By Ben Feller
Associated Press
Saturday, September 23, 2006

A scorching internal review of the Bush administration's billion-dollar-a-year reading program says the Education Department ignored the law and ethical standards to steer money how it wanted.

The government audit is unsparing in its view that the Reading First program has been beset by conflicts of interest and willful mismanagement. It suggests that the department broke the law by trying to dictate which curriculum schools must use. It also says that program review panels were stacked with people who shared the director's views and that only favored publishers of reading curricula could get money.

In one e-mail, director Chris Doherty told a staff member to come down hard on a company he didn't support, according to the report released yesterday by the department's inspector general. "They are trying to crash our party, and we need to beat the [expletive deleted] out of them in front of all the other would-be party crashers who are standing on the front lawn waiting to see how we welcome these dirtbags," Doherty wrote, the report says.

Doherty is resigning, department spokeswoman Katherine McLane said. Asked whether his quitting was in response to the report, she said only that Doherty is returning to the private sector after five years at the agency. Doherty declined to comment.

Education Secretary Margaret Spellings pledged to swiftly adopt all the audit's recommendations. She also pledged a review of every Reading First grant her agency has approved. About 1,500 school districts have received $4.8 billion in Reading First grants.

Reading First aims to help young children read through scientifically proven programs, and the department considers it a jewel of No Child Left Behind, Bush's education law. Just this week, a separate review found that the effort is helping schools raise achievement.

But from the start, the program has been dogged by accusations of impropriety, leading to several ongoing audits. The new report from the Office of Inspector General -- an independent arm of the Education Department -- calls into question the program's credibility.

The ranking Democrat on the House education committee was furious. "They should fire everyone who was involved in this," said Rep. George Miller (Calif.). ". . . This was an intentional effort to corrupt the process."

Spellings said the problems happened in the early days of the program, which began in 2002, before she was secretary. She said those responsible have left the agency or been reassigned.

The audit found that the department:

· Botched the way it picked a panel to review grant applications, raising questions about whether grants were approved as the law requires.

· Screened grant reviewers for conflicts of interest but then failed to identify six who had a clear conflict based on their industry connections.

· Did not let states see the comments of experts who reviewed their applications.

· Required states to meet conditions that weren't part of the law.

· Tried to play down elements of the law it didn't like when working with states.

The report does not name Doherty, referring to him as the Reading First director. It says he repeatedly used his influence to steer money toward states that used a reading approach he favored called Direct Instruction (DI). In one case, the report says, he was told that a review panel was stacked with people who backed that program.

"That's the funniest part -- yes!" he responded in an e-mail in 2002. "You know the line from Casablanca, 'I am SHOCKED that there is gambling going on in this establishment!' Well, 'I am SHOCKED that there are pro-DI people on this panel!' "

Spellings took issue with the use of such e-mails in the audit. The IG said the e-mails were written by Doherty in his role as director, and it said there is no evidence that they were inaccurate or pulled out of context.

The audit also faults other officials who had a big hand in Reading First, including Susan B. Neuman, the former assistant secretary of elementary and secondary education.

Spellings, who became secretary in 2005, said she is not aware of any effort to favor certain reading programs. "I'm doing everything I can at this point," she said. "I can't undo what's been done."