oversight

Office of Indian Education's Management of the Professional Development Grant Program.

Published by the Department of Education, Office of Inspector General on 2010-02-02.

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

          Office of Indian Education’s Management of the
             Professional Development Grant Program



                                 FINAL AUDIT REPORT




                                    ED-OIG/A19I0002
                                     February 2010




Our mission is to promote the                         U.S Department of Education
efficiency, effectiveness, and                        Office of Inspector General
integrity of the Department's                         Washington, DC
programs and operations.
                           NOTICE
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.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports
issued by the Office of Inspector General are available to members of the
press and general public to the extent information contained therein is
not subject to exemptions in the Act.
                                    UNITED STATES DEPARTMENT OF EDUCATION
                                           OFFICE OF INSPECTOR GENERAL


                                                                    February 2, 2010

Memorandum

TO:                  Thelma Meléndez de Santa Ana, Ph.D.
                     Assistant Secretary
                     Office of Elementary and Secondary Education

FROM:                Keith West /s/
                     Assistant Inspector General for Audit

SUBJECT:             Final Audit Report
                     Office of Indian Education’s Management of the
                     Professional Development Grant Program
                     Control Number ED-OIG/A19I0002

Attached is the subject final audit report that covers the results of our audit to determine the
effectiveness of the Office of Indian Education’s management of the Indian Education
Professional Development grant program. We received the Office of Elementary and Secondary
Education’s comments concurring with the findings and associated recommendations in our draft
report.

Corrective actions proposed (resolution phase) and implemented (closure phase) by your office will be
monitored and tracked through the Department’s Audit Accountability and Resolution Tracking System
(AARTS). Department policy requires that you develop a final corrective action plan (CAP) for our
review in the automated system within 30 days of the issuance of this report. The CAP should set forth
the specific action items, and targeted completion dates, necessary to implement final corrective actions
on the findings and recommendations contained in this final audit report.

In accordance with the Inspector General Act of 1978, as amended, the Office of Inspector General
is required to report to Congress twice a year on the audits that remain unresolved after six months
from the date of issuance.

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.

We appreciate the cooperation given us during this review. If you have any questions, please
call Michele Weaver-Dugan at (202) 245-6941.

Enclosure

cc:       Jenelle Leonard, Acting Director, Office of Indian Education
          Delores Warner, Audit Liaison Officer, Office of Elementary and Secondary Education
 The Department of Education’s mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                   excellence and ensuring equal access.
                                              TABLE OF CONTENTS


                                                                                                                                 Page

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

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

AUDIT RESULTS .........................................................................................................................4

          FINDING NO. 1 – Significant Improvements Are Needed in OIE’s
                          Management of the Professional Development
                          Grant Program ................................................................................4

          FINDING NO. 2 – OIE Created a System of Records Without Proper
                          Notification and Authorization ....................................................21

          FINDING NO. 3 – OIE Awarded Funds to Grantees With Low
                          Amounts Proposed for Actual Student Training .......................23

OTHER MATTERS ....................................................................................................................25

OBJECTIVE, SCOPE, AND METHODOLOGY ....................................................................27

ATTACHMENT 1                   Funding/Participant Data by Grant Award Year

ATTACHMENT 2 Acronyms/Abbreviations Used in this Report

ATTACHMENT 3 OESE Response to Draft Report
Final Audit Report
ED-OIG/A19I0002                                                                       Page 1 of 28


                                EXECUTIVE SUMMARY


The objective of our audit was to determine the effectiveness of the Office of Indian Education’s
(OIE) management of the Indian Education Professional Development (IEPD) grant program.
Through this program, authorized under the Elementary and Secondary Education Act of 1965,
as amended by the No Child Left Behind Act of 2001 (Public Law 107-110), awards are made
primarily to institutions of higher education to prepare and train Indians to serve as teachers and
school administrators. Funds may be used to finance students’ educational expenses (in part or
in full), provide monthly stipends and dependent allowances, and pay for personnel and other
costs incurred in administering the grant. Individuals who receive training must perform work
related to the training received under the program and that benefits Indian people (work payback)
or they must repay all or a prorated part of the financial assistance received (cash payback).
These individuals are also required to report semiannually to OIE on their compliance with the
work requirement.

We determined that OIE must undertake significant efforts to improve its management of the
IEPD grant program. We found OIE has failed to maintain adequate records on students
receiving assistance under the program and subsequently ensure these students fulfill their
payback obligation. As a result, OIE is unable to adequately account for the number of students
actually being served by the program; adequately account for training funds provided to students
under the program; determine whether students are fulfilling work payback requirements in
support of program goals; ensure students who cannot fulfill work payback requirements are
returning Federal funds received; and identify potential anomalies in student participation. The
weaknesses noted have ultimately fostered an environment susceptible to fraud, waste, and
abuse.

We also discovered OIE developed a database to be used in tracking IEPD grant program
participants without having published the requisite Federal Register notice and currently
maintains personal information on hundreds of individuals who received funds through the
program. As a result, data on individual IEPD program participants are being stored without
their knowledge, thus denying them the opportunity to contest any potentially inaccurate
information.

Lastly, we determined a number of IEPD grants were awarded to schools that proposed spending
less than half of their budgets on student training costs. Awarding grants to projects with low
percentages of funds targeted for actual student training may defeat the purpose for which these
grants are intended and decrease the numbers of students that could actually benefit from the
program.
Final Audit Report
ED-OIG/A19I0002                                                                       Page 2 of 28
To correct the weaknesses identified, we recommend that the Assistant Secretary for Elementary
and Secondary Education take the following actions, among other things:

      Require that OIE conduct a review of its grant and student files to identify all IEPD grant
       program participants who have failed to provide employment verification letters, in
       accordance with program regulations, and submit to the Office of the Chief Financial
       Officer (OCFO)/Accounts Receivable Group (ARG) the names of any such individuals.
      Require that OIE submit immediately to OCFO/ARG the names of all individuals known
       to have withdrawn or been terminated from an IEPD project, and for whom there have
       been no approved deferments.
      Review the management and staff structure of the IEPD grant program office and make
       changes, as appropriate, to ensure that the program is managed and implemented
       consistent with statutory requirements.
      Establish and implement written policies and procedures regarding the monitoring of the
       IEPD grant program, to include the collection of participant information that will allow
       OIE to account for and track students receiving funding under the program, review of
       grantee performance reports for information on students that have withdrawn or been
       terminated from the program, and filing procedures for pertinent information.
      Provide adequate funding and other support to allow OIE to hire a full-time employee
       whose primary, if not sole, responsibility is the tracking of former IEPD grant program
       participants.
      Require that OIE work with the Office of Management and Budget (OMB) and the
       appropriate Department of Education (Department) officials to develop a standard
       payback agreement to be used to collect personally identifiable information on
       individuals who receive funds through grants awarded under the IEPD grant program.
      Ensure that OIE promptly refers to OIG any credible evidence of suspected fraud or
       other criminal misconduct on the part of students and/or grantees.
      Require that OIE work with OMB and the responsible Department officials to have
       approved its current system of records and/or any future system(s) developed for the
       purpose of tracking recipients of funds under the IEPD grant program.
      Require OIE staff and management to assess for reasonableness the percent of each
       budget devoted to student training costs, taking into account historical averages as well as
       other relevant factors, prior to awarding grant funds.

In its response to the draft audit report, the Office of Elementary and Secondary Education
(OESE) concurred with our findings and recommendations. OESE’s comments are summarized
at the end of each finding. The full text of OESE’s response is included as Attachment 3 to this
report. No changes were made to the report as a result of OESE’s response.
Final Audit Report
ED-OIG/A19I0002                                                                      Page 3 of 28


                                      BACKGROUND


The Indian Education Professional Development (IEPD) grant program is authorized under the
Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left
Behind Act of 2001 (Public Law 107-110). It is administered by the Office of Indian Education
(OIE), whose mission is, “to support the efforts of local educational agencies, Indian tribes and
organizations, postsecondary institutions, and other entities to meet the unique educational and
culturally related academic needs of American Indians and Alaska Natives so that these students
can achieve to the same challenging State standards as all students.”

The purpose of the IEPD grant program is to prepare and train Indians to serve as teachers and
school administrators. These grants are awarded to: increase the number of qualified individuals
in professions that serve American Indians; provide training to qualified American Indians to
become teachers, administrators, teacher aides, social workers, and ancillary education
personnel; and improve the skills of those qualified American Indians who already serve in these
capacities. Grants are awarded to eligible entities, which include (1) institutions of higher
education (IHEs), including Indian IHEs; (2) State education agencies or local educational
agencies, in consortium with IHEs; (3) Indian tribes or organizations, in consortium with IHEs;
and (4) Bureau of Indian Affairs-funded schools.

Grant funds may be used to fully finance a student's educational expenses or supplement other
financial aid – including Federal funding other than loans – for meeting a student’s educational
expenses. Grantees are also permitted to provide monthly stipends to students (with the
maximum amount set yearly by the Secretary of Education), pay for certain induction services
after the student completes his or her training program, and use funds for grant-related
administrative expenses.

Individuals who receive training must perform work related to the training received under the
program and that benefits Indian people (work payback) or they must repay all or a prorated part
of the assistance received under the program (cash payback). Participants are also required to
report semiannually to OIE on their compliance with the work requirement.

Approximately $104 million was obligated under 139 IEPD grants awarded between
Fiscal Years (FY) 1999 and 2009.
Final Audit Report
ED-OIG/A19I0002                                                                     Page 4 of 28


                                     AUDIT RESULTS


We determined that OIE must undertake significant efforts to improve its management of the
IEPD grant program. Specifically, we found that (1) OIE has failed to maintain adequate records
on students receiving assistance under the program and subsequently ensure these students fulfill
their payback obligation, (2) OIE developed a database to be used in tracking IEPD grant
program participants without having published the requisite Federal Register notice, and (3) a
number of IEPD grants were awarded to schools that proposed spending less than half of their
budgets on student training costs.

