Paper Beats Rock AND Scissors: More on the New York ‘Reading First’ Decision

March 15, 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.)

As we discussed recently, the U.S. Department of Education’s decision on the allegations lodged against New York State’s Reading First program by ED’s Office of Inspector General was essentially a slap on the wrist. But both the substance of the argument and the decision process itself offer some important lessons.

First lesson: Keep your paperwork!

As one of President George W. Bush’s signature education initiatives, the $1 billion Reading First program drew considerable attention from the OIG. States played a key role in the grant process. Like other state education agencies, the New York State Education Department (NYSED) was required to establish rigorous subgrant competitions for districts seeking grants. The funds were to be used for “scientifically based” reading programs in grades 1-3.

One of the OIG’s key allegations hinged on NYSED’s failure to retain documentation relating to its review of applications. Specifically, the OIG contended that NYSED’s subgrant review process was flawed, so there was no guarantee that the 66 districts receiving subgrants were operating compliant Reading First programs. The OIG was concerned that the NYSED had failed to clearly instruct the peer reviewers that applicants had to adequately address each and every one of the seven core Reading First elements. Although NYSED produced significant documentation that the reviewers had been properly instructed, Yudin found that “the auditors were unable to review any completed [reviewer] worksheets because NYSED had discarded them based, apparently, on erroneous guidance from an ED contractor.”

Oops.

Auditors just hate hearing that you threw out your paperwork. Based in part on this fact, they recommended that ED require the state to demonstrate that the 66 programs were fully compliant or return the $216 million awarded to those schools.

Fortunately for the NYSED, Yudin determined that the other documentation supplied by the state was sufficient to show that the reviewers were properly instructed. Further, he concluded, intensive site visits and other monitoring supported the conclusion that the programs were, in fact, operated correctly. So Yudin felt that no recovery of funds was necessary.

On to the second lesson: Even if you retain your paperwork, make sure it is clear!

In its other major finding, the OIG alleged that the NYSED improperly applied its point system, with result that nine districts that otherwise would have fallen short of qualifying for a grant just managed to eke out the minimum acceptable number of points. In the end, it boiled down to a matter of interpretation, and Yudin found that the state’s approach was “reasonable and plausible,” although “NYSED’s failure to clearly define terms in the subgrant application may have caused some unnecessary confusion regarding this matter.” Yudin also said that he did not believe that the state had attempted to make ineligible districts eligible for funding. Hence, he nixed the OIG’s recommendation that the $118 million awarded to these schools be refunded.

It probably helped that NYSED proactively moved to fix its documentation problems — a step universally recommended by audit experts because it demonstrates good faith.

All in all, NYSED’s experience show how important paperwork is in managing public funds. One truism in the audit community is you not only have to be compliant — you have to show you are compliant! And records are how you do it.

In the audit world, paper beats rock and scissors.

(Final thoughts on the New York Reading First decision soon.)

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