oversight

The Michigan Department of Education's Compliance with the Public School Choice and SES Provisions of NCLB.

Published by the Department of Education, Office of Inspector General on 2005-08-02.

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

    The Michigan Department of Education’s Compliance with the 

     Public School Choice and Supplemental Educational Services 

          Provisions of the No Child Left Behind Act of 2001




                                    FINAL AUDIT REPORT





                                            ED-OIG/A05F0007 

                                              August 2005


Our mission is to promote the efficiency,                  U.S. Department of Education
effectiveness, and integrity of the                        Office of Inspector General
Department’s programs and operations                       Chicago/Kansas City Audit Region
                                         Notice

Statements that managerial practices need improvement, 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
                          Department of Education officials.

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. 

                    UNITED STATES DEPARTMENT OF EDUCATION 

                           OFFICE OF INSPECTOR GENERAL 

                                        ChicagolKansas City Audit Region

                    III N. Canal St. Ste. 940                  8930 Ward Parkway, Ste 2401
                    Chicago, IL 60606-7297                     Kansas City, MO 64114-3302
                    PhoDe (312) 886-6503                       PhODe (816) 268-0500
                    Fax (3 12) 353-0244                        Fax (8 16) 823-1398




                                                                                             August 2, 2005

Dr. Jeremy M. Hughes
Interim Superintendent
608 W. Allegan Street
P.O. Box 30008
Lansing, MI 48909

Dear Dr. Hughes:

Enclosed is our final report, Control Number ED-OIO/A05F0007, entitled The Michigan
Department ofEducation's Compliance with the Public School Choice and Supplemental
Educational Services Provisions ofthe No Child Left Behind Act of2001 . This report
incorporates the comments you provided in response to the draft report. 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:

                       Raymond J. Simon
                       Assistant Secretary
                       Office of Elementary and Secondary Education
                       U.S. Department of Education
                       Room3W315
                       Federal Building No.6
                       400 Maryland Ave, SW
                       Washington, DC 20202

                       NinaS. Rees
                       Assistant Deputy Secretary
                       Office of Innovation and Improvement
                       U.S. Department of Education
                       Room 4W317
                       Federal Building No.6
                       400 Maryland Ave, SW
                       Washington, DC 20202

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 appreciated.
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,
                                         /"/"::::::---...

                                    Richard        d
                                    Regional Inspector General
                                    for Audit

Enclosure
                                                    TABLE OF CONTENTS



                                                                                                                                      Page


EXECUTIVE SUMMARY ...........................................................................................................1 


BACKGROUND ............................................................................................................................3 


AUDIT RESULTS


     Finding No. 1 – MDE Did Not Have an Adequate Process in Place to Review LEAs For 

                    Compliance With the Public School Choice and SES Provisions................... 4 


     Finding No. 2 – MDE Did Not Provide High School AYP Results to LEAs in a Timely                                                       

                    Manner............................................................................................................. 9 


     Finding No. 3 – MDE Did Not Monitor the Quality and Effectiveness of SES Providers .... 10 


     Finding No. 4 – One LEA Supplanted Non-Federal Funds with Title I Funds.......................11 



OBJECTIVES, SCOPE AND METHODOLOGY ...................................................................11 


ENCLOSURE 

Michigan Department of Education                                                                Final Report

Public School Choice and SES Provisions                                                    ED-OIG/A05F0007



                                     EXECUTIVE SUMMARY


The objectives of our audit were to determine if, for the 2004-2005 school year, (1) the Michigan
Department of Education (MDE) had an adequate process in place to review local educational
agency (LEA) and school compliance with the Adequate Yearly Progress (AYP), Public School
Choice, and Supplemental Educational Services (SES) provisions of the Elementary and
Secondary Education Act of 1965, as amended by the No Child Left Behind Act of 2001 (Act),
and the implementing regulations; (2) LEAs provided to students attending schools identified for
improvement (failed AYP two consecutive years), corrective action, or restructuring the option
of attending another public school; and (3) LEAs provided SES to students attending schools that
failed to make AYP while identified for improvement, corrective action, or restructuring.1 To
achieve these objectives, we reviewed MDE and six judgmentally selected LEAs:
Commonwealth Community Development Academy (CCDA), Battle Creek Public Schools
(Battle Creek), Chandler Park Academy (CPA), School District of the City of Detroit (Detroit),
Public Schools of the City of Muskegon (Muskegon), and School District of Ypsilanti
(Ypsilanti). During our audit, we expanded our scope to include a review of whether LEAs
supplanted transportation funds from non-federal sources with Title I funds for the 2003-2004
and 2004-2005 school years.

While implementing the Public School Choice and SES provisions of the Act during the
2004-2005 school year, MDE (1) provided updated guidance to LEAs that included sample
parental notification letters and a checklist for schools in each year of improvement; (2) had a
clear definition of persistently dangerous schools and a system for identifying persistently
dangerous schools; (3) used a SES provider application process that provided adequate assurance
that each SES provider met its requirements; and (4) identified, approved, and disseminated a list
of SES providers to LEAs in a timely manner.

