oversight

Financial Difficulties and Funding at D-Q University

Published by the Government Accountability Office on 1977-10-17.

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

                             DCCUMENT BESUME

                     eAX>
03695 - [B2914161] /i/           e

k:.n -·-4.al Difficulties and Funding at D-Q University.
HRED  .-146; B-164031(a). October 17, 1977. 34 pp. + appendix (1
pp.).
Report to Rep.   B.   F. Sisk; by Elmer B. Staats,   Comptroller
General.

Contact: Human Resources Div.
Budget Function: Education, Manpower, and Social Services:
    Higher Education (502).
Organizattim Concerned; Department of Health, Education, and
    Welfare; D-Q Univ., Davis, CA.
Congressional Relevance: Rep. B. F. Sisk.
Authority: Higber Education Act of 1965, title III (20 U.S.C.
    1051 et seq.). Education Amendments of 1976. 45 C.r.R. 100.
         D-Q University, located near Davis, California, was
established in 197'4 to provide an educational program for Native
American and Chicano people. The Department of Health,
Education, and Welfare (HEM) denied D-Q University's funding
proposals under the developing institutions of higher education
title III program for 1974 through 1976. The University had many
accountability problems involving Federal funds and other
natters. Those evaluating D-Q's prcgrams had well-founded
concerns and, therefore, funding denials were justified.
Findings/Conclusicns: Although D-Q satisfied the minimum
criteria for the title III program, both GAO and the Office of
Education were concerned about D-Q's progress in satisfying
certain other criteria established by the Office of Educat r.
for the title III program. Fo.· example, D-Q depended on Federal
funds for its support, and its repcorted enrollment varied
greatly from year to year. Class attendance appeared to be poor,
and few students transferred from the 2-year program at D-Q to
4-year colleges. Relatively few associate degrees have been
awarded by the school. D-Q University has also had problems
under other HEW and other Federal agency programs. D-Q should be
categorized as a high risk institution when being considered for
Federal funding. If, in the future, Government support for D-Q
University programs is resumed, D-Q will need considerable
technical assistance to protect the Federal investment in D-Q
and for D-Q to continue operating. (Author/SC)
                 RESTRITED -       Plot to be ren4Pf
                                                  ,               ,ryte;da the      "eInieal
                 Acco;ititng Office ePxcrt , ,.  - .             3f       pscific approval
                 by the Office of Congressional      etatot,&o        .


O       ,-.\^*    REPORT OF()THE
                 COMPTROLLER G.ENERAL
    °      '-oust\+
                 OF THE UNITED STATES



                  Financial Difficulties And Funding
                  At D-Q University
                  Department of Health, Education, and Welfare

                  Th-. Department of Health, Education, and
                  Welfare denied D-Q Ur;versity's funding
                  proposals under the deveioping institutions
                  of higher education program for 1974
                  through 1976. The university had many
                  accountability problems involving Federal
                  funds and other matters. Those evaluating
                  D-Q's progiams had well-founded concerns
                  and, therefore, tunding denials were jus-
                  tified.
                 If D-0 Univers;ty is to receive substantial
                 Federal support, HEW will have to provide
                 considerable technical assistance to D Q.




                 HRD-77-146                                               OCTOBER 17, 1977
     Shi/.~~     COMPTROLLER GENERAL OP THE UN I'sD
                            W^FeCASHINTON. D.C. U
                                                  0TATES




B-164331(1)




The Honorable B. F. Sisk
House of Representatives

Dear Mr. Sisk:
     This is our report containing information and our
observations on certain aspects of the denial of funding
of proposals submitted by D-Q University for assistance
under the Title III Strengthening Dev-loping Institutions
of Higher Education Program and other matters.
     We reviewed the extent to which Department of Health,
Education, and Welfare assistance to D-Q University has
resolved the university's problems, thereby enabling resump-
tion of title III funding, and the appropriateness of HEW's
decision to deny funds to D-Q University during the 3-year
period between 1974 and 1976.

     In accordance with discussions with your office,
this report was discussed with the Department of Health,
Education, and Welfare.

     In addition, as arranged with your office, we will
send copies of this report to interested parties and make
copies available to others upon request.



                                 Sincerely yours,




                                 Comptroller General
                                 of the United States
 COMPTROLLER GENERAL'S REPORT            FINANCIAL DIFFICULTIES AND
 TO THE HONORABLE B. F. SISK             FUNDING AT D-Q UNIVERSITY
 HOUSE OF REPRESENTATIVES                Department of Health,
                                         Education, and Welfare


               DIGEST
               D-Q University has had financial difficulties
               for several years. This 2-year institution
               located near Davis, California, was established
               in April 1971 to provide an educational program
               for Native American and Chicano people.

               The report answers the following questions:

               -- How reasonable were Department of Health,
                  Education, and Welfare (HEW) decisions to
                  deny the university funding under the Title
                  III Strengthening Developing Institutions of
                  Higher Rducation Program?

               -- How much did HEW assist D-Q in resolving its
                  problems so funding under title III could be
                  continued?
               Under the title III program, the Office of
               '-ucation makes grants to developing institu-
               tions to strengthen academic, administrative,
               and student services programs. D-Q University
               received a $100,000 title II. grant in fiscal
               year 1973 but was denied grants from 1974
               through 19'6.
              D-Q satisfied the minimum criteria for the title
              III program, but GAO and the Office of Education
              were concerned about D-Q's progress in satisfying
              certain other criteria established by the Office
              of Education for the title III program.  (See
              p. 12.)

              For example, D-0 depended on Federal funds for
              its support, and its reported enrollment varied
              greatly from year to year.  (See p. 16.)  Class
              attendance appeared to be poor. In addition,
              few students transferred from D-Q to 4-year
              colleges, and relatively few associate degrees
              have been awarded.  (See p. 19.)

cvShlt.      Upon removal, the report
coveFr    e should  notWd hereon.
                                                          HRD-77-146
 The Office of Education has invited D-Q personnel
 to attend technical assistance workshops and,
 in fiscal year 1976, awarded D-Q a $25,000 grant
 for preparing a fundable title III program for
 the 1977-78 academic year.  (See p. 22.)
 In addition to problems under the title III
 program, D-Q University has had problems under
 other HEW and other Federal at,ency programs.
 (See ch. 3.)  For example,
 -- For the 1976-77 academic year, D-Q could not
    get funding under the Office of Education's
    Special Services for Disadvantaged Stidents
    Programs, although it had previously.
 -- Department of Labor officials had, among
    other things, questioned D-Q's accounting
    for property acquired under the Migrant
    Worker Program.

 -- HEW questioned D-Q's compliance with escrow
    agreements for Government surplus property
    which the university occupies.
--The Office of Education questioned expendi-
  tures by D-Q under a library support grant.
-- D-Q did not keep detailed performance records
   for a project covered by the Indian Education
   A t.

Because of tne above, title III officials were
correct in doubting D-Q University's ability to
efficiently and effectively use title III funds.
HEW's Grants Administration Manual provides for
special consideration to high risk institutions,
and GAO would categorize D-Q as such an
institution. (See p. 23.)

