UNITED STATES DEPARTMENT OF EDUCATION OFFICE OF INSPECTOR GENERAL KANSAS CITY OFFICE 8930 Ward Parkway, Suite 2401 Kansas City, Missouri 64114-3302 AUDIT SERVICES INVESTIGATION SERVICES Telephone (816) 268-0500 FAX (816) 823-1398 FAX (816) 268-0526 June 18, 2004 Richard Roybal, Executive Director LULAC National Educational Service Centers, Inc. 2000 L Street NW, Suite 610 Washington, DC 20036 Dear Mr. Roybal: This is our final audit report, Control Number ED-OIG/A07-D0024, entitled Audit of the Talent Search (TS) program at LULAC National Educational Service Centers, Inc. (LNESC).l The objective of our audit was to determine if LNESC administered the TS program in accordance with the Higher Education Act (HEA) of 1965 and specific TS regulations governing the documentation of participant eligibility. In its May 10,2004, response to our draft report, LNESC concurred with our finding and recommendations, but did not agree with our summary statement of audit results. We slightly modified this statement in this final report. The full response is provided as an attachment to this letter. AUDIT RESULTS We found that LNESC did not always administer its TS grant in accordance with the law and TS regulations governing the documentation of participant eligibility. As a result, LNESC overstated TS participants served in its Annual Performance Report (APR) submitted to the Department of Education (Department) for the September 1,2001, through August 31, 2002, budget period. Finding - LNESC Overstated TS Participants in Its APR We estimate that LNESC served approximately 13,610 eligible TS participants for the September 1,2001, through August 31, 2002, budget period. While 13,610 participants exceed the 12,200 participants LNESC was funded to serve, it is significantly less than the 15,228 LNESC reported to have served in its APR for the budget period. We found 23 confirmed duplications among the reported participants and estimated, based on a statistical sample, that approximately 1,595 of the 15,205 unduplicated participants reported did not meet both conditions required for TS participants. 2 I LNESC is a national not-for-profit organization established by the League of United Latin American Citizens (LULAC) in 1973. 2 We estimate that LNESC overstated the number of participants served for the 2001-2002 budget period by 1,618 (10.6 percent). Our mission is to ensure equal access to education and to promote educational exceUence throughout the Nation. Final Audit Report ED-OIG/A07-D0024 The Department uses the information provided in APRs to assess a grantee's progress in meeting its approved goals and objectives, and to determine a grantee's prior experience points. The data collected are also aggregated to provide national information on project participants and program outcomes. As a result of the error in LNESC' s APR, the Department may be making decisions based on an inflated count of participants and services delivered. Duplicate Participants The LNESC Executive Director provided a listing of 15,228 participants for the 2001-2002 budget period as reported in the APR. We determined that 23 names on the listing were duplicates, as confirmed by the LNESC TS Manager. The TS Manager had attempted to remove duplicates using a manual process, which is particularly difficult for LNESC due to the large number of reported participants. Although the number of duplicates found was minimal, encouraging the use of unique ID numbers 3 and automated controls to prevent duplicates is particularly important considering the dispersion of the LNESC centers across the country, the variation that can occur in names, and the large volume of participants tracked. Statistical Sample to Determine Whether Reported Students Met the Definition of a TS Participant We selected a random sample of200 participant names from the universe of 15,205 unduplicated participants (15,228 - 23 duplicates) to determine whether they met both of the conditions defined in 34 C.F.R. § 643.7. (b) Other definitions . .. Participant means an individual who (1) Is determined to be eligible to participate in the project under § 643.3; and (2) Receives project services designed for his or her age or grade level. We found that 21 ofthe 200 sampled students did not meet one of the requirements to be considered a TS participant. We reviewed student files and all supplemental information supplied, but there was no documentation of five students' eligibility or another 16 students' services as required by 34 C.F.R. § 643.32. (c) Recordkeeping. For each participant, a grantee shall maintain a record of (1) The basis for the grantee's determination that the participant is eligible to participate in the project under § 643.3 ... (3) The services that are provided to the participant; .... Based on the sample results, we estimate that LNESC served about 13,6104 eligible participants and that 1,595 should not have been reported as TS participants. 3 We observed some database entries with SSN numbers, others with school ID numbers, and many that were blank or marked nla. 4 We are 90 percent confident that the participants receiving eligible services total 13,608 +/- 3.98 percent (rounded to 13,310 for reporting purposes). 