However, MDE did not have an adequate process in place to determine whether all LEAs
actually offered, timely and properly, school choice and SES to all eligible students.
Specifically, MDE did not adequately review LEAs to determine whether (1) school choice and
SES parental notification letters were sent in a timely manner and included all required
information, (2) LEAs offered school choice and SES to all eligible students and not to ineligible
students, and (3) LEAs offered all applicable SES providers to parents. In addition, MDE did
not provide high school AYP results to LEAs in a timely manner and did not monitor the
qualifications and effectiveness of SES providers. Finally, one LEA supplanted non-federal
funds with Title I funds.




1
  To accomplish our objectives, we reviewed compliance with selected provisions of the Act and the implementing
regulations. See the Objectives, Scope, and Methodology section of this report for more detail.
Michigan Department of Education                                                     Final Report
Public School Choice and SES Provisions                                         ED-OIG/A05F0007


We recommend that the Assistant Secretary for Elementary and Secondary Education, in
conjunction with the Assistant Deputy Secretary for Innovation and Improvement require MDE
to:

• 	 Adequately review LEAs for compliance with the Public School Choice and SES provisions
    of the Act and the revised guidance MDE provided to them after the start of the 2004-2005
    school year. Specifically, MDE should implement a process to review LEAs for compliance
    with the requirements to (1) offer school choice and SES to all eligible students and only to
    eligible students, (2) provide timely and adequate parental notifications of school choice and
    SES, and (3) allow parents to choose from all state-approved SES providers in the LEA’s
    geographic area.
• 	 Confirm that MDE provides high school AYP assessment results to LEAs before the
    beginning of each school year.
• 	 Confirm that MDE develops and implements a system for (1) monitoring SES providers for
    the 2005-2006 school year and (2) withdrawing approval from SES providers that fail for
    two consecutive years to contribute to increasing the academic proficiency of students.
• 	 Ensure that (1) Ypsilanti does not supplant non-federal funds with federal funds for the
    2004-2005 school year and future school years, and (2) Ypsilanti returns $18,532 to its Title
    I program.

In response to the draft of this report, MDE concurred with all of the findings and
recommendations. MDE’s comments on the draft report are included in their entirety as an
ENCLOSURE.




                                                2

Michigan Department of Education                                                                      Final Report

Public School Choice and SES Provisions                                                          ED-OIG/A05F0007



                                              BACKGROUND


Title I, Part A of the Elementary and Secondary Education Act of 1965, as amended by the No
Child Left Behind Act of 2001 (P.L.107-110), significantly increased the choices available to the
parents of students attending Title I schools that fail to meet state standards. Beginning with the
2002-2003 school year, the Act provided immediate relief for students in schools that were
previously identified for improvement or corrective action under the 1994 reauthorization of the
Elementary and Secondary Education Act of 1965. LEAs must offer all students attending
schools identified for improvement, corrective action, or restructuring the choice to attend a
public school (including public charter schools) within the LEA that is not identified for
improvement, corrective action, or restructuring. Schools that fail to make AYP while identified
for improvement, corrective action, or restructuring are required to offer SES to low-income
students. SES providers must be approved by the state and offer services tailored to help
participating students meet state academic standards. To help ensure that LEAs offer meaningful
choices, the Act requires a LEA to spend an amount equal to 20 percent of its Title I allocation to
provide transportation to the school of choice and SES to eligible students, unless a lesser
amount is needed to satisfy all demand. The LEA must spend a minimum of five percent of its
Title I allocation on transportation and a minimum of five percent of its allocation on SES, if the
amount is needed.

The U.S. Department of Education allocated $416,586,723 in Title I funds to MDE for the
2004-2005 school year. MDE allocated Title I funds during this period to 693 of its 807 LEAs.
For the 2004-2005 school year, 378 schools in 108 Michigan LEAs were identified as needing
improvement, corrective action, or restructuring—112 schools in the first year of improvement,
58 in the second year, 67 in the third year, 78 in the fourth year, and 63 in the fifth year. For five
of the six LEAs we reviewed as part of our audit,2 282 of the 105,265 (less than 1 percent)
eligible students at 152 schools exercised school choice. In addition, 10,839 of the 57,825
(19 percent) eligible students at 109 schools enrolled in SES.

MDE administered the Michigan Educational Assessment Program (MEAP) test in January and
February 2004 for elementary and middle school students and in May 2004 for high school
students. Based on the results of the MEAP test, MDE provided the preliminary and final AYP
determinations to the LEAs for elementary and middle schools on June 10, 2004, and
August 5, 2004, respectively. MDE provided the preliminary and final high school AYP
determinations to the LEAs in the last week of August 2004 and October 8, 2004, respectively.




2
  Ypsilanti did not track students who transferred under the Act or its intra-district transfer program. Therefore, we
cannot conclude how many students transferred under the Public School Choice provision of the Act. For this
reason, we did not include Ypsilanti in the calculation of the total number of students exercising school choice.