As a result, OIE is unable to adequately account for the number of students actually being served
by the program; adequately account for training funds provided to students under the program;
determine whether students are fulfilling work payback requirements in support of program
goals; ensure students who cannot fulfill work payback requirements are returning Federal funds
received; and identify potential anomalies in student participation. In addition, data on
individual IEPD program participants are being stored without their knowledge, thus denying
them the opportunity to contest any potentially inaccurate information. Awarding grants to
projects with low percentages of funds targeted for actual student training may defeat the
purpose for which these grants are intended and decrease the numbers of students that could
actually benefit from the program.


FINDING NO. 1 – Significant Improvements Are Needed in OIE’s
                Management of the Professional Development Grant Program

OIE must undertake significant efforts to improve its management of the IEPD grant program.
We found OIE has failed to maintain adequate records on students receiving assistance under the
program and subsequently ensure these students fulfill their payback obligation. As a result, OIE
is unable to adequately account for the number of students actually being served by the program;
adequately account for training funds provided to students under the program; determine whether
students are fulfilling work payback requirements in support of program goals; ensure students
who cannot fulfill work payback requirements are returning Federal funds received; and identify
potential anomalies in student participation. The weaknesses noted have ultimately fostered an
environment susceptible to fraud, waste, and abuse.

OIE Has Not Maintained Adequate Records on Students Receiving Assistance
Under the Program

We found OIE has not maintained adequate records to report accurately on the total number of
students trained through grants awarded under the IEPD grant program, nor has it fully identified
individual program participants and the amount of assistance received by each. Specifically, for
the 82 grants awarded between FYs 1999 and 2004, we found OIE maintained separate student
files for only 52 (63 percent).
Final Audit Report
ED-OIG/A19I0002                                                                                       Page 5 of 28
The files that were maintained varied significantly in both the quantity and quality of information
contained within.1 Although some included student names, addresses, phone numbers, social
security numbers (SSNs), signed payback agreements, individual funding amounts, class
schedules, and graduation dates, others lacked even the most basic personally identifiable
information (PII).2 In many cases, we had to review the performance reports contained in the
official grant files in an attempt to identify participants and whatever limited contact and/or
status information project directors would occasionally provide.

In order to determine the number of students who received training during the time period
reviewed, we used the information contained in the existing student files and information
contained in performance reports in the official grant files. We could not identify the number of
students trained for four of the nine FY 1999 awards. We subsequently calculated that
approximately 1,660 individuals received training through grants awarded under the IEPD grant
program during the time period reviewed.

Of the 1,660 students trained, we were able to identify 1,187 by name. We later determined 48
of these 1,187 participants (4 percent) were listed more than once, either under (1) a different
grant awarded to the same grantee, (2) a different grant awarded to a different grantee in the
same State, or (3) a different grant awarded to a different grantee in a different State. We noted
nearly half of the duplicates (49 percent) were associated with just two grantees.

In early 2007, OIE began developing a “Master Student Database” to assist with the tracking of
students receiving assistance under the IEPD program. Our review of this database found it to be
largely incomplete and unreliable. We found the database did not include any students receiving
assistance under FY 1999 IEPD grants. In comparison to the above, we found the database
included the names of 1,217 students trained under grants awarded in FYs 2000-2004. For many
of the students, the only data maintained was their name.

To determine whether OIE’s recordkeeping has improved in more recent grant years, we
reviewed a sample of grantees and associated student files from FY 2005 through FY 2007. We
found the structure of student files appears to have improved, with summary lists of students
attached at the beginning of the files and subfolders for each of the students listed. However,
although the structure of the student files may have improved, we still identified students who
did not have participation agreements on file, students who were specifically identified in the
grantee-submitted performance reports who were not included in OIE’s files, student information
that was included in the wrong file, and student information that was not entered into OIE’s
student tracking database.




1
  Grants awarded from FYs 2005 through 2007 were not reviewed to the same extent as earlier grants because of the
structure of the IEPD grant program. Because these grants are for 4-year programs, it was determined the majority
of students would not have completed their training at the time of our review, thus, it was not expected of OIE to
have yet developed and be maintaining comprehensive files concerning the employment of individual participants.
2
  PII is defined in Office of Management and Budget (OMB) Memorandum 07-16 as, “Information which can be
used to distinguish or trace an individual's identity, such as their name, social security number, biometric records,
etc….”
Final Audit Report
ED-OIG/A19I0002                                                                                     Page 6 of 28
OIE Has Not Ensured Students Fulfill Their Payback Obligation

We found OIE has not satisfied its responsibility to adequately monitor individual program
participants to ensure they fulfill their work-related payback or cash payback obligation.
Specifically, we identified the following areas of concern: (1) a notable absence of employment
verification letters; (2) inappropriate granting of exemptions and/or inappropriate notice of
completion of payback obligations; and (3) lack of followup with individuals reported as
withdrawn or terminated from IEPD projects.

Of the approximately 1,660 students identified as having been trained under IEPD projects with
performance periods that had ended prior to our review, we could find documentation to support
work payback for only 262 (16 percent).3 We determined these 262 individuals were trained
under 43 (52 percent) of the 82 grants reviewed, meaning not a single employment verification
letter was provided and/or retained on file for participants from 39 grantees (48 percent).

Of the 262 participants for whom evidence of work payback was found, we were able to locate
the required semiannual certifications for only 8 (3 percent). We further noted that written
notices of intent to perform work payback, required by regulation, and requests for deferment,
which if approved would allow participants to postpone payback, were also uncommon, with
such documentation maintained for participants in less than 20 percent of the grants awarded
between FYs 2000 and 2004.

According to the database maintained by OIE, evidence of employment has been provided for
397 (33 percent) of 1,217 FY 2000-2004 IEPD participants. Thus, even by OIE’s own count,
approximately two-thirds of the individuals trained under the IEPD grant program for the time
period noted are of unknown status.

We also noted OIE officials issued nine certifications for completion of work payback without
creditable evidence of such and may have exempted some participants under at least one
FY 2000 IEPD project from their payback obligation. We were unable to determine the reasons
the officials may have granted exemptions. An analysis of emails relevant to our review, as well
as statements made by former OIE employees, disclosed that the idea was discussed over email
and during at least one staff meeting in October 2005. We reviewed a letter exempting these
participants that was drafted and shared within OIE. Based on a subsequent review of emails
related to the IEPD grant program, it appears the letter was mailed to at least some students who
were trained under two projects administered by the same grantee. The emails, however, allude
to the letter being sent in error to either some or all of these students, and another letter was
drafted informing any such recipients that they should disregard the previous letter. We also
noted that in one email to the most recent OIE Director, the Discretionary Grants Group Leader
stated, “We had decided to begin payback with 2001.”4 Our discussion with the applicable
3
  We relied on the program regulations in determining what would be considered adequate evidence to support work
payback. This included letters from school supervisors as well as copies of employment contracts. Emails or letters
from students and/or notations from project directors in performance reports were not considered sufficient. From
our review of the OIE database, however, it appears such documentation was accepted – either on occasion, or as a
matter of policy.
4
  The OIE Director at the time of our fieldwork retired from the Department of Education (Department) in July
2009; consequently, she is referred to as the “most recent” OIE Director throughout this document. The
Department’s Director for School Support and Technology Programs is currently serving as the Acting Director of
OIE.
Final Audit Report
ED-OIG/A19I0002                                                                                    Page 7 of 28
Office of General Counsel (OGC) attorney noted that program officials do not have the authority
to exempt program participants from payback requirements. She further noted that OGC was not
consulted on this matter.

In our review of performance reports, we also noted at least one grantee that was improperly
granting exemptions from payback. This included waivers to students who withdrew from the
program because of “personal” circumstances, and students being excused from payback
obligations as a result of local government layoffs and budget cuts. When asked whether they
were aware this occurred, the most recent OIE Director and the Discretionary Grants Group
Leader stated they were not and noted any such action is beyond the scope of a grantee’s
authority.

We found information on participants who were terminated or withdrew from their respective
programs was often provided to OIE, but in most cases we could find no evidence of followup in
either the official grant or associated student files. We identified 116 participants who were
dropped from grants awarded between FYs 1999 and 2004. These individuals collectively
received approximately $1.4 million in IEPD grant program funds.5 At the time of our review,
we determined that only seven individuals were on cash payback (none of whom were previously
identified as having been dropped from the program), and that payback for at least one was
initiated at the participant’s own request.6 In those few instances where followup did occur, we
found communications to be minimal at best. We also found information indicating OIE may
not have pursued appropriate action against one individual identified by a grantee as potentially
being in serious violation of program regulations. Specific examples include the following: 7

       In January 2001, OIE was informed by a grantee that two participants had withdrawn
        from its FY 2000 IEPD project. These students received approximately $15,400 in
        program funds. Two years later, the same grantee informed OIE that another participant
        – and recipient of more than $38,000 in program funds – had also withdrawn from the
        project. The project director provided names, addresses, and signed payback agreements
        with SSNs for all three individuals. Between January 2004 and June 2005, OIE was
        provided the names of four more individuals who were terminated or withdrew from an
        FY 2002 IEPD grant awarded to the same grantee. These students received
        approximately $75,000 in program funds. In April 2007, the grantee once again notified
        OIE that participants – this time a total of 21 – had withdrawn from an FY 2007 IEPD
        project. These students received just over $74,000 in program funds and were also
        identified by name, address, and SSN. Thus, we determined that this grantee provided
        over $202,000 in financial assistance to individuals who were subsequently terminated or
        withdrew from its IEPD projects. It appears a monitoring site visit was scheduled for
        September 2007, but we found nothing to indicate any further action was taken with

5
  We determined OIE counts 49 participants as having dropped from IEPD projects, though none are on cash
payback. These individuals received just over $629,000 in program funds, according to information maintained in
OIE’s student database.
6
  Three of the seven individuals received assistance under IEPD projects funded between FYs 1999 and 2004. We
were unable to locate any information on the other four, which suggests they may have received assistance under
more recent IEPD grants.
7
  The cases cited below represent just some of the more egregious examples of OIE’s failure to hold participants
accountable for cash payback. For each, OIE was provided indisputable evidence/statements regarding participant
withdrawals and/or terminations, in addition to sufficient contact information, but did not initiate collection
activities.
Final Audit Report
ED-OIG/A19I0002                                                                                    Page 8 of 28
        regard to this issue until the Office of Inspector General (OIG) mentioned it during a
        meeting between the audit team and the OIE Discretionary Grants Group Leader. We
        followed up with this individual to determine what OIE planned to do with regard to the
        dropped students and were told that OIE employees were in the process of verifying the
        information maintained on each student. Once this was completed, the students would be
        notified of the payback requirements by letter and afforded the opportunity to contest
        their debt and/or provide evidence of work payback before being referred to OCFO/ARG
        for collection. Whether OIE followed through with this as planned is unknown, however
        none of the students are currently on cash payback.

