	Background

		Laws Governing the Opportunity Scholarship Program

Congress passed the D.C. School Choice Incentive Act of 2003 in  January 2004, which directed the Secretary of Education to award a grant  on a competitive basis for up to 5 years to an entity or entities to use to  make scholarship payments to parents of eligible students to be used for   This Act  private school tuition, fees, and transportation expenses.created the program known as the District of Columbia Opportunity  Scholarship Program (OSP), the first private kindergarten-through-grade- 12 school choice program supported by federal funds. The Act sets  forth requirements for participating private schools.provides that none of the funds may be used by an eligible student to  enroll in a participating private school unless the participating school  1.  has and maintains a valid certificate of occupancy issued by the  2.  makes readily available to all prospective students information on its  3.  if operating for 5 years or less, submits to the eligible entity  administering the program proof of adequate financial resources and  the ability to maintain operations throughout the school year;  4.  agrees to submit to site visits as determined to be necessary;  5.  has financial systems, controls, policies, and procedures to ensure  that funds are used according to the statute; and  6.  ensures that each teacher of core subject matter in the school has a  baccalaureate degree or its equivalent, regardless of whether the  degree was awarded in or outside of the United States. Specifically, it provides up to $8,000 for grades K-8 and  $12,000 for grades 9-12 starting in school year 2011-2012. The Trust Provides Untimely Information and Scholarship Awards

		The Trust Provides Information to Families through Many Channels, but Its Participating School Directory Provides Incomplete and Untimely Information

The Trust provides program information to prospective and current OSP  families through a variety of outreach activities. To reach prospective  OSP families, the Trust advertises through print, radio, and bus ads, as  well as in newspapers and flyers posted in neighborhood libraries,  recreation centers, and local government service centers. The Trust also holds a participating school fair in which OSP  families can obtain additional information about participating schools. Most  families we spoke with were generally happy with their children’s  participation in the program, citing increased safety and security at their  children’s OSP schools and improved quality of education. In addition to having incomplete information, the Directory has also been  published too late to truly assist families in selecting a school. However, the Trust published the Directory for the  2012-2013 school year in May 2013, about 9 months after the start of that  school year. By that time,  many of the schools in OSP had already completed their admissions and  enrollment processes. The Trust Has Not Developed Effective Internal Controls to Safeguard Program Funds

		The Trust Has Not Developed Effective Policies and Procedures for Implementing and Overseeing the Program

The Trust’s policies and procedures lack detail in several areas related to  school compliance and financial accounting, which may result in little  overall accountability for program funds. Internal control is broadly defined as a process  designed to provide reasonable assurance that an organization can  achieve its objectives with effective, efficient operations, reliable financial  reporting, and compliance with laws and regulations. However,  these amendments do not address all weaknesses identified in this  report, and they have not yet been fully implemented. Without a mechanism or procedures for verifying the accuracy  of the information provided by participating schools, the Trust cannot  ensure that schools are eligible to participate in OSP and, therefore, risks  providing federal dollars to students to attend schools that do not meet  the educational and health and safety standards required by the District. Based on documents provided by the Trust, several schools we visited  that participated in OSP during the 2010-2011 and 2011-2012 school  years did not provide detailed financial statements necessary to assess  their financial stability, and during this time, the Trust did not have a   The financial  practice of documenting its financial review of schools.information submitted by 6 of the 10 schools we visited did not include  detailed financial information required by the Trust’s policies and  procedures. In other words, it  does not appear possible to use the Trust’s database to derive this  priority category and puts in question the Trust’s ability to provide  accurate priority categories for the OSP lottery. Lastly, data entry of application information is also problematic. According to the  MOU, Education is responsible for working with the Trust to improve  certain aspects of the administration of OSP. Education Has Provided Limited Assistance to the Trust

Education has provided limited assistance to the Trust as agreed upon in  the MOU and cooperative agreement governing OSP. Trust officials  acknowledged that they have not proactively sought Education’s  assistance in these areas. Further, as a result of the Trust’s tardiness in  submitting mandatory financial reports, the Trust was unable to account  for federal dollars spent on OSP for about 2 years after the end of fiscal  year 2010. Although the MOU is a written agreement between Education and the  District, it includes a responsibility for the Trust. Specifically, the MOU  states that the Trust—as the grantee—is responsible for notifying District  agencies to conduct these required inspections of participating private  schools. However, because the Trust is not a  signatory to the MOU, Trust officials were not acutely aware that they  were responsible for notifying the District agencies. In its comments, Education did not indicate agreement or  disagreement with our recommendations. The Trust generally agreed with  our recommendations, but disagreed with some of the findings. In addition, the Trust’s revised policies and procedures  do not address all of the weaknesses for which GAO recommended  action, such as developing a process for addressing schools that are  noncompliant with program requirements. Appendix I: Scope and Methodology

