WASHINGTON (AP) — Federally run schools for Native American children have misspent millions of dollars and in one case $1.7 million was illegally transferred to an offshore account, an apparent result of hacking, a government watchdog said Thursday in a report sharply criticizing fiscal oversight of the schools.
The Government Accountability Office said the financial monitoring of these schools is weak and that there is “little assurance” that federal funds will properly be used to provide students with needed instruction and other services — including special education.
The agency said the financial mismanagement will continue unless federal workers overseeing the spending are given written procedures to follow and more closely track schools when potential financial transgressions are flagged.
The Interior Department runs the Bureau of Indian Education, which oversees more than 180 schools for about 41,000 students primarily on reservations in some of the more remote and poverty-stricken places in America. The schools have a tainted legacy that stems from the 19th century when Native American children on reservations were taken far from their homes and sent to boarding schools. Today, the schools are among the nation’s lowest performing, and have struggled with issues such as shoddy facilities and recruiting quality teachers.
The GAO said external auditors identified $13.8 million in unallowable spending at 24 schools as of July 2014, but that there was “minimal” follow-up by federal managers with the schools that had “misused funds or did not adhere to program or legal requirements.”
Since 2011, the GAO said the number of administrators overseeing school expenditures decreased from 22 to 13 — due partly to budget cuts. One administrator interviewed by GAO described being unable to visit schools with “serious financial weaknesses,” including a school with an audit that found more than $1 million in questionable costs.
“High staff turnover and reductions in the number of education line office administrators as well as their lack of expertise and training have left them struggling to adequately monitor school expenses,” the GAO said.
In response, Kevin Washburn, the assistant secretary of Indian Affairs at the Interior Department said he agreed with nearly all the GAO’s recommendations and said the findings will be “beneficial.” He said the agency is restructuring in a way that would address many of the issues raised by the GAO.
“The department understands that providing quality administrative services to assist in the success of Indian youth in Indian Country is vital to their individual success and to the future of Indian country,” Washburn said.
The Obama administration is seeking to overhaul the schools, in part by streamlining cumbersome bureaucracy and turning the agency from an operator of schools into a school improvement organization. It also wants to turn more control of the schools over to tribes. Already, more than 120 of the schools are tribally controlled, while the others are run directly by the federal government.
The GAO report comes months after a government commission spelled out many of the schools’ problems and identified $125 million in unspent federal funds that have accumulated over time by 80 of the tribally controlled schools. It said the law allows them to accumulate the money and spend the interest generated as they choose, which provides an incentive for schools to not spend money as it was intended.
The GAO also addressed the issue of the unspent money. It said that federal officials told GAO that some tribes have a history of placing Interior and Education funds for these schools in savings accounts rather than providing intended services.
At one school, GAO said $1.7 million was illegally transferred to an off-shore account, an apparent result of “cybercrimes committed by computer hackers and/or other causes.” About $500,000 was recovered.
At the same school, an administrator reported that it had at least another $6 million in federal funds in a bank account. But as of June 2014, the federal agency overseeing it had not “yet determined how the tribe accrued that much in unspent federal funds,” the GAO said.
“The school’s single audit stated that its inadequate case management and risk assessment procedures contributed to the incident,” the GAO said.
The GAO did not identify the schools highlighted in its report.
Among the GAO’s other findings:
— One school accumulated over $900,000 in unspent funds intended for special education services for students with disabilities.
—One school went multiple years without submitting an audit, as required.
—One school used $1.2 million in funds to provide a no-interest loan to a local public school district, which was not permitted by law.
—One school had to adjust its financial statements by nearly $1.9 million after financial reports from three years were found to be unreliable.
Unlike traditional public schools, these schools get nearly all their money from the federal government. They received about $830 million in the 2014 budget year.
They are also more expensive to run, costing an average of at least $15,391 per pupil compared to $9,896 on average for a public school student, the GAO said. Among the reasons given for the difference was a higher concentration of students living in poverty and with special needs. The remoteness of the schools and high facilities maintenance costs because of the old age of the buildings were also given as reasons.
The GAO said the federal government needs more staff and better training of federal managers who oversee the schools’ spending.