[Audit Report on On-Call Substitute Teachers, Department of Education, Government of Guam]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 99-I-13

Title: Audit Report on On-Call Substitute Teachers, Department
       of Education, Government of Guam

Date:  October 21, 1998






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U.S. Department of the Interior
Office of Inspector General




AUDIT REPORT


ON-CALL SUBSTITUTE TEACHERS,
DEPARTMENT OF EDUCATION,
GOVERNMENT OF GUAM

REPORT NO. 99-I-13
OCTOBER 1998


MEMORANDUM


TO:               The Secretary

FROM:             Richard N. Reback
                  Acting Inspector General

SUBJECT SUMMARY:  Final Audit Report for Your Information
                  - "On-Call Substitute Teachers,
                  Department of Education,
                  Government of Guam" (No. 99-I-13)


Attached  for  your  information is a copy of the subject final
audit report.  The objective  of  the   audit  was to determine
whether Guam's Department of Education complied with applicable
laws   and   budgetary   and   accounting  procedures  in   its
administration  of  the  on-call substitute  teachers  program.
However, our review was limited  because the Department did not
have manual or automated records that were adequate to identify
and determine the total cost of the program.

We found that the Department paid substitute teachers for hours
not worked, for hours worked on nonschool  days,  and for hours
that  were not adequately supported by required documents.   In
addition,  the  Department  did  not  provide  its schools with
access  to  or  funding  for  an  adequate  number of qualified
substitute teachers.  As a result, during fiscal years 1996 and
1997, the Department paid the substitute teachers in our sample
$10,766 in excess payments (the total excess  payments  to  all
substitute  teachers may be as high as $316,000) and $10,915 in
unsupported payments  (the  total  unsupported  payments to all
substitute  teachers  may  be  as  high  as  $1  million).   In
addition,  schools  had  to  combine classes and/or use  school
aides  in  lieu  of  substitute  teachers   and  therefore  the
Department  could  not  ensure  that  public  school   students
received a quality education.

To  correct the conditions noted, we made four recommendations.
Specifically,  we recommended  that the Department of Education
(1) update payroll  procedures  for  substitute  teachers,  (2)
prepare  a  handbook detailing the responsibilities and payment
procedures for  substitute  teachers,  (3)  submit a request to
amend the Guam retirement law to allow retired  teachers  to be
hired as substitute teachers without financial penalty, and (4)
improve  the  process  of  estimating  the  costs of substitute
teachers to permit more accurate budgeting.

Although we requested a response to the report by September 18,
1998, the Board of Education had not provided  a response as of
September 30,  1998.   However,  based  on  the  Department  of
Education's   September  17,  1998,  submission  to  the   Guam
Legislature of  draft  legislation to allow retired teachers to
work  as  substitute teachers  without  financial  penalty,  we
considered  one recommendation resolved and implemented and the
three remaining recommendations unresolved.

If  you  have any  questions  concerning  this  matter,  please
contact  me  at  (202)  208-5745  or  Mr. Robert  J.  Williams,
Assistant Inspector General for Audits, at (202) 208-4252.

Attachment





                                           N-IN-GUA-004-97-B



Ms. Gloria Nelson
Chairperson
Interim Board of Education
Post Office Box DE
Hagatna, Guam 96932


Subject:  Audit Report  on On-Call Substitute
          Teachers, Department of Education,
          Government of Guam (No. 99-I-13)


Dear Ms. Nelson:

This report presents  the  results  of  our  review  of  the
Department   of   Education's   on-call  substitute  teacher
program.   The  objective  of our review  was  to  determine
whether the Department complied  with  applicable  laws  and
budgetary and accounting procedures in its administration of
its  on-call  substitute  teacher program.  The scope of the
audit included, for fiscal  years 1996 and 1997, a review of
the  number  and  costs  of substitute  teachers  in  public
schools; the procedures used  to  administer  the selection,
use, and payment of substitute teachers; and the  sources of
and controls over funding for substitute teachers.  However,
our audit scope was limited because the Department  did  not
have  manual  or  automated  records  that  were adequate to
identify  and  determine  the  total  cost  of  the  on-call
substitute teacher program.

We concluded that the Department needed to make improvements
in  its  on-call  substitute teacher program.  Specifically,
the  Department  paid  substitute  teachers  for  hours  not
worked, for hours  worked  on  nonschool days, and for hours
that were not adequately supported  by  required  documents.
In addition, the Department did not provide its schools with
access  to  or  funding  for an adequate number of qualified
substitute teachers.

