The Department of Education’s most recent audit shows serious problems with the agency’s financial management, Rep. Peter Hoekstra charged at a subcommittee hearing last week.
The Michigan Republican, who chairs the House Subcommittee on Oversight and Investigations, used recently released data from the department’s fiscal 1998 audit to argue that the agency has kept shoddy records and mismanaged billions of dollars in federal funds.
He contended, for instance, that the department can’t account for $6 billion in spending for unidentified programs, authorized an $800 million Stafford college loan to one student, and issued $123 million in duplicate payments for grants. The $6 billion discrepancy was noted in the audit report, and the other charges were based on correspondence between Mr. Hoekstra and the Education Department, according to Becky Campoverde, the spokeswoman for the Republicans on the House Education and the Workforce Committee.
Mr. Hoekstra, a persistent and outspoken critic of the agency, said he believes those charges are only the tip of the iceberg of potentially wasted or misused funds.
“The Education Department cannot balance its checkbook,” he said. “When your shoelaces are untied, eventually you’re going to trip over them.”
The department was one of six federal agencies that received “incomplete” designations for their fiscal 1998 audits, meaning that auditors were unable to verify whether their financial statements were reliable. The Education Department was the last agency to release its audit statements, waiting until Nov. 18, more than eight months past the March 1 due date.(“Republicans Seek Probe of Department Accounts,” Nov. 10, 1999.)
Michael Lampley, a partner with Ernst & Young, the accounting firm that conducted the audit, told the House panel that his auditors were unable to complete the paperwork because of missing documentation and conflicting figures provided by the department.
In addition, Gloria Jarmon, who oversees education accounting for the General Accounting Office, the nonpartisan investigative arm of Congress, said that her office had found serious problems with internal recordkeeping and reporting in the agency. While there is no evidence that money has been lost or stolen, she said, the accounting system puts the agency at greater risk for fraud and abuse.
Reporting Mistakes
Education Department officials said that Mr. Hoekstra’s accusations stemmed from reporting mistakes, and did not show any mismanagement or loss of funds.
The officials also defended their financial recordkeeping system as an improvement from those of previous administrations, and said they had made great efforts to correct past mistakes.
Acting Deputy Secretary of Education Marshall S. Smith said the agency had been hampered by a new computer-data system, significant turnover of key personnel in the chief financial officer’s office, and new requirements from the White House Office of Management and Budget.
“I firmly believe that these programs are better managed than they were before,” said Mr. Smith, who is leaving the department next month. “The money that the Education Department is entrusted with by Congress reaches its recipients.”
He added that the fiscal 1998 audit could eventually have been completed, but that the auditors decided to turn their attentions and effort to the fiscal 1999 audit instead.
Neither he nor Mr. Lampley would predict whether the department would be able to produce enough data for the next audit, because the deadline for the paperwork is not until March 1.
Democrats on the House subcommittee defended the Education Department and deemed Mr. Hoekstra’s hearing excessive.
“I am confident [the Education Department’s] efforts will continue to ensure sound fiscal management,” said Rep. Robert C. Scott, D-Va.
Mr. Hoekstra, meanwhile, plans to monitor the department’s progress in implementing recommendations for improvements in the accounting system outlined by the auditors, Ms. Campoverde said. He also wants to ensure that the fiscal 1999 audit will take place, she said.
