Budget Office Cites E.D. Programs at ‘High Risk’ of Abuse

December 13, 1989 2 min read

Washington--The Education Department has several “high risk” programs whose management weaknesses threaten to cost the taxpayers money, according to a report by the Office of Management and Budget made public last week.

The omb describes 73 programs in 16 federal departments and agencies in which hundreds of billions of dollars are deemed to be at risk. Richard G. Darman, director of the omb, met with agency officials to compile the list, which is designed to send warning signals to agencies to help prevent another costly scandal like the one that has unfolded at the Department of Housing and Urban Development.

The chief area of concern cited for the Education Department is in stu4dent financial-assistance programs, particularly in the growing rate of student-loan defaults. New management strategies should be considered, the report states, including separate legislation and regulations for proprietary schools, elimination of abuses in the “ability to benefit” provision that allows non-high- school graduates to participate, and stricter controls over the accreditation and eligibility process.

Omb officials would not expand on the report, so it remained unclear if the agency was endorsing the idea of separate financial-aid programs for trade-school students. That idea is being vigorously opposed by the proprietary-school sector as federal officials gear up for reauthorization of higher-education programs in 1991.

Other Potential Trouble Spots

Other problem areas cited by the omb include:

Lack of monitoring of formula and discretionary grants. The report states that “little is being done” to make sure grant recipients are complying with the terms of their grants.

Awarding of excessive or unnecessary discretionary grants, and the existence of expired grants that may be “vulnerable to unauthorized draws.”

Management of the office of special education and rehabilitative services, whose internal operations have also drawn scrutiny from the department’s inspector general and from the General Accounting Office.

Other concerns highlighted in the report include the questionable reliability of the department’s accounting data and lack of proper follow-up to audits.

Thomas E. Anfinson, deputy undersecretary for management in the department, said the omb report was not a surprise because department officials worked with the budget agency to identify potential problem areas.

“We sort of called these on ourselves,” he said, adding that officials are taking the necessary steps to address the problems. “We have the wherewithal to do what must be done,” he said.--mw

A version of this article appeared in the December 13, 1989 edition of Education Week as Budget Office Cites E.D. Programs at ‘High Risk’ of Abuse