Defense Management:

Actions Are Needed to Improve the Management and Oversight of the National Guard Youth Challenge Program

GAO-06-140: Published: Nov 29, 2005. Publicly Released: Nov 29, 2005.

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The fiscal year 1993 National Defense Authorization Act established the National Guard Youth Challenge Program as a pilot program to evaluate the effectiveness of providing military based training to improve the life skills of high school dropouts. The Assistant Secretary of Defense for Reserve Affairs, under the authority of the Under Secretary of Defense for Personnel and Readiness, is responsible for overall policy for the program. The National Guard Bureau (NGB) provides direct management and oversight. In 1998, Congress permanently authorized the program and began decreasing the federal cost share until it reached its current level of 60 percent in 2001. Conference Report 108-767 directed GAO to review the program. Specifically, GAO reviewed (1) historical trends of the program; (2) the extent of analyses performed to determine program costs and the need to adjust the federal and state cost share; and (3) NGB oversight of the program. GAO is also providing information on Reserve Affairs' and states' efforts to obtain funding from alternative sources.

Between fiscal years 1998 and 2004, total expenditures for the Challenge Program, including funds spent to cover the federal and state cost shares and federal management expenses, have increased from about $63 million to $107 million. During this same period, participation in the program has grown from 10 sites in 10 states to 29 sites in 24 states and Puerto Rico. Since the program's inception, NGB has reported positive performance outcomes in academic performance, community service activities, and post-residential placements. For example, in 2004, NGB reported graduating 7,003 students, or 79 percent of those enrolled, with 70 percent of those graduates earning a high school equivalent diploma. While Reserve Affairs and NGB have expressed concern about the current program funding level and have suggested increasing both the cost basis used to determine funding needs and the federal cost share, neither has performed analyses to support the need for such changes. Federal financial standards state that reliable cost information is crucial for effective management of government operations. Since 1993, NGB has used $14,000 per student as the basis for determining the amount of funds needed to cover program operating costs, and applied the federal-state cost share to this amount. To keep pace with inflation, NGB has suggested increasing the per student cost to $18,000. Reserve Affairs has reported some states are having difficulty meeting their share and, in 2004, recommended the federal share be increased from 60 percent to 75 percent. However, neither Reserve Affairs nor NGB has compiled or analyzed data on actual program costs, states' financial situations, or the impact of adjusting the federal and state cost-share. Without better cost and financial information, the Department of Defense (DOD) cannot justify future funding requests or a change in the cost-share ratio. Although NGB uses various oversight mechanisms, it lacks a complete oversight framework, making it difficult to measure program effectiveness and to adequately address audit and review findings. Also, some audits have not been performed as required. The Government Performance and Results Act suggests a complete oversight framework including goals and measures against which to objectively evaluate performance. While NGB requires states to report certain performance outcomes, it does not require states to establish performance goals in these areas, and therefore does not have a firm basis for evaluating program outcomes and DOD's return on investment. Existing agreements require state programs to be audited at least every three years. However these audits have not been conducted as required and no provisions exist for submitting audit results to NGB. Without regular audits and access to results, NGB cannot be assured that programs are using federal funds appropriately and that audit findings are addressed.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the management and oversight of the National Guard Youth Challenge Program, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness, in consultation with the Assistant Secretary of Defense for Reserve Affairs and the Chief of the National Guard Bureau, to direct U.S. property and fiscal officers to conduct audits as required and require that copies of audit results are provided to the appropriate office at the National Guard Bureau in order to ensure that the results of audits are promptly reviewed and resolved.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The National Guard Bureau issued a memorandum dated January 30, 2007, that established a formal process to comply with our recommendation to direct the U.S. property and fiscal officers to conduct audits as required and require that audit results are provided to the appropriate office at the National Guard Bureau to ensure that the results of the audits are promptly reviewed and resolved. According to the memo, each National Guard Youth Challenge Program will undergo an audit once every three years. The U.S. property and fiscal officers will forward their reports to the National Guard Bureau Internal Review Office where they will be consolidated, reviewed and programmatic issues will be forwarded to the National Guard Bureau Athletics and Youth Development Office for coordination and/or corrective action.

    Recommendation: To improve the management and oversight of the National Guard Youth Challenge Program, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness, in consultation with the Assistant Secretary of Defense for Reserve Affairs and the Chief of the National Guard Bureau, to establish performance goals to measure the effectiveness of the Challenge Program.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The National Guard Bureau issued a memo on March 6, 2007, that established national performance goals to measure the effectiveness of the National Guard Youth Challenge Program. The performance goals are aligned within each area of the President's Management Agenda. In addition, each state program is required to establish state level program performance goals and update them annually.

    Recommendation: To improve the management and oversight of the National Guard Youth Challenge Program, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness, in consultation with the Assistant Secretary of Defense for Reserve Affairs and the Chief of the National Guard Bureau, to determine the actual costs of the Challenge Program, including states' ability to fund their share of the program, and use this information, as appropriate, to support funding requests or a request to change the cost-share ratio.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In November 2005 (GAO-06-140), we reported that while Reserve Affairs and the National Guard Bureau (NGB) had expressed concern about the current program funding level and have suggested increasing both the cost basis used to determine funding needs and the federal cost share, neither had performed the analyses to support the need for such changes. We concluded that without better cost and financial information, DOD cannot justify future funding requests or a change in the cost-share ratio. We recommended that the Secretary of Defense determine the actual costs of the Challenge Program, including states' ability to fund their share of the program, and use this information, as appropriate, to support funding requests or to change the cost-share ratio. In a November 2007 memorandum, Reserve Affairs reported that based on our recommendation, the National Guard Bureau has developed a funding formula to determine the actual costs of the Challenge Program. This formula will work in conjunction with the individual Challenge program budget execution data being collected in the Challenge program budget management and reporting system. This formula will allow NGB to consider standard, actual and projected costs in determining the federal funding amounts for individual programs and to evaluate the need for any funding increases for basic program staff and services. This funding formula will be used to calculate and validate funding for fiscal year 2008, as well as prepare the future program budget estimates.

    Recommendation: To strengthen efforts at obtaining alternative funding in support of the National Guard Youth Challenge Program, the Secretary of Defense should direct the Undersecretary of Defense for Personnel and Readiness, in consultation with the Assistant Secretary of Defense for Reserve Affairs, to develop more formal strategies for requesting alternative funding support for the Challenge Program. Such strategies may include submitting requests for funding that include the amount of funding requested and a sufficiently detailed description of the proposed program to allow potential providers of funds, such as nondefense agencies, to determine whether it would be an appropriate use of their funds.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In meeting the intent of our recommendation to have more involvement from other federal agencies with the Challenge Program, in late 2009, Reserve Affairs held a formal meeting with the Office of Management and Budget (OMB) to discuss the results of the Challenge Program and how the Challenge Program meets the goals of programs run by other federal agencies. As a result of this meeting, OMB transferred $20 million from the Department of Education's fiscal year 2011 budget request to DOD's fiscal year 2011 budget request to support the Challenge Program.

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