These conditions occurred  because  the  Department  had not
provided  adequate  written  guidance  to  the  Department's
Payroll   Section   personnel,    school   timekeepers,  and
substitute  teachers to ensure that the substitute  teachers
were paid only  for  hours actually worked and in compliance
with the Department's directives.  In addition, the shortage
of substitute teachers  and funding occurred because (1) the
Government of Guam's retirement  law  effectively  prevented
retired teachers from working as substitute teachers despite
a  shortage  of  qualified  substitute teachers and (2)  the
Department, during fiscal years  1996  and  1997,   did  not
allocate  sufficient  funds to pay for all needed substitute
teachers  because  the  Department   did  not  consider  and
determine  all  of the costs associated  with  using  school
aides as substitute teachers.

As  a  result,  during  fiscal  years  1996  and  1997,  the
Department paid the substitute teachers in our sample excess
payments  of $10,766  (the  total  excess  payments  to  all
substitute   teachers  may  be  as  high  as  $316,000)  and
unsupported  payments  of  $10,915  (the  total  unsupported
payments to all  substitute  teachers  may  be as high as $1
million).   In addition, the Department's schools  sometimes
had to combine  classes  and/or  use school aides in lieu of
substitute  teachers and therefore  could  not  ensure  that
Guam's  public  school  students  received  the  quality  of
education   intended   by  Federal  law  and  the  Board  of
Education's goals.

To correct the conditions noted, we recommended that you, as
the  Chairperson of the Board  of  Education,  instruct  the
Director  of  the  Department  of Education to (1) prepare a
single  set  of written procedures  for  substitute  teacher
timekeeping and  payroll processing to be issued and used by
all school timekeepers  and  Payroll  Section personnel; (2)
prepare  and  distribute  a  Substitute  Teacher  Procedures
Handbook, which contains guidelines and responsibilities for
all substitute teachers, including the specific  limitations
and  rights  of substitute teachers relating to payment  for
services; and  (3)  perform a financial analysis to estimate
the total financial cost of using school aides as substitute
teachers and, based on  the  costs  identified,  adjust  the
annual   Departmentwide   and   individual   school   budget
allocations   to   ensure  adequate  funding  of  substitute
teachers.  Finally, we recommended that you submit a request
to the Guam Legislature  to  amend  Title  4,  Section  8121
("Suspension   of  Annuity  Payments"),  of  the  Guam  Code
Annotated  to exempt  retired  teachers  from  the  required
suspension of retirement benefits when they are employed  as
on-call substitute teachers.

Based  on  the Department of Education's September 17, 1998,
submission (Appendix 2)  to  the  Guam  Legislature of draft
legislation to allow retired teachers to  work as substitute
teachers    without    financial    penalty,   we   consider
Recommendation  B.1  resolved and implemented.  However,  we
transmitted a draft of  this  report  to you requesting your
comments by September 18, 1998, but we  had  not  received a
response  as  of September 30, 1998.  Therefore, this  final
report is being issued without the benefit of your comments,
and Recommendations  A.1,  A.2,  and B.2 are unresolved (see
Appendix 3).

The  Inspector  General  Act,  Public  Law  95-452,  Section
5(a)(3), as amended, requires semiannual  reporting  to  the
U.S.  Congress  on  all  audit  reports issued, the monetary
impact  of audit findings (Appendix  1),  actions  taken  to
implement  audit recommendations, and identification of each
significant  recommendation  on  which corrective action has
not been taken.

In view of the above, please provide a response, as required
by Public Law 97-357, to this report  by  November 25, 1998.
The  response  should  be  addressed  to  our Pacific  Field
Office, 415 Chalan San Antonio, Baltej Pavilion,  Suite 306,
Tamuning,  Guam  96911.   The  response  should provide  the
information requested in Appendix 2.

We appreciate the assistance of management and staff of the
Department of Education in the conduct of our audit.


