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Attention to Long-standing Concerns Needed to Improve Education's 
Oversight of Grant Programs' which was released on September 21, 
2009. 

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Report to the Chairman, Subcommittee on Higher Education, Lifelong 
Learning, and Competitiveness, Committee on Education and Labor, House 
of Representatives: 

United States Government Accountability Office: 
GAO: 

August 2009: 

Low-Income And Minority Serving Institutions: 

Management Attention to Long-standing Concerns Needed to Improve 
Education's Oversight of Grant Programs: 

GAO-09-309: 

GAO Highlights: 

Highlights of GAO-09-309, a report to the Chairman, Subcommittee on 
Higher Education, Lifelong Learning, and Competitiveness, Committee on 
Education and Labor, House of Representatives. 

Why GAO Did This Study: 

Institutions that serve large proportions of low-income and minority 
students may receive funding under Titles III and V of the Higher 
Education Act. In fiscal year 2008, $667 million in grants were awarded 
to over 500 institutions. GAO was asked to determine (1) the 
characteristics of institutions eligible to receive grants under Titles 
III and V and characteristics of students served; (2) any challenges 
grantees face, and how they spent Title III and V funds to address 
these challenges; and (3) the extent to which the Department of 
Education (Education) monitors the financial and programmatic 
performance of grantees, and uses this information to target its 
technical assistance. To address these objectives, GAO analyzed data 
from a representative sample of grant applications and annual 
performance reports for the entire population of fiscal year 2006 
grantees. GAO also interviewed officials from Education and 27 grantee 
institutions, and conducted financial site visits at other 7 grantee 
institutions. 

What GAO Found: 

Twenty-eight percent of all 2-year and 4-year public and private, not-
for-profit institutions are eligible to receive Title III and V grants. 
Eligible institutions had fewer resources, including endowment holdings 
and revenue from tuition and fees, and lower per student spending on 
equipment than ineligible institutions. Eligible institutions also 
served more students who were minority, low-income, and attended part-
time. 

In their grant applications, Title III and V grantees reported 
challenges in all four grant focus areas: academic quality, student 
support, institutional management, and fiscal stability. Grantees 
reported spending almost $385 million in fiscal year 2006 grant funds 
to address challenges in these areas, primarily to strengthen academic 
quality and student support services. Specifically, grantees reported 
using 43 percent of grant funds on efforts designed to improve academic 
quality, such as using the latest technology in the classroom and 
improving academic space. Efforts to improve student support services, 
including remedial courses, tutoring, and academic counseling 
represented about one-third of grantee expenditures. While nearly all 
grantees reported challenges related to strengthening institutional 
management and fiscal stability, expenditures in these areas 
represented less than one-quarter of all grant funds spent. 

Since GAO reported and made recommendations on the management of these 
programs in 2004 and 2007, Education has continued to take steps to 
improve monitoring, but many of its initiatives have not been 
completed. Education has made recent progress in developing an 
electronic monitoring system and risk-based criteria to improve 
monitoring, but it discontinued the use of annual plans to guide its 
efforts. Also, limited progress in addressing staff skill gaps and 
substantial declines in site visits to grantees has impeded Education’s 
ability to adequately monitor grantees. Because Education lacks a 
comprehensive approach to target monitoring, it lacks assurance that 
grantees appropriately manage federal funds, increasing the potential 
for fraud, waste, or abuse. For example, GAO identified more than 
$100,000 in questionable expenditures at one grantee institution, 
including student trips to locations such as resorts and amusement 
parks, and an airplane global positioning system. Education provides 
limited technical assistance to grantees, but it has not developed a 
systematic approach that targets the needs of grantees. For example, 
some grantees told GAO that Education could strengthen grantee 
performance by sharing more information regarding common implementation 
challenges and successful projects. Additionally, GAO found that 
Education’s ability to target technical assistance is limited because 
its current approach for obtaining feedback does not encourage candor, 
and it does not use the feedback it currently receives from grantees. 

What GAO Recommends: 

GAO recommends that Education develop a comprehensive, risk-based 
approach to target monitoring and technical assistance; follow-up on 
improper uses of grant funds identified in this report; ensure staff 
training needs are fully met; disseminate information about 
implementation challenges and successful projects to grantees; and 
develop appropriate feedback mechanisms. Education agreed with our 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-09-309] or key 
components. For more information, contact George Scott at (202) 512-
7215 or scottg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Eligible Institutions Had Fewer Resources to Serve Proportionately More 
Students at Academic Risk: 

Institutions Faced Challenges across the Grant Programs' Four Focus 
Areas but Spent Most of Their Funds in Two Areas, Academic Quality and 
Student Support: 

Long-standing Deficiencies in Grant Monitoring and Technical Assistance 
Limit Education's Ability to Ensure That Funds Are Used Properly and 
Grantees Are Supported: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Institutional and Student Characteristics, by Program 
Eligibility Status: 

Appendix III: Fiscal Year 2002 to 2005 Grantee Expenditures by Focus 
Area: 

Appendix IV: Comments from the Department of Education: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Characteristics and Eligibility Criteria of Title III and V 
Grant Programs: 

Table 2: Title III and V Funding, Fiscal Years 1999 and 2008: 

Table 3: Comparison of All Title III and V Allowable Activities by 
Program: 

Table 4: Summary of Opportunities for Improvement in Grants Management: 

Table 5: Title III and V Eligibility Status of Postsecondary 
Institutions: 

Table 6: A Comparison of the Status of Education's Monitoring 
Initiatives in 2004 and 2008: 

Table 7: Site Visits to Title III and V Grantees, Fiscal Years 2003 
through 2008: 

Table 8: Summary of Findings from Financial Site Visits: 

Table 9: Number of 2002 to 2006 Applications Reviewed during Content 
Analysis: 

Table 10: Summary of GAO Contacts with Title III and V Grantees: 

Figures: 

Figure 1: Location of Institutions Currently Eligible for Title III and 
V Funding and Projected Change in College-Age Minority Population by 
2015: 

Figure 2: Race and Ethnicity, by Eligibility Status, 2006: 

Figure 3: Fiscal Year 2006 Grantee Expenditures by Focus Area: 

Figure 4: Before-and-After Photos of Science Facilities on Native 
Hawaiian Campus: 

Figure 5: Monitoring Index Criteria Used to Assess Institutional Risks: 

Figure 6: Desk and Chair Purchased by Grantee: 

Figure 7: Fiscal Years 2002 and 2003 Grantee Expenditures, by Focus 
Area: 

Figure 8: Fiscal Years 2004 and 2005 Grantee Expenditures, by Focus 
Area: 

Abbreviations: 

Education: Department of Education: 

HEA: Higher Education Act of 1965: 

IDUES: Institutional Development and Undergraduate Education Service: 

IPEDS: Integrated Postsecondary Data Systems: 

NPSAS: National Postsecondary Student Aid Study: 

OPE: Office of Postsecondary Education: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

August 17, 2009: 

The Honorable Rubén Hinojosa: 
Chairman: 
Subcommittee on Higher Education, Lifelong Learning, and 
Competitiveness: 
Committee on Education and Labor: 
House of Representatives: 

Dear Mr. Chairman: 

With more than two-thirds of 2008 high school graduates estimated to 
enroll in college soon after graduating, higher education has become 
more accessible than ever before. Yet students from some demographic 
groups still face challenges in attending college. For example, in 2006 
only half of low-income students enrolled in college soon after 
completing high school, compared to 80 percent of students from high- 
income families. Similarly, African American and Hispanic high school 
graduates enrolled at lower rates than white students, and those who do 
enroll are at greater risk of dropping out before earning a degree or 
certificate than other students. Given current population projections 
showing the proportion of college-age minorities may increase by as 
much as 54 percent for some minority groups over the next decade, the 
federal government has a continuing interest in ensuring the needs of 
these students are met. 

Beginning in 1965, Congress enacted several grant programs under the 
Higher Education Act (HEA) to strengthen and support developing 
postsecondary institutions. In subsequent reauthorizations, Congress 
expanded the HEA to include programs that support institutions that 
provide low-income and minority students with access to higher 
education. These programs have been authorized under Title III and 
Title V of the HEA, as amended.[Footnote 1] Institutions eligible to 
receive these grants include Historically Black Colleges and 
Universities, Hispanic-serving institutions, Tribal colleges and 
universities, Alaska Native-serving institutions, and Native Hawaiian- 
serving institutions, and other undergraduate postsecondary 
institutions that serve low-income students. In fiscal year 2008, $667 
million in grants were awarded to over 500 institutions. Under the 
Department of Education's (Education) program guidance, participating 
institutions are allowed to spend these grants on challenges in four 
focus areas: academic quality, student support services, institutional 
management, and fiscal stability. Within these areas, activities might 
include renovating existing buildings to upgrade technological 
capacity, providing remedial classes or tutoring, developing faculty, 
or building endowments, among others. 

In 2004 and 2007, we reported on Education's administration of Title 
III and V programs and found that it had made limited progress in 
implementing initiatives to enhance monitoring of and technical 
assistance for grantees.[Footnote 2] In this requested report, we 
address the following questions:(1) what are the characteristics of 
institutions eligible to receive grants under Titles III and V, 
including the characteristics of students served; (2) what challenges 
do grantees face, and how have they spent Title III and V funds to 
address these challenges; and (3) to what extent does the Department of 
Education monitor the financial and programmatic performance of Title 
III and V grantees, and use this information to target its technical 
assistance? 

To describe the characteristics of postsecondary institutions eligible 
to receive grants under Titles III and V and the characteristics of 
their students, we analyzed the most recent data available from 
Education data systems. Specifically, we analyzed 2006 data from 
Education's Integrated Postsecondary Education Data System (IPEDS) to 
identify institutions eligible to receive Title III and V grants and to 
describe both institutional and student characteristics.[Footnote 3] 

We also analyzed data from Education's 2004 National Postsecondary 
Student Aid Study (NPSAS) to provide additional insight into student 
characteristics.[Footnote 4] Because NPSAS data are based on a 
representative sample of students enrolled in postsecondary education, 
it does not include the universe of institutions as reported in IPEDS. 
As a result, it is not possible to discuss the NPSAS data in terms of 
eligible and ineligible institutions, as can be done with IPEDS data. 
Instead, when discussing NPSAS data, we refer to minority serving and 
non-minority serving institutions. While only Historically Black 
Colleges and Universities, Hispanic-serving Institutions, and Tribal 
Colleges are classified as minority serving institutions for NPSAS, 
these data are the most complete source of information on the 
characteristics of students attending minority serving institutions. We 
determined that IPEDS and NPSAS data are sufficiently reliable for the 
purposes of this report by testing it for accuracy and completeness, 
reviewing documentation about systems used to produce the data, and 
interviewing agency officials. We also conducted a review of the 
literature to gain a better understanding of the characteristics of 
minority serving institutions and the students they serve. To describe 
the challenges that grantees face and how they used grant funds to 
address these challenges, we reviewed grant applications and annual 
performance reports. Specifically, we conducted a content analysis of 
grant applications using a representative sample of 78 of the 511 
fiscal year 2006 grantees, allowing us to generalize our findings to 
the entire population of grantees with a 95 percent degree of 
confidence. Additionally, we analyzed data from annual performance 
reports detailing expenditures of fiscal year 2006 grant funds--the 
most recent data available--for 503 of 511 fiscal year 2006 grantees 
that submitted these data electronically.[Footnote 5] We also 
interviewed officials from 27 grantee institutions--including 11 
conducted on-site--about the challenges they face and their experiences 
with the grant programs. We selected this nonprobability sample based 
on program participation, size of grant, and geographic location. To 
determine how Education monitors and provides technical assistance, we 
conducted interviews with officials at Education and reviewed grant 
program requirements, policies, procedure manuals, and monitoring 
plans. Finally, we conducted additional site visits at seven grantee 
institutions to evaluate their fiscal policies and internal control 
practices, and determine whether program funds were properly used. 
These institutions were selected using a nonprobability sample based on 
factors such as program participation, size of grant, and geographic 
location. A more detailed explanation of our methodology can be found 
in appendix I. 

We conducted this performance audit from September 2007 through June 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

Title III and Title V of the Higher Education Act (HEA) authorize 
federal funding for postsecondary institutions that provide large 
proportions of low-income and minority students access to higher 
education. In 1965, Congress authorized grant programs[Footnote 6] to 
strengthen and support developing postsecondary institutions, leading 
to today's Strengthening Institutions Program. This program provides 
discretionary grants to help institutions that serve large numbers of 
low-income students improve their academic quality, institutional 
management, and fiscal stability.[Footnote 7] In subsequent 
reauthorizations, Congress established several programs to target grant 
funding to certain institutions that serve large numbers of minority 
students. Specifically, in 1986, a program was created to designate 
formula grant funding for historically black colleges and 
universities.[Footnote 8] In 1998, further amendments to the HEA 
created new grant programs specifically for tribally controlled 
colleges and universities, Alaska Native and Native Hawaiian-serving 
institutions, and Hispanic-serving institutions.[Footnote 9] Prior to 
these amendments, these institutions competed for funding under the 
Strengthening Institutions program. Collectively, these institutions 
are referred to as minority serving institutions. 

Institutions that participate in the Historically Black Colleges and 
Universities and Tribal programs receive mandatory grants based on two 
distinct formulas.[Footnote 10] Institutions that participate in all 
other programs receive grants based on a ranking of applications by a 
competitive peer-review evaluation. Such institutions may apply 
individually or as part of a cooperative partnership for development 
grants to develop capacity in specified areas on selected campuses. 
Institutions that receive cooperative grants partner and share 
resources with another postsecondary institution--which may or may not 
be eligible for Title III or V funding--to achieve common goals without 
costly duplication of effort. In addition to 5-year individual 
development and cooperative grants, Title III, Part A and Title V 
institutions may apply for a 1-year grant for the purposes of planning 
an application for a 5-year grant, 1-year construction grant, or 1-year 
renovation grant. Table 1 briefly describes the characteristics and 
eligibility criteria of Title III and V programs. 

