September 2011 — GAO's Comments on the Latest Round of Recipient Reporting

What GAO Found

The Department of Education and States Continue to Oversee the Quality of Recipient Reporting Data in Latest Round of Reporting

GAO focused this review on the quality of data reported by recipients of education grants from the State Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and Secondary Education Act (Title I); and Individuals with Disabilities Education Act (IDEA), Part B. Using education recipient data from the latest reporting period, which ended June 30, 2011, GAO continued to check for errors or potential problems by repeating analyses and edit checks reported in previous reports.

The Department of Education (Education) uses various methods to review the accuracy of recipient reported data to help ensure data quality. Specifically, Education compared data from the agency's grant database and financial management system with recipient reported data. These systems contain internal data for every award made to states, including the award identification number, award date, award amount, outlays, and recipient names. Education program officials told GAO they verified expenditure data in states' quarterly reports by comparing it to data in their internal grants management system. Education officials told GAO that state expenditures can vary from outlays depending on how the state reimburses its subrecipients, but Education officials review the figures to determine if they are reasonable. In addition, SFSF officials told GAO they cross-walked the recipient reported data with previous quarterly reports to check for reasonableness. For example, the officials stated they compared the number of subrecipients and vendors from quarter to quarter to see if they increased or stayed the same, as would be expected for a cumulative data point. Education officials stated they worked directly with states to correct any issues found during their checks of recipient reported data. Overall, Education officials agreed that they have made significant progress in ensuring data quality, as compared to the early quarters when they had to focus on helping states understand basic reporting requirements. At this point, the program officials told GAO they do not generally see significant data quality issues or mistakes when they review recipient reports. In August 2011, the Education OIG reported that they performed 49,150 data quality tests of recipient reported data for grant awards and found anomalies in 4 percent of the tests. The OIG reported that the Department's processes to ensure the accuracy and completeness of recipient reported data were generally effective.

In addition to Education's efforts to ensure data quality, selected state officials GAO spoke with said they examined recipient reports of individual subrecipients. For example, Georgia officials told GAO they reviewed full-time equivalent (FTE) data for reasonableness, compared revenues and expenditures, and ensured all vendors were included in vendor payment reports. The officials stated that they followed up on any questionable items with district staff. As GAO previously reported, calculating FTE data presented initial challenges for many local education agencies (LEAs), and states worked to ensure the accuracy of the data through a variety of checks and systems. For example, the Mississippi Department of Education helped LEAs calculate FTE data correctly by providing LEAs spreadsheets with ready-made formulas. New York officials told GAO they examined the calculation of FTEs funded and compared that data with payroll records. North Carolina officials told GAO that through their review of LEA data, they identified issues with FTE figures that were budgeted but not ultimately verified against actual figures. To improve the accuracy of the data, the state now compares LEA payroll records to their budgeted figures.

Education and selected states told GAO they used recipient reports to obtain data on expenditures, FTEs, and other activities funded to enhance their oversight and management efforts. For example, Education's special education program officials and most selected states used recipient reported data to track the amount of Recovery Act funds LEAs spent.

In particular, Education officials that administer the IDEA, Part B grant told GAO they monitored LEA expenditures through recipient reports because it was the only information they had on how much subrecipients had spent. Education and several selected states also told GAO they examined recipient reports as part of their monitoring efforts. For example, SFSF program officials reviewed recipient reports, particularly expenditure data and the subrecipient award amount, to help choose subrecipients for monitoring. Officials from Arizona, the District of Columbia, and North Carolina told GAO they used recipient reported data to assess risk and inform their monitoring efforts. For example, the District of Columbia tracks spending rates to ensure subrecipients meet the deadline for using the funds. If a subrecipient has lower than expected spending rates, they are subject to increased monitoring. Arizona uses recipient reported data to verify that internal controls are working, for instance by examining expenditure rates to see whether there may be cash management issues. In addition, Iowa and New York officials said they used recipient reported data to ensure appropriate uses of funds.

