FR Doc E7-20842
[Federal Register: October 23, 2007 (Volume 72, Number 204)]
[Notices]
[Page 60185-60199]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23oc07-78]
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Part V
Department of Education
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Compliance Agreement; Notice
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DEPARTMENT OF EDUCATION
Compliance Agreement
AGENCY: Department of Education.
ACTION: Notice of written findings, compliance agreement with the
Commonwealth of Puerto Rico and the Puerto Rico Department of
Education, and subsequent actions.
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SUMMARY: This notice is being published in the Federal Register
consistent with sections 457(b)(2) and (d) of the General Education
Provisions Act (GEPA). Section 457 of GEPA authorizes the U.S.
Department of Education (the Department) to enter into a compliance
agreement with a recipient that is failing to comply substantially with
Federal program requirements and for whom the Department determines
that full compliance is not feasible until a future date. Section
457(b)(2) requires the Department to publish written findings leading
to a compliance agreement, with a copy of the compliance agreement, in
the Federal Register. If a recipient fails to comply with the terms and
conditions of a compliance agreement, the Secretary may take any action
authorized by law with respect to the recipient.
On October 25, 2004, the Department entered into a compliance
agreement (Agreement) with the Commonwealth of Puerto Rico (Puerto
Rico) and the Puerto Rico Department of Education (PRDE) because PRDE
was failing to comply substantially with numerous Federal requirements,
and it was clear to the Department from all available information that
PRDE would not be able to come into full compliance with applicable
Federal requirements for the administration of Department programs
until a future date. The Agreement applied to all grant funds awarded
to Puerto Rico and PRDE by the Department's Offices of Special
Education and Rehabilitative Services; Elementary and Secondary
Education; English Language Acquisition, Language Enhancement and
Academic Achievement for Limited English Proficient Students;
Vocational and Adult Education; Innovation and Improvement; and
Postsecondary Education. Prior to, and during the term of, the
Agreement, the Department and PRDE have been working collaboratively to
resolve a backlog of PRDE audits dating back to 1994 and, through
jointly developed corrective action plans, to address a range of
longstanding problems in PRDE's administration of Federal grants in the
areas of grants management, payroll, financial management, property
management, and procurement.
FOR FURTHER INFORMATION CONTACT: Mr. Phil Maestri, U.S. Department of
Education, Office of the Secretary, 400 Maryland Avenue, SW., Room
7E206, Washington, DC 20202-6132. Telephone: (202) 205-3511.
If you use a telecommunications device for the deaf (TDD), you may
call the Federal Relay Service (FRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed under FOR FURTHER
INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION: PRDE is a State educational agency (SEA)
that receives grant funds under a number of programs administered by
the Department, including programs authorized under the Elementary and
Secondary Education Act of 1965, as amended; the Carl D. Perkins Career
and Technical Education Act of 2006 (formerly the Carl D. Perkins
Vocational and Technical Education Act); the Adult Education and Family
Literacy Act; and the Individuals with Disabilities Education Act.
Because of longstanding and recurring audit findings of fiscal and
programmatic accountability deficiencies in the administration of
Department programs by PRDE and several other agencies in Puerto Rico
with management responsibility for Department funds, in 2002 the
Department designated PRDE a ``high-risk'' grantee under the authority
of 34 CFR 80.12. At that time, the Department imposed special
conditions on all Department grants awarded to PRDE because of its
history of unsatisfactory performance, as uncovered by audits dating
back to 1994. Audit findings were recurrent over several years and
involved such issues as missing or inadequate documentation to support
procurements, lack of proper accounting procedures, mismanagement of
property, and improper payroll costs.
In September 2003, the Department and PRDE began a collaborative
effort, under the Department's Cooperative Audit Resolution and
Oversight Initiative (CAROI) to resolve jointly the backlog of
unresolved PRDE audits, which contained over six hundred audit findings
dating back to 1994. Through this effort, PRDE made some progress in
establishing controls to improve its payroll and procurement processes
and its grants management system, to enable it to address a number of
the recurring audit issues and make systemic changes. However, it
appeared that it would take additional time to address completely the
underlying issues and longstanding systemic problems that led to the
large number of audit findings that PRDE was attempting to resolve.
Therefore, the Department proposed the possibility of Puerto Rico,
PRDE, and the Department entering into a compliance agreement, pursuant
to section 454 of GEPA, that would apply to all Department grants
awarded to, and administered by, PRDE. The purpose of the compliance
agreement would be to bring PRDE ``into full compliance with the
applicable requirements of the law as soon as feasible and not to
excuse or remedy past violations of such requirements.'' \1\ 20 U.S.C.
1234f(a). Under a compliance agreement, PRDE would have up to three
years to continue its efforts to address the audit findings and
underlying problems by implementing significant changes and
improvements in grant administration, payroll, financial and property
management, and procurement in order to come into full compliance with
Federal requirements related to the programs under which the Department
awards grants to PRDE. In order to enter into a compliance agreement
with Puerto Rico and PRDE, the Department had to determine, in written
findings, that PRDE would not be able to comply until a future date
with the applicable program requirements and that a compliance
agreement would be a viable means for bringing about such compliance.
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\1\ Section 454 of GEPA, 20 U.S.C. 1234c, sets out the remedies
available to the Department when it determines that a recipient ``is
failing to comply substantially with any requirement of law
applicable'' to the Federal program funds administered by this
agency. Specifically, the Department is authorized to--
(1) Withhold funds;
(2) Obtain compliance through a cease and desist order;
(3) Enter into a compliance agreement with the recipient; or
(4) Take any other action authorized by law.
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In accordance with the requirements of section 457(b) of GEPA, 20
U.S.C 1234f(b), Department officials conducted a public hearing in
Puerto Rico in October 2004. Witnesses representing PRDE and other
concerned individuals testified at this hearing on whether a compliance
agreement with Puerto Rico and PRDE would be appropriate. The
Department reviewed this testimony and all other relevant materials and
concluded that, while the Department had been working closely with
Puerto Rico, PRDE, and other Puerto Rico agencies to address the major
issues that PRDE had been facing in administering Department grant
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programs, it was clear that the problems could not be corrected by PRDE
immediately and that PRDE would need more than one year to correct
them. Therefore, the Department, Puerto Rico, and PRDE entered into the
Agreement, a comprehensive compliance agreement with a three-year term.
The Agreement, which incorporated the Department's written findings,
gave PRDE time to develop integrated and systemic solutions to problems
in managing its Department funds and programs. Under the terms of the
Agreement, by the end of the three-year term, PRDE is supposed to be in
full compliance with the requirements of all programs funded by the
Department. The Agreement became effective on October 25, 2004 and is
set to expire on October 25, 2007.
Upon entering into the Agreement, the Department removed PRDE's
``high-risk'' designation related to the audit findings and underlying
problems, based upon PRDE's demonstration of initiative and commitment
to resolving the problems that had led to the ``high-risk''
designation, and upon PRDE's willing and effective collaboration with
the Department. Also upon entering into the Agreement, the Department
and PRDE worked together to develop corrective action plans covering
grants management, payroll, property management, and procurement. These
plans contained goals, action steps, and objectives to guide PRDE into
full compliance with Federal requirements applicable to the grants that
it receives from the Department. The Department has been closely
monitoring PRDE's progress in implementing these corrective action
plans through site visits, conference calls, meetings, and reviews of
PRDE's periodic written reports. In addition, in July 2006, the
Department and PRDE collaboratively resolved the backlog of audit
findings from audit reports issued for fiscal years 1994 through 2003;
in May 2007, they resolved the fiscal year 2004 single audit of PRDE;
and in September 2007, they resolved, in large part, the fiscal year
2005 single audit of PRDE. The Department is currently working with
PRDE to determine the full extent of PRDE's progress under the
compliance agreement and corrective action plans, and the effect of
such progress. Based on this assessment, the Department is also
determining next steps for PRDE following the expiration of the
Agreement.