Table 1: Characteristics and Eligibility Criteria of Title III and V 
Grant Programs: 

Grant program: Title III, Part A, Strengthening Institutions; 
Type of grant: Competitive; 
Duration: Up to 5 years; 
Wait-out period[A]: 2 years; 
Eligibility criteria: An institution of higher education which (1) has 
an enrollment of needy students--at least 50 percent of students 
receive need-based federal financial assistance or its percentage of 
students receiving Pell Grants exceeds that of comparable institutions; 
(2) has average educational and general expenditures that are low 
compared to other institutions that offer similar instruction; (3) is 
accredited or making reasonable progress toward accreditation; and (4) 
is legally authorized by the state in which it is located to be a 
junior college or award bachelor's degrees. 

Grant program: Title III, Part A, Tribal Colleges; 
Type of grant: Formula noncompetitive[B]; 
Duration: Up to 5 years; 
Wait-out period[A]: None; 
Eligibility criteria: Must meet the same eligibility criteria as the 
Strengthening Institutions program. Additionally, must meet the 
statutory definition of "tribally controlled college or university." 

Grant program: Title III, Part A, Alaska Native and Native Hawaiian; 
Type of grant: Competitive; 
Duration: Up to 5 years; 
Wait-out period[A]: None; 
Eligibility criteria: Must meet the same eligibility criteria as the 
Strengthening Institutions program. Additionally, must have an 
undergraduate enrollment of at least 20 percent Alaska Native or at 
least 10 percent Native Hawaiian, as applicable. 

Grant program: Title III, Part B, Historically Black Colleges and 
Universities; 
Type of grant: Formula noncompetitive; 
Duration: Up to 5 years; 
Wait-out period[A]: None; 
Eligibility criteria: Any college or university established prior to 
1964 and whose principal mission was, and is, the education of African 
Americans, and is accredited or is making reasonable progress toward 
accreditation. 

Grant program: Title V, Part A, Hispanic-Serving Institutions; 
Type of grant: Competitive; 
Duration: Up to 5 years; 
Wait-out period[A]: None; 
Eligibility criteria: Must meet the same eligibility criteria as the 
Strengthening Institutions program. Additionally, must have an 
undergraduate enrollment of full-time equivalent students that is at 
least 25 percent Hispanic, of which no less than 50 percent are low- 
income individuals. Institutions receiving grant funds through Title V 
may not simultaneously receive funds through Title III, Parts A or B. 

Sources: Higher Education Act of 1965, as amended, and Department of 
Education regulations. 

[A] The minimum number of years institutions receiving an individual 
development grant must wait before they are eligible to receive another 
grant under the same program. 

[B] The Tribal College program awarded the first formula grants in 
2009. 

[End of table] 

From fiscal year 1999 to fiscal year 2008, total appropriations for 
these programs increased from $230 million to $667 million. In fiscal 
year 2008, the range of new annual institutional awards was $172,560 
for a 1-year planning grant to $3 million for an individual development 
grant (see table 2). 

Table 2: Title III and V Funding, Fiscal Years 1999 and 2008 (Dollars 
in millions): 

Program: Title III, Part A, Strengthening Institutions; 
Funding: 1999: $60; 
Funding: 2008: $78. 

Program: Title III, Part A, Tribal Colleges; 
Funding: 1999: 3; 
Funding: 2008: 53. 

Program: Title III, Part A, Alaska Native/Native Hawaiian Institutions; 
Funding: 1999: 3; 
Funding: 2008: 20. 

Program: Title III, Part B, Historically Black Colleges and 
Universities; 
Funding: 1999: 136; 
Funding: 2008: 323. 

Program: Title V, Part A, Hispanic Serving Institutions; 
Funding: 1999: 28; 
Funding: 2008: 193. 

Program: Total; 
Funding: 1999: $230; 
Funding: 2008: $667. 

Source: Department of Education, Budget of the United States 
Government--Appendix, Fiscal Year 2001, at 362, Fiscal Year 2010, at 
372-73. 

[End of table] 

The HEA outlines broad goals for Title III and V programs to strengthen 
participating institutions but provides institutions flexibility in 
deciding what approaches will best meet their needs. An institution can 
use the grants to focus on one or more activities to address the 
challenges articulated in its comprehensive development plan, which is 
required as part of the grant application and must include the 
institution's strategy for achieving growth and self-sufficiency. Under 
Education's program guidance, institutions are allowed to address 
challenges in four broad focus areas: academic quality, student support 
services, institutional management, and fiscal stability. More 
specifically, funds can be used for activities such as supporting 
faculty development; purchasing library books, periodicals, and other 
educational materials; hiring tutors or counselors for students; 
improving educational facilities; or building endowments. Although each 
Title III and V program allows funds to be used in the same broad 
areas, there are variations in the rules for allowable activities 
across each of the Title III and V programs (see table 3). 

Table 3: Comparison of All Title III and V Allowable Activities by 
Program: 

Allowable activity: Acquisition of scientific or laboratory equipment; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Construction or improvement of instructional 
facilities, including the integration of computer technology into 
instructional facilities; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Faculty exchange and development for attaining 
advanced degrees; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Development and improvement of academic programs; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Purchase of educational materials; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Tutoring, counseling, and other services to improve 
academic success; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Management of funds and administration; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Joint use of facilities; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Establishment or improvement of development office; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Establishment or improvement of an endowment; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Creation or improvement of facilities for distance 
learning capabilities; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Academic instruction in disciplines for 
underrepresented groups; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Establishment or enhancement of a teacher education 
program; 
Program: Strengthening Institutions: [Empty]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Increase the number of underrepresented graduate or 
professional students served through expanded courses and institutional 
resources; 
Program: Strengthening Institutions: [Empty]; 
Program: Tribal: [Empty]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Empty]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Establishing community outreach programs that 
encourage elementary and secondary school students to develop the 
academic skills and interest to pursue postsecondary education; 
Program: Strengthening Institutions: [Empty]; 
Program: Tribal: [Empty]; 
Program: Alaska Native/Native Hawaiian: [Empty]; 
Program: Historically Black College or University: [Empty]; 
Program: Hispanic Serving Institution: [Check]. 

Allowable activity: Other activities approved by the Secretary of 
Education; 
Program: Strengthening Institutions: [Check]; 
Program: Tribal: [Check]; 
Program: Alaska Native/Native Hawaiian: [Check]; 
Program: Historically Black College or University: [Check]; 
Program: Hispanic Serving Institution: [Check]. 

Source: GAO analysis of the Higher Education Act. 

[End of table] 

Title III and V programs are administered by the Institutional 
Development and Undergraduate Education Service (IDUES) within 
Education's Office of Postsecondary Education (OPE). In addition to the 
Title III and V programs we examine in this report, IDUES administers 
the Strengthening Historically Black Graduate Institutions, Minority 
Science and Engineering Improvement, and the Robert C. Byrd Honors 
Scholarships programs. Additionally, in 2007, IDUES assumed 
responsibility for several new grant programs for other categories of 
minority serving institutions, including Native American-serving 
Nontribal Institutions and Asian American and Native American Pacific 
Islander-serving Institutions.[Footnote 11] IDUES currently has 32 
program staff members to administer more than 1,000 grants across its 
portfolio. 

The Comptroller General's Domestic Working Group highlights areas of 
opportunity and promising practices in grants management--focused both 
on ensuring grant funds are spent properly and on achieving their 
desired results[Footnote 12] (see table 4). Effective grants management 
calls for establishing adequate internal control systems, including 
efficient and effective information systems, training, policies, and 
oversight procedures, to ensure grant funds are properly used and 
achieve intended results. 

Table 4: Summary of Opportunities for Improvement in Grants Management: 

Areas of opportunity: Internal control systems; 
Promising practice issue areas: 
* Preparing policies and procedures before issuing grants; 
* Consolidating information systems to assist in managing grants; 
* Providing grant management training to staff and grantees; 
* Coordinating programs with similar goals and purposes. 

Areas of opportunity: Preaward process; 
Promising practice issue areas: 
* Assessing applicant capability to account for funds; 
* Competing grants to facilitate accountability; 
* Preparing work plans to provide framework for grant accountability; 
* Including clear terms and conditions in grant award documents. 

Areas of opportunity: Managing performance; 
Promising practice issue areas: 
* Monitoring the financial status of grants; 
* Ensuring results-through-performance monitoring; 
* Using audits to provide valuable information about grantees; 
* Monitoring subrecipients as a critical element of grant success. 

Areas of opportunity: Assessing and using results; 
Promising practice issue areas: 
* Providing evidence of program success; 
* Identifying ways to improve program performance. 

Source: Domestic Working Group. 

[End of table] 

Internal controls provide federal managers with reasonable assurance 
that their program is (1) achieving its primary objectives of effective 
and efficient operations, reliable financial reporting, and compliance 
with applicable laws and regulations; (2) safeguarding assets; and (3) 
preventing fraud, waste, abuse, and mismanagement. Like other federal 
departments and agencies, Education is expected to implement internal 
control systems consistent with the requirements established by the 
Office of Management and Budget and GAO.[Footnote 13] Entities that 
receive federal funds, such as institutions of higher education, are 
also expected to implement effective internal control systems 
consistent with federal requirements. 

Eligible Institutions Had Fewer Resources to Serve Proportionately More 
Students at Academic Risk: 

Lower Revenues May Make It Difficult for Eligible Institutions to Meet 
Needs of Current and Future Students: 

We estimate that 28 percent of 2-year and 4-year public and private not-
for-profit postsecondary institutions are eligible to participate in 
the Title III and V programs, and together these institutions enrolled 
just over 4 million students. About one-half of all eligible 
institutions are 2-year colleges, such as community colleges, compared 
to 31 percent of 2-year institutions that are ineligible to participate 
in the programs (see table 5). The substantial representation of 2-year 
public institutions that are eligible to participate in the programs 
appears to amplify some of the overall differences in both 
institutional and student characteristics between eligible and 
ineligible populations discussed throughout this section. 

Table 5: Title III and V Eligibility Status of Postsecondary 
Institutions: 

Eligible: 
2-year public: Number: 400; 
2-year public: Percent: 46; 
2-year private, not-for-profit: Number: 47; 
2-year private, not-for-profit: Percent: 5; 
4-year public: Number: 154; 
4-year public: Percent: 18; 
4-year private, not-for-profit: Number: 277; 
4-year private, not-for-profit: Percent: 32; 
Total: Number: 878[A]; 
Total: Percent: 28. 

Ineligible: 
2-year public: Number: 654; 
2-year public: Percent: 29; 
2-year private, not-for-profit: Number: 66; 
2-year private, not-for-profit: Percent: 3; 
4-year public: Number: 489; 4-year public: Percent: 21; 
4-year private, not-for-profit: Number: 1,080; 
4-year private, not-for-profit: Percent: 47; 
Total: Number: 2,289; 
Total: Percent: 72. 

All institutions: 
2-year public: Number: 1,054; 
2-year public: Percent: 33; 
2-year private, not-for-profit: Number: 113; 
2-year private, not-for-profit: Percent: 4; 
4-year public: Number: 643; 4-year public: Percent: 20; 
4-year private, not-for-profit: Number: 1,357; 
4-year private, not-for-profit: Percent: 43; 
Total: Number: 3,167; 
Total: Percent: 100. 

Source: GAO analysis of 2006 IPEDS data. 

[A] Postsecondary institutions with branch campuses can decide whether 
to report IPEDS data for the entire system or individually for each 
branch campus. Totals do not fully account for branch campuses that are 
otherwise eligible but did not report as an individual campus into 
IPEDS. 

[End of table] 

Overall, eligible institutions had access to fewer revenue sources, 
including endowment holdings and tuition and fees, to serve their 
students. Endowments provide additional funds for activities, such as 
providing scholarships and constructing facilities, which would be 
unaffordable if institutions relied solely on tuition, private 
philanthropic gifts, or government funding. The median per-student 
endowment holdings at eligible institutions were lower than the 
holdings of their ineligible peers. For example, the median per-student 
endowment for eligible 4-year private, not-for-profit institutions was 
nearly three times less per student ($7,297) than the median for 
ineligible 4-year private, not-for-profit institutions ($20,391). 
Another major source of revenue for institutions is the tuition and 
fees charged to students. For all eligible institutions, the median 
tuition and fees reported were lower than what was reported at 
ineligible institutions. Median tuition and fees at eligible 
institutions were 12 percent less than at ineligible institutions for 2-
year private, not-for-profit institutions, and 38 percent less at 4- 
year private, not-for-profit institutions. 

Lower revenues may limit an institution's ability to undertake 
activities that build institutional capacity, such as improving campus 
facilities and enhancing academic offerings. In 2006, per-student 
spending on instructional equipment at eligible institutions was almost 
47 percent less than spending at ineligible institutions. Eligible 
institutions also spent almost 60 percent less per student on expenses 
related to day-to-day operations, such as financial aid and 
registration, and about two times less per student on certain services, 
such as providing technology in classrooms and activities related to 
student life and development. 

While eligible institutions had lower revenues and per-student 
spending, they more often had admissions policies associated with the 
enrollment of students who need greater academic support. Research has 
shown that students attending institutions that accept any student who 
applies for admission--known as open-enrollment institutions--are less 
likely to be prepared to successfully undertake college-level 
coursework. About 60 percent of eligible institutions had open 
enrollment, compared to 35 percent of ineligible institutions. Almost 
all 2-year public institutions--both eligible and ineligible--reported 
open enrollment policies, which is consistent with the mission most 
community colleges have to work with students of all ability levels. 
Open-enrollment policies were much less common at eligible 4-year 
institutions. Less than 30 percent of these schools had open 
enrollment, but it was still more prevalent than at ineligible 4-year 
institutions, of which 10 percent or less had such policies. 

