Low-Income and Minority Serving Institutions:

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

GAO-09-309: Published: Aug 17, 2009. Publicly Released: Sep 21, 2009.

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

Twenty-eight percent of all 2-year and 4-year public and private, not-for-profit institutions are eligible to receive Title III and V grants. Eligible institutions had fewer resources, including endowment holdings and revenue from tuition and fees, and lower per student spending on equipment than ineligible institutions. Eligible institutions also served more students who were minority, low-income, and attended part-time. In their grant applications, Title III and V grantees reported challenges in all four grant focus areas: academic quality, student support, institutional management, and fiscal stability. Grantees reported spending almost $385 million in fiscal year 2006 grant funds to address challenges in these areas, primarily to strengthen academic quality and student support services. Specifically, grantees reported using 43 percent of grant funds on efforts designed to improve academic quality, such as using the latest technology in the classroom and improving academic space. Efforts to improve student support services, including remedial courses, tutoring, and academic counseling represented about one-third of grantee expenditures. While nearly all grantees reported challenges related to strengthening institutional management and fiscal stability, expenditures in these areas represented less than one-quarter of all grant funds spent. Since GAO reported and made recommendations on the management of these programs in 2004 and 2007, Education has continued to take steps to improve monitoring, but many of its initiatives have not been completed. Education has made recent progress in developing an electronic monitoring system and risk-based criteria to improve monitoring, but it discontinued the use of annual plans to guide its efforts. Also, limited progress in addressing staff skill gaps and substantial declines in site visits to grantees has impeded Education's ability to adequately monitor grantees. Because Education lacks a comprehensive approach to target monitoring, it lacks assurance that grantees appropriately manage federal funds, increasing the potential for fraud, waste, or abuse. For example, GAO identified more than $100,000 in questionable expenditures at one grantee institution, including student trips to locations such as resorts and amusement parks, and an airplane global positioning system. Education provides limited technical assistance to grantees, but it has not developed a systematic approach that targets the needs of grantees. For example, some grantees told GAO that Education could strengthen grantee performance by sharing more information regarding common implementation challenges and successful projects. Additionally, GAO found that Education's ability to target technical assistance is limited because its current approach for obtaining feedback does not encourage candor, and it does not use the feedback it currently receives from grantees.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In 2009, Education officials agreed with this recommendation and noted that they were working to implement a comprehensive, risk-based approach that would target grant monitoring and technical assistance based on the needs of grantees. However, during our 2010 testimony Education was still in the process of modifying its monitoring approach and it was too early to determine the effectiveness of its efforts. We have learned that since our 2009 report, Education has twice updated the index. In FY10, Education officials reported that they reduced the number of criteria to focus on those criteria that experience has found to more accurately identify high-risk schools. Since our 2009 report was published, Education required all major program offices to develop a monitoring plan for the following fiscal year. Officials from the office responsible for administering Title III and V programs said they submitted a monitoring plan for review in February 2010, and have been using the plan in draft form while waiting for it to be approved. They anticipated hiring four new program officers during the summer of 2010. However, it was unclear what effect the new hires would have on Education's ability to conduct site visits. We noted in 2010 that none of the five site visits completed in that fiscal year was selected based on the monitoring index. In addition, based on our review of the Monitoring Plans for fiscal year 2010 and 2011, it was still not clear how Education uses the monitoring information it collects or its risk-based criteria to prioritize site visits and technical assistance; and Education acknowledged that it was still working to develop its risk criteria and that past efforts that looked at risk at the institutional level have not been successful. As of FY12, Education had made progress in integrating monitoring data into its information system, GEMS and made several desktop tools such as independent audits, grant management issue tracking, and annual performance reports, electronically available to monitoring staff. In FY13, Education reported that the Office of Postsecondary Education (OPE) updated its monitoring plan, which includes an addendum providing guidance on conducting virtual site visits. The plan addresses risk assessment, noting that if areas of concern arise, staff will determine the need for risk mitigation actions are necessary. Regarding grantees with significant adverse risk assessment findings, OPE may attach special terms and conditions to their grant awards, such as requiring special reporting and/or targeted monitoring to include onsite visits, monthly conference calls, or placing the grantee on a cost reimbursement status if necessary. In communicating FY 12 risk assessment findings to the institutions, OPE requested that each institution provide a response addressing how the concerns had been or would be resolved.

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

    Agency Affected: Department of Education

  2. Status: Closed - Implemented

    Comments: In response to the recommendation, from November 2009 to October 2010 Education conducted site visits to each of the four institutions where GAO identified potential improper uses of grant funds from November 2009 and October 2010.

    Recommendation: The Secretary of Education should follow up on each of the improper uses of grant funds that were identified in this report.

    Agency Affected: Department of Education

  3. Status: Closed - Implemented

    Comments: According to officials, Education held 2 training sessions on conducting fiscal monitoring/internal controls and programmatic monitoring for a total of 4.5 hours in 2010. Thirteen staff (out of 35 total IDUES program officers) attended the training. In these sessions staff were instructed in interpreting A133 findings and assessing internal controls. Education has also continued to conduct training for program officers on the use of its electronic monitoring system.

    Recommendation: The Secretary of Education should provide program staff with the necessary training to fully carry out monitoring and technical assistance responsibilities.

    Agency Affected: Department of Education

  4. Status: Closed - Implemented

    Comments: In response to our 2009 report which highlighted the lack of Title III and V conferences between 2007 and 2009 despite considerable grantee interest, Education officials told us they held an annual meeting in March 2010 for all grantees allowing participants to share promising practices and common concerns. Officials reported that its 2011 monitoring plan will include future workshops/conferences.

    Recommendation: The Secretary of Education should disseminate information to grantees about common implementation challenges and successful projects to leverage the investment that has been made across the programs.

    Agency Affected: Department of Education

  5. Status: Closed - Implemented

    Comments: According to officials, Education established an e-mail address for grantees to express concerns, ask questions, or make suggestions about the programs. The address is displayed on every program Web page and is monitored by an Education official not associated with the program office to allow grantees to provide anonymous feedback. Officials told us in April 2010 that they received several messages through the e-mail address and were analyzing them. Additionally, Education officials reported that they have developed a customer satisfaction survey that the Office of Management and Budget has approved for distribution. The survey will be sent to new grantees and grantees that are near the end of their grant period and will obtain feedback on the quality of information provided before a grant is approved, the quality of technical assistance provided, and satisfaction with communications with the program office.

    Recommendation: The Secretary of Education should develop appropriate mechanisms to collect and use feedback from grantees.

    Agency Affected: Department of Education


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