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Report to Congressional Requesters:
December 2004:
AMERICAN SAMOA:
Accountability for Key Federal Grants Needs Improvement:
GAO-05-41:
GAO Highlights:
Highlights of GAO-05-41, a report to congressional requesters
Why GAO Did This Study:
American Samoa, a U.S. territory, relies on federal funding to support
government operations and deliver critical services. The Secretary of
the Interior has administrative responsibility for coordinating federal
policy in the territory. Under the Single Audit Act of 1996, American
Samoa is required to perform a yearly single audit of federal grants
and other awards to ensure accountability.
To better understand the role of federal funds in American Samoa, GAO
(1) examined the uses of 12 key grants in fiscal years 1999-2003, (2)
identified local conditions that affected the grants, and (3) assessed
accountability for the grants.
What GAO Found:
In fiscal years 1999-2003, 12 key federal grants supported essential
services in American Samoa. These services included support for
government operations, infrastructure improvements, nutrition
assistance, the school system, special education, airport and highway
infrastructure improvements, Medicaid, and early childhood education.
A shortage of adequately trained professionals, such as accountants and
teachers, as well as inadequate facilities and limited local funds
hampered service delivery or slowed project completion for many of the
grants. For example, American Samoa’s only hospital lacked an adequate
number of U.S.-certified medical staff. Further, the hospital had
persistent and serious fire-safety code deficiencies that jeopardized
its ability to maintain the certification required for Medicaid
funding.
American Samoa’s failure to complete single audits, federal agencies’
slow reactions to this failure, and instances of theft and fraud
limited accountability for the 12 grants to American Samoa. The
American Samoa government did not comply with the Single Audit Act
during fiscal years 1998-2003. The 1998-2000 audit reports, completed
in 2003, and the 2001 audit report, completed in 2004, cited pervasive
governmentwide and program-specific accountability problems. Despite
the audits’ delinquency, federal agencies were slow, or failed, to
communicate concern to the American Samoa government or to take
corrective action. In addition, accountability for all of the grants
was potentially undermined by instances of theft and fraud. For
example, the American Samoa Chief Procurement Officer, whose office
handles procurements for most of the grants GAO reviewed, was convicted
of illegal procurement practices.
Single Audit Deadlines and Completion Dates:
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO recommends that the Secretary of the Interior coordinate with other
granting federal agencies and the American Samoa government to resolve
fire-safety issues that threaten the hospital’s continued certification
to participate in Medicaid. GAO also recommends that the Secretary
coordinate with the other agencies to designate the American Samoa
government as a high-risk grantee at least until it has completed all
delinquent single audits and to take steps designed to ensure that the
American Samoa government completes its overdue, current, and future
single audits in compliance with the Single Audit Act.
www.gao.gov/cgi-bin/getrpt?GAO-05-41.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact David Gootnick, (202)
512-3149, gootnickd@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Federal Grants Provided Essential Services to American Samoa:
Local Conditions Limited Delivery of Services or Project Completion for
Many of the Grants:
Grants Had Limited Accountability, and U.S. Agencies Reacted Slowly:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: U.S. Department of the Interior Programs in American
Samoa:
Government Operations Grant:
Capital Improvement Grants:
General Technical Assistance Grants:
Appendix III: U.S. Department of Agriculture Programs in American
Samoa:
School Lunch Program:
Special Supplemental Nutrition Program for Women, Infants, and
Children:
Food Stamp Program:
Appendix IV: U.S. Department of Education Programs in American Samoa:
Innovative Programs Grants:
Special Education Grants:
Appendix V: U.S. Department of Transportation Programs in American
Samoa:
Airport Improvement Program:
Federal-Aid Highway Program:
Appendix VI: U.S. Department of Health and Human Services Programs in
American Samoa:
Medicaid:
Head Start:
Appendix VII: Federal Grants Process in American Samoa:
Appendix VIII: Comments from the Department of the Interior:
GAO Comments:
Appendix IX: Comments from the Department of Health and Human Services:
GAO Comment:
Appendix X: Comments from the American Samoa Government:
GAO Comments:
Appendix XI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Staff Acknowledgments:
Tables Tables:
Table 1: Key Federal Grants to American Samoa, Fiscal Years 1999-2003:
Table 2: Government Operations Grant to American Samoa, Fiscal Years
1999-2003:
Table 3: Capital Improvement Grants Awards to American Samoa, Fiscal
Years 1999-2003:
Table 4: General Technical Assistance Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Table 5: School Lunch Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Table 6: WIC Program Grant Awards to American Samoa, Fiscal Years 1999-
2003:
Table 7: Food Stamp Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Table 8: Innovative Programs Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Table 9: Budget Allocation of Innovative Programs Grant Funds to
American Samoa, Fiscal Year 2003:
Table 10: Special Education Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Table 11: Airport Improvement Program Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Table 12: Federal-Aid Highway Program Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Table 13: Federal Medicaid Funds to American Samoa, Fiscal Years 1999-
2003:
Table 14: Head Start Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Figures:
Figure 1: Map Showing Location of American Samoa:
Figure 2: Selected Federal-aid Highway Projects in American Samoa:
Figure 3: LBJ Hospital's Key Revenue Sources, Fiscal Years 1998-2003:
Figure 4: American Samoa Single Audit Time Line and Federal Actions,
Fiscal Years 1997-2003:
Figure 5: American Samoan Organizations or Sectors Receiving DOI
Capital Improvement Grants, Fiscal Years 1999-2003:
Figure 6: Tafuna High School Classroom Block Built with Capital
Improvement Grant Funds, American Samoa:
Figure 7: LBJ Hospital Laboratory Renovated with Capital Improvement
Grant Funds, American Samoa:
Figure 8: Airport Immigration Tracking System, American Samoa:
Figure 9: School Lunch Program at Leone Midkiff Elementary School,
American Samoa:
Figure 10: Vendor Posting of Official Food List for American Samoa Food
Stamp Program:
Figure 11: New Fire Suppression Vehicle for American Samoa Airports:
Figure 12: Head Start Classroom at Tafuna Early Childhood Education
Center, American Samoa:
Abbreviations:
ASG: American Samoa government:
CAFR: Comprehensive Annual Financial Report:
CPI: Consumer Price Index:
DOI: U.S. Department of the Interior, Office of Insular Affairs:
DOT: U.S. Department of Transportation:
EBT: electronic benefit transfer:
ED: U.S. Department of Education:
FAA: Federal Aviation Administration:
FHWA: Federal Highway Administration:
FNS: Food and Nutrition Service:
HHS: U.S. Department of Health and Human Services:
IDEA: Individuals with Disabilities Education Act:
LBJ hospital: Lyndon Baines Johnson Tropical Medical Center:
Medicaid: Medical Assistance Program:
MOA: memorandum of agreement:
MOU: memorandum of understanding:
NCLBA: No Child Left Behind Act:
NHS: National Highway System:
OCFO: Office of the Chief Financial Officer:
OMB: Office of Management and Budget:
TEA-21: Transportation Equity Act for the 21ST Century:
TOFR: Territorial Office of Fiscal Reform:
USDA: U.S. Department of Agriculture:
WIC: Special Supplemental Nutrition Program for Women, Infants and
Children:
Letter December 17, 2004:
The Honorable Nick J. Rahall II:
Ranking Minority Member:
Committee on Resources:
House of Representatives:
The Honorable Eni F.H. Faleomavaega:
House of Representatives:
American Samoa, a U.S. territory,[Footnote 1] relies on federal funding
to support its general government operations and deliver critical
services; over the last 5 years, federal awards to the territory
represented, on average, about 45 percent of the territory's operating
budget.[Footnote 2] Each fiscal year, the government of American Samoa
is required by the Single Audit Act of 1996 to undergo an audit of its
federally funded programs within 9 months of the year's end.[Footnote
3] The Secretary of the Interior has general administrative
responsibility for coordinating this and other federal policies in
American Samoa, and the U.S. Department of the Interior's Office of
Insular Affairs (DOI) is authorized to take appropriate action
regarding the single audit.[Footnote 4] The American Samoa government,
which has historically operated under deficits, has struggled to reform
its financial management and decrease its dependence on federal funds
by increasing local revenues. However, the territory has a limited
economic base: its largest employer is the American Samoa government,
and the next largest employers are two tuna canneries that benefit from
federal tax incentives due to expire in 2005.
We reviewed 12 key federal grants that provided about $450 million to
American Samoa during fiscal years 1999-2003. In fiscal year 2000,
these grants represented about three-quarters of all federal
expenditures by the American Samoa government. To better understand the
role of federal funds in American Samoa, we (1) examined the uses of
these key federal grants to American Samoa, (2) identified local
conditions that affected the grants, and (3) assessed accountability
for the grants.[Footnote 5]
To examine the use of the grants and the effects of local conditions,
we collected and reviewed grant data from the federal and local
agencies responsible for overseeing the selected programs in fiscal
years 1999-2003, interviewed federal and American Samoa program
officials to learn about program activities and operations, and
conducted site visits in American Samoa to observe programs and
projects funded by the 12 grants. To assess accountability, we reviewed
legislation, regulations, and other relevant documents; monitoring
reports and financial audits conducted by federal agencies; and
American Samoa's single audit reports for fiscal years 1998-2001, which
were completed in 2003 and 2004. We also conducted federal agency
interviews and on-site observations. We performed this work between
September 2003 and October 2004 according to generally accepted
government auditing standards. Appendix I provides further details of
our scope and methodology. Appendixes II through VI describe each
federal department's use of grant funds and assess the performance and
accountability for each of the 12 grants we reviewed.
Results in Brief:
In fiscal years 1999-2003, five federal departments provided 12 key
grants to the American Samoa government to support several essential
services. DOI provided grants to support government operations and
infrastructure improvements. The U.S. Department of Agriculture (USDA)
offered nutrition assistance to about half of the territory's
population. The U.S. Department of Education (ED) provided a large
share of grant funding to the American Samoa school system and
supported the Special Education Program. Airport and highway grants
from the U.S. Department of Transportation (DOT) supported important
infrastructure improvements. The U.S. Department of Health and Human
Services (HHS) supported health care services at Lyndon Baines Johnson
Tropical Medical Center (LBJ Hospital), the territory's sole hospital,
as well as early childhood education.
Local conditions in American Samoa in fiscal years 1999-2003 limited
the delivery of services or project completion for many of the 12
grants we reviewed. A shortage of adequately trained professionals in
American Samoa, such as qualified accountants, technical staff,
teachers, and health care specialists, hindered financial oversight for
all of the grants as well as service delivery for several of the
programs we reviewed. For example, LBJ Hospital lacked an adequate
number of U.S.-certified medical staff. Additionally, inadequate
facilities at schools and LBJ Hospital hampered the ability of the Head
Start and Medicaid Programs to deliver services to their target
recipients. In particular, the hospital suffered from persistent and
serious fire-safety code deficiencies that jeopardized its ability to
maintain the certification required for continued Medicaid funding.
Limited local funds also affected the hospital's ability to hire needed
staff to deliver required services as well as its ability to upgrade
its facility to correct long-standing fire-safety issues. Similarly,
insufficient local revenues affected the ability of American Samoa
airports to complement or match federal Airport Improvement Program
grant funds and slowed the completion of critical infrastructure
upgrades and the acquisition of rescue equipment.
In fiscal years 1998-2003, American Samoa failed to complete single
audits as required, limiting accountability for the grants, and federal
agencies reacted slowly to this failure; accountability may have been
further weakened by incidents of theft and fraud. The American Samoa
government did not comply with the Single Audit Act during fiscal years
1998-2003, compromising the accountability of all federal grants to the
territory. Further, delinquent single audit reports for fiscal years
1998-2000, completed in 2003, and the 2001 single audit, completed in
2004, cited pervasive governmentwide and program-specific
accountability problems. Despite the lack of single audits, most
federal agencies responsible for the 12 grants that we reviewed were
slow to communicate their concern to the American Samoa government or
did not take corrective action, although they were authorized to do so.
In August 2002, DOI, the agency responsible for audit supervision, and
the American Samoa government signed a memorandum of agreement (MOA)
that included a schedule for completing the delinquent audits. In
September 2003, ED designated American Samoa as a high-risk grantee
because of its lack of single audits. However, DOI did not coordinate
with the other awarding agencies to ensure compliance with the Single
Audit Act and the terms of the MOA. Furthermore, documented instances
of theft and fraud undermined the accountability of most of the grants
we reviewed. For example, the Chief Procurement Officer of the American
Samoa Government was convicted of illegal procurement practices,
potentially affecting most of the grants. Other examples of theft or
fraud included bid-rigging in the American Samoa department that
administers the Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC) and the Food Stamp Program, as well as
vendor fraud in WIC and theft of goods from the School Lunch Program
warehouse.
We are recommending that the Secretary of the Interior coordinate with
other federal granting agencies and the American Samoa government to
ensure the resolution of fire-safety deficiencies threatening LBJ
Hospital's continued Medicare certification as well as to address the
hospital's staffing and resources constraints, as warranted. To improve
fiscal accountability, we are recommending that the Secretary
coordinate with other federal agencies to designate the American Samoa
government as a high-risk grantee, particularly until it has completed
all of its overdue single audits; to take steps designed to ensure that
the American Samoa government completes its overdue single audits in
compliance with the Single Audit Act; and to take steps designed to
ensure that current and future single audits are completed in
compliance with the act.
We provided a draft of this report to the Departments of the Interior,
Agriculture, Education, Transportation, and Health and Human Services
as well as to the government of American Samoa. We received oral
comments from the Departments of Agriculture, Education, and
Transportation. The Departments of Agriculture and Transportation
limited their oral comments to technical corrections. The Department of
Education agreed with our recommendations and provided technical
corrections. We received written comments from the Departments of the
Interior and Health and Human Services as well as the American Samoa
government, which are reprinted in appendixes VIII, IX, and X. Both
departments agreed with all but our recommendation to designate
American Samoa a high-risk grantee. However, DOI agreed to consult with
the other federal agencies to evaluate whether, or under what
conditions, a joint declaration of American Samoa's high-risk status
would be prudent and to discuss what other steps might be taken to help
American Samoa come into compliance with the Single Audit Act more
quickly. The American Samoa government strongly recommended against its
being declared a high-risk grantee, because it believes that high-risk
status would imperil future funding. We believe that a coordinated,
consistent approach to a high-risk grantee across the agencies would be
more productive than the agencies' current inconsistent approaches. A
high-risk designation would not result in an immediate suspension of
federal grants.
Background:
American Samoa lies 2,600 miles southwest of Hawaii and consists of
seven islands,[Footnote 6] covering a land area of 76 square miles (see
fig. 1). In 2003, it had a population of 57,844.[Footnote 7] The main
island of Tutuila has very little level land and is mostly rugged, with
four high peaks, the tallest rising over 2,000 feet. Agricultural
production is limited by the scarcity of arable land, and tourism is
impaired by the island's remote location and lack of tourist-rated
facilities. Two tuna canneries constitute the main sources of private
sector employment. Most of the economic activity and government
operations on Tutuila take place in the Pago Pago Bay area.
Figure 1: Map Showing Location of American Samoa:
[See PDF for image]
[End of figure]
As an unorganized, unincorporated[Footnote 8] U.S. territory, American
Samoa is not subject to the U.S. Constitution in the same manner as the
50 states. For example, some constitutional rights, such as the rights
to vote in national elections and to full voting representation in the
U.S. Congress, do not apply to American Samoa. Although no
congressional act formally establishes a government structure in
American Samoa, the territory has its own local government and
constitution. Those born in American Samoa are U.S. nationals.[Footnote
9] Since 1977, a popularly elected governor has headed the American
Samoan executive branch for a 4-year term, and the legislature, or
Fono, has comprised 18 elected senators and 20 elected representatives.
Nearly 40 American Samoan departments, offices, and other entities
provide public safety, public works, education, health, commerce, and
other services to American Samoans.
Providing these services has proved financially challenging for the
American Samoan government. After a period of relative budget growth in
the early 1980s, the territory's finances rapidly deteriorated in the
second half of the decade when expenditures exceeded income in American
Samoa's budget. In fiscal year 1991, the government borrowed $5 million
from its employee pension fund to temporarily relieve its cash flow
problems.
Following a GAO report in 1992, Congress directed DOI and the American
Samoa government to form a joint working group to address the
government's financial management problems.[Footnote 10] The working
group made recommendations to the American Samoa government, which
pledged to implement a financial recovery plan based on these
recommendations. Beginning in fiscal year 1997, the Senate
Appropriations Committee directed DOI to withhold $2 million of capital
improvement funding from the territory until DOI could certify that the
American Samoan government had adequately implemented the recovery
plan.[Footnote 11] However, the territory's financial situation
subsequently worsened and, in 1999, Congress authorized[Footnote 12] a
direct federal loan to American Samoa for $18.6 million[Footnote 13] to
pay debts and implement reforms. In 2001, the American Samoa government
submitted an initial fiscal reform plan to DOI. DOI and the American
Samoa government signed an MOA in 2002, implementing fiscal and
operational reforms. The MOA was designed to bring the American Samoa
government operating expenses into balance with projected revenues for
fiscal years 2003 and beyond. It also outlined a schedule for American
Samoa to complete all outstanding single audit reports.
Five federal departments have historically provided significant grants
to the American Samoa government, including one large grant from DOI to
support government operations. During fiscal years 1999-2003, DOI,
USDA, ED, DOT, and HHS provided about $450 million in grant funds to
American Samoa through 12 key grants. Of these 12 grants, 4 were
structured specifically for American Samoa, 2 were structured for all
U.S. insular areas, and 6 were structured in the same manner as in the
50 U.S. states. Table 1 shows the federal awarding departments and
agencies, the grants, the grant structures, and the grant award amounts
for fiscal years 1999-2003.
Table 1: Key Federal Grants to American Samoa, Fiscal Years 1999-2003:
Dollars in millions.
Awarding department, agency, and grant: Interior, Office of Insular
Affairs; Government operations grant;
Grant structure[A]: American Samoa;
Grant award[B]: 1999: $22.8;
Grant award[B]: 2000: $22.8;
Grant award[B]: 2001: $22.7;
Grant award[B]: 2002: $22.8;
Grant award[B]: 2003: $22.7;
Grant award[B]: 5-year total: $113.8.
Awarding department, agency, and grant: Interior, Office of Insular
Affairs; Capital improvement grants;
Grant structure[A]: Insular areas;
Grant award[B]: 1999: $8.2;
Grant award[B]: 2000: $10.1;
Grant award[B]: 2001: $12.1;
Grant award[B]: 2002: $10.1;
Grant award[B]: 2003: $10.1;
Grant award[B]: 5-year total: $50.8.
Awarding department, agency, and grant: Interior, Office of Insular
Affairs; Technical assistance grants;
Grant structure[A]: Insular areas;
Grant award[B]: 1999: $0.3;
Grant award[B]: 2000: $0.1;
Grant award[B]: 2001: $0.7;
Grant award[B]: 2002: $0.6;
Grant award[B]: 2003: $0.1;
Grant award[B]: 5-year total: $1.7.
Awarding department, agency, and grant: Agriculture, Food and Nutrition
Services; School Lunch Program;
Grant structure[A]: American Samoa;
Grant award[B]: 1999: $8.5;
Grant award[B]: 2000: $9.1;
Grant award[B]: 2001: $9.7;
Grant award[B]: 2002: $10.5;
Grant award[B]: 2003: $11.2;
Grant award[B]: 5-year total: $49.0.
Awarding department, agency, and grant: Agriculture, Food and Nutrition
Services; Special Supplemental Nutrition Program for Women, Infants and
Children (WIC);
Grant structure[A]: United States;
Grant award[B]: 1999: $4.9;
Grant award[B]: 2000: $5.0;
Grant award[B]: 2001: $5.2;
Grant award[B]: 2002: $5.5;
Grant award[B]: 2003: $6.1;
Grant award[B]: 5-year total: $26.7.
Awarding department, agency, and grant: Agriculture, Food and Nutrition
Services; Food Stamp Program;
Grant structure[A]: American Samoa;
Grant award[B]: 1999: $5.3;
Grant award[B]: 2000: $5.3;
Grant award[B]: 2001: $5.3;
Grant award[B]: 2002: $5.3;
Grant award[B]: 2003: $5.4;
Grant award[B]: 5-year total: $26.6.
Awarding department, agency, and grant: Education, Office of Elementary
and Secondary Education; Innovative Programs grant;
Grant structure[A]: United States;
Grant award[B]: 1999: $6.8;
Grant award[B]: 2000: $7.0;
Grant award[B]: 2001: $7.7;
Grant award[B]: 2002: $15.3;
Grant award[B]: 2003: $16.8;
Grant award[B]: 5-year total: $53.6.
Awarding department, agency, and grant: Education, Office of Special
Education and Rehabilitative Services; Special Education Grants to
States;
Grant structure[A]: United States;
Grant award[B]: 1999: $4.8;
Grant award[B]: 2000: $5.0;
Grant award[B]: 2001: $5.1;
Grant award[B]: 2002: $5.7;
Grant award[B]: 2003: $5.8;
Grant award[B]: 5-year total: $26.4.
Awarding department, agency, and grant: Transportation, Federal
Aviation Administration; Airport Improvement Program;
Grant structure[A]: United States;
Grant award[B]: 1999: $9.6;
Grant award[B]: 2000: $8.9;
Grant award[B]: 2001: $7.5;
Grant award[B]: 2002: $8.9;
Grant award[B]: 2003: $4.4;
Grant award[B]: 5-year total: $39.3.
Awarding department, agency, and grant: Transportation, Federal Highway
Administration; Federal-aid Highway Program;
Grant structure[A]: United States;
Grant award[B]: 1999: $5.0;
Grant award[B]: 2000: $5.5;
Grant award[B]: 2001: $5.8;
Grant award[B]: 2002: $7.5;
Grant award[B]: 2003: $6.6;
Grant award[B]: 5-year total: $30.4.
Awarding department, agency, and grant: Health and Human Services,
Centers for Medicare & Medicaid Services; Medical Assistance Program
(Medicaid);
Grant structure[A]: American Samoa;
Grant award[B]: 1999: $3.1;
Grant award[B]: 2000: $3.2;
Grant award[B]: 2001: $3.3;
Grant award[B]: 2002: $3.5;
Grant award[B]: 2003: $3.7;
Grant award[B]: 5-year total: $16.8.
Awarding department, agency, and grant: Health and Human Services,
Administration for Children and Families; Head Start;
Grant structure[A]: United States;
Grant award[B]: 1999: $1.7;
Grant award[B]: 2000: $2.7;
Grant award[B]: 2001: $3.2;
Grant award[B]: 2002: $3.7;
Grant award[B]: 2003: $2.3;
Grant award[B]: 5-year total: $13.5.
Grant award total[C];
Grant award[B]: 1999: $81.0;
Grant award[B]: 2000: $84.7;
Grant award[B]: 2001: $88.4;
Grant award[B]: 2002: $99.5;
Grant award[B]: 2003: $95.2;
Grant award[B]: 5-year total: $448.8.
Source: GAO analysis of federal agency award data.
[A] Of the 12 grants, 4 were structured specifically for American
Samoa, 2 were structured for all U.S. insular areas, and 6 were
structured in the same manner as in the 50 states.
[B] Grant awards are shown in nominal dollars and exclude grant
amendments. DOI's Government Operations grant includes general U.S.
government budget rescissions.
[C] Total may not correspond to the column sum because of rounding.
[End of table]
Federal Grants Provided Essential Services to American Samoa:
In fiscal years 1999-2003, 12 federal grants, funded by five
departments, provided and supported several essential services in
American Samoa. DOI awarded grants that subsidized government
operations, supported infrastructure improvements, and provided
technical assistance. USDA awarded grants that provided nutrition
assistance for which about half of the territory's population was
eligible. ED awarded grant funds that supported American Samoa's
education programs, including the special education program. DOT
awarded grants for critical infrastructure improvements to the
territory's airports and roadways. Finally, HHS awarded grants to
support health care and early childhood education in American Samoa.
DOI Supported Government Operations and Infrastructure Improvements:
In fiscal years 1999-2003, DOI provided grants that supported
government operations and infrastructure improvements in American
Samoa. DOI provided, on average, about 16 percent of the American Samoa
government's total budget during the period of our review, through an
annual direct subsidy as well as through grants for capital
improvements and technical assistance. (See app. II for more details
and an assessment of the DOI grants.)
Government Operations Grant:
DOI provides the government operations grant as an annual direct
subsidy to the American Samoa government to help fund the difference
between the territory's revenues and the cost of maintaining its
current government programs and services. To promote the American Samoa
government's self-sufficiency, DOI has held the amount of the grant
constant, without adjusting it for inflation or population growth. The
grant supports general government operations, including public works,
economic development, and salaries. Specific operations that the grant
supports include American Samoa's Department of Education; LBJ
Hospital, the territory's primary clinic and only hospital; and the
High Court of American Samoa. In fiscal years 1999-2003, the American
Samoa government received an average annual operations grant award of
about $23 million. According to DOI officials and our analysis, the
portion of the American Samoa government's budget supported by the
government operations grant decreased from about 18 percent in fiscal
year 1999 to about 15 percent in fiscal year 2003.[Footnote 14]
Capital Improvement Grants:
DOI's capital improvement grants provide funds to improve the physical
infrastructure of American Samoa and other U.S. insular areas. Capital
improvement projects in American Samoa are prioritized and carried out
according to the American Samoa government's Capital Improvements Plan.
In fiscal years 1999-2003, DOI provided an average annual award for
capital improvement grants of $10.2 million to the American Samoa
government. During this period, about 28 percent of the funds awarded
to American Samoa were allotted for water and sewer improvements; 25
percent for school improvements, including new and renovated
classrooms; 16 percent for improvements to the LBJ Hospital; and 4
percent for roads. LBJ Hospital was allotted about $1.5 million for
each year during that period.
Technical Assistance Grants:
DOI provided general technical assistance grants to all U.S. insular
areas for short-term noncapital projects, such as obtaining computer
hardware and software and providing training to improve the insular
area's capacity to conduct government operations. In fiscal years 1999-
2003, DOI's general technical assistance grants provided American Samoa
an average of about $350,000 annually. Examples of DOI's technical
assistance included, in April 2001, a $200,000 grant to the American
Samoa Port Authority to purchase and install a container tracking
system for cargo entering and leaving American Samoa's harbor of Pago
Pago and, in April 2002, a $185,000 grant to the American Samoa
government to purchase and install an upgraded immigrant tracking
system. LBJ Hospital also received technical assistance grants.
USDA Offered Nutrition Assistance to About Half of the American Samoan
Population:
Three USDA programs made nutrition assistance available to about half
of the American Samoan population during most of the period of our
review. The School Lunch Program made free breakfast and lunch
available to all school-age children. WIC provided nutrition assistance
to pregnant, breast-feeding, and postpartum women and to infants and
children up to 5 years of age. The Food Stamp Program in American Samoa
provided nutrition assistance to the low-income elderly, the blind, and
the disabled. (See app. III for a more detailed description and an
assessment of the USDA grants.)
School Lunch Program:
USDA's School Lunch Program is funded as a special block grant and
operates under a memorandum of understanding (MOU) established
specifically for American Samoa in 1991 and administered by the
American Samoa Department of Education. Before 1991, the program in
American Samoa followed the same requirements as in the rest of the
United States, providing subsidized breakfast and lunch to children in
public and nonprofit schools, based on the income level of the
children's households. Since 1991, the American Samoa School Lunch
Program has provided free breakfast and lunch to all school-age
children. Officials explained that the change in grant and program
structure gave American Samoa greater flexibility to serve the needs of
its children. In fiscal years 1999-2003, USDA provided an average
annual grant of $9.8 million. In school year 2002-2003, the American
Samoa Department of Education reported public and private school
enrollment of about 19,000 students, all of whom are eligible for the
program. In the same year, the School Lunch Program served about 3.2
million breakfasts and 3.6 million lunches. The program currently
serves meals at 23 elementary schools, 6 high schools, 10 private
schools, 55 early childhood education (Head Start) centers, and 37 day
care centers. The program has no citizenship, residency, or income
requirements.
Special Supplemental Nutrition Program for Women, Infants, and
Children:
USDA's WIC Program in American Samoa follows the same requirements as
the program in the 50 states, providing supplemental food and nutrition
education at no cost to eligible pregnant, breast-feeding, and
postpartum women and to infants and children up to 5 years of age. The
American Samoa WIC Program was established in 1996 and is administered
by the American Samoa Department of Human and Social Services. In
fiscal years 1999-2003, USDA provided an average annual grant of $5.3
million. During fiscal years 2000-2003, an average of about 6,000
recipients were receiving monthly WIC "food instruments," or checks.
Eligibility for benefits is determined on the basis of nutritional
risk, income,[Footnote 15] and residency.
Food Stamp Program:
USDA's Food Stamp Program in American Samoa is designed specifically
for the territory and operates under a MOU that allows American Samoa
to provide food vouchers for the low-income elderly and for blind and
disabled persons. Under the MOU, American Samoa is able to set its own
eligibility standards as long as it stays within the capped block
grant--in fiscal year 2003, about $5.4 million.[Footnote 16] In the 50
states, the Food Stamp Program is an entitlement program; all qualified
applicants receive benefits, and funding is not capped. In American
Samoa, Food Stamp recipients must meet financial and nonfinancial
eligibility criteria, as specified in the MOU;[Footnote 17] however,
benefits are calculated so as not to cumulatively exceed the capped
grant. The maximum benefit in American Samoa for fiscal year 2004 was
$132 per person per month. In fiscal years 1999-2003, USDA provided an
average annual grant of $5.3 million. During fiscal years 2000-2003,
the program served an average of about 2,800 recipients monthly. The
program is one of the few remaining U.S. Food Stamp Programs that still
uses paper food coupons; most of the other programs have implemented an
electronic benefits transfer system to provide food assistance to
eligible recipients.
ED Supported the American Samoa School System and Special Education
Students:
ED's Innovative Programs grant provides a large share of funds to the
American Samoa Department of Education to support its education
programs, and ED's Special Education grant funds the territory's
special education program. In fiscal year 2003, the two grants
provided, respectively, about $16.8 million and $5.8 million. (See app.
IV for a more detailed description and an assessment of the ED
grants.)
Innovative Programs Grant:
State and local education agencies are eligible for federal grants and
funds to implement numerous federal education programs. In fiscal years
1999-2003, using a consolidated grant application, American Samoa
applied for and received an Innovative Programs grant to fund many of
the territory's education programs. The Innovative Programs grant is
designed to assist state and local education agencies in implementing
education reform programs and improving student achievement. Funding
under the grant can be used to implement local Innovative Programs,
which may include at least 27 activities identified in the No Child
Left Behind Act of 2001.[Footnote 18] For fiscal years 1999-2003, the
American Samoa Department of Education reported that it implemented
programs for training instructional staff, acquiring student materials,
implementing technology, meeting the needs of students with limited
English proficiency, and enhancing the learning ability of students who
are low achievers. During the 5-year period, the annual Innovative
Programs grant increased from about $6.8 million in fiscal year 1999 to
about $16.8 million in fiscal year 2003. Beginning in 2002, the grant
award to American Samoa more than doubled as a result of the No Child
Left Behind Act of 2001, which increased appropriations for the
Innovative Programs and other education programs.[Footnote 19] The
grant award that the American Samoa government received in fiscal year
2003 provided about 40 percent of the American Samoa Department of
Education's budget for that year. Other federal funds provided another
30 percent of American Samoa's education budget (including funds from
the DOI Government Operations grant), with local funds contributing the
remaining portion.
Special Education Program:
In fiscal years 1999-2003, ED provided an average of $5.3 million,
under its Individuals with Disabilities Education Act (IDEA) grants,
for American Samoa's Special Education Program. The program is required
to provide a free, appropriate public education to eligible children
with disabilities, regardless of nationality or citizenship. The
Special Education Program in American Samoa operates under the same
requirements and guidelines as special education programs in the 50
states and is almost entirely funded by its annual IDEA grant. The
American Samoa Department of Education reported that, as of January
2004, its Special Education Program was providing services to slightly
more than 1,100 eligible 3-to 21-year-old students with disabilities.