Limited revenues may also impact the ability of eligible institutions 
to meet the demand of future students based on population projections. 
Specifically, about two-thirds of eligible institutions are located in 
southern and western states, many of which are projected to experience 
an increase in the number of college-age students in coming years (see 
figure 1). Studies also project long-term growth in the number of 
minority and low-income high school graduates in these two regions 
beginning in 2015 and extending through 2022, driven in part by 
accelerated growth in the Hispanic population.[Footnote 14] Given the 
importance many students enrolled at minority-serving institutions 
place on geographic proximity to home when choosing a college, eligible 
institutions in high-growth states could experience proportionately 
more growth in numbers of students and changes in the demographics of 
the college-age population may result in an expansion in the number of 
eligible institutions. For example, a 2008 Education study found that 
in some states including Texas, Arkansas, and North Carolina, over 80 
percent of entering freshmen are state residents.[Footnote 15] 
Additionally, Education's 2004 NPSAS survey found that 80 percent of 
students enrolled at Hispanic-serving institutions and almost 73 
percent of students enrolled at Historically Black Colleges and 
Universities stated that geographic location was a key reason for 
selecting their postsecondary institution. 

Figure 1: Location of Institutions Currently Eligible for Title III and 
V Funding and Projected Change in College-Age Minority Population by 
2015: 

[Refer to PDF for image: map of the United States] 

Projected percentage change in total college-age minority population by 
2015: (Number of Title III and V eligible institutions in states, 
territories, and commonwealths in parenthesis) 

Less than 0 percent (negative projected growth): 
Alaska (4); 
Connecticut (4); 
Hawaii (3); 
Illinois (37); 
Kansas (11); 
Louisiana (14); 
Maine (9); 
Maryland (8); 
Massachusetts (14); 
Michigan (12); 
Minnesota (8); 
Montana (10); 
Nebraska (5); 
New Hampshire (2); 
New York (73); 
North Dakota (7); 
Ohio (31); 
Pennsylvania (22); 
Puerto Rico (48); 
Rhode Island (0);
South Dakota (8); 
Vermont (2); 
Virgin Islands (1); 
West Virginia (13); 
Wisconsin (9); 
Wyoming (1). 

0.01 to 5 percent: 
California (81); 
Mississippi (21); 
Missouri (13); 
New Mexico (20); 
Oregon (9); 
Washington (13). 

5.01 to 10 percent: 
Alabama (29); 
District of Columbia (3); 
Iowa (14); 
Kentucky (26); 
Oklahoma (17); 
South Carolina (21); 
Virginia (25). 

10.01 to 20 percent: 
Colorado (9); 
Delaware (1);
Georgia (21); 
Indiana (8); 
New Jersey (11); 
Tennessee (15); 

Greater than 20 percent: 
Arizona (11); 
Arkansas (26); 
Florida (24); 
Idaho (1); 
Nevada (0); 
North Carolina (34); 
Texas (62); 
Utah (1). 

Source: GAO analysis; Map Resources (map). 

Note: Demographic projection data were not available for U.S. 
territorial and commonwealth holdings. 

[End of figure] 

Eligible Institutions Enrolled More Minority and Low-Income Students 
Than Ineligible Institutions: 

On average, eligible institutions enrolled more minority students than 
ineligible institutions. In 2006, about one-half of all students 
enrolled at eligible institutions were minority, compared to about one- 
quarter at ineligible institutions (see figure 2). While eligible 
institutions represent 28 percent of all postsecondary institutions, 
they enrolled over 43 percent of all minority students. Eligible 
institutions were largely comprised of the minority group associated 
with their program eligibility. For example, at Historically Black 
Colleges and Universities the predominant student population was 
African American, and at Hispanic-serving institutions, it was 
Hispanic. Almost 60 percent of all students enrolled at eligible and 
ineligible institutions were women. 

Figure 2: Race and Ethnicity, by Eligibility Status, 2006: 

[Refer to PDF for image: two pie-charts] 

Racial/ethnic composition of eligible institutions (percentage of 
enrollment): 

Non-Hispanic White: 45%; 
Total, all minority: 48%: 
- African American: 18%; 
- Hispanic: 22%; 
- Native American: 1%; 
- Asian: 6%; 
Nonresidents: 2%; 
Other: 5%. 

Racial/ethnic composition of ineligible institutions (percentage of 
enrollment): 

Non-Hispanic White: 67%; 
Total, all minority: 24%: 
- African American: 9%; 
- Hispanic: 8%; 
- Native American: 1%; 
- Asian: 6%; 
Nonresidents: 2%; 
Other: 7%. 

Source: GAO analysis of Department of Education 2006 IPEDS data. 

Note: The sum of individual race/ethnicity percentages may not equal 
total minority enrollment due to rounding. 

[End of figure] 

Eligible institutions also served more low-income students, a central 
requirement for participation in Title III and V programs. 
Specifically, 44 percent of students enrolled at eligible institutions 
received Pell grants compared to 26 percent at ineligible institutions. 
[Footnote 16] In addition, eligible institutions reported that half of 
all first-time, full-time students enrolled received some form of 
federal student aid, compared to 25 percent of students enrolled at 
ineligible institutions.[Footnote 17] 

Students at eligible institutions also may have characteristics that 
put them at academic risk, including attending part-time and delaying 
their enrollment following high school. In 2006, 47 percent of students 
at eligible institutions attended part-time compared with 34 percent of 
students at ineligible institutions. This difference is largely driven 
by the substantial proportion of 2-year public institutions in the 
eligible population. At both eligible and ineligible 2-year public 
institutions, more than 60 percent of students attended part-time. In 
particular, about two-thirds of students attending both eligible and 
ineligible 2-year public, Hispanic-serving institutions attended part- 
time. At 4-year institutions, rates of part-time attendance were much 
lower. However, eligible institutions enrolled more part-time students 
than ineligible institutions: 29 percent of students at eligible 4-year 
public institutions attended part-time, compared to 19 percent at 
ineligible 4-year public institutions. One possible explanation for the 
difference in part-time enrollment may be related to the extent to 
which a student works while enrolled. According to Education's 2004 
NPSAS survey, almost 40 percent of students attending minority serving 
institutions worked 35 hours or more per week and considered themselves 
as employees enrolled in college instead of students who work, when 
compared to students attending non-minority serving institutions. 

A greater percentage of students at eligible institutions delayed 
enrollment in college than students at ineligible institutions. 
Research has shown, however, that students who delay enrollment are at 
greater risk of not completing a postsecondary credential, as compared 
to their peers who enroll soon after completing high school. At 4-year 
private, not-for profit institutions, for example, 34 percent of 
students at eligible institutions compared to 21 percent at ineligible 
institutions enrolled in college for the first time when 25 or older. 
Rates at 2-year public colleges were similar with more than 40 percent 
of students at eligible and ineligible institutions enrolling for the 
first time at age 25 or older. One exception to this trend among 
eligible institutions was students at Historically Black Colleges and 
Universities, where almost three-quarters of the students enroll right 
after high school. 

Eligible institutions had lower retention rates, on average, than 
ineligible institutions.[Footnote 18] For example, in 2006, eligible 
institutions retained 60 percent of their full-time students compared 
to 69 percent at other institutions. Research has shown that a number 
of factors, including attending part-time, working full-time, and 
delaying enrollment in college for more than a year after high-school, 
put students at a greater risk of leaving postsecondary education 
without a credential.[Footnote 19] The retention rate for 2-year public 
institutions was lower, but similar, at eligible and ineligible 
institutions. Graduation rates were lower as well.[Footnote 20] 
Specifically, 39 percent of students at eligible 4-year institutions 
received a bachelor's degree within 6 years of enrolling, compared to 
60 percent of students at ineligible 4-year institutions. According to 
a recent Education study, graduation rates may decline as the 
percentage of an institution's low-income student population increases. 
[Footnote 21] This may be for a variety of reasons, including a 
student's academic preparation, working full-time while enrolled, 
parents' educational attainment, as well as an institution's 
selectivity in admissions. However, the report also found that several 
highly selective minority serving institutions enrolled a significant 
number of low-income students and were high performers with respect to 
graduation. Another possible explanation for the difference in 
graduation rates may also be tied to institutional expenditures. One 
study reported that those institutions with lower expenditures on 
student support services had lower graduation rates.[Footnote 22] 
Graduation rates for both eligible and ineligible 2-year public 
institutions were similar; however, the relevance of graduation rates 
at 2-year institutions has been widely debated since students may 
enroll in these institutions for a variety of reasons other than 
completing a degree or certificate program. See appendix II for more 
information on institutional and student characteristics. 

Institutions Faced Challenges across the Grant Programs' Four Focus 
Areas but Spent Most of Their Funds in Two Areas, Academic Quality and 
Student Support: 

In their grant applications, Title III and V grantees reported 
challenges across all four grant focus areas: academic quality, student 
support, institutional management, and fiscal stability. According to 
data collected through Education's annual performance reports, fiscal 
year 2006 grantees reported spending almost $385 million in total grant 
funds on activities across all four focus areas, with over three- 
quarters of the funds expended in the areas of academic quality and 
student support services (see figure 3). See appendix III for 
additional information on Title III and V expenditures of grant funds 
for fiscal years 2002 to 2006. 

Figure 3: Fiscal Year 2006 Grantee Expenditures by Focus Area: 

[Refer to PDF for image: pie-chart and horizontal bar graph] 

Percentage of total dollars, by focus area: 
Academic quality: 43%; 
Student support: 34%; 
Institutional management: 17%; 
Fiscal stability: 6%. 

Percentage of grantees undertaking at least one activity, by focus 
area: 

Academic quality: 57%; 
Student support: 66%; 
Institutional management: 28%; 
Fiscal stability: 27%. 

Source: GAO analysis of Department of Education fiscal year 2006 annual 
performance report data. 

[End of figure] 

Academic Quality: 

Based on our review of a representative sample of grant applications, 
we estimate that all grantees reported challenges in improving academic 
quality, such as recruiting and training highly qualified faculty, 
using the latest technology in the classroom for instruction, improving 
academic space, and tailoring courses to student needs. Fifty-seven 
percent of fiscal year 2006 grantees dedicated at least one activity to 
improving academic quality, and expenditures in this focus area 
represented about 43 percent of total grant funds spent. Specific 
examples of how institutions used grant funds to address academic 
quality challenges follow: 

* A 2-year Alaska Native institution seeking to provide access to 
students in seven remote villages--covering roughly 88,000 square 
miles--began offering classes online. However because access to 
computers and high-speed Internet in the villages was costly, 
unreliable, or nonexistent, most lesson plans limited the use of 
multimedia. By leveraging its Title III grant with funds from the 
Department of Housing and Urban Development's Assisting Communities 
program, the school obtained wireless capability and now offers 8 to 12 
online courses each semester. 

* A 4-year Native Hawaiian institution said that it has struggled to 
provide science instruction to students due to outdated laboratory 
facilities. These facilities were reportedly so antiquated that the 
television show "Lost" used the facilities to replicate a 1950s 
laboratory. The institution leveraged $2.3 million in Title III grant 
funds to renovate 12,000 square feet of un-air-conditioned, termite- 
damaged laboratory space that did not comply with federal safety and 
health regulations (see figure 4). 

Figure 4: Before-and-After Photos of Science Facilities on Native 
Hawaiian Campus: 

[Refer to PDF for image: photographs] 

Source: Chaminade University, Honolulu, Hawaii. 

[End of figure] 

Student Support Services: 

Nearly all grantees reported difficulty providing student support 
services, including remedial courses, tutoring, and academic 
counseling. Many of these grantees reported that the unique needs of 
their students underscore the importance of providing student support 
services. Over three-quarters of grantees cited difficulties associated 
with retaining and graduating their students, which most attributed to 
incoming students arriving underprepared for college-level course work. 
Two-thirds of fiscal year 2006 grantees reported dedicating at least 
one activity to improving student support services, and expenditures in 
this area represented 34 percent of total Title III and V grant funds 
spent. Most of these expenditures were for tutoring and counseling. 
Specific examples of how institutions used grant funds to address 
student support challenges follow: 

* A 2-year strengthening institution in Illinois reported in 2005 that 
75 percent of its first-year students were at risk of leaving college 
without a degree because the institution could not provide adequate 
academic support and advisement. To reduce the likelihood that students 
would fail or drop out, the school reported spending $360,000 in grant 
funds to provide training to 175 faculty members on the use of 
multimedia and technology, active learning, and strategies to support 
various learning styles. Additionally, all 46 of its academic advisors 
were provided training in techniques for advising students with 
different learning styles. 

* A 2-year Hispanic-serving institution in Texas reported using almost 
$350,000 in fiscal year 2006 grant funds to conduct an outreach program 
at area high schools for students at risk of dropping out without 
earning a diploma, as well as to provide bilingual financial aid 
services to better serve its students. By providing support services to 
students while they are in high school, the college aims to improve 
high school graduation and college enrollment rates in Dallas County 
high schools where 63 percent of Hispanic and 52 percent of African 
American students left high school in 2001 without a diploma. The 
outreach program provides students with career exploration courses in 
math, science, and technology, as well as peer mentors who are enrolled 
in 4-year colleges or universities. College officials credit the 5-year 
Title V grant as contributing to a 12 percent increase in students 
pursuing postsecondary education and a 45 percent increase in the 
number of associate degrees awarded between 2004 and 2007. 

