oversight

Semiannual Report - October 1, 2018, through March 30, 2019

Published by the Department of Education, Office of Inspector General on 2019-03-30.

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

Semiannual Report
to Congress, No. 78
   October 1, 2018–March 30, 2019
    U.S. Department of Education
      Office of Inspector General
Office of Inspector General
Sandra D. Bruce
Acting Inspector General

May 2019

This report is in the public domain. Authorization to reproduce it in whole or in part
is granted. While permission to reprint this publication is not necessary, the citation
should be: U.S. Department of Education, Office of Inspector General, Semiannual
Report to Congress, No. 78.




Please Note:
The Inspector General’s Semiannual Report to Congress, No. 78 is available on the
ED OIG website at http://www2.ed.gov/about/offices/list/oig/sarpages.html.


All images used under license from Shutterstock.com.
                    Message to Congress
As the Acting Inspector General of the U.S. Department           weakness in internal controls over the reliability
of Education (Department) Office of Inspector General            of information used in modeling activities and
(OIG), I present this Semiannual Report on the activities        one significant deficiency in information tech-
and accomplishments of this office from October 1,               nology controls. Ineffective controls impact
2018, through March 31, 2019. The audits, investigations,        management’s ability to prevent, detect, and
and related work highlighted in the report are products          correct errors and can increase the risk of unau-
of our mission to identify and stop fraud, waste, and            thorized access to the Department’s systems. In
abuse, and promote accountability, efficiency, and               addition, the auditors identified one instance
effectiveness through our oversight of the Department’s          of noncompliance involving a provision of the
programs and operations.                                         Debt Collection Improvement Act of 1996,
                                                                 as amended by the Data Accountability and
The work that the OIG accomplished over the                      Transparency Act of 2014.
last 6 months reflects our ongoing dedication
and commitment to our mission and goals. In                 •	   We found that FSA needed to take additional
our audit-related work, we issued 12 reports and                 actions to mitigate the risk of student loan
recommendations aimed at improving Department                    servicer noncompliance with requirements for
programs and operations. This work also identified               servicing federally held student loans. Although
more than $712 million in questioned and disallowed              FSA oversight activities regularly identified
costs. Examples of this audit work include the following.        instances of servicers’ noncompliance, it did not
                                                                 track identified instances of noncompliance that
  •	   We found that the Department did not have                 servicers remediated, FSA had not analyzed the
       controls in place to ensure that it processed             information it did track to identify trends and
       Family Educational Rights and Privacy Act (FERPA)         recurring instances of noncompliance at each
       complaints timely and effectively. We found a             servicer and across all servicers, and FSA rarely
       long-standing and substantial backlog of unre-            used available contract accountability provisions
       solved FERPA complaints that prevented timely             to hold servicers accountable for instances
       and effective resolution of new complaints, as            of noncompliance. By not holding servicers
       well as a number of significant control weak-             accountable for instances of noncompliance with
       nesses that hampered the Department’s ability             Federal loan servicing requirements, FSA did
       to resolve FERPA complaints. As a result, the             not provide servicers with an incentive to take
       Department did not ensure the timely remedia-             actions to mitigate the risk of continued servicer
       tion of violations, which may have compounded             noncompliance that could harm students.
       the adverse impact on students.
                                                            •	   Our loan servicing oversight audit was the focus
  •	   Our fiscal year (FY) 2018 Federal Information             of a Congressional hearing in March and is one
       Security Modernization Act, or FISMA, review              of many reports issued by the OIG over the years
       concluded that the Department’s and Federal               aimed at improving Federal higher education
       Student Aid’s (FSA) overall information security          programs and operations. As you proceed with
       programs were generally not effective as defined          the critical task of reauthorizing the Higher
       by the reporting metrics. Although both the               Education Act of 1965, as amended, I hope that
       Department and FSA continued to make progress             you will consider the OIG’s Recommendations
       in strengthening their information security,              for the Reauthorization of the Higher Education
       weaknesses remained, leaving their systems                Act that we provided to Congress in 2018. We
       vulnerable to security threats.                           provided these recommendations in accordance
  •	   In FY 2018, although the Department and FSA               with our mission; we provide independent
       received unmodified financial statements audit            and objective assistance to ensure continuous
       opinions, the auditors identified one material            improvement in program operations as well as
       prevent fraud, waste, and abuse. We based our            organization with its proven record of accomplishment
       recommendations on OIG audits, reviews, and              and exemplary work. I have every intention of continuing
       investigations related to the Federal student aid        to maintain the high level of integrity and service you
       programs and program participants, as well as            have come to expect from this office and that America’s
       a review of legislation and legislative proposals        taxpayers and students deserve. I look forward to
       issued before March 1, 2018. We welcome the              working with the Department, members of Congress,
       opportunity to discuss these suggestions or              and my colleagues in the Inspector General community
       provide additional information should you so             to provide our nation’s taxpayers with assurance that
       require.                                                 the Federal government is using their hard-earned tax
                                                                dollars effectively and efficiently.
In our investigative work, we closed 39 investigations
involving fraud or corruption and secured more than
$26.5 million in restitution, settlements, fines, recoveries,
and forfeitures. As a result of this work, criminal actions
were taken against a number of people, including                Sandra D. Bruce
current and former school officials and service providers       Acting Inspector General
who cheated students and taxpayers. This included
the following:

   •   12 college and university officials, contractors,
       and employees, including two former financial
       aid officers at the Center for Employment Training
       in Chicago who pled guilty for their roles in a
       multimillion dollar fraud scheme;

   •   16 members of student aid fraud rings, including
       a father and son team in Arizona who are alleged
       to have orchestrated a scam that targeted nearly
       $7.5 million in student aid;

   •   11 people who embarked on their own fraud
       scams, including a man who was sentenced to
       17 years in prison for operating a $12 million
       identity theft, student aid, and phony tax return
       scam; and

   •   10 high-ranking K–12 school officials and con-
       tractors for stealing public education funds
       for their own purposes, including the former
       superintendent of Oklahoma’s Grant-Goodland
       Public Schools who was sentenced to prison
       and was ordered to pay more than $1 million
       in restitution for theft, and the founder of New
       Mexico’s Southwest Learning Center charter
       schools who was sentenced to prison and was
       ordered to pay more than $3 million in restitu-
       tion for fraud.

In closing and as you know, I have been Acting Inspector
General since Inspector General Kathleen Tighe retired
on November 30, 2018. Inspector General Tighe
oversaw the work of this office for the first 2 months
of this reporting period. It is truly an honor to lead this
1                            16                              26
Federal Student Aid          Elementary, Secondary,          Department Management
Programs and Operations      and Indian Education            and Operations
                             Programs and Operations




         36                             46                          69
         Other OIG Efforts              Required Reporting          Acronyms and
                                                                    Abbreviations
Federal Student Aid
Programs and Operations
T
          he Federal student aid programs have long
          been a major focus of our audit and investigative
          work. These programs are inherently risky
          because of their complexity, the amount of funds
involved, the number of program participants, and the
characteristics of student populations. U.S. Department
of Education (Department) Office of Inspector General
(OIG) efforts in this area seek not only to protect Federal
student aid funds from fraud, waste, and abuse, but also
to protect the interests of the next generation of our
nation’s leaders—America’s students.
                            Office of Inspector General Semiannual Report  3




Audits
The Department disburses about $122.5 billion in Federal student aid annually and
manages an outstanding loan portfolio of more than $1 trillion. This makes the
Department one of the largest financial institutions in the country. As such, effective
oversight and monitoring of its programs, operations, and program participants
are critical. Within the Department, the Office of Postsecondary Education and the
Federal Student Aid office (FSA) are responsible for administering and overseeing
the student aid programs. The Office of Postsecondary Education develops Federal
postsecondary education policies, oversees the accrediting agency recognition
process, and provides guidance to schools. FSA disburses student aid, authorizes
schools to participate in the student aid programs, works with other participants
to deliver services that help students and families finance education beyond high
school, and enforces compliance with FSA program requirements. During this
reporting period, OIG work identified actions that FSA should take to address the
identified weaknesses in program operations and management. Summaries of
these reports follow.

FSA Oversight of Student Loan Servicing
The objective of our audit was to determine whether FSA had established policies
and procedures to mitigate the risk of servicers not servicing federally held student
loans in accordance with Federal requirements. We assessed FSA’s operations as
of September 2017.

Our audit found that FSA’s oversight policies, procedures, and activities collectively
did not provide reasonable assurance that the risk of servicer noncompliance with
requirements for servicing federally held student loans was being mitigated or
reduced.

Specifically, our audit determined that FSA’s oversight activities regularly identified
instances of servicer noncompliance; FSA identified servicer noncompliance in
210 (about 61 percent) of the 343 monitoring reports that we analyzed. FSA routinely
tracked the instances of noncompliance when servicers did not remediate them
before FSA issued a final monitoring report. However, FSA did not track the identified
instances of noncompliance if servicers remediated them. For example, if during the
course of a review, FSA found multiple instances of noncompliance in a sample of
4  Office of Inspector General Semiannual Report




borrower accounts, and the servicer corrected all but one of them during the course
of the review, FSA tracked only the single uncorrected instance of noncompliance.
Further, FSA did not analyze information to track and identify trends and recurring
instances of noncompliance at each servicer and across all servicers. We also found
that FSA rarely used available contract provisions to hold servicers accountable for
instances of noncompliance and did not incorporate a performance metric relevant
to servicer compliance into its methodology for assigning loans to servicers.

Because FSA’s oversight policies, procedures, and activities did not collectively
provide reasonable assurance that the risk of servicer noncompliance was being
mitigated, FSA did not have reasonable assurance that servicers were complying
with Federal loan servicing requirements when handling borrowers’ inquiries.
Additionally, borrowers might not have been protected from poor services, and
taxpayers might not have been protected from improper payments. Also, as it was
not holding loan servicers accountable for instances of noncompliance, FSA did not
provide servicers with an incentive to take actions to mitigate the risk of continued
servicer noncompliance that could harm borrowers.

We made 6 recommendations, including that FSA (1) track all instances of
noncompliance identified during its oversight activities; (2) analyze the records
relevant to noncompliance, identify trends and recurring noncompliance for each
servicer and across all servicers, and use the information as a basis for assessing
servicer performance; and (3) use the contractual provisions available to hold
servicers accountable for instances of noncompliance.

In response to our draft report, FSA stated that it already had or will implement
all of our report recommendations, and it described improvements it has made
to its oversight activities since September 2017. However, FSA strongly disagreed
with the overall conclusion that it did not establish policies and procedures that
provided reasonable assurance that the risk of servicer noncompliance with Federal
requirements was mitigated. We acknowledge that reasonable assurance of risk
mitigation is a matter of management’s risk appetite and risk tolerance. However,
FSA did not explain or provide evidence showing the level of noncompliance
that is acceptable to FSA or the level of noncompliance that would compel FSA
to take enforcement actions against a servicer. Because the post-September 2017
improvements that FSA described in its comments did not occur during our audit
period, we did not evaluate them; however, the improvements as described are
aligned with our recommendations. FSA Oversight of Student Loan Servicing Audit

Compliance with Verification and Reporting
Requirements
To ensure that the information provided by students and parents on the Free
Application for Federal Student Aid (FAFSA) is accurate, the Department requires
colleges and universities to verify financial and demographic data included on
the FAFSA. Schools are then required to report the results of the verification to
the Department. Verification helps ensure that students receive the appropriate
amount of Federal financial aid and is an important control to prevent improper
payments of Federal financial aid. The OIG is conducting a series of audits to
determine whether schools completed verification of applicant data in accordance
                            Office of Inspector General Semiannual Report  5




with Federal requirements and whether they accurately reported the results to the
Department in accordance with Federal guidance. During this reporting period,
we issued the first reports in this series involving three schools: the University of
Houston, the College of Southern Nevada, and MiraCosta College in California. The
results of these audits follow. We will share the findings results of our additional
work once completed.

University of Houston
We found that the University of Houston completed verification of applicant data
in accordance with Federal requirements for 55 of the 60 students in our sample for
award year 2016–2017. However, the school did not properly perform verification
of applicant data in accordance with Federal requirements for 5 of the 60 students.
As a result, the school improperly disbursed about $14,000 in Federal Pell Grant
Program funds for students. Our audit also determined that the University of Houston
accurately reported verification results to FSA for 59 of 60 students included in our
sample. In addition to recommending that FSA confirm that the school returned
the improperly disbursed funding, we recommended that that the school develop
and implement control activities to ensure proper management of its verification
processes. University of Houston agreed with our findings and identified corrective
actions it had taken to address our recommendations. University of Houston Audit

College of Southern Nevada
We found that College of Southern Nevada completed verification of applicant
data in accordance with Federal requirements for all 60 students included in our
sample. We also determined that College of Southern Nevada accurately reported
verification results to FSA for 57 of the 60 students included in our sample. Although
the school did not accurately report verification results for three students, the
inaccurate reporting did not affect the amount of Title IV funds that were disbursed
to the students. We did not have any recommendations for corrective actions.
College of Southern Nevada Audit

                       MiraCosta College
                      We found that MiraCosta generally completed verification
                      of applicant data in accordance with Federal requirements.
                      Specifically, MiraCosta completed verification for 59 of the
                      60 students we reviewed, but did not complete verification
                      after a subsequent Institutional Student Information Record
                      was received for 1 of the 60 students. We also determined that
                      MiraCosta did not accurately report verification results to FSA.
                      Specifically, for 10 of the 60 students sampled, MiraCosta did
                      not accurately report new Central Processing System transaction
                      numbers to the Common Origination and Disbursement System
                      after MiraCosta completed verification. If not corrected, this
                      type of error would enable students to receive more than their
                      Pell lifetime eligibility limit in future award periods. Based on
our findings, we recommended that MiraCosta revise its policies and procedures to
ensure proper placement and review of Institutional Student Information Records,
and that FSA confirm that the school submitted documentation noting that the Pell
Grant data discrepancies identified in our report have been corrected. MiraCosta
6  Office of Inspector General Semiannual Report




College officials agreed with our findings and noted that it had implemented
corrective actions. MiraCosta College Audit


Investigations
Identifying and investigating fraud in the Federal student financial assistance
programs has always been a top OIG priority. The results of our efforts have led to
prison sentences for unscrupulous school officials and others who stole or criminally
misused Federal student aid funds, significant civil fraud actions against entities
participating in the Federal student aid programs, and hundreds of millions of dollars
returned to the Federal government in fines, restitutions, and civil settlements.

Investigations of Schools and School Officials
The following are summaries of OIG investigations and relevant press releases
involving Federal student aid fraud and other fraud involving schools and school
officials.

