oversight

Payback Provisions of the Personnel Development to Improve Services and Results for Children with Disabilities Program

Published by the Department of Education, Office of Inspector General on 2015-03-03.

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

                                          UNITED STATES DEPARTMENT OF EDUCATION
                                                OFFICE OF INSPECTOR GENERAL



                                                                                                                   AUDIT SERVICES

                                                                                                        Control Number
                                                                                                        ED-OIG/A19O0004
                                                              March 3, 2015

Michael K. Yudin
Acting Assistant Secretary
Office of Special Education and Rehabilitative Services
U.S. Department of Education
400 Maryland Avenue, S.W.
Washington, DC 20202-4300

Dear Mr. Yudin:

This final audit report, titled Payback Provisions of the Personnel Development to Improve
Services and Results for Children with Disabilities Program, presents the results of our audit.
The objectives of our audit were to determine whether the Personnel Development to Improve
Services and Results for Children with Disabilities Program (PDP) effectively (1) met program
objectives by training recipients who subsequently performed work related to the program, and
(2) obtained repayment of the assistance received for recipients that did not fulfill work
agreements. This audit was part of a review of payback provisions of selected grant programs
throughout the U.S. Department of Education (Department).



                                                         BACKGROUND


The Office of Special Education Programs (OSEP) administers the PDP, one of a number of
grant programs authorized under the Individuals with Disabilities Education Act (IDEA). The
purposes of the PDP are to help address State-identified needs for highly qualified personnel—in
special education, early intervention, related services, and regular education—to work with
children, including infants and toddlers, with disabilities; and to ensure that those personnel have
the necessary skills and knowledge, derived from practices that have been determined through
scientifically-based research and experience, to be successful in serving those children. The
average funding level for the PDP has been approximately $87 million over the last 5 years, with
the 5-year grants generally averaging between $225,000 and 250,000 per grantee, per year. 1


1
  This is the average size of awards per year as noted in the most recent Federal Register Notices Inviting
Applications for those grants under the PDP where scholars receive training and have their service obligations
tracked by the Department.

    The Department of Education's mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                      excellence and ensuring equal access
Final Audit Report
ED-OIG/A19O0004                                                                                       Page 2 of 22

Notices inviting application for the PDP have consistently required that 65 percent of the total
requested annual budget must be used for scholar support, unless the applicant provides
justification for any lesser designation. Students who receive financial assistance from projects
funded under this program, often referred to as “PDP scholars,” are required to pay back such
assistance either by providing special education, early intervention, or related services to infants,
toddlers and children with disabilities for a period of time after they complete their training, or
by making a cash repayment to the Federal government. Upon completing their respective
program, scholars who receive funding under the PDP must work 2 years for every 1 year of
funding received. Scholars who complete at least 1 year of training are also eligible for work
payback. Work payback must be completed within the sum of the number of years owed plus
5 additional years, often referred to as the grace period. Scholars are required to repay all or part
of any scholarship they receive if they do not complete their service obligation. The PDP
regulations do, however, provide for specific circumstances under which the Secretary of
Education (Secretary) may grant a deferral or exception to performance or repayment under a
scholarship agreement. 2

Grantees are required to fully inform students about their payback obligations and other
requirements before disbursing scholarship funds and students must sign a pre-
scholarship/repayment agreement before they receive funds. Grantees are also required to track
current PDP scholars and maintain accurate and complete information on them from the time
they are enrolled in the program until the time they exit the program. Once a scholar exits the
program and an exit certification is completed, which includes the total amount of scholarship
assistance received that is subject to the work or repayment requirements and the time period
during which the scholar must satisfy the service obligation, responsibility for monitoring the
scholar’s fulfillment of his or her service obligation falls to the Secretary. Scholars who are
found to be noncompliant with the PDP requirements are referred for repayment to the
Department’s Debt and Payment Management Group (DPMG).

In 2007, OSEP awarded a contract to establish the National Center on Service Obligations
(NCSO). The purpose of the NCSO was to act as an agent of the Department in tracking exited
PDP scholars to determine whether they were fulfilling their service obligations. The NCSO was
also tasked with collecting and analyzing data that would assist OSEP in reporting on selected
performance measures established under the Government Performance and Results Act (GPRA).
To accomplish its objectives, the NCSO launched the Service Obligation Tracking System
(SOTS), a web-based data collection system with the ability to collect data on a continuous basis
from grantees, scholars, and employers. Prior to this time, OSEP’s only means for collecting
scholar-specific data was the scholar data report (SDR), which was developed under a separate
contract awarded by OSEP in 2001. 3 Grantees are required to submit an SDR annually for each
scholar who received financial assistance or was enrolled in the program during the reporting
period, but are not required to continue submitting an SDR once a scholar has exited the
program. In 2012, OSEP awarded a new contract with the goal of consolidating its two primary
data collection systems. The contractor established the Personnel Development Program Data

2
  Title 34 of the Code of Federal Regulations (C.F.R.) § 304.31 provides that the Secretary may grant a deferral or
exception to performance or repayment under the following circumstances: permanent disability, death, further
academic study, active duty in the military, and service in the Peace Corps or as a Domestic Volunteer.
3
  This contract also required the development of a web-based data collection system.
Final Audit Report
ED-OIG/A19O0004                                                                                        Page 3 of 22

Collection Center (DCC) upon award and in July 2014 began a phased launch of the
consolidated Data Collection System (DCS). 4

OSEP awarded a total of 81 PDP grants in fiscal year (FY) 2006, the year of focus for our
review. We chose to focus on FY 2006 grants because of differences in the regulations and
scholar tracking requirements for grants awarded prior to this time. 5 FY 2006 grants were also
more likely to have a larger number of scholars that had completed the training and were in the
payback portion of the program than more current grants, thereby enabling us to obtain sufficient
evidence to answer our audit objectives. We noted that the number of scholars served under the
nine FY 2006 grants included in our sample ranged from 8 to 49, with a total of 220 scholars
having received funding under these grants. According to the SOTS, financial assistance
provided over the course of scholars’ participation in these projects ranged from $125 to
$166,611, with a total of $3.6 million in financial assistance awarded to the scholars served
under these grants. 6



                                             AUDIT RESULTS


Overall, we found that results related to PDP objectives are encouraging, but data limitations and
quality issues limit stakeholders’ ability to assess PDP effectiveness. Specifically, our audit
results indicate that more than half of the PDP scholars in our sample who received training
under the FY 2006 grants and exited their respective programs have either completed or are
currently working toward completion of their service obligation. However, limited data
availability for the scholars in our sample due to the program’s 5-year grace period made it
generally too early to comment on program effectiveness with regard to the employment of those
scholars. While related GPRA measures provide some insight into program effectiveness, we
identified certain data limitations and quality issues concerning information on PDP scholars
used by OSEP and its contractor in compiling some of the performance data. We also noted that


4
  DCS completed phase one of its launch, consisting of data migration and testing, in July 2014. Grantees began
entering data in July 2014 as part of phase two and scholars and employers were to begin entering data in January
2015 as part of phase three of the launch. Because the DCS was not fully operational at the time of our audit
fieldwork, we were unable to assess its effectiveness as a tool for monitoring the PDP.
5
  For grants awarded in FY 2004 or earlier, the regulations published in the Federal Register on December 9, 1999
(64 FR 69138) implementing section 673(h) of IDEA, as amended by the IDEA Amendments of 1997, apply,
including the requirement that grantees track the service obligations of scholarship recipients. For grants awarded in
FY 2005, the “Additional Requirements” section of the notice inviting applications published in the Federal Register
on March 25, 2005 (70 FR 15299) applies, including the requirement that the Secretary track the service obligations
of scholarship recipients. For grants awarded in FY 2006 and any year thereafter, the regulations published in the
Federal Register on June 5, 2006 (71 FR 32396) apply, fully implementing the requirement in section 662(h) of the
IDEA, as amended by the Individuals with Disabilities Education Improvement Act of 2004 (IDEIA), that the
Secretary track the service obligations of scholarship recipients.
6
  For some scholars, the amount of financial assistance awarded was not yet included in the SOTS, as grantees do
not have to enter funding amounts into the system for scholars who are enrolled and have not yet completed the
program. As a result, the total financial assistance provided to scholars served under these grants is greater than the
$3.6 million reflected in the SOTS.
Final Audit Report
ED-OIG/A19O0004                                                                                       Page 4 of 22

improvements are needed in OSEP’s process for identifying and referring scholars for financial
repayment.

With regard to objective one, we found that more than half of the scholars who received training
under the nine FY 2006 PDP grants in our sample and exited their respective programs have
either completed or are currently working toward completion of their service obligation.
Specifically, we determined that 89 of the 168 (53 percent) scholars who graduated or otherwise
exited their respective program have either completed or are working toward completing their
service obligation. However, we noted that 61 of the 168 scholars (36 percent) who graduated or
otherwise exited their respective program and have not yet begun work in eligible employment
are still in their 5-year grace period and, therefore, not yet required to have begun work in
eligible employment. As a result, it is generally too early to comment on program effectiveness
with regard to the employment of FY 2006 PDP scholars. 7

We also reviewed other available information on program performance as part of our assessment
of the PDP’s effectiveness in meeting its objectives. Specifically, we noted that OSEP reports
overall scholar employment data in the PDP’s annual Congressional budget justifications, which
require discussion of each Department program’s performance on measures established under
GPRA. While these measures provide some insight into program effectiveness, we identified
certain data limitations and quality issues concerning information on PDP scholars maintained by
OSEP and its contractor that impacted one of the measures. Specifically, we noted issues related
to the total number of scholars served and reported employment data, as well as problems with
the methodology used to calculate results that limit stakeholders’ ability to draw reliable
conclusions on program effectiveness.