DOT Provided Grants for Airport and Highway Infrastructure
Improvements:
DOT provided funds that allowed for important airport and roadway
infrastructure improvements through the Airport Improvement Program and
the Federal-aid Highway Program grants. (See app. V for more details
and an assessment of the DOT grants.)
Airport Improvement Program:
In fiscal years 1999-2003, DOT, through the Federal Aviation
Administration's (FAA) Airport Improvement Program, provided American
Samoa an average annual grant of $7.9 million. The program operates
under the same regulations in American Samoa as in the rest of the
United States. American Samoa has three airports, all of which receive
Airport Improvement Program grants. The main airport, Pago Pago
International, has two runways, one of which can accommodate large
commercial jets,[Footnote 20] and has eight commercial airline flights
departing per week. Since 1998, the Airport Improvement Program grants
have been used for extending runways and constructing taxiways and for
rehabilitation and new overlays of existing runways, taxiways, and
shoulders. Projects funded with Airport Improvement Program grants also
included the construction of a rescue and firefighting training
facility, new aircraft rescue and firefighting vehicles, and perimeter
fencing to improve airport security. Runway safety areas at Pago Pago
International Airport, the territory's main airport, were upgraded to
meet FAA standards, providing additional margins of safety. These
projects have benefited from the presence of an airport engineer, hired
with funds from the Operations and Maintenance Improvement Program, a
separate DOI grant.
Federal-Aid Highway Program:
DOT's Federal Highway Administration provided American Samoa an average
annual grant of $6.2 million under the Federal-aid Highway Program
during fiscal years 1999-2003.[Footnote 21] Although the territory's
highway subprograms are funded under a separate statute,[Footnote 22]
the Federal Highway Administration administers them in the same manner
as programs in the other states under the Federal-aid Highway Program,
with the territorial transportation agency functioning as the state
highway agency. American Samoa's Five-Year Highway Division Master Plan
sets forth sequenced budgets and time frames to improve and maintain
Route 1, the island's main traffic corridor. The American Samoa
Department of Public Works typically handles the planning and
construction supervision of the highway program. Figure 2 shows a map
of American Samoa and selected highway projects that we reviewed along
Route 1 and other village roads.[Footnote 23]
Figure 2: Selected Federal-aid Highway Projects in American Samoa:
[See PDF for image]
[End of figure]
HHS Supported Health Care and Early Childhood Education:
HHS grants supported (1) health care at LBJ Hospital under the Medicaid
program and (2) early childhood education for American Samoan children
under the Head Start Program. (See app. VI for more details and
assessments of each grant.)
Medicaid:
HHS's Medicaid Program in American Samoa operates under a U.S.
statutory waiver, which exempts it from most Medicaid laws and
regulations;[Footnote 24] instead, it uses a plan of operations
approved by HHS. A territorial statute requires American Samoa to
provide free health care to its population.[Footnote 25] Virtually all
care, both inpatient and outpatient, is provided by LBJ Hospital, which
is managed by the LBJ Medical Center Authority. In fiscal years 1999-
2003, HHS provided the hospital an average annual reimbursement of $3.4
million; in fiscal year 2003, federal Medicaid funds represented about
13 percent of the hospital's revenues.[Footnote 26] American Samoa
receives a capped amount for its Medicaid Program, like the other U.S.
territories[Footnote 27] but unlike the states, where Medicaid is
treated as an entitlement program with no cap on total federal funds.
In American Samoa, the federal Medicaid grant is used as one of the
hospital's sources of revenue to support the territory's universal
health care system, rather than as support for a separate Medicaid
Program with enrolled Medicaid beneficiaries as in the 50 states.
Although there is no separate Medicaid enrollment in American Samoa,
HHS requires the LBJ Medical Center Authority to submit an annual
estimate of the population presumed to be eligible for Medicaid. This
estimate of "presumed eligibility" is based on the size of the
population in American Samoa and the percentage of families living
below the U.S. poverty level, according to the U.S. Census.[Footnote
28]
As the territory's Medicaid provider, LBJ Hospital must provide all
Medicaid-required services. If these services are not available on-
island, American Samoa must arrange for them to be provided off-island.
Although the Medicaid grant's broadly stated goal is the provision of
basic medical services, HHS officials do not require the hospital to
supply data on its provision of such services. As a result, no data
were available for us to determine the quality of the care or whether
all required Medicaid services were provided to the eligible
population. HHS officials stated that they have some assurance that a
minimum standard of care is provided, because LBJ Hospital must meet
Medicare certification standards to participate in Medicare and
Medicaid. However, the hospital faces long-standing challenges in
maintaining its Medicare certification (see app. VI).
Head Start:
The Head Start Program in American Samoa, referred to locally as the
Early Childhood Education Program, is part of the American Samoa
Department of Education. The program in American Samoa is subject to
the same performance requirements as Head Start Programs in the rest of
the United States and delivers most required services, according to HHS
officials. In fiscal years 1999-2003, HHS provided the Early Childhood
Education Program an average annual grant of $2.7 million. The grant
set the enrollment level at 1,532 slots for 3-to 5-year-old children.
As of March 2004, the program had 54 classrooms and 111 classroom
instructors, according to American Samoa officials. Early Childhood
Education officials stated that although there are more eligible
children than available slots, the program serves virtually all of the
children who apply for it. Program highlights include dental screening
and follow-up treatment for almost all enrolled children and a literacy
program emphasizing both Samoan and English. The curriculum and
materials are locally designed and incorporate native culture,
community, and environment, as well as family traditions. Another key
program activity is the construction of several new facilities
dedicated exclusively to early childhood education classrooms. In
fiscal years 1999-2003, HHS provided the program about $3.8 million in
additional "program improvement" grant awards for the construction of
seven new facilities containing 38 classrooms.
Local Conditions Limited Delivery of Services or Project Completion for
Many of the Grants:
Conditions in American Samoa limited the delivery of services or
project completion for many of the grants we reviewed. A lack of
adequately trained professionals limited financial oversight for all
programs and service delivery in several programs. In addition,
inadequate facilities affected the delivery of services under Head
Start at Early Childhood Education Program centers and under Medicaid
at LBJ Hospital. In particular, the LBJ Hospital building had
persistent fire-safety deficiencies that jeopardized the hospital's
ability to maintain the certification required for continued Medicaid
funding. Finally, limited local resources to complement federal grants
slowed the completion of critical projects at LBJ Hospital and Pago
Pago International Airport.
Lack of Professional Staff Limited Service Delivery:
Some of the programs that we reviewed experienced a shortage of staff
with adequate professional training, which limited the financial
oversight of federal funds and delivery of certain services. The
relatively low salaries in American Samoa and the remote location of
the territory made it difficult to attract and retain individuals with
specialized training. Staff shortages included the following:
* In the American Samoa government, the position of Territorial Auditor
remained unfilled in fiscal years 1998-2003. An official in the
American Samoa Department of Treasury, the department that processes
nearly all federal grants, reported that the department experiences
difficulty in retaining certified public accountants, because the
American Samoa government is unable to afford competitive salaries for
these professionals.
* In the American Samoa Department of Education, most teachers had
obtained only an associate in arts degree from the American Samoa
Community College. Further, according to the Special Education Division
Office, the program had only one physical therapist during the period
of our review and needed speech pathologists, occupational therapists,
audiologists, and psychologists. In addition, the local Head Start
Program was unable to comply with the federal standard to deliver
mental health services to enrolled children and families, because no
mental health professionals were available in the territory to work
with the program.
* In the American Samoa Department of Human and Social Services, the
WIC and Food Stamp Programs lacked sufficient staff with technical
skills to adequately maintain the databases on which the programs rely
to record and process recipient transactions, reconcile transactions,
and perform required monitoring and evaluation of issued benefits.
* LBJ Hospital officials reported that they did not have an adequate
number of U.S.-certified medical doctors or registered nurses, despite
incentive programs to attract them. The hospital also had unmet needs
for medical technicians, such as radiology and operating room
technicians. The hospital lacks the capacity to provide the full range
of Medicaid-covered services, and consequently those services that are
not available must be provided off-island. For fiscal years 2001-2003,
the hospital reported an average off-island medical care expenditure of
about $2 million annually.
Inadequate Facilities Also Affected Service Delivery:
Limited facilities hampered the ability of the Head Start and Medicaid
Programs to deliver services to their targeted populations. Examples
are as follows:
* While the Head Start Program in American Samoa made progress in
constructing several new facilities to provide modern classrooms, the
program continued to depend on villagers who made their homes available
for Early Childhood Education classes. As of March 2004, 19 of the
program's 54 classes were held in village homes, according to the local
program officials. The officials stated that their first priority for
the use of supplemental federal Head Start grant funds was to continue
to build additional classrooms but that, as a result, no funds were
available to provide adequate playgrounds or perimeter security
fencing.
* LBJ Hospital's poor physical infrastructure made it difficult to
deliver a minimum standard of care to the population of American Samoa,
including the Medicaid-eligible population. For more than a decade, the
hospital suffered from persistent, serious fire-safety building code
deficiencies that threatened its ability to maintain the Medicare
certification required for participation in Medicare and Medicaid. In a
Medicare-certification survey of the hospital conducted in November
2003, the survey team cited the hospital for a lack of "basic features
of fire protection, which are fundamental to all health care
facilities," such as smoke and fire detection and alarm systems,
automatic sprinklers, adequate water pressure, and fire-rated smoke and
fire compartmentation. Earlier Medicare certification surveys cited
many of the same problems, but the hospital has failed to correct them
despite HHS's threats, since at least 1993, to terminate the hospital's
certification.
In 2004, in response to the fire-safety deficiencies identified in the
2003 Medicare-certification survey, the hospital reprogrammed $650,000
of its fiscal year 2003 DOI capital improvement funds to install a
facilitywide sprinkler system. However, hospital officials said that
the project would not be completed until December 2005 and that the
renovation efforts would be constrained by "a fixed barrier of time,
money and space." Although the hospital depends primarily on DOI funds
to bring its facility up to HHS standards, DOI and HHS did not
collaborate during fiscal years 1999-2003 to identify construction
needs and funding resources to ensure that common goals are met.
Specifically, when awarding capital improvement grants to the America
Samoa government and LBJ Hospital, DOI did not obtain information from
HHS regarding deficiencies that threatened the hospital's Medicare
certification.
Limited Local Funds Hampered Service Delivery and Slowed Project
Completion:
Limited local resources also affected some of the programs in our
review. LBJ Hospital's ability to upgrade its facility and hire needed
staff was severely hampered by chronic budget deficits and outstanding
debt. Likewise, the lack of local funds to complement Airport
Improvement Program grants slowed the pace of completing critical
projects, according to American Samoa officials. Examples of the effect
of limited local resources on these programs include the following:
* LBJ Hospital officials reported that because of persistent operating
budget deficits, they were unable to hire needed staff and respond to
the many infrastructure needs of its aging facility. DOI capital
improvement grants, which average about $1.5 million annually for the
hospital, support only one or two new construction projects per year.
According to hospital officials, the hospital depends entirely on
federal grant funds to support its infrastructure upgrades, including
those needed to correct the fire-safety deficiencies cited by HHS
hospital certification surveys.[Footnote 29]
Two key sources of revenue for LBJ Hospital, from DOI and the American
Samoa government, did not increase during the period of our review (see
fig. 3). The hospital's annual subsidy from the government of American
Samoa dropped from about $8.1 million in fiscal year 1998 to about $5.3
million in fiscal year 2003. During the same period, DOI directly
provided LBJ Hospital about $7.8 million of the government operations
grant annually without adjusting this amount for inflation. Although
the Medicaid grant increased over time to cover the cost of inflation,
HHS officials reported that the cap on the Medicaid grant resulted in a
smaller federal contribution than American Samoa would have received if
funded like the 50 states.[Footnote 30] A hospital official reported
that patient revenues increased during fiscal years 1998-2003 but that
much greater increases would be needed if the hospital could not
identify other sources of revenue. The LBJ Medical Center Authority has
proposed to charge service fees to patients to cover about 20 percent
of the cost of their medical care. However, hospital officials believed
that the local legislation needed to change such fees would be
difficult to obtain, because the public views free medical care as an
entitlement. Currently, the hospital charges residents a facility fee
of $5 per outpatient visit and $20 per day for inpatient stays. The
hospital charges nonresidents $10 for outpatient visits and $100 per
day for inpatient stays.
Figure 3: LBJ Hospital's Key Revenue Sources, Fiscal Years 1998-2003:
[See PDF for image]
[End of figure]
* American Samoa airport officials reported that they lacked the local
resources to complement FAA's Airport Improvement Program funds, which
slowed the pace of critical airport infrastructure projects. For
example, the airports had not acquired all of the rescue vehicles they
needed, and upgrades of the main runway at Pago Pago International had
to be phased in over several years. In August 2003, following damage to
a commercial airplane from loose asphalt on the runway, the airport's
main runway shut down for 2 weeks. The closure left American Samoa cut
off from commercial flights to Honolulu until the pavement could be
repaired. According to FAA and American Samoa airport officials, a
great deal of progress was made in improving Pago Pago International
Airport's infrastructure and rescue response capability during the past
several years; however, it will probably not reach an acceptable
standard until 2007.
For most U.S. airports, including those in American Samoa, a passenger
facility charge of up to $4.50 per passenger provides a key source of
revenue. However, because only eight flights per week depart from Pago
Pago International, the airport generates relatively little revenue and
operates at a loss annually. Congress raised the cap on passenger
facility charges from $3.00 to $4.50 in fiscal year 2000 in FAA's
reauthorization legislation[Footnote 31] but elected not to raise it
again in legislation reauthorizing FAA for fiscal years 2004-
2007.[Footnote 32]
Grants Had Limited Accountability, and U.S. Agencies Reacted Slowly:
A lack of required single audits, U.S. agencies' slow reactions to lack
of single audits, and incidents of theft and fraud compromised the
accountability of federal grants to American Samoa. The American Samoa
government did not comply with the Single Audit Act[Footnote 33] during
fiscal years 1998-2003. The delinquent single audit reports issued for
fiscal years 1998-2001 cited governmentwide and program-specific
accountability problems. However, most federal agencies responsible for
programs in American Samoa did not formally express concern about the
delinquent single audit reports and were slow, or failed, to set forth
a plan of action to complete single audits. In addition, two grants had
instances of theft and fraud, and the accountability of almost all of
the grants was potentially compromised by fraud in the American Samoa
Government's Office of Procurement.
Lack of Single Audits Compromised Accountability, Recent Audits Cited
Problems:
The American Samoa government did not complete single audits for fiscal
years 1998-2003 in accordance with the time frame specified in the
Single Audit Act. As a result, U.S. agencies had limited knowledge of
American Samoa's accountability for federal funds received during the
period of our review. Specifically, they were unaware of whether
grantees complied with the Davis-Bacon Act[Footnote 34] and with
requirements for financial reporting and retention of and access to
financial records, among other requirements.
Federal agencies are responsible for ensuring that grant recipients
subject to the Single Audit Act complete single audits no later than 9
months after the end of each fiscal year.[Footnote 35] An August 2002
MOA between DOI and the American Samoa government established a
schedule for completing overdue single audits; however, American Samoa
failed to comply with the schedule. The single audit reports for fiscal
years 1998, 1999, and 2000 were completed by the auditors in August
2003. Relative to the deadlines in the MOA, the 1998 and 1999 reports
were 8 months late, and the 2000 report was 3 months late. The auditors
completed the 2001 single audit report in June 2004, 12 months late.
The single audit reports for fiscal years 1998-2001 cited pervasive
governmentwide and program-specific accountability problems. For the
1998, 1999, and 2000 single audits, the auditors did not express an
opinion on the financial statements of the American Samoa government
because the scope of their work did not enable them to do so.[Footnote
36] However, in the single audit report for fiscal year 2001, the
auditor expressed a qualified opinion regarding American Samoa's
financial statements. According to the report, the qualified opinion
was issued because the limitations on the scope of the audit resulted
in the auditor's inability to locate or verify physical inventory
records, verify the accuracy of the beginning balance of the
government's general funds, and verify the physical existence and cost
of recorded fixed assets, among other items. These opinions are similar
to those in American Samoa's single audits for fiscal years 1996 and
1997, indicating that federal and American Samoa officials did not
resolve issues identified in prior single audit reports, as required.
The reports for fiscal years 1998-2001 cited an average of 31
governmentwide and program-specific findings for each fiscal year. For
example, each audit found that the American Samoa government and its
entities did not maintain adequate systems of internal
controls[Footnote 37] to ensure compliance with laws, regulations,
contracts, and grants applicable to federal programs. The auditors
reported that the American Samoa government did not comply with major
federal program requirements for, among other items, financial
reporting, grant payment, and retention of and access to
records.[Footnote 38] The audits stated that these problems could
adversely affect the American Samoan government's ability to administer
federal grant programs in accordance with applicable requirements.
The single audits for fiscal years 1998-2001 also reported program-
specific findings each year for at least 6 of the 12 programs we
reviewed.[Footnote 39] For example, the auditors reported that in
fiscal year 2000, DOI's capital improvement funds for constructing
toilet facilities were used to purchase computers. The 2000 report also
stated that ED contract documents for $39,960 were missing. According
to auditors, a number of program files were incomplete and many
programs' transactions were difficult to assess because the American
Samoa government maintained its records in a haphazard and open manner.
In spite of document retention issues, the auditors reported about $1.3
million in questioned costs[Footnote 40] and a total of about $18
million in budget overruns from their sampling of approximately $295
million in transactions funded by federal grants in fiscal years 1998-
2001.[Footnote 41]
In our sample review of 12 selected grant transactions,[Footnote 42] we
found that 7 of these had inadequate supporting documentation and
insufficiently detailed data to show whether program expenditures were
allowable. Of 12 transaction files that we requested from the American
Samoa Department of the Treasury, 3 could not be located; 4 lacked
purchase orders, invoices, receiving reports, or pricing estimates; and
2--from the Food Stamp and Head Start Programs--were complete.
According to an American Samoa government official, grant transaction
files should contain a purchase order or request; an invoice; a pricing
estimate (if applicable); a copy of a receiving report, indicating that
a purchased item was received, or a copy of the check issued for
payment; and an accounts payable voucher. (See app. VII for a detailed
description of federal grant processing in American Samoa.)
Despite Delinquent Single Audits, Most Federal Agencies Reacted Slowly:
In spite of the lack of single audits in fiscal years 1998-2003, most
federal agencies were slow to act. For example, DOI did not set forth a
plan of action to complete single audits until 2002 and ED did not take
remedial action until 2003. In order for entities, such as federal and
American Samoa agencies, to administer and control the grant programs,
officials must have relevant, reliable, and timely communications
relating to internal and external events.[Footnote 43]
DOI, the cognizant agency[Footnote 44] for American Samoa, established
a schedule for completing the delinquent single audit reports, in an
MOA with the American Samoa government in August 2002 following several
months of discussion. The MOA established a new completion schedule for
the delinquent single audits, among other fiscal and operational
reforms for the territory. Figure 4 provides a time line showing the
single audits and federal actions, including OMB's regulation deadlines
for the reports, the MOA's extended deadlines, the dates when American
Samoa's reports were completed, and the number of months that the
reports were late.
Figure 4: American Samoa Single Audit Time Line and Federal Actions,
Fiscal Years 1997-2003:
[See PDF for image]
[A] The 2003 date for the MOA deadline is before the date of the OMB
deadline.
[End of figure]
ED reported that it sent a letter in March 2002 to the then Governor of
the territory expressing concern about the late single audits and
advising that the department is authorized to take various
administrative actions, including interrupting grant funding. ED's
Inspector General subsequently visited American Samoa and alerted its
Deputy Secretary in December 2002 that inspectors had found instances
of fraud, waste, and abuse that might have been detected and prevented
if single audit reports had been completed and submitted on time. The
memo from the Inspector General also indicated a need for ED to develop
a coordinated strategy for obtaining the required Single Audits. USDA
officials cited the lack of single audits in their 2003 on-site review.
HHS noted the delinquency of single audit reports in on-site program
reviews in 2000 and 2003; DOT reported that the last American Samoa
single audit it had received was for fiscal year 1996.
According to OMB Circular A-133, which implements the Single Audit Act,
if a grantee has specifically failed to conduct its single audit
reports, federal agencies should impose sanctions such as, but not
limited to, (1) withholding a percentage of federal awards until single
audits are completed satisfactorily, (2) withholding or disallowing
overhead costs, (3) suspending federal awards until the single audit is
conducted, or (4) terminating the federal award. None of the agencies
in our review imposed any of these sanctions on American Samoa.
According to the Grants Management Common Rule,[Footnote 45] federal
awarding agencies may designate a grantee "high risk" if the grantee
has a history of unsatisfactory performance, is not financially stable,
has an inadequate management system, has not conformed to terms and
conditions of previous awards, or is otherwise irresponsible. Single
audits provide key information about the adequacy of a grantee's
management system. Federal agencies that designate a grantee high-risk
may impose special conditions including (1) issuing funds on a
reimbursement basis; (2) withholding authority to proceed to the next
phase until receipt of evidence of acceptable performance within a
given funding period; (3) requiring additional, more detailed financial
reports; (4) requiring the grantee to obtain technical or management
assistance; or (5) establishing additional prior approvals. According
to DOI and DOT, they have required some similar conditions for American
Samoa for years. For example, both agencies issue funds to American
Samoa on a reimbursement basis. However, only ED exercised its
authority under the common rule, when, in September 2003, it placed
American Samoa on high-risk status[Footnote 46] as a result of American
Samoa's noncompliance with the Single Audit Act. ED now allows American
Samoa to draw down only 50 percent of its grant funds until certain
conditions defined by the department are fulfilled. Other agencies
included in our review took none of the corrective actions available,
under the common rule or under the OMB circular, as a result of the
delinquent single audits. Specifically, although American Samoa did not
comply with the agreed-on schedule for completing the outstanding
single audits, the departments included in our review neither placed
American Samoa on high-risk status nor withheld, disallowed, suspended,
or terminated funds under any of their grants.[Footnote 47]
Theft or Fraud Weakened Accountability of Most Grants:
Recent instances of theft and fraud by American Samoa government
officials call into question accountability for most of the grants that
we reviewed. Examples of theft or fraud are as follows:
* In May 2004, the Chief Procurement Officer of the American Samoa
Government was found guilty of illegal procurement practices. Since
this office handles the procurement activity for most of the grants
that we reviewed, the accountability of the grant funds may be
compromised.
* In the American Samoa Department of Education, the Director of the
School Lunch Program pled guilty in July 2004 to charges of stealing
approximately $68,000 worth of food and goods from the School Lunch
Program warehouse between October 2001 and September 2003. The former
School Lunch Program Director was also charged with conspiring with
others to commit offenses against the United States. The current School
Lunch Director said that, while most of the employees involved in the
theft had been removed, one warehouse employee remains.
* In August 2004, the U.S Department of Justice filed charges against
the former deputy director of the American Samoa Department of Human
and Social Services (the department that operates the WIC and Food
Stamp Programs) for conspiring to rig bids for contracts totaling more
than $120,000 in exchange for cash kickbacks.
* During the September 2003 USDA review of WIC in American Samoa, USDA
officials were alerted to vendor fraud. The review found widespread
evidence of WIC food checks being exchanged for cash, cigarettes, other
nonfood items, and unauthorized foods at WIC-authorized grocery stores
instead of for the supplemental foods prescribed by WIC and paid for
with federal funds. USDA officials informed the American Samoa WIC
Program that it must comply with corrective action or face fiscal
sanctions.
As USDA became aware of problems with theft and fraud, it took action
to increase oversight of those programs.
Additional accountability problems have been alleged. For example, the
local press has published numerous accounts of ongoing federal
investigations. The American Samoa Fono has conducted hearings and
investigations of accountability problems in the territory's
government. Finally, the recently hired American Samoa Comptroller, at
work since March 2004, resigned as of August 2004 citing concerns over
fraudulent and unethical American Samoa government practices.
Conclusions:
In fiscal years 1999-2003, federal grants from multiple agencies
provided critical funds for essential human services and critical
infrastructure improvements in American Samoa. However, the American
Samoa government faced a range of local challenges to delivering
services and completing infrastructure projects funded with federal
grants. These challenges included a shortage of adequately trained
professionals, such as accountants and teachers, as well as inadequate
facilities and limited local funds. In particular, LBJ Hospital, which
provides medical care for most of American Samoa's population, received
multiple federal grants but struggled to overcome challenges posed by
an inadequate facility and limited resources. Specifically, although it
receives DOI construction grants for facility upgrades, the hospital
struggled to meet HHS fire-safety standards for continued Medicare
certification required for Medicaid funding. Nevertheless, in recent
years federal departments, principally DOI and HHS, have not formally
collaborated on the use of DOI construction grants at the hospital. In
overseeing the hospital's use of capital improvement grants, DOI could
benefit from information that HHS could provide regarding the
hospital's ongoing efforts to maintain Medicare certification.
In addition, in fiscal years 1998-2003, the American Samoa government
failed to comply with the Single Audit Act, demonstrating a lack of
overall accountability for federal grants. Federal agencies are
responsible for ensuring that grant recipients subject to the Single
Audit Act complete single audits no later than 9 months after the end
of each fiscal year, yet when American Samoa failed to complete the
audits, the agencies either failed to act or acted slowly to designate
the American Samoa government a high-risk grantee. The agencies had no
consistent response. Further, incidents of theft and fraud should have
heightened federal agencies' concerns about enforcing the requirements
of the Single Audit Act and the Grants Management Common Rule. The lack
of federal action indicates a need for greater monitoring and reporting
and a need for improved coordination among agencies to ensure the
accountability of federal grants awarded to American Samoa.
Recommendations for Executive Action:
We recommend that the Secretary of the Interior take the following four
actions:
To ensure resolution of fire-safety deficiencies threatening the
continued certification of the Lyndon Baines Johnson Tropical Medical
Center in American Samoa and, as warranted, to address the hospital's
staffing and resource constraints, we recommend that the Secretary:
* coordinate with federal agencies that grant funds to the hospital and
the American Samoa government to address these issues.
To improve fiscal accountability of federal grants to American Samoa,
we recommend that the Secretary coordinate with other federal awarding
agencies to:
* designate the American Samoa government as a high-risk grantee,
according to the Grants Management Common Rule, at least until it has
completed all overdue single audits;
* take steps designed to ensure that the American Samoa government
completes its overdue single audits in compliance with the Single Audit
Act; and:
* take steps designed to ensure that current and future single audits
are completed in compliance with Single Audit Act requirements.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Departments of the Interior,
Agriculture, Education, Transportation, and Health and Human Services
as well as to the government of American Samoa. We received oral
comments from the Departments of Agriculture and Transportation on
October 22 and Education on October 25, 2004. The Departments of
Agriculture and Transportation limited their oral comments to technical
corrections. The Department of Education agreed with our initial
recommendations and provided technical corrections. We received written
comments from the Departments of the Interior and Health and Human
Services as well as the American Samoa government, which are reprinted
in appendixes VIII through X.
The Departments of the Interior, Health and Human Services, and
Education, as well as American Samoa, agreed with our first
recommendation. DOI stated that it would take appropriate action with
other federal agencies to address issues that affect LBJ Hospital's
certification. HHS agreed to collaborate with DOI and American Samoa on
hospital infrastructure issues. The American Samoa government pointed
out that it is making progress in bringing LBJ Hospital into compliance
with Medicare standards.
The Departments of the Interior and Health and Human Services and
American Samoa disagreed with our second recommendation, and the
Department of Education agreed with us. DOI raised serious concerns
about declaring American Samoa a high-risk grantee but agreed to
consult with the other federal agencies to evaluate whether, or under
what conditions, a joint declaration of high-risk status would be
prudent. DOI's concerns about imposing high-risk status for American
Samoa included the possible loss of access to federal programs for
American Samoa and the possible impact of such an action on the
American Samoan population and eventually on other insular areas.
Losing access to such programs would further limit the funds available
to American Samoa to address their staffing and resource problems.
Furthermore, DOI argued that many of the measures available with a
high-risk declaration are already being taken by DOI in American Samoa.
HHS stated that American Samoa should not be designated a high-risk
grantee with respect to the Medicaid Program. In our view, the findings
of the audits of the LBJ Hospital raise concerns about accountability
at the hospital. The American Samoa government strongly recommended
against its being declared a high-risk grantee unless it fails to meet
the terms of its agreement with DOI, because it believed high-risk
status would imperil future funding. As we report on pages 28-29, the
American Samoa government has already failed to comply fully with the
terms of the agreement with DOI.
We recognize DOI's concerns about the population of American Samoa and
its dependence upon federal grants for key services. We also recognize
the challenges that DOI faces in balancing its activities in any
individual insular area with sensitivity to the effect of those
activities on other insular areas and on insular area populations.
However, a declaration of high-risk status would more accurately
reflect the findings of the completed single audits, specifically, the
auditors' declining to express an opinion on the financial statement
and citing numerous internal control problems. In addition, according
to the relevant regulations, high-risk status does not require a
suspension of funds. For example, ED declared American Samoa a high-
risk grantee while continuing its funding to the territory and
significantly improving its oversight of the funded programs. Under a
coordinated high-risk designation, the federal agencies could impose a
common set of improvement milestones for American Samoa to have the
high-risk status removed. Under the current system, several agencies
exercise different levels of heightened oversight, and only ED has
declared American Samoa a high-risk grantee. We continue to believe
that a coordinated, consistent approach to a high-risk grantee across
the agencies would be more productive than the agencies' current
inconsistent approaches.
The Departments of the Interior, Education, and Health and Human
Services agreed to collaborate to ensure completion of outstanding and
future single audits, as per the initial wording of our third and
fourth recommendations. DOI agreed to consult with other agencies to
determine other steps that might be taken to help American Samoa come
into compliance more quickly. However, responding to the initial
wording of our third and fourth recommendations that the agencies
coordinate efforts to ensure compliance with the act, DOI stated that
it is unable to ensure that a grantee will comply with the Single Audit
Act. In light of DOI's response to our initial recommendations, we are
recommending that DOI coordinate with the other awarding agencies to
take steps designed to ensure American Samoa's compliance with the act.
The American Samoa government cited its progress in completing the
delinquent single audits.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the date of this letter. At that time, we will send copies of this
report to interested Congressional Committees and to the Secretaries of
the Departments of the Interior, Agriculture, Education,
Transportation, and Health and Human Services as well as to the
Governor of American Samoa. We also will make copies available to
others upon request. In addition, the report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions regarding this report, please
contact me at 202-512-4128 or gootnickd@gao.gov or Emil Friberg,
Assistant Director, at 202-512-8990 or friberge@gao.gov. Staff
acknowledgments are listed in appendix XI.
Signed by:
David Gootnick:
Director:
International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
To provide information for the Ranking Minority Member of the House
Resources Committee and the U.S. Delegate from American Samoa, we (1)
examined the uses of key federal grants to American Samoa, (2)
identified local conditions that affected the grants, and (3) assessed
accountability for the grants.
Identifying Key Grants to American Samoa:
To address these objectives, we first analyzed available information on
total federal expenditures in American Samoa. We reviewed data from the
U.S. Census Consolidated Federal Funds report and the American Samoa
delegate's Web site, which listed total expenditures to American Samoa
in fiscal years 1995-2001 by federal department. We used these data to
identify the federal departments that provided the largest grants over
the 7-year period. We narrowed our scope to five federal departments--
the U.S. Department of the Interior (DOI), the U.S. Department of
Agriculture (USDA), the U.S. Department of Education (ED), the U.S.
Department of Health and Human Services (HHS), and the U.S. Department
of Transportation (DOT)--whose aggregate grant expenditures totaled
more than 80 percent of the total grants to American Samoa in fiscal
years 1995-2001. To determine that the data were sufficiently reliable
for the purpose of sample selection, we corroborated the ranking from
the U.S. Census Consolidated Funds Report data with data from the
American Samoa delegate's Web site. We found that despite discrepancies
in the dollar amounts of the five departments' grants shown by the two
sources, the amounts are the same when aggregated for fiscal years
1995-2001.
