[Congressional Record Volume 146, Number 122 (Wednesday, October 4, 2000)]
[House]
[Pages H8767-H8773]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          EDUCATION IN AMERICA

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Colorado (Mr. Schaffer) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SCHAFFER. Mr. Speaker, for the next hour I will be joined by at 
least one other of our colleagues and perhaps others who are making 
their way to the floor to talk about the important issue of education 
in America, and specifically, the work that is being undertaken by the 
Republican majority in the Committee on Education and the Workforce.
  It is the number one topic that voters tell us they care about, and 
with good reason. Education is essential and fundamental to the 
maintenance of our Republic. It is virtually impossible in a Nation 
that is devised on a philosophy where the people hold the power and 
loan that authority to politicians at election time to have a nation 
made up of an unwise electorate.
  Of course, being educated liberally in the education of our history, 
of political philosophy, economics, science, math, and all the rest is 
absolutely essential in maintaining our presence in the world and on 
this planet as the world's freest democracy and the nation with the 
most economic opportunity in the world.
  With that in mind, we have begun the process of looking at the United 
States Department of Education, an agency that spends and manages on 
the order of $120 billion per year.
  Now, about $40 billion of that is annual appropriations, and that 
level of funding increases pretty dramatically every year, and has 
increased even more dramatically now that Republicans have taken over 
control of the House, a fact which many friends, many of my Democrat 
friends on the other side of the aisle, cannot seem to come to grips 
with, and choose to ignore the reality of that.
  Not all spending in the Department of Education is good, just because 
we support education. I say that because of the failure to achieve our 
ultimate goal in education funding. Our ultimate goal where education 
funding is concerned is to get dollars to the classroom, to get the 
money that the American people send to Washington and expect us to 
appropriate responsibly to the children who need it most. That is our 
goal. That is our mission.
  Unfortunately, that does not happen to the extent we would like. I am 
sorry to say that the United States Department of Education, despite 
the best of intentions, despite the wonderful mission statement that is 
printed on their brochure and beneath their seal that Members will find 
just down the road here at the several Education Department office 
buildings and headquarters, wastes too much money on waste, fraud, and 
abuse. Money has been stolen right out from underneath the noses of the 
Department of Education budget managers.
  I want to talk about some of those examples, because before we begin 
the process of trying to streamline the Federal government, trying to 
reorient ourselves and the way we spend money on children and the 
education process, we need to understand what the failures are at the 
Department of Education today.
  As I mentioned, out of an agency that manages about $120 billion a 
year, we see too much of it squandered. Again, about $40 billion of it 
is appropriated annually through this Congress. The rest is managed 
through the loan portfolio, student loans that are managed by the 
United States Department of Education.
  In total, it comes out to about $120 billion, making this agency one 
of the largest financial institutions in the United States, and 
certainly one of the largest financial institutions in the world. With 
that much money, we should spend an inordinate amount of time, in my 
opinion, making sure those dollars are spent properly and correctly.
  What really turned us on to this project was our efforts on the 
Subcommittee on Oversight and Investigations, under the leadership of 
the gentleman from Michigan (Mr. Hoekstra). Our efforts were focused on 
spending. We wanted to go back to the Department of Education and ask, 
what did they do with the money we appropriated last year?
  On a number of indicators, it is unfortunate that we see the quality 
of education declining, borne out by the comparisons of our students in 
the United States in math and science. Against students in math and 
science in 21 of our industrialized peers around the world, we rank 
near the bottom. Out of those 21 countries, we are number 19, 19. It is 
unacceptable.
  So we ask, what are they doing with all the money? Why do we continue 
to rank lower and lower when compared to our international peers, yet 
we keep spending more and more in Washington on the Federal education 
bureaucracy? There seems to be some problem.
  So we started looking at the money. We asked some fundamental 
questions about how the past dollars were spent. To our horror, we 
discovered that in 1998, the Department of Education could not tell us 
how they spent and how they managed their $120 billion agency. They 
could not tell us.
  See, the Congress requires every Federal agency to conduct audits of 
their financial activities and to rely those audits to the Congress, 
which we review and consider at the time when we appropriate more 
money. So various Federal agencies sent their audits back to the 
Congress.
  Most Federal agencies did not do very well. Their books were not kept 
in a way that meets reasonable standards for accountability. But in the 
case of the Department of Education, it was worse than that, Mr. 
Speaker. In 1998, the United States Department of Education managed its 
books so poorly that it could not even audit the books.
  When I say the word ``managed,'' that is being generous. In reality, 
the Department of Education in 1998 mismanaged its books so severely 
that when the audit was required, the auditors, outside auditors in 
Ernst & Young, came back to the Congress and said, we cannot even do 
the audit, it is that bad. A $120 billion agency cannot audit its 
books. The books were unauditable.
  In 1999, things got slightly better. The Department was able to audit 
its books, which gave us a better idea of how it accounts for its 
money. It received the poorest grade possible on that financial audit. 
There were huge discrepancies on the order of hundreds of millions of 
dollars that were misplaced, that were put in the wrong accounts.
  We found a grant-back account, as it is called, where the U.S. 
Department of Education sends a check to various vendors around the 
country and grant recipients, universities, mainly. At the Department 
they send not one check, often they send two checks. They have to set 
up an account to receive the second check back.
  The receipt of that check is usually predicated on a conscientious 
university somewhere recognizing the error, recognizing that they 
received two identical checks for the same expenditure, and sending one 
back.

