Corporation For National And Community Service: Better Internal  
Control and Revised Practices Would Improve the Management of	 
AmeriCorps and the National Service Trust (16-JAN-04,		 
GAO-04-225).							 
                                                                 
The Corporation for National and Community Service (the 	 
Corporation) was created to help meet community needs and expand 
educational opportunity by providing education awards to	 
participants. The Corporation oversees and funds the AmeriCorps  
program as well as the National Service Trust (the Trust), which 
pays the education awards. From November 2002 to March 2003 the  
Corporation suspended AmeriCorps enrollments because there would 
not have been sufficient funds in the Trust to pay education	 
awards. GAO was asked to determine (1) if all AmeriCorps	 
enrollments were accurately recorded, (2) how the Corporation	 
estimated its funding needs, and (3) if the Corporation made	 
changes to prevent another enrollment suspension and to address  
requirements established in the Strengthen AmeriCorps Program	 
Act. GAO analyzed laws, reviewed documents, interviewed 	 
officials, assessed the reliability of the Trust database,	 
examined the model used to estimate funding needs, and surveyed  
Americorps grantees.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-225 					        
    ACCNO:   A09114						        
  TITLE:     Corporation For National And Community Service: Better   
Internal Control and Revised Practices Would Improve the	 
Management of AmeriCorps and the National Service Trust 	 
     DATE:   01/16/2004 
  SUBJECT:   Data base management systems			 
	     Data integrity					 
	     Internal controls					 
	     Strategic planning 				 
	     Volunteer services 				 
	     Funds management					 
	     Community development programs			 
	     Aid for education					 
	     Program evaluation 				 
	     National Service Trust				 
	     AmeriCorps USA Program				 

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GAO-04-225

United States General Accounting Office

GAO

                       Report to Congressional Requesters

January 2004

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

 Better Internal Control and Revised Practices Would Improve the Management of
                   AmeriCorps and the National Service Trust

GAO-04-225

Highlights of GAO-04-225, a report to Congressional Requesters

The Corporation for National and Community Service (the Corporation) was
created to help meet community needs and expand educational opportunity by
providing education awards to participants. The Corporation oversees and
funds the AmeriCorps program as well as the National Service Trust (the
Trust), which pays the education awards. From November 2002 to March 2003
the Corporation suspended AmeriCorps enrollments because there would not
have been sufficient funds in the Trust to pay education awards. GAO was
asked to determine (1) if all AmeriCorps enrollments were accurately
recorded, (2) how the Corporation estimated its funding needs, and (3) if
the Corporation made changes to prevent another enrollment suspension and
to address requirements established in the Strengthen AmeriCorps Program
Act. GAO analyzed laws, reviewed documents, interviewed officials,
assessed the reliability of the Trust database, examined the model used to
estimate funding needs, and surveyed AmeriCorps grantees.

GAO recommends that the Corporation make improvements to strengthen
internal control, enhance the accuracy of its budget estimates, ensure the
Trust does not accumulate large balances, and ensure that its policies
support efforts to deliver services. The Corporation generally agreed with
GAO's recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-225.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Cornelia M. Ashby, (202)
512-8403 ([email protected]) or Susan Poling (202) 512-2667.

January 2004

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

Better Internal Control and Revised Practices Would Improve the Management of
AmeriCorps and the National Service Trust

Discrepancies between information in the Trust database and participant
documentation indicate that not all AmeriCorps participant information was
accurately reflected in the Trust database. An estimated 5 percent (8,300)
of about 158,000 enrollments from program years 2000 to 2002 have
discrepancies, and about 3 percent (4,400) have discrepancies that could
affect estimates of future probable expenditures of the Trust. Further,
the users' manual for the Trust database system had not been updated.

In 2003 the Corporation began using a new model with conservative
assumptions of participant behavior to develop its funding estimates.
Corporation officials explained that they used conservative assumptions
because the AmeriCorps program does not have a long history from which to
extrapolate participant behavior, and the Corporation wanted to regain
credibility after the enrollment suspension in 2002. Using the new model
may be prudent until the Corporation gains more experience. However,
because the new model increased the Trust's funding estimates, the
Corporation will need to monitor actual experience compared with the
model's assumptions and may need to deobligate unused Trust funds.
Further, the new model does not incorporate external factors, such as
downturns in the economy, which may affect funding estimates or the
Trust's balances. The Corporation recently formed a team to assess the
costs and benefits of adding external factors in its model.

Flow of Funds and Information for AmeriCorps Education Awards

Source: Corporation officials and GAO analysis.

The Corporation has made some changes to its operations that minimize the
likelihood it will need to suspend enrollments in the future. Corporation
officials have been obligating Trust funds when positions are approved
since June 2003, and the communication and coordination among officials
have greatly improved. Changes have also been implemented and planned to
address the Strengthen AmeriCorps Program Act requirements. However,
changes to improve oversight of grantees have not been fully implemented,
and policies related to refilling vacated positions and converting
unfilled positions may limit enrollments, hinder service delivery, and
contribute to the accumulation of a larger Trust balance.

Contents

  Letter

Results in Brief
Background
Trust Database and Participant Documentation Discrepancies

Could Affect Estimates of Probable Education Award
Expenditures
The New Model Increased Funding Estimates and Does Not
Consider External Factors

Operational Changes Should Reduce the Risk of Enrollment
Suspensions, but Two New Policies May Hinder Service Delivery
and May Contribute to Higher Balances in the Trust

Conclusion
Recommendations
Agency Comments and Our Evaluation

                                       1

                                      2 5

12

16

22 28 29 30

Appendix I Scope and Methodology

Appendix II The Corporation's Antideficiency Act Violation

Appendix III 	Discrepancies between Trust Data and Participant
Documentation That Could Affect the Amount Owed by the Trust

Appendix IV The Service Award Liability Model

Appendix V 	Comments from the Corporation for National and
Community Service 45

  Appendix VI GAO Contacts and Acknowledgments 51

GAO Contacts 51
Staff Acknowledgments 51

  Tables

Table 1: Estimates of Documentation Availability for AmeriCorps

State and National Grantee and VISTA Participants,

Program Years 2000-2002 34 Table 2: Description of Discrepancies for
AmeriCorps State and National Cases 41 Table 3: Description of
Discrepancies for AmeriCorps VISTA cases 42

  Figures

Figure 1: Flow of Funds and Information for AmeriCorps

Education Awards 8 Figure 2: AmeriCorps Enrollments by Program Year 10
Figure 3: Estimate of Discrepancies between Trust Data and

Participant Documentation 13 Figure 4: Percentage of AmeriCorps
Participants Who Earned

Education Awards Compared with the Percentages used

in the SAL and the New Model 20 Figure 5: Points in AmeriCorps Program
Cycle when Deobligation May Occur 21 Figure 6: The SAL Model 44

Abbreviations

NCCC National Civilian Community Corps
OIG Office of Inspector General
SAL Service Award Liability
SSA Social Security Administration
SSN Social Security number
VISTA Volunteers in Service to America

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United States General Accounting Office Washington, DC 20548

January 16, 2004

The Honorable Christopher S. Bond Chairman, Subcommittee on VA,

HUD, and Independent Agencies Committee on Appropriations United States
Senate

The Honorable Charles E. Grassley United States Senate

The Corporation for National and Community Service (the Corporation) was
created in 1993 to help meet community needs in education, the
environment, and public safety through activities such as tutoring and
mentoring youth, building affordable housing, cleaning parks and streams,
and helping communities respond to disasters. The Corporation also helps
to expand educational opportunity by providing national service
participants who complete a term of service with funds-$4,725 for a
fulltime participant in 2002-to help pay for their education. AmeriCorps
is one of three national service programs the Corporation oversees. The
Corporation receives appropriations to fund program operations and the
National Service Trust (the Trust), which provides money to pay education
awards. In fiscal year 2003 the Corporation was appropriated about $400
million to support AmeriCorps-about $300 million to support program
operations and $100 million for the Trust.

From November 2002 to March 2003, the Corporation suspended enrollments in
AmeriCorps because it concluded that there would not be sufficient funds
in the Trust to pay the education awards for all of the 2002 program
positions. In April of 2003 we provided a statement for the record to the
Subcommittee on Veterans Affairs, Housing and Urban Development, and
Independent Agencies of the Senate Committee on Appropriations describing
our preliminary observations regarding the causes for the enrollment
suspension and the proposed policy changes.1 In

1U.S. General Accounting Office, Corporation for National and Community
Service: Preliminary Observations on the National Service Trust and
AmeriCorps, GAO-03-642T (Washington, D.C.).

that statement, we emphasized that had the Corporation appropriately
recorded and tracked its obligations for education awards to program
participants, the Corporation likely would not have needed to suspend
enrollments. In July 2003, Congress passed the Strengthen AmeriCorps
Program Act (Pub. L.No. 108-45). This act requires the Corporation to
obligate funds in the Trust at the time AmeriCorps positions are approved
and to estimate the value of the education awards based on a formula that
considers historical rates of enrollment in the program and for the
earning and use of education awards. The act also established several
other requirements for the Corporation.

Because of concerns about the Corporation's management of AmeriCorps and
the Trust, you asked us to answer the following questions: (1) Has all
AmeriCorps participant information been accurately recorded in the Trust
database? (2) How does the Corporation estimate the funding needed to
provide education awards through the Trust? (3) Has the Corporation made
management and operational changes that ensure enrollments will not be
suspended in the future and that address the Strengthen AmeriCorps Program
Act requirements?

To answer these questions we used a multifaceted methodology. We performed
a detailed reliability assessment of the Trust database by comparing
information in the database with original enrollment and exit forms. We
obtained enough documentation to compare key information on 363 of 400
cases in our sample, or an estimated 157,045 of the 172,434 enrollments in
the 2000 to 2002 program years. We examined the model used by the Trust to
estimate its funding requirements and reviewed reports of auditors and
contractors related to the model. We surveyed all 148 AmeriCorps grantees
for their views on the Corporation's new enrollment and oversight policies
as well as the training and technical support provided by the Corporation,
and obtained a response rate of 71 percent. We also reviewed applicable
laws, analyzed Corporation data, reviewed relevant documents and reports
from the Corporation's Inspector General, and interviewed knowledgeable
officials. We conducted our work between March and December 2003 in
accordance with generally accepted government auditing standards. For more
details about our scope and methodology, see appendix I.

