oversight

South Texas Vocational Technical Institute - Brownsville's Administration of The TITLE IV Student Financial Assistance Programs.

Published by the Department of Education, Office of Inspector General on 2002-03-20.

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

                      UNITED STATES DEPARTMENT OF EDUCATION
                                      OFFICE OF INSPECTOR GENERAL
                                1999 BRYAN STREET, HARWOOD CENTER, SUrrE 2630
                                            DALLAS. TEXAS 75201-6817
                                     PHONE: (214) 880-3031 FAX: (214) 880-2492




                                               MAR2 0 2002

MEMORANDUM

TO         :     GregWoods
                 Chief OperatingOfficer
                 FederalStudentAid

FROM        ..   SherriL. Demmel             ~d               ~
                 RegionalInspectorGeneral
                   for Audit

SUBJECT:         FINAL AUDIT REPORT
                 SOUTH TEXAS VOCATIONAL TECHNICAL INSTITUTE-
                 BROWNSVILLE'S ADMINISTRATION OF THE TITLE W STUDENT
                 FINANCIAL ASSISTANCEPROGRAMS
                 Control NumberED-OIGIAO6-BOO26

Attachedis our subjectreportpresentingour findings andrecommendations
                                                                    resultingfrom our
audit of SouthTexasVocationalTechnicalInstitute- Brownsville.

In accordancewith the Department'sAudit ResolutionDirective, you havebeendesignatedas
the actionofficial responsiblefor resolutionof the findings andrecommendations
                                                                             in this report.

If you haveany questions,pleasecontactme at 214-880-3031.

Pleaserefer to the abovecontrol numberin all correspondence
                                                          relatingto this report.

Attachment




     Our missionis to promotethe efficiency,effectiveness,
                                                        and integrity of the Depal1ment'sprogramsand operations
   SOUTH TEXAS VOCATIONAL TECHNICAL
        INSTITUTE – BROWNSVILLE’S
 ADMINISTRATION OF THE TITLE IV STUDENT
     FINANCIAL ASSISTANCE PROGRAMS




                                 FINAL AUDIT REPORT
                                            ED-OIG/A06-B0026
                                               March 2002




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.                                          Dallas, Texas
                            NOTICE
Statements that management practices need improvement, as well as
other conclusions and recommendations in this report, represent the
opinions of the Office of Inspector General. Determination 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, if
requested, 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
                               1999 BRYAN STREET,HARWOOD CENTER, sum            2630
                                           DALLAS, TEXAS 75201-6817
                                    PHONE: (214) 880-3031 FAX: (214) 880-2492



                                               MAR2 0 2DO2

                                                                                           ED-OIG/AO6-BOO26

Mr. Ray Garcia,President
SouthTexasVocationalTechnicalInstitute - Brownsville
2255N. Coria
Brownsville, TX 78520

Dear Mr. Garcia:
Enclosedis our audit report entitledSOUTH TEXAS VOCATIONAL TECHNICAL
INSTITUTE - BROWNSVlLLE'S ADMINISTRATION OF THE TITLE W STUDENT
FINANCIAL ASSISTANCEPROGRAMS. The report incorporatesthe commentsyou
providedin responseto the draft audit report. If you haveany additionalcommentsor
informationthat you believemay havea bearingon the resolutionof this audit, you shouldsend
them directly to the following EducationDepartmentofficia~ who will considerthem before
taking final Departmentalactionon the audit:

                                  Mr. GregWoods,Chief OperatingOfficer
                                  FederalStudentAid
                                  Union CenterPlaza
                                   830 1st Street, NE
                                  Room 112Gl
                                  Washington, DC 20202

Office of ManagementandBudget Circular A-50 directsFederalagenciesto expeditethe
resolutionof auditsby initiating timely actionon the findings andrecommendations
                                                                               contained
therein. Therefore,receiptof your commentswithin 30 dayswould be greatly appreciated.

In accordancewith the Freedomof Information Act (5 U.S.C.§552),reportsissuedby the Office
of InspectorGeneralaremadeavailable,if requested,to membersof the pressandgeneralpublic
to the extentinformation containedthereinis not subjectto exemptionsin the Act.

Pleaserefer to the aboveaudit control numberin all correspondence
                                                                relatingto this report.

                                                      Sincerely,


                                                      ~          IlJlJ'Jlh\,p..l-
                                                     SherriL. Demmel
                                                     RegionalInspectorGeneral
                                                         for Audit

 Attachment


      Our missionis to promotethe efficiency,effectiveness,
                                                         and integrity of the Department'sprogramsand operations
                                      TABLE OF CONTENTS
                                                                                                                                   Page

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

AUDIT RESULTS...........................................................................................................................2

   Finding No. 1 – STVT Does Not Meet Administrative Capability Requirements......................2

          Requirements for Administrative Capability .......................................................................2

          STVT Has Not Paid Refunds Since January 1, 1999...........................................................3

          STVT Did Not Submit Audit Reports Timely.....................................................................4

          Recommendations................................................................................................................4

          STVT’s Comments on the Draft Report ..............................................................................5

          OIG’s Response to STVT’s Comments...............................................................................5

  Finding No. 2 – STVT Did Not Comply with the Financial Responsibility Requirements .........6

         Requirements for Financial Responsibility ..........................................................................6

         STVT Failed the Financial Responsibility Requirements ...................................................7

         Recommendations.................................................................................................................8

          STVT’s Comments on the Draft Report..............................................................................8

          OIG’s Response to STVT’s Comments...............................................................................9

BACKGROUND .............................................................................................................................9

OBJECTIVE, SCOPE AND METHODOLOGY ............................................................................9

STATEMENT ON MANAGEMENT CONTROLS .....................................................................10

APPENDIX
Control Number: ED-OIG/A06-B0026                                                        Page 1 of 11

                              EXECUTIVE SUMMARY
South Texas Vocational Technical Institute – Brownsville (STVT), located in Brownsville,
Texas, failed to pay required refunds of $51,662 due to the Federal Pell Grant Program from
January 1, 1999, through July 31, 2001. STVT cited continuous cash flow problems as the
reason for the non-payment of refunds. When the Independent Public Accountant (IPA)
performed STVT’s 1999 fiscal year audit, the president of STVT informed the IPA that the
institution had not made refunds since January 1, 1999.