                              {time}  1315

  If they fail to do that, it could take years before the U.S. 
Department of Education ever gets around to finding the error and 
recovering the money.
  When we looked last at that grant back account, it had a balance of 
about $750 million. Now, these are funds that the Department could not 
really tell us where they came from, they were not sure where they were 
supposed to be, and they were unclear as to the status of those funds 
at the time we were there and where they should be properly held. Since 
that investigation, the balance of that fund has been dropped down. But 
the Department, to this day, continues to crank out duplicate checks 
and duplicate payments. The

[[Page H8768]]

Department does not have sufficient controls either to catch these 
errors.
  What we have discovered is that system of poorly managed, of errant 
accounting creates an environment where waste, fraud and abuse are 
actually encouraged, not officially encouraged, but tacitly encouraged.
  Let me give my colleagues an example that involves the State of South 
Dakota, and I see the gentleman from Michigan (Mr. Hoekstra), chairman 
of the Subcommittee on Oversight and Investigations, here as well as 
the gentleman from South Dakota (Mr. Thune) who represents the two 
school districts that are in question.
  It seems that some money called Impact Aid funds was supposed to be 
wired from the U.S. Department of Education to its intended recipients 
in South Dakota, two schools. But somewhere along the line, the 
security system was breached, and somebody rekeyed in the account codes 
of the schools in South Dakota, that effectively the Federal money, $2 
million worth, was wired, stolen, and diverted into private accounts.
  Mr. HOEKSTRA. Mr. Speaker, will the gentleman yield?
  Mr. SCHAFFER. I yield to the gentleman from Michigan to elaborate 
further on that story.
  Mr. HOEKSTRA. Mr. Speaker, I mean, when we think about this process 
and we got involved in this issue, when the Department of Education 
failed its 1998 audit, which means the auditors came in and said the 
way that the numbers are reported in their financial statements, we 
have taken a look at their internal processes and procedures, and there 
is not a clear indication or there is not a high degree of confidence 
that the numbers that they are reporting accurately reflect what 
happened within the Department of Education. They did the same thing 
for 1999. They put some qualifications on it. The Department of 
Education made some progress.
  The interesting thing in the 1999 audit, which bears directly on the 
Impact Aid that the gentleman just brought up is that, in the 1999 
audit statement, which came out earlier in the year 2000, but it was as 
they were taking a look at how the Department of Education was 
processing their checks and their payments in 1999, they said in the 
audit report that there is no integrity in the process; that 
individuals within the process had too much latitude and too many 
responsibilities so that perhaps the same person entering the data 
would have the opportunity to change the data and those types of 
things. It appears that may be exactly what happened in this case. But 
it was brought out in the 1999 audit.
  So what we find is they failed the 1998 audit. They failed their 1999 
audit. Specifically in the 1999 audit, they raise questions about the 
integrity of the way that Impact Aid funds are distributed. Then we end 
up with the gentleman from South Dakota (Mr. Thune) here and a couple 
of school districts in his State not getting their Impact Aid funds. 
Why? Precisely the reason that was identified in the 1999 audit.
  So even when these things are highlighted and specifically 
highlighted within the audit reports, the Department of Education has 
demonstrated an inability or a callousness to actually making the 
changes and responding to the auditors.
  Mr. SCHAFFER. Mr. Speaker, we on the Republican side of the aisle are 
very, very serious about getting dollars to the classroom, and it does 
not always mean we have to spend more. What it does mean, though, is 
that we have to be smarter and wiser. We need to be more vigilant when 
it comes to streamlining the Department of Education so that we can be 
more efficient and squeeze more value out of every dollar that we 
spend.
  Now, we care about this across the spectrum of the Republican 
majority because we care about children, and we want the hard-earned 
dollars of the American people going to the most important priority in 
our Nation. But it matters even more when one is the Congressman who 
represents the children who have been defrauded in the case that we 
just mentioned of $2 million for some of the poorest school districts 
in one's constituency. Of course I am speaking of the gentleman from 
South Dakota (Mr. Thune) who is here, and I yield to him to tell us 
what this means back home in South Dakota for him and his constituents.
  Mr. THUNE. Mr. Speaker, I thank the gentleman from Colorado (Mr. 
Schaffer) and the gentleman from Michigan (Mr. Hoekstra) as well for 
the great leadership that they have taken from discovering and 
examining and reviewing Federal budgets, and particularly in this case 
the Federal Department of Education, to determining what in fact is 
going wrong over there, why are we failing audits and uncovering a lot 
of these issues.
  Mr. Speaker, I just think that the gentleman from Colorado (Mr. 
Schaffer) made a good point, and that is that what we have talked about 
for some time is getting the Federal education dollar, in other words, 
the dollars the taxpayers of this country pay that goes into Washington 
to support education, back into the classroom and keep it from being 
lost in the Washington bureaucracy.
  There is a perfect example of why we have to do that. We look at what 
happened, let us me just retell the story very briefly here because I 
think this paints a picture about what happened in South Dakota. One 
has got a school that is waiting for its money, contacted the 
Department of Education. The Department could not find the money, so it 
cut them a brand-new check.
  Meanwhile, back at the ranch, as they say, two men are trying to buy 
a Corvette in the State of Maryland. They fail a background check and 
the dealer decides to call the FBI. The FBI, of course, investigates 
and finds that $2 million in Federal education dollars intended for two 
rural school districts in South Dakota have been diverted into private 
bank accounts in Maryland and were used to buy luxury SUVs and a house.