Results in Brief 	Discrepancies between information in the Trust database
and participant documentation indicate that not all AmeriCorps enrollment
and exit information has been accurately recorded in the Trust database.
We estimate that there are discrepancies in about 5 percent (8,300) of
158,000

enrollments from program years 2000 to 2002, and of these, about 3 percent
(4,400) could affect estimates of future probable expenditures of the
Trust. One of the most frequently occurring discrepancies pertained to
cases in which the Trust database showed participants were still serving
while their documentation showed they had exited the program without
earning an award. For example, the database, as of July 25, 2003,
indicated that a participant was still serving and the documentation
showed that this participant had completed service on August 24, 2002. Our
analysis also found that more than 300 of the participants enrolled
between 1999 and 2002 had Social Security numbers that were invalid or had
not been issued and about 170 had numbers for persons listed as deceased
in the Social Security death master file. In addition to the data
discrepancies, we found the documentation for the Trust database difficult
and cumbersome to use. Corporation managers told us the users' manual had
not been updated since it was first prepared in 1995, although there have
been many changes to the system. Documenting systems is an important
internal control that helps organizations ensure that data are reliably
collected and properly used and helps ensure organizations are positioned
to continue operations in the event of a disaster or emergency.

The Corporation used one model for several years to estimate the funding
needed to provide education awards through the Trust, and in 2003 it
developed and used a new model that increased the funding estimates of the
Trust. According to Corporation officials, the Corporation used the
Service Award Liability (SAL) model from 1996 to 2003 to estimate the
future probable expenditures of the Trust for past and current
participants, as well as to develop funding estimates for future
participants that it used in its budget requests. Following the passage of
the Strengthen AmeriCorps Program Act in July 2003, the Corporation
developed and used a new model to estimate the funding needed for future
participants. This new model used more conservative values as compared
with the previous model. Corporation officials stated that they believe
their historical data provide a sound basis for Trust funding estimates.
However, they chose to use more conservative assumptions because the
AmeriCorps program does not have a long history and they wanted to regain
credibility after having had to suspend enrollments last year. As a
result, the new model increased the funding estimates. For example, the
SAL model generated a requirement of about $116 million for fiscal year
2004 for 75,000 participants, and 7,000 scholarships for high school
students, while the new model generated funding estimates of about $133

million for the same number of participants and scholarship recipients. 2
Our analysis indicates that by using the new model's assumptions, the
Trust may accumulate larger balances than if historical rates were used.
This accumulation in the balance may occur in addition to the reserve
account that is required by the Strengthen AmeriCorps Program Act. While
Corporation officials acknowledged that these changes may cause larger
balances in the Trust, they said they would be able to deobligate funds at
several points in the AmeriCorps program life cycle and could adjust the
assumptions in the future. While there may be large balances in the Trust,
there are external factors, such as the strength of the economy and the
support for volunteerism, that could either reduce these balances or
further increase them. The Corporation has reported that external factors
have affected its programs, but has not incorporated into its model the
possible effects these factors could have on its estimates. The
Corporation recently formed a management improvement team to assess the
costs and benefits of incorporating external factors into its model.
Building in consideration of external factors could further improve the
quality of the Corporation's estimates.

The Corporation has made changes that minimize the likelihood of a need to
suspend enrollments in the future, and changes have been implemented and
planned to address the Strengthen AmeriCorps Program Act requirements.
However, some operational changes have not been fully implemented, and two
new policies are of concern to grantees. Prior to the suspension of
enrollments, the Corporation did not record an obligation to the Trust
fund at the time it created positions, officials did not communicate
regularly about the number of positions created or the number of
participants enrolled in AmeriCorps relative to Trust resources, and the
Corporation allowed grantees various flexibilities concerning the
enrollment of participants. Beginning in July 2003, Corporation officials
began obligating Trust funds when they approved positions in accordance
with the Strengthen AmeriCorps Program Act. Corporation officials have
placed greater emphasis on monitoring the availability of funds in the
Trust, and the communication and coordination between officials
responsible for managing the Trust and officials responsible for creating
positions have greatly improved. Since March 2003, Corporation managers
have been tracking AmeriCorps enrollments on a biweekly basis,
investigating discrepancies in counts between its enrollment system and
the Trust database, and monitoring enrollments in relation to the

2AmeriCorps distributes funds to high school students through Presidential
Freedom Scholarships. These scholarships are valued at $500 for each
participant.

availability of funds in the Trust. The Corporation also tightened grantee
program rules and now requires grantees to provide timely enrollment
information. For example, grantees can no longer enroll more participants
than are specified in their grant award, and grantees are now required to
enroll participants within 30 days of their starting work. The Corporation
has plans to improve the process for monitoring enrollments, to improve
grantee oversight, and to meet the requirements of the Strengthen the
AmeriCorps Program Act. However, two new policies are of concern to
grantees because they believe these policies may limit enrollments and
hinder service delivery. If these policies reduce enrollments, balances in
the Trust may be further increased. Under current policy, if a participant
enrolls in a program and drops out before earning an award, the grantee
cannot offer the position to another applicant for the balance of the term
of service. Grantees are also prohibited from exchanging a full-time
position for an equivalent value of part-time positions. More than 80
percent of the respondents to our survey stated that the policy
prohibiting refilling positions will have a negative effect on the program
operations of their subgrantees, and 75 percent of the respondents stated
that the policy prohibiting them from converting positions would hurt
their ability to provide services. Also, these policies could hinder the
Corporation's ability to fulfill its mission and reduce the number of
participants and the number of earned education awards, thereby
contributing further to the balance of funds in the Trust.

We are recommending that the Corporation's chief executive officer review
and document the Corporation's data assurance processes, update and
improve Trust database system documentation, incorporate external factors
into its Trust estimates, and assess enrollment policies to determine
whether they have negatively affected service delivery and contributed to
the balance of funds in the Trust.

The Corporation's chief executive officer provided written comments on a
draft of this report and generally agreed with our recommendations.
Additionally, he suggested several changes to help clarify the report,
which we incorporated as appropriate. These comments are discussed in the
report and are shown in appendix V.

Background 	The Corporation is part of the USA Freedom Corps, a White
House initiative to foster a culture of citizenship, service, and
responsibility, and

help all Americans answer the President's Call to Service.3 The
Corporation maintains administrative field offices in almost every state.
AmeriCorps was created in 1993 and is one of three national service
programs the Corporation oversees: the Senior Corps, AmeriCorps, and Learn
and Serve America. AmeriCorps consists of three programs: AmeriCorps State
and National (state and national), AmeriCorps VISTA (Volunteers in Service
to America), and AmeriCorps NCCC (National Civilian Community Corps).
AmeriCorps programs for tribes and territories are included in state and
national programs.

The Corporation makes grants from its program appropriations to help grant
recipients carry out national service programs. These include programs
that tutor and mentor youth, build affordable housing, teach computer
skills, clean parks and streams, run after-school activities, help
communities respond to disasters, and those that are related to homeland
security. About 60 percent of the Corporation's fiscal year 2003 grant
funds for AmeriCorps programs went to state service commissions, tribes,
and national direct grantees4 for AmeriCorps State and National programs,
which award subgrants to nonprofit groups, which then enroll the
AmeriCorps participants. The remaining grant and administrative funding
paid for VISTA and NCCC participants-about 32 percent and 8 percent
respectively, in 2003. AmeriCorps is open to U.S. citizens and nationals
or lawful permanent resident aliens age 17 and older. Participants in the
AmeriCorps program can receive stipends as well as health benefits and
child care coverage. For example, about one-half of AmeriCorps
participants received a $9,300 living allowance and health benefits in
program year 2002. Those participants who successfully complete a required
term of service earn a national service education award that can be used
to pay tuition, fees, and expenses for undergraduate school, graduate
school, or an approved school-to-work program, or to pay back qualified
student loans. In exchange for a term of service, full-time

3On January 29, 2002, during the State of the Union Address, President
George W. Bush said "My call tonight is for every American to commit at
least two years-4,000 hours over the rest of your lifetime-to the service
of your neighbors and your nation."

4State service commissions are governor-appointed public agencies or
private nonprofit organizations that distribute AmeriCorps funding within
a state. The Corporation reported there are 52 state service commissions,
with one each in the District of Columbia, American Samoa, and Puerto
Rico, and one in every state except South Dakota. National direct grantees
are charitable organizations that operate in more than one state, such as
the American National Red Cross. The Corporation provided a list of 48
national direct grantees.

AmeriCorps participants earned an education award of $4,725 in program
year 2002. VISTA participants can elect to receive a cash stipend instead
of an education award. About one-third of VISTA participants chose to take
the stipend rather than the education award in 2002. Figure 1 illustrates
the flow of the funds and information for the AmeriCorps program.

    Figure 1: Flow of Funds and Information for AmeriCorps Education Awards

According to the Corporation's Trust database, AmeriCorps enrollments more
than doubled between 1994 and 2000. Overall AmeriCorps enrollments
increased from about 25,000 in 1994 to about 42,000 in 1999, to over
59,000 in 2001. Enrollments fell in 2002 because of the suspension of
enrollments and were legislatively limited to 50,000 in 2003. The
Corporation requested Trust funding to support 75,000 new enrollments for
2004.

AmeriCorps enrolls participants on a full-time and a part-time basis.
Parttime participants who serve 900 hours or less annually earn education
awards proportional to the hours served. During the first three years when
AmeriCorps programs enrolled participants, 60 percent or more of the
participants served in full-time positions. By 2000 less than 50 percent
of the participants were full-time, and Corporation officials stated that
they are planning for about a 50/50 full-time/part-time mix in 2004.
Trends in total enrollment from 1994 to 2002, and projected enrollment for
2003, and the full-time and part-time mix of participants for each year
are shown in figure 2.

Figure 2: AmeriCorps Enrollments by Program Year

Enrollment 70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Program year

Part time

Full time

Source: National Service Trust Database.

Note: Program year 2003 figures are planned positions.