* A 2-year tribal college in South Dakota reported it relied on faculty 
and staff to provide additional tutoring and counseling support to at- 
risk students because it lacked resources to fully address student 
needs. Because almost all of its students come from low-income 
families, or are the first in their families to attend college, 
additional support could only be provided for one-third of the students 
in need. According to school officials, in fiscal year 2006, the school 
spent nearly $32,000 of its Title III grant to hire additional staff 
and peer mentors to provide tutoring and counseling services for 120 
additional students, an increase of 169 percent. 

Institutional Management: 

Nearly all grantees reported institutional management challenges, 
including recruiting and retaining qualified staff, updating technology 
on campuses, addressing administrative challenges such as financial aid 
or student registration, undertaking strategic planning, or tracking 
student performance. Twenty-eight percent of all fiscal year 2006 
grantees funded at least one activity in this area, and expenditures on 
institutional management represented about 17 percent of total grant 
funds spent. Specific examples of how institutions used grant funds to 
address institutional management challenges follow: 

* A 2-year Alaska Native-serving institution reported significant 
staffing shortages due to its isolated location, and its staff had to 
perform a variety of jobs. For example, the business office director 
also occasionally performs building and grounds maintenance tasks, such 
as shoveling sidewalks and handling computer problems. Additionally, a 
staff member assigned to manage the bookstore was also responsible for 
providing financial aid advice. While it is not possible to address all 
challenges with Title III funds, the grant was a critical first step in 
establishing four full-time financial aid positions that have since 
become part of the college's budget. 

* A 4-year historically black university in North Carolina that ranks 
high nationally in the production of computer science graduates 
reported it has difficulty maintaining its ongoing investment in its 
technology infrastructure. After spending $1.2 million of Title III 
funds in 2000, the college used an additional $834,000 from subsequent 
Title III grants to upgrade telecommunications, implement Web-enabled 
administrative software, and increase classes with wireless 
capabilities by 34 percent. 

* A 4-year Hispanic-serving institution in Puerto Rico said its ability 
to expand is limited by its location in an historic building that 
cannot be altered, hindering service to the island's growing college- 
age population. While delays in obtaining construction permits have 
limited the college's progress, the college is completing renovations 
for a new academic building. It has spent $740,000 in grant funds to 
renovate its library, increasing the space dedicated to this building 
by 32,000 square feet. 

* A tribal college in South Dakota reported using more than $85,000 in 
grant funds to develop a comprehensive training program for its grants 
management staff to address internal control weaknesses identified by 
federal auditors. According to school officials, auditors reported that 
prior practices resulted in $2.3 million in federal grants at risk of 
fraud, waste, and abuse. In 2006, the college used grant funds to 
create a Human Resources Office, increase its administrative staff from 
four to six and provide them with training, and post its internal 
control policies and practices online. Officials reported that a 
federal agency that rescinded a $50,000 grant award in 2005 later 
returned the grant upon completion of these activities. 

* A 4-year historically black college in Tennessee reported spending 
$101,795 in Title III funds to strengthen institutional management by 
developing an operating manual and providing training for members of 
its Board of Directors. A school official told us that most board 
members do not have professional experience related to higher education 
administration, and their staggered 3-year terms result in new members 
joining the board periodically. 

Fiscal Stability: 

We estimate that nearly all grantees reported fiscal stability 
challenges, including decreases in state and local government funding, 
an overreliance on tuition-based revenue, and lack of donations from 
private sources. Twenty-seven percent of fiscal year 2006 grantees 
funded at least one activity in this focus area, and fiscal stability 
expenditures represented 6 percent of all grant funds spent. Specific 
examples of how institutions used grant funds to address fiscal 
stability challenges follow: 

* A 2-year strengthening institution in Iowa cited declining state 
funding as a challenge, reporting that in 2002, it fell below other 
Iowa community colleges in per-credit hour funding from the state and 
was forced to raise tuition and fees. Officials said many of its 
students are low-income and cannot pay more. As a result, the college 
ranks last among Iowa community colleges in general fund balance, 
threatening its long-term viability. To address these challenges, the 
college established three new academic programs--dental hygiene, 
biotechnology, and advanced manufacturing--that are in high demand in 
the surrounding community. The dental hygiene and biotechnology 
programs are anticipated to provide the college with an additional 
$200,000 in revenues annually and $1 million in federal and state 
appropriations.[Footnote 23] 

* Officials at a tribal college in South Dakota reported that despite 
having a large, active donor list of 40,000, the college lacked staff 
with the requisite skills to request major gifts from these donors. The 
college reported using $170,000 in Title III grant funds to improve 
operations at its development office by acquiring software to track 
such information as donor giving history and by centralizing its direct 
mail operations for requesting gifts. Additionally, nearly 20 percent 
of its $2.5 million grant was used to increase its existing endowment 
of $13 million. 

Long-standing Deficiencies in Grant Monitoring and Technical Assistance 
Limit Education's Ability to Ensure That Funds Are Used Properly and 
Grantees Are Supported: 

Education Has Made Limited Progress in Improving Its Monitoring, and 
Still Lacks a Systematic Approach to Coordinate Its Efforts: 

Five times since 1996, GAO and Education's Inspector General have 
recommended that Education implement a systematic approach to 
monitoring to better assess the fiscal and programmatic performance of 
Title III and V grantees. Such an approach would include implementing 
formal monitoring and technical assistance plans based on risk models 
and developing written procedures for providing technical assistance. 
When we previously reported on Education's management of the programs 
in 2004, the department had begun several initiatives to improve 
monitoring, including the development of annual monitoring plans to 
identify potential risk with grants and guide the work of program 
staff. However, we found that the lack of progress it made in 
implementing these initiatives had resulted in uneven monitoring of 
Title III and V grantees.[Footnote 24] Accordingly, we recommended that 
Education take steps to ensure its monitoring plans were carried out 
and targeted toward at-risk grantees by completing its electronic 
monitoring system and training programs. While Education has taken some 
steps to better target its monitoring plans in response to our 
recommendation, many of its initiatives have yet to be fully realized 
(see table 6). 

Table 6: A Comparison of the Status of Education's Monitoring 
Initiatives in 2004 and 2008: 

Monitoring initiative: Implement electronic monitoring system; 
2004 status: Education implemented electronic monitoring of Title III 
and V grantees at the end of 2004; 
2008 status: Redesigned in fiscal year 2007 because the original system 
did not achieve its intended goal of presenting a comprehensive view of 
risk based on an institution's portfolio of higher education grant 
programs. The new system, while fully operational, will continue to be 
enhanced through fiscal year 2010. 

Monitoring initiative: Establish risk-based criteria; 
2004 status: Education's OPE developed risk-based criteria in fiscal 
year 2003, but used these criteria inconsistently within the program 
office; 
2008 status: OPE established preliminary risk-based criteria for all 
its grant programs in fiscal year 2008. Criteria have been used to 
create a monitoring index of schools on which to focus additional 
monitoring, but only a small portion of these criteria are being 
utilized to set priorities. 

Monitoring initiative: Develop monitoring plans; 
2004 status: Following a fiscal year 2002 effort to place greater 
emphasis on performance monitoring for all grantees, annual monitoring 
plans were developed to guide monitoring and technical assistance; 
2008 status: Once the requirement to submit these plans to Education's 
OPE was rescinded in 2006, the program office ceased to develop 
monitoring plans. 

Monitoring initiative: Design comprehensive approach to site visits; 
2004 status: While program staff were required to complete at least two 
site visits annually, the majority of staff did not fulfill the 
requirement. Site visits that were conducted lacked a standard approach 
and varied in quality; 
2008 status: The requirement for program officers to complete a minimum 
number of site visits has been eliminated. Since 2004, few site visits 
have been completed, and most of those did not include financial 
monitoring to determine whether program funds were properly used. 

Monitoring initiative: Develop training for enhanced monitoring; 
2004 status: Education developed a corrective action plan to provide 
additional courses over a 3-year period to address training needs of 
its staff; 
2008 status: Education has developed courses to enhance monitoring, but 
most staff have not completed coursework and one key course has yet to 
be offered. 

Source: GAO analysis. 

[End of table] 

In 2007, the Office of Postsecondary Education (OPE) reestablished an 
office to oversee monitoring across all of its higher education grant 
programs. The program oversight staff is responsible for overseeing OPE 
monitoring policies, procedures, and standards, and training staff in 
these areas. The establishment of the oversight staff was designed to 
increase consistency in monitoring practices throughout more than 40 
grant programs administered by OPE, including Title III and V programs, 
and to supplement the responsibilities of individual program offices 
with regard to monitoring and technical assistance. 

Electronic Monitoring System: 

In 2007, Education redesigned its electronic monitoring system to 
provide several key enhancements lacking in the system that was 
originally introduced 4 years earlier. The original system was not 
designed to share key information across grant programs administered by 
OPE. The redesigned system brings together information about an 
institution's performance in managing its entire portfolio of higher 
education grants, increasing Education's ability to assess the risk of 
grantee noncompliance with program rules. Program officers can also 
enter updates about a grantee's performance in the system, based on 
routine interactions with the grantee. According to Education 
officials, this information can be used to reflect real-time 
information about institutional behavior. Because the system integrates 
financial and programmatic data, such as institutional drawdown of 
grant funds and annual performance reports, staff will have ready 
access to information needed to perform monitoring tasks. Given that 
each program officer is responsible for managing around 50 grants, 
electronic monitoring, if fully integrated into the oversight 
activities of program staff, has the potential to improve the quality 
and consistency of monitoring. 

Another feature of the system is a monitoring index, implemented in 
2008, that determines an institution's need for heightened monitoring 
or technical assistance based on nine weighted criteria designed to 
assess risk related to an institution's ability to manage its grants 
(see figure 5). For example, an institution that has lost accreditation 
(30 percent of the index) or has grants totaling more than $30 million 
(5 percent of the index) is automatically prioritized for heightened 
monitoring, which may involve site visits or other contacts with the 
school. Education has identified over 130 institutions across all 
higher education grant programs for heightened monitoring, of which 43 
percent participate in the Title III and V programs. Education 
officials said they will review the criteria and make revisions, as 
necessary, to better assess risk. 

Figure 5: Monitoring Index Criteria Used to Assess Institutional Risks: 

[Refer to PDF for image: pie-chart and sub-chart] 

Accreditation status: 30%; 
Decline in enrollment by 25 percent: 15%; 
Past operating deficit: 15%; 
Independent audits with findings: 15%; 
Fund not completely expended during grant cycle: 5%; 
Total number of higher education grants: 5%; 
Other: 15%: 
- Total grant funds exceeded $30 million: 5%; 
- Number of earmarks held: 5%; 
- Institutional matches required: 5%. 

Source: GAO analysis of Department of Education data. 

[End of figure] 

Annual Monitoring Plans: 

While Education has made recent progress in automating its monitoring 
tools and developing risk-based criteria, it lacks a coordinated 
approach to guide its monitoring efforts. Specifically, Education 
officials told us they discontinued the development of annual 
monitoring and technical assistance plans for Title III and V programs, 
one of the initiatives that we reported on in 2004. In 2002, Education 
directed each program within the agency to develop a monitoring plan to 
place greater emphasis on performance monitoring for all grantees. In 
addition to asking whether grantees were achieving results, program 
officials were also to consider what assistance Education could provide 
to help grantees accomplish program objectives and incorporate an 
increased departmental emphasis on compliance with the law into their 
planning. Education developed a plan for Title III and V programs that 
called for staff to (1) conduct risk assessments, (2) perform a minimum 
number of site visits each year, and (3) follow up with grantees 
regarding their performance reports. However, in 2006, Education 
rescinded the requirement for each program office to submit annual 
monitoring plans because the practice did not achieve its intended 
purpose of better targeting its monitoring resources. Since then, OPE 
has not developed any plans to guide its monitoring activities for 
Title III and V programs, although such plans are in place for other 
OPE grant programs. 

Site Visits: 

Since our 2004 report, site visits to Title III and V grantees, a 
critical component of an effective grants management program, have 
declined substantially. For example, Education conducted 26 site visits 
in fiscal year 2003, but only visited 22 grantees over the 4-year 
period of fiscal year 2005 through fiscal year 2008 (see table 7). We 
were unable to fully determine the nature or quality of these site 
visits because Education could not account for most of the reports 
required to document site visit findings. Additionally, since the 
issuance of our 2004 report, which found that about three-quarters of 
the program staff were not meeting the requirement to complete at least 
two site visits per year, Education has discontinued the two site visit 
requirement. Instead Education officials said they have changed the 
focus to improve the quality of monitoring by relying on the risk 
criteria to target grantees most in need of site visits to make the 
best use of the department's limited resources. 

Table 7: Site Visits to Title III and V Grantees, Fiscal Years 2003 
through 2008: 

Program: Title III, Part A, Strengthening Institutions; 
2003: 14; 
2004: 14; 
2005: 1; 
2006: 7; 
2007: 0; 
2008: 1. 

Program: Title III, Part A, Alaska Native/Native Hawaiian Institutions; 
2003: 7; 
2004: 0; 
2005: 0; 
2006: 0; 
2007: 0; 
2008: 0. 

Program: Title III, Part A, Tribal Colleges; 
2003: 0; 
2004: 3; 
2005: 3; 
2006: 0; 
2007: 0; 
2008: 0. 

Program: Title III, Part B, Historically Black Colleges and 
Universities; 
2003: 1; 
2004: 0; 
2005: 2; 
2006: 3; 
2007: 0; 
2008: 4. 

Program: Title V, Part A, Hispanic Serving Institutions; 
2003: 4; 
2004: 1; 
2005: 1; 
2006: 0; 
2007: 1; 
2008: 0. 

Program: Total; 
2003: 26; 
2004: 18; 
2005: 6; 
2006: 10; 
2007: 1; 
2008: 5. 