With regard to objective two, we found that OSEP does not always appropriately identify and
refer for financial repayment scholars who are not fulfilling their service obligation. We
determined that 17 scholars within the nine FY 2006 PDP grants in our sample should have been
identified as either not eligible or not on track to complete their service obligation within the
number of years required, based on information contained in the SOTS. We found that OSEP
appropriately identified for financial repayment and subsequently referred to the DPMG 12 of
the 17 scholars since they were not eligible for work payback because they did not complete at
least 1 year of the program. However, we determined that OSEP did not appropriately identify
the remaining five scholars as not on track to complete their service obligation within the number
of years required and, as a result, did not contact these scholars for the purpose of determining
whether they should be referred to DPMG for financial repayment.

The weaknesses noted with regard to the identification and referral of scholars for financial
repayment increase the susceptibility of the PDP to fraud, waste, and abuse. We noted that the
five scholars who should have been identified as not on track to complete their service
obligation, and therefore placed in repayment status, received approximately $16,000 in Federal
funds. These are funds that are owed to the Federal government according to the agreements that
these scholars signed upon starting their respective programs. Because a significant majority of
7
  Of the remaining 168 scholars, 13 have paid back financial assistance received or have been referred for financial
repayment; 5 scholars are outside of their grace period but are not working in eligible employment and should be
referred for financial repayment.
Final Audit Report
ED-OIG/A19O0004                                                                        Page 5 of 22

scholars who graduated or otherwise exited their respective program are still in their grace period
and, therefore, not yet required to have begun work in eligible employment, there are very few
scholars for whom this situation has occurred. However, as time goes by, there is increasing risk
that greater numbers of PDP scholars who are unable to fulfill their service obligation according
to the program regulations will not be appropriately identified and referred for financial
repayment and that OSEP will not timely recover funds owed to the Federal government. Also,
because OSEP does not refer scholars for financial repayment until their period of obligation has
expired, the accrued interest owed to the Federal government will be less than what it should
have been had OSEP, consistent with the regulations, correctly identified when a scholar entered
into repayment status and timely initiated debt collection activities.

OSEP management noted, and our review of the applicable performance work statement
indicated, that the new contract awarded in September 2012 and the resulting new system
launched in July 2014 will allow for project officers to reconcile system data against data in
grantee performance reports and allow OSEP to more efficiently and effectively collect, analyze,
and report data. If the system includes the functionalities discussed, it should allow for more
active and effective monitoring of the program’s payback provision.

In its response to the draft audit report, OSEP did not state whether it agreed or disagreed with
the findings, but concurred with each of the 11 recommendations and noted significant actions
that it has taken or plans to undertake to address these recommendations. OSEP stated that its
goal is to ensure that the information collected and reported for the PDP is accurate and that all
scholars who are not fulfilling service obligations are referred in a timely manner for financial
repayment. OSEP also stated that it continues to make significant strides in its collection of data,
delivery of technical assistance to grantees on data quality, and in making appropriate referrals
for debt collection.

OSEP’s comments are summarized at the end of each applicable finding. OSEP also provided
technical comments that we considered and addressed, as appropriate, in the body of the
report. The full text of OSEP’s response is included as Attachment 2 to this report.

FINDING NO. 1 – Results are Encouraging, but Data Limitations and Quality
                Issues Limit Stakeholders’ Ability to Assess PDP Effectiveness

We found that more than half of the scholars who received training under the nine FY 2006 PDP
grants in our sample have either completed or are currently working toward completion of their
service obligation. Specifically, we determined that 89 of the 168 (53 percent) scholars who
graduated or otherwise exited their respective program have either completed or are working
toward completing their service obligation. However, we noted that 61 of the 168 scholars
(36 percent) who graduated or otherwise exited their respective program and have not yet begun
work in eligible employment are still in their 5-year grace period and, therefore, not yet required
to have begun work in eligible employment. As a result, it is generally too early to comment on
Final Audit Report
ED-OIG/A19O0004                                                                                                              Page 6 of 22

program effectiveness with regard to the employment of FY 2006 PDP scholars. 8 [See Table 1
below for additional information on the number and status of all scholars served under the grants
in our sample.]

                       Table 1: Number and Status of All Scholars Served Under a
                                   Sample of FY 2006 PDP Grants
                                                                                                       Total Number        Percent*
       Scholars                                                                                       220
          Unknown Status**                                                                                   1               <1%
          Current Scholars                                                                                   51              23%
          Exited Scholars***                                                                                168              76%
             Scholars Who Fulfilled Service Obligation or
                                                                                                                  89             53%
             Are Currently Working in Eligible Employment****
             Scholars Who Are Not Working in Eligible
                                                                                                                  66             39%
             Employment *****
             Scholars Who Paid Back Financial Assistance Received or
                                                                                                                  13               8%
             Have Been Referred for Financial Repayment
       * Percentages do not always add to 100 due to rounding.
       ** We know that this scholar exists according to our review of available documentation, but we could not make a determination
       regarding his or her status.
       *** Of these 168 scholars, 145 (86 percent) graduated from their respective program and 23 (14 percent) withdrew or otherwise
       exited prior to completion.
       **** Of these 89 scholars, 20 (23 percent) have already fulfilled their service obligation and 67 (75 percent) are currently
       working in eligible employment. We could not make a clear determination on whether the remaining 2 scholars were currently
       working or had already fulfilled their service obligation.
       ***** This number includes 61 scholars who are still in their 5-year grace period and, therefore, not yet required to have begun
       working in eligible employment. The remaining 5 scholars are outside of their grace period but are not working in eligible
       employment and should be referred for financial repayment.


We identified scholars based on data located in the SOTS and/or through our review of
associated grant files. Because a significant number of FY 2006 PDP scholars were still in their
5-year grace period during our audit period and, therefore, not yet required to have begun work
in eligible employment, the SOTS did not contain the employment data necessary for us to draw
any firm conclusions about program effectiveness. As a result, we reviewed other available
information on program performance as part of our assessment of the PDP’s effectiveness in
meeting its objectives. Specifically, we noted that OSEP reports overall scholar employment
data in the PDP’s annual Congressional budget justifications, which require discussion of each
Department program’s performance on measures established under GPRA. The PDP has
established two annual performance measures and one long-term performance measure under
GPRA related to overall scholars’ employment:

    1. the percentage of degree/certification recipients who are working in the area(s) for which
       they are trained upon program completion (annual);


8
  This assessment differs from what was reported recently about another similar program under the jurisdiction of
the Office of Special Education and Rehabilitative Services (OSERS), the Rehabilitation Long-Term Training
(RLTT) program (“Payback Provisions of the Rehabilitation Long-Term Training Program,”
April 25, 2014, ED-OIG/A19M0004). In the case of RLTT, which is administered by the Rehabilitation Services
Administration (RSA), no more than 14 percent of exited scholars had not yet begun working in eligible
employment and were still in their grace period at the time of our audit—a number small enough to allow us to
conclude that RSA appeared to have met RLTT program objectives by training recipients who subsequently
performed work related to the program.
Final Audit Report
ED-OIG/A19O0004                                                                                        Page 7 of 22

    2. the percentage of degree/certification recipients who are working in the area(s) for which
       they are trained upon program completion and who are fully qualified under IDEA 9
       (annual); and
    3. the percentage of degree/certification recipients who maintain employment for 3 or more
       years in the area(s) for which they were trained and who are fully qualified under IDEA
       (long-term).

We noted that the annual performance measures provide some insight into program effectiveness
and are calculated using a sufficient data source and reasonably sound methodologies. However,
we identified certain data limitations and quality issues specific to the long-term performance
measure which are discussed in further detail below.

Annual Performance Measures

At the time of our audit, the most recent year for which data were available for the two annual
performance measures noted above was FY 2011. In FY 2011, 82 percent of degree or
certification program recipients were working in the area(s) in which they were trained upon
program completion. OSEP’s target for this measure was 84 percent. That same year,
79 percent of degree or certification recipients were working in the area(s) for which they were
trained upon program completion and were fully qualified under IDEA. OSEP’s target for this
measure was 80 percent. We further noted that OSEP made progress on both measures when
compared to FY 2010 data, increasing its success rates from 78 percent to 82 percent and
76 percent to 79 percent, respectively.

Results on both of these measures are calculated based on data submitted annually by grantees in
SDRs. Grantees submit SDRs using a web-based data collection system designed specifically
for the PDP. According to OSEP management and staff, PDP grantees are required to submit
annually an SDR for each scholar who received financial assistance or was enrolled in the
program during the reporting period, with data collection via the SDR ending when the scholar
completes or otherwise exits the program.

Long-Term Performance Measure

We found that OSEP’s long-term performance measure related to scholar employment is meant
to be particularly useful in gauging the effectiveness of the PDP, as it accounts for scholars who
are years removed from the program and continue to work in eligible employment. However, we
learned that OSEP and its contractor had previously identified certain limitations with regard to
the value of this measure as it does not align with the regulations governing service obligation
fulfillment. Specifically, we found that annual interim SOTS reports submitted to OSEP by the
NCSO noted that a large number of scholars—nearly 62 percent as of August 2012—had service
obligations of 3 years or less, meaning many would not even meet the criteria being measured or
would not be required to report employment data for more than 3 years. We substantiated this
particular issue through our review of available data for the nine FY 2006 PDP grants in our

9
  OSEP considers scholars who meet State certification and licensure standards for their particular field as being
fully qualified under IDEA.
Final Audit Report
ED-OIG/A19O0004                                                                                      Page 8 of 22

sample, whereby we noted that 56 percent of scholars who received training under these grants
had service obligations of 3 years or less.

