months after the start of the project.

Recommendations

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE,

1.1 	 Require UIC to return to the Department the $1,018,212 in federal funds it received
      for the first three years of the grant, and
1.2 	 Take appropriate action pursuant to 34 C.F.R. § 74.62 to protect future GEAR UP
      grant funds.

Auditee Comments

UIC agreed that the individual files of some of the students were incomplete and did not
include all of the documents necessary to show services received by participants. UIC
further stated that the GEAR UP project did provide the services proposed in the grant
application, and that all of the students who participated in the project during the audit
period were eligible based on the fact that they attended schools where more than 75
percent of the students enrolled were eligible for free or reduced-price lunches. UIC
provided additional information as appendices to its response and stated that the
appendices document that services were provided to eligible students, parents, and school
staff during the first three years of the grant. The appendices included the results of
UIC’s review of 100 percent of the project participants’ files for the first three years of
the grant.

UIC, as a result of information provided during the audit, has instituted aggressive action
to document all of the services provided in each student’s file. While all of the staff
included in the initial GEAR UP proposal were not on board for the first three years of
the grant, the Project Director was hired three months after the award notice was received
and the Outreach Coordinator was hired three months later.

UIC stated that it has taken significant action to assure that the project has appropriate
fiscal and programmatic management and disagreed with the recommendation that it
should return to the Department the federal funds it received for the first three years of
the grant.

OIG Response

We reviewed the additional information that UIC provided in response to a draft of this
audit report. UIC did not provide any additional information that would cause us to
revise our finding regarding the eligibility of participants during the audit period.
Similarly, UIC did not provide any evidence that caused us to change our finding
regarding UIC’s failure to provide services to the 1,130 participants its project was
funded to serve.




Final Audit Report	                           5                            ED-OIG/A05D0017
In response to our draft audit report, UIC compiled activity sign-in sheets and other
documentation for the first three years of the grant. We reviewed parent and participant
activity sign-in sheets that UIC provided and analyzed the spreadsheets documenting
UIC’s review of 100 percent of the participants’ files. When counting the number of
students receiving documented GEAR UP services for each year, we did not count
students who only had Iowa Tests of Basic Skills scores or participated only in an
orientation session. We did not consider the test scores or participation in orientation to
be services because UIC’s GEAR UP grant application stated that it would provide more
services than just Iowa Tests of Basic Skills scores and orientation.

Even if we were to consider the test scores and orientation as services, UIC would have
provided documented services to no more than 254, 345, and 147 students, respectively,
during the 1999-2000, 2000-2001, and 2001-2002 grant years—far less than the 1,130
students UIC’s GEAR UP project was funded to serve.

Therefore, we did not revise our recommendation that the Department recover 100
percent of the funds UIC received during the first three years of the GEAR UP grant.

Finding No. 2 UIC Did Not Make Required Matching Contributions

UIC and its partnership did not provide $990,847 of the $1,021,157 in non-federal
matching contributions it committed to provide during the first three years of the grant.
Pursuant to 34 C.F.R. § 694.8, a project must comply with the matching percentage stated
in its application for each year of the project.5 According to its revised budget, UIC’s
GEAR UP project was to provide just over 50 percent ($1,021,157) of the total
anticipated cost of the project ($2,039,369) during the first three years of the grant.

UIC’s failure to provide the proposed non-federal matching contributions for the first
three years of the grant, in part, prevented the GEAR UP project from delivering services
per the terms of UIC’s agreement with the Department. UIC failed to provide its required
non-federal matching contributions because it did not have written policies and
procedures in place to monitor and document the accumulation of non-federal matching
contributions. The CFO, in conjunction with the Assistant Secretary, OPE, should
require UIC to refund the $1,018,2126 of federal funds it received for the first three years
of the grant and take appropriate action pursuant to 34 C.F.R. § 74.62 to protect future
GEAR UP grant funds.