If, in the future, Government support for D-Q
University programs is resumed, D-Q will need
considerable technical assistance to protect
the Federal investment in D-Q and for D-Q to
continue operating.
An HEW review team had several suggestions for
helping D-Q comply with Federal escrow agree-
ments on surplus property. Because D-Q was


                      ii
granted full accreditation by the Accrediting
Commission for Junior Colleges, Western Asso-
ciation of Schools and Colleges, HE!' Region
IX officials are considering certain matters
which coulu affect the university's future.
(See pp. 27 and 32.)
The Acting Director of the Office of Educa-
tionrs Division of Institutional Development
believed GAO's report thoroughly and objec-
tively presents the situation at D-Q Univer-
sity. (See ch. 5.)
                          Contents


DIGEST                                                    i

CHAPTER
   1       INTRODUCTION                                   1
               Background for title III program           1
               History of D-Q University                  4
               Scope                                      4

   2       D-Q UNIVERSITY STANDING REGARDING TITLE
           III PROGRAM CRITERIA AND HEW ACTIONS TO
           HELe                                           6
                Funding for D-Q University                6
                D-Q has only marginally met minimum
                  title III criteria                      9
                D-Q has been granted full accreditation   9
                D-Q University does not compare
                  favorably to other private 2-year
                  institutions                            12
                Observations on student enrollment,
                  class attendance, credit transfer,
                  and other activities                    19
                OF actions to assist D-Q University       22

       3   D-Q UNIVERSITY HAS HAD PROBLEMS IN OTHER
           FEDERAL PROGRAMS                               25
               HEW Region IX expresses concern about
                 D-Q's future                             25
               Federal support denied by special
                 services program                         28
               Problems encountered by other Federal
                 agencies providing assistance to D-Q     29

       4   SUMMARY AND CONCLUSIONS                        31
               Conclusions                                31

       5   AGENCY COMMENTS                                34

APPENDIX

       I   Letter dated June 21, 1976, from the
             Honorable B. F. Sisk                         35

                             ABBREVIATIONS

GAO        General Accounting Office
HEW        Department of Health, Education, and Welfare
OE         Office of Education
                          CHAPTER 1
                        INTRODUCTION

     At the request of Congressman B. F. Sisk,
certain circumstances surrounding the denial     we reviewed
                                              of funding of
proposals by D-Q University for assistance
III Strengthening Developing Institutions under the Title
                                           of Higher Educa-
tion Program authorized by the Higher Education
                                                  Act of 1965,
as amended (20 U.SoC. 1051 et seq.). D-Q University
Native American and Chicano--institution located       is a
California. The specific matters we were          near Davis,
                                           requested to
review were

     -- the extent to which the Department of Health,
        Eduction, and Welfare (HEW' has assisted
                                                   D-Q
        University idi resolving its problems so that
        funding under title III could be continued
                                                      and
     -- the appropriateness of HEW's decision to
        D-Q University funding during the 3-year deny
                                                 period
        from 1974 to 1976.
     In his request letter, Mr. Sisk further advised
D-Q University could not continue to operate          that
                                             without
Federal title III funds and that when the
                                          university was
established, it was known that long-term Federal
                                                 assistance
would be required. Such aid was deemed appropriate
D-Q University was established to provide            because
                                          Native Americans
and Chicanos with a meaningful education.

BACKGROUND FOR TITLE Iii PROGRAM

     The Office of Education (OE) offers title
                                                III grants
to assist developing institutions in strengthening
academic, administrative, and student services      their
These institutions are limited in their ability programs.
students, engage outstanding faculty, offer      to attract
curricula, and acquire adequate financial   diverse
                                          resources.
     Minimum eligibility for title III assistance
institutions of higher education to               requires

    -- provide an educational program, which
                                             awards
       bachelor's degree, or be a junior or communitya
       college,




                             1
    -- be accredited by a nationally recognized ac-
       crediting agency or association (or be making
       reasonable progress toward accreditation), and
     -- with certain exceptions, have met the above
        two requirements during the 5 years preceding
        the gzant year.
     Lie Commissioner of Education is authorized to waive
certain of these requirements for institutions located on
or near Indian reservations or which have substantial
Indian populations if he determines such action will
increase higher education for Indians. Until the Education
Amendments of 1976 deleted the provision, grants made under
the Indian waiver could not exceed 1.4 percent of the annual
program appropriation. The Commissioner can also waive 3
years of the 5-year requirement if he determines that higher
education for Spanish-speaking people will be increased
substantially.

     Title III program legislation requires the Commissioner
cf Education, in order to approve grants to institutions
of higher education, to determine that the institutions are
(1) making a reasonable effort to improve the quality of
teaching and administrative staff and student services and
(2) struggling for survival because of financial or other
reasons and isolated from the main currents of academic
life. To help the Commissioner identify developing institu-
tions through which title III program goals can be achieved,
and establish priorities and criteria for making grants,
the law established an Advisory Council on Developing
Institutions.

     Applications for title III assistance must show that
Federal funds will be used to supplement and, to the extent
practical, increase the level of funds that would be made
available to the institution by others and not to supplant
such funds.
     For those institutions meeting the minimum eligibility
criteria stipulated in the law, OE has established eight
quantitative measures (see table on p. 13) for assessing
if an institution may be classified as developing. They
have been quantified by institutional type and control.
Institutions outside the range of one or more of the
suggested minimum quantitative criteria are allowed to
demonstrate that being outside does not alter tnue character
of the institution.




                             2
       According to Or regulations, institutions meeting
 quantitative standards are further evaluated under
 qualitatair criteria, Qualitative factors are       certain
                                                 evaluated
 over a 3-year period and include the following:

      -- enrollment - Consideration is given to
         full-time equivalent enrollment; number of
         junior or community colleg9 graduates con-
         tinuW-q their education at 4-year institu-
         tion,  or graduates of 4-year institutions
         continuing -heir education a; graduate or
         professional schools; high school class
        standing of entering freshmen; percentage
        of freshmen completing their first y ar;
        and the percentage of freshmen who even-
        tually graduate from the institution. If
        enrollment has ueclined in the 3 years
        immediately preceding the grant application
        year, F!,e institution must demonstrate that
        such decline does not impair continued
        institutional viability. OE encouragec
        institutions to adopt open enrollment
        policies (a'j.high school graduate can
        enter), and an OE official estimated that
        about 80 percent of the title III institu-
        tions have open enrollment policies.
     -- Insti'ution personnel - An nstitution is
        evaluated on the quality of its personnel
        in the areas of institutional administration,
        including financial operat.ons, student
        services, teaching and research.  Factors
        considered will include the percentage of
        professionals with advanced degrees and the
       salary scale of the institution.
     -- Institution vitality - Factors corsidered
        include the institution's fund raising and
        planning capabilities and whether the insti-
        tution has devised a development plan.
     Those institutions meeting quantitative and qualitative
criteria are classified as developing. OE further
                                                   evaluates
the merits of these institutions' grant applications.

     For fiscal years 1974 throuch 1976, the developinr
stitution program's annual appropriations were             in-
                                                approxiriately
$100, $110, and $110 million, respectively. Amounts
fied for institutions of higher education offering      i.~nti-
                                                     Inrian



                              3
programs were $3.5, $3.9, and $4.4 million for the same
3 years.  Thus, the total percentages of funds for these
3 years allocated to institutions serving substantial
Indian populations were 3.5, 3.5, and 4, respectively.

HISTORY OF D-Q UNIVERSITY

     D-Q University was established as a 2-year institu-
tion in April 1971 for the education of Native American
and Chicano peoples. The university's primary concern
is to direct these peoples toward self-determination
and self-direction. These goals were to be accomplished
by helping students to

        --be aware of their cultural heritage and
          unique ethnic values,

        -- prepare educationally for service in their
           own c.mmunities, and
        -- interact between their own clture and the
           dominant cllture.

     The D-0 University main campus is on approximately 640
acres which were formerly an Army Communications Center. The
university location was declared surplus property by the
General Services Administration. The university operates
several geographically dispersed branches in California com-
munities. It has an open enrollment policy for students.