  Now, the Department of Education has an enormous budget in relative 
terms, I think in direct expenditures somewhere around a little under 
$40 billion a year. If we add all the student loans and other things 
that are processed there as much as $120 billion actually goes through 
the Department of Education. Two million dollars, with an ``M,'' $2 
million may not seem like a lot to them, but it means a lot to the kids 
and the teachers in those two schools.
  Let me just very briefly talk about Wagner, South Dakota. That was 
one of the schools whose money was mysteriously lost by the Department 
of Education. Wagner is a small town, population 1,462, about a 2-hour 
drive from the largest city in South Dakota.
  Now, there are about 780 K through 12 students in the town of Wagner, 
and they rely heavily on Federal education dollars because many of the 
students, over 50 percent in fact, live on the nearby Indian 
reservation.
  Now, when Wagner does not get its Federal education dollars, there 
are very real consequences. This year, using Federal Impact Aid 
dollars, which is the program that we are discussing here at this 
point, Wagner is expanding the kindergarten program, adding chemistry 
and sociology classes in the high school, and hiring four new teachers 
this year. Real fraud means real pain to real students.
  Now, some of the students at Wagner High School sent me a letter, and 
I would like to read it for my colleagues. Interestingly enough, this 
was written to the car dealer in Maryland who blew the whistle on this; 
and had it not been for him, we maybe never would have discovered this, 
but it is to the car dealer. The kids at Wagner write this.
  It says: ``To the honest car dealer, we are writing to thank you for 
being an honest and aware individual. Your awareness has helped solve a 
crime and your honesty has helped us to get the money we have needed 
for our educational programs. The money we received has helped us to 
build additional classroom space for the elementary, junior and senior 
high school. We were badly overcrowded, and this extra space helps make 
our daily life so much better.
  ``The money has also been used to provide additional computers and 
the educational programs we need so that we can have the best education 
possible. You probably have children and understand how important 
getting a good education is.
  ``For this reason, we are very grateful that there are still people 
in the

[[Page H8769]]

world who know the difference between right and wrong and choose 
right.''
  It is signed ``Sincerely, students from Wagner Community School in 
Wagner, South Dakota,'' which I think is a remarkable, remarkable 
letter in that it acknowledges the honesty and integrity of the 
gentleman from Maryland, the car dealer who exposed this particular 
incident, brought it to our attention, and has helped us, I think, get 
to the bottom of a lot of other issues that are occurring at the 
Department of Education.
  I would just simply add, Mr. Speaker, and say I think what we are 
talking about here is making sure that the children of this country 
have the best possible education, that they have the highest standards. 
I think, unfortunately, what happens in Washington is we tend to dumb 
down the standards because it is so big and so bureaucratic, and it is 
easy to lose a few million dollars here and a few million dollars 
there. Pretty soon we are talking about real money.

  I am very proud of the school system in South Dakota. I have two 
daughters in that school system. But the reason the school system works 
in South Dakota is because we have local administrators, because we 
have school boards, because we have teachers, because we have parents 
who care enough about their children's education to become involved. 
This sort of thing would not have happened with the local school board 
in South Dakota.
  I have to say again I appreciate the work that both the gentleman 
from Colorado (Mr. Schaffer) and the gentleman from Michigan (Mr. 
Hoekstra) are doing in exposing some of these situations, finding out 
more about it. The failed audits in 1998 and 1999 I think drew 
attention to this. Certainly the work that the gentlemen are doing is 
valuable to the people of this country and, more importantly, to the 
children who our schools are supposed to serve.
  Mr. HOEKSTRA. Mr. Speaker, will the gentleman yield?
  Mr. SCHAFFER. I am happy to yield to the gentleman from Michigan.
  Mr. HOEKSTRA. Mr. Speaker, here is the quote out of the Ernst and 
Young report on internal control fiscal year 1999 audit of the 
Department of Education: ``During testing of grant expenditures for the 
Impact Aid grant program,'' which is the program that affected the 
school districts of the gentleman from South Dakota (Mr. Thune), 
``which incurred approximately $1 billion of expenditures during fiscal 
year 1999, we,'' that is Ernst and Young, ``noted that two individuals 
were able to process drawdown requests for funds and then subsequently 
approve their own processing of the drawdown request. Furthermore, we 
noted that several other individuals performed incompatible functions 
in the processing of Impact Aid payments. For example, certain 
individuals have the authority to initiate payment requests, approve 
payment requests, and subsequently batch the requests and authorize 
payment by the finance department. Inadequate segregation of duties in 
sensitive areas such as payment processing can greatly increase the 
risk of errors or irregularities.''
  I guess they are using nicer English here to talk about exactly what 
went on. But I would guess that errors or irregularities is 
transferring the payment from the gentleman's two school districts in 
South Dakota and say let us put them into a bank account, into a 
personal bank account that we can use to buy SUVs or a Corvette or 
purchase a house.
  But that is what Ernst and Young said in 1999 in their financial 
audit. The thing that we find is the Department of Education does not 
respond.
  Mr. SCHAFFER. Mr. Speaker, if I can clarify, Ernst and Young was 
hired by the Department of Education to perform the audit on the 
Department's books, much like many businesses do around the country 
today to hire outside auditors to come in and give an objective 
perspective. This was an audit the Department of Education paid for 
presumably so they can learn from the result, not only on the financial 
side of the audit, but the performance side.
  What I am hearing the gentleman from Michigan (Mr. Hoekstra) say, as 
what we have heard in the committee before, that the Department of 
Education actually had predicted, they knew. Go ahead; please clarify.
  Mr. HOEKSTRA. Ernst and Young predicted.
  Mr. SCHAFFER. Yes, Mr. Speaker, Ernst and Young predicted that the 
Department of Education had fully been apprised of their possibility 
that its controls were so lax and insufficient that waste, fraud and 
abuse could take place in the specific fund that ended up costing the 
constituents of the gentleman from South Dakota (Mr. Thune) $2 million. 
The thieves would have still been carrying on the caper were it not 
for, not the Department of Education finding this crime, but a sales 
agent as at a car dealership.
  I would like to underscore that for a second, just that whole action, 
because we spend $40 million a year in the Department of Education on 
accountants, on auditors, on people who are supposed to oversee the 
financial transactions of the Department. Their job, $40 million worth 
of them, their job is to make sure this kind of crime does not take 
place, to read the audit and put the proper controls in place so that 
the money gets to the children.
  They were warned. They paid for the warning. They paid for the expert 
advice. They ignored the warnings. The crime took place. Even with $40 
million worth of auditors and accountants, they still had no idea. It 
took a sales agent at a car dealership to find the $2 million that was 
stolen from the South Dakota schools.
  That is why I find it so remarkable and gratifying that the children 
are writing letters to the proper person in this case. It is not the 
Department that got the money to the classroom, it was the 
conscientious car sales agent at the dealership in Maryland, 
Hyattsville, Maryland if I am not mistaken, who saved the day.
  Mr. THUNE. Mr. Speaker, if the gentleman will yield, this is one 
particular obvious incident that we are looking at here today, and it 
does become somewhat personal because it was school districts in my 
State and school districts that are particularly in need of this 
support. Impact Aid is a program that supports school districts that 
have a heavy Federal impact in their school districts, in this case 
Native American populations close to reservations.

