	Background

VA provides education benefits to eligible veterans and their beneficiaries  enrolled in approved programs of education and training to help them  afford postsecondary education. In addition, each year, VA contracts with state  agencies to help provide this school oversight. Limited Funding Has Impacted States’ Oversight Abilities, Leading State Agencies to Withdraw from This Role, and VA Has Not Assessed How It Will Respond to Future State Withdrawals

		Funding Has Remained Relatively Constant Over a Decade and VA Recently Revised Its Allocation Method

For over a decade, funding provided by VA to state agencies remained at  the same level of $19 million. In fiscal year 2018, VA allocated $21 million  for state agencies—the first increase in funds allocated to states since  fiscal year 2006 (see fig. State Agencies Identified Impacts of Limited Funding on Their Ability to Fulfill Oversight Responsibilities

VA, NASAA, and selected state agency officials we spoke with said that  limited funding before and after the recent changes to the funding method  has impacted state agencies’ ability to fulfill their oversight responsibilities  in three areas: (1) ability to pay and train oversight staff, (2) ability to visit  geographically dispersed schools due to travel costs, and (3) ability to  provide technical assistance and training to schools. New Mexico Did Not Renew Department of Veterans Affairs (VA) Contract Due to  Lack of Funding  New Mexico’s state agency began to face significant funding difficulties starting in fiscal  year 2015, according to a state official, and it did not renew its VA contract to oversee  schools receiving VA education benefits in fiscal year 2018. In  addition, VA staff may be strained in providing oversight in geographically  large states where schools are widely dispersed because school visits  would be time consuming and costly. However, VA has not completed an assessment to ensure the agency  can handle additional school oversight responsibilities in states that do  not renew their contracts and has yet to prepare a contingency plan. Then, in responding to these risks, the standards  state that agencies should define contingency plans for assigning  responsibilities if key roles are vacated to help the entity continue to  achieve its objectives. Without fully identifying and assessing the risks  of additional state withdrawals, and without a contingency plan to address  how VA can oversee additional schools, the agency runs the risk that if  more states withdraw from their oversight responsibilities, then VA will be  unprepared to oversee the schools in these states. VA and State Agencies Use Certain Risk Factors to Select Schools for Review, and Have Taken Steps toward a New Oversight Approach

		VA and State Agencies Use Payment Errors and Other Risk Factors to Select Schools for Compliance Surveys

Each year, VA uses findings from prior compliance surveys and other  information to develop a strategy for prioritizing a sample of schools to  receive annual reviews, according to VA officials. For its fiscal year 2018 compliance  survey strategy, VA prioritized the following types of schools for review:  100 percent of schools with flight programs;  100 percent of schools with fewer than 20 veterans, with priority to those  that had not received surveys for the longest time period;  100 percent of federal on-the-job training and apprenticeship programs;  schools with serious deficiencies identified in previous compliance surveys;  schools newly approved for the program with enrolled VA beneficiaries;  schools that have never received a compliance survey (for example, VA officials said  some schools have not received a compliance survey due to a shortage of VA  oversight staff or due to the fact that in prior years, the statute did not require VA to  conduct compliance surveys at schools with fewer than 300 veterans); and  a sample of foreign schools receiving VA education benefits for students from the  United States (conducted by VA via remote survey). Risk Factors Identified in the Harry W. Colmery Veterans Educational Assistance  Act of 2017  The Colmery Act explicitly authorizes the Department of Veterans Affairs (VA) and state  agencies to use risk-based surveys (reviews) in oversight of schools receiving VA  education benefits. According to VA officials, as of mid-October  2018, VA used this strategy to select five schools to undergo risk-based  reviews. VA officials said they expect these five reviews to be completed  by late December 2018. VA and State Agencies Have Approaches to Coordinate Oversight Activities and VA Is Developing Additional Guidance for States on Targeted Reviews

		VA and State Agencies Identified Various Ways They Coordinate on Oversight Activities

VA and state agencies coordinate to divide responsibility for who will  conduct compliance surveys of schools receiving VA education benefits in  a variety of ways, according to VA and NASAA officials. VA Is Developing New Guidance for States on Targeted Complaint-Based Reviews