                                                           3

Michigan Department of Education                                                      Final Report

Public School Choice and SES Provisions                                          ED-OIG/A05F0007



                                     AUDIT RESULTS

While implementing the Public School Choice and SES provisions of the Act during the
2004-2005 school year, MDE (1) provided updated guidance to LEAs that included sample
parental notification letters and a checklist for schools in each year of improvement; (2) had a
clear definition of persistently dangerous schools and a system for identifying persistently
dangerous schools; (3) used a SES provider application process that provided adequate assurance
that each SES provider met its requirements; and (4) identified, approved, and disseminated a list
of SES providers to LEAs timely.

However, MDE did not (1) have an adequate process in place to review LEAs for compliance
with the Public School Choice and SES provisions of the Act; (2) provide high school AYP
results to LEAs in a timely manner; and (3) have a process to monitor the quality and
effectiveness of SES providers. In addition, one of the six LEAs we reviewed supplanted non-
federal funds with Title I funds.

Finding No. 1: MDE Did Not Have an Adequate Process in Place to Review LEAs For
               Compliance With the Public School Choice and SES Provisions


For the 2004-2005 school year, MDE did not have an adequate process in place to determine
whether each LEA carried out its responsibilities under the Act and the implementing
regulations. Specifically, MDE did not adequately review LEAs to determine whether (1) LEAs
offered school choice and SES to all eligible students and only to eligible students, (2) school
choice and SES parental notification letters were timely and adequate, and (3) LEAs made all
state-approved SES providers serving the geographic area available to parents.

Section 1116 (c)(1)(A) of the Act requires a state to annually review the progress of each LEA
receiving Title I funds to determine if each LEA is carrying out its responsibilities under Section
1116 of the Act.

MDE Needs to Strengthen Its Compliance Review Procedures
To monitor LEAs, MDE relied primarily on Technical Assistance Packet responses LEAs
returned to its administrative office. These responses should have included completed checklists
and samples of parental notification letters of school choice and SES. Before the start of the
2004-2005 school year, MDE provided LEAs with a Technical Assistance Packet that did not
include sample parental notification letters. After the start of the 2004-2005 school year, MDE
provided LEAs with a new Technical Assistance Packet that included adequate sample
notification letters for school choice and SES.

MDE’s review process required regional consultants to review the LEAs’ completed checklists
and parental notification letters. However, budget issues limited regional consultants’ visits to
MDE’s administrative office to review the 2004-2005 school year responses. Of the six LEAs
we reviewed, one LEA (CCDA) submitted an incomplete response and five LEAs (Battle Creek,
CPA, Detroit, Muskegon, and Ypsilanti) submitted responses that had inadequate parental


                                                 4

Michigan Department of Education                                                                     Final Report
Public School Choice and SES Provisions                                                         ED-OIG/A05F0007


notification letters. However, MDE only followed up with two of the six LEAs (CCDA and
CPA) regarding the incomplete response or inadequate parental notification letters. Also, MDE
limited site visits to LEAs with schools identified for restructuring and did not visit schools
identified for improvement or corrective action. A MDE official stated that it was developing a
more comprehensive monitoring system, including an electronic system that would allow
regional consultants to review LEA responses from remote locations. Had MDE reviewed LEAs
as required by the Act, it could have reduced the risk of the following:

Five of Six LEAs Did Not Offer School Choice to All Eligible Students
• 	 Three LEAs (CCDA, CPA, and Ypsilanti) did not offer school choice to any eligible
    students.
• 	 Two LEAs (Detroit and Muskegon) did not offer school choice to some eligible students.
    Detroit did not offer school choice to pre-kindergarten, kindergarten, or high school students.
    Muskegon did not offer school choice to middle school students.

All schools in CCDA and Ypsilanti, two of three CPA schools reviewed for school choice, and
all Detroit high schools did not offer school choice and did not notify parents that students were
eligible for the school choice option.3 These schools, along with both Muskegon middle schools,
did not provide other information also required by Section 1116 (b)(6) of the Act and
34 C.F.R. § 200.37(b).4 None of these schools identified school choice options, provided
information comparing the child’s current school to other schools in the LEA or state, or stated
that transportation would be provided.

By not offering school choice, these five LEAs did not comply with Section 1116 (b)(1)(E) of
the Act, which requires a school identified for improvement, corrective action, or restructuring to
provide all students with the option to transfer to another public school not identified for
improvement, corrective action, or restructuring. In addition, 34 C.F.R. § 200.44 (h)(1) states
that a LEA without eligible schools for transfer must, to the extent practicable, establish a
cooperative agreement for a transfer with one or more LEAs in the area. Had LEAs offered
school choice or pursued cooperative agreements for transfer with other LEAs, students may
have had a better chance to improve their academic achievement by attending a school not
identified for school improvement, corrective action, or restructuring.

Officials representing CCDA, CPA, and Muskegon were not aware of the requirement to attempt
to establish cooperative agreements with other LEAs for transfer. CCDA and CPA, both charter
school LEAs, did not have any eligible school choice options within the LEA for any students.
Muskegon did not have any eligible school choice options for middle school students. Detroit
did not offer school choice to high school students because the only three high schools that were
not identified for improvement had academic admission requirements. Even though it sent
school choice parental notification letters for pre-kindergarten and kindergarten students, Detroit
believed that pre-kindergarten and kindergarten students were not eligible for school choice.