We reviewed relevant federal and District laws and regulations and  analyzed key documents from the DC Children and Youth Investment  Trust Corporation (Trust), the federal Department of Education  (Education), and participating schools, as well as generally accepted  guiding documents for internal controls including those published by GAO  and the Committee of Sponsoring Organizations of the Treadway  Commission (COSO). To determine the  roles and responsibilities of the Trust, Education, and the District, we  examined the grant transfer agreement between the Trust, the  Washington Scholarship Fund, and Education; the memorandum of  understanding between Education and the District of Columbia  Government; and the cooperative agreement between Education and the  Trust.
Why GAO Did This Study

School vouchers, a school choice program designed to provide students with public funds to attend private schools, feature prominently in policy discussions about education reform. The OSP was reauthorized by Congress in 2011 by the Scholarships for Opportunity and Results Act, and has garnered national attention as the first federally-funded voucher program. Since the program's inception in 2004, Congress has provided almost $152 million for the program benefitting almost 5,000 students, currently providing scholarships of about $8,000 for grades K-8 and about $12,000 for grades 9-12. As requested, GAO examined (1) the extent to which the Trust provides information that enables families to make informed school choices, (2) whether the Trust's internal controls ensure accountability for OSP, and (3) how Education and District agencies responsible for overseeing OSP have performed their stated roles and responsibilities.
To conduct this work, GAO visited 10 participating schools; interviewed school officials; conducted discussion groups with 14 parents of scholarship students; analyzed key program documents; reviewed generally accepted guiding documents for internal controls; and interviewed officials at Education, relevant District agencies, and the Trust.

What GAO Found

The DC Children and Youth Investment Trust Corporation (the Trust) provides information to prospective and current families of children participating in the District of Columbia (the District) Opportunity Scholarship Program (OSP) through a variety of outreach activities. To reach prospective OSP families, the Trust advertises through print, radio, and bus ads, as well as in newspapers and flyers posted in neighborhood libraries, recreation centers, and local government service centers. However, the Trust provides incomplete and untimely information about participating schools to OSP families. The participating school directory, which is published by the Trust, lacks key information about tuition, fees, and accreditation. The Trust published the directory 9 months after the start of the 2012-13 school year, too late to assist families in selecting a school for that year. Without such information, parents cannot make fully informed school choices. Additionally, the Trust awarded scholarships to students several months after many schools completed their admissions and enrollment processes, limiting the amount of time and choice in selecting schools. Most families GAO spoke with were generally happy with OSP but some were concerned about the availability of program information.
The Trust's internal controls do not ensure effective implementation and oversight of OSP. Adequate policies and procedures can provide reasonable assurance of effective, efficient operations, reliable financial reporting, and compliance with applicable laws. However, the Trust's policies and procedures do not include a process for verifying eligibility information that schools selfreport. As a result, the Trust cannot ensure that schools are eligible to participate in the program and, therefore, risks providing federal dollars to students to attend schools that do not meet standards required by law. Furthermore, the Trust's database is not well structured and hampers the effectiveness of program implementation. For example, the Trust lacks written documentation for the database, and staff must rely on institutional memory to ensure processes such as data entry are conducted properly, which could contribute to errors in the database. As required by law, the Trust groups eligible applicants into three priority categories by which scholarships are then awarded by lottery; however, weaknesses in the database's structure puts into question the Trust's ability to provide accurate priority categories. Additionally, the Trust has not submitted its mandatory financial reports on time, despite a legal requirement that these reports be filed within 9 months of the end of the entity's fiscal year. The Trust's fiscal year 2010 financial report was almost 2 years late, and the Trust's fiscal year 2011 and 2012 reports had not yet been submitted as of August 2013. In August 2013, the Trust also made amendments to its policies and procedures in three areas GAO identified. However, these amendments do not address all weaknesses identified in this report, and have not yet been fully implemented.
The Department of Education (Education) has provided limited assistance to the Trust in certain areas outlined in the memorandum of understanding (MOU) with the District and in the cooperative agreement with the Trust. Specifically, Education is responsible for helping the Trust make improvements to its financial system, enhance its site visit policies and procedures, and improve the accuracy of information provided to parents. Trust officials acknowledged that Education has provided general assistance regarding administrative and operational functions, but it has not assisted with specific improvements in these areas. Although the MOU is a written agreement between Education and the District, it holds the Trust, as the grantee, responsible for notifying District agencies to conduct required building, zoning, health, and safety inspections of participating schoolsa requirement that is not detailed in the cooperative agreement signed by Education and the Trustbut would assist the Trust in providing continued oversight of schools participating in OSP. As a result, Trust officials were not acutely aware of this responsibility, and required inspections were not being conducted in the manner described in the MOU between Education and the District.

What GAO Recommends

GAO is making 10 recommendations to Education to improve OSP, such as ensuring that the Trust publishes a more complete school directory and updates key aspects of its policies and procedures. Education did not indicate agreement or disagreement with our recommendations. The Trust disagreed with some findings and both provided additional information.