Sloppy Bookkeeping, Errors, Plague School Stimulus Spending

John Mooney | November 8, 2010 | Education
DOE alerts school districts about monitoring results for more than $1.6 billion in federal funds

The 2009 federal stimulus money for schools is almost all spent by now in New Jersey, but it’s still drawing attention from state monitors and raising questions as to how it was spent.

Acting Education Commissioner Rochelle Hendricks last month sent an alert to districts on the findings that have arisen in the state’s monitoring of more than $1.6 billion in federal aid distributed to districts in 2009 – 2010.

The monitoring is ongoing, with the state so far releasing local reports on about half of the more than 80 districts being monitored, including most recently Newark. The selected districts represented about 60 percent of the overall stimulus funds disbursed.

Accounting Errors

And while there appeared few instances so far of any alleged wrongdoing, there were plenty of examples of sloppy bookkeeping and other accounting errors with funds distributed under the American Recovery and Reinvestment Act (ARRA), according to Hendricks’ alert.

For instance, one of the centerpieces of the ARRA money was for it to be used to retain school jobs, but Hendricks said nearly half of the districts failed to properly account for which specific jobs were saved.

“In 41 percent of the districts monitored, no backup was provided,” said the October 4 letter from Hendricks.

Other common shortcomings were centered on contracting with nonpublic schools, as well as failures to follow bidding requirements for the purchase of equipment and services. The federal grants’ requirements are more stringent than state regulations.

“Over 75 percent of the districts monitored were not competitively contracting per the Education Department General Administrative Regulations,” Hendricks wrote. “Items such as professional development and software purchases have been a major source of noncompliance.”

New Jersey is hardly alone in facing these questions, with the federal General Accounting Office in September releasing its own report raising questions about the capacity of all levels of government to adequately track the stimulus funds, from federal on down.

An Ongoing Issue

And it remains an ongoing issue, with more than $268 million in additional stimulus funds distributed to New Jersey schools this fall. That money comes with the professed aim to immediately save teaching and staff jobs, but many districts have said it will likely be used to plug budget holes for next year.

In New Jersey, the influx of federal money and all its conditions only puts an added burden on an already strained state Department of Education.

“We’re had hiring and staff freezes,” said Patrick McGuinn, an associate professor of political science at Drew University who has tracked spending under the federal Race to the Top grants. “The capacity of the DOE has actually decreased over the past several years as its responsibilities have increased dramatically.”

Yet McGuinn also pointed out the level of paperwork demanded of districts can also be confounding, especially those that require districts to parse out what jobs are saved by what funds.

“Imagine the accounting headaches for districts, even if there is a good faith effort,” he said. “Even if the state can force compliance, what you end up is people gaming the paperwork.”

The state does say in its local reports that it will follow up areas of noncompliance, and requires that the reports be discussed publicly at local school board meetings within 30 days of release.

But short of referring the most serious instances for further investigation, McGuinn said there are few consequences meted out from either the state or federal governments. “There is the capacity challenge, and then there’s the will issue,” he said.