To obtain current and original data, we met with and requested grant
award data from the five federal departments for fiscal years 1999 and
2003. Each department referred us to their agencies with grants or
programs to American Samoa, and these agencies provided data for a
total of 61 grants. From that data, we identified the largest granting
agencies across the five federal departments and selected 12 key
federal grants to review that were among the largest total grant awards
when aggregated for fiscal years 1999-2003. These grants primarily
covered areas of government operation, infrastructure, social programs
(such as health and nutrition), and education. DOI's grants for capital
improvement projects and technical assistance were selected although
they were smaller than some of the other large federal grants, because
DOI was the largest federal grantor to American Samoa during the period
of our review and because these two grants provided infrastructure
assistance that helped meet funding requirements or served as support
to help meet the requirements of other grants that we selected. We
excluded loan grants that are not provided through local agency or
government offices in American Samoa. We also excluded grants from the
Departments of Justice, Commerce, and Labor and the Environmental
Protection Agency because of the grants' small size. Finally, we
excluded grants from the Federal Emergency Management Agency because
they do not provide ongoing support for government and related
operations.
The scope of our report was limited to the information that we
collected from the five departments and specific agencies that
administer the grant funds; we cannot make statements about grants that
we did not review. However, based on our analysis of data for fiscal
years 1999-2003, the aggregated grant totals from the departments that
we did not review were smaller, in most cases, than the largest single
grants we selected. To corroborate the data for federal funds to
American Samoa, we compared agency data with data in the single audit
reports for fiscal years 1998-2001 and found that of the grants that we
had selected, only the general technical assistance grant was not
included in the single auditor's reports. However, we used the single
audit data only to compare grant data from the federal agencies with
total federal grant expenditures in American Samoa. We estimated that
the selected grants represented about 70 percent of all federal
expenditures in American Samoa in fiscal year 2000.
Examining the Uses of Key Federal Grants:
To examine the uses of key federal grants to American Samoa, we
collected and reviewed grant data from the federal and local agencies
responsible for overseeing the selected programs in fiscal years 1999-
2003; interviewed federal and American Samoa program officials to
obtain knowledge of program activity and operations; conducted site
visits to observe programs and projects funded by federal grants; and
compared data in single audit reports for fiscal years 1998-2001 with
agency data for selected grants and background on total federal grants
reported by the American Samoa government. Single audit reports for
years after fiscal year 2001 were not available during the time of our
review. To report grant awards to American Samoa between fiscal years
1999-2003, we relied on grant data provided by federal agencies.
Although we did not audit the grant data from the federal officials and
are not expressing an opinion on them, we discussed the sources and
limitations of the data with the appropriate officials and addressed
discrepancies before reporting grant totals. We determined that the
federal agency data were sufficiently reliable for the purposes of
reporting grant award totals and the general use of grant funds and, to
the extent possible, we corroborated these data with other information
sources, including federal department (headquarters) data, single audit
reports, and U.S. Census data. To describe the activities that grant
funds supported, we relied on information from federal and American
Samoa officials overseeing or administering the grants. We corroborated
information from American Samoa officials with the information we
received from federal officials. For example, we used participation
rates in fiscal years 2000-2003 for the American Samoa Special
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
and the Food Stamp Program and the total number of children enrolled
during the 2000-2003 school years to estimate the percentage of the
population for which nutrition assistance was made available during
those years. These estimates are approximations. Although the
participant populations may occasionally overlap (e.g., a WIC recipient
might also have received free school lunches), the distinct target
populations in American Samoa would not allow enough overlap to greatly
affect our estimates.
Identifying Local Conditions That Affected Grants in American Samoa:
To identify local conditions that affected the uses of the selected
grants, we interviewed federal and American Samoa officials, reviewed
program documents, and made observations in American Samoa in March
2004. Specifically, we looked at the availability of professional staff
to administer grants services or projects, the adequacy of facilities
to deliver services, and the availability of funds to deliver services
or complete projects as specified by program officials or supporting
documents for the 12 key grants that we reviewed.
Assessing Accountability for Federal Funds:
To assess accountability for the grants, we identified requirements in
the legislation, regulations, or other relevant documents; reviewed
monitoring reports and financial audits conducted by federal agencies;
reviewed the single audit reports for fiscal years 1998-2001; conducted
federal agency interviews and on-site observations; discussed
accountability issues with federal and local officials; and reviewed
GAO reports on selected grants and programs for reviews relating to
accountability issues.
To further assess accountability, we randomly selected transaction data
from the American Samoa Department of Treasury, the Lyndon Baines
Johnson Tropical Medical Center (LBJ Hospital), and the Territorial
Office of Fiscal Reform--the three American Samoa departments
responsible for accounting for the 12 grants we selected. We based our
selection of transactions on seven "object codes" (e.g., expenditure
categories for personnel, supplies, contractual services, travel, other
expenses, office equipment, and indirect costs) assigned by the
Department of Treasury.
To determine the reliability of the single audit data, we interviewed
the external auditors who completed the single audit reports for
American Samoa and confirmed that the auditors had received a peer
review. We consulted with financial accountants in GAO regarding the
single audit reports. We determined that the single audit data were
sufficiently reliable for reporting on American Samoa governmentwide
accountability and citing specific audit findings for the selected
grants.
We relied on federal monitoring reports to assess other accountability
issues for our selected programs. We confirmed the opinions or report
findings with federal officials. We determined that these data were
sufficiently reliable for the purpose of assessing the overall and
specific accountability of federal funds.
Evaluating Grant Performance:
To evaluate the performance of the selected grants, we determined
whether the grants had specific program goals or performance standards
that federal and American Samoa officials used for evaluation;
collected and reviewed agency performance and monitoring reports;
reviewed GAO reports; and consulted with GAO experts and methodologists
on the selected grants. On basis of the evaluative criteria provided by
federal officials overseeing the selected programs, we concluded that
most agencies evaluated the grants based on program or service delivery
or whether projects funded by grants were completed. We relied, for the
most part, on federal agency reviews and found them to be sufficiently
reliable for our purposes of describing if and how federal and American
Samoa officials evaluated performance of the 12 key grants. Our
findings are detailed in appendixes II through VI.
We performed our work from September 2003 through October 2004 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: U.S. Department of the Interior Programs in American
Samoa:
Government Operations Grant:
Purpose and Legislation:
Since fiscal year 1952, the U.S. Department of the Interior (DOI) has
provided the government operations grant to American Samoa as directed
assistance, earmarked through the federal budget process[Footnote 48]
and appearing in federal appropriations tables as a line item.[Footnote
49] The grant is divided among the American Samoa government, the
Lyndon Baines Johnson Tropical Medical Center (LBJ Hospital), and the
High Court of American Samoa. According to DOI, the annual grant to the
American Samoa government is the only regular general operating subsidy
that DOI provides to an insular area government in the form of a grant
and is intended to supplement, but not substitute for, local revenues
and is also intended to promote self-sufficiency. The portion of the
grant allocated to LBJ Hospital is stated in the grant award documents.
The portion of the grant allocated to the High Court of American Samoa
is included in the budget justifications.
Funding Levels:
The government operations grant comprises almost $23 million each year
(see table 2 for details).
Table 2: Government Operations Grant to American Samoa, Fiscal Years
1999-2003:
Fiscal year: 1999;
Grant recipients: American Samoa government operations: $14,460,000;
Grant recipients: LBJ Hospital: $7,772,000;
Grant recipients: High Court: $586,000;
Total grant award: $22,818,000.
Fiscal year: 2000;
Grant recipients: American Samoa government operations: $14,460,000;
Grant recipients: LBJ Hospital: $7,772,000;
Grant recipients: High Court: $563,476;
Total grant award: $22,795,476.
Fiscal year: 2001;
Grant recipients: American Samoa government operations: $14,428,188;
Grant recipients: LBJ Hospital: $7,754,902;
Grant recipients: High Court: $545,797;
Total grant award: $22,728,887.
Fiscal year: 2002;
Grant recipients: American Samoa government operations: $14,460,000;
Grant recipients: LBJ Hospital: $7,772,000;
Grant recipients: High Court: $568,000;
Total grant award: $22,800,000.
Fiscal year: 2003;
Grant recipients: American Samoa government operations: $14,366,000;
Grant recipients: LBJ Hospital: $7,721,000;
Grant recipients: High Court: $603,000;
Total grant award: $22,690,000.
Fiscal year: 5-year total;
Grant recipients: American Samoa government operations: $72,174,188;
Grant recipients: LBJ Hospital: $38,791,902;
Grant recipients: High Court: $2,866,273;
Total grant award: $113,832,363.
Source: U.S. Department of the Interior.
Note: Grant awards are shown in nominal dollars. Variation in the
annual funds results from general U.S. government budget rescissions.
[End of table]
Since 1998, DOI has specified that nearly $7.8 million of the grant be
allotted to the budget of LBJ Hospital. Since 1952, a portion of the
grant has been allotted directly to the budget of the High Court. The
use of these funds is not restricted to U.S. nationals or citizens by
law or regulations.
Activities Supported, Target Recipients, and Basic Accomplishments:
The government operations grant supports the operations of the American
Samoa government, LBJ Hospital, and the High Court. In each instance,
the money is deposited directly to the recipient's accounts and becomes
part of the recipient's funding stream, losing its separate
identity.[Footnote 50] The grant funds are drawn down from U.S.
Treasury accounts in monthly allotments. During fiscal years 1999-2003,
once the funds were drawn down, they were deposited in the American
Samoa government accounts. The grant is allocated as follows.
* Basic government operations. According to the American Samoa
government annual budget for 2003, the funds allocated for basic
government operations were to be spent as follows: $7.4 million to the
American Samoa Department of Education, $2.7 million to the Department
of Public Works, $1.4 million each to the Department of Public Safety
and the American Samoa Community College, $866,500 to the Department of
Legal Affairs, and $750,000 to the Port Administration. In fiscal year
2003, the grant's $14.5 million provided 6.5 percent of the American
Samoa government total budget.
* LBJ Hospital. The portion of the grant designated for LBJ Hospital
enters the hospital's budget as a revenue source, whereupon its
specific uses cannot be traced. In fiscal year 2003, the $7.7 million
represented about 26 percent of LBJ Hospital's $29.3 million revenue.
* High Court. According to DOI and American Samoa budget documents, the
grant provides all of the High Court's budget.
Performance Goals and Accountability Standards:
The primary goal of the government operations grant is to provide
financial assistance to help ensure that the American Samoa government
is providing adequate government systems and services. DOI's secondary
goal for this grant is to promote self-sufficiency for American Samoa.
According to DOI, over the years American Samoa has assumed an
increasing percentage of the total costs of government operations.
According to DOI, since the mid-1990s, the agency's policy has been to
maintain the grant at a constant level, requiring American Samoa to
absorb costs associated with inflation and population growth[Footnote
51] and thereby encouraging the territory's self-sufficiency. According
to DOI officials, the single audit is a major source of accountability
for the portion of the grant provided to the American Samoa government.
LBJ Hospital is to conduct its own audit annually. Both the American
Samoa government and LBJ Hospital are also supposed to provide
financial and cash transaction reports as they use the DOI grant.
Performance Evaluation:
According to DOI, providing the government operations grant to American
Samoa is consistent with the agency's goals of serving communities by
providing financial assistance to help ensure that governments provide
adequate systems and services and encouraging self-sufficiency. Budget
data show and DOI confirms that, generally, over the years, American
Samoa has assumed an increasing portion of the total costs of
government operations. However, assessing the American Samoa
government's progress toward self-sufficiency is difficult because of
the lack of verifiable expenditure data. Because the grant is a direct
subsidy to the American Samoa government, the grant's performance in
encouraging self-sufficiency must be evaluated in light of accurate
revenue and expenditure information, which single audits should
provide. However, because of American Samoa's failure to comply with
the Single Audit Act, audited financial statements do not exist for
years after fiscal year 2001,[Footnote 52] and DOI has no verifiable
information on American Samoa's actual revenues and expenditures other
than the financial and cash transaction reports sent to DOI by the
American Samoa government. Therefore, it is difficult to determine the
extent to which the American Samoa government is moving toward self-
sufficiency.
American Samoa government budget data show that DOI's contribution to
the government's budget decreased from about 18 percent in fiscal year
1999 to about 15 percent in fiscal year 2003.[Footnote 53] According to
DOI officials and American Samoa's Department of Treasury, local
revenues accounted for about 60 percent of all government revenue for
fiscal year 2003, an increase of about 5 percent since fiscal year
1999.[Footnote 54]
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the government operations
grant was limited. DOI officials asserted that the unique nature of the
grant--that is, as a subsidy to the American Samoa government--implies
limited accountability and that Congress designed the grant as such.
Except for standard grant reporting requirements, the government
operations grant is entirely dependent on the single audits for
assurance of accountability. In the single audits of the American Samoa
government for fiscal years 1998-2001, the auditors stated no opinion
about the reliability of the financial statements or the allowability
of claimed costs. They found significant failure in the internal
controls structure.[Footnote 55] The single audits for fiscal years
2002-2003 remain uncompleted.
Accountability for LBJ Hospital is likewise limited. Independent audits
of the LBJ Medical Center Authority[Footnote 56] for fiscal years 1998-
2001 found significant problems with the LBJ Hospital
accounts.[Footnote 57] For the relevant years, LBJ Hospital declined to
present the auditor a statement of cash flows, summarizing its
operating, investing, and financing activities as required by generally
accepted accounting principles. Because of this and other matters, the
auditor was unable to express an opinion on the financial statements
printed in the audit. In reviewing compliance with internal controls,
the auditors found instances of noncompliance as well as several
reportable conditions and material weaknesses. Audits of later years
were not available as of November 2004.
Capital Improvement Grants:
Purpose and Legislation:
Capital improvement grants to American Samoa are among the covenant
grants authorized by the 1976 Covenant to Establish a Commonwealth of
the Northern Mariana Islands.[Footnote 58] As such, they are mandatory,
subject to annual appropriations. Although a specific amount of
covenant grants is reserved for the Northern Mariana Islands, capital
improvement grants are provided for all other territories, including
American Samoa. DOI's budget justifications list the intended recipient
territory and the projects to be funded each year.
Before 1996, American Samoa received an annual discretionary grant for
capital improvement needs. These grants averaged approximately $5
million annually and came from the Assistance to the Territories
appropriation. According to DOI officials, during that time period,
American Samoa fell further behind the infrastructure needs of its
rapidly growing population. As a consequence, according to DOI, the
people of the territory faced increasing hardship and risk with regard
to basic needs such as drinking water, medical services, and education.
In fiscal year 1996, Congress enacted legislation directing that some
of the mandatory covenant funds be used to pay for critical
infrastructure in American Samoa.[Footnote 59] The legislation also
required the Secretary of the Interior to develop a multiyear capital
plan with American Samoa and to update it annually. DOI and the
American Samoa government together developed the Capital Improvements
Plan, which established the following priorities for capital
improvement projects:
* First-order priorities include health, safety, education, and
utilities.
* Second-order priorities include ports and roads.
* Third-order priorities include industry, shoreline protection, parks
and recreation facilities, and other government facilities.
DOI awards capital improvement grants on the basis of a ranked list of
proposed projects submitted by the American Samoa government based on
the plan. Independent American Samoa authorities also received capital
improvement grants.
Funding Levels:
In fiscal years 1999-2003, American Samoa was awarded $50.8 million for
capital improvements, an average amount of $10.2 million annually.
According to DOI, the use of these funds is not restricted to U.S.
nationals or citizens, and construction projects are not limited to
U.S. companies by law or regulation. Table 3 shows the annual grant
award.
Table 3: Capital Improvement Grants Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal year: 1999;
Grant award: $8,240,000.
Fiscal year: 2000;
Grant award: $10,140,000.
Fiscal year: 2001;
Grant award: $12,140,000.
Fiscal year: 2002;
Grant award: $10,140,000.
Fiscal year: 2003;
Grant award: $10,140,000.
Fiscal year: 5-year total;
Grant award: $50,800,000.
Source: U.S. Department of the Interior, Office of Insular Affairs.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
In fiscal year 2005, DOI will implement a new competitive allocation
system for the $27.72 million in mandatory covenant grants.[Footnote
60]
Activities Supported, Target Recipients, and Basic Accomplishments:
Of the $50.8 million in capital improvement projects awarded to
American Samoa in fiscal years 1999-2003, the American Samoa Power
Authority received about $14 million; the American Samoa Department of
Education received about $12.6 million; health care services, including
LBJ Hospital, received about $8.3 million; the Department of Port
Administration received about $4.6 million; and the Department of
Public Works received about $1.8 million for village road construction.
An operations and maintenance fund receives 5 percent of each capital
improvement grant, accruing about $2.7 million in fiscal years 1999-
2003.[Footnote 61] (See fig. 5 for percentages.) Other recipients of
capital improvement grants include the American Samoa Community
College, the Department of Public Safety, and a fuel storage facility
for rehabilitation, among others.
Figure 5: American Samoan Organizations or Sectors Receiving DOI
Capital Improvement Grants, Fiscal Years 1999-2003:
[See PDF for image]
[End of figure]
Although the American Samoa government compiles the list and awards
grants with DOI approval, many American Samoa agencies either manage
their own projects or arrange for another agency to manage them. Both
the American Samoa Power Authority and LBJ Hospital use their own
contract management to control grant funds and obtain desired services.
Also, the American Samoa Departments of Education and Port
Administration use the Territorial Office of Fiscal Reform to oversee
and manage their capital improvement grants. According to agency
officials, the American Samoa agencies have established separate
contract management systems because the regular American Samoa Treasury
administrative process for project design, contracting, construction,
and vendor payment is extremely slow. As a result, several American
Samoa agencies have developed parallel payment systems. (See app. VII
for a diagram showing this payment process.)
The American Samoa Department of Education received about $2.5 million
per year on average--approximately 25 percent of all capital
improvement grants in fiscal years 1999-2003. According to American
Samoa officials, the American Samoa Department of Education used its
grants to:
* construct almost 120 new rooms, including classrooms (see fig. 6),
school offices, and science labs;
* purchase 16 new buses for $1 million;
* construct new toilet facilities at several schools and hire bathroom
monitors at 21 schools to clean and guard the new toilets;
* renovate classrooms and office buildings by improving electrical
systems with lights and fans, as well as installing new window screens,
new doors and locks, and roofs; and:
* provide new classroom furniture in many of the new and renovated
buildings.
Figure 6: Tafuna High School Classroom Block Built with Capital
Improvement Grant Funds, American Samoa:
[See PDF for image]
[End of figure]
LBJ Hospital, built in 1968, has used its $1.5 million average annual
capital improvement grants to renovate its aging facility and obtain
specific medical devices. Until 1999, few improvements had been made
since the building's construction. In fiscal years 1999-2003, the total
of $7.4 million in capital improvement grants allowed the hospital to:
* expand the existing hospital laboratory and renovate of the old
laboratory space (see fig. 7);
* construct an ear, nose, and throat clinic and public restrooms;
* purchase and install five dialysis machines;
* purchase and install a new medical records filing system; and:
* replace hospital core area air-conditioning chillers.
Figure 7: LBJ Hospital Laboratory Renovated with Capital Improvement
Grant Funds, American Samoa:
[See PDF for image]
[End of figure]
The Department of Public Works receives $361,000 annually to build
village roads, which are not eligible for funds from the Federal
Highway Administration's programs. Village roads run from the main
connector road into a population center or to a school.
Performance Goals and Accountability Standards:
DOI reported that capital improvement projects in American Samoa are
consistent with its goal of improving infrastructure in American Samoa.
These grants are the only direct financial assistance for
infrastructure in DOI's budget. According to DOI officials, project
completion is the main criterion for assessing performance of capital
improvement grants. The agency does not have a staff engineer to
conduct technical reviews of construction projects; instead, it has a
standing agreement with the U.S. Army Corps of Engineers in Hawaii to
conduct reviews on an "as needed basis." Accountability arises from the
inclusion of large projects in the single audits; on-site monitoring by
federal officials, including the resident DOI representative; and
financial reports.
Performance Evaluation:
We selected and reviewed several completed projects constructed with
capital improvement grant funds. According to DOI, the resident DOI
representative visits projects as she determines necessary or when
requested by DOI. About once each year, DOI officials from headquarters
visit American Samoa, review project files, and inspect the projects.
American Samoa Department of Education. We toured several recently
constructed classroom buildings, which featured handicapped-accessible
classrooms for about 30 students, furnished with new desk chairs,
electric lights and ceiling fans, and sinks. We also visited renovated
classroom buildings. Generally, these buildings had no peeling paint,
and no plaster or drywall was falling from the walls. According to a
principal at a newly built facility, a number of postconstruction
problems remained unaddressed by the contractor or the Departments of
Education and Public Works. These problems included failure to clean
and restore playground areas to a safe standard for the returning
children, office spaces built without provision for telephone lines,
and improperly welded stair railings.
We also toured several new and renovated toilet facilities on the
school campuses. Generally, these toilets were clean and functional,
although we found instances of blocked drains, tiles missing from
walls, and disconnected power lines into a new building.
LBJ Hospital. We visited the new lab facility, air-conditioned with new
equipment and updated workstations, and the new ear, nose, and throat
clinic, which also had air-conditioned facilities. We were also shown
new wards with private rooms and oxygen piped to bedsides rather than
provided in tanks as in the older wards. We saw many pieces of new
equipment, including equipment for mammography, magnetic resonance
imaging, sonograms, X-ray, and X-ray developing. We visited the new
file room for maintaining medical records. In contrast, the older parts
of the hospital had no air-conditioning and poor ceiling ventilation.
The hospital has had persistent fire-safety problems, including
inflammable building materials and lack of sprinkler systems in older
wards. During the period of our review, the inflammable materials were
being replaced as wards were renovated; however, sprinklers remained
inadequate.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the capital improvement
grants was limited. According to DOI officials, the accountability of
these grants is no less than for other federally funded construction
grants to the states and local governments. However, in American
Samoa's single audits for fiscal years 1998-2001, which include the
grants, the auditors disclaim any opinion about the reliability of the
territory's financial statements, the allowability of claimed costs,
and the effectiveness of internal controls. The single audits for
fiscal years 2002 and 2003 remained uncompleted as of November 2004.
The audits for LBJ Hospital for fiscal years 1998-2001 found
significant problems with the hospital accounts. For fiscal years 1998-
2000, LBJ Hospital declined to present a statement of cash flows
summarizing the operating, investing, and financing activities as
required by generally accepted accounting principles. As a result, the
auditor was unable to express an opinion regarding the financial
statements printed in the audit. For fiscal year 2001, the auditors
found the hospital unable to locate supporting documents for its
accounting records. The auditors expressed no opinion on the hospital's
financial statements for 2001. The auditors found several instances of
noncompliance as well as several reportable conditions and material
weaknesses in internal controls. Audits for fiscal years 2002-2003 were
not available as of November 2004.
General Technical Assistance Grants:
Purpose and Legislation:
Each year, Congress appropriates money for technical assistance grants
in the territories. Significant portions of this appropriation have
been used for specific projects, such as the Coral Reef Initiative;
Brown Tree Snake Control, focused on Guam; Maintenance Assistance, also
known as the Operations and Maintenance Improvement Program; and the
Insular Management Control Initiative. The annual appropriation also
provides for general technical assistance to support short-term,
noncapital projects. General technical assistance is not designated for
any specific purpose, unlike the other forms of technical assistance,
and is not intended to supplant local funding of regular operating
expenses. DOI allocates these funds as it deems appropriate through an
application process.
Funding Levels:
The number of grants funded annually varies. For example, in fiscal
year 2001, general technical assistance funding of $665,600 (see table
4) comprised 10 separate grants, the largest of which was $200,000 for
a container tracking system for the Port Administration. General
technical assistance grants must be spent in the year that they are
obligated; however, DOI sometimes provides another year of funding to a
project with the understanding that funding for the following year will
depend on the availability of funds.
Table 4: General Technical Assistance Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Fiscal year: 1999;
Grant award: $320,367.
Fiscal year: 2000;
Grant award: $82,215.
Fiscal year: 2001;
Grant award: $665,600.
Fiscal year: 2002;
Grant award: $614,625.
Fiscal year: 2003;
Grant award: $63,000.
Fiscal year: 5-year total;
Grant award: $1,745,807.
[End of table]
Source: U.S. Department of the Interior, Office of Insular Affairs.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
Activities Supported, Target Recipients, and Basic Accomplishments:
All territories and freely associated states may compete for general
technical assistance grants. DOI staff assess whether the applications
adequately address the problems cited in the applications. According to
DOI officials, DOI helps the insular governments structure their grant
applications to address applicants' needs and capacity--for example,
whether a requested computer system is sufficient and appropriate for
the designated purpose.
The 23 general technical assistance grants to American Samoa in fiscal
years 1999-2003 totaled $1.75 million, and included $7,790 for Medicare
Coverage Training and $350,000 for computers for the American Samoa
government. Several technical assistance grants, totaling about
$390,000, were to be used to improve operations at LBJ Hospital.
In April 2001, DOI granted the American Samoa Department of Port
Administration $200,000 to purchase and install a container tracking
system for cargo entering and leaving American Samoa's harbor of Pago
Pago. The system was designed to maintain complete information about
the status of all containers arriving in American Samoa and to improve
the accuracy of the billing procedures for the containers. According to
the pier superintendent, the system allows ships at sea to radio their
container tracking numbers and contents to the port authority, allowing
for better revenue collection and more timely handling of the
containers.
In May 2002, DOI granted the American Samoa government $185,000 to
purchase and install an immigrant tracking system upgrade (see fig. 8).
According to DOI documents, the new system maintains a database of
visitors entering the territory and presents a daily list of those
whose visitation has expired or is about to expire. The system also
keeps a digital photograph of visitors' passports.
Figure 8: Airport Immigration Tracking System, American Samoa:
[See PDF for image]
[End of figure]
In 1999, DOI provided $285,000 and, later in 2001, $300,000 more to the
Pacific Basin Development Council in Honolulu for organizing the
American Samoa Economic Advisory Commission. The commission was
chartered to make recommendations to the President through the
Secretary of the Interior regarding the economic future of American
Samoa and to analyze the history of, and prospects for, economic
development in American Samoa. The commission was also to recommend
policies, actions, and time frames to achieve a secure and self-
sustaining economy for American Samoa. Finally, the commission was to
comment on the related appropriate role of the federal government. In
2002, the commission issued a four-volume report that targeted four
potential growth industries: fisheries, agriculture, and aquaculture;
telecommunications and technology:
information; manufacturing; and tourism.[Footnote 62] The report
recommended creating:
* a public-private working group in American Samoa to define and set up
a process, structure, and timetable and to manage and oversee the
implementation of the plan explained in the report; and:
* a federal-territorial task force to coordinate activities and resolve
pressing and potential problems and conflicts by seeking workable
solutions.
An interim report from 2001 by the commission summarized its findings
and cited skepticism within the American Samoan population about the
federal government's long history of commissioning studies that yielded
no tangible or sustainable results. DOI officials told us that no one
in the American Samoa government had taken responsibility for pursuing
the commission' s recommendations. The commission included the then
Lieutenant Governor, who became Governor of the territory in March
2003. According to DOI officials, the American Samoa government
responded to these recommendations by promoting an e-commerce
development corporation for which it had already requested DOI funds.
Performance Goals and Accountability Standards:
No performance goals have been established for this program.
Performance Evaluation:
According to the DOI official responsible for administering the
program, DOI works to structure the general technical assistance grants
according to the American Samoa government's needs. However, according
to DOI, once the grant is structured, the funds provided, and the
training or project completed, DOI does not follow up to evaluate
performance unless prompted by a complaint from the government or
recipient.
[End of section]
Appendix III: U.S. Department of Agriculture Programs in American Samoa:
School Lunch Program:
Purpose and Legislation:
The U.S. Department of Agriculture (USDA) provides grant funds for the
American Samoa School Lunch Program.[Footnote 63] The purpose of the
program in American Samoa is to provide nutrition assistance to
residents of American Samoa, with priority given to school-age
children. The current program is funded by a special block grant that
operates according to a memorandum of understanding (MOU) and provides
free breakfast and lunch to all school age children. From 1962 to 1991,
the School Lunch Program in American Samoa followed the same
regulations, policy, and procedures as the National School Lunch
Program in the 50 states.[Footnote 64] In 1991, USDA converted the
amount paid under the original program to the Child Nutrition block
grant, which has been adjusted for inflation annually since the
transition.[Footnote 65] According to the MOU, the governor of American
Samoa is charged with administering the program in American Samoa. The
American Samoa Department of Education has been designated as the grant
coordinator. According to federal officials, this transition caused no
break in program services to the children in American Samoa.
Officials explained that the change in grant and program structure was
intended to provide American Samoa with greater flexibility to serve
the needs of its children. In addition, given American Samoa's
remoteness and unique needs, funding the program with the block grant
allowed American Samoa to better meet those needs than would the
national USDA child nutrition programs (National School Lunch Program,
School Breakfast Program, State Administrative Expense Funds, and
Nutrition Education and Training Program). Another reason cited for the
change, according to federal officials, was that the management and
oversight responsibilities for the traditional child nutrition programs
in American Samoa were costly and severely disproportionate to the
overall level of federal assistance provided to American Samoa; in
contrast, the block grant reduced USDA's oversight responsibilities and
administrative investment.
Funding Levels:
School Lunch Program grants to the American Samoa government are made
on a federal fiscal year basis. Since fiscal year 1991, USDA's Food and
Nutrition Service (FNS) has provided grant funds on a quarterly basis,
with each year's grant contingent on the availability of funds and
FNS's approval of American Samoa's fiscal year Plan of Operations and
completion of the Drugfree Workplace Certification and Lobbying
Certification.[Footnote 66] On August 15 of each year, American Samoa
is required to submit a Plan of Operations to FNS that describes how
funds will be used, the targeted population to be served, and how often
food or other services will be made available to program recipients.
The plan also must include a budget for program expenditures. Grants
are calculated with a fiscal year 1989 grant calculation methodology
that was amended in 1992 and includes a yearly inflation
adjustment.[Footnote 67] After adjusting for base year funds, FNS adds
funding for the Nutrition Education Training Program, as authorized by
Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. §1788). Funds
that are obligated by FNS to American Samoa in a given fiscal year are
available for obligation and expenditure by the School Lunch Program in
the following fiscal year, or 2 years from the date of disbursement.
Table 5 shows the grant award amount for fiscal years 1999-2003.
Table 5: School Lunch Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal year: 1999;
Grant award: $8,485,224.
Fiscal year: 2000;
Grant award: $9,096,081.
Fiscal year: 2001;
Grant award: $9,727,818.
Fiscal year: 2002;
Grant award: $10,464,902.
Fiscal year: 2003;
Grant award: $11,230,206.
Fiscal year: 5-year total;
Grant award: $49,004,231.
Source: USDA, FNS Western Region.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
The American Samoa School Lunch Program uses grant funds to provide
free breakfast and lunch to children attending public or private
schools and early education centers (see fig. 9). As of July 2004, the
program was serving meals at 23 public elementary schools, 6 public
high schools, 10 private schools, 55 early childhood education centers,
and 37 day care centers.
Figure 9: School Lunch Program at Leone Midkiff Elementary School,
American Samoa:
[See PDF for image]
[End of figure]
Although the School Lunch Program in American Samoa is not held to the
same nutritional requirements as in the 50 states, the MOU requires
that meals be nutritious and include a variety of foods. FNS encourages
the use of foods native to the Samoan Islands, as well as other
nutritious foods acceptable to the groups being served. FNS also
encourages menu planning to keep fat, sugar, and salt at moderate
levels and to keep the menu consistent with dietary guidelines
published by USDA and the U.S. Department of Health and Human Services.
According to FNS officials, the American Samoa School Lunch Program
develops its own menu, and the nutritionist works with the schools'
cooks to ensure that the menu is being followed. FNS provides as much
advice as possible on the development and nutrition quality of the
meals.
In addition to funding the delivery of meal services and program
administration, the block grant includes funds earmarked specifically
for nutrition education. The National School Lunch Program is not
legislatively required to provide, and does not receive funding
specifically for, nutrition education. However, training funds are
included in the grant portion for nutrition education. The American
Samoa School Lunch Program Director told us that he is committed to
seeking training for his employees and that, following our fieldwork,
several of his staff attended training in the continental United
States. He reported that, in April 2004, he sent four employees to
attend the USDA School Meals Initiative conference held in Phoenix,
Arizona. This conference addressed areas of concern for school meals
initiatives, with particular focus on the advancement of research and
technology to improve services. The Director explained that his staff
acquired updated knowledge of school food services techniques and
methods for improving the American Samoa program. Three other employees
received training in Sacramento, California, and visited the FNS
offices in San Francisco. The Director reported that the staff returned
with fresh enthusiasm about improving menu planning for nutritious
student meals and assisting the field school food coordinators in
improving their job performance.