3
  A LEA, including one that relies on schools to offer school choice and SES and notify parents of these options, is 

responsible for ensuring compliance with the Public School Choice and SES provisions. 

4
  All regulatory citations are as of July 1, 2004.



                                                          5
Michigan Department of Education                                                      Final Report
Public School Choice and SES Provisions                                          ED-OIG/A05F0007


Ypsilanti only offered school choice under its intra-district transfer policy and allowed each
student to transfer to any school in the LEA, including those identified for improvement,
corrective action, or restructuring.

All Three LEAs That Offered School Choice Provided Inadequate or Untimely Parental
Notification Letters
• 	 Two LEAs (Detroit, Battle Creek) did not provide timely parental notification of school
    choice. Detroit, which only offered school choice to students in grades 1 through 8, provided
    parental notification for these students after the start of the 2004-2005 school year. One of
    four Battle Creek schools we reviewed that were required to offer school choice provided
    parental notification after the start of the 2004-2005 school year.
• 	 One LEA (Battle Creek) did not notify parents that their children were eligible for school
    choice because their school was identified for improvement. Four of five Battle Creek
    schools we reviewed did not provide this information. One of these four schools was an
    alternative school that enrolled students with disciplinary problems. Because Battle Creek
    did not have any other alternative schools, it should have notified parents that this school was
    identified for improvement and why school choice was not available.
• 	 Three LEAs (Detroit, Battle Creek, Muskegon) did not identify school choice options or
    include academic information on those schools. Detroit only provided school choice options
    to parents of students in grades 1 through 8 who responded to the parental notification of
    school choice. All four Battle Creek schools we reviewed that were required to offer school
    choice did not provide this information. The only Muskegon school that offered school
    choice did not provide academic information on the school choice options.
• 	 Two LEAs (Detroit, Muskegon) did not provide information comparing the school to other
    schools in the LEA or state. The only Muskegon school that offered choice did not provide
    this information.
• 	 One LEA (Battle Creek) did not state that transportation would be provided. Two of four
    Battle Creek schools we reviewed that were required to offer school choice did not provide
    this information.

By not including the required information in parental notification letters, the LEAs did not
comply with Section 1116 (b)(6) of the Act and 34 C.F.R. § 200.37(b), which require that a LEA
promptly notify the parent or parents of each student enrolled when a school is identified for
improvement, corrective action, or restructuring. The notice must explain the option to transfer
due to the school's status and the reasons for that status, identify schools to which a child may
transfer, include information on the academic achievement of schools to which a child may
transfer, explain how the school compares in terms of academic achievement to other schools
served by the LEA and state educational agency, and offer to provide or pay for transportation
for students exercising school choice. In addition, Section 1116 (b)(1)(E) of the Act states that,
for a school identified for improvement, corrective action, or restructuring, the LEA must
provide school choice no later than the first day of the school year following such identification.




                                                 6

Michigan Department of Education                                                      Final Report
Public School Choice and SES Provisions                                          ED-OIG/A05F0007


Because the LEAs did not provide adequate parental notifications of school choice, parents were
not fully informed about the status of their children’s schools and could not make fully informed
decisions to transfer their children from a school identified for improvement, corrective action,
or restructuring. Detroit and Battle Creek officials believed it was sufficient to discuss the
required information with parents who called the LEA, and Muskegon officials believed it was
sufficient to only have the information on the Internet. Had MDE provided sample school
choice parental notification letters before the start of the 2004-2005 school year, LEAs might
have provided adequate school choice parental notification letters and increased school choice
participation.

All Six LEAs Provided Inadequate SES Notification Letters or Did Not Clearly Offer SES
• 	 One LEA (Battle Creek) sent parental notification of SES that did not clearly offer SES.
    Two of three schools we reviewed sent notification letters informing parents that, as parents
    of children attending a school that had not made AYP, they may request SES. However, the
    letters also stated that the school had made AYP.
• 	 Two LEAs (CCDA, Battle Creek) provided letters that did not describe the procedures and
    timelines that parents must follow to select a provider. Two of three Battle Creek schools we
    reviewed for SES did not provide this information.
• 	 Two LEAs (CCDA, Detroit) did not identify state-approved SES providers within or near the
    LEA. Detroit sent parental notification letters for approximately 40,200 students. The
    parents of approximately 10,700 students responded. Instead of identifying the state-
    approved SES providers in the parental notification letter for all eligible students, Detroit
    only provided the required information in follow-up letters to the parents of approximately
    9,400 students of the 10,700 students whose parents responded to the original notification
    letter.
• 	 All six LEAs did not provide a description of each provider’s qualifications and
    demonstrated effectiveness and, with the exception of Muskegon, all LEAs did not list the
    services of each available provider. All three Battle Creek schools we reviewed, all three
    CPA schools we reviewed, and both Ypsilanti schools we reviewed did not provide this
    information.