       An FY 2000 grantee identified four participants who were terminated or withdrew from
        its IEPD project in a 2001-2002 annual grant performance report. Three of these four
        individuals received a total of approximately $29,200 in program funds; the other
        withdrew prior to the first disbursement of funds. The grantee provided the then-OIE
        Discretionary Grants Team Leader with a followup report in January 2003 in which two
        additional participants who had dropped from the program were identified. These
        individuals received approximately $21,800 in program funds, bringing the total funds
        expended on dropped participants under this grant to just over $51,000. An accounting of
        funds disbursed by program year was provided for all six students, along with their SSNs.
        None of the students are currently on cash payback.

       Between October 2003 and November 2004, OIE was informed that four participants had
        dropped from an FY 2002 IEPD project and was provided documentation on each. Their
        names, addresses, and SSNs were also included in the final grant performance report
        submitted in late 2006. These individuals received approximately $83,400 in program
        funds. We found this same grantee notified OIE in March 2005 that a student had
        dropped from its FY 2004 IEPD project, again providing a name, address, phone number,
        SSN, and signed payback agreement. OIE’s response, however, was that they did “not
        have an official setup here in DC to accept paybacks… it is being constructed now.” The
        official went on to state that, “Until it is ready, we CANNOT accept any money… You
        need to get… contact information and basically have her sit tight until our system is up
        and running. I know this is a risk when she is willing to pay it now, but there is no way
        we can process it.”8 None of the students are currently on cash payback.

       In December 2005, a former OIE employee emailed students known to have participated
        under an FY 2001 IEPD project asking that they contact the office to verify their
        employment status. Records show at least one individual – the recipient of
        approximately $7,900 in program funds – responded that she had not completed the
        program and would like to set up a repayment plan, but there is no evidence OIE pursued
        the matter. We found this same grantee reported in a spring 2006 quarterly grant
        performance report that four students had dropped from one of its FY 2004 IEPD
        projects. An attachment to the report, however, identified six students who were

8
  Records and testimony provided by officials in the Office of the Chief Financial Officer’s (OCFO) Accounts
Receivable Group (ARG) indicate they met with OIE management and/or staff on multiple occasions prior to this.
These meetings were informational in nature (i.e., explanation of the accounts receivable process) and always
initiated by OCFO/ARG, rather than OIE. When asked about the outcome of these discussions, the Supervisor,
OCFO/ARG, stated OIE provided no indication that any students had defaulted on their service obligation or that
OCFO’s services would be required.
Final Audit Report
ED-OIG/A19I0002                                                                       Page 9 of 28
       terminated from the project. These individuals received approximately $69,000 in
       program funds. OIE was provided copies of signed payback agreements, which included
       SSNs, for each student. Three students also left or were suspended from the grantee’s
       other FY 2004 IEPD project, according to a summer 2007 quarterly performance report.
       Funding information was not provided for two of the participants, but the third received
       total financial assistance of over $46,400, bringing the total known funds expended on
       dropped participants by this grantee to over $123,000. OIE was again provided copies of
       signed payback agreements for each student, but this time no SSNs. None of the students
       are currently on cash payback.

      OIE was provided information on eight students who either withdrew or were dropped
       from an FY 2002 IEPD project in late 2005. These individuals received approximately
       $116,500 in program funds. Signed payback agreements were submitted by the grantee.
       None of the students are currently on cash payback.

      Another FY 2002 grantee provided OIE a detailed accounting of funds disbursed to each
       of its IEPD project participants in a summer 2005 quarterly grant performance report.
       The grantee identified four students who had withdrawn from the project after having
       received over $101,000 in program funds. Signed payback agreements are on file for
       each. None of the students are currently on cash payback.

      An FY 2003 grantee informed OIE in a summer 2006 quarterly grant performance report
       that two of its IEPD project participants had been terminated from the program. Two
       others had not been heard from in some time, with all attempts to contact them described
       as “unsuccessful.” As a result, their status could not be ascertained. These four
       individuals, for whom payback agreements are on file, received in excess of $163,000 in
       program funds. None of the students are currently on cash payback.

      In October 2006, OIE was alerted to the fact that a student had been participating and
       receiving funds under two separate FY 2004 IEPD projects. This student received
       approximately $26,000 from one grantee and an unknown amount from the other. In an
       email to OIE, the grant project director stated efforts had been made to contact the
       student to try to remedy the situation, but that the individual was unwilling to cooperate,
       subsequently withdrew from both programs, and had not been heard from in some time.
       This information appears to have been shared with the most recent OIE Director and the
       Discretionary Grants Group Leader, though the extent to which the case was pursued
       cannot be determined based on a review of the files maintained by OIE and discussions
       with OIE management. In a July 2007 grant performance report, the same grantee
       informed OIE that eight participants (including the individual described above) had
       withdrawn from its IEPD project. These students received approximately $109,000 in
       program funds and were identified by name, address, and SSN. OIE also has copies of
       signed payback agreements for each participant. None of the students are currently on
       cash payback.

      A final evaluation report completed by a contractor for another FY 2004 grantee, and
       subsequently provided to OIE, notes six students withdrew from the project. We
       identified five of these students by name through our review of the student files
       maintained by OIE. These individuals, for whom participant agreements are on file,
Final Audit Report
ED-OIG/A19I0002                                                                      Page 10 of 28
       received approximately $72,500 in program funds. None of the students are currently on
       cash payback.

Office of Management and Budget (OMB) Circular A-123, Management’s Responsibility for
Internal Control, states

       Management has a fundamental responsibility to develop and maintain effective internal
       control. The proper stewardship of Federal resources is an essential responsibility of
       agency managers and staff. Federal employees must ensure that Federal programs
       operate and Federal resources are used efficiently and effectively to achieve desired
       objectives. Programs must operate and resources must be used consistent with agency
       missions, in compliance with laws and regulations, and with minimal potential for waste,
       fraud, and mismanagement.

With regard to the IEPD grant program itself, section 7122(h)(1) of the ESEA, states

       The Secretary (of Education) shall require, by regulation that an individual who receives
       training pursuant to a grant made under this section –
               (A) perform work –
                      (i) related to the training received under this section; and
                      (ii) that benefits Indian people; or
               (B) repay all or a prorated part of the assistance received.

Section 7122(h)(2) of the ESEA states

       The Secretary shall establish, by regulation, a reporting procedure under which a grant
       recipient under this section shall, not later than 12 months after the date of completion of
       the training, and periodically thereafter, provide information concerning compliance with
       the work requirement under paragraph (1).

Title 34 of the Code of Federal Regulations (C.F.R.) § 263.10 states

       (a) Notice of intent. Participants shall submit to the Secretary, within 30 days of
           completion of their training program, a written notice of intent to complete a work-
           related or cash payback, or to continue in a degree program as a full-time student.
       (b) Work-related payback. If the participant proposes a work-related payback, the
           written notice of intent shall include information explaining how the work-related
           service is related to the training received and how it benefits Indian people.
               (1) For work-related service, the Secretary shall review each participant’s
               payback plan to determine if the work-related service is related to the training
               received and that it benefits Indian people. The Secretary approves the payback
               plan if a determination is made that the work-related service to be performed is
               related to the training received and benefits Indian people, meets all applicable
               statutory and regulatory requirements, and is otherwise appropriate.
               (2) The payback plan for work-related service shall identify where, when, the type
               of service, and for whom the work will be performed.
               (3) A participant shall notify the Secretary in writing of any change in the work-
               related service being performed within 30 days of such change.
Final Audit Report
ED-OIG/A19I0002                                                                     Page 11 of 28
              (4) For work-related payback, individuals shall submit a status report every six
              months beginning from the date the work-related service is to begin. The reports
              shall include a certification from the participant’s employer that the service(s)
              have been performed without interruption.
              (5) For participants that initiate, but cannot complete, a work-related payback, the
              payback reverts to a cash payback that is prorated based upon the amount of time
              the work-related payback has been completed.
       (c) Cash payback. If a cash payback is to be made, the Department will contact the
           participant to establish an appropriate schedule for payments.

The regulations at 34 C.F.R. § 263.9(b), however, permit the Secretary to defer the payback
requirement for any participant who plans to continue his or her education, “as a full-time
student without interruption, in a program leading to a degree in an accredited institution of
higher education.” Requests for deferment must be submitted within 30 days of leaving an IEPD
project and include information on school attendance and the degree being sought. Students in
deferment status must also, “submit to the Secretary a status report from an academic advisor or
other authorized representative… showing verification of enrollment and status, after every
grading period.”

