oversight

Gaining Early Awareness and Readiness for Undergraduate Programs.

Published by the Department of Education, Office of Inspector General on 2002-06-07.

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

           Audit of Gaining Early Awareness and Readiness for
                        Undergraduate Programs



                                  FINAL AUDIT REPORT




                                            ED-OIG/A07-A0033
                                                June 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.                          Region VII - Kansas City Offic e
                                      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 appropriate Department of Education officials.

In accordance with the Freedom of Information Act (5 U.S.C. Section 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.
             Audit of Gaining Early Awareness and Readiness for
                          Undergraduate Programs

                                             Table of Contents


Executive Summary ......................................................................................................................1


Audit Results .................................................................................................................................3

    Finding No. 1 – GEAR UP Officials Did Not Notify GPOS of Changes
       Regarding Warrants Issued to GEAR UP Personnel ............................................................3

    Finding No. 2 – GEAR UP Officials Did Not Review Budgets Prior to
       Awarding Grant Funds..........................................................................................................5

    Finding No. 3 – GEAR UP Program Does Not Have a Plan for Monitoring
       Grant Activity .......................................................................................................................6

    Finding No. 4 – Eligibility Checklists Not Sufficiently Completed ..........................................7

    Finding No. 5 – Sample of Technical Review Forms and Panel Summary
       Sheets Revealed Errors .........................................................................................................9

Background ................................................................................................................................. 12

Objectives, Scope and Methodology.......................................................................................... 15

Statement on Management Controls ......................................................................................... 16


    Exhibit 1 – GEAR UP Criteria................................................................................................ 17


    Appendix A – GEAR UP Officials Response to Preliminary Audit Results .......................... 19




                                                        ED-OIG/A07-A0033
    Audit of Gaining Early Awareness and Readiness for Undergraduate
                               Programs

                                    Executive Summary


We found that the U.S. Department of Education’s (the Department) Gaining Early Awareness
and Readiness for Undergraduate Program (GEAR UP) office did not establish and follow
management controls necessary to assure that it administered the program in accordance with
legislative, regulatory and internal administrative requirements. Effective management controls
help safeguard assets, ensure the reliability of accounting data, promote efficient operations, and
ensure compliance with established policies.

Specifically, we found that the Department did not assure that:

•   GEAR UP officials informed Grants Policy and Oversight Service (GPOS) when changes
    were made with GEAR UP program staff and officials holding warrant authority,

•   GEAR UP program staff followed the Department’s Technical Review Plan in reviewing
    budget data submitted by applicants prior to awarding grant funds,

•   GEAR UP officials established and implemented a monitoring plan as prescribed in the
    Technical Review Plan,

•   GEAR UP program staff completed the necessary steps to determine eligibility prior to
    awarding grant funds, and

•   GEAR UP program staff adequately reviewed the completed technical review forms and
    panel summary sheets for completion and mathematical accuracy as required by the
    Technical Review Plan.

We recommend that the Assistant Secretary for Postsecondary Education require that GEAR UP
officials and staff follow:

1. Policies and procedures in place to inform GPOS when changes are made to warrant status of
   GEAR UP program staff and officials;



ED-OIG                                      A07-A0033                                      Page 1
2. Procedures in reviewing budgets for assurance that all expenditures and matching costs are
   allowable according to applicable federal regulations;

3. ED Directive, GPA 1-101 – Monitoring Discretionary Grants and Cooperative Agreements,
   issued March 24, 1994, and prepare a strategic monitoring plan, annual monitoring plan, and
   annual report as a means of providing assurance that Federal grant funds are being
   safeguarded;

4. Procedures in place to determine eligibility of applications prior to consideration for funding;
   and

5. Control procedures in place to ensure that all reviews of applications are conducted in
   accordance with guidelines established by GEAR UP officials.

Officials of the Gaining Early Awareness and Readiness for Undergraduate Program did not
provide any additional comments to the draft audit report. Appendix A to this report contains the
Department’s initial response, dated April 23, 2001, to our preliminary findings.