2 Final Audit Report ED-OIG/A07-D0024 Eligibility Was Not Documented LNESC served five students, neither citizens nor pennanent residents, without documenting evidence from the Immigration and Naturalization Service (INS) of intent to become a pennanent resident contrary to the eligibility requirements found at 34 C.F.R. § 643.3. (a) An individual is eligible to participate in a Talent Search project if the individual ... : (1)(i) Is a citizen or national of the United States; (ii) Is a pennanent resident of the United States; (iii) Is in the United States for other than a temporary purpose and provides evidence from the Immigration and Naturalization Service of his or her intent to become a pennanent resident; .... The LNESC TS Manager reported that they started serving students who were neither citizens nor pennanent residents after attending a presentation by a TRIO Educational Specialist at a TRIO Conference who said "intent" was not defined in the regulation and was "open to interpretation by the individual." The LNESC TS Manager concluded that, "our Centers could (under our interpretation) prove 'intent' by simply getting a family home address or showing that the student was enrolled in a public school." The LNESC TS Manager continued, "Currently for ... 2003-2004, I have notified all Centers that students who do not check US Citizen or Pennanent Resident are not eligible for TS services." Although the specific definition of "intent" has not been specified, 34 C.F.R. § 643.3(a)(I)(iii) clearly requires evidence from the INS of an individual's intent to become a pennanent resident. Accordingly, the five students without such documentation were not eligible to participate in a TS project. An Eligible Service Was Not Documented The TS Manager confinned that all contacts recorded for one student reflected only mailings (not services), but asserted that 15 other students actually received a service even though there was no record of a valid service with adequate documentation (e.g., sign-in sheets) to support the delivery of a TS service. LNESC's "Talent Search Handbook" is in compliance with the record-keeping regulations cited above in that it requires the recording ofthree eligible services before counting a participant and prescribes retention of support documentation as a practice to be followed in all of the center offices. The inappropriate recording of services and failure to retain support documentation was the result of inconsistent staff compliance with LNESC's "Talent Search Handbook." Recommendations: We recommend that the Chief Financial Officer (in collaboration with the Assistant Secretary for Postsecondary Education) require LULAC National Educational Service Centers to: 3 Final Audit Report ED-OIG/A07-D0024 1. Improve recording of TS participants using unique identifiers and automate identification of potential duplicates to reduce the reporting of duplicate participants. 2. Train and monitor LNESC TS staff to ensure that established procedures are followed, only eligible students are counted as participants, only valid project services are recorded, and support documentation is retained. BACKGROUND Title IV of the Higher Education Act of 1965, as amended (20 U.S.C. § 1070a-11 and 12), authorizes the TS program, one of the Department's TRIO programs. The TS program is governed by the regulations in 34 C.F.R. Part 643. All regulatory citations in the report are to the regulations in effect as of July 1, 2001. The TS program provides grants to projects designed to (1) identify qualified youths with potential for education at the postsecondary level and encourage them to complete secondary school and undertake a program of postsecondary education; (2) publicize the availability of student financial assistance for persons who seek to pursue postsecondary education; and (3) encourage persons who have not completed education programs at the secondary or postsecondary level, but who have the ability to do so, to reenter these programs (34 C.F .R. § 643.1). The League of United Latin American Citizens (LULAC) was established in 1929 and is the oldest and largest Hispanic membership organization in the United States. LULAC National Educational Service Centers (LNESC) is a national not-for-profit community-based organization whose mission is to better the educational condition of Hispanic and other low-income, first generation youth. LULAC established LNESC in 1973 to operate an outreach counseling program to assist educationally disadvantaged and economically poor high school youth to gain admission to college. LNESC was established as a separately incorporated entity with its own governing board and control of its program. LNESC has operated a Talent Search program since 1978. During the period of our review, the LNESC Talent Search program consisted of a network of 13 counseling centers around the nation and in Puerto Rico, managed by a national office located in Washington, DC. LNESC was awarded a four-year TS grant covering the performance period September 1, 1998, through August 31, 2002 (p044A980663). For the 2001-2002 budget period, LNESC was awarded $2,961,438 to provide services to 12,200 participants and a $10,000 supplemental technology grant awarded to all TS projects. AUDIT OBJECTIVE, SCOPE, AND METHODOLOGY The objective of our audit was to determine if LNESC administered the TS program in accordance with the law and TS regulations governing the documentation of participant eligibility. Specifically, we sought to determine whether participants met the twofold requirements of (1) eligibility and (2) receipt of eligible services during the budget period. 