Performance Goals and Accountability Standards:
The American Samoa School Lunch Program does not have specific program
goals, but language in the MOU states that in developing its Plan of
Operations, the program should give priority consideration to the needs
of its preschool and school-age children; meals should be appealing and
nutritious; and the program should work toward serving meals that meet
the current dietary guidelines for Americans, contain nutrients at
Recommended Dietary Allowances, and conform to the Food Guide Pyramid.
To assess accountability, the annual Plan of Operations requires the
American Samoa government to identify program activities and
administrative areas that it funds with the grant. The plan should
identify the number of schools where services will be provided and
estimate the number of students who will be served both breakfast and
lunch. It should also provide details of administration expenses and
nutrition education expenses. According to federal officials, there is
no requirement that the American Samoa School Lunch Program "buy
America" or that the American Samoa government hire U.S. citizens.
Program and financial information is provided to federal officials
annually and quarterly in a series of reports.[Footnote 68] FNS also
relies on annual single audit reports to assess accountability for
American Samoa School Lunch Program funds. In addition, according to
USDA headquarters officials, FNS program and financial management staff
are required to conduct program and financial reviews every 3 years to
ensure that American Samoa is complying with the terms and conditions
in the MOU. However, FNS program staff reported that although they
would like to conduct reviews more frequently, cuts in the travel
budget make this difficult. Because the American Samoa School Lunch
Program is funded by a special block grant, FNS program officials have
discretion in the criteria they use to evaluate and monitor the
program. FNS further explained that funds allocated to American Samoa
are much smaller than those allocated to mainland programs and that the
agency focuses its limited resources where attention is needed most.
FNS said that the programs in American Samoa and the Commonwealth of
the Northern Mariana Islands were converted to block grants to enable
the FNS to save on administrative and oversight costs, among other
reasons.[Footnote 69] FNS conducted program reviews in American Samoa
in September 1998, September 2001, and January 2004, and it conducted
financial management reviews in September 1997 and January 2004.
Performance Evaluation:
The American Samoa School Lunch Program is meeting its purpose of
delivering breakfast and lunch to schoolchildren. Federal program
officials reported that they review meal service based on information
that the American Samoa government submits in the FNS required
quarterly performance reports, which contain the number of meals served
in that period of the grant. Federal officials evaluate the program on
the basis of its effectiveness in delivering services, and they
identify areas where American Samoa can improve management
effectiveness and efficiency to achieve quality management practices.
Following are some of the findings that the officials reported, based
on FNS program reviews in September 2001 and January 2004:
In September 2001:
* FNS reported that the American Samoa School Lunch Program was doing a
good job of using grant funds to feed children in schools and day care
centers; however, FNS expressed concern about the maintenance of
refrigeration equipment, health and sanitation, and the availability of
fresh fruit and vegetables in the menus.
In January 2004:
* FNS reported that the American Samoa School Lunch Program staff had
made significant improvements in program operations and administration
under the new School Lunch Program Director. These improvements
followed charges and a guilty plea of the former School Lunch Program
Director owing to the mishandling and theft of department food supplies
and materials.
* Regarding program delivery, FNS reported that the warehouse is the
only area where staffing is short and that food collection for
distribution to day care centers consumes considerable staff time.
* The American Samoa School Lunch Program includes meal service to day
care centers. FNS reported its concern that supporting the day care
centers may limit the administrative ability of program staff to
provide food to all other schools. Since day care centers already
receive $180 per month per child from the American Samoa Department of
Human and Social Services under a grant from HHS,[Footnote 70] FNS is
recommending that the American Samoa School Lunch Program (1) consider
charging a small per-pound fee to help cover the administrative costs
of delivering food to the centers and (2) develop a contract with each
center to explain that the program contribution is only a subsidy for
the center's food needs.
* FNS reviewers reported that American Samoa School Lunch Program
nutritionists have conducted workshops with the school cooks to help
develop their skills and to improve nutritional quality of the meals
being served. Nutritionists have been working with the department to
expand the use of fresh fruits and vegetables, particularly those that
can be purchased locally, and have attended training for the School
Meals Initiative for Healthy Children to improve the menus and track
nutritional content.
During our visit to American Samoa, we observed meals being served at
one school, and inspected the kitchens and cafeterias in seven schools.
At one school we visited, pests were evident. When we addressed this
with American Samoan officials, the American Samoa School Lunch Program
Director said that they have had some problems with rodents and
termites and have submitted a request for pest control. In addition,
four kitchens had equipment or maintenance problems, such as broken
thermometers on refrigerators and freezers, holes in window or door
screens, and leaking faucets.
Local Conditions Affecting Program Delivery or Project Completion:
The American Samoa School Lunch Program has faced barriers to program
delivery owing to recent natural disasters and program dependence on
imported food supplies. In January 2004, Cyclone Heta struck the
island, and for 1 week the program's food service department had to
provide food to a number of emergency shelters throughout the island.
Although the Federal Emergency Management Agency reimbursed the program
for the food costs, both staff and food resources were diverted from
the program's routine services, and the cyclone damaged at least one
school cafeteria. The American Samoa School Lunch Program Director said
that he does not want the program to be the sole source of disaster
relief in any future emergencies.
The nutrition education specialist said that the program's reliance on
food imports by boat and the lack of local food production also present
barriers to the program's delivery of services. Problems with the boat
sometimes cause food shortages. Food shortages also occurred in 2004
because of the cyclone. Because the nutrition specialist prepares the
menu based on what is available in the warehouse, shortages limit the
menu options and the program's ability to meet federal nutrition
guidelines.
Grant Accountability:
Accountability in the American Samoa School Lunch Program was limited
at both the federal and the program levels, but changes have recently
taken place to improve accountability. The main mechanisms for
accountability in the School Lunch Program are the single audit reports
and the financial management reviews that FNS conducts, in addition to
their monitoring through quarterly and annual reports.
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the School Lunch Program
was limited. Further, the single audits for fiscal years 1998-2000,
which were completed in August 2003, have questioned costs because of
missing documentation and unaccounted-for expenses, for which the audit
findings cited lack of internal controls and lack of adherence to the
accounting documentation procedures required by the Office of
Management and Budget. According to the single audits, the questioned
costs during fiscal year 1998-2000 totaled $168,252. As of July 2004,
FNS reported that they had received the single audit report for
American Samoa for fiscal year 1999 but not for fiscal years 1998 and
2000.[Footnote 71]
In addition to being aware of the internal control problems cited in
the single audits, federal officials were alerted to procurement fraud
and theft that occurred in the program throughout fiscal year 2003. The
American Samo School Lunch Program Director and the Chief Procurement
Officer were charged with committing offenses against the United States
between October 2001 and September 2003. These officials pleaded guilty
to the federal charges on July 2004. The School Lunch Program Director
pleaded guilty to charges of taking food and goods valued at $68,000 or
more from the American Samoa School Lunch Program Warehouse and
converting such goods for his and others' personal use. Although the
chief officials involved in theft and fraud have been replaced, the new
Director told us that not all staff involved in the theft were
terminated from program employment. He said that one person is still
working in the warehouse because of his government status and the
department's inability to place him elsewhere. The Director said that
he is trying to put more controls in all areas to prevent repetition of
past problems.
FNS program officials said that there are still problems with
procurement. For example, the American Samoa School Lunch Program staff
asked recently for an orange juice contract, but the Governor and
Attorney General rewrote the specifications of the contract to allow a
contractor to provide a different and less expensive juice. This change
was never communicated to the School Lunch Program staff. To improve
oversight and monitoring, FNS officials are now requiring that all milk
and juice contracts be sent to the Western Region office for review,
with follow-up documentation and justification, to be approved by FNS
in accordance with USDA's regulation governing procurement (7 C.F.R. §
3016.36). FNS officials stated that they would not normally be involved
with this level of oversight. FNS officials also reported that program
funds were used to purchase vehicles for the Director of the Department
of Education and the Director of the American Samoa School Lunch
Program. FNS officials asked the American Samoa officials to return the
vehicles to the warehouse and explained that no government-funded
vehicles should be used during nonwork hours.
FNS financial management officials recently issued their Financial
Management Review of fiscal year 2000. This is the first review that
American Samoa School Lunch Program financial management officials have
conducted since September 1997. FNS officials explained that they
focused on fiscal year 2000 because they had not conducted a financial
management review for a long time and they needed to select a year for
which there would be complete transaction records. An official
explained that they have experienced budget constraints and staff
shortages and that they currently schedule on-site reviews every 5
years.
Their review findings included the following:
* According to the Code of Federal Regulations,[Footnote 72] "effective
control and accountability must be maintained for all grant and
subgrant cash, real and personal property, and other assets. Grantees
and subgrantees must adequately safeguard all such property and assure
that is used solely for authorized purposes." However, FNS reviewers
could not determine whether the American Samoa government Property
Management Department consistently performed a physical inventory of
the American Samoa School Lunch Program assets.
* Four vehicles were not being used exclusively for program purposes.
FNS officials explained that government-funded vehicles should not be
used during nonwork hours and that the American Samoa officials
probably were not aware of this. FNS has requested that American Samoa
officials provide documentation ensuring that the vehicles are used
solely for program purposes.
* The financial management review cited internal control problems
regarding inventory of food and fixed assets, misuse of food service
equipment, and draws from the grant's letter of credit that were not
made on an as-needed basis.
In addition to reviewing reports by the FNS officials, we met with
American Samoa School Lunch Program staff to better understand the
program's operations and controls. The Program Director provided
documentation and responded to our questions regarding corrective
measures to improve the previous problems in the program. These actions
included suspension and removal of staff involved in incidents of
theft, identification of personnel resources to carry on continued
operations, and tighter controls and monitoring of purchases. The
Director has also identified long-range corrective measures, such as
the development and implementation of a modern computer system to
improve food inventory; development of a network system to improve
shipping, receiving, and issuing of inventory; and a more transparent
distribution of resources to ensure that services and tasks are not
duplicated among employees.
While discussing program budgets with American Samoa School Lunch
Program staff, we found that American Samoa had not established a food
cost per child and had estimated food program costs based on an
arbitrary annual increase from the previous year. Until July 2003, the
budget report for the Plan of Operations was completed by staff in the
main American Samoa Department of Education and not by the program
staff. The Director also reported that the program staff did not
receive the grant award letter and that, as a result, the Plan of
Operations was not submitted on time, resulting in a delay of the grant
obligation. Although FNS does not require a food cost per child for
budgets in the Plan of Operations, we found it problematic that program
year budget estimates were not based on analyses of student enrollment
and number of meals served for the prior school year and were not
compared with food costs, food used, and other inventory expenses and
allocations. When we communicated our concern to the American Samoa
School Lunch Program and Department of Education staff, they agreed
that estimating food costs per child would be an important step in
improving the budget process, particularly given the program's purpose
to provide meals to all school-age children.
Special Supplemental Nutrition Program for Women, Infants, and
Children:
Purpose and Legislation:
The Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC) follows the same regulations and requirements in
American Samoa as in the 50 states.[Footnote 73] The purpose of the WIC
Program is to provide supplemental food and nutrition education at no
cost to eligible low-income pregnant, breast-feeding, and postpartum
women and to infants and children up to 5 years of age.[Footnote 74]
According to federal regulations, the program is intended to serve as
an adjunct to good health care during critical times of growth and
development, in order to prevent the occurrence of health problems,
including drug and other harmful substance abuse, and to improve the
health status of these persons.[Footnote 75]
The WIC Program in American Samoa was established in 1996. The grant to
American Samoa is awarded by USDA's FNS and is overseen from FNS's
Western Region.[Footnote 76] In American Samoa, the state agency is
also the local WIC services provider. Eligibility determinations,
nutrition assessments, and distribution of benefits are all provided in
one building, administered by the American Samoa Department of Human
and Social Services, with a satellite clinic operating on the sparsely
populated Manu'a Islands.
Funding Levels:
Funding for the WIC Program in American Samoa increased steadily in
fiscal years 1999-2003 (see table 6). For fiscal year 2004, American
Samoa received a grant award of $6,145,322, with $4,736,905 dedicated
to food benefits and $1,408,417 for nutrition services and
administration.[Footnote 77] The American Samoa WIC Program also
receives a rebate every month from Mead Johnson for cans of infant
formula purchased from WIC vendors. FNS officials explained that the
fiscal year 2003 rebate was between $62,000 and $62,668 monthly; in
fiscal year 2004, the average monthly rebate increased to $70,034.
Rebates are deposited into the WIC food account and offset charges to
the WIC food grant for food costs.
Table 6: WIC Program Grant Awards to American Samoa, Fiscal Years 1999-
2003:
Fiscal year: 1999;
Grant award: $4,882,544.
Fiscal year: 2000;
Grant award: $5,030,025.
Fiscal year: 2001;
Grant award: $5,167,447.
Fiscal year: 2002;
Grant award: $5,536,391.
Fiscal year: 2003;
Grant award: $6,054,942.
Fiscal year: 5-year total;
Grant award: $26,671,349.
Source: USDA, FNS, Western Region.
Note: Amounts shown were awarded for food and for nutrition services
and administration. Grant awards are shown in nominal dollars and
exclude grant amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
Pregnant, breast-feeding, and postpartum women; infants; and children
up to 5 years of age become eligible if they (1) are individually
determined by a competent professional authority to be in need of the
special supplemental foods supplied by the program because of
nutritional risk;[Footnote 78] (2) meet the WIC income criterion or
receive, or have certain family members that receive, benefits under
the Food Stamp, Medicaid, or Temporary Assistance for Needy Families
Program; and (3) reside in the state in which the benefits are
received. FNS program officials explained that nutrition risk is based
on blood work, height, weight, health history, and dietary assessment
and that participants must qualify on at least one of these factors.
The current income requirement is 185 percent of the poverty level. FNS
officials told us that because incomes in American Samoa are so low,
nearly everyone in American Samoa is eligible for WIC benefits if they
also meet the gender, age, and residency requirements. Additionally,
FNS officials explained that, similar to WIC recipients in the 50
states, most American Samoans who meet the income requirement also meet
the nutritional risk criteria.[Footnote 79]
The WIC Program in American Samoa has 30 full-time staff, including
five eligibility workers, an eligibility manager, a registered nurse,
three licensed nurses, three community health assistants, and one
clerk. As of March 2004, the program had 6,300 WIC recipients, and the
WIC offices were serving about 350 clients per day, with services
ranging from nutrition risk assessments to issuance of WIC "food
instruments," or checks. Eligible WIC recipients receive (1) a food
package, which is a prescription for food specific to each
client;[Footnote 80] (2) nutrition education; and (3) referrals for
health care. American Samoan officials explained that all WIC
applicants are given a health assessment when they first visit the
clinic. Applicants are asked to present immunization cards for the
children; if the immunizations are not current, children are referred
to the Lyndon Baines Johnson Tropical Medical Center, where shots can
be obtained. After applicants are certified to receive WIC benefits,
the public health staff conduct follow-up assessments for infants every
6 months, from birth to 1 year.
WIC recipients are offered at least two nutrition classes within a 6-
month period. Classes are generally 10 to 15 minutes long and focus on
issues such as breast-feeding tips and other nutrition topics that
emphasize the use of the WIC foods. American Samoa WIC Program staff
reported that the nutrition unit of the WIC Program holds classes
regularly. In addition to nutrition classes, the WIC Program
implemented a Reading Readiness Class in 2002 for children. The class
is intended to support education delivered through the Early Childhood
Education Program and is targeted to children aged 1 to 5 years.
WIC recipients are issued WIC checks that they can use to obtain food
at authorized vendor locations. Currently, there are about 80
authorized WIC vendors in American Samoa among the three islands.
According to FNS officials, most of the goods on American Samoa are
imported and, consequently, the WIC vendors have high food costs. As a
result, the average cost of WIC food packages is higher in American
Samoa than in the 50 states. WIC recipients give vendors WIC checks for
specific foods, and the vendors fill in the dollar amount on the checks
and submit them to their bank. FNS officials reported that the high
costs for WIC food packages in American Samoa also result, in part,
from vendor fraud (See Grant Accountability).
Performance Goals and Accountability Standards:
To gauge the performance of the nutritional services that WIC offers,
FNS has established multiple program output measures. Generally, these
measures are used to assess the types and quantities of services the
state agencies provide and the agencies' compliance with grant
expenditure and other program requirements.[Footnote 81] The state
agencies develop guidelines intended (1) to ensure that local agencies
effectively deliver WIC benefits to eligible participants and (2) to
monitor local agencies' compliance with these guidelines. In addition
to using output measures to measure performance of WIC state agencies,
FNS has established breast-feeding initiation rate as an outcome-based
measure for the WIC Program's breast-feeding promotion and support
activities. However, FNS has no outcome measures for its nutrition
education or health referral services.[Footnote 82]
To monitor the delivery of WIC services in American Samoa, FNS program
officials conduct an on-site management evaluation known as a State
Technical Assistance Review, usually on a 3-year cycle as funds allow.
According to FNS officials, these reviews were conducted in 2000 and
2003. FNS financial management officials conduct on-site financial
management reviews, and FNS officials told us that they follow a
schedule similar to that of the program staff's on-site reviews.
However, FNS officials later reported that only one financial
management review of American Samoa WIC had been conducted, in June
2004. FNS Regional financial management reviews are now performed on a
5-year cycle.
To ensure the accountability of WIC funds in American Samoa, FNS relies
on state technical assistance reviews, financial management reviews,
and A-133 audits (single audit reports). FNS requires American Samoa
grantees to submit monthly financial and participation reports (FNS-
798), which provide information on projected and actual food
expenditures, infant formula rebates, cumulative nutrition services and
administration expenditures and obligations, and revenues from food
vendor and participant collections and from program income. If the WIC
Program receives separate infrastructure grant funds, American Samoa
reports these expenditures annually to FNS on the SF-269A report.
Performance Evaluation:
WIC services and nutrition education were being delivered in American
Samoa, but data to evaluate the performance of the WIC Program, beyond
general program delivery, was limited. Furthermore, incidents of fraud
and theft have jeopardized the integrity and, possibly, the quality of
services to recipients. Under the FNS criteria for the state technical
assistance review, program reviewers assess 11 functional areas of the
WIC Program; however, FNS officials told us that it is difficult to
cover all 11 areas during on-site reviews because they spend only about
4.5 days on island. Consequently, they identify and focus on the
functional areas they see as critical. During an FNS program review in
June 2000, FNS reviewers found that program services were hampered by
inefficient clinic operations and recipient certifications. FNS
officials reported a number of errors in the determination of
nutritional risk and the capture of related participant data in the
automated system. For example, one file recorded a child's height as 32
inches and, 6 months later, as 31 inches.
FNS recommended that the staff be unified under a single supervisor to
improve communication and clinic operations. FNS also recommended that
staff conducting eligibility assessments be retrained in the
certification requirements. In the 2003 FNS state technical assistance
review, officials reported that, although not all clinic operations
recommendations from the 2000 report had been implemented, the
designation of a single supervisor for the certification process had
improved communication and the certification procedures had
dramatically improved, including the documentation, assessing, and
processing of WIC recipients. However, the review cited serious
concerns and program violations, including food vendor overcharging and
fraud, and the program is now being monitored by FNS until American
Samoa officials respond to and implement corrective actions necessary
to avoid fiscal sanction.
Local Conditions Affecting Program Delivery or Project Completion:
The American Samoa WIC officials reported technology barriers to
program delivery. Until June 2004, the WIC nutrition education official
lacked an Internet connection that would allow her access to important
nutrition information available on the USDA Web site, despite a request
by the WIC staff in 2003 in response to a recommendation in the FNS on-
site review in September 2003. The WIC Program Director said that the
computer programs were out-of-date and needed to be redesigned. The
Director also reported that the information specialist needed technical
assistance and that the program needed a computer system that connects
all WIC units, including finance, nutrition education, and public
health.
FNS officials cited distance to American Samoa and limited travel
budgets as a barrier to effective oversight.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the WIC Program was
limited. All USDA grantees are required to comply with the Single Audit
Act Amendments of 1996 and OMB Circular A-133. In the single audit
reports for fiscal years 1998-2001, auditors found questionable costs
in the WIC Program for all 4 years, totaling $46,799. The reports also
identified various internal control weaknesses, including missing files
and support documentation for purchases, payments, and contracts, and
payroll as well financial records. They further stated that the
auditors could not test for eligibility of participants in all 4 years
because sufficient data systems and documentation were not available.
FNS officials told us that as of February 2004, they had not received
copies of the 1998-2001 single audit reports that list the questioned
costs. They also said that they had not been made aware of any findings
that required them to follow up on corrective actions for at least 5
years. In July 2004, Western Region FNS officials reported that they
had received only the fiscal year 1999 single audit report, on May 5,
2004.
In addition, FNS identified various accountability problems in the
American Samoa WIC Program, including incidents of vendor fraud and
abuse and misuse of grant funds. The single audit reports for fiscal
years 1998-2001 also identified a lack of internal controls, including
missing documentation for expenditures and case files to test for
recipient eligibility.
During the September 2003 FNS review of the American Samoa WIC Program,
FNS officials were alerted to vendor fraud and abuse occurring in the
program. The review found widespread evidence of WIC checks being
exchanged for cash, cigarettes, other nonfood items, and unauthorized
foods at WIC-authorized grocery stores and redeemed by the stores at
local banks. In addition, the reviewer found frequent instances of
vendors overcharging for WIC foods. The 2003 review requires corrective
action to disqualify eight vendors. FNS reported that American Samoa's
food package cost was the highest among 88 WIC state agencies and
almost double the national average for food package costs (American
Samoa's average food package cost per person was $62.15, compared with
the national average of $35.22 and Guam's average of $52.05). The June
2000 FNS program review stated that the American Samoa vendor manager
had done a "very good job" in establishing a strong WIC presence at all
36 authorized stores through frequent visits and policy clarifications.
However, by September 2003, when FNS conducted another on-site review,
the FNS reviewer found that the number of authorized vendors had
increased from 36 to 83 and that the "authorization process appeared to
be little more than an annual 'rubber stamp,' with no evidence of
applications being denied or assessed for competitive pricing against
other stores as required by WIC regulations." FNS responded by
recommending that all new vendor applications be frozen until further
notice, preferably for 2 fiscal years. American Samoa officials told us
that no new vendor applications had been approved since 2003. Although
no new vendors have been authorized, FNS reported that the previous
number, 36, was more than adequate for an island of slightly more than
100 square miles, with an excellent transportation system connecting
all villages. FNS reported that the Guam WIC Program has only 16 stores
for about the same number of WIC participants and on an island twice
the size of Tutuila, the main island of American Samoa. WIC regulations
require the state agency to "authorize an appropriate number and
distribution of vendors of order to ensure adequate participant access
to supplemental foods and to ensure effective State agency management,
oversight, and review of its authorized vendors." FNS officials
reported that they do not see the justification for having more than 40
well-distributed WIC-authorized vendors in American Samoa.
FNS officials said that American Samoa WIC staff are responsible for
authorizing vendors and training them on WIC check transaction and
redemption procedures. FNS officials also reported that the state
agencies administering WIC are required to perform compliance
investigations and/or inventory audits for the WIC Program. The
American Samoa Department of Human and Social Services established a
Grants Management and Evaluation Division to conduct programmatic
reviews of grant-funded programs and monitor programs' compliance with
regulations. The division found various noncompliance issues, which it
reported along with recommendations for corrective action to the
department director and WIC staff. However, according to division
staff, program officials did not report back to them whether actions
were taken based on their findings and recommendations.
While visiting several authorized WIC stores with American Samoa WIC
officials, we found two violations, based on the guidelines in the
American Samoa WIC Vendor Handbook. In one instance, WIC-authorized
food had no price displayed, and in another instance, a WIC-authorized
food item had expired.
Owing to the seriousness of the problems in the WIC Program, FNS
officials have involved the Governor of American Samoa. The Governor
responded to FNS with a corrective action plan in January 2004;
however, the State agency had delayed implementation of critical
actions in the plan, including mandatory disqualification of the eight
stores found to have committed the most serious WIC violations, cited
in the September 2003 FNS review. The FNS Regional Administrator
conveyed his concern to the American Samoa Governor during their July
2004 meeting. During his visit to American Samoa, the Regional
Administrator also found that the Governor's concerns about participant
access and cheaper prices at the affected vendors were not warranted.
The Governor reported that actions had been taken against 12 other
vendors who were found to have overcharged for food packages and that 9
of these vendors had reimbursed the program as of June 3, 2004. We
requested documentation from American Samoa's Treasury department and
found that 8 out of 12 vendors had paid the program for the overcharges
in April 2004. FNS has yet to determine whether the American Samoa
government's actions met WIC regulatory requirements and is following
up with the state agency regarding the individual cases. As of August
2004, FNS officials were deciding what actions to take against the
American Samoa WIC Program.
In October 2004 the Governor wrote to FNS stating that the eight
disqualifications, required in the September 2003 FNS review, had been
carried out; FNS is requesting additional documentation to assure this
and other corrective actions had taken place. FNS officials have
threatened fiscal sanctions if the program does not come into
compliance.
In addition to failing to take corrective action on the cases of vendor
fraud and abuse, the WIC Program staff did not meet deadlines for
submitting monthly status reports to FNS. Grant data that we requested
from FNS officials revealed that in fiscal years 1998-2003, FNS staff
had to communicate with American Samoa officials because reports were
submitted late, or information was missing. Furthermore, in August
2004, charges were filed against the Deputy Director of the Department
of Human and Social Services, the grantee of the WIC and Food Stamp
Programs in American Samoa. The Deputy Director was charged with
defrauding the government by conspiring to rig contracts totaling more
than $120,000 in exchange for cash kickbacks.
With regard to internal controls, FNS officials said that the American
Samoa WIC staff were encouraged to adopt an automated system for
financial management and that FNS provided some technical assistance
but that WIC staff turnover had hampered the system's implementation.
In addition, in a May 2004 review, FNS Financial Management staff found
that the American Samoa Department of Human and Social Services had
overcharged the WIC Program $128,400 for WIC building renovations; FNS
has since demanded a repayment.
Food Stamp Program:
Purpose and Legislation:
The American Samoa Food Stamp Program is a nutrition assistance program
that provides food coupons to American Samoa's eligible low-income
elderly residents and blind or disabled residents.[Footnote 83] The
program is administered by the American Samoa Department of Human and
Social Services. The Food Stamp Program in American Samoa was
authorized by the act of December 24, 1980,[Footnote 84] which allowed
USDA to extend programs administered by the department to American
Samoa and other territories.[Footnote 85] The program became effective
in April 1994, and the first month's benefits of the Food Stamp Program
were issued in July 1994. The current program is funded through a
capped block grant and operates under an MOU between the American Samoa
government and FNS. The MOU is effective for a 1-year period and is
negotiated annually prior to the beginning of each fiscal year.
Unlike the Food Stamp Program in the 50 states, the American Samoa Food
Stamp Program is not an entitlement program; further, the MOU under
which it operates allows American Samoa to set its own eligibility
standards as long as they are within the capped block grant. FNS
officials explained that American Samoa decided to target the program
to the elderly and disabled in part because they do not receive
Supplemental Security Income[Footnote 86] and because offering benefits
on the basis of income would have caused the program to be too broad
given the limited resources of the capped grant. The American Samoa
program requirements are outlined in the MOU and not in the laws and
regulations that apply to the Food Stamp Program in the 50 states.
Prior to the negotiation of the MOU, no Food Stamp Program existed in
American Samoa. Over the years, certain aspects of the MOU have
changed, such as the American Samoa Food Stamp Program's definition of
"disabled"; however, the basic concept and design of the program have
remained the same.
Funding Levels:
The block grant for the American Samoa Food Stamp Program covers the
administration costs of operating the program (e.g., staff salaries,
facility charges) and delivering nutrition assistance benefits to the
recipients. The initial grant amount was $2.7 million; however, in
fiscal year 1996, the annual grant was capped by statute at $5.3
million[Footnote 87] with adjustments for annual inflation. When the
Food Stamp Program reauthorized in fiscal year 2002, the cap for fiscal
year 2004 increased to $5.6 million, as a result of the Farm Bill, and
tied American Samoa funding to Puerto Rico's grant amount.[Footnote 88]
American Samoa may not carry over more than 2 percent of its funding
from one fiscal year to the next. Table 7 shows the grant awards for
fiscal years 1999-2003.
Table 7: Food Stamp Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal year: 1999;
Grant award: $5,300,000.
Fiscal year: 2000;
Grant award: $5,300,000.
Fiscal year: 2001;
Grant award: $5,300,000.
Fiscal year: 2002;
Grant award: $5,300,000.
Fiscal year: 2003;
Grant award: $5,422,939.
Fiscal year: 5-year total;
Grant award: $26,622,939.
Source: USDA, FNS.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
The American Samoa Food Stamp Program provides nutrition assistance to
low-income elderly, blind, or disabled American Samoa residents.
American Samoa is allowed to set its own eligibility standards to stay
within the capped block grant. Food Stamp recipients in American Samoa
must meet the following financial and nonfinancial eligibility
criteria, as specified in the MOU:
* Nonfinancial eligibility criteria (residency, citizenship, and age or
mental or physical disability). To be eligible, a recipient must be
either a U.S. national; a citizen; an alien lawfully admitted to the
United States as an immigrant as defined in Section 101 (a) (15) of the
Immigration and Nationality Act; an alien admitted to the Territory of
American Samoa as a permanent resident pursuant to sections 41.0202
(c)ii, 41.0402 and 41.0403 of the American Samoa Code; an alien legally
married to a U.S. citizen or U.S. national; or an alien who has legally
resided in American Samoa for at least 5 consecutive years.
* Resource eligibility standards. A recipient aged 60 and older,
disabled, or blind is subject to the maximum resource standards of
$3000.
* Gross income eligibility standards. Income is based on the
applicant's (not household's) monthly gross income. The current
standard is a gross monthly income of $712 or less.
The fiscal year 2004 MOU defines maximum monthly benefits as $132 per
person. By comparison, the Food Stamp Program in the 50 states provides
maximum monthly benefits of $141 per person. The American Samoa Food
Stamp Program Director told us that potential recipients must attend an
orientation offered weekly explaining the program benefits and
qualification requirements. After attending an orientation, a potential
recipient must apply for certification. The Director of the American
Samoa Food Stamp Program described the program's efforts to encourage
healthier eating through nutrition classes that recipients can take
while waiting to receive their monthly benefits. Although classes are
not mandatory, the Food Stamp Program staff budget approximately $6,000
for nutrition education classes per year. At the time of our visit, the
American Samoa Community College was holding nutrition classes at the
Food Stamp clinic to show recipients how to prepare healthier meals at
home. The Director explained that classes are conducted once per month
to coincide with the issuance of the food stamps.
Food Stamp recipients must come to the Food Stamp offices monthly to
receive their food coupons. In fiscal year 2003, the program served an
average of 2,830 persons and issued $292,061 in benefits per month. The
average monthly benefit per person during this period was about $103.
The program is one of the few remaining U.S. Food Stamp Programs that
still uses paper food coupons since the program in the 50 states has
implemented an electronic benefits transfer system to provide food
assistance to eligible recipients.
Performance Goals and Accountability Standards:
The American Samoa Food Stamp Program does not have federally
prescribed program goals or performance standards. FNS officials told
us that they evaluate the American Samoa program according to (1) the
number of people served, (2) whether recipients received the right
number of coupons, (3) whether benefits were awarded correctly, and (4)
whether the coupons were used appropriately. According to FNS
officials, the Department of Human and Social Services, the American
Samoa grantee, is required to monitor and coordinate all program
activities and ensure that the activities conform to the guidelines
established in the MOU. The MOU outlines procedures for operating the
program, such as determining eligibility and processing applications.
