	Background

Title III and Title V of the Higher Education Act (HEA) authorize federal  funding for postsecondary institutions that provide large proportions of  low-income and minority students access to higher education. Eligible Institutions Had Fewer Resources to Serve Proportionately More Students at Academic Risk

		Lower Revenues May Make It Difficult for Eligible Institutions to Meet Needs of Current and Future Students

We estimate that 28 percent of 2-year and 4-year public and private not-for- profit postsecondary institutions are eligible to participate in the Title III  and V programs, and together these institutions enrolled just over 4 million  students. In 2006, per-student spending on  instructional equipment at eligible institutions was almost 47 percent less  than spending at ineligible institutions. Institutions Faced Challenges across the Grant Programs’ Four Focus Areas but Spent Most of Their Funds in Two Areas, Academic Quality and Student Support

In their grant applications, Title III and V grantees reported challenges  across all four grant focus areas: academic quality, student support,  institutional management, and fiscal stability. Academic Quality

Based on our review of a representative sample of grant applications, we  estimate that all grantees reported challenges in improving academic  quality, such as recruiting and training highly qualified faculty, using the  latest technology in the classroom for instruction, improving academic  space, and tailoring courses to student needs. Student Support Services

Nearly all grantees reported difficulty providing student support services,  including remedial courses, tutoring, and academic counseling. Two-thirds of fiscal year  2006 grantees reported dedicating at least one activity to improving  student support services, and expenditures in this area represented 34  percent of total Title III and V grant funds spent. Twenty-eight percent of all fiscal year 2006 grantees funded  at least one activity in this area, and expenditures on institutional  management represented about 17 percent of total grant funds spent. Long-standing Deficiencies in Grant Monitoring and Technical Assistance Limit Education’s Ability to Ensure That Funds Are Used Properly and Grantees Are Supported

		Education Has Made Limited Progress in Improving Its Monitoring, and Still Lacks a Systematic Approach to Coordinate Its Efforts

Five times since 1996, GAO and Education’s Inspector General have  recommended that Education implement a systematic approach to  monitoring to better assess the fiscal and programmatic performance of  Title III and V grantees. In fiscal year 2008, for example, five site visits that  program oversight staff conducted were to Title III grant recipients. Education Lacks Assurance That Grant Funds Are Used Appropriately

Education has not fully implemented its planned monitoring initiatives and  lacks assurance that grantees appropriately manage federal funds,  increasing the potential for fraud, waste, or abuse. Of that amount, we found that the  institution used more than $79,975 to pay for numerous student trips to  locations such as resorts and amusement parks. Officials from about half of the schools and some officials from advocacy  groups we interviewed also reported that Education could strengthen  grantee performance by more broadly disseminating information about  successful projects. As we reported in 2004 and 2007, Education’s ability to target technical  assistance is also limited in that the annual performance reports used to  obtain feedback about program improvements may discourage candor  because the reports identify grantees and are used to make continued  funding decisions. The department also does not readily use the feedback  it obtains from grantees to improve the programs. Education has  made progress in developing tools, such as an electronic monitoring  system and risk-based criteria, to assess potential risks associated with  Title III and V grants, but it lacks a comprehensive risk-based monitoring  and technical assistance approach to target its efforts. GAO staff who made key contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

We reviewed Title III and V grants programs to determine (1) what are the  characteristics of institutions eligible to receive grants under Titles III and  V, including the characteristics of students served, (2) what challenges do  grantees face , and how have they spent Title III and V funds to address  these challenges, and (3) to what extent does the Department of Education  (Education) monitor the financial and programmatic performance of Title  III and V grantees, and use this information to target its technical  assistance.
Why GAO Did This Study

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.

What GAO Found

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.