Source: GAO analysis of Department of Education data. 

Note: As of April 2009, Education had completed six site visits for 
fiscal year 2009 to an equal number of Strengthening Institutions, 
Historically Black Colleges and Universities, and Hispanic Serving 
Institutions. 

[End of table] 

One former senior Education official told us that site visits had 
declined because the program office has limited staff and few have the 
requisite skills to conduct financial site visits. According to 
Education, the OPE office responsible for administering Title III and V 
grant programs currently has 32 staff to monitor more than 1,000 grants 
across its assigned programs, compared to 2003 when it had 38 staff 
responsible for approximately 750 grants. To address concerns that 
program officers do not have the right skill mix to conduct 
comprehensive site visits, OPE's program oversight staff assumed 
responsibility for conducting site visits for Title III and V programs 
in 2008. However, because the office is responsible for conducting site 
visits across more than 40 higher education grant programs, the number 
of Title III and V grantees it can visit will be limited. In fiscal 
year 2008, for example, five site visits that program oversight staff 
conducted were to Title III grant recipients. 

With the implementation of an electronic monitoring system and risk- 
based monitoring index, Education now has tools to enhance its ability 
to select grantees for site visits. However, officials said that aside 
from referrals from the Inspector General, the criteria they used in 
selecting schools for fiscal year 2008 and 2009 site visits was the 
total amount of higher education grants awarded (i.e., grantees 
receiving $30 million or more), which represents only 5 percent of the 
monitoring index criteria. In fiscal year 2008, this limited criteria 
resulted in a narrow subset of schools being visited, with four of the 
five site visits being made to Historically Black Colleges and 
Universities. Ideally, Education's risk-based approach would consider 
not only grant amounts, but also the full list of weighted criteria on 
its monitoring index, along with other factors such as grant program 
participation and institution type to ensure that risk is considered 
across each of the grant programs and a mix of schools are visited. 

Staff Training: 

Education has made progress in developing grant monitoring courses to 
enhance the skills of Title III and V program staff, but skill gaps 
remain and limit the ability of program staff to fully carry out their 
monitoring and technical assistance responsibilities. Since our 2004 
report, Education has developed courses on internal control and grants 
monitoring, but these courses have been attended by less than half of 
the program staff. For example, of 28 staff members only 2 have 
completed a new internal control course and 13 have completed a course 
on grants monitoring. Senior officials at Education we spoke to also 
identified critical areas where additional training is needed. 
Specifically, one official told us that the ability to conduct 
comprehensive reviews of grantees has been hindered because program 
staff have not had training on how to review the financial practices of 
grantees. A course on this topic was developed in 2007 but has yet to 
be offered. Another official said Education needs to provide training 
for program staff on how to incorporate the results of the external 
evaluations that grantees are required to complete into their reviews. 

Education Lacks Assurance That Grant Funds Are Used Appropriately: 

Education has not fully implemented its planned monitoring initiatives 
and lacks assurance that grantees appropriately manage federal funds, 
increasing the potential for fraud, waste, or abuse. During the course 
of this study, we reviewed financial and grant project records at seven 
institutions participating in Title III and V programs in fiscal year 
2006. We identified $142,943 in questionable expenses at 4 of 7 
institutions we visited[Footnote 25] (see table 8). 

Table 8: Summary of Findings from Financial Site Visits: 

Grantee: A; 
State: Texas; 
Total dollars reviewed: $300,438; 
Questionable grant expenses: $2,127. 

Grantee: B; 
State: Puerto Rico; 
Total dollars reviewed: $353,963; 
Questionable grant expenses: $29,258. 

Grantee: C; 
State: Illinois; 
Total dollars reviewed: $226,670; 
Questionable grant expenses: [Empty]. 

Grantee: D; 
State: Maryland; 
Total dollars reviewed: $427,180; 
Questionable grant expenses: $105,117. 

Grantee: E; 
State: Tennessee; 
Total dollars reviewed: $175,388; 
Questionable grant expenses: [Empty]. 

Grantee: F; 
State: California; 
Total dollars reviewed: $108,977; 
Questionable grant expenses: $6,441. 

Grantee: G; 
State: North Dakota; 
Total dollars reviewed: $299,846; 
Questionable grant expenses: [Empty]. 

Grantee: Total; 
Total dollars reviewed: $1,892,462; 
Questionable grant expenses: $142,943. 

Source: GAO analysis of grantee disbursement records conducted during 
site visits. 

[End of table] 

At one institution, we identified significant internal control 
weaknesses and $105,117 in questionable expenditures. Specifically, a 
review of grant disbursement records for Grantee D revealed spending 
with no clear linkage to the grant and instances in which accounting 
procedures were bypassed by grant staff at the institution. Of the 
questionable expenditures we identified, $88,195 was attributed to an 
activity designed to promote character and leadership development. Of 
that amount, we found that the institution used more than $79,975 to 
pay for numerous student trips to locations such as resorts and 
amusement parks. According to the grant agreement, the funds were to be 
used for student service learning projects. Additionally, $4,578 in 
grant funds was used to purchase an airplane global positioning system 
even though the school did not own an airplane. Over $6,000 of grant 
funds was used to purchase a desk and chair (see figure 6). In 
purchasing the global positioning system and office furniture, a school 
official split the payments on an institutionally issued purchase card 
to circumvent limits established by the institution. Officials at the 
institution ignored multiple warnings about mismanagement of this 
activity from external evaluators hired to review the grant. Education 
visited the school in 2006 but found no problems, and recommended we 
visit the institution as an example of a model grantee. We referred the 
problems we noted at this institution to Education's Inspector General 
for further investigation. 

Figure 6: Desk and Chair Purchased by Grantee: 

[Refer to PDF for image: photograph] 

Source: GAO. 

[End of figure] 

Examples of the questionable expenditures we identified at three other 
institutions we visited follow: 

* We were unable to complete testing for about $147,000 of grant fund 
transactions at Grantee A due to a lack of readily available supporting 
documentation. For one transaction that was fully documented, the 
grantee improperly used $2,127 in grant funds to pay late fees assessed 
to the college. Once we pointed out that grant funds cannot be used for 
this purpose, the college took corrective action by writing a check to 
reimburse the grant. 

* Grantee B used $27,530 to prepay subscription and contract services 
that would be delivered after the grant expired. 

* Grantee F used more than $1,500 in grant funds to purchase fast food 
and over $4,800 to purchase t-shirts for students. 

We presented Education with the results of our analysis supporting each 
of our findings related to our grantee visits, and senior officials 
expressed commitment to follow up on each of the findings in 
coordination with grantees. 

The annual performance reports that grantees are required to submit to 
receive continued funding provide a key tool for monitoring grantee 
performance, but we found evidence that the program office is not 
consistently reviewing these reports. In reviewing seven annual 
performance reports that fiscal year 2006 grantees submitted late, we 
found six that lacked detail, provided inaccurate information, or were 
incomplete. For example, one grantee reported that 80 percent ($2.3 
million) of total funds allotted for the year were committed to "other 
unspecified activities" instead of clearly listing how the funds were 
spent, as required. Another institution in the final year of its grant 
submitted a report that was mostly blank, but it was counted as 
complete by program staff until we pointed out the discrepancy. The 
lack of information provided by the institution limits OPE's ability to 
follow administrative requirements for closing the grant, and it also 
significantly impairs its ability to understand the impact federal 
funds had on this particular campus or whether funds were used 
appropriately. Education subsequently requested that the school 
finalize its performance report a full year after it was originally 
due. While such reports will now be easily accessible through the 
electronic monitoring system, program staff will still have to take the 
initiative to review the information to determine whether grantees have 
demonstrated adequate progress to justify continued funding. 

Education's Ability to Target Technical Assistance Remains Limited: 

While Education provides technical assistance for prospective and 
current Title III and V grantees through preapplication workshops and 
routine interaction between program officers and grant administrators 
at the institutions, it has not made progress in developing a 
systematic approach to target the needs of grantees. According to one 
senior Education official, technical assistance is generally provided 
to Title III and V grantees on a case-by-case basis at the discretion 
of program officers. There are no particular criteria to determine when 
a program officer should provide technical assistance. For example, 
officials at a few of the institutions we spoke to told us that 
Education should provide technical assistance whenever the grant 
administration staff at an institution changes. Another senior 
Education official said that technical assistance should be provided 
when annual performance reports show numerous grantees experiencing 
similar problems, or if program officers receive numerous calls on a 
particular issue. Since we found evidence that program staff may not 
consistently review these reports, the extent to which this type of 
follow-up is occurring is unclear. 

According to grantees we interviewed, the technical assistance 
Education provides is not consistent throughout the grant cycle. 
Specifically, several officials from schools at which we conducted 
interviews were complimentary of the technical assistance Education 
provided when they were applying for grants. Some of those officials, 
however, noted a precipitous drop in assistance during the first year 
after grants were awarded when grantees often need help with 
implementation challenges, such as recruiting and retaining highly 
qualified staff, securing matching funds for endowments, and overcoming 
construction delays. In the past, grantees had an opportunity to 
address such challenges at annual conferences sponsored by Education, 
but these conferences have not been held since 2006. Nearly 40 percent 
of the 113 grantees that provided comments in their annual performance 
reports requested that Education resume providing the conferences on a 
regular basis. According to Education officials, resource constraints 
have prevented them from holding the conferences, but plans are under 
way to hold a conference in fall 2009. Since Education stopped 
convening conferences, schools, and in some cases higher education 
advocacy groups, have hosted conferences at which Education staff 
participated. For example, five conferences or workshops held for the 
Title V program in 2008 were hosted by schools or advocacy groups. 
Officials from a few schools we interviewed said it is important for 
Education to take the lead in planning conferences to ensure that 
grantees receive information that is consistent with program rules. 
They also noted that when conferences were held in locations such as 
Washington D.C., participation could be expensive and suggested 
Education consider holding regional conferences to make it more 
affordable for grantees to attend. 

Officials from about half of the schools and some officials from 
advocacy groups we interviewed also reported that Education could 
strengthen grantee performance by more broadly disseminating 
information about successful projects. Education has included limited 
information on its Web site about six current and past projects. 
However, the information for each project is maintained on the specific 
Title III or V program pages, rather than being presented in a 
centralized location for the benefit of all grantees. For example, one 
of the projects that highlighted student retention efforts at a Native 
Hawaiian institution, a topic that has wide applicability across the 
grant programs, was only located at the Strengthening Institutions 
Program Web site. Additionally, this Web information did not 
consistently include contact information to allow interested schools to 
contact the featured grantees. School officials said such information 
sharing would provide lessons learned from similar projects and better 
leverage the federal investment. For example, an official at a 2-year 
Strengthening Institutions grantee in North Carolina told us he 
independently identified a contact at a Title III grantee to discuss 
the application process, but suggested that a clearinghouse of 
successful projects would be helpful for connecting institutions with 
similar challenges. 

As we reported in 2004 and 2007, Education's ability to target 
technical assistance is also limited in that the annual performance 
reports used to obtain feedback about program improvements may 
discourage candor because the reports identify grantees and are used to 
make continued funding decisions. The department also does not readily 
use the feedback it obtains from grantees to improve the programs. In 
2004, we recommended that Education use appropriately collected 
feedback from grantees to target its technical assistance. While 
Education agreed with the recommendation and officials said they were 
considering ways to obtain feedback separate from the annual 
performance reporting process, Education continues to rely on these 
reports to obtain feedback. Education has separate feedback mechanisms 
in place to measure customer satisfaction and gauge the need for 
program improvement for some of its other programs.[Footnote 26] One 
senior Education official said the current process for obtaining 
feedback is adequate for assessing the needs of Title III and V 
grantees. However, our review of the annual performance reports that 
fiscal year 2006 grantees submitted found that only 22 percent provided 
feedback. Additionally, a representative from the contractor 
responsible for compiling information from the reports said that the 
narrative data--where feedback from grantees can be found--is not 
summarized for Education. The 113 grantees that provided feedback in 
these reports made a number of suggestions for improving the program, 
including requests for improved communications from Education, 
consistency in timing of events and reporting requirements, re- 
establishing annual conferences for grantees, and clarifying program 
regulations. For instance, Education has posted program regulations on 
its Web site, but 61 of 113 grantees that provided feedback 
specifically requested that Education clarify the regulations. 

Conclusions: 

Given the current challenges low-income and minority serving 
institutions face, and the projected growth in the college-age 
population, Title III and V funds will continue to play an integral 
role in helping these institutions address some of their most critical 
needs. Because these institutions have limited resources, they may need 
additional assistance to successfully implement their grant projects. 
Education's role in monitoring and providing assistance to Title III 
and V grantees is critical to ensuring that the substantial investment 
the federal government makes in these programs leads to improvements in 
institutional capacity and student outcomes. When we reviewed the 
management of these programs in 2004 and 2007, Education had begun 
several initiatives to improve its monitoring and assistance. However, 
many of these initiatives never achieved their intended purpose or 
remain unfinished. Education has made progress in developing tools, 
such as an electronic monitoring system and risk-based criteria, to 
assess potential risks associated with Title III and V grants, but it 
lacks a comprehensive risk-based monitoring and technical assistance 
approach to target its efforts. Previously, we recommended that the 
Secretary of Education take steps to ensure that monitoring and 
technical assistance plans are carried out and targeted to at-risk 
grantees and the needs of grantees guide the technical assistance 
offered. At the core of such an approach, which Education has not fully 
implemented, would be plans to guide its monitoring and technical 
assistance efforts following a thorough assessment of the risk and 
needs of grantees. Such an approach would also ensure that more 
information is shared among grantees about common implementation 
challenges and successful projects to better leverage the considerable 
federal investment, and ensure that grantees have an opportunity to 
provide feedback on areas for program improvement. Additionally, 
Education has not adequately addressed skill gaps that limit the 
ability of program staff to carry out monitoring and technical 
assistance. Consequently, Title III and V funds continue to be at risk 
for fraud, waste, or abuse. The internal control weaknesses and 
questionable expenditures we identified at certain grantees we reviewed 
demonstrate the importance of having a strong monitoring and assistance 
program in place. In an environment where Education is called on to 
administer additional programs with limited resources, a coordinated 
approach to guide its efforts is critical to ensuring that grant funds 
are appropriately spent and the needs of grantees are met. 