Program monitoring includes reviews to evaluate program operations,
eligibility certification, and retail compliance. To monitor the
program for accountability, the Department of Human and Social Services
is required to keep necessary records indicating whether the program is
being conducted in compliance with the MOU. To monitor this, FNS
requires Human and Social Services to submit monthly reports on
participation and issuance data and financial information. FNS has also
established procedures for recipients and retailers, penalties and
disqualifications for fraud, and procedures for clients and retailers
who do not adhere to the procedures.
To ensure that the program is in compliance and the services are being
delivered appropriately, FNS conducts on-site reviews. These reviews
are scheduled annually but may occur less often. Program reviews were
conducted in 1995, 2001, and 2004. The last financial management review
was conducted in 2003.
Performance Evaluation:
FNS officials reported that they generally find that the American Samoa
Food Stamp Program delivers assistance to the appropriate recipients.
FNS officials reported that the program operations have improved since
the implementation of an automated system[Footnote 89] in August 2001.
However, during an on-site review of the Food Stamp Program in April
2004, the FNS Program Manager found some instances in which file
certification procedures for granting eligibility were not adequately
documented. The FNS reviewer reported that FNS made recommendations to
the American Samoa Food Stamp Program staff to improve documentations
and adhere to the guidelines set forth in the MOU.
The Food Stamp Program Director in American Samoa believes that the
grant is adequate to serve the number of eligible recipients and that
recipients are happy with the program. During our interview with the
American Samoa Department of Human and Social Services Director and
Deputy Director, officials reported that no long-term assessment of the
program's effectiveness had been conducted but that they are seeing a
change of diet as a result of the nutritional training that the Food
Stamp Program provides. However, the officials could not document
dietary changes. Moreover, they reported that when they recently
surveyed recipients regarding where they would like to use their
coupons, recipients responded that they would like a chain fast-food
restaurant to be added as one of the program's authorized vendors. FNS
officials responded that under the current MOU, the American Samoa
program staff cannot authorize the fast-food chain to be a program
vendor.
Local Conditions Affecting Program Delivery or Project Completion:
Several local conditions affected the delivery of the American Samoa
Food Stamp Program services. Our interviews with federal and program
officials indicated that the program had an inadequate number of
professional staff to maintain and operate the program's technology
infrastructure, including databases to manage program services and
account for the use of funds. We also found that other technology
barriers affected the delivery of program services. In addition,
because the American Samoa Food Stamp Program staff consider the local
postal system unreliable, they require applicants and recipients to
come to the program offices for all correspondence regarding their
benefits. According to the FNS review in April 2004, the automated
system that processes eligibility and administers benefits
automatically closes cases that are not certified within 30 days of the
initial application but does not generate a letter to inform the
applicant. The FNS review also found that although the System
Administrator in American Samoa is very knowledgeable of the automated
system, the staff has limited programming knowledge essential to
designing and programming detailed reports or enhancing the system to
meet all of the Food Stamp Program's automation needs. FNS officials
reported that American Samoa program officials are in the process of
recruiting a computer programmer.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the Food Stamp Program was
limited. The program is subject to OMB Circulars A-87, A-102, and A-
133, which contains standards required by the Single Audit Act. The
recently released American Samoa single audit reports for fiscal years
1998-2000 showed questionable costs of $26,033 for the American Samoa
Food Stamp Program. For example, in fiscal years 1998, 1999, and 2000,
the questioned costs resulted from missing reports and missing support
documentation that auditors cited as a lack of adherence to
accountability documentation procedures. Also, in all 3 fiscal years,
because of incomplete or missing participant files auditors were unable
to verify that participants were eligible to receive benefits or that
they did not receive benefits prior to their approval through the
certification process.
Although the March 2003 financial management review by FNS officials
did not find significant problems with internal controls in the
American Samoa Food Stamp Program, the findings in the single audit
reports point to accountability weaknesses in financial management. The
financial management review noted that the program was not in
compliance with 7 C.F.R. § 3052, which requires submission of an
agency's single audits; however, FNS reported only that it would follow
up on the completion status of the missing audits. Additionally, FNS
officials reported that as of July 2004, they had received only one of
the three single audit reports for fiscal years 1998-2000, despite the
fact that all three were completed in August 2003. Federal officials
explained that since 1997, when the Federal Audit Clearinghouse was
established, a management decision documents the agreement between FNS
and American Samoa on the proposed corrective action for single audit
findings and the date that the actions will be completed.[Footnote 90]
The American Samoa Food Stamp MOU states that any firm or local food
producer that has been disqualified by the American Samoa WIC Program
will automatically be disqualified from the American Samoa Food Stamp
Program for the same period of time. FNS officials said it is difficult
to uncover fraud in retail purchases through the type of management
evaluation reviews conducted by federal Food Stamp Program staff.
Federal program reviewers examine American Samoa Food Stamp retailer
authorization and redemption processes, and adherence to retailer
requirements, and retailer training and monitoring. While these reviews
would not reveal food stamp retailer fraud, since the WIC vendors are
also food stamp vendors, and there have been problems with WIC
transactions, FNS is monitoring food stamp retailers closely. FNS
officials told us in February 2004 that the Food Stamp Program in
American Samoa has a compliance program but that compliance reports are
not required by FNS. They are considering amending the fiscal year 2005
MOU to include a requirement for compliance reports to be submitted to
FNS in addition to the already required reports. In its April 2004
review, FNS found that Food Stamp Program staff were diligent in
ensuring timely authorizations for vendors participating in the
program. FNS also found that program staff in American Samoa conducted
periodic site visits to vendors and ensured that vendors that redeemed
large numbers of food stamps were monitored and reported violators were
investigated. FNS Food Stamp officials discussed the problems in the
American Samoa WIC Program with Food Stamp Program staff and found that
vendor case files contained copies of disqualification letters;
however, these disqualification letters had not been enforced by the
WIC program officials as of August 2004. Staff acknowledged that they
were aware of the MOU requirement to disqualify the vendors from the
Food Stamp Program once decisions have been made in the WIC Program.
We visited three stores that were authorized vendors for the Food Stamp
Program, WIC, or both. In our Food Stamp review, we found that one
vendor had not posted the Official Food List (see fig. 10 for an
example of the posted list). We did not conduct a full-scale review of
all compliance requirements, but when we asked store staff about the
Food Stamp procedures, one staff member had difficulty understanding
Samoan and English. Other staff members could name only a few of the
procedures on the checklist in the Food Stamp Program retailer guide,
which program staff had provided us before our visit.
Figure 10: Vendor Posting of Official Food List for American Samoa Food
Stamp Program:
[See PDF for image]
[End of figure]
The Food Stamp Programs in the 50 states implemented an electronic
benefit transfer (EBT) system, a point-of-sale system that helps ensure
program compliance.[Footnote 91] FNS had discussions with American
Samoa officials about the territory's implementing the system. However,
FNS cautioned that many factors should be considered in determining the
feasibility of implementing an EBT system in American Samoa, including
the costs of the system relative to American Samoa's resources under
the capped grant award; the state of American Samoa's automation
technology and resources; the financial and technology limitations of
vendors; and the potential impact of such a system on elderly and
disabled recipients.
[End of section]
Appendix IV: U.S. Department of Education Programs in American Samoa:
Innovative Programs Grants:
Purpose and Legislation:
State and local education agencies are eligible for federal grants and
funds to implement numerous federal education programs. In fiscal years
1999-2003, under a consolidated grant application, American Samoa
applied for, and received, Innovative Programs grants to support its
education programs.[Footnote 92] The Innovative Programs grant is
designed to assist state and local education agencies in implementing
education reform programs and improving student achievement. Innovative
Programs grant funding provided by a state education agency to local
education agencies can be used to carry out local innovative assistance
programs that may include at least 27 "activities," which are
identified in the No Child Left Behind Act (NCLBA).[Footnote 93] The
American Samoa Department of Education reported that it is both a state
education agency and a local education agency because it acts as a
state education agency when performing its federal grant administration
functions but as a local education agency when implementing and
assessing local assistance programs.
Funding Levels:
Table 8 identifies the Innovative Programs grant award amounts to
American Samoa for fiscal years 1999-2003. In fiscal year 2003, the
Innovative Programs grant accounted for about 40 percent of the
American Samoa Department of Education's total budget (about $40
million). Annual awards to American Samoa and the other insular areas
are based on a statutory formula for set-asides that allocates up to 1
percent of the total federal education funds available each year to the
50 states for distribution to the insular areas, according to their
respective need. The American Samoa Department of Education can draw
down awarded grant funds throughout the year and spend any remaining
grant funds during the following fiscal year. The increase in the
Innovative Programs grant award to American Samoa for fiscal years 2002
and 2003 resulted from the enactment of the NCLBA. The act authorized a
$65 million increase in total federal appropriations for Innovative
Programs grants and parental choice provisions from fiscal year 2001 to
2002 and a $25 million increase from fiscal year 2002 to 2003. The
NCLBA also permitted consolidated grant applicants such as American
Samoa to transfer up to 50 percent of certain nonadministrative federal
funds to the Innovative Programs grant.
Table 8: Innovative Programs Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal year: 1999;
Grant award: $6,783,601.
Fiscal year: 2000;
Grant award: $7,040,347.
Fiscal year: 2001;
Grant award: $7,727,525.
Fiscal year: 2002;
Grant award: $15,334,085.
Fiscal year: 2003;
Grant award: $16,763,115.
Fiscal year: 5-year total;
Grant award: $53,648,673.
Source: U.S. Department of Education, Office of Elementary and
Secondary Education.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
For fiscal years 1999-2001, the American Samoa Department of Education
reported that it implemented programs for training instructional staff,
acquiring student materials, implementing technology, meeting the needs
of students with limited English proficiency, and enhancing the
learning ability of students who are low achievers. Similar initiatives
were proposed in American Samoa's fiscal year 2002 and 2003
consolidated grant applications, in addition to others (see table 9 for
a full list). Under the Innovative Programs grant rules, American Samoa
must spend at least 85 percent of the funds on local innovative
assistance programs, whereas up to 15 percent of the funds may be spent
on state education agency programs and the administration of the
Innovative Programs grant. Table 9 shows how the American Samoa
Department of Education allocated Innovative Programs grant funds among
its various programs in fiscal year 2003.
Table 9: Budget Allocation of Innovative Programs Grant Funds to
American Samoa, Fiscal Year 2003:
Program name: State education agency activities: State technical
assistance;
Amount: $2,137,297;
* Project Safe School Environment; Amount: $1,000,000;
* Project Assessment; Amount: $619,016;
* Project Leadership; Amount: $443,047;
* Project Evaluation; Amount: $75,234;
Allowable allocation: 15%.
Program name: State education agency activities: State administration;
Amount: $377,170.
Program name: State education agency activities: Subtotal;
Amount: $2,514,467.
Program name: Local education agency activities: Public schools:
Teacher quality;
Amount: $5,938,187;
Allowable allocation: 85%.
Program name: Local education agency activities: Public schools:
Supplemental instructional materials;
Amount: $2,829,273.
Program name: Local education agency activities: Public schools:
Acquisition of technology;
Amount: $1,341,600.
Program name: Local education agency activities: Public schools:
Library services;
Amount: $600,577.
Program name: Local education agency activities: Public schools:
Community learning centers;
Amount: $567,419.
Program name: Local education agency activities: Public schools:
Technology training;
Amount: $300,000.
Program name: Local education agency activities: Public schools:
At-risk schools;
Amount: $300,000.
Program name: Local education agency activities: Public schools:
Alternative education program;
Amount: $298,255.
Program name: Local education agency activities: Private schools:
Private school programs[A];
Amount: $2,073,337.
Program name: Local education agency activities: Subtotal;
Amount: $14,248,648.
Total;
Amount: $16,763,115;
Allowable allocation: 100%.
Sources: American Samoa Department of Education data and GAO
calculation.
[A] Federal law permits some "secular, neutral, non-ideological
services" to be provided by a local education agency to private school
students using Innovative Programs grant funds; however, the program
funds must be controlled and administered by a public agency, and all
services must be provided independently of any private school or
religious organization.
[End of table]
In fiscal year 2003, the largest dollar share of local education agency
funds supported local activities such as teacher quality improvement
programs, class size reduction efforts, and the purchase of
supplemental instructional materials. According to the American Samoa
Department of Education, every classroom for kindergarten through
eighth grade currently has an average of about 27 students per teacher.
However, the department would like to reduce the average class size to
15 students per teacher for kindergarten through third grade and to 20
students per teacher for grades four through eight, by hiring more
fully certified teachers. Teachers may obtain teaching degrees locally
from the American Samoa Community College or from a University of
Hawaii cohort program. The American Samoa Department of Education
reported that the community college enrolled 600 to 900 students per
year from 1999-2002 in its teacher certification program and that 142
teachers graduated from the Hawaii cohort program in 1999-2002.
However, according to department officials, teachers are difficult to
retain owing to the island's inability to pay salaries that are
commensurate with the cost of living.
For all fiscal years included in our review, American Samoa used the
Innovative Programs grant to budget for local education agency
innovative assistance programs and costs associated with those
programs, such as payroll, supplies, contractual services, travel,
equipment, and indirect costs. According to the American Samoa
Department of Education, various programs receive local education
agency program funds on a per child basis, with equal allocations for
each 5-to 12-year-old child. American Samoa's fiscal year 2004
consolidated grant application reported that about 17,000 children aged
5 to 17 years were attending 23 elementary, 6 secondary, and 13 private
schools.
Performance Goals and Accountability Standards:
The consolidated grant application form developed by the U.S.
Department of Education (ED) identifies five performance
goals,[Footnote 94] with corresponding indicators, that apply to all
proposed education programs. The form requires applicants to provide
certain minimum information, including performance "targets" to confirm
the state or local education agency's program compliance with these
five goals. The American Samoa Department of Education is not
specifically required to comply with NCBLA, but it reported in its
fiscal year 2003 grant application that "it has made the commitment to
utilize" some of the performance goals as a framework for improving
education in the territory.[Footnote 95] In addition, local assistance
programs funded under the Innovative Programs grant must be (1) tied to
promoting challenging academic achievement standards, (2) used to
improve academic achievement, and (3) part of an overall education
reform strategy. According to an American Samoa Department of Education
official, implementing certain aspects of the NCLBA could begin to tie
federal dollars to progress and measurable results for students in
American Samoa.
In 2002, ED began requiring the American Samoa Department of Education
(and state education agencies in the 50 states) to submit reports that
describe how programs implemented under the Innovative Programs grant
have affected student achievement and education quality. State and
local education agencies have the authority to develop the content and
format of their own summaries and evaluations, but each agency must
meet certain reporting requirements. According to ED guidance, local
education agencies must submit annual "evaluations" that include, at a
minimum, information and data on the funds used, the types of services
furnished, and the students served by the programs. State education
agencies must submit an annual statewide "summary" based on the
evaluation information received from the local education agencies.
ED reported that it relies primarily on single audit reports, in
addition to its own financial monitoring, to assess the fiscal
accountability of American Samoa's Innovative Programs grant. ED's
annual performance report requires grantees to include information
about how grant funds were spent. Since September 2003, ED has
designated American Samoa as a high-risk grantee and has begun
requiring the American Samoa Department of Education to submit
quarterly financial reports.
Performance Evaluation:
We found that local program performance was difficult to evaluate,
owing to yearly variations in the types of programs implemented,
variations in funding levels for the programs that did not change, and
variations in the types of data provided in annual performance reports.
The Western Association of Schools and Colleges (an accrediting
commission for schools in the United States) reported that one of
American Samoa's six high schools continued to be denied accreditation
because of long-standing issues, including poor teacher qualifications,
failure to make certain improvements in student education programs, and
failure to procure education materials and equipment in a timely
manner.
In spite of our inability to determine local program performance, ED's
Office of Elementary and Secondary Education indicated that the
American Samoa Department of Education generally submitted the annual
reports on a timely basis for fiscal years 1999-2002 and that the
reports provided some information about American Samoa's education
programs. In addition, ED's program managers reported that they have
frequent communication with American Samoa Department of Education
officials throughout the application and reporting process but that on-
site reviews of the program are infrequent: the last ED program review
in American Samoa was conducted in 1991. Officials from ED's Office of
Inspector General (OIG) visited American Samoa in August 2002 to
determine whether allegations of fraud in its programs warranted
additional investigation and audit. The OIG's report did not include
specific findings on the Innovative Programs grants. ED officials told
us that they visited American Samoa in September 2004.
Local Conditions Affecting Program Delivery or Project Completion:
According to the American Samoa Department of Education, American
Samoa's remoteness presents challenges in all aspects of implementing
the Innovative Programs grant in American Samoa. For example,
transporting personnel, materials, and supplies to and from the
territory is costly and logistically difficult. Attracting and
retaining qualified teachers is also a problem, given that the average
teacher salary in American Samoa is about $13,000 per year while the
cost of living is comparable to that in Hawaii. Although the American
Samoa Community College offers an associate degree in education, the
territory has no institutions of higher education. Most teachers hired
in American Samoa have an associate degree from the community college.
Another factor affecting education in American Samoa is limited English
proficiency. Most students are formally introduced to English in
kindergarten but are raised speaking Samoan, which has fewer letters in
its alphabet and many fewer words than English. According to the
American Samoa Department of Education's annual grant application for
2003, at least 70 percent of all students in kindergarten through
twelfth grades have limited English proficiency.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the Innovative Programs
was limited and ED was unable to ensure fiscal accountability for the
grant funds. ED:
designated the American Samoa government a high-risk grantee[Footnote
96] in September 2003, primarily because of its failure to provide
timely single audit reports. Although the American Samoa Department of
Education submitted annual Innovative Programs grant applications and
reports in fiscal years 1999-2003, we determined that the annual
reports did not contain sufficient detail on program expenditures to
demonstrate accountability for the use of all the grant funds. ED
officials report that the agency is now working closely with the
American Samoa Department of Education to submit quarterly financial
reports that describe in more detail how funds are being used.
Special Education Grants:
Purpose and Legislation:
The Individuals with Disabilities Education Act (IDEA) is the primary
federal law that addresses the unique needs of children with
disabilities, including, among others, children with specific learning
disabilities, speech and language impairments, mental retardation, and
serious emotional disturbance. Under IDEA, Part B,[Footnote 97] ED
provides grants to states and outlying areas, including American Samoa,
to provide eligible children with disabilities who are aged 3 through
21 years with a free appropriate public education in the least
restrictive environment[Footnote 98] to the maximum extent appropriate.
Funding Levels:
American Samoa relies almost entirely on its IDEA grants to fund its
Special Education Program. Special Education grants to American Samoa
and other outlying areas are allotted proportionately among them on the
basis of their respective need, not to exceed 1 percent of the
aggregate amounts available to the states in a fiscal year, as
determined by the Secretary of Education.[Footnote 99]
IDEA funds have historically been appropriated every July 1 and remain
available for obligation for 15 months. Under the law, if a state
education agency does not obligate all of its grant funds by the end of
the fiscal year for which the funds were appropriated, it may obligate
the remaining funds during a carryover period of one additional fiscal
year.[Footnote 100] The per student federal amount includes special
education services such as regular and special education classes,
resource specialists, and other related services. Table 10 shows
Special Education Program funds awarded to American Samoa for fiscal
years 1999-2003. Amounts do not reflect carryovers from prior years.
Table 10: Special Education Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal year: 1999;
Grant award: $4,832,745.
Fiscal year: 2000;
Grant award: $4,956,510.
Fiscal year: 2001;
Grant award: $5,127,424.
Fiscal year: 2002;
Grant award: $5,705,650.
Fiscal year: 2003;
Grant award: $5,816,515.
Fiscal year: 5-year total;
Grant award: $26,438,844.
Source: U.S. Department of Education, Office of Special Education
Programs.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
As of January 2004, the American Samoa Department of Education reported
that its Special Education Program was using the IDEA grant to provide
services to slightly more than 1,100 eligible 3-to 21-year-old students
with disabilities and that it was providing the requisite
services[Footnote 101] to eligible children in the territory.
Under IDEA, federal funds may be used for salaries of teachers and
other personnel, education materials, and related services such as
special transportation or occupational therapy. According to the
American Samoa Department of Education, IDEA funds support all but 1 of
the Special Education Program's approximately 200 positions. According
to ED officials, IDEA does not prohibit the provision of services to
non-U.S. nationals.
Performance Goals and Accountability Standards:
The Special Education Program in American Samoa is required to
demonstrate that it meets all of the conditions that apply to the 50
states under IDEA. The main objective of IDEA is to identify each child
with a disability, determine his or her eligibility for special
education services, and provide each eligible student an individualized
education program designed to meet his or her needs.[Footnote 102] To
monitor performance of special education programs nationwide, ED
required two biennial reports for the program covering school years
1998-1999 and 2000-2001. For 2002 and 2003, American Samoa was required
to submit an annual report that included (1) a comparison of actual
accomplishments to the objectives established for the reporting period,
(2) reasons for any failure to meet the established objectives, and (3)
additional pertinent information including a description of planned
future educational activities. In response to ED's request, American
Samoa submitted a self-assessment in May 2003 based on ED's special
education monitoring process (Continuous Improvement Monitoring
Process), which was being implemented in 2003.
Federal officials said that they rely primarily on the single audit
reports to determine accountability for IDEA program funds. ED also
reported that although the agency is not currently required to perform
on-site reviews of the Special Education Program in American Samoa or
any other insular area or state, members of ED's Office of Special
Education Programs conducted an on-site review in September 2004.
Performance Evaluation:
The American Samoa Special Education Division Office submitted the
required biennial and annual performance reports between 1999 and 2003.
The Division Office also submitted the required self-assessment report
for 2003. In these reports, American Samoa reported to ED that it was
difficult to measure the progress of its Special Education Program
because of data limitations and because its limited review indicated
both progress and "slippage" in several core IDEA areas, such as
general supervision of the program, provision of transition services,
parent involvement, and provision of a free appropriate public
education in the least restrictive environment.
In 1999, a consultant from the Western Regional Resource Center (a
grantee of ED's Office of Special Education Programs) was contracted by
the American Samoa Department of Education to conduct a compliance
review of IDEA, as part of its general supervisory authority, by
reviewing eight elementary and secondary schools. The consultant
reported that all of the schools had various problems in preparing,
updating, and retaining students' individualized education programs.
Seven of the eight schools did not provide a free appropriate public
education to all eligible disabled students in accordance with
requirements under IDEA. Four schools failed to place their special
education students in the least restrictive environment; four schools
were out of compliance with procedural safeguards of the act; and four
schools had no mechanisms in place for identifying children and
referring them for an evaluation, conducting an evaluation for those
referred to the program, and determining whether those evaluated were
eligible for services.
In May 2003, an American Samoa special education program steering
committee submitted a self-assessment report of the Special Education
Program to ED. The report indicated that certain aspects of the program
needed improvement in areas such as general supervision, public
awareness and child find, early childhood and secondary transition, and
providing a free appropriate public education in the least restrictive
environment. The steering committee also reported that some aspects of
American Samoa's Special Education Program complied with IDEA
requirements.
After reviewing American Samoa's self-assessment, ED's Office of
Special Education Programs identified program areas that were
noncompliant or in danger of failing to comply with IDEA. For example,
American Samoa's self-assessment indicated that its Special Education
Program had a limited pool of trained personnel and no physical
therapists, occupational therapists, or social psychologists, chiefly
because of a reported freeze on new hires and new positions in the
program.[Footnote 103] ED also identified inconsistencies in the
program's stated ability to meet the requirement for special education
students to participate in territory-wide assessments. In addition, ED
found that the program failed to comply with IDEA requirements for
parent participation and interagency coordination in transition
planning and provision of services.
During our visit to American Samoa, we selected 17 individualized
education program files from six elementary and secondary schools that
provide special education services in American Samoa, and we reviewed
them for the requisite content.[Footnote 104] All requested files were
provided, and they generally included the requisite content. We did not
evaluate the quality of the written content in each individualized
education program, although some student files appeared more
comprehensive than others.
IDEA also requires each public education agency to identify all
children with possible disabilities residing in its jurisdiction. For
each child identified, the agency must provide a full and individual
evaluation to determine whether the child has a disability and the
nature of the child's educational needs, so that an individualized
education program can be developed. IDEA requires the public education
agency to initiate a collaborative planning effort between parents and
school officials to develop this education program and calls for
implementing the program as soon as possible. However, parents,
teachers and education officials in American Samoa reported that the
Special Education Division Office was often slow in responding to
requests for services and other resources.
For example, we met one student who was completely deaf in both ears
but had been passed from kindergarten to third grade without being
identified and referred to the Special Education Program for an
assessment or evaluation. In third grade, the student was tested by an
audiologist and confirmed to be deaf, and her principal requested the
purchase of hearing aids to enhance the child's ability to hear.
According to the American Samoa Special Education Division Office, it
did not submit a purchase order for hearing aids until April 2003, 4
months after the request was made; as of our visit in March 2004, the
hearing aids had not arrived.[Footnote 105] Officials from the American
Samoa Department of Education's Special Education Division Office
explained that the hearing aids had not yet arrived because of a
miscommunication with the off-island company from which the devices
were ordered. American Samoa Special Education officials said that the
off-island company did not process the hearing aids order because it
required advance payment, but that the company did not notify the
American Samoan Special Education Division Office officials of this
requirement. As a result, payment was not sent to the vendor and the
hearing aids were not ordered.
Local Conditions Affecting Program Delivery or Project Completion:
One barrier to effective implementation of the Special Education
Program in American Samoa is the limited number of licensed or
certified professionals. At the time of our review, American Samoa's
Special Education Program had about 200 staff, including program
administrators, teachers, social workers, bus drivers, and other
personnel. However, American Samoa Department of Education officials
noted that the program needs more certified professionals. For example,
according to the American Samoa Special Education Division Office, the
program has only one physical therapist (hired in October 2003) and
needs speech pathologists, occupational therapists, audiologists,
psychologists, and other professionals certified or trained in teaching
special education. In addition, the program had no certified
psychologist at the time of our review.[Footnote 106] American Samoa
reported that because its education program is supported almost
entirely by federal funds, its average dollar allocation per child is
more limited than are allocations in states that subsidize their IDEA
grants with state or local contributions.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the American Samoa Special
Education Program was limited. The single audit reports for fiscal
years 1999 and 2000, which were completed in August 2003 stated that
the program did not adequately maintain supporting documents for
certain financial transactions and had questioned costs of more than
$18,000 in 1999 and more than $170,000 in 2000. In addition, we found
that the Special Education Program Director and staff had limited
awareness of the program's fiscal position for at least 2 years.
Program funds are controlled almost entirely by the American Samoa
Department of Education.
[End of section]
Appendix V: U.S. Department of Transportation Programs in American
Samoa:
Airport Improvement Program:
Purpose and Legislation:
The Department of Transportation's (DOT) Airport Improvement
Program[Footnote 107] provides federal grants for airport planning and
infrastructure development involving safety, security, environmental
mitigation, airfield infrastructure, airport capacity projects,
landside access, and terminal buildings. The Federal Aviation
Administration (FAA), which administers the program, has identified
more than 3,000 airports that are significant to the national air
transportation system and thus eligible to receive Airport Improvement
Program grants. Total funding authorization for the Airport Improvement
Program was $3.4 billion in fiscal year 2003.[Footnote 108] American
Samoa has participated in the Airport Improvement Program since it
began in 1982.
Funding Levels:
Table 11 provides a summary of total FAA Airport Improvement grant
awards to American Samoa during the period of our review.
Table 11: Airport Improvement Program Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Fiscal year.
1999; Grant award: $9,554,090.
2000; Grant award: $8,909,629.
2001; Grant award: $7,482,113.
2002; Grant award: $8,936,051.
2003; Grant award: $4,409,997.
5-year total; Grant award: $39,291,880.
Source: FAA Honolulu Airport District Office.
Note: Total combined annual grants for all three American Samoa
airports. Figures do not include grant amendments. Grant awards are
shown in nominal dollars.
[End of table]
Distribution of Airport Improvement Program grants is based on a
combination of formula grants and discretionary funds. The amounts of
formula grants for primary airports,[Footnote 109] which include the
main airport in American Samoa, are based on the number of passenger
boardings or a minimum of $1,000,000 per year in grant funds. For
nonhub primary airports like Pago Pago International, these funds are
available in the year they are apportioned and remain available for 3
fiscal years. Larger airports have only 2 additional fiscal years to
use these funds. Airports compete with other airports in their region
for available discretionary funds.[Footnote 110] The American Samoa
Department of Port Administration, which operates the airports, is the
grant recipient. Before fiscal year 2004, the department was not
required to provide any matching funds for the first $2 million of the
grant award; above $2 million, the local contribution was 10 percent.
For fiscal years 2004-2007, the department is not required to provide
matching funds for the first $4 million; above $4 million, the required
local contribution will be 5 percent. The department fulfills its
matching requirement with credit for in-kind contributions, such as
land or staff time, because it has no funds to contribute to the
projects.
Activities Supported, Target Recipients, and Basic Accomplishments:
American Samoa has three airports, all of which receive Airport
Improvement Program grants. The main airport, Pago Pago International,
is classified by FAA as a commercial service-primary airport and has
two runways, one of which can accommodate large commercial jets.
Typically, eight commercial passenger flights depart Pago Pago
International per week. The other two airports, Fitiuta and Ofu, are
very small commercial service-nonprimary airports that cannot
accommodate large commercial carriers.
Since 1998, Airport Improvement Program grants have been used for
constructing taxiways, extending runways, and rehabilitating existing
runways, taxiways, and shoulders. Maintaining the quality of runways,
taxiways, and shoulders is critical to airport safety; according to
airport officials in American Samoa, the jet engines can suck in debris
such as loose asphalt as if they were "huge vacuum cleaners." Projects
also included the construction of an "aircraft, rescue and
firefighting" training facility, the purchase of new fire and rescue
vehicles (see fig. 11), new shelters for rescue vehicles, and the
installation of perimeter fencing to improve airport security. Runway
safety areas at the airport in Pago Pago were upgraded to meet FAA
standards, providing additional margins of safety. Construction
projects are completed through competitive contracts with engineering
and construction firms.
Figure 11: New Fire Suppression Vehicle for American Samoa Airports:
[See PDF for image]
[End of figure]
Performance Goals and Accountability Standards:
The same federal regulations apply to Airport Improvement Program
grants in American Samoa as in the 50 states. Airports must have a 3-to
5-year capital improvement plan, which identifies the airport's
development priorities and forms the basis for the grants they request
and are awarded by FAA. FAA works with the airports to develop this
plan. FAA views project completion as the primary performance goal and
monitors the performance of projects primarily through weekly
construction progress reports. An FAA engineer also conducts an on-site
inspection of every project, ideally at the project's completion.
[Footnote 111] However, according to an FAA official, such inspections
are not always possible because of the cost of travel from the FAA
Airport District Office in Honolulu to American Samoa.
According to the FAA official overseeing Airport Improvement Program
grants in American Samoa, contractors' monthly claims for reimbursement
represent a key means of assuring project accountability. Additionally,
FAA must approve all contract change orders. Grantees must conform to a
broad range of requirements governing the implementation of project
grants, detailed in the FAA Airport Improvement Program
Handbook.[Footnote 112] The handbook outlines project eligibility
requirements, planning process guidelines, procurement and contract
requirements, project accomplishment requirements, grant closeout
procedures, and audit requirements. The Airport Improvement Program
also relies on single audit reports to assess accountability for its
funds to American Samoa.
Procurements made under the Airport Improvement Program must comply
with required federal contract provisions established by various laws
and statutes. For example, the grantee must ensure that contractors
comply with minimum wage requirements under the Davis-Bacon Act. The
FAA official responsible for American Samoa stated that "Buy America"
preferences[Footnote 113] apply to the purchase of steel and
manufactured products but not to services, such as engineering,
consulting, and construction, that comprise the bulk of grant
expenditures. The official also stated that American construction firms
do not bid on runway pavement projects in American Samoa, most likely
because of costs associated with American Samoa's remote location and
the relatively small size of the projects involved. In addition, the
official stated that the program does not require contractors to hire
workers from the local labor force, according to the FAA official.