As required by section 457(b)(2) of GEPA, 20 U.S.C. 1234f(b)(2),
the Agreement (which incorporates the Department's written findings in
the sections entitled ``Overview of Issues Addressed by this Compliance
Agreement'' and ``Removal of `High-Risk' Designation'') is included as
appendix A of this notice.
Electronic Access to This Document
You may view this document, as well as all other Department of
Education documents published in the Federal Register, in text or Adobe
Portable Document Format (PDF) on the Internet at the following site:
http://www.ed.gov/news/fedregister.
To use PDF you must have the Adobe Acrobat Reader Program with
Search, which is available free at this site. If you have questions
about using PDF, call the U.S. Government Printing Office (GPO), toll
free, at 1-888-293-6498; or in the Washington, DC area at (202) 512-
1530.
Note: The official version of a document is the document
published in the Federal Register. Free Internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at:
http://www.gpoaccess.gov/nara/index.html.
(Authority: 20 U.S.C. 1234c, 1234f).
Dated: October 18, 2007.
Hudson La Force III,
Senior Counselor to the Secretary of Education.
Appendix A--Compliance Agreement Among The Commonwealth of Puerto Rico,
The Puerto Rico Department of Education, and The United States
Department of Education
October 25, 2004
I. Overview of Issues Addressed by This Compliance Agreement
The Puerto Rico Department of Education (PRDE) has been undertaking
a large-scale endeavor to address long-standing, systemic issues faced
by PRDE, including the resolution of audit findings issued by auditors
dating back to 1994. PRDE has been putting forth great effort to
rebuild, to make important changes, to improve education services to
students, and to restore the trust and credibility previously lost by
PRDE. A number of these activities have been undertaken in accordance
with special conditions imposed on PRDE's grants, with technical
assistance by the U.S. Department of Education (the Department), and as
part of an initiative undertaken between PRDE and the Department, under
the Department's Cooperative Audit Resolution and Oversight Initiative
(CAROI). Although the Department has been working closely and
productively with PRDE in recent months to address these major issues,
it appears that it will take more than one year to completely address
some of the long-standing, systemic problems that PRDE is working so
hard to correct, and it will also take the continued cooperation of
other parts of the Puerto Rico government. Therefore, the Department is
entering into this comprehensive, three-year Compliance Agreement
(Agreement) with the Commonwealth of Puerto Rico (Puerto Rico) and
PRDE.
Through this Agreement, Puerto Rico and PRDE, with assistance from
the Department, agree to develop or complete integrated and systemic
solutions to problems they have had in the management of Federal
education funds and programs. The issues are being carefully examined
and addressed from the perspective of PRDE and other Puerto Rico
agencies with management responsibility for resources or programs that
have an impact on education in Puerto Rico. Solutions involve re-
engineering systems and processes and the increased use of technology.
In addition, solutions must address communication and cooperation among
Puerto Rico agencies, including PRDE (including its Office of Federal
Affairs (OFA)), Departmento de Hacienda, Oficina de Gerencia y
Presupuesto (OGP), and Banco Gubernamental de Fomento. Whatever the
solutions Puerto Rico and PRDE choose to implement, they should seek to
ensure the best educational systems possible for the students of Puerto
Rico. It is also understood that by the end of the term of this
Agreement, Puerto Rico, and PRDE in particular, must be in full
compliance with the requirements of all programs funded by the
Department.
This Compliance Agreement is also intended to ensure an effective
planning and evaluation process throughout PRDE's programs and
initiatives. Planning and evaluation processes are the basis for
determining program goals, current status, improvement needs, budgets,
resources, effectiveness of results, and other important aspects of
effective program management. Through this Agreement, Puerto Rico and
PRDE will improve program planning and evaluation for education
programs and use the plans and evaluation results to drive management
and resource decisions.
This Compliance Agreement addresses the following issue areas:
Grants Management generally, Grants Management for several specific
program areas, Payroll, and Procurement and Property Management. This
Agreement lists specific tasks, goals, and measurable objectives for
each issue area. Action steps and substeps with corresponding
timelines, the persons and offices responsible for carrying out
specific tasks, and
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underlying problems resolved by Puerto Rico's compliance with each
task, goal, and action step, will be contained more fully in the Puerto
Rico Action Plans that will be completed within the next thirty days
and will be incorporated into the Agreement by reference.
The General Grants Management Task contained in this Agreement
(Task 1.0) applies to the administration of all Federal education
programs administered by PRDE. In addition to the general section on
Grants Management, Tasks 2.0 through 5.0 below contain additional,
program-specific tasks, goals, and steps, which will apply to the
administration of specific areas or programs, as noted, including the
Community Schools, the Vocational Education Program, authorized under
the Carl D. Perkins Vocational and Technical Education Act of 1998 (20
U.S.C. 2301, et seq.), the Adult Education Program, authorized under
the Adult Education and Family Literacy Act (20 U.S.C 9201 et seq.),
and the Special Education Program, authorized under Part B of the
Individuals with Disabilities Education Act (20 U.S.C. 1401, et seq.).
The Department will review Puerto Rico's and PRDE's progress in
meeting the terms of this Agreement by assessing the systemic
approaches and degree of integration that Puerto Rico and PRDE bring in
designing and implementing solutions to the complex problems in each of
the crosscutting areas, by the demonstrated communication, cooperation,
and organizational culture change toward ``getting the work done
right,'' and by assessing Puerto Rico's and PRDE's completion of
corrective action steps. The approaches adopted by Puerto Rico and PRDE
should include effective planning and evaluation of resource and
management decisions that are designed to produce better educational
results.
In making the critical systemic and organizational changes required
to meet the terms of this Compliance Agreement, it is important to
understand that the Agreement is not only designed to bring about
compliance with Federal requirements but toward improving education for
the students of Puerto Rico. In the end, the Department and Puerto Rico
will judge success by compliance with all requirements and by
determining how well Puerto Rico has improved educational programs by
meeting applicable requirements and the terms of this Compliance
Agreement.
II. Removal of ``High-Risk'' Designation
In 2002, the Department designated PRDE a ``high-risk'' grantee,
under authority of Sec. 80.12 of the Education Department General
Administrative Regulations (EDGAR) (34 C.F.R. 80.12). At that time,
special conditions were placed on all Department grants awarded to PRDE
because of its history of unsatisfactory performance, as uncovered by
audits dating back to 1994. The Department's special conditions were
intended to bring about necessary changes to Federal program
administration in Puerto Rico that would ultimately bring it into
compliance with all Federal program requirements. The special
conditions were intended to result in important improvements to Federal
grants administration in Puerto Rico so that the systemic problems
uncovered by the auditors would be corrected and would not reoccur. In
addressing the special conditions, and in conjunction with CAROI, as
outlined below, PRDE has taken numerous steps to address underlying
problems.