Non-Federal Matching Contributions Not Provided
UIC secured allowable non-federal matching contributions of only 1.5 percent
($30,310/$2,039,369) of the total cost of the project over the first three years of the grant.

5
  In addition, during the first year of the grant, UIC was required to provide not less than 20 percent of the
cost of the project from non-federal matching contributions. Effective May 30, 2000, the regulation
governing matching requirements was moved to 34 C.F.R. § 694.7. The 20 percent rule was eliminated in
the revised regulation, but the requirement to comply with the matching percentage stated in the application
for each year of the project stayed the same.
6
  These are the same dollars questioned in Finding No. 1, Recommendation 1.1.


Final Audit Report                                    6                                 ED-OIG/A05D0017
For the 1999-2000, 2000-2001, and 2001-2002 grant years, UIC's revised GEAR UP
budget stated that it would match $330,375, $340,287, and $350,495 ($1,021,157),
respectively, from non-federal sources. The $1,021,157 was just over 50 percent of the
total anticipated cost ($2,039,369) of the project for the first three years of the grant (see
Table II).

Table II
                                                                   Non-
                                       Total    Salaries          Salaries
                  Required             Non-       and               and             Matching
          Federal   Non-              Federal    Wages Employee Wages Allowable Amount
  Grant    Funds   Federal Total Cost Matching Matching Benefits Matching Matching    Not
  Year    Awarded Matching of Project Claimed Portion    Portion  Portion   Portion Provided
1999-2000 $329,422 $330,375 $659,797    $18,679  $11,000   $2,090    $5,589  $13,090 $317,285
2000-2001    $339,305   $340,287   $679,592    $19,422   $11,330   $2,323    $5,769         $0    $340,287
2001-2002    $349,485   $350,495   $699,980    $23,414   $14,000   $3,220    $6,194     $17,220   $333,275
Totals      $1,018,212 $1,021,157 $2,039,369   $61,515   $36,330   $7,633   $17,552     $30,310   $990,847


For the 1999-2000, 2000-2001, and 2001-2002 grant years, UIC's records showed that it
secured non-federal matching contributions of only $61,515. Of the total non-federal
matching contributions UIC recorded, $13,653 ($11,330 + $2,323) was attributed to
salaries, wages, and employee benefits for an employee whose associated costs were
included in UIC's indirect cost pool. Those costs should not have been included as part
of the GEAR UP non-federal matching contributions. In addition, the non-salaries and
wages portion ($17,552) of UIC’s matching contribution is unallowable because UIC's
documentation was insufficient to verify that the non-federal matching contributions were
used for GEAR UP activities. Consequently, only $30,310 of the matching contributions
UIC recorded for the first three years of the grant is allowable.

Not Less Than 50 Percent of the Cost of the Project Must Come from Non-Federal
Matching Contributions
Pursuant to 34 C.F.R. § 694.8,7 a project must comply with the matching percentage
stated in its application for each year of the project period, and the non-federal share of
the cost of the GEAR UP project must be not less than 50 percent of the total cost over
the project period. According to 34 C.F.R. § 74.23, all contributions, including cash and
third party in-kind, are accepted as part of the recipient's cost sharing or matching when
contributions are, among other things, verifiable from the recipient's records. The
recipient's supporting records for in-kind contributions from third parties must be
documented and, to the extent feasible, supported by the same methods used by the
recipient for its own employees. The basis for determining the valuation for personal
service, material, equipment, buildings, and land also must be documented. Pursuant to
CAS8 9905.502, “no final cost objective shall have allocated to it as a direct cost any


7
  Effective May 30, 2000, the regulation governing matching requirements was moved to 34 C.F.R. §
694.7. 

8
  Cost Accounting Standards for Educational Institutions as described in OMB Circular A-21, Cost 

Principles for Educational Institutions. 




Final Audit Report                                   7                                ED-OIG/A05D0017
cost, if other costs incurred for the same purpose, in like circumstances, have been
included in any indirect cost pool to be allocated to that or any other final cost objective.”