                                    Sincerely,



                                    Richard N. Reback
                                    Acting Inspector General

cc:  Director, Department of Education
     Governor of Guam





CONTENTS                                                     Page

INTRODUCTION................................................... 1

    BACKGROUND................................................. 1
    OBJECTIVE AND SCOPE........................................ 2
    PRIOR AUDIT COVERAGE....................................... 3

FINDINGS AND RECOMMENDATIONS................................... 4

    A.  PAYMENTS TO SUBSTITUTE TEACHERS........................ 4
    B.  ACCESS TO AND FUNDING FOR SUBSTITUTE TEACHERS.......... 7

APPENDICES

    1.  CLASSIFICATION OF MONETARY AMOUNTS.................... 10
    2.  RESPONSE TO DRAFT REPORT 11
    3.  STATUS OF AUDIT REPORT RECOMMENDATIONS................ 15


INTRODUCTION

BACKGROUND

The  original (1950) version of the Organic Act of  Guam
(Title 48, Section 1421g(b), of the U.S. Code Annotated)
stated,   "The  Governor  [of  Guam]  shall  provide  an
adequate public  educational system of Guam, and to that
end  shall  establish,   maintain,  and  operate  public
schools according to the laws of Guam."  On November 19,
1993, Guam Public Law 22-42  was  enacted  to repeal and
enact  a new version of Title 17, Section 3101,  of  the
Guam Code Annotated, which established the Department of
Education  within  the Government of Guam.  Section 3102
of the new version of  Title  17 states, "The Department
[of  Education]  shall  be  administered   through   the
Territorial  Board of Education . . . which shall be the
governing and  policy-making  body  of  the Department."
Further,  Section  3102(a)  states that the  Territorial
Board  will  hire  a  Director and  Deputy  Director  of
Education.

Prior to April 28, 1997, Education's primary funding was
provided  by  appropriations   from  the  General  Fund.
However,  on  April  28,  1997,  Guam  Public  Law 24-17
created  the  School  Operations Fund  and  changed  the
Department's primary source of funding from General Fund
appropriations to the Gross  Receipts  Tax.   Under this
law,  88  percent  of  the total monthly collections  of
gross  receipts  taxes are  to  be  transferred  to  the
Department of Education.   Further, effective on May 21,
1997, Guam Public Law 24-34 amended Title 11 of the Guam
Code Annotated by adding Section 26208, which designated
the Director of Education as  the  official  responsible
for receiving, accounting for, and disbursing all monies
in the School Operations Fund.

On February 27, 1998, Guam Public Law 24-142 was enacted
to  divide  the  Board  of  Education  into four elected
District  Boards  of  Education,  each with  a  District
Superintendent.  In addition, a restructured  Department
of   Education,  with  the  Director  appointed  by  the
Governor,   was  created  to  provide  guidance  to  and
coordinate the activities of the districts and to "serve
as the state  educational agency for purposes of Federal
statutes, policies,  grants,  programs and regulations."
This law also provided for the  existing school board to
serve on an interim basis for a 1-year transition period
and for the election, in November  1998,  of the members
of the four new District Boards of Education.

During fiscal year 1997, the Department of Education had
total  revenues  of $168.8 million ($152.6 million  from
local sources and  $16.2  million  from Federal sources)
and total expenditures of $167.2 million ($150.6 million
from  local  funds  and  $16.6 million[1]  from  Federal
funds).  During the same fiscal year, the Department had
3,792 employees and administered  36 schools  that had a
total enrollment of 32,923 students.

During  fiscal  years  1996  and  1997,  the  Department
employed  about  400 individuals each year as substitute
teachers for regular elementary, middle, and high school
classes; for special  education  classes;  for  Language
Other  Than  English  (LOTE)  classes; and as one-to-one
aides  for disabled children attending  public  schools.
The Department's  Personnel  Services  Division provided
screening   of   applicants  (substitute  teachers   are
required to be high  school  graduates and obtain police
clearances)  and  issued  written  certificates  to  all
substitute teachers authorized  to  work  in  the public
schools.   However,  because of the transient nature  of
the jobs and the individuals  who  worked  as substitute
teachers, the Department did not budget positions  for a
specific  number  of  or school locations for substitute
teachers.  The Department considered substitute teachers
as temporary employees  who generally were paid only for
the hours actually worked.

During   fiscal   year  1995,   while   the   Department
reorganized the on-call  substitute teacher program, the
Department's  central  office   managed  the  substitute
teacher program budget.[2]  However,  for  fiscal  years
1996  and  1997,  the  Department  emphasized site-based
management and in each year allocated  $1.68 million for
the substitute teacher program among the  35 schools.[3]
Each school was delegated responsibility for  the  daily
management  of  its  share  of  the  substitute  teacher
budget.    According  to  Departmental  officials,  when
schools  ran  out  of  funds  allocated  for  substitute
teachers,   additional   funds  were  allocated  by  the
Department   to   cover   the   costs.    Although   the
Department's accounting system could  not  provide exact
amounts, we found that the Department expended  at least
$1.9  million  in  fiscal  year  1996  and at least $2.3
million  in  fiscal  year  1997  for on-call  substitute
teachers.