On August 9, 2001, the U.S. Department of Education (“the Department”) and STVT entered
into an agreement that required STVT to pay the $27,024 of refunds that were due during fiscal
year 1999.1 The agreement did not address the remaining $14,327 of unpaid refunds for fiscal
year 2000. We identified an additional $10,341 in unpaid refunds for the period of September 8,
2000, through July 31, 2001. STVT received $671,392 in funds under Title IV of the Higher
Education Act of 1965, as amended (HEA), during the fiscal year ending December 31, 2000.

STVT did not meet the requirements for an administratively capable institution or a financially
responsible institution. In the institution’s 1999 financial statement audit report, the IPA cited a
“going concern” issue. In addition, the institution failed to submit its financial statement audits
and compliance audit reports for fiscal years 1997 through 2000 in a timely manner. The
institution is currently provisionally certified because it failed to submit audit reports on time.

We recommend that the Chief Operating Officer for Federal Student Aid2—

    •   Pursue an action to revoke STVT’s provisional certification, under 34 C.F.R. § 668.13(d),
        or fine, limit, or suspend STVT under Subpart G of 34 C.F.R. Part 668; and

    •   Require repayment of all unpaid refunds that have been identified.

If STVT’s provisional certification is not revoked, we also recommend that the Chief Operating
Officer for Federal Student Aid ensure that STVT—

    •   Remains on the reimbursement method of payment until it returns all unpaid refunds, all
        required audit reports have been submitted, and STVT demonstrates that it will comply
        with the requirements for repaying refunds and submitting audit reports timely; and

    •   Submits required irrevocable letters of credit immediately. (If STVT does not submit the
        required irrevocable letters of credit immediately, we recommend that the Chief
        Operating Officer pursue an action to revoke STVT’s provisional certification, under 34
        C.F.R. § 668.13(d).)

In general, STVT concurred with our findings and most of our recommendations. We have
summarized STVT’s comments in this report and included a copy its comments as an appendix
to this report.

1
  The payment agreement erroneously included a $30 return on credit balance due directly to a
student and not to the Federal Pell Grant Program.
2 Student Financial Assistance (SFA) became Federal Student Aid (FSA) on March 6, 2002.
Control Number: ED-OIG/A06-B0026                                                        Page 2 of 11


                                    AUDIT RESULTS
STVT is not administratively capable and failed to comply with the requirements of financial
responsibility. Except for the issues described in our findings, we concluded that STVT met
other program, institutional and student eligibility requirements reviewed, including
requirements for Title IV disbursements and the “90 Percent Rule.”



                               FINDING NO. 1
                    STVT DOES NOT MEET ADMINISTRATIVE
                         CAPABILITY REQUIREMENTS

STVT is not administratively capable because it failed to—

•   Pay required refunds, and

•   Submit timely audited financial statements and compliance reports.

Requirements for Administrative Capability

Federal regulations for administrative capability state—

    To begin and to continue to participate in any Title IV, HEA program, an institution
    shall demonstrate to the Secretary that the institution is capable of adequately
    administering that program under each of the standards established in this section. The
    Secretary considers an institution to have that administrative capability if the institution
    . . . [a]dministers the Title IV, HEA programs in accordance with all statutory
    provisions of or applicable to Title IV of the HEA, all applicable regulatory provisions
    prescribed under that statutory authority, and all applicable special arrangements,
    agreements, and limitations entered into under the authority of statutes applicable to
    Title IV of the HEA . . . . (34 C.F.R. § 668.16(a))

Federal regulations for the treatment of Title IV funds when a student withdraws (refunds)
state—

    When a recipient of title IV grant or loan assistance withdraws from an institution
    during a payment period or period of enrollment in which the recipient began
    attendance, the institution must determine the amount of title IV grant or loan assistance
    . . . that the student earned as of the student’s withdrawal date . . . . (34 C.F.R.
    § 668.22(a)(1))

    If the total amount of title IV grant or loan assistance, or both, that the student earned is
    less than the amount of title IV grant or loan assistance that was disbursed to the student
    or on behalf of the student in the case of a PLUS loan, as of the date of the institution’s
Control Number: ED-OIG/A06-B0026                                                        Page 3 of 11

    determination that the student withdrew . . . [t]he difference between these amounts
    must be returned to the title IV programs . . . . (34 C.F.R. § 668.22(a)(2)(i))

    An institution must return the amount of title IV funds for which it is responsible . . . as
    soon as possible but no later than 30 days after the date of the institution’s
    determination that the student withdrew . . . . (34 C.F.R. § 668.22(j)(1))

    An institution must determine the withdrawal date for a student who withdraws without
    providing notification to the institution no later than 30 days after the end of the earlier
    of the—
           (i) Payment period or period of enrollment, as appropriate . . . ;
           (ii) Academic year in which the student withdrew; or
           (iii) Educational program from which the student withdrew. (34 C.F.R. §
    668.22(j)(2))

Federal regulations for compliance audits and audited financial statements state—

    The Secretary considers an institution to [be administratively capable] if the institution
    . . . [h]as provided all program and fiscal reports and financial statements required for
    compliance with the provisions of this part and the individual program regulations in a
    timely manner . . . . (34 C.F.R. § 668.16(i))

    An institution that participates in any title IV, HEA program must at least annually have
    an independent auditor conduct a compliance audit of its administration of that program
    and an audit of the institution’s general purpose financial statements. (34 C.F.R.
    § 668.23(a)(2))

     [A]n institution must submit annually to the Secretary its compliance audit and its
    audited financial statements no later than six months after the last day of the
    institution’s fiscal year. (34 C.F.R. § 668.23(a)(4))

STVT Has Not Paid Refunds Since January 1, 1999

During the performance of STVT’s 1999 fiscal year compliance audit, its president informed the
IPA that STVT had not paid refunds from January 1, 1999, through the time of the fieldwork.
Although STVT established procedures and controls to calculate refunds due, STVT failed to
make the required refunds because of cash flow problems. According to STVT’s president, the
institution has had continuous cash flow problems because the institution lost eligibility to
participate in the Federal Family Education Loan Program in September 1996. However,
according to the notes to STVT’s audited financial statements for its 1999 fiscal year, STVT’s
president withdrew $346,086 in cash from the institution and, as of December 31, 1999, owed a
total of $644,891 to the institution.