We found OIE’s lack of sufficient records on IEPD grant program participants and substandard
tracking/implementation of student payback requirements resulted primarily from negligence on
the part of OIE staff and management involved with the program. Specifically, we found OIE
did not require its grantees to provide information concerning individual students receiving
training funds under the program, did not have a process established to properly review and file
information that was received, and failed to take actions that could significantly increase the
Department’s ability to locate and collect from participants who fail to fulfill their payback
obligation.

Several current and former OIE employees also attributed the problems noted to an inefficient
use of OIE staff, lack of management attention – including an adversity to working with
OCFO/ARG and OMB, and a dysfunctional work environment. In addition, when resources
were devoted to the program, it appears they were either ignored, encountered resistance, or
reassigned when issues were brought to light and they tried to proactively address the situations
encountered.

Grantees Were Not Required to Provide Adequate Information

We noted a significant lack of consistency in the type and amount of information provided by
grantees in their quarterly and annual performance reports. Although some grantees included
detailed information on their project participants, such as names, addresses, and SSNs, others
were less forthcoming, such that OIE would have no idea who was actually receiving funds in
order to ensure accountability with future payback requirements. We found little documentation
to suggest OIE followed up with grantees who may have failed to provide adequate information
on their projects and/or participants in grant performance reports.
Final Audit Report
ED-OIG/A19I0002                                                                                    Page 12 of 28
Lack of Process to Properly Review and File Information

The most recent Director, who held several high-level positions within OIE over the last 20
years, noted the bulk of OIE’s work is and always has been in formula grants.9 Far less money
and grantees are involved with the two discretionary grant programs administered by the office,
one of which is the IEPD grant program. She stated that given the substantially higher dollar
value, it is likely OIE employees spent the majority of their time on formula grants, perhaps to
the detriment of the discretionary grants. She also noted OIE has gone from a staff of about 45
full-time equivalents (FTE) during the 1990s to 15 FTE currently. She noted that stability has
not been a feature of OIE, noting that there have been a number of Directors and Acting
Directors over the years, each with his or her own idea about how to best run the office. As a
result, certain processes and procedures (e.g. maintaining sufficient grant records to allow for the
tracking of student payback) were never formalized, communicated to staff, and/or implemented
consistently throughout the office. Guidance has been provided on a piecemeal basis, with some
supervisors taking greater initiative than others. She also noted OIE would be in a difficult
situation enforcing payback without a signed payback agreement, adding this doesn’t mean there
is no chance of recouping the money, but that it would be difficult, especially when dealing with
grants and grantees from early in the IEPD program (i.e., FYs 1999, 2000). OIE would have to
rely heavily on information obtained from the grantees. When asked why, if this is the case, a
better effort was not (and has not been) made to collect signed payback agreements and track
participants, she again highlighted the instability of both OIE and some of its grantees.

Inefficient Use of OIE Staff/Lack of OIE Management Attention

Between 2002 and 2004, the IEPD grant program was essentially administered by one employee,
who was also responsible for all aspects of discretionary grants management, from administering
annual competitions and making grant awards to, among other things, providing technical
assistance, monitoring grantees for adequate performance, and ensuring fiscal requirements were
met. This former employee noted this was an almost impossible task for one person, with 120-
150 grants in progress at any given time. He readily acknowledged difficulties with
recordkeeping.

According to the former OIE employee, issues with the IEPD grant program were first brought to
the attention of the then-Special Assistant to the OIE Director (now most recent Director)
sometime in 2003. It was not until October 2004, however, that another OIE employee was
instructed by this official to focus specifically on organizing the grant files and attempting to
identify the number of students who had received training under the program. This coincided
with the hiring of the current OIE Discretionary Grants Group Leader in January 2005 – and,
according to the most recent Director, primary person involved with payback since then. During
a discussion with the audit team, the most recent OIE Director stated the first request for an
additional FTE was actually made during the FY 2003 budget process, but that OIE was not able
to hire someone until 2005. This is effectively when OIE began tracking students.




9
 Among this individual’s former job titles are Group Leader, Special Assistant to the Director, Deputy Director, and
Acting Director – a position she held on more than one occasion during the past few years.
Final Audit Report
ED-OIG/A19I0002                                                                                Page 13 of 28
In April 2005, OIE brought on an FTE with the sole task of tracking student payback. This
individual was asked by the most recent OIE Director and the Discretionary Grants Group
Leader to locate names and contact information for those participants trained under grants
awarded in FY 2001, and follow up as necessary to ensure they were fulfilling their service
payback obligation. When finished with FY 2001, he was to move on to FY 2002, then
FY 2003 and so on and so forth until caught up to the current day. According to the now-former
OIE employee, he was told by his supervisors not to pursue grantees from FYs 1999 and 2000
because of a lack of sufficient records to substantiate individual students’ participation in the
program.

This individual stated he found the IEPD grant program files to be incomplete and in a general
state of disarray – sentiments echoed by successors in this position, including both former and
current OIE employees. Documents were not properly filed, but rather scattered throughout the
office – on the floor and on top of and behind filing cabinets. Some grant files were nearly
empty.

Despite this obstacle, by August 2005, the former employee had constructed a Microsoft Excel
database file to be sent to all FY 2001 IEPD grant program project directors to verify contact
information for their former participants. This individual recounted encountering a certain level
of resistance from the project directors he contacted and noted some of them seemed to lack any
real working knowledge of the program, including what information should be provided to the
Department to allow for the tracking of student payback. He also noted some never responded to
his requests and some had invalid email addresses and/or disconnected phone numbers.

In September 2005, the employee provided the current OIE Discretionary Grants Group Leader
an electronic copy of the file, complete with the results of his review. Two months later, the
individual also sent a copy of the file to the Supervisor, OCFO/ARG, for reference if OIE
management ever contacted OCFO/ARG for assistance with debt collection, which OCFO/ARG
confirmed they never did. According to OCFO/ARG, this was the first individual from OIE that
was responsive to OCFO/ARG’s assistance and provided related data for possible collection
efforts.10

Around this time, it appears this employee was transferred to another group within OIE because
of concerns the most recent OIE Director and the Discretionary Grants Group Leader had
regarding his allegedly brusque interaction with grantees. A different OIE employee – also no
longer employed in the office – was subsequently tasked with continuing the effort to identify
former program participants, beginning with FY 2002 grantees.

According to this individual, the information she inherited from her predecessor showed students
who had received funds through grants awarded under the IEPD grant program in FY 2001 were
not being tracked, and that there was almost no accountability when it came to the payback
portion of the program. She found even greater discrepancies when she began compiling
information for FY 2002 grantees and beyond, noting there were few student records and that


10
  OCFO/ARG first initiated a meeting with OIE in May 2003 to provide information about the collection services
provided by the Department and share a draft letter that OIE could use to send to individuals that appeared to
warrant collection activity. A second meeting was initiated by OCFO/ARG in February 2005 to determine whether
OIE had identified any such individuals.
Final Audit Report
ED-OIG/A19I0002                                                                                   Page 14 of 28
those she was able to pull were of no value in terms of the contact and status information
provided.

Between March and June 2006, this individual met at least twice with officials in OCFO/ARG –
first to gain an understanding of the debt collection process, and later to share her concern that
debts were being forgiven by the most recent OIE Director and the Discretionary Grants Group
Leader (in excess of their authority) for students who failed to complete their work payback.
Between June and September 2006, she provided OCFO/ARG the names and addresses of 177
individuals who had participated in IEPD projects but never submitted documentation to support
their work in schools serving Indian students – the primary goal of the program. Of these,
108 (61 percent) had already received a letter from OIE regarding their payback obligation.
Copies of these letters, which were signed and date-stamped, were forwarded to OCFO/ARG by
this individual so that receivables could be established, or “formally” referred, in the words of
one official.11 These students alone represent $2.29 million in debts owed the Department. It
remains unclear whether or not any of the other 69 individuals (39 percent – the “informally”
referred) were ever contacted by OIE. The former employee admitted this was at times done
without the knowledge and consent of her supervisor, but stated she had concerns that
information she provided was being held back from OCFO/ARG for some unknown reason.
OCFO/ARG officials succeeded in contacting a number of these individuals, but stated they
received many calls from students who disputed their apparent failure to fulfill the service
requirement. These students were directed to call OIE, with the end result being the
Discretionary Grants Group Leader requesting that all collection efforts be suspended in July
2007. By this time, OIE employees had also located employment verification letters for some of
the students.

The former employee stated she took her findings to the then-Assistant Secretary of the Office of
Elementary and Secondary Education (OESE) in December 2006, once it had become clear to
her that her direct supervisors were not going to take action to collect from former participants
who had failed to fulfill their service payback obligation. Attendees at an ensuing presentation
included the current Director of the Office of the Secretary’s Risk Management Service; former
OESE Executive Officer; then-Acting Director of OIE; current OCFO/ARG Supervisor; and
both the most recent OIE Director and the Discretionary Grants Group Leader. According to this
individual, those present – with the exception of the most recent OIE Director and the
Discretionary Grants Group Leader – listened intently and expressed concern that adequate
records were not being kept and monitoring by OIE was basically non-existent. She added the
most recent OIE Director and the Discretionary Grants Group Leader interrupted her throughout,
claiming the information being presented was false and misleading, but providing no support for
their claims. The current OCFO/ARG Supervisor indicated these individuals also hesitated when
asked to obtain and/or provide SSNs for the students referred by the former OIE employee,
despite OCFO/ARG’s (1) assurance that it would be permissible under the Privacy Act of 1974,
provided the required steps were taken, and (2) offers of assistance – both then and in future
communications. OCFO/ARG requires SSNs in order to forward uncollectible delinquent debts
to the U.S. Department of the Treasury for further collection action, as mandated under the Debt
Collection Improvement Act of 1996. 