OBJECTIVE AND SCOPE

The objective of our review was to determine whether the
Department  of Education complied with  applicable  laws
and  budgetary   and   accounting   procedures   in  its
administration   of   the  on-call  substitute  teachers
program.  The scope of  the  audit  included, for fiscal
years 1996 and 1997, a review of the  number and cost of
substitute   teachers   in   the  public  schools;   the
procedures used to administer  the  selection,  use, and
payment  of  substitute teachers; and the source of  and
controls over funding for substitute teachers.  However,
our review was  limited  because  the Department did not
have manual or automated records that  were  adequate to
identify  and  determine  the  total cost of the on-call
substitute teacher program.  For example, the Department
was not able to provide, nor were  we  able  to  develop
using  school and payroll records, complete listings  of
and the  costs related to substitute teachers who worked
during specified  pay  periods  at the schools reviewed.
We visited the Department of Education,  the  Department
of  Administration,  the Bureau of Budget and Management
Research, and 10 public schools (5 elementary, 3 middle,
and 2 high schools) to  interview  officials  and review
records  pertaining  to  the  on-call substitute teacher
program.

Our review was made in accordance  with  the "Government
Auditing  Standards," issued by the Comptroller  General
of the United  States.   Accordingly,  we  included such
tests of records and other auditing procedures that were
considered necessary under the circumstances.

As  part  of  the  audit,  we  evaluated  the system  of
internal   controls  related  to  the  operational   and
financial management  of  the on-call substitute teacher
program to the extent that  we  considered  necessary to
accomplish the audit objective.  We identified  internal
control   weaknesses   in   the  areas  of  payments  to
substitute  teachers  and the budgeting  for  substitute
teachers,  which  are  discussed  in  the  Findings  and
Recommendations   section    of    this   report.    Our
recommendations,  if  implemented,  should  improve  the
internal controls in these areas.

PRIOR AUDIT COVERAGE

During  the  past  5  years,  neither the  U.S.  General
Accounting Office nor the Office  of  Inspector  General
has  issued  any audit reports concerning the Department
of  Education's   on-call  substitute  teacher  program.
However, an independent  public  accounting  firm issued
single  audit  reports  on Government of Guam operations
for fiscal years 1995 and  1996, which included findings
related  to  the  on-call  substitute  teacher  program.
Specifically, the 1995 single  audit  report stated that
the Department of Education (1) did not  provide Federal
grantor  agencies  with  the required estimates  of  the
number of disabled children  and the personnel needed to
educate  them, (2) did not provide  all  requested  time
sheets and  related payroll records to the auditors, and
(3) did not properly  authorize  payroll records.  These
findings were still unresolved at the time of the single
audit  for fiscal year 1996. Although  the  Department's
single audit  for  fiscal year 1997 (which began in July
1998) will again be  conducted as part of the Government
of Guam's single audit,  the  Department will be audited
as a component unit instead of  as  a line agency within
the Executive Branch.


**FOOTNOTES**

[1]:Expenditures from Federal funds exceeded  revenues  from
Federal  sources  because the Department had carryover funds
from fiscal year 1996  that  were  available  for use during
fiscal year 1997.

[2]:Although the Department's budget request  included  $3.5
million for on-call substitute teachers for fiscal year 1995,
Departmental personnel could  not provide information on the
actual amount of funding included in the fiscal year 1995 budget
for substitute teachers.

[3]:A 36th school was opened in August 1997, and its expenses
for substitute teachers are included in the $2.3 million expended
by the Department in fiscal year 1997.


