The chief responsibility of the Department of Education’s (ED) Office of the Inspector General (OIG) is to detect waste, fraud and abuse — intentional or not — within ED and the institutions under its purview. Its recently released 2022 Annual Plan provides a roadmap and points of emphasis regarding that mission in the new financial year.
Following nearly two years of institutions utilizing pandemic relief programs and implementing new — and frequently changing — reporting requirements, the OIG has a more important role than ever. While the OIG duties focus on more than just pandemic relief, the relief provided by Congress and ED is a significant component of the 2022 Annual Plan.
Here’s a breakdown of the key points to note for financial aid departments and professionals, as well as a brief analysis from McClintock & Associates:
Pandemic Relief Oversight
Following three rounds of Higher Education Emergency Relief Fund (HEERF) grants and a raft of rule changes and waivers surrounding Federal Student Aid (FSA), the OIG is intent on ensuring pandemic relief money is being spent within the limits set by ED and that institutions are keeping in compliance with Title IV rules.
This oversight includes:
- Evaluating FSA processes for waiving the return of Title IV funds because of the pandemic, canceling Direct Loans for students who withdrew because of the pandemic, and excluding subsidized loan usage and Federal Pell Grant lifetime usage for any payment period the student did not complete because of the pandemic.
- Determining whether selected schools complied with provisions in the CARES Act, federal regulations and ED guidance for waivers to R2T4 for students who withdrew because of the pandemic.
- Determining whether selected states designed and implemented awarding processes that ensured Governor’s Emergency Education Relief (GEER) funds were used to support institutions that were most significantly impacted by the pandemic or deemed essential for carrying out emergency educational services, as well as monitoring processes that ensure subgrantees were using the funds in accordance with applicable requirements. This work is continuing in Oklahoma, Missouri and Michigan’s education departments.
- Determining whether the Office of Postsecondary Education has an adequate process to ensure institutions use HEERF grants appropriately and meet performance standards, as well as determining whether selected institutions used their HEERF student and institutional portions for allowable and intended purposes.
Already, we are seeing OIG request explanations from institutions that were allocated more than $500,000 and who did not file a HEERF grant audit. In addition, OIG performed desk reviews related to the HEERF audit reports performed by independent auditors. We are yet to see much follow-up on HEERF findings, but increased oversight may occur as we move into subsequent HEERF audits.
Overall, we have yet to see any significant punitive measures taken by ED regarding CARES Act and ED relief provisions. However, we have noted audit findings in applying the relief provisions. As ED continues to increase staff and gain direction from the new administration, this could become a focus of attention.
Federal Student Aid Programs and Operations
Before the pandemic, OIG’s traditional work included oversight of ED’s FSA programs and program participants, and that work is ongoing with some new and continuing priorities for 2022.
- New Priorities — Proprietary School Oversight
- Determining FSA’s processes for overseeing proprietary school compliance with the 90/10 revenue and reporting requirements.
- Determining whether FSA’s oversight of its contractor’s acceptability review process ensures annual proprietary school audits meet applicable audit reporting requirements.
- Continuing Work
- Determining schools’ compliance with the requirements for using professional judgment to adjust students’ financial information. Selected schools have been issued reports or will be soon.
- Addressing emerging areas of heightened risk, stemming from referrals from program offices requesting review of certain institutions or hotlines with allegations of fraud, waste or abuse of federal funds. Objectives vary based on the nature of the concern.
- Work Required by Statute
- Overseeing and monitoring the independent public accounting firm contracted to provide an opinion on the fairness of FSA’s financial statements in all material respects.
- Assuring the quality and usefulness of the non-federal audit process and ensuring these audits meet requirements and are reliably effective in improving the integrity and effectiveness of ED programs.
With the negotiated rulemaking process in 2022 addressing the 90/10 rule, we are not surprised this is an area of focus for the OIG. Many institutions will move closer to the 90% threshold if additional federal funds are counted as part of the numerator. Therefore, ED and OIG may want to understand current 90/10 calculations to recognize how these rates may change when new 90/10 rules are potentially in effect in 2023.
We have seen OIG/ED perform a review in one case in which a significant number of professional judgement adjustments were processed. As noted above, this falls under the OIG’s category of “continuing work.” We assume the reviews that were specified in the 2022 Annual Plan began prior to the pandemic, as ED has since stated on multiple occasions that it will not apply increased use of professional judgment as a selection criterion for program reviews for the 2019-20, 2020-21 or 2021-22 award years ().
On to 2022
Simply the word “oversight” can trigger anxiety for government agencies and individual institutions alike, but when OIG is performing as it should, it helps create a more efficient and fairer environment. Nevertheless, the office’s emphasis on relatively new pandemic relief programs, coupled with its continuing work, may lead to a busier than normal year. For institutions that want to ensure they are using these funds correctly and meeting proper reporting requirements, schedule a time to chat with a member of the McClintock & Associates team.