     Funding and enrollment statistics fJr D-Q University
are discussed in chapter 2.
SCOPE

     To respond to questions on D-Q University's denials
for title III funding, we made two visits to the D-Q
campus between August and December 1976. At the campus we
reviewed financial records, class rosters, and attendance
records; spoke with university officials and instructors;
and observed classes. We spoke with HEW headquarters and
regional officials associated with the title III and other
OE programs to discuss D-Q's participating in higher educa-
tion programs and to determine if they had evaluated D--Q's
programs. We also spoke to officials of OE's Division of
Eligibility and Agency Evaluation about D-Q's accreditation
status. In addition, we spoke with officials of the Depart-
ments of Labor and Interior concerning D-Q's participating




                                4
in other Federal programs and to officials at five institu-
tions of higher education in California c'oncerning trans-
ferability of D-Q credits to institutions offering 4-year
programs.
                             CHAPTER 2
        D-Q UNIVERSITY STANDING REGARDING TITLE III
         PROGRAM CRITERIA AND HEW ACTIONS TO HELP


      OE officials have been concerned about D-Q University's
reliance on Federal funds for support. The accrediting
organization which gave D-Q a recognized candidacy
                                                    status
 (and subsequent full accreditation) also noted D-Q's
ance on Federal funds for support. D-Q                reli-
                                         University has only
marginally met the minimum criteria for developing
                                                    institu-
tions. However, disagreement exists among OE officials
to whether the university has been progressing toward     as
ing the quantitative and qualitative criteria for      meet-
institutions. D-Q has been rated lower than many developing
                                                   other
title III applicants which were also denied funding.
                                                       Also,
D-Q University enrollment varied significantly in
class attendance was poor at classes we observed, the past,
                                                   transfer
of D-Q students to 4-year colleges has been minimal,
                                                      and
relatively few students have graduated with associate
degrees. In addition, we noted other shortcomings
                                                    in D-Q's
programs and facilities.

     HEW has offered assistance to the university through
workshop invit:ations and has provided a $25,000 Blanning
grant to assist D-Q in preparing a fundable title
                                                   III
proposal.
FUNDING FOR D-Q UNIVERSITY

     The following table shows D-Q University funding
for the 3 fiscal years, 1974 to 1976.                 sources




                               6
                                           Fiscal years
   Federal support

Title III, Developing
  Institutions               $        -    $        -     $ 25,000
Title IV, Part B, Indian
  Education Act, as
  amended                        250,000        200,000    175,000
Special Services for
  Disadvantaged Students
  (TRIO Programs)                 65,309         65 '09      9,420
Student Assistance:
  College Work-Study              23,635         49,757     55,299
  Supplemental Educational
    Opportunity Grants            31,814        106,779     85,200
  Basic Educational
    Opportunity Grants            6,181          42,581     54,439
  Bureau of Indian Affairs        6,064          35,129     42,803
Federal Library Grant         __4&235             3,918      3,930
    Total Federal            $387L238          $503,473   $451,091
Tuition and fees                 12,800          30,000     45,000
Donations (note a)                  319          34,275     14,451
Sale of stock (note a)           51,797             -        -
Farm management(note a)             -             4,122    5,328
Other (note a)                      795    _      7l212   __255
    Total non-Federal        $_65,711          $_75L69    $_66,834
Total                        $452L949      $ 579,82       $517,925


a/Amounts based on information provided to us by D-Q
  University.
For the 3 fiscal years from 1974 to 1976, Federal support
each year represented approximately 85, 87, and 87 percent,
respectively, of D-Q's budget. D-Q has relied heavily on the
Federal Government as its major sour-e of funds




                                  7
      D-Q first applied for support under title III in fiscal
,rear 1973 (academic year 1973-74). For academic year 1973-74,
D-Q received a $100,000 title III grant under the program's
Indian waiver (according to OE officials, only one other
institution has ever been granted funding under this waiver).
The D-Q grant included assistance for the Indian and Chicano
components at D-Q and had two major purposes--library devel-
opmert, including salaries for two positions, and academic
development for Tiburcio Vasquez College. The latter amount
included the salary of the director and associate director.
Remaining funds supported two clerk typist positions,
expenses for library workshops, academic workshops, and
general expenses, including supplies and communications.

     On February 23, 1972, the Department of Labor con-
tracted with D-Q to coordinate a Migrant Worker Program to
provide orientation, basic education, vocational training,
and supportive services for 550 migrant farm workers. The
contract allowed approximately $2 million to be used between
June 1972 and December 1973.

     In its August 23, 1974, report on an interim audit of
D-Q University, the Office of the Assistant Secretary for
Administration, Depprtment of Labor, said D-Q had failed
to maintain proper control of property acquired under the
contract. The Department questioned expenditures of
$107,128 and said that the university's accounting system
and internal controls could not adequately safeguard the
assets made available to D-Q under the program.  this matter
had not been resolved as of June 1, 1977.

     D-Q has also received funding under Title IV, Part B
of the Indian Education Act, as amended (20 U.S.C. 241aa
etseg., Supp. V, 1975).   Funds for fiscal yearq 1974 to
1976 were used for language materials and native language
reading and writing for training two Indian tribes. We
discuss this project in more detail on page 29.

     D-Q requested funding under title III for fiscal
1974 and 1975 but was refused by OE (see p. 16). The years
                                                       two
proposals were essentially to expand upon the 1973 proposal
and to include several new -ositions. In lieu of the
$339,000 title III request Dy D-Q for fiscal year 1976, OE
provided a $25,000 title III planning grant to assist D-O
in developing a fundable proposal.

     In addition to D-Q's participation in the College Work-
Study, Supplemental Educational Opportunity Grants, and
Bureau of Indian Affairs student aid programs, most students



                             8
at D-Q qualify for Basic Educational Opportunity Grants
which are administered by OE. D-Q's authorized levels
for the Basic Grant program were $10,700, $46,256, and
$128,038 in fiscal years 1974 to 1976, respectively.
However, authorized amounts can differ from actual amounts
awarded to students, depending on demand for such funds.
As shown by the table on page 7, D-Q disbursed $6,181,
$42,581, and $54,439 (latest amount available) to D-Q
students for the same fiscal years.

D-Q HAS ONLY MARGINALLY MET MINIMUM
TITLE III CRITERIA

     D-Q University, despite its name, is a junior college.
Effective July 1, 1977, it received full accreditation by
the Accrediting Commission for Junior Colleges, Western
Association of Schools and Colleges, a nationally recognized
accrediting association for Western States junior and
community colleges.

     For fiscal year 1973, D-Q qualified under the Indian
waiver. Therefore, it did not have to meet certain OE re-
quirements for the 5 years preceding the grant. No ques-
tion exists that D-Q has been struggling for survival
because of financial reasons and is isolated from the main
currents of academic life.  However, questions have arisen
concerning the reasonableness of D-Q's efforts to improve
the quality of teaching and administrative staffs and
student services. (See pp. 12 to 19.)
D-Q HAS BEEN GRANTED FULL ACCREDITATION

     As mentioned previously, developing institutions need
accreditation by a nationally recognized accrediting agency
or association or should be making reasornble progress
toward it.  In 1972 D-Q University applied to the Accredit-
ing Commission for Junior Colleges, Western Association
of Schools and Colleges, for accreditation. The Commission
made a site visit to D-Q before granting the university's
initial candidacy status.
     In a letter dated July 5, 1972, the Accrediting Commis-
sion informed D-Q of its acceptance as a recognized candidate
for accreditation for the period July 1, 1972 to June 30,
1973. The Commission stated that acceptance as a recognized
candidate for accreditation implies that an institution



                             9
      '* * * appears to be offering students on at
     least a minimally satisfactory level, the
     educational opportunities implied by its
     objectives. In the commission's view the
     institution's organization, structure, and
     staffing are acceptable for its stage of
     development, its sponsors are committed to
     supplying its needs and are able to do so,
     its governing board is functioning properly,
     and its academic and financial plans are well
     designed. Candidacy is not accreditation. It
     indicates that an institution is progressing
     steadily and properly toward accreditation,
     but does not assure or even imply eventual
     accreditation."
In its July 5 letter, the Accrediting Commission told D-Q
that it was particularly concerned about D-Q's fiscal
accountability.