FINDINGS AND RECOMMENDATIONS

A.  PAYMENTS TO SUBSTITUTE TEACHERS

The Department of Education paid substitute teachers for
hours not worked,  hours  worked  on nonschool days, and
hours  that  were not adequately supported  by  required
documents.  Title  17, Section 3102(g), of the Guam Code
Annotated  states,  "The   Board  [of  Education]  shall
establish  and approve rules  and  regulations  for  the
administration  of  the  Department which are consistent
with   recognized   sound   business    principles   and
management."  Sections 906.197(3) and (4)  of  the Board
of   Education   Policy   906.00   ("Certification   and
Appointments") establish pay guidelines, qualifications,
and  restrictions on the use of substitute teachers, and
Department   of  Education  Operating  Instructions  No.
OI: 94-47 identifies  the  official reporting procedures
required for processing payments to substitute teachers.
Despite  these  requirements,  the  Department  had  not
provided adequate  written  guidance to the Department's
Payroll  Section  personnel,   school  timekeepers,  and
substitute teachers to ensure that  substitute  teachers
were   paid  only  for  hours  actually  worked  and  in
compliance  with  the  Department's  directives.   As  a
result,   during   fiscal   years  1996  and  1997,  the
Department paid the substitute  teachers  in  our sample
excess payments of $10,766 (the total excess payments to
all substitute teachers may be as high as $316,000)  and
unsupported  payments  of $10,915 (the total unsupported
payments to all substitute teachers may be as high as $1
million).

According to Departmental  records,  the Department paid
382 substitute teachers $1.9 million in fiscal year 1996
and 444 substitute teachers $2.3 million  in fiscal year
1997.[4]   We  reviewed  the  Department's  records  for
payments  to substitute teachers  for  10  pay   periods
(5 in fiscal  year 1996 and 5 in fiscal year 1997) at 10
of 35 public schools  and  determined  that  for the pay
periods   and  schools  reviewed,  the  Department  paid
223 substitute  teachers  a  total  of  $140,620[5]  for
15,714.5  hours  of  work.   For  these  223  substitute
teachers, we traced the hours worked, as recorded in the
Biweekly   Attendance   Sheet   (the   official  payroll
document), to (1) the Daily Substitute Teachers  Report,
(2)  the  payroll  records  maintained  at  the  Payroll
Section,  (3)  the  personnel  records  at the Personnel
Services Division for 44 of the 223 substitute teachers,
and (4) the actual amounts the Department  paid  to each
substitute teacher reviewed.  The results of our reviews
are discussed in the paragraphs that follow.

**FOOTNOTES**

[4]:Manual   and   automated   records   maintained  by  the
Department's schools and Central office were not adequate to
provide a complete and accurate listing of  all  substitutes
who  worked  and the amounts paid to them.  For example,  we
verified, for  3 of the 10 schools tested, the accuracy of a
Department labor  distribution report that listed substitute
teachers and identified 20 substitutes who had worked at the
3 schools during the  pay  periods  tested  but who were not
listed in the labor distribution report.

[5]:The total does not include payments made  by  the Department
for the Government's share of Social Security Federal Insurance
Compensation Act tax  and  Guam  retirement  system
contributions.  Although  the  labor distribution report for
substitute teachers  included these amounts, the reports did not
include all substitute teachers.  Therefore,  we did not estimate
the total amount of Government contributions.
Excess Payments

Board of Education Policy 906.197(4) states, "Short-term
appointees and on-call substitutes . . . are entitled to
pay  only  for  hours worked, except that assignment for
five (5) consecutive  school days or more (to substitute
for the same teacher) shall  entitle  the  person to pay
for an eight-hour day beginning on the sixth day `if the
assignment    includes   lesson   preparation/grading.'"
Further, in memoranda  dated  September  14,  1995,  and
September 5, 1996, the Associate Superintendent, Special
Education, notified all school principals that the "Fair
Labor  Standards Act (FLSA) requires that an employee be
granted  a  minimum of a one-half hour lunch.  The hours
paid  are  exclusive   of  the  lunch  hour."   Finally,
principals at 2 of the 10  schools reviewed had prepared
substitute teacher handbooks,  and  one of the handbooks
provided  substitute  teachers  with  instructions   for
keeping   and   submitting  time  sheets,  stating  that
"substitute teachers  will  be  paid  for only the hours
they have worked during the day."

