D.C. Schools' Accounting Is Termed 'High Risk'

U.S Education Officials Threaten Penalties

Officials say many of the system's problems predate Superintendent Clifford B. Janey's arrival. (Gerald Martineau - The Washington Post)

The U.S. Department of Education has declared the D.C. school system at "high risk" for mismanaging federal funds, a rarely used designation that puts the District in the same category as Puerto Rico, Guam, the U.S. Virgin Islands and American Samoa, officials said yesterday.

If the problems are not corrected, the school system could face -- as a last resort -- having an outside agency manage its $120 million in federal funds or could lose up to 1 percent of the money. Federal funds represent about 14 percent of the system's budget.

The likely scenario is that the Education Department would work more closely with D.C. school administrators to resolve the accounting deficiencies, federal officials said.

In an April 21 letter, Deputy Education Secretary Raymond Simon said federal dollars are jeopardized by numerous weaknesses in the school system, including lack of timely audits, poor monitoring of federally financed programs, lack of appropriate documentation for salaries and poor record-keeping on funding of charter schools.

"The systemic nature of these weaknesses in DCPS's grants management places the federal funds granted to DCPS at high risk of mismanagement, misuse or misallocation," Simon wrote in the letter addressed to Superintendent Clifford B. Janey. "DCPS cannot expect to improve the performance of its schools unless DCPS puts effective accountability systems in place."

Education Department officials blamed the deficiencies on long-standing weaknesses in fiscal management that predated Janey's administration. Janey took over as superintendent in fall 2004.

"It's been no secret we've had some serious challenges rehabilitating our infrastructure," Janey said yesterday. "We are encouraged by their offer to help us . . . to restore the kind of efficiency in our management system that has been languishing for some time."

Janey added that the system has recently introduced a new procurement process and will introduce a new automated human resources system next year that he said should improve efficiency.

The high-risk designation is expected to be discussed Friday at a hearing before the House Committee on Government Reform, chaired by Rep. Thomas M. Davis III (R-Va.).

"Davis will want to hear from the Education Department why this move can benefit D.C. students in the long run, and what exactly is at stake for and expected of DCPS," David Marin, staff director of the committee, said yesterday in an e-mail.

"He'll want to give Superintendent Janey a chance to discuss the strides he's made since coming on board, whether he thinks he can turn this high-risk lemon into high-performing lemonade, or whether he believes this step simply makes his job more difficult," Marin continued. "If this is what it takes to give more kids a brighter future, then [Davis] will be supportive."

Education Department officials said they would consider imposing financial penalties if no progress is made in a year on the accounting problems.

The D.C. school system is the only one on the U.S. mainland that has received the high-risk label, officials said.