     In its June 7, 1973, report on D-Q University, the Ac-
crediting Commission made the following comments on D-Q's
status.

    -- The teaching staff comprises 5 full-'ime and
       about 14 part-time instructors and teaching
       assistants. Their salaries are low, but their
       commitment appears high. The rather high turn-
       over may have both negative and positive
       effects. The quality of instruction in some
       fields may be uncertain from year to year
       as may be the continuity in planning. How-
       ever, the contributing faculty brought to D-Q
       their specialized training and enthusiasm.
    -- The free and informal manner of the staff
       allowed students to grow naturally, free from
       the tensions of some educational institutions.
    -- The library is being expanded, and some space
       exists for developing instructional, service,
       and storage areas.
    -- Equipment for science laboratories, business,
       and occupational training is urgently needed.

    -- Much progress has been made in student services
       to include sound policies for admissions, tutoring,
       testing and placement, and a program for students



                            10
       needing precollege services.

     -- Because D-.Q prepares students to return to their
        communities, academics should not be the issue.
     -- The university is now operating primarily with Federal
        funds.

     -- Weaknesses noted by an auditor's report were being
        revised or corrected.

     -- The board of trustees broadly represents Rative
        American and Chicano national interests.

     The Accrediting Commission's conclusions were that
D-Q's approach is effective for educating Native American
and Chicano students. The university's growth and progress
depend on a constant source of funds to provide building,
facilities, and operating expenses. Expanding to include
baccalaureate and graduate studies should be planned care-
fully without haste and with concern for academic standards,
instructional resources, and stable financing. The institution
should try to retair permanent staff to give continuity to
planning and establishing programs and services.

     On May 15-16, 1975, representatives of the Accrediting
Commission for Junior Colleges visited D-Q to consider re-
viewing D-Q's candidacy for accreditation and subsequently re-
ported to the Commission that D-Q met all eligibility condi-
tions. However, in a letter of July 16, 1975, the Commission
advised D-Q as follows:
     "The Commission decided that a sufficiently serious
      deficiency existed at the time of the visit to justify
      a decision to permit candidacy to lapse on June 30, 1975.
      However, the Commission recognized that such a decision
      might render it more difficult as a practical matter to
      remedy this area of deficiency. Accordingly, the Com-
      mission voted to extend to D-Q University a special
      status. Under this decision, candidacy will be con-
      tinued for a period of one year only, until June 30,
      1976. During this one year, the College will be
      required to remedy this deficiency and demonstrate
      why its status should not be terminated on June 30,
      1976."
D-Q had been found to be seriously deficient in its ability to
achieve a stable financial condition. This had affected its
ability to provide for an adequate full-time teaching staff.




                             11
     The Commission further informed D-Q that the Commission
report was inaccurate in its statement that D-Q had met all
conditions for candidacy eligibility.  For example, D-Q had
not furnished the visiting committee with financial statements.
D-Q also failed to submit audited financial statements to the
Commission to show the existence cf an "adequate financial
base of funding commitments."

     The Commission, therefore, requested that D-Q furnish the
Commission with a certified audit for fiscal year 1975 and
budget for fiscal year 1976, indicating an adequate financial
plan for the continuing operation of the institution. This
was to be done by November 15, 1975. Furthermore, the Com-
mission expressed concern about (1) D-Q's provisions for
supervising and coordinating the 13 brancn centers it was
establishing and the effect the centers would have on D-Q's
financial condition, and (2) D-Q's ability to offer an effect-
ive instructional program with a staff of teachers which is
largely part-time and volunteer.

     After receiving an accreditation renewal report and a
certified audit from D-Q, the Commission extended D-Q's candi-
dacy for accreditation to June 30, 1977. Based on a site
visit in April 1977, the Commission granted D-Q full accredi-
tation effective July 1, 1977.

     We contacted officials of OE's Division of Eligibility
and Agency Evaluation, which assists the Commissioner of
Education in recognizing national accrediting organizations
for institutions of higher education, concerning D-Q's
accreditation status. Officials there cc'ild only tell us
that D-Q was eligible for Federal funding since the univer-
sity had been accredited by the nationally recognized Wcatern
Association of Schools and Colleges.

D-Q UNIVERSITY DOES NOT COMPARE FAVORABLY
TO OTHER PRIVATE 2-YEAR INSTITUTIONS

     D-Q University has not compared favorably with other
2-year institutions rated under OE's Title III evaluation pro-
cedures. This may be due, at least partially, to D-Q's special
philosophy for serving Native American and Chicano students.

Quantitative factors

     D-Q was rated on the eight quantitative factors for de-
veloping institutions established by OE for those institutions.
These are listed in column one of the table which follows. For
academic years 1972-73, 1973-74, 1974-75, and 1975-76, the
table shows D-Q's status with regard to these eight factors.


                            12
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                                                                                                                   13
     OEEanel review process
     Proposals submitted to OE by institutions of higher
education for title III support are subject to review by
outside reviewers. The following table shows the ratings
given to D-Q's request for funds for academic years 1974-75,
1975-76, and 1976-77. The numbers one to five in each
column are a scale, with five being the highest rating for
each category.




                              14
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                                                                                                                                               l 4d..q
     OE could not provide records comparing D-Q's rating to
those for other institutions which were denied funds in aca-
demic year 1974-75. Reviewers' comments indicated D-Q wa;
clearly eligible for title III fundir- nd that it appeared
to be working toward making progress     vrie reservation existed
about D-Q's dependence on Federal sul    : to continue func-
tioning. We noted that D-Q received a lower overall rating on
its proposals for academic years 1975-76 and 1976-77 than sev-
eral other 2-year institutions. For example, on its academic
year 1975-76 proposal D-Q received an average rating of less
than three on the sca'? of five. Seventy-seven nonfunded 2-year
institutions received ratings of four or above. On their aca-
demic year 1976-77 proposal, D-Q's average rating was less than
three. Seventy-one nonfunded 2-year institutions were rated
four or above.
Reasons OE denied title III funding

     In a July 24, 1974, letter, the Director, Division of
Institutional Development, advised D-Q 'hat its academic year
1974-75 proposal for title III funding was denied because:

     -- Enrollmenit dropped below a level consistent with the
        title III intention of selecting institutions with
        growth pote,.tiel and a possibility of moving into
        the mainstream of American higher education.
     -- Although the 1973-74 title III grant to D-Q came
        under the Indian waiver, the university appeared to
        be serving primarily Chicano students.
     The project officer for D-Q's proposals g!ve us an
internal memorandum from OE officials regarding D-Q's 1973
proposal. In that proposal, D-Q reported its student enroll-
ment as 54 in academic year 1971-72. They expected this to
increase to 720 in academic year 1973-74. According to OE,
D-Q's academic year 1974-75 proposal showed 75 students. OE
did not conduct a site visit to confirm D-Q's enrollment statis-
tics for the 1974-75 school year.