Recommendations for Executive Action: 

We recommend that the Secretary of Education take the following five 
actions: 

* Develop a comprehensive, risk-based approach to target grant 
monitoring and technical assistance based on the needs of grantees. In 
doing so, Education should take steps to ensure that all available 
tools, including its electronic monitoring system, risk-based criteria, 
site visits, and grantee annual performance reports, are fully 
integrated to better target its limited resources. 

* Follow up on each of the improper uses of grant funds that were 
identified in this report. 

* Provide program staff with the necessary training to fully carry out 
monitoring and technical assistance responsibilities. 

* Disseminate information to grantees about common implementation 
challenges and successful projects to leverage the investment that has 
been made across the programs. 

* Develop appropriate mechanisms to collect and use feedback from 
grantees. 

Agency Comments: 

We provided a draft of this report to officials at the Department of 
Education for review and comment. In written comments, Education agreed 
with our findings and recommendations. Officials indicated that they 
have begun to undertake a number of corrective actions to respond to 
these recommendations, such as convening a task force to better 
coordinate program resources toward grantees most in need of monitoring 
and/or technical assistance. Officials also agreed to provide 
additional training to new and existing program staff, reinstitute the 
annual Title III and V project director's meeting in an effort to 
better disseminate information about the program and successful grants, 
and implement an e-mail address that grantees can use to provide 
feedback. 

Reinstituting the annual Title III and V project director's meeting is 
an important step in strengthening Education's technical assistance for 
grantees, but it will be important for Education to develop an approach 
for disseminating key information to grantees on a more routine basis 
than annual meetings. Additionally, Education's plan to provide 
grantees with an e-mail address that is monitored by staff outside the 
program office may encourage grantees to provide more candid feedback. 
However, unless Education develops an approach to systematically 
collect and use the feedback, it may miss opportunities to further 
improve its oversight efforts. Education also provided technical 
comments, which we incorporated where appropriate. Education's comments 
appear in appendix IV. 

As arranged with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from its issue date. At that time, we will send copies of this report 
to relevant congressional committees, the Secretary of Education, and 
other interested parties. The report will also be available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have questions about this report, please contact 
me at (202) 512-7215 or scottg@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made key contributions to this 
report are listed in appendix V. 

Sincerely yours, 

Signed by: 

George A. Scott: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We reviewed Title III and V grants programs to determine (1) what are 
the characteristics of institutions eligible to receive grants under 
Titles III and V, including the characteristics of students served, (2) 
what challenges do grantees face , and how have they spent Title III 
and V funds to address these challenges, and (3) to what extent does 
the Department of Education (Education) monitor the financial and 
programmatic performance of Title III and V grantees, and use this 
information to target its technical assistance. 

To describe the characteristics of postsecondary institutions eligible 
to receive grants under Titles III and V, we analyzed 2006 data on 2- 
year and 4-year public and private, not-for profit institutions from 
Education's Integrated Postsecondary Education Data System.[Footnote 
27] Historically Black Colleges and Universities and Tribal Colleges 
that receive formula grants through Title III were automatically 
included in our eligible population. To determine the number of 
institutions eligible for discretionary grant programs under Title III 
and V, we identified postsecondary institutions that had low 
educational and general expenditures and enrolled more Pell grant 
recipients, as compared to comparable institutions. To determine 
eligibility for specific types of grant programs, we also analyzed 
racial and ethnic data for students enrolled at eligible institutions. 
Eligible institutions reporting Hispanic student enrollment of 25 
percent or more were categorized as Title V eligible. The 2,283 
institutions that did not meet any of the criteria mentioned above were 
categorized as ineligible for participation in the Title III and V 
grant programs.[Footnote 28] 

We also analyzed data from Education's 2004 National Postsecondary 
Student Aid Study (NPSAS), the most recent year for which data were 
available, to provide insight into student characteristics. Because 
NPSAS data are based on a representative sample of students enrolled in 
postsecondary education it does not include the universe of 
institutions as reported in Integrated Postsecondary Education Data 
Systems (IPEDS). As a result, it is not possible to discuss the NPSAS 
data in terms of eligible and ineligible institutions as can be done 
with IPEDS data. Instead, when discussing NPSAS data, we refer to 
minority serving and non-minority serving institutions. While only 
Historically Black Colleges and Universities, Hispanic-serving 
institutions, and Tribal Colleges are classified as minority serving 
institutions for NPSAS, these data are the most complete source of 
information on the characteristics of students attending minority 
serving institutions. To determine the completeness and reliability of 
this data, we reviewed the documentation from the National Center for 
Education Statistics on how the data were collected, interviewed 
Education officials responsible for handling the data, and performed 
electronic tests to look for missing or out-of-range values. Based on 
our reviews and tests, we found the data sufficiently reliable for our 
purposes. 

To describe the challenges that grantees face and how they used grant 
funds to address their challenges, we reviewed a representative sample 
of grant applications, all electronically submitted annual performance 
reports, and interviewed officials from 27 Title III and V grantees. 
Specifically, we conducted a content analysis of grant applications 
using a representative sample of 78 of the 511 fiscal year 2006 
grantees, allowing us to generalize our findings to the entire 
population of grantees (see table 9.) 

Table 9: Number of 2002 to 2006 Applications Reviewed during Content 
Analysis: 

Grant program: Title III, Part A, Strengthening Institutions; 
Total number of grantees: 222; 
Sample size and total cases reviewed: 20. 

Grant program: Title III, Part A, Tribal Colleges; 
Total number of grantees: 27; 
Sample size and total cases reviewed: 14. 

Grant program: Title III, Part A, Alaska Native Institutions; 
Total number of grantees: 10; 
Sample size and total cases reviewed: 5. 

Grant program: Title III, Part A, Native Hawaiian Institution; 
Total number of grantees: 9; 
Sample size and total cases reviewed: 5. 

Grant program: Title III, Part B, Historically Black Colleges and 
Universities; 
Total number of grantees: 97; 
Sample size and total cases reviewed: 16. 

Grant program: Title V, Part A, Hispanic Serving Institutions; 
Total number of grantees: 146; 
Sample size and total cases reviewed: 18. 

Grant program: Total; 
Total number of grantees: 511; 
Sample size and total cases reviewed: 78. 

Source: GAO calculations based on Department of Education data. 

[End of table] 

We stratified our sample by the six programs and, within these strata, 
randomly selected grantees. Our sample was statistically drawn and 
weighted so that we could generalize the results of our review across 
programs. As with all samples, our review of grant files is subject to 
sampling errors. The effects of sampling errors, due to the selection 
of a sample from a larger population, can be expressed as confidence 
intervals based on statistical theory. Sampling errors occur because we 
use a sample to draw conclusions about a larger population. If a 
different sample had been taken, the results might have been different. 
To recognize the possibility that other samples might have yielded 
other results, we express our confidence in the precision of our 
particular sample's results as a 95 percent confidence interval. Each 
sample element was subsequently weighted in the analysis to account for 
all members of the population, including those that were not selected. 

In conducting our content analysis, we developed a code tree that 
consisted of potential challenges identified through our review of the 
literature and interviews with grantees and higher education advocacy 
groups. Two analysts independently coded each application, and then 
reconciled any differences in their analysis to ensure inter-rater 
reliability. 

To describe how Title III and V grantees used grant funds to address 
their challenges, we analyzed data from 503 of 511 fiscal year 2006 
grantee annual performance reports that were submitted electronically. 
To determine the reliability of these data, we interviewed officials 
from Education and its contractor about limitations with the data 
collected and how its uses these data. We performed a number of data 
reliability checks, such as establishing frequency tables for certain 
variables to check for outliers and missing values. We also ran tests 
to check for out-of-range values for specific variables. Based on 
information about outliers provided by Education for a small percentage 
of these data (about 1 percent), we decided to keep data for all 
variables supplied by the department. As a result of our tests, we 
found these data to be sufficiently reliable for our purposes. 

To better understand the nature of grantee challenges and how Title III 
and V grant funds were used to address them, we also interviewed 
officials from 27 grantee institutions about the challenges they face 
and their experiences with the grant programs. We selected a 
nonprobability sample based on program participation, size of grant, 
and geographic location (see table 10). 

Table 10: Summary of GAO Contacts with Title III and V Grantees: 

Grant program: Strengthening Institutions; 
Location: North Carolina and Virginia; 
Number of institutions contacted: Site visit: 3; 
Number of institutions contacted: Interview: 0. 

Grant program: Historically Black Colleges and Universities; Location: 
North Carolina, South Carolina, and Virginia; 
Number of institutions contacted: Site visit: 3; 
Number of institutions contacted: Interview: 0. 

Grant program: Hispanic Serving Institutions; Location: New Mexico and 
New York; 
Number of institutions contacted: Site visit: 3; 
Number of institutions contacted: Interview: 4. 

Grant program: Tribal Colleges; Location: New Mexico and Montana; 
Number of institutions contacted: Site visit: 2; 
Number of institutions contacted: Interview: 1. 

Grant program: Alaskan Native Serving Institutions; Location: Alaska; 
Number of institutions contacted: Site visit: 0; 
Number of institutions contacted: Interview: 3. 

Grant program: Native Hawaiian Serving Institutions; Location: Hawaii; 
Number of institutions contacted: Site visit: 0; 
Number of institutions contacted: Interview: 8. 

Grant program: Total; 
Number of institutions contacted: Site visit: 11; 
Number of institutions contacted: Interview: 16. 

Source: GAO. 

[End of table] 

We also conducted a review of the literature to gain a better 
understanding of the challenges that specific types of minority serving 
institutions face. To determine how Education monitors and provides 
technical assistance, we conducted interviews with officials at 
Education and reviewed program requirements, policies, procedure 
manuals, and monitoring plans. We also conducted additional site visits 
at seven Title III and V fiscal year 2006 grantees to evaluate their 
fiscal policies and internal control policies and determine whether 
program funds were properly used. These institutions were selected 
using a nonprobability sample based on factors such as program 
participation, size of grant, and geographic location. The grantees 
selected were located in California, Illinois, Maryland, North Dakota, 
Puerto Rico, Tennessee and Texas. Our grantee site reviews were limited 
in scope and were not sufficient for expressing an opinion on the 
effectiveness of grantee internal controls or compliance. 

[End of section] 

Appendix II: Institutional and Student Characteristics, by Program 
Eligibility Status: 

Table: 

Institutional resources (median $ per student): Endowment; 
Eligible: 2-year public: $273; 
Eligible: 2-year private, not-for-profit: $2,125; 
Eligible: 4-year public: $1,251; 
Eligible: 4-year private, not-for-profit: $6,610; 
Eligible: Total: $1,069; 
Ineligible: 2-year public: $287; 
Ineligible: 2-year private, not-for-profit: $2,781; 
Ineligible: 4-year public: $2,623; 
Ineligible: 4-year private, not-for-profit: $20,391; 
Ineligible: Total: $5,451. 

Institutional resources (median $ per student): Tuition and fees; 
Eligible: 2-year public: $2,163; 
Eligible: 2-year private, not-for-profit: $8,055; 
Eligible: 4-year public: $4,005; 
Eligible: 4-year private, not-for-profit: $11,826; 
Eligible: Total: $3,687; 
Ineligible: 2-year public: $2,183; 
Ineligible: 2-year private, not-for-profit: $10,868; 
Ineligible: 4-year public: $5,445; 
Ineligible: 4-year private, not-for-profit: $19,455; 
Ineligible: Total: $6,952. 

Institutional expenditures (median $ per student): Instructional 
equipment; 
Eligible: 2-year public: $1,276; 
Eligible: 2-year private, not-for-profit: $2,417; 
Eligible: 4-year public: $3,648; 
Eligible: 4-year private, not-for-profit: $5,909; 
Eligible: Total: $2,177; 
Ineligible: 2-year public: $1,288; 
Ineligible: 2-year private, not-for-profit: $3,405; 
Ineligible: 4-year public: $4,747; 
Ineligible: 4-year private, not-for-profit: $8,118; 
Ineligible: Total: $4,690. 

Institutional expenditures (median $ per student): Academic support; 
Eligible: 2-year public: $449; 
Eligible: 2-year private, not-for-profit: $780; 
Eligible: 4-year public: $1,065; 
Eligible: 4-year private, not-for-profit: $1,318; 
Eligible: Total: $675; 
Ineligible: 2-year public: $490; 
Ineligible: 2-year private, not-for-profit: $846; 
Ineligible: 4-year public: $1,414; 
Ineligible: 4-year private, not-for-profit: $1,916; 
Ineligible: Total: $1,163. 

Institutional expenditures (median $ per student): Institutional 
support; 
Eligible: 2-year public: $862; 
Eligible: 2-year private, not-for-profit: $2,778; 
Eligible: 4-year public: $1,642; 
Eligible: 4-year private, not-for-profit: $3,922; 
Eligible: Total: $1,402; 
Ineligible: 2-year public: $901; 
Ineligible: 2-year private, not-for-profit: $3,100; 
Ineligible: 4-year public: $1,697; 
Ineligible: 4-year private, not-for-profit: $4,665; 
Ineligible: Total: $2,463. 