We also learned that OSEP and its contractor had previously identified data quality issues
pertaining to the calculation of results on this measure using the SOTS. These issues included
difficulty determining the total number of scholars served and the number of scholars working in
eligible employment, which we substantiated through our review of available performance data
as discussed further below. As a result of these data quality issues, OSEP decided to stop
publishing data as of FY 2009, at which time it was reported that 65 percent of degree or
certification recipients maintained employment in the area(s) for which they were trained for 3 or
more years and were fully qualified under IDEA. OSEP’s target for this measure for FY 2009
was 91 percent.

According to PDP’s FY 2014 Congressional budget justification, results on the long-term
performance measure were calculated for FY 2009 using a temporary data collection
methodology that involved surveying a small sample (nine) of the largest grantees who received
program funds to support training for scholars who graduated in 2004. Although this
methodology allowed for the reporting of at least some information on program results, OSEP
believed that there was room for improvement. In 2010, OSEP began obtaining data from all
currently funded PDP grantees through the NCSO, which began tracking graduates from
grantees who received grants in FY 2005 and later, to assess scholars’ compliance with the
program’s service obligation requirement. 10 OSEP subsequently determined, however, that the
available data did not provide an accurate representation of the actual proportion of scholars who
maintained employment for 3 or more years in the area(s) for which they were trained and
decided against reporting results on this measure. Most recently, in PDP’s FY 2015
Congressional budget justification, OSEP reported that it, “[h]as found it difficult to accurately
and meaningfully calculate and report data on this measure. As such, we are currently evaluating
this measure and the available methodologies for accurately calculating it.”

As noted above, during the course of our audit, we corroborated a number of data quality issues
related to the calculation of results on PDP’s long-term performance measure. Most significant
among these is grantees’ failure to enter the names of exited scholars into the SOTS to allow for
tracking by the NCSO. When we reviewed grant files for the nine FY 2006 PDP grantees in our
sample, we identified 220 scholars who received funding under the program. However, when we
reviewed the initial response to our request for data from the SOTS, we found that the system
included information on only 202 scholars. 11 We subsequently determined that one grantee had
failed to enter data for 17 scholars, and that another grantee had failed to enter data for 1

10
   Although the NCSO contract was awarded in September 2007, reports provided by the contractor noted that
grantees were not able to access the SOTS for the purpose of submitting scholar data until July 2009.
11
   We first requested data on scholars funded under the PDP grants in our sample in December 2012. OSEP
provided summary-level information on these scholars, obtained by its contractor, in February 2013, but did not at
that time provide detailed scholar-level information that would enable the audit team to perform independent
analyses of the data to verify the payback status of each scholar. We made additional requests for scholar-specific
data in July and August 2013 (i.e., scholar start and exit dates, method of exit, work years owed, work years
completed, and service obligation completion date) and were provided with initial data in September 2013 and
revised data in November 2013. OSEP last provided data on scholars funded under the PDP grants in our sample in
January 2014.
Final Audit Report
ED-OIG/A19O0004                                                                        Page 9 of 22

scholar. 12 Scholars cannot access the SOTS nor upload employment information until they have
been entered into the system by a grantee—a step that is supposed to occur when a scholar exits
the program. If a grantee does not enter or update a scholar’s information in the SOTS, OSEP
does not have another mechanism by which to determine the scholar’s enrollment status or verify
the scholar’s fulfillment of his or her service obligation. We found that some of the grantees in
our sample did not update scholar information in the SOTS in a timely manner based on our
reviews of annual performance reports (APR) and final performance reports (FPR). For
example, the grantee who failed to enter data for 17 scholars submitted an FPR in April 2012 that
identified 48 scholars as having been served under the grant—44 of whom completed the
program. However, when we first received data from the contractor in February 2013, we noted
that the grantee had not updated scholar information in the SOTS since October 2009, at which
point it identified 32 scholars as having been served under the grant.

We also identified a few issues related to the employment records in the SOTS. Specifically, of
the 92 scholars in our sample with employment records located in the SOTS, we identified one
scholar whose employment end date occurred before the start date, one scholar who the
contractor confirmed was receiving credit for the same employment twice, and four additional
scholars who also may be receiving credit for the same employment twice.

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.

Section 662(h)(3) of the IDEA, as amended by the IDEIA, makes the Secretary responsible for
ensuring that scholars funded under the PDP comply with the service obligation requirement.

Under 34 C.F.R. § 304.23(d), grantees are required to forward to the Secretary any information
that is necessary to carry out the Secretary’s functions under the IDEA, as amended. Under
34 C.F.R. § 304.30(i), scholars are required to provide the Department all information that the
Secretary needs to monitor the scholar’s service obligation.

The Department’s “Handbook for the Discretionary Grant Process” (OS-01, dated
January 26, 2009) (Handbook) states that monitoring shall continue for as long as the
Department retains a residual financial interest in the project, whether or not it is providing
active grant support. Specifically, staff are to monitor each grantee to the extent appropriate so
as to achieve expected results under approved performance measures, while assuring compliance
with grant requirements.

12
     We found that 16 of these 18 scholars have since been added to the SOTS.
Final Audit Report
ED-OIG/A19O0004                                                                                   Page 10 of 22

Reasons for Data Quality Concerns

Issues noted with regard to the quality of data used to report on the effectiveness of the
PDP are directly attributable to (1) the overall design of the program, which requires
coordination between four distinct parties, the use of multiple data collection systems, and
reliance on self-reported data; and (2) OSEP’s limited involvement in the monitoring of the
program’s payback provision, to include a lack of contractor oversight. Specifically, we noted
that although the PDP is not unique in relying on grantee and other self-reported data for the
purpose of determining progress toward meeting GPRA performance measure targets, the
program represents a distinct risk to the Federal government in that scholars—many of whom
received significant sums of money—must continue to be tracked by the Federal government
once they have exited their respective programs. We also noted that OSEP has long relied on its
contractor to monitor scholars’ fulfillment of their service obligations—an arrangement that,
while not a concern in and of itself, has not been managed as diligently and effectively as it
could have been.

Program and Systems Design

Responsibilities for various aspects of the PDP are divided between multiple entities, including
OSEP, the SOTS contractor, grantees, and scholars. Further, OSEP’s abilities to draw
conclusions about program effectiveness and to fulfill its other monitoring responsibilities (as
discussed in Finding No. 2) are complicated by the fact that it must rely significantly on
interactions between (and the responsiveness of) these entities.

We noted that OSEP provides annual training to grantees regarding data reporting requirements
for both enrolled and exited scholars. The stated goal of this training is to improve the quality of
data submitted to OSEP by its grantees, as well as to provide information on any changes in
OSEP’s data collection systems. However, we found that annual interim SOTS reports
submitted to OSEP by the NCSO identified data quality issues related to the reported data. For
example, the February 2010 report stated that results for the performance measures depend on
both grantee and scholar data entry, and that if data entry is incomplete, then the performance
measure results can be diluted. The report noted that not all scholars who had completed their
program were entered into the SOTS by their respective grantee. Specifically, as of
January 4, 2010, 128 of 442 grantees (29 percent) had not entered scholars into the SOTS or
indicated that there were no scholars to enter. 13

With regard to the scholars themselves, the July 2010 report noted that the number of scholars
who were entered into the SOTS and the percentage of those meeting the performance measure
criteria were low due primarily to user reporting delays, as more than half of the scholars who
were not meeting the performance measures had not logged into the SOTS and, therefore, had
not entered any employment records. Improvements in this area were noted in the final interim
report, provided to OSEP in August 2012, but the NCSO nevertheless reported that almost one-
third of scholars who had been entered into the SOTS still had not logged into the system.
13
   As noted above, the NCSO was tasked with tracking graduates from grantees who received grants in FY 2005 and
later to assess scholars’ compliance with the program’s service obligation requirement. The 442 grantees mentioned
here received grants between FYs 2005 and 2010.
Final Audit Report
ED-OIG/A19O0004                                                                     Page 11 of 22

The NCSO also noted difficulty in obtaining current and complete contact and employment
information for scholars whom it was tasked with tracking, mainly because there were no
consequences for scholars who did not provide such information during their 5-year grace
period. Additionally, because the NCSO did not collect the total number of scholars who should
have been entered into the SOTS for each grant, it lacked the ability to determine the actual
number of scholars who were unaccounted for.

The issues described above are tied substantially to OSEP’s use of various data collection
systems, none of which were integrated during the scope of our audit. Specifically, we noted
that OSEP relied on no fewer than three means by which to obtain financial and performance
data from grantees and scholars: APRs/FPRs, SDRs, and the SOTS. Although it is not
uncommon for programs to use multiple management information systems, OSEP did not
reconcile data—primarily between grantees’ APRs/FPRs and the SOTS—to determine whether
grantees were providing complete and accurate information.

The Handbook requires that all Department grantees submit an APR for each year of their grant
and an FPR at the end of their grant. The purpose of such reporting is for the grantee to provide
data on the funded project that corresponds to the scope and objectives established in the
approved application and any approved amendments. OSEP also requires grantees to submit an
SDR for each year of a scholar’s enrollment in the project and to input scholar data into the
SOTS once the scholar completes or otherwise exits the project, as discussed above. We found
that OSEP did not compare data from the various sources available for review and, as a result,
did not identify any discrepancies reported in the numbers of scholars served under each grant.
Additionally, we noted that SDRs do not contain any personally identifiable information, thus
preventing OSEP and its contractor from determining whether scholars reported on by a grantee
during their enrollment in the program were subsequently entered into the SOTS.