State and LEA officials GAO spoke with continued to report greater ease in collecting and reporting data for recipient reports. As GAO previously reported, recipients told GAO they have gained more experience reporting and the reporting process was becoming routine. For example, Arizona officials told GAO that their centralized reporting process now runs with very little effort or burden on state and local recipients of Recovery Act education funds. Alaska officials stated that the early quarters were challenging for reporting, but the state training sessions with LEAs helped establish a smooth process by the third quarter. At the local level, an LEA official in Iowa told GAO that while recipient reporting was confusing in the beginning, her district changed some internal procedures and automated some calculations to make the process more efficient. One measure of recipients' understanding of the reporting process is the number of noncompliant recipients. There were no non-compliers in the eighth reporting period for recipients of SFSF, ESEA Title I, Part A or IDEA, Part B funds.

State and LEA officials GAO spoke with continued to report greater ease in collecting and reporting data for recipient reports. As GAO previously reported, recipients told GAO they have gained more experience reporting and the reporting process was becoming routine. For example, Arizona officials told GAO that their centralized reporting process now runs with very little effort or burden on state and local recipients of Recovery Act education funds. Alaska officials stated that the early quarters were challenging for reporting, but the state training sessions with LEAs helped establish a smooth process by the third quarter. At the local level, an LEA official in Iowa told GAO that while recipient reporting was confusing in the beginning, her district changed some internal procedures and automated some calculations to make the process more efficient. One measure of recipients' understanding of the reporting process is the number of noncompliant recipients. There were no non-compliers in the eighth reporting period for recipients of SFSF, ESEA Title I, Part A or IDEA, Part B funds.

Although the recipient reporting process has become smoother over time, some states and LEAs noted that there continues to be a burden associated with meeting reporting requirements, particularly due to limited resources. For example, California officials stated it had been burdensome to collect data from over 1,500 LEAs when there were significant budget cuts. Officials from the Massachusetts SEA stated that the most burdensome aspect of recipient reporting was the short time frame for collecting data from nearly 400 LEAs when local staff were already stretched thin. At the local level, officials at a rural Mississippi school district stated that gathering the supporting documents for their quarterly reports was cumbersome and took a significant amount of time. For example, in the previous quarter one staff member had to upload more than 70 supporting documents to the state's centralized reporting system. Further, Education officials noted that the improvements in the process for recipient reporting have not eliminated the burden on LEAs. Moreover, according to Education officials, although the primary goal of the Recovery Act grants was not reporting, grantees were spending significant amounts of time complying with the reporting process when the Department already had some data elements, such as grant awards and drawdowns, from other sources.

Two recent actions indicate that recipient reporting could be expanded to funds beyond those from the Recovery Act. A White House Executive Order dated June 13, 2011, established a Government Accountability and Transparency Board (Board) to provide strategic direction for enhancing the transparency of federal spending and advance efforts to detect and remediate fraud, waste, and abuse in federal programs, among other things. By December 2011, the Board is required to develop guidelines for integrating systems that support the collection and display of government spending data, ensuring the reliability of those data, and broadening the deployment of fraud detection technologies. In addition, one of the objectives of proposed legislation—the Digital Accountability and Transparency Act of 2011 (DATA Act)—is to enhance transparency by broadening the requirement for reporting to include recipients of non-Recovery Act funds.

While FTE Data Have Limitations, Education Found These Data to Be Useful

According to Recovery.gov, during the quarter beginning April 1, 2011, and ending June 30, 2011, the Recovery Act funded approximately 286,000 FTEs using funds under the programs in GAO's review. Further, for this latest round of reporting, similar to what GAO observed in previous rounds, education FTEs for these programs accounted for about half of all FTEs reported for the quarter. Following OMB guidance, states reported on FTEs directly paid for with Recovery Act funding, not the employment impact on suppliers of materials (indirect jobs) or on the local communities (induced jobs). According to Education officials, FTE numbers were expected to decrease over time because fewer prime recipients would be reporting as they exhaust all of their Recovery Act funds.

FTE data provide an overall indication of the extent to which the Recovery Act met one of its intended goals of saving and creating jobs in order to help economic recovery, although some limitations with these data may make it difficult to determine the impact the Recovery Act made in any one particular reporting period. In May 2010, GAO identified a number of issues that could lead to under- or over-reporting of FTEs.

