Allegations on the Front Page, Exoneration on the Last: The New York State ‘Reading First’ Decision

March 14, 2012 | By Thompson Education | Post a Comment

(This post originally appeared on Title I-Derland, Thompson’s blog on federal K-12 education, and was written by Chuck Edwards, senior executive director for Thompson’s education products.) More than five years after the Office of Inspector General issued an audit report criticizing New York State’s process for awarding Reading First subgrants to its districts, the U.S. Department of Education has informed New York that it should be more careful with its paperwork in grant competitions.

Total costs questioned by the OIG: $334 million

Total repayment demanded: $0.00.

The New York audit was one of a number of oversight efforts undertaken by the OIG to review the implementation of President George W. Bush’s signature reading initiative. When the audit report appeared, the billion-dollar program was already in trouble due to allegations that federal officials were overzealously promoting certain reading programs for use by grantees in contravention of law.

In his Feb. 1 “program determination letter” resolving the New York audit, Acting Assistant Secretary for Elementary and Secondary Education Michael Yudin was careful to say that he was “generally pleased” with OIG’s work and acknowledged the “challenges due to recordkeeping problems” at the New York State Education Department at the time. Still, to an outsider, this may seem quite a fizzle for an investigation that got significant headlines at the time.

But this outcome actually is not out of the ordinary. It is little understood that the OIG, which is an independent watchdog within the department, has an institutional incentive to question everything. The auditors are more afraid of missing something than being overly rigorous. “Rigor” is their reason for living. One result: audits with huge headline figures for “questioned” or “unsupported” costs, followed years later by little or no recovery of funds.

The main reason is that the OIG can only recommend action to the program office, which in this case was the Office of Elementary and Secondary Education (OESE). As the office in charge of Reading First, it was in charge of further investigating the OIG’s allegations and determining (1) whether they are supported and, if they are, (2) what remedies are appropriate. In making the latter determination, OESE is bound by law to ascertain if there was actual “harm to the federal interest.” If not, or if the harm was minimal, the penalty must be scaled accordingly. After all, the objective is to serve kids, not penalize harmless errors.

So, in most cases — although by no means all — the resulting demand for repayment in the final PDL is a  fraction of the amount initially recommended by the OIG.

But this is not widely understood. And it is no fault of the media. The OIG posts its audit reports on its web page soon after they are issued. They even have a listserv that will notify you when a new audit report is posted. But the PDLs are not announced or posted anywhere. They are issued only to the object of the investigation and its attorneys. Even if the press learns a PDL has been issued — itself a hit-or-miss proposition — the only way to get it is by contacting the entity involved or filing an official Freedom of Information Act (FOIA) request with ED. And, depending on the backlog, getting a FOIA fulfilled can take weeks or months.

Hence, we witness the classic dilemma facing everyone subject to public accountability: the allegations appear on the front page of the paper, but the exoneration appears on the last — if at all.

In fact, the case offers a wealth of lessons on audits and audit resolution. This post is the first part of a three-part series that will examine those lessons. Watch for the second part soon.

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