                              {time}  1330

  But if we extrapolate or expand this, Impact Aid is just one program. 
It is a program that has worked very effectively and one program that I 
have supported wholeheartedly to make sure that the resources are there 
to support our children, but think of all the various programs not only 
throughout the Department of Education but across all of government 
across this country, and the enormous potential for waste, fraud and 
abuse.
  This is why when we have these broad philosophical debates in 
Washington about what to do with Federal surplus dollars, should we 
spend it in Washington or should we get it back home, this is exactly 
why we have to get this money out of Washington and back in the hands 
of the American people.
  Furthermore, if we look at it in terms of a principle, again coming 
back to decision-making, who really cares about our children? And I 
think we all agree children ought to be the focus of our educational 
efforts. They ought to be able to learn in safe, drug-free 
environments, they ought to have the brightest and best teachers, and 
they ought to know that there will be standards and accountability. The 
taxpayers in this country and the parents, who pay the bills, ought to 
be able to know with some assurance that the dollars they are sending 
to Washington, D.C. to support education are not being squandered in 
some enormous bureaucracy, but are actually making it back into the 
classroom where they are improving the rate of learning for our 
children.
  This is an issue which I just think cries out for change, in the 
sense that when we look at these issues, whether it is education or any 
other, that we have to get more of the decision-making and more of the 
power and more of the money out of Washington and back into the 
classrooms and back into the living rooms and back into the communities 
where it can make a difference; where there are local decision-makers 
who care enough about their kids not to let this sort of thing happen.
  Mr. SCHAFFER. Republicans are for decentralized government. We are 
for

[[Page H8770]]

strong high-quality schools, we are for well-paid teachers who are 
well-trained and paid on a professional basis, and we are for money 
being spent on the priorities that exist in various communities around 
the country.
  The Washington model, the liberal model, the one the Democrats and 
the President have espoused over in the White House is something very 
different. Their model is oriented toward building this large Federal 
bureaucracy here in Washington to make decisions for the whole country. 
To them, that seems more efficient. And as we are seeing, structurally 
it just cannot work. A large centralized education authority here in 
Washington takes power away from locally elected school board members. 
It takes decision-making away from the classroom teacher, away from the 
school board members, away from the principals, away from the people 
who know the children best and understand the priorities of a local 
community most; the people who can actually name the names of the 
children in those classrooms.
  Those are the people we as Republicans trust, and that is where we 
want to place the authority and resources, meaning tax dollars. That is 
our preference. These folks over at the Department of Education are 
nice people. We have been down there. The gentleman from Michigan (Mr. 
Hoekstra) and I have actually walked down to the office and paid them a 
personal visit. We went office to office and met a lot of these folks. 
They are like anybody we know in our neighborhoods. They have the 
pictures of their kids on their desks, and they have got education 
systems in their neighborhoods that they care about. But just from a 
functional perspective, this large bureaucracy charged with trying to 
manage 50 State education systems, it is just not set up to do it well. 
It cannot succeed. It just cannot. It is too big, too impersonal, and 
there are too many moving parts.
  There are 760-some-odd Federal programs they try to manage over 
there, and they manage a $120 billion budget. So when they lose a 
couple million, they do not notice it. The car dealer has to notice it 
and the kids notice it, but the Department does not notice it. But I 
tell my colleagues this. If we can get that money to the local 
classroom, I know every single principal in my district would notice $2 
million missing. I know every school board member elected to manage 
schools in Colorado would notice $2 million missing. I know every 
single schoolteacher would notice $2 million missing. But over in the 
Department, they did not notice. It took the car sales agent to find 
the guy who was trying to buy a Corvette with the stolen money to 
notice, a real person who made a big difference for children in South 
Dakota in this case. And presumably for other children because we are 
going to crack down on this part of a failed department as well.
  I yield to the gentleman from Michigan.
  Mr. HOEKSTRA. I wanted to build off the comments that our friend from 
South Dakota made in talking about the amount of money that comes to 
Washington and how Washington responds.

