District of Columbia Opportunity Scholarship Program:

Additional Policies and Procedures Would Improve Internal Controls and Program Operations

GAO-08-9: Published: Nov 1, 2007. Publicly Released: Nov 1, 2007.

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The D.C. School Choice Incentive Act created the first private kindergarten-through-grade-12 school-choice program supported by federal funds. The program was named the D.C. Opportunity Scholarship Program (OSP). GAO was asked to assess the (1) accountability mechanisms governing the use of funds, (2) results of the grantee's efforts to meet the program's recruiting priorities and eligibility requirements and inform parents of their choices, and (3) extent that the evaluation of OSP reflects statutory requirements and the implementation of the program supported the detection of useful and generalizable findings. To assess the program, GAO analyzed financial, program, and evaluation data. GAO did not assess the performance of participating private schools nor did GAO evaluate the impact of the program.

Following the Department of Education's selection of the Washington Scholarship Fund (WSF) to operate the District of Columbia Opportunity Scholarship Program, WSF greatly expanded its operations from $150,000 in federal and foundation grants in fiscal year 2004 to $12.9 million in 2006 without sufficient accountability mechanisms to govern the use of the funds. With such rapid expansion, WSF had little time to design and implement the needed systems, procedures, and internal controls for managing such a major increase in its operations. WSF's accountability was further weakened by high staff turnover, a lack of detailed fiscal policies, and nonintegrated accounting functions. We found that WSF did not adhere to its own procedures for making scholarship payments, and WSF's use of OSP funds to pay tuition for students attending schools that do not normally charge students tuition is not in accordance with the Act. Additionally, on the basis of a lack of documentation about whether before-and-after care included academic support, GAO was unable to determine if use of OSP funds to pay these fees was in accordance with the Act. Despite recruitment efforts and efforts to inform parents of their choices, WSF faced challenges recruiting students from schools designated as in need of improvement, ensuring private school quality and placement opportunities, and providing parents with accurate information regarding private schools. Students who were offered scholarships generally reported income consistent with OSP's financial eligibility standards, but, among students offered scholarships, students from schools in need of improvement were underrepresented relative to their presence in the population of District students. Although most private schools in the District officially participated in the program, the schools varied widely in the number of openings available to scholarship students, and few openings were available at the secondary level. The characteristics of participating schools varied, and some schools did not meet basic requirements to operate in the District, but the information WSF provided to parents to help them choose schools for children was not always complete and correct. The evaluation contractor developed a strong evaluation design that reflected the statutory requirements and used random assignment to strengthen comparisons between students offered and not offered scholarships. However, factors related to program implementation limited the ability to perform comparisons directed by the Act and the usefulness and generalizability of findings. For example, the Act directed the evaluation contractor to use the same test as the District used to measure achievement and to compare the achievement of students offered scholarships with students in District public schools. The contractor did use the test used by the District, but District officials adopted a new testing program the second year of the evaluation, making it infeasible to compare students offered scholarships with students in District public schools.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The District agreed with our recommendation and noted that the Mayor delegated direct oversight responsibility under the MOU with Education to the District's State Superintendent of Education. The Superintendent subsequently met with Education to discuss oversight issues identified by GAO, as well as monitoring the Washington Scholarship Fund's (WSF) compliance with statutory and regulatory requirements. Because the original MOU did not specify coordination or division of oversight roles, the Superintendent recommended to Education that they enter into a follow-on agreement to clearly assign roles and responsibilities. The Superintendent also met with WSF to explore ways that the District could help them better comply with federal and local statutes and regulations. The Superintendent assigned a staff member to act as the liaison with Education and WSF to ensure that the District's oversight obligations under the follow-on agreement were met. Finally, the Superintendent's office is developing a way to track the compliance of all non-public schools in the District with local regulations.

    Recommendation: The Mayor of the District of Columbia should direct the Office of the State Superintendent of Schools to collaborate with the Board of Education to develop and implement procedures for ensuring that private schools in the District meet applicable District requirements and to actively participate in the oversight of OSP.

    Agency Affected: District of Columbia

  2. Status: Closed - Implemented

    Comments: On May 14, 2010, the DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program from the Washington Scholarship Fund. The Trust developed and approved MOUs that articulate the roles and responsibilities of each entity. This will enhance its ability to ensure schools are in compliance. The Secretary of Education and DCPS should continue to monitor the adequacy of these agreements and future compliance.

    Recommendation: The Secretary of Education should collaborate with the Mayor of the District of Columbia to ensure participating schools are in compliance with all relevant District of Columbia education and safety requirements, including school accreditation and health, safety, and fire code requirements, and receive approval to operate in the District.