NASAA officials told us that VA has not provided state agencies with  sufficient information on how to conduct targeted school reviews in  response to complaints, and as a result it is difficult for states to conduct  these types of reviews. VA officials acknowledged, however,  that the document is outdated and does not provide sufficient detail. As of late October 2018, VA officials said these procedures were  undergoing internal review. We believe that when implemented, VA’s new  procedures could help enhance VA’s and state agencies’ efforts in  responding to complaints about schools receiving VA education benefits. Recommendation for Executive Action

We recommend that the Secretary of Veterans Affairs direct the Under  Secretary for Benefits to:  (1) Complete efforts to identify and assess risks related to future  withdrawals by state agencies in overseeing schools and (2) address  these risks by preparing a contingency plan for how VA will oversee  additional schools if more states choose not to renew their oversight  contracts.
Why GAO Did This Study

In fiscal year 2017, VA provided about $11 billion in education benefits to about 14,460 schools to help eligible veterans and their beneficiaries pay for postsecondary education and training. VA typically contracts with state agencies to help it provide oversight of schools participating in this education benefit program.
The Harry W. Colmery Veterans Educational Assistance Act of 2017 included a provision for GAO to review VA's and states' oversight of schools receiving VA education benefits. This report examines (1) how, if at all, the available level of funding to state agencies has affected states' and VA's ability to carry out their oversight responsibilities, (2) to what extent VA and state agencies use risk-based approaches to oversee schools, and (3) to what extent VA coordinates and shares information with the states to support their oversight activities. GAO reviewed VA documents; assessed VA funding data for fiscal years 2003-2018; interviewed VA and selected state agency officials; and reviewed correspondence between these officials. GAO interviewed officials from eight state agencies who were past or present officials at the association representing state agencies, and officials from three other states, including one that did not renew its contract with VA in fiscal year 2018.

What GAO Found

The Department of Veterans Affairs (VA) is responsible for overseeing schools nationwide that provide VA education benefits to veterans. To help provide this oversight, VA contracts with state agencies to oversee schools in their states and provide outreach and training to school officials and allocates them funding to cover the cost of oversight, outreach, and training activities. However, since fiscal year 2006, funding for oversight, outreach, and training has remained at about $19 million, and only recently increased in fiscal year 2018 to $21 million. State agency officials told GAO that the limited level of funding they have received from VA has been a long-standing problem that has strained their ability to (1) adequately cover staff costs, (2) pay for travel for school visits, and (3) provide needed technical assistance and training to the schools about VA education benefit requirements. As a result, a few states, such as New Mexico, have chosen to withdraw from their school oversight roles. When this happens, VA must take over the state agencies' oversight responsibilities. GAO found that assuming additional oversight responsibilities is likely to stretch VA's staff resources, especially in large states, where schools are geographically dispersed and school visits are time consuming and costly. VA has begun but has not completed an assessment of the risks that potential future state agency withdrawals could have on its ability to provide school oversight. Moreover, VA has not developed a contingency plan for how it will oversee more schools if additional states do not renew their oversight contracts. Federal standards for internal control state that agencies should identify and assess risks related to achieving objectives, and define contingency plans for assigning responsibilities if key roles are vacated. Until VA takes these steps, the agency runs the risk of being unprepared to conduct effective oversight in the event that more state agencies withdraw from their contracts in the future.
VA and state agencies use certain risk factors to select schools for oversight. VA officials said that they prioritize schools for annual reviews of compliance with program requirements based on findings from prior reviews as well as other risk factors, such as schools with a history of VA benefit payment errors. GAO found that VA and state agencies have recently begun a joint effort to explore a new strategy that they expect will strengthen the school review selection and prioritization process. According to VA officials, as of mid-October 2018, VA used this strategy to select five schools to undergo risk-based reviews. VA officials said they expect these five reviews to be completed by late December 2018.
VA and state agencies coordinate and share information about their oversight activities in a variety of ways. For example, VA has shared information with the state agencies on how to conduct annual reviews of schools in their states. However, according to officials at the association representing state agencies, VA has not provided specific direction on conducting targeted reviews in response to complaints. VA officials acknowledged that the procedures they currently have in place are outdated and said that they are being revised to provide state agencies with more details. As of late October 2018, VA officials said these procedures were undergoing internal review. Once implemented, VA's new procedures have the potential to enhance VA's and state agencies' efforts to conduct reviews at those schools for which they have received complaints.

What GAO Recommends

GAO recommends that VA complete the identification and assessment of oversight risks, and prepare a contingency plan for overseeing schools if additional states do not renew their oversight contracts. VA concurred with the recommendation.