Additionally, AmeriCorps enrolls "education award only" participants.
AmeriCorps does not pay these participants a living allowance or other
benefits, but it provides funding to grantees for administrative purposes
only, about $400 annually per participant. However, each education award
participant receives an education award equivalent to that earned by a
paid AmeriCorps member. More than half of the AmeriCorps enrollment growth
has come from grants that provide participants no benefits other than the
education award. The Corporation reports there has been high interest in
these grants in recent years. Enrollments for these positions increased
from fewer than 6,500 in 1999 to almost 16,000 in 2001. All
participants-full-time, part-time, and education award-have up to 7

years after they successfully complete their service to use their
education awards.5

AmeriCorps also distributes funds to high school students through
Presidential Freedom Scholarships. These scholarships are valued at $500
for each participant. For 2003 and 2004, the Corporation planned to award
about 7,000 Presidential Freedom Scholarships.

The Government Corporation Control Act requires the Corporation to have an
annual audit of its financial statements. 6 The Corporation prepares its
financial statements using generally accepted accounting principles that
are used by private sector corporations and federal corporations. The
Corporation plans to include a statement of net cost and a statement of
budgetary resources as supplemental information in its annual Performance
and Accountability Report by fiscal year 2005.

The Corporation's financial statement auditor reported that in fiscal year
2002 the Corporation approved AmeriCorps national service positions in
excess of the number of positions that the Trust could support. In
November 2002 the Corporation suspended enrollments in AmeriCorps. Several
factors contributed to the need to suspend enrollments, including a lack
of communication among staff responsible for program and Trust operations.
The Office of the Inspector General (OIG) reported in April 2003 that the
AmeriCorps program approved grants for thousands of positions more than
were used in the Corporation's model to estimate the funding needs of the
National Service Trust. On July 24, 2003, the OIG reported the Corporation
had enrolled more AmeriCorps participants than the Corporation's National
Service Trust could support, and as a result, beginning in 2000, the
Trust's liabilities exceeded the funds it had available from
appropriations and interest earnings.7 In that report, the OIG concluded
that the Corporation had violated the Antideficiency Act. The
Antideficiency Act prohibits an employee or officer of the United States

5Funds deposited into the Trust and obligated for education service awards
remain available without fiscal year limitation. For example see
Consolidated Appropriations Resolution, 2003, Pub.L.108-7 ("...of which
$100,000,000, to remain available without fiscal year limitation, shall be
transferred to the National Service Trust for educational awards...")

631 U.S.C. S:S: 9105, 9106.

7Office of Inspector General Report 03-007, The National Service Trust:
Internal Control Weaknesses Cause an Anti-Deficiency Act Violation at the
Corporation for National and Community Service, July 24, 2003.

  Trust Database and Participant Documentation Discrepancies Could Affect
  Estimates of Probable Education Award Expenditures

government from making or authorizing an expenditure or obligation
exceeding an amount available in an appropriation.8 The Corporation
submitted an Antideficiency Act report to OMB, but as of December 2003,
the report, including the amount of the deficiency, had not been submitted
to the President and the Congress.9 For more information see appendix II.

Discrepancies between the information in the Trust database and
participant documentation indicate that not all AmeriCorps enrollment and
exit information has been accurately recorded in the Trust database.10
Some of these discrepancies could affect the estimated probable
expenditures of the Trust because these data are used to estimate the
amount of education awards the Corporation will ultimately pay.
Furthermore, the Corporation does not have complete or current user
documentation for the Trust database. Without clear documentation
explaining the components of the database, the Corporation may be at risk
of not being able to properly interpret and analyze its participant data.

Trust Database and Out of about 172,000 enrollments in program years 2000
to 2002, we Participant Documentation obtained sufficient documentation to
estimate the extent of discrepancies Discrepancies Could for about 158,000
enrollments.11 We estimate that about 5 percent (8,300 Affect Estimates of
How enrollments) have a discrepancy between the Trust database and

participant documentation.12 Of these, about 3 percent (4,400
enrollments)Much the Corporation could affect estimates of future probable
expenditures of the Trust.13 Owes in Education Awards Figure 3 illustrates
these results.

831 U.S.C. S: 1341(a).

9The Antideficiency Act requires that if an officer or employee of the
United States government violates the act, the agency head "shall report
immediately to the President and Congress all relevant facts and a
statement of actions taken." 31 U.S.C. S:1351. OMB Circular A-11 instructs
agencies to submit the transmittal letter and report from the agency head
to the President through OMB. Circular A-11 S: 145.7.

10The database used by the Trust is called SPAN, for System for Programs,
Agreements, and National Service Participants.

11Some participants were enrolled for more than one term of service during
this period.

12With a 95 percent confidence interval between 3 and 9 percent.

13With a 95 percent confidence interval between 1 and 6 percent.

Figure 3: Estimate of Discrepancies between Trust Data and Participant
Documentation

Several of the discrepancies that could affect what is owed by the Trust
were similar in nature. One of the most frequently occurring discrepancies
pertained to cases in which the Trust database showed participants were
still serving while their documentation showed they had exited the program
without earning an award. For several other cases, the Trust data showed
VISTA participants were still serving while the documentation showed they
had elected to receive a cash stipend instead of an education award.
According to an AmeriCorps official, cash stipends are not paid from funds
in the Trust. In several other cases, the Trust data showed participants
were still serving while their documentation showed they had signed up for
a shorter term of service and should have exited the program. The
Corporation acknowledged it would need to take further action to determine
the actual status of these cases. The specific discrepancies we found that
could affect the amount owed by the Trust are described in appendix III.

Nearly all the discrepancies that will not affect the amount owed by the
Trust were for cases without an enrollment date on the form, although an
enrollment date was in the database. These cases do not affect the
estimate of what the Trust owes because other information in the
documentation was consistent with the database, such as whether or not the
participant earned an award. Corporation officials told us an

enrollment date should be recorded on the forms and that they would issue
clarifying instructions to grantees.

According to Corporation officials, there are numerous processes designed
to help ensure the accuracy and validity of its data. However, the results
of our analysis raise questions about the effectiveness of some of these
processes. The Corporation has controls over who may enter or change
participant information in the Web-Based Reporting System (WBRS), and
several edit and data checks are in place to ensure data is entered
properly and completely. For example, only a grantee's program director
can certify that participants have completed their service and qualified
for an award, and WBRS will not allow grantees to enroll more participants
than the number of slots they were awarded. Corporation officials also
stated that a number of data checks are performed when WBRS data are
transferred to the Trust database. For example, after each weekly upload,
an error report is generated showing such things as participants who had
not been officially enrolled in the Trust and duplicate enrollments.
Furthermore, the Corporation's fiscal year 2001 Performance and
Accountability Report noted that the Corporation had instituted a
procedure to randomly sample and verify enrollment and exit data on an
annual basis. However, Corporation officials could not provide any reports
documenting the results of these reviews.

Our analysis of the Trust data also found that out of 186,000 participants
enrolled during program years 1999 to 2002, 313 participants had Social
Security numbers (SSNs) that were invalid or that the Social Security
Administration (SSA) had not issued, and 169 had SSNs for persons listed
in SSA's death master file. In about 75 percent of these last cases, the
name and birthday of the individual in the SSA death file differed from
the information in the Trust database. In the remaining 25 percent of
cases, the name and birthday matched, but either the SSA records show the
individual had died more than 30 days before the service completion date
shown in the Trust database or no completion date was in the Trust
database, indicating these participants may be listed as still serving.

Corporation officials told us that some of these cases could be the result
of data entry errors. They also said that, on occasion, grantee officials
create records for nonexistent individuals, including mock SSNs, to test
how the data entry system works. However, these erroneous data are not
routinely cleared from the database, according to Corporation officials.
Since these cases are in the database, they are considered as enrolled
participants. Such records for nonexistent individuals will cause the
Corporation to overstate the estimated amount owed by the Trust for

education awards. In November, 2001, the Corporation entered into an
agreement with SSA to test the validity of the SSNs of newly enrolled
participants. Corporation officials provided information showing that they
completed a SSN match under this agreement in May 2002 and found that
2,910 participants out of about 58,000 that did not match SSAs records.
Corporation officials stated that they were undertaking an internal review
to resolve these discrepancies. The Corporation has not done any
subsequent matches, but officials told us that because of our findings,
they would reconsider this. Corporation officials also said that while the
database could be improved, there are safeguards to prevent an
unauthorized person from claiming an award. For example, the postsecondary
institution the participant is attending must verify that he or she is a
student there, and the award funds are sent directly to the institution.
Nonetheless, since there are tens of thousands of different individuals
joining AmeriCorps every year and given the concerns about how SSNs are
used and protected, particularly in light of the rise in identify theft,
it may be in the Corporation's best interest to regularly verify the
accuracy of the SSNs. 14 Without valid SSNs in the Trust database on its
participants, the Corporation cannot be certain that it has accurate
information on its participants and that all participants meet the
eligibility criteria.

    The Corporation Has Not Updated Its Users' Manual for the Trust Database

We found the system documentation for the Trust database was difficult to
use and, in some instances, out of date. As a result, we had to rely on
oral testimony and e-mails provided by Corporation officials and the WBRS
support contractor for information about the system. The users' manual for
the database was prepared in 1995. However, Trust database managers told
us that this manual does not reflect all system changes since that time.15
The Corporation has a data definition dictionary for the Trust database
intended to describe the data fields used in the database and what
information they represent. However, the document we obtained does not
provide definitions or labels for the data fields. Without this
information, we were not able to identify what the data fields
represented, nor would any new users of the system be able to identify the
data fields. In commenting on a draft of this report, Corporation
officials stated that the system documentation, including the data
definition dictionary, was

14U.S. General Accounting Office, Social Security Numbers: Government
Benefits from SSN Use, but Could Provide Better Safeguards. GAO-02-352
(Washington, D.C.) May 31, 2002.

15An updated e-SPAN operator's guide was issued in August 2002 for use by
VISTA programs.

formatted to facilitate use by system developers rather than laypersons.
We were also only able to obtain a partial written inventory of edit and
data checks used for the database. We had to rely on two Corporation
employees knowledgeable about the system's components to explain the type
of information in each of the data fields, identify the data fields used
in determining education awards, and determine what related data and edit
checks were used.