Since September 2003, the Department and PRDE have been working
together in a collaborative effort under the CAROI process, to jointly
resolve the backlog of unresolved PRDE audits, which contain over six
hundred audit findings dating back to 1994. As a result of this effort,
PRDE has already taken steps and established controls to improve its
payroll and procurement processes and its management of grants to
address numerous recurring audit issues and make systemic changes. It
has assigned knowledgeable staff to this task and has employed expert
contractors to assist in this effort. PRDE has sought to come into
compliance with Federal requirements with the ultimate goal of
improving educational services to all students in Puerto Rico.
One of the most significant steps Puerto Rico and PRDE have taken
is the creation of both an Internal Audit Office and an Audit Oversight
Committee that will provide independent review and oversight of Puerto
Rico and PRDE activities and will assure Puerto Rico and PRDE's
commitment to maintaining a strong control environment, quality
financial reporting, and compliance with program objectives and
regulations. The signing of the legislation for the Audit Oversight
Committee, on August 5, 2004, was a very positive step that
demonstrated the commitment and strides Puerto Rico and PRDE are taking
to protect the Federal funds they receive and to help ensure they meet
the fiscal and programmatic responsibilities under all Federal
programs. PRDE has worked very effectively with the Department and has
generally committed itself to improving its Federal program
administration by placing a high priority on addressing and ultimately
eliminating what had been found to be serious problems.
Since PRDE has demonstrated great initiative and commitment to
resolving the problems that led to the 2002 ``high-risk'' designation,
in recognition of the progress shown by PRDE, upon execution of this
Agreement, the Department will remove PRDE's ``high-risk'' designation.
However, all special conditions currently applicable to Federal
education grants awarded to PRDE remain in effect. The Department will
work with PRDE within thirty days to eliminate possible duplication of
effort in the special conditions and in this Agreement including with
respect to reporting requirements. In lieu of the ``high-risk''
designation, during the first six months following execution of this
Agreement, i.e., the early implementation phase of this Agreement, PRDE
will be on ``probationary status.'' During this period, the Department
and PRDE will continue the close, cooperative relationship that has
characterized their work under the CAROI initiative, but the Department
will scrutinize very carefully the progress that PRDE is making under
the Agreement. The Department will remain available to provide PRDE
with technical assistance that is needed, and it will also oversee the
progress made by PRDE on its Federal program administration, consistent
with the terms of this Agreement. PRDE will remain committed to
continued and timely movement toward full compliance with Federal
requirements.
III. Consequences for Not Meeting the Terms and Conditions of This
Agreement
A. Mutual Agreements and Understandings Regarding the Terms, Conditions
and Enforcement of This Compliance Agreement
Severability
The parties agree that this Compliance Agreement includes terms and
conditions that apply to the various Federal programs included in the
Agreement (hereafter ``covered Federal programs'') and also terms and
conditions that are program specific. To that end, the parties agree
that each such term and condition for each covered Federal program may
constitute a separate agreement among Puerto Rico, PRDE and the
Department. For purposes of 20 U.S.C. Sec. 1234f, each such term or
condition as to each covered Federal program shall be severable from
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each other term or condition for each of the covered Federal programs.
Unless set out otherwise, a determination by the Department under 20
U.S.C. Sec. 1234f (d) that Puerto Rico or PRDE is not meeting terms
and conditions may be specific to such term, condition, or program
without impacting Puerto Rico's or PRDE's continuing obligations under
the Agreement. That is, all other terms and conditions for all covered
Federal programs or the specific term or condition for other covered
Federal programs would remain in place for the duration of the
Agreement or until such time as the Department were to determine that
Puerto Rico or PRDE had substantially failed to meet those terms and
conditions.
Alternatively, the parties understand and agree that a
determination by the Department under 20 U.S.C. Sec. 1234f(d) that
Puerto Rico or PRDE has substantially failed to meet any of the terms
and conditions shall, at the Department's discretion, be grounds for
finding the Agreement, as to such terms and conditions, no longer in
effect and that the Department may take any and all additional actions
authorized by law. At the same time, if Puerto Rico or PRDE
substantially fails to meet the terms and conditions of the Agreement,
the Department may terminate the entire Agreement, and the Department
may take any and all actions authorized by law. Some examples of such
actions are set out below.
Judicial Enforcement
1. Cease and Desist Order Under 20 U.S.C. Sec. Sec. 1234c(a)(2)
and 1234e
The Department may seek injunctive relief to compel specific
actions or to stop specific actions. Under this process, the Department
issues a complaint to Puerto Rico or PRDE, describing the factual and
legal basis for the Department's belief that Puerto Rico or PRDE is
failing to comply substantially with a requirement of law including
this Agreement, and containing a notice of hearing. A hearing before an
Administrative Law Judge (ALJ) could then occur. The ALJ's report and
order, requiring Puerto Rico or PRDE to stop specific actions or
compelling specific actions, becomes the final agency decision. The
Department may enforce the final order by withholding any portion of
Puerto Rico's or PRDE's grant award or certifying the facts to the
Attorney General who may bring an appropriate action for enforcement of
the order.
2. Referral to Department of Justice For Appropriate Enforcement--
20 U.S.C. Sec. 1416
If the Department finds, after reasonable notice and opportunity
for hearing to Puerto Rico or PRDE, that there has been a failure by
Puerto Rico or PRDE to comply substantially with any provision of
applicable Federal laws (with regard to the programs to which 20 U.S.C.
Sec. 1416 applies) (including terms of Compliance Agreement within
timelines in the Agreement), the Department may, after notifying Puerto
Rico or PRDE, refer the matter for an appropriate enforcement action,
which may include referral to the Department of Justice.
Withholding of Grant Funds--20 U.S.C. Sec. Sec. 1234c(a)(1), 1234d and
1416
If the Department finds, after reasonable notice and opportunity
for hearing to Puerto Rico or PRDE, that there has been a failure to
comply substantially with a requirement of law, including with this
Agreement, the Department may, after notifying Puerto Rico or PRDE or
both, withhold, in whole or in part, future payments. The Department
may limit withholding to a particular Federal grant or part of the
grant.
Escrow Account To Fund Third-Party
If Puerto Rico or PRDE fails substantially to meet a significant
term in this Compliance Agreement, the Department may place an
appropriate amount of Puerto Rico's or PRDE's grants into an interest
bearing escrow account to fund the duties of a third-party fiduciary
agent. Puerto Rico or PRDE may request a reconsideration of this
action.
Recovery of Funds--20 U.S.C. Sec. 1234a
Any funds improperly expended or not properly accounted for are
subject to recovery by the Department according to 20 U.S.C. Sec.
1234a.
B. Criteria for Determining Consequences
Puerto Rico or PRDE will provide the Department with progress
reports--as required in Section IV below--for the action steps and
measurable objectives set forth in the Agreement. Puerto Rico or PRDE,
and the Department agree that substantial failure to: (1) provide all
required reports in a timely manner, (2) show substantial progress in
completing action steps as required, (3) complete significant action
steps within the timeframes designated in the Agreement, or (4) achieve
critical measurable objectives as specified in this Agreement, will be
considered a failure to meet the terms and conditions of this
Agreement.
Reinstatement of ``High-Risk'' Status Under 34 CFR Sec. 80.12
In the event that PRDE and Puerto Rico fail to continue their
efforts toward correcting the systemic problems uncovered by the
auditors between 1994 and 2003, and are not making sufficient progress
to meet the terms of this Agreement, the Department retains the
authority to reinstate the ``high-risk'' designation being removed
under the terms of this Agreement. If the Department determines that
such reinstatement becomes necessary, additional special conditions or
restrictions may include, but will not necessarily be limited to: (1)
payment of Federal funds on a reimbursement basis; (2) withholding
authority to proceed to next phase until receipt of evidence of
acceptable performance within a given funding period; (3) requiring
additional, more detailed financial reports; (4) requiring additional
project monitoring; (5) requiring PRDE to obtain technical or
management assistance, including the designation of a third-party
fiduciary to administer all or part of PRDE's grants from the
Department; or (6) establishing additional prior approvals. The use of
a condition for one covered Federal program does not require or
preclude its use for a different covered Federal program.
