Desegregation Activities:

Administration of Education Grant Funds at the Cleveland School District

HRD-89-83: Published: Aug 29, 1989. Publicly Released: Sep 21, 1989.

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Pursuant to a congressional request, GAO reviewed Department of Education grants awarded to the Cleveland, Ohio, School District, for desegregation activities, to determine: (1) the total amount of federal funding the school district received; (2) the school district's compliance with a 1978 desegregation court order and grant agreements; (3) the school district's compliance with federal grant conditions and restrictions; and (4) whether Education adequately monitored and administered the grant agreements.

GAO found that the school district: (1) received a total of $30.2 million in federal funds from 1978 through 1987 for desegregation activities; (2) used federal funds derived from the Emergency School Aid Act (ESAA) and Magnet School Assistance Programs (MSAP) consistently with the 1978 court order; (3) spent other federal funds on desegregation activities, but did not comply with all of the specifications of the 1978 court order and subsequent federal grant agreements; (4) requested and received excessive advances of federal grant funds and accrued interest on those advances, but did not report or remit that income to Education; (5) obligated and spent first-year grant funds during the second year, without Education approval, and spent more than $1.5 million in ESAA 1979-1980 and 1981-1982 funds during the 1985-1986 school year; and (6) did not comply with some federal procurement requirements. GAO also found that Education did not adequately monitor and administer the grant agreements.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Education stated the Secretary is barred from recovering this money because the violation occurred more than 5 years ago. GAO continues to believe this recommendation is valid.

    Recommendation: The Secretary of Education should direct the Cleveland School District to return the $1,553,000 of ESAA funds that remained in its accounts when the authorization for ESAA expired in 1982.

    Agency Affected: Department of Education

  2. Status: Closed - Implemented

    Comments: With the help of consultants, the District developed a procurement manual that was sent to Education in January 1990. In 1991, Education reviewed the District's procurement system and sent a memo to it suggesting several modifications. Education believes the District's procurement system complies with federal procurement regulations. Education has closed this recommendation.

    Recommendation: The Secretary of Education should direct the Cleveland School District to review its procurement system to ensure compliance with federal procurement regulations.

    Agency Affected: Department of Education

  3. Status: Closed - Implemented

    Comments: In July 1992, the Cleveland School District sent Education a check for over $32,000 for the interest earned on excessive cash balances from federal grants.

    Recommendation: The Secretary of Education should work with school district officials to determine the amounts of interest earned on excessive cash balances from federal grant programs over the years, which should be returned to Education.

    Agency Affected: Department of Education

  4. Status: Closed - Implemented

    Comments: This recommendation has been kept open until Education's Office of Inspector General (OIG) completed a survey of the department's administrative policies and procedures for MSAP grants. After completing this survey, however, OIG decided not to issue a report because no significant problems were found. OIG has no plans to take any other action on this recommendation.

    Recommendation: To determine whether Education's grant management weaknesses seen in Cleveland's MSAP grants are prevalent in other grant programs and other school districts, the Inspector General, Department of Education, should review Education's grant administration policies and practices, especially relating to cash management and grant closeouts.

    Agency Affected: Department of Education: Office of Inspector General


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