Documenting how data systems are to be used is a common, and required,
management practice.16 Without clear or up-to-date system documentation
explaining the data elements in the Trust database, and procedures for
validating the data, the Corporation may be at risk of using incorrect
data for its estimates of future probable expenditures. Also, the
Corporation would be dependent upon a few employees who are familiar with
the system to produce reports or prepare analyses of the data. Documenting
systems is an important internal control that helps organizations ensure
that data are reliably collected and properly used and helps ensure
organizations are positioned to continue operations in the event of a
disaster or an emergency.

In 2003, the Corporation began using a new model to estimate the funding
needed to provide future education awards through the Trust. This new
model used conservative values that increased the Trust's funding
estimates as compared with the previous model. Corporation officials
believe the historical data they possess provide a sound basis for Trust
funding estimates. However, they chose to use more conservative values
because the AmeriCorps program does not have a long history and they
wanted to regain credibility after having had to suspend enrollments in
2002. In addition, the Trust fund now includes a reserve account required
by the Strengthen AmeriCorps Program Act. The Corporation's model also
does not include a way to consider the possible effects that external
factors could have on its estimates. If the Corporation does not ensure
its funding estimates for future education awards are as reasonable and
complete as possible, millions of federal dollars may accumulate in the
Trust and not be available to help support this or other programs.

  The New Model Increased Funding Estimates and Does Not Consider External
  Factors

16Agencies are required by OMB to follow Federal Financial Management
Systems Requirements issued by the Joint Financial Management Improvement
Program (JFMIP). These include maintaining comprehensive and up to date
systems documentation. JFMIP is a joint undertaking of the U.S. Department
of Treasury, GAO, the Office of Management and Budget and the Office of
Personnel Management, working in cooperation with one another and other
agencies to improve financial management practices in Government.

    The New Model Increased the Estimated Funding Needed for the Trust

The Corporation used one model, the SAL model, to estimate both the
probable expenditures of the Trust for past and current participants and
the funding needed to provide education awards for future participants.
According to Corporation officials, the SAL model was used from 1996 to
2003. In 2003, the Corporation developed a new model and revised its
method for developing the Trust's future funding estimates.

The SAL model is still used to estimate probable education award
expenditures for past and current participants. The reliability and
supportability of the estimates produced by earlier versions of the SAL
model have been examined by outside auditors on two separate occasions.17
The auditors asked to review and assess the Trust model determined that
the model produced reliable estimates for the period examined. However,
they suggested functional enhancements and provided model documentation to
the Corporation. Other auditors also reviewed the model as part of the
annual audits of the Corporation's financial statements.18 These auditors
advised the Corporation that controls and checks on the model's data
should be strengthened. They also recommended that automated techniques be
periodically used to systematically review the model's database and that
the Corporation should consider several minor changes to the model to
enhance the reasonableness of its estimates.19 We also reviewed the SAL
model and found that the key factors and assumptions used to develop the
accounting estimates were generally reasonable. Furthermore, neither the
Corporation's IG nor our assessment found that the SAL model was a key
factor that contributed to the suspension of enrollments in 2002. For
information on the structure and content of the SAL model, see Appendix

IV.

In the new model, the Corporation used more conservative values for the
rates at which education awards are earned and used. The Strengthen
AmeriCorps Program Act states that the Corporation shall use a formula for
estimating Trust obligations that takes into consideration historical
rates of relevant participant behavior. In considering historical rates,
the

17See OIG Audit Report Number 01-49, June 15, 2001, Assessment of the
Service Award Liability Calculation, Price Waterhouse Coopers, December
10, 2001.

18See OIG Audit Report Number 03-01, February 4, 2003, Audit of the
Corporation for National and Community Service Fiscal Year 2002 Financial
Statements.

19Audit Report Number 03-02. Recommended Improvements to the Corporation's
Internal Controls, Fiscal Year 2002 Management Letter. January 24, 2003.

Corporation officials commented that they believe the historical data they
possess provides a sound basis for Trust funding estimates and having
extra funds available in the Trust-as compared with those estimated by the
SAL model-might be prudent, particularly since the AmeriCorps program does
not have a long history from which to extrapolate trends in participant
behavior-only one cycle has been completed. The officials also noted that
the new model's assumptions do not differ significantly from the
historical averages. For example, the rate at which participants earn
awards in the former model is about 75 percent, while the new model uses a
rate of 80 percent. Further, the officials said they chose to use more
conservative values because they wanted to regain credibility after having
had to suspend enrollments in 2002. These officials said that they wanted
to ensure that the Corporation would have adequate funds in the Trust and
avoid any possible need to suspend enrollments again. It may be
appropriate to gain some experience with the new model and current
participant behavior before adjusting the assumptions used.

The Strengthen AmeriCorps Program Act also required the Corporation to
consult with the Congressional Budget Office (CBO) on its model formula.
CBO focused its analysis on the Corporation's discount rate and reported
that the Corporation used a discount rate that is more conservative than
the one it uses when calculating the costs related to proposed
legislation.

When the new model's assumptions are used, the Corporation's Trust funding
estimates were greater for the same number of participants than if the
values in the SAL model were used. We calculated that the cost to provide
education awards for up to 75,000 AmeriCorps participants and 7,000
Presidential Freedom scholarship recipients using SAL model assumptions
was about $116 million. Using the assumptions in the new model, the
Corporation's funding estimate was about $133 million for the same number
of participants and scholarship recipients. The total amount in the Trust
also may be higher because the act required the Corporation to include a
reserve account. Corporation officials told us the reserve account value
of 10 percent of the funding estimate was a value reached through
discussions with congressional staff, and this value could change in
subsequent years.

The New Model Our analysis indicates that by using the assumptions in the
new model, the Assumptions May Increase Trust may accumulate more funds
than have been needed to pay estimated Balances in the Trust education
awards in the past. For instance, the Corporation's data show

the Trust funding estimates are $13 million and $17 million more,
respectively, when 50,000 and 75,000 participants are assumed, and the

new award levels and the award earning and usage rates are used than those
used in the SAL model. Not only are the assumptions in the new model
greater than those used in the SAL model, but the SAL model assumptions
are higher than the actual rates in most years. For example, the
percentage of AmeriCorps participants who earned education awards has
fluctuated since the beginning of the program. The rate decreased from a
high of about 75 percent in 1994 to 68 percent in 1998, and then increased
to 73 percent in 2001. The rate used in the SAL model for earned awards
was about 75 percent-the highest average percentage rate achieved in the
history of the program.20 Figure 4 compares the actual rates at which
education awards were earned with the rate used in the SAL model and the
rate used in the new model. If future participant behavior reflects the
behavior of most past participants, the Trust fund balance may increase
more using the new model assumptions than it would using the estimates
produced by the SAL model. It may be appropriate for the Corporation to
gain some experience with the new model and current participant behavior
before adjusting the assumptions used.

20We are using the SAL model from June 30, 2003. The rate shown is for the
1994 program year.

Figure 4: Percentage of AmeriCorps Participants Who Earned Education
Awards Compared with the Percentages used in the SAL and the New Model

Percent

85

80

75

70

65

60

1994 1995 1996 1997 1998 1999 2000 2001

Program year

Participants who earned awards

SAL model rate

New model rate

Source: National Service Trust Database.

The Corporation acknowledges that the new model may create Trust balances
that are greater than if historical rates were used if future participant
behavior mirrors historical behavior. The Corporation chief financial
officer said that there are opportunities to periodically deobligate funds
during the program cycle. Funds could be deobligated from the Trust if (1)
the positions created in the grant awards are less than the
fulltime-equivalent number of the positions approved, (2) all positions
are not filled, (3) participants drop out before earning an education
award, and (4) participants who earn awards do not use them. Figure 5
illustrates the points when the Corporation can deobligate funds.

Figure 5: Points in AmeriCorps Program Cycle when Deobligation May Occur

Note: Shaded boxes are points at which Trust funds may be deobligated.

Corporation officials said any deobligated funds would become available
for other enrollments. They also said these funds would be used to fund
other awards in current and future program years, and would be considered
as reductions in subsequent budget requests. Furthermore, Corporation
officials stated that the annual financial audit will address whether the
size of the reserve account and the assumptions used are prudent.

As of December 2003, the Corporation had two studies under way examining
AmeriCorps participants' attrition rates and their utilization of earned
awards.21 These studies focus on the frequency with which awards are
earned and used. Corporation officials said that these studies have
provided information that aids them in understanding AmeriCorps attrition
and award usage, but they have not resulted in recommendations for policy
changes that could affect the assumptions used in the model.

    External Factors Not Considered in Developing Estimates

Although Corporation reports indicate that external factors have affected
program participation levels, these factors are not included in either
model, nor have the Corporation officials taken them into account when
they submit their funding request for the Trust. Estimating models should
account for factors external to the business or entity that can affect the
reasonableness of the estimates. Several factors can affect the
assumptions used by the Corporation to estimate its budget needs. These
factors include the state of the economy, the cost of postsecondary
education and the availability of financial aid, and the levels of
interest in

21These studies are called the AmeriCorps Attrition Overview Study and the
AmeriCorps Education Award Utilization Survey.

volunteerism. Neither of the Corporation's models takes into account any
external factors that could change future trends when it creates its
assumptions or calculates its final budget estimates. Corporation
officials stated that the models are not sophisticated enough to account
for all of these factors. However, the Corporation has formed a Management
Improvement Team to examine the potential costs and benefits of upgrading
the model to account for some external factors.

External factors could affect the number of AmeriCorps participants, as
well as the attrition rate and use of awards once enrolled. For example,
if unemployment rates are high, more participants may be willing to
enroll, since they could receive a stipend as well as future education
awards. Additionally, if postsecondary education costs increase, more
participants may be likely to ensure they earn, and afterward use, their
education awards. The Corporation has acknowledged that external factors
have prevented it from achieving program goals. In its fiscal year 1999
and 2000 Performance Reports, the Corporation said it believed the strong
economy was partly to blame for the Corporation's not achieving its
program year 1998 and 1999 enrollment goals. In its fiscal year 2002
Performance and Accountability Report, the Corporation said the high level
of interest in volunteerism following September 11, 2001, and the
President's Call to Service contributed to higher levels of AmeriCorps
enrollments than were anticipated.