Institutional expenditures (median $ per student): Student services; 
Eligible: 2-year public: $568; 
Eligible: 2-year private, not-for-profit: $1,623; 
Eligible: 4-year public: $993; 
Eligible: 4-year private, not-for-profit: $2,185; 
Eligible: Total: $878; 
Ineligible: 2-year public: $595; 
Ineligible: 2-year private, not-for-profit: $1,341; 
Ineligible: 4-year public: $1,106; 
Ineligible: 4-year private, not-for-profit: $3,192; 
Ineligible: Total: $1,495. 

Open admission (% of institutions): Yes; 
Eligible: 2-year public: 96%; 
Eligible: 2-year private, not-for-profit: 49%; 
Eligible: 4-year public: 29%; 
Eligible: 4-year private, not-for-profit: 28%; 
Eligible: Total: 60%; 
Ineligible: 2-year public: 95%; 
Ineligible: 2-year private, not-for-profit: 33%; 
Ineligible: 4-year public: 9%; 
Ineligible: 4-year private, not-for-profit: 10%; 
Ineligible: Total: 34%. 

Open admission (% of institutions): No; 
Eligible: 2-year public: 4%; 
Eligible: 2-year private, not-for-profit: 51%; 
Eligible: 4-year public: 71%; 
Eligible: 4-year private, not-for-profit: 72%; 
Eligible: Total: 40%; 
Ineligible: 2-year public: 5%; 
Ineligible: 2-year private, not-for-profit: 67%; 
Ineligible: 4-year public: 91%; 
Ineligible: 4-year private, not-for-profit: 90%; 
Ineligible: Total: 66%. 

Offers remedial services (% of institutions): Yes; 
Eligible: 2-year public: 100%; 
Eligible: 2-year private, not-for-profit: 85%; 
Eligible: 4-year public: 88%; 
Eligible: 4-year private, not-for-profit: 78%; 
Eligible: Total: 90%; 
Ineligible: 2-year public: 99%; 
Ineligible: 2-year private, not-for-profit: 67%; 
Ineligible: 4-year public: 74%; 
Ineligible: 4-year private, not-for-profit: 62%; 
Ineligible: Total: 75%. 

Offers remedial services (% of institutions): No; 
Eligible: 2-year public: 0; 
Eligible: 2-year private, not-for-profit: 15%; 
Eligible: 4-year public: 12%; 
Eligible: 4-year private, not-for-profit: 23%; 
Eligible: Total: 10%; 
Ineligible: 2-year public: 1%; 
Ineligible: 2-year private, not-for-profit: 33%; 
Ineligible: 4-year public: 26%; 
Ineligible: 4-year private, not-for-profit: 38%; 
Ineligible: Total: 25%. 

Average undergraduate enrollment; 
Eligible: 2-year public: 5,995; 
Eligible: 2-year private, not-for-profit: 497; 
Eligible: 4-year public: 7,712; 
Eligible: 4-year private, not-for-profit: 1,552; 
Eligible: Total: 4,595; 
Ineligible: 2-year public: 5,870; 
Ineligible: 2-year private, not-for-profit: 291; 
Ineligible: 4-year public: 9,199; 
Ineligible: 4-year private, not-for-profit: 1,956; 
Ineligible: Total: 4,575. 

Race/ethnicity (% of students): African American; 
Eligible: 2-year public: 16%; 
Eligible: 2-year private, not-for-profit: 16%; 
Eligible: 4-year public: 22%; 
Eligible: 4-year private, not-for-profit: 24%; 
Eligible: Total: 18%; 
Ineligible: 2-year public: 11%; 
Ineligible: 2-year private, not-for-profit: 13%; 
Ineligible: 4-year public: 8%; 
Ineligible: 4-year private, not-for-profit: 8%; 
Ineligible: Total: 9%. 

Race/ethnicity (% of students): Asian; 
Eligible: 2-year public: 7%; 
Eligible: 2-year private, not-for-profit: 8%; 
Eligible: 4-year public: 6%; 
Eligible: 4-year private, not-for-profit: 3%; 
Eligible: Total: 6%; 
Ineligible: 2-year public: 6%; 
Ineligible: 2-year private, not-for-profit: 3%; 
Ineligible: 4-year public: 7%; 
Ineligible: 4-year private, not-for-profit: 5%; 
Ineligible: Total: 6%. 

Race/ethnicity (% of students): Hispanic; 
Eligible: 2-year public: 19%; 
Eligible: 2-year private, not-for-profit: 15%; 
Eligible: 4-year public: 25%; 
Eligible: 4-year private, not-for-profit: 29%; 
Eligible: Total: 22%; 
Ineligible: 2-year public: 11%; 
Ineligible: 2-year private, not-for-profit: 15%; 
Ineligible: 4-year public: 6%; 
Ineligible: 4-year private, not-for-profit: 6%; 
Ineligible: Total: 8%. 

Race/ethnicity (% of students): Native American; 
Eligible: 2-year public: 1%; 
Eligible: 2-year private, not-for-profit: 7%; 
Eligible: 4-year public: 1%; 
Eligible: 4-year private, not-for-profit: 1%; 
Eligible: Total: 1%; 
Ineligible: 2-year public: 1%; 
Ineligible: 2-year private, not-for-profit: [Empty]; 
Ineligible: 4-year public: 1%; 
Ineligible: 4-year private, not-for-profit: 1%; 
Ineligible: Total: 1%. 

Race/ethnicity (% of students): Total minority; 
Eligible: 2-year public: 43%; 
Eligible: 2-year private, not-for-profit: 46%; 
Eligible: 4-year public: 54%; 
Eligible: 4-year private, not-for-profit: 56%; 
Eligible: Total: 48%; 
Ineligible: 2-year public: 30; 
Ineligible: 2-year private, not-for-profit: 30%; 
Ineligible: 4-year public: 22; 
Ineligible: 4-year private, not-for-profit: 29%; 
Ineligible: Total: 24%. 

Race/ethnicity (% of students): White; 
Eligible: 2-year public: 56%; 
Eligible: 2-year private, not-for-profit: 54%; 
Eligible: 4-year public: 45%; 
Eligible: 4-year private, not-for-profit: 41%; 
Eligible: Total: 51; 
Ineligible: 2-year public: 70%; 
Ineligible: 2-year private, not-for-profit: 70%; 
Ineligible: 4-year public: 76%; 
Ineligible: 4-year private, not-for-profit: 68%; 
Ineligible: Total: 75%. 

Race/ethnicity (% of students): Other; 
Eligible: 2-year public: 1%; 
Eligible: 2-year private, not-for-profit: [Empty]; 
Eligible: 4-year public: 1%; 
Eligible: 4-year private, not-for-profit: 3%; 
Eligible: Total: 1%; 
Ineligible: 2-year public: [Empty]; 
Ineligible: 2-year private, not-for-profit: [Empty]; 
Ineligible: 4-year public: 2%; 
Ineligible: 4-year private, not-for-profit: 3%; 
Ineligible: Total: 1%. 

Gender (% of students): Male; 
Eligible: 2-year public: 41%; 
Eligible: 2-year private, not-for-profit: 34%; 
Eligible: 4-year public: 42%; 
Eligible: 4-year private, not-for-profit: 38%; 
Eligible: Total: 41%; 
Ineligible: 2-year public: 42%; 
Ineligible: 2-year private, not-for-profit: 37%; 
Ineligible: 4-year public: 46%; 
Ineligible: 4-year private, not-for-profit: 43%; 
Ineligible: Total: 44%. 

Gender (% of students): Female; 
Eligible: 2-year public: 59%; 
Eligible: 2-year private, not-for-profit: 66%; 
Eligible: 4-year public: 58%; 
Eligible: 4-year private, not-for-profit: 62%; 
Eligible: Total: 59%; 
Ineligible: 2-year public: 58%; 
Ineligible: 2-year private, not-for-profit: 63%; 
Ineligible: 4-year public: 54%; 
Ineligible: 4-year private, not-for-profit: 57%; 
Ineligible: Total: 56%. 

Part-time attendance; 
Eligible: 2-year public: 62%; 
Eligible: 2-year private, not-for-profit: 34%; 
Eligible: 4-year public: 29%; 
Eligible: 4-year private, not-for-profit: 22%; 
Eligible: Total: 48%; 
Ineligible: 2-year public: 62%; 
Ineligible: 2-year private, not-for-profit: 28%; 
Ineligible: 4-year public: 19%; 
Ineligible: 4-year private, not-for-profit: 17%; 
Ineligible: Total: 34%. 

Age at time of first enrollment: Under 18; 
Eligible: 2-year public: 7%; 
Eligible: 2-year private, not-for-profit: 2%; 
Eligible: 4-year public: 4%; 
Eligible: 4-year private, not-for-profit: 3%; 
Eligible: Total: 5%; 
Ineligible: 2-year public: 6%; 
Ineligible: 2-year private, not-for-profit: 2%; 
Ineligible: 4-year public: 2%; 
Ineligible: 4-year private, not-for-profit: 2%; 
Ineligible: Total: 4%. 

Age at time of first enrollment: 18 to 24%; 
Eligible: 2-year public: 51%; 
Eligible: 2-year private, not-for-profit: 51%; 
Eligible: 4-year public: 70%; 
Eligible: 4-year private, not-for-profit: 64%; 
Eligible: Total: 58%; 
Ineligible: 2-year public: 53%; 
Ineligible: 2-year private, not-for-profit: 65%; 
Ineligible: 4-year public: 80%; 
Ineligible: 4-year private, not-for-profit: 77%; 
Ineligible: Total: 69%. 

Age at time of first enrollment: 25 or older; 
Eligible: 2-year public: 42%; 
Eligible: 2-year private, not-for-profit: 47%; 
Eligible: 4-year public: 26%; 
Eligible: 4-year private, not-for-profit: 34%; 
Eligible: Total: 37%; 
Ineligible: 2-year public: 41%; 
Ineligible: 2-year private, not-for-profit: 33%; 
Ineligible: 4-year public: 18%; 
Ineligible: 4-year private, not-for-profit: 21%; 
Ineligible: Total: 27%. 

Financial aid (% of students receiving): Pell grants; 
Eligible: 2-year public: 41%; 
Eligible: 2-year private, not-for-profit: 58%; 
Eligible: 4-year public: 43%; 
Eligible: 4-year private, not-for-profit: 48%; 
Eligible: Total: 44%; 
Ineligible: 2-year public: 33%; 
Ineligible: 2-year private, not-for-profit: 40%; 
Ineligible: 4-year public: 23%; 
Ineligible: 4-year private, not-for-profit: 23%; 
Ineligible: Total: 15%. 

Financial aid (% of students receiving): Federal grant aid[A]; 
Eligible: 2-year public: 50%; 
Eligible: 2-year private, not-for-profit: 68%; 
Eligible: 4-year public: 53%; 
Eligible: 4-year private, not-for-profit: 67%; 
Eligible: Total: 54%; 
Ineligible: 2-year public: 33%; 
Ineligible: 2-year private, not-for-profit: 39%; 
Ineligible: 4-year public: 23%; 
Ineligible: 4-year private, not-for-profit: 22%; 
Ineligible: Total: 25%. 

Retention rate; 
Eligible: 2-year public: 55%; 
Eligible: 2-year private, not-for-profit: 49%; 
Eligible: 4-year public: 67%; 
Eligible: 4-year private, not-for-profit: 65%; 
Eligible: Total: 60%; 
Ineligible: 2-year public: 56%; 
Ineligible: 2-year private, not-for-profit: 67%; 
Ineligible: 4-year public: 74%; 
Ineligible: 4-year private, not-for-profit: 75%; 
Ineligible: Total: 69%. 

Graduation rate; 
Eligible: 2-year public: 20%; 
Eligible: 2-year private, not-for-profit: 39%; 
Eligible: 4-year public: 40%; 
Eligible: 4-year private, not-for-profit: 38%; 
Eligible: Total: 39%; 
Ineligible: 2-year public: 22%; 
Ineligible: 2-year private, not-for-profit: 59%; 
Ineligible: 4-year public: 56%; 
Ineligible: 4-year private, not-for-profit: 67%; 
Ineligible: Total: 60%. 

Source: GAO analysis of 2006 IPEDS data and 2006 to 2007 Pell Grant 
recipient data. 

[A] Federal grant aid reported in IPEDS captures data for first-time, 
full-time students only. 

[End of table] 

[End of section] 

Appendix III: Fiscal Year 2002 to 2005 Grantee Expenditures by Focus 
Area: 

Figure 7: Fiscal Years 2002 and 2003 Grantee Expenditures, by Focus 
Area: 

[Refer to PDF for image: two pie-charts, two horizontal bar graphs] 

Total expenditures, by focus area, fiscal year 2002 grantees: 
Fiscal stability: 7%; 
Institutional management: 19%; 
Student support: 32%; 
Academic quality: 42%. 

Percentage of fiscal year 2002 grantees undertaking at least one 
activity, by focus area: 
Fiscal stability: 32%; 
Institutional management: 33%; 
Student support: 64%; 
Academic quality: 67%. 

Total expenditures, by focus area, fiscal year 2003 grantees: 
Fiscal stability: 7%; 
Institutional management: 19%; 
Student support: 32%; 
Academic quality: 41%. 

Percentage of fiscal year 2003 grantees undertaking at least one 
activity, by focus area: 
Fiscal stability: 34%; 
Institutional management: 35%; 
Student support: 66%; 
Academic quality: 69%. 

Source: GAO analysis of Department of Education annual performance 
report data. 

Note: Due to rounding, totals may not add to 100 percent. 

[End of figure] 

Figure 8: Fiscal Years 2004 and 2005 Grantee Expenditures, by Focus 
Area: 

[Refer to PDF for image: two pie-charts, two horizontal bar graphs] 

Total expenditures, by focus area, fiscal year 2004 grantees: 
Fiscal stability: 7%; 
Institutional management: 21%; 
Student support: 34%; 
Academic quality: 38%. 