By not including the required information in parental notification letters, the LEAs did not
comply with Section 1116 (e)(2)(A) of the Act and 34 C.F.R. § 200.37. LEAs are required to
provide, at a minimum, annual notice to parents of (1) the availability of services and how
parents can obtain the services for their children; (2) the identity of approved providers within or
near the LEA; and (3) a brief description of the services, qualifications, and demonstrated
effectiveness of each provider.

Because the LEAs did not provide adequate parental notifications of SES, parents did not have
all the information needed to make fully informed decisions regarding SES. CCDA, CPA, and
Detroit officials told us they were not aware that they had to provide the required information to
all eligible students. Also, Battle Creek, Detroit, Muskegon, and Ypsilanti officials stated that
they could not obtain complete SES provider information from MDE. Had MDE provided
adequate sample parental notifications of SES and complete SES provider information to LEAs



                                                 7

Michigan Department of Education                                                                 Final Report
Public School Choice and SES Provisions                                                     ED-OIG/A05F0007




before the start of the 2004-2005 school year, LEAs might have provided adequate parental
notifications of SES and increased SES participation.5

Three LEAs Denied SES to Eligible Students and One LEA Offered SES to Ineligible
Students
Three LEAs (Detroit, Ypsilanti, and CPA) denied SES to eligible students, and one LEA (CPA)
offered SES to ineligible students. Detroit provided parental notification of SES for pre-
kindergarten and kindergarten students, but denied SES to students who requested the services.
Ypsilanti denied SES to low-income students who were at or above a certain academic
achievement level so it would have SES funds available for low-achieving students who applied
for SES later in the school year. CPA denied SES to low-income students because schools,
including a school not identified for improvement, corrective action, or restructuring, had
students with lower academic achievement. CPA provided SES to low-achieving students who
were ineligible for SES because they were not low-income or were enrolled at a school that was
not identified for improvement, corrective action, or restructuring.

These three LEAs did not comply with Section 1116 (e)(1) of the Act, which requires a LEA
serving schools identified for improvement, corrective action, or restructuring to arrange SES for
eligible students in the school. Section 1116 (e)(12)(A) of the Act states that low-income
students who are attending a school required to provide SES are eligible for those services.
Also, the Technical Assistance Packet MDE provided to LEAs after the start of the 2004-2005
school year stated that SES should be offered for low-income students. Detroit denied SES to
pre-kindergarten and kindergarten students who requested the services because a Detroit official
thought the students were ineligible for SES. Ypsilanti’s Executive Director of Educational
Services believed the LEA could limit SES to students below a certain achievement level, and
CPA officials did not know that only low-income students were eligible for SES. By denying
them SES, these three LEAs did not allow eligible students to take advantage of SES, which
could have improved their academic achievement.

One LEA Did Not Make All SES Providers Available to Parents
Detroit did not allow parents to choose a SES provider from the list of all state-approved SES
providers serving Detroit’s geographic area. Detroit obtained a list of 105 state-approved SES
providers from MDE’s website and then sent letters to the providers to determine which SES
providers would provide services to Detroit students. Forty-six providers stated they would
serve Detroit students. Detroit assigned these providers, including 12 that did not have off-site
locations, to specific schools. Detroit did not allow parents to select from the 12 SES providers
assigned to other schools because the providers did not have off-site locations.

Detroit did not comply with Section 1116 (e) of the Act, which requires a LEA to arrange for
SES from a provider selected by the parents and notify parents of the availability of services

5
  MDE did not provide information on the demonstrated effectiveness of each SES provider because it did not have
adequate data. See Finding No. 3 for more information.


                                                        8
Michigan Department of Education                                                              Final Report
Public School Choice and SES Provisions                                                  ED-OIG/A05F0007


from providers that are within or near the LEA. The Department's Supplemental Educational
Services

Non-Regulatory Guidance, dated August 22, 2003, question H-2, states that parents must be able
to choose from among all SES providers identified by the state for the area served by the LEA.6

Detroit did not allow students to receive SES from providers assigned to other schools if the
provider did not have an off-site location because Detroit officials believed there was a safety
risk involved with students commuting to other school locations. By not allowing students to
receive SES from these providers, parents had fewer SES providers to choose from. Therefore,
students might not have received SES that best met their academic needs.

Recommendation
We recommend that the Assistant Secretary for Elementary and Secondary Education, in
conjunction with the Assistant Deputy Secretary for Innovation and Improvement:

1.1 Require MDE to adequately review LEAs for compliance with the Public School Choice and
    SES provisions of the Act and the revised guidance MDE provided to them after the start of
    the 2004-2005 school year. Specifically, MDE should implement a process to review LEAs
    for compliance with the requirements to (1) offer school choice and SES to all eligible
    students and only to eligible students, (2) provide timely and adequate parental notifications
    of school choice and SES, and (3) allow parents to choose from all state-approved SES
    providers in the LEA’s geographic area.

Finding No. 2: MDE Did Not Provide High School AYP Results to LEAs in a Timely
               Manner

For the 2004-2005 school year, MDE did not notify LEAs of their high schools’ final AYP status
until after the start of the school year. MDE administered the high school MEAP test in May
2004 and used this test to determine each school’s AYP status. MDE posted preliminary AYP
determinations for high schools on its website during the last week of August 2004, but did not
send final AYP determinations or instruct LEAs to implement the requirements of the Act for
high schools until October 8, 2004.