     In fiscal year 1975 the Advisory Council on Developing
Institutions defined a Native American institution as "having
100 or more American Indian students which constitute at least
10 percent of the total enrollment." Accordingly, OE desig-
nated 10 fiscal year 1975 title III applicants as Native
American institutions. An OE official told us D-Q was not
included on the list because I.s enrollment did not include 100
American Indian students. Information on numbers of students
given student assistance from the Bureau of Indian Affairs



                            16
(see p. 7) showed that 5, 24, and 45 students
1974, 1975, and 1976, respectively. Criteria received  aid in
                                              for this program
state that applicants must be at least one-quarter
be members of a federally recognized Indian        Indian and
                                            tribe.
      In a letter dated September 11, 1974, the chairman
                                                         of the
board of trustees at D-Q advised OE that the large
                                                    drop in the
university's enrollment resulted from students
the Migrant Worker Program, which is supported graduating through
                                                by the Department
of Labor. (See p. 8.) The chairman sail that
                                                because D-Q
provided total financial support for its students,
                                                    it could
not afford to admit all the students who had applied.
told OE that D-Q's program was uniquely designed       He also
students and the Indian community.                for Iidian

     In a June.30, 1975, letter to D-Q, the Director,
of Institutional Development, stated                   Division
                                     that OE could not fund the
academic year 1375-76 D-Q proposal for the followin.a
                                                      reasons:
    --Outside readers gave the proposal an overall
                                                   insufficient
      rating to warrant recommending support. The proposal
      failed to project a well-planned program.
    --OE staff had difficulty getting accurate enrollment
       data on D-Q University. The revised proposal failed
       provide an enrollment breakdown for Indian students. to
       This was a critical factor since D-Q s proposal
                                                       was
       submitted under the Indian waiver.
    -- OE received considerable mail from perscas interested
       in D-O's continued operation.  Much of this correspond-
       ence suggested the college would not survive wittout
       title III support.

    -- The outside readers found the philosophic statement
       of the institution's program well articulated.
       the readers said the university proposal did notHowever,
                                                         explain
       how goals were to be achieved.
    -- Concerns arose concerning the consortium of Indian
       and Chicano colleges proposed by D-Q.  Most of the
       institutions listed were ineligible for support
       because they were not accredited.  The -equest
       seemed geared to paying the staffs of each college.
      In response to this letter, the chairman
 of trustees of D-Q wrote to thy Commissioner ofof the board
                                                  OE
 1975. The letter questioned the Director's reasons on July 16,
 ing D-Q's funding, stating the reasons were either for deny-
 subject to challenge. He further stated that:       untrue or



                           17
        -- The Acctediting Commission's report on D-Q provided
           an excellent evaluation of D-Q's educational program.
           This report, which was done by professional educators,
           contradicted the Director's evaluation.
       -- Enrollment data were      discussed with title III program
          officials in January      1975, and at that time a docu-
          mented enrollment of      220 students was accepted by
          OE. Over 70 percent       of those enrolled were Indians.
       -- At the January 1975 meeting, D-Q was told it
          could qualify under either the Indian or the Spanish-
          speaking waiver. This matter was to be left open
          because D-Q might find it advantageous to apply under
          both waivers.
       -- Mail suggesting D-Q could not survive without title
          III funds should not be used to justify denying funds
          to D-Q. The letters do indicate D-Q's role in the
          Indian and Chicano communities, but statements
          in the letters should not replace documented'
          records used for evaluating proposals.

       -- The program narrative, the title III evaluation
          report, and the "Accrediting Commission for Junior
          Colleges Accreditation Report" explained how goals
          were to be achieved.
       -- Concerns about the eligibility of participants
          in the consortium of Indian and Chicano colleges
          which may not be accredited are unfounded. D-Q
          as an accredited institution, acting as the
          coordinating college, submitted a second arrangement
          for that reason. The consortium was patterned after
          another group of unaccredited Indian colleges
          which has continued to receive title III support.
       The title III project officer for D-Q proposals told
us the university was advised by telephone that its 1976 pro-
posal was not recommended for funding. However, OE offered
D-Q a $25,000 planning grant so D-Q could obtain assistance
to prepare a fundable proposal for the next year.

OE title III program reviews

     An OE title III representative has made only one visit
to D-Q University. The Assistant Director, Division of Insti-
tutional Development, conducted the visit to D-Q University on
November 3-4, 1975. His November 20, 1975, site visit report,



                               13
expressed his conviction that D-Q was progressing satisfac-
torily toward the goals set for the university. He recom-
mended support for D-Q but called for frequent and careful
monitoring of fund expenditures and program progress. He
said D-Q's farm management program could provide the univer-
sity with great financial assets. Ernrollment totaled 240
full-time students, with 33 at the main campus and 207 in the
off-campus centers. Enrollment was expected to increase by
80 on the main campus by the -pring 1976 semester. In addi-
tion, student financial aid had increased.

     Others inOE,  however, believed D-Q had not demonstrated
sufficient capacity to use title III funds to develop its
educational programs. In addition to other reasons for denying
D-Q funds, an OE employee rated D-Q University's proposal
for the l976-77 program year and placed D-Q in the lowest
category for each area. The rater made several comments re-
garding the proposal, including:

     -- The university is relying solely on title III funds
        for basic operations.

     -- The initial Federal title III funding had little impact.
     -- The institution is requesting support, not developmental
        funds.
     -- A well-planned program is not projected in the proposal.
     -- In 1975-76 only five full-time faculty were onboard.

     -- A proposed college of medicine is totally unrealistic
        for a 2-year college.
OBSERVATIONS ON STUDENT ENROLLMENT,
 CASS ATT ENDANCE, CREDIT TRANSFER,
AND OTHER ACTIVITIES

     In several reviews at D-Q and in several reports
submitted to OE and the Department of Labor, student enroll-
ment figures varied. Based on our visits to D-Q, class
attendance at the university's main campus appeared to be poor.
Few former D-Q students have gone on to 4-year institutions,
and relatively few associate degrees have been awarded.
Other problems were also noted during our visits to D-Q.
Number of students enrolled at D-Q

     In their academic year 1973-74 application to title III,
D-Q reported an enrollment of 610 students during academic
 year 1972-73. The university projected that enrollment
                                                         would
 increase to 720 for academic year 1973-74. However, D-Q's
 academic year 1974-75 application shoved only 75 students
 enrolled for 1973-74 and gave no projection statistics.
 The drastic decrease in enrollment was attributed to the
 terminated Department of Labor Migrant Workers Project.
 (See p. 8.)   In January 1975 D-3 reported to OE an enroll-
 ment of 220 students. In December 1976 we vilited D-Q
                                                         and
 calculated enrollment at 161 (see table below). In January
 1977 HEW regional officials visited D-Q and confirmed
 85 students were enrolled on campus for the 1977 springthat
 semester.

                     Location And Numbers Of Students
                          I
                       Encolma At D-Q University
                                            Number of
          Location                          students
Main campus - Davis                        a/70
    Centers - Covelo                       b/29
              Lakeport                        5
              Mendocino                      17
              Willits                      b/40
                     Total                  161

a/   Includes 7 students involved in independent study out-
     side of the classroom, and at least 22 are taking less
     than 12 units.
b/   Includes four part-time students.

