Congressional Record, Volume 146 Issue 122 (Wednesday, October 4, 2000)

[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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