    Agency Affected: Department of Education

  3. Status: Closed - Implemented

    Comments: The Washington Scholarship Fund closed its doors. On May 14, 2010, the DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program. The Trust requires that each school sign a participating agreement. These agreements require schools to attest to legislatively required information such as summary achievement data for students, teacher qualifications, and tuition levels.

    Recommendation: Given the importance of using funds appropriately to further program objectives and help ensure that schools are safe and provide sound educational experiences, parents are given accurate information about schools their children may attend, and program oversight is sufficient. The Secretary of Education should direct WSF, the grantee, to develop procedures to ensure that accurate information is provided to parents before a school is chosen about the summary achievement data of students, teacher qualifications, and tuition levels, and that schools make such information available on an annual basis to parents of enrolled students.

    Agency Affected: Department of Education

  4. Status: Closed - Implemented

    Comments: On May 14, 2010, the DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program. The Trust has developed protocols to guide the site visits it conducts at schools. Each school is visited at least once a year. Those schools with certain risk characteristics may receive multiple visits. The Trust collects financial statements from each school on an annual basis. GAO is in the process of evaluating these financial statements.

    Recommendation: Given the importance of using funds appropriately to further program objectives and help ensure that schools are safe and provide sound educational experiences, parents are given accurate information about schools their children may attend, and program oversight is sufficient. The Secretary of Education should direct WSF, the grantee, to develop and implement procedures for conducting site visits, including that site visit reports be prepared and contain information on the overall financial stability of the school.

    Agency Affected: Department of Education

  5. Status: Closed - Not Implemented

    Comments: The Washington Scholarship Fund closed its doors. On May 14, 2010, the DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program. As of September 2012, it is too soon to determine whether the Trust has been able to integrate its information system with its financial systems.

    Recommendation: Given the importance of using funds appropriately to further program objectives and help ensure that schools are safe and provide sound educational experiences, parents are given accurate information about schools their children may attend, and program oversight is sufficient. The Secretary of Education should direct WSF, the grantee, to continue its efforts to implement an integrated financial management system to facilitate processing and recording of scholarship payments and overall financial reporting.

    Agency Affected: Department of Education

  6. Status: Closed - Implemented

    Comments: The DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program from the Washington Scholarship Fund (WSF). Because the Trust has considerably more staff than did WSF, they have been able to build in controls such as the segregation of duties that help reduce the potential risk of fraud. No additional compensating controls are needed.

    Recommendation: Given the importance of using funds appropriately to further program objectives and help ensure that schools are safe and provide sound educational experiences, parents are given accurate information about schools their children may attend, and program oversight is sufficient. The Secretary of Education should direct WSF, the grantee, to establish compensating controls, such as supervisory review, to reduce the risk of fraud in situations where segregation of duties is not possible due to the size limitations of OSP's staff so that no one employee can authorize, process, review, and have access to the funds relating to OSP.

    Agency Affected: Department of Education

  7. Status: Closed - Implemented

    Comments: On May 14, 2010, the DC Children and Youth Investment Trust Corporation (the Trust) assumed the role of administrator of the Washington Scholarship program from the Washington Scholarship Fund. The Trust has developed a policies and procedures manual that fully articulates specific requirements for approving scholarship payments. The Trust also built into their processes segregation of duties so that no on individual decides which scholarship payments to be made. Additionally, the Trust has made a number of improvements to the program's information systems that document payments.

    Recommendation: Given the importance of using funds appropriately to further program objectives and help ensure that schools are safe and provide sound educational experiences, parents are given accurate information about schools their children may attend, and program oversight is sufficient. The Secretary of Education should direct the Washington Scholarship Fund (WSF), the grantee, to establish and implement detailed policies and procedures to improve financial controls over Opportunity Scholarship Program (OSP) grant funds, including specific requirements for the process of approving scholarship payments and documentation of the process.

    Agency Affected: Department of Education

  8. Status: Closed - Implemented

    Comments: The Department of Education has taken steps toward this end. In May 2012, ED reaffirmed Westat as the contractor for the mandated evaluation. The new contract includes a requirement to submit its design plans for review and comment to the District of Columbia's Public School system. As the contract proceeds, Education should make sure to monitor Westat's plans.

    Recommendation: In planning for future programs for which Congress has required an evaluation, the Secretary of Education should take steps to make certain the program to be evaluated is overseen to ensure it is implemented in a manner consistent with the evaluation design.

    Agency Affected: Department of Education

 

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