     D-Q's president told us he anticipated an
least 70 students at the 5 additional centers byincrease
                                                  the end
                                                          of at
of the semester (Greenville-30, Healdsiburg-15, Redding-10,
Santa Rosa-13, and Livermore-2). As of December 7, 1976,
none of these centers were affiliated with D-Q. Due
                                                      to
time constraints, we did not visit the centers to verify
rollment and other information which we had obtained       en-
                                                      during
visits to D-Q's main campus.
Class Attendance

     We determined that at least 38 students (the number
on campus) were physically present on the Davis campus.  living
attendance, however, appeared to be poor based on our    Class
                                                      review



                                20
of attendance records (where available) and observations of
certain classes. For example, the average absentee rate was
32 percent in the 3 classes we observed. In 1 class, 2 of the
5 students enrolled missed 8 of the first 10 sessions, and
only 1 student was present for the mid-term examination. Also,
a faculty member was enrolled in the three classes we observed
yet did not attend any class meetings. In another :ourse, re-
cords showed he attended only 2 of the first 10 clascer.
Transfer of D-Q credits

     We contacted five 4-year institutions to which D-Q had
sent student transcripts to determine if they would accept
credits earned by D-Q students. School officials at all five
institutions follow the recommendations listed in the American
Association of Collegiate Registrars and Admissions Officers'
"Report of Credit Given by Educational Institutions." This
report recommends that D-Q's credits be accepted provisionally
insofar as they are applicable to a student's program. For
appropriate postsecondary academic courses or courses compar-
able to their own, the schools give conditional credit. Full
credit is given for such courses after a transfer student has
completed a minimum of 24 units with at least a "C" average.

     Additionally, one university official gave us a list
of D-Q courses for which the university had given credit in
the past. We found that two of four D-Q students known to
have transferred to this university had graduated, and two had
withdrawn. The registrar at D-Q could only remember sending
about 20 student transcripts to 4-year institutions since
the school opened in 1971.
Other information obtained
durnEi'  lsts to D-D

       During our visits to D-Q University we noted the follow-
ing:

       -- Relatively few students have graduated with associate
          degrees (degrees conferred by institutions offering
          programs based on at least 2 but less than 4 years of
          woLk beyond high school).  Five such degrees were
          issued at the end of the spring 1976 term.
       -- Two D-Q students were awarded associate degrees based
          on "life experiences." They received science course
          credits for skydiving and fishing.



                              21
    -- The affiliation between D-Q and its community education
       branch centers appears questionable in light of the
       limited support provided by D-Q. Much uncertainty exists
       concerning the centers' continued existence based on
       tne frequency of their closings and/or termination of
       their affiliations with D-Q. As of December 7, 1976,
       only 4 of the 10 centers listed in D-Q's last self-study
       were offering D-Q courses.

    -- The university's acting president told us he intends to
       transport community education branch center students to
       the main campus for two weekends a month, if necessary,
       in order to count them in satisfying the HEW land grant
       condition which requires a minimum enrollment of 200 stu-
       dents on the main campus by June 30, 1977. (See p. 25.)

     -- D-0 lacks physical facilities and needs to repair
        existing ones. For instance, D-Q had no campus book-
        store. In need of repair were holes in the windows,
        floors, and gymnasium walls. In the main classroom we
        found a hole in the middle of the blackboard.
     -- The library appeared disorganized.
OE ACTIONS TO ASSIST D-Q UNIVERSITY

     In a letter dated October 17, 1975, the Secretary of HEW
stated that OE would assist D-Q in preparing its academic
year 1976-77 title III application which was due on or before
October 31, 1975. The Director, Institutional Development
Program, had previously offered to assist D-Q in developing a
fundable proposal. The extent of OE's direct assistance to
D-Q since July 1973 has included the following:
     --In September 1974, OE invited D-Q to attend an OE
       technical assistance workshop in San Francisco,
       California. D-Q sent a representative to the work-
       shop, but its pending 1974-75 academic year proposal
       was not discussed.

     -- D-Q was a member of the American Indian Higher Edu-
        cation Consortium, coordinated by the Navajo Community
        College, which received $350,000 of OE title III sup-
        port in fiscal year 1975. However, D-Q left this
        consortium because the university believed it received
        very little benefit from this group. D-Q believed it
        had more expertise than the other consortium schools.



                             22
     -- In January 1975 title III officials and HEW Indian Edu-
        cation representatives met with D-Q officials and dis-
        cussed D-Q's 1976 title III proposal. D-Q presented up-
        dated student enrollment figures.
     -- In June 1975 OE invited D-Q to attend a September title
        III informational workshop in Denver, Colorado. D-Q
        sent a representative to the workshop.

     -- In November 1975 a title III official came to D-Q for
        2 days to visit the main campus and D-Q's five community
        branch centers.
     -- In June 1976 OE approved a $25,000 planning grant to
        D-Q to assist in preparing a fundable proposal.
     -- In October 1976, a D-Q representative attended a work-
        shop in Chicago, Illinois along with 131 representatives
        from other nonfunded institutions.

     Assistance to D-Q, therefore, has consisted of comments
on weaknesses in D-Q's proposals and invitations to attend work-
shops to improve its proposals. Also, OE provided D-Q with the
$25,000 planning grant.

     We noted that Part III, Section 2, of the HEW Grants
Administration Manual provides for special consideration for
organizations it determines as high risk. These organizations
are identified by any or all of the following criteria:

     --Poor financial stability (that is, insolvency or threat
       of insolvency).

     -- Inexperience such as that of newly formed organiza-
        tions or that of organizations which have not pre-
        viously received Federal grants.
     -- Financial dependence on Federal support (that is,
        80 percent or more of an organization's revenues
        expected to be derived from Federal awards in forth-
        coming years).
    -- Serious deficiencies in program or business management
       systems (for example, substantial failure to comply
       with the financial management standards or procurement
       standards in 45 C.F.R. Part 100).
    -- History of unsatisfactory performance, material viola-
       tions of grant terms and conditions, or large cost
       disallowances on previous awards from the same or other
       Federal program.

                             23
     -- An advocacy organization whose purposes diverge from or
        conflict with those of the published rules and regula-
        tions of the prospective grant.
     Organizations identified as high risk should be brought
to the attention of the Director, Grant and Procurement
Management Division, who will decide to (1) not award a
grant, (2) award a grant, but with special terms and conditions
and require closer monitoring by OE, or (3) award a grant but
through a separate contract to provide appropriate technical
assistance to the grantee.
     According to our evaluations, D-Q would have qualified
as a high risk institution. However, an OE grants and con-
tracts official told us this manual provision was added in
February 1977, and, therefore, D-Q could not have been con-
sidered under it for its 1974 through 1976 proposals.




                            24
                          CHAPTER 3

               D-Q UNIVERSITY HAS HAD PROBLEMS
                  IN OTHER FEDERAL PROGRAMS

      D-Q University has received assistance under several
Federal programs. An HEW regional review team reviewed D-Q's
compliance with escrow agreements on the 640 acres of the
school's main campus. The team found that D-Q served more
cultural than educational purposes and concluded that the
school was not complying with the law under which it received
this surplus property from HEW. The review team recognized
D-Q's unique situation and tried not to measure the university
aga-.nst established colleges and universities. Because D-Q
University has full accreditation by the Accrediting Ccmmis-
sion for Junior Colleges, Western Association of Schools and
Colleges, HEW Region IX officials are planning to visit D-Q
University to review other matters which could affect the future
of the school.

     OE's Special Services for Disadvantaged Students Program
had also provided funds to D-Q University to cover the period
through August 31, 1976. Reviewers of D-Q's funding proposals
for previous years had certain c, ncerns about D-Q's programs
but they generally believed that the programs deserved funding.
However, D-Q's most recent funding proposal was denied.

