[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Page 18562]
[From the U.S. Government Publishing Office, www.gpo.gov]



         WASTE, FRAUD AND ABUSE IN THE DEPARTMENT OF EDUCATION

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




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