View audit

The Department of Education (DOE) has violated the requirements of the Reading First program by failing to aggressively seek out and fund the most deserving schools, according to a new audit from New York City Comptroller William C. Thompson, Jr.

“Merely 16 of the 64 public elementary schools – 25 percent – that received Reading First funds in FY 2008 were among the most deserving schools,” Thompson said. “Further, the Education Department inexplicably funded 17 public elementary schools in which the majority of students met or exceeded reading standards.”

The revealing audit – available at www.comptroller.nyc.gov – found that Reading First expenditures were fundamentally flawed because they were not allocated to the most deserving schools. During FY 2008, DOE received $34.4 million in Reading First funds from New York State and expended these funds on 118 elementary schools – 64 public and 54 non-public.

“In its response to our audit, the DOE noted that most of our suggestions were ‘obvious,’ which begs the question as to why they have not been followed,” Thompson said. “Reading First was designed to provide critical reading skills to our most vulnerable young people and the mismanagement and misuse of these funds is totally inexcusable.”

Thompson’s auditors found other significant flaws in the DOE’s management of the Reading First program. Specifically:

• DOE personnel did not obtain, review, and maintain adequate supporting documentation for $11.6 of $14.9 million—nearly 78 percent—of FY 2008 Reading First OTPS (Other Than Personnel Services) expenses.
  
• The DOE spent $3.9 million in FY 2008—and at least $34.4 million in total– on iREADfirst, an Internet website that was difficult or impossible to access and ultimately shut down.
  
• Reading First personnel were not properly qualified.

In July 2009, Thompson released two audits that revealed DOE’s failures to accurately track graduation rates and monitor standardized testing. And last month, a third audit demonstrated that DOE failed to monitor the use of State funds provided to reduce early grade class size.

“Yet again, we found a pattern of mismanagement and misuse of funds by the Education Department, and sadly, our findings were met with a cavalier attitude,” Thompson said.

Reading First, created under the federal No Child Left Behind Act, was established to ensure that every student could read at or above grade level by the end of the third grade and was intended to serve poorly-performing, low-income students. Accordingly, federal and State guidelines mandate that Reading First funds must go to public schools with the highest percentages of students reading below grade level and the highest poverty levels, based on the most current available data, as well as on their neighboring non-public elementary schools.

“Basic literacy is fundamental to the mission of education,” Thompson said. “Good reading skills are not only essential for the success of our young people as they move through the educational system, but for their later success as they enter the world of work. Because our children are the future of our city, this is a matter of some urgency for the economic health of New York.”

Thompson’s audit charged that since the second Reading First grant started with the 2006-2007 school year, the DOE should have identified and funded those public elementary schools with the highest percentages of students reading below grade level and poverty levels in the 2005-2006 school year. Instead, DOE first funded 38 public elementary schools that previously participated in Reading First. These schools received funds under the initial Reading First grant and were selected based on data for the 2002-2003 school year.

Thompson’s audit also found that DOE failed to properly identify and fund non-public elementary schools in accordance with federal and State guidelines. Similar to its public school selection, DOE first funded 26 non-public elementary schools that previously participated in the Reading First program. DOE then funded an additional 28 non-public schools based on the erroneous distribution of Reading First funds to public elementary schools.

“As the public elementary school selection itself was erroneous, the Department may not have funded the most deserving non-public schools,” Thompson said.

Furthermore, Thompson’s audit revealed that DOE personnel did not adequately monitor Reading First grant expenditures. During the process, auditors could not obtain adequate supporting documentation for more than 60 percent – or $9.5 million of $14.9 million of FY 2008 Reading First OTPS expenses.

“By failing to monitor grant expenditures, the Education Department is not ensuring that federal and State grant money is used only for its intended purpose and populations in accordance with all guidelines,” Thompson said.

Additionally, Thompson’s examination found that $3.9 million was used to support an Internet website called iREADfirst, which was difficult or impossible for users to access. In total, DOE spent at least five years and $34.4 million on this website, which was ultimately shut down on June 30, 2009 due to its impracticality and a lack of funding.

“Before sinking close to $35 million—25 percent of Reading First funds received for FYs 2005-2009—of vital literacy funding into this website, the Department should have made sure it was properly developed and, ultimately, usable,” Thompson said.

Finally, Thompson’s audit charged that Reading First program personnel were not properly qualified because they did not have reading licenses as required by No Child Left Behind Federal Teacher Quality Requirements, the New York State sub-grant application, and the DOE. A sample of 20 program personnel resulted in the following findings:

• Five of seven Literacy Coaches lacked a reading license.
• One of two Regional Coordinators lacked a reading license.
• None of the 11 teachers were highly qualified – certified to teach in the subject area – as defined by No Child Left Behind.

“Reading First was designed to provide critical reading skills to our most vulnerable young people,” Thompson said. “That I would have to remind the Department to employ properly qualified people to implement such a program is truly shameful and a bitter waste of precious education dollars designed to address long-term achievement disparities in our city.”

He added, “Needless to say, I hope that our ‘obvious’ recommendations are followed in the future.”

Reading First will end on June 30, 2010, since its federal statute was not renewed and Congress discontinued funding for the program. However, Thompson recommends that DOE generally should:

• Expend federal and State grant money only for its intended purpose and populations, and in accordance with federal and State guidelines.
  
• Monitor grant expenditures and ensure that they are reasonable, appropriate, and comply with federal and State guidelines.
  
• Maintain adequate supporting documentation – including bills, invoices, and receiving reports – for all federal and State grant expenditures.
  
• Require employees who authorize payments to compare receiving reports to invoices prior to rendering payments to vendors.
  
• Ensure that Internet portals and Web sites are properly developed, implemented, and functional.
  
• Employ only properly qualified pedagogical employees.
  

Additional news available at www.comptroller.nyc.gov
You can sign up for news alerts at the Comptroller’s Twitter site at http://twitter.com/ComptrollerNYC/
New York City Comptroller’s Office press@comptroller.nyc.gov / Main: (212) 669-3747 / Fax: (212) 669-8879