Two Former Center for Employment Training Employees Pled Guilty in a
Multimillion Dollar Fraud Scheme (Illinois)
In a recent Semiannual Report, we noted that six former employees of the Center
for Employment Training in Chicago were indicted for conspiring to steal millions
of dollars from the Federal student aid programs. During this reporting period, two
of the Center’s former financial aid officers pled guilty for their roles in the scheme.
From 2005 through 2013, the two and their alleged conspirators applied for and
obtained Federal student aid for “ghost students” or students who were ineligible
to receive the funds because they had not graduated from high school or earned
a high school diploma equivalent. The two former employees and their alleged
conspirators created and submitted to the Department fake FAFSAs and other
information making it appear as though the students were eligible to receive the
aid when they were not. As a result of their criminal efforts, the school received at
least $2.9 million in Federal student aid to which it was not entitled.

More Actions Taken in Columbia University’s Teachers College Fraud
Scheme (New York)
As highlighted in previous Semiannual Reports to Congress, a former financial aid
director at Columbia University’s Teachers College and four students were indicted
for participating in a bribery and kickback scam that targeted more than $1.4 million
in stipends, scholarships, and student loans. From 2008 through 2017, the former
director approved excessive cost of attendance figures for the students that did
not comport with their actual needs or costs of living, which increased the amount
of financial aid the students were eligible to receive. She also approved stipends
for the students and created fraudulent request forms for financial awards, which
gave the appearance that professors or other school administrators had requested
the stipends for the students. When the students received the money, they kicked
back hundreds of thousands of dollars to the former director. During this reporting
period, the former financial aid director pled guilty and agreed to forfeit more than
$2 million. Two of the four students also pled guilty, with one agreeing to pay more
than $796,400 in restitution and the second agreeing to pay more than $484,700 in
                           Office of Inspector General Semiannual Report  7




restitution. Two other students were sentenced for their roles in the scheme: one
received a sentence of 1 year and 1 day in prison followed by 3 years of supervised
release and was ordered to pay more than $620,000 in restitution; the second was
sentenced to 3 months in prison followed by 18 months of supervised release and
was ordered to pay more than $166,100 in restitution.

Former Director of HDS Trucking Institute Sentenced to Prison for Fraud
(Arizona)
The former director of HDS Trucking Institute was sentenced to serve 48 months
in prison followed by 5 years of supervised release for fraud. The former director
used his position to implement various schemes to fraudulently steal money from
the school. Among these schemes, the former director deposited HDS students’
financial aid refund balances to bank accounts he controlled and caused the school
to pay fictitious financial obligations he created and deposited the payments into
bank accounts he controlled. In his guilty plea, the former director agreed to pay
more than $1.2 million in restitution. Press Release

Shaw University and a Contractor Agreed to Pay $316,900 to Settle False
Claims Allegation (North Carolina)
Shaw University and one of its contractors agreed to pay $316,900 to settle claims
that they falsely obtained funds from the Department. A former Shaw vice president
and a local building contractor were alleged to have violated the False Claims Act
by making false statements and violating competitive bid requirements to obtain
Department funds. Our investigation found that the two fabricated bids for a
construction contract to evade the Department’s competitive bid requirements
and used those fabricated bids to justify payment of Federal funds. Press Release

Former Owner of Now-Defunct Stenotype Institute of Jacksonville
Sentenced to Prison for Fraud (Florida)
The former owner of the now-defunct Stenotype Institute of Jacksonville was
sentenced to serve more than a year in prison and was ordered to pay more than
$288,000 in restitution for failing to refund Federal student aid. The school was
authorized to receive Federal student aid funds on behalf of its students to cover
tuition, fees, and living expense stipends. The school was required to refund to the
Department or to the student any excess funds it drew on behalf of students within
45 days. Beginning in 2015, instead of refunding the excess funds for students, the
school began tracking the amounts owed in a spreadsheet while the former owner
continued to draw funds from the school for personal use. In total, the former
owner and the school held some $290,000 that should have been returned to the
government, none of which has ever been paid. The school closed in March 2016,
shortly after a Department program review. Press Release

Former Texas Christian University Upward Bound Program Official
Sentenced to Prison for Theft (Texas)
The former assistant director of Texas Christian University’s Upward Bound program
was sentenced for stealing money from the program. For 18 years, the former official
oversaw the payment of funds to Upward Bound program participants. She would
receive $5,000 each month in cash to operate the program, a portion of which she
deposited into her personal checking account for her own use. The former official
8  Office of Inspector General Semiannual Report




was sentenced to serve 5 years in prison. In her plea agreement, the former official
agreed to pay more than $210,000 in restitution. Press Release

Former Trinity Valley Community College Financial Aid Director Pled
Guilty to Fraud (Texas)
The former director of financial aid at Trinity Valley Community College pled guilty
to student aid fraud. From 2016 through 2017, the former official used her position
and access to the school’s records to remove her son, a student at the school, from
academic suspension, thereby allowing him to receive student aid he was not
eligible for. The former director also diverted student aid funds of other students
into her personal bank accounts. As a part of her plea, the former director agreed
to pay more than $61,700 in restitution.

Owner of Regina’s College of Beauty Sentenced to Prison for Conspiracy
to Commit Fraud (North Carolina)
The owner of the now-defunct Regina’s College of Beauty—a for-profit cosmetology
school that operated campuses in North Carolina and Georgia—was sentenced on
charges of conspiracy to commit financial fraud. The owner and the vice president
(who previously pled guilty and was sentenced to prison for her role in the scheme)
failed to remit to students or to the Department students’ credit balance overages
totaling more than $89,000—money that they used for their personal benefit. The
former owner was sentenced to serve 6 months in prison and 6 months of home
confinement, followed by 1 year of supervised release and was ordered to pay
more than $39,300 in restitution.

Former Delgado Community College Financial Aid Official Sentenced for
Bribery (Louisiana)
A former financial aid official at Delgado Community College was sentenced for
bribery. While employed at the school, the former official was responsible for
importing and exporting financial aid files as well as verifying student financial
aid applications. In this position, he had access to all financial aid systems and had
the ability to manually authorize, award, and disburse aid to students. From 2014
through 2016, three Delgado Community College students sought the former official’s
assistance in their appeals because they were not meeting satisfactory academic
progress requirements. The former official used his position to help them obtain
student aid and requested money from them in exchange for doing so. As a result of
his bribes, the former official obtained about $6,700 from the students. The former
official was sentenced to serve 4 years of probation and perform 150 hours of unpaid
community service. He was also ordered to pay $6,700 in restitution. Press Release

City University of New York Medgar Evers Lecturer Sentenced to Prison
for Fraud (New York)
A full-time, tenured lecturer at the City University of New York Medgar Evers College
was sentenced to prison for fraud. The lecturer sold sham certificates of completion
of health care courses to students that the students then used to obtain employment
in the health care field, including at New York City hospitals. From 2013 through 2017,
the lecturer allegedly provided students with the sham certificates in exchange for
fees up to $1,000, money he kept for himself. The lecturer was sentenced to serve
6 months in prison, 6 months of home confinement, and 2 years of supervised
“
                                      Office of Inspector General Semiannual Report  9




                                                           release. He was also ordered to pay
A father and son were indicted                             $20,000 in restitution. Press Release

for allegedly filing hundreds of                           Investigations of
fraudulent college admissions                              Fraud Rings
                                                          Below are summaries and relevant
forms and applications for Federal                        press releases of actions taken over
                                                          the last 6 months against people
student aid and defrauding the                            who participated in Federal student
                                                          aid fraud rings. Fraud rings are
Department out of more than                               large, loosely affiliated groups of

$7.4 million in grants and loans.
                                                          criminals who seek to exploit distance
                                                          education programs in order to
                                                          fraudulently obtain Federal student
                                                          aid. These cases are just a sample of
                                                          the large number of actions taken
           against fraud ring participants during this reporting period.

           Father and Son Indicted for Orchestrating Fraud Ring that Targeted More
           Than $7.4 Million (Arizona)
           A father and son were indicted for allegedly filing hundreds of fraudulent college
           admissions forms and applications for Federal student aid and defrauding the
           Department out of millions of dollars in grants and loans. The two allegedly used
           the identities of more than 300 people—some of which were stolen—to register
           for classes at community colleges in Arizona, Ohio, and elsewhere in order to obtain
           student aid. Upon receiving the grant and loan money for the straw students, the
           colleges disbursed a portion of the financial aid funds onto prepaid debit cards that
           the father and son then used for their own personal expenses. The duo is alleged
           to have targeted more than $7.4 million in Federal student aid funds in the scam.

           All Members of Fraud Ring that Targeted $1.8 Million Now Sentenced to
           Prison (Ohio)
           Three women who orchestrated a $1.8 million student aid fraud scheme have now
           been sentenced. The three women used the identities of hundreds of people—
           including prison inmates—to apply for admissions to and receive Federal student
           aid from several community colleges, including schools in the Maricopa Community
           College District in Arizona. They completed the coursework to make it appear that
           the inmates and others were regular students and had the student aid refunds
           directed to bank accounts they controlled. The first ring member was sentenced
           to serve nearly 7 years in prison and was ordered to pay more than $1.2 million in
           restitution; the second was sentenced to 5 years of supervised release and was
           ordered to pay more than $520,200 in restitution; and the third was sentenced to
           probation and was ordered to pay more than $76,400 in restitution. Press Release

           Criminal Actions Taken Against Members of Fraud Ring that Targeted
           More Than $1.8 Million (Ohio)
           Two people were sentenced and two others pled guilty for their roles in a fraud ring
           that targeted more than $1.8 million in Federal student aid. From 2009 through 2017,
10  Office of Inspector General Semiannual Report




the ring recruited straw students to participate in the scheme. The straw students
provided their personally identifiable information, which ring members used to apply
for admissions to and receive Federal student aid from a number of community
colleges on their behalf. The ring members knew that none of the students had
any intention of attending classes, and many did not have a high school diploma or
equivalent, making them ineligible to receive student aid. The ring charged the straw
students fees to complete their academic coursework as well as fees for counterfeit
high school diploma equivalent certificates or high school transcripts. As a result of
these fraudulent efforts, the ring received more than $1.8 million in Federal student
aid. One of the ring participants was sentenced to serve 114 months in prison
and was ordered to pay more
than $1.8 million in restitution;
the second was sentenced to
serve 66 months in prison and
was ordered to pay more than
$205,700 in restitution. Press
Release

More Actions Taken
Against Members of
Criminal Enterprise
Composed Mostly of
Former Prison Inmates
(Colorado)
In previous Semiannual Reports
to Congress, we highlighted
a case involving nine people,
most connected through family
or periods of incarceration, who
were indicted on charges that
included racketeering and
conspiracy. As we previously reported, three of the nine ring members were sentenced
for their roles in the scheme; during this reporting period, three additional members
were sentenced. The ring used the personally identifiable information of people
to apply for and receive more than $488,500 in student aid. They obtained most
of the information from stolen wallets and from unwitting victims, including from
the business clients of a cleaning company run by one of the participants. Another
participant used her position and access at the Department of Motor Vehicles to
supply additional information needed to complete fraudulent admissions and
student aid applications, and another member used her position in a bank to assist
the ring. One of the three ring members was sentenced to serve 14 years in prison,
the second was sentenced to serve more than 12 years in prison, and the third was
sentenced to serve 180 days in jail.

Leaders of $600,000 Fraud Ring Sentenced (Louisiana)
Two leaders of a fraud ring that sought to obtain more than $600,000 in Federal
student aid were sentenced for their roles in the scheme. From 2008 through 2014,
the ringleaders obtained the personally identifiable information of 38 people—some
with and others without consent—that they used to apply for and receive Federal
                           Office of Inspector General Semiannual Report  11




student aid from a number of schools, including Ashford University, University
of Phoenix, and American Public University. One of the leaders was sentenced to
serve 24 months in prison and 2 years of supervised release and was ordered to
pay more than $141,000 in restitution; the second leader was sentenced to serve
81 months in prison and 3 years of supervised release and was ordered to pay more
than $2,500 in restitution. Press Release

Leader of $257,400 Fraud Ring Sentenced (Michigan)
The leader of a fraud ring was sentenced for using the identities of 100 people to
fraudulently apply for and receive Federal student aid. From 2011 through 2015, the
ringleader electronically enrolled the straw students for classes at colleges located in
Phoenix, Arizona. Once enrolled, the ringleader completed and submitted student
aid applications loaded with false information. She also completed or arranged
coursework on their behalf to make it appear that the people were regularly meeting
their student obligations. Student aid funds in excess of what was needed to cover
the expenses at the colleges were forwarded to the straw students, who kicked
back a portion of those proceeds to the ringleader. The woman was sentenced to
serve 2 years of probation with the first 6 months in home confinement and was
ordered to pay more than $257,400 in restitution.

Leader of $136,600 Fraud Ring Sentenced (California)
The leader of a fraud ring was sentenced for fraudulently obtaining more than
$136,600 in student aid from various California community colleges. The leader
used the identities of others to fraudulently apply for admissions to and receive
Federal student aid from the schools, knowing that none of them intended to go to
classes or use the money for educational purposes. A number of the straw students
were ineligible to receive the aid, including people who were incarcerated, people
who did not have a high school diploma or its equivalent, a 13-year-old child, and a
person who had died. Some of the people had no idea that their information was
being used in the scheme. The leader was sentenced to serve 2 years of probation,
including 14 months in a home detention program, and was ordered to pay more
than $136,600 in restitution.

Investigations of Other Student Aid Fraud Cases
The following are summaries and relevant press releases of the results of additional
OIG investigations into abuse or misuse of Federal student aid.

Man Sentenced to 17 Years in Prison for Orchestrating $12 Million
Identity Theft, Student Aid, and Phony Tax Return Scam (Indiana)
In a recent Semiannual Report to Congress, we highlighted our case with the Internal
Revenue Service Criminal Investigations Division and the U.S. Postal Inspection
Service that led to guilty pleas by two men for using thousands of stolen identities
to fraudulently obtain more than $12 million in Federal funds. During this reporting
period, one of the two men was sentenced to 17 years in prison and was ordered
to pay more than $4.8 million in restitution. The men obtained the stolen identities
in several ways, and in many cases used those stolen identities to obtain taxpayer
information through the Data Retrieval Tool on the Department’s Free Application
for Federal Student Aid website, and used the information to file false tax returns
with the IRS. The two, along with others, directed the Internal Revenue Service to
12  Office of Inspector General Semiannual Report




deposit tax refunds resulting from the false returns onto prepaid debit cards that
they used to purchase money orders at several locations in Indiana and Georgia.

