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entitled 'District of Columbia Opportunity Scholarship Program: 
Actions Needed to Address Weaknesses in Administration and Oversight' 
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United States Government Accountability Office: 
GAO: 

Report to the Chairman, Subcommittee on Financial Services and General 
Government, Committee on Appropriations, U.S. Senate: 

September 2013: 

District of Columbia Opportunity Scholarship Program: 

Actions Needed to Address Weaknesses in Administration and Oversight: 

GAO-13-805: 

GAO Highlights: 

Highlights of GAO-13-805, a report to the Chairman, Subcommittee on 
Financial Services and General Government, Committee on 
Appropriations, U.S. Senate. 

Why GAO Did This Study: 

School vouchers, a school choice program designed to provide students 
with public funds to attend private schools, feature prominently in 
policy discussions about education reform. The OSP was reauthorized by 
Congress in 2011 by the Scholarships for Opportunity and Results Act, 
and has garnered national attention as the first federally-funded 
voucher program. Since the program’s inception in 2004, Congress has 
provided almost $152 million for the program benefiting almost 5,000 
students, currently providing scholarships of about $8,000 for grades 
K-8 and about $12,000 for grades 9-12. As requested, GAO examined (1) 
the extent to which the Trust provides information that enables 
families to make informed school choices, (2) whether the Trust’s 
internal controls ensure accountability for OSP, and (3) how Education 
and District agencies responsible for overseeing OSP have performed 
their stated roles and responsibilities. 

To conduct this work, GAO visited 10 participating schools; 
interviewed school officials; conducted discussion groups with 14 
parents of scholarship students; analyzed key program documents; 
reviewed generally accepted guiding documents for internal controls; 
and interviewed officials at Education, relevant District agencies, 
and the Trust. 

What GAO Found: 

The DC Children and Youth Investment Trust Corporation (the Trust) 
provides information to prospective and current families of children 
participating in the District of Columbia (the District) Opportunity 
Scholarship Program (OSP) through a variety of outreach activities. To 
reach prospective OSP families, the Trust advertises through print, 
radio, and bus ads, as well as in newspapers and flyers posted in 
neighborhood libraries, recreation centers, and local government 
service centers. However, the Trust provides incomplete and untimely 
information about participating schools to OSP families. The 
participating school directory, which is published by the Trust, lacks 
key information about tuition, fees, and accreditation. The Trust 
published the directory 9 months after the start of the 2012-13 school 
year, too late to assist families in selecting a school for that year. 
Without such information, parents cannot make fully informed school 
choices. Additionally, the Trust awarded scholarships to students 
several months after many schools completed their admissions and 
enrollment processes, limiting the amount of time and choice in 
selecting schools. Most families GAO spoke with were generally happy 
with OSP but some were concerned about the availability of program 
information. 

The Trust’s internal controls do not ensure effective implementation 
and oversight of OSP. Adequate policies and procedures can provide 
reasonable assurance of effective, efficient operations, reliable 
financial reporting, and compliance with applicable laws. However, the 
Trust’s policies and procedures do not include a process for verifying 
eligibility information that schools self-report. As a result, the 
Trust cannot ensure that schools are eligible to participate in the 
program and, therefore, risks providing federal dollars to students to 
attend schools that do not meet standards required by law. 
Furthermore, the Trust’s database is not well structured and hampers 
the effectiveness of program implementation. For example, the Trust 
lacks written documentation for the database, and staff must rely on 
institutional memory to ensure processes such as data entry are 
conducted properly, which could contribute to errors in the database. 
As required by law, the Trust groups eligible applicants into three 
priority categories by which scholarships are then awarded by lottery; 
however, weaknesses in the database’s structure puts into question the 
Trust’s ability to provide accurate priority categories. Additionally, 
the Trust has not submitted its mandatory financial reports on time, 
despite a legal requirement that these reports be filed within 9 
months of the end of the entity’s fiscal year. The Trust’s fiscal year 
2010 financial report was almost 2 years late, and the Trust’s fiscal 
year 2011 and 2012 reports had not yet been submitted as of August 
2013. In August 2013, the Trust also made amendments to its policies 
and procedures in three areas GAO identified. However, these 
amendments do not address all weaknesses identified in this report, 
and have not yet been fully implemented. 

The Department of Education (Education) has provided limited 
assistance to the Trust in certain areas outlined in the memorandum of 
understanding (MOU) with the District and in the cooperative agreement 
with the Trust. Specifically, Education is responsible for helping the 
Trust make improvements to its financial system, enhance its site 
visit policies and procedures, and improve the accuracy of information 
provided to parents. Trust officials acknowledged that Education has 
provided general assistance regarding administrative and operational 
functions, but it has not assisted with specific improvements in these 
areas. Although the MOU is a written agreement between Education and 
the District, it holds the Trust, as the grantee, responsible for 
notifying District agencies to conduct required building, zoning, 
health, and safety inspections of participating schools—a requirement 
that is not detailed in the cooperative agreement signed by Education 
and the Trust—but would assist the Trust in providing continued 
oversight of schools participating in OSP. As a result, Trust 
officials were not acutely aware of this responsibility, and required 
inspections were not being conducted in the manner described in the 
MOU between Education and the District. 

What GAO Recommends: 

GAO is making 10 recommendations to Education to improve OSP, such as 
ensuring that the Trust publishes a more complete school directory and 
updates key aspects of its policies and procedures. Education did not 
indicate agreement or disagreement with our recommendations. The Trust 
disagreed with some findings and both provided additional information. 

View [hyperlink, http://www.gao.gov/products/GAO-13-805[. For more 
information, contact George A. Scott at (202) 512-7215 or 
scottg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The Trust Provides Untimely Information and Scholarship Awards: 

The Trust Has Not Developed Effective Internal Controls to Safeguard 
Program Funds: 

Agencies Have Not Fully Executed Responsibilities Outlined in 
Governing Documents: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Schools That Agreed to Accept Students in the District's 
Opportunity Scholarship Program in School Years 2010-2011 and 2011-
2012 ("Participating Schools"): 

Appendix III: Total School and OSP Enrollment, School Year 2011-2012: 

Appendix IV: Internal Control Frameworks: 

Appendix V: Comments from the Department of Education: 

Appendix VI: Comments from the District of Columbia Children and Youth 
Investment Trust Corporation: 

Appendix VII: Contact and Staff Acknowledgments: 

Tables: 

Table 1: COSO Internal Control--Integrated Framework: 

Table 2: GAO Site Visit Priorities Based on Student Enrollment 
Criteria, School Year 2011-2012: 

Figures: 

Figure 1: Federal Appropriations for the Opportunity Scholarship 
Program, FY 2004-2013: 

Figure 2: Location and Enrollment of OSP Participating Schools in the 
District, School Year 2011-2012: 

Figure 3: OSP Scholarship Timeframes and Application Deadlines at 
Participating Schools with Highest and Lowest OSP Enrollment, School 
Year 2012-2013: 

Figure 4: The Trust's FY 2010-2012 Timeline of Mandatory Reporting 
Deadlines and Report Publication for OSP, as of August 9, 2013: 

Figure 5: Responsibilities of Education and District Agencies as 
Stated in the June 2012 Memorandum of Understanding: 

Abbreviations: 

COSO: Committee of Sponsoring Organizations of the Treadway Commission: 

D.C./District: District of Columbia: 

DCRA: Department of Consumer and Regulatory Affairs: 

Directory: Participating School Directory: 

Education: Department of Education: 

EMS: Emergency Medical Services: 

MOU: Memorandum of Understanding: 

OSP: Opportunity Scholarship Program: 

OSSE: Office of the State Superintendent for Education: 

SOAR Act: Scholarships for Opportunity and Results Act: 

Trust: DC Children and Youth Investment Trust Corporation: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

September 30, 2013: 

The Honorable Tom Udall 
Chairman 
Subcommittee on Financial Services and General Government 
Committee on Appropriations 
United States Senate: 

Dear Chairman Udall: 

In 2004, Congress passed the D.C. School Choice Incentive Act of 2003--
the first federally-funded private school voucher program in the 
United States--in an effort to provide low-income parents residing in 
the District of Columbia (the District) with "expanded opportunities 
for enrolling their children in higher-performing schools."[Footnote 
1] Specifically, the Act authorized the Secretary of Education to 
award grants to eligible entities to provide eligible students with 
scholarships to attend private elementary and secondary schools in the 
District. The District's program is known as the D.C. Opportunity 
Scholarship Program (OSP), and it was reauthorized in 2011 for 5 years 
under new legislation, the Scholarships for Opportunity and Results 
Act (SOAR Act).[Footnote 2] Since the program's inception, Congress 
has provided more than $152 million for OSP, which has, in turn, 
provided expanded school choice to low-income students by awarding 
almost 5,000 scholarships to students who would unlikely have 
otherwise been able to attend private school. Questions have been 
raised, however, about whether students have as broad a choice as 
intended. In the 2011-2012 school year, for example, over half of OSP 
students were enrolled in only 15 percent of private schools that have 
agreed to accept students from this program (participating schools). 

In 2007, we reviewed OSP and found a need for increased accountability 
from the program administrator.[Footnote 3] Specifically, we found 
that the administrator at the time of our review--the Washington 
Scholarship Fund--did not have the capacity to oversee participating 
private schools and administer a growing scholarship program funded 
with federal dollars. We also found that because of inadequate 
accountability mechanisms, the program administrator could not provide 
key information to low-income families about school performance, 
quality indicators,[Footnote 4] or conformance with local safety and 
health regulations. 

In 2010, the Washington Scholarship Fund withdrew as the administrator 
of OSP and the Department of Education (Education) transferred the 
grant to run the program to the DC Children and Youth Investment Trust 
Corporation (the Trust). The Trust was initially created to link 
public and private resources to address the needs of children, youth, 
and families in the District. Its activities are primarily funded by 
grants from the District government. 

At the request of the committee, we assessed the extent to which the 
Trust is meeting its stated goals and properly managing federally 
appropriated funds. More specifically, our objectives were to 
determine: 

1. the extent to which the Trust provides information that enables 
families to make informed school choices; 

2. whether the Trust's internal controls ensure accountability for 
OSP; and: 

3. how agencies responsible for implementing and overseeing OSP have 
performed their stated roles and responsibilities. 

To address these objectives we used multiple strategies. To assess the 
extent to which scholarship recipients are able to make informed 
school choices, we analyzed key documents regarding participating 
schools and the OSP program that are available to parents. We also 
conducted site visits to 10 participating schools and interviewed key 
school officials. In selecting the schools we visited, we chose the 5 
schools with the highest absolute number of OSP students and the 5 
schools with the highest concentration of OSP students given the total 
enrollment at the school in the 2011-2012 school year. In addition, we 
used information from the 2011-2012 OSP Participating School Directory 
(the Directory) as well as OSP enrollment information for the 2011-
2012 school year from the Trust's database to better understand the 
characteristics of participating schools. We also interviewed 
officials at the Trust and Education. To assess the reliability of the 
enrollment data from school year 2004-2005 to school year 2011-2012 
from the Trust's database, we performed electronic testing for obvious 
errors in accuracy and completeness and interviewed agency officials 
knowledgeable about the data. We found substantial problems with the 
data, including missing fields or partially entered applications. 
However, we determined that the data were sufficiently reliable for 
the purpose of determining characteristics of OSP schools and students 
in school year 2011-2012. Lastly, to obtain information about the 
experiences of families in the program, we conducted two discussion 
groups--one in English and one in Spanish--with parents and guardians 
of students who received and used an OSP scholarship in the 2012-2013 
school year. 

To assess the extent to which the Trust's internal controls ensure 
accountability for OSP, we reviewed relevant laws and regulations, 
internal documents such as the Trust's policies and procedures manual, 
as well as generally accepted guiding documents for internal controls 
including those published by GAO and the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO).[Footnote 5] We also 
analyzed the Trust's database for administering OSP. In addition, we 
interviewed officials at the Trust and Education, and the Trust's 
contractor in charge of creating and maintaining the database. 

To assess the extent to which agencies responsible for overseeing OSP 
performed their stated roles and responsibilities, we reviewed 
relevant federal laws and regulations, guiding documents such as the 
June 2012 memorandum of understanding (MOU) between Education and the 
District of Columbia Government. We also interviewed key officials at 
the Trust, Education, and select agencies in the District. A more 
detailed discussion of our scope and methodology appears in appendix I. 

We conducted this performance audit from May 2012 through September 
2013 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: 

Laws Governing the Opportunity Scholarship Program: 

Congress passed the D.C. School Choice Incentive Act of 2003 in 
January 2004, which directed the Secretary of Education to award a 
grant on a competitive basis for up to 5 years to an entity or 
entities to use to make scholarship payments to parents of eligible 
students to be used for private school tuition, fees, and 
transportation expenses.[Footnote 6] This Act created the program 
known as the District of Columbia Opportunity Scholarship Program 
(OSP), the first private kindergarten-through-grade-12 school choice 
program supported by federal funds. The purpose of the Act was to 
provide low-income parents of students in the District, particularly 
parents of students who attend public schools identified as in need of 
improvement under the Elementary and Secondary Education Act of 1965, 
as amended, "with expanded opportunities for enrolling their children 
in higher performing schools in the District" by providing annual 
scholarships to attend the private elementary or secondary schools of 
their choice. 

In April 2011, Congress reauthorized OSP for 5 years under the 
Scholarships for Opportunity and Results Act (SOAR Act).[Footnote 7] 
The Act sets forth requirements for participating private 
schools.[Footnote 8] Specifically, the law provides that none of the 
funds may be used by an eligible student to enroll in a participating 
private school unless the participating school: 

1. has and maintains a valid certificate of occupancy issued by the 
District of Columbia; 

2. makes readily available to all prospective students information on 
its school accreditation; 

3. if operating for 5 years or less, submits to the eligible entity 
administering the program proof of adequate financial resources and 
the ability to maintain operations throughout the school year; 

4. agrees to submit to site visits as determined to be necessary; 

5. has financial systems, controls, policies, and procedures to ensure 
that funds are used according to the statute; and: 

6. ensures that each teacher of core subject matter in the school has 
a baccalaureate degree or its equivalent, regardless of whether the 
degree was awarded in or outside of the United States.[Footnote 9] 

Administration and Oversight of OSP: 

Education's Office of Innovation and Improvement, which is charged 
with the management of the program and oversight of the program 
administrator, awards scholarship funds to a grantee and provides 
programmatic guidance and technical assistance. Soon after the D.C. 
School Choice Incentive Act passed in 2004, Education awarded the 
grant to operate the OSP to the Washington Scholarship Fund, a 
nonprofit organization in the District of Columbia that had experience 
providing privately funded scholarships to low-income students. In May 
2010, Washington Scholarship Fund withdrew as the grantee and 
Education transferred the grant for administration of OSP to the DC 
Children and Youth Investment Trust Corporation (the Trust), a non-
profit organization.[Footnote 10] As the program administrator, the 
Trust recruits new students and schools, receives and processes 
applications, and awards scholarship funds to program participants. 
The Trust is also responsible for providing oversight to participating 
private schools. 

The SOAR Act, which was enacted about 11 months after the Trust 
assumed responsibility for administering the OSP grant, states that 
the grantee (the Trust) must ensure that scholarships be awarded 
through a random selection process if more eligible applicants seek 
admission to the program than the program can accommodate, or if more 
eligible applicants seek admission to a participating school than the 
school can accommodate, and the Trust has implemented this requirement 
through a lottery process. The groups of applicants that have a 
priority status as defined in the SOAR Act are (1) applicants who are 
currently attending a school that has been identified for improvement, 
corrective action, or restructuring under the Elementary and Secondary 
Education Act of 1965, as amended; (2) applicants who have a sibling 
currently participating in OSP; and (3) applicants who received an OSP 
scholarship award in a previous year but did not use it. At the time 
of our review, the lottery process was carried out by Westat, a 
contractor. 

In addition, the SOAR Act updates the responsibilities for 
implementing OSP for the District and Education. It directs the 
Secretary of Education and the Mayor of the District to revise the MOU 
regarding the implementation of OSP that was required pursuant to the 
D.C. School Choice Incentive Act. The MOU governs the program for 
fiscal year 2011 and all subsequent years. It is intended to help 
ensure the efficient and effective continued implementation of the OSP 
in a manner that incorporates and is consistent with the roles and 
responsibilities of both Education and the District. According to the 
MOU, Education is responsible for overseeing the Trust[Footnote 11] as 
a recipient of federal funds and working with the Trust to ensure that 
it makes improvements to various aspects of program administration. 
The District also has a role in the administration of OSP. The MOU 
states that District agencies are directly responsible for conducting 
required building, health, and safety inspections of participating 
schools when notified by the Trust. 

Federal Funding for OSP and Use of Funds: 

According to Education, from fiscal years 2004-2010, Congress 
appropriated between $13.2 and $14.8 million per year for OSP, as 
shown in figure 1. For fiscal year 2011, the appropriated amount 
increased to about $15.5 million, and in fiscal year 2012, the 
appropriated amount increased to $20 million. Most recently, Congress 
appropriated about $19 million for the program for fiscal year 2013. 
Since OSP's creation, about $152 million has been appropriated in 
total. 

Figure 1: Federal Appropriations for the Opportunity Scholarship 
Program, FY 2004--2013: 

[Refer to PDF for image: line graph] 

Fiscal year 2004: $13.9 million. 

Fiscal year 2005: $13.9 million. 

Fiscal year 2006: $13.9 million. 

Fiscal year 2007: $13.9 million. 

Fiscal year 2008: $14.8 million. 

Fiscal year 2009: $14.0 million. 

Fiscal year 2010: $13.2 million. 

Fiscal year 2011: $15.5 million. 

Fiscal year 2012: $20.0 million. 

Fiscal year 2013: $19.0 million. 

Source: U.S. Department of Education. 

[End of figure] 

The SOAR Act permits 11 percent of the grant funds each year to be 
used for certain administrative and other purposes as follows--with 
the remainder of the funds going towards student scholarships: 

* Education: 

- 5 percent for the program's evaluation,[Footnote 12] 

* The grantee (the Trust): 

- 3 percent for administrative costs,[Footnote 13] 

- 2 percent for parental assistance,[Footnote 14] and: 

- 1 percent for student academic support services.[Footnote 15] 

The law provides for an increase in the amount of the scholarship for 
eligible students. Specifically, it provides up to $8,000 for grades K-
8 and $12,000 for grades 9-12 starting in school year 2011-2012. 
[Footnote 16] While tuition is paid first, any leftover scholarship 
funds can be used to pay for school fees--including uniforms, field 
trips, before and after care--and transportation expenses.[Footnote 17] 

Student Eligibility and Enrollment in OSP: 

OSP is open to residents of the District who meet income eligibility 
guidelines. Specifically, students must come from households that have 
a combined income at or below 185 percent of the federal poverty 
threshold[Footnote 18] or that receive Supplemental Nutrition 
Assistance Program benefits (known as SNAP benefits) issued within the 
District. The student must also be at least 5 years old by September 
30TH of the school year. 