11
  OCFO/ARG noted that SSNs were provided for just 50 of these 108 individuals, making it difficult to initiate
billing actions.
Final Audit Report
ED-OIG/A19I0002                                                                       Page 15 of 28
Lack of Resources Committed to Development of Functional Student Database

When the aforementioned employee left the Department in January 2007, another OIE program
specialist was detailed to payback, at the request of the then-Acting Director of OIE. This
individual was tasked with organizing documents and information on students trained under
IEPD projects from FYs 2000 to 2006 (a continuation of efforts undertaken by the former
staffers); compiling a list of each projects’ student cohort(s); and developing an electronic
tracking system (referred to in later communications as the “master student database”) to monitor
individual participants’ paybacks.

Upon assuming the detail, the employee was provided access to the grant files – which she, too,
found to be in disarray – as well as approximately 40 documents dating back to 2002, attached to
an email from the most recent OIE Director. Among these were questions from project directors
and participants – some of which appear to have been answered – as well as intra-office
correspondence. In one email from July 2006, one of the former OIE employees responsible for
payback notified the OIE Discretionary Grants Group Leader that many of the project directors
he contacted informed him they had already provided information to OIE on their students, and
that at least one was “irate” in his response.

The detailed employee stated she spent a good deal of time simply organizing the files, in order
to get the information ready for entry into the database she was developing in Microsoft Access.
She was at times assisted in this task by three other OIE employees, but noted she struggled with
management to get help. When asked whether this may have been because of resource issues,
she stated that was “definitely not the case.” This individual added that by the time the team was
finished going through the files, the list of participants had grown from the approximately 500
identified by her predecessors to nearly 1,800.

From our review of emails related to the IEPD grant program, we learned the database was
operational by, and perhaps before, July 2007. Around this time, the individual described above
emailed her supervisor, the OIE Discretionary Grants Group Leader, stating she was prepared to
begin training support staff on how to enter data into the participant tracking system. A series of
emails followed in which the Discretionary Grants Group Leader expressed concerns with how
the detailed employee was spending her time and questioned whether it was necessary to involve
additional staff in the project. The then-Acting Director of OIE responded that establishing the
payback system was “priority work” and, further, that he was the one who requested that others
in the office provide assistance in order to finish the project by the end of the summer – a request
he was told previously would not be a problem. The emails end with the Discretionary Grants
Group Leader voicing disapproval of the situation, and both the then-Acting Director and most
recent Director of OIE advising that the managers meet to discuss the issue.

Failure to Take Actions That Could Significantly Increase the Department’s Ability to Locate
and Collect From Participants

In addition to the apparent hesitancy, if not unwillingness of OIE management to actively work
with OCFO/ARG, we also noted ongoing resistance with regard to working with OMB to have
approved a standard participant payback agreement or some other form that would provide OIE
with the information necessary to adequately track students and enforce payback obligations.
Such an agreement would allow the office to collect SSNs and other PII deemed necessary for
Final Audit Report
ED-OIG/A19I0002                                                                      Page 16 of 28
the purpose of tracking IEPD grant program participants. To store this information, OIE would
also need to notify OMB of its intent to establish a system of records.12 More than one
interviewee, however, stated the most recent OIE Director was averse to dealing with both OMB
and the Department’s internal approving officials, and resisted doing so for years. This has left
OIE in a difficult position, as OCFO/ARG requires SSNs to initiate debt collection activities.

When asked to comment on this, the most recent OIE Director stated OIE has not developed and
mandated the use of a standard payback agreement form because “the agreement is between the
grantee and student.” She stated OIE provides project directors with a sample payback
agreement but does not require that they use it as presented. We questioned this logic, noting
OIE – not each grantee – is ultimately responsible for ensuring all students fulfill their payback
obligation and that taxpayer dollars are properly accounted for. She then provided additional
rationales for the decision to forgo standardization and acknowledged the approval process can
be difficult, long, and tedious.

We determined this issue was discussed at least as far back as August 2005 during our review of
emails related to the IEPD grant program. In notes provided to the most recent OIE Director and
others following a team meeting, the OIE Discretionary Grants Group Leader wrote the
following: “[OIE program specialist] suggested to create a standard payback agreement form to
distribute. However, this would require OMB clearance and not an activity warranted for OIE to
attempt.” Why this activity was deemed unwarranted for OIE to attempt remains unknown.

Recent OIE Efforts

OIE appears to have recently made some progress toward remedying the situation with regard to
student payback, beyond development of the database. This includes scanning quarterly grant
performance reports for information on program participants and maintaining separate student
files for each grantee from the start of the grant performance period, rather than waiting until
later in the grant lifecycle. However, we noted a disconnect persists between the various
individuals responsible for oversight of the IEPD grant program, and it remains ambiguous as to
who is ultimately responsible for receiving participant information, ensuring it is properly
documented and filed, and actually tracking students both pre- and post-graduation.

Specifically, the individuals interviewed with regard to this process provided conflicting
descriptions of what actually occurs. The OIE employee tasked with reviewing the quarterly
grant performance reports stated he is not responsible for entering information on participants
into OIE’s student database nor is he personally involved in the tracking of former participants to
ensure they are fulfilling the cash or work payback requirement. Rather, he forwards any such
information to his supervisors, who in turn see to it that the database is updated. One of these
supervisors – a Discretionary Grants Team Leader who has since left OIE for another position
within the Department – confirmed this individual forwards information on students contained in
the quarterly performance reports, but not to her. The former Team Leader stated that copies are
provided to two other OIE employees – one who inputs the information into the student database
and another who files the hardcopy documents. However, we had previously learned that the
individual identified as being responsible for inputting the data was actually the detailed
employee described above, who returned to her permanent position in OIE in March 2008. The

12
     See additional discussion under Finding No. 2.
Final Audit Report
ED-OIG/A19I0002                                                                        Page 17 of 28
employee’s other supervisor – the OIE Discretionary Grants Group Leader – stated he is
responsible for monitoring program participants, but did not elaborate on the process.

Through communications with the current OIE Discretionary Grants Group Leader and
aforementioned Team Leader toward the end of our fieldwork, we learned OIE has also begun
working with the Department’s Budget Service and Institute of Education Sciences on the “Data
Quality Initiative” (DQI). The DQI places an increased emphasis on Government Performance
and Results Act (GPRA) requirements, and encourages greater interaction with OMB. Most
recently, we discovered OIE published a Federal Register Notice of Proposed Information
Collection Requests (NPICR) in July 2009, and we were informed that the office has submitted
the paperwork to advertise for a Career Intern Position specifically to work on student payback.

The NPICR abstract describes OIE’s intentions to implement a (1) Semi-Annual Participant
Report (SAPR), (2) Participant Follow-Up Protocol, and (3) Employment Verification Survey.
According to OIE, the information collected using these forms is necessary to (1) assess the
performance of the IEPD grant program on its GPRA measures, (2) determine whether
participants are fulfilling the terms of their work payback requirements, and (3) provide project-
monitoring and compliance information to IEPD grant program staff.

We reviewed an attachment detailing the electronically submitted SAPR and found that OIE will
require that grantees provide, among other things, student names, SSNs, home addresses, phone
numbers, email addresses, and information on their program completion and placement status.
OIE will also require that grantees provide alternate contact information for each participant if
they cannot be located. According to the current OIE Discretionary Grants Group Leader,
information on this process will be presented to all IEPD project directors at an upcoming
conference.

Overall Impact on IEPD Grant Program

As a result of the above, OIE is unable to:

           adequately account for the number of students actually being served by the program;
           adequately account for training funds provided to students under the program;
           determine whether students are fulfilling work payback requirements in support of
            program goals;
           ensure students that cannot fulfill work payback requirements are returning Federal
            funds received; and
           identify potential anomalies in student participation.

The weaknesses noted significantly increase the risk of fraud, waste, and abuse under this
program.

For the 82 grants awarded between FYs 1999 through 2004, we determined OIE obligated
approximately $62.9 million. Based on our review of the approved budgets included in the grant
files, we determined approximately $41.3 million (66 percent) was to be used to pay for the costs
associated with training individual students, i.e., tuition, books, fees, stipends for those attending
school on a full-time basis, and dependent allowances. However, we subsequently found OIE
did not maintain adequate records to account for approximately $24.4 million (59 percent) of the
Final Audit Report
ED-OIG/A19I0002                                                                                  Page 18 of 28
funds budgeted for costs associated with student training; we were only able to tie back
approximately $16.9 million (41 percent) to less than 800 unique participants – half the number
of participants identified through our review of the grant and student files.

OIE’s lack of recordkeeping has significantly hindered OCFO/ARG’s ability to effectively
pursue cash payback. As previously stated, between June and September 2006, a former OIE
program specialist provided OCFO/ARG the names and addresses of 177 IEPD grant program
participants for whom she could find no documentation to support their work in schools serving
Indian students. OCFO/ARG officials succeeded in contacting a number of these individuals,
but stated they subsequently received a number of calls from students who disputed their alleged
failure to fulfill the service requirement and noted they had already provided the necessary
information to OIE.13 OCFO/ARG was also contacted by at least one project director who
wanted to follow up on behalf of a number of former students in the same situation. These
students were directed to call OIE, with the result being the Discretionary Grants Group Leader
requesting that all collection efforts be suspended in July 2007 to allow time for OIE staff to
organize the program files and develop a computer database. In her letter to OCFO/ARG, the
OIE Discretionary Grants Group Leader stated OIE would, “… provide updated information
regarding students previously forwarded to Debt Management and possibly additional students
by September 4, 2007.” However, it was not until November 2007 that OIE began to provide
OCFO/ARG updates on the status of a number of these debts, and only after several followup
inquiries from OCFO/ARG. A similar situation occurred between June and November 2008,
with no less than four requests from OCFO/ARG to OIE regarding the status of certain debtors.
OIE finally responded on December 1, 2008, advising OCFO/ARG to proceed with collection,
but failing to provide the information necessary to do so.