GAO's analysis of the data on Recovery.gov showed variations in the number of FTEs reported, which Education officials said could be explained by states' broad flexibility in determining what they used Recovery Act SFSF funds on and when they allocated those funds. For example, Illinois reported less than 1 FTE in the second reporting round and over 40,000 in the third reporting round for the SFSF education stabilization funds. Education officials stated that rarely would the districts in one state hire 40,000 teachers in 1 quarter. Rather, Education officials said the state likely made a decision to allocate those funds in that quarter to teacher salaries. Similarly, from the fourth to fifth reporting rounds, the number of FTEs more than doubled in Arkansas and nearly doubled in Florida for the SFSF education stabilization funds. Education officials explained that any significant increase or decrease in FTEs likely reflects the state's decision to allocate the funds in one quarter rather than during another quarter. They noted that some states used their funds consistently over time, whereas others used a large portion of the funds at the beginning or end of a school year. Therefore, sharp increases or decreases in the FTE data are not uncommon or unexpected. Delaware reported no FTEs for SFSF government services funds in the eighth reporting round. Education officials stated that Delaware decided to use those funds on operating costs, not salaries.

Education officials told GAO that recipient reported FTE data were useful to them when assessing the impact of grants on jobs funded. Education does not have any comparable data on jobs funded. Therefore, FTE data provided them a measure of the extent to which the Recovery Act programs, particularly SFSF, accomplished that specific goal of funding jobs. According to Education officials, determining jobs funded was an important, but secondary impact of the Recovery Act funding for the ESEA Title I, Part A and IDEA, Part B grants. The purpose of ESEA Title I is to ensure that all children have a fair, equal, and significant opportunity to obtain a high-quality education by providing financial assistance to LEAs and schools with high numbers or percentages of poor children. The purpose of IDEA, Part B is to ensure that all students with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs. According to Education officials, some of the services provided to students using the ESEA Title I, Part A and IDEA, Part B Recovery Act funds led to the creation of jobs while others served the needs of children but did not directly create jobs. Therefore, while FTE data did provide a useful indication of jobs funded for those programs under the Recovery Act, other measures such as student outcomes will be more useful after the Recovery Act ends when assessing the impact of programs with education-related goals.

What GAO DidBack to top

For GAO's review of the latest submission of recipient reports covering the period from April 1, 2011, through June 30, 2011, GAO built on findings from its prior reviews of the reports. GAO performed edit checks and basic analyses on the latest submission of recipient report data that became publicly available at Recovery.gov on July 30, 2011. To understand how the quality of jobs data reported by Recovery Act education grantees has changed over time, GAO compared the 8 quarters of recipient reporting data that were publicly available at Recovery.gov on July 30, 2011.

In addition, GAO also reviewed documentation and interviewed federal agency officials from Education who have responsibility for ensuring a reasonable degree of quality across their programs' recipient reports. Due to the limited number of recipients reviewed and the judgmental nature of the selection, the information GAO gathered about state reporting and oversight of FTEs is limited to those selected states in GAO's review and not generalizable to other states. GAO’s findings based on analyses of FTE data are limited to those Recovery Act education programs and time periods examined and are not generalizable to any other programs’ FTE reporting.

GAO compared, at the aggregate and state level, funding data reported directly by recipients on their quarterly reports against the recipient funding data maintained by Education. The cumulative funding data reported by the recipients aligned closely with the funding data maintained by the Department of Education. An Education Inspector General report included a similar analysis comparing agency data to recipient reported data from the first quarter of 2010. Although not directly comparable to GAO’s analysis, their assessment identified various discrepancies between agency and recipient reported data. GAO also noted some discrepancies across the education programs GAO reviewed where the state recipients’ reported expenditures were either greater or less than 10 percent of the respective outlays reported by Education. In general, however, GAO considers the recipient report data to be sufficiently reliable for the purpose of providing summary, descriptive information about FTEs or other information submitted on grantees’ recipient reports.

Full Report

September 22, 2011

Recovery Act Education Programs:
Funding Retained Teachers, but Education Could More Consistently Communicate Stabilization Monitoring Issues
GAO-11-804
Recovery Act Education Programs:
Survey of School Districts' Uses of Funds
GAO-11-885SP