As for the issues related to employment records in the SOTS, we learned through our review of
policies and procedures and discussions with OSEP management and staff that employers cannot
be required to verify scholars’ employment records. Also, although the system includes some
quality control and logic checks, the primary focus is on data completeness and formatting rather
than validity. In fact, scholars are able to override one check designed to identify double
employer entries as long as they provide a justification for listing the same employer information
twice. OSEP management stated that the Department cannot require employers to log into the
SOTS and verify scholars’ employment records. However, OSEP is currently considering other
ways of achieving this objective, to include making scholars responsible for obtaining
verification and providing supporting documentation. OSEP management further stated that, in
the future, employment will not count toward a scholar’s fulfillment of his or her service unless
it has been appropriately verified.

OSEP management noted that a new contract awarded in September 2012 will consolidate the
two web-based data collection systems (the SDR and the SOTS) and also allow for project
officers to reconcile data in the new system against data in APRs/FPRs. According to the
performance work statement, the new system, known as the DCS, will allow OSEP to more
efficiently and effectively collect, analyze, and report data. We also noted that OSEP will
require grantees to enter what it refers to as “Pre-Scholarship Agreements” into the system upon
Final Audit Report
ED-OIG/A19O0004                                                                                   Page 12 of 22

a scholar’s enrollment in the program as opposed to waiting to enter scholar data until a scholar
exits the program, as was done under the SOTS. This will ensure that all funded scholars are
accounted for. Grantees will also be required to upload scholars’ “Exit Certifications.”

The DCS, which was originally scheduled to launch in February 2013 but subsequently began a
phased launch in July 2014, is operated by the DCC, the successor to the NCSO. 14 Because the
DCS was not fully operational at the time of our audit fieldwork, we were unable to assess its
effectiveness as a tool for monitoring the PDP. However, if the system includes the
functionalities discussed, it should allow for more active and effective monitoring of the
program’s payback provision.

Contractor Oversight

We learned through discussions with OSEP management and staff that program officers are not
held responsible for monitoring the service obligation portion of the grants but instead are
advised to focus only on how grantees spend their money and whether they are making progress
in achieving grant objectives. The latter is accomplished by reviewing APRs/FPRs.
Responsibility for payback monitoring falls solely on the SOTS contractor with whom program
officers have little or no contact. The only exception to this is the program officer who is also
the designated Contracting Officer’s Representative (COR), and is supposed to maintain
communications with the contractor and hold it accountable for adhering to the terms of the
contract. We further learned that neither program officers nor the COR had access to the
SOTS. 15 As a result, staff were unable to reconcile data in grantee applications and APRs/FPRs
with data in the SOTS.

OSEP management stated that although individual program officers are not involved in payback
monitoring, certain deliverables under the prior contract enabled officials to monitor grantee and
scholar compliance with PDP reporting requirements. However, we noted that OSEP either did
not receive or did not review several reports identified in the NCSO Handbook 16 that would have

14
   The contract required that the DCS be approved by the Office of the Chief Information Officer and operational by
February 2013. OSEP was also required to obtain clearance from OMB on the information package. A contract
modification in June 2013 extended the date by which the system should be operational to
February 2014. The DCC actually began migrating data from the SDR and the SOTS in July 2014, and the DCS
completed phase one of its launch, consisting of data migration and testing, in September 2014. Scholars and
employers were to begin entering data in November 2014 as part of phase three of the launch.
15
   OSEP management stated that it did not obtain access to the SOTS due to the time and expense required to
develop the SOTS database, but that the COR will have read-only access to the DCS under the terms of the new
contract. OSEP management also requested the ability to run reports in order to save on the cost of requesting
additional reports from the contractor, with the expectation that they will run reports every 3 to 6 months to help
project officers reconcile the number of scholars listed for their grants.
16
   The NCSO Handbook, formally titled the “Final Draft Procedural Handbook for the SOTS,” was submitted to
OSEP by the former contractor in June 2008. The current contractor, who was tasked with running the SOTS until
the DCS was authorized and operational, submitted to OSEP an augmented version of the NCSO Handbook (in draft
form) in September 2013. According to the COR for the current contract, in order to have functional use of the
SOTS, the current contractor found it necessary to create screenshots of the system to augment the existing
NCSO Handbook and then write detailed procedures that matched the actual system logic. In its introduction to the
augmented NCSO Handbook, the current contractor indicated that there will be future revisions to the
NCSO Handbook once the DCS is fully operational.
Final Audit Report
ED-OIG/A19O0004                                                                     Page 13 of 22

been helpful for these purposes. For example, OSEP management stated that if a grantee was not
updating information in the SOTS, it would be included on a report that OSEP received from the
contractor every 6 months. After reviewing an example of such a report, we found that it
included grantees who had never logged into the SOTS, but did not account for those grantees
who had logged into the system but failed to update scholar information—a key piece of
information that would have necessitated followup with the grantees. We also noted that the
contractor was required to send OSEP reports on each grantee’s projected number of funded
scholars relative to the actual number of funded scholars entered into the SOTS. However, the
contractor stated that it was never provided with the projected number of scholars to be served
under each grant and, therefore, could not reconcile the number of scholars in the SOTS with
other program data for reporting purposes. Lastly, while it was the contractor’s intent to provide
OSEP users the ability to generate various reports in the SOTS to monitor program compliance
and reporting requirements – to include a list of scholars who did not update their information in
the SOTS – OSEP did not see any such reports as it did not receive access to the SOTS.

The data limitations and quality issues discussed above limit stakeholders’ ability to draw
reliable conclusions on program effectiveness. Specifically, because OSEP was unable to
reconcile data in APRs/FPRs and in the SOTS, it was unaware that a number of scholars funded
under the PDP were not in the system and, therefore, not being tracked for the purpose of
determining whether they were fulfilling their service obligation. Further, scholars that were not
in the system were subsequently unable to enter employment data. Additionally, data that was
entered into SOTS was not verified to ensure it was current, accurate, and complete. Without
verifying employment data or, at a minimum, incorporating adequate system logic checks,
scholars may report erroneous employment data and may not adequately complete their required
service obligation.

Recommendations

We recommend that the Assistant Secretary for OSERS require OSEP to

1.1    Continue to emphasize to grantees, through training or by other means, the need to timely
       submit accurate and complete scholar data into the DCS; also emphasize to grantees the
       need to remind scholars of their obligations once they have exited the program.

1.2    Require grantees to submit scholar data into the DCS upon a scholar’s enrollment in the
       program, as currently planned, to ensure that all funded scholars are accounted for.

1.3    Ensure that the DCC identifies grantees who fail to timely submit accurate and complete
       scholar data and takes appropriate actions, to include referring to OSEP any
       noncompliant grantees.

1.4    Monitor implementation of the DCS, to include ensuring that all required OSEP access
       privileges are granted and that all other terms and conditions of the contract are met,
       including the development of a handbook based on the new system.
Final Audit Report
ED-OIG/A19O0004                                                                     Page 14 of 22

1.5    Generate periodic reports and use them to reconcile data in the DCS against data in
       grantees’ APRs and FPRs and conduct followup with grantees as needed.

1.6    Require the DCC to develop system logic checks to prevent scholars from entering
       erroneous employment information such as duplicative employment entries and illogical
       employment start and end dates.

1.7    Establish and implement a process for verifying scholars’ employment records, to include
       notifying scholars of their responsibilities in this area as part of the agreement that they
       must sign to participate in the program, and credit only those records that have been
       verified toward scholars’ fulfillment of their service obligations. Refer to DPMG
       scholars that fail to report or misreport employment information.

1.8    Work with OMB and the appropriate Department parties to establish and implement a
       long-term performance measure and related methodology that will enable OSEP to
       calculate and report accurate and meaningful data for use in assessing the effectiveness of
       the PDP in training scholars who subsequently perform work related to the program.

OSEP Comments

OSEP concurred with the recommendations and described the actions that it will take to improve
the accuracy and timeliness of data for the PDP, including both grantee- and scholar-submitted
data. These actions include requiring scholar data to be submitted into the DCS upon a scholar’s
enrollment in the program to ensure that all funded scholars are accounted for, establishing an
annual submission cycle where all grantees are given an annual deadline by which all records
must be updated, and adding logic checks to the DCS to prevent scholars from entering
erroneous employment information. OSEP also established a process for verifying scholars’
employment records to include notifying scholars of their responsibilities in the Pre-Scholarship
Agreement and crediting only those records that have been verified toward scholars’ fulfillment
of service obligations. OSEP noted that its documents, training and technical assistance
materials, and the DCS procedural handbook will be updated to reflect these actions and any new
policies.

In addition, OSEP has been working with the DCC to develop two new reports that will be used
to identify any discrepancies between the number of scholars reported in the DCS and the APRs
as well as grantees that have not submitted required data by the annual deadline. With this
information, OSEP project officers will be able to contact the noncompliant grantees to ensure
that they submit required data and comply with service obligation regulations. Read-only access
to the DCS will also be made available to OSEP’s COR and Alternate COR if deemed necessary
to conduct monitoring activities. OSEP has also been working on its outcome measures.
Specifically, it has been working with its DCS subcontractor to develop three new outcome
performance measures, including a long-term measure, and related methodologies. The three
outcome measures and their methodologies have been submitted for review and approval to
Budget Service and the measures will be piloted beginning in 2015 once OSEP receives Budget
Service and OMB approval.
Final Audit Report
ED-OIG/A19O0004                                                                                   Page 15 of 22

FINDING NO. 2 – Improvements are Needed in OSEP’s Process for Identifying and
                 Referring Scholars for Financial Repayment

We found that OSEP does not always appropriately identify and refer for financial repayment
scholars who are not fulfilling their service obligation. Scholars who receive funding under the
PDP must work 2 years for every 1 year of funding received upon completing their respective
program. Scholars who do not complete their respective program but complete at least 1 year of
training are also eligible for work payback. Work payback must be completed within the sum of
the number of years owed plus 5 additional years known as the grace period. 17

Based on information contained in the SOTS, we determined that 17 scholars within the nine
FY 2006 PDP grants in our sample should have been identified as either not eligible or not on
track to complete their service obligation within the number of years required.

