The Office of the Virgin Islands Inspector General has issued the audit report of the Education Initiative Fund. The objectives of the audit were to determine whether the Department of Education: (1) accurately and timely disbursed the funds to the applicable schools; (2) monitored the schools’ accounting of the funds in accordance with applicable laws; and (3) expended funds and accounted for any undistributed and unused funds in accordance with the Code.
We found that while Education made some improvements since the V.I. Inspector General issued the 2011 audit report on the Fund, more improvement is needed in oversight to ensure that the Fund is adequately managed to meet the law’s requirements. Specifically, improvement is needed in (a) the consistent and complete application of the funding formula, (b) the timely disbursement of the schools’ Fund annual allotment, and (c) the appropriate accounting for and spending of the funds within the annual limits specified by the law.
Also, 13 years after the Office of the V.I. Inspector General recommended that Sections 3093 and 3100i of the law be merged to address ambiguous and contradictory statutes, both sections remain active.
We attribute these conditions to: (i) Education officials not always accurately calculating and timely disbursing the funds to schools; (iii) Education, in Fiscal Year 2021, not distributing funds to the territory’s schools, and (iii) Education officials not ensuring that schools adhere to the annual spending limit imposed on specific categories of expenses established by law, though generally identifying and holding schools accountable for individual unallowable expenses. In addition, many aspects of the law are outdated and have not been updated to address changing needs and inflationary measures. Also, although previously recommended and agreed to by the then Commissioner of Education that the law be merged, this was not accomplished.
As a result, (1) in Fiscal Year 2019, three St. Thomas/St John district schools received an advantage totaling $18,919 when Education officials inconsistently used year-end bank statements. Five other schools lost the ability to recoup a total of $16,762. This inconsistency caused the unequal treatment of the schools when determining the schools’ Fund allotment for the next year. (2) Also, because the Fund’s allocation formula was not consistently applied throughout all three phases to ensure fair distribution among the schools, in Fiscal Year 2019, two schools in the St. Thomas/St. John district did not receive a total of $4,590 because those schools were not compensated the extra $15 per student enrolled over 500. (3) The St. Croix district did not receive a total of $11,175 because step 3 of the formula, ensuring that both districts received equal funding, was either not effectuated or applied in Fiscal Years 2019 and 2020. (4) The funds were disbursed to schools as many as 27 months after the October 15th date set by law. (5) As of this report’s date, Education has not released as much as $1,350,000 of the 2021 annual school funding. (6) Schools exceeded the annual spending limit imposed on specific categories of expenses by $226,843. (7) There was at least $14,540 in unsupported expenses. (8) The schools’ monthly reports were not always completed according to Education’s reporting requirements. (9) For two years, $19,299 was expended from one school without accounting for those expenditures. (10) Education expended $5,195,162 in questionable costs from the Fund. (11) After 29 years since the law’s enactment, the law should be updated to account for changes in needs and the impact of inflation on administrative costs and the annual spending limits set on categories of expenses. Furthermore, the law’s merger and statutory updates are needed to remove the existing ambiguities and standing contradictions, thereby improving the Fund’s management. These findings highlight the need for improvement in oversight, reporting requirements, and updates to the law.
We made several recommendations to address the conditions and causes of the findings included in this report. Our recommendations addressed funding, expenditures, internal controls, and the law. To view the report, click here.