OCFO/ARG provided OIG with updated information between January and March 2009 showing
OIE had requested that the debts of at least 62 of the 108 individuals “formally” referred for
collection be withdrawn. Of these 62, 32 (52 percent) were trained under the same IEPD project
for which the idea of a blanket exemption was discussed. At the time we reviewed OIE’s files,
documentation supporting work payback had been provided for just 8 (25 percent) of these 32
individuals. These students received approximately $84,200 in program funds. In total, we
determined OIE maintained evidence to support some level of work payback (i.e., at least one
letter from a school official) for 23 (37 percent) of the 62 individuals included on the withdrawal
lists. The other 39 participants, for whom no such documentation could be found, received
approximately $643,200 in program funds.

We also learned OIE provided conflicting information in subsequent communications with
OCFO/ARG. For instance, in March 2009, after having previously requested that the debts of
dozens of IEPD grant program participants be withdrawn, the OIE Discretionary Grants Group
Leader notified OCFO/ARG that she only had employment verification letters for two
individuals, and that OCFO/ARG should proceed with collection on the other accounts. We
reviewed our files for information on these two participants and found that no such
documentation was available at the time of our initial file review. Conversely, we noted that a

13
  An email exchange in July 2007 documents one student’s experience with OIE. In her email, the student states
she was contacted regarding her failure to provide any employment information, but notes she had already done so.
An OIE employee responded she found a letter from the student, dated October 2005, but would need something on
official school letterhead to comply with program regulations.
Final Audit Report
ED-OIG/A19I0002                                                                        Page 19 of 28
number of the individuals for whom the OIE Discretionary Grants Group Leader recommended
the initiation of collection activities did, in fact, provide valid employment verification letters.
One even provided required semiannual certifications – one of just eight IEPD grant program
participants who did so.

Just days later, the same individual provided OCFO/ARG withdrawal letters for six IEPD grant
program participants, meaning documentation to support work payback was apparently found in
OIE’s files. According to OCFO/ARG officials, this issue of inconsistency in statements and
actions has persisted for some time and has had an adverse effect on their ability to collect from
IEPD grant program participants.

Lastly, OIE’s inadequate recordkeeping has hindered its ability to identify anomalies that could
indicate problems. For example, with regard to those participants identified as having received
funds under different grant awards, there exists the possibility they were either participating in
two programs simultaneously or enrolling in one program after completing or dropping from
another – either legitimately (continuing their education, in which case documentation of a
deferment request and approval should be on file), or illegitimately (for the sole purpose of
obtaining additional Federal grant funds).

We identified one grantee that had served, and thereby funded, three individuals under three
separate IEPD grants (awarded in FYs 1999, 2000, and 2002). These students – two of whom
are listed as having the same last name, address, and phone number – received approximately
$236,749 in program funds. We found OIE maintained documentation to support work payback
for all three participants, but we question the reasonableness of students participating in multiple
IEPD projects over many years. Allowing individuals to enter and drop at their discretion
presents serious accountability concerns, and although the grantee in question kept adequate
records to report back to OIE the amount of financial assistance provided and time owed, there is
no guarantee others will.

When asked to comment on the situation, the most recent OIE Director stated she was generally
unsure how this might occur, but she did note that some grantees – unbeknownst to OIE at the
time – were recruiting additional students toward the end of the grant performance period if there
was money left over. Assuming the grantee was awarded another grant, the student might then
show up on the lists of participants from both the old and new grants. The OIE Discretionary
Grants Group Leader stated she, too, could not explain why this occurred but indicated it should
have been flagged by OIE.

Recommendations

We recommend that the Assistant Secretary for OESE take the following actions:

1.1    Require that OIE conduct a review of its grant and student files to identify all other IEPD
       grant program participants who have failed to provide employment verification letters, in
       accordance with program regulations, and submit to OCFO/ARG the names of any such
       individuals.
Final Audit Report
ED-OIG/A19I0002                                                                     Page 20 of 28
1.2    Require that OIE submit immediately to OCFO/ARG the names of all individuals known
       to have withdrawn or been terminated from an IEPD project, and for whom there have
       been no approved deferments.

1.3    Review the management and staff structure of the IEPD grant program office and
       make changes, as appropriate, to ensure that the program is managed and implemented
       consistent with statutory requirements.

1.4    Establish and implement written policies and procedures regarding the monitoring
       of the IEPD grant program, to include the collection of participant information that will
       allow OIE to account for and track students receiving funding under the program, review
       of grantee performance reports for information on students that have withdrawn or been
       terminated from the program, and filing procedures for pertinent information.

1.5    Provide adequate funding and other support to allow OIE to hire an FTE whose
       primary, if not sole, responsibility is the tracking of former IEPD grant program
       participants.

1.6    With respect to the above, require that this individual provide monthly status reports on
       student tracking efforts to the Director and Discretionary Grants Group Leader, OIE;
       Deputy Assistant Secretary for Management and Planning, OESE; and Supervisor,
       OCFO/ARG.

1.7    Conduct a comprehensive assessment of the OIE Master Student Database to
       identify weaknesses, missing information, and potential areas for improvement.

1.8    Require that OIE work with OMB and the appropriate Department officials to develop a
       standard payback agreement to be used to collect PII on individuals who receive funds
       through grants awarded under the IEPD grant program.

1.9    Encourage OIE management to conduct additional research on best practices
       employed by programs with similar payback requirements, both at the Department and in
       other agencies, and engage in discussions with relevant officials. [See Other Matters
       section]

1.10   Ensure that OIE continues working with the Department’s DQI to further enhance
       its data collection efforts.

1.11   Ensure that OIE promptly refers to OIG any credible evidence of suspected fraud or
       other criminal misconduct on the part of students and/or grantees.

OESE Comments

OESE concurred with the finding and recommendations, stating that OIE has recently recruited
staff specifically assigned to work on payback. This individual is developing and/or completing
payback files for each participant funded through the IEPD grant program from 1999 to 2009.
Project Directors will be contacted for any missing information or documentation. OIE will
begin providing monthly updates to OCFO/ARG regarding participants who are identified for
Final Audit Report
ED-OIG/A19I0002                                                                         Page 21 of 28
cash payback. Beginning in 2010, project directors will be required to complete and submit new
information collection forms that will provide consistency in participant information collected
and in calculating expected payback service completion. Lastly, OESE noted that OIE remains
in need of additional program specialist staff for its discretionary grant program.


FINDING NO. 2 – OIE Created a System of Records without Proper Notification
                and Authorization

We found OIE developed a database to be used in tracking IEPD grant program participants
without having published the requisite Federal Register notice and currently maintains personal
information on hundreds of individuals who received funds through the program. Agencies have
an obligation to develop procedures that allow individuals to ascertain whether a system of
records contains a record pertaining to them, and, if so, how to gain access to any such record
and contest its content.

As noted in Finding No. 1, we learned OIE began developing a “Master Student Database” in
early 2007 to track IEPD grant program participants. From our review of emails related to the
IEPD grant program, we learned the database was operational by, and perhaps before, July 2007.

Although generally deficient in terms of the amount of information available, it nevertheless
contains records – in some cases replete with PII – on individuals who were trained under the
program. Data fields include name, address, phone number, email, the amount of financial
assistance provided and for how long, graduation date, degree, certification area, and current
status. Each trainee is assigned a unique identifier composed of the first three letters of their last
name and first two letters of their first name (e.g., John Smith = SMIJO). Individual records are
retrieved by entering all or part of the participant’s first and/or last name.

Section 552a(a)(4) of the Privacy Act of 1974 defines “record” as

       Any item, collection or grouping of information about an individual that is maintained by
       an agency, including, but not limited to, his education, financial transactions, medical
       history, and criminal or employment history and that contains his name, or the identifying
       number, symbol, or other identifying particular assigned to the individual… .

Section 552(a)(5) of the Privacy Act of 1974 defines “system of records” as

       A group of any records under the control of an agency from which information is
       retrieved by the name of the individual or by some identifying number, symbol, or other
       identifying particular assigned to the individual.

Section 552a(e)(4) of the Privacy Act of 1974 requires that

       Each agency that maintains a system of records shall—

               (4) subject to the provisions of paragraph (11) of this subsection, publish in the
               Federal Register upon establishment or revision a notice of the existence and
               character of the system of records, which notice shall include—
Final Audit Report
ED-OIG/A19I0002                                                                                  Page 22 of 28
                          (A) the name and location of the system;
                          (B) the categories of individuals on whom records are maintained in the
                          system;
                          (C) the categories of records maintained in the system;
                          (D) each routine use of the records contained in the system, including the
                          categories of users and the purpose of such use;
                          (E) the policies and practices of the agency regarding storage,
                          retrievability, access controls, retention, and disposal of the records;
                          (F) the title and business address of the agency official who is responsible
                          for the system of records;
                           (G) the agency procedures whereby an individual can be notified at his
                          request if the system of records contains a record pertaining to him;
                          (H) the agency procedures whereby an individual can be notified at his
                          request how he can gain access to any record pertaining to him contained
                          in the system of records, and how he can contest its content; and
                          (I) the categories of sources of records in the system….

Office of Management Directive 6-104, The Privacy Act of 1974 (The Collection, Use, and
Protection of Personally Identifiable Information), includes the following definitions:

        System of Records – Any group of records under ED’s control from which information is
        retrieved by a personal identifier.

        Personal Identifier – Name, Social Security Number, fingerprint, voice print, photograph,
        or any other coding device that correlates directly to an individual.