Percentage of fiscal year 2004 grantees undertaking at least one 
activity, by focus area: 
Fiscal stability: 30%; 
Institutional management: 33%; 
Student support: 64%; 
Academic quality: 66%. 

Total expenditures, by focus area, fiscal year 2005 grantees: 
Fiscal stability: 7%; 
Institutional management: 19%; 
Student support: 33%; 
Academic quality: 41%. 

Percentage of fiscal year 2005 grantees undertaking at least one 
activity, by focus area: 
Fiscal stability: 29%; 
Institutional management: 27%; 
Student support: 60%; 
Academic quality: 63%. 

Source: GAO analysis of Department of Education annual performance 
report data. 

[End of figure] 

[End of section] 

Appendix IV: Comments from the Department of Education: 

United States Department Of Education: 
Office Of Postsecondary Education: 
The Assistant Secretary: 
1990 K St. N.W. 
Washington, DC 20006: 
[hyperlink, http://www.ed.gov] 

"The Department of Education's mission is to promote student 
achievement and preparation for global competitiveness by fostering 
educational excellence and ensuring equal access." 

June 30, 2009: 

Mr. George A. Scott: 
Director: 
Education, Workforce, and Income Security Issues: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Scott: 

Thank you for providing the U.S. Department of Education (the 
Department) with a draft copy of the U.S. Government Accountability 
Office's (GAO's) report entitled, "Low-Income And Minority Serving 
Institutions: Management Attention to Longstanding Concerns Needed to 
Improve Education's Oversight of Grant Programs" (GAO-09-309). 

This study focuses on institutions that serve large proportions of low-
income and minority students. GAO was asked to determine: (1) 
characteristics of institutions eligible to receive, grants under 
Titles III and V, including characteristics of students served, (2) any 
challenges grantees face, and how they spent Title III and V funds to 
address these challenges, and (3) to what extent the Department of 
Education monitors the financial and programmatic performance of Title 
III and V grantees, and uses this information to target its technical 
assistance. As a result of its study, GAO made five recommendations to 
the Department. Below are the Department's responses to each 
recommendation. 

Recommendation 1: Develop a comprehensive, risk-based approach to 
target grant monitoring and technical assistance based on the needs of 
grantees. In doing so, Education should take steps to ensure that all 
available tools, including its electronic monitoring system, risk-based 
criteria, site visits, and grantee annual performance reports are fully 
integrated to better target its limited resources. 

Response: We agree with this recommendation. In May of 2009, the 
Department convened a Postsecondary Oversight Improvement Task Force to 
help ensure that the Department's oversight of postsecondary schools is 
sufficient to protect the investments made with federal aid and to 
ensure that institutions are able to make informed decisions and 
accomplish their postsecondary goals. This task force serves as a 
vehicle for exchanging information and coordinating resources 
strategically to ensure that those grantees most in need of technical 
assistance and oversight from the Department receive it. 

Recommendation 2: Follow up on each of the improper uses of grant funds 
that were identified in this report. 

Response: We agree with this recommendation. The Institutional 
Development and Undergraduate Education Service (IDUES) program 
officers will coordinate with the Program Oversight staff in the Office 
of Postsecondary Education (OPE) to conduct site visits at the 
institutions mentioned in the report. The site visits will include both 
a programmatic and fiscal review, with corrective actions as 
appropriate. 

Recommendation 3: Provide program staff with the necessary training to 
fully carry out monitoring and technical assistance responsibilities. 

Response: We agree with this recommendation. OPE will coordinate with 
the Department's Risk Management Service to continue to offer grant 
monitoring training and strongly encourage program staff to 
participate. OPE will also implement a mentoring process through which 
each new program officer is paired with an experienced program officer. 
The two program officers will meet regularly for a full year so that 
the more experienced program officer can provide the less experienced 
program officer with detailed training about grants monitoring. In 
addition, each new program officer will conduct an on-site review with 
the Program Oversight staff in order to gain valuable field experience 
in offering technical assistance and providing fiscal review and 
oversight of grant funds. Further, OPE will continue to offer regular 
training to its staff on the Grants Electronic Monitoring System as 
well as training on how to interpret Annual Performance Report data to 
ensure greater consistency in awarding noncompetitive continuation 
grants. 

Recommendation 4: Disseminate information to grantees about common 
implementation challenges and successful projects to leverage the 
investment that has been made across the programs. 

Response: We agree with this recommendation. IDUES recognizes the need 
to increase its interactions with grantees and to facilitate 
interactions among grantees. IDUES will reinstitute the annual meeting 
of Title III and Title V grantees, which allows grantees to share 
promising practices and common concerns. 

Recommendation 5: Develop appropriate mechanisms to collect and use 
feedback from grantees. 

Response: We agree with this recommendation. To capture the kind of 
feedback necessary for continuous program improvement, we will 
implement an e-mail address to provide grantees an opportunity to 
submit comments, questions, praise and criticism to the Department. To 
encourage candor, an individual not associated with OPE program offices 
will monitor the mailbox so that grantee input remains anonymous. We 
will use both email and program office Web sites to encourage grantees 
to provide this feedback. 

Responses will be redacted as needed and distributed to program office 
directors regularly for appropriate handling. 

We greatly appreciate your examination of this important issue. 

Sincerely, 

Signed by: 

Daniel T. Madzelan: 
Delegated the Authority to Perform the Functions and Duties of the 
Assistant Secretary for Postsecondary Education: 

Attachment: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

George A. Scott, (202) 512-7215 or scottg@gao.gov: 

Staff Acknowledgments: 

Debra Prescott (Assistant Director) and Carla Craddock (Analyst-in- 
Charge) managed this assignment. In addition, the following individuals 
made important contributions to this report: Susan Aschoff, Jenna 
Aurand, Carolyn Boyce, Muriel Brown, Sunny Chang, Alisha Chugh, Bonnie 
Derby, Lauren Fassler, Doreen Feldman, Jeanette Franzel, Alice 
Feldesman, Lisa Galvan, Jeremie Greer, Melissa Jaynes, Angela Leventis, 
Sheila McCoy, John Mingus Jr., Lauren Mohlie, Mimi Ngyuen, Dae Park, 
Susan Ragland, Glenn Spiegel, Sabrina Springfield, Nicholas Weeks, and 
Doris Yanger. 

[End of section] 

Footnotes: 

[1] These programs include three Title III, Part A programs: 
Strengthening Institutions, American Indian Tribally Controlled 
Colleges and Universities, and Alaska Native and Native Hawaiian 
Serving Institutions. It also includes Title III, Part B Strengthening 
Historically Black Colleges and Universities, and Title V, Part A 
Developing Hispanic Serving Institutions. Throughout the report when we 
refer to Title III and Title V programs or grants we are referring to 
these specific programs. Our review did not include Title III, Part B 
Historically Black Professional or Graduate Institutions; Part D HBCU 
Capital Financing; or Part E Minority Science and Engineering 
Improvement Program. 

[2] GAO, Low-Income and Minority Serving Institutions: Department of 
Education Could Improve Its Monitoring and Assistance, [hyperlink, 
http://www.gao.gov/products/GAO-04-961] (Washington, D.C. : Sept. 21, 
2004) and GAO, Low-Income and Minority Serving Institutions: Education 
Has Taken Steps to Improve Monitoring and Assistance but, Further 
Progress Is Needed, [hyperlink, 
http://www.gao.gov/products/GAO-07-926T] (Washington, D.C.: June 4, 
2007). 

[3] IPEDS is a system of surveys designed to collect data from all 
primary providers of postsecondary education on institution-level 
information such as enrollments, program completions, faculty, staff, 
finances, and academic libraries. Data are collected annually from 
approximately 9,600 postsecondary institutions, including over 6,000 
institutions eligible for the federal student aid programs. 

[4] NPSAS is a comprehensive nationwide study designed to determine how 
students and their families pay for postsecondary education and to 
describe some demographic and other characteristics of those enrolled. 
The surveys use a nationally representative sample of postsecondary 
education institutions and students within those institutions. 

[5] Eight grantees submitted paper filings of these reports and these 
were not included in our analysis. 

[6] Higher Education Act of 1965, Pub. L. No. 89-329, Title III, 79 
Stat. 1219, 1229. 

[7] See 20 U.S.C. §§ 1057-1059g. While not specified in the Act, 
Education's guidance also allows grantees to use grant funds to improve 
student support services. 

[8] See Higher Education Act of 1986, Pub. L. No. 99-498, Title III, 
100 Stat. 1294. For Education's Strengthening Institutions Program 
regulations, see 34 C.F.R. pt. 607. 

[9] See Higher Education Act of 1998, Pub. L. No. 105-244, Title III, 
112 Stat. 1581, 1636, 1639, 1641, 1765. 

[10] The Historically Black Colleges and Universities program formula 
considers, in part, the amount of funds appropriated, the number of 
Pell Grant recipients, the number of graduates, and the number of 
students who enroll in graduate school in degree programs in which 
African Americans are underrepresented within 5 years of earning an 
undergraduate degree. Institutions that participate in the Title III, 
Part A, Tribally Controlled Colleges and Universities program receive 
grants based on a formula which also allows the Secretary of Education 
to reserve 30 percent of appropriations for 1-year construction, 
maintenance, or renovation projects for grants not less than $1 million 
beginning in fiscal year 2009. The majority of other funds available 
are to be distributed based on Native American student head count. 

[11] These programs were first authorized in the College Cost Reduction 
and Access Act (Pub. L. No. 110-84) prior to inclusion in the Higher 
Education Opportunity Act (Pub. L. No. 110-315). 

[12] Domestic Working Group, Grant Accountability Project, Guide to 
Opportunities for Improving Grant Accountability (October 2005). 

[13] Under 31 U.S.C. § 3512 (c), (d), commonly known as the Federal 
Managers' Financial Integrity Act of 1982, agency management is 
responsible for establishing, maintaining, and assessing internal 
control to provide reasonable assurance that it is meeting the Act's 
broad internal control objectives consistent with the standards GAO 
prescribes and the evaluation guidance Office of Management and Budget 
(OMB) issues. For more information on internal control standards and 
guidance, see GAO, Standards for Internal Control in the Federal 
Government, [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999); and OMB, Management's Responsibility 
for Internal Control, Circular No. A- 123 (Washington, D.C.: Dec. 21, 
2004). 

[14] Western Interstate Commission for Higher Education, Knocking at 
the College Door, Projections of High School Graduates by State and 
Race/Ethnicity (Boulder, Colo., 2008). 

[15] M. Planty, et. al., "Mobility of College Students" (Indicator 10, 
Supplemental Table 10-2), The Condition of Education 2008 , NCES 2008- 
031, a report for the U.S. Department of Education, National Center for 
Education Statistics, Institute of Education Sciences (Washington, 
D.C., 2008). 

[16] Pell Grants are grants to low-and middle-income undergraduate 
students who have federally defined financial need and who are enrolled 
in a degree or certificate program. In general, a student's Pell Grant 
award is determined by subtracting a student and family's expected 
family contribution from either the maximum allowable Pell Grant award, 
$5,350 for the 2009-2010 school year, or the cost of attendance, 
whichever is less. 

[17] Grants provided by federal agencies such as Education, include 
Title IV Pell Grants and Supplemental Educational Opportunity Grants, 
as well as need-based and merit-based educational assistance funds and 
training vouchers provided from other federal agencies and/or federally-
sponsored educational benefits programs. 

[18] For 4-year institutions, retention rate is defined as the 
percentage of first-time degree-seeking undergraduates from the 
previous fall who are enrolled the following fall semester. For all 
other institutions, this is the percentage of first-time degree or 
certificate-seeking students from the prior fall who either re-enrolled 
or successfully completed their program by the following fall. 

[19] U.S. Department of Education, College Persistence on the Rise? 
Changes in 5-year Degree Completion and Postsecondary Persistence Rates 
between 1994 and 2000 (Washington, D.C., 2004). 

[20] Graduation and completion rates are measured by the proportion of 
students who earn a degree within 150 percent of the expected time--6 
years for a bachelor's degree and 3 years for an associate degree. The 
formula counts only first-time, full-time students. 

[21] U.S. Department of Education, Placing College Graduation Rates in 
Context: How 4-Year College Graduation Rates Vary With Selectivity and 
the Size of Low-Income Enrollment (Washington, D.C., 2006). 

[22] The Pell Institute, Demography Is Not Destiny: Increasing the 
Graduation Rates of Low-Income College Students at Large Public 
Universities (Washington, D.C., 2007). 

[23] At the time of publication, the institution did not have data 
available for the advanced manufacturing technology program. 

[24] [hyperlink, http://www.gao.gov/products/GAO-04-961]. 

[25] Questionable expenses are expenditures that appear to have been 
made for incorrect amounts, for unauthorized purposes, or for personal 
use. They can be inadvertent errors, such as duplicate payments and 
calculation errors, or violations of grant agreement terms, such as 
payments for unsupported or inadequately supported claims or payments 
resulting from fraud and abuse. 

[26] Education has collected customer satisfaction data for selected 
grant programs and federal student aid programs through the American 
Customer Satisfaction Index to use in decision making for program 
improvement. 

[27] Because participation in Title III and V programs is restricted to 
public and private not-for-profit institutions, for-profit institutions 
are not included in our analysis. 

[28] Decisions institutions with branch campuses make about whether to 
report their Integrated Postsecondary Education Data Systems data 
separately for each branch campus or in the aggregate for an entire 
system of campuses may have resulted in the number of eligible 
institutions being underestimated in this report. Branch campuses may 
apply for the Title III and V programs if they independently meet the 
eligibility criteria. 

[End of section] 

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Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: