Serial No. 106-134


Printed for the use of the Committee on Education

and the Workforce

Table of Contents


















October 25, 2000

U. S. House of Representatives

Committee on Education and the Workforce

Washington, D.C.

The Committee met, pursuant to call, at 10:34 a.m., in Room 2175, Rayburn House Office Building, Hon. William F. Goodling, Chairman of the Committee, presiding.

Present: Representatives Goodling, Petri, Ballenger, Boehner, Hoekstra, McKeon, Castle, Norwood, Schaffer, Fletcher, Ehlers, Tancredo, DeMint, Isakson, Clay, Miller, Kildee, Owens, Payne, Mink, Roemer, Scott, Woolsey, Hinojosa, McCarthy, Tierney, Kind, Sanchez, Ford, Kucinich, Wu, and Holt.

Staff Present: Peter Warren, Professional Staff Member; Krisann Pearce, Professional Staff Member; Whitney Rhoades, Staff Assistant; Kevin Talley, Chief of Staff; Becky Campoverde, Deputy Chief of Staff for Strategic Planning and Communications; Jo-Marie St. Martin, General Counsel; Sally Lovejoy, Education Policy Coordinator; Kirsten Duncan, Assistant to the Education Policy Coordinator and Counsel; Dan Lara, Press Secretary; Patrick Lyden, Professional Staff Member; Michael Reynard, Deputy Press Secretary; Deborah Samantar, Office Manager; Gail Weiss, Minority Staff Director; Mark Zuckerman, Minority General Counsel; Cedric R. Hendricks, Minority Deputy Counsel; June Harris, Minority Education Coordinator; Cheryl Johnson, Minority Counsel, Education and Oversight; Alex Nock, Minority Legislative Associate/Education; Mary Ellen Ardouny, Minority Legislative Associate/Education; and Roxana Folescu, Minority Staff Assistant/Education.

Chairman Goodling. The Committee on Education and the Workforce will come to order. We are meeting today to hear testimony on waste, fraud and program implementation at the Department of Education. I am going to limit the opening statements to the Chairman, the Ranking Minority Member, and a designee from each side. Therefore, if other Members have statements, they will be included in the hearing record.

With that, I ask for unanimous consent for the hearing record to remain open for 14 days to allow Members' statements and other documents referenced during the hearing to be submitted in the official hearing record. Without objection, so ordered.

I now yield to myself for an opening statement.




I am pleased to welcome Secretary Riley and our other guests from the Department of Education to our hearing this morning. I expect this may be the last hearing of this Committee that I will chair, so this is a significant day for me. I look forward to your testimony and candor in response to the questions that will be posed.

As you know, we plan to cover a wide variety of topics including Impact Aid, funding for IDEA, travel and financial management issues of the Department. Some of these are issues that have been visited to different extents by our Subcommittee on Oversight and Investigation, and we raise these questions with you today to hear directly from you your assessment of the management situation at the Department. I know that as the Secretary, you cannot pay personal attention to every potential problem in the Department. You rely on other others to be your eyes, ears, and implementation of your policies and decisions. When a situation does develop that could negatively affect children, then I would consider that to be deserving of your personal attention.

Today's hearing will focus broadly upon how the Department accounts for and manages taxpayer dollars. Today we will also examine whether recent IDEA funding increases are actually being spent by schools on students with special needs. Since fiscal year 1996, we have increased IDEA funding by $2.6 billion, a 115 percent increase. Our goal all along has been to ensure that more of the money be used by schools to provide services to students with disabilities. Yet we do not know whether these increases are being spent directly on students. I am hopeful that in our exchange with the Secretary, we can find out what the Department is doing to help ensure that our intent is being realized.

At the appropriate time, I plan to inquire about a program that is of great personal interest. Under the terms of last year's negotiations on the class size reduction program, 25 percent of the funds are to be available outright for school districts that wish to exercise flexibility. Schools may use that 25 percent of the class size funding to improve the skills of their existing teachers rather than hiring new ones.

I am concerned that the Department may be giving short shrift to the 25 percent for flexibility. I am also concerned that we negotiated 100 percent for those who have more than 10 percent of unqualified teachers, so that they could use 100 percent to improve the teachers they presently have. I will be interested to know how we are doing along those lines and how much money is being spent that way rather than hiring new, unqualified teachers.

I took forward to your testimony and answers to our questions, and at this time I will yield to the Ranking Member. And I think when we complete his, we will run and vote and come back and take the next two statements.








Mr. Clay. Thank you, Mr. Chairman. I want to welcome Secretary Riley and the other witnesses here today. Secretary Riley, I commend you for your outstanding service as Secretary of Education. During my 32 years in this Congress, none of your predecessors has matched your commitment, your grace, and your success in improving education for all children, and for this we are greatly appreciative. During the past 8 years, no one has fought harder than you to improve the management of the Department of Education. No one has fought harder to expand college opportunities, especially for minority and low-income students, than you. And no one has worked as tirelessly as you to improve performance of our public schools.

Beyond that, you have been a champion in advocating for more investment in education and have succeeded in winning billions more in new spending, even when some in Congress were trying to abolish the Department of Education and slash billions in education spending.


Mr. Chairman, when Secretary Riley took over in 1993, the GAO concluded that the Reagan-Bush years left the Department of Education, and I quote, "replete with longstanding management problems and ill-equipped to carry out its managerial responsibilities," end of quote. Rather than ignoring these problems, the Secretary took them on and has made substantial progress in turning the Department around. This is not just my view. The Mercatus Center at George Mason University rated the Department's performance report, quote, "fourth among all government agencies," end of quote.

Congressman John Porter, Chairman of the Subcommittee on Labor-HHS, said in March of this year that, and I quote, "The Department of Education is making admirable progress in developing and applying performance standards," end of quote.

Even Dick Armey, a former Member of this Committee, rated the Department of Education's strategic plan number 2 among 24 government agencies in 1997.


Mr. Chairman, let me mention just a few of the Secretary's management accomplishments. One, the student default rate has been brought down from 22 percent to a record low of 8.8 percent, saving taxpayers over $7 billion. Next, collections from borrowers who defaulted on loans have increased from $1 billion in fiscal year 1993 to $3 billion in fiscal year 1999. The Department eliminated 1993's $2 billion shortfall in the Pell program and has recorded a surplus every year since. And the accomplishments go on and on, Mr. Chairman.

Beyond these and other significant management improvements, Secretary Riley has gotten results. In 1992, only 14 States had standards in core subjects. Today, 49 States have them and 48 have assessments to measure student progress. And there are other accomplishments, Mr. Chairman.

As we sit here today, much remains to be done. Unfortunately, the ESCA reauthorization is in shambles. Efforts to reduce class size, modernize our crumbling schools and improve teacher quality remain the unfinished business of this unaccomplished Congress. These urgent priorities are now left to last-minute deals by the appropriators. If the performance of this Congress on education was held to the same level of scrutiny as the Department of Education, it surely would flunk any test for success.

So, Mr. Chairman, I challenge the Majority to spend the remaining time we have left in this session to take action to improve public schools rather than hold pre-election hearings like this one designed to score political points in lieu of making real accomplishments. And I yield back the balance of my time.


Chairman Goodling. Mr. Hoekstra.




Mr. Hoekstra. I thank the Chairman for yielding. Welcome, Mr. Secretary. It has been a pleasure working with you on education issues for the last number of years. In my role as the Chairman of the Oversight Subcommittee, we have had the tremendous pleasure, as I know you have, of going around the country and taking a look at what is working in education and seeing some of the tremendous things that local school districts are doing to improve education for the kids in their community; taking a look at many of the exciting reforms that States are implementing to improve education for the kids and the children in their States.

At the same time, as Chairman of the Oversight Subcommittee, I have the responsibility of coming back to Washington and having our Subcommittee take a look at how we are appropriating and using taxpayer dollars. You know the concern that our committee has had over the last couple of years beginning in 1998 when the Department of Education failed its financial audit, when they failed it again in 1999, and as we received testimony indicating that it might be 2 to 3 years more before the Department would actually get a clean audit.

Coming out of the private sector, when an auditor tells you that a clean audit of the books cannot be achieved, it sends up a red flag that you are creating an environment that may be ripe for waste, fraud and abuse. And disappointingly, I think, and I am sure you can share the concern, we have found that to be the case all too often in the last 12 to 18 months. Especially disturbing was the briefing that we received yesterday from the people in the Inspector General’s Office that there are two new cases that are under development, which we are not free to talk about today because they are just being implemented, but two new cases of potential fraud within the Department. I am sure that you have been briefed on them as well. And that builds on the two high-profile cases that have caught much of our attention this summer: the theft ring in the purchasing department of close to $1 million and the theft/embezzlement ring that occurred in the Impact Aid program approaching $1.9 million.

I congratulate the Justice Department for the success that they have had, and we got copies of the checks yesterday in the briefing with the Inspector General's Office and it looks like we've recovered $1.6 million of the 1.9 that was embezzled in the Impact Aid case. I guess the SUVs went on the auction block this week, so there is an opportunity to recover another 50- to $60,000. And who knows what happens with the property that was purchased with that money, but it looks like we may be in a position to recover somewhere in the neighborhood of 1.75 million out of that.

These are some of the cases that we know about. We know about the theft ring in the purchasing department. We know about the Impact Aid. We know the Department has had a problem with duplicate payments. We know that they have had a problem with loan forgiveness. We know that there have been problems with improperly awarded Pell grants. We know that there is concern about the integrity of the computer system.

And the question that I think we are left with as an Oversight Subcommittee is how much money really is missing? How much money has been misappropriated? How much money has been embezzled and stolen and how much of this has just been wasted? And I am hoping that that is one of the things that you can give us a kind of an idea about, because like with the Impact Aid, we know that the funds for the two school districts in South Dakota were recovered.

But has the Department gone back and taken a look at the entire Impact Aid program to determine whether there were other cases where money has been misallocated and embezzled from the American taxpayers? Has the Department gone through and identified other areas of potential theft within the purchasing department because of the lack of controls within the purchasing area? And if we can't get a handle as to exactly, or if you are unable today to give us a handle as to exactly the magnitude, because I don't believe these are the entire cases; because like with Impact Aid, we only found out about this case not because of the work of the Department but because of the work of a car salesman in Maryland who raised some red flags.

So I am interested in the work that the Department has done in trying to determine the exact amount of money that potentially has been taken from the Department illegally or been used inappropriately. So I am hoping you can give us that kind of number today. And I am hoping that you also will join the House and others on the Senate side in encouraging the passage of a bill that is bipartisan. It is an agreement between the legislative and executive branch, that we need to bring in the experts from the General Accounting Office to do a comprehensive fraud audit of the Department of Education to provide us with greater information, a greater understanding of the problems that are facing the Department, and hopefully outline corrective actions that can and should be implemented as quickly as possible.

In the private sector, two failed audits in consecutive years would never be tolerated. We shouldn't tolerate it here in the Federal Government. It is time for Congress and the executive branch to say enough is enough for an agency of this size. And it is time to outline the appropriate mechanisms and the appropriate actions to take care of this problem as quickly as possible and for once and for all. I yield back my time. Thank you Mr. Chairman.




Chairman Goodling. I am reluctantly substituting Mr. Holt for Mr. Roemer, not reluctantly because of Mr. Holt, but because Mr. Roemer may be very unhappy when he returns. But, Mr. Holt, I understand you are giving Mr. Roemer's statement.

Mr. Holt. Mr. Chairman, it would be my own statement. But if you prefer to wait for Mr. Roemer while we go to vote, I would accept that, but I would be happy to speak because I have been drawn into this hearing in a very direct way.

Chairman Goodling. And you will have to do it during the 5-minute question and answer period because we have set up that there be two from each side. So Mr. Roemer is back and we will recognize him at this time.

Mr. Roemer. Thank you Mr. Chairman. I would ask unanimous consent that my entire statement be entered into the record.

Chairman Goodling. Without objection.

Mr. Roemer. Thank you Mr. Chairman. Mr. Chairman, first of all, I would like to thank you for your years of service to the Congress, Mr. Chairman, and your efforts to put bipartisan legislation together. And I know that we have had a couple of retirement parties for you. Many of us on this side will miss your personality and your humor and your efforts to reach out to both sides of the aisle to accomplish bipartisan legislation.

Secretary Riley, before I get into some very, very short comments in my opening statement, I first of all want to say thank you on behalf of the Committee for your many appearances before this Education Committee. I want to thank you for the integrity and the principled work that you have done to try to improve education for every single child throughout America.

I want to thank you for improving the student loan program in this country. I am a product of student loans. Not too recently, a couple years ago, a few years ago, I finished paying my student loans. And many people now in this country depend on those student loans. And under your guidance, the Department of Education has saved the taxpayer billions of dollars in improving not only the amount of loans that go out to many students, but have seen the interest rates decline, making college and community schools more affordable, and then also improve the default rate taking it down from about 22 percent to lower than 10 percent, saving again the taxpayer money.

Those are significant achievements for taxpayers, for Americans, for access to higher education. And I want to thank you and your staff at the Department of Education for your hard work.

Now we have had, I think, some jurisdictional concern on this Committee about some problems of concern at the Department of Education. Let me say, Mr. Chairman, that I think it is legitimate for this Committee to look into some problems that might take place at the Department of Education and be concerned about our taxpayers' money. I know that you are working on these things. I know that, for instance, with respect to a problem that we had on a loss of some electronic equipment at the Department of Education involving several hundred thousand dollars, I believe that you are in the process of recovering most of those funds. I hope you recover all of those funds. I hope the people responsible are prosecuted and sent to jail.

You have several thousand employees at the Department of Education and I hope these two or three employees are dealt with in the swiftest terms and that you are able to address this and send a message that this won't happen again. And as I said before, I think you have recovered almost all the funds.

I would also like to hear, and I understand you are doing something about it, how you are addressing in that particular instance, so it doesn't happen again through internal controls, the COTR situation, the controlling officer and technical representative, and that you have taken action to address these kind of things so it doesn't happen in your Department again.

I have got some other comments in my statement that I am sure those interested will read. That will be in the record.

Let me conclude on this. While I think this COTR situation and the electronic thefts are legitimate for this Committee to look at, I also think that when we get into the second and third and fourth and fifth hearing on that kind of situation, and we have not passed the Elementary Secondary Education Act, which is always reauthorized, that we are not having hearings here today on quality teachers, that we are not trying to reduce class size. Those are things that I think are most interesting to most people here at election time in the next 2 weeks, and I would hope that we would continue to put a lot of emphasis on those concerns. And if we are going to look into these concerns with the COTR problem, which we should, we shouldn't spend 4 or 5 different hearings doing it.

Thank you for your attendance here today. I look forward to hearing your answers.

Chairman Goodling. With that we will begin the 5-minute questioning period. And I will begin, as I indicated, Mr. Secretary. I'm sorry. First we will hear from the Secretary, then I will begin. Mr. Secretary.






Secretary Riley. Thank you so much Mr. Chairman. And I am here today, of course, at your request, and I respect that and I ask that my prepared statement be entered in the record, some really extensive answers to some of the issues that are brought up here.

I have at the table with me Frank Holleman who is the Deputy Secretary of Education and is the Chief Operating Officer in that capacity of the Department; Scott Fleming, my Assistant Secretary for Congressional Affairs; and Judy Heumann, Assistant Secretary for Special education and Rehabilitative Services, which you have asked some questions about.


Mr. Chairman, I think I would begin by saying this is a difficult 2 weeks for the American people: The death of so many brave American soldiers on the U.S.S. Cole. I served in the Navy, as you know, for several years as an officer on a minesweeper, and I extend my sympathies to the families of those who have lost their brave loved ones, and my prayers are with those who are recovering from their injuries. I think it is proper for us to remember them here. And, like all of you, I was very shocked about the death of my good friend, Governor Mel Carnahan, who died suddenly in an airplane crash with his son and close aide. His death is a real loss to the people of Missouri and to America.

And I would join with Congressman Roemer and thank you, Chairman Goodling, for your many years of service, service to the country, as you prepare to retire from the Congress. You and I on occasion have disagreed on policy matters, but we have always had a friendly and cordial relationship and respected each other's abiding commitment to improving education, and that is what is important.

I extend my sincere thanks to Congressman Bill Clay who made a statement, and I appreciate his statement, who is also retiring. He has been a forceful advocate for quality public education for all children and it has been a pleasure to work with him. I believe that this will be my last time also to appear before this committee as Secretary of Education. And I will make it clear that good management is important. It leads to good policies and results.

So it makes some sense to make a few comments on the current state of American education. I think that is proper. As education Secretary for the last 8 years, I have learned a lot about what the American people think about the education of their children. One thing I know for certain is the American people are deeply committed, deeply committed to the success of public education. You see it throughout the country. I am convinced that the American people want education to be a State responsibility, local function, and a national priority. And I am convinced also they are certainly not in favor of abolishing the U.S. Department of Education.

The American people have also made it clear that they want us to solve the problems of American education and not get sidetracked by divisiveness and finger-pointing. I say that for a specific reason. I have observed as I have traveled around the country the emergence of a new American consensus on education as we begin this exciting new century. As my testimony indicates, this consensus crosses party lines. It includes a strong focus on smaller classes, improving basic reading and math, quality teaching, safe schools, parent and community involvement, getting technology into the classroom, increased accountability, and the recognition that early childhood initiatives hold a great deal of promise. Access to college and helping parents pay for college is a very real part of this emerging consensus.

One immediate example of this emerging consensus, I think, is the bipartisan shift where we see a majority of the Members of Congress who now support the Johnson-Rangel school modernization legislation. We can talk all we want about high expectations, but we certainly send a different message to our children when we ask them to learn the high standards in dingy, crowded, worn-out school buildings. Our public schools are the foundation of our democracy. In most cases they are good schools. We are doing so much better, I think, a much better job of improving those schools, but they absolutely need to get better. We all need to understand that. That is one reason; though recognizing local forming of schools and trying to turn them around is one reason we are starting to see some progress in American Education.

One purpose of good management is to help State and local school districts get their standards in place and move them into the classroom to make sure young people are ready for college and ready for work. My prepared statement includes a checklist that gives you some idea of the good things that have been happening. And let me point out just briefly a couple of highlights. According to the 1997-98 NAEP reading assessment, average reading scores increased for students in all grades tested: fourth, eighth and twelfth. This is the first time that we have ever seen such progress across the board and it is very encouraging indeed. The long-term trend NAEP assessment (that is the chart that you have attached to your things over here) also tells us that reading scores for our lowest performing students are on the way up. I believe that our efforts to raise standards and reform Title I are beginning to take hold. We also are making progress in math. Again according to NAEP, math achievement has improved significantly between 1990 and 1999 in all three grades tested: reading, all three grades; math, all three grades. Math SAT scores are now at their highest level since 1960 and verbal scores are up as well.

A few more definitive facts I think are worth noting. Since 1993 the number of students taking advanced placement tests has increased by two-thirds; African American students, plus 500 percent; Hispanic students, plus 300 percent. More Americans are going to college than ever before and there has been a 9 percent increase in the college completion rate in the last 10 years.

I suggest the progress we have achieved did not just happen. In states and school districts all across the country, parents, teachers and principals did their hard work of raising expectations and standards and turning around low performing schools. And students have done their part also. These parents also knew that they had a partner in the Federal Government, and I think that is proper. However, I think that we are a junior partner, but we are a partner all the same.

Now, this administration set out 8 years ago to challenge the status quo, to move American education forward into the 21st Century. We did it by developing policies that I think made a difference. For example, we have been tireless in our efforts to include reading, as my previous testimony stated.

Now let me turn to the specific issues which, Mr. Chairman, you raised in your letter beginning with IDEA. As I say, Judy Heumann is here who heads up that Department for me. I know that the Chairman and other Committee Members have been strong supporters of the effort to increase funding for IDEA. Funding of the Part B grants to States has more than doubled over the past 5 years and that is significant.


Mr. Chairman, you ask in your letter how this money is being spent. I think that is a very legitimate question. Most funds flow through to local school districts to help pay excess costs of providing special education and related services to a growing number of children with disabilities. There has been a 14 percent increase in excess costs in the last 4 years, and we are now serving 640,000 more children. Although we don't systematically collect information on how IDEA funds are used, the National Association of State Directors of Special education has conducted an informal survey of 27 states and school districts within those states. States reported using their share of the increases to expand training for teachers, paraprofessionals, interpreters, and parents, as well as improvements in assistive technology and to develop more inclusive assessment practices. At the local level, school districts reported that about 85 percent of the Part B increases (that really was a part of your question) have been used; 85 percent, to high hire new special education teachers and other staff that enables these children to go to their local neighborhood schools and to decrease the caseload for special education teachers. The other 15 percent is being used to purchase computers for classrooms and expand professional development in areas like reading instruction and school-wide discipline approaches.

As we look to the future, I think there is a growing agreement that we need to get on a deliberate path of reaching the 40 percent goal. As we work to increase funding for IDEA, we also need to recognize that three-quarters of all children with disabilities now spend roughly half of their time in the regular classroom. That is why President Clinton, and I believe that many of our other initiatives, from reducing class size, increasing technology, to after-school programs, modernizing our schools, all that makes a powerful difference to children with disabilities while benefiting other children as well.

Now let me turn to the management of the Department, which has been discussed and is part of the discussion for this meeting. A brief review of the management history of the Department I think is a proper place to start. Mr. Clay referred to that when I arrived in the Department in 1993, this was an agency that had a history of being deprioritized and starved for resources. The Department faced serious, serious management programs, and that was a great concern to me. The GAO issued a report soon after I arrived. It made very clear we had a lot of rebuilding to do. According to the GAO, this was in 1993, past education Secretaries, this is a quote, "had not built an organization that could implement major policy initiatives. Moreover, the Department's history," it goes on to say, "is replete with longstanding management problems."

That was a GAO report when I first arrived. We have been working very hard ever since to rebuild the entire management structure, from team-building among all of our employees forward. We created a comprehensive strategic plan in response to GPRA that was rated number 2 among the 24 government agencies in the 1997 report released by House Majority Leader Dick Armey.

I am pleased to note also that John Porter, the House Appropriations Subcommittee Chairman, noted the, quote, "admirable progress the Department had made on developing and applying performance standards under the Government Performance and Results Act. We cut regulations for elementary and secondary education by two-thirds and we increased flexibility.

We have moved aggressively to use technology to reach our customers, who ultimately are our children, but of course we work with states and school districts and colleges and universities all across the country. Our Web site has received many national accolades; 8 or 10 million hits a month.

Several years ago, Congressman Horn gave this Department along with many other agencies a grade of F as we were preparing for the Y2K challenge. Two years later, after we worked diligently on that issue, Congressman Horn gave the Department an A for successfully responding to this challenge. We successfully managed down student loan default rates, reducing the default rate by more than two-thirds, as was pointed out, from 22.4 percent down to 6.9 percent. You said under 10; it is way under 10. And we also increased collections on defaulted loans.

That combination of things alone, if we just look at those two things, saved the taxpayers $14 billion over the past 7 years. Mr. Chairman, that is significant. I believe that this is an outstanding demonstration of our diligence in protecting taxpayer funds from fraud, abuse and waste.

We also strengthened the management of the student aid program by transforming the Office of Student Financial Aid programs into the first performance-based organization, the first PBO in government, running it really almost like a separate business, and that has been very successful. We also ensure, as a 1999 GAO report noted, this was last year, that over 99 percent of appropriations for the 10 largest elementary and secondary education programs go straight to the states; 99 percent of that money for the 10 largest programs we have, according to GAO, over 99 percent go directly to the states.

Overall, the Department has done more with less, even though we have significantly increased our workload. I think everyone will admit to that. We actually have 200 fewer full-time employees compared to 1993. When we got here, we had around 4,800, and now we have about 4,600. I would point this out. We have around 3,000 fewer employees compared to 1980 when the Department came into existence. At that time, there were around 7,500 to 7,600.

We are continually working to improve our financial management and that is important. We began a complicated and difficult upgrade of our financial and management systems even as the new audit requirements were established in 1996. 1996 was the first year that the Federal Government required these Federal audits from the agencies. We worked with a great deal of effort to meet these new audit requirements and, in fact, we received a clean audit in 1997. Unfortunately, a crucial part of a newly purchased and GSA-approved general ledger system failed to do the job that it needed to do in the next year. In other words, we were trying to put in a system that would integrate all of our systems, which was absolutely needed, and it turned out that the company could put together four parts of that in a very good way but the fifth part was not acceptable to us, and all of that was over a period of a couple of years. I think this explains in large part why we did not achieve our goal of a clean audit in 1998 and 1999.

We are, however, making clear progress. The Department has closed out 118 of 139 recommendations from the financial audits since 1995. We take every one of those recommendations absolutely to heart. And we proceed to every one of them to close them out. We expect all the rest of the recommendations to be closed out by early next year, if not the end of the year; all of them except one, and that is the one financial system we are yet to integrate, but we have this new system being developed by a new contract that was entered into early this year with Oracle Federal Financials, and we will have a state-of-the-art, completely integrated system in the year 2001. That will be something that I will be very proud of. That process has been in place now. It did take us several years, Congressman, as you pointed out. This is now a state-of-the-art system and it is being put in place and will be in place in 2001 at some point in time. Nevertheless, I would be the first to tell you that we need to keep working to strengthen our management infrastructure.

And I share your concern about any instance of fraud in the Department. I do not, and will not, tolerate fraud of any kind, nor would anyone on this Committee. We are working closely with the Inspector General and the Justice Department to address the two specific cases of fraud in question. I would point out that these investigations are still underway.

We have to be somewhat limited in what we say in terms of specifics, but in terms of the stolen computer equipment and excessive overtime charges, we have seized the stolen property and expect to recover every single penny in addition to damages by the time the investigation and prosecution is completed. We anticipate that very clearly, and I think I can safely say that will happen. My understanding of the situation is that, and this is important, our faith in a long-serving and trusted contract administrator was misplaced. This is a person that had been with the Department for years; was there when I got there. This individual colluded with an employee of a respected private company that was providing services and selling equipment to our Department. Unfortunately, several other long-term employees became involved with it. The computers were not stolen from the Department. They were diverted and never got to the Department with this collusion between the seller and the buyer. To date, six individuals have pleaded guilty to criminal charges. We have put additional controls in place and this will not happen again.

In the case of the embezzled Impact Aid funds, another source of concern to me in a serious way, it was a forged document situation. We have seized the property, as was pointed out. We have seized the funds. Here again we take this case of embezzlement very seriously. And I would point out that we process over 500,00 payments a year. You multiply that by eight, you will see how many payments we make a year. It is a big business; 500,000 payments a year, over that. And the fact that these are out-and-out forgeries that occurred had a direct impact on two school districts. That leaves me with a great concern. The school districts got their money, and it is my honest feeling that when all of these things are completed, those two situations side by side, people will be prosecuted to the full extent of law, controls will be fully put in place to ever prevent them happening again. However, you cannot 100 percent prevent stealing, fraud, embezzlement, forgeries. Every bank has to worry about that, I don't care how good they are; every company. I can't say it will not happen again, but we have put additional safeguards in place. And in terms of these two situations, I say that we will not lose one penny in the process.

Now, in any case where fraud has occurred, an agency should respond forcefully, prosecute to the fullest extent possible, recover the stolen property and put additional safeguards in place. Those things should happen. We have taken such a course of action, we have responded forcefully through our Inspector General, through the Justice Department, in prosecuting the individuals who broke the law. Property has been recovered and is being recovered, and we have put new safeguards in place to help prevent further attempts to defraud the government.

Now, the third issue raised by the Committee is about my travel. And I don't know if Mr. Hoekstra mentioned that or not, but that is another issue that was before the Committee and the Chairman asked me to deal with it. I would point out that I have traveled to some 400 schools over the past 7 years. I do a lot of traveling. I might add I work around 7 days a week. Not fully, but almost. And I know some of you understand that. But I do travel a lot. I probably respond to 10 percent of the requests I have to come to speak and to be with schools and to be with school events, but I do as much as I can. When I travel on the taxpayer's dollar, every cent is for an educational purpose. My office works closely with our career ethics staff, and they are here if anybody wants to question them, to ensure that this is the case in every situation. These are career people who have been with the Department for years. They have handled Secretaries before me, and they handled me just like they did them. Only a fraction of all the these visits includes accepting invitations from Members of Congress, Members who want me to visit schools in their districts, go to meetings in their districts, see and hear what their constituents have to say about their schools. A lot of them are public hearings. I accept invitations from Republican Members on the same basis as invitations from Democratic Members. And doing that is not only the right thing to do, it is clearly in the Department's best interest in working with Congress. And I think all of you will admit I try to do that in all cases for Democrats and Republicans. Most of these requests come from Members of Congress who support the administration's position. So I think it is natural when there is an issue up that the administration is supporting, that more Democrats obviously ask me to come speak.

Similarly, when the Department schedules an educational event, our consistent practice is to notify Members who represent the district, as well as other public officials, without regard to party affiliation or campaign status. As I have often said, and I really mean this, our children are not educated as Democrats and Republicans; they are educated as Americans. And that is the attitude I think we should have.

I welcome constructive criticism, Mr. Chairman, as you know. You and I have had our discussions over the years. They have all been honorable. Regarding the management of our Department or whatever the Committee wants to discuss, I believe that an informed and cooperative approach leads to better management. And we would urge that in the future, if people have concerns or whatever, to discuss them with us and we would respond immediately as we've done with the auditors, with the GAO, and with our own IG. I pledge to the Members of the Committee that we will continue to do all we can to give this Department the best management possible.

That concludes my testimony and I would be prepared to respond to questions.




Chairman Goodling. Thank you, Mr. Secretary. As I am sure is no secret, we do belong to each other's mutual admiration society. And I am happy to say that during my watch as the Chairman that we were able to increase Special ed funding. We have doubled it, as a matter of fact, in spite of getting budgets from the administration 2 years in a row which actually cut it, if you consider increased participation and inflation.

I am glad that we got Head Start turned around so that it is now doing what they had hoped it would do in the beginning, which was not to be a poverty jobs program. It was to be a preparation of children for school, and I think we've made headway there.

I am pleased with the family literacy efforts we have made. I am happy that we are able to bring the lowest interest rate and the highest Pell grants; Sally Stroup is a tough, tough negotiator.

I am glad that we were able to get the PBO there so we could straighten out that direct lending mess, including loan consolidation, which I am sure was as painful to you as it was to all of us. I am pleased we were able to get about a 30 percent increase in spending during this particular time. I wish we could have done a lot more, and if I would have gotten the President to put the horse before the cart instead of the cart before the horse, I think we could have.

One of the areas I would like to talk about is class size reduction. I want to ask the question because, of course, I warned from day one that unless there was a quality teacher to put in there, reducing the class size wasn't going to do any good. As you know the first 30 percent were totally unqualified, and unfortunately they went to the districts that needed the very best teachers because they already had 30, 40, 50 percent of unqualified teachers in their school districts. That is why the question that I have is, as I mentioned in my opening statement, when we negotiated last year, we moved the use for local districts from 15 percent to 25 percent for all districts for teacher rehabilitation, teacher training, teacher preparation, but we moved it 100 percent for any school district that had 10 percent or more of unqualified teachers, which is probably true of every center city school district in the United States.

My questions is: Is that the best-kept secret, or are we seeing some positive effects from moving that money not to hire new, unqualified teachers, but in your system that is overwhelmed with unqualified teachers now, to improving teachers that are presently on the beat?

Secretary Riley. Mr. Chairman, as you point out, there is a lot more flexibility in the class size reduction program than I think you hear in the general discussion. A lot of the flexibility, of course it has to lead toward class size reduction with qualified teachers. Class size reduction without qualified teachers is certainly not worth the effort. You and Mr. Miller made that point very well. And you fought for that and you got the provision in there about the 10 percent, and I certainly agree with it and think that strengthens the whole concept, the idea of having a portion of the funds used for professional development, a portion for recruitment. Really, if a district has a lack of teachers and really is have having to recruit teachers to bring them in, they can use these funds. They have to show that it is leading towards class size reduction to recruit teachers. It is that flexible, and I think that makes for good sense. And that is a move into reaching the goal of 18, and of course we have given some waivers in cases where it was close to that and it was a state move; then, of course, they can move all of their money toward professional development, as I say they can use it for recruitment.

Chairman Goodling. Will you be able to give me a percentage that has gone for new teachers and a percentage that has gone for professional development?

Secretary Riley. Yes, sir. I will be happy to do that. And we have a number of districts where we can show you, Mr. Chairman, that they tell us with data that they have had tremendous benefits from it. And I would be glad to do that and we have got some very good examples, so I really think the program is moving well.

Chairman Goodling. Because I know it is a hopeless situation in many large cities if we think of only trying to add new teachers, if we have can't get quality teachers in the district that already has the 10, 20, 30, percent.

Secretary Riley. Absolutely. I think you all certainly helped to add that flexibility to it.

Chairman Goodling. The second question I wanted to ask is, there is no question that we have increased, probably doubled, the IDEA funding. My question would be, we dramatically increased Title I but we have not been able to show any closing of the achievement gap, unfortunately. Now we are dramatically increasing Special ed funding. Can you again show me how much of that money has really gotten down into the classroom where you are really helping the child? Do we have those kinds of statistics?

Secretary Riley. Mr. Chairman, I spoke to that briefly in my statement. Let me ask Assistant Secretary Judy Heumann if she would speak to that point. Judy.

Ms. Heumann. Let me say.

Chairman Goodling. She used to be standing behind us. Now she is out in front of us.

Ms. Heumann. Thank you. Let me also say we have a study which is beginning to occur from the Center for Special education Finance which will be addressing a number of issues, and we can submit the questions that the Center is going to be investigating which is also going to be looking at the ways funding is being used at the local level.

I think the changes that occurred in the 1997 reauthorization allowed for more money actually to be getting down to the district level, and what the Secretary mentioned in his statement earlier from the survey, that was done by NASDSE, the National Association of State Directors of Special ed, is in fact showing that much of these dollars are being utilized for bringing new teachers into school and related service personnel, professional development and technology use, but I think also one of the issues that you have been addressing is the ability to make sure we have qualified personnel.

You may remember also that in the '97 reauthorization there was another provision put in there for State improvement grants. The State improvement grant money requires that 75 percent of those dollars be used for professional development, and we believe that we are hopeful that we are going to get the full appropriation that we have requested because there are States that need these dollars that have not yet been able to get them. But for the States that have in fact been successful in acquiring those dollars we are also seeing that these dollars are being used to train new teachers and also to train teachers who are currently in the classrooms, special ed and regular teachers.

Chairman Goodling. Again, if you have any statistical information that you might be able to give me to indicate that a lot of the money didn't get trapped in D.C. Or didn't get trapped in State capitals.

Ms. Heumann. The money is going to the State and going to the local districts and, actually, one of our concerns is that States are not necessarily keeping the amount of money that they are statutorily allowed to keep; and our concerns there are, as States and locals are getting more money, we believe that the issue of accountability is more important than ever because we are also concerned about closing the achievement gap for disabled children. So our continuous monitoring process that we have put in place, some States are working very cooperatively with us. But some of the States have insufficient dollars in order to be able to do the kind of monitoring that needs to be done not only to assure that the dollars are getting to the classroom but that we are not over-identifying minority children or under-identifying children, that we are making sure that these children are, in fact, participating in the general curricula and are participating in state assessments.

So we want to ensure that the amount of money that the statute stipulates has to go down to the local level does do that, but we also want to encourage states to make sure that they are maintaining the level of funding that they are able to statutorily do in order to ensure appropriate accountability.

Chairman Goodling. Mr. Kildee.

Mr. Kildee. Thank you, Mr. Chairman.

Mr. Chairman and Mr. Secretary, I cosponsored and voted for the bill which created the Department of Education. We had some good Secretaries of Education during that time, but I want to tell you that you are by far the very, very best in integrity, in your ability, in your commitment and your achievement. And I want to thank you on behalf of the children of the Ninth Congressional District of Michigan for what you have done. I think there are three of us on this side of the aisle who helped to form the Department of Education, three of us left from those days, George, Mr. Clay and myself.

Mr. Secretary, Mr. McKeon and I two years ago worked very closely together to write the Higher Education Reauthorization Act and I think we wrote a very good bipartisan bill at that time. How has the student loan default rate decreased during your tenure and what are some of the reasons and how much have the taxpayers saved through default reduction, improved collections and the direct student loan program?

Secretary Riley. Well, of course, the numbers have been mentioned in terms of defaults, how it has gone from over 22 to down below seven; and tools that were given us by Congress have really helped us do that. But I will tell you, we are the gatekeepers, as you well know; and you all have worked closely with us on that. We have to make a decision based on data, based on regulations and law, that if a proprietary school, for example, is not meeting the test then we have to deny them funds. When you do that, normally they are having trouble anyhow; and they usually close down.

Tragically, since I have been in this position, by being strict, by being careful, and my staff people all across the country have done that, we have had to deny funds to over 1,300 higher education institutions. And most of those of course closed down, and some of them were not institutions at all. They were taking Pell grants improperly. They were handling funds that they shouldn’t have been, in ways they shouldn't have been handling them.

So, anyhow, we have been very strict on that. We had the tools to do it; and in that process then we are able to have much more argument for good, strong Pell grant program college loans, work-study and so forth. But 1,300 institutions have been denied funds, and every one of them has been difficult, but this has happened over our period.

So I am very, very comfortable with the program now, Congressman. I appreciate the way we have worked together on it, and I do think it is working well.

Mr. Kildee. I think Mr. McKeon and I both remember when we were reauthorizing it, your deep interest in trying to give you the tools to crack down on some of the defaults around some of the schools that were abusing the program. You were one of the leaders in helping us arrive at language that would give you the tools to do just what you are doing, and this has been a good bipartisan cooperation. I think that we have had great achievement under your leadership, both during your reauthorization and subsequent to the new tools that we gave you.

You know, Mr. Secretary, I have always believed, as you believe, too, that kindergarten through third grade students learn to read and after that they read to learn. If you don't do a good job in those first kindergarten through third grade years you are going to have difficulty. Flint, Michigan, about 10 years ago reduced its class sizes of kindergarten through third grade to 17 students; and the longitudinal students' 10-year study indicates that has helped. Do you believe that expanding this program? To what degree do you think that will help us in the later years as students enter junior high school and high school if we reduce the class size in those first few grades?

Secretary Riley. Well, Congressman, the longitudinal study, the star study out of Tennessee, really looked at that. They didn't look just at the one, two, three, four grades. They looked at how it impacted children when they reached 7th and 8th grade, how it impacted them when they finished high school and went on to college.

I will tell you, the study is very impressive and very well respected. It shows that if you can get between 15 and 18 pupils per teacher and, Mr. Miller and Mr. Goodling, and the teachers well qualified. You have to have both. If you have that combination, it is absolutely working where you have it. There is no question about that, and the research shows it.

I will tell you, you can ask just about any teacher out there that teaches young children and any parent, they know that it works if you have that combination of a quality teacher, a teacher who knows how to teach reading and a teacher who then has a class of 15 to 18. And I will tell you that is happening all around the country now. For those early grades, that is doable.

We recommended, as you know, over a period of 7 years to come in with 100,000 teachers in this, paid for by the Federal Government. That would then bring it down from 22 and 23 down to about 18, and that is a very sensible thing to do. We are on track to do that, and it has been bipartisan. I am very proud of it, and it is working, but research shows that it works all into the future.

Mr. Kildee. Thank you very much, Mr. Secretary. Thank you for all you have done for education.

Chairman Goodling. Mr. Norwood.

Mr. Norwood. Governor Riley, thank you very much for being here. I want to try to refocus us just a little bit about this hearing. Perhaps we should have a hearing to congratulate you and go over the achievements that you have accomplished in education, but that is not what we are about today. There are Members who want to talk about IDEA. There are Members who want to talk about your travel. But, more importantly, I think there are Members on the Oversight Subcommittee here who want to talk about the waste, fraud and abuse and criminal activities in the Department of Education. That doesn't take away from the good things you have done, but we have an obligation to do that.

This hearing is not just about children and the families that are involved in education today. It is a hearing also about the taxpayers who need to have the confidence that a Federal agency actually can use their tax dollars, which they are burdened to pay, I might add, in an efficient way and one that actually does help education.

So, with that, let me just start right in to the problems that we are hearing that are occurring in the Department.

It is my impression that you really never had to have an independent, complete Department audit until 1995. That is when Congress, I believe, demanded that. That doesn't mean you didn't have internal audits. I am talking about an independent audit. Now, since 1995, how many of those audits has the Department of Education passed?

Secretary Riley. Well, I might ask Frank Holleman to speak to some of these questions.

I would say this. The law was for Federal agencies to have a Federal audit in 1996 instead of '95. However, we had an audit in '95 trying to get ready for that.

Mr. Norwood. That was an internal audit that the Department conducted.

Secretary Riley. Yeah.

Mr. Norwood. How about Ernst and Young? How many, since there have been audits from an outside source, how many of those have you come away with passing grades?

Secretary Riley. In 1997 we had a clean audit; and, as I explained a minute ago, then we were in the process of having an integrated financial system. We had a stovepipe kind of a system with five different systems.

Mr. Norwood. That '97 audit, Governor, wasn't that done internally? That wasn't an Ernst and Young audit or any other outside accounting firm?

Secretary Riley. It wasn't the Ernst and Young firm, but it was another firm.

Mr. Holleman. Price Waterhouse.

Mr. Norwood. That was not an internal audit.

Mr. Holleman. And neither was '95, that is my understanding.

Mr. Norwood. So we passed that one and not done as well in '98, '99, is that correct? From what I read in here, it is simply because the books are in such disarray it is pretty hard to conduct the audit? Is Ernst and Young wrong about that?

Mr. Holleman. Mr. Norwood, as the Secretary explained, in 1997 we did have a clean audit; and we were in the process of implementing a new accounting system. In 1998, an important part of the system did not work, but in 1999 we did receive qualified opinions on four of the five statements between 1996 and '99.

Mr. Norwood. Mr. Holleman, because of limited time, forgive me for interrupting you, but I understand that basically, you did not get a real good grade. And people who are the taxpayers, not people that have children in education, would ask, should we send more money over there until you get this great system in place?

Now, my understanding is that you had a great problem with Impact Aid. We have perhaps lost as much as $2 million. There has been computer theft, a computer theft ring going on, that we have lost as much as a million dollars. Also, my understanding is that there is criminal activity going on in the mailroom.

Now, Mr. Riley, you mentioned the two things, I think, Impact Aid and computer theft; and I am hearing out and about that there is another criminal investigation about to occur and erupt. Would you wish to go back over how many different problems we are currently having over there other than just the big problem of Impact Aid and computer theft? You want to talk about any of the others?

Secretary Riley. Well, I think it is not a good idea to speculate on investigations, examinations that are going on. We really probably ought not to be talking about the two that are in the middle of the investigation now. And we are always, always, constantly having matters investigated and examined. That is what the IG does, and that is always true.

I would say, you named these large amounts of money that had been lost; and I would point out that in my earlier statement, Congressman, and I appreciate your position, but my earlier statement that when all these things are over these two issues, Impact Aid and the computer theft, we will not have lost one dollar.

Mr. Norwood. In all due respect, Governor, that is not exactly the problem the taxpayer sees. The taxpayer says, okay, we have lost two million here, a million here. We have got criminal activity. We don't know for sure if we didn't have criminal activity 2 years ago because we can't check the books to know that in fact some of these long-time employees who have been caught in fact weren't also doing 2, 3 years ago.

It is the perception out there that we don't know for sure what is going on in the Department, and that scares people who are sending their tax money up here.

I am not being specific about these other problems. I am trying to accommodate you on that. We shouldn't be talking about ongoing investigations, but can we agree there is more than two that are in the pipeline.

Secretary Riley. Well, I think we can say that the IG's office will constantly be looking at those issues. We work with the General Accounting Office daily. And I think other agencies do, too. We handle lots of payments, I mentioned over 500,000 payments a year for 8 years is an awful lot of payments, and we have constant relationship with the General Accounting Office. Our IG is constantly working on those very issues you are talking about and so is our accountant. Everything they recommend, Congressman, we attempt to do as soon as possible; and that is the truth.

Mr. Norwood. Well, other agencies report their loss, estimated loss.

Chairman Goodling. Would everybody keep your questions short and your answers brief? The Secretary must leave at 12:30.

Secretary Riley. Mr. Chairman, Congressman Norwood, if we could, I would love to come by and visit with you in your office and talk about any further details of whatever that you are concerned about, and I would like to develop that relationship with Mr. Hoekstra and you.

Mr. Norwood. Well, you are very kind, Governor. My question is going to be, why does the Department of Education not report its estimates of loss and other Federal agencies do? So we thank you for that offer.

Chairman Goodling. Mr. Roemer.

Mr. Roemer. Thank you, Mr. Secretary, again for your time. As the ranking member on the Investigation and Oversight Committee where I serve with Mr. Hoekstra, this is about the third or fourth hearing we have had on this topic; and I want you to continue your diligent and good efforts to get to the bottom of these cases that we have talked about.

I want to ask you about a concern that I have worked very closely with you and Mr. Fleming and others on trying to, as Mr. Goodling said, increase the quality of teachers. We have a lot of good teachers in our schools. I want to see even more coming in math and science and technology.

We have had several discussions with all of you about a bill they have introduced with Mr. Davis from Florida. It is a bipartisan bill that Mr. DeWine and Mr. Graham on the Senate side have been supportive of, to try to help us bring people at mid-career from math and science and technology into the teaching profession with rigorous testing and licensing but not necessarily that they have to go back through the standard procedure of a masters degree to teach.

We have wide support for this. This was in the President's budget. I believe you are very supportive of it. It would provide a $5,000 stipend to help train people through a not-for-profit port, a college, to transition people from the private sector and mid-career into teaching.

It would do what Mr. Goodling and Mr. Clay and many of us want to do, that is, enhance both the quality of teaching and reduce class size. If you are a teacher teaching 16 children or 26 children, we want to make sure that the American people, to get their tax dollars, the best benefit, have a great quality teacher in that classroom and compliment the great teachers that we already have out there but also meet the needs of two million new teachers that we are going to have to hire coming up in the future.

Since we did not reauthorize the Elementary and Secondary Education Act for the first time in 30 years, we are now working on an appropriations bill to try to get these proposals, these bipartisan proposals that I have just discussed into that bill at the end of the session. Can you or Mr. Fleming give me an update on how we are on that particular piece of legislation and your emphasis on quality teaching?

Secretary Riley. I will see if Scott can add things to it.

I would say I fairly agree with you. As you know, we have talked about it, this in mid-career person. We need the Troops to Teachers and those kind of thing expanded into engineers and even lawyers, whatever.

But the discussions, Mr. Goodling, I know, is involved.

Scott, are you familiar with that?

Mr. Fleming. Possibly we should defer this question to Chairman Goodling and Ranking Member Clay. They and their staffs have been involved in the ongoing discussions of what this final package of teacher quality provisions will look like in the appropriations bill.

This is an item, as you mentioned, that the administration strongly supports; and I think we are making some progress in that direction. The process is not complete; and, again, they may want to comment on that directly, but I think we are making progress. And you are right. It is a very creative way to get at this need for two million new teachers for the next decade.

Mr. Roemer. As the Secretary pointed out, our bill is based on the success of the Troops to Teachers program which transitioned people in the military into the teaching profession where they are now predominantly in inner city schools with high attrition rates. They are staying there. They are teaching in math and science and other disciplines that are very difficult to get teachers into those areas and retain them. We have based this bill on that successful model, and we think it really will provide a good choice for our public schools to fill the gap of the quality in our teaching profession.

So I hope we continue to work on that in a bipartisan way, and I hope that in a bipartisan way we can finish up this session of Congress soon. You don't have a guess on a date that we are going to finish, do you, Mr. Secretary?

Secretary Riley. The Chairman probably knows more about that than I do, but I do thoroughly agree with the whole intended purpose of the measure that you are talking about. I think it is the right way to go, and I think we all ought to move in that direction.

Mr. Roemer. Thank you for your support.

Chairman Goodling. Mr. Hoekstra.

Mr. Hoekstra. I thank the Chairman for yielding.

Mr. Holleman, I believe our information is that the Inspector General issued the report on the 1997 audit working with an outside firm but that an outside firm did not give the Department a clean audit. That is the information that we have.

What I want to talk a little bit about is that I think what you have here are some systems problems, all right? What you have with the theft ring and the purchasing area is it appears that a small group of people, although I guess it has grown now into 10 people, and the Justice Department describes it as a massive fraud. But the proper controls weren't in place to actually track the stuff that was being purchased, to track it to see if it was received and then to track it once it has been received, to actually authorize payment. This is something corporations do around the country each and every day to make sure there is integrity in the process.

The Justice Department information says they haven't quite tracked down when this theft ring started, saying sometime in the '90s. My concern in this area is that we fix the systems problems. I am concerned that we don't know the total amount of money that was stolen. We know the total amount of money that was stolen by this theft ring in a short period of time, but we don't know whether this kind of lack of financial controls created an opportunity for other people in the Department to be doing the same types of things.

Same thing with the embezzlement of the Impact Aid funds. The systems that were in place, and we have heard a lot of testimony about there not being integrity to the computer system. That in this case people put in forged documents. There weren't the mechanisms in place to change this or to catch these types of improper changes. The end result is 1.9 million gets sent to a local bank rather than getting sent out to a school district.

Mr. Norwood and I brought up in my opening statement that we know about those two cases. We were briefed yesterday on two new cases, which cause us, again, further concern on top of all of the other things that have happened in the Department.


I have got a simple question for you. Will you work with us yet in the few days that we are left here and ask for GAO to come in and do a comprehensive fraud audit, which I think will do two things for us. It will force a rigorous investigation of the processes, the systems that you have in place to make sure that you know that these kinds of systems' problems are dealt with effectively and are dealt with on a timely basis. And the second thing that they will do is perhaps give us an idea as to the amount of theft or fraud that has occurred over a period of time, maybe the last 3 to 4 years, which I don't think we have got a real good handle on right now. Will you join us in asking GAO and the Senate to go along with a comprehensive fraud audit of the financial systems within the Department?

Secretary Riley. Congressman, let me ask Mr. Holleman to speak to the COTR, the position of the person that was involved in the criminal activity and what we have done about that, the controls on computers and the other responses that we have had to those that you mentioned. I think we should respond to that. Then I will get into your other question.

Mr. Hoekstra. I know you guys have been responsive in taking care of the purchasing person and the systems place, some of the stuff with Impact Aid. You know, I am more concerned about a more comprehensive look, which is GAO coming in and taking a look at the fraud audit. We know that we have had these two cases. We know that there are two more in development right now that I think are equally as serious. I want this taken a look at from a comprehensive standpoint that has GAO coming and taking a look at the systems and that is coming in and doing a comprehensive fraud audit.

Secretary Riley. We have had a lot of people over there that are very conscientious people that are working hard, and we have got strong leadership people in the financial management area.

You keep mentioning these two situations, and I would be happy to talk with you about them, you say they are equal. If it is what I have heard just a brief word about then it is not anywhere close to being equal, and one of them is primarily with a contract employee completely. But I don't think we ought to be discussing those because they haven't even decided whether or not there is or is not something to investigate. I think that this is a wrong place. I would love to come discuss those what I know about them. You know more about them than I do.

Mr. Hoekstra. You have done well in not answering my questions. Will you support a comprehensive fraud audit by GAO of the Department?

Secretary Riley. Well, I will tell you this. GAO is in our Department. They can do a fraud audit this afternoon. That is perfectly up to them. I mean it. We don't have to ask them to come in. If they think the fraud audit needs to be done, if there is some danger, they could do that any moment they want to do it; and we would welcome that.

I don't think it is for me to say, because I think we have complete control of the property. I think we have control of everything. We can't say that nobody will ever steal anything in the future, nobody will ever commit forgery. But I can say that every time anybody suggests something for us to do, we do it, and if you have any suggestions of any controls I will assure you, we will proceed to do our best to do it.

Mr. Hoekstra. I have got a suggestion. I would suggest you invite GAO to come in and do a fraud audit as quickly as possible.

Thank you, Mr. Chairman.

Chairman Goodling. Mr. Holt.

Mr. Holt. Thank you, Mr. Chairman.

Mr. Secretary, your Department has eliminated one-third of its regulations in elementary and secondary education, reduced paperwork aggressively, implemented waiver authority to encourage reform. I think it is now a cost-effective agency where 98 percent of the Federal education dollars end up in the States for education. It is what I call real dollars to the classroom.

With a great decrease in the student loan default rate and elimination of $2 billion Pell grant shortfall and providing increased access in savings through the direct student loan program, you have been a great Secretary of Education; and I think you run a $35 billion operation in a way that really works for the student and the taxpayer.


Mr. Chairman, you started your Chairmanship holding a hearing on education reform in 1995; and under your leadership the Committee has pushed for such reform efforts. Since I joined you on this Committee, we have fought together for public school choice and for strength and accountability for our schools, for special education, to give local school districts more flexibility. I am proud to have worked with you on this Committee. But it is for that reason that I am disappointed in today's hearing.

What disturbs me about this hearing is that the Secretary is being accused of being political because, at my request, he visited my district to talk about education. This is information that has been leaked to newspapers. It has been politicized by your party's campaign arm. The charges are without merit; and, even on the face of it, it is obviously politically motivated. I think it is outrageous that you would dignify these charges by including them in any way in this hearing.


Mr. Chairman, I was sent to Congress 2 years ago in large part to help get Congress away from witch-hunts and partisan bickering that characterized previous Congresses. You know, as a former teacher and a scientist I take the issue of education very seriously. I lobbied hard to get a seat on this Subcommittee so I could work directly on education policies. It is for that same reason that I visited over 80 or 90 schools in my district in the past 2 years and held numerous town meetings on education.

I represent a constituency that is not only among the best educated in America, but puts education at the highest priority. Of course I would ask the Secretary of Education to come to my district to talk about education. My constituents deserve no less.

I first discussed the possibility of the Secretary coming to my district when we met before I was even sworn in at the New Members Session in December of 1998. Secretary Riley has come to my district twice. The second visit was because the first visit was truncated, a public meeting was postponed. At the time the Secretary said he would make it up with a second trip, and he was good to his word.

Schools in central New Jersey face serious problems of overcrowding. In one school district, the student population has doubled in the past 10 years, actually, in several school districts.

Every time I visit a school or talk with a parent or administrator I hear about this issue. Teacher recruitment and professional development are national problems that we also face in New Jersey. Asking the Secretary of Education to come and talk about them and other education issue is common sense.

I was elected to represent the people of central New Jersey, and that is what I have been doing. I have asked a number of government officials to come to my district to participate in town hall meetings, to meet with New Jerseyians. It is part of my job.

It is for that reason I had Bruce Babbitt come to listen to constituents about conservation and Rodney Slater to listen to issues of truck safety, a huge concern in central New Jersey; Donna Shalala to listen to constituents' concerns about health care; Ken Aptel about social security. I had astronaut Mark Polansky visit schools with me to talk about science education in Marlboro and Ocean Township. I had Representative Lewis come to bring history alive in schools in Ewing and Freehold.

But I want the record to show it was Secretary Riley I invited first. It is for the same reason that I hold daylong meetings here in Washington for my constituents, for school board members to environmental leaders to religious leaders, for librarians, for mayors. I had Carol Browner speak to environmental leaders from my district. I had DOT officials meet with mayors from my district; Fred Hochberg from the Small Business Administration speak with women business leaders; Bill Lann Lee speak to Asian Americans from central New Jersey. I could go on and on.

This is not being political. This is being a good representative. Secretary Riley is not being political. He is being a good Secretary. Secretary Riley has a reputation for being accessible. I think you might say; if you ask him, he will come. Well, I asked him. My constituents are glad that I did.

Now I don't know why Republicans haven't invited him to visit more, but I can guess. There is a deep vein of distrust for the Department of Education. Most of the Members of the current majority voted to abolish the Department of Education. They have real problems with our proposals for school construction so we can have modern facilities, adequate facilities for our students and hiring teacher s for smaller class sizes.


Mr. Chairman, you have served this country for 26 years, the last five chairing this Committee. You have been a champion for important causes like family literacy. That is why I am so disappointed that in your last hearing you would be supporting what will be surely seen as partisan bickering. Our teachers and our students and our parents deserve better.

I yield back my time, Mr. Chairman.

Chairman Goodling. I hope that applause is for his statement he made about me.

Mr. Isakson.

Mr. Isakson. Thank you, Mr. Chairman.

Chairman Goodling. Excuse me, there are two votes. Mr. Isakson will be the last one before we go to vote.

Ms. Woolsey. Mr. Chairman, we are not going to be back here by 12:30. Shouldn't we let them go after this?

Chairman Goodling. Thank you for the opportunity to help me chair the Committee, but we will continue.

Mr. Isakson.

Mr. Isakson. Thank you, Mr. Chairman.

Welcome, Mr. Secretary. At the outset, I would like to thank you for the effort and help you gave us in Georgia the 3 years that I chaired the State Board of Education. I enjoyed very much when you did visit there, and I think of all the members of this administration's Cabinet, there is no question that you have done an outstanding and dedicated job, exemplary in every incident. I agree with my colleagues that, on the areas that we have talked about with regard to audits and problems, that we should get to the bottom of those and get to the bottom of them quickly; and I am confident that once that is done they will be corrected.

My questions will be three, and they will be short; and, hopefully, the answers will be somewhat short, too, so we can get them all in before the time to leave. They deal with the school construction issue. They deal with the hundred thousand teachers, and maybe Mrs. Heumann would answer the last one with regard to IDEA. My interest here has nothing to do with partisan politics although the issues from time to time are done that way. It is with the fact that we sometimes in public life cumulatively send the wrong signals to the people of the country when we argue about significant issues and their misperceptions.

Number one, on the hundred thousand teacher issue the Chairman did a great job last year in providing the funding for teacher training and professional development, because it was a great concern that unqualified teachers were being handled. Would you agree with me that it is a true statement that in America today there are not 100,000 qualified unemployed public school teachers in America to hire?

Secretary Riley. I think that is a fair statement. I think they might be out there, Congressman, and I appreciate your statement. It has been a pleasure working with you. I think they might be out there if the pay was up and it was more attractive in terms of working conditions. In some school districts I think there are an awful lot of people who are good quality teachers that have dropped out in 3 years or 4 years and gone into other work because of the pay and working conditions.

But I think, generally, it is a very good point, that all of a sudden you don't have 100,000 teachers. But, of course, this is a 7-year program; and it has in it, as we discussed, funds for recruiting, for bringing in teachers. And all of that I think is very important, but I think the mid-career person is something we really do have to look at.

Again, we need to look at pay and working conditions to attract people in. But I understand your question. It is a very good question. We need to make sure we can bring people in to fill the slots that we are talking about.

Mr. Isakson. Well, my point, I don't necessarily disagree at all with your comment about mid-career teachers, but my point is simply here that, hopefully, it gets written somewhere that we put money in for classroom size reduction, that you and the Chairman both have corrected professional development to have certified teachers as the key. Our problem in America is not that we have got a bunch of teachers out there who aren't working. Our problem is in America we don't have a large enough resource of teachers to employ that are certified.

The second question: As you know, I have cosponsored a bill that deals with school construction; and in Georgia we initiated a $6 billion school construction program that is under way. The best estimate I have seen and the most conservative estimate on classroom construction in America is that there is a $303 billion need for classroom construction in the United States of America.

I fear that as this classroom construction debate goes on and we talk about the current proposal of 1.3 billion of the President's; which is 3/10ths of 1 percent of the need and $25 billion of tax credit bonds, which then is 8 percent, that if we establish the belief in the America people's minds that the United States Congress and government can fund the needs of classroom construction, we will never pass a bond issue locally, we will never pass a special purpose sales tax locally.

So as this winds down it is my hope that the Department, the administration and the Congress will come together to understand that where we help must be finite, it must be related to the role of the Federal Government, and not leave the perception in the minds of people who would vote on bond issue s and other local mechanisms that there is enough money here to do it. Because the unfunded need exceeds the $257 billion surplus that we have. And I say that constructively, not politically.

Secretary Riley. I think your point is well taken, and it is a very good point. You don't want to make people think that just because we pass a portion that all of a sudden the problem is solved. It isn't.

But the way that the proposal is designed, it is to call for sharing. In other words, it pays only the interest, as you know, on the bonds. It is not in any way intended to take the whole issue. And by doing that it spreads it out and takes a lot of the burden off. But it does call for sharing and calls for the continued passing of a bond issue and so forth. But you can go much, much farther; twice as far, really, if you do that.

But I thoroughly agree with you. You don't want to mislead people in thinking you have solved the problem, because that would not be true.

Mr. Isakson. Thank you.

My last question, if the Chairman will give me the liberty, and maybe Mrs. Heumann will answer this. This is one just for the local systems, just want to get this on the record. Since the first passage of 42194 I guess in the '70s and subsequently, IDEA, isn't it true that IDEA and special ed has been really an entitlement available to any American child that qualifies?

Ms. Heumann. Yes, IDEA is intended to be an entitlement.

Mr. Isakson. Isn't it true as we reach towards 100 percent funding of the 40 percent level everybody needs to understand local schools have for years been funding a hundred percent of that entitlement without much support and as we move forward we are not paying for new special education as much as we are freeing up dollars that otherwise had this been for the right reasons been spent that way?

Ms. Heumann. I think that what we are doing is having the Federal Government step in to assist local school districts in providing needed services at the same time that we are making it clear that the States have a constitutional obligation to assure education for disabled children.

Mr. Isakson. I think that is the same thing, and I thank you very much. Thank you, Mr. Chairman.

Chairman Goodling. We will recess. There are two votes. Come right back immediately after that second vote so that we can continue.

Before we go, I just do want to straighten the record on default rates. I don't want anyone to think that 95 percent increase is some big whopper. Because the big increase came in '90 to '91, which was 4.6 percent; and I believe that was a little before this administration. So I just wanted to make sure we have the record straight.

We will come back immediately after we vote.

Mr. Ford. Secretary, are you going to be able to stay until we get back, sir?

Secretary Riley. I am here.

Chairman Goodling. The Secretary said he would stay up till one o'clock.





Chairman Goodling. Committee will come to order.

Mr. Hinojosa, you are next. We will just hold a minute, Mr. Hinojosa.


Mr. Hinojosa. Thank you, Mr. Chairman. I ask for unanimous consent to enter my entire statement into the record.

Chairman Goodling. Without objection.




Mr. Hinojosa. Secretary Riley, Deputy Secretary Holleman, Assistant Secretary Fleming, Assistant Secretary Judith Heumann, it is always a pleasure to see all of you.


Mr. Secretary, you have been a true friend to all American children during your tenure, but you have especially been a friend to the Hispanic community as no other education Secretary before you. Thank you for your tireless dedication and your genuineness to improving both education programs and the Education Department. And thank you, Mr. Fleming, for the outstanding service you have rendered to me and all of my colleagues in the House. I, for one, have greatly enjoyed the opportunities we have had to work together; and I am honored to call each of you my friend.

But I, too, would like to express my disappointment with today's hearing. The reported purpose of this hearing is to examine waste and fraud in the Department of Education. To be fair, it should be noted that Secretary Riley inherited a great number of problems from prior Secretaries of Education, some of whom are known to have been dedicated to the dismantling of their own Department, going so far as to refuse to submit budgets to the Department for 2-fiscal-year cycles for years ending 1983 and fiscal year ending 1984.

For example, we have reaped a great benefit from the $75 million given to date to the region, one education service center in Texas which oversees 38 school districts with over 298,000 students, 95 percent of whom are Hispanic, in south Texas. I know each time you visited you came away with a better appreciation for these programs' impact on Hispanic, low income but extremely motivated and bright students.

And to be fair, Mr. Secretary, you have corrected many of these institutional flaws during your remarkable tenure. You have admirably responded to the Chairman's request for information on various subjects.

Fellow Committee Members, I am proud to say the Secretary has personally visited my district twice during my 4 years now in Congress. Each time he came to witness the great impact of Federal programs like the E-rate or special programs such as Gear Up in my south Texas congressional district.

Today Secretary Riley has provided detailed explanations that show the problems inherited by his Department were quickly redressed or are still being addressed.

It is a sad comment that the Committee majority could have used our last remaining hours for better purposes such as focusing on the fact that there is much good news in higher education this year. Many of these accomplishments are due to you and your 4,600 department employees, Mr. Secretary.

While many of the Department's achievements are noted in your testimony, there are others worthy of note here today. For example, $18 billion have been added to the annual Federal education spending since 1995, and math SAT scores are at an all-time high. The National Assessment of Educational Progress reading scores have significantly improved in all grades' tests, and SAT scores increased in the last 7 years. The numbers of females and minorities taking the SAT test increased five-fold.


Mr. Chairman, Secretary Riley is the undisputed champion of minority education. Under his tenure the Department of Education has helped more than 200 colleges and universities, middle and high schools form partnerships to help 480,000 students and their families to attend college. Many of the beneficiaries are minority students, and that in south Texas is helping us a great deal improve and raise the level of education attainment, which is so important to us.

The Department of Ed has also been an avid partner in implementing the Hispanic Education Action Plan, which we know as HEAP. Since that time, investment in ed programs that serve large numbers of Hispanic students has grown significantly. American children in general have also benefited from grade funding increases for new and successful programs, which I mentioned earlier, E-rate, Gear Up and community technology centers.

These are among the exemplary programs that assist a great number of minority students and their families in districts such as mine in south Texas, which is the third poorest metropolitan statistical area in the Nation.

These are significant accomplishments, sharply contrasted by a RAND report released yesterday on public education in my home State of Texas.

Mr. Chairman, I ask unanimous consent to enter the entire report into the record.

Chairman Goodling. Without objection.

Mr. Hinojosa. Thank you.

The RAND report raises serious questions about the purported test scores gained on our State's standard assessment, the Texas Assessment of Academic Skills, which we commonly refer to as the TAAS. In particular, this report finds that results on TAAS collected by Governor Bush's State education agency and the other standardized tests tell very different stories. So when their report states that alleged minority student gains are illusory we must take notice. The report goes on to observe that evidence regarding the validity of score gains must be obtained by investigating.






So I want to conclude, Mr. Chairman; and I think it is vital to remember that true ed reform is slow and steady, based on empirical, unbiased data as you, Mr. Secretary, and your Department have done. We thank you very for the work you are doing for our children.

Chairman Goodling. That question wasn't too difficult to answer, was it? May I suggest that we not bring the presidential campaign into this hearing? We are not interested in that at this particular time.

Mr. Boehner?

Mr. Boehner. Thank you, Mr. Chairman. Mr. Secretary, welcome to this oversight hearing.

I think all of us understand that this is a political year, presidential election; and much has been made over the years of the travel by Cabinet members, especially to areas where there seems to be great political vulnerability. And much has been said about a race in New York, I can't remember which one, an excessive amount of travel there. But, Mr. Secretary, I bring this up because there has been some questions about travel that you have made into districts where this year, in any case, there are very vulnerable members.

I would point to an article that appeared in the Washington Post on August 27th of this year; and that article said, and I will quote, "In the past 7 months Riley has traveled at government expense to the congressional district of 10 vulnerable House Democrats to make joint appearances at what his schedule has described as education events".

I also draw some attention to your travel schedule in 1999, and this is from information submitted by the Department to the Committee. During 1999, Secretary Riley traveled to 12 Democrat districts to make joint appearances with Members. Only two of these districts in fact were competitive.

Now let me also then move to a third point, as to whether party affiliation has anything to do with where the travel has occurred. Again, from information submitted by the Department, we found that on April 1st, 1998, Representative Mike Forbes, then a Republican, asked you to visit his district. On July 17th, 1999, Representative Forbes switched political parties. This year, Mr. Forbes, again from information provided by the Department earlier this year, Mr. Forbes asked you to visit his district for a second time. It just so happened on April 6th of year, the Minority Leader, Mr. Gephardt, asked you to visit his district. And these are the facts, Mr. Secretary. On May 12th you visit ed a school in his district.

I might also point out again on August the first of this year, you visited another school in Mr. Forbes' political district, which happened to be about 5 weeks before the New York primary contest.

Now, in light of this evidence, would you be willing to admit, Mr. Secretary, that your travel planning involved targeting vulnerable Democratic incumbent Members?

Secretary Riley. Well, let me respond to several of your questions. The answer to that is no.

Let me first of all mention, it is a political time. I have an article from the Associated Press when Lamar Alexander had this job, and of course the same kind of questions were asked him about his visits in behalf of President Bush. And I would say to you that we have a standard that we go by.

The Washington Post article that you referred to was, unfortunately, misleading and wrong. I don't know where they got all the information from. But they referred to trips over the entire year that I had made, and I have made literally hundreds and hundreds of visits, and they identified some 12 visits over an entire year. One of the big things in their article was my State of America education speech in Durham, North Carolina, February or March and said that I was there to help Congressman Price. That is not right. That was where I made my American state of education speech. I was invited by Governor Hunt 3 or 4 years in a row, and I was finally able to agree to that. He picked the school out. It was a turnaround school. It was very poor and it had gotten to be very good. Congressman Price was there and I think two other Democrats were there. Richard Burr was there, a Republican. It was publicized nationally.

Mr. Boehner. Mr. Secretary, is it true that you had not visited a Republican Member of Congress this year until after the Committee sent a letter requesting the backup information which I referred to earlier, until after the Department received that letter.

Secretary Riley. Well, Scott, do you want to respond?

Mr. Fleming. Yes, you are referring to his visit on September 15 with Congresswoman Nancy Johnson, Republican of Connecticut. In fact she had initially requested the Secretary to visit her district when she was with the Secretary at a press conference back in April, early April. Immediately following that we contacted the Congresswoman's office to see if we could arrange a visit during the April district work period. Unfortunately her schedule was such that she was not going to be in the district at that time, which led to the postponement, and we have worked with her office to find a date. So that is the reason that trip occurred in September rather than much earlier.

Mr. Boehner. Mr. Chairman, my time is up but time permitting, if we get to a second round I will have further questions.

Chairman Goodling. Mrs. McCarthy.

Mrs. McCarthy. Thank you, Mr. Chairman, and thank you, Secretary Riley, for having patience regarding all of us. I am just curious when you came in in 1993 and took over, what challenges were you facing as far as the management of all the things that you are basically being accused of right now. What kind of setup was already there? How far had you gone from 1993 to now to where you put in safeguards, which I think is really important, and also from reading through an awful lot of our testimony and looking at everything else, what I could see is that you actually reported to the Inspector General that you saw some potential problems that you had heard from your staff and immediately started work with them, and I was just wondering if you would clarify that.

Secretary Riley. I would be happy to. As I pointed out earlier, there was a GAO report that came out in May of 1993. That is when we first came in office. The title of it "Department of Education: Longstanding Management Problems Hamper Reforms." I would point out that then we had another report that gave some seven points that they asked us to comply with as we were coming into office. They were promoting school readiness, these are very important issues that GAO came to us with, promoting high standards related to national education goals, widespread reform of Title I, Goals 2000, and so forth, helping students in transition from school to work, reducing student loan default rates. That was a big, big thing that we faced when we got there, new student loan information systems to prevent aid from being awarded to defaulters. Build a department that can implement major policy initiatives. These were the big things that GAO came to us with, and I am pleased to say that we have complied with all seven of them.

Now when you look at where we were in terms of management, we then started trying to put in an up to date system of management personnel and financial. I might point out to Mr. Hoekstra, one of the young people whom I attracted, Rod McGowan, who was a young White House fellow that was a Harvard businessperson, was really in charge of a lot of my personnel management and he left my department and went to work with Mr. Hoekstra's company. And I think he might have taken your job. I don't know. His job might not have been that high. His job is now with your company. He did a wonderful job in terms of management of our department while he was here. But we lost him to your company. This kind of thing, bright young people coming in, working on team development to get people where they knew how to work from department to department and not just under, as I have indicated, the single stovepipe system because everybody's department was connected.

And then we have proceeded in 1995 and 1996 to take the five different systems, all the financial systems and integrate them. That is very, very complex and complicated. We got a very responsible company that was on the list approved by the GSA, and they proceeded to do that. They have done it. We thought we were going to do it and have it completely in shape in 2 years, 2-1/2 years. After that period of time they had four of the five stovepipes in good shape but the fifth one was inadequate for our purposes.

So during that period that Mr. Hoekstra talks about we were dealing with that and we now have contracted with Oracle to do the fifth part of that and it is going to be next year a state of the art system. I am totally convinced of that, but it has been a long way from where we picked it up in 1993 to where we are today.

Mr. Clay. Will the gentle lady yield for a unanimous consent?

Mrs. McCarthy. Certainly, Mr. Clay.

Mr. Clay. Mr. Chairman, I ask unanimous consent to insert in the record at this point following Mr. Boehner's inquiry about political trips an article by the Associated Press dated August 29, 1992, headline, "Alexander To Visit Schools That Spotlight Bush's Programs." "Education Secretary Lamar Alexander said Friday he will begin a series of school visits to spotlight education programs spurred by President Bush. The trips are billed as a tour of excellent school programs. However, the political benefit to the travel is obvious, since most of the schools are in key states to Bush's reelection. Asked if the trips are used politically to boost the President, Alexander said, and I quote, 'I hope I boost the President. I hope I don't hurt him. I think the political season is the time and it is a good time really when we try to help America understand the issues.'"

Thank you.

Chairman Goodling. The gentleman's time has expired.

Mr. Schaffer.

Mr. Schaffer. Thank you, Mr. Chairman. Mr. Fleming, I am wondering if you might be a little more direct in answering Mr. Boehner's question. As I heard you, the answer was yes. Am I incorrect in that assessment?

Mr. Fleming. Would you rephrase? I am not sure which question.

Mr. Schaffer. Perhaps I will yield to Mr. Boehner to ask the question again; that a visit by the Secretary had not occurred in the Republican district until a letter had been forwarded, until after that point.

Mr. Fleming. I think I explained the chronology of events that led to that occurrence and we had been working with her office to find a date.

Mr. Schaffer. Would it be accurate to say that the answer would be, yes?

Mr. Wu. Would the gentlemen care to yield for me to address that travel issue a little bit?

Mr. Schaffer. Who is talking? Mr. Fleming, please.

Mr. Fleming. It would be helpful if I could add some further clarification with regard to the invitations and so forth involving Mr. Forbes.

Mr. Schaffer. Let's assume all the clarification. Is the answer yes or is it no?

Mr. Fleming. That was the first event this year where a Republican Member had requested the Secretary's presence.

Mr. Schaffer. Mr. Fleming, is there some reason you don't want to answer the question?

Mr. Fleming. However, I would point out in the last 2 years we received two requests from the Republican Members of the Congress that the Secretary join them for events in their district. The other was Chairman Goodling and he had asked that the Secretary join him at the York, Pennsylvania Chamber of Commerce back in January. Unfortunately, the Secretary had a commitment that evening. We had worked with the Congressman's staff to see if there was any flexibility with regard to the date.

Mr. Schaffer. Mr. Fleming, that is a fine explanation. I think you have documented that amply for the Committee. But in answer to Mr. Boehner's question as to whether a visit to a Republican district had taken place prior to or after the receipt of inquiries from this Committee, the answer is yes.

Mr. Wu. Would the gentlemen yield?

Mr. Fleming. If I could clarify, the answer is no.

Mr. Schaffer. So you did visit prior to the letter being received. Whose district was that?

Mr. Fleming. The Secretary has visited a number of Republican districts during the year and we provide notification to Members' offices when he is traveling there. And on various occasions Members have responded.

Mr. Schaffer. Well.

Mr. Wu. Would the gentleman stop badgering the witness and yield for a moment?

Mr. Schaffer. This was about the request that you had received.

Mr. Fleming. I explained.

Mr. Schaffer. Were any of those visits as a result from a request of a Republican?

Mr. Fleming. No, they were not. I made that clear.

Mr. Schaffer. So therefore the answer to Mr. Boehner's question is yes. Am I right or am I wrong?

Mr. Fleming. The answer is yes, but it must be understood that we had attempted to arrange that visit and it was not convenient to the Congresswoman's schedule prior to that date, and I think that is a very important clarification.

Mr. Schaffer. Let me go back to Mr. Holleman. Mr. Holleman mentioned that the Department of Education had received an outside audit in 1997. I just want to clarify, and I would ask unanimous consent to submit for the record the schedule or the list going back to 1991 up through 1999 of audits that have been accomplished in the Department of Education.




Mr. Schaffer. What it points out is that in 1997 the Department conducted its own audit with the assistance of Price Waterhouse, but it was not an outside audit. It was an internal audit.

Mr. Holleman. Price Waterhouse is an outside accounting firm. The inspector general is responsible for the audit of our department.

Mr. Schaffer. That is right. It was accomplished with the assistance of Price Waterhouse, but it was not an outside audit as we have seen with the Ernst & Young audits.

Mr. Holleman. It is impossible for me to respond. According to my Chief Financial Officer, Price Waterhouse did it.

Mr. Schaffer. I would point out, Mr. Chairman that it is inconsistent with the information given to the Committee previously. I would submit the previous testimony to the record if there were no objection.

Secretary Riley. Mr. Chairman, I could ask our Chief Financial Officer to make a statement since he has raised that question.

Mr. Schaffer. Mr. Chairman that may be in order. I have some more questions I would like to accomplish within the 5 minutes here.

Mr. Holleman. I don't think there is any doubt.

Mr. Schaffer. I am completely satisfied that the previous testimony had been accepted by the Committee for the record.

Mr. Kind. Mr. Chairman, I would request that the witness be given a chance to respond.