ED-OIG                                     A07-A0033                                      Page 2
                                        Audit Results

We found that GEAR UP officials did not establish and follow management controls necessary
to assure that they administered GEAR UP in accordance with legislative, regulatory and internal
administrative requirements. GEAR UP officials did not assure that: (1) GPOS was notified
when changes were made with GEAR UP program staff holding warrants, (2) program staff
followed the Department’s Technical Review Plan in reviewing budget data submitted by
applicants prior to awarding grant funds, (3) a monitoring plan was established and implemented
as prescribed in the Technical Review Plan, (4) program staff completed the steps necessary to
determine eligibility prior to awarding grant funds, and (5) program staff adequately reviewed
the technical review forms and panel summary sheets for completion and mathematical accuracy
as required by the Technical Review Plan.



Finding No. 1 - GEAR UP Officials Did Not Notify GPOS of Changes Regarding
Warrants Issued to GEAR UP Personnel


Grants Policy and Oversight Service (GPOS) were not provided changes of Gaining Early
Awareness and Readiness for Undergraduate Programs (GEAR UP) personnel in order to
provide an accurate list of program officials and staff that have warrant authority to obligate
GEAR UP grant funds. The list provided by GPOS did not identify the name of the official who
obligated the funding for the 2000 grants. In addition, we found former GEAR UP program staff
and a former GEAR UP official listed as still holding warrant authority under the GEAR UP
program.

The policy Procedures to Obtain A Warrant to Obligate Discretionary Grant Funds established
by the Office of the Chief Financial Officer (OCFO) states that the Department authorizes the
Principal Office's (PO) Senior Officer to designate certain persons to obligate grant funds. To
obligate the funds that person or persons must obtain an official warrant signed and issued by the
Director of the OCFO’s GPOS. In addition, it is the responsibility of the Executive Office to
notify GPOS when it wants to revise or cancel a warrant when the person transfers or leaves the
Department.




ED-OIG                                     A07-A0033                                     Page 3
GEAR UP officials did not inform GPOS when changes were made with GEAR UP program
staff holding warrants. It is the responsibility of the Executive Office to notify GPOS when
revisions or cancellations of warrants are necessary, including changes in programs for which
warrants can be authorized and authorization amounts. GEAR UP officials were not maintaining
the necessary management and quality controls to safeguard Federal discretionary grant funds.
The lack of accurate warrant lists could result in the unauthorized obligation of discretionary
grant funds.

When we brought this matter to the attention of Department officials, they did not fully concur.
The Department stated that the person who had obligated the FY 2000 funds held a warrant of
the correct size for the Office of Postsecondary Education (OPE). Therefore, this official had
authority to obligate the GEAR UP funds. As discussed in the body of the finding, without the
necessary controls to assure an accurate listing of officials who are authorized to obligate
particular discretionary grant funds, these funds could be obligated inappropriately. The
obligation of FY 2000 GEAR UP grant funds was one aspect of the overall finding. In addition
to this official not being identified on the list provided to us from GPOS officials, we also found
that former GEAR UP staff, as well as one former Department of Education employee were still
listed as having current warrant authority under the GEAR UP program. According to
documentation from GPOS, it is the responsibility of the Executive Office to request revision or
cancellation of a warrant when the person transfers or leaves the Department.

Recommendations

We recommend that the Assistant Secretary for Postsecondary Education require that:

1.1    GEAR UP officials adhere to current policies and procedures to inform GPOS when
       changes are made to GEAR UP staff and officials with authority to obligate discretionary
       grant funds (warrant status).

1.2    GEAR UP officials provide an updated list to reflect only the current GEAR UP warrants
       issued to GEAR UP officials, thereby deleting program staff members who are no longer
       assigned to GEAR UP.




ED-OIG                                      A07-A0033                                      Page 4
Finding No.2 – GEAR UP Officials Did Not Review Budgets Prior to Awarding
Grant Funds


We found that GEAR UP staff did not follow the Department’s Technical Review Plan in
reviewing budget data submitted by applicants prior to awarding grant funds. Program staff
informed us that proposed budgets included in the grant applications were not reviewed until
after the funding slate had been approved and the awards had been made. As part of the overall
grant application, for a grantee to be considered, the application must include a section detailing
its proposed budget for the project. The GEAR UP application booklet (2000) indicates that 15
out of the 100 possible points available would be given for “Adequacy of Resources.” In
determining the adequacy of resources, the Secretary considers the following factors:

       •   The adequacy of support, including facilities, equipment, supplies and other
           resources, from the applicant organization or the lead applicant organization.
       •   The releva nce and demonstrated commitment of each partner in the proposed
           project to the implementation and success of the project.
       •   The extent to which the costs are reasonable in relation to the number of
           persons to be served and the anticipated results and benefits.
       •   The potential for continued support of the project after Federal funding ends,
           including, as appropriate, the demonstrated commitment of appropriate
           entities to such support.