In the 2011-2012 school year, there were 53 participating schools in 
OSP (see figure 2). These schools represent a wide range of grades, 
sizes, sectors, and tuition levels. 

Figure 2: Location and Enrollment of OSP Participating Schools in the 
District, School Year 2011-2012: 

[Refer to PDF for image: interactive map] 

Interactive instructions: Roll your mouse over each dot to see more 
information regarding the participating schools. 

Appendix III provides the information for each school in a table. 

Sources: GAO analysis of DC Children and Youth Investment Trust 
Corporation program data; MapInfo; 2012 DC government ward data. 

[End of figure] 

These schools are located throughout all eight wards of the District, 
with the greatest number of schools located in Ward 3. In accordance 
with District regulations for all private schools operating in the 
District, these schools must be accredited by, or be in the process of 
being accredited by, at least one of seven recognized accrediting 
organizations or any other approved accrediting body. Schools that are 
unaccredited must submit documentation to demonstrate satisfactory 
evidence of instruction. 

Internal Controls Relevant to Implementation and Oversight of OSP: 

Internal control is broadly defined as a process--affected by an 
entity's board of directors, management, and other personnel--designed 
to provide reasonable assurance that the following objectives are 
being achieved: (1) effectiveness and efficiency of operations, (2) 
reliability of financial reporting, and (3) compliance with applicable 
laws and regulations. Internal controls include management and program 
policies, procedures, and guidance that help ensure effective and 
efficient use of resources; compliance with laws and regulations; 
prevention and detection of fraud, waste, and abuse; and the 
reliability of financial reporting. Effective internal control is a 
major part of managing any organization to achieve desired outcomes 
and manage risk. 

Standards for Internal Control in the Federal Government presents five 
standards that define the minimum level of quality acceptable for 
internal control in government and provide the basis against which 
internal control is to be evaluated.[Footnote 19] These standards--
control environment, risk assessment, control activities, information 
and communication, and monitoring--apply to all aspects of an agency's 
operations and should be an integral part of a system that managers 
use to regulate and guide an agency's operations. The private sector 
also recognizes the importance of internal controls for executives to 
better manage their business enterprises. The Committee of Sponsoring 
Organizations of the Treadway Commission's (COSO)[Footnote 20] 
Internal Control--Integrated Framework includes the same five key 
elements stated previously, which are intended to promote efficiency, 
reduce risk of asset loss, and help ensure the reliability of 
financial reports and compliance with laws and regulations. 

The Trust Provides Untimely Information and Scholarship Awards: 

The Trust Provides Information to Families through Many Channels, but 
Its Participating School Directory Provides Incomplete and Untimely 
Information: 

The Trust provides program information to prospective and current OSP 
families through a variety of outreach activities. To reach 
prospective OSP families, the Trust advertises through print, radio, 
and bus ads, as well as in newspapers and flyers posted in 
neighborhood libraries, recreation centers, and local government 
service centers. For example, one OSP parent told us she found out 
about OSP through a local Spanish-language newspaper. The Trust 
conducts several application events throughout the District where 
interested families can apply for the program. The Trust also holds a 
participating school fair in which OSP families can obtain additional 
information about participating schools. In addition, the Trust works 
with families directly, offering frequent personal contact to assist 
families through the scholarship application and renewal processes, 
according to Trust officials. The Trust provides this assistance via 
phone, e-mail, and through one-on-one interactions, and employs 
Spanish and Amharic speakers to assist non-English speaking 
families.[Footnote 21] Lastly, the Trust holds events to assist 
current OSP families, such as a workshop for students transitioning 
from 8th grade to high school. Most families we spoke with were 
generally happy with their children's participation in the program, 
citing increased safety and security at their children's OSP schools 
and improved quality of education. 

The SOAR Act requires all OSP grantee applicants to describe how 
parents of eligible students will be notified of the expanded choice 
opportunities each year, and the Directory is a key source of 
information about schools in the program. The Trust publishes the 
Directory for each school year in both English and Spanish, and it is 
designed to provide families with basic information on each 
participating school. The Directory also includes guidance on how to 
apply to private schools and worksheets to help families in their 
school search. In addition, the Directory provides information on 
tuition, accreditation, admissions, and facilities for each school 
participating in OSP for a given school year. 

The 2011-2012 Directory was used to assist families with selecting 
schools for 2012-2013. We found that this Directory lacked key 
information about schools' tuition, fees, and accreditation that could 
help families make more informed school choices: 

* Tuition: The 2011-2012 Directory listed one tuition amount for each 
school. According to Trust officials, the published tuition amount is 
the tuition applicable to each student unless the student is in a 
category to receive a discount on tuition. Whether a school offered 
different tuition levels, however, was not noted in the Directory. We 
found that many schools have different tuition levels, varying by 
grade level and religious affiliation. 

- Grade level: Nine of the 53 participating schools in school year 
2011-2012 offered different tuition levels for students in grades K-8 
versus students in grades 9-12. In addition, 10 of the 53 
participating schools had tuition levels that differed within grades K-
8. 

- Religious affiliation: Some religious schools also offered lowered 
or discounted tuition rates for their members. For example, in school 
year 2011-2012, 6 Catholic schools offered lowered tuition rates for 
Catholic families, but the Directory only listed the higher, non-
Catholic tuition rate. In addition, a Seventh-day Adventist school 
offered three different tuition levels, with the lowest rates offered 
to families belonging to their church and the highest rate offered to 
families who were not affiliated with this denomination. Only the 
highest tuition rate, however, was published in the Directory. 

* Fees: The Directory offers parents limited information about fees. 
For example, the Directory excluded the cost of commonly required fees 
at schools, such as registration and book fees. In addition, many OSP 
families may need services such as before and after care, and hot 
lunches. The Directory listed the availability of such services but 
did not include their cost. The Directory also excluded information 
about parental involvement or fundraising fees. Some schools can 
reimburse at least part of these fees if parents volunteer a certain 
number of hours, according to four school officials. If a family 
cannot fulfill these volunteer hours, then it must pay these fees out 
of pocket because these fees are not covered under the OSP 
scholarship. Most OSP students attend schools where the maximum OSP 
scholarship amount would cover the estimated total cost of attendance 
(see sidebar). But without having this information, it is difficult 
for families to know the full cost of attendance, and they may be 
responsible for paying fees that they were unaware of. This may be 
difficult, given this program's target population. 

* Accreditation: The Directory also offers families incomplete 
information about schools' accreditation status. According to 
representatives of accreditation organizations, school accreditation 
is important because it serves as a means of accountability and 
oversight. The Directory indicates which accrediting organizations are 
recognized by the District. However, the Directory lists some schools' 
affiliated memberships as an accreditation organization. For example, 
one school was listed as having the National Association of Episcopal 
Schools as an accrediting organization, but this organization does not 
accredit schools. Three schools were listed as being accredited by 
Nativity Miguel, which is a network of schools serving low-income 
communities, not an accrediting organization. 

Side bar: 

OSP School Selection and Schools’ Cost of Attendance: 

There is a large [school], which I really liked…but when they sent me 
the paper where it says the [tuition] amounts, I got rid of that 
hope... The price [was] around $32,000 and near to my house. No, that 
is not for me. So I got rid of [that] hope, and I went looking for 
other schools, that were around what the scholarship gives you [for 
high school], $12,000. – an OSP parent. 

Although there are 53 participating schools in OSP, over half of all 
OSP students enroll in 8 of these schools. In the 2011-2012 school 
year, the estimated minimum cost of attendance at all of these 8 
schools was completely covered by the full OSP scholarship amount. The 
estimated cost of attendance at 18 schools was over $20,000, far 
exceeding the amount that could have been covered by an OSP 
scholarship. About 5 percent of OSP students were enrolled in these 
schools. For the remaining 27 schools, the estimated cost of 
attendance ranged from about $5,700 to $18,300. These enrollment and 
cost of attendance trends suggest that families may choose schools 
where the entire cost of attendance could be covered by the OSP 
scholarship. Therefore, although a wide range of schools participate 
in OSP, families’ choices may, in practice, be constrained to certain 
schools. 

[End of side bar] 

Some families we spoke with told us that they did not receive the 
Directory or tuition information, and therefore, they were not aware 
of which costs would not be covered by OSP or which schools were 
participating in the program. Instead, they communicated directly with 
schools about whether they were participating in the program. Although 
the Directory is publicly available on the Trust's website, not all 
program participants may have computer or Internet access. In 
addition, even if families have Internet access through smart phones, 
this does not necessarily mean that program participants can use them 
to access everything they need, according to one school official. 
Trust officials told us they provide direct assistance to families to 
help them select schools and discern their total cost of attendance, 
but not all families may be receiving this assistance. 

In addition to having incomplete information, the Directory has also 
been published too late to truly assist families in selecting a 
school. Families need to select schools for their students before the 
school year starts in August or September. However, the Trust 
published the Directory for the 2012-2013 school year in May 2013, 
about 9 months after the start of that school year. According to Trust 
officials, the Directory was published late because the school site 
visits--during which Trust officials confirm and update key school 
data for the Directory--occurred later in the year than in previous 
years due to substantial staff changes. Trust officials also told us 
that these directories are primarily meant to inform families 
selecting schools for the upcoming school year. While the 2012-2013 
Directory was issued too late to assist families for that same school 
year, it can assist families for the upcoming 2013-2014 school year. 
Trust officials stated that in the future they plan to publish the 
Directory by December of the current school year. The Trust plans for 
future Directories to include more accurate notation of the school 
accrediting bodies and a general notation about applicable discounts 
and/or additional fees. 

According to Trust officials, they issued a list of participating 
schools in the fall for the 2012-2013 school year to assist families 
with school selection. This list of participating schools was intended 
to be a companion piece to the 2011-2012 Directory and included 
schools' addresses and grades served, but it did not include key 
information such as updated tuition information and admissions 
requirements. According to Trust officials, the participating school 
list is updated as needed to reflect any school changes that may have 
occurred between the publication of the previous year's Directory and 
the start of the school year. For example, the 2012-2013 list of 
participating schools excluded a school that had closed, even though 
this school was listed in the 2011-2012 Directory. While some families 
may have been able to fill any gaps between these two sources of 
information through the guidance and hands-on assistance provided by 
the Trust, the extent to which all families had access to this direct 
assistance is unclear. 

The Timeframes for Awarding Scholarships Do Not Align with Many 
Schools' Admissions and Enrollment Schedules: 

For both the 2012-2013 and the 2013-2014 school years, the Trust 
awarded scholarships several months after many schools' application 
deadlines had passed. For the 2012-2013 school year, the Trust 
conducted its scholarship lottery in July 2012, about 1 month before 
classes started for many schools. In addition, the Trust did not hold 
its school placement and welcome fair, which it uses to assist 
families with school selection, until August 2012, the same month that 
classes began for 6 of the 10 schools we visited, as shown in figure 
3. By that time, many of the schools in OSP had already completed 
their admissions and enrollment processes. We found that 9 of the 10 
schools we visited did not have an application deadline or were still 
accepting applications after students had been notified that they had 
received a scholarship.[Footnote 22] 

Figure 3: OSP Scholarship Timeframes and Application Deadlines at 
Participating Schools with Highest and Lowest OSP Enrollment, School 
Year 2012-2013: 

[Refer to PDF for image: illustration] 

OSP scholarship award timeframe for SY 2012-13: 

Schools with highest concentration and enrollment of OSP students: 

Academia de la Recta Porta: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/20. 

Academy for Ideal Education: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/5. 

Archbishop Carroll High School: 
Application deadline: 1/18; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/21. 

The Bridges Academy: 
Application deadline: 8/1; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/5. 

Calvary Christian Academy: 
Application deadline: 8/30; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/4. 

Preparatory School of DC: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/27. 

Roots Activity Learning Center: 
Application deadline: None; 
Community outreach meeting: 
OSP application events: 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/4. 

St. Augustine School: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/27. 

St. Francis Xavier Academy: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/27. 

St. Thomas More Academy: 
Application deadline: None; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/27. 

Schools with few or no OSP students: 

Aidan Montessori School: 
Application deadline: 1/18; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/5. 

Beauvoir-National Cathedral Elementary School: 
Application deadline: 12/19; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/4. 

Georgetown Day School: 
Application deadline: 1/9; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/4. 

National Presbyterian School: 
Application deadline: 1/13; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 9/4. 

Washington International School: 
Application deadline: 1/10; 
Community outreach meeting: January 2012; 
OSP application events: February-March; 
OSP application deadline: 
OSP scholarship lottery: 7/31; 
School placement fair: 8/4; 
First day of school: 8/27. 

Source: GAO analysis of program timeframes and SY 2011-2012 OSP 
enrollment data. 

[End of figure] 

For the 2013-2014 school year, the Trust moved up its timeframes, 
giving families more time to select schools than in the previous year. 
First, the Trust awarded scholarships in late May 2013 and held its 
school placement and welcome fair in early June rather than August, as 
was done in 2012, according to Trust officials. Still, as in school 
year 2012-2013, many schools had already completed their admissions 
and enrollment processes by that time. In addition, according to some 
schools we visited, awarding scholarships so close to the start of the 
school year can affect their ability to adequately plan for the coming 
school year. For example, officials at two schools we visited told us 
that as a result of the scholarship lottery and school fair being held 
in July and August 2012, respectively, they did not know how many 
students would be enrolled at their schools until just a few weeks 
before the school year started in August. This made it difficult to 
discern class sizes and plan for the number of teachers needed. 

Officials at schools we visited told us that they have found ways to 
work around the scholarship time frame and accommodate OSP students. 
For example, one school held an additional open house and another 
school accepted applications as late as the first week of school, 
according to two school officials. However, several parents we spoke 
with mentioned that they only had about a month to find a school and 
enroll their students, at which time many schools were no longer 
accepting students, and three school officials told us that the 
scholarship timeframes do not give families enough time to research 
school options. Since the application and financial aid deadlines for 
some of the program's most costly schools occur much earlier than the 
OSP scholarship timeframes, by the time a student is awarded a 
scholarship, there are neither financial aid dollars from the school 
nor space available for that student.[Footnote 23] 

According to Trust officials, Education's requirement to verify family 
income using the most recent complete year of income information 
delays scholarship awards. To verify income information, the Trust 
also told us they have to wait until after the April 15th tax filing 
deadline. Trust officials noted that some schools use prior year 
income information to determine provisional financial aid awards, 
reconcile these awards with the current year's tax information once 
that is available, and rescind financial aid awards if the incomes 
exceed a certain level. Trust officials expressed concerns about 
having to potentially rescind any scholarships, even though the chance 
that incomes will change so substantially among program participants 
is low. Trust officials are currently exploring ways to use prior year 
income information to determine eligibility earlier in the year and 
enable them to award scholarships earlier. Education officials told us 
if the Trust wants to consider using a different year's income for the 
purpose of making preliminary determinations regarding students' 
eligibility, it would have to submit its proposal to Education for 
evaluation. 

The Trust Has Not Developed Effective Internal Controls to Safeguard 
Program Funds: 

The Trust Has Not Developed Effective Policies and Procedures for 
Implementing and Overseeing the Program: 

The Trust's policies and procedures lack detail in several areas 
related to school compliance and financial accounting, which may 
result in little overall accountability for program funds. The absence 
of detailed policies and procedures also reflect weak internal control 
in the areas of risk assessment, control activities, information and 
communication, and control environment. Internal control is broadly 
defined as a process designed to provide reasonable assurance that an 
organization can achieve its objectives with effective, efficient 
operations, reliable financial reporting, and compliance with laws and 
regulations. The Committee of Sponsoring Organizations of the Treadway 
Commission's (COSO) Internal Control--Integrated Framework,[Footnote 
24] includes five key elements or components, as shown in table 1. 
COSO is applicable to the Trust because it is a non-governmental 
entity. 

Table 1: COSO Internal Control--Integrated Framework: 

Control environment: 
The Control Environment sets the tone of an organization, influencing 
the control consciousness of its people. It is the foundation for all 
other components of internal control, providing discipline and 
structure. 

Risk Assessment: 
Risk Assessment is the identification and analysis of relevant risks 
to achievement of the objectives, forming a basis for determining how 
the risks should be managed. 

Control activities: 
Control Activities are the policies and procedures that help ensure 
management directives are carried out. Control Activities include a 
range of activities as diverse as approvals, authorizations, 
verifications, reconciliations, reviews of operating performance, 
security of assets and segregation of duties. 

Information and communication: 
Information and Communication relates to the idea that pertinent 
information must be identified, captured, and communicated in a form 
and timeframe that enables people to carry out their responsibilities. 
Information systems produce reports, containing operational, 
financial, and compliance-related information, that make it possible 
to run and control the business. There also needs to be effective 
communication with external parties, such as customers and regulators. 

Monitoring: 
Internal control systems need to be monitored--a process that assesses 
the quality of the system's performance over time. This is 
accomplished through ongoing monitoring activities, separate 
evaluations or a combination of the two. 

Source: COSO. 

[End of table] 

Policies and procedures are a central part of control activities and 
help ensure necessary actions are taken to address risks to 
achievement of the entity's objectives. In August 2013, the Trust made 
amendments to its policies and procedures to address the financial 
review performed on schools, administrative expenses, and bank 
reconciliations. However, these amendments do not address all 
weaknesses identified in this report, and they have not yet been fully 
implemented. 

Self-Reported Information for School Compliance: 

The Trust, as administrator of OSP, is responsible for ensuring that 
participating schools comply with the reporting and program 
requirements that are outlined in the SOAR Act. The Trust, however, 
does not have a process for independently verifying the information 
that schools submit as evidence of compliance, reflecting weaknesses 
in the Trust's risk assessment process and internal control activities. 

The SOAR Act requires a potential OSP grantee to demonstrate how it 
will ensure that participating schools meet certain reporting and 
program requirements specified in the Act. In addition, the SOAR Act 
requires the grantee applicants to ensure that participating schools 
report to parents at least once during the school year on students' 
academic achievement, as well as the safety and accreditation status 
of the school. The Act also requires schools to meet certain 
standards, such as building occupancy and teacher credentialing 
requirements. The Trust's policies and procedures state that 
participating schools must self-certify whether they have met several 
of these requirements. 