The Corporation has implemented and planned substantive changes that
should minimize the risk of an enrollment suspension in the future, and it
has met or plans to meet the requirements established by the Strengthen
AmeriCorps Program Act. Our previous statement and testimony from the
Corporation's Inspector General identified several factors that
contributed to the conditions surrounding the November 2002 suspension in
enrollments.22 The Corporation has made changes to address these factors.
However, grantees raised concerns about two new policies because they may
limit enrollments and hinder service delivery. If these policies reduce
enrollments, balances in the Trust may be further increased.

22Testimony of J. Russell George, Inspector General of the Corporation for
National and Community Service, Before the Subcommittee on VA, HUD, and
Independent Agencies of the Senate Committee on Appropriations. April 10,
2003.

  Operational Changes Should Reduce the Risk of Enrollment Suspensions, but Two
  New Policies May Hinder Service Delivery and May Contribute to Higher Balances
  in the Trust

    The Corporation Has Improved Aspects of Its Operations

The Corporation has made changes to address the three conditions that we
reported contributed to the need to suspend enrollments in AmeriCorps.23
The Corporation had not recognized its obligation to fund participant
education awards. There was a lack of communication among program, grants
management, and Trust officials with regard to the number of AmeriCorps
positions the Trust could support. Finally, because they did not require
grantees to provide timely enrollment information, Corporation and
AmeriCorps managers could not be certain about the number of AmeriCorps
participants and their effect on the Trust.

The Corporation's obligation practices comply with the Strengthen
AmeriCorps Program Act. In accordance with this act, the Corporation began
obligating Trust funds when it approved positions in AmeriCorps grants
beginning in June 2003. As of September 2003, the Corporation had
obligated fiscal year 2003 appropriated Trust funds for about 46,000 of
the 50,000 AmeriCorps positions.

Greater emphasis has been placed on monitoring the availability of funds
in the Trust, and the communication and coordination between officials
responsible for managing the Trust and officials responsible for creating
positions have greatly improved. Since March of 2003, the Corporation has
been tracking AmeriCorps enrollments on a biweekly basis, investigating
discrepancies in counts between its enrollment system and the Trust
database, and monitoring the enrollments against the capacity of the
Trust. These results are made available to high-ranking program and
financial management officials of the Corporation, who meet monthly to
discuss the results of these exercises.

The Corporation has also tightened the controls and eliminated much of the
flexibility it previously gave grantees. Grantees are now prohibited from
enrolling more participants than specified in their grant awards, and the
Corporation modified WBRS to prevent grantees from enrolling more
participants than the number of positions contained in the grant award. To
better monitor progress toward its enrollment goals and their effect on
the Trust, the Corporation now requires grantees to report certain data
about potential participants to the Corporation prior to their actual
enrollment. If a potential participant does not enroll within 45 days of
the expected start

23U.S. General Accounting Office, Corporation for National and Community
Service: Preliminary Observations on the National Service Trust and
AmeriCorps. GAO 03-642T (Washington, D.C.) April 10, 2003.

date, the file on the potential participant is deleted. If the individual
enrolls as scheduled, the grantee must complete the enrollment process
within 30 days of the participant beginning work. The Corporation added a
tool to WBRS that allows managers to monitor the average number of days
between a participant's start date and enrollment. According to the
Corporation, 60 percent of program year 2002-2003 grantees have improved
the average time between participants' start dates and the reporting of
their enrollment compared to their performance in program year 2001-2002.
However, less than 50 percent of the program year 20022003 grantees
reported an average time from start date to enrollment of 30 days, or
less.

In addition, the Corporation provided training and technical support to
assist grantees with the system changes and new enrollment requirements.
Most of the AmeriCorps grantees who responded to our survey said the
training was adequate to meet the new requirements. Of the AmeriCorps
grantees who responded, 80 percent said that the Corporation provided
enough training and technical support to help them meet these new
requirements. However, in written responses some grantees said they would
like to receive training more frequently and believed it would be
beneficial if the Corporation could provide training directly to
subgrantees, rather than just to grantees. Additionally, about 7 percent
of the responding grantees said that as a result of the new requirements,
they or their subgrantees would have to perform additional tasks in their
enrollment procedures. One of the responding grantees said that because it
had over 150 part-time positions, and only limited staff, the requirement
to enter data on participants twice imposed a significant burden.

                  Some Changes Have Not Been Fully Implemented

Corporation officials stated that they are planning to improve oversight
of grantees' performance. The Corporation plans to create consolidated
reports in WBRS to facilitate oversight of the performance of its
grantees, such as the state commissions and national direct grantees. This
will allow them to identify programs having enrollment reporting problems
more quickly and allow them to focus their oversight on those most in need
of attention. Additionally, the Corporation plans to strengthen grantee
oversight requirements to ensure that grantees are overseeing their
subgrantees' compliance with enrollment procedures and time frames. The
Corporation updated the administrative standards for the state
commissions' process for monitoring their subgrantees' compliance with the
enrollment procedures. These standards also include the expectation that
state commissions will consider a subgrantee's compliance with the
enrollment procedures and time frames in their funding decisions. The
Corporation issued this guidance to the commissions in November 2003. In

commenting on the draft report, Corporation officials said that the
revised standards will be piloted in spring 2004 and then submitted to OMB
for review in early fiscal year 2005. The Corporation also plans to
establish a schedule for its staff to review grantees' enrollment cycle
times and provide additional training and technical assistance to
grantees.

There are two provisions in the Strengthen AmeriCorps Program Act that
increase the oversight of Trust operations. The first provision requires
that the Corporation's chief executive officer (CEO) certify annually in a
report to Congress that the Corporation is in compliance with other
sections of the act. The second provision requires an annual audit of the
accounts and records supporting the national service positions, and the
National Service Trust estimate to fund those positions-referred to in the
act as the Corporation's trust obligations. The act requires the CEO to
include this annual audit with the CEO certification report forwarded to
Congress. Although the audit has been completed, the Corporation has not
yet provided its report to Congress.24 The auditor found, after accounting
for

the model's assumptions and reserve account, the Trust still had about $10
million of its fiscal year 2003 appropriation available for awards as of
September 30, 2003. The acting CEO certified the Corporation's compliance
with the act in the management representation letter provided to the
Corporation's Inspector General on November 13, 2003. Corporation
officials said they also plan to include the CEO certification and the
audit of the estimated obligations in its 2003 Performance and
Accountability report to Congress.

    Two Policy Changes May Limit Enrollments and Contribute to Balances in the
    Trust

Prior to the suspension in enrollments, the Corporation allowed grantees
to replace a participant who left AmeriCorps before earning a full award
and to convert an unfilled position to a different number of positions
with an equivalent value of education awards. For example, if a grantee
had a difficult time recruiting full-time participants, it could convert
the full-time position into two half-time positions. In an effort to help
ensure the Trust would not incur education award expenditures greater than
its funds, the Corporation established policies that prohibit grantees
from replacing participants and converting full-time positions. With these
policies, if a participant enrolls in a program but then leaves after 1
week, the grantee cannot replace that person, and if a grantee has one
full-time position but can only find people willing to work part-time, the
grantee cannot convert

24Audit Report 04-03, Audit of the Corporation for National and Community
Service's National Service Trust Schedule of Fiscal Year 2003 Budgetary
Resources and Obligations, October 31, 2003.

that position to two half-time positions but instead can only fill it with
one part-time person. The Corporation established these policies because
it estimated that the Trust could only support a finite number of 2002
positions. Subsequently, Congress placed a 50,000 limit on the number of
total AmeriCorps enrollments that could be filled with the 2003 Trust
appropriations. However, as of November 2003, Congress has not included an
enrollment limit in the proposed 2004 Trust appropriations.

The policies prohibiting grantees from refilling vacated positions and
converting unfilled positions helped the Corporation officials to control
enrollments and helped them to comply with the legislatively imposed
limit, which in turn helped ensure the solvency of the Trust. However,
grantees who responded to our survey said that these policies may hinder
their ability to provide services. Additionally, these policies may lead
to fewer enrollments and coupled with the Corporation's obligation
practices and the model assumptions may contribute to a higher balance of
funds in the Trust.

Our survey of AmeriCorps grantees shows that of those grantees that
responded, 80 percent reported that the prohibition regarding the
refilling of positions will have a generally or very negative effect on
their program operations. Three-quarters of respondents reported that this
policy will force changes in their program operations or those of their
subgrantees or operating sites. Eighty-one percent reported that that it
will limit enrollments and hinder their ability to provide services.
Sixty-five percent reported that the policy will require changes to the
services provided. Respondents reported that they may have to recruit more
carefully, or not report recruitments until the latest possible time, to
maximize the likelihood participants will remain in the program. This will
affect AmeriCorps participants as well as those being served. One
respondent in our survey commented,

Our subgrantees must now rethink their member enrollment and termination
policies. In the past, programs could "take a chance" on enrolling a
potential member who showed promise but who may have also had potential
risk factors. They were able to do this because they could refill the slot
if the member did not work out. In relation to terminating members,
subgrantees will now be somewhat hesitant to release a member who is not
performing as expected, because they will not be able to refill the slot.

Similarly, most of the respondents reported that the policy on converting
unfilled positions will affect program operations and service delivery.
About 75 percent of respondents reported that this restriction will

negatively affect their operations and require them to change their
operations. Seventy-five percent reported that it will hinder service
delivery, and 60 percent reported that it will cause changes in services
provided. Respondents commented that the authority to convert positions
allowed them to respond positively to changing circumstances and better
address community needs. One respondent noted that without being able to
convert positions, applicants will not be accommodated if their
availability does not conform to the slots provided in the grant.
Positions, therefore, could go unfilled.