In the event that the Department decides to reinstate ``high-risk''
status, it would notify PRDE as early as possible, in writing, of the:
(1) Nature of additional special conditions and restrictions; (2)
reason(s) for imposing them; (3) corrective actions which must be taken
before they will be removed and time allowed for completing any
additional corrective actions; and (4) method of requesting
reconsideration of conditions and restrictions imposed.
IV. Reporting Requirements
This Compliance Agreement requires regular progress reporting for
all issues. Generally, Puerto Rico and PRDE must provide the Department
with progress reports on a quarterly basis.
The submission of each written report will be preceded by a meeting
or conference call among representatives of Puerto Rico (which may
include representatives of the various Puerto Rico agencies mentioned
in Section I above), PRDE, and the Department, within five business
days (according to PRDE's business calendar) of the end of the quarter,
to discuss Puerto Rico and PRDE's progress and what level of detail the
Department wants Puerto Rico and PRDE to cover in its written quarterly
report that will be submitted within fifteen business days (according
to
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PRDE's business calendar) of the call or meeting. The parties may
modify the schedule by mutual agreement.
Subject to the meeting or call above, in general, each quarterly
report will include information such as: (1) a description of
activities and progress for each task and its related sub-tasks during
the reporting period, (2) the status of each critical action step
required to be taken during the reporting period, (3) documentation of
critical action step completion for those steps required to be
completed during the reporting period (including explanations of delays
for all steps not completed that were scheduled to be completed during
the period, and expected completion dates for all unimplemented steps),
(4) documentation of measures of performance and results, and (5) other
data or documentation as specified within the action steps for each
task or related sub-task in this Agreement, and/or discussed in the
pre-report meeting among the Department, Puerto Rico, and PRDE.
Puerto Rico and PRDE will consider, if feasible and cost-effective,
transmitting reporting information to the Department via an Internet
web site. If transmittal of the reporting information is not possible
via a website, Puerto Rico and PRDE will continue to be responsible for
tracking, monitoring and reporting progress on all requirements and
milestones in this Agreement in a manner that is fully accessible to
the Department and the public. Reporting information will be updated
continuously, but in any event, on a quarterly basis, no later than
within fifteen business days (according to PRDE's business calendar)
from the day of the call or meeting among the Department, Puerto Rico,
and PRDE, specifying the specific reporting required for that quarterly
period. These reports also will fulfill the reporting requirements
required under PRDE's special conditions that are currently in effect
or as modified in accordance with the process to eliminate duplication
in Section II above. The first quarterly period will encompass the time
from which all parties sign this Agreement through December 31, 2004.
Within the first thirty days of this Agreement, the Department will
work with PRDE to agree on a more rigorous reporting schedule for
reporting progress during the first six months following execution of
this Agreement, (the early implementation phase of this Agreement).
V. Updated Action Plans, Action Steps, and Timelines
Action steps and timelines that PRDE has developed are included in
the task descriptions throughout this Agreement as well as in PRDE's
Action Plans that will be completed and incorporated into this
Agreement within thirty days of the execution of this Agreement. PRDE,
Puerto Rico, and the Department will continuously reassess the action
steps and timelines to determine if: (1) the action steps fully meet
the requirements of this Agreement, (2) the action steps will move
Puerto Rico and PRDE toward achieving required measurable objectives,
and ultimately, full compliance within three years, and (3) the
timelines need to be modified within the time boundaries set forth in
this Agreement. In addition to the areas currently covered in this
Agreement, the Action Plans will also include a section covering
continuing progress to be made in implementing the oversight systems
for the Internal Audit and Audit Oversight Committee, and the internal
audit function within PRDE.
Updating the action steps and interim timelines into Action Plans
for which Puerto Rico and PRDE will be accountable is a critical step
for each task and sub-task. Once Puerto Rico and PRDE complete the
development of Action Plans that address each task or sub-task, as
specified in this Agreement, and the Department agrees to the revised
Action Plans, the action steps and timelines in the Action Plans will
become additional requirements of this Agreement and be subject to the
reporting requirements and consequences for not meeting terms and
conditions as set forth in this Agreement. The Department will assist
by consulting with Puerto Rico and PRDE to develop reports or reporting
formats that shall satisfy the reporting requirements as set forth in
this Agreement. The Department will also assist Puerto Rico and PRDE,
to the extent that resources are available, with the orientation and
training of personnel and the provision of meaningful technical
assistance.
VI. Resolution of Outstanding Audit Findings
As noted above, the Department designated PRDE a ``high-risk
grantee'' under 34 CFR Sec. 80.12 due to numerous serious recurring
audit findings which uncovered deficiencies in PRDE's administration of
Federally funded programs. This Compliance Agreement does not absolve
PRDE's liability under any of these audit findings. The Department has
been working closely with PRDE to address all of the issues uncovered
in single audits and audits by the Department's Office of the Inspector
General (ED OIG) conducted over the years 1994 through 2003. While
steady progress is being made, resolution of all findings has not been
completed. Thus, in addition to undertaking corrective action in
response to these many monetary and non-monetary audit findings, under
this Agreement, PRDE also agrees to continue working with the
Department toward resolution of all audit findings issued under the
single and ED OIG audits covering 1994 through 2003, under the
Department's CAROI process. The Department and PRDE anticipate
continuing to work cooperatively through a CAROI process so that these
audit findings can be resolved no later than six months from the date
of the execution of this Agreement. PRDE's continued work with the
Department on resolving remaining audit issues is a critical element of
compliance with this Agreement. However, in the event that the CAROI
process does not appear to be progressing, in addition to other
remedies the Department has including those under this Agreement, the
Department retains the discretion to issue one or more program
determination letters (PDLs) to resolve one or more of these audit
findings at any time. In the event that one or more PDLs are issued,
PRDE may exercise its appeal rights, and such exercise would not be
considered a breach of this agreement, and would not be inconsistent
with the resolution of other findings through CAROI.
VII. General Additional Measurable Objectives
Puerto Rico, PRDE, and the Department agree that the following
measurable objectives apply for each task and sub-task contained in
this Agreement and in the Action Plans that are to be incorporated into
this Agreement within thirty days, in addition to other measurable
objectives specified throughout this Agreement.
1. Plans, other documents, and reports are timely, complete,
accurate, and address the requirements set forth in this Agreement.
2. Action steps are implemented within the timeframes set forth in
this Agreement.
3. Implementation of sub-tasks and action steps demonstrates
progress towards achieving the outcomes or measurable objectives set
forth in this Agreement.
The remainder of this document provides task descriptions, action
steps, and measurable objectives for: (1)
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General Grants Management, (2) Specific Program Management, (3)
Payroll, and (4) Procurement and Property Management. By signing this
Agreement and by the end of the three-year period covered by this
Agreement, Puerto Rico and PRDE commit to taking the necessary actions
to be in full compliance with the program requirements applicable to
all Department grants for which Puerto Rico and PRDE expend funds and
any other requirements set forth in this Agreement. Puerto Rico and
PRDE commit to full implementation of improved grants management,
payroll, and procurement and equipment inventory processes laid out in
this Agreement and in greater detail in the PRDE Action Plans that will
be incorporated by reference into this Agreement.
VIII. Tasks
This section on Tasks represents what the parties have generally
agreed to at the time of execution of this Agreement. Some of the
subtasks and steps set forth below may be modified as the parties agree
to the Action Plans in their final form within thirty days. Appropriate
modifications to this section will be made by mutual consent of the
parties once the Action Plans are finally agreed to.
Task 1.0: Improving PRDE General Grants Management
Overall Task Description
Because the stated purpose of this Agreement is to improve
education for the students of Puerto Rico, it is critical to
successfully meeting the terms of this Agreement that Puerto Rico and
PRDE use the first year of the next three-year period to develop and
refine long-term goals, assess the current status of each program
receiving Federal assistance, and design coherent plans to bridge the
gap between the current status of education in Puerto Rico and its
goals of improving education and fully complying with all Federal
program requirements. As set forth in Section I above, this General
Grants Management Task applies to the administration of all Federal
education programs administered by PRDE.
Effective grants management includes the development of effective:
(1) Pre-award planning processes, (2) grant application, evaluation,
and approval processes, (3) baseline assessments of current PRDE
practices as compared with applicable Federal requirements, (4) plans
for interagency coordination among relevant Puerto Rico agencies, such
as PRDE, Hacienda, the Office of Federal Affairs (OFA), and the Puerto
Rico Department of Health (PRDH), (5) restructured budget processes
ensuring that all agencies and programs receiving Federal awards will
meet stated goals, (6) measurable objectives to determine if the
planned grants management improvements are having the intended effect,
and (7) options for further modification if implementing the plan is
not having the intended effect. The new grants management process
implemented by Puerto Rico and PRDE will take into account and adhere
to Federal requirements for each program, as well as other applicable
accounting and professional standards. In addition, the planning
process should include citizen and/or customer input and feedback;
input is a vital part of the process to set goals, and feedback is
equally significant in assessing results. A critically important aspect
of the planning and design process is that it is fully integrated as
the foundation for other program-related decisions about budgets,
financial management, personnel requirements, and other resource needs.
The Department will continue to provide technical assistance, as
appropriate, including referrals to successful jurisdictions for
guidance. Puerto Rico and PRDE will seek the assistance of expert
consultants and other grantees to provide hands-on guidance in
improving its grants management process. Reasonable and necessary
expenses for this assistance will be considered allowable costs
chargeable to a Department grant provided an approvable application is
received in a timely manner.
Sub-Task 1.1: Pre-Award Planning Process
Goal: To ensure that PRDE application, evaluation and approval
processes allow for the timely approval of work plans so that
implementation of Federally funded programs can commence upon receipt
of grant award notifications, i.e., in July or August of each year.
The following step will help achieve the goal:
Create process to ensure that budget planning for all appropriate
Federal programs is nearly complete by receipt of grant award
notification by September 30, 2005.
Measurable Objectives for Sub-Task 1.1:
Short term: 80% of all applications for Federal funds in the OFA
pilot program will have completed the planning process timely so that
the approval process is completed by the time grant award notification
is received (October 31, 2005).
Mid term: 50% of all applications will have completed the planning
process timely so that the approval process is completed by the time
the grant award notification is received (October 31, 2006).
Long term: 100% of all applications for Federal funds will have
completed the planning process timely so that the approval process is
completed by the time grant award notification is received (October 1,
2007). In addition, all applications for Federal funds will comply with
all applicable requirements (October 25, 2007).
Sub-Task 1.2: Application, Evaluation, and Approval Process
External Application Goals: To submit applications to the
Department for formula and discretionary grant funds in a timely manner
in substantially approvable form.
Internal Application Goals: To have an internal application process
that is streamlined, is oriented to the needs of PRDE's internal
applicants for funds, and provides useful information about the
allowable uses of Federal funds.
Evaluation and Approval Process Goals: To have an evaluation and
approval process that is streamlined and rapid, and provides useful and
timely feedback to PRDE internal applicants.
The following steps will help achieve the goals:
A. Review all applicable Federal requirements,
B. Streamline and strengthen external application process,
C. Streamline and strengthen internal application process for
formula grant funds,
D. Streamline and strengthen application process for discretionary
grant programs (that require subgrants to be allocated by competition),
E. Streamline and strengthen competitive proposal process for
external contractors (refer to procurement plan),
F. Ensure staff has necessary knowledge and expertise to implement
revised application process,
G. Create process to ensure proper documentation is maintained
throughout the application process,
H. Create streamlined evaluation and approval processes that
support the proper use of Federal funds, and
I. Ensure staff has necessary knowledge and expertise to implement
revised evaluation and approval processes that are consistent with
Federal requirements.
Measurable Objectives for Sub-Task 1.2:
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External Application Process: By July 2006, improve and strengthen
all applications that are submitted to the Department, utilizing a
revised procedure consistent with the milestones contained in the
grants management action plan.
Internal Application, Evaluation, and Approval Processes: By
January 2007, all applications for Federal funds are going through the
new application, evaluation, and approval process, consistent with the
planning process.
Sub-Task 1.3: Interagency Process
Goal: Ensure productive coordination between PRDE and other Puerto
Rico agencies, such as Hacienda, OGP, PRDH, and OFA, to ensure that
budget processes operate efficiently, in accordance with PRDE
procedures, and in accordance with all applicable Federal requirements.
Measurable Objective for Sub-Task 1.3:
In accordance with current PRDE Special Conditions, to prepare an
Action Plan to address this initiative and will submit it to the
Department by February 15, 2005.
Sub-Task 1.4: Budget Process
Goal: Restructure the PRDE budget process so that all programs that
receive Federal funds will have prepared a preliminary budget and
received preliminary approval from PRDE's budget office prior to their
receipt of a grant award notification.
The following steps will help achieve the goal:
A. Review all applicable Federal requirements,
B. Create detailed map of the current budget process, including all
forms and approvals necessary for Federal funds to be awarded and flow
from PRDE to programs/entities,
C. Streamline PRDE budget process, consistent with applicable
Federal requirements,
D. After budget process has been streamlined, prepare a written
document describing uniform procedures that PRDE and subrecipients must
follow in submission of budgets for approval by PRDE, and
E. Ensure the obligation of Federal funds in a timely manner.
Measurable Objective for Sub-Task 1.4:
By July 2006, 100% of all programs that have received Federal funds
will have prepared a preliminary budget according to all program
requirements for 2005-2006 and received preliminary approval from the
budget office prior to the receipt of a grant award notification.
Sub-Task 1.5: Program Implementation Process
Goal: To ensure that all PRDE staff responsible for program
implementation and administration have the necessary knowledge, tools,
and resources necessary for implementing and administering Federal
programs consistent with all applicable Federal programmatic and fiscal
requirements.