Federal Interest Harmed and Participants Not Served
UIC’s failure to provide the proposed non-federal matching contributions for the three
grant years harmed the federal interest. In addition, the lack of sufficient non-federal
matching contributions, in part, prevented the GEAR UP project from delivering services
per the terms of its agreement with the Department (see Finding No.1).

Non-existent Policies and Procedures
UIC failed to secure the required non-federal matching contributions because it did not
have policies and procedures in place to monitor and document the accumulation of non-
federal matching contributions. After the initiation of our audit in April 2003, UIC
developed a Third-Party In-Kind Contributions-Certificate of Donated Service form that
would allow the project to better track matching contributions. If used, the form would
provide UIC with a method to track non-federal matching contributions.

Recommendations

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE,

2.1 	 Require UIC to return to the Department the $1,018,212 in federal funds it received
      for the first three years of the grant,9 and

2.2 	 Take appropriate action pursuant to 34 C.F.R. § 74.62 to protect future GEAR UP
      grant funds.

Auditee Comments

UIC concurred that, for the first three years of the GEAR UP grant, it did not secure all of
the matching funds. UIC asserts that, under grant regulations, it has the entire life of the
grant to secure all the matching funds. UIC further stated that GEAR UP and UIC staff
continue to aggressively pursue new matching partners that will yield a significant match
over the entire life of the grant. As part of its response, UIC provided us with letters of
commitment it received for the period September 1, 1999, through August 31, 2002. It
also provided us with documentation of matching funds it secured after the start of and
subsequent to our audit.

OIG Response

We did not revise our finding or recommendations. UIC did not secure the required non-
federal matching contributions it committed to provide during the first three years of the
grant. Pursuant to 34 C.F.R. § 694.8 (now 34 C.F.R. § 694.7), a project must comply


9
 The $1,018,212 questioned in Finding No. 2, Recommendation 2.1, consists of the same dollars
questioned in Finding No. 1, Recommendation 1.1.


Final Audit Report	                                8                               ED-OIG/A05D0017
with the matching percentage stated in its application for each year of the project.10 The
non-federal share of a project must not be less than 50 percent of the total cost of the
project. For the 1999-2000, 2000-2001, and 2001-2002 grant years, UIC's revised GEAR
UP budget stated that it would match $330,375, $340,287, and $350,495 ($1,021,157),
respectively, from non-federal sources. During the first three years of the grant, UIC
secured allowable non-federal matching contributions of only $30,310—1.5 percent of
the total cost of the project.

In its response dated October 6, 2003, UIC claimed that, pursuant to the regulations, it
has the entire life of the grant to secure all matching funds and stated that GEAR UP and
UIC staff continue to aggressively pursue new matching partners that will yield a
significant match over the entire life of the grant. However, UIC provided us
documentation of non-federal matching contributions it secured subsequent to our audit
period totaling only $19,896. As of the end of the fourth year of the grant, UIC had
secured allowable non-federal matching contributions totaling only $50,206 ($30,310 +
$19,896). According to its revised GEAR UP budget, UIC planned to secure non-federal
matching contributions of $1,753,205 ($330,375, $340,287, $350,495, $361,010 and
$371,038) during the five-year life of the project. Therefore, UIC not only did not meet
its annual matching requirements, but it would now have to secure $1,702,999 in non-
federal matching contributions in its final year of the grant to achieve the 50 percent it
committed to in its grant application.

                                         BACKGROUND
GEAR UP is a discretionary grant program designed to increase the number of low-
income participants who are prepared to enter and succeed in postsecondary education.
Under the GEAR UP program, the Department provides five-year grants to states and
partnerships to provide services at high poverty middle and high schools. Grantees serve
an entire cohort of participants beginning no later than the 7th grade and follow the
cohort through high school.