Man Sentenced for Role in $1.1 Million Fraud Scam (Virginia)
A man who used the identities of more than 60 people to fraudulently obtain
Federal student aid was sentenced to serve 111 months in prison and was ordered
to pay more than $1.1 million in restitution. The man initially used the personally
identifiable information of family and friends and enrolled them as students in online
universities for the sole purpose of obtaining student aid. He then expanded his
efforts and targeted low-income residents in the Danville area, where he persuaded
people to provide their personally identifiable information for enrollment purposes,
promising free government money and other benefits. Press Release	

Woman Pled Guilty for Role in Phony Debt Elimination Scheme
(New Jersey)
One of five people who were charged with using phony money orders, cashier
checks, and other fabricated documents that they used to fraudulently discharge
hundreds of thousands of dollars in financial obligations, including student loans,
has pled guilty to her role in the scam. The woman and her alleged conspirators
submitted phony money orders and cashier checks to various financial institutions,
sometimes in amounts larger than the debt owed so they could eliminate the debt
and obtain extra money that they used for their personal benefit. Among the debt
she sought to eliminate was $52,000 in student loans. She sent phony money orders
and cashier’s checks totaling more than $67,000 to the Department. The Department
rejected the payment. Press Release

Three People Target Federal Student Aid at Bossier Parish Community
College in Three Separate Schemes (Louisiana)
During this reporting period, criminal actions were taken against three people
who each orchestrated a fraud scam that targeted Federal student aid at Bossier
Parish Community College. In the first case, a woman was sentenced to 5 years of
probation and was ordered to pay more than $34,500 in restitution for enrolling
people in classes at the school knowing that they had no intention of attending
classes. She completed enrollment forms, student aid applications, and attended
classes using their identities in order to receive the aid. In the second case, a man
completed 20 FAFSAs in other students’ names, completed their admissions and
student aid forms, and attended classes in exchange for a portion of the student
aid. As a result of his fraudulent efforts, the man obtained more than $400,700 in
student aid. In the third case, a woman was indicted for enrolling straw students
in the school. As a result of her alleged criminal actions, she fraudulently received
more than $93,000 in Federal student aid. Press Release

Former State Department Employee Sentenced to Prison for Student
Loan Fraud (Virginia)
A former State Department employee was sentenced for fraudulently discharging
more than $250,000 in student loan debt. From 2013 through 2017, while employed
at the State Department, he was also a supervisor for a security company that
provided protection for a Federal building in Washington, D.C. However, he applied
for a Total and Permanent Disability discharge of more than $200,000 in student
                          Office of Inspector General Semiannual Report  13




loan debt, affirming that he was unable to work and was earning no income. In
2016, he submitted a signed self-certification stating that he did not have any
earned income from 2013 through 2016, when in reality he had earned more than
$300,000 from his two full-time jobs. He was sentenced to serve 15 months in prison
and 3 years of supervised release and was ordered to pay more than $244,800 in
restitution. Press Release

Former Department of the Interior Employee Sentenced for Fraud and
Identity Theft (Kentucky)
A former Department of the Interior employee was sentenced for fraud and
identity theft. The former employee submitted about 40 false loan applications
to 10 lending institutions in the names of her children, her sister, and her niece
to obtain student loans without her relatives’ knowledge or consent. She forged
signatures on applications forms and falsified pay stubs to show false amounts of
income. She was sentenced to serve 36 months in prison and 3 years of supervised
release and was ordered to pay more than $128,200 in restitution.

Internal Revenue Service Employee Sentenced in Student Loan 	
Unemployment Deferment Scam (New Jersey)
An Internal Revenue Service employee was sentenced for making false statements
on student loan deferment forms in connection with two parent PLUS student loans
totaling more than $86,000. The employee submitted unemployment deferment
requests, falsely certifying that she was unemployed when in fact she was employed
with the Internal Revenue Service. The employee also used her work email address
on the deferment requests and submitted some of the requests by an Internal
Revenue Service fax machine. The employee was sentenced to 5 years of probation
and was ordered to pay more than $86,300 in restitution.

Family Members Pled Guilty for Roles in Separate Student Aid Fraud
Scams (Colorado)
Two family members pled guilty to running separate student aid fraud scams. One
of the family members devised a scheme where she fraudulently obtained more
than $30,300 in student aid for purported attendance at the Community College of
Denver and Front Range Community College. She also obtained more than $16,400
in student aid by submitting fraudulent enrollment and financial aid forms to the
Community College of Denver on behalf of her unwitting mother. The woman
spent much of the fraudulently obtained aid on various extravagances, including
gambling, vacations, and cosmetic surgery. The second family member also applied
for and received more than $30,300 in student aid to attend the Community College
of Denver and the Front Range Community College, but did not make a realistic
effort to pursue an education at either institution. She used the funds for personal,
noneducational purchases such as event tickets.
14  Office of Inspector General Semiannual Report




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
   •	   Department of Education Policy Committees. OIG staff participate in an advisory capacity on these
        committees, which were established to discuss policy issues related to negotiated rulemaking for
        student loan regulations and for teacher preparation regulations.

   •	   FBI Cyber Crime Investigations Task Force. The OIG is a member of this task force of Federal, State,
        and local law enforcement agencies conducting cybercrime investigations nationwide, with agents
        physically located in Washington, D.C., and Boston, Massachusetts. OIG agents are currently assisting
        with investigations in Alabama, Connecticut, Florida, Georgia, Louisiana, and Texas associated with
        this task force.

Reviews of Legislation, Regulations, Directives, and Memoranda
   •	   H.R. 640, Student Aid Simplification Act. The OIG provided technical assistance on this bill that
        would authorize the disclosure of tax return information to determine eligibility for student financial
        aid programs under the Higher Education Act.

   •	   Draft Bill, Stop Student Debt Relief Scams Act. The OIG provided technical assistance that would
        criminalize improper access to the Department’s student financial aid systems for fraudulent or private
        financial gain purposes, as recommended in OIG’s 2018 Recommendations for the Reauthorization
        of the Higher Education Act, and require the Department to take various actions to protect students
        from debt relief scams.

   •	   Department’s Revised Draft Notice of Proposed Rulemaking for Borrower Defense. The OIG
        made clarifying recommendations related to efficiency and effectiveness.

   •	   Department’s Draft Notice to Allow Additional Time, Until July 1, 2020 for Institutions to
        Comply with Certain Disclosure Requirements in the Gainful Employment Regulations. The OIG
        continued to recommend that existing student distribution requirements remain in effect because
        schools remain obligated to complete and post on their websites the gainful employment disclosure
        template by July 1.

   •	   Department’s Draft 1 Final Rule for Gainful Employment. The OIG disagreed with the proposed
        elimination of the gainful employment accountability provision.
Office of Inspector General Semiannual Report  15
Elementary,
Secondary,
and Indian
Education
Programs and
Operations
T
         he Department administers more than 100 programs that involve
         55 States and territorial educational agencies, nearly 18,400 public
         school districts, 132,000 schools, and numerous other grantees and
         subgrantees. Effective oversight of and accountability in how these
entities spend the Department funding they receive is vital. Through our
audit work, we identify problems and propose solutions to help ensure that
the Department’s programs and operations are meeting the requirements
established by law and that federally funded education services are reaching the
intended recipients—America’s students. Through our criminal investigations,
we help to protect public education funds for eligible students by identifying
those who abuse or misuse Department funds and helping hold them
accountable for their unlawful actions.
                           Office of Inspector General Semiannual Report  19




Audits
During this reporting period, we completed two audits involving elementary,
secondary, and special education programs and operations. These included our
audit of the Utah State Board of Education’s process for calculating and reporting of
its high school adjusted cohort graduation rate and our audit of the Department’s
Office of Special Education Program’s implementation of its differentiated monitoring
and support system. Summaries of this work follow.

Calculating and Reporting Graduation Rates in Utah
States are required to calculate and report high school adjusted cohort graduation
rates (ACGR) under the Every Student Succeeds Act. The ACGR is considered an
academic indicator that measures student achievement and school performance.
The OIG conducted a series of audits to determine whether State educational
agencies have implemented systems of internal control over calculating and
reporting graduation rates sufficient to provide reasonable assurance that reported
graduation rates were accurate and complete. In previous Semiannual Reports, we
shared the findings of our audits at the Alabama State Department of Education and
the California Department of Education. During this reporting period, we completed
the third and final audit in our series at the Utah State Board of Education (Utah).

Our audit found that Utah’s system of internal control did not provide reasonable
assurance that reported graduation rates were accurate and complete for the time
period covered by our audit (school year 2014–2015). Specifically, Utah did not have
sufficient processes to ensure that (1) ACGR data received from the local educational
agencies were accurate and complete, (2) students who the local educational
agencies identified as graduates in the cohort met State graduation requirements,
and (3) local educational agencies maintained adequate documentation for students
removed from the cohort. Further, we found that Utah did not calculate its ACGR
in accordance with Federal requirements. Utah’s methodology for calculating its
ACGR improperly included students as graduates who earned an alternative award
and did not include all students who should have been reported in the school year
cohort. As a result of the issues identified, Utah’s reported ACGR was not accurate and
complete and, based on our analysis, was about 1.3 percentage points higher than it
should have been. This means that both Utah and the Department are at risk of using
20  Office of Inspector General Semiannual Report




inaccurate and incomplete data
when describing and reporting
on Utah’s progress towards raising
its graduation rate and when
using Utah’s graduation rate as
an academic indicator to measure
student achievement and school
performance for accountability
purposes.

Based on our findings, we
recommended that the Department
require Utah to ensure that local
educational agencies have internal
controls regarding the accuracy
and completeness of ACGR data,
establish local educational agency
accountability for maintaining
adequate documentation for
students removed from the
cohort, develop and implement
a risk-based monitoring process,
and ensure that local educational agencies conform to Federal guidance for
maintaining required documentation supporting student removal from a cohort.
We also recommended that it require Utah to update its ACGR methodology for
future school years to ensure that its calculation accurately includes all students
who should be included in the cohort and does not count students as graduates
if they earn a diploma or certificate that does not meet the Federal definition of a
regular high school diploma, that it review prior year cohorts that were inaccurately
reported to the Department and correct the ACGR for those years or note that the
ACGR was not accurate, and that it document its policies and procedures related to
calculating and reporting the ACGR to the Department in accordance with Federal
requirements. Utah agreed with our findings and described actions it was taking
to address our recommendations. Utah Audit

Office of Special Education Programs’ Differentiated
Monitoring and Support
The Individuals with Disabilities Education Act, as amended, was enacted to ensure
that children with disabilities have access to a free and appropriate public education
and to protect the rights of children with disabilities and their parents. States,
school districts, and other local educational agencies are primarily responsible for
providing a free and appropriate education to children with disabilities. Through
the Individuals with Disabilities Education Act, as amended, the Department
awards Special Education Grants to States for this purpose, providing more than
$11.9 billion for FY 2017. Within the Department, the Office of Special Education
Programs (OSEP) is responsible for administering this program. OSEP uses the
Differentiated Monitoring and Support (DMS) system to fulfill its responsibilities
to mitigate potential risks and to help OSEP use its resources wisely.
                           Office of Inspector General Semiannual Report  21




During this reporting period, we concluded an audit that sought to evaluate OSEP’s
implementation of its DMS component under the results driven accountability
initiative. We found that OSEP needs to enhance its internal controls to help ensure
that it plans and conducts DMS properly and consistently across all States. Specifically,
OSEP did not have sufficient policies and procedures for how personnel should
perform and document the four phases of DMS: (1) performing organizational
assessments, (2) designating engagement levels, (3) issuing notices and charts to
States, and (4) conducting and documenting tasks and activities. OSEP developed
a partial framework for the four phases of DMS, including templates for personnel
to record information for each DMS phase, written instructions for performing
organizational assessments, and written guidance for documenting tasks and
activities; however, OSEP did not develop written policies or procedures for the DMS
phases on designating engagement levels and issuing notices and charts to States.
OSEP also did not have a document retention policy for DMS. Further, the written
instructions and guidance that OSEP developed for DMS lacked sufficient detail on
key processes that personnel should perform or information that personnel should
record in the templates. OSEP’s written instructions also did not provide guidance on
how OSEP personnel should review information related to DMS, such as organizational
assessments or notices and charts issued to States. In addition to these issues, we
identified limitations in OSEP’s ability to obtain or verify the Technical Assistance
Accessed data it used in its organizational assessments. When OSEP does not assess
State risks using applicable and consistent data, it may designate an improper DMS
engagement level for the State. Further, without proper or sufficient documentation
of DMS activities, OSEP may lack evidence that it is effectively supporting States in
their efforts to educate children with disabilities, improve educational results for
such children, and ensure equal protection under the law.

Based on our finding, we recommended that OSEP improve its internal controls over
the DMS component, including (1) developing and implementing written policies and
procedures for how its personnel will prepare, review, and approve organizational
assessments and designate engagement levels; (2) developing and implementing
written policies and procedures for how its personnel will prepare, review, and
approve notices and charts it issues to the States; (3) enhancing written policies
and procedures on documenting DMS tasks and activities; and (4) establishing and
implementing a formal DMS document retention policy that ensures all relevant
documents are readily accessible to OSEP and maintained as official records. OSEP
did not explicitly agree with our finding or specific recommendations but was
already taking actions to strengthen DMS. OSEP Audit


Investigations
OIG investigations in the elementary, secondary, and adult education areas include
criminal investigations involving bribery, embezzlement, and other criminal activity,
often involving State and local education officials, vendors, and contractors who
have abused their positions of trust for personal gain. Examples of some of these
investigations and relevant press releases follow.
22  Office of Inspector General Semiannual Report




Investigations of School Officials and Contractors
The following are summaries of OIG investigations involving K–12 school officials
and contractors.

Former Grant-Goodland Public School Superintendent Sentenced to
Prison for Stealing More than $1 Million (Oklahoma)
The former superintendent of the Grant-Goodland Public School system was
sentenced to serve 108 months in prison and was ordered to pay more than
$1 million restitution for fraud and Federal programs embezzlement. From
2010 through 2016, the former superintendent, with assistance from a school
employee, created phony invoices, purchase orders, and payment requests in
the names of legitimate school district vendors, prepared and presented checks
to the school board for payment of those purchases and services that were
never provided, converted the checks to be payable to himself, and pocketed
the money. Press Release

Former Swink Public Schools Treasurer Pled Guilty to Theft
(Oklahoma)
The former treasurer of Swink Public Schools pled guilty to stealing more than
$42,700 from the school district. From 2012 through 2015, the former treasurer
wrote checks to herself and others unrelated to school business. In her plea
agreement, the former treasurer agreed to pay more than $42,730 in restitution.
Press Release

Former High School Counselor Pled Guilty to Fraud (West Virginia)
A former counselor at Greenbrier West High School pled guilty to fraud charges
for using her position to alter the grades of her two daughters to receive merit-
based and Federal student aid to which they were otherwise not entitled. The
former counselor abused her access to the West Virginia Education Information
System—the State’s system that manages student records, including grading for
all active, inactive, and graduated students—and altered more than 35 grades
for her daughters; some were changed several years after the original grades
were posted. As a result of her actions, the girls fraudulently received more than
$10,000 in merit-based and Federal student aid. Press Release

Brainstrong Agrees to $250,000 Settlement (Puerto Rico)
Brainstrong, a company that provided after-school tutoring services under
contract with the Puerto Rico Department of Education (Puerto Rico), agreed to
pay $250,000 to settle claims that its payment invoices or claims to Puerto Rico
violated the False Claims Act. Brainstrong was alleged to have billed Puerto Rico
for tutoring services and other remedial academic services that it did not perform.