Section 1116 (a)(2) of the Act requires that MDE provide state academic assessment results to
the LEAs before the start of the school year that follows the school year in which the
assessments were administered. Also, Section 1116 (b)(1) of the Act states that, before the start
of the school year, LEAs should identify schools that failed to make AYP for improvement.

Michigan state law required MDE to administer high school assessment tests during the last 30
days of the 2003-2004 school year. This constraint did not allow MDE to provide AYP results
to LEAs before the beginning of the 2004-2005 school year. Because MDE did not provide final
6
  The Department issued an updated version of Supplemental Educational Services Non-Regulatory Guidance, dated
June 13, 2005. Question H-2 remained applicable.


                                                      9
Michigan Department of Education                                                   Final Report
Public School Choice and SES Provisions                                       ED-OIG/A05F0007


high school AYP results to LEAs until October 8, 2004, LEAs did not know which high schools
were identified for improvement, corrective action, or restructuring before the start of the
2004-2005 school year and could not offer school choice or SES or notify parents of these
options in a timely manner.

On October 15, 2004, Michigan amended its Revised School Code to allow MDE to administer
high school assessment tests during the last 90 days of the school year. MDE officials believe
this will allow them to provide AYP results to LEAs before the start of the 2005-2006 school
year.

Recommendation
We recommend that the Assistant Secretary for Elementary and Secondary Education, in
conjunction with the Assistant Deputy Secretary for Innovation and Improvement:

2.1 Confirm that MDE provides high school AYP assessment results to LEAs before the
    beginning of each school year.

Finding No. 3: MDE Did Not Monitor the Quality and Effectiveness of SES Providers

During the 2004-2005 school year, MDE did not, as required by Section 1116 (e)(4)(D) of the
Act, develop, implement, or publicly report on standards and techniques for (1) monitoring the
quality and effectiveness of services provided by approved SES providers and (2) withdrawing
approval from providers that fail for two consecutive years to contribute to increasing the
academic proficiency of students. Instead, MDE relied on LEAs to monitor the quality and
effectiveness of SES providers.

MDE relied on LEAs to monitor SES providers because it did not have adequate data to
determine whether SES providers contributed to the academic proficiency of students. However,
MDE provided no guidance to LEAs for monitoring SES providers. Of the six LEAs we visited,
one LEA (Ypsilanti) did not monitor SES providers and two LEAs (Battle Creek and CPA) only
reported problems with SES providers to MDE if they were unable to resolve them with the SES
providers first. Because MDE did not have a process to monitor SES providers, it has no
assurance that SES providers provided quality and effective services to students. MDE’s lack of
monitoring also increases the risk that it will not identify ineffective providers and will allow
ineffective providers to continue to provide substandard services.

An MDE official stated that, starting in the 2005-2006 school year, MDE will initiate a process
to monitor the effectiveness of each provider's services based on MEAP tests administered in the
Fall of 2005. MDE will use these test results to compare the achievement gains of students
served by each SES provider with the achievement gains of students in the same schools who did
not receive SES.




                                               10 

Michigan Department of Education                                                      Final Report
Public School Choice and SES Provisions                                          ED-OIG/A05F0007



Recommendation
We recommend that the Assistant Secretary for Elementary and Secondary Education, in
conjunction with the Assistant Deputy Secretary for Innovation and Improvement:

3.1 Confirm that MDE develops and implements a system for (1) monitoring SES providers for
    the 2005-2006 school year and (2) withdrawing approval from SES providers that fail for
    two consecutive years to contribute to increasing the academic proficiency of students.

Finding No. 4: One LEA Supplanted Non-Federal Funds with Title I Funds

During the 2003-2004 school year, Ypsilanti used Title I funds to supplant district funds used to
pay for intra-district transfer students. Ypsilanti had an intra-district transfer program that
included paying for the transportation of students with non-federal funds. Ypsilanti could not
determine whether students transferred under this intra-district transfer program or under the
Act. However, it used $18,532 of Title I funds to pay for school choice transportation.
Subsequent to our fieldwork, a Ypsilanti official informed us Ypsilanti would return the funds to
the Title I program, but has not provided any documentation that Ypsilanti has transferred funds
back to the Title I program.

Section 1120A (b)(1) of the Act requires a state educational agency or LEA to use Title I funds
received only to supplement the funds that would, in the absence of such federal funds, be made
available from non-federal sources for the education of pupils participating in programs assisted
under this part, and not to supplant such funds. Ypsilanti officials were unaware that they could
not use Title I funds to pay for school choice transportation when non-federal funds were
ordinarily used to pay for transportation for intra-district transfer students. In addition, MDE did
not adequately monitor Ypsilanti to ensure that it did not supplant Title I funds. Because
Ypsilanti used $18,532 in Title I funds to supplant non-federal funds, Ypsilanti did not use these
funds to benefit Title I students.

Recommendation
We recommend that the Assistant Secretary for Elementary and Secondary Education, in
conjunction with the Assistant Deputy Secretary for Innovation and Improvement:

4.1 Require MDE to ensure that (1) Ypsilanti does not supplant non-federal funds with federal
    funds for the 2004-2005 school year and future school years, and (2) Ypsilanti returns
    $18,532 to its Title I program.

                  OBJECTIVES, SCOPE AND METHODOLOGY

The objectives of our audit were to determine if, for the 2004-2005 school year, (1) MDE had an
adequate process in place to review LEA and school compliance with AYP, Public School
Choice, and SES provisions of the Act and the implementing regulations; (2) LEAs provided to
students attending schools identified for improvement (failed AYP two consecutive years),


                                                11 

Michigan Department of Education                                                                     Final Report
Public School Choice and SES Provisions                                                         ED-OIG/A05F0007


corrective action, or restructuring the option of attending another public school; and (3) LEAs
provided SES to students attending schools that failed to make AYP while identified for
improvement, corrective action, or restructuring. Our examination of MDE’s process for
reviewing LEA and school compliance with the AYP provisions focused solely on the timeliness
of providing AYP determinations to LEAs. During our audit, we expanded our scope to include
a review of whether LEAs supplanted transportation funds from non-federal sources with Title I
funds for the 2003-2004 and 2004-2005 school years.

To achieve our objectives, we reviewed selected provisions of the Act and the implementing
regulations. We also interviewed officials from MDE and the six LEAs reviewed. In addition,
we reviewed documents provided by MDE, including (1) MDE’s organization charts; (2)
documents related to compliance with the Act provisions related to AYP, the identification of
persistently dangerous schools, school choice, and SES; (3) the Michigan Consolidated State
Application Accountability Workbook for State Grants under Title IX, Part C, Section 9302 of
the Elementary and Secondary Education Act (Public Law 107-110), Amended September 7,
2004; and (4) the Michigan Office of the Auditor General’s report titled Financial Audit
Including the Provisions of the Single Audit Act of the Department of Education, October 1,
2001, through September 30, 2003.

We also reviewed, for compliance with the Public School Choice and SES provisions of the Act
and the implementing regulations, 6 judgmentally selected LEAs from a universe of 108
Michigan LEAs that had schools identified for improvement, corrective action, or restructuring
for the 2004-2005 school year. We selected the 6 LEAs—1 large (Detroit), 3 medium (Battle
Creek, Muskegon, and Ypsilanti), and 2 small (CCDA and CPA)—based on total student
enrollment. We defined a large LEA as one with a student enrollment of 10,000 or more, a
medium LEA as one with a student enrollment of 1,000 through 9,999, and a small LEA as one
with a student enrollment of 999 or less.

For each of the six selected LEAs, we reviewed documentation related to the LEAs’ compliance
with the Public School Choice and SES provisions of the Act and the implementing regulations.
The documentation included (1) school choice and SES parental notification letters sent by the
six LEAs;7 (2) documentation related to the number of students eligible for and participating in
school choice and SES; and (3) documentation related to school choice transportation
expenditures for the 2003-2004 and 2004-2005 school years. Our review of the school choice
and SES parental notification letters focused on selected provisions of the Act and the
implementing regulations. For the school choice parental notification letter, we determined

7
  Because Battle Creek, CPA, Muskegon, and Ypsilanti relied on their schools to develop and provide school choice
and SES parental notification letters, we selected a sample of schools in these LEAs to test the parental notification
letters for compliance with the requirements. For each LEA, we reviewed sample letters provided by district
officials and parental notification letters sent by selected schools. For our review of school choice in Battle Creek,
we randomly selected three of the seven schools required to offer school choice and judgmentally selected two
additional schools. For our review of SES in Battle Creek, we randomly selected three of the four schools required
to offer SES. For CPA, we selected all three schools required to offer school choice and SES. For Muskegon, we
selected all three schools required to offer school choice and both schools required to offer SES. For Ypsilanti, we
randomly selected three of the six schools required to offer school choice and two of the four schools required to
offer SES.


                                                         12
Michigan Department of Education                                                      Final Report
Public School Choice and SES Provisions                                          ED-OIG/A05F0007


(1) whether parents were notified in a timely manner; and (2) whether the notice, at a minimum,
(a) informed parents that their children were eligible to attend another public school due to the
identification of the current school as in need of improvement; (b) identified each public school,
which could include charter schools, that the parent could select; (c) explained how the school
compared in terms of academic achievement to other schools served by the LEA and MDE;
(d) included information on the academic achievement of the schools that the parents could
select; and (e) clearly stated that the LEA would provide, or pay for, transportation for the
student.

For the SES parental notification letter, we determined (1) whether parents were notified of SES
and given comprehensive, easy-to-understand information about SES; and (2) whether the
notice, at a minimum, (a) identified each approved service provider within the LEA, in its
general geographic location, or accessible through technology such as distance learning; (b)
described the services, qualifications, and evidence of effectiveness for each provider; (c)
described the procedures and timelines that parents must follow in selecting a provider to serve
their child; and (d) was easily understandable, in a uniform format, and, to the extent practicable,
in a language the parents could understand. If the LEA had insufficient funds to serve all
students eligible to receive services, we also determined whether the SES parental notification
letter included information on how the LEA would set priorities in order to determine which
eligible students would receive services.