4 Final Audit Report ED-OIG/A07-D0024 To accomplish our objective, we • reviewed applicable Federal law and regulations, • reviewed files relating to the TS project at LNESC and at the Department's TRIO program office located in Washington, DC, . • interviewed LNESC and Department of Education personnel, • determined whether the TRIO cluster had been audited by LNESC's Certified Public Accountants, • obtained and analyzed documents related to the TS project at LNESC (e.g., organization chart, LNESC policies and procedures), and • randomly selected 200 TS participants from a universe of 15,205 to test documentation of participant eligibility, an eligible service, and low-income and first-generation status. Files for all participants selected in the sample were reviewed. We relied upon the universe provided to us by the LNESC Executive Director for drawing our sample. We tested the universe for accuracy and completeness by comparing source records to the universe and the universe to source records. Based on this test, we concluded the population data was sufficiently reliable to be used for a sample population in meeting the audit's objective. The audit covered the 2001-2002 grant budget period (September 1,2001, through August 31, 2002). We visited the Department's TRIO program offices located in Washington, DC (July 31, 2002, to August 2, 2002) and conducted fieldwork at LNESC Headquarters in Washington, DC, (August 4, 2003, to August 8, 2003), at the Colorado Center (August 13, 2003), and the Kansas City Center (August 19,2003). We held an exit conference with LNESC officials on November 19,2003, at LNESC Headquarters in Washington, DC. Our audit was conducted in accordance with generally accepted government auditing standards appropriate to the scope of 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 LNESC's administration of the TS program. Our assessment was performed to determine the level of control risk for determining the nature, extent, and timing of our substantive tests to accomplish the audit objective. For the purpose of this report, we assessed and classified the significant controls into the following categories: • Participant service, • Participant eligibility, and • Program record maintenance. Because of inherent limitations, a study and evaluation made for the limited purpose described above would not necessarily disclose all material weaknesses in the management controls. However, our assessment disclosed management control weaknesses, which adversely affected LNESC's ability to administer the TS program. These weaknesses included noncompliance with 5 Final Audit Report ED-OIG/A07-D0024 Federal regulations related to documentation of student eligibility, documentation ofparticipant services, and deficient record maintenance procedures. These weakness and their effects are fully discussed in the Audit Results section of this report. ADMINISTRATIVE MATTERS Statements that managerial practices need improvements, as well as other conclusions and recommendations in this report represent the opinions of the Office of Inspector General. Determinations of corrective action to be taken will be made by the appropriate Department of Education officials. If you have any additional comments or information that you believe may have a bearing on the resolution of this audit, you should send them directly to the following Education Department official, who will consider them before taking final Departmental action on this audit: Jack Martin Chief Financial Officer Office of the Chief Financial Officer U.S. Department of Education 400 Maryland Avenue, SW Washington, DC 20202 It is the policy ofthe U.S. Department of Education to expedite the resolution of audits by initiating timely action on the findings and recommendations contained therein. Therefore, receipt of your comments within 30 days would be appreciated. In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by the Office of Inspector General are available to members of the press and general public to the extent information contained therein is not subject to exemptions in the Act. Sincerely, 1~()~ kl Richard J. Dowd Regional Inspector General for Audit Attachment cc: Jack Martin, Chief Financial Officer Sally Stroup, Assistant Secretary, Office of Postsecondary Education 6 LHEse 2000 L Street. N. w.. Suite 610 Washington. DC20036 (202) 835-9646 FAX (202) 835-9685 \"i [~ !i,; May 10, 2004 I : ~ MAY f I 2004 _.._-_._.-'-"---;--,_<>--4 Ianice D. Keeney ALBUQUERQUE. NM Assistant Regional Inspector General for Audit 505m3·3787 U.S. Department ofEducation CHICAGO.IL Office ofthe Inspector General 7731277·2513 8930 Ward Parkway, Suite 2401 CORPUS CHRISTI. TIC Kansas City, MO 64114-3302 \ 3611883·5134 Dallas. TX .Dear Ms. Keeney: 2141943·2528 EI Paso. TX 1 recently received your Draft Audit Report (Control Number ED 91sn71·6545 0IG/A07D0024) ofthe Educational Talent Search program administered by the HOUSTON. TX LULAC National Educational Service Centers, Inc. As requested, please find 713/641·2463 attached our written response to the finding and recommendations offered by the KANSAS cm. MO OIG. 816/561·0227 MlAMI. FL On behalf ofthe staff, administration and clients ofthe organiZation, I would like 3051261·5341 to extend our appreciation for this opportunity to review our program and improve PHILADELPHIA. PA it through close examination of all its components. 2151423·4811 POMONA.CA Please feel free to contact me with any further questions or comments. 