Investigations of Charter Schools and Charter
School Officials
The following are summaries and relevant press releases of OIG criminal
investigations involving charter schools and charter school officials. These
now-former school leaders were in control of or in positions overseeing Federal
education programs.
                             Office of Inspector General Semiannual Report  23




Founder of Southwest Learning Centers Charter Schools Sentenced to
Prison, Ordered to Pay $3 Million in Restitution for Running 15-Year Fraud
Scheme (New Mexico)
The founder of Southwest Learning Centers, a group of public charter schools
that he established in Albuquerque, was sentenced to prison for running a 15-year
scheme aimed at defrauding millions of dollars from the schools. Starting in 2000,
the founder devised a series of schemes to defraud the schools for his personal
benefit, including purchasing buildings under the name of one company and
charging the schools exorbitant rates for rental space, making more than $700,000
in profits, and charging students for online courses, diverting more than $1 million
of those payments away from the schools and into bank accounts he controlled.
He also created and submitted fraudulent proposals and invoices from a bogus
business he created for services never produced or provided, and used most of
the money for his personal benefit, including $199,000 to pay down a personal
line of credit, $50,000 to his personal bank account, $12,000 for personal items, and
$4,000 at a casino in Las Vegas. The founder was sentenced to serve 60 months in
prison followed by 3 years of supervised release and was ordered to pay $3 million
in restitution. Press Release

Criminal Actions Taken Against Celerity Educational Group Founder and
a Former Chief Executive Officer for Roles in $2.5 Million Fraud Scheme
(California)
The founder and former chief executive officer of Celerity Educational Group,
a nonprofit company that owned and operated charter schools, pled guilty for
misappropriating about $2.5 million in public education funds awarded to several
Celerity charter schools. Another former chief executive officer was indicted for
her role in the scheme. The founder used the money to pay for personal expenses,
including first-class air travel, fine dining, and luxury goods from shops in Beverly Hills
and Tokyo. Money was also used to purchase a building for another charter school
in Ohio, monthly rent and renovations at a soundstage and recording studio that
Celerity students rarely used, and leather-making equipment used by a for-profit
                                                  company the founder and her family was
                                                  involved with. To cover up the theft, the
                                                  founder, and allegedly other Celerity
                                                  leaders, falsely certified to Federal, State,
                                                  and local authorities that they were
                                                  complying with all rules and regulations
                                                  governing the use of the public funds
                                                  that they received. Press Release

                                                 Director of Now-Closed Bradley
                                                 Academy of Excellence Pled
                                                 Guilty, Other Officials Indicted
                                                 for Roles in $2.5 Million Fraud
                                                 Scheme (Arizona)
                                                 The former director of the now-defunct
                                                 Bradley Academy of Excellence pled
                                                 guilty to participating in a $2.5 million
                                                 conspiracy. Two other officials, the former
24  Office of Inspector General Semiannual Report




principal and the former registrar, were indicted by a State Grand Jury for their
alleged roles in the scam. From 2016 through 2018, the former director and his
alleged conspirators fraudulently overreported the number of students enrolled
in the school in order to receive additional funding they were otherwise not
entitled to receive. For school year 2016–2017, the school reported 652 enrolled
students; however, 191 of them were fraudulent; for school year 2017–2018, the
school reported 528 enrolled students, 453 of whom were fraudulent. As a result
of the false reporting, the school received about $2.5 million from the State and
the Federal government. Press Release (Director), Press Release (Principal, Registrar)
                                                     Office of Inspector General Semiannual Report  25




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Federal and State Audit-Related Groups

    •	   Association of Government Accountants Partnership for Management and Accountability. The
         OIG participates in this partnership that works to open lines of communication among Federal, State,
         and local governmental organizations with the goal of improving performance and accountability.

    •	   Intergovernmental Audit Forums. OIG staff serve on a number of intergovernmental audit forums,
         which bring together Federal, State, and local government audit executives who work to improve audit
         education and training and exchange information and ideas regarding the full range of professional
         activities undertaken by government audit officials.

Reviews of Legislation, Regulations, Directives, and Memoranda
    •	   Department’s FY 2018 Agency Financial Report. The OIG recommended that the Department
         highlight ESSA requirements/related activities aimed at fraud reduction/program accountability.

    •	   Revised Grant Bulletin 18-02, The Official Grant File for Discretionary Grant Programs. The OIG
         made technical comments.

    •	   Department’s Data Integration Strategy: New Data Standards for the Next-Generation Grants
         Management System (in response to OMB’s Memorandum re: DATA Act Requirements, Strategies
         to Reduce Grant Recipient Reporting Burden). The OIG made technical comments.
Department
Management
and Operations
E
         ffective and efficient business operations are critical to ensure that
         the Department effectively manages and safeguards its programs
         and protects its assets. Our reviews in this area seek to help the
         Department accomplish its objectives by ensuring its compliance
with applicable laws, policies, and regulations and the effective, efficient, and
fair use of taxpayer dollars with which it has been entrusted.
                          Office of Inspector General Semiannual Report  29




Audits
OIG work completed over the last 6 months in this area includes statutory audits
involving information technology security, and financial management, as well as
reviews of the Department’s processing of Family Educational Rights and Privacy
Act complaints, and risks associated with the Department’s use of government
purchase cards. Summaries of this work follow.

Information Technology Security
The E-Government Act of 2002 recognized the importance of information security
to the economic and national security interests of the United States. Title III of the
E-Government Act, the Federal Information Security Management Act of 2002, as
amended by the Federal Information Security Modernization Act of 2014 (FISMA),
requires each Federal agency to develop, document, and implement an agency-
wide program to provide security for the information and information systems
that support the operations and assets of the agency, including those provided or
managed by another agency, contractor, or other source. It also requires inspectors
general to perform independent evaluations of the effectiveness of their agency’s
information security programs.

Our FY 2018 FISMA review reporting metrics were grouped into five cybersecurity
framework security functions that have a total of eight metric domains, as outlined
in the National Institute of Standards and Technology’s Framework for Improving
Critical Infrastructure Cybersecurity. The five functions and their associated metric
domains are Identify (Risk Management); Protect (Configuration Management, Identity
and Access Management, Data Protection and Privacy, and Security Training); Detect
(Information Security Continuous Monitoring); Respond (Incident Response); and
Recover (Contingency Planning). Using this framework, we assessed the effectiveness
of each security function using maturity level scoring prepared in coordination with
the Office of Management and Budget and the Department of Homeland Security.
The scoring distribution is based on five maturity levels: (1) Ad-hoc, (2) Defined,
(3) Consistently Implemented, (4) Managed and Measurable, and (5) Optimized.
Level 1, Ad-hoc, is the lowest maturity level and Level 5, Optimized, is the highest
maturity level. For a security function to be considered effective, agencies’ security
programs must score at or above Level 4, Managed and Measurable.
30  Office of Inspector General Semiannual Report




FY 2018 FISMA Review Results
As guided by FY 2018 FISMA Metrics, we found that the Department and FSA were
not effective in any of the five security functions—Identify, Protect, Detect, Respond,
and Recover. We also identified findings in all eight metric domains, of which seven
are repeat findings. Repeat findings are current report findings with the same or
similar conditions contained in prior Office of Inspector General reports. At the
metric domain levels, we determined that the Department’s and FSA’s programs
were consistent with the maturity level of Defined for Configuration Management,
Identity and Access Management, Data Protection and Privacy, Security Training,
Information Security Continuous Monitoring, and Incident Response. “Defined”
means policies, procedures, and strategy are formalized and documented but not
consistently implemented. We determined the programs were consistent with the
maturity level of Consistently Implemented for Risk Management and Contingency
Planning. “Consistently Implemented” means policies, procedures, and strategy are
consistently implemented, but quantitative and qualitative effectiveness measures
are lacking. The Department demonstrated some improvement from FY 2017 in
several metric areas, most notably in contingency planning where the maturity level
improved from Defined to Consistently Implemented. While the overall maturity
level did not improve for Risk Management, Configuration Management, and
Incident Response, the Department did make improvement on individual metric
scoring questions in each of these functions. For example, the Department improved
from consistently implemented to optimized for two Risk Management metric
questions. Specifically, we found the Department and FSA have improved their risk
management programs by implementing the Department’s Cybersecurity Framework
Risk Scorecard used to perform regular framework-based risk assessments, identify
gaps and improvement opportunities, enhance incident response capabilities, and
protect its network assets and data.

                                                   To address the issues identified,
                                                   we made 45 recommendations
                                                   (28 of which were rep eat
                                                   recommendations) to assist
                                                   the Department and FSA with
                                                   increasing the effectiveness of their
                                                   information security programs.
                                                   These recommendations will
                                                   help the Department and FSA
                                                   fully comply with all applicable
                                                   requirements of FISMA, the Office
                                                   of Management and Budget,
                                                   the Department of Homeland
                                                   Security, and the National Institute
                                                   of Standards and Technology.
                                                   The Department agreed with 39
                                                   recommendations, partially agreed
                                                   with 4 recommendations, and did
                                                   not agree with 2 recommendations.
                                                   FY 2018 FISMA Audit
                          Office of Inspector General Semiannual Report  31




Financial Management
One of the purposes of the Chief Financial Officers Act of 1990 is to improve agency
systems of accounting, financial management, and internal controls to ensure the
reporting of reliable financial information and to deter fraud, waste, and abuse
of government resources. The act requires an annual audit of agency financial
statements, which is intended to help improve an agency’s financial management
and controls over financial reporting. A summary of our FY 2018 financial statements
audits follows.	

FY 2018 Financial Statements Audits
The OIG’s contracted auditors found that the FY 2018 financial statements for the
Department and FSA were presented fairly in all material respects, in accordance
with generally accepted accounting principles. However, the auditors identified
one material weakness and one significant deficiency in internal control over
financial reporting. First, the auditors found material weaknesses in controls over
management’s documentation and analysis of the models use to estimate student
loan portfolio costs, controls over the completeness and accuracy of data elements
used in the models, and controls to ensure that certain data extracts related to
the total exposure amount for loan guarantees were complete and accurate. The
auditors noted that although the Department and FSA had controls related to the
accounting and reporting of loan programs, the weaknesses in processes, procedures,
and controls impacted management’s ability to prevent, detect, and correct errors
in the loan cost re-estimate process, which could lead to a material misstatement
of the financial statements. Second, the auditors noted information technology
control deficiencies related to logical access in the Department’s network and in
one application system, access and change control in two application systems, and
in program development where evidence of data validation upon system migration
to a new data center was not available. Additionally, management had not fully
remediated prior year weaknesses related to logical access administration, user
access removal, user access reviews, and recertification and system configuration
management. Ineffective information technology controls increase the risk of
unauthorized use, disclosure, disruption, modification, or destruction of information
and information systems that could impact the integrity and reliability of information
processed in the associated applications, which could lead to misstatements of the
financial statements.

The auditors also found an instance of noncompliance involving a provision of the
Debt Collection Improvement Act of 1996, as amended by the Digital Accountability
and Transparency Act of 2014, which requires Federal agencies to notify the Secretary
of the Treasury of debts that are more than 120 days delinquent—60 days earlier than
the previous 180 days requirement. The auditors found that due to the number of
entities and systems involved in handling student loan debts and the decentralized
nature of such processes, FSA was not yet capable of meeting this accelerated
timeline. Accordingly, as of September 30, 2018, the Department and FSA were not
in compliance with the requirement to refer student debt delinquent for 120 days
to the Department of the Treasury. FY 2018 Department Report, FY 2018 FSA Report
32  Office of Inspector General Semiannual Report



FY 2018 Closing Package Financial Statements
The OIG contracted auditors found that the Department’s FY 2018 Closing Package
Financial Statements were presented in accordance with generally accepted
accounting principles. The auditors identified no material weakness in internal
control over financial reporting and no instances of reportable noncompliance
with Federal law. The Department concurred with the auditors’ report. FY 2018
Closing Package Report

Department’s Processing of Family Educational Rights and Privacy Act 	
Complaints
The Family Educational Rights and Privacy Act (FERPA) grants certain rights and
privacy protections to parents and students regarding student education records.
FERPA applies to all schools (elementary, secondary, and postsecondary) that
receive Federal education funding under any applicable program administered
by the Department, as well as to educational agencies such as school districts and
State departments of education. FERPA affords rights to parents of students under
18, but those rights transfer to students when they turn 18 or begin attending
postsecondary school. Under FERPA, parents or students can review the student’s
education record maintained at the school and can request that the school correct
records they believe to be inaccurate, misleading, or that violate the student’s rights
to privacy. Parents and eligible students also have the right to file a complaint with
the Department if they believe their FERPA rights have been violated. FERPA requires
the Department to establish an office for the purpose of investigating, processing,
reviewing, and resolving FERPA violations or complaints and to take appropriate
actions to enforce the law.

During this reporting period, we concluded an audit assessing whether the Office of
the Chief Privacy Officer (Privacy Office)—the office responsible for administering
FERPA at the time of our audit—had controls in place to ensure that it timely and
effectively processed FERPA complaints. For the period covered by our review,
we determined that it did not. The Privacy Office had a long-standing backlog of
unresolved FERPA complaints; Privacy Office officials estimated they were about
2 years behind on complaint investigations. However, based on the number of open
complaints and the number of complaint investigations that the Privacy Office had




                                          “
recently closed, we concluded that the backlog may be significantly greater than
2 years. Multiple factors contributed to the backlog, including a lack of resources to
timely investigate all complaints
and unresolved FERPA policy
issues that impede complaint
investigations.                                       When a school inappropriately
The Privacy Office had an                             discloses personal information
opportunity to reduce or
eliminate the complaint backlog                       from a student’s education
beginning in FY 2015 when
it received authority to hire
                                                      record, the student can face
additional staff for the student                      consequences including a loss
privacy function. However,
despite the significant complaint                     of reputation, harassment, and
backlog, the Privacy Office
                                                      retaliation.
                           Office of Inspector General Semiannual Report  33




dedicated the majority of the new resources to performing FERPA work unrelated
to resolving existing complaints.