Participating schools complete a School Participation Verification 
Form that is submitted to the Trust each year to attest to student 
academic performance, school safety, and all of the applicable 
requirements in the SOAR Act, including status of accreditation. 
According to District regulation, if a private school in the District 
is not accredited, the school can provide evidence of acceptable 
instruction to the District's Office of the State Superintendent for 
Education (OSSE) by submitting information regarding teacher 
credentials and curriculum documentation. However, during our 
interview, officials from OSSE stated that they do not regularly 
ensure that schools have an acceptable curriculum. Officials we spoke 
with said that they are revisiting this policy, but they did not 
provide a timeline for whether and when any changes will occur. 
According to OSSE officials, the last time the Trust requested an 
accreditation review of participating OSP schools was before the start 
of the 2010-2011 school year. 

The SOAR Act states that participating schools must maintain a valid 
certificate of occupancy. The Trust collects and reviews copies of the 
certificates of occupancy. However, if the validity of the certificate 
of occupancy changes, the Trust may not know of the change. We 
obtained and reviewed the certificates of occupancy for the 10 schools 
we selected for site visits. In 5 of the 10 schools, we could not 
discern the validity of their certificates of occupancy. For example, 
one school's certificate of occupancy did not list "school" or 
"private school" for the use, but rather "child development center and 
infant preschool." Enrollment at three other schools, as shown in the 
Directory, appeared to exceed the listed capacity, and one additional 
school's certificate did not list a capacity so it is not known if the 
school has exceeded its current capacity. Additional follow-up is 
needed to determine if these certificates of occupancy are, in fact, 
valid, but the Trust does not make any inquiries with the District 
agency responsible for issuing certificates of occupancy, nor does the 
Trust follow up with the schools. 

In addition, the Trust conducts site visits at participating schools 
but does not verify the documents or activities to which the schools 
attest. Participating schools complete a School Review Form to 
document each site visit. This form is also used by schools to attest 
to meeting reporting and program requirements and is not independently 
verified by the Trust. 

As the program administrator, the Trust is responsible for mitigating 
potential program risks. Verifying the information reported by 
participating schools is important to ensuring that scholarships are 
awarded only to students to attend participating schools that are in 
compliance with the SOAR Act's requirements and that the program is 
administered effectively. Without a mechanism or procedures for 
verifying the accuracy of the information provided by participating 
schools, the Trust cannot ensure that schools are eligible to 
participate in OSP and, therefore, risks providing federal dollars to 
students to attend schools that do not meet the educational and health 
and safety standards required by the District. 

Financial Stability Review of Schools: 

The Trust's policies and procedures lack sufficient detail to ensure 
each participating school in OSP has the financial systems, controls, 
policies, and procedures in place to ensure federal funds are used 
according to the law, a requirement of the SOAR Act. 

The Trust's policies and procedures require the financial Controller 
of the Trust to review documentation that demonstrates the adequacy of 
each participating schools' financial resources. Based on this 
financial review, the Trust has identified two schools as "high risk," 
one for issues that occurred during the 2010-2011 school year, and the 
other for financial struggles in 2011. However, the policies and 
procedures for this financial stability review do not identify the 
specific risk factors that should be considered when assessing 
schools' financial sustainability information.[Footnote 25] In 
addition, it is unclear what risk factors were considered during the 
prior Controller's review of the schools' documentation demonstrating 
adequate financial resources since the policies and procedures did not 
specify factors to consider and, according to current Trust officials, 
there was no documentation about the review. 

According to the risk assessment and control activities components of 
COSO's internal control framework, it is important that management 
carefully considers factors that contribute to or increase risk and 
that management creates policies and procedures that help ensure that 
necessary actions are taken to address these risks. For OSP, factors 
that contribute to or increase risk include whether a school can 
continue to reasonably meet its financial obligations as they become 
due, and how dependent a school is on OSP funds. If a school cannot 
reasonably meet its financial obligations, it could be monitored more 
closely before and after being accepted into the program. If a school 
is overly reliant on OSP funds, which would be determined by the 
Trust, further review or increased monitoring could be warranted. As a 
result of certain risk factors not being considered in assessing 
schools' financial sustainability, schools that are not financially 
sustainable may be participating in the program. 

Based on documents provided by the Trust, several schools we visited 
that participated in OSP during the 2010-2011 and 2011-2012 school 
years did not provide detailed financial statements necessary to 
assess their financial stability, and during this time, the Trust did 
not have a practice of documenting its financial review of schools. 
[Footnote 26] The financial information submitted by 6 of the 10 
schools we visited did not include detailed financial information 
required by the Trust's policies and procedures. There was not any 
documentation or guidance completed by the previous Controller on 
these financial reviews. Officials from participating OSP schools we 
visited also confirmed that the Trust did not ask for additional 
information or support for the financial condition of the schools. 
Despite the policies and procedures that exist for OSP financial 
review of schools, there is little documentation detailing the 
analyses performed or the conclusions reached by the Trust. In 
addition, exceptions to the policy, such as where schools submitted 
information that did not adhere to the policies and procedures, was 
not documented. As stated earlier, the Trust amended their policies 
and procedures in August 2013 to include more detail regarding the 
financial review of participating schools; however, these amendments 
have not yet been fully implemented. 

Addressing Non-Compliant Participating Schools: 

The Trust does not have detailed policies and procedures for dealing 
with schools that are not in compliance with program rules. For 
example, if the Trust discovers that a school no longer possesses a 
valid certificate of occupancy or is not accredited and did not meet 
the District's educational standards, the Trust lacks policies and 
procedures dictating what is to be done at what time in the school 
year to ensure all schools participating in the program meet program 
rules and all students in OSP are attending schools that comply with 
these standards of safety, educational quality, and financial 
stability. The Trust's policies and procedures provide only one 
example of a policy directed at a school not meeting standards 
required by the SOAR Act: if a school is unable to provide supporting 
documentation for financial sustainability, the Trust's policy is that 
scholarship payments to the school will be distributed on a month-to-
month basis, as opposed to three times per year. It is a weakness in 
the Trust's control activities that there is not a clearly defined, 
comprehensive written policy addressing schools out of compliance with 
program rules. Trust officials told us that they were not clear on 
what actions they could take to address non-compliant schools. 
However, Education officials told us that under certain circumstances 
the Trust can remove a school from participating in OSP. 

Administrative Expenses and Bank Reconciliations: 

The Trust's policies and procedures for fiscal years 2010, 2011, and 
2012 did not specify how to track administrative expenses, including 
what expenses should be included, and the Trust has little 
documentation to support administrative expenses incurred during the 
fiscal years 2010, 2011, and 2012. In addition, the Trust does not 
have detailed policies and procedures outlining the monthly bank 
reconciliation process, where staff review accounting system records 
and compare them to bank records.[Footnote 27] As stated earlier, it 
is important that an entity's management have policies and procedures 
in place that address risks to achieving an entity's objectives. 
Control activities include a range of activities such as 
verifications, reconciliations, as well as reviews of operating 
performance and security of assets. 

The SOAR Act limits the Trust's administrative expenses to 3 percent 
of the annual grant amount. The Trust's policies and procedures state 
that they may only draw down federal funds from Education on a 
reimbursement basis after such expenses have been incurred and paid. 
While the Trust's policy manual does provide guidance for tracking 
employee time that should be billed to the program, it does not 
provide guidance for other expenses such as rent, telephone, printing, 
or office supplies, which could possibly be counted as administrative 
expenses for purposes of seeking reimbursement. The cost of 
administering OSP could be higher or lower than the 3 percent 
designated for administrative costs. Because these expenses were not 
tracked prior to October 2012, the true cost of administering the OSP 
program is unknown. In part due to the outcome of their fiscal year 
2010 financial audit, the Trust has begun to track administrative 
expenses more closely. 

The Trust did not draw down federal reimbursement from Education for 
administrative expenses for fiscal years 2010, 2011, and 2012. 
[Footnote 28] In addition, the Trust did not document the decision or 
approval as to why it did not follow its policies and procedures or 
did not request reimbursement from Education for its administrative 
expenses. According to Education officials, grantees do not typically 
document why they have not drawn down funds. In addition, they 
explained that Education's grants management system automatically 
flags funds that have not been drawn down within a particular time 
frame and the system has not flagged the Trust since funds had been 
drawn for the scholarships. Education officials also stated that the 
Trust classifies its obligations and expenditures in reports such as 
their monthly expense reports, which is sufficient for the 
department's purposes. 

In addition, as part of the finance department's monthly bank 
reconciliation process, the Trust's policies and procedures also refer 
to scholarship payment reconciliation as well as administrative 
expense drawdown reconciliation. However, the Trust's policies and 
procedures do not specify certain aspects of the reconciliation, such 
as when the reconciliations should be completed, how exceptions should 
be identified and dispossessed, how the process should be documented, 
and when the reconciliation should be reviewed--and by whom. 

Without the specific guidance in the policies and procedures, it will 
be difficult for the Trust to ensure that items are being 
appropriately and consistently tracked and recorded, as administrative 
expenses may be included that should not be (or not included that 
should be). In addition, without specificity in the policies and 
procedures regarding bank reconciliations, these reconciliations may 
not be completed in a consistent or timely manner and increases the 
potential for errors, and likelihood that errors will not be 
identified and corrected in a timely manner. 

The Trust's Database Is Not Efficiently Structured: 

The Online Reports and Invoicing System (the database), which is used 
by the Trust to manage the OSP program, is not structured well enough 
for effective program implementation and oversight. Information 
contained in the database includes current and past application 
information for students and guardians, school placement information 
for each student who received a scholarship award, payment 
information, and information on participating schools. 

According to COSO's Integrated Framework, information should be 
communicated to management and within the entity in a form and time 
frame that enables officials to carry out their responsibilities and 
determine whether they are meeting their stated objectives. For 
example, in OSP, it is important that Trust officials have access to 
accurate, up-to-date student application information in order to meet 
program objectives, such as determining eligibility and awarding OSP 
scholarships in an efficient and timely manner. Similarly, families of 
OSP scholarship award recipients, as consumers, need complete and 
timely information about participating schools to make informed 
decisions about what school is best for the student. The Trust's 
database has several deficiencies including a lack of documentation 
and automated checks, and a deficient structure, which leaves the 
database open to errors and slows the Trust's ability to manage the 
program on a day-to-day basis, and communicate information about the 
program to families and Education. 

Lack of Documentation: 

The Trust (including the contractor that created and maintains the 
database) does not have any documentation for this database. For 
example, there is no user guide or data dictionary, and potential 
users of the database must rely on the institutional memory of select 
users who have had more experience with the database to understand how 
to properly use the database or the definitions of key data fields. 
When we attempted to follow various verbal or informal written 
instructions for using the database, we found flaws in these 
instructions that necessitated several rounds of follow-up to 
successfully perform key functions and basic data manipulation. It is 
not known what specifically caused this condition, but Trust officials 
have noted financial constraints in requesting more support from the 
contractor. 

Lack of Automated Checks: 

In addition to lacking documentation, the database does not have key 
automated checks built into the system to ensure accuracy and 
efficient data entry. Automated checks help maintain integrity in a 
database reducing the risk that a significant mistake could occur and 
remain undetected and uncorrected. For example, the Trust's database 
does not have checks to determine if a student's application 
information has already been entered. When a student submits an 
application, before his or her information is entered into the system, 
a Trust staff person must run searches in the database for his or her 
name, the guardian's name, both persons' Social Security numbers and 
address to ensure the applicant is not already in the system. These 
checks are necessary because the system allows duplicate entry of the 
same student information, potentially rendering the data unreliable, 
even with the searches described above. To ensure data are accurate 
given the lack of automated checks, the Trust stated that one of their 
officials runs several queries and creates tables in Microsoft Excel 
to check for errors by hand on a weekly or more frequent basis during 
key periods for the program. 

Weaknesses in Structure: 

The database's current structure hampers an administrator's ability to 
look at historical trends and use them as an effective management 
tool. When the Trust inherited the database from the Washington 
Scholarship Fund, the older data in the system were not cleaned, and 
thus there are many records in the database with missing fields, or 
applications that are only partially entered, suggesting they are not 
valid records. The Trust has stated they cannot attest to the accuracy 
of these older data. Yet, the Trust is using these older data in 
reports without an explanation of the potential issues of inaccuracy. 

The weaknesses in the database's structure also affect key activities 
for the Trust, such as determining the priority groups of applications 
for the OSP lottery. As stated earlier in this report, the SOAR Act 
states that if more students apply to OSP than the program can 
accommodate, the grantee (the Trust) must ensure that applicants are 
selected for awards through a random selection process that gives 
weight to three priority groups (which the Trust has implemented 
through a lottery). The groups of applicants that have a priority 
status as defined in the SOAR Act are: (1) applicants who are 
currently attending a school that has been identified for improvement, 
corrective action, or restructuring under the Elementary and Secondary 
Act of 1965, as amended; (2) applicants who have a sibling currently 
participating in OSP; and (3) applicants who received an OSP 
scholarship award in a previous year but did not use it. Using the 
Trust's database, we employed our own methodology to replicate the 
process to determine the number of students in each applicant priority 
group for the 2011-2012 school year because no documentation exists 
for these queries. However, we were unable to determine which students 
belonged in the third priority category of students for the 2011-2012 
school year because a key variable necessary for this calculation 
appears to be unreliably populated. In other words, it does not appear 
possible to use the Trust's database to derive this priority category 
and puts in question the Trust's ability to provide accurate priority 
categories for the OSP lottery. 

Weaknesses in Data Entry Process: 

Lastly, data entry of application information is also problematic. In 
addition to basic eligibility information, OSP applications also 
include important information needed for the third-party evaluation of 
the OSP program. According to Education officials, the evaluation 
timelines have been negatively affected for the 2011-2012 and 2012-
2013 school years because data entry was not completed in a timely 
manner. In one instance the Trust had to retrieve hard copies of the 
applications from storage and send relevant application data to the 
officials involved in the evaluation because they were so behind in 
data entry. Education officials stated that there may have been a lack 
of clarity regarding the specific information the Trust was supposed 
to enter into the database and that delays resulting from untimely 
data entry should not be an issue going forward. 

The Trust Has Not Filed Its Mandatory Financial Reports on Time: 

The Single Audit Act requires that recipients submit their Single 
Audit reports to the federal government no later than 9 months after 
the end of the period being audited, which would be June 30th for an 
entity with a September 30th fiscal year end, such as the Trust. The 
Trust's Financial Statements, Schedule of Expenditures of Federal 
Awards, and Independent Auditors' Reports Required by Government 
Auditing Standards and OMB Circular A-133 for the Year Ended September 
30, 2010, were issued on January 31, 2013--more than 2 years after the 
end of its 2010 fiscal year. Until this report was issued, Education 
did not have the financial reports required to properly account for 
the federal funds expended for OSP under the Trust's administration. 
According to Trust officials, the 2010 audit was delayed because of a 
need to change audit firms and ongoing investigations regarding its 
finances related to other grants. 

The issue of delayed reports has not been resolved. As of August 2013, 
the Trust's audited financial statements for fiscal year ending 
September 30, 2011, and 2012 have not been issued yet (see figure 4). 
On August 9, 2013, Trust officials told us that the final fiscal year 
2011 audit is expected to be completed by the end of August 2013 and 
the fiscal year 2012 audit will not be completed before September 
2013.[Footnote 29] As a result of the Trust's delay in submitting 
mandatory financial reports there was no opportunity for formal 
oversight of federal dollars spent on OSP for almost 2 years under the 
Trust's administration. In addition, the continued delay in the audit 
reports means the Trust has not taken actions on deficiencies found in 
each audit in a timely manner to mitigate further issues. 

Figure 4: The Trust's FY 2010-2012 Timeline of Mandatory Reporting 
Deadlines and Report Publication for OSP, as of August 9, 2013: 

[Refer to PDF for image: timeline] 

September 30: End of FY 2010. 

June 30: FY 2010 Mandatory Financial Reports due. 

September 30: End of FY 2011. 

June 30: FY 2011 Mandatory Financial Reports due. 

September 30: End of FY 2012. 

January 31: FY 2010 Mandatory Financial Reports Published. 

June 30: FY 2012 Mandatory Financial Reports due. 

As of August 2013: 
FY 2011 Mandatory Financial Reports not yet published; 
FY 2012 Mandatory Financial Reports not yet published. 

September 30: End of FY 2013. 

Source: GAO. 

[End of figure] 

Agencies Have Not Fully Executed Responsibilities Outlined in 
Governing Documents: 

The SOAR Act requires that the Secretary of Education and the Mayor of 
the District of Columbia enter into a memorandum of understanding 
(MOU) that addresses how OSP will be implemented. The MOU, which was 
agreed upon by Education and the District in June 2012, is intended to 
help ensure the efficient and effective implementation of OSP in a 
manner that incorporates and is consistent with the roles and 
responsibilities of Education and the District. It describes, for 
example, offices and officials within Education and the District that 
have lead responsibility for implementing OSP, issues and areas on 
which Education and the District will collaborate, and specific 
activities that Education and District agencies, such as the 
Department of Consumer and Regulatory Affairs (DCRA), Fire and 
Emergency Medical Services (EMS), and the Department of Health will 
carry out. According to the MOU, Education is responsible for working 
with the Trust to improve certain aspects of the administration of 
OSP. The District is responsible for conducting regulatory inspections 
of participating schools--upon notification by the Trust--and 
providing the Trust with the results of those inspections (see figure 
5).[Footnote 30] 

Figure 5: Responsibilities of Education and District Agencies as 
Stated in the June 2012 Memorandum of Understanding: 

[Refer to PDF for image: illustration] 

Education: Assist the Trust in four areas: 
1. Improve Trust’s financial systems; 
2. Improve Trust’s site visit policies and procedures; 
3. Improve Trust’s accuracy of information; 
4. Provide oversight of the Trust. 

Trust: 
Notifies District agencies to conduct inspections. 

District: Inspect OSP schools. 

DCRA: 
* Building; 
* Zoning; 
* Certificates of occupancy. 

Fire/EMS: 
* Building safety. 

Health: 
* Food safety; 
* Review of student health records. 

Source: GAO analysis of OSP Memorandum of understanding. 

[End of figure] 

In addition, Education entered into a cooperative agreement with the 
Trust to set forth the responsibilities of each entity for 
implementing OSP as required by the SOAR Act and the Education 
Department General Administrative Regulations. Education and Trust 
officials signed the cooperative agreement in June 2013, 3 years after 
the grant for OSP had been transferred to the Trust. Education 
officials stated that, among other reasons, the cooperative agreement 
had not been developed any earlier because of substantial turnover in 
staff at the Trust. Education officials stated they wanted to wait to 
implement the agreement until the Trust's staff had stabilized. Trust 
officials stated that the cooperative agreement was an opportunity to 
codify the various ways in which Education and the Trust would assist 
each other in implementing the program. Through the cooperative 
agreement, Education also agreed to assist the Trust in the same four 
areas stated in the MOU. 