GEAR UP program staff did not obtain a determination of whether the proposed expenditures
and partner resources were allowable prior to awarding grants funds. This is contrary to
Education Department General Administrative Regulations (EDGAR) § 74.25(a), which says
that the budget plan for the project is approved during the award process.

Each step in the Technical Review Plan needs to be completed to ensure the integrity of the
award process and that all grant applications being considered meet applicable criteria. By not
following its own written plan, GEAR UP management could approve a grant application that
does not meet all of the elements of an eligible entity. It is the responsibility of GEAR UP
management to assure that program staff follows the Technical Review Plan in its entirety before
awarding grant funds.




ED-OIG                                      A07-A0033                                       Page 5
Recommendation

We recommend that the Assistant Secretary for Postsecondary Education require:

2.1       GEAR UP officials and staff to follow its procedures in reviewing budgets for assurance
          that all expenditures and matching costs are allowable according to applicable federal
          regulations.



Finding No. 3 – The GEAR UP Program Did Not Have a Plan for Monitoring
Grant Activity

We found that the Department had not followed the ED Directive, GPA1-101 – Monitoring
Discretionary Grants and Cooperative Agreements, and its own Technical Review Plan, in the
area of developing and implementing a monitoring plan.

      •   ED Directive, GPA 1-101 – Monitoring Discretionary Grants and Cooperative
          Agreements provides a framework for monitoring discretionary grants and cooperative
          agreements in the Department of Education by establishing Department-wide standards
          that give general guidance to Principal Officers for preparing their monitoring plans and
          reports; developing monitoring methods, instruments, and procedures that are appropriate
          to each Principal Office; using information obtained through monitoring to improve
          program performance and service; meeting legislative intent; and achieving the goal of
          improving education. The directive indicates that all Principal Offices must develop and
          maintain a Strategic Monitoring Plan and an Annual Monitoring Plan. Further each
          Principal Offices must also submit an annual report as a means of providing assurance
          that Federal grant funds are being safeguarded.

      •   The Technical Review Plan for State and Partnership Grants for FY 2000 states that a
          plan will be established to implement program staff monitoring and technical assistance.

At the time of our review, GEAR UP management had not committed to monitoring grant funds
nor had they followed their own Technical Review Plan. GEAR UP officials and program staff
informed us that a monitoring policy did not exist at the time of our review. GEAR UP program
staff stated that providing technical assistance to grantees, not monitoring, was their primary
focus. Moreover, GEAR UP officials have told program staff that there would be no site visits to


ED-OIG                                       A07-A0033                                    Page 6
grantees. GEAR UP program staff also informed us that they have not been instructed on how to
monitor grant activity. One of the risks of not monitoring grant funds, through site monitoring
visits, is that a grantee may be using Federal funds for purposes other than intended and this
abuse may go undetected.

When we brought this matter to the attention of Department officials, they concurred with our
finding. We were informed that all GEAR UP staff received training in conducting on-site
reviews in September 2001 and each will participate in two on-site institutional reviews during
fiscal year 2002. The Department’s written preliminary response, dated April 23, 2001,
indicated that GEAR UP officials have contacted Program Monitoring and Information
Technology (PMIT) for guidance on drafting an appropriate monitoring plan.

Recommendations
We recommend that the Assistant Secretary for Postsecondary Education require:

3.1      GEAR UP officials develop and implement a strategic monitoring plan, annual
         monitoring plan, and annual report as indicated in the ED Directive, GPA1-101 –
         Monitoring Discretionary Grants and Cooperative Agreements.

3.2      GEAR UP officials consider the use of grant fund monitoring as a means of providing
         assurance that Federal grant funds are being safeguarded.

3.3      GEAR UP management implement training plans for individual program staff members,
         especially in the area of monitoring grant funds.



Finding No. 4 – Eligibility Checklists Not Completed


We found that the checklists utilized by GEAR UP program staff to determine applicants’
eligibility were not completed. The three-page document consisted of general questions such as:

•     Are 50 percent of the students in the participating school(s) eligible for free or reduced
      lunch?
•     Are there at least four partners?
•     Is there a 50 percent match over five years in cash or in-kind?