Furthermore, if these policies result in fewer enrollments, the balance in
the Trust may grow. As previously mentioned, since the passage of the
Strengthen AmeriCorps Program Act, the Corporation obligates funds for all
AmeriCorps positions when the grants are approved and prior to
participants actually enrolling. Also, the new model the Corporation uses
for developing funding estimates assumes 100 percent enrollment for all
positions created. If enrollments do not reach the approved levels, and if
Corporation officials do not regularly and diligently monitor enrollments
and periodically deobligate funds, the funds in the Trust may accumulate.

    Internal Control Weaknesses Remain

Financial statement auditors have reported several internal control
weaknesses or conditions at the Corporation and whether the Corporation
has improved those previously identified. For example, the auditors
reported that the grant approval policies and procedures were a serious
weakness in fiscal years 1999 and 2000. The reports for 2001 and 2002 show
that the Corporation improved in this area and the auditors did not list
this as a concern in the 2003 report.

However, the Corporation continues to have some internal control problems.
The fiscal year 2003 audit reported a continuing internal control problem
regarding the Corporation's monitoring of grantee activities. This problem
was also cited in the audit reports for fiscal years 2001 and 2002.
Additionally, as previously stated, we found that the Corporation has not
fully implemented its efforts to improve oversight of grantees'
performance, its procedures do not ensure accurate data in the Trust
database, and the Corporation's ability to fully use the data on its
participants may be limited because the users' manual for the database has
not been kept current.

In light of these internal control weaknesses and the concerns related to
the problems that lead to the suspension in enrollments, having an auditor
review internal control would provide a measure of assurance over the
Corporation's accountability and internal control. Auditor opinions on

Conclusion

internal control are a critical component of monitoring the effectiveness
of an entity's risk management and accountability systems. When an auditor
renders an opinion on internal control, the auditor is providing
reasonable assurance that the entity has maintained effective internal
control over financial reporting (including safeguarding of assests) and
compliance such that material misstatements, losses, or noncompliance that
are material to the financial statements would be detected in a timely
fashion. The auditor also reports on any significant deficiencies or
material weaknesses in the internal control over financial reporting. An
opinion on internal control is appropriate and necessary for major
government entities and in other cases where an opinion on internal
control would add value and mitigate risk.25

The suspension of AmeriCorps enrollments had a serious impact on the
Corporation's operations, resulting in both internal and external
scrutiny. This scrutiny revealed many shortcomings with the Corporation's
management of the AmeriCorps program and the Trust. Since the suspension
in enrollments, the Corporation has made significant changes to some of
its operating procedures and internal controls. Most notably, the
Corporation began obligating Trust funds when AmeriCorps positions were
created, and key Corporation officials have been much more focused on
ensuring adequate funds are in the Trust.

However, weaknesses still existing in the Corporation's procedures and
internal control could negatively affect the Trust or hinder the
Corporation's ability to fulfill its management responsibilities. For
instance, discrepancies between the Trust database and the participant
data indicate that the Corporation does not have adequate internal control
procedures to ensure the accuracy of its data. Accurate and complete
participant information in the Trust database is critical. This
information plays a significant role in estimating the education awards
owed by the Corporation and ensuring they are awarded properly. Inadequate
system documentation is an internal control weakness that could limit the
Corporation's ability to maximize its use and understanding of the data it
possesses. Without valid SSNs in the Trust database on its participants,
the Corporation cannot be certain that it has accurate information on its
participants and could indicate that not everyone participating in the
program meets the eligibility criteria.

25U.S. General Accounting Office, Government Auditing Standards.
GAO-03-673G (Washington, D.C.) June 2003.

Recommendations

In addition, other changes are needed to enhance the Corporation's efforts
to be good stewards of public funds while fulfilling its mission. Given
the Corporation's relatively short history, and fluctuation in its program
data, it may be prudent for the Corporation to use factors and value in
its model that provide some additional funds in the Trust. Nonetheless,
future funding estimates for the Trust should be as reasonable and
complete as possible to minimize the accumulation of large balances in the
Trust. The Corporation needs to balance its efforts to ensure the Trust
does not assume future probable expenditures in excess of its funds with
the mission and goals of the grantees and subgrantees that enroll
AmeriCorps participants to help meet community needs. Policies that do not
balance these goals may also contribute to the accumulation of balances in
the Trust. If the Corporation does not ensure its funding estimates are as
reasonable and complete as possible and does not regularly and diligently
monitor enrollments and periodically deobligate funds, millions of federal
dollars may accumulate in the Trust and not be available to help support
other federal programs. Finally, obtaining an auditor's opinion on
internal control over financial reporting as part of its annual financial
statement audits would provide additional accountability and assurance.

To improve the management of AmeriCorps and the National Service Trust, we
recommend that the chief executive officer of the Corporation take the
following nine actions:

To ensure the Trust receives accurate data for use in its model estimates
and Trust database,

o  	implement a strategy to correct discrepancies between the Trust
database and the enrollment and exit forms,

o  review and document the effectiveness of its data assurance processes,

o  regularly verify the accuracy of the SSNs of its participants.

To better ensure that the Corporation has data that are readily available
and is positioned to continue operations in the event of a disaster,
emergency, or employee turnover, and

o  	update the users' manual for the Trust database and develop an
inventory of edit and data checks used for the database.

To provide additional assurance over internal control and to minimize the
related risks,

o  	obtain an auditor's opinion on the adequacy of the internal control
over financial reporting as part of the annual financial statement audit.

To enhance the accuracy of Trust budget estimates and ensure the Trust
does not accumulate large balances,

o  	create a means to take into account the possible impact that external
factors may have on participant behavior in its funding estimates and
budget requests,

o  	establish and execute a periodic deobligation schedule for unused
Trust obligations, and

o  	review the assumptions being used in the new funding model after the
Corporation gains more experience with the new model and current
participant behavior.

To ensure its policies support its mission and grantees' efforts to
deliver services while also providing adequate management controls,

o  	evaluate the enrollment policies regarding refilling and converting
positions.

                                Agency Comments
                               and Our Evaluation

We received written comments from the chief executive officer for the
Corporation for National and Community Service. These comments are
reprinted in appendix V. The chief executive officer agreed with eight of
the nine recommendations and identified the actions planned to address
them. As for the other recommendation-to obtain an auditor's opinion on
the adequacy of the Corporation's internal control over financial
reporting as part of the annual financial statement audit-the chief
executive officer stated that he would refer it to the Corporation's
Office of Inspector General, since that office contracts for the annual
financial audit.

Additionally, the chief executive officer identified several areas that
needed further clarification. He pointed out that the system documentation
for the Trust module of eSPAN was not outdated, as we said in our draft,
and informed us that the documentation is up to date but neither it nor
the data dictionary is maintained in a laypersons' format. We modified the
report to better reflect this information. The chief executive officer
stated that the Corporation believes that the historical data currently
used to estimate Trust funding provides a sound basis for the estimates.
We modified the language in the report to reflect the

Corporation's views. Further responding to the chief executive officer's
comments, we (1) deleted the statement that the Corporation planned to
begin using Generally Accepted Accounting Principles for federal
government entities, (2) added program year information to better describe
the comparison of the average time between participants' start dates and
reporting of their enrollment, (3) made it clear that the Corporation's
oversight efforts will focus on its grantees-the state commissions and
national direct grantees, (4) updated the status of the Corporation's
revised administrative standards, and (5) changed the date when the CEO
certification was provided.

Further, the chief executive officer expressed the view that our
discussion of the Antideficiency Act violation focused on the amount of
the deficiency at a specific time in the past and does not calculate the
amounts deobligated over time. He also states that it is the Corporation's
view that the deficiency is the amount needed at this time to liquidate
obligations. We disagree and we revised this section of the report to
explain that the Antideficiency Act requires an agency to report the
amount of the violation at the time the violation occurred. The chief
executive officer also stated that the $64 million deficiency
appropriation should be sufficient. The report does not reflect nor did we
calculate the amount the Corporation needs to liquidate its obligations.

As we agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days
from the issuance date. We will then send copies to the Chief Executive
Officer of the Corporation for National and Community Service and make
copies available to others who request them. At that time, the report will
also be made available at no charge on GAO's Web site at
http://www.gao.gov.

If you have any questions about this report, please call me on (202)
512-8403 or Carolyn Taylor on (202) 512-2974. Other contacts and staff
acknowledgments are listed in appendix VI.

Cornelia M. Ashby
Director, Education, Workforce

and Income Security Issues

                       Appendix I: Scope and Methodology

To determine if the activities of AmeriCorps participants were accurately
recorded in the Trust database, we performed a data reliability test
comparing information in the Trust database with information from original
enrollment and exit forms completed by the participants and their
AmeriCorps program managers. We obtained data files from the Web-Based
Reporting System (WBRS) and the System for Programs, Agreements, and
National Service Participants (SPAN). SPAN is the database used by the
Trust. We performed general checks on these files to look for invalid data
such as Social Security numbers that are invalid or have not been
assigned. Because of a lack of documentation describing the data fields in
detail, particularly for SPAN, we held several discussions with
Corporation officials and contractor staff to resolve technical issues
associated with the data files and to identify data fields to use in our
reliability test. Based on these discussions, we developed a list of WBRS
data fields that would document participants' enrollment, exit, and award
eligibility. At our request, Corporation staff provided a list of
corresponding SPAN data fields.

The population we performed the reliability test for consisted of 172,434
state and national direct grant program and VISTA individual enrollments
that were in the SPAN database as of July 25, 2003, and enrolled during
the 2000, 2001, and 2002 program years. Each individual enrollment
consisted of a discrete period of time a specific individual was an
AmeriCorps participant at a single grantee. We did not sample National
Civilian Conservation Corps (NCCC) participants because they constitute a
small percentage of AmeriCorps enrollments (less than 3 percent).