  Obviously, the Congress appropriates this money to the executive 
branch. What this chart points out is that there are nine major 
agencies or cabinet level offices that cannot get a clean audit. It 
means that the auditors come in and say that their internal procedures 
are not good enough to give a high degree of confidence that their 
reporting in their financial statements accurately reflects what is 
happening.
  The first thing we ought to be really scared about is the one we have 
listed first, the Treasury Department. Our Treasury Department cannot 
get a clean audit. We have talked about education. The interesting 
thing here is that neither Treasury nor Education can get a clean 
audit, and one of the problems that we have highlighted in the 
education department is that they have the authority to write checks 
and at the end of the month, when they check what they have written 
against what the Treasury Department has reported as being cashed, they 
cannot reconcile these two numbers. So we have two major departments, 
Treasury and Education, which cannot get clean audits.
  The Justice Department cannot get a clean audit, the Defense 
Department cannot get a clean audit, the Agriculture Department cannot 
get a clean audit, EPA, HUD, OPM, and AID. None of these agencies can 
get clean audits. And we know by the work we have done by taking a 
close look at the Department of Education, when these agencies cannot 
get a clean audit, they are creating an environment that is ripe for 
waste, fraud and abuse. We have found all of that within the Department 
of Education.
  And I think as the gentleman from South Dakota mentioned, real 
problems and real mistakes impact real people. In this case, the fraud 
within the Department of Education impacts young people in some of the 
neediest schools in the country.
  Mr. SCHAFFER. The Clinton-Gore administration knew that they had this 
problem years ago. In fact, it was the Vice President who put together 
a report back in 1993 called the National Performance Review report. 
Here it is right here. Does the gentleman have the famous quote 
highlighted here, by chance?
  Well, somewhere in this document, this nice shiny document that 
apparently the Department of Education never opened up, is this quote, 
and remember this is a quote from the report published by the Vice 
President, it says, ``In other words, if a publicly traded corporation 
kept its books the way the Federal Government does, the Securities and 
Exchange Commission would close it down immediately.''
  That is what the Vice President said in this report evaluating just 
what the gentleman from Michigan had highlighted. The problems that 
plagued the Clinton-Gore administration's whole management style back 
in 1993 still exists today. In fact, it is worse. It has gotten worse 
over time.
  Mr. HOEKSTRA. If the gentleman will yield, there are a couple of 
other quotes the Vice President wrote in his reinvention booklet here. 
Remember, now, he is talking about a department that has failed its 
1998 audit, failed its 1999 audits, and has projected it will fail its 
next three audits. ``The Department of Education has suffered from 
mistrust and management neglect almost from the beginning. To overcome 
this legacy and to lead the way in national education reform, Ed must 
refashion and revitalize its programs, management, and systems. Al 
Gore, Report of the National Performance Review.'' And it is dated not 
2000, but ``Al Gore, 1993.''
  Another quote: ``The Department is redesigning its core financial 
management systems to ensure that data from accounting, grants, 
contracts, payments and other systems are integrated into a single 
system. Al Gore, Report of the National Performance Review, 1993.'' The 
end result is that we are now in the year 2000, the Department of 
Education is still failing its audits, and the litany of waste, fraud 
and abuse within this department is getting to be an embarrassment to 
the department and actually an embarrassment to the executive branch.
  Mr. THUNE. Not only is it an embarrassment obviously to the 
government, I think it ought to be an embarrassment to the taxpayers. 
And ultimately that is what we are talking about here, the taxpayers, 
the people who are paying the bills here. The people who pay the 
freight in this country are the people who are hurt the most.
  I come back to the point that in this particular case we are talking 
about waste, fraud and abuse as it applies to a couple of school 
districts in my State of South Dakota, but waste, fraud and abuse means 
real pain to real students. Unless we can refashion and reshape these 
agencies of government in a way that makes them responsive to the 
people that they are there to serve, we will continue, I think, to 
uncover incidents just like this one.

  And, again, thankfully, there was a car dealer in Maryland who had 
the courage to recognize this incident and contact the appropriate 
authorities. Because, frankly, had it not been for that, who knows. 
Really, who knows if this ever would have been discovered. Because the 
Department of Education, when the shortfall became evident in the State 
of South Dakota in the two school districts, after a period of time, 
and in one school district a protracted period of time, but they just 
issued a new check. They just cut a new check. Hey, it is no big deal, 
we will just get a little more money here and we will take care of it. 
But that is the problem, again, when there is no accountability. And 
what this cries out for is

[[Page H8771]]

higher standards and more accountability.
  And, really, it does start at the top. I appreciate all the studies 
that have been done, the Vice President's study back in 1993; but here 
we are in the year 2000, and leadership on issues like this really 
starts at the top, from the top all the way down through all the 
respective agencies. I am sure the gentlemen will find, as they 
continue to research the Department of Education, more incidents, more 
examples of waste, fraud and abuse. And certainly from the standpoint 
of the taxpayers, it is not a good return and it does not do anything 
to help the children of this country to have the taxpayers send almost 
$40 billion a year, that is with a B, $40 billion to Washington with 
the intention that those dollars are going to be used in some fashion 
to help improve the rate of learning of children in this country only 
to find examples like this, and the others that the gentlemen have 
noted and that throughout their research continue to crop up. This only 
continues to build the cynicism and the mistrust and everything else 
that exists in our culture today about the Federal Government, and that 
is truly unfortunate.
  These are embarrassing examples not only for the agencies of 
government who are responsible and have the taxpayers' trust and are 
the stewards of those dollars; but, more importantly, these are 
embarrassing to the people who pay the bills in this country. If we 
want to build trust and confidence in the government, we cannot have 
these sort of things happening.
  Again, in my judgment, what it does is it just points to the need to 
make sure that we do our job as a Congress in terms of oversight; and, 
secondly, to make sure that the Federal dollars that come in here are 
used efficiently and that we do everything we can to get them back out 
of Washington, back where decisions are made locally, back where 
decisions are made by people who care about their communities and their 
children.
  As the gentleman mentioned, I am sure they are very well-intentioned 
people and good people at the Department of Education here in 
Washington, and they care about their children. But the reality is 
parents, communities, and teachers care a lot more about the children 
when they know their names, when they have the personal contact. And 
that is where the decision-making, that is where the authority, and 
that is where the power and resources ought to be focused, not in a 
Washington bureaucracy.
  Mr. SCHAFFER. I have actually had superintendents of schools and 
school board members and principals who tell me not to spend another 
dime on that agency until we get it cleaned up and until we get that 
financial disaster corrected. They need the money. They want the 
dollars in the classrooms. But they also realize that when there is a 
Department of Education that is hemorrhaging cash to the extent that it 
is today, that it serves no one well to continue to feed more money 
into this machine that loses cash, has it stolen, has it squandered, 
cannot account for it, and, in the end, gets a fraction of the money 
back to children.
  We have talked about the example of the $2 million that was stolen 
out of the department from the children in South Dakota and used to buy 
cars. I would point out the thieves in this case actually did buy two 
cars. It was the third dealer that they went to to buy another car that 
realized there was a crime going on and turned them in. But my point 
is, this is more than a suggestion that there is a potential for more 
waste, fraud and abuse. We have lots of other examples, and I will go 
through a couple more here in the next minute or so, but I would yield 
to the gentleman from Michigan.
  Mr. HOEKSTRA. Well, I just wanted to mention that not only did they 
buy cars, they bought a Lincoln Navigator, a Cadillac Escalante, they 
bought a house, and they were going to try to actually buy a Corvette. 
So it is interesting.
  I was going to say we have to get to this before our time is up. We 
ought to go through some of these other cases of abuse, but we should 
also talk about what is actually happening with our kids.