At the IPA’s request, the institution performed a 100 percent reconstruction of refunds due from
January 1, 1999, through September 7, 2000, which was the ending date of the IPA’s fieldwork.
The 100 percent reconstruction identified $41,351 of unpaid Federal Pell Grant refunds from
Control Number: ED-OIG/A06-B0026                                                      Page 4 of 11

January 1, 1999, through September 7, 2000. The audit report was not submitted to the
Department until January 2001, even though the report was due June 30, 2000.

The Department’s final audit determination letter only addressed $27,024, STVT’s liability for
the amount of refunds due for its 1999 fiscal year. On August 9, 2001, the Department and
STVT entered into an agreement for STVT to pay the 1999 fiscal year refunds ($27,024) and
interest (6% interest, $886) at a rate of $2,326 a month for one year ($27,024 + $886 = $27,910
[rounded to the nearest dollar]), with a down payment of $511. During our audit work, we
verified that STVT had paid the $511 down payment and the first monthly payment of $2,326 to
the Department. The Department did not establish a repayment schedule for STVT’s remaining
$14,327 of unpaid refunds (for the period from January 1, 2000, through September 7, 2000), but
stated that these refunds would be “addressed in the appropriate final audit determination
letters.”

We identified an additional $10,341 in Federal Pell Grant refunds that the institution accurately
computed but failed to return to the Department for the period September 8, 2000, through July
31, 2001. In total, for the period January 1, 1999, through July 31, 2001, STVT failed to pay
$51,662 (($41,351 minus $30)1 + $10,341) in refunds due to the Federal Pell Grant Program.

STVT Did Not Submit Audit Reports Timely

STVT failed to submit its audit reports for fiscal years 1997 through 2000 timely:

•   STVT submitted its audit reports for fiscal years 1997 and 1998 over one year late, at which
    time Federal Student Aid required STVT to participate under a provisional certification.

•   STVT did not submit its fiscal year 1999 audit reports until December 2000 (financial
    statement audit) and January 2001 (compliance audit), which were due June 30, 2000.

•   As of the date of this report, STVT had not submitted its fiscal year 2000 audit reports, which
    were due June 30, 2001.

Recommendations

We recommend that the Chief Operating Officer for Federal Student Aid—

1.1 Pursue an action to revoke STVT’s provisional certification, under 34 C.F.R. § 668.13(d), or
    fine, suspend, or limit STVT under Subpart G of 34 Part 668, based on STVT’s failure to
    pay refunds and submit audit reports timely.

1.2 Require repayment of the additional $24,668 in unpaid refunds that were due for the period
    from January 1, 2000, through July 31, 2001 ($14,327 + $10,341 = $24,668).


1
  The $41,351 liability computed by STVT included a $30 return on a credit balance due directly
to one student and not to the Federal Pell Grant Program. The institution is liable to the Federal
Pell Grant Program for $41,321 of the $41,351.
Control Number: ED-OIG/A06-B0026                                                      Page 5 of 11


If STVT’s provisional certification is not revoked, we also recommend that the Chief Operating
Officer for Federal Student Aid—

1.3 Ensure that STVT remains on the reimbursement method of payment until it returns all
    unpaid refunds, all required audit reports have been submitted, and STVT demonstrates that
    it will comply with the requirements for paying refunds and submitting audit reports timely.

STVT’s Comments on the Draft Report

STVT concurred with the finding. It stated that it had not submitted audit reports timely and that
it owed a total of $51,662 to the Federal Pell Grant Program for the period from January 1, 1999,
through August 31, 2001. STVT also agreed “with the recommendation that the institution
remain on reimbursement method of payment until all unpaid refunds have been submitted in
accordance with agreements reached with the Department.”

Concerning the withdrawal of STVT’s cash by its president, STVT stated, “There is a legitimate
reason concerning the issue of the 1999 cash withdrawal of $346,086.00 by the institute’s
president. These funds were used to satisfy debts related to the school and not for the president’s
personal use.”

STVT stated that it “understands the importance of processing termination calculations and
paying refunds in a timely manner and the institution intends to comply fully with all rules and
regulations to satisfy timely refunds due.” STVT also states that it “understands the importance
of submitting all required audit reports in a timely manner and is making every effort to avoid
the lateness of any audit report in the future.”

STVT did not comment on Recommendation 1.1. STVT also did not provide target dates for
submitting the audit reports that were due on June 30, 2001, or for returning the additional
$24,668 in refunds that were not part of the agreement with the Department.

OIG’s Response to STVT’s Comments

STVT misstated that the liability in our Recommendation 1.2 is for the period from January 1,
2000, through August 31, 2001. The period applicable to the liability in Recommendation 1.2 is
from January 1, 2000, through July 31, 2001. Any refund unpaid by STVT after July 31, 2001,
needs to be addressed separately.

We found no indication during our audit that the funds withdrawn by the president had been used
to satisfy STVT’s debts.

Our recommendation that STVT remain on the reimbursement method of payment is not
contingent upon its return of refunds only. We also recommend that STVT remain on the
reimbursement method of payment until all of its required audit reports have been submitted and
it demonstrates that it will comply with the requirements for paying refunds and submitting audit
reports timely.
Control Number: ED-OIG/A06-B0026                                                           Page 6 of 11

Given STVT’s past performance, STVT’s written statements that it now understands the
importance of payment of refunds and submission of audits do not provide a reliable basis to
conclude that STVT will promptly and independently carry out its refund and audit obligations.
We have made no substantive changes to our recommendations.




                             FINDING NO. 2
               STVT DID NOT COMPLY WITH THE FINANCIAL
                    RESPONSIBILITY REQUIREMENTS

STVT failed to comply with the requirements of financial responsibility because it—

•   Failed to pay required refunds;

•   Received a “going concern” note from the IPA for its fiscal year ending December 31, 1999;
    and

•   Did not submit timely audited financial statements and compliance audit reports for its fiscal
    years ending December 31, 1997, through 2000.