Education Has Provided Limited Assistance to the Trust: 

Education has provided limited assistance to the Trust as agreed upon 
in the MOU and cooperative agreement governing OSP. Trust officials 
acknowledged that they have not proactively sought Education's 
assistance in these areas. They told us that although they have had 
several discussions with Education regarding the general 
administration of the program and operational issues, they have not 
had opportunities to discuss lessons learned or making improvements in 
certain areas of program administration. 

Improvements to Financial Systems: 

Through the MOU and cooperative agreement, Education is responsible 
for helping the Trust ensure that it implements appropriate 
improvements to its financial system. However, according to Trust 
officials, Education has not undertaken any activity to help improve 
its financial systems and the Trust has not had any conversations with 
Education about doing so. Education officials told us that the Trust's 
financial systems were an improvement over the previous 
administrator's financial system and that they have not had to closely 
manage the Trust in this area. However, as previously discussed, the 
Trust's policies and procedures do not provide specific guidance on 
allocating certain administrative expenses and the Trust does not have 
detailed policies and procedures outlining the bank reconciliation 
process. Further, as a result of the Trust's tardiness in submitting 
mandatory financial reports, the Trust was unable to account for 
federal dollars spent on OSP for about 2 years after the end of fiscal 
year 2010. 

Site Visit Policies and Procedures: 

Education has not assisted the Trust in developing, implementing, or 
updating its policies and procedures for conducting site visits, as 
specified in the MOU and cooperative agreement. According to Education 
officials, as long as the Trust maintained the procedures used by the 
previous administrator, there was no need to revise its site visit 
procedures. When we spoke to Trust officials, however, we were told 
that although Education has not assisted with its site visit policies 
and procedures, the Trust updates its procedures every year and 
provides them to Education for review. Additionally, Education told us 
that it did not have any concerns with the timing of the Trust's site 
visits, even though the Trust did not conduct site visits for the 2012-
2013 school year until February 2013--the second semester of the 
school year. 

Information Provided to Families: 

According to the MOU and cooperative agreement, Education agreed to 
assist the Trust in developing procedures to improve the accuracy of 
information provided to families before they choose a participating 
school and encourage schools to make such information available on an 
annual basis to families of enrolled students. Education officials 
stated that they meet with the Trust at the start of each school year 
to discuss marketing and recruitment, the participating school fair, 
and how to engage with families, and to provide feedback on these 
aspects of OSP as needed. For example, Education worked with the Trust 
to publish the school Directory for the 2012-2013 school year. 
Education did not have any concerns with the accuracy of the 
information provided to families for the purpose of selecting a school 
to attend. According to the Trust, Education relies on it to verify 
that schools are providing parents with such information. However, as 
discussed earlier, the school Directory does not include complete 
information about schools' tuition, fees, and accreditation that 
families need to make informed school choices. 

Oversight: 

In addition to the responsibilities described above, Education is also 
responsible for providing oversight of the Trust as a recipient of 
federal funds. According to Education officials, its role is to 
identify a grantee to administer OSP and ensure that the grantee 
adheres to applicable federal law and regulations. Education monitors 
the Trust with regard to (1) progress in implementing OSP; (2) 
financial records; and (3) data records, including records on student 
placements and numbers of scholarship awards. The activities that 
Education conducts as part of its oversight of the Trust are 
documented in the cooperative agreement between Education and the 
Trust and it conducts ongoing reviews of the Trust's activities to 
ensure satisfactory performance under the cooperative agreement. 
Education officials stated that the cooperative agreement was 
developed, in part, to increase its oversight of the Trust. For 
example, Education used the cooperative agreement to institute 
reporting requirements and clarify program rules. Officials said they 
also recognized the need for a closer partnership with the Trust and 
stated that the cooperative agreement was an opportunity to clearly 
describe the Trust's expectations. 

Education officials also told us that they provide guidance and 
technical assistance to the Trust. For example, Education officials 
told us they participate in conference calls with Trust officials, 
review the Trust's annual performance report and monitoring plans, and 
provide ongoing technical assistance. Education officials also stated 
that they conduct regular, ongoing desk monitoring of the Trust, and 
will also conduct biannual site visits with the Trust beginning in the 
fall of 2013. If there were any problems with safeguarding OSP funds, 
Education officials stated they would work with the Trust to correct 
the problem or, if necessary, they could penalize the Trust through 
actions such as freezing and withholding funds, recovering funds, and 
ensuring that the grant cannot be renewed. 

Requirements Under the MOU Are Not Being Met: 

The MOU requires that the District conduct inspections necessary for 
schools to participate in OSP "upon notification by the grantee (the 
Trust)," but required inspections are often not being conducted. For 
example, the MOU requires the District Government, upon notification 
by the Trust, to conduct regulatory inspections of all program schools 
to determine whether they have a current certificate of occupancy. The 
District's DCRA issues certificates of occupancy and conducts 
inspections based on the types of building or trade permits that 
schools have. A DCRA official, however, stated that it relies on the 
permit holder to make requests for all required inspections. Also, the 
District's Fire and EMS Department is responsible for conducting 
biennial inspections or otherwise determining whether participating 
schools comply with applicable District health and safety 
requirements, as required by the MOU. However, a Fire and EMS official 
stated that private schools are not subject to regular inspections. 
Trust officials told us they did not know whether participating 
schools had been inspected by the District agencies. Lastly, officials 
at schools we visited told us that certain District agencies had 
conducted some inspections but not specifically for OSP. Rather, they 
occurred for other reasons, such as general inspections for schools 
that offer special education or early childhood services. 

The MOU also states that the District should provide information to 
the Trust regarding whether participating schools are in conformance 
with District requirements. The Trust's understanding of this 
requirement is that the District should be providing the inspection 
results on a regular basis without being specifically asked by the 
Trust. However, Trust officials told us they do not receive any 
information from the District as a result of any inspections that may 
have been conducted at participating schools. And according to the 
Trust, it does not follow up with District agencies to inquire about 
the results of any of the inspections. 

Although the MOU is a written agreement between Education and the 
District, it includes a responsibility for the Trust. Specifically, 
the MOU states that the Trust--as the grantee--is responsible for 
notifying District agencies to conduct these required inspections of 
participating private schools. Given that the Trust is responsible for 
ensuring that participating schools continue to be eligible to receive 
federal dollars through OSP, notifying the District agencies can be 
important in ensuring appropriate oversight of participating schools. 
This activity can be especially important for agencies like the 
District's Fire and EMS department that do not normally inspect 
private schools. However, because the Trust is not a signatory to the 
MOU, Trust officials were not acutely aware that they were responsible 
for notifying the District agencies. Furthermore, the cooperative 
agreement between Education and the Trust does not include this 
requirement for the Trust to notify District agencies. Officials from 
the Trust stated that they assumed that District agencies conducted 
inspections of private schools as a matter of process, without the 
Trust prompting them to do so. As a result, activities that are 
crucial to the successful implementation of the program--such as 
building, zoning, health, and safety inspections--may not be occurring 
for all participating schools. 

Conclusions: 

The OSP is intended to afford District families the opportunity to 
attend higher-performing schools of their choice and have all or part 
of the cost of attendance paid. In order to make well-informed 
decisions, however, families need complete and timely information on 
schools' tuition, fees, and accreditation, as well as timely 
scholarship awards. Since taking over OSP, the Trust has not provided 
such information to families in a timely manner, requiring families to 
make less-informed decisions near the beginning of the school year, 
when many schools no longer have places for admission. 

The Trust needs to improve program management and operations to assure 
efficiency and effectiveness. Currently, it does not effectively 
oversee participating schools, has not implemented effective policies 
and procedures, and is unable to efficiently manage day-to-day program 
operations. As a result, families may believe that participating 
schools fully meet program requirements, although the Trust cannot 
ensure that these schools meet them. In August 2013, the Trust made 
amendments to its policies and procedures manual regarding the 
financial review performed on schools, administrative expenses, and 
bank reconciliations. However, these amendments do not address all 
weaknesses identified in this report, and they have not yet been fully 
implemented. Without sufficiently detailed policies and procedures for 
all aspects of the Trust's operation, the Trust cannot sufficiently 
monitor its own operation of the program and may not be able to 
account for all federal dollars spent on OSP. Additionally, because of 
the weaknesses in its program database, the Trust cannot efficiently 
manage day-to-day operations of the program. 

The weaknesses that we have identified highlight the need for 
sustained oversight and management attention to ensure efficient and 
effective program implementation and accountability over federal 
funds. However, Education has provided the Trust with limited 
assistance in specific areas stated in the MOU and the cooperative 
agreement governing the program. Furthermore, the Trust is unsure 
whether key activities crucial to the successful implementation of the 
program--inspections for compliance with the District's building, 
zoning, health, and safety requirements--are being conducted. Under 
the MOU, the inspections are to be done upon the Trust's notification 
to District agencies, but the Trust is not a signatory to the MOU. 
Moreover, the cooperative agreement between Education and the Trust is 
silent regarding the responsibilities of the Trust on this issue. The 
Trust's limited ability to effectively oversee participating schools 
coupled with the weaknesses in the Trust's internal control 
environment underscore the need for Education to conduct more rigorous 
oversight and monitoring of the Trust. Not only would increased 
oversight help ensure that the Trust is administering the program 
effectively, but it would also help ensure that OSP achieves its 
intended purpose as outlined in the SOAR Act. 

Recommendations for Executive Action: 

To ensure families receive expanded opportunities for school choice 
and OSP is implemented and overseen effectively, we recommend that the 
Secretary of Education take the following actions: 

* Revise the June 2013 cooperative agreement between Education and the 
Trust to include Education's expectations for the Trust regarding 
collaboration with District agencies to ensure they conduct required 
building, zoning, health, and safety inspections. 

* Work with the Mayor of the District of Columbia to revise the 
memorandum of understanding that governs OSP implementation to include 
processes that will help ensure that the results of OSP school 
inspections, when they are conducted, are communicated to the Trust. 

* Explore ways to improve Education's monitoring and oversight of the 
Trust. For example, Education could require the Trust to develop and 
implement a plan for how it will address its timeliness in mandatory 
financial reporting. 

* Conduct activities to ensure that the Trust: 

- publishes the school Directory prior to participating schools' 
application deadlines with more complete information. 

- more closely aligns its scholarship timeframes with schools' 
admissions and enrollment schedules. Education could find ways to 
assist the Trust in executing the OSP lottery earlier in the school 
year, for example, by allowing the Trust to use the prior year's 
income information to make preliminary determinations regarding 
eligibility. 

- improves its OSP database by creating and maintaining documentation 
for the use of the database, adding automated checks to the system, 
creating flags and/or variables for the key priority categories called 
for in the SOAR Act, and streamlining the data entry process for new 
applications in order to ensure there is sufficiently reliable data 
regarding the operation of the program. 

* Require the Trust to update its policies and procedures in several 
key respects, and monitor the Trust's activities to ensure that these 
updates are made. These updates should include: 

- identifying the steps the Trust will take to verify reported 
information on participating schools' compliance with reporting and 
program requirements specified in the SOAR Act. 

- identifying the specific risks that should be included in the 
evaluation performed when assessing participating schools' financial 
sustainability information, including a record of the analyses 
performed, and ensure that the conclusions reached with regard to 
schools' financial sustainability are documented. 

- specifying a process for addressing schools that are noncompliant 
with program requirements. 

- providing more detailed procedures in key areas including 
calculating yearly administrative expenses, and performing monthly and 
year end reconciliations of the OSP bank account, and ensure the 
document reflects current practices and that key decisions associated 
with administrative expenses are documented. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to Education, the Office of the 
Mayor of the District of Columbia (the District), and the DC Children 
and Youth Investment Trust Corporation (the Trust) for comment. 
Education officials provided technical comments, which were 
incorporated into the final report as appropriate. Written comments 
from Education and the Trust are reproduced in appendices V and VI, 
respectively, and are also summarized below. The District did not 
provide written comments on the draft report. In its comments, 
Education did not indicate agreement or disagreement with our 
recommendations. The Trust generally agreed with our recommendations, 
but disagreed with some of the findings. Both Education and the Trust 
provided additional information on issues raised in the report. 

In its letter, Education stated that it took the issues raised in the 
GAO report seriously and would continue to consider them carefully, 
but noted that the report did not fully reflect the Trust's efforts to 
provide complete and timely information about participating schools to 
OSP families. However, in our final report, we discuss a number of 
different ways in which the Trust provides information and assistance 
to current and prospective OSP families, and we believe we adequately 
reflected the Trust's efforts. Education also noted that the report 
does not fully recognize the significant staff turnover in leadership 
at the Trust, which affected several aspects of the Trust's 
implementation of the program in school year 2012-2013. We recognize 
that the Trust faced a number of challenges as it assumed 
responsibility for the program. However, several issues that we 
identified in the report are not new, but rather contribute to long-
standing weaknesses in internal controls and oversight of the program. 
Therefore, we believe that if Education had provided more effective 
oversight of the program and more timely technical assistance to the 
Trust, many of the challenges identified in the report could have been 
addressed sooner. In addition, more effective internal controls, 
including robust policies and procedures for program administration 
and school oversight, could have helped to smooth the difficulties 
associated with the transition in leadership and program 
administration. 

The Trust disagreed with our finding that its Participating School 
Directory provided incomplete and untimely information. More 
specifically, in its comments, the Trust emphasized that this 
condition does not exist under the current management and 
administration of OSP and that the Trust provides information through 
a comprehensive array of tools, events, and individualized assistance. 
We acknowledge the substantial change in staff that occurred at the 
Trust and discuss in our report the number of ways in which the Trust 
provides assistance to families through channels other than the 
Directory. However, the most recent Directory--a key source of school 
information for families--was still published too late and contained 
incomplete information about tuition, fees, and accreditation. 
Education's written comments focus on the Trust making a deliberate 
decision to maintain a reasonably sized, user-friendly directory with 
straightforward information on average tuition and fees and on the 
efforts of the Trust to provide individualized ongoing assistance to 
families and assistance through school placement fairs. We agree that 
the Directory must be prepared for a non-technical audience, but 
continue to believe that for a program predicated on choice, it is 
imperative that the Trust provide families with complete and timely 
information needed to make informed decisions, especially with respect 
to tuition and fees. The Trust could accomplish this without 
overburdening families with excessive information by using a general 
notation for schools that have discounted or different tuition rates, 
as the Trust noted in its written comments, or providing a range of 
the potential total cost of attendance for families. As the Trust 
indicated in its letter, it could also include more accurate notation 
of school-accrediting bodies. We support the Trust's efforts to update 
the Directory for future school years by including more complete 
information for OSP families. 

In addition, in its comments, Education noted that substantial changes 
in the Trust's staff and leadership transition affected the timing of 
the Trust's site visits at participating schools. As we discuss in our 
report, these circumstances resulted in site visits occurring later in 
the year, which in turn affected the timeliness of the Directory's 
publication. We acknowledge that this is not a routine practice of the 
Trust and encourage the Trust to continue to work toward conducting 
these site visits earlier in the school year and publishing the 
Directory earlier. We also support Education's plans to work with the 
Trust to provide the Directory prior to participating schools' 
application deadlines. The plan to publish the Directory by December 
2013 for the 2013-2014 school year, and by November in future school 
years, represents a marked improvement in the timeliness of the school 
directories. However, we maintain that families need to have 
information about schools prior to participating schools' application 
deadlines. We encourage Education and the Trust to consider publishing 
the Directory earlier than November or December to help families start 
making school decisions as early as possible in the scholarship 
application process, ensuring that families have the full range of 
school options available to them. 

In response to GAO's finding regarding the misalignment of scholarship 
awards with participating schools' admissions and enrollment 
schedules, Education expressed concern that an earlier scholarship 
lottery date could, among other things, result in the Trust conducting 
less outreach to potential applicants. We acknowledge the steps that 
Education identified the Trust needs to take prior to the lottery, 
such as screening applications for eligibility, conducting multiple 
rounds of baseline testing, and ensuring that the lottery pool of 
eligible applicants is sufficient so that the evaluation can proceed 
with the necessary sample size. Education stated that the Trust would 
need to submit a proposal to Education if it wanted to use a different 
approach for screening student eligibility, such as using a different 
year's income information, that could help expedite the steps leading 
up to the lottery. We support Education's consideration of any 
proposal to use a different approach that would ultimately enable the 
Trust to award scholarships earlier and ensure that OSP families have 
the widest range of choice possible, and we would encourage the Trust 
to fully consider the issues, and if it deems it appropriate, develop 
such a proposal for Education's consideration. 

The Trust also disagreed with our finding regarding its lack of 
policies and procedures for implementing and overseeing OSP, stating 
that its policies and procedures manual clearly and accurately 
reflects the policies and procedures governing the program. Further, 
the Trust stated that although amendments to the policies and 
procedures regarding allocation of costs and reconciliation were 
codified in August 2013, these policies were in practice prior to that 
date. GAO applauds the Trust's efforts to increase oversight of 
participating schools and update their policies and procedures 
accordingly. Despite the Trust's claims that these policies and 
procedures were already in practice, GAO does not consider these 
policies and procedures fully implemented until these activities take 
place on a regular basis. In addition, the Trust's revised policies 
and procedures do not address all of the weaknesses for which GAO 
recommended action, such as developing a process for addressing 
schools that are noncompliant with program requirements. Education 
commented that the Trust's proposed revisions to the letter of 
agreement with participating schools reserves the Trust's right to 
limit or suspend a school's participation in OSP and that any OSP 
schools that require further discussion about compliance would be 
handled on a case-by-case basis. However, we continue to believe that 
the Trust needs to develop a more clearly defined, comprehensive 
written policy to address schools that are noncompliant. 

With regard to weaknesses GAO identified in the structure of the 
Trust's database, the Trust stated they would take GAO's comments 
under advisement and consider key changes and improvements. The Trust 
stated that the database is proficient in areas such as determining 
student eligibility, student invoicing, school oversight documentation 
tracking, and notation of communication with individual families and 
schools. The Trust also noted that they must use outside spreadsheets 
to complete any reporting on historical information about the program, 
and that automated checks do not exist, but the database does not 
impede data collection or identification of student sub-groups for 
inclusion in the scholarship lottery (referred to in this report as 
"priority categories"). Based on our review, we continue to believe 
that the Trust's ability to determine the third priority category 
described in the SOAR Act--applicants who received an OSP scholarship 
award in a previous year but did not use it--is questionable because, 
according to GAO's analysis, a key variable in the database used to 
determine this priority category is not reliable. 

As agreed 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, the 
Mayor of the District of Columbia, the Executive Director of the 
District of Columbia Children and Youth Investment Trust Corporation, 
and other interested parties. In addition, the report will be 
available at no charge on GAO's web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff should have any 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 VII. 

