Saturday, July 20, 2024

Louisiana audit finds lack of oversight in state Department of Education that led to a $74k theft

by BIZ Magazine

By Victor Skinner | The Center Square contributor

A lack of oversight allowed a Louisiana Department of Education employee to swindle more than $74,000 from a federal grant program in 2021, one of several issues highlighted in a recent report from the Louisiana Legislative Auditor.

Louisiana Legislative Auditor Mike Waguespack issued results from an audit of the Louisiana Department of Education in late June that detailed the misappropriation of $74,250 in funds from the Child Care Assistance Program, as well as reporting issues with multiple federal programs.

“DOE launched an investigation on March 29, 2021, when personnel became aware that an employee manipulated data in the grant tracking and payment systems for the Child Care Assistance Program. As a result of the investigation, DOE identified $74,250 in alleged fraudulent payments,” auditors wrote.

“The misappropriation of funds occurred because DOE did not have adequate controls in place to prevent the employee from manipulating data used to process provider payments and from changing provider banking information in the payment system.”

An employee tasked with certifying child care providers in the program is accused of manipulating the information and submitting and receiving payment for four allegedly fraudulent grant applications, according to the report.

The education department reported the issue to state and federal officials in April 2021, and the employee was fired the same month. In June 2021, the employee was arrested and charged with multiple crimes including theft, computer fraud, bank fraud, money laundering, filing false public records, and malfeasance in office.

The DOE repaid the stolen money to the U.S. Department of Health and Human Services in July 2021.

Auditors also found the DOE incorrectly reported more than $70 million in expenditures for the Child and Adult Care Food Program as expenditures for the National School Lunch Program.

“This caused amounts provided to non-state subrecipients to be understated for CACFP and overstated for NSLP by $70,684,713,” the report reads. “DOE management indicated that this occurred because the incorrect assistance listing number was entered for the CACFP grant when it was initially set up in the accounting system.”

Auditors uncovered issues with reporting requirements for Title I grants and Education Stabilization Fund programs, including 554 sub-awards not entered into the reporting system totaling more than $913 million. Other reporting issues with those programs involved unreported sub-awards, incorrect dates, late reporting, and duplicated reporting of more than $18 million in sub-awards, according to the audit report.

“DOE management became aware of the duplicated sub-awards and made attempts to correct the issue four months after the report was submitted, but it failed to submit the revised report,” auditors wrote.

A final finding in the audit showed the DOE did not properly certify tuition and fee information for the Student Scholarships for Educational Excellence Program before making $2.6 million in payments to participating non-public schools to cover tuition increases.

The LLA offered several recommendations for rectifying the issues and improving internal controls, and State Superintendent of Education Cade Brumley responded with a plan to correct the issues in a letter to the LLA in May.

Brumley explained in regards to the misappropriated funds that the person responsible was a manager of a team that validated providers, and they overrode internal controls to reopen a child care facility closed in 1997 to funnel four grants of $18,562.50 to a specific bank account.

“In this instance, the internal controls did, in fact, identify the issue,” Brumley wrote. “LDOE was able to act quickly and ensured corrective action was taken.”

DOE has already implemented changes to segregate duties and strengthen the review process, he wrote.

A full copy of the audit and Brumley’s response is available on the LLA website.

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