The Department awarded UIC its GEAR UP grant (P334A990454-02) for the period
September 1, 1999, through August 31, 2004. UIC was awarded GEAR UP funds and
was required to contribute funding from non-federal sources as follows:

Grant Year        Award Amount                        Required Match                      Total
1999-2000         $ 329,422                           $ 330,375                           $ 659,797
2000-2001         $ 339,305                           $ 340,287                           $ 679,592
2001-2002         $ 349,485                           $ 350,495                           $ 699,980
2002-2003         $ 359,969                           $ 361,010                           $ 720,979
2003-2004         $ 370,768                           $ 371,038                           $ 741,806
Totals            $1,748,950                          $1,753,205                          $3,502,155


10
  Pursuant to the regulations in effect for the 1999-2000 grant year, UIC was required to provide not less
than 20 percent of the cost of the project from non-federal matching contributions.



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UIC's application stated that its GEAR UP project would serve a cohort of 1,130 low-
income participants each year of the project. According to the application, the services
would include (1) curricula in algebra, foreign languages, science, and English
composition; (2) after school tutoring programs; (3) college visitations; (4) mentoring and
shadowing programs; and (5) cultural and educational enrichment activities.

On September 17, 2002, the Department placed UIC’s GEAR UP project on high-risk
status because it had not served the number of participants it was funded to serve. The
Department also was concerned about UIC’s lack of clarity in listing its active partners
and their commitment to the matching contributions. The Department required UIC to
comply with certain special conditions and corrective actions—such as monthly reports,
revised budgets, detailed accounting, and revised goals and objectives. If all the
corrective actions were not addressed in a satisfactory manner, the Department could
terminate the grant.

According to 34 C.F.R. § 74.62, if a recipient materially fails to comply with the terms
and conditions of an award, whether stated in a federal statute, regulation, assurance,
application, or notice of award, the Secretary may, in addition to imposing any of the
special conditions outlined in 34 C.F.R. § 74.14, take one or more of the following
actions as appropriate in the circumstances: “(1) Temporarily withhold cash payments
pending correction of the deficiency by the recipient or more severe enforcement action
by the Secretary, (2) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action not in compliance, (3)
Wholly or partly suspend or terminate the current award, (4) Withhold further awards for
the project or program, (5) Take other remedies that may be legally available.”

                OBJECTIVES, SCOPE, AND METHODOLOGY
The objectives of our audit were to determine whether UIC’s (1) GEAR UP project
served the 1,130 eligible participants it was funded to serve and (2) partnership matched
federal funds with non-federal matching contributions for each year in accordance with
the percentage stated in its application for the period September 1, 1999, through August
31, 2002.

To achieve our objectives, we

1. 	 obtained background information on UIC’s GEAR UP project;
2. 	 requested UIC’s written policies and procedures over (a) selecting project
     participants, (b) using GEAR UP funds, (c) accounting for GEAR UP funds
     (including matching from non-federal funds), (d) determining the eligibility of
     services provided, and (e) submitting required reports;
3. 	 reviewed written policies and procedures for (a) using GEAR UP funds and (b)
     accounting for GEAR UP funds, the only written policies and procedures UIC
     provided us;11
11
 After the initiation of our audit in April 2003, UIC developed and implemented a procedure to track
matching contributions.


Final Audit Report	                                10                                ED-OIG/A05D0017
4. 	 reviewed performance reports for the audit period, identified the number of
     participants UIC reported as being served, and identified the amount of non-federal
     matching contributions UIC reported as being contributed to the project;
5. 	 reviewed 20, 20, and 60 randomly selected participant files from the 1999-2000,
     2000-2001, and 2001-2002 grant years, respectively, from the lists of participants
     UIC provided. These lists showed 862, 887, and 1,281 participants, respectively;
6. 	 obtained UIC’s records covering the GEAR UP project and identified the sources of
     revenue for each year of the project;
7. 	 compared the federal funds revenue received each year with non-federal matching
     contributions and calculated the percentage of total project costs that UIC provided
     each year from non-federal sources; and
8. 	 reviewed information UIC provided in response to the draft audit report that
     documented services participants received during the audit period, including (a)
     spreadsheets that compiled activity sign-in sheets and other documentation for every
     participant listed for the 1999-2000, 2000-2001, and 2001-2002 grant years; and (b)
     parent sign-in sheets and participant activity sign-in sheets supporting the
     spreadsheets UIC developed.