                              {time}  1345

  There is a lot of information out there. Our kids are not testing 
well when we compare them to international standards.
  It is kind of interesting. A number of the newspapers have been 
running an ad this week saying we are lucky this is not the Olympic 
scores, and they list 21 countries and the U.S. is 18. What it is is on 
educational achievement, on the third international math and science 
study. And it is disheartening. Not enough of our kids are testing at 
proficiency grade level.
  The fastest growing program in our colleges today, we had a hearing 
today on overseas studies programs, that is not the fastest growing 
program on college campuses today. The fastest growing program on 
college campuses today is remedial education, taking kids who have 
graduated from high school, but cannot perform at basic levels in 
reading, writing and math so they get in college and they have the 
colleges and the universities to do remediation.
  But that is the problem and that is the sad part here is that we have 
got a Department of Education with all the kinds of problems that we 
have outlined and at the same time we are leaving too many kids behind.
  And so, if the gentleman wants to take a look at some of the other 
examples of waste, fraud and abuse, we can do that.
  Mr. SCHAFFER. Mr. Speaker, one other example that we investigated in 
the Subcommittee on Oversight and Investigations was a theft ring 
involving collaboration between outside contractors and the Department 
of Education employees who operated this theft ring for at least 3 
years, starting in 1997; and we finally caught it almost in 2000.
  They stole more than $300,000 worth of electronic equipment. They 
stole computers. They stole television sets. They stole VCRs. They 
stole phone equipment. They stole all kinds of electronic computer 
equipment and so on. And they also collected more than $600,000 in 
false overtime claims.
  So we had people in the Department of Education who were signing 
these work vouchers for some pseudo contractors outside of the 
Department of Education so that they were getting paid for work that 
they did not do. Except in one case, in this particular example, the 
manager in the Department of Education actually sent an employee out to 
go out to Maryland to pick up crabcakes and bill that to the taxpayers 
of America.
  It is just mind boggling. Here is how it worked: The Department of 
Education employee charged with overseeing these outside contractors 
would order equipment through the contractor and these were funds that 
were paid for, equipment that was paid for by the Department of 
Education, and they would have it delivered by a complicit contract 
employee, she had it delivered to her house and to her friends' houses.
  And the contract employee also did these personal errands. I 
mentioned the crab cakes that this contract employee ran out to buy and 
bring back so she could eat them for lunch. And, in return, she signed 
off on these false weekends and holiday hours that were never worked. 
And that was paid for by the children of America. That is where the 
money went.
  Money that we want to get to classrooms, money we Republicans think 
children could use, instead was going to pay almost $600,000 worth of 
false overtime hours and bills and these projects where they run out 
and buy crab cakes for themselves.
  This theft ring is still under investigation by the Justice 
Department. There are several who were investigated who signed guilty 
pleas, and seven Department of Education employees have been suspended 
indefinitely without pay pending the final outcome of this probe. And 
there are more examples.
  Mr. HOEKSTRA. Mr. Speaker, if we just go through them quickly:
  The Department of Education, September 1999, prints 3.5 million 
financial aid forms. One problem, they printed them incorrectly. It 
cost the American taxpayer $720,000.
  There is one that we call ``dead and loving it.'' The Department of 
Education improperly discharged almost $77 million in student loans. We 
have a policy in place that, if a person, a borrower, dies or they 
become disabled, their loans are forgiven them. In this

[[Page H8772]]