We  determined  that  the  Department   paid  substitute
teachers $10,766 (of the $140,620) for 1,171   hours  in
excess of hours authorized by substitute teacher payment
guidelines.   The  excess payments included payments for
lunch  periods,  8-hour   days   before  the  substitute
teachers qualified under the extended  work provision of
Board  of Education Policy 906.197(4), and  work  during
days when  children  were  not  present  because of such
activities as parent/teacher conferences.   The  Payroll
Section Supervisor told us that she "misunderstood"  the
guidelines  on extended substitute teaching.  The school
timekeepers at  the  10 schools reviewed stated that the
Payroll Section had instructed  them  to  pay substitute
teachers for 8 hours per day from the first  day  of  an
extended  teaching  assignment instead of from the sixth
day, as required by Departmental  policy.   According to
school  timekeepers, substitute teachers were  used  for
parent/teacher   conferences  when  they  filled  vacant
teaching  positions.   Although  we  believe  that  this
practice is  reasonable,  we  questioned  the payment of
$819  for  91 hours charged on nonteaching days  because
the written guidance provided by the Department does not
address this issue.  Based on the results of our limited
review of payments  to substitute teachers, we estimated
that  the  Department  could  have  overpaid  substitute
teachers as much as $132,700  in  fiscal  year  1996 and
$183,900 in fiscal year 1997.

Unsupported Payments

Department  of Education Operating Instructions No.  OI:
94-47 states,  "Principals shall:  complete the attached
Daily Substitute  Teacher  Report  for  every day that a
substitute  is  used;  and  submit it and the  attendant
information . . . to the Payroll  Section  at the end of
each  pay period."  The Daily Substitute Teacher  Report
form states,  "The teachers' leave form and substitutes'
time sheets must be attached to this form." In addition,
the report form requires that the payroll clerk sign the
document and the  school  administrator certify that the
report is correct.

We  reviewed  records  for five  pay  periods  at  three
schools  (one  elementary,  one  middle,  and  one  high
school)  and  determined   that   the   Department  paid
substitute  teachers  at  least $10,915 for  1,199 hours
without the documentation of  Daily  Substitute  Teacher
Reports to support that the substitute teachers actually
worked and replaced a particular teacher or performed an
authorized   teaching   assignment.   According  to  the
timekeepers  at  the  three   schools,   this  condition
occurred for reasons such as the following: (1) the aide
assigned  to  complete  the  forms "did not do  the  job
properly," (2) the alternate timekeeper   "didn't   make
the    proper    entries,"   and   (3)  the  responsible
individuals  "made  errors  in filling  out  the  forms"
through oversights.  Although  we  did  not quantify the
dollar impact for the other seven schools tested, we did
note similar problems at each of the other schools.  For
example, officials at one middle school could not locate
any records for the pay period ending October  14, 1995,
and  officials  at another middle school did not prepare
the Daily Substitute  Teacher  Reports.   Based  on  our
limited  review,  we  estimated  that the Department may
have  paid substitute teachers as much  as  $769,100  in
fiscal  year  1996  and  $230,500  in  fiscal  year 1997
without adequate support for the payments.

Recommendations

We  recommend  that  the  Chairperson  of  the  Board of
Education  instruct  the  Director of the Department  of
Education to:

1.  Update and consolidate  the  written procedures for
substitute teacher timekeeping and payroll processing to
be  issued  to  and used by all school  timekeepers  and
Payroll Section personnel.

2.   Prepare  and   distribute   a  Substitute  Teacher
Procedures  Handbook  which  contains   guidelines   and
responsibilities  for all substitute teachers, including
the  specific  limitations   and  rights  of  substitute
teachers relating to payment for services.

Board  of  Education Response and  Office  of  Inspector
General Reply

The Board of Education  did  not  respond to the draft
report. Therefore, Recommendations 1 and 2 are unresolved
(see Appendix 3).

B. ACCESS TO AND FUNDING FOR SUBSTITUTE TEACHERS

The Department of Education did not provide its schools
with access to or  funding for an adequate number of
qualified substitute teachers.  Title 48, Section
1421g(b), of the U.S. Code Annotated  states,
"The Government of Guam shall provide an adequate  public
educational system of Guam." In addition, the Board of
Education adopted, as one of its nine educational goals,
the goal of ensuring that every adult  on   Guam  possesses
the knowledge and skills necessary to  compete in a global
economy. The shortage of  substitute teachers  occurred,
at least in part, because   the   Government   of  Guam's
retirement  law effectively prevented retired  teachers
from working as substitute teachers despite a shortage of
qualified substitute teachers.  In addition, during fiscal
years 1996 and 1997, the Department did not allocate
funds to pay  for  a  sufficient  number  of  substitute
teachers because   it   did   not  consider  and  determine
the incremental costs necessary to hire additional
substitute teachers instead  of  using  school  aides in
lieu   of   substitute   teachers.   As  a  result,  the
Department's schools had to  combine some classes and/or
use  school  aides  in lieu of substitute  teachers  and
therefore could not ensure  that  Guam's  public  school
students  received the quality of education intended  by
Federal law and the Board of Education goals.