We also relied, in part, on computer-processed data recorded in UIC’s FileMaker Pro©
Database system. UIC uses the FileMaker Pro Database to keep a record of all
participants in the GEAR UP project. To assess the reliability of the data, we reviewed
the 2001-2002 participant list that included 1,281 GEAR UP participants. The data
appeared to be complete but not entirely accurate (the list included duplicate names).
However, the duplicate names were minimal, and we do not believe the use of the data
would lead to incorrect conclusions. Therefore, based on our review, we concluded that
the data were sufficiently reliable for the purposes of our audit.

We performed our audit work at UIC’s administrative offices and our Chicago office
from March through June 2003. We discussed the results of our audit with UIC officials
on July 8, 2003. Our audit was performed in accordance with generally accepted
government auditing standards appropriate to the scope of the review described above.

              STATEMENT ON MANAGEMENT CONTROLS
As part of our audit, we assessed UIC’s system of management controls, policies,
procedures, and practices applicable to its administration of the GEAR UP project.

For the purpose of our audit, we classified the significant GEAR UP controls into the
following categories:

    • 	 selecting project participants;
    • 	 using GEAR UP funds;
    • 	 accounting for GEAR UP funds (including documenting and monitoring non-
        federal matching contributions);
    • 	 determining the eligibility of services provided; and
    • 	 submitting required reports.


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Because of inherent limitations, a study and evaluation made for the limited purpose
described above would not necessarily disclose all material weaknesses in the
management controls. However, our assessment disclosed significant management
control weaknesses that adversely affected UIC's ability to administer the GEAR UP
project. These weaknesses included (1) inadequate procedures for selecting program
participants, (2) nonexistent procedures for delivering services and maintaining
documentation sufficient to show what services were provided to participants from UIC’s
cohort, and (3) nonexistent procedures for documenting and monitoring the accumulation
of non-federal matching contributions. These weaknesses and their effects are discussed
in the AUDIT RESULTS section of this report.

                        ADMINISTRATIVE MATTERS
Statements that managerial practices need improvements, as well as other conclusions
and recommendations in this report, represent the opinions of the Office of Inspector
General. Determinations of corrective action to be taken will be made by the appropriate
U.S. Department of Education officials.

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

                              Jack Martin, Chief Financial Officer
                              Office of the Chief Financial Officer
                              U.S. Department of Education
                              Room 4E313
                              400 Maryland Avenue, SW
                              Washington, DC 20202

                              Sally Stroup, Assistant Secretary
                              Office of Postsecondary Education
                              U.S. Department of Education
                              Room 7115
                              1990 K Street, NW
                              Washington, DC 20006

It is the policy of the U.S. Department of Education to expedite the resolution of audits
by initiating timely action on the findings and recommendations contained therein.
Therefore, receipt of your comments within 30 days would be greatly appreciated.




Final Audit Report                          12                            ED-OIG/A05D0017
In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by
the Office of Inspector General are available to members of the press and general public
to the extent information contained therein is not subject to exemptions in the Act.