Sincerely yours, 

Signed by: 

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

[End of section] 

Appendix I: Scope and Methodology: 

We reviewed relevant federal and District laws and regulations and 
analyzed key documents from the DC Children and Youth Investment Trust 
Corporation (Trust), the federal Department of Education (Education), 
and participating schools, as well as generally accepted guiding 
documents for internal controls including those published by GAO and 
the Committee of Sponsoring Organizations of the Treadway Commission 
(COSO).[Footnote 31] We also conducted site visits at 10 of the 53 
participating private schools in the program and interviewed relevant 
school officials. In addition, we conducted two discussion groups--one 
in English and one in Spanish--with parents and guardians of students 
who received and used an Opportunity Scholarship Program (OSP) 
scholarship in the 2012-2013 school year. We also interviewed key 
officials at the Trust, Education, and select agencies in the 
District, as well as representatives of accreditation organizations 
and nonprofit tuition assistance organizations. In addition, we 
analyzed the structure of the Trust's database and the Trust's program 
data. 

We conducted this performance audit from May 2012 to September 2013 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 based on our audit objectives. 

Review of Program Documents: 

To determine the types of information available to families and the 
types of schools participating in OSP, we reviewed the Trust's 
Participating School Directory (the Directory) for school years 2010-
2011, 2011-2012, and 2012-2013. We also reviewed the list of 
participating schools available to families at the beginning of the 
2012-2013 school year and compared it to the Directory when it was 
issued in May 2013 to determine if there were any discrepancies. We 
also examined OSP application materials as well as documents given to 
OSP families at the 10 participating schools we visited. These 
documents included application materials, tuition and fees 
information, and notices sent to families, such as school newsletters 
and notices about safety incidents occurring in and around the school. 

To determine the types of information participating schools submit to 
the Trust, we reviewed schools' Key School Data Forms. These forms 
include information on a school's enrollment, facilities, number of 
days of instruction, curriculum, and services offered and are used by 
the Trust to compile the Directory. We also reviewed schools' Tuition 
and Fees forms to estimate a student's total cost of attendance. Given 
the variation in fees among participating schools, we estimated the 
total cost of attendance using several assumptions, such as full-time 
attendance for one school year for a new OSP student. We also used 
information provided by schools about their admissions requirements 
and deadlines to determine how their application deadlines aligned 
with scholarship award timeframes implemented by the Trust. 

To determine the extent to which the Trust implemented internal 
controls over financial transactions and program administration, we 
reviewed the Trust's financial management policies and procedures. We 
also reviewed the Trust's financial statements, schedule of 
expenditures of federal awards, and independent auditors' reports 
required by government auditing standards and OMB Circular A-133 for 
the year ending September 30, 2010. In addition, we reviewed the 
Trust's administrative expense report and copies of monthly and annual 
bank reconciliations and reviewed relevant federal laws and 
regulations. To determine the roles and responsibilities of the Trust, 
Education, and the District, we examined the grant transfer agreement 
between the Trust, the Washington Scholarship Fund, and Education; the 
memorandum of understanding between Education and the District of 
Columbia Government; and the cooperative agreement between Education 
and the Trust. 

To determine the Trust's assessment of participating schools' 
financial stability, we reviewed fiscal year end 2010-2012 financial 
statements and other documentation submitted by schools, such as 
management letters and reports. We also reviewed forms submitted by 
schools, such as the School Participation Verification Forms, to 
determine the mechanism by which schools attest to the veracity of the 
information they submit. In addition, we reviewed COSO's standards for 
internal controls for non-federal entities. 

Analysis of Program Data from the OSP Database: 

To determine several aspects of the Trust's administration of OSP, we 
requested program data from the Trust, including participating school 
characteristics, OSP student enrollment at participating schools, 
student eligibility determination, scholarship payments, and student 
characteristics, including the priority categories for awarding 
scholarships as stated in the SOAR Act. We received program data from 
the 2004-2005 school year, the first year in which the program was 
administered by the Washington Scholarship Fund, to the 2011-2012 
school year. We assessed the reliability of the data through 
performing electronic testing for obvious errors in accuracy and 
completeness and interviewing agency officials knowledgeable about the 
data. We found substantial problems with the data, including missing 
fields or partially entered applications. As we previously stated in 
this report, the lack of documentation for the database made it 
difficult to understand which fields were current or still in use. As 
a result, we limited the scope of our analyses to data from the 2011-
2012 school year, the most recent and complete year of data available 
at the time of our review. We determined that these data were 
sufficiently reliable for the purposes of our report. 

OSP Student Enrollment: 

The Trust did not have a documented query or process to determine the 
number of OSP students enrolled at each participating school. 
Following the instructions from the Trust's data contractor, we 
initially determined the number of OSP students at each school by 
using variables representing the year, student and school identifiers, 
student school placement, and the number of days the student was 
enrolled. We found, however, that there was an extensive number of 
missing values for several of the key variables needed to complete 
this analysis. As a result, we determined that we could not use this 
method of calculating OSP enrollment. Instead, we calculated OSP 
enrollment by using a count of student identifiers by school and 
payment information.[Footnote 32] We also analyzed OSP student 
enrollment by race and ethnicity to determine the demographic 
characteristics of OSP students enrolled at each participating school. 

Priority Categories for Awarding OSP Scholarships: 

Under the SOAR Act, Education is required to give priority to grantee 
applicants that will most effectively give priority to: 

1. Students who, in the preceding year, attended a public school in 
the District that was identified as a school in need of improvement, 
corrective action, or restructuring under the Elementary and Secondary 
Education Act of 1965, as amended. 

2. Students who previously were awarded a scholarship in a preceding 
year but have not used the scholarship, specifically emphasizing 
students that were awarded a scholarship for the first time in 2009-
2010, when the 216 new scholarships awarded that year were rescinded 
by the Department of Education. 

3. Students that have a sibling participating in OSP. 

To assess the Trust's application of these priority groups for the 
2011-2012 school year, we attempted to replicate the Trust's process 
for determining the number of students in each priority group. Since 
the Trust has not documented these processes, we determined the number 
of students in two of these priority groups--those attending a school 
identified for improvement and those with a sibling in the program--
using detailed queries and clarifications from the Trust's contractor. 
Despite employing several different approaches, our results did not 
corroborate the Trust's results for these two categories. We were 
unable to determine a reliable number of students in the third 
priority group--those who were previously awarded a scholarship but 
had not used it. We found that one of the key variables Trust 
officials use to determine this category was unreliable. As a result, 
we could not use other variables in its place to reliably determine 
the number of students belonging in this group. 

Site Visits to Participating Schools: 

To review aspects of participating schools' compliance with program 
rules and regulations, as well as their admissions and enrollment 
processes, we conducted site visits to 10 participating schools (see 
table 2). During these visits, we interviewed key school officials; 
reviewed documents, including certificates of occupancy, health 
certificates, and teacher credentials; and toured school facilities. 
We also interviewed finance officers at these schools to determine the 
schools' financial stability and the types of financial information 
schools submit to the Trust. 

Site Visit Selection Criteria: 

We selected a nongeneralizable sample of 10 schools to visit based on 
two criteria: (1) the percentage of OSP students enrolled and (2) the 
largest number of OSP students enrolled. Using this approach allowed 
us to visit schools that potentially were almost entirely funded by 
OSP scholarships as well as schools that were receiving the most 
absolute OSP dollars. We used student enrollment data obtained from 
the Trust for the most recent school year available (2011-2012) as 
well as information from the 2011-2012 Directory.[Footnote 33] 

Using these criteria, we determined the sample of 10 schools to visit 
by selecting 5 schools with the highest concentration of OSP students 
relative to the total school enrollment and 5 schools with the highest 
number of OSP students, as shown in table 2. 

Table 2: GAO Site Visit Priorities Based on Student Enrollment 
Criteria, School Year 2011-2012: 

OSP school name: Academia de la Recta Porta International Christian 
Day School[A]; 
OSP students as percentage of enrollment: 108; 
Total OSP enrollment: 54; 
Total school enrollment: 50. 

OSP school name: Academy for Ideal Education; 
OSP students as percentage of enrollment: 93; 
Total OSP enrollment: 67; 
Total school enrollment: 72. 

OSP school name: Preparatory School of DC; 
OSP students as percentage of enrollment: 88; 
Total OSP enrollment: 79; 
Total school enrollment: 90. 

OSP school name: The Bridges Academy; 
OSP students as percentage of enrollment: 86; 
Total OSP enrollment: 98; 
Total school enrollment: 114. 

OSP school name: Roots Activity Learning Center; 
OSP students as percentage of enrollment: 82; 
Total OSP enrollment: 14; 
Total school enrollment: 17. 

OSP school name: Archbishop Carroll High School; 
OSP students as percentage of enrollment: 37; 
Total OSP enrollment: 164; 
Total school enrollment: 449. 

OSP school name: Calvary Christian Academy; 
OSP students as percentage of enrollment: 62; 
Total OSP enrollment: 124; 
Total school enrollment: 201. 

OSP school name: St. Augustine Catholic School; 
OSP students as percentage of enrollment: 49; 
Total OSP enrollment: 102; 
Total school enrollment: 207. 

OSP school name: St. Francis Xavier Catholic School; 
OSP students as percentage of enrollment: 44; 
Total OSP enrollment: 96; 
Total school enrollment: 220. 

OSP school name: St. Thomas More Academy; 
OSP students as percentage of enrollment: 57; 
Total OSP enrollment: 94; 
Total school enrollment: 165. 

Source: GAO analysis of DC Child and Youth Investment Trust 
Corporation program data. 

[A] As we previously explained, given the Trust's lack of a documented 
process for determining OSP enrollment at participating schools, we 
determined the number of OSP students enrolled based on whether the 
student was placed at each school and whether or not a payment was 
made. Based on this approach, the number of OSP students enrolled at 
this school exceeded the number of total students enrolled. 

[End of table] 

In order to develop these criteria, we made multiple requests for 
information from the Trust and made several clarifying inquiries to 
ensure the accuracy of our approach. After we completed this analysis, 
through the course of additional interviews with the Trust, we learned 
there were some additional types of records in the Trust's database 
that we needed to exclude to execute a more exact query for OSP 
enrollment. However, we received this information several months after 
nearly all the site visits were conducted. 

To provide balance, we also spoke with National Presbyterian School 
and Aidan Montessori School--two schools that historically had few or 
zero OSP students enrolled--to determine what factors impact their 
interest and ability to enroll OSP students. We selected these schools 
based on our analysis of the Trust's 2011-2012 data on the number of 
OSP students enrolled at participating schools. 

Discussion Groups with Parents and Guardians of OSP Students: 

To better understand families' experiences with OSP, we conducted two 
semi-structured discussion groups with parents and guardians of 
students who received and used an OSP scholarship in the 2012-2013 
school year. To ensure we had a diverse group of parents, we conducted 
one group in English and one group in Spanish. The Trust recruited 
parents and guardians to participate in these groups by randomly 
selecting 75 to 100 English-speaking and Spanish-speaking parents/ 
guardians. Of these randomly selected parents and guardians, 14 
participated in these discussion groups. Although asking the program 
administrator to recruit participants may result in a biased group of 
participants, the Trust staff knew this population best and could most 
effectively reach out to this group. As a result, the extent to which 
these participants represent all OSP families is unclear, and the 
results of these discussion groups are not generalizable to the entire 
population of OSP families. 

The Trust e-mailed letters written by GAO in both English and Spanish 
to parents explaining the purpose of the discussion groups and 
encouraging their participation. Two discussion groups were held in 
December 2012 and were about 1 to 2 hours in length. To ensure 
participants' privacy, parents and guardians were asked to use 
alternate first names during the discussion. 

In each of the discussion groups, we covered the following topics: 

* reasons why parents were drawn to the OSP; 

* how they found out about the program; 

* the school selection and application process; and: 

* their children's experience at their OSP schools. 

Following the discussion group, we asked participants to provide us 
with some basic background information in a short voluntary 
questionnaire. Thirteen of the 14 participants completed the 
questionnaire, which we provided in both English and Spanish. After we 
conducted the groups, we obtained transcripts of both groups to ensure 
the accuracy of the groups' discussions. For the discussion group 
conducted in Spanish, we obtained a transcript in Spanish as well as a 
translation in English to ensure the accuracy of the translation. 

Interviews: 

We interviewed officials at the Trust to determine how they 
administered OSP, their relationship with Education and the District, 
and their internal control activities. During one of these interviews 
with Trust officials, we conducted a walk-through where Trust staff 
demonstrated how they enter and maintain their database. To better 
understand how the Trust manages its database, we interviewed Trust 
officials and the Trust's contractor, who is responsible for 
maintaining the database. To determine Education's role in OSP and 
their relationship with OSP and the Trust, we interviewed officials at 
Education's Office of Innovation and Improvement and Institute of 
Education Sciences. To understand the scholarship lottery process and 
how OSP is evaluated, we interviewed officials from Education and 
Westat, the contractor responsible for conducting the lottery. To 
understand the relationship between the District, Education, and the 
Trust, and to specifically understand the execution of the MOU, we 
interviewed officials at key agencies in the District, such as the 
Office of Deputy Mayor for Education and the Office of the State 
Superintendent for Education. We also requested and received written 
responses to key questions from certain District agencies, including 
the Department of Health, the Department of Consumer and Regulatory 
Affairs, and the Fire and Emergency Medical Services Department. To 
determine the significance and role of accreditation, we spoke with 
representatives from Middle States Association of Colleges and Schools 
Commissions on Elementary and Secondary Schools, Association of 
Independent Maryland & DC Schools, and AdvancED. We also spoke with 
Independent Education, an association of private independent District-
area schools that requires its member schools to be accredited. To 
better understand the role played by nonprofit organizations that 
provide additional private school tuition assistance, we interviewed 
representatives from the Archdiocese of Washington, Latino Student 
Fund, Capital Partners for Education, and the Jack Kent Cooke 
Foundation's Young Scholars Program. 

[End of section] 

Appendix II: Schools That Agreed to Accept Students in the District's 
Opportunity Scholarship Program in School Years 2010-2011 and 2011-
2012 ("Participating Schools"): 

School name: Academia De La Recta Porta International Christian Day 
School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Academy for Ideal Education; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Adventureland School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Empty]. 

School name: Aidan Montessori School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Annunciation Catholic School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Archbishop Carroll High School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Beauvoir - National Cathedral Elementary School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Bishop John T. Walker School for Boys; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Blessed Sacrament School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: The Bridges Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Calvary Christian Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Capitol Hill Day School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Christian Family Montessori School; 
Agreed to participate in OSP in 2010-2011 school year: [Empty]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Cornerstone School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Dupont Park Adventist School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Edmund Burke School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Emerson Preparatory School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Georgetown Day School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Georgetown Visitation Preparatory School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Gonzaga College High School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Holy Trinity School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Howard University Early Learning Program; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Kingsbury Day School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Kuumba Learning Center (MLK Campus); 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Little Flower Montessori School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Lowell School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Metropolitan Day School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: The Monroe School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Muhammad University of Islam; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Nannie Helen Burroughs School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: National Cathedral School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: National Presbyterian School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Naylor Road School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Our Lady of Victory School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Parkmont School; 
Agreed to participate in OSP in 2010-2011 school year: [Empty]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Preparatory School of DC; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Randall Hyland Private School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Roots Activity Learning Center; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Sacred Heart School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: San Miguel School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Sheridan School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Sidwell Friends School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Albans School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Ann's Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Anselm's Abbey School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Anthony School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Augustine School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Francis Xavier Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. John's College High School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Peter School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: St. Thomas More Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Washington International School; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Washington Jesuit Academy; 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Washington Middle School for Girls (THEARC & Washington 
View Campuses); 
Agreed to participate in OSP in 2010-2011 school year: [Check]; 
Agreed to participate in OSP in 2011-2012 school year: [Check]. 

School name: Total number of participating schools; 
Agreed to participate in OSP in 2010-2011 school year: 52; 
Agreed to participate in OSP in 2011-2012 school year: 53. 

Source: District of Columbia Children and Youth Investment Trust 
Corporation. 

[End of table] 

[End of section] 

Appendix III: Total School and OSP Enrollment, School Year 2011-2012: 

School name: Academia De La Recta Porta Intl Christian Day School; 
Grades served: K-12; 
Total school enrollment: 50; 
Total OSP students: 54. 

School name: Academy for Ideal Education; 
Grades served: K-12; 
Total school enrollment: 72; 
Total OSP students: 67. 

School name: Aidan Montessori School; 
Grades served: PK-6; 
Total school enrollment: 199; 
Total OSP students: 0. 

School name: Annunciation Catholic School; 
Grades served: PK-8; 
Total school enrollment: 139; 
Total OSP students: 34. 

School name: Archbishop Carroll High School; 
Grades served: 9-12; 
Total school enrollment: 449; 
Total OSP students: 164. 

School name: Beauvoir-National Cathedral Elem. School; 
Grades served: PK-3; 
Total school enrollment: 400; 
Total OSP students: 1. 

School name: Bishop John T. Walker School for Boys; 
Grades served: PK-2; 
Total school enrollment: 55; 
Total OSP students: 9. 

School name: Blessed Sacrament School; 
Grades served: K-8; 
Total school enrollment: 516; 
Total OSP students: 9. 

School name: The Bridges Academy; 
Grades served: PK-8; 
Total school enrollment: 114; 
Total OSP students: 98. 

School name: Calvary Christian Academy; 
Grades served: K-8; 
Total school enrollment: 201; 
Total OSP students: 124. 

School name: Capitol Hill Day School; 
Grades served: PK-8; 
Total school enrollment: 212; 
Total OSP students: 2. 

School name: Christian Family Montessori School; 
Grades served: PK-6; 
Total school enrollment: 102; 
Total OSP students: 0. 

School name: Cornerstone School; 
Grades served: PK-10; 
Total school enrollment: 149; 
Total OSP students: 66. 

School name: Dupont Park Adventist School[A]; 
Grades served: PK-10; 
Total school enrollment: 203; 
Total OSP students: 86. 

School name: Edmund Burke School; 
Grades served: 6-12; 
Total school enrollment: 277; 
Total OSP students: 4. 

School name: Emerson Preparatory School; 
Grades served: 9-12; 
Total school enrollment: 43; 
Total OSP students: 15. 

School name: Georgetown Day School; 
Grades served: PK-12; 
Total school enrollment: 1,075; 
Total OSP students: 1. 

School name: Georgetown Visitation Preparatory School; 
Grades served: 9-12; 
Total school enrollment: 490; 
Total OSP students: 4. 

School name: Gonzaga College High School; 
Grades served: 9-12; 
Total school enrollment: 957; 
Total OSP students: 8. 