The following steps will help achieve the goal:
A. Identify specific technical assistance available from OFA to
academic staff and other recipients of Federal funds, to ensure that
Federal programs are implemented and Federal program funds are expended
in a manner consistent with Federal requirements,
B. Ensure that all staff responsible for the implementation of
Federal programs at all levels is aware of and familiar with all
applicable Federal programmatic requirements,
C. Ensure that all staff responsible for the implementation of
Federal programs at all levels is aware of and familiar with all
applicable Federal requirements related to procurement with Federal
funds, such as RFP requirements for contracts, competitive bidding
requirements (which is discussed in greater detail below under Task
7.0,
D. Create uniform documentation requirement/template for all staff
responsible for implementing Federal programs, and
E. Ensure that all staff responsible for implementing Federal
programs fully understands Federal requirements on retention of
documentation
Measurable Objectives for Sub-Task 1.5:
By July 2005, there has been formalized and regularly
scheduled staff training for non-OFA, PRDE staff for relevant central
level employees who administer Federal funds, and
By July 2006, program specific and Federal grants
management training will have been completed for 100% of Central Office
PRDE staff responsible for implementing Federal programs.
Each year, there is a significant reduction in the number
of sustainable audit findings contained in single audit reports.
Sub-Task 1.6: Monitoring and Technical Assistance Process
Goal: To ensure that weaknesses in Federal program administration
are identified and remedied in a timely manner to significantly reduce
audit findings.
Goal: To ensure that all PRDE personnel who administer Federal
funds have access to high-quality technical assistance and training
that responds to the needs of PRDE.
The following steps will help achieve the goals:
A. Establish a formal, unified monitoring process for all Federal
programs administered by OFA,
B. Create consistent monitoring tools that identify specific
programmatic requirements and align programmatic and fiscal monitoring,
and
C. Analyze and identify audit findings that are repetitive across
programs and ensure that additional monitoring is performed for these
programs.
1. Based on recent findings, conduct additional monitoring and
intensive technical assistance for Migrant Education Program (MEP):
--Formalize process for maintaining required documentation to support
the eligibility of students participating in the program. Ensure that
formalized process includes all documents required under the statute,
--Train program directors, regional directors, and other appropriate
migrant staff on revised documentation maintenance requirements,
--Conduct additional staff training for all relevant MEP personnel on
specific eligibility requirements of migrant program, such as the
definition of a qualifying move, agricultural or fishing activity,
Principal Means of Livelihood (PMOL), etc. to ensure the accuracy of
the Certificates of Eligibility (COE), and
--Conduct additional staff training on specific provision of services
requirements, including, but not limited to:
Priority for services,
How MEP students should be served in schoolwide programs,
Service to private school students, and
Fiscal requirements.
--Consistent with monitoring plan, monitor revised documentation
process and other migrant program requirements, deliver immediate
technical assistance if needed, and
--Review manual clarifying eligibility requirements of the migrant
program. If necessary, revise manual.
2. Based on recent findings, conduct additional monitoring and
intensive technical assistance for the Even Start Program:
--Formalize process for maintaining required documentation to support
the eligibility of families participating in the program. Ensure that
the formalized process includes all documents required under the
statute,
[[Page 60193]]
--Train program directors, Even Start partners and other appropriate
staff on revised documentation maintenance requirements,
--Develop formal procedure to ensure matching requirements are met or
appropriately waived by PRDE consistent with the statutory
requirements, and
--Develop formal monitoring process, consistent with statutory
requirements, to measure whether there is sufficient progress and
indicators of program quality by Even Start subrecipients.
D. Schedule integrated monitoring visits according to identified
needs,
E. Train employees who will be conducting monitoring visits,
F. Improve access to information about monitoring process for PRDE
programs/offices that will be monitored,
G. Develop a Master Technical Assistance Plan for PRDE programs in
accordance with results from monitoring process,
H. Create links between the Department's website, other educational
websites and PRDE's website,
I. Develop a plan to properly document PRDE technical assistance,
J. Train employees who will be giving technical assistance, and
K. Ensure that any weaknesses or instances of non-compliance are
identified and corrected in a timely manner.
Measurable Objectives for Sub-Task 1.6:
By April 2005--A master monitoring plan will be created,
based on past findings, targeting high need programs first, including
MEP and Even Start,
By August 2005--Uniform monitoring instruments will be
created for each Federal program and program/fiscal monitors will use
these instruments for their monitoring activities,
By July 2006--Regular monitoring by appropriate staff will
be fully implemented,
By July 2006--Regular, high-quality technical assistance
will be provided by PRDE to PRDE staff regarding Federal requirements.
Technical assistance will be provided prior to the delivery of Federal
program services by PRDE personnel and will promptly respond to any
weaknesses discovered in the monitoring process, and
Each year, there is a significant reduction in the number of
sustainable audit findings contained in single audit reports,
particularly in the number of recurring audit findings.
Sub-Task 1.7: Reporting
Goal: By July 2005, PRDE will ensure that all reports submitted to
the Department are timely and accurate.
The following steps will help achieve the goal:
A. Compose Master List of all performance and financial reports due
to the Department under applicable requirements, and
B. Identify PRDE staff responsible for completing and filing all
required reports.
Measurable Objective for Sub-Task 1.7:
By July 2005, PRDE will ensure that all reports submitted to the
Department are timely and accurate.
Sub-Task 1.8: Private Schools and Equitable Services
Goal: PRDE is in compliance with all Federal requirements
applicable to private schools, including the requirements for providing
equitable services to private school students.
The following step will help achieve the goal:
Compose a Master List of all Federal programs that contain
requirements regarding participation by private school students,
including equitable services requirements, and provide appropriate
training on these requirements to appropriate PRDE personnel.
Measurable Objectives for Sub-Task 1.8:
By July 2005, PRDE has trained all relevant employees on
the equitable services requirements in the Federal programs
administered or monitored by those employees, and
By July 2006, uniform processes regarding equitable
services requirements will be fully implemented.
Sub-Task 1.9: Schoolwide Programs
Goal: PRDE complies with all Schoolwide program requirements
The following steps will help achieve the goal:
A. Create a work group to review the schoolwide program process and
make recommendations for, and implement, improvements in the process.
B. Improvements will include identifying Master List of all schools
eligible for schoolwide program status and ensuring that all schools
deemed eligible and included in the Master List have the required
elements in their schoolwide plan, and ensuring that fiscal and
programmatic requirements of schoolwide schools are understood by
relevant staff.
Measurable Objectives for Sub-Task 1.9:
By July 2005, PRDE has trained all relevant employees on
requirements pertaining to schoolwide programs, and
By December 2006, uniform processes regarding schoolwide
programs will be fully implemented.
Sub-Task 1.10: Implementation of Reorganization Plan
Goal: PRDE's OFA will implement new processes and a new
organizational structure to ensure the efficient and effective
administration of all the Federal funds it administers and to ensure
the administration of those funds in compliance with all applicable
Federal requirements.
Measurable Objectives for Sub-Task 1.10:
By December 2004, a new human resource plan will be
implemented, and
By July 2006, most new processes contained in this grants
management plan will be operational, leading to a substantial reduction
in audit findings.
Sub-Task 1.11: Implementation of Puerto Rico's Integrated Financial
Administration System (PRIFAS) Grants Management and Project Modules
Goal: PRDE's OFA will implement the PRIFAS grants management and
project module to improve PRDE's control over the timely obligation of
Federal funds and bring PRDE into compliance with Federal requirements
applicable to the period of availability of funds, cash management, and
proper liquidation of obligations.
Measurable Objective for Sub-Task 1.11:
By January 2005, the new PRIFAS grants management and project
module will be operational.
Sub-Task 1.12: Puerto Rico as an SEA/LEA
Goal: PRDE will work with the Department to identify PRDE's needs
for technical assistance on the issue of best practices in grants
administration by a single SEA and LEA by February 15, 2005.