We found that OSEP appropriately identified for financial repayment and subsequently referred
to DPMG 12 scholars who were not eligible for work payback because they did not complete at
least 1 year of the program. We made this determination by identifying all scholars whose SOTS
data indicated that the scholar exited from their respective program prior to completion and also
did not include the date on which the scholar completed at least 1 year of the program. We then
compared our results to information on scholars in repayment status that was provided by DPMG
staff and confirmed that appropriate actions were taken.

However, we determined that OSEP did not appropriately identify five scholars as not on track to
complete their service obligation within the number of years required and, as a result, did not
contact these scholars for the purpose of determining whether they should be referred to, nor
subsequently refer them to, DPMG. 18 We again made this determination based on data
contained in the SOTS for each grant in our sample. Specifically, we determined how many
work years each scholar had left to complete their service obligation and compared work years
owed to the amount of time remaining between the date on which each scholar last updated his
or her employment information in the SOTS, and each scholar’s completion date. [See Table 2
below for information on the number and status of exited scholars served under the grants in our
sample.]




17
   For example, if a scholar began a program in 2006, received 2 years of funding, and completed the program in
2008, he or she would have until 2017 to complete his or her service obligation.
18
   One of the 5 scholars was actually referred to DPMG for financial repayment because he or she was erroneously
identified as not having completed at least 1 year of the program.
Final Audit Report
ED-OIG/A19O0004                                                                                                               Page 16 of 22

                 Table 2: Exited Scholars’ Status in Fulfilling Work Requirements
                                                                                                           Total Number         Percent
      Scholars                                                                                             168
         Exited Scholars Who Were Still Within 5-Year Grace Period as of
                                                                                                                 142             85%
         January 2014*
         Exited Scholars Who Were Not Eligible to Fulfill Their Obligation
                                                                                                                 12              7%
         Through Acceptable Employment
         Exited Scholars Who Should Have Started Working in
                                                                                                                 14              8%
         Acceptable Employment by January 2014**
            Scholars Who Fulfilled Service Obligation or
                                                                                                                         9         64%
            Are On Track to Fulfill Service Obligation***
            Scholars Who Are Not On Track to Fulfill Service Obligation****                                              5         36%
      * This is the date when OSEP last provided data on scholars funded under the PDP grants in our sample.
      ** This number is composed of scholars whose 5-year grace period expired on or before January 2014, as well as scholars
      who withdrew or were expelled from their respective program but completed at least 1 year of training.
      *** Of these 9 scholars, 3 (33 percent) have already fulfilled their service obligation and 5 (56 percent) are on track to fulfill
      their service obligation within the required timeframe. We could not make a clear determination on whether the remaining
      scholar was currently working or had already fulfilled the required service obligation.
      **** None of these 5 scholars are currently working in eligible employment based on the amount of work reported as
      completed in the SOTS. [See below for additional discussion regarding OSEP’s scholar referral process, including reasons
      why scholars were not appropriately identified and referred for financial repayment.]


The five scholars described above were all required to be working in eligible employment as of
January 2014, when we last received data from OSEP on scholars funded under the nine
FY 2006 PDP grants in our sample. However, according to data in the SOTS, none of the five
scholars were on track to complete their service obligation on time.

We further noted that 2 of the 5 scholars (40 percent) last updated their employment information
in the SOTS in 2010, and 3 of the 5 scholars (60 percent) never entered employment information
in SOTS. We asked the contractor to verify whether these scholars were reminded to enter or
update their employment information. The contractor stated that these scholars had not yet been
reminded to enter employment information and that it is in the process of developing procedures
for contacting scholars such as these.

According to 34 C.F.R. § 304.30(j)(4), a scholar enters repayment status on the first day of the
first calendar month after the earliest of the following dates, as applicable: (1) the date the
scholar informs the grantee or the Secretary that the scholar does not plan to fulfill the service
obligation under the agreement; (2) any date when the scholar’s failure to begin or maintain
employment makes it impossible for that individual to complete the service obligation within the
number of years required; or (3) any date on which the scholar discontinues enrollment in the
course of study at the educational institution or agency designated in the scholarship.

Under 34 C.F.R. § 304.30(j), scholars enter into an agreement in which they agree to repay in an
amount proportional to the service obligation they do not complete, any scholarship they receive,
plus interest, provided they do not receive an exception or deferral to repayment under
34 C.F.R. § 304.31. The debt the scholar owes is a debt to the United States that is subject to
collection by the Secretary. The debt equals any amount of the scholarship that has not been
repaid through eligible employment, excluding deferral or repayment exceptions, plus interest on
the unpaid balance which accrues from the date the scholar is determined to have entered
repayment status.
Final Audit Report
ED-OIG/A19O0004                                                                                   Page 17 of 22

The Handbook states that monitoring must address the Department’s fiduciary responsibility to
ensure grantees’ legal and fiscal compliance and to protect against fraud, waste, and abuse.

Reasons for Not Always Appropriately Identifying and Referring Scholars for Financial
Repayment

OSEP did not always appropriately identify and refer for financial repayment scholars who are
unable to fulfill their service obligation, and is at risk of doing so in the future, because (1) its
policies, procedures, and practices regarding the identification and referral of scholars for
financial repayment are not consistent with PDP regulations; and (2) the SOTS is not coded to
allow for the identification of scholars who are outside of their grace period and unable to fulfill
their service obligation within the required timeframe.

Repayment Policies, Procedures, and Practices

We found that OSEP appears to appropriately identify and refer to DPMG scholars who do not
complete at least 1 year of their respective program. According to OSEP staff, the contractor
was told to code the system to identify scholars for referral to DPMG if a scholar was in a
program for less than 1 year, assuming that the program length was 1 year or longer. However,
we also found that its policies and procedures—specifically, the NCSO and DPMG
Handbooks 19—appear to allow for scholars to avoid being referred for financial repayment once
their 5-year grace period has expired as long as they are working in eligible employment even if
they cannot complete the service obligation within the required time period. This is contrary to
the program regulations, which require OSEP to refer to DPMG any scholars who are outside of
their grace period and unable to fulfill their service obligation within the required timeframe,
regardless of whether or not they are working in eligible employment. OSEP staff and
management confirmed that they will wait until the date by which a scholar must complete his or
her service obligation before identifying and referring the scholar for financial repayment.

Additionally, although the NCSO Handbook currently requires the contractor to refer to DPMG
scholars who are outside of their grace period and miss a reporting period without updating their
employment information, we learned that OSEP intends to remove this requirement from future
updates to its procedures. The requirement as now written, however, helps ensure that scholar
information is current and complete for payback monitoring purposes, so removal of this
requirement may have an adverse impact on the contractor’s ability to fulfill its payback
monitoring responsibilities.




19
  The DPMG Handbook, formally titled the “Final DPMG Procedures Handbook,” was submitted to OSEP by the
current contractor in May 2013. The version provided to the audit team was identified by the COR as a final
product (albeit one subject to changes to reflect updates to procedural requirements for referrals to DPMG). The
COR further stated that the DPMG Handbook is a standalone manual per the DCC performance work statement
(Task 10), but may become a chapter in the DCS Procedural Handbook (Task 8).
Final Audit Report
ED-OIG/A19O0004                                                                      Page 18 of 22

System Capabilities

Contractor staff cannot easily identify in the SOTS scholars who should be classified as being in
repayment status and potentially referred to DPMG. This is due to the system not being
structured in a manner that would allow for contractor staff to run periodic reports on scholars
who are unable to complete their service obligation within the required timeframe. Specifically,
the database underlying the SOTS lacks certain fields that are necessary for calculating the
difference between the number of work years still owed by a scholar and the amount of time
remaining before the date he or she must complete his or her service obligation. Scholars who
have less time remaining to complete their service obligation than time owed should be in
repayment status; however, because contractor staff would have to perform this calculation
manually, they instead wait until the date by which the scholar must complete his or her service
obligation (and for which an automated query can be run) before initiating debt collection
activities.

The SOTS is also not coded to alert contractor staff when a scholar’s deferral period has ended,
at which point they must either begin working in eligible employment or be referred to DPMG.
Instead, there is a table in the database that needs to be reviewed manually by staff to make this
determination.

The weaknesses noted with regard to the identification and referral of scholars for financial
repayment increase the susceptibility of the PDP to fraud, waste, and abuse. We noted that the
five scholars who should have been identified as not on track to complete their service
obligation, and therefore placed in repayment status, received approximately $16,000 in Federal
funds. These are funds that are owed to the Federal government according to the agreements
which these scholars signed upon starting their respective programs. Because a significant
majority of scholars who graduated or otherwise exited their respective program are still in their
grace period and, therefore, not yet required to have begun work in eligible employment (as
discussed in Finding No. 1), there are very few scholars for whom this situation has occurred.
However, as time goes by, there is increasing risk that greater numbers of PDP scholars who are
unable to fulfill their service obligation according to the program regulations will not be
appropriately identified and referred for financial repayment and that OSEP will not timely
recover funds owed to the Federal government. Also, because OSEP does not refer scholars for
financial repayment until their period of obligation has expired, the accrued interest owed to the
Federal government will be less than what it should have been had OSEP, consistent with the
regulations, correctly identified when a scholar entered into repayment status and timely initiated
debt collection activities.