909/623-0588 PUEBLO. CO Sincerely, 719/542·9074 SAN ANTONIO. TX ~~/ 210-226·2772 Richard L. RoYbal SAN FRANCISCO. CA Executive Director 4151206·1155 BAYAMON.PK 787nSS·8080 An Independent separately Incorporated tax exempt organization sponsored by the League of United Latin American CitiZens Response to Draft Audit Report Control Number ED-OIGIA07D0024 lof3 After reviewing the Draft Audit report (Control Number ED-OIGIA07D0024) dated April 12, 2004, we offer the following response. Summary of Response We do not agree with the statement, ''LNESC did not administer its TS grant in accordance with the law and TS regulations governing the documentation of participant eligibility." We acknowledge that the auditors have estimated that LNESC serviced 13,610 eligible TS participants, which is less than the APR report of 15,228, but higher than the contracted 12,200. We have taken corrective action to improve the quality of our recordkeeping and to strengthen managerial controls. Elaboration of Response Finding- LNESC Over Reported TS Participants in Its APR Though LNESC's accordance with the law and TS regulations governing the documentation of participant eligibility was not an area that OIG cited in the audit report as a finding, we felt it necessary to clarify that in fact LNESC successfully served the number it contracted to serve .with· the Department of Education through the partnership agreement and therefore was in accordance with the law and TS regulations governing the documentation of participant eligibility. Ofthe 15,205 unduplicated participants recorded in the LNESC 2001· 2002 APR, we acknowledge the auditors have estimated that 1,595 were ineligible for participation in Talent Search leaving an estimated 13,610 eligtble TS participants. Though this number is lower than the 15,228 reported in the APR, it far exceeds the 12,200 participants we were contracted to serve. We believe that many if not the vast majority of the 1,595 participants deemed ineligible did actually receive services but were not documented completely. Furthermore, LNESC believes that any decisions made by the Department "based on an inflated count of participants and services delivered" should be mindful of the fact that LNESC met and surpassed its partnership agreement contract. Response to Draft Audit Report Control Number ED-OIG/A07D0024 20f3 Corrective Actions Taken to Improve Record Keeping Duplicate Participants In an effort further reduce the already minimal number of duplicate participants reported in the APR, LNESC has taken steps to implement within the database a unique automated serial number for each client entered into our management information system. The use of the automated serial numbers for each client record will create unifonnity in recordkeeping across the network. Documentation of Eligibility Although the eligibility requirements found 34 CFR §643.3 define who is qualified for participation in the Talent Search program, the 34 CFR §643.3(a)(1)(iii) is indeterminate as to what comprises "evidence from the Immigration and Naturalization Service of... intent to become a permanent resident." Based on the 1982 Supreme Court Decision, Plyer vs. Doe, which ruled the Fourteenth Amendment prohibits states from denying a free public education to undocumented immigrant children regardless of their immigrant status and emphatically declared that school systems are not agents for enforcing immigration law, and determined that the burden that undocumented aliens may place on school districts is not an acceptable argument for excluding or denying educational service to any student, LNESC believes documenting citizenship status places an undue burden on the agency and forces LNESC staff to become de facto agents ofthe INS. Both of which are far beyond the scope or intent of the Talent Search program. Additionally, LNESC has created new forms to be added to the Talent Search Handbook to strengthen proof of Talent Search eligibility (e.g. Verification of Income Form and Verification ofFirst Generation Status). Documentation of Services LNESC has taken several steps to improve the recording and retaining of services and support documentation throughout the network including: 1) All TS activity sign-in sheets will be photocopied and placed in the TS participant's file. The sign-in sheets will correspond to the dated written session report. 2) Written session reports documenting services to a TS participant must clearly detail the service(s) provided. 3) LNESC has created new forms to be added to the Talent Search handbook. Response to Draft Audit Report Control Number ED-OIGIA07D0024 30f3 4) LNESC has begun discussions to update our Talent Search Handbook and Personnel Policies and Procedures Manual. Response to Recommendations Recommendation 1 LNESC agrees that it should improve the recording of TS participants using unique identifiers and automated identification of potential duplicates in order to reduce the reporting of duplicate records and has already begun these processes. Recommendation 2 LNESC agrees that TS staff must be further trained and monitored to ensure that established procedures are followed, only eligtble students are counted as participants, only valid project services are recorded, and support dOcumentation is retained. Response to Statement on Managerial Controls We recognize that there are some minor weakness in our managerial controls and have taken efforts to tighten the administration of the Talent Search program. LNESC has begun a series of on-site trainings for each Center providing Talent Search services. These trainings will ensure that established procedures are followed, only eligible students are counted as participants, only valid project services are recorded, and support documentation is retained. Additionally, an updated version of the database management system has been created and disseminated to all LNESC Talent Search program sites. However, LNESC maintains that the managerial controls already in place are sufficient to appropriately meet and exceed the partnership agreement.
Talent Search (TS) program at LULAC National Educational56 Service Centers, Inc.
Published by the Department of Education, Office of Inspector General on 2004-06-18.
Below is a raw (and likely hideous) rendition of the original report. (PDF)