GAO Questions How Minority-Serving Colleges Spent Federal Funds

May 27, 2010

The U.S. Government Accountability Office questioned the uses of federal grant funds at four of the seven minority-serving institutions it examined last year, the agency says in a new report. That includes more than $105,000 that was spent by Morgan State University in Baltimore, identified by a U.S. Department of Education official.

The GAO charges that officials at Morgan State used nearly $80,000 to take students in a leadership program to resorts and amusement parks, more than $6,000 for office furniture, and $4,578 for an airplane global-positioning system, "even though the school did not own an airplane," according to the report, "Low-Income and Minority-Serving Institutions: Sustained Attention Needed to Improve Education's Oversight of Grant Programs."

In addition, the U.S. Department of Education has not followed up on several recommendations over the past six years to better monitor federal grants awarded to minority-serving institutions, the report says.

Morgan State acknowledged that the smaller purchases were the result of a faculty member's poor judgment. But the university defends the travel expenses for the students, saying the destinations were not resorts but camping trips and other outdoor experiences meant to challenge the young men who were participating.

The GAO, which is the investigative arm of Congress, presented the report as testimony to Congress on the department's oversight of institutions that receive such grants. The report was released on Thursday at a hearing of the U.S. House of Representatives Subcommittee on Higher Education, Lifelong Learning, and Competitiveness.

Robert M. Shireman, deputy undersecretary of education, told committee members that the department was working to improve electronic monitoring of the federal grants given to minority-serving institutions and conducting more visits to check on compliance at campuses that receive the money.

Late Fees and T-Shirts

For its study, the GAO randomly selected seven minority-serving institutions that received grants from Title III and Title V of the Higher Education Act--programs meant to help colleges that serve a high proportion of minorities, such as historically black colleges, American Indian tribal colleges, and Hispanic-serving institutions.

The institutions received a total of nearly $1.9-million in such grants during the period studied, the 2006 fiscal year.

In reviewing how the colleges spent their grants, however, the GAO found that nearly $143,000 was used for questionable purposes, such as $2,127 that Wiley College, in Texas, used to pay late fees; $4,800 that Riverside Community College, in California, spent on T-shirts for students; and $27,530 that the University of the Sacred Heart, in Puerto Rico, used to prepay subscription and contract services that would be delivered after the grant expired. (The specific institutions were not identified by the GAO, but Mr. Shireman named them in his written testimony to the House subcommittee).

The GAO said Morgan State, a historically black institution, misused nearly a quarter of the $427,180 in federal grants it had received in 2006.

"A review of grant disbursement records revealed spending with no clear link to the grant and instances in which accounting procedures were bypassed by the school's grant staff," the report said.

For example, the accountability office found that in purchasing the office furniture and GPS, a college official "split the payments on an institutionally issued purchase card to circumvent limits established by the institution. Officials at the institution ignored multiple warnings about mismanagement of this activity from external evaluators hired to review the grant," the GAO reported.

'Reasonable' Overhead

Clinton R. Coleman, director of public relations at Morgan State, said all of the expenses the agency identified were related to the Morgan MILE, a leadership program for male students that has been studied and emulated by other colleges across the country. He said the program has been successful at keeping the participants in college and graduating.

The university was reimbursed for both the furniture and the GPS, which Morgan MILE participants used to learn how to pilot the aircraft of a supporter, Mr. Coleman said.

The young men who were in the program were taken on trips for activities like white-water rafting and rock climbing, he said, similar to wilderness challenges in the Outward Bound program.

A statement from the National Association for Equal Opportunity in Higher Education, a nonprofit group representing the nation's historically and predominantly black colleges, said that the amount of misused money identified by the report was a small portion of the overall grant money spent by just four of 511 minority-serving institutions.

"The small amount of spending in question here ... could be considered as reasonable administration overhead charges that accounting adjustments would clarify," the association said in a written statement.

The problems at Morgan State, the report says, are also indicative of the Education Department's failure to properly monitor institutions that receive the federal grants. In fact, officials from the department had visited the university in 2006 and recommended it to the GAO as a "model grantee."

The GAO had advised stronger monitoring of these grant programs as early as 2004 and repeated its concerns in reports in both 2007 and 2009.

Mr. Shireman, who will be stepping down from his post this summer, acknowledged that the department had not fully met the GAO's standards, in part, because of a lack of staff and money. But he said the department had made "good progress" and would continue to work toward that goal in the coming months and years.

Members of Congress responding to the report emphasized that the misuse of federal grant money undermined President Obama's goal of having the nation achieve the highest proportion of college-educated adults in the world. Reaching that goal will require significant improvement in graduation rates by minority-serving institutions, said U.S. Rep. Rubén Hinojosa, Democrat of Texas.

"Our students deserve the very best, and our institutions must provide exemplary leadership in managing these resources effectively," Mr. Hinojosa said in his opening statement to the subcommittee.

"The institutions that receive funds through these programs serve some of the most vulnerable students and those students perhaps in most need of a postsecondary education," U.S. Rep. Brett Guthrie, Republican of Kentucky, said in his opening remarks at the hearing.

"As a result, it is important to ensure the institutions being attended by these students are using federal taxpayer dollars wisely," he said.