Congress appropriated federal payments for  school improvement in the District every fiscal year from 2004 to 2009 to  the state education office (now OSSE) to expand D.C. public charter  schools and to DCPS to improve public education in the District. OSSE has allocated approximately $17  million for other initiatives to improve the quality of public charter school  education, such as supplemental education (e.g. OSSE also used nearly $1.5 million for administrative purposes and  the remaining funds on other activities that included a truancy center and  data collection efforts. OSSE Conducts Monitoring But Policies and Procedures Not Fully Documented

According to OSSE officials, OSSE employs a range of activities to  monitor public charter schools and other entities that receive grants  funded by federal payments (federal payment grantees), but has limited  written policies and procedures for conducting monitoring activities. OSSE staff did not consistently document their collection and review of  grantee narrative and financial reports. In instances in which files  did not include all of the reports, the Director indicated that this may be  because the grantee did not submit the reports or the staff responsible for  monitoring the grantee did not put the report in the file. Further, the files did not  consistently have evidence that staff followed-up to obtain the reports. For example, two files that had no reports  included notices to grant recipients requesting that they submit final  performance reports since they had been reimbursed for the amount of the  grant award. DCPS Used Federal Payments for a Range of Purposes, But Some Information Was Not Available Before 2009

According to the expenditure data D.C. provided, DCPS has used its $105  million in federal payments for school improvement since 2004 for a  variety of purposes—ranging from summer school programs to staff  incentive pay. However, a lack of available information describing  programs or initiatives funded with federal payments prior to 2009  precludes a full identification of the use of these funds. Staff incentive pay. Supplemental education. For the period between 2004 and 2008, D.C. provided expenditure data  showing that DCPS used federal payments to fund a variety of programs  for early childhood education, supplemental education, professional  development activities, and supply purchases. For example, expenditure data indicate that  between 2004 and 2007, DCPS used $37.4 million to fund a literacy  improvement program; however, DCPS was unable to provide information  to describe the program’s goals, objectives, or outcomes. DCPS Monitoring Policies Existed But Were Not Con Followed In Monitoring Contracts

DCPS program offices have employed a variety of methods to monitor  contractor performance; however, in practice we found evidence of  weaknesses in carrying out some monitoring responsibilities possibly  attributable to staff turnover and a lack of a formal process to reassign  responsibilities when turnover occurs. In our review of 14 contract files, we found that som contained notes from the contracting staff that the program officer left  before the end of the contract term, and the file had no evidence that anew program officer was assigned. The statu language appropriating these funds does not generally direct OSSE and  DCPS on how to use these monies for school improvements. Because OSSE and DCPS distribute a large portion of federal payment for school  improvement funds through grants and contracts, respectively, effective  internal controls over grants and contracts are critical to their missions. Direct the State Superintendent of Education to establish and  implement written policies and procedures for monitoring federal  payment grantees. Agency Comments and Our Evaluation

We provided a draft of this report to the D.C. Mayor’s Office, OSSE, and  DCPS for review and comment. DCPS agreed with our recommendation to improve monitoring acti and maintain contract files and other applicable documents. In response to this, we have provided  additional clarification in the report, where appropriate, to explain that  current DCPS officials took steps to locate information we requested on federal payment use prior to 2009, but spending plans or programmatic  information that they could not locate may not have been created by prior  administrations. Appendix I: Scope and Methodology

To identify the activities that both the Office of the State Superintendent of  Education (OSSE) and the District of Columbia Public Schools (DCPS)  funded with federal payments, we analyzed allocation and spending data,  reviewed documentation provided by the offices, and conducted  interviews with officials in these and other knowledgeable offices. OSSE  identified 42 grants that were awarded during this time.
Why GAO Did This Study

Between fiscal years 2004 and 2009, Congress appropriated nearly $190 million in federal payments for school improvement to the District of Columbia (D.C.). This includes $85 million to the state education office--currently the Office of the State Superintendent of Education (OSSE)--to expand public charter schools and $105 million to D.C. Public Schools (DCPS) to improve education in public schools. Over the years, GAO and others have identified challenges that DCPS and OSSE face in managing federal monies. This report identifies, on the basis of available information, activities for which OSSE and DCPS used federal payments between 2004 and 2009 and describes how OSSE and DCPS monitored grant and contract recipients, respectively. GAO reviewed expenditure data and interviewed and collected documentation from OSSE and DCPS, among others. GAO reviewed all available grants awarded by OSSE in 2008 and 2009 and 14 of the largest contracts awarded by DCPS during that time.

What GAO Found

Approximately 77 percent of federal payments for public charter school improvement in D.C. have been awarded for facility costs, including acquiring, renovating, constructing, or leasing facilities. The funding for facilities has mainly been disbursed through direct loans to schools and grants to expand schools in certain neighborhoods as part of a city improvement initiative. OSSE used the remaining funds for initiatives intended to improve the quality of education through efforts such as academic enrichment and supplemental education activities (provided beyond the normal school day), as well as a variety of other charter school expenditures. OSSE officials reported having established some policies and procedures for monitoring its grant recipients, but, with one exception, these were not documented. Furthermore, the procedures as explained to us by OSSE were not consistently followed. OSSE did create a list of information that program staff are to acquire from grantees. However, the grant files we reviewed often lacked evidence that staff collected this information or performed other monitoring activities. Specifically, most of the files did not include all the narrative and financial reports as required by OSSE in many of their grant agreements. Also, few included any record indicating that staff had followed-up to obtain such documents. According to the expenditure data D.C. provided, DCPS has used federal payments for a variety of purposes--ranging from summer school programs to teacher incentive pay--but available information prior to 2009 does not provide enough details for GAO to fully identify specific activities funded with federal payments. In 2009, DCPS used $40 million primarily for teacher incentive pay, salaries for staff such as physical education and art teachers at underserved schools, and supplemental education activities such as summer school. Expenditure data show that between 2004 and 2008, DCPS funded a variety of programs such as supplemental education and professional development; however, DCPS could not locate information that may have been created on specific activities funded with federal payments during this time. For example, about half of these expenditures were for a "literacy improvement program," but DCPS was unable to provide information to describe the program's goals, objectives, activities, or outcomes. DCPS has policies on responsibilities for monitoring contractor performance; however, these policies do not cover how to do the monitoring and they were not consistently followed. According to program office staff, they have some flexibility in how they implement their monitoring responsibilities and have employed a variety of methods to monitor contractor performance. Of the contract files we reviewed, we found that several lacked any evidence of a performance evaluation by a program officer, or any subsequent review. Notes added to several of the files indicated a program officer had left before the end of the contract term; however, we found no indication that these contracts had been reassigned. Furthermore, the contracting office could not locate 3 of the 17 files we requested for our review.

What GAO Recommends

To improve internal controls, GAO recommends that the Mayor direct OSSE and DCPS to establish and implement written policies and procedures for monitoring use of federal payments for school improvement, and DCPS to maintain contract files and other expenditure documentation. The District agreed with GAO's recommendations and provided additional information on steps taken to improve internal controls.