ED-OIG                                        A07-A0033                                       Page 7
The majority of the questions require only a checkmark indicating “yes” or “no.” There were
some questions that required a brief narrative explanation. According to the Director of the
GEAR UP program, the checklist was a voluntary procedure implemented by the program office.
However, the Technical Review Plan for the GEAR UP State Grants and Partnership Grants for
Fiscal Year (FY) 2000 requires GEAR UP program staff to screen all accepted applications for
eligibility prior to the review process. By not determining eligibility prior to selecting gr antees
for funding, applicants not eligible for GEAR UP grants potentially could receive funding, and
review resources are expended on applications that are not eligible for consideration.

For our review, we analyzed 21 checklists, which encompassed 14 partnership and 7 state grant
applications. These 21 checklists were selected from the sample generated for analysis of
reviewer scores for the FY 2000 GEAR UP grant competition. Checklists were only completed
on grant applications that were selected for funding; therefore, all 21 of the applicants we
selected for review received funding in FY 2000.

We found that:

•   GEAR UP program staff reviewed eligibility only after the review process for applications
    selected for funding had been completed.

•   Twenty of the 21 checklists were missing answers for at least one question. The most
    skipped question dealt with verification that 50 percent of students in participating schools
    were eligible for free or reduced lunch, a major eligibility requirement of the legislation.

•   Twelve of the 21 checklists did not have a narrative response with an answer or an
    explanation for the lack of an answer to questions that required a response. Again, the
    majority contained no explanation addressing the verification of the students eligible for free
    or reduced lunch.

The Department concurred with our finding and made revisions to the Technical Review Plan for
the 2001 competition to complete all eligibility checks prior to the application being read or
scored. When we brought the matter regarding incomplete checklists to the Department’s
attention, its response stated that the checklist is not mandatory and was designed as an internal
document to merely identify all mandatory criteria and listed all essential assurances that the
applications must contain. When staff knew that an applicant met the eligibility criteria or the
eligibility was checked in another manner, the checklists were not completed. The response
continued by stating that all applications were carefully and thoroughly reviewed to determine
eligibility and no grants were awarded to applicants who were not eligible to participate.

ED-OIG                                      A07-A0033                                      Page 8
GEAR UP program staff did not perform the eligibility screening until after the review process
had been completed. The timing of the review did not follow the guidance contained in the
Technical Review Plan, which required program staff to screen all qualified applications for
eligibility prior to the review process. Further, documentation should be maintained to support
review of grant applications for eligibility.

Recommendation

We recommend that the Assistant Secretary for Postsecondary Education assure that GEAR UP
program officials:

4.1    Follow the procedures in place for determining the eligibility of an applicant prior to
       submitting the application for review.



Finding No. 5 – Sample of Technical Review Forms and Panel Summary Sheets
Revealed Errors


Our objective was to determine if the scores from the individual reviewer’s technical review
forms were transferred correctly to the panel summary sheets and then to the funding slate. We
found technical review forms and panel summary sheets completed by reviewers contained
errors related to either transferring the wrong scores to summary sheets or simple mathematical
errors in calculating the scores. According to the Technical Review Plan, program staff were
responsible for reviewing all forms and checking for completeness and/or any major
discrepancies. It further states that it is the role of program staff to review completed technical
review forms for their mathematical accuracy, completion, consistency, and quality of comments
in justifying scores. To address our objective, we selected a sample of partnership applications
for review; in addition, we reviewed all FY 2000 state applications. Below are the results of the
review.

Partnership Applications

From the 258 FY 2000 GEAR UP partnership grant applications received, we randomly selected
50 applications for review. The universe included both funded and non- funded applications from
the FY 2000 competition. We reviewed the individual reviewer technical review forms and



ED-OIG                                     A07-A0033                                      Page 9
panel summary sheets for each of the selected applications. We determined that 43 of the 50
partnership applications reviewed contained some fo rm of discrepancy.

Our review of the 50 partnership applications scored yielded the following results:

Thirteen of the 50 applications contained some error on the technical review form or panel
summary sheet related to the scores that reviewers assigned to GEAR UP grant applications.
None of the errors on the 13 applications resulted in any material impact on the applicants, e.g.,
keeping them out of the fundable range of scores or placing them in this range when they should
not have been. The largest difference on the technical review forms for the 13 applications was
two points, which yielded an average score difference of more than half a point. One error
resulted from scores being reversed between two criterions when the scores were transferred
from the individual criteria pages to the summary page. This reversal resulted in no change to
the total score. The differences noted would not have moved any of the applications into the
fundable range as their average scores were well below the funding cut-off.