We also identified a number of weaknesses in the Privacy Office’s processes for
resolving complaints. The Privacy Office’s tracking process for FERPA complaints
was inadequate and did not enable the Privacy Office to identify the number of
individual complaints it had received or track the status of all complaints through
the resolution process. As a result, the Privacy Office did not have reliable data on
its effectiveness in resolving complaints and could not set meaningful performance
goals or evaluate its performance. The Privacy Office’s processes also lacked
consistency and in some cases were not appropriate, in part because the Privacy
Office had not implemented written policies and procedures to guide personnel.
Many critical decisions were left to the discretion of caseworkers and managers did
not sufficiently oversee the work, which led to inconsistency in complaint handling.
The Privacy Office also did not always communicate effectively with complainants
during the complaint resolution process. Finally, the Privacy Office generally processed
complaints in the order they were received rather than evaluating the risk of each
complaint and prioritizing the complaints with the highest risk or most significant
potential adverse impact.

FERPA violations can have significant ramifications for students. Because of weaknesses
in its FERPA complaint resolution processes, the Privacy Office did not ensure
the timely remediation of violations, which may have compounded the adverse
impact on students. For example, when a school inappropriately discloses personal
information from a student’s education record, the student can face consequences
including a loss of reputation, harassment, and retaliation. Further, when a school
denies a student the opportunity to access, review, and correct the information
in their education record, the student can lose out on important educational or
employment opportunities. Complainants rely on the Privacy Office to take timely
enforcement action on their complaints when warranted.

Based on our findings, we made a number of recommendations, including addressing
the complaint backlog and correcting the control weaknesses associated with its
complaint resolution processes. Specific recommendations included (1) allocating
appropriate resources to eliminate the current unresolved complaint backlog so
that it can resolve complaints in a timely manner going forward; (2) resolving FERPA
policy issues that affect its ability to resolve certain complaints; and (3) eliminating
control weaknesses by developing written policies and procedures, implementing
an effective tracking process, and developing performance standards for complaint
resolution. The Department agreed with the finding and all recommendations and
described corrective actions that it had taken or planned to take to address each
of the recommendations. FERPA Audit

Purchase Card Risk Assessment
As required by the Government Charge Card Abuse Prevention Act of 2012, the OIG
performed a review to analyze the risk of illegal, improper, and erroneous purchases
and payments made through the Department’s purchase card program, and to
use the results to determine the scope, frequency, and number of periodic audits
of purchase card transactions to perform in the future. Based on our review of the
Department’s FY 2018 purchase card data, we determined that the purchase card
34  Office of Inspector General Semiannual Report




program does not pose a high risk to the Department and an audit of the program
was not necessary. FY 2018 Purchase Card Risk Assessment


Investigations
The following is a summary of an OIG investigation involving Department employees.

Director of Department’s Office of Security Reassigned
As a result of an OIG investigation, the Director of the Department’s Office of
Security, Facilities, and Logistics Services (Office of Security) has been reassigned
and removed from the ranks of the Senior Executive Service. The OIG received
an allegation that high-ranking staff within the Office of Security were carrying
firearms in Department buildings without proper authorization. This included two
GS-15 employees. We found that the U.S. Marshals Service’s special deputation
authorizations for these two GS-15 employees had expired in 2015. In August 2016,
Department officials ordered the Director of the Office of Security, a member of the
Senior Executive Service, to disarm the employees and lock up the firearms. The
Director, however, instructed the staff to continue carrying their firearms despite
no longer being authorized to do so, and although the staff were aware of the
order to disarm and the lack of legal authorization, they followed the instructions
of the Director. After presenting the results of our investigation to the Department’s
Office of Management, the Director was reassigned and removed from the ranks of
the Senior Executive Service. The Office of Security employees were not formally
disciplined and were alternatively required to attend training classes related to
government ethics and internal controls, topic areas all Department employees
are required to take.
                                                       Office of Inspector General Semiannual Report  35




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Department

   •	   Department of Education Senior Assessment Team. The OIG participates in an advisory capacity
        on this team that provides oversight of the Department’s assessment of internal controls and related
        reports. The team also provides input to the Department’s Senior Management Council concerning the
        overall assessment of the Department’s internal control structure, as required by the Federal Managers’
        Financial Integrity Act of 1982 and Office of Management and Budget Circular A-123, “Management’s
        Responsibility for Internal Control.”

   •	   Department of Education Investment Review Board and Planning and Investment Review
        Working Group. The OIG participates in an advisory capacity in these groups that review technology
        investments and the strategic direction of the information technology portfolio.

   •	   Department Human Capital Policy Working Group. The OIG participates in this group that meets
        monthly to discuss issues, proposals, and plans related to human capital management.

Review of Legislation, Regulations, Directives, and Memoranda
   •	   S. 375, Payment Integrity Information Act of 2019. The OIG provided technical suggestions on
        this bill and noted its concerns with the bill’s expansion of the scope and complexity of OIGs’ annual
        compliance reviews and restricting OIGs’ ability to plan work in the areas identified by OIGs as significant
        management challenges and areas of higher risk.

   •	   Department Directive, Contractor Employee Personnel Security Screenings. The OIG made
        technical comments.

   •	   Department Directive, Voluntary Separations before Resolution of a Personnel Investigation,
        Draft HCP 715. The OIG made technical comments.

   •	   Department Directive, Controlled Unclassified Information Program. The OIG made technical
        comments.

   •	   Department Directive, Duty to Cooperate with the IG. The OIG made technical changes and
        submitted to the Department for review.
Other
OIG Efforts
I
    n this section of our Semiannual Report, you will find information on
    other efforts completed during this reporting period specific to the OIG,
    specifically our non-Federal audit-related work.
                            Office of Inspector General Semiannual Report  39




Non-Federal Audit Activities
The Inspector General Act of 1978, as amended, requires that inspectors general
take appropriate steps to ensure that any work performed by non-Federal auditors
complies with Government Auditing Standards. To fulfill these requirements, we
perform a number of activities, including conducting quality control reviews of
non-Federal audits, providing technical assistance, and issuing audit guides to
help independent public accountants performing audits of participants in the
Department’s programs.

Quality Control Reviews
The Office of Management and Budget’s “Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards” requires entities, such
as State and local governments, universities, and nonprofit organizations that spend
$750,000 or more in Federal funds in one year to obtain an audit, referred to as a
“single audit.” Additionally, for-profit institutions and their servicers that participate
in the Federal student aid programs and for-profit lenders and their servicers
that participate in specific Federal student aid programs are required to undergo
annual audits performed by independent public accountants in accordance with
audit guides that the OIG issues. These audits assure the Federal government that
recipients of Federal funds comply with laws, regulations, and other requirements
that are material to Federal awards. To help assess the quality of the thousands
of audits performed each year, we conduct quality control reviews of a sample of
audits. The Council of Inspectors General on Integrity and Efficiency (CIGIE) issued
the following guidance regarding the classification of quality control review results.

    •	   Pass—audit documentation contains no quality deficiencies or only minor
         quality deficiencies that do not require corrective action for the audit under
         review or future audits.

    •	   Pass with Deficiencies—audit documentation contains quality deficiencies
         that should be brought to the attention of the auditor (and auditee, as
         appropriate) for correction in future audits.

    •	   Fail—audit documentation contains quality deficiencies that affect the
         reliability of the audit results or audit documentation does not support
40  Office of Inspector General Semiannual Report




         the opinions contained in the audit report and require correction for the
         audit under review.

During this reporting period, we completed 24 quality control reviews of engagements
conducted by 19 independent public accountants. We concluded that 6 (25 percent)
were Pass, 3 (12.5 percent) were Pass with Deficiencies, and 15 (62.5 percent) were Fail.

When a quality control review receives a rating of Fail, the independent public
accountant must resolve the deficiencies identified. If the independent public
accountant does not adequately resolve the deficiencies, we may find the audit
report is not reliable and we will recommend that the report be rejected. During
this reporting period, we recommended that FSA reject the audit report of one
institution, and FSA did. We also referred four independent public accountants to the
American Institute of Certified Public Accountants and/or to the appropriate State
Boards of Accountancy for possible disciplinary action. We made these referrals due
to the independent public accountants’ unacceptable audit work. We are currently
awaiting the results of these referrals.

Technical Assistance
The OIG’s Non-Federal Audit Team is also
dedicated to improving the quality of non-
Federal audits through technical assistance and
outreach to independent public accountants
and others, including auditee officials and
Department program officials. Technical
assistance involves providing advice about
standards, audit guides and guidance, and
other criteria and systems pertaining to
non-Federal audits.

During this reporting period, we conducted
a training session focused on the audit guide,
Guide for Audits of Proprietary Schools and
for Compliance Attestation Engagements of
Third-Party Servicers Administering Title IV
Programs. The training was provided to financial
aid professionals and auditors at the 2018 Federal Student Aid Training Conference.
Other topics covered included audit guide frequently asked questions, common
quality control review deficiencies, and common documentation weaknesses.

Also during this reporting period, the OIG developed a reporting system to better
track audit deficiencies identified through quality control reviews. This type of
tracking will allow us to focus our resources on training and outreach activities to
address common audit quality issues. It will also enable the OIG to evaluate whether
its technical assistance is effective in reducing the amount of repeat deficiencies. We
have collected information about the results of quality control reviews of FY 2017
audits. We used those results to update our list of frequently asked questions and to
compile a list of common quality control review deficiencies, which were discussed
during training sessions. We will also use the FY 2017 audits as a baseline to compare
future quality control review results.
                           Office of Inspector General Semiannual Report  41




Congressional Testimony
During this reporting period, the OIG testified before the U.S. House of Representatives
Appropriations Subcommittee on Labor, Health and Human Services, Education,
and Related Agencies. A summary of the testimony follows.

Loan Servicing Oversight Audit
On March 6, 2019, Assistant Inspector General for Audit Bryon Gordon testified
before the U.S. House of Representatives Appropriations Subcommittee on
Labor, Health and Human Services, Education, and Related Agencies on the
OIG’s recent audit of FSA’s oversight of student loan servicing. Assistant
Inspector General Gordon shared with the subcommittee the audit objectives,
findings, and recommendations, specifically noting that the audit found that
FSA’s oversight policies, processes, and activities collectively did not
provide reasonable assurance that the risk of servicer noncompliance
with requirements for servicing Federally held student loans was being
mitigated or reduced. He also noted that FSA rarely used available contract
accountability provisions to hold servicers accountable for instances of
noncompliance and did not incorporate a performance metric relevant to
servicer compliance into its methodology for assigning loans to servicers. As a
result, FSA did not have reasonable assurance that servicers were complying
with Federal loan servicing requirements when handling borrowers’ inquiries,
borrowers might not have been protected from poor services, and taxpayers
might not have been protected from improper payments. He also stated
that because it was not holding loan servicers accountable for instances
of noncompliance, FSA did not provide servicers with an incentive to take
actions to mitigate the risk of continued servicer noncompliance that
could harm students. Congressional Testimony


Other OIG Reports & Efforts
During this reporting period, the OIG issued three reports specific to the
OIG mission and goals, including the required Management Challenges report.
The OIG also launched its official podcast series, “Eye on ED.” Summaries of
these efforts follow.

FY 2019 Management Challenges
In October, the OIG issued its FY 2019 Management Challenges Report, a statutorily
required report that highlights the most serious management challenges
the Department faces and actions the Department needs to take to address
them. To identify these challenges, the OIG routinely examines past audit,
inspection, and investigative work and reports issued by the Government
Accountability Office, including reports issued to management where
corrective actions have yet to be taken; assesses ongoing audit,
inspection, and investigative work to identify significant vulnerabilities; and
analyzes new programs and activities that could pose significant challenges
because of their breadth and scope. For FY 2019, the OIG identified four
management challenges: (1) improper payments, (2) information technology
security, (3) oversight and monitoring, and (4) data quality and reporting.
FY 2019 Management Challenges Report
42  Office of Inspector General Semiannual Report




FY 2019 Annual Plan
In November, the OIG issued its FY 2018 Annual Plan, which presents the major
initiatives and priorities that we intend to undertake to assist the Department
in fulfilling its responsibilities to America’s taxpayers and students. It details the
assignment areas and resources the OIG plans to devote to evaluating the efficiency,
effectiveness, and integrity of Department programs and operations. It incorporates
suggestions from Department leaders, the Office of Management and Budget, and
members of Congress. FY 2019 Annual Plan

FY 2018 Small Business Innovation Research Report
In October, the OIG issued its statutory report on OIG investigations involving the
Small Business Innovation Research program. The National Defense Authorization
Act for FY 2012 requires the inspector general of a Federal agency that participates
in the program to submit an annual report describing its investigations involving
those programs. The Department participates in the Small Business Innovation
Research program, although it is a relatively small program within the agency. As
reported, for FY 2018, no cases involving the Small Business Innovation Research
program were referred to the OIG. FY 2018 SBIR Report

Eye on ED Podcasts
During this reporting period, the OIG
launched its official podcast series, “Eye
on ED.” Each episode of Eye on ED features
interviews, discussions, and summaries
of OIG work, including its audits, criminal
investigations, and other special reports
and efforts. During this reporting period,
the OIG released two episodes: the first
discussing our audit of the Department’s
processing of Family Educational Rights
and Privacy Act, or FERPA, complaints, and
the second summarizing our audit of FSA’s
oversight of student loan servicing. OIG staff write, produce, and are featured on
Eye on ED podcasts, which are available on the OIG’s website. Eye on ED Podcast
                                                      Office of Inspector General Semiannual Report  43




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Federal Government

    •	   Government Accountability Office Domestic Working Group. Before her retirement on
         November 30, 2018, Inspector General Tighe served on this working group focused on advancing
         accountability in Federal, State, and local government.

Inspector General Community

    •	   Council of the Inspectors General on Integrity and Efficiency (CIGIE). OIG staff continue to play an
         active role in CIGIE efforts. Before her retirement, Inspector General Tighe was the at-large member of
         CIGIE’s Executive Council, as well as a member of CIGIE’s Audit Committee. Acting Inspector General
         Bruce is a member of the Audit Committee and the Information Technology Committee.

         OIG staff serve on the following CIGIE committees, subcommittees, and work groups:

            •	   Information Technology Investigations Subcommittee (Chair)
            •	   Assistant Inspector General for Investigations Subcommittee
            •	   Assistant Inspector General for Management Working Group
            •	   Council of Counsels to the Inspectors General
            •	   Data Analytics Working Group of the Information Technology Committee
            •	   CIGIE/Office of Management and Budget Grant Reform Working Group
            •	   Undercover Review Committee
            •	   Federal Hotline Working Group
            •	   Quality Standards for Digital Forensics Working Group
            •	   Disaster Assistance Working Group
            •	   Human Resources Directors’ Roundtable
            •	   CIGIE/Government Accountability Office Annual Financial Statement Audit Conference

Government-Wide Audit-Related Groups

    •	   Interagency Fraud and Risk Data Mining Group. The OIG participates in this group that shares best
         practices in data mining and evaluates data mining and risk modeling tools and techniques that detect
         patterns indicating possible fraud and emerging risks.