We drew a stratified random sample of 400 enrollments from this SPAN
database. The population was stratified into four groups on the basis of
program enrollment (i.e., state and national direct grant program or
VISTA) and exit status (i.e., had exited from the program or not). With
this statistically valid probability sample, each enrollment in the study
population had a nonzero probability of being included, and that
probability could be computed for any enrollment. Each sample element was
subsequently weighted in the analysis to reflect the sample design. The
weighting factors were computed as the ratio of the population to the

Appendix I: Scope and Methodology

sample within each stratum. We express confidence in the precision of our
estimates as a 95 percent confidence interval.1

Corporation regulations require that participant documentation be kept on
file for 3 years from the date a participant finishes his or her term of
service.2 Documentation for VISTA participants is maintained at the
Corporation's state field offices and for state and national participants
the documentation is maintained at the grantee's or subgrantee's office.
The Corporation sent requests for the participant documentation to the
appropriate grantees for each enrollment in our sample. The grantees sent
the documents to the GAO headquarters in Washington, DC. We reviewed the
documentation to make sure all applicable forms were submitted. Because of
a larger than expected number of nonresponses and incomplete document
submissions, we made a second request to the grantees that had not
provided complete documentation. In total we allowed program officials 6
weeks to provide the documents.

Not all grantees provided us with complete participant documentation for
the cases we randomly selected. We did not receive any of the
documentation needed to assess whether enrollment information was
accurately recorded for an estimated 14,055 of the 172,434 enrollments in
the 2000 to 2002 program years. Although we received incomplete documents
for an estimated 30,176 enrollments, we were able to compare key
information with the SPAN data. Corporation officials expressed surprise
that we did not receive all of the documents requested. Table 1

1Because we used a sample (called a probability sample) to develop our
estimates, each estimate has a measurable precision, or sampling error,
that may be expressed as a plus/minus figure. A sampling error indicates
how closely we can reproduce from a sample the results that we would
obtain if we were to take a complete count of the universe using the same
measurement methods. By adding the sampling error to and subtracting it
from the estimate, we can develop upper and lower bounds for each
estimate. This range is called a confidence interval. Sampling errors and
confidence intervals are stated at a certain confidence level-in this
case, 95 percent. For example, a confidence interval at the 95-percent
confidence level means that in 95 out of 100 instances, the sampling
procedure we used would produce a confidence interval containing the
universe value we are estimating.

2In certain circumstances, paper forms are not required. For example VISTA
summer associates do not need to complete an enrollment form. Also, VISTA
has developed a practice of not requiring programs to complete the
certification section of the paper exit form if the program official who
certifies the award status of the participant is the same individual who
would complete this section in e-Span. Several cases for which paper forms
are not required were included in the sample and we considered these cases
as ones for which complete documentation was provided.

                       Appendix I: Scope and Methodology

shows estimates of documentation availability for all enrollments during
program years 2000-2002.

Table 1: Estimates of Documentation Availability for AmeriCorps State and
National Grantee and VISTA Participants, Program Years 2000-2002

                                                   Incomplete 
                    Number of No documentation  documentation        Complete 
                                                                documentation 
                    enrollees        available      available       available 
AmeriCorps state                       7.6%          15.9%           76.5% 
     and national                                             
                     157,045   (4.3 - 12.4%)     (11 - 21.8%)  (70.5 - 82.5%) 
AmeriCorps VISTA                      13.4%          34.3%           52.3% 
                       15,388  (8.5 - 19.6%)   (27.1 - 41.6%)  (44.7 - 59.9%) 
                                          8.2%          17.5%           74.3% 
        Total        172,434       (5 - 12.4%)   (13 - 22.8%)  (68.9 - 79.8%) 

Notes: Totals may not add because of rounding.

Ninety-five percent confidence intervals shown in parentheses.

Grantee officials are responsible for entering and updating all
information about participants. Participants complete enrollment and exit
forms at the start and completion, respectively, of their terms of
service. Grantee officials complete and sign other portions of these forms
certifying the participant's enrollment and exit dates and whether or not
the participant earned an education award. The grantee officials enter the
participant's information into WBRS.3 It is then transferred to the Trust
database on a weekly basis.

Since participant data from the Trust database were used to calculate the
Corporation's future probable expenditures of the Trust for past and
current participants as well as develop its funding estimates for future
participants that it uses in its annual budget requests, we focused our
comparison on key fields that would affect the estimates. According to
Corporation officials, these include the enrollment date, the number of
hours the participant committed to serve, the number of hours actually
served, and the participant's termination status-whether or not the
participant completed the term of service and earned an award. We recorded
as a discrepancy any case where the information for these fields in the
documentation did not match the information recorded in SPAN or

3VISTA participants do not enroll through WBRS. They are enrolled by
Corporation officials at AmeriCorps state offices into the Trust database
through eSPAN, an enrollment program that feeds into SPAN directly.

Appendix I: Scope and Methodology

the information appeared to be inconsistent with enrollment period rules
such as participants still serving when other information indicates they
should have finished their term. We assessed whether the discrepancies
would affect what the Trust owed. We provided a list of the discrepancies
to Corporation officials for further investigation. In several cases, they
were able to explain why we found a discrepancy and document that the case
was accurately recorded in the Trust database. We did not include these
cases in our discrepancy count.

To answer the question of how the Corporation develops its funding
estimates for the Trust, we reviewed the models used by the Trust to
develop its funding estimates. We obtained electronic versions of the
models and input data to assess whether the models worked as described by
Corporation officials. We gained an understanding of the controls over the
preparation of the estimates and supporting data. We also learned about
the controls over the sources of data and external factors that could
affect the estimates. We verified the consistency of assumptions with
historical data and the reliability of historical data. We considered
whether changes in business or industry would cause other factors to
become significant, and questioned Corporation officials regarding the
possible impact of changes in Corporation operations on the factors. We
also performed a test of calculations in the model. We obtained and
reviewed revisions to the model recommended by auditors and contractors,
and the changes planned for future budget submissions. We discussed all
these issues with knowledgeable staff in the chief financial officer's
office and conducted several hands-on sessions during which the
Corporation staff demonstrated how the model worked and was used.
Additionally, we obtained and reviewed financial statement reports from
the Corporation's IG and assessed the sections of those reports that
discussed the models and the supporting data.

To determine if the management and operational changes to controls put in
place following the suspension in enrollments in November 2002 would be
effective, we reviewed Corporation memos and related data to check the
progress of and compliance with these reforms and we interviewed
knowledgeable staff. We also surveyed 148 AmeriCorps grantees-state
commissions, national direct parent organizations, education award
programs, tribes and territories-and asked their views on the new
enrollment and oversight policies as well as the adequacy of the training
and technical assistance provided by the Corporation. In developing the
questionnaire, we reviewed memos implementing the new policies and met
with Corporation officials to gain a better understanding of the new
policies. We also obtained comments from Corporation officials on a draft

Appendix I: Scope and Methodology

of the questionnaire. We pretested the questionnaire in person or by
telephone with the four grantee groups-state commissions, national direct
grantees, education award programs, tribes and territories. Guided by the
pretest results and comments from the Corporation, we revised the
questionnaire to ensure that all questions were fair, relevant, and easy
to understand and answer. In addition, we tested the questionnaire to
ensure that completing it would not place too great a time burden on
grantees. Overall, we received responses from about 71 percent of the
grantees (105 of the 148 surveyed). Response rates for each type of
grantee were: state commissions (81 percent), national direct (73
percent), education award programs (60 percent), tribes and territories
(54 percent).

To establish whether the Corporation obligated funds in excess of the
amount available in the Trust, we reviewed applicable statutes concerning
how federal funds should be obligated and the 1993 Corporation
legislation. We also reviewed reports related to the violation issued by
the Corporation's OIG and its financial statement auditor. We clarified
legal issues through correspondence with legal counsel from the
Corporation and the Office of Management and Budget (OMB).

We reviewed the internal control processes related to various Corporation
activities using the Standards for Internal Control in the Federal
Government.4

We conducted our work between March and December 2003 in accordance with
generally accepted government auditing standards.

4U.S. General Accounting Office, Standards for Internal Control in the
Federal Government. GAO/AIMD-00-21.3.1 (Washington, D.C.) November 1999.

Appendix II: The Corporation's Antideficiency Act Violation

In July 2003, the Corporation's Office of the Inspector General (OIG)
reported that the Corporation had obligated funds in excess of the amount
available to it in the National Service Trust. In that report the OIG
noted that the Corporation had suspended participant enrollment on
November 15, 2002, because it was concerned that the Trust would not have
sufficient funds to cover education awards. At the time, in November 2002,
Corporation did not record education award obligations in the Trust Fund
until it paid education awards to eligible participants, so it had no
assurance that adequate funds were available. The Corporation amended
AmeriCorps grants to suspend enrollments and did not permit any additional
enrollments until Congress appropriated additional funds to the Trust in
March 2003.

However, the suspension came too late. In February 2003, the Corporation's
financial statement auditor reported that, in fiscal year 2002, the
Corporation had approved AmeriCorps national service positions in excess
of the number of positions that the Trust could support.1 The July 2003
OIG report stated that the Corporation had enrolled more AmeriCorps
participants than the Trust could support, and as a result, the "[t]rusts'
liabilities, based on appropriations and interest forbearance2 expected to
be paid, exceeded the Trust's appropriations and interest earnings
beginning in 2000."3 The report also stated that the Corporation had
violated the Antideficiency Act.4

Additionally, the OIG report stated that the Corporation estimated that
the violations resulted in a Trust deficiency of approximately $64
million. This $64 million was derived from a reconstruction of the Trust's
financial status that the Corporation prepared at the Office of Management
and Budget's (OMB) request. In its July 25, 2003, response to the OIG's
report, the Corporation conceded that it had violated the Antideficiency
Act but

1Audit of the Corporation for National and Community Service's Fiscal Year
2002 Financial Statements, Audit Report 03-01 at 24, KPMG, Feb. 4, 2003.

2Interest forbearance refers to the payment of student loan interest by
the Corporation for the participant during the period of service.

3Office of Inspector General Report 03-007, The National Service Trust:
Internal Control Weaknesses Cause an Anti-Deficiency Act Violation at the
Corporation for National and Community Service, July 24, 2003.

4The Antideficiency Act prohibits an employee or officer of the United
States government from making or authorizing an expenditure or obligation
exceeding an amount available in an appropriation. 31 U.S.C. S: 1341(a).