Performance Evaluation:
According to the FAA official responsible for American Samoa, in fiscal
years 1999-2003, the airports successfully completed projects, paid for
with Airport Improvement Program grants, to improve safety and
capacity. The main runway at Pago Pago International is free of areas
with the potential for foreign object debris, and the taxiway's
repavement is almost completed. The airport now has the ability to
respond to a land accident with its new aircraft rescue and
firefighting vehicles, although maritime rescue capability does not
currently exist.
According to an FAA official, the use of separate DOI Operations and
Maintenance Improvement grants to hire an experienced airport engineer
in 2001 to manage the infrastructure projects contributed significantly
to the effective use of the Airport Improvement Program grants in
American Samoa.[Footnote 114] Prior to the engineer's arrival, the
airports had difficulty prioritizing and implementing projects funded
with FAA's Airport Improvement grants. Because of the engineer's
presence, projects were completed and contractors were paid on time,
according to the FAA official. These DOI funds, which required a 50
percent local match, were sufficient to cover the engineer's salary for
3 years. The engineer's contract with the American Samoa Department of
Port Administration expired at the end of June 2004.
Local Conditions Affecting Program Delivery or Project Completion:
American Samoa airport officials reported that because the airports
operate at a loss annually, they have been unable to complement Airport
Improvement Program grant funds, which has slowed the completion of
critical projects.[Footnote 115] For example, as of July 2004, the
airports had not acquired all needed rescue vehicles, and upgrades of
the main runway at Pago International had to be phased in over several
years. Despite significant progress in upgrading the airport's
infrastructure and rescue response capability, an American Samoa
airport official estimated that the airport would probably not reach an
acceptable standard until 2007, based on the amount of federal funding
available.
An incident at Pago Pago International in August 2003 illustrates the
impact of delays in upgrading the airport runway surface. The main
runway had to close for 2 weeks because of the presence of foreign
object debris on the runway. Hawaiian Air, which provides the only
service between Pago Pago and Honolulu, suspended service after one of
its jets took in debris after landing at Pago Pago, sustaining damage
to one of its engines. Service did not resume until after emergency
repairs to the runway, stranding travelers in American Samoa for 2
weeks.
The airports recently acquired two aircraft rescue and firefighting
vehicles, which are now available for use at Pago Pago International.
However, two additional rescue vehicles are still needed, one each for
Fitiuta and Ofu airports, according to an airport official in American
Samoa. At Pago Pago International, crowded commercial jets arrive and
depart despite a lack of maritime rescue capability. The airports have
had to delay acquisition of this essential rescue equipment because of
other priorities for the use of available grant funds. Future grant
funds are to be used to purchase additional aircraft rescue and
firefighting vehicles and a maritime rescue craft.
According to an American Samoa official, the airport generates
relatively little revenue from passenger facility charges of up to
$4.50 per boarding passenger--a key revenue source for airports in the
United States. Because only eight flights per week depart from Pago
Pago International, passenger facility charges at that airport generate
about $300,000 per year, which is insufficient to support any
significant infrastructure upgrades or matching contributions, the
official stated. American Samoa officials pointed out that foreign
airports in the Pacific islands charge as much as $25 per departing
passenger. They roughly estimated that if Pago Pago International were
to charge $20 per departing passenger, it would generate more than $1
million per year. However, the $4.50 cap is statutory; Congress raised
the cap from $3.00 to $4.50 in FAA's 2000 reauthorization
legislation[Footnote 116] and elected not to raise it again in FAA's
2004-2007 legislation.[Footnote 117]
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the timeframe specified in the Single
Audit Act, overall accountability for the Airport Improvement Program
in American Samoa was limited. The single audits for fiscal years 1998-
2000 did not test Airport Improvement Program expenditures. The 2001
single audit report tested several of the program's expenditures and
found that the American Samoa government received federal funds in
excess of allowable federal expenditures and did not meet the matching
requirements of FAA grants. In addition, the auditors found that the
American Samoa government is not in compliance with drawdown
requirements of FAA funds, because the funds requested were not
supported by proper documentation. According to prescribed procedures,
these findings were forwarded to the U.S. Department of Transportation
Inspector General, who would determine whether FAA needed to take
remedial measures to improve the American Samoa Department of Port
Administration's financial accountability.
The FAA official responsible for American Samoa stated that the Airport
Improvement Program grantee had complied with accountability
requirements. The official reported that, throughout projects, he
received on a timely basis contractors' monthly requests for
reimbursement, as well as weekly construction progress reports from
American Samoa airport officials. We asked airport officials in
American Samoa to document that the contract for the major runway
extension project was bid on competitively and that FAA reviewed and
approved the contract award and contract change orders. The airport
officials complied with this request, and FAA officials confirmed that
they reviewed the bid process and all change orders. FAA officials also
stated that there were no unresolved bid protests for any projects in
American Samoa.
Federal-Aid Highway Program:
Purpose and Legislation:
DOT's Federal-aid Highway Program[Footnote 118] provides funding to
state transportation agencies in the planning and development of an
integrated, interconnected highway system important to nationwide
commerce and travel.[Footnote 119] The primary focus of the program is
funding construction and rehabilitation of the National Highway System
(NHS)--including the Interstate System--and improvements to public
roads, with some exceptions, such as local roads. In 1970, the Federal-
Aid Highway Act[Footnote 120] established, among other programs, the
Territorial Highway subprogram; since then, the Federal-aid Highway
Program has provided for the improvement of roads in American Samoa.
Although Federal-aid Highway Program projects in American Samoa are
funded under a different statute than projects in the 50 states,
[Footnote 121] the territory's projects are administered in the same
manner as those in the states, with the territorial transportation
agency functioning as the state agency. The Department of
Transportation's Federal Highway Administration (FHWA) Hawaii Division
Office administers three main subprograms in American Samoa under the
Federal-aid Highway Program.[Footnote 122]
* Territorial Highway subprogram. The subprogram's purpose is to assist
American Samoa and other U.S. territories in constructing and improving
its arterial highways and necessary interisland connectors.[Footnote
123] Territorial Highway funds can be used for improvements on all
routes designated as part of the Territorial Highway System.
* High Priority Projects subprogram. The subprogram provides designated
funding for specific projects described in law and determined by
Congress to be high priority.[Footnote 124]
* Emergency Relief subprogram. Subprogram funds are intended for the
repair and reconstruction of federal-aid highways and roads on federal
lands that have suffered serious damage as a result of natural
disasters or catastrophic failures from an external cause. The funds
may be used for repair work to restore essential travel, minimize the
extent of damage, or protect the remaining facilities.
Funding Levels:
Table 12 shows total annual funding for federal highway planning and
construction in American Samoa for fiscal years 1999-2003. The table
also shows funding for the Territorial Highway, High Priority Projects,
and Emergency Relief subprograms.
Table 12: Federal-Aid Highway Program Grant Awards to American Samoa,
Fiscal Years 1999-2003:
Fiscal year: 1999;
Subprograms: Territorial Highway: $3,214,120;
Subprograms: High Priority Projects: $1,800,000;
Subprograms: Emergency Relief: $0;
Total grant award: $5,014,120.
Fiscal year: 2000;
Subprograms: Territorial Highway: $3,170,440;
Subprograms: High Priority Projects: $2,275,386;
Subprograms: Emergency Relief: $70,000;
Total Grant award: $5,515,826.
Fiscal year: 2001;
Subprograms: Territorial Highway: $3,199,560;
Subprograms: High Priority Projects: $2,360,627;
Subprograms: Emergency Relief: $260,000;
Total Grant award: $5,820,187.
Fiscal year: 2002;
Subprograms: Territorial Highway: $3,297,599;
Subprograms: High Priority Projects: $2,280,000;
Subprograms: Emergency Relief: $1,928,000;
Total Grant award: $7,505,599.
Fiscal year: 2003;
Subprograms: Territorial Highway: $3,609,301;
Subprograms: High Priority Projects: $2,265,180;
Subprograms: Emergency Relief: $685,000;
Total Grant award: $6,559,481.
Fiscal year: 5-year total;
Subprograms: Territorial Highway: $16,491,020;
Subprograms: High Priority Projects: $10,981,193;
Subprograms: Emergency Relief: $2,943,000;
Total Grant award: $30,415,213.
Source: FHWA-Hawaii Division Office Fiscal Management Information
System.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Federal funds account for 100 percent of all federal highway
construction projects in American Samoa. The Territorial Highway
subprogram provides a set amount of $36.4 million each fiscal year for
the U.S. territories.[Footnote 125] Of this amount, American Samoa and
the Commonwealth of the Northern Mariana Islands each receive 10
percent, while Guam and the Virgin Islands each receive 40 percent,
according to a 1993 allocation formula.[Footnote 126] Territorial
Highway funds are available for expenditure in the fiscal year in which
they are awarded and up to an additional 3 years. High Priority
Projects and Emergency Relief funds are available for an unlimited
period until they are expended and are subject to an annual obligation
limit. The obligation limit for Emergency Relief funding in the
territories as a group is $20 million.
Activities Supported, Target Recipients, and Basic Accomplishments:
The Federal Highway Administration's (FHWA) Hawaii Division Office is
responsible for administering the Federal-aid Highway Programs in
American Samoa, while the American Samoa Department of Public Works
typically handles the actual work, including planning and construction
supervision. The FHWA-Hawaii Division Office estimated that it
approved, funded, and initiated a total of 43 projects for the
Territorial Highway, High Priority Projects, and Emergency Relief
subprograms in American Samoa in fiscal years 1999-2003. Officials said
that about 19 projects showed signs of being completed or near
completion in March 2004.[Footnote 127] Many of these projects were to
construct and rehabilitate different segments of the island's main
road--Route 1--and other village roads. One of the completed projects
we viewed restored a segment of Route 1 with new pavement, curb and
gutter, a new concrete revetment on one side, and an embankment to
protect the road from falling rock on the other side.
Performance Goals and Accountability Standards:
FHWA officials characterized the goal of the Federal-aid Highway
Program in terms of project completion more than performance. The main
goal for federal highway projects in American Samoa is to complete
funded projects listed in American Samoa's Five-Year Highway Division
Master Plan. The master plan serves as a guidebook for highway
development goals in American Samoa and sets forth sequenced budgets
and time frames for the program's main priority--to rebuild the heavily
trafficked corridor stretching from American Samoa's main airport to
Breakers Point.
According to a U.S. Department of Transportation (DOT) official,
American Samoa, as a Federal-aid Highway Program grantee, is generally
subject to the same construction and program regulations as a state
grantee. The program's financial accountability is determined in part
by the results of single audit reports. Officials from the Federal
Highway Administration's Hawaii Division Office said that it relies on
the American Association of State Highway and Transportation Officials'
greenbook, A Policy on Geometric Design of Highways and Streets, for
technical (construction) accountability standards. The greenbook
contains specific nationwide design controls and criteria for the
optimization and improvement of highways and streets.
According to DOT officials, the Buy America Act applies to the
procurement of materials such as steel, iron, and other manufactured
goods that are used in all Federal-aid Highway Program construction
projects.[Footnote 128] The act does not apply to procurement of
engineering or other services. The act requires competitive bidding for
contracting, equipment, and other services. The act also requires that
federal-aid highway projects follow other general provisions for
awarding contracts, construction, prevailing wage rates,
nondiscrimination in hiring practices, and other requirements. In
addition, the act stipulates that the Federal Highway Administration's
Hawaii Division Office comply with general project approval and
oversight requirements, but it defines no specific level of federal
oversight for projects in American Samoa.
Performance Evaluation:
According to DOT officials, projects in fiscal years 1999-2003 were
completed in a timely manner, within federal regulations, and in
accordance federal highway greenbook standards. Officials said that the
level of oversight and control of highway funds to American Samoa is
uniquely determined by the FHWA Hawaii Division Office. Officials
stated that they visit American Samoa frequently (at least once per
quarter, not including emergency events) to ensure that projects
continue to meet these goals. FHWA officials said that federal-aid
highway programs in American Samoa have vastly improved significantly
in the past several years. Nonetheless, officials acknowledged that
documentation and certain organizational capability issues in the
American Samoa Department Public Works have been a problem in the past,
although they stated that this problem has improved as well.
Local Conditions Affecting Program Delivery or Project Completion:
The weather and topography in American Samoa present significant
barriers to highway construction and maintenance. Tropical storms cause
major problems, particularly on Route 1, which runs along the
shoreline. Because some roads throughout the island are built into
narrow terraces on hillsides, storms often wash out roadbeds or cause
landslides.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the timeframe specified in the Single
Audit Act, overall accountability for the Federal-aid Highway Program
was limited. Officials from the Federal Highway Administration's Hawaii
Division Office indicated that they were confident that federal-aid
highway projects initiated in fiscal years 1999-2003 were carried out
according to the program's requirements and standards. According to the
agency, the American Samoa government submits invoices or other
documentation for each current bill submitted to the Hawaii Division
Office for reimbursement. However, the delinquent 1998-2001 single
audit reports cited noncompliance with the Davis-Bacon Act. The reports
also found that the program lacked formal procedures regarding the
retention of road sampling results in 1998 and that documentation for
expenditures in at least 3 of those years could not be found.
[End of section]
Appendix VI: U.S. Department of Health and Human Services Programs in
American Samoa:
Medicaid:
Purpose and Legislation:
Medicaid was established in 1965 as a joint federal-state program that
finances health care coverage for certain low-income families,
children, pregnant women, and individuals who are aged or
disabled.[Footnote 129] Medicaid consists of mandatory health care
services, which participating states and territories must offer to
certain categories of beneficiaries, and optional services, which
states and territories can elect to offer under a federally approved
state Medicaid plan. In exchange for their providing Medicaid services,
the federal government pays each state and territory a federal medical
assistance percentage of its Medicaid expenditures, which is determined
through a statutory formula based on states' per capita income. Under
this formula, states and the District of Columbia are generally
eligible to receive reimbursement for 50 to 83 percent of their
Medicaid expenses with no cap on the federal share.[Footnote 130]
However, under federal law, American Samoa can receive federal funding
for only 50 percent of its Medicaid expenses up to a maximum dollar
ceiling, or cap.[Footnote 131]
In fiscal year 2001,[Footnote 132] Medicaid had more than 46 million
enrollees nationwide, and federal and state Medicaid expenditures
totaled $228 billion. Medicaid is administered by the HHS Centers for
Medicare & Medicaid Services.
Funding Levels:
Table 13 reflects the federal funding received by American Samoa for
its Medicaid Program since fiscal year 1999.
Table 13: Federal Medicaid Funds to American Samoa, Fiscal Years 1999-
2003:
Fiscal years: 1999;
Grant award: $3,090,000.
Fiscal years: 2000;
Grant award: $3,200,000.
Fiscal years: 2001;
Grant award: $3,320,000.
Fiscal years: 2002;
Grant award: $3,470,000.
Fiscal years: 2003;
Grant award: $3,727,000.
Fiscal years: 5-year total[A];
Grant award: $16,807,000.
Source: Department of Health and Human Services.
Note: Grant awards are shown in nominal dollars and exclude grant
amendments.
[End of table]
Activities Supported, Target Recipients, and Basic Accomplishments:
American Samoa operates its Medicaid program under a statutory waiver,
which exempts it from most Medicaid laws and regulations but not the
statutory 50 percent federal match or cap.[Footnote 133] As a result,
American Samoa's "Plan of Operations" approved by the U.S. Department
of Health and Human Services (HHS) has only three requirements: federal
payments may not exceed the cap, the federal matching rate may not
exceed 50 percent, and American Samoa must provide all mandatory
Medicaid services. All in-patient care and virtually all outpatient
care are provided by the territory's only hospital, the Lyndon Baines
Johnson Tropical Medical Center (LBJ Hospital).[Footnote 134]
Unlike the 50 states, American Samoa does not enroll individuals in a
separate Medicaid program based on eligibility determinations. Instead,
Medicaid funds in American Samoa are combined with LBJ Hospital's
other sources or revenue[Footnote 135] to support a system of free
universal health care.[Footnote 136] In lieu of federal Medicaid
reimbursements for specific services to enrolled Medicaid
beneficiaries, HHS requires that American Samoa submit an annual
estimate of the number of people "presumed eligible" for Medicaid.
[Footnote 137] According to its Medicaid plan, American Samoa defines
its presumed eligible population as the share of its population living
below the U.S. poverty level, which in American Samoa is 61 percent,
according to the 2000 Census.[Footnote 138] It is not known what the
federal Medicaid expenditure for American Samoa would be if the
Medicaid Program were administered there in the same manner as in the
50 states. However, according to HHS officials in Region IX, Centers
for Medicare & Medicaid Services headquarters, and Honolulu, the
federal Medicaid expenditure in American Samoa would probably be
greater if there were no statutory funding cap.
Performance Goals and Accountability Standards:
According to its approved Medicaid plan, American Samoa is required to
provide standard Medicaid mandatory services, which include physician
services; laboratory and X-ray services; inpatient and outpatient
hospital services; medical screening of minors; family planning; nurse-
midwife and certified nurse-practitioner services; nursing facilities
for individuals 21 years or older; and home health care for individuals
entitled to nursing facilities. If these services are not available on-
island, American Samoa is required to make arrangements for them to be
provided off-island.
In addition to meeting approved Medicaid plan requirements, American
Samoa must also ensure that LBJ Hospital, American Samoa's only
hospital facility and a provider of the territory's Medicaid services,
complies with certain Medicare hospital requirements. Specifically, HHS
requires hospitals receiving payment under Medicaid to meet hospital
conditions of participation established under the Medicare
Program.[Footnote 139] These conditions are required by the Social
Security Act and are intended to protect patient health and safety and
ensure that high-quality care is provided.[Footnote 140] To assess LBJ
Hospital's compliance with these conditions, HHS conducts an on-site
survey about every 3 years.
Further, HHS requires the American Samoa Medicaid Program to submit
both an annual budget request and quarterly expenditures reports. In
addition, American Samoa must submit its annual estimate of the
presumed eligible Medicaid population, which HHS must approve before
awarding Medicaid funds. HHS also relies on single audit reports to
assess accountability for the federal Medicaid funds provided to
American Samoa.
Performance Evaluation:
No data showing whether all required Medicaid services were being
provided to the eligible population, on-or off-island, or indicating
the quality of care were available for the period of our review. HHS
officials stated that they had some assurance that a minimum standard
of care was provided, because, as a participant in the Medicaid
Program, LBJ Hospital must meet Medicare certification standards to
participate in Medicare and Medicaid. However, federal and American
Samoan officials also acknowledged that the hospital, which was built
in the late 1960s, has struggled to meet the conditions of
participation and to provide adequate health care.
Local Conditions Affecting Program Delivery or Project Completion:
The quality of health care in American Samoa, supported partially by
Medicaid funds, depends largely on the standards of care at LBJ
Hospital. However, the hospital must contend with an inadequate
facility, a lack of qualified medical staff, budget constraints, and
American Samoa's remote location.
Inadequate Facility:
LBJ Hospital persistently suffers from serious fire-safety code
deficiencies, which threaten its ability to maintain its Medicare
certification.[Footnote 141] HHS has conducted on-site Medicare
certification surveys of the hospital every few years, most recently in
November 2003. The hospital has failed to correct its fire-safety
problems despite formal threats by HHS, beginning in 1993, to terminate
its certification. The 2003 survey cited many of the same deficiencies
identified in earlier surveys conducted in 1997 and 2000, including a
lack of "basic features of fire protection, which are fundamental to
all health care facilities." The hospital's primary fire safety code
violations were due to noncompliant smoke and fire detection and alarm
systems, the failure to install automatic sprinklers, and inadequate
water pressure.[Footnote 142]
In April 2004, the hospital submitted a "plan of corrections," as
required, in response to the deficiencies cited in the hospital
certification survey. The plan of corrections, which has been approved
by HHS, indicated that the hospital was dependent on annual U.S.
Department of the Interior (DOI) capital improvement grant funds of
about $1.5 million annually to address infrastructure deficiencies
cited in Medicare certification surveys. In fiscal year 2004, the
hospital reprogrammed $650,000 of these funds to install a facility-
wide sprinkler system; however, the hospital reported that this project
will not be completed until December 2005. The hospital also cautioned,
"LBJ will continue to face a fixed barrier of time, money and space in
[its] efforts to renovate the entire campus facility to fire safety
code requirements."
Although funds from DOI are essential to LBJ Hospital's ability to
address critical infrastructure deficiencies cited by HHS, the two
federal departments have not formally collaborated on the hospital's
priorities for using DOI's capital improvement grants. According to
hospital officials, the DOI capital improvement grants are sufficient
to support only one or two new construction projects per year. The
hospital also reported that it uses these grants for many other
hospital facility upgrades beyond those needed to address deficiencies
cited in Medicare certification surveys.[Footnote 143] During our visit
to the hospital, we found that although the newly renovated areas had
been fitted with automatic sprinklers, the sprinklers were not yet
hooked up or functional. LBJ Hospital officials attributed this
situation to inadequate water pressure.
Lack of Qualified Staff:
LBJ Hospital's ability to deliver adequate health care was also
hampered by a lack of qualified staff.[Footnote 144] According to LBJ
officials, the hospital has difficulty attracting U.S.-certified
medical doctors and relies mostly on medical staff that attended
medical school in Fiji.[Footnote 145] The hospital also suffers from a
shortage of nurses. Recent Medicare certification surveys found that
the hospital did not meet minimum standards for 24-hour nursing
services. With only 22 registered nurses available, the hospital
acknowledged that it does not have a large enough nursing staff to
cover every shift on every unit, 24 hours per day, 7 days per week, as
the standard requires. LBJ Medical Center Authority[Footnote 146]
officials stated that they have installed incentive programs to try to
attract medical doctors and registered nurses but that the relatively
low salaries and the territory's remote location make it difficult to
attract qualified staff. The hospital also had unmet needs for medical
technicians such as radiology and operating room technicians.
Budget Constraints:
LBJ Hospital's ability to upgrade its facility and hire needed staff is
severely hampered by chronic budget deficits and outstanding debt,
according to hospital officials. Key local and federal financial
support for the hospital has either decreased or remained constant. The
hospital's annual subsidy from the government of American Samoa has
dropped from about $8.1 million in fiscal year 1998 to about $5.3
million in fiscal year 2003. Since 1998, the DOI has directly provided
LBJ Hospital with about $7.8 million annually from its government
operations grant. This amount has not been adjusted for inflation.
Although its federal Medicaid funding has increased over time to cover
the cost of inflation, HHS and American Samoa Medical Center Authority
officials reported that the cap on the funding probably results in a
smaller federal contribution than American Samoa would receive if it
were funded in the same way as the 50 states.
According to a hospital official, patient revenues increased during
fiscal years 1998-2003; however, much greater increases are needed if
the hospital cannot identify other sources of revenue. The Medical
Center Authority has proposed a plan to charge patients higher fees to
cover about 20 percent of the cost of their medical care. However,
hospital officials believe that passing local legislation to authorize
the increases would be difficult, since the public views free medical
care as a free service or entitlement. Currently, the hospital charges
a nominal facility fee of $5 per outpatient visit and $20 per day for
inpatient stays. The hospital charges nonresidents $10 for outpatient
visits and $100 per day for inpatient stays.
Remote Location:
American Samoa's remote location also hampers the delivery of medical
care. Costs of importing supplies are high and, as stated, attracting
qualified medical and other personnel is difficult. Medical care not
available in the territory must be provided off-island at a much higher
cost. For example, patients in need of long-term care must be moved to
nursing homes off the island, usually in Hawaii or California. In
fiscal years 2001-2003, the hospital reported that the average cost of
care referred off-island averaged over $2 million per year--about 8
percent of the hospital's total expenses.[Footnote 147]
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for Medicaid funding was
limited. Medicaid expenditures were not included in the American
Samoa's single audits for fiscal years 1998-2001, because they were
included in LBJ Hospital's financial statements; however, an
independent audit of the hospital's financial statements for fiscal
year 2001 found significant problems. The hospital had difficulty
locating documentation to support its accounting records and lacked
adequate evidential matter to support a number of recorded
transactions. Because of this and other problems, the auditor was
unable to express an opinion on the financial statements printed in the
audit. In addition, in reviewing compliance with internal controls, the
auditors found several instances of noncompliance that they considered
to be reportable conditions and material weaknesses. An independent
audit of LBJ Hospital for fiscal years 1998-2000 found similar
problems, which also resulted in the auditor's inability to express an
opinion on the financial statements for those years.[Footnote 148]
Head Start:
Purpose and Legislation:
The purpose of the Head Start Program is to promote school readiness by
providing comprehensive services designed to foster healthy development
in 3-to 5-year-old children from low-income households.[Footnote 149]
The program,[Footnote 150] created in 1965, is administered by the HHS
Head Start Bureau, Administration on Children, Youth and Families,
Administration for Children and Families. Grants are awarded by the HHS
regional offices.
Federal appropriations for the Head Start Program nationwide have grown
substantially in recent years, from $1.552 billion in fiscal year 1990
to $6.668 billion in fiscal year 2003. The expansions have been used to
increase the number of children served and provide "quality
improvement" activities. Funds to grantees are awarded at the
discretion of HHS from state allocations determined by a formula set
forth in law after set-aside provisions have been applied. Payments to
the U.S. territories of Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, and the Virgin Islands are not to exceed one-
half of 1 percent of the total annual appropriation.[Footnote 151]
Funding Levels:
Table 14 shows annual grants to the Head Start Program in American
Samoa during the period of our review.
Table 14: Head Start Program Grant Awards to American Samoa, Fiscal
Years 1999-2003:
Fiscal years: 1999;
Grant award: $1,669,246.
Fiscal years: 2000;
Grant award: $2,674,555.
Fiscal years: 2001;
Grant award: $3,159,180.
Fiscal years: 2002;
Grant award: $3,724,689.
Fiscal years: 2003;
Grant award: $2,287,466.
Fiscal years: 5-year total[A];
Grant award: $13,515,136.
Source: HHS Head Start Bureau, Region IX.
Note: Amounts do not include unexpended funds carried over from the
previous year, which are shown in nominal dollars, and exclude grant
amendments. These amounts include about $3.8 million in additional
"program improvement" grant awards for the construction new facilities.
[End of table]
During the annual grant award process, HHS regional offices communicate
to Head Start grantees their level of funded enrollment. For American
Samoa's Head Start Program, known as Early Childhood Education, HHS set
the enrollment level for fiscal year 2003 at 1,532 funded slots. The
annual grant award includes a base amount to cover basic operating
expenses, plus additional funds such as cost of living adjustments and
quality improvements, which are included in the base amount for the
next fiscal year. A grant award may also include nonrecurring funds for
training and technical assistance and for program improvements such as
new facilities. According to an HHS official, funds may be carried over
for 1 year. The Head Start Program in American Samoa typically does not
carry over any funds, with the recent exception of some supplemental
grant funds used for construction of new facilities.
Activities Supported, Target Recipients, and Basic Accomplishments:
Head Start grantees provide a range of individualized services in the
areas of education and early childhood development; medical, dental,
and mental health; nutrition; and parent involvement. The targeted
population is 3-to 5-year old children from low-income
families.[Footnote 152] American Samoa has had a Head Start Program for
more than 30 years. Early Childhood Education, the territory's only
Head Start grantee, is part of the American Samoa Department of
Education. Program officials report that they had 54 classrooms and 111
classroom instructors as of March 2004. (Fig. 12 shows a Head Start
classroom.) According to Early Childhood Education officials, there are
more eligible children in American Samoa than available slots; however,
the program serves virtually all of the children who apply for it. Not
all eligible children apply or remain enrolled throughout the year.
Some children start each year on a waiting list but are eventually able
to participate because of attrition.
Figure 12: Head Start Classroom at Tafuna Early Childhood Education
Center, American Samoa:
[See PDF for image]
[End of figure]
Performance Goals and Accountability Standards:
The Head Start Program in American Samoa is subject to the same goals,
standards, and oversight requirements as Head Start Programs in the 50
states, according to HHS officials. Head Start grantees must adhere to
a set of performance standards required in federal
regulations.[Footnote 153] The performance standards define the
services that grantees are to provide to the children and the families
they serve and constitute the Head Start Program's expectations and
requirements that grantees must meet. The performance standards cover
five service areas including services for children with disabilities;
education (i.e., classroom instruction); building family and community
partnerships; health, including medical, dental, and mental health
screening as well as nutrition and safety; and program management and
operation.
The Head Start Act and accompanying regulations require the HHS Head
Start Bureau to conduct an on-site review every 3 years to ensure that
performance standards are met. The grantee must respond in writing with
a plan for correcting any findings of noncompliance with federal
standards. In addition to undergoing the on-site reviews, grantees are
required to submit an annual "Program Information Report" that tracks
program characteristics and performance data.
Several processes exist to ensure the financial accountability of the
national Head Start Program. First, an HHS fiscal analyst completes an
annual checklist for assessing a grantee's financial accountability and
makes a recommendation for approving funding to the grantee. Second,
the grantee's budget figures are included in the annual application,
which the fiscal analyst reviews to make sure that they are allowable.
The grantee must have an approved indirect cost rate and must certify
that administrative costs do not represent more than 15 percent of the
total approved costs of the program. Third, the single audit reports
test for accountability of the program. Fourth, quarterly financial
status reports must be sent by the grantee to the HHS in Region IX.
Finally, during HHS's triennial, on-site monitoring review, a fiscal
analyst reviews the program to ensure that annual audits are up to date
and that financial management systems, inventory, and procurement
processes include required elements.
Performance Evaluation:
Data were not available to assess whether the goal of improving low-
income children's readiness for school has been achieved.[Footnote 154]
However, in its most recent triennial on-site monitoring review, HHS
found that Early Childhood Education "operates a very high quality Head
Start program." Additionally, HHS officials in Region IX highlighted
progress made by the grantee in constructing modern, new classroom
facilities with the help of supplemental grant funds.
In May 2003, a team of nine participated in a weeklong review to assess
the degree to which services were implemented according to Head Start
Performance Standards. The review found that the program provided most
required services, and it cited strong community partnerships and a
high level of parent involvement and support for the program.
Additionally, the review highlighted the literacy program, which
utilized locally designed curriculum and materials that incorporated
native culture, community, and environment as well as family
traditions. Part of the success of this literacy program, according to
the review, was attributable to the use of a community lending library
and a partnership with a community-based organization, called "Read to
Me Samoa," to promote child and family literacy by emphasizing both
English and Samoan languages as well as cultural traditions. The review
also found that the Early Childhood Education Program implements a
model oral health program, in partnership with LBJ Hospital, in which
virtually all children receive dental screenings and follow-up
treatment.[Footnote 155]
HHS officials in Region IX also highlighted the tremendous improvements
in the quality of the classroom facilities owing to the help of
supplemental grant funds. Seven new facilities providing a total of 38
classrooms devoted exclusively to Head Start either have been completed
or are in the process of being constructed, according to an American
Samoa official. Additional facilities are planned, depending on the
future availability of Head Start grant funds. During our visit to
American Samoa, we toured several Early Childhood Education classrooms,
including those in two of the newer facilities. The classrooms were
spacious, well lit, and well ventilated. The addition of these
facilities will enable several classes previously held in village homes
to move into a modern institutional setting. One of the new facilities
has enabled children to be moved from overcrowded classrooms in eight
private homes into a modern institutional setting, according to Early
Childhood Education officials. Currently, the program relies on 19
village homes and 13 elementary schools to provide classrooms.
Local Conditions Affecting Program Delivery or Project Completion:
Although HHS officials viewed the Early Childhood Education Program
favorably, some challenges remain. Early Childhood Education is unable
to meet the performance standards for providing mental health services
to children and their families, and adequate playground space with
secure perimeter fencing is lacking. Additionally, a language barrier
poses additional challenges for assessing children and acquiring
curricular materials. Some of these challenges are as follows:
* American Samoa does not have mental health professionals available to
enable the Early Childhood Education Program to fulfill the HHS
performance standard of providing a "comprehensive mental health
program that provides prevention, early identification and
intervention." Because of this lack of access to mental health
professionals, the program has only requested supplemental training and
technical assistance for a consultant to provide training and awareness
to Early Childhood Education staff and parents on mental health.
* Early Childhood Education officials stated that their priority for
the use of supplemental grant funds is to continue to build additional
classrooms, which leaves no funds for adequate playgrounds or perimeter
security fencing.