Obtaining Qualified Substitute Teachers

Title 4, Section  8121  ("Suspension  of  Annuity Payments")
, of the Guam Code Annotated states, "A retired member who
subsequently  becomes  an  employee  not ineligible  for
membership . . . shall upon becoming so  employed,  have
his  right  to  receive payment of his annuity suspended
for the duration  of  his  employment."  This section of
the  Code  also  provides  an  exemption   for   certain
categories  of  personnel employed (not temporarily)  as
(1) classroom teachers  when a critical need arises; (2)
Chamorro language teachers;  and (3) hospital personnel,
such as nurses.  However, the  section  does not provide
an  exemption for retired teachers temporarily  employed
as substitute  teachers.  According to school principals
and  Departmental   administrators,   retired  teachers,
although they would like to work as substitute teachers,
could not afford to lose their retirement benefits while
being  employed  as  substitute teachers.   Departmental
officials also stated  that  retired  teachers  had "far
more  to  offer  students"  (because  of  their teaching
experience) than most of the other substitute teachers.

Officials  at the 10 schools reviewed stated  that  they
often had a  shortage  of substitute teachers and had to
address the problem in different  ways, including having
the principal or assistant principal  teach  the classes
and combining some classes to provide adult supervision.
Officials at two of the three middle schools and at both
high  schools  reviewed told us that classes had  to  be
combined because  of  a shortage of substitute teachers.
For example, during our testing of the pay period ending
February 3, 1996, we noted  that at one high school, for
8 of the 10 school days during  the pay period, the lack
of substitute teachers necessitated  combining from 6 to
11  classes  per  day  in  the  school  cafeteria.    In
addition,  during  the  same pay period, one of the high
school  mathematics  classes   spent   1   week  in  the
cafeteria.   Departmental  administrators  stated   that
students  learn  very  little  in  such a situation when
compared with learning in a classroom  environment.   In
our  opinion,  public  school  students,  because of the
effects of the retirement law, did not have  the benefit
of  both  the  teaching  experience  and  the additional
number  of  substitute  teachers  who  would  have  been
available from the ranks of retired teachers.

Funding for Substitute Teachers

Title  17,  Section  3102(g), of the Guam Code Annotated
directs the Department  of  Education to establish rules
and  regulations  that  are consistent  with  recognized
sound business principles  and management.  In addition,
Section 906.197 of Department  of Education Board Policy
906.00 ("Certification and Appointments")  requires that
substitute teachers be high school graduates.   Further,
Department  of  Education  Special  Instruction No. 95-9
states, "School aides assigned to classrooms, except the
computer lab, are not to be used for  regular  classroom
substitute  purposes."   Finally,  the  school aide  job
descriptions  state,  and  our  review  of  school  aide
personnel  files confirmed, that school aides  were  not
required to  have  high  school  diplomas  to  be either
employed or promoted.

To  calculate  the  annual  budget allocation for fiscal
years  1996  and  1997 for substitute  teachers  and  to
distribute the funds  among  the  35 public schools, the
Department's central office used a  formula based on the
prior  year's expenditures for substitute  teachers  and
the percentage  of teacher absences.  However, according
to Departmental administrators,  the Department's budget
allocation for substitute teachers  did  not reflect the
schools'  use  of  school  aides as substitute  teachers
because information was not available on the incremental
costs necessary to hire an adequate number of substitute
teachers.  Based on our review,   we determined that the
schools  did not maintain records of  the  frequency  or
cost  of  using  school  aides  as  substitute  teachers
because the aides were detailed from other duties at the
same  schools.  Officials  at  all  10  of  the  schools
reviewed  stated  that they frequently had to use school
aides as substitute  teachers, and officials at 6 of the
10 schools specifically  cited a shortage of funding for
substitute teachers as the  reason why school aides were
used  in  lieu  of  substitute teachers.   According  to
Departmental officials, the Department, although funding
allocations  for  substitute   teachers  may  have  been
insufficient,    provided   schools   with    additional
substitute teacher  funding  as  needed  and  requested.
However,  for  the schools that used aides to substitute
teach, public school  students  did not have the benefit
of the teaching experience and training  provided by on-
call  substitute  teachers  and  may  not have  received
adequate instruction from the school aides  used in lieu
of substitute teachers.