Requirements for Financial Responsibility

Federal regulations state—

    To begin and to continue to participate in any title IV, HEA program, an institution
    must demonstrate to the Secretary that it is financially responsible . . . . (34 C.F.R.
    § 668.171(a))

    [T]he Secretary considers an institution to be financially responsible if the Secretary
    determines that . . . [t]he institution is meeting all of its financial obligations, including
    but not limited to . . . [r]efunds that it is required to make under its refund policy . . . .
    (34 C.F.R. § 668.171(b)(4)(i))

    [T]he Secretary does not consider the institution to be financially responsible if . . . [i]n
    the institution’s audited financial statements, the opinion expressed by the auditor was
    an adverse, qualified, or disclaimed opinion, or the auditor expressed doubt about the
    continued existence of the institution as a going concern . . . . (34 C.F.R. §
    668.171(d)(1))

    If the . . . institution does not submit its financial and compliance audits by the date
    permitted and in the manner required under § 668.23, the Secretary may . . . [f]or an
    institution that is provisionally certified, take an action against the institution under the
    procedures established in § 668.13(d). (34 C.F.R. § 668.171(e)(2))
Control Number: ED-OIG/A06-B0026                                                           Page 7 of 11

    An institution demonstrates that it makes required refunds . . . if the auditor or auditors
    who conducted the institution’s compliance audits for the institution’s two most
    recently completed fiscal years . . . [d]id not note for either of those fiscal years a
    material weakness or a reportable condition in the institution’s report on internal
    controls that is related to refunds. (34 C.F.R. § 668.173(b)(2))

    Upon a finding that an institution . . . is not making its refunds timely . . . the institution
    must submit an irrevocable letter of credit, acceptable and payable to the Secretary,
    equal to 25 percent of the total amount of title IV, HEA program refunds the institution
    made or should have made during its most recently completed fiscal year. (34 C.F.R.
    § 668.173(c))

    An institution is not financially responsible if the institution . . . [h]as been cited during
    the preceding five years for failure to submit in a timely fashion acceptable compliance
    and financial statement audits . . . . (34 C.F.R. § 668.174(a)(3))

STVT Failed the Financial Responsibility Requirements

We identified the following conditions during our review of STVT’s compliance with the
financial responsibility requirements:

•   The institution did not pay $51,662 of Federal Pell Grant refunds due to the Department from
    January 1, 1999, through July 31, 2001 (see Finding No. 1, under “STVT Has Not Paid
    Refunds Since January 1, 1999”).

•   The IPA expressed doubt about the continued existence of the institution as a going concern
    in the audited financial statements for fiscal year 1999. The IPA expressed this doubt
    because the Texas Workforce Commission, the state-licensing agency, suspended STVT’s
    license to operate in Texas based on the institution’s failure to meet the state requirements for
    a financially responsible institution. The institution appealed the suspension and was
    allowed to operate pending the results of the appeal.

•   The institution failed to submit its audit reports for fiscal years 1997 through 2000 timely
    (see Finding No. 1, under “STVT Did Not Submit Audit Reports Timely”).

The regulations provide two alternative standards under which STVT may continue to participate
in the Title IV programs in spite of its failure to meet financial responsibility requirements. The
regulations at 34 C.F.R. § 668.175(c) provide a letter of credit alternative for participating
institutions:

    A participating institution that is not financially responsible . . . qualifies as a financially
    responsible institution by submitting an irrevocable letter of credit, that is acceptable
    and payable to the Secretary, for an amount determined by the Secretary that is not less
    than one-half of the title IV, HEA program funds received by the institution during its
    most recently completed fiscal year.
Control Number: ED-OIG/A06-B0026                                                          Page 8 of 11

In addition to the letter of credit alternative, the regulations provide a provisional certification
alternative at 34 C.F.R. § 668.175(f)(1): “The Secretary may permit an institution that is not
financially responsible to participate in the title IV, HEA programs under a provisional
certification . . . .” In addition to other requirements, to participate under this provisional
certification alternative, an institution must—

    Submit to the Secretary an irrevocable letter of credit that is acceptable and payable to
    the Secretary, for an amount determined by the Secretary that is not less than 10 percent
    of the title IV, HEA program funds received by the institution during its most recently
    completed fiscal year . . . . (34 C.F.R. § 668.175(f)(2)(i))

Recommendations

We recommend that the Chief Operating Officer for Federal Student Aid—

2.1 Require STVT to submit immediately an irrevocable letter of credit for 25 percent of the
    total amount of Title IV refunds it should have made during its most recently completed
    fiscal year, to comply with the requirements in 34 C.F.R. § 668.173(c). STVT failed to
    make any of $18,948 in Federal Pell Grant refunds due during fiscal year 2000 and must
    submit an irrevocable letter of credit for $4,737.

2.2 Require STVT to submit immediately an additional irrevocable letter of credit for at least
    $67,140, to continue participation under 34 C.F.R. § 668.175(f)(2)(i). STVT received
    $671,392 of Title IV for fiscal year 2000, and the lowest whole-dollar amount that is not less
    than 10 percent of this amount is $67,140.

2.3 If STVT does not submit the two letters of credit as described in recommendations 2.1 and
    2.2, pursue an action to revoke STVT’s provisional certification, under 34 C.F.R. §
    668.13(d).

STVT’s Comments on the Draft Report

STVT concurred with the finding that it was not complying with the financial responsibility
requirements. Concerning the recommendations, “STVT concurs with the recommendation to
submit an irrevocable letter of credit for $4,737.00 to comply with the requirements of 34 C.F.R.
§ 668.173 (c) and a $67,140.00 additional irrevocable letter of credit to continue participation
under 34 C.F.R. § 668.175 (A)(2)(i).”

In addition, STVT stated, “The IPA’s going concern that our state license is suspended is
incorrect based on a memo sent to us from Texas Workforce Commission notifying us of our
status with the state pending our appeal . . . . South Texas Vocational Technical Institute is
legally doing business in the state of Texas.”

STVT did not comment on Recommendation 2.3. STVT also did not provide target dates for
submitting the recommended letters of credit.
Control Number: ED-OIG/A06-B0026                                                       Page 9 of 11

OIG’s Response to STVT’s Comments

STVT is incorrect in stating that the IPA’s going concerns were based on a belief that STVT is
not doing business legally in the State of Texas. As described in our report, the IPA’s concerns
were based on actions by the Texas Workforce Commission to suspend STVT based on STVT’s
failure to meet state requirements for a financially responsible institution. Our report
acknowledges that STVT has been allowed to operate pending the results of its appeal.



                                     BACKGROUND
STVT, incorporated in 1973, is a proprietary school located in Brownsville, Texas. The school
received its initial approval to participate in the Title IV, HEA programs on January 13, 1983.
The Council on Occupational Education accredits the school. The school offers vocational
programs in administrative, medical, and legal administrative assisting, as well as vocational
programs in accounting and computer information sciences.

