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USDOE Calls For Trustee to Manage Federal Funds

March 8, 2005 – The Education Department will soon have a third party managing its federal funds due to the department's failure to effectively use those funds.
During its regular meeting Tuesday, members of the Board of Education were told that the U.S. Department of Education has requested that the V.I. government identify and contract with a third party "fiduciary," which would — for a defined period of time — receive and manage the federal funds awarded to the V.I. Education Department.
"The U.S. Department of Education has indicated that it is dissatisfied with the lack of progress that the government of the Virgin Islands has made on the financial management component of its compliance agreement of which this board is a signatory," Tregenza Roach, executive director of the Board of Education, said, in his report to the board. "The agreement would affect approximately $35 million worth of funds received from the federal government annually to support education programs."
Roach did not say, nor does the compliance agreement, exactly who or what the trustee would be. He also did not offer details on the contracting procedure.
In the last fiscal year, nearly $3 million federal education funds had to be reverted to the U.S. Department of Treasury because of the department's failure to use the funds within the allotted time. (See "Analysis: V.I. Schools Fail To Use $2.9 million in Federal Funds").
In the prior fiscal year the V.I. returned more than $2 million in federal funds that were not properly expended. Roach said the V.I. government has agreed to have the fiduciary agreement in place before the Sept. 23 expiration of the compliance agreement and is now working on the scope of work that will define the relationship between the third-party trustee and the V.I. government.
The Education Department entered into the compliance agreement with the federal government in September 2002. Go to compliance agreement to view the agreement. See page 6 of the agreement for the specific terms addressing the fiduciary.
The federal government has provided guidelines, in which it insists upon a fiduciary agreement, Roach said, adding that the provisions address timely procurement of goods and services and timely payments to vendors who do business with the local government. The agreement states that in the event that the V.I. government fails to meet the terms of the agreement the fiduciary will be put in place.
"The period of the third party arrangement will be affected by how fast the government is able to convince the federal government that it has an established financial management system, which is capable of delivering identified data and which can timely reconcile balances on numerous grants," Roach said.
According to the compliance agreement, the V.I. government was supposed to have had "safeguards to assure that lapses of funds will be minimized" in place two years ago.
By March 2004 the agreement called for the VIDOE to have implemented the plan to properly disburse federal funds and to have fully integrated disbursement functions with a financial management system in place by the end of the compliance agreement in September.
Roach said the financial management system must also include the appropriate system of reporting to avoid lapses of federal funds.
Roach said the fiduciary, be it one person or a board, will not be chosen from members of the Education Department. However, he gave no information about how, or by whom, the fiduciary will be chosen, other than to say it will be the V.I. government.
Another area of concern in the compliance agreement was the certification of teachers. Roach said the board failed to meet its goal of certifying 20 percent of teachers last year. The board hopes to certify all teachers in the system by 2007.
"I am not pleased with the progress that the staff is making on certification," Judy Gomez , Education Board chairwoman, said. "I believe we should be moving aggressively to make sure our teachers are certified."
Board member Keith Richards said the board needed to be clear about what its role was in the certification process.
"The issue before us at this time is that you have many professionals in the system that are not meeting the board's requirements," Richards said, adding a large percentage of teachers had failed the required Praxis exam, which is used in evaluating teachers for purposes of licensure.
However, Roach said data showed that V.I. teachers scored above average in reading and writing but below the national average in mathematics.
About 115 teachers with the Education Department are candidates for certification, Roach said, but are lacking in some aspect.

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