Recommendations

We  recommend  that  the  Chairperson  of  the Board  of
Education:

1.  Submit a request to the Guam Legislature  to  amend
Title 4, Section 8121 ("Suspension of Annuity Payment"),
of  the  Guam  Code Annotated to exempt retired teachers
from the required  suspension  of retirement benefits if
they are employed as on-call substitute teachers.

2.   Instruct  the  Director  of  the   Department   of
Education  to  perform  a financial analysis to estimate
the  total  financial cost  of  using  school  aides  as
substitute teachers  and, based on the costs identified,
adjust the annual Departmentwide  and  individual school
budget  allocations for on-call substitute  teachers  to
ensure adequate funding of substitute teachers.

Board of  Education  Response  and  Office  of Inspector
General Reply

In  response  to Recommendation 1, the Department  of
Education's  legal counsel provided  us, by letter dated
September 18, 1998 (Appendix 2), a copy of draft
legislation which was submitted to the Chairman, Committee
on Education,Guam Legislature, on September 17, 1998.
The legislation would  amend Title 4, Section 8121, of the
Guam Code Annotated to allow retired teachers to  be hired
as substitute teachers without financial penalty.  Based on
the    draft    legislation   submitted,   we   consider
Recommendation 1 resolved and implemented.  However, the
Board of Education  did not respond to the draft report.
Therefore, Recommendation  2 is unresolved (see Appendix 3).



                                              APPENDIX 1


               CLASSIFICATION OF MONETARY AMOUNTS


                                            Funds  To Be
Put
                                 Finding            Area
To Better Use*

A. Payment of Substitute Teachers
Excess Payments $10,766
Unsupported Payments   10,915

Total $21,681


              *The amounts represent local funds.
                                              APPENDIX 2
                                            Page 1 of  4


              RESPONSE TO DRAFT REPORT
                                              APPENDIX 3


       STATUS OF AUDIT REPORT RECOMMENDATIONS

 -----------------------------------------------------------
                     Finding/Recommendation


Reference      Status                  Action Required
_________      ______                  _______________

A.1          Unresolved          Reconsider               the
                                 recommendation,  and provide
                                 a     response    indicating
                                 concurrence               or
                                 nonconcurrence.           If
                                 concurrence   is  indicated,
                                 provide  a  plan  of  action
                                 that identifies  the  target
                                 date  and  the  title of the
                                 official   responsible   for
                                 updating  and  consolidating
                                 the written  procedures  for
                                 substitute           teacher
                                 timekeeping    and   payroll
                                 processing which  are  to be
                                 issued  to  and  used by all
                                 school    timekeepers    and
                                 Payroll Section personnel.

A.2          Unresolved          Reconsider               the
                                 recommendation,  and provide
                                 a     response    indicating
                                 concurrence               or
                                 nonconcurrence.           If
                                 concurrence   is  indicated,
                                 provide  a plan  of  action
                                 that identifies  the  target
                                 date  and  the  title of the
                                 official   responsible   for
                                 preparing  and  distributing
                                 the    Substitute    Teacher
                                 Procedures  Handbook,  which
                                 contains    guidelines   and
                                 responsibilities   for   all
                                 substitute         teachers,
                                 including    the    specific
                                 limitations  and  rights  of
                                 substitute teachers relating
                                 to payment for services.

B.1         Implemented          No    further    action   is
                                 required.

B.2          Unresolved          Reconsider               the
                                 recommendation,  and provide
                                 a     response    indicating
                                 concurrence               or
                                 nonconcurrence.           If
                                 concurrence   is  indicated,
                                 provide  a  plan  of  action
                                 that identifies  the  target
                                 date  and  the  title of the
                                 official   responsible   for
                                 performing    a    financial
                                 analysis  to  estimate   the
                                 total  cost  of using school
                                 aides as substitute teachers
                                 and,  based  on   the  costs
                                 identified,   for  adjusting
                                 the   annual  Departmentwide
                                 and individual school budget
                                 allocations    for   on-call
                                 substitute    teachers    to
                                 ensure adequate  funding  of
                                 substitute teachers.
-------------------------------------------------------------




ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED

TO THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:



Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
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Calling:

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Outside the Continental United States


Caribbean Region

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Calling:
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U.S. Department of the Interior
Office of Inspector General
North Pacific Region
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Agana, Guam 96910


Calling:
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COMM 9-011-671-472-7279