We determined that this issue occurred because of an apparent misunderstanding of the law on
the part of OIE management, specifically, the most recent OIE Director. We were informed at
various times and by numerous employees (including the Discretionary Grants Group Leader)
that OIE could neither request nor retain SSNs because it lacked an OMB-approved form – with
the process of obtaining one described as “not an activity warranted for OIE to attempt.”14
However, we found this reasoning to be faulty, as OIE collected, with the intent to store, other
PII on IEPD grant program participants. Based on interviews with OIE employees and
management, it appears officials were not aware such information also constitutes PII.

OIE is currently in noncompliance with the Privacy Act of 1974. As such, data on individual
IEPD program participants are being stored without their knowledge, thus denying them the
opportunity to contest any potentially inaccurate information.

We learned OIE previously stored such information on participants under its Fellowships for
Indian Students program.15 The program – though no longer authorized – could serve as a
reference should OIE management pursue action on the system of records.


14
  See additional discussion under Finding No. 1.
15
  A Federal Register notice from June 1999 includes mention of a “Fellowships for Indian Students-Applications
and Awards System,” which OIE planned to use to store information on program participants, including, among
other things, names and SSNs.
Final Audit Report
ED-OIG/A19I0002                                                                       Page 23 of 28
Recommendations

We recommend that the Assistant Secretary for OESE take the following actions:

2.1        Ensure that OIE management and staff receive training on the Privacy Act of 1974, as
           well as related OMB guidance and Departmental Directives.

2.2        Require that OIE work with OMB and the responsible Department officials to have
           approved its current system of records and/or any future system(s) developed for the
           purpose of tracking recipients of funds under the IEPD grant program.

OESE Comments

OESE concurred with the finding and recommendations, stating that OIE has been working with
the Department’s Regulatory and Information Management Services/Records Management and
Privacy Division since October 2009 for approval to maintain a system of records. OIE staff will
also be required to attend training on the Privacy Act of 1974 by July 30, 2010.


FINDING NO. 3 – OIE Awarded Funds to Grantees With Low Amounts
                Proposed for Actual Student Training

During the course of our audit, we discovered a number of IEPD grants were awarded to
grantees that proposed spending less than half of their budgets on student training costs. We
identified 11 grants (made to 8 unique grantees) with training budgets under 50 percent of the
total grant award. Seven of these, including four below 40 percent, were awarded in FY 2000.
One FY 2004 grantee proposed spending just $205,000 (24 percent) of an $852,000 grant on
participants’ tuition, books, fees, and stipends. Another was awarded million-dollar grants in
FYs 2000, 2001, and 2004, each with a proposed training budget under 40 percent of the total
grant award. According to the OIE Discretionary Grants Group Leader, an allocation for student
training costs of approximately 60 to 70 percent of the total budget is generally considered
reasonable. This mirrors our calculated average of approximately 66 percent for the 82 grants
awarded between FYs 1999 and 2004.16

When asked to comment on these grants, the most recent OIE Director stated there are a number
of factors that could account for variations in training costs among grantees, including the costs
of tuition, books, and fees; level of stipend provided; number of participants with dependents;
and whether students are attending school part-time or full-time. Further, some schools opt to
pay for professors to travel to the reservations to teach students, rather than have the students
commute. This was cited as an example in which one might see an increase in administrative
costs, but decrease in training costs.

OCFO-04, Handbook for the Discretionary Grants Process, Section 4.3.1, requires that program
staff conduct a cost analysis of each applicant’s budget before setting the amount of any new
grant. This analysis should include, among other things, a determination of whether the costs are


16
     We could not locate detailed budget data for all FY 1999 grants.
Final Audit Report
ED-OIG/A19I0002                                                                      Page 24 of 28
necessary and reasonable for the proper and efficient performance and administration of the
grant project.

Both the most recent OIE Director and the Discretionary Grants Group Leader stated OIE
performs such an analysis for those grantees it intends to fund. The latter attributed the
anomalies we identified – of which she appeared surprised to learn – to oversight errors on the
part of OIE.

Awarding grants to projects with low percentages of funds targeted for actual student training
may defeat the purpose for which these grants are intended and decrease the numbers of students
that could actually benefit from the program.

Recommendations

We recommend that the Assistant Secretary for OESE:

3.1    Require OIE staff and management to assess for reasonableness the percent of each
       budget devoted to student training costs, taking into account historical averages as well as
       those factors described by the most recent OIE Director, prior to awarding grant funds.

OESE Comments

OESE concurred with the finding and recommendation, stating that OIE will screen and review
all proposed budgets in the upcoming 2010 grant competition to ensure that all costs identified
are well-justified, allowable, and reasonable.
Final Audit Report
ED-OIG/A19I0002                                                                       Page 25 of 28


                                     OTHER MATTERS


As part of our audit, we identified and researched other Federal grant and/or scholarship
programs that include a service obligation/payback requirement. Four of these programs are
administered by the Department. They are:

      Teacher Education Assistance for College and Higher Education (TEACH) Grant
       Program [Federal Student Aid (FSA)]
      Teacher Quality Enhancement (TQE) Grant Program [Office of Postsecondary Education
       (OPE)]
      Personnel Development Program to Improve Services and Results for Children with
       Disabilities [Office of Special Education and Rehabilitative Services (OSERS)]
      Rehabilitation Long-Term Training Program (OSERS)

The programs vary in the methods by which students are funded [i.e., (1) awarded to grantee,
then to students by grantee (as is the case for the IEPD grant program); (2) awarded to student,
but provided via conduit; or (3) awarded directly to student], but all require that trainees perform
some sort of work payback for a specified period of time upon graduating. Based on our review,
it also appears all programs have developed, or are in the process of developing, processes and
procedures to (1) guarantee they have adequate documentation regarding program participants,
and (2) track these participants to ensure they are fulfilling their service obligation (i.e.,
employment verification forms), or are referred to the appropriate office to initiate debt
collection.

Examples of some of these data collection techniques are provided below:

      FSA requires that TEACH Grant recipients complete and submit an electronic
       Agreement-to-Serve (ATS), which involves providing a valid SSN. The ATS is
       accessible online.
      TQE Grant recipients must complete and submit an OMB-approved Scholarship Terms
       and Conditions Form, which also involves providing a valid SSN. According to program
       officials, a copy of the coversheet must be forwarded to the Department at this time for
       input into an internet-based tracking system, while the original, signed contract is
       maintained by the grantee until the student graduates or drops from the program, at which
       time it too must be forwarded to the Department. OPE also requires that former
       participants complete and submit an OMB-approved Verification of Teaching Obligation
       Form once each year.
      Recipients of grants under the Personnel Development Program to Improve Services and
       Results for Children with Disabilities will soon be required to provide status updates
       online. OSERS recently contracted with a research and consulting firm to establish the
       National Center on Service Obligation to track and verify fulfillment of the service
       obligation for all individuals funded from grants awarded in FY 2005 and later. This is to
       be accomplished via the Service Obligation Tracking System, which can be accessed by
       scholars, colleges and universities, and employers.
Final Audit Report
ED-OIG/A19I0002                                                                   Page 26 of 28
      Recipients of grants under the Rehabilitation Long-Term Training Program must
       complete and submit a Scholarship Agreement, which, again, involves providing a valid
       SSN. A 2006 program assessment noted OSERS was in the process of moving from a
       web-based “Payback Reporting System” – used since 2002 to collect annual data from
       grantees on the number of scholars supported, number of scholars graduating, payback
       location, and key indicators of performance – to a more comprehensive “Management
       Information System” (to be submitted to OMB for approval in 2009). The program
       assessment also notes OSERS had developed an internal system that allows staff to track
       the employment status of individual scholars and obtain data not otherwise available
       through web-based reporting by grantees – similar in notion to OIE’s student database,
       but used in corroboration with other processes and/or systems.

The information above is intended to provide OIE management with an idea of what similar
programs are doing to ensure they possess adequate data on their grant participants.
Coordination among the various offices and programs that administer grants of this nature could
be of great benefit to the Department, perhaps resulting in future efficiencies of operations.
Final Audit Report
ED-OIG/A19I0002                                                                                  Page 27 of 28


                     OBJECTIVE, SCOPE, AND METHODOLOGY


The objective of our audit was to determine the effectiveness of OIE’s management of the IEPD
grant program. To accomplish our objective, we gained an understanding of internal control
applicable to processes relating to the awarding and monitoring of IEPD grants including
tracking of program participants. We reviewed applicable laws and regulations, OMB circulars,
Department policies and procedures, Federal Register notices, and Government Accountability
Office Standards for Internal Control in the Federal Government. In addition, we reviewed
OCFO’s Grants Administration and Payments System (GAPS) for information on grant
obligations and available balances.

We conducted discussions with current and former OIE officials and staff to obtain an
understanding of the history of the IEPD grant program and operating procedures, both past and
present, and reviewed available emails and correspondence related to the program. We also held
discussions with officials in the Department’s OCFO/ARG and reviewed documentation
provided related to their communications with OIE since May 2003. We reviewed information
maintained by OCFO/ARG on individuals for whom OIE requested debt servicing and, in a
number of cases, debt withdrawal. Data were most recently provided by OCFO/ARG to the
audit team in July 2009.

The scope of our review included grants awarded from FY 1999 through 2004, with a limited
analysis of grants awarded between FYs 2005 and 2007. We reviewed the official grant files and
associated student participant files maintained by OIE for all grants awarded between FYs 1999
and 2004, and files for grants awarded in FYs 2005, 2006, and 2007 for which student
participant files were maintained, as noted in the table below.