    •	   Federal Audit Executive Council, Financial Statement Audit Committee Workgroup. OIG staff
         serve on this interagency workgroup consisting of OIG auditors from numerous Federal agencies. The
44  Office of Inspector General Semiannual Report




        committee addresses government-wide financial management and financial statement audit issues
        through coordination with the Government Accountability Office, the Department of the Treasury,
        and the Office of Management and Budget. It also provides technical assistance on audit standards,
        policies, legislation, and guidance, and plans the CIGIE/Government Accountability Office Annual
        Financial Statement Audit Conference.

Review of Legislation, Regulations, Directives, and Memoranda
   •	   H.R. 6891, the Anti-Deficiency Reform and Enforcement Act of 2018 (115th Congress). The OIG
        noted its support for specific provisions of the bill, its concern with the bill’s assessment requirement
        for OIGs as it may be duplicative of existing OIG annual financial statements audit requirements, and
        provided clarifying changes to the bill’s legal provisions regarding disciplinary actions against Federal
        employees and officers involved in Anti-Deficiency Act violations.

   •	   Grant Application Risk Identified from Single Audit Findings Draft Business Use Summary. As
        part of the CIGIE/Office of Management and Budget Grant Reform Working Group, the OIG made
        technical comments.
Office of Inspector General Semiannual Report  45
Required
Reporting
48  Office of Inspector General Semiannual Report



Required Tables and Appendices
The following provides acronyms, definitions, and other information relevant to the tables that follow.

Acronyms and Abbreviations Used in the Required Tables
Department	     U.S. Department of Education
FFEL		          Family Federal Education Loan
FSA		           Federal Student Aid
FY		            Fiscal Year
HEA		           Higher Education Act of 1965, as amended
IES		           Institute of Education Sciences
IG Act		        Inspector General Act of 1978, as amended
OCFO		          Office of the Chief Financial Officer
OCIO		          Office of the Chief Information Officer
OCTAE		         Office of Career, Technical, and Adult Education
ODS		           Office of the Deputy Secretary
OESE		          Office of Elementary and Secondary Education
OFO		           Office of Finance and Operations
OIG		           Office of Inspector General
OII		           Office of Innovation and Improvement
OM		            Office of Management
OPE		           Office of Postsecondary Education
OPEPD		         Office of Planning, Evaluation, and Policy Development
OS		            Office of the Secretary
OSDFS		         Office of Safe and Drug-Free Schools
OSEP		          Office of Special Education Programs
OSERS		         Office of Special Education and Rehabilitative Services
Recs		          Recommendations
RMS		           Risk Management Service
SAR		           Semiannual Report to Congress
Title I		       Grants to local educational agencies through State educational agencies funded 		
		                under Title I of the Elementary and Secondary Education Act of 1965, as 			
		                amended by the Every Student Succeeds Act
Title IV		      Federal student aid programs funded under Title IV of the HEA
Definitions
Attestation Reports. Attestation reports convey the results of attestation engagements performed within the
context of their stated scope and objectives. Attestation engagements can cover a broad range of financial and
nonfinancial subjects and can be part of a financial audit or a performance audit. Attestation engagements
are conducted in accordance with American Institute of Certified Public Accountants attestation standards, as
well as the related Statements on Standards for Attestation Engagements.
Management Information Reports. Management information reports are used to provide the Department
with information and suggestions when a process other than an audit, attestation, or inspection is used to
develop the report. For example, OIG staff may compile information from previous OIG audits and other activities
to identify overarching issues related to a program or operational area and use a management information
report to communicate the issues and suggested actions to the Department.
Inspection Reports. Inspections are analyses, evaluations, reviews, or studies of the Department’s programs.
The purpose of an inspection is to provide Department decision makers with factual and analytical information,
which may include an assessment of the efficiency and effectiveness of their operations and vulnerabilities
created by their existing policies or procedures. Inspections may be conducted on any Department program,
                                                        Office of Inspector General Semiannual Report  49


policy, activity, or operation. Typically, an inspection results in a written report containing findings and related
recommendations. Inspections are performed in accordance with quality standards for inspections approved
by the Council of Inspectors General for Integrity and Efficiency.
Special Project Reports. Special projects include OIG work that is not classified as an audit, attestation,
inspection, or any other type of alternative product. Depending on the nature and work involved, the special
project may result in a report issued outside the OIG. Information presented in the special project report varies
based on the reason for the special project (for example, response to congressional inquiry or other evaluation
and analysis). The report may contain suggestions.
Questioned Costs. As defined by the Inspector General Act of 1978 (IG Act), as amended, questioned costs
are identified during an audit, inspection, or evaluation because of (1) an alleged violation of a law, regulation,
contract, grant, cooperative agreement, or other agreement or document governing the expenditure of funds;
(2) such cost not being supported by adequate documentation; or (3) the expenditure of funds for the intended
purpose being unnecessary or unreasonable. OIG considers that category (3) of this definition would include
other recommended recoveries of funds, such as recovery of outstanding funds or revenue earned on Federal
funds or interest due the Department.
Unsupported Costs. As defined by the IG Act, as amended, unsupported costs are costs that, at the time of
the audit, inspection, or evaluation, were not supported by adequate documentation. These amounts are also
included as questioned costs.

OIG Product Website Availability Policy
OIG final issued products are generally considered to be public documents, accessible on OIG’s website unless
sensitive in nature or otherwise subject to Freedom of Information Act exemption. Consistent with the Freedom
of Information Act, and to the extent practical, the OIG redacts exempt information from the product so that
nonexempt information contained in the product may be made available on the OIG website.
50  Office of Inspector General Semiannual Report


Required Reporting
The following pages presents summary tables and tables containing statistical and other data as required by
the IG Act, the Inspector General Empowerment Act of 2016, and the National Defense Authorization Act for
Fiscal Year 2008.

                                                                                                 Table    Page
      Section                                        Requirement
                                                                                                Number   Number

          -            Statistical Summary of Audit and Other Report Accomplishments              1        52
                       (October 1, 2018, through March 31, 2019)

          -            Statistical Summary of Investigations Accomplishments                      2        53
                       (October 1, 2018, through March 31, 2019)

 Section 5(a)(1)       Significant Problems, Abuses, and Deficiencies Related to the              10       68
 and 5(a)(2) of the    Administration of Programs and Operations
 IG Act

 Section 5(a)(3) of    Significant Recommendations Described in Previous Semiannual Reports       3        54
 the IG Act            to Congress on Which Corrective Action Has Not Been Completed
                       (October 1, 2018, through March 31, 2019)

 Section 5(a)(4) of    Matters Referred to Prosecutive Authorities                                2        53
 the IG Act            (October 1, 2018, through March 31, 2019)

 5(a)(5) and 6(c)(2)   Summary of Instances in Which Information or Assistance Was Refused or     10       68
 of the IG Act         Not Provided

 Section 5(a)(6) of    Listing of Reports                                                         4        56
 the IG Act
                       Audit and Other Reports and Products on Department Programs and
                       Activities (October 1, 2018, through March 31, 2019)

 Section 5(a)(8) of    Questioned Costs                                                           5        58
 the IG Act
                       Audit and Other Reports with Questioned or Unsupported Costs

 Section 5(a)(9) of    Better Use of Funds                                                        6        59
 the IG Act
                       Audit and Other Reports with Recommendations for Better Use of Funds

 Section 5(a)(10) of   Unresolved Reports                                                         7        60
 the IG Act
                       Unresolved Audit and Other Reports Issued before Reporting Period

 Section 5(a)(10)(B)   Reports for Which No Agency Comment Was Returned to the OIG within         10       68
 of the IG Act         60 days of Issuance

 Section 5(a)(10)(C)   Outstanding Unimplemented Recommendations with Aggregate                   7        60
 of the IG Act         Potential Cost Savings

 Section 5(a)(11) of   Significant Revised Management Decisions                                   10       68
 the IG Act

 Section 5(a)(12) of   Significant Management Decisions with Which the OIG Disagreed              10       68
 the IG Act
                                                              Office of Inspector General Semiannual Report  51




                                                                                                    Table         Page
     Section                                         Requirement
                                                                                                   Number        Number

Section 5(a)(13) of   Unmet Intermediate Target Dates Established by the Department Under             10           68
the IG Act            the Federal Financial Management Improvement Act of 1996

Section 5(a)(14)-     Peer Review Results                                                              9           67
(16) of the IG Act

Section 5(a)(17) of   Investigative Reports Issued                                                     2           53
the IG Act
                      Number of Persons Referred to the U.S. Department of Justice                   (All four
                                                                                                  requirements
                      Number of Persons Referred to State and Local Prosecuting Authorities
                                                                                                    included)
                      Indictments and Criminal Informations That Resulted from Prior Referrals
                      to Prosecuting Authorities

Section 5(a)(18) of   Description of the Metrics Used for Developing the Investigative Data for        2           53
the IG Act            the Statistical Tables Under 5(a)(17)

Section 5(a)(19) of   Report on Each Investigation Conducted by the OIG Involving a Senior             8           67
the IG Act            Government Employee (GS-15 or Above) Where the Allegations of
                      Misconduct Were Substantiated

Section 5(a)(22)      Description of Investigations Involving Senior Government Employees             10           68
(B) of the IG Act     (GS-15 or Above) That Were Closed but Not Disclosed to the Public

Section 5(a)(20) of   Description of Instances of Whistleblower Retaliation                           10           68
the IG Act

Section 5(a)(21) of   Description of Attempt by Agency to Interfere with OIG Independence             10           68
the IG Act

Section 5(a)(22)(A)   Description of Audits Closed but Not Disclosed to the Public                    10           68
of the IG Act

Section 845 of the    Contract-Related Audit Products with Significant Findings                       10           68
National Defense
Authorization
Act for Fiscal Year
2008
52  Office of Inspector General Semiannual Report


Table 1. Statistical Summary of Audit and Other Report
Accomplishments (October 1, 2018, through March 31, 2019)

                                                            October 1, 2018–
                    Accomplishment
                                                             March 31, 2019


 Audit Reports Issued                                                  11

 Inspection Reports Issued                                              0

 Other Products Issued                                                  1

 Questioned Costs (Including Unsupported Costs)                   $14,004

 Recommendations for Better Use of Funds                               $0

 Reports Resolved By Program Managers                                  10

 Questioned Costs Sustained (Including Unsupported Costs)     $712,673,223

 Unsupported Costs Sustained                                           $0

 Additional Disallowances Identified by Program Managers               $0

 Management Commitment to the Better Use of Funds                      $0
                                                              Office of Inspector General Semiannual Report  53


Table 2. Statistical Summary of Investigative Accomplishments
(October 1, 2018, through March 31, 2019)

                                                                                                                 SAR 76
    Accomplishment                                     Description of the Metric                            (October 1, 2017–
                                                                                                             March 31, 2018

Investigative Cases Opened     Number of cases that were opened as full investigations or converted                     31
                               from a complaint or preliminary inquiry to a full investigation during the
                               reporting period.

Investigative Cases Closed     Number of investigations that were closed during the reporting period.                   39

Cases Active at the End of     Number of investigations not closed prior to the end of the reporting                   329
the Reporting Period           period.

Investigative Reports Issued   Number of Reports of Investigation issued during the reporting period.                   46

Total Number of Persons        Number of individuals and organizations formally referred to state or                     0
Referred to State and Local    local prosecuting authorities for prosecutorial decisions during the
Prosecuting Authorities        reporting period.

Total Number of Persons        Number of individuals and organizations formally referred to the U.S.                1 Civil
Referred to the U.S.           Department of Justice for prosecutorial decisions.                              14 Criminal
Department of Justice

Indictments and Criminal       Number of individuals who were indicted or for whom a criminal                           22
Informations that Result       information was filed during the reporting period.
from Prior Referrals to
Prosecuting Authorities

Convictions/Pleas              Number of criminal convictions, pleas of guilty or nolo contendere, or                   24
                               acceptance of pretrial diversions that occurred during the reporting
                               period.

Fines Ordered                  Sum of all fines ordered during the reporting period.                               $2,700

Restitution Payments           Sum of all restitution ordered during the reporting period.                     $19,118,173
Ordered

Civil Settlements/             Number of civil settlements completed or judgments ordered during                         4
Judgments (number)             the reporting period.

Civil Settlements/             Sum of all completed settlements or judgments ordered during the                $3,066,900
Judgments (amount)             reporting period.

Recoveries                     Sum of all administrative recoveries ordered by the Department or               $4,326,622
                               voluntary repayments made during the reporting period.

Forfeitures/Seizures           Sum of all forfeitures/seizures ordered during the reporting period.               $20,000

Estimated Savings              Sum of all administrative savings or cost avoidances that result in a                    $0
                               savings to, or better use of funds for, a program or victim during the
                               reporting period. These are calculated by using the prior 12 month
                               period of funds obtained or requested and then projecting that amount
                               12 months forward.

Suspensions Referred to        Number of suspensions referred to the Department during the                              11
Department                     reporting period.

Debarments Referred to         Number of debarments referred to the Department during the                                9
Department                     reporting period.
54  Office of Inspector General Semiannual Report


Table 3. Significant Recommendations Described in Previous
Semiannual Reports to Congress on Which Corrective Action Has
Not Been Completed (October 1, 2018, through March 31, 2019)
This table is limited to OIG internal audit reports of Departmental operations because that is the only type of
audit in which the Department tracks each related recommendation through completion of corrective action.

