GUAM SCHOOLS FACE FEDERAL SANCTIONS OVER FINANCES

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By Oyaol Ngirairikl

HAGATNA, Guam (Pacific Daily News, Sept. 25) - If Guam's
Department of Education fails to meet special conditions recently imposed by the
U.S. Department of Education, the local school system might face serious
consequences, which could include a federal takeover of programs paid for by
federal grants.

In a Sept. 17 letter to Gov. Felix Camacho, U.S. Education
Department Undersecretary Eugene W. Hickok said that the local education
department has been put on "high-risk grantee" status for failing to
audit financial records for the past five years. Audits on programs paid for by
federal grants are mandated annually by the federal Single Audit Act, Hickok
said.

Hickock said failure to comply with any of the conditions in the
new layer of federal requirements will prompt the federal agency to take on more
remedies. Hickock said the federal government could:

· Stop the further draw-down of any remaining balance
on a federal grant in question;

· Place more special conditions on the grants;

· Recover any misspent funds; or

· Hire a third party to manage and provide the services
provided by the grants.

Hickok said the department must comply with the law and
thoroughly account for the use of grants. "The Single Audit Act is the
principal oversight mechanism for the federal funds administered by the Guam
Department of Education; therefore, Guam's non-compliance with the annual audit
requirement has caused us significant concerns," Hickok said. "The
requirement for timely and complete single audits is a fundamental requirement
to ensure proper accountability, and the submission of late audits cannot be
allowed to continue."

Auditors have found that DOE bank statements on federal programs
have not been reconciled for five years. Balance sheets for 25 funds do not
balance, with questionable amounts as high as $12 million. Auditors have
expressed concern with unrecorded transactions, according to Hickok. Hickok said
Guam DOE must meet the following special conditions:

· DOE will receive only 50 percent of federal grant
money until the agency has provided detailed reports to U.S. DOE officials. If
and when federal officials approve those reports, the local department will
then be given the remaining funds.

· Audits for fiscal years 1998 to 2002 must be completed
and provided to U.S. DOE. Records for fiscal years 1998 to 2001 must be filed by
Nov. 30; fiscal 2002 audits must be filed by March 31, 2004; and fiscal 2003
records must be audited by June 30, 2004.

· If concerns arise from the audits, Guam DOE officials
must immediately report those concerns and explain the process by which those
concerns will be addressed.

· The local public school system must find an
independent agent, such as the Guam Office of the Public Auditor, to monitor how
federal funds are spent, as well as track the progress of the federally funded
programs. That agent also is required to file quarterly reports with the federal
education department.

· DOE Superintendent Juan Flores, as the official
certifying officer for the federal grants -- or another DOE official he
authorizes -- must certify and verify, under penalty of federal law, that all
expenditures are made for authorized purposes only.

· The local education department must adopt a
"transparent" budgeting and expenditure reporting system, which must
be available to the public. At a minimum, Guam DOE officials must post on an
Internet Web site, which must be available to the public, information about
federal program budgets, applications and all reports. Such information must be
updated monthly.

Flores yesterday said the new layer of federal control is a
challenge for the local department, but he is confident that his agency will
meet the recently imposed requirements.

In Hawaii, the federal government took over the special
education program as a result of a 1993 federal lawsuit that alleged that
"qualified handicapped children" were not receiving required services.

Flores said Guam's situation is different because the situation
of system-wide non-compliance is not specific to the individual needs of special
education students. He added that special education administrators have assured
him they should be able to administer the program even with the new
requirements. Flores added that work already is being done on some of the
requirements, such as the completion of the single audits. "The Office of
the Public Auditor has taken the lead in that, and with their help, I'm sure we
can get those audits to the federal government on time," he said.

Flores added that Public Auditor Doris Flores Brooks will have
oversight of all federally funded programs, required by the federal education
department. The public auditor said yesterday that she has yet to read Hickok's
letter, so she could not answer questions specific to the sanctions. Flores
Brooks said she plans to meet with the superintendent to discuss the matter.

September 25, 2003

Pacific Daily News: www.guampdn.com

 

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