School name: Holy Trinity School; 
Grades served: PK-8; 
Total school enrollment: 343; 
Total OSP students: 7. 

School name: Howard University Early Learning Program; 
Grades served: PK-K; 
Total school enrollment: 44; 
Total OSP students: 0. 

School name: Kingsbury Day School; 
Grades served: K-12; 
Total school enrollment: 223; 
Total OSP students: 14. 

School name: Kuumba Learning Center (MLK Campus); 
Grades served: PK-8; 
Total school enrollment: 48; 
Total OSP students: 15. 

School name: Little Flower Montessori School; 
Grades served: PK-K; 
Total school enrollment: 20; 
Total OSP students: 0. 

School name: Lowell School; 
Grades served: PK-7; 
Total school enrollment: 300; 
Total OSP students: 1. 

School name: Metropolitan Day School; 
Grades served: PK-5; 
Total school enrollment: 52; 
Total OSP students: 25. 

School name: The Monroe School; 
Grades served: 6-12; 
Total school enrollment: 38; 
Total OSP students: 5. 

School name: Muhammad University of Islam; 
Grades served: K-10; 
Total school enrollment: 53; 
Total OSP students: 22. 

School name: Nannie Helen Burroughs School; 
Grades served: PK-6; 
Total school enrollment: 54; 
Total OSP students: 33. 

School name: National Cathedral School; 
Grades served: 4-12; 
Total school enrollment: 583; 
Total OSP students: 2. 

School name: National Presbyterian School; 
Grades served: PK-6; 
Total school enrollment: 276; 
Total OSP students: 0. 

School name: Naylor Road School; 
Grades served: K-8; 
Total school enrollment: 110; 
Total OSP students: 66. 

School name: Our Lady of Victory School; 
Grades served: PK-8; 
Total school enrollment: 202; 
Total OSP students: 17. 

School name: Parkmont School; 
Grades served: 6-12; 
Total school enrollment: 39; 
Total OSP students: 13. 

School name: Preparatory School of DC; 
Grades served: PK-11; 
Total school enrollment: 90; 
Total OSP students: 79. 

School name: Randall Hyland Private School; 
Grades served: PK-K; 
Total school enrollment: 20; 
Total OSP students: 1. 

School name: Roots Activity Learning Center; 
Grades served: 1-8; 
Total school enrollment: 17; 
Total OSP students: 14. 

School name: Sacred Heart School; 
Grades served: PK-8; 
Total school enrollment: 199; 
Total OSP students: 83. 

School name: San Miguel School; 
Grades served: 6-8; 
Total school enrollment: 61; 
Total OSP students: 21. 

School name: Sheridan School; 
Grades served: K-8; 
Total school enrollment: 228; 
Total OSP students: 1. 

School name: Sidwell Friends School; 
Grades served: PK-12; 
Total school enrollment: 1108; 
Total OSP students: 10. 

School name: St. Albans School; 
Grades served: 4-12; 
Total school enrollment: 578; 
Total OSP students: 5. 

School name: St. Ann's Academy; 
Grades served: PK-8; 
Total school enrollment: 187; 
Total OSP students: 59. 

School name: St. Anselm's Abbey School; 
Grades served: 6-12; 
Total school enrollment: 231; 
Total OSP students: 6. 

School name: St. Anthony School; 
Grades served: PK-8; 
Total school enrollment: 217; 
Total OSP students: 57. 

School name: St. Augustine School; 
Grades served: PK-8; 
Total school enrollment: 207; 
Total OSP students: 102. 

School name: St. Francis Xavier Academy; 
Grades served: PK-8; 
Total school enrollment: 220; 
Total OSP students: 96. 

School name: St. John's College High School; 
Grades served: 9-12; 
Total school enrollment: 1,044; 
Total OSP students: 32. 

School name: St. Peter School; 
Grades served: PK-8; 
Total school enrollment: 227; 
Total OSP students: 9. 

School name: St. Thomas More Academy; 
Grades served: PK-8; 
Total school enrollment: 165; 
Total OSP students: 94. 

School name: Washington International School[B]; 
Grades served: PK-12; 
Total school enrollment: 910; 
Total OSP students: 0. 

School name: Washington Jesuit Academy; 
Grades served: 6-8; 
Total school enrollment: 78; 
Total OSP students: 9. 

School name: Washington Middle School for Girls[C]; 
Grades served: 4-8; 
Total school enrollment: 101; 
Total OSP students: 39. 

Source: GAO analysis of DC Children and Youth Investment Trust 
Corporation program data. 

[A] Dupont Park Adventist School has two campuses: Alabama Ave (grades 
PK-5) and Massachusetts Ave (grades 6-10). 

[B] Washington International School has two campuses: Primary School 
Campus (grades PK-5) and Tregaron Campus (grades 6-12). 

[C] Washington Middle School for Girls has two campuses: THEARC Campus 
(grades 6-8) and Washington View Campus (grades 4-5). 

[End of table] 

[End of section] 

Appendix IV: Internal Control Frameworks: 

Internal control is broadly defined as a process, effected by an 
entity's board of directors, management and other personnel, designed 
to provide reasonable assurance regarding the achievement of 
objectives in the following categories: 

* effectiveness and efficiency of operations, 

* reliability of financial reporting, and: 

* compliance with applicable laws and regulations. 

According to the Committee of Sponsoring Organizations of the Treadway 
Commission (COSO),[Footnote 34] the five components of internal 
control for businesses and other entities are: 

* Control Environment: The control environment sets the tone of an 
organization, influencing the control consciousness of its people. It 
is the foundation for all other components of internal control, 
providing discipline and structure. Control environment factors 
include the integrity, ethical values and competence of the entity's 
people; management's philosophy and operating style; the way 
management assigns authority and responsibility, and organizes and 
develops its people; and the attention and direction provided by the 
board of directors. The control environment has a pervasive influence 
on the way business activities are structured, objectives established 
and risks assessed. It also influences control activities, information 
and communication systems, and monitoring activities. This is true not 
only of their design, but also the way they work day to day. The 
control environment is influenced by the entity's history and culture. 
It influences the control consciousness of its people. Effectively 
controlled entities strive to have competent people, instill an 
enterprise-wide attitude of integrity and control consciousness, and 
set a positive "tone at the top." They establish appropriate policies 
and procedures, often including a written code of conduct, which 
foster shared values and teamwork in pursuit of the entity's 
objectives. 

* Risk Assessment: Every entity faces a variety of risks from external 
and internal sources that must be assessed. A precondition to risk 
assessment is establishment of objectives, linked at different levels 
and internally consistent. Risk assessment is the identification and 
analysis of relevant risks to achievement of the objectives, forming a 
basis for determining how the risks should be managed. Because 
economic, industry, regulatory and operating conditions will continue 
to change, mechanisms are needed to identify and deal with the special 
risks associated with change. All entities, regardless of size, 
structure, nature or industry, encounter risks at all levels within 
their organizations. Risks affect each entity's ability to survive; 
successfully compete within its industry; maintain its financial 
strength and positive public image; and maintain the overall quality 
of its products, services and people. There is no practical way to 
reduce risk to zero. Indeed, the decision to be in business creates 
risk. Management must determine how much risk is to be prudently 
accepted, and strive to maintain risk within these levels. Objective 
setting is a precondition to risk assessment. There must first be 
objectives before management can identify risks to their achievement 
and take necessary actions to manage the risks. Objective setting, 
then, is a key part of the management process. While not an internal 
control component, it is a prerequisite to and enabler of internal 
control. This chapter first discusses objectives, followed by the 
discussion of risks. 

* Control Activities: Control activities are policies and procedures, 
which are the actions of people to implement the policies, to help 
ensure that management directives identified as necessary to address 
risks are carried out. They help ensure that necessary actions are 
taken to address risks to achievement of the entity's objectives. 
Control activities occur throughout the organization, at all levels 
and in all functions. They include a range of activities including 
approvals, authorizations, verifications, reconciliations, reviews of 
operating performance, security of assets and segregation of duties. 
Control activities can be divided into three categories, based on the 
nature of the entity's objectives to which they relate: operations, 
financial reporting, or compliance. Although some controls relate 
solely to one area, there is often overlap. Depending on 
circumstances, a particular control activity could help satisfy entity 
objectives in more than one of the three categories. For example, 
operations controls also can help ensure reliable financial reporting 
and financial reporting controls can serve to effect compliance. 
Although these categories are helpful in discussing internal control, 
the particular category in which a control happens to be placed is not 
as important as the role it plays in achieving a particular activity's 
objectives. 

* Information and Communication: Pertinent information must be 
identified, captured and communicated in a form and time frame that 
enables people to carry out their responsibilities. Information 
systems produce reports, containing operational, financial and 
compliance-related information, that make it possible to run and 
control the business. They deal not only with internally generated 
data, but also information about external events, activities and 
conditions necessary to informed business decision-making and external 
reporting. Effective communication also must occur in a broader sense, 
flowing down, across and up the organization. All personnel must 
receive a clear message from top management that control 
responsibilities must be taken seriously. They must understand their 
own role in the internal control system, as well as how individual 
activities relate to the work of others. They must have a means of 
communicating significant information upstream. There also needs to be 
effective communication with external parties, such as customers, 
suppliers, regulators and shareholders. Every enterprise must capture 
pertinent information, financial and non-financial, relating to 
external as well as internal events and activities. The information 
must be identified by management as relevant to managing the business. 
It must be delivered to people who need it in a form and timeframe 
that enables them to carry out their control and other 
responsibilities. 

* Monitoring: Internal control systems need to be monitored, a process 
that assesses the quality of the system's performance over time. This 
is accomplished through ongoing monitoring activities, separate 
evaluations or a combination of the two. Ongoing monitoring occurs in 
the course of operations. It includes regular management and 
supervisory activities, and other actions personnel take in performing 
their duties. The scope and frequency of separate evaluations will 
depend primarily on an assessment of risks and the effectiveness of 
ongoing monitoring procedures. Internal control deficiencies should be 
reported upstream, with serious matters reported to top management and 
the board. Internal control systems change over time. The way controls 
are applied may evolve. Once-effective procedures can become less 
effective, or perhaps are no longer performed. This can be due to the 
arrival of new personnel, the varying effectiveness of training and 
supervision, time and resource constraints or additional pressures. 
Furthermore, circumstances for which the internal control system 
originally was designed also may change, causing it to be less able to 
warn of the risks brought by new conditions. Accordingly, management 
needs to determine whether the internal control system continues to be 
relevant and able to address new risks. Monitoring ensures that 
internal control continues to operate effectively. This process 
involves assessment by appropriate personnel of the design and 
operation of controls on a suitably timely basis, and the taking of 
necessary actions. It applies to all activities within an 
organization, and sometimes to outside contractors as well. For 
example, with outsourcing of health claims processing to a third-party 
administrator, and such processing directly affects benefits' costs, 
the entity will want to monitor the functioning of the administrator's 
activities and controls. 

GAO Standards for Internal Control[Footnote 35] for federal agencies 
also comprise the five standards of internal control: 

* Control Environment: Management and employees should establish and 
maintain an environment throughout the organization that sets a 
positive and supportive attitude toward internal controls and 
conscientious management. A positive control environment is the 
foundation for all other standards. Several key factors affect the 
control environment including the integrity and ethical values 
maintained and demonstrated by management and staff, management's 
commitment to competence, and philosophy and operating style. In 
addition, the agency's organizational structure and the manner in 
which the agency delegates authority and responsibility throughout the 
organization affect the control environment. Good human capital 
policies and practices are another critical environmental factor. A 
final factor affecting the control environment is the agency's 
relationship with Congress and central oversight agencies such as the 
Office of Management and Budget. Congress mandates the programs that 
agencies undertake and monitors their progress and central agencies 
provide policy and guidance on many different matters. In addition, 
Inspectors General and internal senior management councils can 
contribute to a good overall control environment. 

* Risk Assessment: Internal control should provide for an assessment 
of the risks the agency faces from both external and internal sources. 
A precondition to risk assessment is the establishment of clear, 
consistent agency objectives. Risk assessment is the identification 
and analysis of relevant risks associated with achieving the 
objectives, such as those defined in strategic and annual performance 
plans developed under the Government Performance and Results Act, and 
forming a basis for determining how risks should be managed. 
Management needs to comprehensively identify risks using methods such 
as qualitative and quantitative ranking activities, management 
conferences, forecasting and strategic planning, and consideration of 
findings from audits and other assessments. Once risks have been 
identified, they should be analyzed for their possible effect. Because 
governmental, economic, industry, regulatory, and operating conditions 
continually change, mechanisms should be provided to identify and deal 
with any special risks prompted by such changes. 

* Control Activities: Internal control activities help ensure that 
management's directives are carried out. The control activities should 
be effective and efficient in accomplishing the agency's control 
objectives. Control activities are policies, procedures, techniques, 
and mechanisms that enforce management's directives, such as the 
process of adhering to requirements for budget development and 
execution. They help ensure that actions are taken to address risks. 
Control activities are an integral part of an entity's planning, 
implementing, reviewing, and accountability for stewardship of 
government resources and achieving effective results. Control 
activities occur at all levels and functions of the entity. They 
include a wide range of diverse activities such as approvals, 
authorizations, verifications, reconciliations, performance reviews, 
maintenance of security, and the creation and maintenance of related 
records which provide evidence of execution of these activities as 
well as appropriate documentation. Control activities may be applied 
in a computerized information system environment or though manual 
processes. Activities may be classified by specific control 
objectives, such as ensuring completeness and accuracy of information 
processing. Examples of control activities include top level reviews 
of actual performance, reviews by management at the functional or 
activity level, management of human capital, controls over information 
processing, physical control over vulnerable assets, establishment and 
review of performance measures and indictors, segregation of duties, 
proper execution of transactions and events, accurate and timely 
recording of transactions and events, access restrictions to and 
accountability for resources and records, and appropriate 
documentation of transactions and internal control. 

* Information and Communications: Information should be recorded and 
communicated to management and others within the entity who need it 
and in a form and within a time frame that enables them to carry out 
their internal control and other responsibilities. For an entity to 
run and control its operations, it must have relevant, reliable, and 
timely communications relating to internal as well as external events. 
Information is needed throughout the agency to achieve all of its 
objectives. Program managers need both operational and financial data 
to determine whether they are meeting their agencies' strategic and 
annual performance plans and meeting their goals for accountability 
for effective and efficient use of resources. For example, operating 
information is required for development of financial reports. This 
covers a broad range of data from purchases, subsidies, and other 
transactions to data on fixed assets, inventories, and receivables. 
Operating information is also needed to determine whether the agency 
is achieving its compliance requirements under various laws and 
regulations. Financial information is needed for both external and 
internal uses. It is required to develop financial statements for 
periodic external reporting, and, on a day-to-day basis, to make 
operating decisions, monitor performance, and allocate resources. 
Pertinent information should be identified, captured, and distributed 
in a form and time frame that permits people to perform their duties 
efficiently. Effective communications should occur in a broad sense 
with information flowing down, across, and up the organization. In 
addition to internal communications, management should ensure there 
are adequate means of communicating with, and obtaining information 
from, external stakeholders that may have a significant impact on the 
agency achieving its goals. Moreover, effective information technology 
management is critical to achieving useful, reliable, and continuous 
recording and communication of information. 

* Monitoring: Internal control monitoring should assess the quality of 
performance over time and ensure that the findings of audits and other 
reviews are promptly resolved. Internal control should generally be 
designed to assure that ongoing monitoring occurs in the course of 
normal operations. It is performed continually and is ingrained in the 
agency's operations. It includes regular management and supervisory 
activities, comparisons, reconciliations, and other actions people 
take in performing their duties. Separate evaluations of control can 
also be useful by focusing directly on the controls' effectiveness at 
a specific time. The scope and frequency of separate evaluations 
should depend primarily on the assessment of risks and the 
effectiveness of ongoing monitoring procedures. Separate evaluations 
may take the form of self-assessments as well as review of control 
design and direct testing of internal control. Separate evaluations 
also may be performed by the agency Inspector General or an external 
auditor. Deficiencies found during ongoing monitoring or through 
separate evaluations should be communicated to the individual 
responsible for the function and also to at least one level of 
management above that individual. Serious matters should be reported 
to top management. Monitoring of internal control should include 
policies and procedures for ensuring that the findings of audits and 
other reviews are promptly resolved. Managers are to (1) promptly 
evaluate findings from audits and other reviews, including those 
showing deficiencies and recommendations reported by auditors and 
others who evaluate agencies' operations, (2) determine proper actions 
in response to findings and recommendations from audits and reviews, 
and (3) complete, within established time frames, all actions that 
correct or otherwise resolve the matters brought to management's 
attention. The resolution process begins when audit or other review 
results are reported to management, and is completed only after action 
has been taken that (1) corrects identified deficiencies, (2) produces 
improvements, or (3) demonstrates the findings and recommendations do 
not warrant management action. 

[End of section] 

Appendix V: Comments from the Department of Education: 

United States Department of Education: 
Office of Innovation and Improvement: 
400 Maryland Avenue, SW: 
Washington, DC 20202: 

September 20, 2013: 

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

Dear Mr. Scott: 

Thank you for the opportunity to comment on the draft report entitled. 
"District of Columbia Opportunity Scholarship Program (OSP): Actions 
Needed to Address Weaknesses in Administration and Oversight." 

The Department of Education (the Department) is committed to 
supporting the children of Washington. DC, and their families, through 
efforts to improve public schools for all students, to support those 
students currently enrolled in the OSP, and to provide information to 
families for their decisions about their participation in the OSP. The 
Department continues to work with its grantee, the DC Children and 
Youth Investment Trust Corporation (Trust), through a cooperative
agreement, to ensure effective implementation of the OSP in accordance 
with the SOAR Act. 

In the two years since the SOAR Act was enacted in 2011, the Trust has 
worked diligently to provide for the orderly transition of the OSP 
from the previous authorization of the program to the SOAR Act OSP, in 
accordance with Section 3012 of the SOAR Act. For example, over the
last two years, the Trust conducted significant outreach to OSP 
families, worked directly with hundreds of families on school 
placements, performed all necessary steps to conduct two lotteries, 
and implemented the OSP in an appropriate manner. As you know. the 
Trust was substituted as the OSP grantee when the Washington 
Scholarship Fund (WSF) withdrew as the grantee in 2010. In April 2011, 
Congress passed the SOAR Act, which reauthorized the OSP. Congress 
then directed the Department to award new scholarships for the 2011-
2012 school year. The Trust moved quickly to address the urgent 
additional SOAR Act requirements and enroll new OSP students before 
the end of the summer 2011. Since that time, the Trust has 
administered the program with limited administrative funds and through 
periods of significant turnover in leadership and OSP staffing. 

