[Congressional Record Volume 146, Number 99 (Wednesday, July 26, 2000)]
[House]
[Pages H7061-H7062]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        EDUCATION DEPARTMENT'S MISMANAGEMENT OF TAXPAYERS' MONEY

  (Mr. SCHAFFER asked and was given permission to address the House for 
1 minute and to revise and extend his remarks.)
  Mr. SCHAFFER. Mr. Speaker, I am here on a personal crusade. I came to 
Congress because I have got five children and I care about their 
school. They are getting ready to go back to school in August.
  A couple of things disturb me, Mr. Speaker. The Department of 
Education contract employees, some of them,

[[Page H7062]]

pleaded guilty to participating in a scheme to defraud the Department 
of more than $1 million in equipment and false overtime. They illegally 
procured equipment, including a 61-inch television set, digital 
cameras, and Gateway computers for the personal use of Department 
employees and their families.
  That is not all. Another fraudulent overtime claim includes a trip to 
Baltimore to pick up crab cakes for another Department employee. Two 
more Department employees were recently charged by the Department of 
Justice with involvement in this scandal, and as many as four other 
Department employees remain under investigation.
  In 1998, the Department could not even audit its books, they were so 
badly managed. In 1999 when they did audit their books, they got a D 
minus.
  Republicans have a different idea. We want to get dollars to the 
classroom and out of that bureaucracy over there.
  Mr. Speaker, unbeknownst to all but Beltway bureaucrats and a handful 
of reform minded Members of Congress, the U.S. Department of Education 
has failed its last two financial audits.
  The nationally known and respected accounting firm Ernst and Young 
has attempted, for fiscal years 1998 and 1999, to determine if the 
Department of Education has spent the money sent to it by Congress 
appropriately and lawfully.
  The sad truth is, we just don't know. The Department's books were 
unauditable for FY 1998. This means the auditors couldn't even form an 
opinion on the state of the Department's books, let alone say whether 
those books were balanced and accurate.
  In FY 1999, the Department received a grade equivalent of a D-. This 
means the auditors could put the books together into some sort of 
coherence, but not well enough to give the Department a passing grade 
in Accounting 101.
  According to the auditors, if a private company received the same 
results the Department did on its FY 1999 audit, its stock would 
plummet. A real life example of this is MicroStrategy, whose stock, on 
the day a critical and unfavorable audit was announced, fell 62% and 
unleashed a slew of investor lawsuits.
  Sadly, no one really knows when the Department will be able to 
receive a clean audit.
  So, Mr. Speaker, what does this really mean to taxpayers--parents--
and children? A few recent incidents illustrate the effects of this 
financial mis-management.
  A Department of Education contract employee pleaded guilty to 
participating in a scheme to defraud the Department of more than one 
million dollars in equipment and false overtime. Illegally procured 
equipment included a 61 inch TV, digital cameras, and Gateway computers 
for the personal use of Department employees and their families.
  However, that's not all. Among the fraudulent overtime claims was a 
trip to Baltimore to pick-up crab-cakes for another Department 
employee.
  Two more Department employees were recently charged by the Department 
of Justice with involvement with this scandal, and as many as four 
other Department employees remain under investigation.
  Earlier this year, 39 students were incorrectly notified by the 
Department that they had won the prestigious Jacob Javits scholarships. 
The cost of the mistake? Nearly $4 million dollars.
  The theft ring and mis-identified students may only be the tip of the 
iceberg. Who knows what other kinds of waste, fraud, abuse and 
mismanagement might be taking place right now because of the inaction 
of the Al Gore and Education Secretary Riley?
  For example, in one academic year alone, $177 million dollars in Pell 
Grants were improperly awarded, and the Department forgave almost $77 
million in student loans for borrowers who falsely claimed to be either 
permanently disabled or dead.
  The Department of Education also maintains a ``grantback'' account 
which at one time contained $750 million. Not surprisingly for an 
agency that cannot pass a basic audit, most of this money didn't really 
belong there. So far, the Department has been unable to explain exactly 
where the money came from, where it went, or why it came and went.
  Is a clean audit an unreasonable goal for a federal agency? 
Bureaucrats would have you believe it is, but we all know it isn't. In 
fact, businesses large and small comply with this simple measure of 
fiscal responsibility every day. Any business owner will tell you the 
importance of a clean audit to maintain the confidence of investors and 
customers and to prevent waste, fraud and abuse.
  The Department has failed to address its financial management for 
eight years running. Inaction has consequences and our children are 
paying the price. Fortunately, Republicans have responded to this 
inexcusable waste of hard-earned taxpayer money devoted to support the 
education of American children. We have held numerous oversight 
hearings, continue a rigorous investigation and passed a bill requiring 
a comprehensive fraud audit of the Department by the General Accounting 
Office.
  We know what needs to be done. Until it is, the taxpayers' investment 
in the education of American school children will not reap anything 
close to maximum return.

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