In other instances, individual reviewers brought forward incorrect scores, failed to bring forward
changed scores, did not initial changes made, or reviewer comments were typed not written. For
the FY 2000 grant competition, none of the errors found in our review adversely affected any of
the applications.

State Applications

We reviewed all 21 state grant applications that the GEAR UP program office received for FY
2000; seven of these states received funding. The universe included both funded and non- funded
applications from the FY 2000 competition. We reviewed the individual reviewer technical
review forms and panel summary sheets for each of the applications. We determined that 15 of
the 21 State applications reviewed contained some form of discrepancy. Two of the 15
applications contained math errors. Other discrepancies noted consisted of typed comments
instead of written, incomplete checklists, checklists indicating comments were written in ink
when they were typed, changes made were not initialed and in one instance scores were written
in pencil.

For the FY 2000 grant competition, none of the errors found in our review adversely affected any
of the applicants. The differences we found in average score would not have moved any
applicants into or out of the fundable range.




ED-OIG                                     A07-A0033                                      Page 10
Not following written procedures already in place could jeopardize the integrity of the review
process by funding applications in error. Further, applications that should be funded may not
rank high enough to receive an award if changes are not carried forward correctly. This could
potentially affect whether an applicant receives funding.

The Reviewers’ Handbook: Instructional Handbook for the 2000 GEAR UP Grant Review
Process--stated that reviewers were to write their evaluations in ink. The Technical Review Plan
also required reviewers to independently change their scores and edit or amend their comments
in ink.

The Department agreed that there were errors in the technical review forms and Panel Summary
Sheets. The Department stated that in the new Technical Review Plan for the 2001 competition,
changes would be instituted to minimize the possibility of errors in the review process. No
scores will be logged in as complete without approval from both a Department of Education
employee serving as a panel monitor and another Department of Education employee serving in
the control room. To further address this concern, the Department plans to dedicate one staff
member in the control room to check for mathematical errors, transposed numbers, and incorrect
transfer of numbers from the technical review forms to the panel summary sheets. In addition,
the guidance for readers has been changed to indicate specifically that reviewers may write in ink
or type their comments.

Recommendation

We recommend that the Assistant Secretary for Postsecondary Education assure that:

5.1    GEAR UP management follows the procedures it has in place for the application review
       process.




ED-OIG                                     A07-A0033                                     Page 11
                                         Background

Congress authorized the Gaining Early Awareness and Readiness for Undergraduate Programs
(GEAR UP) as part of the Higher Education Amendments of 1998 (Public Law 105-244). The
GEAR UP program is designed to accelerate the academic achievement of cohorts of
disadvantaged middle and secondary school students. The goal is to support institutions of
higher education, local schools, community-based organizations, businesses, and States in
working together to help students and their parents gain needed knowledge and strengthen
academic programs and student services in the schools. GEAR UP provides two types of
competitive grants, partnership and state, that supports early college preparation and awareness
activities at the local and state levels. OPE’s Policy, Planning, and Innovation Office currently
administers the GEAR UP program. GEAR UP grants are five years in length.

Partnership grants are submitted on behalf of a locally designed partnership between one or more
local education agencies acting on behalf of an elementary or secondary school, one or more
degree-granting institution of higher education, and at least two community organizations or
entities. These other entities could include such organizations as arts groups, businesses,
religious groups, college student organizations, state agencies, family organizations, or parent
groups. Partnership grants must include an early intervention component. The maximum annual
Federal contribution under Partnership grants is $800 per each student served. The early
intervention component involves the project providing early college awareness and preparation
activities for participating students through comprehensive mentoring, counseling, outreach, and
supportive services.

For state grants, the governor of a state designates which state agency will apply for and
administer a GEAR UP grant. State projects must include both early intervention and
scholarship components. The scholarship component means a project shall establish or maintain
a financial assistance program that awards scholarships to GEAR UP eligible students so that
they may attend institutions of higher education. Partnership grants have the option of including
a scholarship component.