We take the issues that the Government Accountability Office (GAO) has 
raised in the report very seriously, and we will continue to consider 
them carefully as described below. At the same time. we believe that 
it is important for GAO to effectively present in the report the
circumstances facing the Trust during this transition period; GAO does 
not appear to fully recognize this important context. As such, before 
responding to GAO's specific recommendations, we would like to offer 
some additional general comments about GAO's study of the OSP. 

We believe the draft report does not fully reflect the Trust's efforts 
to provide complete and timely information about participating schools 
to OSP families. The report states that the participating schools 
directory, which is published by the Trust, lacks key information about
tuition, fees, and accreditation. The Trust made a deliberate decision 
to maintain a reasonably sized, user-friendly directory with 
straightforward information on average tuition and fees. In
addition, the Trust provides individualized assistance to families on 
an ongoing basis to help ensure that they have the specific 
information they need about participating OSP schools. For example, 
the Trust provides individualized assistance to families through its 
telephone hotline, electronically, and in person. The Trust also holds 
school placement fairs where school representatives explain each 
school's respective fee and tuition scales to families. We believe
these approaches are appropriate ways to provide information to OSP 
families. 

Even before receiving this draft report, the Department recognized the 
need to modify its oversight of, and to have a closer, more direct 
relationship with, the Trust. For this reason, on June 5, 2013, the 
Department and the Trust executed a cooperative agreement. It sets 
forth the Trust's and the Department's respective responsibilities for 
implementing the OSP, as required by the SOAR Act and the Education 
Department General Administrative Regulations (EDGAR), incorporates by 
reference existing documents governing the ongoing relationship 
between the Department and the Trust, and formalizes a close working 
relationship between the Department and the Trust. We believe this 
cooperative agreement is an important step in ensuring the efficient 
and effective continued implementation of the OSP. 

At the same time, it is the Trust, and not the Department, that 
implements such activities as database functionality, internal 
documentation of policies and procedures, monthly reconciliations of 
its internal bank accounts, and assessment of the risk and financial
sustainability of participating schools. The Department's role is to 
offer technical assistance and advice to help the grantee improve the 
types of processes described above. The Department conducts ongoing 
desk monitoring and periodic site visits to monitor the Trust's 
progress and provides technical assistance to the Trust to address 
issues as necessary. We recognize that the Trust has had some 
challenges during the transition period. We believe that the Trust will
address these matters, and the Department will work with the Trust and 
provide technical assistance as the Trust works to improve these 
processes. For this reason, the Department's Risk Management Service 
will be working with the program office and the Trust on improving such
processes as the Trust's database functionality, internal 
documentation of policies and procedures, monthly reconciliations of 
its internal bank accounts, and assessment of the risk and financial 
sustainability of participating schools. 

Readers of the report should be sensitive to the context when the GAO 
conducted its study. The Trust's leadership and staff transition 
impacted several aspects of the Trust's implementation of the OSP in 
school year 2012-13. For instance, the Trust's site visits for school 
year 2012-13 occurred in February 2013, rather than the late Fall 
2012, because the OSP director did not begin her position until 
December 2012. The timing of the site visits affected the timing of the
publication of the school directory for the year. This timing is not 
the routine practice for the Trust, but rather reflects the impact of 
a specific instance of significant staff turnover on this relatively 
small organization. 

For this upcoming implementation cycle, the Trust plans to publish its 
school directory no later than December 2013. This will give 
applicants for the upcoming school year ample time to use the 
directory to aid with their OSP school choices. Further, the Trust is 
currently updating both its letter of agreement with participating 
schools and its school site visit form to better fulfill the
financial oversight responsibilities recommended by this GAO study. 
The Department is currently reviewing the Trust's proposed revisions 
to the school letter of agreement, which will govern the financial 
accountability responsibilities for participating OSP schools. Once the
school visit form is available for Department review, we will consider 
proposing any needed revisions to address financial compliance issues 
raised in this GAO study. We continue to stand ready to give the Trust 
technical assistance to ensure that it is aware of its financial 
oversight responsibilities for participating OSP schools and to work 
with the Trust to build its capacity in an appropriate and feasible 
manner. 

Comments on Specific Recommendations: 

Revise the June 2013 cooperative agreement between Education and the 
Trust to include Education's expectations for the Trust regarding 
collaboration with District agencies to ensure they conduct required 
building, zoning, health, and safety inspections. 

In developing the cooperative agreement, the Department and the Trust 
identified activities that needed to be included to govern the award, 
prospectively[Footnote 1]. In our work with this program, we will 
continually review the implementation of the cooperative agreement, 
and determine if it should be supplemented. Department staff will 
continue to work with the Trust to ensure that the Trust is aware of 
its responsibilities for collaboration with District agencies. 

Work with the Mayor of the District of Columbia (District) to revise 
the memorandum of understanding (MOU) that governs OSP implementation 
to include processes that will help ensure that the results of the OSP 
school inspections, when they are conducted, are communicated to the 
Trust. 

To date, the Trust has implemented the OSP in accordance with the SOAR 
Act, EDGAR, and the cooperative agreement. The inspections in the MOU 
describe the process by which the District is notified of the need for 
inspections. The Trust is now fully informed of its responsibility to
notify the District, and is aware that the next step is to define the 
process by which it will communicate with the District. Department 
staff will continue to work with the Trust and the District to ensure 
that the Trust and the District are aware of their responsibilities for
collaboration, and we will continually review the implementation of 
the cooperative agreement, and determine if it should be supplemented. 

The Department is committed to providing technical assistance to the 
Trust while it explores ways to improve the process of inspection 
notification to the District. Initially, we plan to suggest that at 
the beginning of every school year, the Trust send the District a list 
of every participating OSP school for the District to use when 
scheduling its inspections. 

Explore ways to improve its monitoring and oversight of the Trust. For 
example, Education could require the Trust to develop and implement a 
plan for how it will address its timeliness in mandatory financial 
reporting. 

Currently, the Department conducts regular, ongoing desk monitoring of 
the Trust. The ongoing activities of this grant's program officer are 
focused on regular communication with the Trust. These activities 
include e-mail and telephone communication with the project director 
to answer questions, resolve issues, ensure compliance, and share 
information. Additionally, the Department conducts scheduled monthly 
performance update calls to discuss progress with outreach to 
prospective OSP families, eligibility screening, and effective 
implementation of the cooperative agreement. 

Also, the Department provides extensive technical assistance to the 
Trust when we uncover problems or issues, and we take timely 
corrective action. As a control to check the accuracy of
implementation of the OSP, the Department has developed specific site 
visit questions and related procedures, and the Department plans to 
implement the site visit procedures on a semi-annual basis. Further, 
the Department's OSP program officer will participate in periodic school
site visits with the Trust. As stated in the cooperative agreement, 
the Trust is required to conduct annual school site visits and use the 
Trust's approved school site visit form. The Trust's school site visit 
form is currently under revision to increase financial oversight. 

The cooperative agreement incorporates all applicable EDGAR 
requirements by way of reference; therefore, the Trust must adhere to 
the financial reporting guidance provided in EDGAR. In response to 
GAO's specific example, the Trust's 2010 and 2011 audit reports are
complete and now available for review. Our understanding is that the 
2012 audit report will be complete by the end of September 2013. The 
Trust has given us no indication that its upcoming audits will be 
untimely. 

Conduct activities tho ensure that the Trust publishes the school 
directory prior to participating schools' application deadlines with 
more complete information. 

For the upcoming 2014-15 school year, the Department plans to work 
with the Trust to update the school directory language in the 
cooperative agreement to include a mutually agreed upon time for the 
directory to be published. This time frame should occur around the 
time when applications become available to parents in the late fall od 
2013. The Department requires the Trust to publish a school directory 
to inform parental decision-making regarding the OSP. The language 
used in the cooperative agreement requires the Trust to create a 
school profile directory to be available for parent information and 
ensure that this directory includes accurate information that is 
provided to parents before a school is chosen. The information 
available for parents must include at a minimum summary achievement 
data for the students enrolled at the school, teacher qualifications 
and tuition levels. All participating schools should make this 
information available on an annual basis to parents of enrolled OSP 
students. 

The Trust has provided a school directory available for parent usage. 
In addition, the Trust provides ongoing, extensive technical 
assistance to parents by communicating with schools on parents' behalf 
and ensuring that parents are able to contact schools with any 
specific admissions questions. The delay in issuing the 2012-13 school 
year directory was due to staff turnover and the delayed site visits 
that occurred at the Trust that year. Going forward, the Department 
will work with the Trust to provide a directory prior to participating 
schools' application deadline. This upcoming school year's directory 
is expected to be available by December 2013 and future years' 
directories are expected to be available by November of the proceeding 
school year. 

In terms of including more complete information in the directory, the 
Department will discuss ways for the Trust to explain to parents that 
the school has varying tuition and fees and that parents should 
contact either the Trust or the school for further information. 
Decisions regarding the inclusion of additional data or information in 
the directory must be balanced with the impact on its size and 
usability for parents. The Department and the Trust believe that 
parents benefit more from clear and succinct guidance in key areas 
than from an encyclopedic description of school policies guiding 
tuition and fees. More detailed information is available to parents
through school placement fairs as well as individualized support from 
the Trust and its staff, as described above. 

Conduct activities to ensure the Trust more closely aligns its 
scholarship timelines with schools' admissions and enrollment 
schedules. Education could find ways to assist the Trust in executing
the OSP lottery earlier in the school year, for example, by allowing 
the Trust to use the prior year's income information to make 
preliminary determinations regarding eligibility. 

The lottery date is determined by the Trust in consultation with the 
Department and is derived by using other milestones' timelines to 
determine its date. Moving up the lottery date significantly could 
mean that the Trust either conducts less outreach to potential 
applicants, provides less time and assistance to families in 
completing applications, or does less due diligence on eligibility
determinations. In addition, many potentially eligible families do not 
begin thinking about their children's school options, and therefore 
about applying to the OSP, until after January and into the spring. 
Holding the lottery earlier than late spring would likely reduce the 
number of eligible applicants. 

For school year 2013-14, the Trust informed the Department through its 
implementation timeline that May 24, 2013, would be the earliest that 
it could schedule the lottery. The lottery date was planned in early 
fall of 2012 when the Trust submitted its implementation timeline to 
the Department. Prior to the lottery, the Trust must first conduct 
extensive outreach, screen all applications for eligibility, and 
conduct multiple rounds of baseline testing before it submits the
applicant file to the Institute of Education Sciences' contractor 
(Westat). 

The contractor then needs up to two weeks to check the data and the 
lottery programming. The Department is committed to working with the 
Trust to explore ways to expedite the steps leading up to the lottery, 
but cannot ensure that the Trust will more closely align its 
scholarship timelines to schools' admissions timelines. Further, the 
Department is committed to ensuring that the lottery pool of eligible 
applicants is sufficient so that the evaluation can proceed with the
necessary sample size; our priority, therefore, is to maximize the 
time for outreach to new families. 

In response to GAO's example, please note that, as explained 
previously, when the Trust was substituted as the OSP grantee it 
continued to implement WSF's approved 2009 OSP grant application. The 
2009 application--which is incorporated by reference into the 
cooperative agreement--proposed to use the most recent completed tax 
year to determine income eligibility rather than earlier tax years 
(see, for example, forms from the application seeking 2008 tax year
data for the 2009-10 scholarship period beginning on page 137). If the 
Trust wants the Department to consider a change to this approach and 
use a different year's income for the purpose of making preliminary 
determinations regarding students' eligibility, it would have to
submit its proposal to the Department with an explanation, and we 
would evaluate the effect of such a change on the project and the 
requirements of the program. Further, the Trust would have to include 
its control mechanisms to ensure that families whose income exceeded 
the threshold in the current year would be notified of their income 
ineligibility prior to being awarded an OSP scholarship. 

Conduct activities to ensure that the Trust improves its OSP database 
by creating and maintaining documentation for the use of the database, 
adding automated checks to the system, creating flags and/or variables 
for the key priority categories called for in the SOAR Act, and 
streamlining the data entry process for new applications in order to 
ensure there is sufficiently reliable data regarding the operation of 
the program. 

The Trust has previously shared that it is aware of some of its OSP 
database challenges. The Trust is currently working to improve many of 
the database features that should improve the database functionality. 
The Department will ask for periodic status updates on the database
through an addition to the cooperative agreement. Further, beginning 
in 20l2 when its contract was awarded, Westat has conducted some 
checks on the OSP database for applicants eligible for the lottery. 
West at checks for duplicate entries, anomalies in key variables, 
missing data, data out of reasonable range, and students entered 
erroneously who have already received payments. Westat will continue 
this monitoring throughout its contract. Finally, in regard to GAO's
assessment that backlogs in the Trust's data entry of the application 
forms led to delays in Westat's first evaluation report, the 
Department reiterates that the problem was not the timeliness
of the data entry but a misunderstanding about whether data items that 
are used only for the evaluation would be entered by the Trust. This 
issue has been resolved. 

Require the Trust to Update its Policies and Procedures in Several Key 
Respects: 

Identifying the steps the Trust will take to verify reported 
information in participating schools' compliance with reporting and 
program requirements specified in the SOAR Act. 

The cooperative agreement currently contains language stating the 
following: "Require participating schools to sign the letter of 
agreement... Conduct annual school site visits and use the Trust's 
approved School Site Visit Form to conduct the review. The site visit 
repOt1S should contain information on the overall financial stability 
of the schools." 

In addition, the Trust's current letter of agreement between OSP 
schools and the Trust includes language that requires schools to 
provide sufficient documentation to verify that the school is:
financially responsible and will use scholarship funds effectively; 
has financial systems, controls, policies, and procedures to ensure 
that scholarship funds are used for the education of OSP participants; 
has adequate financial resources reflecting the financial 
sustainability of the school; and ensures that each teacher who 
teaches core academic subjects to OSP participants has a baccalaureate 
degree or equivalent degree. Further, the Department is currently 
reviewing the Trust's proposed revisions to the letter of agreement 
that include language requiring all OSP schools to: provide immediate 
notification of any bankruptcy, civil or criminal actions or
investigations filed against the school; and provide immediate 
notification of any levies or liens filed against the school's 
property. Further, the Trust is proposing to require all schools that 
are members of an umbrella organization to provide audits and all 
fiscal year-end financial statements for the individual OSP school. 

In previous conversations, the Trust has shared that it will review 
fiscal programmatic documentation relative to the utilization of OSP 
funds while on school site visits. Previously, the Trust was allowing 
schools to self-report this information. The updated school site visit 
reports will be revised to address the financial documentation review 
process. Given the Trust's proposed updated policies and procedures 
that are currently being reviewed by the Department prior to 
implementation, it is not apparent to us that the Department should 
require the Trust to make further updates at this time. Once the 
updated school site visit form is available for review, the Department 
will further address these concerns. 

Identifying the specific risks that should be included in the 
evaluation performed when assessing participating schools financial 
sustainability information, including a record of the analyses
performed and ensure that the conclusions reached with regard to 
schools financial sustainability are documented. 

The Trust's letter of agreement between OSP schools and the Trust 
requires that schools provide sufficient documentation to permit the 
Trust to make an informed judgment as to whether there is proof of 
adequate financial resources reflecting the financial sustainability 
of the school and the school's ability to continue operations through 
the end of the school year. The Department will review the Trust's 
approach to risk analysis once it receives the updated school site visit
form. 

As discussed above, the Trust is in the process of updating its school 
site visit form, and the Department plans to use this as one vehicle 
for working with the Trust to strengthen its risk assessment 
responsibilities with regard to OSP schools. The Department will work 
with the Trust to update its school site visit report and help ensure 
that the Trust is carrying out its responsibilities appropriately. 

Specifying a process for addressing schools that are not compliant 
with program requirements. 

The most recent proposed revisions to the letter of agreement between 
OSP schools and the Trust reserves the Trust's right to limit and/or 
suspend a school's participation in the OSP. Any OSP schools that 
require a further compliance discussion will be handled on a case-by-
case basis. 

Providing more detailed procedures in key areas including calculating 
yearly administrative expenses, and performing monthly and year end 
reconciliations of the OSP bank account, and ensure the document 
reflects current practices and that key decisions associated with the 
administrative expenses are documented. 

The cooperative agreement currently requires the Trust to: "Use funds 
authorized under Section 3007 of the SOAR Act for expenses that are 
reasonable and necessary to effectively implement the Program, 
consistent with EDGAR. In particular, the Trust will: 

* Ensure that the administrative expenses do not exceed the 3% 
statutory limitation for general administrative expenses in accordance 
with Section 3007(b) of the SOAR Act; 

* Ensure that the expenses related to assisting parents to participate 
in the Program do not exceed the 2% statutory limitation in accordance 
with Section 3007(c) of the SOAR Act; 

* Seek prior approval from ED to use up to 1% of the funds for student 
academic assistance under Section 3007(d) of the SOAR Act; and 

* Seek prior approval before transferring money between budget 
categories. 

Further, the Department required that all administrative expenses 
associated with the 2011 orderly transition were documented, and 
required the Trust to submit receipts for all expenses
incurred. Overall, the Department requires that administrative 
expenses are documented through the Annual Reporting Form 524(B) and 
requires that this reflect a grantee's current practices. Given the 
procedures that the Department currently employs and the additional 
administrative expense language in the cooperative agreement, the 
Department will hold discussions with the Trust about the options for 
implementing processes to further ensure that the Trust calculates 
yearly administrative expenses correctly and documents this for its 
own records. If necessary, the Department will update the cooperative 
agreement with more detailed procedures. 

Thank you for the opportunity to provide a written response to the 
draft report. We strongly encourage GAO to consider the information 
provided in this response when preparing the final report. As 
indicated, we will use the information in this report to continue to 
improve the Department's oversight to help ensure the success of the 
program, along with helping to ensure the oversight of the Trust and 
its coordination with the D.C. Deputy Mayor's Office. 

Sincerely, 

Signed by: 

Nadya Chmoy Dabby: 
Acting Assistant Deputy Secretary for Innovation and Improvement: 

Footnote: 

[1] The cooperative agreement between the Department and the Trust 
incorporates by reference previously existing documents governing the 
ongoing relationship between the Department and the Trust, including
WSF's May 26, 2009, approved application and the agreement 
transferring the administration of the OSP to the Trust. Section B.4 
of the cooperative agreement indicates that the Trust will notify the 
District of Columbia when new schools are added to the program. The 
responsibilities of the District of Columbia that are referenced in 
the memorandum of Understanding (MOU), and that are triggered "upon
notification by the grantee," had been met for schools already 
participating in the program. Thus, these issues were not reiterated 
specifically in the cooperative agreement. We also note that before a 
school is added to the OSP program, it is required to demonstrate to 
the Trust that it has already met these building, zoning, health, and 
safety requirements. 

