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FOR RELEASE:
May 23, 2001 |
CONTACT: Lindsey Kozberg
(202) 401-3026 |
In a letter to several members of Congress regarding mismanagement and fraud matters involving Education Department funds during the late 1990s and 2000, U.S. Secretary of Education Rod Paige today set forth a current tally of funds that have been recovered and summarized efforts underway to recover additional funds.
In the letter to members of Congress who have demonstrated an interest in the issue, Paige described the management initiative he launched recently in order to address persistent management and financial issues at the department. "Our job is straightforward, " Paige said, "fix the problems and protect the taxpayers' money."
The Education Department participates in approximately half a billion financial transactions annually and makes payments in the amount of approximately $63 billion each year to a wide range of government agencies, private and public organizations, colleges, universities and school campuses, and individuals.
The Education Department Inspector General has testified, and news reports have indicated, that $450 million was lost due to mismanagement, fraud or theft during the period from 1998 to 2000. Paige used the letter to explain that dollar figure significantly overstates the magnitude of the loss to the department. "I want to clarify at the outset that the $450 million figure does not represent funds lost by the Department and is not a proper measure of the Department's financial management problems," Paige said.
Below is a summary of the recovery effort: $250 million in duplicate payments by the department have been recovered in their entirety at no financial loss to the taxpayer. $100 million in funds illegally or improperly obtained by department grantees and others are or have been the subject of recovery efforts that the department has turned over to the U.S. Department of Justice. To date, this effort has resulted in recovery of approximately $40 million, and the department continues to work aggressively with the U.S. Department of Justice to pursue recovery of the remaining funds. $100 million in funds have been identified as misspent through routine financial audits of grantees, contractors, and other fund recipients. Approximately $3 million of the funds spent contrary to the terms and conditions of a grant award or by recipients unable to provide adequate documentation have been recovered. The department holds promissory notes from other fund recipients that are expected to yield an additional $53 million. Most of the remaining $44 million may not be recoverable due to debtor proceedings or legal proceedings.
Paige noted that $200 million of the above-described items represent losses due to the actions of recipients of department funds such as wrongdoing, failure to adhere to contract or grant terms, or lack of documentation by recipients, and reiterated that he will continue in his efforts to address financial and management deficiencies within the department and restore public confidence in the department and its ability to improve the quality of the American education system. "The American people and the Congress have every right to expect effective stewardship of taxpayer funds by the department," Paige said. "Rest assured, it is my mission to see that taxpayers' money is protected and spent on educating children."
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Last Modified: 08/23/2003
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