     We included D-Q University in a previous review (HRD-76-
172; March 14, 1977) of institutions which had participated in
projects under Part B of the Indian Education Act of 1972.
At that time, we found that records were not being kept to
measure the level of participation in or the objectives of
the projects.

HEW REGION IX EXPRESSES CONCEPN
ABOUT D-    PUWUR31
                t     RS
     In January 1977 an HEW Region IX review team visited D-Q
University to evaluate the school's progress in meeting accredi-
tation and increased enrollment standards. These efforts were
to comply with the escrow agreements covering the 640 acres of
surplus property which D-Q occupies. Following are the points
discussed by the Region IX team with D-Q personnel:

     1.   Verifying onsite and offsite student enroll-
          ment.




                              25
     2.   Status of D-Q's accreditation.
     3.   Discussing title III funding endeavors.
     4.   Verifying Chicano presence and participation in
          student and faculty programs.
     5.   Status of D-Q's reply to audit exceptions.
     6.   Verifying acaiemic courses being held onsite
          and offsite.
     7.   Funding received from other Federal agencies.
     8.   Disposing of agricultural funds generated at D-Q.
     The original escrow agreement with HEW, which transferred
the surpl.us property to D-Q in April 1971, required that D-Q
obtain full junior college accreditation and have 500 full- and
part-time students on the main campus by October 1, 1975.
The escrow agreement was amended in September 1974 to (1) re-
quire full junior college accreditation by October 1, 1976,
and (2) change the required number of students to 125 by
the fall of 1974, 150 by the spring of 1975, and 200 by
the fall of 1975.

     In June 1976 a second amendment to the escrow agreement
changed the required date for full junior college accreditation
to June 30, 1977. This change reflected an extension of
candidacy status to June 30, 1977, by the Accrediting Commission
for Junior Colleges. The amendment also extended the require-
ment for enrollment of 200 full- and part-time students until
June 30, 1977.

     The HEW Region IX review team stated in its February 8,
1977, site visit report:

     "From the initial inception of DQU, the Region IX Office
      of Federal Property Assistance has tried not to measure
      it against the standards of established colleges and
      universities owing to its unique situation. After
      approximately six years of existence it is apparent
      that the Federal property transferred to DQU is serving
      more cultural than educational purposes. DQU['Is programs
      appear to be heavily committed to Indian culture.
      While such cultural purposes are certainly important
      to the Indian people and needed by them, unfortunately,




                            26
       such p ,poses are not eligible for transfer
       property by this Department under PL-152    of real
                                                81st Congress,
       as amended and by which the property
                                            was conveyed."
      The following options were suggested
 Director, Region IX, by the site review     to the HEW Regional
 of dealing with the property occupied    team  as possible ways
                                        by D-Q University:
      -- Return the property to the General
                                            Services Administra-
         tion for their disposal, possibly by
                                               transferring it to
         the Department of the Interior, Bureau
                                                 of Indian Affairs,
         for development under some tribal government.
     -- Provide HEW support for seeking congressional
        lative relief in behalf of D-Q. This               legis-
                                               would require en--
        listing the aid of congressional representatives
        reintroduce legislation similar to H.R.                to
        of July 21, 1976, to convey land to D-Q   14785
                                                  for estab-
        lishing a cultural center. This legislation
        eliminate the current educational limitations would
        prohibit establishing such a center.              which

     -- Return about 400 acres of unimproved
                                              land to the General
        Services Administration for disposal.
                                                About 200 acres
        would remain, including the buildings
                                               for
        tional program. Such action would probably  D-QO's educa-
        new escrow agreement containing rigid          require a
                                               controls.      Fur-
        thermore, OE headquarters would be required
        adequate resources to insure success of        to   provide
        program. Without OE financial assistance,the educational
        would do nothing more than prolong facing this option
       problem. The third option could be exercised the same
       junction with the second.                          in con-

     The review team recommended
pending the June 1977 decision of that action be postponed
                                   the Accrediting Commission
for Junior Colleges regarding D-Q's accreditation.
D-Q would receive a favorable decision,              Assuming
the third option. This would hinge on    thb team recommended
stantial financial assistance to enable OE assurance of sub-
enrollment.                              D-Q to increase its

     As a result of D-O's receipt of full
                                          accreditation, HEW
Rtgion IX officials met on August 9,
                                     1977, to consider the D-Q
situation. At that time, these officials
to extend the escrow agreements pending   tentatively decided

    -- a site visit to the university and
                                          its branch centers
       by HEW Region IX officials,


                             27
      --a review of the status and outlook of legislation
        transfer title of the surplus property to D-Q      to
                                                      without
        the current restrictions imposed on the university
        by the escrow agreements,
      --a review of the status of audit exceptions
                                                   noted by
        D-Q's auditor, and
      -- discussions with Department of Labor officials
                                                        regarding
         the exceptions noted by a review team which visited
                                                             D-Q
         in connection with a migrant workers contract.
 FEDERAL SUPPORT DENIED BY
 SPECIAL SERVICES PROGRAM

     The Special Services for Disadvantaged Students
for which D-Q earlier received but was later          Program,
                                              denied Federal
funding, uses an outside panel review process
lar to that used in the title III program. D-Qsomewhat simi-
funding of $65,309 under the special services    received
                                               program in each
of fiscal years 1974 and 1975 and $9.420 in fiscal
                                                    year 1976.
     D-Q's request for funds was reviewed in May 1974,
reviewers voiced some concern for '-Q's proposal.      and
less, they generally believed that ~te proposal    Nonethe-
Some of the reviewers' summary comments were    had some merit.
                                             as follows:
     -- D-Q's concern seems more with theory, philosophy,
        and structure than with the students themselves.
     -- The university realizes the importance of
                                                  positive re-
        gard for the students' culture and is responding
        to this need.
     -- A site visitation should be made.

     --The university's project should continue to
                                                   provide
       needed services to the special service student
                                                       popula-
       tion. By incorporating increased cultural activities,
       the total program will be enriched to benefit
                                                      the
       students. Although the number of students served
                                                          is
       small, it must be recognized that these students'
       needs are very great.
     However, for academic year 1976-77, OE denied
to D-Q under the Special Services for Disadvantaged funding
Program. In July 1976 reviewers commented that       Students
funds request was:                              D-Q's  1976


                             28
     -- Recommended but the proposal's lack of fiscal manage-
        ment was affecting program activities. The proposal's
        overall rating is fair, but flaws exist.

     -- Not recommended because accreditation status at
        D-Q is unclear, and the school's course offerings
        appear too limited.
     --Not recommended because serious doubt exists as to
       the program's credibility.
     In 1976, 58 applicants submitted proposals to the special
services program, and OE funded 32. D-Q ranked 42d among the
applicants, receiving 135 out of a maximum of 200 ranking
points.

PROBLEMS ENCOUNTERED BY
OTHER   -EDERALAGENCIES-
PROVIDINGASSISTANCE TO D-Q
     In addition to problems in accounting for property acquired
under the Migrant Workers Program of the Department of Labor
(see p. 8.), OE's Federal Library Grant Program has requested
that D-Q remit about $2,800 because of unauthorized fiscal year
1974 expenditures.

