Award of Grant by Education

GAO was asked whether the Department of Education's failure to award a grant to an education improvement program beginning in March 1981 constituted an impoundment of funds. The issue became moot on September 30, 198l, when Education awarded the grant. Under the award, the program may recover grant program expenses which it incurred from March 1981 through the date of the award. The failure to fund the program beginning on March 1, 1981, reflected the agency's decision not to renew the grant for another year, rather than the cancellation of an ongoing grant. Education's decision not to award the grant earlier was based primarily on factors relating to the efficient operation of the program. An audit showed that the accounting system and internal controls were not adequate to safeguard assets and accurately report grant costs and that none of the expenditures were adequately supported by records. There was also a disagreement between the grantee and the agency as to how the grant funds should be distributed. The grantee proposed that the funds be awarded directly to local school districts, but Education declined to reprogram the funds without continuing involvement by the grantee. Education also felt that it was inappropriate to make the award until it was clear how much money would remain for the grant after rescission. GAO did not believe that funds for the grant were impounded before the award except for those which were withheld pending consideration of the rescission proposal. Education's failure to award the grant until September 30, 1981, did not constitute an impoundment of funds.