The school lost eligibility to participate in the Federal Family Education Loan Program in
September 1996, because its cohort default rate for each of the three most recent fiscal years was
greater than 25 percent. Due to the institution’s failure to submit audit reports on a timely basis,
the Department provisionally certified STVT from March 14, 2001, through March 31, 2002.
The Department placed STVT on the reimbursement method of payment, effective October 2,
2001.

During the period January 1, 2000, through December 31, 2000, STVT received $671,392 in
Title IV funds (Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, and
Federal Work-Study).


              OBJECTIVE, SCOPE AND METHODOLOGY
The objective of our audit was to determine whether STVT administered selected aspects of the
Title IV, HEA programs according to the HEA and regulations. We reviewed (1) institutional
and program eligibility requirements, and (2) selected administrative and compliance
requirements relating to student eligibility, Title IV disbursements, refunds, and the “90 Percent
Rule.”

To accomplish our objective, we—

   •   Obtained and reviewed background information about the institution.

   •   Reviewed STVT’s audited financial statements and compliance audit reports for fiscal
       years 1998 and 1999.

   •   Interviewed current STVT personnel, state licensing agency officials, and Department
       officials.
Control Number: ED-OIG/A06-B0026                                                     Page 10 of 11


   •   Applied statistical sampling techniques by reviewing the files for randomly selected
       samples of 1) 25 students from the universe of 269 students who received Title IV funds
       from July 1, 2000, through June 30, 2001; 2) 10 students from the universe of 78 students
       who had refunds due to the Federal Pell Grant Program from January 1, 1999, through
       July 31, 2001, to determine if the institution calculated the refunds correctly; and 3) 10
       students from the universe of 119 students who withdrew from January 1, 1999, through
       July 31, 2001, to determine if any additional refunds to the Federal Pell Grant Program
       were due. The files for all students selected were reviewed for accuracy of refund
       computations.

   •   Obtained and reviewed data applicable to the institution from the Department’s National
       Student Loan Data System, Postsecondary Education Participants System, Payment
       Management System, and Grants Administration and Payment System.

   •   Relied on computer-processed data obtained from the above-mentioned systems to
       accomplish our audit objective. We performed limited tests of the data, for the universe
       of 269 students, to verify reliability by comparing the data to information in STVT’s
       student files. Based on the results of these tests, we concluded that the computerized data
       was sufficiently reliable to formulate conclusions associated with our audit objective.

   •   Relied on the data provided by STVT for the universe of 78 students who had refunds
       due to the Pell Grant Program from January 1, 1999, through July 31, 2001, and 119
       students who withdrew from January 1, 1999, through July 31, 2001. We performed
       limited tests of the data to verify reliability by testing the refund calculation of the
       students and comparing to STVT student financial assistance records. Based on the
       results of these tests, we concluded that the data was sufficiently reliable to formulate
       conclusions associated with the objective of our audit.

Our audit of the school’s administration of the Title IV programs initially covered the period July
1, 2000, through June 30, 2001. For our review of refund calculations and refunds not paid by
the school, the audit period was expanded to include the period beginning January 1, 1999,
through July 31, 2001. All work pertaining to the “90 Percent Rule,” under 34 C.F.R.
§ 600.5(a)(8), covered the school’s fiscal year ended December 31, 2000. We performed
fieldwork from August 6 through August 24, 2001, at the institution’s campus in Brownsville,
Texas. 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 review, we assessed the system of management controls, policies, procedures, and
practices applicable to the institution’s administration of the Title IV, HEA programs. We
assessed the level of control risk for determining the nature, extent, and timing of our
substantive tests.
Control Number: ED-OIG/A06-B0026                                                      Page 11 of 11


For the purpose of this report, we assessed and classified the significant controls into the
following categories:

•   Institutional and program eligibility,
•   Student eligibility, and
•   Calculation and payment of refunds.

Because of inherent limitations, a study and evaluation made for the limited purposes described
above would not necessarily disclose all material weaknesses in management controls.
However, our audit disclosed that STVT circumvented established controls and procedures over
the payment of Federal Pell Grant refunds and the timely submission of required financial and
compliance audit reports. These weaknesses are discussed in the AUDIT RESULTS section of
this report.
                                                                                           APPENDIX

~¥0T ECH
  Sou
 'J
 T.
                     t-h-T         e x a S                                            CERTIFICATE
                                                                                               OFAPPROVAL
                                                                                   TEXAS WORKFORCE COMMISSION

                                                                                        ACCREDITEDBY THE
                                                                                        ACCREDITED BY THE
                                                                                           COUNCIL ON
                                                                                           COUNCIL ON
              BROWNSVILLE                                                             OCCUPATIONALEDUCATION
                                                                                      OCCUPATIONAL EDUCATION




      February 26. 2002


      SherriDemmel
      RegionalInspectorGeneralfor Audit
      U.S. Departmentof Education
      Office of InspectorGeneral
      1999Bryan Street,Suite2630
      Dallas,TX 75201-6718

      DearMs. Demmel:

      This letter is in responseto the Draft Audit Report (Control Number ED-OIG/A 06-BO026)of
      SOUTH TEXAS                    VOCATIONAL   TECHNICAL   INSTITUTE    -   BROWNSVILLE'S
      ADMINISTRATION OF THE TITLE IV STUDENT FINANCIAL ASSISTANCEPROGRAMS
      Enclosedpleasefind our report respondingto the draft audit we receivedon January30, 2002.
      If you have any questionsregardingthis letter or the responseand documentsprovided, please
      contactme at (956) 546-0353.


      8
       :2 '   cere}

              "~:/'      ~,(:;,~
               p yC""/

      Ray Garcia
      Administrator/Owner



      Enclosure




                         2255N. CORIA        BROWNSVILLE. TEXAS 78520     (956) 546-0353
                             APPENDIX




AUDIT RESULTS/FINDING No.1

        RESPONSE
                                                                                              APPENDIX


FINDING NO.1
STVT DOES NOT MEET ADMINISTRATIVE                    CAPABILITY       REQUIREMENTS

(A) STVT Has Not Paid Refunds Since January 1, 1999.

      RESPONSE
      South Texas Vocational Technical Institute concurs with this finding and agrees that the
      instit~tion owes a total of$ 51,662.00 of Federal Pell Grant refund due to the Department
      from January 1, 1999 through August 31, 2001.
      For the amount of refunds due for the 1999 fiscal year, STVT has entered into agreement
      with the Department and paymentsare being made to satisfy this arrangement.
                                                                    ,
      (SEE ATTACHMENT # 1)
      Refunds due for the 2000 fiscal year and through the I G Audit Report date have not been
      included in the above mentioned agreement with the Department because the final
      determination letter has not beenreceived by our institution. Upon receiving the final audit
      determination letter, the institution will make immediate repayment arrangementswith the

      Department.
      There is a legitimate reasonconcerning the issueof the 1999 cashwithdrawal of $346,086.00
      by the institute's president. Thesefunds were used to satisfy debts related to the school and
      not for the president's personal use.
      As this draft audit indicates STVT has not been negligent in disclosing refunds due. All
      refund calculationsthrough August 31,2001 havebeenreviewed by both IG auditors and the
      audit indicate that they have been made correctly and           in accordance with required
      calculations to satisfy the state rules and regulation, as well as, the Department.
      In our plans to correct the issue of refunds, the institute has implemented advising the
      studentsupon enrollment of the Return to Title IV calculations and the possibility of incurring
      a debt with the school for any monies STVT must return as unearnedby the student due to
      termination. This has had a positive result in student's earning Title IV monies before
      dropping from school.
      STVT understandsthe importance of processingtermination calculations and paying refunds
      in a timely manner and the institution intends to comply fully with all rules and regulations to
      satisfy timely refunds due.
                                                                                            APPENDIX


(B) STVTDid Not SubmitAudit ReportsTimely


     RESPONSE

     South Texas Vocational Technical Institute concurs with the fmdings and acceptsthat the
     audit reports for 1997, 1998, 1999, and 2000 have not been submitted in a timely manner.
     STVT is experiencinga more positive cashflow and is working with the IPA to submit audits

     in a timely manner.
      STVT'S corrective measureto avoid submitting late audit reports in the future is to schedule
     early IPA visits/audits in order to satisfy the time neededto prepare a final audit due.
                                                                       ,


      RECOMMENDATIONS for findin2 # 1

      South Texas Vocational TechnicalInstitute concurs with the recommendationthat the
      institutionremainon reimbursement
                                      methodof paymentuntil all unpaidrefundshavebeen
      submittedin accordancewith agreements
                                          reachedwith the Department.


      STVT understandsthe importanceof submittingall required auditedreports in a timely
      mannerandis makingeveryeffort to avoid the latenessof anyaudit report in the future.
                             APPENDIX




AUDIT RESULTS/FINDING No.2

        RESPONSE
                                                                                         APPENDIX


FINDING NO.2
STVT DID NOT COMPLY WITH THE FINANCIAL RESPONSIBILITY
REQUIREMENTS.


.    The institution did not pay $ 51, 662.00 of Federal Pell Grant refunds due to the Department

    from January 1, 1999throughJuly 31, 2001.

     SeeResponseto Finding # 1 (A)



.    TheIPA expresseddoubt about the continued existenceof the institution as a going concern
    in the audited financial statementsfor fiscal year 1999. The IP A expressedthis doubt
    becausethe Texas Workforce Commission, the state-licensing agency, suspendedSTVT's
    license to operated in Texasbasedon the institution 'sfailure to meet the state requirements
    for a financially responsible institution. The institution appealed the suspensionand was
    allowed to operate pending the results of the appeal.


    RESPONSE

    The IPA's going concern that our statelicenseis suspendedis incorrect basedon a memo sent
    to us from Texas Workforce Commissionnotifying us of our status with the statepending our
    appeal (SEE ATTACHMENT # 2)
    South Texas Vocational Technical Institute is legally doing businessin the state of Texas.



.    The institution failed to submit its audit reports for fiscal years 1997 through 2000
    timely.


    SeeResponseto Finding # 2 (B)
                                                                          APPENDIX

RECOMMENDATION for findin2 # 2

STVT concurswith the recommendationto submit an irrevocableletter of credit for
$4,737.00to comply with the requirementsin 34CFR 668.173 (c) and a $ 67,140.00
additional irrevocableletter of credit to continue participation under 34CFR 668.175

(A)(2)(i).
                 APPENDIX




ATTACHMENT # 1
                                                                                                                              APPENDIX
                                UNITED STATES DEPARTMENT OF EDUCATION
~~
                                             OFFICE OF TIlE CHIEF FINANCIAL OFFICER




                                                         SEP     - 5 2001
     Ccrtificd      Mail
     -



     MroRay Garcia
     President
     SouthTexasVocational°I'cchnicall11stitlltc
     2255North Coria
     Brownsville,Texas78520"8779

     Re: Short-TermPaymelltAgreement
                                  -
     Dear Mr. Garcia:

     Enclosedfor your recordspleasefind an executedcopy of the Short-TermPayment
     Agreement.TIle $510.86down paymentwasreceivedAugust28 at St. Louis and
     creditedto your account. Also, pleasecheck to be surethat the first monthly paymentof
     $2,325.86due011SeptemberISIRasmailedtimely.

     If you have any questions. please call Dave Concannon on (202) 401-0458.

                                                            Sincerely,



                                                             '-Jl4~~-           f.   ci.~1Uu.-/-~
                                                            NancyI.~glund, Supervisor
                                                            Debt ManagcmentGroup

     Enclosure




                                          400 MARYLAND AVE., S.W. WASHINGTON, D.C. 20202-4300
                                                                   www.ed.gov

                 Our mi..~o;ionis to ensure equal access to education and to promolJ! educational exce~   throughout the Nation.
0.
:i
     ~~iOF




 ':~..I       ~
                                    UNITED STATES DEPARTMENT

                                                OFFICE OF THE CHIEF FINANCIAl. OFFICER
                                                                                       OF EDUCATION
                                                                                                                                APPENDIX




                                        SII()I~l'-TF,I~M         PA YMENT A(;I"{ltIi:MI':NT

             11lis Agreement is entered into between (1) [{ G Educational Services Inc. D/BI A South
             '[exas Vocational Technical Institute ofI3rownsville, Texas ("Debtor") al1d(2) the United
             StatesDepartment of l~ducation ("[~ducatiotl"). 'Ine Dcbtor and l:ducation hereby agree
             tnattnc Dehtor Gwest::ducation $27.024.00 and undertakesto repay this debt arising ii'om
             outstanclitlgmollctary exceptiollS in aLcorcIancewit\.l the terms a11cl COllditiollSset forth in
             tllis Agrcclnl'llt. rnc dc.~bt  W3Sestablishedas a result of r~dueatj()11
                                                                                    's [;'inal Audit
             I)ctcrmil}~~tiollI ,cttcr, AttcIit ('olltrol Numbcrs 06-1999-16564 anti 06-1998-04254, datcd
             l:chruary 21, 2001.                                                                         .


              loe I )t'btor sllall pay tIle dcht t() r:uucatioll with a down paymel]( of $5] 0.86, due upon
             siglling, ()r bat:k intercst accrucd to toe start of the term of this Agreemcnt and then in
             (wel\:c( I 2) equal monthly instalimcilts of$2,325.86 each, commCnCiJlgSeptember 2001
             allL!l'llllillg ;\llgust 2002. I'aymcllts ..Ireduc and payable on the first day o[each month.
             Intcrcst \vill ..]ccrueat the r..ucof six {6) percent per annum on the outstanding principal
             hal;lnCt'()f' thc ucl)t hcginlling August 1, 20()1. The debtor may prepay any amount of
             principill without penalty. An administrative charge 0[$200.00 and penalty chargc at the
             rate of six (6) pllccnt pcr annum will be assessed        ifpaymcnts are not receivedtimcly in
             (lCCQrd:lllce   with (Ile terms of this Agrecmcnt.

              l'Ilc I)cbt\)r sl1aliinakc payments pursuant to this Agrccmcnt wit!1 funds that arc not
             rcstrictcd by r;edcrallaw. 'rhe Debtor shall make each payment hy check payable to the
             u.s. Dcpartment of I-:ducationand include the identification-.1        -          -and
          --                             oneachpaYlllcnt.
                                                       TheDebtorshallsendpa.)'ments
                                                                                to thett)ll.owing
           acIdrcss:
                                                    u.s. Departmentof Educatioll
                                                    P.O.Box 952226
                                                    St. JJouis,MO 63195-2226

             I I !l(IYlllCllt is no! received in accordancewith this Agrcement, I:dllcatioll may collect the
             alll()UJlttlllC and payable by (ldmillistrative offset ag(linst any payments due the Debtor
             fi'om tIle I;cocral C,overnmcnt. This debt may also be referred to the Departmcnt of tllC
             'Ircasury lor fttrtllcr action as authorized by tl1eDebt Collection Jmprovcmcnt Act of
              199h. The Ochtl)r shall he respOllsiblefor any legal fees and costs incurred by the
             rcdcral (fl)Vernlllcnt with cn~ctil1g such a recovet"y.




                                             400 MARYLAND AVE., S.W WASHINGTON, D.C. 20202.4300
                                                                  www.ed.gov

                     Our mission is to ensure equal access to education and to promote edut:ational exceUencethroughout the Nation.
                                                                                        APPENDIX


Pagc2 - Short-Tcrm Paymcn(.AJ:!;rccmcnt



If the Debtor makes a general assignment for the benefit of creditors or tiles a petitio)) in
bankruptcy, or i r a petitioll ill bcmkrllptcy is fllcd against the Dcbtor or a reccly.cr is
appointed to adll1inister the I)ebtor's property or assets,then the principal balance a11tl
accI"1.led
         interest under tllis Agreement are immediately due and payable without notic(:.
The Debtor waives presentment [(If rayment, notice of non-payment, pfotest and
disoonor.




                                                              f=~~-=~y-
R;;,(1~6~~~-
SouthTexasVocationalTcchnicallnstitutc
                                                       Date




               I ~~:{:::-                              -   q-
Nancy I. oglund, Supervisor                            I)atc
I )cbt iv1alagcmc!l1.Group
Office of the Chief I;inancial Onicer
{J.S. r)epartment of Educati\)!l
                                                            APPENDIX
~ACK INTER~§TS~~~~_S
      South Texas Vo- Tech
      Brownsville, Texas

                                 !,MOUNT:      $27,024.00

ACCRUAL                           INTEREST
DATE:              07-Apr-O1          RATE:         6.00%

#OF     DATE        MONTHLY        INTEREST
DAYS              ~~~___~ANCE
 23     Ar:JRIL         102.17        10217
 31      MAY            137.71        239.88
 30     JIJNE           13327         37315
 31     JULY            137.71        51086


      PREPARED       06-Aug-01      03:39PM
                                                                     APPENDIX




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    APPENDIX




~
                                                                                                                                                                          APPENDIX


                                                                                                                                          ...




-".         .. ~                  .     -       .- "'        ,== ""-'-"'---".""'-'-.A_~"_'-;;-'-",---'~"""'-"-W_-""""".~_.."..-,~                                 - ~      -~~-        -~~        -
                                                                                                                                                  .
                                                                                                                                                                                       5681
                    .                   SOUTH TEXAS VO-TECH BROWNSVILLE                                              5.94
                                                        2255 N CORIA ST. PH. 956-546.0353
                                  '.                         BRO\"tNSVILLE. TX 78520
                                                                                                                                                            9jg~~-
                                                                                                                                                            ...,,~ '()/                ~3
                                                                                                                                                                                       88-1158




                                                                                                                                                        ~
                                                                                                                                                DATE                              --



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                                                                                                                                                                                                      ,




                                                   .
                APPENDIX




ATTACHMENT# 2
   2-19-20[12          12: 20r:Jt,1              FJ::;:OM                                                                        P.2
02/19/200!   Tl.1E12:2g              ,"'AX 463    :%2IJ              ! "'"   \"e-l.Ul\L   \'VV."'L\L



                                                                                                                             APPENDIX




     Memo
                Yo:               R~y Garcia

                ~                 MichaeJ De Long,            Schools.512/936-3104
                ~:                Febf'lJary19.2002
                Re:               Cerbficates of Approval Renevval



                This Is the explanationof our legalcounselof me $~$ of C2rtificcrtes
                                                                                  d\Jr1ng
                                                                                        the renewalP!"{;~.

                If 8 proplietaryschool whose Certi1icateOfApPI'tJvalis about to ~        files a proper ap~"'/ic;aton fa:
                renewal,the sct\(X)I'SexiStingceruficatedoes not ~ir8 until the $(:t\(X)1 ha had a full op~nity        t\'\
                renewit If a scho~'scertiftcateappearsfi'omIts~ to haveexpired.the rerutIcatemay 51H!         be val[(jii
                the SChOOl  ,,as an applicQtionfor renewalpending. The Texas WOrkfcfreCommi$$iOn        ~r) vaify Iht
                status of a $<.'-hoots
                                     certificateunder me circumsbncesdescribedabove. You ~id             (;Lil!or ~-r!1ai
                Rosalind Gamble at rosalind.gamble@twc.~.tx.ua or (512) 936.3114 for i~l«;                   aOOvtttll.
                ~$     of a schoofs certificate. If ~e$ were not resotlleauntil aftef the expirationdate, t:le et~ivl
                date of the renewalcertificatewill rafted the datethe issueswere resolved.