Recommendations

We recommend that the Assistant Secretary for OSERS require OSEP to

2.1    Direct the DCC to both immediately and periodically review scholar data in the DCS to
       determine whether any scholars should be classified as being in repayment status in
       accordance with the program regulations; conduct followup with grantees and/or scholars
       as needed to ensure that scholar data is current, accurate, and complete; and refer to
Final Audit Report
ED-OIG/A19O0004                                                                        Page 19 of 22

       DPMG for financial repayment any noncompliant scholars, along with all required
       documentation.

2.2    Consider changing the regulation defining when a scholar enters repayment status to be
       consistent with OSEP’s current practice, or revise all current policies and procedures
       related to the identification and referral of scholars for financial repayment to reflect the
       current regulatory requirements.

2.3    Work with the DCC to include fields in the DCS that would allow for the identification of
       scholars who are outside of their grace period and unable to fulfill their service obligation
       within the required timeframe; also identify other potential areas for improvement.

OSEP Comments

OSEP concurred with the recommendations and described actions that it has taken or plans to
take to improve its process for identifying and referring scholars for financial repayment.
Specifically, it is working with the DCC to include fields in the DCS that would allow for the
identification of scholars who are outside of their grace period and unable to fulfill their service
obligation within the required timeframe. In addition, the DCS now requires grantees to upload
completed and signed Pre-Scholarship Agreements and Exit Certifications. This will allow the
DCC to easily identify and refer scholars for financial repayment to DPMG since it will already
have proof of debt. The DCC will document these steps and procedures in the procedural
handbook. OSEP stated it is also identifying other potential areas for improvement, to include
the development and documenting of procedures for ensuring high scholar and employer
response rates.

Finally, OSEP concurred with the recommendation to explore changing the regulation defining
when a scholar enters repayment status or revising current policies and procedures related to the
identification and referral of scholars for financial repayment to reflect current regulatory
requirements. OSEP stated that after a thorough review, management will decide the best
approach for the PDP and the DPMG procedural handbook will be revised accordingly.
Final Audit Report
ED-OIG/A19O0004                                                                     Page 20 of 22


                 OBJECTIVES, SCOPE, AND METHODOLOGY


The objectives of our audit were to determine whether the PDP effectively (1) met program
objectives by training recipients who subsequently performed work related to the program, and
(2) obtained repayment of the assistance received for recipients that did not fulfill work
agreements. This audit was part of a review of payback provisions of selected grant programs
throughout the Department.

To accomplish our objectives, we gained an understanding of internal control applicable to the
Department’s administration and oversight of discretionary grant programs, in general, and to
OSEP’s process for monitoring grantees and scholars who receive funding under the PDP. We
reviewed applicable laws and regulations, OMB guidance, Department policies and procedures,
Federal Register notices, and the Government Accountability Office’s (GAO) “Standards for
Internal Control in the Federal Government.” In addition, to identify potential vulnerabilities, we
reviewed prior Office of Inspector General (OIG) and GAO audit reports with relevance to our
audit objectives. We also reviewed the performance work statement for the SOTS and DCS
contracts, as well as system documentation prepared by the contractors, to obtain an
understanding of the contractor responsibilities and system capabilities under each contract.

We conducted discussions with OSEP management and staff, including program officers, to
obtain a more complete understanding of the PDP. These discussions focused primarily on
monitoring activities pertaining to the service obligation component of the PDP, as well as
information on GPRA performance measures and relevant program studies. We conducted
discussions with DPMG officials regarding the referral and financial repayment processes and to
determine whether OSEP has utilized their services. We also conducted discussions with the
SOTS and DCS CORs and DCS contractor officials regarding monitoring and tracking activities
and the data collection systems used to perform such activities.

The scope of our review was limited to the Department’s post-award activities for grants made
under the FY 2006 PDP competition, with a particular focus on monitoring of scholars’
fulfillment of the applicable payback requirement. We chose to focus on FY 2006 grants
because of differences in the regulations and scholar tracking requirements for grants awarded
prior to this time. We selected a sample of 9 of the 81 (11 percent) PDP grants awarded in
FY 2006. Our sample included eight grants that were randomly selected and one grant that was
judgmentally selected based on the results of a prior OIG audit at the entity. Our sample
included $7 million of the $64.5 million (11 percent) awarded to FY 2006 PDP grantees.
Because there is no assurance that the judgmental sample used in this audit is representative of
the respective universe, the results should not be projected over the unsampled awards.

To achieve our objectives, we relied primarily on grantee- and scholar-reported data found in the
SOTS. We reviewed data from SOTS as of January 6, 2014 for each of the nine FY 2006 PDP
grants in our sample. We also reviewed official grant files, which are maintained in hardcopy
form, most notably the annual and final performance reports. We reviewed documentation for
Final Audit Report
ED-OIG/A19O0004                                                                      Page 21 of 22

each of the grants in our sample to determine: (1) the number of scholars served; (2) financial
assistance provided to each scholar; (3) the current program enrollment status of each scholar;
and (4) whether payback (either employment or financial) had begun for those scholars who
completed or otherwise exited their respective program. We also reviewed referral and financial
repayment documentation provided by DPMG and OSEP.

We relied on computer-processed data from G5, the Department’s grants management system,
and from the SOTS. We used data from G5 for the purpose of identifying the universe of PDP
grants awarded in FY 2006 and related obligation amounts. Because G5 is the Department’s
system of record for such information and the data were used primarily for informational
purposes and did not materially affect our findings and resulting conclusions, we did not perform
a data reliability assessment.

We used the SOTS for the purpose of identifying the universe of scholars served under the nine
FY 2006 PDP grants in our sample and also to determine the current status of each scholar. We
compared the total number of scholars served under each grant according to the SOTS with
information contained in each grantee’s annual and final performance reports. During our
review of the SOTS data, we noted that some information was missing, to include total funding
amount, and in some cases we identified scholars who had received funding but were never
entered into the SOTS. In addition, we noted cases where SOTS contained illogical entries for a
scholar, such as an employment exit date that occurred prior to the employment start date and/or
a scholar entering and twice receiving credit for the same employment. [See Finding No. 1 for
additional information.] Because source data for information contained in the SOTS is primarily
located at various grantees and employers across the country, our ability to perform an
assessment of the reliability of the information in the SOTS was limited, and as such, we could
not fully determine the reliability of the data. However, despite these limitations, we believe the
evidence obtained provides a reasonable basis for our findings and conclusions based on the
audit objectives. Specifically, the limitations noted did not impact our ability to assess OSEP’s
processes related to the identification and referral of noncompliant scholars nor provide enough
basis for us to completely discount what available data indicate with regard to program results.

We conducted fieldwork at Department offices in Washington, D.C., from November 2012
through August 2014. We provided our audit results to Department officials during an exit
conference conducted on August 14, 2014.

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.
Final Audit Report
ED-OIG/A19O0004                                                                     Page 22 of 22



                           ADMINISTRATIVE MATTERS


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. 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 OIG is required to report
to Congress twice a year on the audits that remain unresolved after 6 months from the date of
issuance.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by the OIG
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.


                                            Sincerely,



                                            Patrick J. Howard /s/
                                            Assistant Inspector General for Audit
                                                                           Attachment 1


                  Abbreviations, Acronyms, and Short Forms
                             Used in this Report


APR             Annual Performance Report

CAP             Corrective Action Plan

C.F.R.          Code of Federal Regulations

COR             Contracting Officer’s Representative

DCC             Data Collection Center

DCS             Data Collection System

Department      U.S. Department of Education

DPMG            Debt and Payment Management Group

DPMG Handbook   Final DPMG Procedures Handbook

FPR             Final Performance Report

FY              Fiscal Year

GPRA            Government Performance and Results Act

Handbook        Handbook for the Discretionary Grant Process

IDEA            Individuals with Disabilities Education Act

IDEIA           Individuals with Disabilities Education Improvement Act of 2004

NCSO            National Center on Service Obligations

NCSO Handbook   Final Draft Procedural Handbook for the Service Obligation Tracking
                System

OIG             Office of Inspector General

OMB             Office of Management and Budget
OSEP    Office of Special Education Programs

OSERS   Office of Special Education and Rehabilitative Services

PDP     Personnel Development to Improve Services and Results for Children with
        Disabilities Program

RLTT    Rehabilitation Long-Term Training

RSA     Rehabilitation Services Administration

SDR     Scholar Data Report

SOTS    Service Obligation Tracking System
                                                                                                        Attachment 2


                             UNITED STATES DEPARTMENT OF EDUCATION 

                         OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE SERVICES 


                                                   JAN- 9 2015
Michele Weaver-Dugan, Director
Operations Internal Audit Team
U.S. Department of Education
Office of Inspector General
400 Maryland Avenue, S.W.
Washington, D.C. 20202-1500

Dear Ms. Weaver-Dugan:

OSERS received the December 12, 2014letter from the Assistant Inspector General for Audit, which
included the draft audit report, titled Payback Provisions ofthe Personnel Development to Improve
Services and Results for Children with Disabilities Program, control number ED-OIG/A1900004.
My staff and I appreciated the opportunity to review the draft report. It has been and will continue to
be our goal to ensure that the information collected and reported for the Office of Special Education
Program's (OSEP's) Personnel Development Program's (PDP) Service Obligation payback is
accurate and that all scholars who are not fulfilling service obligations are referred in a timely
manner to the Debt and Payment and Management Group (DPMG) for financial repayment. To that
end, we have made and continue to make significant progress in our collection of data, delivery of
technical assistance to grantees on data quality, and in making appropriate referrals for debt
collection.

We agree with all recommendations in the draft report, and, on the assumption it will be issued in
final without substantive change, we identify below the significant actions OSEP has taken, and
plans to undertake, to address the eight recommendations under Finding No.I and the three
recommendations under Finding No.2.