case, we forgave $77 million of student loans.
  Even better news for these young people is that they were not dead 
and they were not disabled. We just forgave them the loan improperly.
  This again, where we talk about I think what we saw in South Dakota, 
this affects real people. Thirty-nine students were selected to receive 
the Jacob Javits Fellowship. This is an award given to students that 
are graduating from undergrad that the Federal Government agrees to pay 
for 4 years of graduate schoolwork for them.
  Having a daughter that is just going to college, I can imagine how 
excited the parents would be that the tuition is covered. I can imagine 
how excited the student would be, and I can also imagine how excited 
her friends and also her academic institution would be for that kind of 
recognition.
  The good news is we had 39 winners. The bad news is the Department of 
Education notified the wrong 39 young people and said, you are the 
winners, and 2 days later they had to call back and say, sorry, we got 
it wrong; you did not win.
  That was February of 2000.
  This year alone, the Department of Education has issued over $150 
million in what I think my colleague was talking about earlier, 
duplicate payments. We pay you once. We pay you twice. And that is the 
$150 million of the contractors who have notified us or that the 
Department of Education caught. Who knows how much they have not 
caught.
  Mr. SCHAFFER. So this is, the Department, I mentioned this before, 
sends duplicate payments for the same expenditures. It would be like 
your employer sending you two paychecks for the same month.
  Mr. HOEKSTRA. Absolutely, and maybe knowing it and maybe not knowing 
it.
  Student financial programs are annually cited. And while we are 
talking about real money, this is now talking 70 to 80 billion dollars 
of loan portfolios that they manage.
  The General Accounting Office calls these high-risk programs most 
susceptible to waste, fraud, and abuse. And what do we know when 
outside experts come in and highlight these programs? They are right.
  Ernst & Young says the $40 billion that you spend is right for waste, 
fraud, and abuse. We have got a long list of it. Now GAO comes in and 
says your loan programs are high risk for waste, fraud, and abuse. And 
we have got all kinds of examples in that area, as well, and it gets to 
be real money at a time when we really ought to be focusing on getting 
those dollars into a classroom.
  Mr. THUNE. Mr. Speaker, I would just simply add, Mr. Speaker, to what 
my colleagues have said here in the sense that a lot of these dollars 
in these various programs, I am sure there are people who appreciate 
it. The people who have gotten their loans forgiven are probably real 
happy about this and the people who got the double payments that are 
being made out there. I mean, there are some beneficiaries of all this 
waste, fraud and abuse I am sure. But the people who are paying for it 
are the people who are supposed to be served by the programs and the 
taxpayers of this country whose dollars they are in the first place and 
who have high expectations about what their Government ought to be in 
terms of being responsible and efficient in the use of those tax 
dollars.
  I know my colleagues are focusing on education. We had in the 
Committee on Agriculture the other day, and I am not on this 
subcommittee, but the Committee on Oversight and Investigations had a 
hearing. The agency or division within the Department of Agriculture 
that is responsible for the CRP program came up to the Committee on 
Agriculture to explain how $20 million had been spent on a mural on a 
garage and on providing bus transportation for people to attend Sierra 
Club meetings.
  Now, when questioned about that, how could you use those dollars in 
that fashion, the answer was, well, we have very broad authorities and 
that is a justifiable, legitimate use of taxpayer dollars.
  I do not know about my colleagues, and irrespective of what they 
think about one organization or another, providing federally subsidized 
transportation to go to a Sierra Club meeting or any other club meeting 
seems to me to be a little bit outside of what people would expect in 
terms of taxpayers and the use of their tax dollars in this country.
  And so, I just use that again. My colleagues are talking about 
educational issues and the Department of Education and clearly they 
have a very, very long record and have accumulated tremendous amount of 
evidence of the waste, fraud, and abuse that occurs there.
  But as the gentleman from Michigan (Mr. Hoekstra) noted earlier with 
his chart, many other agencies of Government fail their audits, as 
well. And this is another example, another department of Government, a 
program, the Conservation Reserve Program, which is designed to benefit 
producers in this country and to further protect the environment, add 
to wildlife production and other things that is designed specifically 
with a purpose in mind, those dollars are being misdirected in a way 
that I think is totally inconsistent with the purpose and totally 
inconsistent with what is right with the taxpayers.
  Mr. SCHAFFER. Mr. Speaker, I would submit and I know my colleague 
would agree that it all relates. It is all the same from a taxpayer's 
perspective. Back home in Ft. Collins, Colorado or Pierce, South Dakota 
or Holland, Michigan they are sending their money to Government. That 
is all they know. They are not saying an education tax, an agriculture 
tax, a defense tax. They are just paying taxes, almost half their 
income; and they expect that somebody here in Washington is going to 
object for the $20 million mural in the Department of Education. 
Because what every American knows is that they prefer to have that 
money spent on their children and schools.

  So whether it is waste in the one department or any of the nine 
agencies that cannot even tell us how they spend their money because 
they fail their audits and do not do it well, from a taxpayer's 
perspective, they know what real priorities are in America: defending 
the country, educating our children, keeping the roads in operable 
condition, and things of that sort that are real priorities for the 
country.
  I think we owe it to taxpayers. As Republicans, I think taxpayers 
rely on us to expose this kind of waste, fraud and abuse whether it is 
in the Department of Education, Department of Agriculture, or whether 
it is the million-dollar outhouses that the U.S. Park Service built out 
in some national park. All of these things should not go unnoticed.
  I think it is the more honest approach that we have joined forces as 
a Republican majority to tell the truth about this waste, to expose it, 
to talk about it, to begin to fix these problems. Because our message 
is positive. We want to get resources to the top priority where they 
are needed most. We disagree with our Democrat colleagues who say these 
are problems but let us just spend more so we do not notice.
  No. People work too hard for that money. It should not be wasted and 
squandered in accordance with these examples that we have spoken about 
today. Our positive agenda is to spend money wisely and to be prudent 
and responsible with somebody else's money, in this case the money that 
is taxed and sent to the Federal Government by way of tax revenues.
  Mr. HOEKSTRA. Mr. Speaker, when we take a look at it again, when we 
see the waste fraud and abuse, I mean, it is really scary. But then it 
also gets to be scary when we take a look at some of the places where 
we consciously make the decision to spend the money.
  My colleague, the gentleman from South Dakota (Mr. Thune), talked 
about the mural. Somebody in Federal Government made the conscious 
decision that spending $20 million of taxpayer money in that area was a 
good idea. Someone also made the decision consciously that taking 
people and busing them to these events was a good use of taxpayer 
money.
  The Department of Education's closed captioning. We pay for this. We 
can watch The Young and the Restless; The Bold and the Beautiful, I 
never heard of that one; Days of our Lives; Sunset Beach; Men in Tool 
Belts; the New Maury Povich Show; Dukes of Hazard; Bewitched; Gomer 
Pyle; Dynasty; WKRP in Cincinnati. The Federal Government is paying for 
closed