Task 2.0: Improving PRDE Grants Management--Community Schools
Administration
Sub-Task 2.1: Improving Accounting Records at the Community Schools
Administration:
Goal: Develop comprehensive plan to resolve accounting issues
described in Single Audit findings.
The following steps will help achieve the goal:
A. Map out community school administration responsibilities, and
[[Page 60194]]
B. Streamline the application/approval/distribution process to
schools.
Measurable Objective for Sub-Task 2.1:
By February 15, 2005, in accordance with the special conditions,
PRDE will complete a comprehensive plan to strengthen the accounting
records of the Community Schools Administration and submit it to the
Department.
Sub-Task 2.2: Improving Cash Management at the Community Schools
Administration
Goal: Develop a comprehensive plan to resolve cash management
issues at the public school level identified and described in Single
Audit findings.
Measurable Objective for Sub-Task 2.2:
By February 15, 2005, in accordance with the special conditions,
PRDE will complete a comprehensive plan to strengthen cash management
at the public school level and submit it to the Department.
Sub-Task 2.3: Implementation of PRIFAS Grants Management and Project
Modules
Goal: PRDE's Community Schools Administration will implement the
PRIFAS grants management module and project module to improve control
over the timely obligation of funds, comply with period of availability
requirements, cash management, and proper liquidation of obligations.
Measurable Objective for Sub-Task 2.3:
By July 2005, the new PRIFAS grants management and project modules
will be in operation.
Task 3.0: Improving PRDE Grants Management--Vocational Education
Program
Sub-Task 3.1: Improving the Application Process
Goal: Compliance with the Federal vocational education requirement
for a State Board to serve as the eligible agency, and related
conditions in PRDE's Perkins III grant.
The following steps will help achieve the goal:
A. Establish the new State Board for Vocational and Technical
Education within PRDE (completed--EO 2004-29),
B. Nominate members of the new State Board (completed),
C. Create a draft of the new State Board Rule,
D. Create a chart of the new governance structure of the State
Board,
E. Adopt the State Plan for Vocational Education submitted by PRDE,
including the request to extend and revise the plan, the budget for
year six, and the agreed-upon adjusted performance levels for year six,
F. Ratify past actions of the Puerto Rico Secretary of Education
and the PRDE,
G. Adopt any necessary revision to ensure conformity with the State
Plan,
H. Submit certifications required to be included in the State Plan,
I. Complete the document that delegates to PRDE the authority to
receive, hold, and disburse funds awarded under the State Plan, and
J. Create a detailed map of the current application process both
for PRDE applications to the Department and PRDE application
requirements for Department funds within PRDE.
Measurable Objective for Sub-Task 3.1:
Short Term--30% of all internal applications work plans for Federal
funds will be almost operational by the time Grant Award Notification
is received in July 2005.
Task 4.0: Improving PRDE Grants Management--Adult Education Program
Sub-Task 4.1: Monitoring and Technical Assistance Process
Goal: Monitor and administer the Adult Education program
effectively and in compliance with all applicable requirements.
The following steps will help achieve the goal:
A. Create detailed map of current monitoring process,
B. Identify criteria to be used in identifying monitoring needs,
C. Align programmatic monitoring activities with fiscal monitoring
activities
D. Rank program projects by monitoring needs,
E. Develop a master monitoring schedule that coordinates the
monitoring of adult education projects,
F. Train employees who will be conducting monitoring visits,
G. Improve communication between adult education and all programs,
H. Create a detailed map of the current technical assistance
process,
I. Identify technical assistance resources for developing and
completing applications available from the Department, and
J. Develop a master technical assistance plan for the Adult
Education Program.
Task 5.0: PRDE Grants Management--Special Education Program
Sub-Task 5.1: Monitoring and Corrective Action Process
Goal: Ensure non-compliance identified through monitoring is
corrected within one year of its identification.
The following steps will help achieve the goal:
A. Ensure personnel responsible for the implementation of IDEA
requirements fully understand those requirements and, where non-
compliance is identified, understand and implement the corrective
actions needed to ensure correction of all non-compliance within a
reasonable period of time not to exceed one year from identification,
B. Provide training and technical assistance in a comprehensive and
systematic manner to staff in districts or sites where non-compliance
is identified to ensure the correction of all non-compliance within a
reasonable period of time not to exceed one year from identification,
C. Provide technical assistance on the development and
implementation of corrective action plans to ensure that they are
developed and implemented in a manner that addresses all areas of
identified non-compliance,
D. Provide technical assistance and feedback to district and other
personnel to ensure that the corrective action plans submitted to PRDE
are designed to correct all areas of non-compliance within a reasonable
amount of time, not to exceed one year from the identification of the
non-compliance,
E. Request and review progress reports from regions, districts and
other sites that are implementing corrective action plans,
F. Ensure follow-up activities in regions, districts and other
sites that have corrective action plans to ensure that the identified
non-compliance has been addressed and is not recurring,
G. All monitoring findings will be corrected within one year of
identification,
H. List any sanctions imposed on a district or school for failure
to come into compliance with the IDEA requirements as agreed upon in
the corrective action plan, and
I. If PRDE, or any district or school failed to achieve compliance
and no additional actions, including sanctions were identified,
required, or imposed, PRDE must explain the basis for not taking
additional actions.
Measurable Objective for Sub-Task 5.1:
[[Page 60195]]
All monitoring findings are corrected under the new
monitoring system within a reasonable period of time, not to exceed one
year from identification of the monitoring finding,
Correction of findings from 2002-2003 and 2003-2004 school
years is reported to the Department's Office of Special Education
(OSEP) no later than July 1, 2005. Thereafter, each quarterly report,
as part of this Compliance Agreement, includes documentation of
correction of monitoring findings within a reasonable period of time,
not to exceed one year from identification,
Develop and implement an effective set of procedures for
sanctioning persistent long-standing non-compliance,
Analyze existing procedures,
Amend existing procedures, as necessary, and
Apply new sanction procedures where required to ensure
correction, by January 1, 2006.
Sub-Task 5.2: Ensuring Accurate Child Count Reports
Goal: Ensure Child Count Reports submitted to the Department are
accurate.
The following steps will help achieve the goal:
A. Ensure that the staff responsible for the child count reports
understand the requirements, processes and timelines to collect the
information and report the data,
B. Provide training and technical assistance regarding the
collection of the Child Count data,
C. Provide training and technical assistance regarding Child Count
data entry,
D. Ensure that the Child Count data collected and reported is
valid, accurate and timely,
E. Develop validation process though sample comparison and analysis
at school, school district and regional level that ensures that all
students receiving special education and related services are
identified and included in the child count data reports,
F. PRDE will continue to run side-by-side comparisons of the paper
and electronic process to determine and verify the accuracy of the
data, and
G. By December 1, 2005, PRDE will ensure that the child count
report reflects a complete and accurate count of all children served.
Measurable Objective for Sub-Task 5.2:
By 2005, PRDE will ensure that the Child Count report reflects an
accurate count of all children served.
Sub-Task 5.3: Implementation of PRIFAS Grants Management and Project
Modules
Goal: PRDE's Office of Special Education will implement the PRIFAS
grants management and project module to improve control over the timely
obligation of funds, and comply with requirements concerning period of
availability, cash management, and proper liquidation of obligations.
The following steps will help achieve the goal:
A. Define new processes and procedures for use of PRIFAS module by
program managers,
B. Train users on use of PRIFAS,
C. Train users on proper fiscal grants management issues
(liquidations of obligations, timely obligation, etc.) to ensure
effective use of PRIFAS, and
D. Implement use of PRIFAS grants management and project modules.
Measurable Objective for Sub-Task 5.3:
By January 2005, the new PRIFAS grants management and project
modules will be operational as to PRDE's Office of Special Education.