                This i$ governed by the AdministJative ProcedureA<;t,which is found in Chapter 2001 0' the         l-e,(a!
                Government Code, specifically. §lOO1.054. Ucenses.

                F'jease ca~ me if you have any questions.




                AI.~-t't: ~ Gov ~~




                I1F ~.1ge-   '1
       2-19-2(1(12          12 : 211=~t.1          FROt.]
"..,   .L~l ..""..   A"'~       J."   AAA   ..",       v                                                                               ~VV..



                                                                                                                                      APPENDIX

                      §2001.054,U~n
                       (a) The provisk)ns of this rJ1apterco~l'1'Iin9 contested cases apply to the grnnl denial, or ~n~;J1 of 'a
                      licel)Se that is required to be prec::$dec:f
                                                                by notQ and oppOt1t,inlt\jft)r hearing.
                      (b) tf a license l'Iolder ~      timely and sufficient application for the renewal of a licen~ Of for ~ "'~
                      license ior an activity of a continuing nature, the existing license d~ nQt expire until t~~ i:lppl~on
                      h-a5 bf:=en finally detf!m1ined by me state 3gency. If the application is denied or the tel'm..~"f ~ nI~
                      ~           are limited. the ~~     license does not expire until tile last day for seekil1g r~" ~ew (Jf the
                      agency order or a later date fixed by oroer of the reviewing court.
                      {c} A rev~tion. suspension. annulment. or withdrawal of a license Ls not effective unk,~. t~r@
                      institution of state <lgency proceedings:
                      ( 1) tI"".eagency gives notice by personal service or by registered or certified mail to the lice~~ holder of
                      ~ds or conduct aI1egedto warrant "theintended ~:           a~
                      (2) the license holder i$ given an oppaltunity \0 show compliance with all requirements of \;'fW fbr the
                      retentic;;,n of theJ~se.                                                                   '
                     (d) A license described in Subsection (a) remains valid unless it expires without timely 3Pt:"flrcation   'for
                     rerlew<JI.is amended. mYokoo. SUSpended. annulled, or withdrawn, or the ~ial                   of ,1 rer1e1NaI
                     appi/(;afKjnbecomes final. rne term or duratIOnof a license descrj~ in Subsection (a) is t.(;,:~ed     dun"9
                     the period the I~nse is subjected to judicial review. HOWever,the telm or (juration of a Iit.,.nse 1$not
                     tolled if, during judicial revieN. the licensee engages in the adivity for whk:;hthe licenS$ was i!:sueo.
                     Addeo by j).(:ts 199~t 13m Leg.. ch. 268. § 1, eft. Sept. 1. 1993. Amended by Acts 1995. 741'1Leg.. (:h.
                     589. § 1. £-fr.sept 1.1995.




                     ~ F1ige.G
                                REPORT DISTRIBUTION LIST
                         CONTROL NO. ED-OIG/A06-B0026
Auditee                                              ED Action Official

Mr. Ray Garcia, President                            Mr. Greg Woods
South Texas Vocational Technical                     Chief Operating Officer
   Institute – Brownsville                           Federal Student Aid
2255 N. Coria
Brownsville, TX 78520

                              Other ED Officials/Staff (electronic copy)

Audit Liaison Officer                                Press Secretary
Case Management Division                             Office of Public Affairs
Federal Student Aid

Correspondence Control                               Assistant General Counsel
Office of General Counsel                            Office of the General Counsel

Assistant Secretary                                  Deputy Secretary
Office of Legislation and                            Office of the Deputy Secretary
    Congressional Affairs

Assistant Secretary                                  Chief of Staff
Office of Intergovernmental                          Office of the Secretary
   and Interagency Affairs

Director                                             Under Secretary
Financial Improvement and                            Office of the Under Secretary
   Post Audit Operations
Office of the Chief Financial Officer

Post Audit Group Supervisor                          Director
Financial Improvement and                            Office of Public Affairs
   Post Audit Operations
Office of the Chief Financial Officer

Indirect Cost Group Supervisor
Financial Improvement and
   Post Audit Operations
Office of the Chief Financial Officer

                                        Others (electronic copy)

                               The Council on Occupational Education
                           ED/OIG Audit Tracking System
                                 Data Input Sheet
                                                                           Thursday, March 21, 2002

ACN:   A06B0026 OFFCODE: 06 AUDIT TYPE: A
TITLE: SOUTH TEXAS VOCATIONAL TECHNICAL INSTITUTE STATE: TX
PROJECT NUMBER: 2001021 PROJECT NAME: AUDITS OF SELECTED
POSTSECONDARY INSTITUTIONS
AWPI: IASD INSTITUTIONAL AUDITS SCHOOLS (DOMESTIC)  GOAL: 2
PERIOD AUDITED FROM 7/1/1999 TO 6/30/2001 AUDIT SCOPE: 4
PROGRAM OFFICE: 3 DIRECT TIME: YES JOB STATUS: 6 ENTITY CODE: 63


                        ACTIVITY DESCRIPTION                            ACTUAL DATE
       DRAFT REPORT                                                     1/29/2002
       COMMENT RECEIVED                                                 3/1/2002
       FINAL REPORT                                                     3/20/2002


CFDA CODE: 84.063

FINAL REPORT DATE ISSUED: 3/20/2002

FINDING CODE: 1 WITH FINDINGS

SIGNIFICANT QUESTIONED COST
   Finding Amount: $24,668.00 1b. (Significant)
   Finding Amount: $71,877.00 2a. (Significant) 2b. (Significant)
SIGNIFICANT NON-MONETARY RECOMMENDATION
  1a. (Significant) 1c. (Significant)
  2c. (Significant)

[a] Copy of Report on Web      [ ] Copy of Report not on Web due to Sensitive Nature


PREPARER's SIGNATURE: ______________________________                 DATE: _______________

APPROVED BY: _______________________________________                 DATE: _______________