     We also noted problems encountered in a previous review. 1/
In that report we examined funding granted to D-Q under Title IV,
Part B, of the Indian Education Act. We reported on the special
educational needs of Indian students and efforts to assess these
special needs. D-0 was one of the institutions which we re-
viewed and which had received funding under Title III, part B,
of the Indian Education Act. We found that under projects in
which D-Q participated:

    -- Four beginning native-language reading booklets and
       30 instructional charts were developed and reproduced.
       Project officials said five training classes were
       conducted during fiscal year 1975, but four classes did
       not start until the end of the fisc-l year. According
       to these officials, about 85 individuals were tnrolled
       in classes meeting 1 day a week for 4 to 6 hours. How-
       ever, the project kept no records showing (1) student
       enrollment, attendance, and achievement, (2) frequency
       of classes, and (3) subject matter covered.


1/"Indian Education In The Public School System Needs More Direc-
  tion From The Congress," (HRD-76-172; March 14, 1977).

                             29
-- We could not determine if the part B project was im-
   proving educational opportunities for Indians because
   measurable project objectives generally were inadequate.




                         30
                         CHAPTER 4

                  SUMMARY AND CONCTLUSIONS


     Throughout its existence D-Q University has been struggling
for survival, because it is isolated from the main currents of
academic life. In a marginal way, D-Q has met the minimum
standards of the Title III, Strengthening Developing Institu-
tions of Higher Education Program. However, Federal and other
officials have voiced many concerns about D-O's dependence
on the Federal Government for support, its ability to maintain
student enrollment and attract full-time faculty, and other
matters. We believe that if Federal participation in D-Q's
funding continues and its survival depends on such support,
substantial technical assistance will be necessary to make it
truly viable as an institution of higher education.
CONCLUSIONS

     "t does not appear that D-Q University can survive without
Fede! 1 support. It does not have sufficient other funding
sources to pay its operating expenses and acquire badly needed
facilities and equipment.
     E,-Q University has met the minimum criteria of the Title
III, Strengthening Developing Institutions of Higher Education
Program in a marginal way. However, D-Q's funding proposal re-
vieweis have found it deficient according to certain OE quanti-
tative and qualitative criteria used to evaluate institutions
which apply for title III support.

     We also noted that student enrollment reported by D-Q has
repeatedly been questioned.  Based on our limited review, class
attendance was low, few transfer students have gone on to 4-year
colleges and universities, and few students have g, :duated from
D-Q with associate degrees since the school's opening in 1971.
     The Accrediting Commission for Junior Colleges, Western
Association of Schools and Colleges, granted D-Q full accred-
itation effective July 1, 19:' . Earlier, the Com-ission ex-
pressed concern over D-Q's financial situation ano dependence
on part-time faculty.

     These deficiencies are significant enough to u trrant
corcern by title III officials regarding continued fnding
of D-Q. The law states that the purpose of title III is not
to supplant funds that otherwise would be made available to an




                              31
 institution but rather to supplement or, to the extent practi-
 cal, increase the level of funds. HEW officials believe that
 continued title III support to D-Q would further increase D-Q's
 reliance on the Federal Government.

      OE has advised D-Q of weaknesses in its proposals and
 invited D-Q to attend OE technical assistance workshops for has
 title III applicants. Also, in 1976 OE awarded D-Q a $25,000
 planning grant for D-Q to use in obtaining assistance in pre-
 paring a fundable fiscal year 1977 proposal.

     D-Q has received funding under several other Federal pro-
grams. HEW program officials, Department of Labor officials,
and we have been concerned about some of these programs.

     OE has also questioned D-Q's adherence to escrow agree-
ments for the surplus-property it occupies. These agreements
were dependent on D-Q's offering an educational program for
Indians. However, D-Q appears to be offering an Indian cul-
tural rather than an educational program.

     Because of the many problems noted above and the unique
character of D-Q University, we believe much concerted effort
will be necessary to give D-Q the extensive technical assist-
ance It needs to become an institution of higher education
which will effectively and efficiently use Federal funds.

     The HEW Region IX review team which evaluated D-Q's com-
pliance with the escrow agreements on the surplus property
recognized the need to provide D-Q with adequate resources
to insure the success of its educational programs. The review
team's suggested options for dealing with D-Q included:

     -- Return the surplus property to the General Services
        Administration for transfer to the Department of the
        Interior.
     -- Provide HEW support for legislation transferring the
        surplus property to D-Q for establishing a cultural
        center.

     -- Allow D-Q to retain 200 acres of surplus property
        and insure that OE headquarters provides adequate
        resources for D-Q's educational program.
     An HEW Region IX official told us that because D-Q
University was granted full accreditation with the Accredit-
ing Commission of Ju:.ior Colleges, Western Association of
Schools and Colleges, a meeting was held on August 9, 1977.



                             32
At the meeting it was tentatively decided that the escrow
agreement would be extended pending a site visit to D-Q
University and review of certain
matters which could affect D-Q's legislation and other
                                 future. It appears to us
that HEW is actively considering the needs of D-Q University
and also taking steps to protect the Federal Government's
interests.




                           33
                        CHAPTER 5

                     AGENCY COMMENTS


     On August 24, 1977, we discussed our findings and
conclusions with the Acting Director, Division of Institu-
ional Development. He said that this report represented
a thorough and objective review of the situation at D-Q
University. Also, he made certain clarifying suggestions
for some sections of the draft report which were incorpor-
ated herein.




                             34
APPENDIX I                                                                                   APPENDIX I

      B. F. SISK1K,                                                                                     L CoI
 It               CUP*                                                                       n        a0Pu*m.
                                                                                                      D  CWm        mH1rw1

COMMIrrrE1        ON   UULM            CONGRESS OF THE UNITED STATES                                  IS a        m
  H  .s
      Omueuluwn                                  HOUSE OF REPRESENTATIVES                            fo-4-b004
 Ww"_n.~, D.C. iII
                                                      WASHINGTON, D.C.   20515                      SA
                                                                                                    ,E. ,a,.-       ,W,,
       TONY   o          rMO                                                                        OCK31
                               ADUw"W"Two   T"St""T                                           M·Duso~~~~C~~orur
                                                                                                     2*I               1007-1114

                                                         June 21, 1976                                 Fm its
                                                                                                  411 W. 1sTH sTM
                                                                                              4mco.CAumo^A            n340

        Mr. Elmer B. Staats
        Comptroller General
        General Accounting Office
        441 "G" Street, N. W.
        Washington, D. C. 20548

        Dear Elmer:

             I come to you as a last resort; but after three years I believe it
        essential that the Congress be provided with a definitive report on the
        funding difficulties of D-Q University, near Davis, California.

             For three consecutive years the U. S. Department of Health, Education
        and Welfare has denied D-Q's application for funding pursuant to Title III
        of the Higher Education Act of 1965.

             A number of congressmen, among them myself, have attempted to resolve
        whatever problems have existed with the applications. We have been .con-
        sistently told by HEW that it would work closely with D-Q officials to
        resolve the problems so that funding could be continued. Each year,
        however, the result is the same.

             There have been charges made by D-Q officials that HEW is biased
        against them and has not made any meaningful effort to assist them in
        preparing a fundable application.

             After three years of false promises, I must conclude                      that those charges
        have merit.

             D-Q University cannot possibly continue to operate without federal
        Title III funds. Indeed, when the university was established it was
        known to everyone that federal assistance would be required over the
        long-term. That aid was deemed appropriate, however, because D-Q University
        was established for the sole purpose of providing Indians and Chicanos
        with meaningful education.

             It may be that HEW's position is correct.                      Thus far, however, no evidence
        has been provided to support that posture.

                   I respectfully request a thorough review of this entire case.




                                                               B. F. SISK
                                                               MEMBER OF CONGRESS




                                                               35