                                                    Sincerely,



                                                 Cl:t:;~
                                                    Regional Inspector General
                                                    for Audit


Attachment




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                                             UN I VERS ITY OF I LLI NO I S
                                                    AT CHICAGO


           om"" of theCho."""lIo. (MC 102)
           283J U n ;v~rs;ly HaU
           601 South Morgan 51""'1
           C hicago, Illinois 60607-7 128


                                                                Oc lobcr 6, 2003


           Mr. Richard J. Dowd
           Region al Inspector General for Audit
           U. S. Department of Educat ion
           Office of In spector General
           III N. Canal StfCCt, Suite 940
           Chicago, Illinois 60606-7204

            Re: Contro l Number ED-OIG/A05-DOOI1

            Dear Mr. Dowd:

                    I am in rece ipt of the Draft Audit Report for the University of Illinois at Chicago's (U IC)
            Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) project and am
            providin g the following responses to the findings in accordance with the instructions listed under
            "Administrati ve Matters" in the Draft Audit Report.

                     The Univers ity appreciates the opportunity to respond to the Draft Audit Resu lts. We have
            provided documentation to support our responses to the Resu lts and if you request, will provide
            addi tional information to document that setviccs wcre provided to eligible students, their parents and
            their school staffs.


                                                                Si ncerely,


                                                                 Cu:", ~       .
                                                                ~fvia Manning ~
                                                                Chance llor




            Attachments




                                                                UIC
                                              I'Mne (JI2) 41 3-.l3S() •   F.~   (312) 41 3-3393




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'   ...

          UN IVERS ITY OF I.LLl NOIS AT C HI CAGO RESPONSE TO THE DRAFT AUDIT
          RE I'O RT OFTHE GEAR UP PROJECT


          FL~ Dl NG No. I Ul C Failed to ~"lnt.ln E"ldenee S howi ng It Provided Services to 1,130
          Participa nts.

          The University concurs that the individual files of some oflhe students for whom we provided
          services were incomplete and did not include all oflhe documents nccessary to show services
          received. However UIC's GEAR UP project did provide the services proposed in the gran!
          IIpplication. All of the Siudents who partici pated (862 in 1999·2000; 887 in 2000·200 I; lind
          1,28 1 in 200]·2002) were eligible based on the facllhatlhey auended schools where more than
          75% of the students enrolled in the schools were eligible for free or reduced· price lunch.
          Accord ing to 34 C. F.R. 694.3, the students scrvcd must be enrolled "in a pan;cipa/ing school in
          which alleasl 50 percenl offhe silldents are eligiblefor free or reduced.price 'I/llch" under the
          National School Lunch ACI. The studcnts served, were enrolled in larget schools located in some
          ofChieago's poorest areas: Englewood, 40% of population below the poverty level; Grand
          Doulevard 64%; West Englewood 30%; and South Shore 27%. More than 60% of lhe adult
          population in all of the target areas has not Dltained a baccalaureate degree.

          Program files for individual students contained the students' application which documented
          when the students enlered the program and the names of the schools in which they were enrolled.
          Servites tbat were provided to eligible students, parents and school stafTwere documented on
          separate ··sign·in" and "lIttivif}'" sheets which included names ofthc students, parents, and
          school stafTwho participated in each activity. The "activity" sheets also contained infonnation
          aboutlhe specifi c program servites, including where the service was conducted and the name of
          the Match Parmer{s) andIor GEAR UP stafTthat provided the service. Activities included the
          following:

                 I.      Do II Yourself Career Day - career exploration and shadowing
                 2.      Sthool Staff Orientation - workshops held at the target sthools 10 orient school
                         staffabout the importance ofa rigorous academic curricul um for low·income
                         students
                 3.      Tesl Taking Workshops - lest laking strategies to prepare students for mandatory
                         standardized examinations
                 4.      Parent Orientation - workshops on the importance of parent a! involvement in the
                         college-go ing and financial aid process
                  5.     Cultural Events - rallies to engender exciteme nt in and motivation for studenlS to
                         participate in Salurday tutoring and cou nseling programs
                 6.      Saturday Co11ege Classes - curric ula included Moring classes in math, English,
                         foreign language, and science
                  7.     College Visitation - visits to local area colleges such as Loyola lind DePaul
                         Universities and of course many of the activities were held here at the University
                         of Illinois at Chicago.