                                                                                               Number of
               Report                                                 Date of    Number of                   Projected
                         Report Title (Prior SAR          Date                                 Significant
  Office      Type and                                              Management   Significant                  Action
                          Number and Page)               Issued                                   Recs
              Number                                                 Decision    Recs Open                     Date
                                                                                               Completed

 FSA         Audit       Final Independent               11/14/16     1/26/17        2             11         9/27/19
             A17Q0002    Auditors’ Report Fiscal
                         Years 2016 and 2015
                         Financial Statements
                         Federal Student Aid
                         (Budget Services also
                         designated as an action
                         official) (SAR 74, page 57)

 FSA         Audit       Final Independent               11/13/17     2/16/18        2             8          1/14/20
             A17R0002    Auditors’ Report Fiscal
             New         Years 2017 and 2016
                         Financial Statements
                         Federal Student Aid
                         (Budget Services is also
                         designated as an action
                         official) (SAR 76, page 58)

 OFO         Audit       Management                      2/11/16      5/9/16         1             4         10/31/19
 (formerly   A06O0001    Certifications of Data
 OCFO)                   Reliability (SAR 72,
                         page 57) (Note: Program
                         Office was changed
                         from ODS to OFO due to
                         recent reorganization)

 OFO         Audit       Final Independent               11/14/16     2/14/17        2             11         8/28/19
             A17Q0001    Auditors’ Report Fiscal
                         Years 2016 and 2015
                         Financial Statements
                         U.S. Department of
                         Education (OCIO and
                         Budget Services also
                         designated as action
                         officials) (SAR 74, page 57)

 OFO         Audit       Final Independent               11/13/17     3/23/18        1             8          1/28/20
             A17R0001    Auditors’ Report Fiscal
             New         Years 2017 and 2016
                         Financial Statements U.S.
                         Department of Education
                         (Budget Services and
                         OCIO are also designated
                         as action officials) (SAR 76,
                         page 58)
                                                         Office of Inspector General Semiannual Report  55




                                                                                           Number of
            Report                                                Date of    Number of                   Projected
                      Report Title (Prior SAR         Date                                 Significant
 Office    Type and                                             Management   Significant                  Action
                       Number and Page)              Issued                                   Recs
           Number                                                Decision    Recs Open                     Date
                                                                                           Completed

OCIO      Audit       The U.S. Department            10/31/17     3/23/18        12            23         7/31/19
          A11R0001    of Education’s Federal
          New         Information Security
                      Modernization Act of
                      2014 Report For Fiscal
                      Year 2017 (The report was
                      addressed to ODS and
                      FSA is also designated as
                      an action official) (SAR 76,
                      page 58)

OESE      Audit       Nationwide Assessment          9/29/16      1/10/17        1             4          5/15/19
(From     A02M0012    of Charter and
the                   Education Management
former                Organizations (SAR 73,
ODS)                  page 52) (Note: Program
                      Office was changed from
                      ODS to OESE due to
                      recent reorganization)
56  Office of Inspector General Semiannual Report


Table 4. Audit and Other Reports and Products on Department
Programs and Activities (October 1, 2018, through March 31, 2019)

                   Report
                                                                        Date      Questioned      Unsupported      Number of
      Office      Type and                 Report Title
                                                                       Issued       Costs            Costs           Recs
                  Number

    FSA           Audit        MiraCosta College’s Compliance          11/27/18        -                 -               2
                  A02S0007     with Verification and Reporting
                               Requirements

    FSA           Audit        Federal Student Aid: Additional         2/12/19         -                 -               6
                  A05Q0008     Actions Needed to Mitigate the
                               Risk of Servicer Noncompliance
                               with Requirements for Servicing
                               Federally Held Student Loans

    FSA           Audit        College of Southern Nevada              11/27/18        -                 -               -
                  A05S0012     Complied with Federal Verification
                               and Reporting Requirements

    FSA           Audit        University of Houston’s Compliance      11/30/18     $14,0041             -              22
                  A06S0007     with Verification and Reporting
                               Requirements

    FSA           Audit        Final Independent Auditors’ Report      11/15/18        -                 -              12
                  A17S0002     Fiscal Year 2018 Financial Statements
                               Federal Student Aid

    OCIO          Audit        The U.S. Department of Education’s      10/31/18        -                 -              45
                  A11S0001     Federal Information Security
                               Modernization Act of 2014 Report
                               For Fiscal Year 2018 (The report was
                               addressed to ODS and FSA)

    OESE          Audit        Calculating and Reporting               11/27/18        -                 -               7
                  A06R0004     Graduation Rates in Utah


    OFO           Audit        Final Independent Auditors’ Report      11/15/18        -                 -              12
    (formerly     A17S0001     Fiscal Year 2018 Financial Statements
    OCFO)                      U.S. Department of Education (The
                               report was addressed to OCFO with
                               OCIO copied)

    OFO           Audit        Final Independent Auditors’             11/16/18        -                 -               -
                  A17S0003     Report Fiscal Year 2018 Closing
                               Package Financial Statements
                               U.S. Department of Education




1
 The University of Houston stated that it returned $14,004 in improperly disbursed Pell funds during our audit; this is considered
questioned costs for SAR reporting purposes.
2
    Report A06S0007 also included a suggestion to the University of Houston.
                                                            Office of Inspector General Semiannual Report  57




            Report
                                                                  Date     Questioned   Unsupported   Number of
  Office   Type and                 Report Title
                                                                 Issued      Costs         Costs        Recs
           Number

OFO        Special      Completion of OIG Risk Assessment        2/1/19        -             -             -
           Project      of the Department’s Purchase Card
           S19T0001     Program for Fiscal Year 2018

OPEPD      Audit        Office of the Chief Privacy Officer’s   11/26/18       -             -            8
           A09R0008     Processing of Family Educational
                        Rights and Privacy Act Complaints
                        (The report was addressed to OM)

OSERS      Audit        Office of Special Education             10/25/18       -             -            5
           A09R0004     Programs’ Differentiated Monitoring
                        and Support

Total      12 reports                                                       $14,004          -          99 Recs
                                                                                                         (and 1
                                                                                                      suggestion)
58  Office of Inspector General Semiannual Report


Table 5. Audit and Other Reports with Questioned or
Unsupported Costs
None of the products reported in this table were performed by the Defense Contract Audit Agency.

                                                                Questioned Costs
                   Requirement                      Number   (Includes Unsupported      Unsupported Costs
                                                                     Costs)

 A. For which no management decision has been         2          $712,778,606*                 $0
     made before the commencement of the
     reporting period

 B. Which were issued during the reporting period     1             $14,004                    $0
       Subtotals (A + B)                              3           $712,792,610                 $0

 C. For which a management decision was made
     during the reporting period                      1           $712,681,125                 $0
       (i) Dollar value of disallowed costs                       $712,673,223
       (ii) Dollar value of costs not disallowed                     $7,902

 D. For which no management decision was made         2             $111,485                   $0
     by the end of the reporting period

* Reflects recommendations from two OIG audit reports: “Western Governors University Was Not Eligible to
Participate in the Title IV Programs” ($712,681,124) and “Puerto Rico Department of Education’s Reliability of
Program Performance Data and Use of Adult Education Program Funds” ($97,481).
                                                           Office of Inspector General Semiannual Report  59


Table 6. Audit and Other Reports with Recommendations for Better
Use of Funds
None of the products reported in this table were performed by the Defense Contract Audit Agency.

                               Requirement                                  Number         Dollar Value


 A. For which no management decision was made before the commencement         0                $0
     of the reporting period


 B. Which were issued during the reporting period                             0                $0
       Subtotals (A + B)                                                      0                $0

 C. For which a management decision was made during the reporting period:
       Dollar value of recommendations that management agreed to              0                $0
       Dollar value of recommendations that management did not agreed to      0                $0


 D. For which no management decision has been made by the end of the          0                $0
    reporting period
60  Office of Inspector General Semiannual Report


Table 7. Unresolved Reports Issued before Reporting Period, and
Outstanding Unimplemented Recommendations with Aggregate
Potential Cost Savings
The Department tracks audit resolution and the implementation of corrective actions related to OIG recommendations
in its Audit Accountability and Resolution Tracking System. The Office of Finance and Operations maintains
this system, which includes input from OIG and responsible program officials. The Audit Accountability and
Resolution Tracking System includes recommendation-level detail for all internal reports where the Department
is directly responsible for implementing corrective action. The system includes less detailed information on
the status of individual recommendations made to external auditees, such as State educational agencies, local
educational agencies, institutions of higher education, other grantees and other participants in the Federal
student aid programs, and contractors. We generally do not estimate monetary benefits in our internal audits
of the Department’s management of its programs and operations, other than to identify better uses of funds.

We consider an audit resolved when the OIG and agency management or contracting officials agree on actions
to be taken on reported findings and recommendations.

The Department commented on all reports within 60 days of issuance.

                                                                                                                Dollar
                                                                                                              Value of
             Report Title and      Summary of Report and Status of             Date      Audit     Number    Aggregate
  Office
                Number                Audit/Recommendations                   Issued    Resolved   of Recs    Potential
                                                                                                                 Cost
                                                                                                               Savings

 FSA        Technical Career     The audit found that although                5/19/08     Yes        13        $6,458
            Institute’s          the school met requirements for
            Administration of    institutional, program, and student
            the Federal Pell     eligibility and for award calculations, it
            Grant and Federal    improperly paid FFEL lenders to pay off
            Family Education     its students’ loans and prevent default,
            Loan Program         and it had internal control deficiencies
                                 in its administration of the Title IV
            A02H0007
                                 programs.
                                 Current Status: FSA informed us that
                                 the audit is resolved, and it is working
                                 to complete the audit.

 FSA        Saint Mary-of-the-   The audit found that the school              3/29/12     Yes        19      $42,362,291
            Woods College’s      had been ineligible to participate
            Administration       in Federal student aid programs
            of the Title IV      since 2005 because at least half of its
            Programs             students were enrolled in ineligible
                                 correspondence courses.
            A05K0012
                                 Current Status: FSA informed us that
                                 the audit is under the appeal process.
                                                            Office of Inspector General Semiannual Report  61


                                                                                                            Dollar
                                                                                                          Value of
           Report Title and      Summary of Report and Status of           Date      Audit     Number    Aggregate
 Office
              Number                Audit/Recommendations                 Issued    Resolved   of Recs    Potential
                                                                                                             Cost
                                                                                                           Savings

FSA       SOLEX College’s      The audit found that the school            9/30/15     Yes        6       $1,795,500
          Administration of    improperly disbursed Federal student
          Selected Aspects     aid to students who were enrolled
          of the Title IV      in programs that were not qualified
          Programs             to participate in Federal student aid
                               programs under the HEA.
          A05O0007
                               Current Status: FSA informed us that
                               the audit is resolved, and it is working
                               to complete the audit.

FSA       Federal Student      The report found that FSA did not          4/17/18     Yes        17         $0
          Aid’s Contractor     effectively implement Department
          Personnel Security   requirements for the contractor
          Clearance Process    personnel security screening process,
                               as FSA officials and staff involved in
          A19R0003
                               the process were generally unaware
          New                  of Department requirements and their
                               related responsibilities for processing
                               contractor employees’ security
                               screenings.
                               Current Status: FSA informed us that
                               the audit is resolved, and it is working
                               to close the audit.

FSA       Federal Student      The audit found that FSA did not           7/24/18     Yes        6          $0
          Aid: Efforts to      implement all elements of its
          Implement            framework or implement all elements
          Enterprise Risk      characteristic of effective enterprise
          Management           risk management. As a result, FSA
          Have Not Included    management did not have reasonable
          All Elements of      assurance that its efforts helped it
          Effective Risk       achieve its enterprise risk management
          Management           objectives and reduce enterprise-level
                               risks to be within the level management
          A05Q0007
                               was willing to accept.
          New
                               Current Status: FSA informed us that
                               the audit is resolved, and it is working
                               to close the audit.
62  Office of Inspector General Semiannual Report


                                                                                                                  Dollar
                                                                                                                Value of
            Report Title and        Summary of Report and Status of            Date      Audit       Number    Aggregate
  Office
               Number                  Audit/Recommendations                  Issued    Resolved     of Recs    Potential
                                                                                                                   Cost
                                                                                                                 Savings

 OCTAE     Puerto Rico            The audit found that the Puerto Rico        2/22/18      No          9        $97,481
           Department             Department of Education can improve
                                                                                        Proposed
           of Education’s         its oversight of the Adult Education
                                                                                        resolution
           Reliability            program to ensure that it (1) submits
                                                                                           date
           of Program             complete, supported, and accurate
                                                                                        unknown
           Performance Data       performance data to the Department,
           and Use of Adult       (2) uses funds in compliance with
           Education Program      applicable laws and regulations, and (3)
           Funds                  obtains and reviews single audit reports
                                  of subgrantees.
           A04O0004
                                  Current Status: OCTAE informed us
                                  that it is working to resolve this audit.
                                  OFO/Post Audit Group Program
                                  Determination Letter was issued on
                                  8/27/2018.

 OESE      Puerto Rico            The audit found that the Puerto Rico        1/24/11      Yes         11      $15,169,109
           Department of          Department of Education lacked
           Education’s Award      sufficient controls to ensure compliance
           and Administration     with State and Federal laws in awarding
           of Personal Services   personal service contracts and in
           Contracts (OCTAE       ensuring that those services were
           OSDFS, OSERS/          allowable and adequately supported.
           OSEP and Risk
                                  Current Status: OESE informed us that
           Management
                                  the audit is resolved, but all corrective
           Services also
                                  actions have not been completed.
           designated as
           action officials)
           A04J0005

 OESE      Harvey Public          The audit found that the Harvey Public      5/18/17      No          5           $0
           School District 152:   School District 152 did not always
                                                                                         Proposed
           Status of Corrective   follow the policies that it designed to
                                                                                        resolution
           Actions on             remediate previously reported findings
                                                                                           date:
           Previously Reported    of inadequate inventory management
                                                                                        September
           Title I-Relevant       and did not design procedures
                                                                                           2019
           Control Weaknesses     to provide reasonable assurance
                                  that it submitted accurate periodic
           A05Q0003
                                  expenditure reports to the State.
                                  Current Status: OESE informed us that
                                  it is working to resolve this audit.

 OESE      Calculating            The audit found that the Alabama State      6/14/17      No          6           $0
           and Reporting          Department of Education’s system
                                                                                        Proposed
           Graduation Rates in    of internal control did not provide
                                                                                        resolution
           Alabama                reasonable assurance that reported
                                                                                           date:
                                  graduation rates were accurate and
           A02P0010                                                                     June 2019
                                  complete for the time period covered
                                  by our audit.
                                  Current Status: OESE informed us that
                                  it is working to resolve this audit.
                                                            Office of Inspector General Semiannual Report  63


                                                                                                                Dollar
                                                                                                              Value of
           Report Title and        Summary of Report and Status of           Date      Audit       Number    Aggregate
 Office
              Number                  Audit/Recommendations                 Issued    Resolved     of Recs    Potential
                                                                                                                 Cost
                                                                                                               Savings

OESE      Calculating            The audit found that the California        1/11/18      No          6          $0
          and Reporting          Department of Education’s system
                                                                                      Proposed
          Graduation Rates in    of internal control did not provide
                                                                                      resolution
          California             reasonable assurance that reported
                                                                                         date:
                                 graduation rates were accurate and
          A02Q0005                                                                    June 2019
                                 complete.
                                 Current Status: OESE informed us that
                                 it is working to resolve this audit.

