[Congressional Record Volume 146, Number 111 (Tuesday, September 19, 2000)]
[House]
[Pages H7842-H7843]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WASTE, FRAUD AND ABUSE IN THE DEPARTMENT OF EDUCATION
The SPEAKER pro tempore (Mrs. Wilson). Under a previous order of the
House, the gentleman from Michigan (Mr. Hoekstra) is recognized for 5
minutes.
Mr. HOEKSTRA. Madam Speaker, as my colleague earlier this evening
talked about, today we had a hearing in the Subcommittee on Oversight
and Investigations of the Committee on Education and the Workforce
doing oversight hearings on the Department of Education. Let me just
put this in context for my colleagues.
In 1998 and 1999, the Department of Education failed its financial
audit. That means that the independent auditors who came in and took a
look at the financial records of the Department of Education indicated
that the way the numbers were presented and the background, the records
that the Department of Education has, the procedures that it has in
place and the interim controls that it has in place, gave the auditors
some reason of doubt that the way the numbers were actually presented
in the financial statements perhaps did not accurately reflect the
expenditures and the flow of revenue throughout the Department.
Coming from the private sector, I know that when the financial
auditors come in and put some disclaimers in or do not give an
organization a clean bill of health, it sets off a number of alarm
bells. Because, basically, what the auditors are saying is that in this
environment, without the proper financial controls in place, an
environment is created that is ripe for waste, fraud, and abuse. Over
the last 18 months, as we have been taking a look at this problem
within the Department of Education, we have come across a number of
cases where the predictions from the auditors have actually been borne
out, and it is very, very disappointing.
Today, we talked about basically what some would characterize as an
embezzlement scheme of roughly $1.9 million out of the Impact Aid funds
that were diverted into individuals' or small companies' checking
accounts. And, again, this was not caught by the internal controls
within the Department of Education, this was caught by a car salesman
who grew suspicious with somebody coming in and buying or attempting to
buy a very expensive automobile.
We know about the theft ring. Three people have pled guilty, another
three have pleadings before the court, and there are a number of
employees within the Department of Education that are suspended without
pay. This is a $300,000 theft ring. The material products they brought
in were anything from a 61-inch television to computers to VCRs to a
whole series of other electronic equipment. It also includes up to
$600,000 of false billable overtime, time that was billed, time that
was paid, but time that was never worked.
We also know of at least one other major theft ring within the
Department of Education that we are not at liberty to talk about
because there are not public documents that have been released at this
point in time. We also know that within the Department of Education the
Inspector General has estimated that improper Pell Grant payments
amounted to $177 million in one recent year.
We know that real decisions have real impact on real people. The $1.9
million embezzlement from the Impact Aid funds impacted directly two
school districts in South Dakota. Another example. Thirty-nine students
were recently awarded Jacob Javits scholarships. These are scholarships
that are given to students who have excelled at the undergraduate
level. The Education Department at the Federal level comes back and
says that they have done such a good job, that the Federal Government
is now going to fund 4 years of graduate school. That is great news for
those young people; that is great news for their parents; and that is
great news for the undergraduate university that has fostered an
environment that has allowed these kids to excel.
Just one problem: The Department of Education notified the wrong 39
students. Two days later they had to call back these young people and
tell them, sorry, they were not the students that won.
We know that the Department of Education has made $150 million in
duplicate payments in this current fiscal year alone. A duplicate
payment is a vendor supplying an invoice for products and services that
they have provided the Department of Education. A duplicate payment
means they get paid once and they get paid again.
We have some serious problems at the Department of Education. At the
same time that we have been looking at these kinds of problems within
the Department of Education, we have also had the opportunity to travel
around America and see what is working in education. We have been in
roughly 21 different States, and what we have seen is some great
education, reform and educational results happening at the local level.
What the Federal Government needs to learn in this issue is where we
are only providing 7 percent of the money, but in some States we
estimate that we are providing 50 percent of the paperwork, it is time
for the Federal Government to step back and let the people who know our
children's names decide what is best for our schools and for our kids.
It is time to step back and to make sure that we get 95 cents of
[[Page H7843]]
every Federal dollar invested in education, that we get 95 cents of
every dollar back into the classroom.
It is time for us to remove the red tape which really restricts
innovation at the local level. It is time for us to allow local school
districts to decide whether they want to use money on technology, to
hire teachers, to pay teachers more for teacher training or for
investment in other projects. Allow people at the local level to make
the decisions.
There is a lot of good things happening in education in America
today. The focus needs to be on the local level and not here in
Washington.
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