FINDING NO. 1 -Results are Encouraging, but Data Limitations and Quality Issues Limit
Stakeholders' Ability to Assess PDP Effectiveness

We summarize this finding very briefly here. The OIG draft audit report noted that, "audit results
indicate that more than half of the PDP scholars in our sample who received training under the FY
2006 grants and exited their respective programs have either completed or are currently working
towards completion oftheir service obligation." The report also stated, "However, limited data
availability for the scholars in our sample due to the program's five year grace period made it
generally too early to comment on program effectiveness with regard to the employment of those
scholars."


OIG Recommendation 1.1

Continue to emphasize to grantees, through training or by other means, the need to timely submit
accurate and complete scholar data into the DCS; also emphasize to grantees the need to remind
scholars of their obligations once they have exited the program.
                           400 MARYLAND AVE. S.W., WASHINGTON, DC 20202-2600 

                                                     www.ed.gov 

 The Department ofEducation's mission is to promote student achievement and preparation for global competitiveness by 

                            fostering educational excellence and ensuring equal access. 

    Page 2- Ms. Weaver-Dugan




 OSEP Response:

We concur with the recommendation to continue to emphasize to grantees the need to a) timely
submit accurate and complete scholar data into the Personnel Development Program Data Collection
System (DCS), and b) remind scholars of their obligations once they have exited the program. OSEP
has provided substantial training and technical assistance to grantees through annual training events,
document dissemination, technical support, and Project Officer communications. OSEP intends to
continue its training and technical assistance to grantees, as described below:

       I. 	 OSEP will continue to provide' annual training to its grantees on submitting high quality data
            through:
               • 	 OSEP's Project Directors' Conferences, face-to-face or virtual (all grantees)
               • 	 Live, interactive webinars (new grantees)
               • 	 On demand, archived training at the DCS website:
                   https://pdp.ed.gov/OSEP/Home/Training (all grantees, scholars, and employers).

      2. 	 OSEP will continue required training for grantees each year on annual performance reporting
           (APR) requirements, including those related to service obligation. These APR webinar
           trainings, conducted by OSEP Project Officers, have been uniquely developed for grants
           funded under the Personnel Development Program (CFDAs 325D, 325K, 325T, and 325N).
           Additional training on developing high quality logic models and project performance
           measures is offered to all grantees.

      3. 	 OSEP disseminates annually information and documents on timely submission of data,
           including data related to service obligation, including:
              • 	 325D and 325K priorities published in the Federal Register.
              • 	 Reiteration of the regulatory requirements to timely submit Annual Performance
                  Reports, Scholar Data Reports, and Service Obligation data (34 CFR 75.253(a)(3) 2;
                  and 34 CFR 75.217(d)(3)(ii) 3) and the possible consequences for not making timely
                  submissions, as disseminated at the OSEP Project Directors' Conference.
              • 	 Annual results on program performance measures, including the need for timely
                  submission of quality data, presented at OSEP's Annual PDP Program Meeting.
              • 	 A Dear Colleague Letter from Research to Practice Director, Dr. Lawrence Wexler,
                  transmitted with each Grant Ayvard Notification for Continuing and New Awards.



1
  Training on SDR data submission has been provided annually since 2008 to PDP grantees at OSEP's Project Directors' 

Conferences; training has been provided annually since 2010 on SDR data submission requirements; and since FY 2012 

training has been targeted to new grantees on submitting quality data. 

2
  According to 34 CFR 75.253(a)(3), the timely submission of this report is one of the factors that the Secretary will 

consider in determining whether to continue your project's funding for next fiscal year. 

3
  According to 34 CFR 75.217(d)(3)(ii), the Secretary can consider the failure to submit scholar data in a timely fashion 

in determining your project's ability to obtain future grants from the Office of Special Education Programs or under any 

other Department program. 

    Page 3-Ms. Weaver-Dugan




      4. 	 The DCS contractor supports a technical assistance help desk, Monday through Friday, from
           8 a.m. to 8 p.m. (Eastern time) to assist grantees not only with issues related to the technical
           submission of data, but also with questions associated with data quality, such as directing the
           grantee to specific, archived training webinars on data quality. Technical support can be
           accessed through email at serviceobligation@ed.gov; phone at 1-800-285-6276; or fax at 1­
           888-252-6960.

      5. 	 Finally, PDP Project Officers conduct a post-award conference for each new award. During
           each post-award conference, all data reporting requirements for timely submission of Annual
           Performance and Final Reports are reviewed,· along with requirements for scholar and service
           obligation reporting.

Because OSEP's contractor recently merged service obligation and scholar data collections from two
separate, previous systems, (SDR and SOTS 4), all OSEP training, documents, and technical
assistance materials will be reviewed and revised to reflect new contact information for the
contractor, new websites for archived training and other resources, as well as any other relevant
updates. Updates will a) emphasize the need for grantees to remind scholars of their obligations
once they have exited the program, and b) increase emphasis on the quality of data that grantees
submit. In particular, we will stress how the quality of grantee data on scholars influences annual
results on program performance measures and the critical importance of scholars submitting their
employment data not only for tracking their service obligation fulfillment, but also for calculating
program effectiveness. Scholar data could be disaggregated at the grantee level, for example, to
determine the employment rates for scholars from each OSEP-funded grantee.

The following activities will continue to be emphasized or added:

      1. 	 The DCS contractor will be required to prepare a targeted training for scholars that will
           emphasize a) how the data they submit documents their service obligation fulfillment, and b)
           their responsibilities to submit their employment data and to obtain employer verification.
           The training will be available on the DCS website, so that scholars may participate in the
           training prior to data submission and on demand throughout a scholar's data submission
           period (annually until the service obligation is fulfilled).

      2. 	 The DCS contractor sends reminders annually by email to grantees three weeks prior to the
           date on which they can begin entering data.

      3. 	 The DCS tracks data submissions throughout the annual submission cycle. Data submissions
           are due 60 days after the data entry start date for grantees indicated in the email notification
           sent by the DCS contractor regarding data system availability. The DCS sends follow-up
           reminders by email to each grantee one month prior to their data submission deadline, for
           grantees that have not completed data submission. OSEP also receives notification of all
           grantees that have not submitted data during the data collection period so that Project
4
 SDR is the Scholar Data Report; SOTS is the Service Obligation Tracking System. SDR and SOTS are no longer active
data collection systems.
Page 4-Ms. Weaver-Dugan



        Officers can follow-up with their grantees not submitting data prior to the data submission
        deadline and consequently will require a time extension to the deadline. After time
        extensions have been used, those grantees which have yet to submit data will be contacted by
        the DCS contractor to provide technical support to resolve their challenges on submitting
        scholar data. At this point, if any grantees are unable to submit scholar data, OSEP options
        include: a) determine that no substantial progress was made and no continuation funds
        would be awarded; b) close the grant; or c) seek further action to determine whether fraud,
        waste, or abuse occurred.

    4. 	 The DCS will continue to collaborate with OSEP on the development and implementation of
         training for grantees on the submission of quality data.

OIG Recommendation 1.2

Require grantees to submit scholar data into the DCS upon a scholar's enrollment in the program, as
currently planned, to ensure that all funded scholars are accounted for.

OSEP Response:

We concur with the recommendation to require grantees to submit scholar data into the DCS upon a
scholar's enrollment. Grantees are required to create a scholar record and upload a Pre-Scholarship
Agreement into the DCS within 30 days of a scholar's enrollment in the program. The Personnel
Development Program Data Collection Center (DCC) now monitors how often grantees are
accessing the DCS and sends reminders if 6 months have passed since the grantee last accessed the
system. In addition, all grantees will be given an annual deadline, typically in April, by which all
records must be updated. The DCC will monitor response rates and report noncompliant grantees to
OSEP. OSEP and the DCC have developed a new Quarterly Report to Project Officer (on key
indicators of project progress) that is expected to be ready for use in March 2015. Project Officers
will be able to compare data in the DCS with data submitted in the grant AP Rs by means of the new
report. The DCC will work with the Project Officers to address any discrepancies between the
number of scholars reported in the DCS and the APRs.

OIG Recommendation 1.3

Ensure that the DCC identifies grantees who fail to timely submit accurate and complete scholar data
and takes appropriate actions, to include referring to OSEP any noncompliant grantees.

OSEP Response:

We concur with the recommendation. Grantees not in compliance will be referred to OSEP. By
giving all grantees a specific annual deadline, the DCC will be able to track grantee responses rates
and identify grantees that have not submitted required data by the annual deadline. Using a process
developed for the Scholar Data Report, the DCC will provide OSEP with a "Nonresponse Report"
identifying noncompliant grantees as of the annual deadline. Each OSEP Project Officer will then
contact their assigned grantees reported to have failed to timely submit data to determine why the
Page 5 - Ms. Weaver-Dugan



grantee has not submitted data and to ensure that all grantees submit required data and comply with
service obligation regulations. The DCC will provide a weekly update to OSEP of the nonresponse
report until all grants are in compliance with data submission requirements.

In addition, OSEP and its contractor have designed the DCS to require grantees to upload each
scholar's Pre-Scholarship Agreement (PSA) prior to submitting scholar data. By using this strategy,
DCC will assure complete data entry within 30 days of scholar enrollment. Grantees have submitted
records of 8, 114 scholars with PS As during the 2014 launch period. Random sampling will begin in
January 2015 for reviewing PSAs and scholar records to assure they are submitted with accurate and
complete data including required signatures.

OIG Recommendation 1.4

Monitor implementation of the DCS, to include ensuring that all required OSEP access privileges are
granted and that all other terms and conditions of the contract are met, including the development of
a handbook based on the new system.