OESE      Detroit Public         The audit found that the school            3/28/18      No          10         $0
          Schools Community      district’s noncompliance occurred
                                                                                      Proposed
          District: Status of    because it did not have adequate
                                                                                      resolution
          Corrective Actions     policies and procedures to review
                                                                                         date:
          on Previously          Title I contracts, invoices, employee
                                                                                      June 2019
          Reported Title         insurance benefit costs, and adjust
          I-Relevant Control     journal entries to ensure they were
          Weaknesses             adequately documented, reasonable,
                                 and allowable.
          A05R0001
                                 Current Status: OESE informed us that
                                 it is working to resolve this audit.

OESE      New York State’s       The audit found that New York had          3/29/18      No          9          $0
          and Selected           not yet completed updating its
                                                                                      Proposed
          Districts’             policies and procedures, did not
                                                                                      resolution
          Implementation         require local educational agencies
                                                                                         date:
          of Selected Every      to submit final documentation in
                                                                                      June 2019
          Student Succeeds       response to monitoring findings,
          Act Requirements       and was not ensuring that local
          under the              educational agencies were reporting all
          McKinney-              unaccompanied youth.
          Vento Homeless
                                 Current Status: OESE informed us that
          Assistance Act
                                 it is working to resolve this audit.
          A03Q0005

OESE      Orleans Parish         Other than a deficiency involving          5/14/18      No          2*         $0
          School Board:          nonpublic schools, nothing came to
                                                                                       Proposed
          Status of Corrective   our attention during the followup
                                                                                      resolution
          Actions on             audit indicating that Orleans Parish
                                                                                         date:
          Previously Reported    did not design and implement policies
                                                                                      September
          Title I-Relevant       and procedures to reduce the risk of
                                                                                         2019
          Control Weaknesses     future noncompliance. Regarding
                                 the deficiency, we found that Orleans
          A05R0002
                                 Parish did not design and implement
          New                    procedures that provided reasonable
                                 assurance that expenditures for services
                                 provided to nonpublic school students
                                 and charged to Title I funds were
                                 allowable.
                                 Current Status: OESE informed us that
                                 it is working to resolve this audit.
64  Office of Inspector General Semiannual Report


                                                                                                                      Dollar
                                                                                                                    Value of
                Report Title and          Summary of Report and Status of            Date      Audit     Number    Aggregate
  Office
                   Number                    Audit/Recommendations                  Issued    Resolved   of Recs    Potential
                                                                                                                       Cost
                                                                                                                     Savings

 OESE          The Department’s         The report found the monitoring             9/28/18     Yes        12         $0
               Oversight of the         activities Office of Indian Education
               Indian Education         conducts are insufficient to ensure that
               Formula Grant            grantees are making progress towards
               Program                  meeting program goals and spending
                                        grant funds appropriately. The report
               A19Q0002
                                        found a lack to written comprehensive
               New                      procedures, follow-through and
                                        documentation. Although the Office of
                                        Indian Education collected some data
                                        on grantee performance and use of
                                        funds, the report found little evidence
                                        that the office used the data to provide
                                        assistance to grantees in implementing
                                        the program successfully.
                                        Current Status: OESE informed us that
                                        the audit is resolved, but all corrective
                                        actions have not been completed.

 OESE          Nationwide Audit of      The report found that the Department’s      9/28/18     Yes        3*         $0
               Oversight of Closed      oversight and monitoring of the States
 (Note:
 audit was     Charter Schools          was not effective to ensure that the
 transferred                            States performed the charter school
               (The report was
 from ODS                               closure process in accordance with
               addressed to ODS
 to OII                                 Federal laws and regulations.
 which is      (now OS) and
 now part      recommended              Current Status: OSERS informed
 of OESE)      that ODS (now            us that the audit is resolved, but all
               OS) coordinate           corrective actions have not been
               with OESE and            completed.
               OII on report
               recommendations)
               A02M0011
               New

 OFO           Audit of the             The audit found that the school did not     1/14/04     Yes        4       $1,018,212
 (Formerly     University of Illinois   serve the number of participants it was
 OCFO)         at Chicago’s Gaining     funded to serve and that its partnership
               Early Awareness          did not provide the required matching
               and Readiness for        funds.
               Undergraduate
                                        Current Status: OFO informed us that
               Programs
                                        the audit is resolved, but all corrective
               Project (OPE also
                                        actions have not been completed.
               designated as
               action official)
               A05D0017
                                                             Office of Inspector General Semiannual Report  65


                                                                                                                 Dollar
                                                                                                               Value of
           Report Title and        Summary of Report and Status of            Date      Audit       Number    Aggregate
 Office
              Number                  Audit/Recommendations                  Issued    Resolved     of Recs    Potential
                                                                                                                  Cost
                                                                                                                Savings

OFO       Massachusetts          The audit found that the Massachusetts      1/25/16      Yes         5          $0
          Department             Department of Elementary and
          of Elementary          Secondary Education’s oversight of
          and Secondary          local education agency single audit
          Education’s            resolution was not sufficient, as it did
          Oversight of           not always work collaboratively or
          Local Educational      communicate effectively with local
          Agency Single Audit    educational agencies that had audit
          Resolution             findings to ensure that they took
                                 timely and appropriate corrective
          A09P0001
                                 action; did not have internal controls
                                 that were sufficient to ensure that
                                 it provided adequate oversight of
                                 the local educational agency audit
                                 resolution process; and did not appear
                                 to make local educational agency audit
                                 resolution a high priority.
                                 Current Status: OFO informed us that
                                 the audit is resolved, but all corrective
                                 actions have not been completed.

OFO       Protection             The audit found internal control            7/12/16      No          3          $0
          of Personally          weaknesses in the State’s system
                                                                                       Proposed
          Identifiable           that contains students’ personally
                                                                                       resolution
          Information in the     identifiable information that increases
                                                                                          date
          Commonwealth           the risk that the State will be unable to
                                                                                       unknown
          of Virginia’s          prevent or detect unauthorized access
          Longitudinal Data      and disclosure of personally identifiable
          System                 information.
          (Note: Audit was       Current Status: OFO informed us that
          transferred from IES   it is working to resolve this audit.
          to OFO.)
          A02P0006

OFO       Protection             The audit found that the Oregon’s           9/27/16      No          3          $0
          of Personally          statewide longitudinal data system had
                                                                                       Proposed
          Identifiable           a lack of documented internal controls
                                                                                       resolution
          Information in         in the system that increases the risk
                                                                                          date
          Oregon’s Statewide     that the State will be unable to prevent
                                                                                       unknown
          Longitudinal Data      or detect unauthorized access and
          System                 disclosure of personally identifiable
                                 information.
          (Note: Audit was
          transferred from IES   Current Status: OFO informed us that
          to OFO.)               it is working to resolve this audit.
          A02P0007
66  Office of Inspector General Semiannual Report


                                                                                                                    Dollar
                                                                                                                  Value of
              Report Title and        Summary of Report and Status of            Date      Audit       Number    Aggregate
   Office
                 Number                  Audit/Recommendations                  Issued    Resolved     of Recs    Potential
                                                                                                                     Cost
                                                                                                                   Savings

 OFO         Illinois State Board   The audit found that the Illinois State     11/7/16      Yes         7          $0
             of Education’s         Board of Education did not provide
             Oversight of           effective oversight to ensure that local
             Local Educational      educational agencies took timely and
             Agency Single Audit    appropriate action to correct single
             Resolution             audit findings.
             A02P0008               Current Status: OFO informed us that
                                    the audit is resolved, but all corrective
                                    actions have not been completed.

 OFO         Protection             The audit found that Indiana did not        7/10/17      No          4          $0
             of Personally          provide adequate oversight of the
                                                                                          Proposed
             Identifiable           Management and Performance Hub
                                                                                          resolution
             Information in         during the development of the Indiana
                                                                                             date
             Indiana’s Statewide    Network and Knowledge system
                                                                                          unknown
             Longitudinal Data      to ensure that the system meet the
             System (IES is also    minimum security requirements found
             designated as an       in the Indiana Code and the Indiana
             action official)       Office of Technology Information
                                    Security Framework.
             A06Q0001
                                    Current Status: OFO informed us that
                                    it is working to resolve this audit.

 OFO         The Department’s       The audit found that the Department         9/20/18      Yes         11         $0
 (From       Implementation         had not effectively implemented
 the         of the Contractor      requirements for the contractor
 former      Personnel Security     personnel security screening process.
 OM)         Clearance Process      The report also found that OM did
                                    not ensure the timeliness of security
             A19P0008
                                    screening activities, ensure contractor
             New                    employee screening information
                                    maintained was accurate and reliable,
                                    or provided adequate training to
                                    principal offices with regard to process
                                    requirements and responsibilities.
                                    Current Status: OFO (formerly OM)
                                    informed us that the audit is resolved,
                                    but all corrective actions have not been
                                    completed.

 OPE         U.S. Department        The audit found that the Department         6/27/18      Yes         3          $0
             of Education’s         did not provide reasonable assurance
             Recognition            that it recognized only agencies
             and Oversight          meeting Federal recognition criteria.
             of Accrediting         We also found that the Department’s
             Agencies               oversight approach may not identify
                                    issues soon enough to mitigate or
             A09R0003
                                    prevent potential harm to accredited
             New                    institutions of higher education,
                                    students, or taxpayers.
                                    Current Status: OPE informed us that
                                    the audit is resolved, but all corrective
                                    actions have not been completed.
* Reports A02M0011 and A05R0002 each contain 1 suggestion in addition to their recommendations.
                                                                Office of Inspector General Semiannual Report  67


Table 8. Report on Each Investigation Conducted by the OIG
Involving a Senior Government Employee (GS-15 or Above)
Where the Allegations of Misconduct Were Substantiated
                                                           Description

As noted on page 23 of this Semiannual Report to Congress, the OIG received an allegation that high-ranking staff within the
Department’s Office of Security, Facilities, and Logistics Services (Office of Security) were carrying firearms in Department
buildings without proper authorization. This included two GS-15 employees. We found that the U.S. Marshals Service’s special
deputation authorizations for these two GS-15 employees had expired in 2015. In August 2016, Department officials ordered
the Director of the Office of Security, a member of the Senior Executive Service, to disarm the employees and lock up the
firearms. The Director, however, instructed the staff to continue carrying their firearms despite no longer being authorized
to do so, and although the staff were aware of the order to disarm and the lack of legal authorization, they followed the
instructions of the Director. After presenting the results of our investigation to the Department’s Office of Management, the
Director was reassigned and removed from the ranks of the Senior Executive Service. The Office of Security employees were
not formally disciplined and were alternatively required to attend training classes related to government ethics and internal
controls, topic areas all Department employees are required to take.




Table 9. Peer Review Results
                                                           Description

During this reporting period, two external peer reviews of OIG operations were conducted.
First, the U.S. Department of Veterans Affairs Office of Inspector General issued its findings related to a peer review it conducted
of the OIG’s investigative organization for the period September 1, 2017, through August 31, 2018. Our office received a peer
review rating of pass. There were no outstanding recommendations from prior peer reviews. The U.S. Department of Veterans
Affairs OIG report was issued in November 2018.
Second, the Tennessee Valley Authority Office of Inspector General (TVA OIG) issued its findings related to a peer review of
the OIG’s inspection and evaluation function. The Council of the Inspectors General on Integrity and Efficiency External Peer
Review Team, led by TVA OIG, determined that the OIG’s policies and procedures generally met the seven Blue Book standards
addressed in the external peer review. Of the three reports reviewed, the review team determined that two generally met the
Blue Book standards and complied with the OIG’s internal policies and procedures. One reviewed report generally did not
meet the standards and did not comply with internal policies and procedures related to Quality Control, Planning, and Data
Collection. The review team offered recommendations that we agreed to implement to further improve our inspection and
evaluation related processes.
68  Office of Inspector General Semiannual Report


Table 10. Other Reporting Requirements

                                      Requirement                                              Results



 Significant Problems, Abuses, or Deficiencies Related to the Administration of Programs
                                                                                           Nothing to Report
 and Operations


 Summary of Instances Where Information or Assistance Was Refused or Not Provided          Nothing to Report


 Summary of Audit Reports for which No Agency Comment was Returned to the OIG
                                                                                           Nothing to Report
 within 60 Day of Issuance


 Significant Revised Management Decisions                                                  Nothing to Report



 Significant Management Decisions with Which the OIG Disagreed                             Nothing to Report


 Unmet Intermediate Target Dates Established by the Department under the Federal
                                                                                           Nothing to Report
 Financial Management Improvement Act of 1996


 Description of Instances of Whistleblower Retaliation                                     Nothing to Report



 Description of Attempt by the Agency to Interfere with OIG Independence                   Nothing to Report



 Audits or Inspections Closed but Not Disclosed to the Public                              Nothing to Report


 Description of Investigations Involving Senior Government Employees (GS-15 or Above)
                                                                                           Nothing to Report
 That Were Closed but Not Disclosed to the Public


 Contract-Related Audit Products with Significant Findings                                 Nothing to Report
                                             Office of Inspector General Semiannual Report  69


Acronyms and Abbreviations
ACGR			        adjusted cohort graduation rates

CIGIE			       Council of the Inspectors General on Integrity and Efficiency

Department		   U.S. Department of Education

DMS			         Differentiated Monitoring and Support

FAFSA			       Free Application for Federal Student Aid

FERPA			       Family Educational Rights and Privacy Act

FISMA			       Federal Information Security Modernization Act of 2014

FSA			         Federal Student Aid Office

FY			fiscal year

OIG			         Office of Inspector General

OSEP			        Office of Special Education Programs
FY 2019 Management Challenges
The Reports Consolidation Act of 2000 requires the OIG to identify and summarize
the most significant management challenges facing the Department each year.
The following are the management challenges that the OIG identified for FY 2019:

   1.	 Improper Payments,

   2.	 Information Technology Security,

   3.	 Oversight and Monitoring, and

   4.	 Data Quality and Reporting.

For a copy of our FY 2019 Management Challenges report, visit our website at
http://www2.ed.gov/about/offices/list/oig/managementchallenges.html.
Anyone knowing of fraud, waste, or abuse involving U.S. Department of Education
funds or programs should contact the Office of Inspector General Hotline:

http://oighotline.ed.gov

We encourage you to use the automated complaint form on our website; however,
you may call toll-free or write the Office of Inspector General.

        Inspector General Hotline
        1-800-MISUSED
        (1-800-647-8733)

        Inspector General Hotline
        U.S. Department of Education
        Office of Inspector General
        400 Maryland Ave., S.W.
        Washington, D.C. 20202

You may make a report anonymously.

The mission of the Office of Inspector General is to promote the efficiency, effectiveness,
and integrity of the U.S. Department of Education’s programs and operations. 

http://www.ed.gov/oig