* Head Start has a new requirement for assessing the educational
achievement of children enrolled in the program; however, the
assessment tool is not available in Samoan, the primary language in
Early Childhood Education classes. Additionally, because very few
curricular materials are available in Samoan, the program must devote
additional resources to creating curricular materials locally.
Grant Accountability:
Because the American Samoa government did not complete single audits
for fiscal years 1998-2003 within the time frame specified in the
Single Audit Act, overall accountability for the Head Start Program was
limited. Officials from HHS Region IX stated that the grantee met the
region's financial reporting requirements, but they cited the program
for the lack of governmentwide single audits. Although the triennial
on-site review team includes a fiscal analyst to review the program's
fiscal management, HHS officials explained that this review does not
rise to the level of a detailed audit. When the May 2003 on-site review
was conducted, the reviewers pointed out that a single audit for
federal grants to American Samoa had not been conducted since 1997. HHS
accepted the grantee's response that efforts were under way by the
American Samoa government to come into compliance with the Single Audit
Act. After the May 2003 review, the American Samoa government completed
single audits for fiscal years 1998-2000 but did not test expenditures
in the Head Start Program, according to HHS officials.
[End of section]
Appendix VII: Federal Grants Process in American Samoa:
[See PDF for image]
[A] The Territorial Office of Fiscal Reform (TOFR) operates as a
parallel procurement entity to the American Samoa Department of
Treasury but manages fewer federal grants.
[B] Independent authorities, such as the Lyndon Baines Johnson Tropical
Medical Center, the American Samoa Power Authority, and the American
Samoa Community College, operate semiautonomously from the American
Samoa government.
[C] The CAFR is to be prepared annually to show the financial position
and operating results of the territory.
[D] Single audit reports include a schedule of expenditures of federal
awards and other financial statements of nonfederal entities
(governments or organizations) that expend $300,000 or more in federal
awards.
[End of figure]
[End of section]
Appendix VIII: Comments from the Department of the Interior:
United States Department of the Interior:
OFFICE OF THE ASSISTANT SECRETARY POLICY, MANAGEMENT AND BUDGET:
Washington, DC 20240:
OCT 21 2004:
David Gootnick:
Director, International Affairs and Trade:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Gootnick:
Thank you for the opportunity to comment on your draft report,
"American Samoa, Accountability for Key Federal Programs Needs
Improvement" (Report). The Report highlights the difficult decisions
and judgments that must be made to effectively administer grant
programs. This applies not just to American Samoa, but to all of the
U.S. affiliated insular areas, that are held to standards designed for
States, but which often lack the institutional capacity to meet those
standards. Specifically, you make four recommendations to the
Department of the Interior (Department): one related to the Lyndon
Baines Johnson Tropical Medical Center (Hospital) and the other three
related to compliance with the Single Audit Act.
The first recommendation deals with a finding that fire safety
deficiencies threaten the continued certification of the Hospital and
that the Hospital is experiencing staffing and resource constraints.
The recommendation is that the Department "coordinate with federal
agencies that grant funds to the Hospital and the American Samoa
government to address these issues."
The Department agrees with this finding and recommendation and will
take appropriate steps to coordinate with other Federal agencies. In
1997, the Department coordinated closely with the Department of Health
and Human Services to force creation of an independent Hospital board
with ratemaking authority. The Report points out the cultural biases
and political obstacles that must be overcome in order to increase
health care fees for services, when free health care is considered an
entitlement. We realize that there is no such thing as free health
care. It either falls on taxpayers or it falls on users. To the extent
health care is funded through grants from the Federal government or by
local subsidies, it is a cost to Federal or local taxpayers. For that
reason, increases in Federal or local subsidies will be limited, if
available at all. Until leadership in American Samoa exerts the
political will to increase fees, the Hospital will continue to
experience staffing and resource constraints. We have provided
technical assistance to the Hospital to support ratemaking efforts and
will continue to do so while we discuss with other Federal stakeholders
specific incentives that can be applied to improve the financial
position of the Hospital.
With respect to physical improvements to correct fire-safety
deficiencies that threaten continued certification of the Hospital,
your report notes that the Department's Office of Insular Affairs (OIA)
has approved a request from the Hospital authority to reprogram
$650,000 of other construction grants to address these deficiencies. We
are pleased that we were able to approve this request and will follow
up with the Hospital authority and the Department of Health and Human
Services to ensure the repairs are adequate.
The Report's other recommendations deal with a finding "to improve
fiscal accountability of federal grants to American Samoa through
compliance with the Single Audit Act." Specifically the Report
recommends that the Department:
* Designate the American Samoa government a high-risk grantee, at least
until it has completed all overdue single audits;
* Ensure that the American Samoa government completes its overdue
audits; and:
* Ensure that future single audits are completed in a timely manner and
in accordance with single audit requirements.
We recognize the compelling importance of having the American Samoa
government come into compliance with the Single Audit Act, and have
devoted significant resources to help the American Samoa government do
so as quickly as is practicable. Much of that effort is reflected in
the Memorandum of Agreement discussed in the Report, although we have
agreed to extend certain deadlines thereunder as it has become clear
that American Samoa lacks the capacity to comply with those deadlines.
OIA, with support from the USDA Graduate School and contractor support
from CPA firms familiar with the territories, launched, in March 2004,
an initiative to bring all territories into compliance with the Single
Audit Act and to implement effective audit resolution practices. We
have supported this effort with a substantial commitment of technical
assistance funds. The Department's Office of the Inspector General is
familiar with this initiative and very supportive of its goals.
OIA has implemented a new policy, effective in fiscal year 2005, that
allocates capital improvement funding among the territories based on
the quality of their proposed projects and on their history of good
financial management and compliance with grant requirements. Compliance
with the Single Audit Act is a threshold requirement, meaning grants
cannot be awarded until compliance is achieved or there is mutual
agreement on a schedule to achieve compliance. The fiscal year 2005
capital improvement grant of $9,731,000 will not be awarded until an
agreement is reached. These criteria have been placed against
indefinite mandatory funding, with support from Congress, so it will
continue to provide an important incentive into the future, consistent
with the final recommendation of the Report.
These steps are part of OIA's broader effort in recent years to improve
accountability for the Federal funds that we send to the insular areas.
OIA revamped its Financial Assistance Manual in 2003 for the first time
in over a decade, instituting comprehensive new accountability criteria
that would be taken into account in awarding grants. One of the new
criteria was the presence of an independent, properly funded public
auditor's office in each insular area. We believe that this requirement
motivated the American Samoa government to hire a public auditor in
2003 after having left the post vacant for several years. OIA continues
to provide substantial technical assistance, through the Financial
Management Improvement Program and other programs, to help American
Samoa and other insular areas develop the capacity to comply with the
Single Audit Act and other requirements. In 2004, OIA hired a former
Federal auditor whose full-time responsibility is coordinate OIA's
efforts to promote accountability; her duties include monitoring
compliance with fiscal reforms in American Samoa.
Notwithstanding OIA's substantial efforts to address Single Audit Act
compliance issues and to promote accountability in general, we
recognize that the insular areas continue to face significant resource
and capacity issues that have prevented them from catching up with
their Single Audit Act obligations as quickly as we would have liked.
New government accounting standards related to fixed asset accounting
(GASB-34) have complicated and delayed the efforts of all insular
governments to achieve compliance. OIA has provided additional
technical assistance to improve capability. Despite a significant
effort by the American Samoa Government to produce auditable financial
statements, delays in completing 2002 and 2003 audits are due in large
part to the new GASB-34 requirements.
As detailed above, the fact that we have chosen thus far not to declare
the American Samoa government to be a "high-risk" grantee does not mean
that we have "failed to act" in response to the American Samoa
government's failure to comply with the Single Audit Act. Because of
our serious responsibilities in the territories and the degree to which
the people of the territories rely on Federal assistance to satisfy
their most basic of needs, we constantly have to weigh the remedies
that we have at our disposal against the consequences that would result
from their exercise. When the negative consequences outweigh the
benefits of an exercise of remedies, it is incumbent upon us to find
creative alternative means to achieve the desired results. We believe
that we are doing that, and indeed believe that we are taking all
reasonable steps to ensure, consistent with the Report's
recommendations, that (a) the American Samoa government completes its
overdue single audits and (b) future single audits are completed in a
timely manner and in accordance with single audit requirements. We are
not in a position to actually "ensure" compliance by a third party, but
are embracing our responsibility to take all appropriate steps to
achieve the objective.
In light of all of our ongoing efforts to help bring American Samoa
into compliance with the Single Audit Act, we have thus far not been
convinced that a "high-risk" declaration would enable us to achieve our
objective any faster. Indeed, such a declaration may have the very
negative effect of placing a stigma on the American Samoa government
that impacts its ability to apply successfully for discretionary
Federal assistance, including assistance you ask that we help
coordinate to address "staffing and resource" problems at the Hospital.
We note that OIA is already imposing most of the remedies available
under regulations governing a high-risk designation. Specifically, a
high-risk designation allows the agency to place the grantee on a
reimbursement basis-that has been OIA's policy for nearly 15 years. It
allows additional project monitoring-we have significantly increased
our monitoring in American Samoa, including, as noted above, devoting a
full staff position to monitor compliance with fiscal reforms in
American Samoa and other accountability requirements in the other
insular areas. A high-risk designation allows for the grantor agency to
require more detailed reporting, and we have already done this through
our Memorandum of Agreement. Finally, a high-risk designation allows
the agency to require the grantee to obtain technical or management
assistance. As noted above, however, we are already very actively
providing this type of assistance.
We believe that it is important, however, to constantly re-evaluate the
effectiveness of our approach and adjust tactics as necessary. We will
therefore consult with the other agencies cited in the Report to
evaluate whether, or under what conditions, a joint declaration of
high-risk status would be prudent, and to discuss what other steps
might be taken to help American Samoa come into compliance more
quickly.
Thank you very much for the opportunity to comment and for your
demonstrated understanding of the unique problems faced by American
Samoa. My office will be happy to follow up with you to ensure the
Department's actions are tracked through completion.
If you have any questions concerning this response, please contact
David B. Cohen, Deputy Assistant Secretary of the Interior-Insular
Affairs or Nikolao Pula, Director of the Office of Insular Affairs, at
(202) 208-4736.
Sincerely,
Signed by
P. Lynn Scarlett, Assistant Secretary,
Policy, Management and Budget:
[End of figure]
The following are GAO's comments on the Department of the Interior's
letter dated October 28, 2004.
GAO Comments:
1. We did not refer to any cultural biases in our report. The only use
of the word "cultural" is in the context of Head Start's teaching
cultural traditions. Neither did we refer to political obstacles. We
did note that hospital officials stated that passing local legislation
to increase fees would be difficult.
2. See page 21.
3. See footnote 13, page 47, appendix II.
4. DOI implies that we assessed it as having "failed to act" in
response to the American Samoa government's noncompliance with the
Single Audit Act. In fact, we judged that DOI was "slow to act" (see
pp. 28-31). We recognize the department's long-standing struggle for
accountability in the insular areas; our report refers to most of the
measures that DOI has taken to improve accountability in American
Samoa. However, as we note in the report, DOI did not set forth a
schedule for American Samoa to comply with the Single Audit Act until
2002--almost 3 years after the due date for the fiscal year 1998
report.
5. DOI asserts that it has taken all available actions short of cutting
off funds in a high-risk status declaration. It further argues that a
high-risk status declaration would imperil funding from other agencies
to American Samoa. However, a high-risk declaration does not mean an
immediate suspension of U.S. funding. Our recommendation is not that
DOI alone declare American Samoa a high-risk grantee, but rather that
the federal agencies coordinate a response to lax accountability in
American Samoa. Improving federal oversight and monitoring will improve
the efficiency and accountability of programs in American Samoa, to the
benefit of most American Samoans.
[End of section]
Appendix IX: Comments from the Department of Health and Human Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES:
Office of Inspector Genera:
Washington, D.C. 20201:
Nov 18, 2004:
Mr. David Gootnick:
Director, International Affairs and Trade:
United States Government Accountability Office:
Washington, DC 20548:
Dear Mr. Gootnick:
Enclosed are the Department's comments on your draft report entitled,
"American Samoa-Accountability for Key Federal Programs Needs
Improvement" (GAO-05-41). The comments represent the tentative position
of the Department and are subject to reevaluation when the final
version of this report is received.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Daniel R. Levinson:
Acting Inspector General:
Enclosure:
The Office of Inspector General (OIG) is transmitting the Department's
response to this draft report in our capacity as the Department's
designated focal point, and coordinator for Government Accountability
Office reports. OIG has not conducted an independent assessment of
these comments and therefore expresses no opinion on them.
COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) ON THE
GOVERNMENT ACCOUNTABILITY OFFICE'S (GAO's) DRAFT REPORT "AMERICAN
SAMOA-ACCOUNTABILITY FOR KEY FEDERAL GRANTS NEEDS IMPROVEMENT" (GAO-05-
41):
GAO Recommendation 1:
To ensure resolution of fire-safety deficiencies threatening the
continued certification of the Lyndon Baines Johnson Tropical Medical
Center in American Samoa and, as warranted, to address the hospital's
staffing and resource constraints, we recommend that the Secretary:
coordinate with federal agencies that grant funds to the hospital and
the American Samoa government to address these issues.
HHS Comment:
The HHS Center for Medicare and Medicaid Services (CMS) concurs and
plans to collaborate with the Department of the Interior and American
Samoa to address infrastructure issues affecting the Lyndon Baines
Johnson Tropical Medical Center hospital's compliance with Medicare
conditions of participation.
GAO Recommendation 2:
To improve fiscal accountability of federal grants to American Samoa
through compliance with the Single Audit Act, we recommend that the
Secretary coordinate with other federal awarding agencies to: designate
the American Samoa government as a high-risk grantee, at least until it
has completed all overdue single audits; ensure that the American Samoa
government completes its overdue single audits; and ensure that future
single audits are completed in a timely manner and in accordance with
single audit requirements.
HHS Comment:
The HHS CMS agrees that American Samoa has been delinquent with respect
to completion of the annual audits required under the Single Audit Act.
Our San Francisco Regional Office financial staff is working with the
American Samoa Medicaid finance officer toward this end and will
continue to provide all the technical assistance we can. In addition,
CMS staff will collaborate with the Department of the Interior to
address the overdue single audits and improve performance of future
single audits.
However, CMS does not agree with the GAO recommendation that American
Samoa be designated a high-risk grantee. CMS works with American Samoa
to ensure that Medicaid budget and expenditure reports are completed
timely and accurately, and we have experienced no significant problems
in this area. Therefore, CMS believes that American Samoa should not be
considered a high-risk grantee with respect to the Medicaid program.
The following is GAO's comment on the Department of Health and Human
Service's letter dated November 18, 2004.
GAO Comment:
1. The Centers for Medicare & Medicaid Services of the Department of
Health and Human Services states that it works with American Samoa to
ensure that Medicaid budget and expenditure reports are completed
timely and accurately and that it has experienced no significant
problems. However, our discussion in appendix VI of accountability at
LBJ Hospital--the primary provider of medical services in American
Samoa and the primary recipient of Medicaid funds to American Samoa--
raises questions about internal controls at the hospital. The
hospital's auditor for fiscal years 1998-2000 was unable to express an
opinion, because the hospital declined to present any statements of
cash flow.
[End of section]
Appendix X: Comments from the American Samoa Government:
OFFICE OF THE GOVERNOR:
PAGO PAGO, AMERICAN SAMOA 96799:
TOGIOLA T.A. TULAFONO:
GOVERNOR:
AITOPELE T.F. SUNIA:
Lieutenant Governor:
Serial No. 1131:
November 5, 2004:
TELEPHONE (684) 633-4116:
FACSIMILE: (684) 633-2269:
Eugene Beye, Senior Analyst:
International Affairs and Trade:
U.S. General Accounting Office:
441 G Street, N.W. Room 4T55A:
Washington D.C. 20548:
Fax (202) 512-9088:
Re: Draft Audit for American Samoa:
Accountability for Key Federal Programs Needs Improvement:
Dear Mr. Beye:
Thank you for the opportunity to comment on the draft audit report. The
American Samoa Government's (ASG) detailed comments are attached.
I was pleased to find that out of all the programs audited, GAO only
identified two major findings. The ASG is in the process of completing
remedial action on both of these findings.
1. GAO noted that the Hospital was not compliant with CMS fire and
safety code standards. ASG notes that only four years ago, the Hospital
was non-compliant with eight condition level standards. Now, only one
is left outstanding. Of the 24 projects necessary to comply with the
fire and safety codes, eighteen have been completed, three are under
construction, one is out to bid and two are in final design. ASG has
made major progress over the past four years, and GAO's finding is not
a serious issue. CMS has approved the ASG program to reach full
compliance with all of its 30 condition level standards.
2. GAO noted that ASG is delinquent in its single audits. ASG has
completed four single audits in the past year, and two are still
delinquent. One of these is scheduled for completion in December, and
the other in June 2005. ASG is working closely with DOI on this catch
up program. ASG recommends strongly against being declared a high risk
grantee, as this would imperil funding for critical programs and divert
scarce resources away from completion of single audits.
ASG agrees with the repeated finding in the report that lack of staff,
facilities and resources has limited service delivery. American Samoa
is the poorest State or Territory of the U.S. Over 56% of American
Samoans live below the poverty level, as compared with 23% in Guam, and
12% in the U.S. ASG's Gross Domestic Product per Capita is estimated at
$8,000 as compared with the Virgin Islands' $19,000, Guam's $?.1,000
and the U.S. average of $37,800. Yet, the DOI and U.S. Congress have
held the ASG Operating Grant essentially constant since 1987. In
constant dollars per capita, the grant has decreased 54% in the past 16
years.
ASG has raised its own taxes and fees over these years to just about
keep pace with inflation and population growth. DOI representatives
continue to assert that holding the Operating Grant constant will
somehow force ASG to promote economic development or to tax its own
people. All that the DOI has accomplished is to force American Samoans
to continue to live with inadequate education and health care systems.
The basic reason for delinquent audits is that there are no CPA's
working at the Treasury Department, and that audit fees are very high.
The Hospital has no U.S. trained doctors or administrators. There are
no licensed engineers or architects at the Department of Public Works.
Most teachers do not have college degrees.
More monitoring and bureaucracy will not solve the basic problem, which
is lack of resources. We thank the DOI and other agencies for the
assistance that is given, but we urge the GAO and the DOI to recognize
the basic problem and to provide assistance, specifically for health
care, education and financial management.
Sincerely,
Togiola T.A. Tulafono:
Governor:
cc:
David Cohen, DOI-OIA:
Lydia Faleafine-Nomura, OIA Field Representative:
Marina Tinitali, OIA Samoa Specialist:
Francis Lcasiolagi:
Jack Kachmarik:
AMERICAN SAMOA GOVERNMENT:
RESPONSE TO GAO AUDIT:
"Accountability for Key Federal Programs Needs Improvements"
Summary:
In early 2004, the General Accounting Office (GAO) performed an audit
of the 12 largest federal grant programs operated by the American Samoa
Government (ASG). In October, the GAO issued a draft report to the ASG
for comment.
Major Findings and Recommendations of the GAO Audit: The report
identified two major findings for action:
1. The Hospital has several fire-safety violations which threaten
Medicare and Medicaid funding.
2. The ASG is delinquent in completing its annual financial statements
and Single Audit Reports.
Hospital Fire Safety Violations:
The LBJ tropical medical hospital must comply with the Center for
Medicare and Medicaid Services' (CMS) standards in order to be eligible
to receive Medicare and Medicaid funds. CMS has 30 condition level
standards.
In unannounced inspections of the hospital, CMS identified eight (8)
condition level findings in the year 2000, five (5) condition level
findings in November 2003, and zero (0) findings in June 2004. The CMS
did not make a condition level finding for the fire-safety violations,
because CMS was satisfied that LBJ had an adequate plan to address the
issue.
There are twenty four (24) separate projects underway to address the
fire-safety deficiencies. In a report to CMS dated October 1, 2004,
eighteen (18) projects were completed; three (3) were under
construction; one (1) was out to bid; and two (2) were in final design.
The Hospital has made enormous progress towards upgrading its
facility, thanks mainly to the federal Capital Improvement Program
(CIP) grants. These grants are also being used to renovate the wards
and operating room, purchase essential medical equipment, deal with
electrical problems such as PCB transformers, correct flooding
problems, and other important improvements. These are not CMS
violations, but they are also important to patient care.
The recommendation made by the GAO audit is for the Secretary of the
Interior to coordinate with other federal granting agencies to resolve
ASG's fire-safety issues. From ASG's point of view, these fire-safety
issues are resolved. CMS is working closely with ASG to complete all
projects, and the funding has been made available by the DOI to
complete all projects. All eight condition level findings identified in
June 2000, have been resolved, except for finishing up the fire-safety
improvements that are underway.
ASG would like to thank the DOI for their continued support in
providing the funding for these improvements, which have led to a much
improved medical facility.
Delinquent Annual Financial Audits and Single Audits.
ASG is required by federal regulations to submit Financial and Single
Audits no later than nine months after the end of each fiscal year. The
latest completed audits were for fiscal year 2001. The 1=Y 2002 and
2003 reports are currently delinquent.
ASG and DOI are both very aware of this problem. ASG is making
prodigious efforts to improve its computer and accounting systems, and
to catch up with delinquent audits.
In the last year, the ASG completed the financial statements and audits
for the years 1998, 1999, 2000, and 2001. The financial statements and
audits for 2002 are scheduled for completion in December 2004. The
completed audits for 2003 and 2004 are scheduled for completion in June
2005 and December 2005 respectively. This will bring the ASG up to
date.
The Audit recommended that because ASG is delinquent in its financial
reports that:
1. ASG should be designated a high risk grantee.
2. DOI should ensure that ASG completes its delinquent single audits.
3. DOI should ensure that future single audits are completed in a
timely manner.
DOI has already complied with the second recommendation. The DOI and
the ASG signed a Memorandum of Agreement two years ago setting forth
the requirements for ASG to have a balanced budget and to complete its
audits. ASG has reported unaudited balanced budgets for three years
running. It has completed four delinquent audits with two to go. DOI is
closely monitoring these activities.
The DOI will certainly monitor future single audits. They have
informed the ASG that they will consider withholding the monthly
operating grant funds if ASG does not meet its target goals.
The ASG is requesting that it not be designated as a high risk grantee
unless it fails to meet the terns of the agreements with DOI. The
designation would lead to a significant increase in detail grant
reporting and monitoring, impair cash flow to vital functions, and
would take valuable resources away from the effort to catch up with the
audit requirements.
Lack of Staff, Facilities and Resources has Limited Service Delivery:
The Audit repeatedly points out that the ASG lacks adequately trained
medical, educational, accounting and other professionals. This is one
of the main causes for deficiencies in the programs and inadequate
service delivery.
ASG agrees totally with this finding. The lack of an adequate tax base
has limited the ASG's ability to deal with the enormous problems it
faces in delivering basic services to the American Samoa population.
The per capita income in American Samoa is $4,357, compared with the
United States average of $30,906. The poorest state is Mississippi with
a per capita income of $22,550 or five times that of American Samoa.
Fifty six percent (56%) of American Samoans live below the poverty
level.
American Samoa has no significant tax base, including no military
bases. The tuna canneries both enjoy large tax exemption contracts that
were negotiated to keep them from moving to other low wage nations such
as Samoa or the Philippines.
American Samoa has a minimum income tax of 4% on all eamed income.
About 90% of the taxpayers qualify for this minimum tax. If there was
no minimum tax, these taxpayers would pay no income tax at all under
the Internal Revenue Code.
American Samoa has mirrored the Intemal Revenue Code, and has suffered
large drops in tax revenues as the U.S. IRS has allowed higher and
higher deductions for dependants, and larger and larger child tax
credits. ASG finally froze its version of the IRC in the year 2000.
The military PX opened in the 1990's, and has also cut deeply into
American Samoa tax revenues. Almost 20,000 of the population of 60,000
qualify for PX privileges. Even those who do not qualify have friends
that do and can purchase from the PX. The PX sells cigarettes, beer and
alcohol untaxed by ASG, and at a significantly lower price than
available on the local market.
American Samoa has no tax base to tap, yet the costs of providing
essential services such no health care and education keep climbing.
Teachers in American Samoa are hired to teach in Saipan, where the
wages are significantly higher. Young American Samoans that earn
college degrees do not return to American Samoa. They get jobs in the
U.S. where the salaries are two to three times higher. American Samoa
can not even begin to compete for doctors or registered nurses with
U.S. facilities.
As a result, audits do not get completed because there are no
CPA's working for the ASG. Medical care is deficient because there are
no U.S. Doctors on the staff. There are no registered engineers or
architects that work for the Department of Public Works. A large
percentage of the teachers do not have college degrees.
The only way to correct this is additional funding. The Department of
Interior has only increased the ASG grant for operations from
$20,154,000 in 1987 to $22,274,000 in 2003. At the same time the
population has grown from 36,960 to 57,902. Inflation has risen 162%.
The DOI Operating Grant per capita in constant dollars has gone from
$545 in 1987 to $238 in 2003, or a reduction of over 54%.
At the same time, local General Fund revenues per capita in constant
dollars has gone from $816 to $722, or a drop of 12%. This is in spite
of many increases in tax rates.
If the DOI Operating Grant were equivalent in constant dollars per
capita to the 1987 Operating Grant, the 2003 Grant would be
$51,134,000, or an increase of $28,860,000. No wonder the ASG is having
a rough time with inadequate resources to meet its growing needs.
The DOI states that they have held the operating grant constant in
order to promote local economic growth. DOI wants the Hospital to
increase fees. This is a dubious position to take. Local economic
growth will have a very difficult time without a decent hospital and
education system. The he Hospital doubled its local fee revenue from
$983,780 in 1999 to $2,040,579 in 2003.
The ASG recommends that the GAO report should recommend an increase
in the operations grant dedicated to education, health and financial
reporting. The grant should keep pace with inflation and population
growth.
The following are GAO's comments on the American Samoa Government's
letter dated November 5, 2004.
GAO Comments:
1. The Centers for Medicare & Medicaid Services (CMS) approved the
American Samoa government's program to achieve compliance. However,
compliance will not be achieved until all projects are complete.
Furthermore, CMS reported that LBJ Hospital had failed to show
compliance with fire-safety regulations since 1987. Specifically, the
November 2003 survey found immediate jeopardy related to inadequate
fire response and lack of adequate pressure in any water system.
Follow-up visits to LBJ Hospital in March and August 2004 found
improvement, but all actions to correct the findings from the November
2003 survey had not yet been accomplished. CMS gave LBJ Hospital a new
date, March 1, 2005, by which to complete corrective actions or face
termination of Medicare and Medicaid funds. The issues will be resolved
when CMS determines the corrective actions are complete.
2. From March through August 2004, the American Samoa Treasury had a
certified public accountant (CPA) employed as Comptroller. As we relate
in the report, he resigned, citing concerns over fraudulent and
unethical American Samoa government practices. However, the presence or
absence of CPAs in the treasury does not preclude a grantee's
compliance with the Single Audit Act. Single audits must be conducted
by auditors who are independent of the audited entity and not by CPAs
or any other professionals who are regularly employed by the American
Samoa government.
3. Compliance will not be achieved until all audits are complete.
American Samoa signed a memorandum of agreement (MOA) to complete the
single audits on a specific schedule. All American Samoa single audits
under the MOA have arrived late, including those that have not been
completed.
4. The American Samoa government requested that it not be designated a
high-risk grantee unless it fails to meet the terms of its agreements
with DOI. However, the American Samoa government has already failed to
meet the agreements, as figure 4 on page 29 shows. American Samoa
asserts that a high-risk designation would lead to significant
increases in detail grant reporting and monitoring. Such increases
would be appropriate, provided they are coordinated among the federal
agencies to eliminate duplicate reporting and monitoring. As we note on
page 31, ED has already declared American Samoa a high-risk grantee and
has implemented increased reporting. ED provides almost 18 percent of
the grant dollars we reviewed. ED provides several other grants that
were not included in this review.
[End of section]
Appendix XI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Emil Friberg (202) 512-8990:
Staff Acknowledgments:
In addition to the individual named above, Eugene Beye, Howard Cott,
Adrienne Spahr, Ann Ulrich, Reid Lowe, Mark Dowling, and Mark Braza
made significant contributions to this report.
(320222):
FOOTNOTES
[1] A territory is an area of the United States that is not included
within any state and has a separate legislature. American Samoa has its
own government and locally adopted constitution.
[2] Federal awards include grants, loans, loan guarantees, property,
cooperative agreements, interest subsidies, insurance, food
commodities, direct appropriations, and federal cost reimbursement
contracts. In addition to federal awards, the American Samoa
government's operating budget includes local revenue, enterprise funds
(utilities and telecommunications), and other revenue.
[3] The act, as amended in 1996, required that nonfederal entities that
spend $300,000 or more in federal funding under more than one program
undergo a single audit. In 2003, the threshold was raised to $500,000
for fiscal years ending after December 31, 2003.
[4] In 1951, President Harry S. Truman issued Executive Order 10264,
transferring administrative responsibility for the islands of American
Samoa from the Secretary of the Navy to the U.S. Secretary of the
Interior. DOI is designated to carry out federal responsibilities with
regard to the single audit.
[5] The period of our review of American Samoa's accountability for the
grants included fiscal year 1998.
[6] American Samoa consists of the island of Tutuila; the Manu'a
Islands of Ta'u, Ofu, and Olosega; Swains Island; Rose Island; and Sand
Island.
[7] In 2000, according to the U.S. Census, about 65 percent of the
population were U.S. nationals or citizens and 37 percent were foreign-
born residents. In addition, 88 percent of the population were Samoan,
3 percent were Tongan, and 9 percent were other ethnicities.
[8] An unorganized territory is an unincorporated U.S. insular area for
which Congress has not adopted an organic act (i.e., a law that
establishes the local political framework--executive, judicial, and
legislative--for governing a territory). An unincorporated territory is
a U.S. insular area to which Congress has determined that only selected
parts of the U.S. constitution apply. (See GAO, U.S. Insular Areas:
Application of the U.S. Constitution, GAO/OGC-98-5 [Washington, D.C.:
Nov. 7, 1997]).
[9] A U.S. national is either a citizen or someone who "owes permanent
allegiance to the United States." 8 U.S.C. § 1101(a)(21),(22).
Citizenship is derived either from the Fourteenth Amendment to the
Constitution ("All persons born or naturalized in the United States,
and subject to the jurisdiction thereof, are citizens of the United
States") or from a specific statute that confers citizenship on the
inhabitants of an area that, although not a state, is under the
sovereignty of the United States. No such legislation conferring
citizenship has been enacted for American Samoa.
[10] GAO, American Samoa: Inadequate Management and Oversight
Contribute to Financial Problems, GAO/NSIAD-92-64 (Washington, D.C.:
April 7, 1992).
[11] Senate Report 104-319, pp. 51-53; and House Report 105-825, Making
Omnibus Consolidated and Emergency Supplemental Appropriations for
Fiscal Year 1999, Conference Report to Accompany H.R. 4328, p. 1210.
[12] Pub. L. No. 106-113--Appendix C, Section 125.
[13] American Samoa is to repay the loan from its share of the Tobacco
Master Settlement Agreement (and the subsequent Enforcing Consent
Decree) entered into on November 23, 1998, and the judgment granted by
the High Court of American Samoa on January 5, 1999, in Civil Action,
No. 119-98. American Samoa Government vs. Phillip Morris Tobacco Co,
et. al.
[14] The portion of the American Samoa government's budget supported by
all federal awards decreased from about 48 percent in fiscal year 1999
to about 40 percent in fiscal year 2003. (Percentages are calculated in
nominal dollars.) The federal award percentages do not include sporadic
federal financial supplements to cover accumulated deficits.
[15] WIC's current income requirement is 185 percent of the U.S.
poverty level. The U.S. Census Bureau calculates poverty level by
family size. In 2003, the poverty level was $9,393 for a family unit of
one person and $18,810 for a family unit of four persons.
[16] This amount represented an increase over block grant caps in prior
years, as a result of the 2000 Farm Bill (Section 4124), which tied
American Samoa's funding to Puerto Rico.