                        FY            Total No. of Grants            Grants Reviewed
                       1999                    9                             9
                       2000                   28                            28
                       2001                    9                             9
                       2002                   15                            15
                       2003                    6                             6
                       2004                   15                            15
                       2005                   16                             3
                       2006                   12                           517
                       2007                    9                           118
                      TOTAL                  119                            91

Grant files for FY 1999 through 2004 awards were reviewed to determine (1) grant award
amounts (including funds budgeted specifically for student training costs), (2) numbers of
participants served, (3) names of participants served (where noted), (4) individual financial

17
   One FY 2006 grantee was funded under three separate IEPD grants, all of which were reviewed as part of our
limited analysis of grants awarded between FYs 2005 and 2007.
18
   At the time of our review, OIE maintained an associated student file for just one FY 2007 grantee.
Final Audit Report
ED-OIG/A19I0002                                                                        Page 28 of 28
assistance provided, (5) students with evidence of work payback, and (6) students reported as
having withdrawn or been terminated from their respective projects. Files for grants awarded in
FYs 2005 through 2007 were reviewed primarily to determine whether improvements were noted
with regard to student identification and tracking. We subsequently reviewed information
provided by OIE officials between January and July 2009 regarding current efforts at tracking
program participants.

For comparison to information obtained through our file reviews, we reviewed OIE's Master
Student Database as of March 2008. As with the file reviews, we sought information on the
number of students who participated in the IEPD grant program during FYs 1999-2004, and to
determine what percentage of these individuals OIE identified as being employed.

We reviewed the Federal Audit Clearinghouse Single Audit Database for a judgmental sample of
grantees from FYs 1999 to 2004 to determine (1) whether each grantee submitted an OMB
Circular A-133 single audit report for the years in question, (2) whether the IEPD grant program
was included in the report, and (3) if so, whether auditors identified any findings specific to this
program.

We reviewed information available on other Departmental programs that have a payback
requirement to determine how participants are being tracked to ensure that they are fulfilling
their service obligation or are referred to the appropriate office to initiate debt collection. We
held discussions with applicable officials where needed to obtain additional information on
program requirements.

To achieve our objective, we relied in part on computer-processed data obtained from GAPS and
the OIE Master Student Database. We compared data in the OIE Master Student Database with
hardcopy source documentation maintained in grant and student participant files. We found the
database contained inaccurate and incomplete information and deemed it unreliable. (See
Finding No. 1 for additional information.) However, we relied primarily on information from
the hardcopy documentation maintained to conduct our analysis, therefore, the information from
the database did not have a material impact on our resulting conclusions and recommendations.
GAPS is the official system of record for grant awards, widely used by Department officials, and
respectively considered the best available data for the purpose of this audit.

We conducted fieldwork at Department offices in Washington, D.C., from January 2008 through
July 2009. We provided our audit results to Department staff during an exit conference
conducted on October 13, 2009. We conducted this performance audit in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objectives.
                                                                                                                                            Attachment 1

                                                   Funding/Participant Data by Grant Award Year




                                           1999        %     2000      %     2001      %     2002       %      2003         %     2004      %     TOTALS     %
Grantees                                     9                28               9               15               6                  15                82
   Grantees with Individual Student
    Files                                    0        0.0      9      32.1     8      88.9     15      100.0    6      100.0       14      93.3      52     63.4


Funds Obligated by the Department
(via GAPS)                                 $3.68             $21.55          $5.65           $12.66            $5.53              $13.80           $62.87
    Funds Budgeted for Training            $1.20      32.6   $14.24   66.1   $4.23    74.9   $8.53     67.4    $3.83       69.3   $9.27    67.2    $41.30   65.7
        Funds Traceable to Individual
        Participants                       $0.00      0.0    $3.96    27.8   $0.70    16.5   $7.70     90.3    $1.60       41.8   $2.97    32.0    $16.93   41.0
            Number of Such
             Participants                    0                229              60             251               62                 162              764

Total Participants                          165               635             185             266              105                 304             1,660
    Payback Agreement on File                0        0.0     231     36.4     62     33.5    234      88.0     64         61.0    239     78.6     830     50.0
    Credible Evidence of
    Employment/Service Payback               0        0.0     45       7.1     74     40.0     89      33.5     26         24.8    28      9.2      262     15.8
        Semiannual Certifications            0        0.0      1       0.2     2      1.1      4        1.5     0          0.0      1      0.3       8      0.5
        Certification of Completion
        Issued w/o Evidence                  0        0.0      0       0.0     6      3.2      3        1.1     0          0.0      0      0.0       9      0.5
    Known Terminated/Withdrawn               1        0.6     39       6.1     2      1.1      26       9.8     11         10.5    37      12.2     116     7.0
        Funds Received                   Unknown             $0.39           $0.01           $0.45             $0.20              $0.37            $1.42




         Notes: Fund amounts in millions ($); all data from OIG grantee and student file reviews unless otherwise noted.
                                                                       Attachment 2

                      Acronyms/Abbreviations Used in this Report
ATS          Agreement-to-Serve

ARG          Accounts Receivable Group

C.F.R.       Code of Federal Regulations

Department   U.S. Department of Education

DQI          Data Quality Initiative

ESEA         Elementary and Secondary Education Act

FSA          Federal Student Aid

FTE          Full-Time Equivalent

FY           Fiscal Year

GAPS         Grants Administration and Payment System

GPRA         Government Performance and Results Act

IEPD         Indian Education Professional Development Grant Program

IHE          Institution of Higher Education

NPICR        Notice of Proposed Information Collection Requests

OCFO         Office of the Chief Financial Officer

OESE         Office of Elementary and Secondary Education

OIE          Office of Indian Education

OIG          Office of Inspector General

OGC          Office of General Counsel

OMB          Office of Management and Budget

OPE          Office of Postsecondary Education
OSERS       Office of Special Education and Rehabilitative Services

PII         Personally Identifiable Information

SAPR        Semi-Annual Participant Report

Secretary   U.S. Secretary of Education

SSN         Social Security Number

TEACH       Teacher Education Assistance for College and Higher Education Grant Program

TQE         Teacher Quality Enhancement Grant Program
                                   OESE Response to Draft Report                                                        Attachment 3

                       UNITED STATES DEPARTMENT OF EDUCATION

                            OFFICE OF ELEMENTARY AND SECONDARY EDUCATION




To:                  Michele Weaver-Dugan                                                        JAN /' Q lO1O
                    Director
                    Operations Internal Audit Team
                    Office of Inspector General


rrom:               Alex Goniprow            •




                    Deputy Assistant Secretary for Management and Planning


Subject:            Draft Audit Report
                    Office of Indian Education's Management orthc
                    Professional Development Grant Program
                    Control Number ED-OIGIA 1910002


This memorandum provides an initial response on the findings and recommendations
identified in the Office of Inspector General's Dran Audit Report ED-OIG/A I 910002
regarding the management of the Office of Indian Education"s Professional Development
Grant Program.


Finding #1: Significant Improvements ;Irc nceded in 01 E's Management of the
Professional Development Grant Program


We concur with Finding No. I and the recommendations. Within the last 30 days, the
Officc of Indian Education (OlE) has recently recruited stafT spccifically assigned to
work on payback. This individual is developing and or completing payback files for each
Professional Development grant from 1999 to 2009. Each payback filc contains
information and documentation on each participant funded through the grant. Where we
have missing information or documentation, the project director is being contacted. All
forms of contact are printed out and kept in the payback folder. The payback individual  •
meets weekly with the Discretionary Grant Group Leader to update the progress on
completing payback files and as needed for advice on a payback issue.


Additionally, OlE is in contact with Office of the Chief Financial Officcr. Accounts
Receivable Group. Throughout 2009, Ms. Estella Duenas has been our primary contact.
We will provide monthly updates beginning January 29, 2010, regarding participants who
are identified for fiscal payback.


Beginning in 2010, new infonnation collection forms as well as guidance and training
regarding these fonns will be provided to alll>rofessional Developmcnt Project Directors.
OlE has been working with Data Quality Initiative contractors to develop these fonns.
These forms arc currently in the clearance process with the Office of Management and
Budget. The forms will provide consistency in participant information collected and in
calculating expected payback service complction.


                                  400 MARYLAND AVE.• S W . WASHINGTON. DC 20202
                                                  www�d8°V

      OUt ml!lsicn is ro ensuro equal access to ed('<collo" and   fa   promote   I'dU~YJucmal   cxcclh"'«' II/mug/muillu: nrl!wn
The Office of Elementary and Secondary Education is currently conducting a review of
personnel needs by program offices. OlE remains in need t o recruit additional program
specialist staff for the discretionary grant program. Since 2007, four discretionary
program specialist staff have left and no replacement recruitment has been possible. The
career intern recently hired is serving as management analyst and assigned to work on
payback. The OlE discretionary grant program has a Group Leader and one education
specialist to manage and administer the Demonstration Grant for Indian Children CFDA
84.299A and the Professional Development Grant erDA 84.299B.


Finding #2: OlE Created     a   System of Records without l'roper Notification and
Authorization


We concur with Finding No.2 and the recommendations. In 2005, an individual was
hired specifically to work on payback. Electronic files were developed to assist in
managing the information being collected. Since October 2009, the Office of Indian
Education has been working with the Regulatory Information and Management
ServiceslRecords Management and Privacy Division for approval to maintain a System
of Records. Additionally. stafT training on the Privacy Act of 1974 will be required and
completed by July 30, 2010.


Finding #3: OlE Awarded Funds to Grantees with Low Amounts Proposed for
Actual Student Training


We concur with Finding No.3 and the recommendation. The Office of Indian Education
develops budgets based on the information provided in the application. We fund
applications that have been read and scored by outside readers and ranked by the Grants
Administration and Paymcnt System. Wc fund the highest scoring application and go
down the slate. In the upcoming 2010 grant competition, we will screen and review all
budgets to ensure that all costs identified are well justified, allowable and reasonable.


We are currently developing the Corrective Action Plan that will address each of the
recommendations in detail. A preliminary draft of that plan is attached. We look forward
to improving the management of the Professional Development program and working
more efTectively with all project directors to ensure program compliance and increased
numbers of American Indian/Alaska Native participants to serve as teachers and school
administrators across Indian country.




                                                                                            2