The Department’s 1999 Performance Reports and 2001 Plans, as submitted under the
requirements of the Government Performance and Results Act (GPRA), contains the GEAR UP
program objectives and indicators for measuring program success. The GEAR UP program
supports this objective and has as its goal to ensure that disadvantaged middle school and

ED-OIG                                     A07-A0033                                      Page 12
secondary school students are prepared for, pursue, and succeed in postsecondary education. The
Department’s measures address the following areas related to students participating in the GEAR
UP program. The objectives are to increase:

♦ Academic performance and preparation for postsecondary education of participating
  students;
♦ High school graduation rates and participation in postsecondary education of participating
  students; and
♦ Educational expectations for participating students and student and fa mily knowledge of
  postsecondary education options, preparation, and financing.

Section 404A of the Higher Education Act of 1965 (HEA), as added by Public Law 105-244,
authorizes the Secretary to establish a program that--

       (1)    encourages eligible entities to provide or maintain a guarantee to eligible low-
              income students who obtain a secondary school diploma (or its recognized
              equivalent), of the financial assistance necessary to permit the students to attend
              an institution of higher education; and
       (2)    supports eligible entities in providing--
              (A) additional counseling, mentoring, academic support, outreach, and supportive
                   services to elementary school, middle school, and secondary school students
                   who are at risk of dropping out of school; and
              (B) information to students and their parents about the advantages of obtaining a
                   postsecondary education and the college financing options for the students
                   and their parents.

The intent of the GEAR UP program, as expressed in the legislative history surrounding the law,
is to provide low income children with the assurance that financial aid for postsecondary
education would be available, as well as connecting these children with mentoring and support
services to enable them to succeed. The program, based upon GEAR UP program
documentation, addresses the challenge of helping more low-income students become prepared
academically and financially to enter into and succeed in college. According to documentation
we reviewed, measuring these areas provides a means of adequately gauging the success of the
GEAR UP program.




ED-OIG                                    A07-A0033                                     Page 13
The first GEAR UP grant was awarded in fiscal year 1999. During this first award year, the
Department awarded 164 partnership grants and 21 state grants. In 2000, 73 partnership grants
and seven state grants were awarded. GEAR UP appropriations for 1999 totaled $120 million,
with $200 million appropriated in 2000.




ED-OIG                                    A07-A0033                                   Page 14
                       Objectives, Scope, and Methodology


The purpose of our audit was to determine if the Department had implemented adequate
management controls to administer the GEAR UP program in accordance with legislative,
regulatory, and its own internal administrative requirements. We focused on the FY 2000 grant
competition from the development of the application Technical Review Plan to the awarding of
grant funds. In addition, we determined whether the measures established for the GEAR UP
program as contained in the Department’s annual performance plan, under the Government
Performance and Results Act (GPRA), adequately addressed the program goals as defined by the
enacting legislation.

To accomplish our audit objectives, we reviewed applicable laws and Federal regulations
governing the enactment of the GEAR UP program. In addition, we conducted interviews with
program officials and staff in the GEAR UP office located in Washington, D.C. and obtained and
analyzed documentation related to the project. We reviewed all 21 funded and non- funded state
applications and randomly selected 50 of the 258 funded and non- funded partnership
applications that the GEAR UP office received for consideration during the FY 2000 grant
competition.

We conducted our fieldwork at the GEAR UP program office during the periods November 6-9
and November 28-30, 2000. We conducted an exit conference at the GEAR UP office on April 9,
2001. We continued to collect and analyze information and the GEAR UP written response to
our preliminary findings, dated April 23, 2001, in our office through July 2001. We discussed
our findings with GEAR UP officials again on March 11, 2002. Our audit was conducted in
accordance with government auditing standards appropriate to the scope of the review described
above.




ED-OIG                                   A07-A0033                                   Page 15
                        Statement on Management Controls

As part of our audit, we assessed the Department’s management controls applicable to the scope
of this review. This assessment included a determination of whether the processes used by the
Department’s GEAR UP office related to the area of compliance with Federal regulations; and
internal policies and procedures provided a reasonable level of assurance that the GEAR UP
program is being appropriately administered.

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

       •   Development and implementation of the Technical Review Plan
       •   Reviewers’ scores
       •   Funding slate

Because of inherent limitations and the limited nature of our review, a study and evaluation made
for the limited purposes described above would not necessarily disclose all material weaknesses
in the control structure. However, our assessment disclosed weaknesses at the Department’s
GEAR UP office related to the area of compliance with Federal regulations, as well as with
internal policies and procedures. These weaknesses are discussed in the Audit Results section of
this report.