[17] An American Samoa Food Stamp recipient must be a U.S. national, a
U.S. citizen, or an alien lawfully admitted to the United States or
American Samoa.
[18] For a full listing of the 27 authorized Innovative Program
assistance areas, see http://www.ed.gov/programs/innovative/
legislation.html.
[19] Title V, Part A, Subpart 4, Section 5146, of the No Child Left
Behind Act (Pub. L. No. 102-10) authorized an increase of about $65
million in the first year in total federal appropriations for
Innovative Programs and parental choice provisions.
[20] The other two airports, Fitiuta and Ofu, are too small to
accommodate large commercial carriers.
[21] The Federal-aid Highway Program comprises, among others, (1) the
Territorial Highway Program, (2) the High Priority Projects Program,
and (3) the Emergency Relief Program.
[22] 23 U.S.C. 215.
[23] About 115 miles of federally funded highways traverse the 76-
square-mile territory.
[24] The waiver under which American Samoa operates is set forth at
section 1902(j) of the Social Security Act (42 U.S.C. § 1396a(j)).
[25] Title 13 of the American Samoa Code Annotated states that American
Samoans and legal residents are entitled to "free medical and dental
attention." The Department of Health or the Medical Center may "make a
reasonable charge for the use of their respective facilities."
[26] LBJ Hospital's financial statements for fiscal year 2003 have not
yet been conducted. Consequently, although the hospital reported
revenues of $29.3 million in 2003, we cannot be confident that this
amount is accurate.
[27] See 42 U.S.C. § 1308 of the Social Security Act, which established
a cap on Medicaid reimbursements to the territories, including American
Samoa.
[28] According to HHS officials, this estimate is intended only to
ensure that federal Medicaid reimbursement does not exceed the federal
share of estimated expenditures for services to the Medicaid-eligible
population in lieu of actual reimbursements for services to an enrolled
Medicaid population. In the rest of the United States, Medicaid
enrollment does not include the entire population living below the
federal poverty level. For example, low-income adults without children
are not categorically eligible to enroll in Medicaid.
[29] LBJ Hospital officials stated that, in addition to receiving DOI
funds, the hospital received some additional grant funds from the U.S.
Department of Housing and Urban Development to renovate one of the
hospital wards. These grants were not part of our review.
[30] The federal share of Medicaid expenditures for all of the
territories is set at 50 percent until expenditures reach the capped
amount. In the 50 states and the District of Columbia, Medicaid
operates as an entitlement program, with no cap on the federal share of
payments. These payments can be no lower than 50 percent and may be as
high as 83 percent depending on a state's per capita income.
[31] Air 21: The Wendell H. Ford Aviation Investment and Reform Act for
the 21ST Century (Pub. L. No. 106-181).
[32] Vision 100: Century of Aviation Reauthorization Act (Pub. L. No.
108-176).
[33] OMB's Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations, which was issued pursuant to the Single Audit
Act, as amended, requires entities to (1) maintain internal control
over federal programs; (2) comply with laws, regulations, and the
provisions of contracts or grant agreements; (3) prepare appropriate
financial statements, including a schedule of expenditures of federal
awards; (4) ensure that the required audits are properly performed and
submitted when due; and (5) follow up and take corrective actions on
audit findings.
[34] For certain federal programs, the Davis-Bacon Act requires that
all laborers and mechanics employed by contractors or subcontractors to
work on construction projects financed by federal assistance be paid
wages not less than those established for the locality of the project
by the Secretary of Labor.
[35] According to the Single Audit Act, there is generally no standard
due date for the annual single audit. The audited entity, upon hiring
the auditor, negotiates a due date for the audit within 9 months after
the close of the entity's fiscal year. The entity must have time to
read the report and prepare the corrective action plan that is required
in the reporting package.
[36] An auditor's decision to qualify or disclaim an opinion because of
a scope limitation indicates an inability to obtain sufficient
competent evidential matter or an inadequacy in the accounting records.
[37] Internal controls are an integral component of an organization's
management and provide reasonable assurance that the objectives of an
organization are being achieved in the following categories:
effectiveness and efficiency of operations, including the use of the
entity's resources; reliability of financial reporting, including
reports on budget execution, financial statements, and other reports
for internal and external use; and compliance with applicable laws and
regulations.
[38] The Compliance Supplement to OMB Circular No. A-133, Audits of
States, Local Governments, and Non-Profit Organizations identifies the
following 14 types of compliance requirements applicable to most
federal programs: (1) activities allowed or unallowed; (2) allowable
costs/cost principles; (3) cash management; (4) Davis-Bacon Act; (5)
eligibility; (6) equipment and real property management; (7) matching,
level of effort, and earmarking; (8) period of availability of federal
funds; (9) procurement, suspension, and debarment; (10) program income;
(11) real property acquisition and relocation assistance; (12)
reporting; (13) subrecipient monitoring; and (14) special tests and
provisions.
[39] The 1998-2000 single audits did not test for program-specific
findings in the following four grant programs that were included in our
review: (1) Airport Improvement, (2) Head Start, (3) Medicaid, and (4)
Technical Assistance. The 2001 single audit did not test transactions
for those same programs, with the exception of the Airport Improvement
Program.
[40] According to OMB Circular A-133, questioned costs include those
questioned by the auditor because of an audit finding (1) that resulted
from a violation or possible violation of a provision of a law,
regulation, contract, grant, cooperative agreement, or other agreement
or document governing the use of federal funds, including funds used to
match federal funds; (2) that the costs, at the time of the audit, were
not supported by adequate documentation; or (3) that the costs appeared
unreasonable and did not reflect the actions that prudent person would
take in the circumstances.
[41] The fiscal year 2001 single audit tested $82,575,820 (73 percent)
of $113,641,331 in total federal expenditures; the 2000 single audit
tested $67,491,230 (67 percent) of $99,305,882 in total federal
expenditures to American Samoa; the fiscal year 1999 single audit
tested $74,116,313 (72 percent) of $101,898,886 in total federal
expenditures; and the fiscal year 1998 single audit tested $71,195,605
(75 percent) of 94,376,919 in total federal expenditures to American
Samoa.
[42] We selected one transaction (between fiscal years 1999 and 2003)
from each of the 12 programs to determine whether the required
supporting documentation was included in the transaction file and, if
so, whether the documentation was sufficiently detailed to determine
whether expenditures were allowable.
[43] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[44] The cognizant agency is the federal agency designated to carry out
the federal responsibilities with regard to a single audit and is the
agency that provides the predominant amount of direct funding to an
entity, such as the American Samoa government. Grantees receiving more
than $25 million in federal assistance are assigned to a cognizant
agency for audit supervision (OMB issued a revision in June 2003 that
increased the threshold for grantees to be assigned to a cognizant
agency from $25 million to $50 million). The functions of the cognizant
agency are operated within the agency's Office of Inspector General for
Audits. The cognizant agency is responsible for (1) providing technical
advice to auditees and auditors, (2) considering grant extensions to
the report submission date, and (3) coordinating management decisions
for audit findings that affect the federal programs of more than one
federal agency, among other responsibilities.
[45] The Grants Management Common Rule was established in 1987 under
presidential direction to adopt governmentwide terms and conditions for
grants to state and local governments and replaced attachments to OMB
Circular A-102. Each federal department incorporates the Grants
Management Common Rule in its agency regulations. DOI's Grants
Management Common Rule is found at 43 C.F.R.§12; USDA's at 7
C.F.R.§3016; ED's at 34 C.F.R. §80; DOT's at 49 C.F.R. §18; and HHS's
at 45 C.F.R. §92. Among the many provisions in the regulations, the
Grants Management Common Rule provides authority to designate a grantee
"high risk."
[46] Under the special conditions established by ED, American Samoa
must submit to the department a detailed quarterly report of
expenditures under each program funded by ED; a certification of
accuracy and completeness of the quarterly report, verifying that all
expenditures are being made for authorized purposes under the law; and
shall consider adopting a transparent budgeting and expenditure
reporting system.
[47] DOI reported that it withheld $2 million of Capital Improvement
Program funds from American Samoa but that no substantial reforms were
made as a result.
[48] The earmarking of the government operations grant occurs in
itemized cost lists in the budget justification documents sent by DOI's
Office of Insular Affairs to the appropriations committees.
[49] DOI appropriations for fiscal years 1999-2003 were adopted in the
following public laws respectively--Pub. L. No. 105-277, Pub. L. No.
106-113, Pub. L. No. 106-291, Pub. L. No. 107-63, and Pub. L. No. 108-
7.
[50] Recently, the American Samoa Treasury set up a separate account
for federal grant funds.
[51] In fiscal years 1990-2003, the cumulative U.S. inflation rate was
about 30.3 percent. Between 1990 and 2003, American Samoa's population
has risen from 46,773 to 57,844--an increase of about 23.7 percent.
[52] In the single audits for 1998-2000, the auditor expressed no
opinion on the accuracy of the financial statements. In the single
audit for 2001, the auditor provided a qualified opinion.
[53] The overall federal contribution to the budget decreased from
about 47 percent in fiscal year 1999 to about 42 percent in fiscal year
2003--a period when the total contribution of the 12 grants that we
reviewed increased by about 18 percent.
[54] This analysis excludes the impact of sporadic federal financial
supplements to American Samoa to cover accumulated deficits. One recent
such supplement was the 2000 federal loan of $18.6 million against
American Samoa's expected share of the tobacco settlement.
[55] Internal control is an integral component of an organization's
management that provides reasonable assurance that the following
objectives are being achieved: effectiveness and efficiency of
operations, including the use of the organization's resources;
reliability of financial reporting, including reports on budget
execution, financial statements, and other reports for internal and
external use; and compliance with applicable laws and regulations.
[56] The LBJ Medical Center Authority manages LBJ Hospital.
[57] LBJ Hospital has its own audit, which is summarized and included
in the single audit.
[58] § 701 of Pub. L. No. 94-241, as amended. The covenant was fully
implemented in November 1986.
[59] § 118(c) of Pub. L. No. 104-134, April 26, 1996.
[60] The new process offers all territorial governments an opportunity
to compete each year for a portion of the guaranteed funding in
addition to other assistance or local funding that might be available.
DOI has developed a set of threshold criteria to determine eligibility
for infrastructure support through covenant capital improvement grants.
The annual allocation will be based on a set of competitive criteria
that measure governments' demonstrated ability to exercise prudent
financial management practices, including compliance with the single
audit requirement; to select and administer high-priority projects; and
to meet federal grant requirements. In addition, DOI will consider the
capacity of the insular government to absorb the allocated capital
assistance, any special or extenuating conditions that might require
adjustments to the allocation, and the relative merits of the proposed
projects. Allocations will vary from year to year depending on how the
insular governments meet the competitive criteria; long-term good
performance will be rewarded, and poor performance will be penalized.
[61] An operations and maintenance fund received 5 percent of each
capital improvement grant to be matched by the American Samoan
government. Proceeds from the fuel storage facility fund the American
Samoa match for the operations and maintenance fund. The fund is
administered by the Territorial Office for Fiscal Reform and is used to
pay for maintenance of anything built with project funds. According to
DOI officials, DOI developed the fund for American Samoa and it served
as the model for similar funds established for the amended Compact of
Free Association for the Federated States of Micronesia and the
Republic of the Marshall Islands.
[62] American Samoa Economic Advisory Commission, Transforming the
Economy of American Samoa: A Report to the President of the United
States of America through the Secretary of the U.S. Department of the
Interior (Honolulu: 2002).
[63] The American Samoa School Lunch Program also provides breakfast.
[64] The National School Lunch Program provides nutritionally balanced,
federally subsidized meals for all children in public and nonprofit
schools and residential child-care institutions, with the size of the
subsidy dependent on the income level of participating households.
[65] American Samoa and USDA's Food and Nutrition Service entered into
an MOU to establish purposes and procedures, whereby American Samoa
establishes a comprehensive Nutrition Assistance Program for the
residents of American Samoa funded by FNS. Pursuant to 48 U.S.C. §
1469d (2004), the MOU delineates the responsibilities and obligations
of the parties in the administration of a Nutrition Assistance Program
in American Samoa that best meets the needs of the residents of
American Samoa.
[66] FNS officials explained that the certification process requires
them to submit forms certifying that they meet the requirements for a
Drugfree Workplace and Disclosure of Lobbying.
[67] According to the MOU, prior to the fiscal year for which the grant
calculation is being made, the base year fund, $4,079,766, is
multiplied by the ratio of the current year's May Consumer Price Index
(CPI) series for Food Away from Home for All Urban Consumers and the
May 1989 Value of 126.7 for the same CPI series. (This process is
identical to the methodology used by USDA to annually calculate
increases in National School Lunch and Breakfast Program meal
reimbursement rates in the 50 states).
[68] Federal officials said that they require the following reports:
SF-269, a financial status report, including outlays, unliquidated
obligations, total federal funds authorized for this funding period,
and the unobligated balance of federal funds; FNS-10, a report of
school operations; and Quarterly Performance Report, a report that
includes data on administration costs (dollars spent and number of
staff), Child Nutrition Program costs, such as dollars spent, and
number of meals served.
[69] Federal officials told us that they visit state agencies several
times per year compared with once every 2 to 3 years in American Samoa.
[70] American Samoa Department of Human and Social Services was awarded
a Child Care Development Fund grant by HHS. From October 1, 2003,
through September 20, 2004, HHS awarded the department $2,646,159 for
child care services and related activities.
[71] FNS officials explained that the single audits for American Samoa
for fiscal years 1998 and 2000 had not been sent to USDA's Office of
the Chief Financial Officer (OCFO) because of an annotation error on
the data sheets and that entities like American Samoa generally forward
these data sheets, along with copies of the reporting package, for each
of the agencies identified on the data sheet as having adverse
findings. USDA's OCFO contacted the Federal Audit Clearinghouse to
obtain copies of the missing reports.
[72] 7 C.F.R. § 3016.20.
[73] WIC is not an entitlement program, because Congress does not set
aside funds to allow every eligible individual to participate in the
program. Congress instead authorizes a specific funding amount each
year for the program. In fiscal year 2000, the WIC Program served
almost half of all infants and about one-quarter of all children aged 1
to 4 years in the United States. WIC operates through 2,000 local
agencies in 10,000 clinic sites, in 50 state health departments, 33
American Indian tribal organizations, American Samoa, the District of
Columbia, Guam, Puerto Rico, and the Virgin Islands.
[74] Authorized under the Child Nutrition Act of 1966, as amended (42
U.S.C. §1786).
[75] WIC provides nutrition education as part of the program's overall
nutrition assistance mission, and the cost of nutrition education is
part of each local agency's administration expenses.
[76] FNS's Western Region is located in San Francisco, California, and
oversees programs in Alaska, Arizona, California, Hawaii, Idaho,
Nevada, Oregon, Washington, Guam, American Samoa, Commonwealth of the
Northern Mariana Islands, Federated States of Micronesia, Republic of
the Marshall Islands, and the Republic of Palau.
[77] Federal grants appropriations for WIC are disbursed to state
agencies that are certified for participation in accordance with
general procedures that are prescribed by the Secretary of USDA. USDA
awards grants to state agencies, which receive grant funding based on
two components that are determined by funding formulas: (1) Food and
(2) Nutrition Services and Administration.
[78] With regard to determining nutritional risk, the regulations
specify that a competent professional authority on the staff of the
local agency shall determine if a person is at nutritional risk through
a medical, nutrition assessment. This determination may be based on
referral data submitted by a competent professional authority not on
the staff of the local agency. Nutritional risk data is documented in
the participant's file and shall be used to assess an applicant's
nutritional status and risk, tailor the food package to address
nutritional needs, design appropriate nutrition education, and make
referrals to health and social services for follow-up, as necessary and
appropriate.
[79] Pregnant women who are income and residency eligible may be
presumed eligible and immediately certified without assessing
nutritional risk for up to 60 days (7 CFR § 246.7(d)(vii) and (e)(v)).
However, the local agency must complete the medical and/or nutrition
assessment and identify (and document) one or more nutritional risks
for the woman to continue receiving benefits beyond the 60 days. All
infants must have an identified nutritional risk to be eligible for the
program.
[80] A food package might contain a specification for milk, juice, and
eggs for a child or the type and quantity of infant formula for
infants.
[81] Output measures include but are not limited to the following
categories and measures: (1) Nutrition Education: Amount of Nutrition
Services and Administration funds spent for nutrition education by
state agency; extent to which participant actually receives nutrition
education; number of local agencies offering nutrition education in
foreign languages; (2) Breast-feeding Promotion and Support: number of
state and local agencies with a breast-feeding coordinator; number of
local agencies offering education devoted to breast-feeding; (3) Health
Referrals: number of participants provided information on health care
providers; number of WIC agencies offering well-baby care and
immunizations.
[82] While the breast-feeding outcome measure allows FNS to examine one
aspect of the impact of its services on WIC clients, it does not
measure the important aspects of this service's impact, such as the
length of time that WIC mothers breast-feed their infants and the
percentage of daily nutrition an infant obtains from breast-feeding.
[83] USDA's FNS is the federal agency that awards the grant and
oversees the program, called the American Samoa Nutrition Assistance
Program. However, in this report, the program is referred to as the
American Samoa Food Stamp Program, because we found that federal and
American Samoa officials referred to the program using both terms
interchangeably.
[84] Pub. L. No. 96-597 § 601, 94 Stat. 3477, 3479 (1980).
[85] In the 50 states, the Food Stamp Program operates under the Food
Stamp Act of 1977, as amended. FNS staff write rules for implementing
the act and its amendments and publish those rules in the Federal
Register. On occasion, FNS grants waivers of sections of the rules to
state food stamp agencies to permit deviations from standard procedures
to allow for temporary conditions, to facilitate more effective and
efficient administration, or to accommodate unique local conditions.
[86] Supplemental Security Income is a federal income supplement
program funded by general tax revenues (not Social Security taxes). It
is designed to help aged, blind, and disabled people, who have little
or no income, and it provides cash to meet basic needs for food,
clothing, and shelter.
[87] The Food Stamp Act of 1977 stated "that effective October 1, 1995
[…] the Secretary shall pay to the Territory of American Samoa not more
than $5,300,000 for each of fiscal years 1996 through 2002 to finance
100 percent of the expenditures for the fiscal year for a nutrition
assistance program extended under section 601 (c) of Pub. L. No. 96-597
(48 U.S.C. § 1469d (c))."
[88] Farm Security and Rural Investment Act of 2002 (Farm Bill 2002),
Pub. L. No. 107-171, § 4124, states that "this provision consolidates
the block grant for Puerto Rico and American Samoa beginning fiscal
year 2003 and provides $1.401 billion in consolidated funding for
fiscal year 2003 with annual adjustments through fiscal year 2007." The
act also states that "0.4 percent [of the funding] is available for
American Samoa to pay 100 percent of costs for its nutrition assistance
program."
[89] The system automates the application process; collects, stores,
and reports client program data; generates program management reports;
provides controls for coupon inventory and issuance accounting; and
provides system controls and checks to reduce opportunities for fraud
and abuse.
[90] FNS stated that there is a 180-day standard for the issuance of
management decisions, beginning with FNS National Office's issuance of
the single audit report to its Regional Office.
[91] The system allows recipients to authorize transfer of their
government benefits from a federal account to a retailer account to pay
for products received. EBT is currently being used in many states to
issue food stamp and other benefits. Over 95 percent of food stamp
benefits are currently being issued by EBT. State food stamp agencies
work with contractors to procure their own EBT systems for delivery of
Food Stamp and other state-administered benefit programs.
[92] Title V, Part A, of the No Child Left Behind Act reauthorized
former Title VI of the Elementary and Secondary Education Act of 1965
to provide funding to enable state educational agencies and local
educational agencies to implement education programs. Title V also
permits the consolidation of two or more authorized programs under one
application to provide for simplified reporting procedures and
flexibility in allocating funds to meet educational needs.
[93] For a full listing of the 27 authorized Innovative Programs
assistance areas, see http://www.ed.gov/programs/innovative/
legislation.html. Funding can also be used by states for activities in
eight education categories outlined in the NCLBA, which include
establishing charter schools or implementing statewide reform.
[94] The five performance goals are as follows: (1) By 2013-14, all
students will reach high standards, at a minimum attaining proficiency
or better, in reading/language arts and mathematics. (2) All limited
English proficient students will become proficient in English and reach
high academic standards, at a minimum attaining proficiency or better
in reading or language arts and mathematics. (3) By academic year 2005-
2006, all students will be taught by highly qualified teachers. (4) All
students will be educated in a learning environment that is safe, drug
free, and conducive to learning. (5) All students will graduate from
high school.
[95] The American Samoa Department of Education's fiscal year 2003
grant application indicated that the English proficiency goal was
replaced by a goal for parents in the community to become equal
partners in their children's educational program.
[96] Under 34 C.F.R. § 80.12, a grantee may be considered "high risk"
if an awarding agency determines that a grantee: (1) has a history of
unsatisfactory performance, (2) is not financially stable, (3) has a
management system that does not meet certain standards, (4) has not
conformed to terms and conditions of previous awards, or (5) is
otherwise not responsible.
[97] Another part of IDEA, Part C, provides eligible children with
disabilities, from birth to 3 years of age, with special education
services. Part C was not covered in our review.
[98] Providing the least restrictive environment means that children
with disabilities are educated alongside children who are not disabled,
unless the nature or severity of the disability is such that education
in regular classes with the use of supplementary aids cannot be
achieved satisfactorily. See 34 C.F.R. § 300.550.
[99] Section 611 of IDEA states that for funds to the outlying areas
that are appropriated for any fiscal year, ED shall reserve not more
than 1 percent, which shall be used to provide assistance to the
outlying areas in accordance with their respective populations of
individuals aged 3 through 21 years.
[100] Any carryover funds that are not obligated by the end of the
carryover period must be returned to the federal government.
[101] Requisite services include, but are not limited to, the
identification, assessment, and evaluation of students and the
provision of specially designed instruction and related services (e.g.,
physical therapy, occupational therapy) to meet the students' unique
needs at no cost to the parents.
[102] An individualized education program is a written statement that
is developed for each student with a disability and is required to be
developed, reviewed, and revised in accordance with IDEA.
[103] IDEA requires a comprehensive system of personnel development to
be in effect that is designed to ensure an adequate supply of qualified
special education, regular education, and related services personnel.
An official from the American Samoa Department of Education indicated
that there was no departmental freeze on new hires and on opening new
positions in the Special Education Program.
[104] Individualized education programs should include statements of
(1) the child's present levels of educational performance; (2)
measurable annual goals; (3) special education and related services to
be provided; (4) an explanation of the extent, if any, to which the
child will not participate with nondisabled children in the regular
class and in certain activities; (5) individual modification in the
administration of assessments; (6) the projected date for the beginning
of services to be provided; (7) transition service needs beginning at
age 14 and updated annually; and (8) how the child's progress toward
the annual goals will be measured.
[105] An ED official recently informed us that the student received the
hearing aids in April 2004. ED officials confirmed this during their
site visit in September 2004.
[106] We did not verify the extent to which all of these positions were
actually filled.
[107] The Airport Improvement Program is established under Title 49
U.S.C., chapter 471.
[108] See 49 U.S.C. §§ 47114 and 47115.
[109] Primary airports have 10,000 or more annual passenger
enplanements from scheduled commercial service.
[110] According to an airport official in American Samoa, Pago Pago
International Airport has too few passenger boardings to receive more
than the $1,000,000 minimum from the formula portion of the grant
funds, in addition to whatever discretionary grant funds it receives.
[111] The FAA official responsible for these inspections stated that it
is not always possible to conduct on-site inspections at the end of
projects because he cannot visit American Samoa as often as he normally
would visit airports nearby.
[112] FAA Order 5100.38B.
[113] 49 U.S.C. §§ 50101-50105.
[114] The Department of Port Administration received DOI Operations and
Maintenance grants of $30,000 in fiscal years 2000 and 2001 and $15,000
in 2002.
[115] FAA stated that it is aware of American Samoa's difficulties in
matching federal funds and, using approved FAA procedures, has
recognized American Samoa's in-kind contributions as the required
match.
[116] AIR 21--The Wendell H. Ford Aviation Investment and Reform Act
for the 21st Century of 2000 (Pub. L. No. 106-181) reauthorizing FAA
for fiscal years 2001-2003.
[117] Vision 100--Century of Aviation Reauthorization Act (Pub. L. No.
108-176) reauthorizing FAA through 2007.
[118] For the purposes of this report, we refer collectively to the
highway projects in American Samoa as the Federal-aid Highway Program.
[119] The Federal-aid Highway Program is authorized under 23, U.S.C.
101, §§ 101-189 (2002).
[120] Federal-aid Highway Act of 1970, Pub. L. No. 91-605, § 112(a), 84
Stat. 1713, 1720-1721 (1970) Current version at 23 U.S.C. § 215
(2002)).
[121] 23 U.S.C. § 215.
[122] According to DOT officials, American Samoa received an additional
$500,000 in fiscal year 2003 for the Route 1 Corridor Program.
[123] The Territorial Highway System is a system of arterial and
collector highways and interisland connectors that have been approved
by the Federal Highway Administration. The territorial highway system
is considered to be the Federal-aid highways of each territory.
[124] The Transportation Equity Act for the 21st Century (TEA-21), Pub.
L. No. 105-178, as amended, authorized 1,850 High Priority Projects
nationwide over 6 years.
[125] The Intermodal Surface Transportation Efficiency Act of 1991,
ISTEA, established the National Highway System (NHS) and provided
continued funding of the territorial highway program as a 1 percent
set-aside from the NHS funds. In 1998, TEA-21 changed the 1 percent
set-aside of the NHS funds for the territories to provide a set amount
of $36.4 million each fiscal year.
[126] TEA-21 provides that the territories are allocated only the
amount of funds for which obligation authority is provided.
[127] Officials at the FHWA-Hawaii Division Office said that they were
unable to determine the exact number of completed projects during the
period of review because the fiscal management information system used
to track projects does not maintain completion dates for each project.
Nonetheless, officials provided an estimate of completed projects based
on their assessment of the low amount of unexpended award dollars for
each project; if the award funds for a particular project were nearly
drawn down completely, the project "had characteristics of being
complete."
[128] The Surface Transportation Assistance Act of 1982, Pub. L. No.
97-424 § 165, applies Buy America restrictions, which stipulate that
funds generally may not be obligated for a project unless steel and
manufactured products used in such projects are produced in the United
States.
[129] Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat.
286.
[130] 42 U.S.C. § 1396d(b).
[131] A 1984 amendment to the Social Security Act set the initial cap
for American Samoa at $750,000, and amendments in subsequent years have
raised the cap. The act provides that the federal Medicaid funding
received by American Samoa cannot exceed the amount provided for the
preceding fiscal year, increased by the percentage increase in the
medical care component of the Bureau of Labor Statistics' consumer
price index for all urban consumers, rounded to the nearest $10,000.
See 42 U.S.C. § 1308(g)(2)(E). The Jobs and Growth Tax Relief
Reconciliation Act of 2003 temporarily raised the federal medical
assistance percentage by 2.95 percent and also temporarily raised the
statutory cap for the territories, including American Samoa, by 5.9
percent for the third and fourth quarters of fiscal year 2003 and the
first three quarters of 2004. See Pub. L. No. 108-27, 117 Stat. 752,
765.
[132] Fiscal year 2001 is the most recent for which data is available
on nationwide enrollment and expenditures.
[133] The waiver under which American Samoa operates is set forth at §
1902(j) of the Social Security Act (42 U.S.C. § 1396a(j)).
[134] Since 1998, the hospital has been managed by the LBJ Medical
Center Authority, which receives all federal funds directly, including
Medicaid funds.
[135] Other key sources of revenue for the hospital include an annual
grant from the Department of Interior of about $7.8 million an annual
subsidy from the American Samoa government, which was about $5.3
million in fiscal year 2003, and net patient revenues estimated by the
hospital to be about $7.5 million for fiscal year 2003. Total "revenues
gains and other support" in fiscal year 2003 was over $29 million. This
figure is unaudited.
[136] See Title 13, American Samoa Code Annotated, Health and Economic
Welfare Services, § 13.0602(a), which states that American Samoans,
legal residents of at least 10 years, and certain U.S. civil service
employees are entitled to free medical assistance and dental attention.
However, the American Samoa Department of Health "may make a reasonable
charge" for the use of health care facilities. In practice, LBJ
Hospital reports that it has no citizenship or residency requirements
for receiving medical care other than charging nonresidents higher
facility fees than residents.
[137] According to HHS officials, this estimate of "presumed
eligibility" is intended only to ensure that the annual cap on federal
Medicaid reimbursements to American Samoa is not higher than the
federal share of American Samoa's annual expenditures for services to
presumed Medicaid-eligible population.
[138] American Samoa's estimate of the presumed eligible population
defines the Medicaid population more broadly than in the 50 states,
where many individuals with incomes below the U.S. poverty level are
not eligible for enrollment in Medicaid. For example, in the states,
childless adults who are not disabled, pregnant, or elderly generally
are not categorically eligible for Medicaid regardless of their degree
of impoverishment.
[139] See 42 C.F.R. § 482.1(a)(5) (2003).
[140] Medicare is a federal program that was enacted in 1965 and
provides insurance for the elderly and disabled. The Social Security
Act requires hospitals participating in Medicare to meet certain
specified requirements and authorizes HHS to impose additional
requirements if they are found necessary in the interest of the health
and safety of patients who are furnished services in hospitals. See §
1395x(e) and 42 C.F.R. § 482.1(a).
[141] The "physical environment" condition of participation requires
hospitals to comply with all provisions of the National Fire Protection
Association's Life Safety Code that HHS determines applicable. See 42
C.F.R. § 482.41.
[142] The survey also found many other deficiencies including those
related to standards for nursing care, administration and preparation
of drugs, retention of medical records, pharmaceutical services, safety
precautions for patients and personnel, and infection control. The
Medicare hospital conditions of participation are set forth at 42
C.F.R. § 482.
[143] Completed projects include a renovated laboratory; dialysis and
mental health facilities; ear, nose and throat and eye-care clinics;
the surgical ward; and the morgue. The hospital also used a grant from
the Department of Housing and Urban Development for some of its
renovations, but this grant was not included in our analysis.
[144] The Medicare conditions of participation require hospitals to
have qualified medical staff (42 C.F.R. § 488.22).
[145] Those who received medical training in Fiji are classified as
medical officers rather than U.S.-certified medical doctors, who are
qualified to bill the Medicare Program for reimbursement.
[146] The LBJ Medical Center Authority manages LBJ Hospital.
[147] For fiscal years 2001-2003, the hospital's total expenses
averaged almost $30 million. The expense figures for fiscal years 2002
and 2003 have not yet been audited.
[148] The audit for fiscal year 2001 was not completed until June 2004.
The audit for fiscal years 1998-2000 was completed in 2002.
[149] Head Start was originally aimed at 3-to 5-year-olds. A companion
program begun in 1994, Early Head Start, made these services available
to children from birth to 3 years of age as well as to pregnant women.
American Samoa currently does not have an Early Head Start Program.
[150] The Head Start Program is authorized under 42 U.S.C. § 9831-9852.
[151] See 42 U.S.C. § 9835.
[152] 42 U.S.C. § 9840 states that children from low-income families
shall be eligible for participation if their families' incomes are
below the poverty line, or if their families are eligible or, in the
absence of child care, would potentially be eligible for public
assistance. Federal regulations (45 C.F.R. § 1305) require that at
least 90 percent of children enrolled in each Head Start Program must
meet income eligibility requirements.
[153] See 45 C.F.R. §§ 1304 and 1308.
[154] The Congressional Research Service has reported recently that
there continues to be disagreement over the Head Start's long-term
benefits (See Head Start Issues in the 108TH Congress, updated December
17, 2003). Our past work has found that research is inadequate to draw
conclusions about the impact of the Head Start Program on a national
basis (See Head Start: Research Provides Little Information on Impact
of Current Program, HEHS-97-59, [Washington, D.C.: April 1997]).
[155] Performance indicator data for program year 2002-2003 provided to
HHS by the Early Childhood Education Program reported that 97 percent
of children enrolled in the program received dental exams and 100
percent of those children requiring dental treatment received it. HHS
does not validate performance indicator data.
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