OSEP Response:

We concur with the recommendation. The DCC has added a read-only user category to the DCS and
will assign accounts to the OSEP Contracting Officer's Representative (COR) and Alternate COR.
Read-only functionality will be available as of January 2015. DCC staff will then train the COR and
Alternate COR on how to navigate the system. Administrative access is not currently required for
monitoring, however, if administrative-level access is required to conduct monitoring activities in
the future, the DCC can make it available to the COR and Alternate COR within 24 hours.

OSEP will also ensure that other terms and conditions of the contract are met by the DCC. The COR
reviews progress on each task during bi-monthly conference calls with the contractor. Deliverables
are archived on a secure SharePoint site for monthly monitoring and future reference. The
contractor submitted a draft procedural handbook for the DCS which is currently under review by
the COR. The contractor will respond to COR feedback by the end of January 2015 and submit a
final draft DCS procedural handbook by the end of February 2015.

OIG Recommendation 1.5

Generate periodic reports and use them to reconcile data in the DCS against data in grantees' APRs
and FPRs and conduct follow-up with grantees as needed.

OSEP Response:

We concur with the recommendation to generate periodic reports and use them to reconcile data in
the DCS against data in grantees' APRs and FPRs (Final Performance Reports). The DCC will
prepare quarterly reports for each Project Officer with aggregated counts tracking scholar data entry
status, program completion status, and service obligation status for each scholar having received
funds from their assigned training grants. OSEP Project Officers will be able to compare these
Page 6 - Ms. Weaver-Dugan



reports to the proposed number of scholars from the grant application and the number of scholars
reported in the most recent APR. The DCC will provide the first quarterly reports to OSEP Project
Officers by March 2015. Please see also the OSEP Response for OIG Recommendation 1.2.

OIG Recommendation 1.6

Require the DCC to develop system logic checks to prevent scholars from entering erroneous
employment information such as duplicative employment entries and illogical employment start and
end dates.

OSEP Response:

We concur with the recommendation. The DCC has added logic checks to the DCS that prevent
scholars from entering illogical employment start and end dates (e.g., end dates in the future). The
DCC has also capped the number of employment hours scholars may submit to one full-time
equivalent (FTE) (i.e., 40 hours/week). This edit prevents duplicative employment records and can
be overridden by DCC staff if the scholar contacts the Help Desk, if he or she is in fact working over
one FTE. These logic checks were added in December 2014 and are in place for the initial launch to
scholars and employer by the end of January 2015. A list of the logic checks will be provided in the
final procedural handbook along with instructions for DCC staff on how to handle the employment
override functionality.

OIG Recommendation 1.7

Establish and implement a process for verifying scholars' employment records, to include notifying
scholars of their responsibilities in this area as part of the agreement that they must sign to
participate in the program, and credit only those records that have been verified toward scholars'
fulfillment of their service obligations. Refer to DPMG scholars that fail to report or misreport
employment information.

OSEP Response:

We concur with the recommendation to establish and implement a process for verifying scholars'
employment records, to include notifying scholars of their responsibilities as part of the Pre­
Scholarship Agreement that they must sign to participate in the program, and credit only those
records that have been verified toward scholars' fulfillment of service obligations. We also concur
with the recommendation to refer to DPMG scholars who fail to report or misreport employment
information.

The system design for the DCS currently assigns to scholars the responsibility for obtaining
employment verification and providing supporting documentation. Through an automated system,
the DCS contacts the employer to verify a scholar's employment. If the employer fails to verify
employment, the scholar is contacted and must seek the employer's verification or the employment
cannot be used for service obligation fulfillment. Data collection for scholars and employers will
    Page 7-Ms. Weaver-Dugan



    begin in January 2015, and employment will not count toward a scholar's fulfillment of his or her
    service unless it has been appropriately verified.

The DCC will refer all scholars who fail to fulfill their service obligation to DPMG. The Procedural
Manual will document the process by which cases are referred to DPMG. Reports will be run on
Mondays by the DCC Data Manager to ensure a timely referral to DPMG.

OIG Recommendation 1.8

Work with OMB and the appropriate Department parties to establish and implement a long-term
performance measure and related methodology that will enable OSEP to calculate and report
accurate and meaningful data for use in assessing the effectiveness of the PDP in training scholars
who subsequently perform work related to the program.

OSEP Response:

We concur with the recommendation to work with OMB and the appropriate Department parties to
establish and implement a long-term performance measure and related methodology that will enable
OSEP to calculate and report accurate and meaningful data for use in assessing the effectiveness of
the PDP in training scholars who subsequently perform work related to the program.

OSEP has been working for the past two years with its DCS subcontractor, Westat5 , to develop three
new outcome measures, including a long-term measure, and related methodologies. During this
process, OSEP sought technical feedback from ED's Budget Service and the Office of the General
Counsel. OSEP Project Officers and focus groups of PDP grantees also provided input and
feedback. The three outcome measures and their methodology have been submitted for review and
approval to the Budget Service. Scholar and employer data collections for these measures were
approved by OMB on May 8, 2014 (OMB# 1820-0686). When OSEP receives Budget and OMB
approval on the methodology, the measures will be piloted in 2015.

FINDING NO. 2 - Improvements are Needed in OSEP's Process for Identifying and
                 Referring Scholars for Financial Repayment

We summarize this finding very briefly here. The OIG draft audit report noted, "We found that
OSEP does not always appropriately identify and refer for financial repayment scholars who are not
fulfilling their service obligation." The report also stated, " ... we determined that OSEP did not
appropriately identify five scholars [in the sample] as not on track to complete their service
obligation within the number of years required and, as a result, did not contact these scholars for the
purpose of determining whether they should be referred to, nor subsequently refer them to, DPMG."




5
 Westat significantly improved performance measures and methodologies on selected ED programs under the Data
Quality Initiative, a former contract with ED's Institute of Education Sciences (IES).
Page 8-Ms. Weaver-Dugan




OIG Recommendation 2.1

Direct DCC to both immediately and periodically review scholar data in the DCS to determine
whether any scholars should be classified as being in repayment status in accordance with the
program regulations; conduct follow-up with grantees and/or scholars as needed to ensure that
scholar data is current, accurate, and complete; and refer to DPMG for financial repayment any
noncompliant scholars, along with all required documentation.

OSEP Response:

We concur with the recommendation. The DCS now requires grantees to upload completed and
                                                                                                                             I
signed Pre-scholarship Agreements and Exit Certifications. The DCC will be able easily to make
referrals to DPMG, since it will already have proof of debt. (Lack of proof of debt was a common
problem for the previous contractor.) In addition, the DCC has established procedures in its draft                           I
handbook for generating and reviewing weekly referral lists to identify scholars who should be                               i
referred. A dedicated, private email account has been established by OSEP for managing all                                   r
referrals from DCS to DPMG: (DPMG.DCS@ed.gov).

OIG Recommendation 2.2

Consider changing the regulation defining when a scholar enters repayment status to be consistent
with OSEP's current practice, or revise all current policies and procedures related to the
identification and referral of scholars for financial repayment to reflect the current regulatory
requirements.

OSEP Response:

We concur with the recommendation. OSEP will explore changing the regulation defining when a
scholar enters repayment status or revising current policies and procedures related to the
identification and referral of scholars for financial repayment to reflect current regulatory
reqilirements. After a thorough review, OSEP management will decide the best approach for the
PDP; practice and policies will be consistent with 34 C.F.R. §304.30G)(4)6 or will be changed to
reflect any new regulatory requirements. The DPMG procedural handbook will be revised
according!y.




6
  According to 34 C.F.R. §304.300)(4), a scholar enters repayment status on the first day ofthe first calendar month after
the earliest ofthe following dates, as applicable: (I) the date the scholar informs the grantee or the Secretary that the
scholar does not plan to fulfill the service obligation under the agreement; (2) any date when the scholar's failure to
begin or maintain employment makes it impossible for that individual to complete the service obligation within the
number of years required; or (3) any date on which the scholar discontinues enrollment in the course of study at the
educational institution or agency designated in the scholarship.
Page 9 - Ms. Weaver-Dugan




OIG Recommendation 2.3

Work with the DCC to include fields in the DCS that would allow for the identification of scholars
who are outside of their grace period and unable to fulfill their service obligation within the required
timeframe; also identify other potential areas for improvement.

OSEP Response:

We concur with the recommendation to work with DCC to include fields in the DCS that would
allow for the identification of scholars who are outside of their grace period and unable to fulfill
their service obligation within the required timeframe. The DCS will use the scholar's end date plus
the grace period to identify the date by which a scholar must have begun eligible employment. After
that date, a scholar's failure to report employment will result in a referral to DPMG. The procedural
handbook will document the steps the DCC will take to ensure timely referrals to DPMG. A draft
version of this handbook is currently under review by OSEP. The DCC will prepare a final version
of the procedural handbook upon receipt of OSEP feedback.

OSEP will also work with the DCC to identify other potential areas for improvement. For example,
OSEP will direct the DCC to develop and document procedures for ensuring high scholar and
employer response rates. By contacting scholars frequently and through different methods (e.g.;
email messages, postcards), OSEP and the DCC will minimize the number of scholars who fail to
report eligible employment.

Other issues:

We previously provided your office with recommendations for technical and conforming edits, that,
if incorporated, we believe will improve the accuracy of certain aspects of the final audit report.


Thank you for the opportunity to review and respond to the draft audit report. Should you have
questions concerning our response or need additional information, please do not hesitate to contact
Dr. Lawrence Wexler, Research to Practice Division, Office of Special Education Programs, at (202)
245-7571.


                                              Sincerely,

                                             \!J==~---
                                                           ?
                                              Michael K. Yudin
                                              Acting Assistant Secretary