[End of section] 

Appendix VI: Comments from the District of Columbia Children and Youth 
Investment Trust Corporation: 

DC Children and Youth: 
Investment Trust Corporation: 
1400 16th Street, NW Suite 500: 
Washington, DC 20036: 
202-347-4441: 
fax: 202-347-3256: 
[hyperlink, http://www.cyitc.org] 

September 20,2013: 

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

Dear Mr. Scott: 

Thank you for permitting the DC Children and Youth Investment Trust 
Corporation (the Trust) the opportunity to comment on the Government 
Accountability Office (the GAO) draft report entitled "District of 
Columbia Opportunity Scholarship Program: Actions Needed to Address 
Weaknesses in Administration and Oversight." The Trust values
evaluation as an important tool to further enhance implementation of 
programs, and looks forward to improving systems in key areas outlined 
in the GAO report. 

We feel it is important to note that the GAO's audit covers a period 
of time prior to program administration by the current Trust 
leadership which assumed responsibility for OSP in December 2012, 
after the previous application cycle already began. Since the 
conclusion of the previous application cycle in May 2013, the current 
leadership already began to assess and enhance OSP administrative 
policies and procedures, which has been done with all other programs 
within the organization. 

We offer the following information in response to the report findings: 

I. The Trust's Response to the GAO Report's notation of Weaknesses in
Administration and Oversight: 

1. The Trust Provides Information to Families through Many Channels, 
but Its Participating Schools Directory Provides Incomplete and 
Untimely Information. 

We disagree. Although this finding addresses the timeliness of 
updating the OSP Participating School Directory, this condition does 
not exist under the current management and administration of the OSP. 
Furthermore, the Trust provides information to families through a 
comprehensive array of tools, events and individualized ongoing 
assistance via direct phone outreach to parents/guardians. 
Specifically, OSP provides the Participating Schools Directory, the 
list of participating schools, the OSP Using Your Opportunity
Scholarship Family Guide, the Admissions Information Guide, the annual 
fall family orientation, and the annual fall event for families with 
students transitioning to middle and high school to assist families in 
the school search process (print resources are provided in English and 
in Spanish and are mailed to each family, also, the Directory and the 
list of participating schools is made available via the OSP website). 

The Participating Schools Directory provides basic school information 
to families. The school profiles section gives an overview of each 
school, including tuition ranges and program and facility offerings. 
In the opening message, families are strongly encouraged to seek 
additional information before applying to school, by visiting school 
websites, attending open houses and tours, and contacting admissions 
staff directly, and are encouraged to check with the schools for the 
most current information. With annual directory updates, The Trust 
will present this message more frequently throughout the document to 
ensure families use it as one--not the only, tool to assist them, and 
will implement a more timely release of the Participating Schools 
Directory by publishing the directory by December of the current 
school year. This update will include more accurate notation of school-
accrediting bodies and a general notation about discounts and/or
additional fees to assist families as they inquire of, and work with, 
schools to determine total school costs. Detailed information on using 
the scholarship, determining fees, and which fees are covered by the 
scholarship or may be the parent/guardian's responsibility is
provided at the annual family orientation to ensure families are made 
fully aware of the importance of working with their student(s)'s 
school to determine total fees. 

2. The Timeframes for Awarding Scholarships Do Not Align With Many 
Schools' Admissions and Enrollment Schedules: 

We Agree. Previous application and eligibility cycles hindered 
families' ability to select a participating school before most 
schools' available slots were filled and financial aid dollars were 
expended. The Trust has worked diligently to adjust the timing of the 
cycle, namely moving from a July lottery date in 2012, to a May 
lottery date in 2013. Families are encouraged, throughout the 
application/renewal intake cycle, to look for a participating
school early in the process to allow for school-specific application 
and admissions decisions timelines. Additionally, OSP communicates 
directly with participating schools to gather data on specific grade 
openings in order to convey that information to families. 

Additionally, while a spring lottery date does not meet the admissions 
timelines of every participating school, it does meet the timelines of 
many. Please see detail here indicating that 25 schools have a 
deadline in or after May, enabling a new awardee family to apply to
those schools prior to admissions deadlines. 

Table: Overview of Participating Schools' Admissions Deadlines*: 

December deadline: 
For SY 2013-14: 5. 

January/February deadline 
For SY 2013-14: 16. 

March deadline: 
For SY 2013-14: 0. 

April deadline: 
For SY 2013-14: 2. 

May/June/July/August/September deadline: 
For SY 2013-14: 4. 

Rolling admissions: 
For SY 2013-14: 21. 

* data excludes schools that serve preschool through Kindergarten only. 

[End of table] 

Please also note that renewing families were notified in March 2013 of 
their scholarship renewal award, enabling them to re-enroll at their 
current school, or enroll at a different participating school, 
starting in March. For schools with December, January or February
deadlines, OSP has encouraged schools to consider OSP students, 
resulting in several OSP students being enrolled, however, the high 
cost of tuition in select schools (well above the scholarship award 
cap), is the primary variable in family and school decisions, not 
timing, as indicated by the report findings. 

3. The Trust Has Not Developed Effective Policies and Procedures for 
Implementing and Overseeing the Program: 

We Disagree. The Trust's current management has engaged in an 
exhaustive and comprehensive review of the policies and procedures 
that govern every aspect of the OSP program in its continual efforts 
to provide increased efficiency, stronger administrative oversight, 
continual risk assessment and increased internal control monitoring to 
ensure greater accountability and program participation. 

To that end, the Trust's OSP Policies and Procedures Manual clearly 
and accurately reflect the policies and procedures governing the 
program including but not limited to program eligibility, school 
participation, and scholarship payments. In addition, the Letter of
Agreement between schools and the Trust further underscores and 
outlines the requisite oversight elements. Furthermore, the Trust's 
Finance & Operations Policies and Procedures Manual buttresses the 
program's efforts to ensure fiscal integrity and accountability as well
as the effective monitoring of each participating school's 
sustainability on an annual basis. 

Regarding School Oversight and Program Implementation specifically, 
the Trust will verify school documentation in addition to the schools' 
self-attestation. In the 2013-14 school year, the Trust will request 
OSSE's assistance in verifying private school accreditation. The Trust 
also will conduct sample audits of required documents during each 
school's site visit. The Trust is currently enhancing the site visit 
tool. 

Amendments to the Trust Policies and Procedures regarding Allocation 
of Costs and Reconciliation of Monthly OSP Accounts were codified in 
August 2013, however, internal policy, practice and adherence to set 
procedures were in place prior to that date. 

4. The Trust's Database is Not Efficiently Structured: 

The database is proficient in the areas of student eligibility, 
student invoicing, school oversight documentation tracking and 
notation of communications with individual families and with schools. 
Elements of historical data reporting require OSP staff to utilize
supplemental spreadsheets for complete reporting and automated checks 
do not currently exist, however, the database enables different levels 
of permissions access which limit errors in data manipulation access 
and capability, and enables identification of key priorities of the 
program which does not impede data collection or identification of 
student sub-groups for inclusion in the scholarship lottery. The Trust 
will take GAO comments under advisement regarding the structure of the 
database to consider key changes and improvements of the current 
database to better serve OSP program needs. 

5. The Trust Has Not Filed Its Mandatory Financial Reports On Time: 

We Agree. The Trust acknowledges that mandated annual A-133 for fiscal 
years ending 2010,2011 and 2012 respectively were not completed within 
the regulatory 90-day period following the close out of the fiscal 
year. The Trust further acknowledges that the delay in completing its 
annual audits is not an indication of a lack of internal controls, but 
reflects significant changes in program management and organizational 
leadership in a relatively short timeframe. 

The Trust's current management has engaged in aggressive efforts to 
complete the requisite audits and has in fact completed and provided 
to the Department of Education the A-133 audits for fiscal years 
ending 2010 and 2011. Further, the Trust anticipates providing the 
Department or Education with the final audit for fiscal year ending 
2012 on or before September 30, 2013. 

The Trust's management has implemented policies and procedures to 
ensure that the requisite audits are completed and provided to the 
Department of Education within the mandated timeframe. 

II. The Trust's Response to the GAO's Recommendations for Executive 
Action: 

The Trust looks forward to working with the Department of Education to 
improve the program in the following areas: 

1. Publish the school directory with more complete information prior 
to participating schools' application deadlines. 

2. More closely align its scholarship timelines with schools' 
admissions and enrollment schedules. 

3. Improve the OSP database by creating and maintaining documentation, 
adding automated checks, creating flags and/or variables for priority 
categories, and streamlining the data entry process. 

4. Identify steps needed to verify reported information on 
participating schools' compliance with reporting and program 
requirements. 

5. Identify the specific risks to be included when assessing 
participating schools' financial sustainability information. 

6. Specify a process for addressing schools that are noncompliant with 
program requirements. 

7. Provide more detailed procedures to include calculating yearly 
administrative expenses, performing monthly and year end 
reconciliations of the OSP bank account, and ensure procedures reflect 
current practice and associated key decisions are documented. 

Again, the Trust appreciates the opportunity to respond to the GAO 
report, and we welcome questions and comments regarding our response. 
Thank you, 

Sincerely, 

Signed by: 

Ed Davies: 
Executive Director, DC Children and Youth Investment Trust Corporation: 

[End of section] 

Appendix VII: Contact and Staff Acknowledgments: 

GAO Contact: 

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

Staff Acknowledgments: 

In addition to the contact named above, Gretta L. Goodwin, Assistant 
Director; Jamila Jones Kennedy; Grace Cho; and Michelle Loutoo Wilson 
made significant contributions to this report. In addition, key 
support was provided by Carl Barden, Hiwotte Amare, Kimberly McGatlin, 
David Chrisinger, Maria C. Belaval, Mimi Nguyen, Melinda Cordero, John 
Lopez, Helina Wong, Ramon Rodriguez, Alexander Galuten, Jean McSween, 
James Rebbe, Edward Bodine, Aron Szapiro, and Kristy Kennedy. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 108-199, Div. C, Title III, 118 Stat. 3, 127 (2004). 

[2] Pub. L. No. 112-10, Div. C, 125 Stat. 38, 199 (2011). The Act 
states that the reauthorization of OSP is part of a 3-part funding 
arrangement for the District's public, charter, and private schools. 
Congress reported that the intent of this approach is to ensure that 
progress would continue to be made to improve public schools in the 
District and that resources would be available for a variety of 
educational options for District families. Id., § 3002. 

[3] GAO, District of Columbia Opportunity Scholarship Program: 
Additional Policies and Procedures Would Improve Internal Controls and 
Program Operations, [hyperlink, http://www.gao.gov/products/GAO-08-9] 
(Washington, D.C.: Nov. 1, 2007). 

[4] That is, information about a school's accreditation status, 
credentials held by teachers, and the financial stability for schools. 

[5] 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 Committee of Sponsoring 
Organizations of the Treadway Commission, Internal Control--Integrated 
Framework (1992). We used the COSO standards to assess the Trust's 
internal controls because the COSO framework applies to non-profit 
entities. 

[6] Pub. L. No. 108-196, Div. C, Title III, §§ 304, 307, 118 Stat. 3, 
127, 129 (2004). Appropriations for the program were authorized 
through fiscal year 2008. 

[7] Pub. L. No. 112-10, Div. C, 125 Stat. 38, 199 (2011). Although the 
program was not reauthorized until April 2011, Congress provided 
appropriations for the program in the Omnibus Appropriations Act, 
2009, Pub. L. No. 111-8, 123 Stat. 524, 653, and the Consolidated 
Appropriations Act, 2010, Pub. L. No. 111-117, 123 Stat. 3034, 3181. 

[8] Pub. L. No. 112-10, § 3007(a)(4), 125 Stat. 38, 203. 

[9] Id., § 3007(a)(4). 

[10] Established in 1999 by a charter from the District of Columbia, 
the DC Children and Youth Investment Trust Corporation partners with 
public schools, city agencies, and for-profit and nonprofit entities, 
to provide grants, technical assistance, youth training, and other 
support for children and youth in the District of Columbia. 

[11] The Trust is not a party to the MOU, nor is it identified by name 
in the MOU. Instead, the MOU refers to the OSP grantee. However, for 
ease of reference, in this report, we refer to the MOU as though it 
does specifically identify the Trust as the OSP grantee. 

[12] Pub. L. No. 112-10, § 3009(d). Under the SOAR Act, Education's 
Institute of Education Sciences has been tasked with the annual 
evaluation of the performance of students who received program 
scholarships. These evaluations are required to include a comparison 
of academic growth and achievement between students who received 
program scholarships and eligible students who applied but did not 
receive scholarships and a comparison of retention, high school 
graduation, and college admission rates of participating students and 
those who did not participate. Id., § 3009(a)(3). However, we do not 
discuss the program evaluation within the scope of this report because 
our focus was on the Trust's administration of the program. 

[13] Pub. L. No. 112-10, § 3007(b). 

[14] Id., § 3007(c). 

[15] Id., § 3007(d). 

[16] The law allows for scholarship amounts to be adjusted for 
inflation beginning in school year 2012-2013. As a result, the maximum 
scholarship amounts for the 2012-2013 school year were $8,256 for 
grades K-8 and $12,385 for grades 9-12. Under the D.C. School Choice 
Incentive Act of 2003, the scholarship amount for all students was 
$7,500. 

[17] Expenses not covered by the program may include parent 
participation and/or fundraising fees, select uniform items such as 
undergarments or sneakers, basic school supplies, personal 
transportation, or other items not related to academic success. 

[18] This threshold is increased to 300 percent of the federal poverty 
threshold for continuing students. The higher income limit for 
continuing students may remove any program disincentives for families 
who are able to increase their incomes. 

[19] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[20] Committee of Sponsoring Organizations of the Treadway Commission, 
Internal Control--Integrated Framework (1992). COSO was formed in 1985 
to sponsor the National Commission on Fraudulent Financial Reporting, 
an independent, private-sector initiative that studied the causal 
factors that can lead to fraudulent financial reporting and developed 
recommendations for public companies and their independent auditors; 
the U.S. Securities and Exchange Commission and other regulators; and 
educational institutions. In 1992, COSO issued Internal Control--
Integrated Framework to help businesses and other entities assess and 
enhance their internal control. Since that time, COSO's internal 
control framework has been recognized by regulatory standards setters 
and others as a comprehensive framework for evaluating internal 
control, including internal control over financial reporting. 

[21] Amharic is a language spoken in Ethiopia. 

[22] We visited schools that had the highest concentration and 
enrollment of OSP students in the 2011-2012 school year. See appendix 
I for additional details about the selection of these schools. 

[23] These schools generally have tuition levels that far exceed the 
OSP scholarship limit, but they also have the capacity to finance the 
remainder of the student's cost of attendance through their own 
financial aid programs, which can include grants and scholarships. 

[24] Committee of Sponsoring Organizations of the Treadway Commission, 
Internal Control--Integrated Framework (1992). COSO was formed in 1985 
to sponsor the National Commission on Fraudulent Financial Reporting, 
an independent, private-sector initiative that studied the causal 
factors that can lead to fraudulent financial reporting and developed 
recommendations for public companies and their independent auditors; 
the U.S. Securities and Exchange Commission and other regulators; and 
educational institutions. In 1992, COSO issued Internal Control--
Integrated Framework to help businesses and other entities assess and 
enhance their internal control. Since that time, COSO's internal 
control framework has been recognized by regulatory standards setters 
and others as a comprehensive framework for evaluating internal 
control, including internal control over financial reporting. In May 
2013, COSO issued an updated Internal Control--Integrated Framework. 

[25] In August 2013, the Trust made amendments to the policies and 
procedures manual regarding the financial review performed on schools, 
administrative expenses, and bank reconciliations. However, these 
amendments do not address all weaknesses identified in this report, 
and they have not yet been fully implemented. 

[26] According to the Trust's policies and procedures, the finance 
resource documentation submitted by schools is used by the Trust's 
administrator to make an informed judgment as to whether there is 
proof of adequate financial resources reflecting the financial 
sustainability of the school, in addition to the school's ability to 
be in operation throughout the school year. The Controller reviews 
documents submitted by the school. Documents accepted for finance 
resources include audited financial statements, financial statements 
accompanied by a letter from a Certified Public Accountant, letter 
signed by a Certified Public Accountant indicating the school is 
operating according to generally accepted accounting principles, or 
other documentation. 

[27] In August 2013, the Trust made amendments to its policies and 
procedures manual regarding the financial review performed on schools, 
administrative expenses, and bank reconciliations. However, these 
amendments do not address all weaknesses identified in this report, 
and they have not yet been fully implemented. 

[28] Due to the transfer of the OSP grant to the Trust in May 2010, 
the fiscal year 2010 draw-down would only reflect administrative 
expenses incurred for OSP administration from May 2010 through 
September 2010. 

[29] In their written comments on a draft of this report in September 
2013, the Trust and Education officials stated that the Trust had 
submitted its fiscal year 2011 mandatory financial reports. 

[30] As noted previously, the Trust is not a party to the MOU, nor is 
it identified by name in the MOU. Instead, the MOU refers to the OSP 
grantee. However, for ease of reference, in this report, we refer to 
the MOU as though it does specifically identify the Trust as the OSP 
grantee. 

[31] We used the COSO internal control framework as opposed to GAO's 
Standards for Internal Control in the Federal Government (Green Book) 
to assess internal controls because the Trust is a non-profit 
organization and the Green Book primarily applies to federal agencies. 

[32] We considered three alternatives to determine OSP student 
enrollment: (1) a count of student identifiers and student placement 
in a school; (2) a count of student identifiers and payment 
information; and (3) a count of student identifiers by school and 
payment information. We ultimately used the third approach. 

[33] The Trust had some combined student enrollment data for three 
schools with multiple campuses including Dupont Park Adventist School 
(Alabama Avenue and Massachusetts Avenue locations), Washington 
International School (Primary and Tregaron campuses), and Washington 
Middle School for Girls (THEARC and Washington View campuses). In 
these instances, we treated these individual campuses as one school. 

[34] Committee of Sponsoring Organizations of the Treadway Commission, 
Internal Control--Integrated Framework (1992). COSO was formed in 1985 
to sponsor the National Commission on Fraudulent Financial Reporting, 
an independent, private-sector initiative that studied the causal 
factors that can lead to fraudulent financial reporting and developed 
recommendations for public companies and their independent auditors; 
the U.S. Securities and Exchange Commission and other regulators; and 
educational institutions. In 1992, COSO issued Internal Control--
Integrated Framework to help businesses and other entities assess and 
enhance their internal control. Since that time, COSO's internal 
control framework has been recognized by regulatory standards setters 
and others as a comprehensive framework for evaluating internal 
control, including internal control over financial reporting. 

[35] 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). 

[End of section] 

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