[[Page H8773]]

captioning, all of those programs, to the tune of almost $9 million 
dollars.
  At the same time, we recognize that a lot of our kids are not reading 
by third grade, they are not reading by fourth grade, they are not 
reading by fifth grade. But we are doing these types of things, and it 
really is time, I think, for us not only to wipe out the waste, fraud 
and abuse but to take the dollars and focus them on the programs and 
the efforts that will make the biggest difference.
  Mr. SCHAFFER. Mr. Speaker, that has been our objective here in 
Congress as a Republican majority is to chop this waste, fraud and 
abuse out of Federal agencies to begin to consolidate programs so that 
we can send money back to the States in larger chunks with fewer moving 
parts so that there is more accountability and we involve more local 
leaders in the disbursement of those funds.
  In that way we really are not talking about spending more money on 
education per child but spending less over time in what is budgeted for 
all this wasted money that takes place here under the Clinton 
administration. And so, it is a positive message that we are about, it 
is a proactive agenda that we are trying to unfold here in Washington. 
It is a different agenda which our Democrat friends and the Clinton-
Gore administration have presided over for the last 8 years.

                              {time}  1400

  In their own words, it could not be made any clearer by the Vice 
President himself when he said, in other words, if a publicly traded 
corporation kept its books the way the Federal Government does, the 
Securities and Exchange Commission would close it down immediately.
  They knew that back in 1993 when they printed this. They knew that 2 
years ago when Ernst & Young did the audit of the Department of 
Education and warned the Department of Education that there was a 
potential for theft to take place in the Impact Aid funds; but in all 
cases they were too busy trying to persuade Americans that they were 
not paying enough taxes and did not spend enough time making the 
government more efficient, and in this case and in several other cases, 
the children of America suffer.
  We want to end the suffering. We want to end this burden of waste, 
fraud and abuse that has been perpetrated upon the American people. We 
want a brighter day for education of American students, where dollars 
are spent wisely, dollars get to the classroom, and Americans have 
their confidence restored in how their Federal Government works.
  Mr. HOEKSTRA. I think we ought to take a little bit of time talking 
about where we are with kids. We know our kids are not tested enough, 
but we also have proposals to fix these problems. We have a series of 
objectives that say here is what we would like to do. We have got a 
program called Dollars to the Classroom. It says we want to get 95 
cents of every Federal education dollar back into a local classroom. We 
have got Ed-Flex. What is Ed-Flex? What Ed-Flex says is we know that as 
we have gone around America with our project called Education at a 
Crossroads, the States have consistently come back and said, we get 6 
to 7 percent of our money from Washington; we get 50 percent of our 
paperwork. Ed-Flex says we are going to allow school districts and 
States to eliminate part of the bureaucratic nightmare that we have 
imposed on them.
  We have a program which we call Straight A's. So we are going to get 
more dollars into the classroom, we are going to get rid of the red 
tape, and then what we are saying is we are going to allow you more 
discretion so that in a school district in Colorado, if they need to 
buy technology, they can go out and buy computers. But if a school 
district in my area of west Michigan says we really want to do teacher 
training, they can take those dollars and use the dollars for teacher 
training, so that we recognize that the needs of west Michigan are very 
different than the needs of Colorado or South Dakota, so we are going 
to give school districts flexibility.
  The other thing that we want to do is we want to fully fund our 
commitment to the Individuals With Disabilities Education Act. The 
Federal Government committed to paying 40 percent of this mandate that 
was placed on our local school districts. I think this year we are 
going to be all the way up to a high, and that is under a Republican 
Congress, the other side was never able to achieve this kind of funding 
for IDEA, we are paying 13 percent. But that means, the other part of 
that mandate, the other 27 percent which we committed to pay now has to 
come out of a local school district's taxes. What we need to do is we 
need to fully fund our commitment and when we do that, we will free up 
local dollars to use for school construction, hiring teachers, 
technology, other improvements, what they believe their kids need.
  Mr. SCHAFFER. We tried, you and I tried and others, the more 
conservative Members of Congress tried to actually put more money into 
that unfunded Federal mandate because we know it frees up local 
districts to provide pay raises for teachers, to build new classrooms, 
to invest in the technology. We offered amendment after amendment here 
on the House floor when the appropriations bill was here to beef up the 
funding for the Individuals With Disabilities Education Act; but Al 
Gore and Bill Clinton, they did not help us, they were not interested. 
In fact, their budget opposes what we want to accomplish with fully 
funding the Individuals With Disabilities Education Act.
  I am hopeful and optimistic that we are on the threshold of perhaps a 
new day over in the White House with a new kind of leadership that 
really understands education funding is about real people, real 
children. When the Department loses funds or squanders resources or 
mismanages programs, there are real Americans who suffer and suffer 
mightily as a result of that kind of mismanagement, and it is the same 
kind of mismanagement that the White House even wrote books about in 
1993. It is a tragedy that they failed to follow their own advice, 
clean up the waste, fraud and abuse in the Department, get money to the 
classroom. They have had 8 years to work on it, they have squandered 
their opportunity, they cannot do it. We will.
  Mr. HOEKSTRA. Creating a Government That Works Better and Costs Less, 
Report of the National Performance Review.
  We can speak from experience that the redesign or the reinvention of 
the Education Department has been a failure. Al Gore dropped the ball 
at the Department of Education. The American taxpayer is paying for 
this. More importantly, America's children are paying the price for 
this failure of reinvention at the Department of Education. It was 
promised us in 1993 and the conditions are as bad if not worse in the 
year 2000 than what they were in 1993.

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