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          1\5 II result of information provided through the audit, the University has instituted aggressive
          action to document all of the services provided in each student's individual file. This includes
          individual contact sheets for each activity the student participates in, as we ll as a summary
          document that will track the services delivered 10 ind ividual students. The resu lts orlhis action
          will document significant project c)(periences and the steady, gradual success or ttle project in
          helping students become ready for undergraduate programs.

           While all orlhe Slaffinciuded in the initial GEAR UP proposal were nOlan board for the first
           three years orlhe grant, the Project Director was hired three months after the award notice was
           received lind the Outreach Coordinator was hi red three months later. The Project Director sel up
           the procedures and began the activities orthe GEAR UP program lind initiated the first dispersal
           of federa l funds. The Outreach Coordinator o rgani zed many of the community service programs
           and exposure activities. In addition, during the first three ycars o f the grant, personne l in the
           Office of the Vice Chancellor for Student Affairs provided planning, management, and clerical
           assistance 10 the GEAR UP proje<:\. This assistance allowed the I' roje<:t Director a nd the
           Outreach Coordinator to spend 100 % of their time 011 the re<:ruiting and identifying eligible
           students, creati ng working relationships with school staffs, organizing commUl1ity service
           programs, coord inating exposure activi ties, and securing Match r anners' contributions.

           The GEA R UP staff and University resources that were provided to the project during the first
           three years mel the objectives set fonh in the ini tial proposal. In addition, the Depanmenl of
           Education Program staff imposed special conditions on the program that required signi ficant
           management responsibilities that were assumed by the Office of the Vice Chancellor for Student
           Affairs' non-project staff. This improvement of management operations was recogn ized by the
           Department of Education Program staff in a leiter from Lynn B. Mahaffie, Director, GEAR UP,
           dated August 8, 2003 in which she stated the foll owing:
                   "As you know, the Department of Education placed the grant on "high-risk" status on
                   September 17,2002. Since that time, the project has implemented a number of changes
                   that have greatly improved the management orthe grant."

           Although federal funds for the fifth year of the grant period have beel1 discontinued, the
           University will continue to opc:r3te the GEAR UP project and with its Match Panncrs, continue
           to provide services to eligible students. Many of the students will be entering their junior year
           and will need the services of the project to ensure that they succeed in thi s critical year of their
           prtpanllion 10 enler undergraduate educat ion.

           Addi tional information is provided as appendices to this response, wh ich document that services
           were provided to el igible students, parenls, and school staffs during the first three years of the
           grant. The costs of the services were consistent wilh the budget approved by the Dcpanmenl of
           Educat ion Program Staff and were administered wi th frugality and in keeping with University
           accoun tin g procedures.

           The University has taken significant aclion to assurt that the project has appropriate fiscal and
           programmatic manageme nt and disagrees with the recommenda tion that it should retum to the
           Depanment of Education the federal funds it received for the first three years of the grant.




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 ".


          n NDlNG No. 2 Ule Failed to Makf R«juired Malchlng Contributions

          The University concurs thai for the first three years of the granl, it did flOt s«:ure all oflhc
          matching funds. However, under grant regulations, the University has the entire life of the grant
          to secure all of the malching funds. GEAR UP and University staffs continue to aggressively
          pursue new Matching Partners thaI will yield a significant match over the entire life of the gran\.
          Although grant funds were discontinued, additional matching funds will anow the GEAR UP
          proje<:IIO deliver services to students in addition to those services funded solely by the
          University.

          As a resu lt of information provided through the: audit, the procedures instituted by the University
          will allow the project to better track previous matching contri butions and to more accurately
          reflect current and fu ture matchi ng contributions.

          The Univer.;ity has taken significant action to assure that the projcct has appropriate fiscal and
          programmatic managemcnt and disagrees with the recommendation that it should relum to the
          Depanment of Education the federal funds it received for the fir.;t three years of the grant.




          October 6, 2003




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