ED-OIG                                     A07-A0033                                     Page 16
                                                                                         Exhibit 1
                                       GEAR UP Criteria
Definition of Eligible Entity: Section 404A(c) of the HEA defines an eligible grant recipient for
the GEAR UP Program as —

   (1) a State; or

   (2) a partnership consisting of--

          (A) one or more local educational agencies acting on behalf of - -
              (i) one or more elementary schools or secondary schools; and
              (ii) the secondary schools that students from the schools described in clause (i)
                   would normally attend;
           (B) one or more degree granting institutions of higher education; and
           (C) at least two community organizations or entities, such as businesses, professional
               associations, community-based organizations, philanthropic organizations, State
               agencies, institutions or agencies sponsoring programs authorized under subpart
               4, or other pub lic or private agencies or organizations.

Program Regulations: GEAR UP program regulations (34 C.F.R. §§ 694.2 and 694.3) specify
that if a partnership or State applicant has chosen the cohort method for providing early
intervention services, the applicant must provide service to at least one entire grade level (cohort)
of students beginning not later than the 7th grade. The cohort to be served must be from a
participating school that has a 7th grade and at least 50 percent of the students must be eligible
for free or reduced-price lunch under the National School Lunch Act. An exception in §694.3 (a)
states that a cohort may consist of all the students in a particular grade level at one or more
participating schools who reside in public housing as defined in section 3(b) (1) of the United
States Housing Act of 1937.

GEAR UP program regulations (34 C.F.R. § 694.7) further define the matching requirements for
a partnership. For a GEAR UP partnership, the applicant must state the percentage of cost of the
GEAR UP project that the partnership will provide each year from non-Federal funds and
comply with this percentage for each year of the project period. The non-Federal share of the
cost of the GEAR UP project must be not less than 50 percent of the total cost over the project
period. The regulations stipulate that a partnership with three or fewer institutions of higher
education as members may provide less than 50 percent, but not less than 30 percent, of the total
cost over the project period if it includes the following:


ED-OIG                                      A07-A0033                                      Page 17
    ♦ A fiscal agent that is eligible to receive funds under Title V (Hispanic-serving
      institutions), or Part B of Title III (Historically Black Colleges), or section 316 or 317
      of the HEA (American Indian Tribally Controlled Colleges and Alaska Natïve and
      Natïve Hawaiian-serving institutions), or a local educational agency;
    ♦ Only participating schools with a 7th grade in which at least 75 percent of the students
      are eligible for free or reduced-price lunch under the National School Lunch Act; and
    ♦ Only local educational agencies in which at least 50 percent of the students enrolled
      are eligible for free or reduced-price lunch under the National School Lunch Act.




ED-OIG                                  A07-A0033                                      Page 18
                          Appendix A
     GEAR UP Officials Response to Preliminary Audit Results




ED-OIG                      A07-A0033                          Page 19
     Audit of Gaining Early Awareness and Readiness for Undergraduate
                                Programs


                                 Report Distribution List

                                                                           No. of
Action Official                                                            Copies

Sally Stroup, Assistant Secretary                                             1
Office of Postsecondary Education
1990 K Street, NW
Washington, DC 20006

Other ED Offices (electronically)

Chief of Staff, Office of the Secretary                                       1
Deputy Secretary, Office of the Deputy Secretary                              1
Under Secretary, Office of the Under Secretary                                1
Assistant Secretary, Office of Intergovernmental and Interagency Affairs      1
Assistant Secretary, Legislation and Congressional Affairs                    1
Chief Financial Officer                                                       1
Office of General Counsel                                                     1
Director, Budget Services                                                     1
Director, Office of Public Affairs                                            1
Director, Financial Improvement & Post Audit Operations, OCFO                 1
Director, Post Audit Group, Office of Chief Financial Officer                 1
Audit Liaison Officer, Office of Postsecondary Education                      1
Press Secretary                                                               1

Office of Inspector General (electronically)

Inspector General                                                              1
Deputy Inspector General                                                       1
Assistant Inspector General for Audit                                          1
Assistant Inspector General for Analysis and Inspections                       1
Assistant Inspector General for Investigations                                 1
Deputy Assistant Inspector General for Audit                                   1
Director, State and Local Advisory and Assistance                              1
Regional inspectors General for Audit                                      1 each
Directors, Internal Audit Teams                                            1 each