Appendix II: The Corporation's Antideficiency Act Violation

disagreed with the amount of the violation reported by its OIG and stated
that the financial reconstruction was a draft that was prepared "while the
legal landscape was still unfolding."5

We suspect that the $64 million amount of the violation may be
understated. In two legal opinions, in April and June 2003, we explained
that the Corporation incurred, and was required to record, an obligation
at the time it awarded a grant approving a new participant slot.6 We
concluded that the Corporation, by waiting to record an obligation until
it paid an education award, was under recording its obligations. In
addition, we explained that the Corporation could not, without specific
statutory authority, record an obligation on the basis of estimates of
what it would have to pay when education awards are earned (its probable
accounting liability). We stated that the Corporation should record its
maximum potential liability. As our legal opinions established, the
Corporation under recorded its obligations by recording (1) obligations at
the time of drawdown rather than at grant award and (2) estimates of what
it would have to pay rather than the full potential costs of the education
awards.

In 2002, OMB advised the Corporation that it should record obligations as
the grantees enrolled new participants. OMB also advised the Corporation
that it should record the amount of the obligation based on estimates of
what enrolled participants will draw down in the future, using historical
information, such as attrition rates and actual usage by participants who
complete a term of service and earn an education award. The Corporation
had already been developing these estimates for its budget request to the
Congress.

At the time of the enrollment suspension, while the Corporation had not
yet instituted the practice of recording obligations as the grantees
enrolled participants, it took into consideration the consequences of
recording obligations at the time of enrollment in its financial
reconstruction for OMB and concluded that if the Corporation had been
recording obligations at the time of enrollment, the deficiency would be
$279 million. We suspect that $279 million might also understate the
amount of the violation at the time the violation occurred because the
Corporation still

5Preliminary Response by Corporation for National and Community Service to
the July 24, 2003, Office of Inspector General Report 03-007, July 25,
2003.

6See B-300480, April 9, 2003 and B-300480.2, June 6, 2003, for a more
detailed discussion of the obligation practices of the Corporation.

Appendix II: The Corporation's Antideficiency Act Violation

would have recorded estimates, as opposed to the maximum potential
liability, and still would have failed to record obligations when
incurred-at time of grant award. The Corporation submitted an
Antideficiency Act report to OMB, but as of December 2003, the report,
including the amount of the deficiency, had not been submitted to the
President and the Congress.7

In our June 6, 2003, legal opinion we noted that the Corporation could
seek legislation that would permit it to use an estimation model for
recording its obligations, and that this model could be similar to the
process that would be used to determine the Corporation's probable
accounting liability. 8 On July 3, 2003, the Congress passed the
Strengthen AmeriCorps Program Act,9 permitting the Corporation to record

obligations based on estimates, as it had been doing without statutory
authority prior to the passage of the act. The act redefined what an
obligation is for purposes of the AmeriCorps program by authorizing the
Corporation to "record as an obligation an estimate of the net present
value of the national service educational award associated with the
position, based on a formula that takes into consideration historical
rates of enrollment in such a program, and of earning and using national
service educational awards for such a program."10 With regard to when the

Corporation incurs a liability, the act requires the Corporation to change
its obligation practices by specifying that the Corporation obligate funds
from the Trust at the time it awards a grant approving a new participant
slot, rather than at time of enrollment.11

Nevertheless, the Corporation must report the amount of its Antideficiency
Act violation based on the legal requirement in place at the time the
violation occurred. According to the report by the Corporation's OIG, and
conceded by the Corporation, the Corporation's violation

7The Antideficiency Act requires that if an officer or employee of the
United States government violates the act, the agency head "shall report
immediately to the President and Congress all relevant facts and a
statement of actions taken." 31 U.S.C. S:1351. OMB Circular A-11 instructs
agencies to submit the transmittal letter and report from the agency head
to the President through OMB. Circular A-11 S: 145.7.

8B-300480.2, June 6, 2003.

9Pub. L. No. 108-45, 117 Stat. 844 (2003).

10Id. at S: 2(b)(1)(B), 117 Stat. at 844.

11Id. at S: 2(b)(A)(ii), 117 Stat. at 844.

Appendix II: The Corporation's Antideficiency Act Violation

occurred beginning in fiscal year 2000, before the Corporation obtained
legal authority to alter its obligation practices. Had the Corporation
reported its violation at the time it occurred, the Antideficiency Act
would have required it to report a violation calculated in consideration
of the cost of new participant slots approved at the time the Corporation
awarded new grants, and not based on an estimate of what these
participants would cost the Corporation in the future. The Corporation
should calculate its Antideficiency Act violation for purposes of its
report to the President and Congress based on the requirement in place at
the time the Corporation incurred the overobligations.

The Antideficiency Act requires an agency to report all relevant facts and
a

statement of actions taken.12 Accordingly, an agency, among other things,
must inform the President and Congress if a violation occurred and in what
amount, and request from the Congress, if needed, a deficiency
appropriation. Even though an agency may cure a violation, it is still
required to report the violation to the President and Congress. Because
the Corporation's legal requirement for recording obligations differs
today from the requirement that was in place when this violation occurred,
the Corporation, in fact, may not need additional appropriations to cure
the violation. Regardless, the Corporation should report the actual amount
of the violation, but advise Congress of the changed circumstances. We
have not assessed and do not address whether the Corporation will need
additional funds to meet its current potential liabilities. To the extent
that the Corporation identifies a need for additional appropriations as a
result of its Antideficiency Act violation, the Corporation should include
that request in its Antideficiency Act report.

1231 U.S.C. S:1351.

Appendix III: Discrepancies between Trust Data and Participant Documentation
That Could Affect the Amount Owed by the Trust

Table 2: Description of Discrepancies for AmeriCorps State and National
Cases

State, national participants Description of discrepancy (Trust data as of
July 25, case number 2003)

1 	Trust data show participant still serving. WBRS report provided in lieu
of exit form indicates member was to complete service on 4-6-03.

2 	Trust data show participant completed term and earned full award. Award
eligibility status was left blank on exit form.

3 	Trust data show participant still serving. Documentation provided shows
participant completed service and earned award.

4 	Trust data show participant still serving. Enrollment form shows
participant signed up for summer term on 8-15-02 with expected completion
date of 8-14-03.

5 	Trust data show participant still serving. Enrollment form shows
participant signed up for summer term on 8-15-01 with expected completion
date of 8-14-02.

6 	Trust data show participant still serving. Enrollment form shows
participant signed up for summer term on 8-15-02 with expected completion
date of 8-14-03.

                             Source: GAO analysis.

Appendix III: Discrepancies between Trust Data and Participant
Documentation That Could Affect the Amount Owed by the Trust

Table 3: Description of Discrepancies for AmeriCorps VISTA cases

VISTA participants
case number Description of discrepancy (Trust data as of July 25, 2003)

Trust data show participant still serving. Documentation shows participant
exited on 3-18-02 as an early termination and was not eligible for an
award.

Trust data show participant still serving. Exit form shows participant
completed service as scheduled on 8-24-02 and is eligible for a full
award.

Trust data show participant still serving. Documentation shows participant
resigned on 3-21-03 and is not eligible for an award.

Trust data show participant still serving. Documentation shows participant
resigned on 4-30-01 and is not eligible for an award.

Trust data show participant still serving. Documentation shows participant
exited on 2-28-01.

Trust data show participant served 305 days with completion date of
10-9-00. Exit form shows completion date of 12-9-00. (Enrolled 12-10-99.)

Trust data show participant still serving. Exit form shows participant
exited early, 1-13-03, and is not eligible for award.

Trust data show participant still serving. Documentation shows enrollment
period ended 2-4-03 and on 2-19-03, participant changed benefit to cash
stipend.

Trust data show participant completed as scheduled and is eligible for
award. Exit form shows participant not eligible for an award because cash
stipend was chosen.

Trust data show participant still serving. Documentation shows participant
changed benefit to cash stipend before completing term.

Trust data show participant still serving. Documentation shows participant
changed benefit to cash stipend before completing term.

Source: GAO analysis.

Appendix IV: The Service Award Liability Model

The Service Award Liability (SAL) model used SPAN data on the actual
behavior of past and current AmeriCorps participants as the basis for
assumptions of future participant behavior. These data included the
proportion of participants who earned awards, the percentage of earned
awards used, the period when awards were used, and the size of the average
award. Also included in the calculations were past and anticipated
appropriations, net of rescissions, as well as the actual and expected
interest earnings of the Trust balance in order to arrive at the estimates
of the funding needed for future participants.1 The model used the
portfolio of the Trust's investments-the proportion held as short- and
mediumterm treasury securities-to calculate a discount rate, which in turn
is used to convert future funding needs into a net present value.2
Corporation officials would then adjust the resulting estimate to account
for any accumulated funds in the Trust. Figure 5 shows how the SAL model
works.

1Trust funds are held in Treasury securities.

2Net present value refers to the amount required today to provide a stream
of benefits over a number of years. In the case of AmeriCorps, the period
of eligibility is about 9 years from the start of the program year. The
Corporation uses the weighted average interest earnings of the Trust's
portfolio as its discount rate.

Appendix IV: The Service Award Liability Model

                            Figure 6: The SAL Model

Enrollment at actual
Earning rate
Usage rate at actual
Actual average award amounts

Source: Corporation officials and GAO analysis.

Note: Shaded boxes represent data used by the SAL model.

            Estimate of the future probable expenditure of the Trust

Page 45 GAO-04-225 Management of AmeriCorps and the National Service Trust

Page 46 GAO-04-225 Management of AmeriCorps and the National Service Trust

Page 47 GAO-04-225 Management of AmeriCorps and the National Service Trust

Page 48 GAO-04-225 Management of AmeriCorps and the National Service Trust

Page 49 GAO-04-225 Management of AmeriCorps and the National Service Trust

Page 50 GAO-04-225 Management of AmeriCorps and the National Service Trust

Appendix VI: GAO Contacts and Acknowledgments

GAO Contacts

  Staff Acknowledgments

(130245)

Carolyn M. Taylor (202) 512-2974 or [email protected] Anthony DeFrank (202)
512-4377 or [email protected]

In addition to those named above, the following individuals made important
contributions to this report: Joel Marus, Susan Higgins, Elizabeth
Lessmann, Patrick diBattista, Hannah Laufe, Thomas Armstrong, James Rebbe,
Julie Phillips, LuAnne Moy, Bob Deroy, Jennifer Popovic, and Avrum Ashery.

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