Chairman Goodling. Would you respond in writing to whatever Mr. Schaffer's question is, and, Mr. Schaffer, would you ask your next question?





Mr. Schaffer. Thank you, Mr. Chairman. The next is going back to the Impact Aid issue. When the $2 million was discovered stolen it was a number of months, in fact it wasn't until July, that the superintendent of the school district in South Dakota called asking where the money was. The Department had known the money had been stolen for a number of months but it was his phone call, according to the superintendent, that precipitated the response in notifying him that the money was stolen and that is why he hadn't received it. He had to call to ask for it in order for him to receive the funds.

Why was there such a lag time between the time the theft took place, the time it was discovered, and the time the school district in South Dakota actually received the $2 million?

Mr. Holleman. According to our Chief Financial Officer and the records, that is simply not correct, that the money, in fact, was paid within, I believe, 2 weeks. It was within 2 weeks of the theft having occurred. So your facts are not correct, Mr. Schaffer.

Mr. Schaffer. Mr. Chairman, I would ask that the article containing the statement of the Bennett County Superintendent of South Dakota also be entered into the record. There is no objection. Thank you, Mr. Chairman.





Chairman Goodling. Ms. Woolsey.

Ms. Woolsey. Thank you, Mr. Chairman. I would like to thank all the members of the Department for being here and our wonderful Secretary. In 1993 I came to Congress from the Sixth Congressional District in California and Governor Riley came from South Carolina at exactly the same time to be the Secretary of Education, and we both came to make education this Nation's number one priority. I came with a great deal of passion for the issue. He came with passion, with experience, knowledge and the ability to run a huge department so that we could have great successes, which we have experienced over the last 8 years, successes that have benefited our teachers, our students and our parents. And finally probably, despite the fact that the Republicans have tried, possibly because of the fact that the Republicans tried to do away with, eliminate the Department of Education, education is finally this Nation's number one priority. If my message was up on these little screens that have been popping up funny little messages all day long that I don't understand, I don't know what these screens are supposed to be about, my message would say thank you, Dick, thank you very, very much. You have been marvelous.

Now about safe districts and the Secretary visiting in close races, I have a safe district, I think it is safe because I have invited Secretary Riley to come to my district to listen to the people in my district and they have given him an earful, let me tell you. And each time he has been there, each time you have been there, Secretary Riley, we have learned something and what we have learned has improved what we are doing here in Washington. One of things we have improved is answering the needs of our teachers and our parents about having too much to do and could we bring services that would support them closer to the school site, and we have a title in the education bill that does just that.

I would like to ask about other issues you have heard about when you have visited our districts and what we have done in response to those issues.

Secretary Riley. Well, as I indicated earlier, it is very good for me to get out of Washington and go hear what really is on people's minds and what real problems are out there. And I have done that in your district and I see a lot of other people. I know I had a great visit in Hawaii. And things are different in Hawaii than they are in perhaps your district or in Washington, in Oregon or New Jersey. The fact is when you get out there and you talk to people they are concerned about safety, they are concerned about drugs, they are concerned about quality teachers. They are concerned about class size. When you have a parent that comes to you and says you know my child has 36 kids in the class and the teacher just climbs the wall, you know, that is a real issue to a parent. And you can talk about all the other stuff you want to, but that is what that parent is interested in.

I was in New Jersey visiting, and it wasn't in your district, Congressman, but another one, urban area, poor area, a downtown school. All of the playground had been taken up with portables out there because it was overcrowded. It had one computer, I think. It was not connected to the Internet. It has since gotten connected. I saw eight or ten children, minority children, little African American children in the hall and I inquired about that. They were waiting to get their asthma treatment. Dingy school, terrible air. These kids are expected to learn without the high standards and we can sit in the comfort of our office and talk about all the bureaucracy we want to talk about. I am concerned about those children and so are you. I would like to get out there and see what is out there, and then it gives us the energy to come here and fight for the things that we believe in.

Ms. Woolsey. If my time is not up, I would like to yield to Congressman Wu.

Mr. Wu. I thank the gentlewoman from California for yielding for a moment. I would like to thank George W. Bush and the Secretary for visiting my congressional district, but I would like to contrast the nature of their two visits. Quite frankly, the Secretary, I thought, did an important job in coming to my congressional district to highlight the way the class size reduction program is working and the way that it was intended to work. It was working exactly as intended and it brought hope to my congressional district. In stark contrast, when Mr. Bush came to visit my congressional district.

Chairman Goodling. Mr. Wu, Ms. Woolsey's time has expired.

Mr. Wu. He declared an education recession, which does not exist in my state. My state has the highest SAT scores.

Chairman Goodling. Do you have a unanimous consent request?

Mr. Clay. Yes. Mr. Chairman, I request unanimous consent to submit a letter from Steven Winnick, the Education Department's Career Ethics Counsel. It speaks to the Secretary's leadership and ethics.

Chairman Goodling. Without objection.

Mr. Castle, you are the last.

Mr. Castle. Thank you, Mr. Chairman. I am happy to be here at all, much less last.

I would like to turn the subject to Title I. We have been working on Title I as part of the reauthorization of ESCA, as you know, Mr. Secretary, during the course of this entire year. I am concerned about Title I frankly. My gut feeling tells me that it does some good but it is about half of all the money we put into public education, and for that reason I would like to have it a little better evaluated than we have.

There was an interim report on something called longitudinal evaluation of school chance and performance which is on Title I, which came out on June of 1999, which said the final report would be ready in early 2000, which we unfortunately did not have during the course of our deliberations on this particular subject matter. There was supposed to be a meeting of the technical advisers to discuss the draft sometime recently. That meeting has been cancelled. It has been my understanding, and I don't know this, it is my understanding the Department has the final work from the contractor on the Title I evaluations but the final report is not scheduled to be released until after the elections.

I recognize you may have some concerns about this evaluation. This delay until after the election frankly raises legitimate questions in my mind about the reasons for the delay and whether they may be politically motivated. It is for this reason that I proposed an independent evaluation in my legislation, instead of doing it for OERI as part of the Department, to have OERI separate so those kinds of things wouldn't happen. But that aside, can you provide me with an update of the evaluation of the Title I program and your best estimate of when it will be released and why it is being delayed?

Secretary Riley. Certainly I will supply you with anything that I have. And I am not familiar with the delay, I know we were waiting on the ultimate evaluation, but I would certainly supply you with that this afternoon. I will check with my Title I people, Congressman, and let you hear from us this afternoon.


Mr. Castle. Thank you. I appreciate that, Mr. Secretary. Let me turn to one of my favorite subjects in which you and I disagree. You may not even know it. Maybe this letter was sent without your seeing a lot of it. But I really disagree with what you stated on the Office of Education, Research and Improvement, and we had an exchange of letters. We were marking it up actually in a bipartisan sense in the Subcommittee, but your letter put the damper on that and it is too bad. I think Dr. Kent McGuire is a fine man. I have no criticism of him at all. But I do believe that we need to seriously look at education research in this country, and I do not believe there have been improvements any time, much less during the 8 years of your administration. I think there is a lack of independence; there is a lack of scientific testing. There are not control groups in terms of how we do education testing. There is a lack of discriminating evaluation. I think there is a lack of replication in dissemination of information.

Can you name for me what you would rate the top three projects to come out of OERI in the last 2 years?

Secretary Riley. What did you say?

Mr. Castle. I am sorry. Can you name for me what you think are the top three or four projects that have come out of OERI in the last 2 or 3 years?

Secretary Riley. I can't respond to that offhand. I will certainly take a look at all the things that have come out of there and tell you what I think are the top three. But you know, they are reporting something out weekly, and I don't know which I would consider the top three. Kent McGuire is our Assistant Secretary over there. Now have you ever met with Kent?

Mr. Castle. I have met with Kent. I have a good working relationship with him and talked with him on a number of occasions about this. But my judgment is there is not a lot coming out of OERI that isn't rubber-stamped. If it goes in, it seems to come out automatically accepted. I just have serious questions about the credibility of the kind of research they are doing, frankly. I think we need to pull together, Mr. Secretary, as Republicans and Democrats on a good piece of legislation to make a difference in that part of your department. It is unfortunate that we couldn't before, and I would hope that we could, whoever is elected president next time. I would hope you would back that.

Secretary Riley. I would back that completely, and I would be happy to get Kent together with you and discuss the issues you are concerned about. I think that is constructive concern, and I would be happy to join with you in whatever recommendation we would have.

Mr. Castle. Let me ask you another question. And as we are both governors together and have done a lot of things in education in a similar sense, serving on the NAGB board and things of that nature, I know this is political and I think I can tell the answer before I ask it. It really bothers me, when I was a governor, when Federal dollars were going to come my way I wanted all the flexibility I could get in terms of how I was going to spend that. I can't imagine that the 50 governors across this country wouldn't say, look, if you are going to give us money, give us the flexibility.

I don't think we should run education from the Federal Government. We only expend about 6 percent of the money, but the bottom line is that when we start to dictate as to how we are going to expend money, such as for school construction or more teachers or whatever it may be, with maybe the exception of those who are poor, in the Title I programs, for example, and nutrition, which is sort of related but a little bit different, or disabilities and IDEA, aren't the States better served if you give them the opportunity to be able to make the decision. Do they want to improve teachers, or do they want more teachers? Can they use the money in something else? Aren't we really putting ourselves in a box by saying it must be these absolute programs simply for political reasons?

Secretary Riley. Let me respond. There is much more, as you well know, flexibility out there now since we came in office than before. Title I is much more flexible. Of course you can use Title I for after school programs, for early childhood, teacher professional development. There are all kinds. I am very big on that coming out of the governor's office and you and I have worked on NAGB together on all of these issues.

I will say that we only had 7 percent of the money, as has been discussed a lot, coming from the Federal Government. If you just throw that 7 percent out there to be used generally in education, you have no way of evaluating it. You have no way of really making a mark with it. And I really think the process of identifying, targeting kids, whether it is disadvantaged kids or disabled kids or limited English proficient kids or whatever, and also prioritizing national priorities, that makes good sense to me, and you have to balance those things out.

So what I prefer to do is to have the targeting and have the priorities, but have flexibility within that, and that makes good sense to me.

Mr. Castle. Just in closing, I think you are talking about making a Federal mark. I think we should be talking about making an education mark. I just think that right now there are too many constraints on the flexibility issue, and I wish you all would consider what you are pushing for at the end so we could work it out together with maximum flexibility to the States and local districts.

I yield back.

Secretary Riley. Congressman, you and I have worked on the Ed Flex, as the Chairman and other Members of the Committee have, and now that is available for all States that can qualify.

Mr. Castle. That is a good program.

Chairman Goodling. We have kept you 10 minutes longer than we said.

Mr. Petri. Mr. Chairman, as we move to adjourn I just want to congratulate you on your tenure as Chairman of this Committee and to note how appropriate it is that we are ending what I think is probably the last hearing of the 106th Congress of the people of the United States on the important subject of education and how we can do an even better job of meeting the educational needs of our country. Congratulations.

Chairman Goodling. Oh, I will give you another hour.

Secretary Riley. You didn't cut him off, I notice.

Chairman Goodling. The Committee stands adjourned.


Whereupon, at 1:10 p.m., the Committee was adjourned.