As part of our audit, we also gained an understanding of MDE’s internal control over LEA
compliance with Public School Choice and SES provisions of the Act. Though we did not assess
the adequacy of MDE’s internal control, our compliance testing at six LEAs disclosed instances
of non-compliance that might have been caused, in part, by weaknesses in MDE’s system of
internal control. These weaknesses are related to monitoring LEAs to determine whether
(1) LEAs offered school choice to all eligible students, (2) school choice and SES parental
notification letters were timely and included all required information, (3) LEAs offered SES to
all eligible students and only to eligible students, (4) LEAs allowed parents to select a SES
provider from all state-approved providers serving their respective geographic areas, and
(5) LEAs supplanted non-federal funds with Title I funds. These weaknesses and instances of
noncompliance are discussed in the AUDIT RESULTS section of this report.

We performed our audit work at MDE’s administrative office, the administrative offices of the
six LEAs reviewed, and our Chicago office from October 2004 through May 2005. We
discussed the results of our audit with MDE officials on May 12, 2005. We performed our audit
in accordance with generally accepted government auditing standards appropriate to the scope
described above.




                                                13 

                                                                                        ENCLOSURE
                                                                                          Page 1 of 2
                                   STATE OF MICHIGAN
                              DEPARTMENT OF EDUCATION
                                       LANSING


                                                                               JEREMY M. HUGHES, PH.D.
JENNIFER M. GRANHOLM                                                             INTERIM SUPERINTENDENT
      GOVERNOR                                                                    OF PUBLIC INSTRUCTION




 June 28, 2005


 Richard J. Dowd 

 Regional Inspector General for Audit 

 Office of Inspector General 

 U.S. Department of Education 

 111 North Canal Street, Suite 940 

 Chicago, Illinois 60606-7297 


 Dear Mr. Dowd:

 Thank you for the opportunity to respond to the findings and recommendations in 

 the draft audit report, Control Number ED-OIG/A05F0007, titled The Michigan 

 Department of Education’s Compliance with the Public School Choice and 

 Supplemental Educational Services Provisions of the No Child Left Behind Act of 

 2001. The Department’s responses are as follows: 


 Finding 1: MDE Did Not Have an Adequate Process in Place to Review LEAs For 

 Compliance With the Public School Choice and SES Provisions


 The Department agrees with this finding and recommendation and is strengthening 

 its process to review LEA compliance. The guidance/reporting packet will be 

 updated to address the problems found in the audit, including new sample parental 

 notification letters. The updated packet will be provided to LEAs in August, 2005. 

 The Department’s regional consultants will review the completed checklists and 

 parental notification letters submitted by LEAs and follow up with the LEAs to 

 correct any problems. Compliance with the public school choice and requirements 

 will also be reviewed through On Site Reviews conducted in selected LEAs each 

 year. The Department will also conduct regional workshops in September 2005 

 focusing on the choice and SES requirements. 

                                    STATE BOARD OF EDUCATION

                 KATHLEEN N. STRAUS – PRESIDENT • JOHN C. AUSTIN – VICE PRESIDENT 

               CAROLYN L. CURTIN – SECRETARY • MARIANNE YARED MCGUIRE – TREASURER         

                      NANCY DANHOF – NASBE DELEGATE • ELIZABETH W. BAUER 

                             REGINALD M. TURNER • EILEEN LAPPIN WEISER 


                 608 WEST ALLEGAN STREET • P.O. BOX 30008 • LANSING, MICHIGAN 48909 

                                www.michigan.gov/mde • (517) 373-3324 

                                                                      ENCLOSURE
                                                                        Page 2 of 2

Page 2

Finding 2: MDE Did Not Provide High School AYP Results to LEAs in a Timely
Manner

The Department agrees with this finding and recommendation and has corrected
the problem. Preliminary 2005 AYP results for high schools were provided to LEAs
on June 20, 2005. Appeals will be accepted through July 15, 2005, and final AYP
results will be released in August.

Finding 3: MDE Did Not Monitor the Quality and Effectiveness of SES Providers

The Department agrees that it did not have a formal process in place to monitor the
quality and effectiveness of SES providers and is taking steps to correct the
problem. The Department has initiated a contractual services request for a formal
2-year evaluation of SES providers that will examine each provider’s service
delivery and contribution to the academic achievement of participating students.
The evaluation period will begin in the fall of 2005, when the new grade 3 – 8 state
assessments will be administered for the first time.

Finding 4. One LEA Supplanted Non-Federal Funds with Title I Funds

The Department agrees with this finding and recommendation and has corrected
the problem. Ypsilanti has filed a 2003-04 expenditure report that does not include
the $18,532 in question and has budgeted the funds as carryover for 2004-05. The
district’s 2004-05 Title I budget does not include any funds for transportation for
school choice.

If you have questions or need additional information, please contact Linda Brown of
my staff at (517) 373-3668.


Sincerely,

/s/

Jeremy M. Hughes, Ph.D.
Interim Superintendent