Task 6.0: Improving Payroll System
Overall Task Description
It is critical to successfully meeting the terms of this Agreement
that Puerto Rico and PRDE use the next three years to develop adequate
controls over a payroll system capable of ensuring that all employees
on the payroll system are authorized and that all payroll charges made
to a Federal account are allocable to that Federal account. The system
developed under this Agreement must include a formal process for
certifying all employees' work and must reflect actual time and effort
by each employee whose salary is charged directly to a Federal account.
The payroll system must be updated in a timely fashion so as to reflect
any changes in funding source and must provide for the maintenance of
appropriate accounting records that can be made available in the event
of an audit. PRDE must be able to account for salary payments to
employees who split their time between Federal and other programs, or
among more than one Federal program. Any indirect payroll charges to
Federal accounts must be allocable to that program and must otherwise
be appropriate and consistent with Federal requirements. Additionally,
the salaries of employees who work under more than one Federal program
must be properly allocated among those programs, in accordance with
accurate time distribution records and in compliance with Federal time
distribution requirements.
The Department will assess progress in meeting the terms of this
Agreement under the ``Payroll'' task by the systemic approaches and
degree of integration that Puerto Rico and PRDE bring to designing and
implementing solutions to longstanding problems in the payroll area.
Sub-Task 6.1: Improving Employee Hiring and Transfer Processes
Goal: To ensure that employees newly hired and employees
transferred (i.e., due to demotion, assignment changes, etc.) are
properly captured in the PRIFAS system.
The following steps will help achieve the goal:
A. Electronic register for special recruitment--To accelerate
document flow and to avoid loss of documents by eliminating or reducing
physical document flow from users (regions and central office) to
Payroll Office (changing from a paper to an electronic process will
increase efficiency and eliminate loss or misplaced records), and
B. Letters and reports for transitory and probation position
expiration--To improve reporting to employees the expiration of
transitory and probation periods so as to avoid having to keep them as
regular employees.
Measurable Objective for Sub-Task 6.1:
By January 2005, all human resources ``events,'' such as new
employees hired, transferred, etc., will be accurately reflected in the
STAFF system (the payroll system used by PRDE).
Sub-Task 6.2: Time Distribution
Goal: Ensure proper allocation of Federal funds by PRDE, based on
employees' time and effort, consistent with applicable Federal
requirements.
The following steps will help achieve the goal:
A. Data entry without GL-200--To allow Time Distribution office to
enter effort reported through time sheets without having received the
corresponding payroll data from Hacienda, so as to accelerate the entry
of effort allocation data,
B. Data entry productivity report (by user)--To report on the
amount of data entry performed by users so as to allow Time
Distribution management to review the productivity of each employee
regarding data entry tasks,
C. Time sheet/STAFF discrepancy report--To report on data changes
made by Time Distribution office based on Time sheets, so that these
corrections can be submitted to Human Resources
[[Page 60196]]
for entry into the Human Resources system,
D. Missing localization code report--To modify several reports to
include the description of the location of the employees,
E. Effort allocation report--To provide an analysis report that
shows the employee efforts that were applied to federally funded
projects by those employees that were paid from state funds, and vice
versa, and
F. Massive allocation of effort data (school-wide)--To facilitate
the data entry of employee effort by allowing this effort to be entered
at different levels, i.e., for a specific employee, for all employees
in a school, for all employees in a group of schools, etc.
Measurable Objective for Sub-Task 6.2:
By December 2005, PRDE will properly record time distribution on a
quarterly basis for all employees that distribute their time among
Federal programs or among State and Federal programs.
Sub-Task 6.3: Semimonthly Payroll Process
Goal: Ensure that PRDE pays employees from the appropriate Federal
account(s) each time salary payments are made.
The following steps will help achieve the goal:
A. Electronic DE-15/409 (pipeline)--To accelerate document flow and
to avoid loss of documents by eliminating or reducing physical document
flow from users (regions and central office) to Payroll Office.
B. Position management--To allow users to make changes to positions
with minimal human intervention and following a controlled process. For
example, to activate, deactivate, and change locations for a given
group of positions.
C. Additional pay management--To improve controls on additional pay
by ensuring that additional pay to positions, instead of employees.
When an employee record is entered, its corresponding additional pay
(if any) will be taken from its position record. When an employee moves
into a different position, its additional pay will not move with the
employee. A history will be maintained of all changes to the
differential amount associated with each position.
D. Automatic generation of retroactive payments (pipeline)--To
reduce human intervention by automatically calculating the
corresponding retroactive payment when an employee already hired is
entered into Payroll. Usually the employee is entered into the Payroll
system sometime after he/she has started to work, therefore a
retroactive payment has to be made.
E. New module for massive payments/deductions--To facilitate
generating payroll transactions by creating a module to allow users to
manage all of the steps involved in handling special generic payroll
transactions. An example of where this module might be used would be in
the creation of fixed amount or fixed percentage salary increases for
certain types of personnel.
F. Code table maintenance--To facilitate table maintenance in the
Human Resources system through a more friendly interface.
G. Account number/position number validation--To make sure only
federal account numbers are assigned to federally funded positions and
local account numbers are assigned to locally funded positions.
H. History of account number changes--To keep track of changes made
by Time Distribution Office to correct account numbers in Time
Distribution data. A report will be produced to inform Positions
Department of these changes, so that they can make them in STAFF.
I. Report on payroll payments with accounts that have expired, or
are about to expire (0/30/60/90 aging report)--To provide the Positions
Department with information on accounts already, or soon to be,
expired, so that actions are taken about the employees being paid by
these accounts.
J. Global payment financial impact report (all global payments [for
example, vacation excess] with an effective date older than the last
account number change are to be reported so as to allow the finance
department to make any necessary adjustments)--To report on all global
payments [for example, vacation excess] with an effective date older
than the last account number changes, so as to allow the Finance
Department to make any necessary adjustments.
K. Position authorization code control--To establish a standard set
of rules so that when certain Human Resources actions occur
(terminations, suspensions, reassignments to another position, etc.)
the system can evaluate that position and determine its proper
authorization code authorized for hiring, frozen, etc.
L. Automatic generation of transactions by STAFF (pipeline)--To
avoid manual entry of Payroll transactions, by generating them
automatically when the Human Resources transactions are entered.
M. Automatic generation of entries to payment card --To avoid
manual entry of these transactions into the Payroll payment card, by
generating them automatically when Payroll transactions are generated.
N. Automatic production of RHUM transaction files (partially
belonging to pipeline)--To integrate all Payroll transactions into a
single file and to produce it through a completely automated process.
O. Error correction--To provide users with a report on rejected
transactions, together with the reason for the rejection, so that these
transactions can be corrected. Most errors should be corrected in the
same payroll run.
P. Transaction resubmission--To give users the opportunity to
resubmit for processing in the same payroll the rejected transactions,
after they have been corrected. Most corrections should be submitted by
the same payroll run.
Q. Inclusion of rejections in item balancing and reconciliation--To
provide users with control totals regarding the rejected transactions
so that they can account for all transactions submitted to payroll.
Transactions accepted plus transactions rejected must equal total
transactions.
R. Consolidation of error files--To facilitate the correction of
rejected transactions by consolidating all error messages in the same
transaction file sent to Hacienda.
S. Readable error messages--To facilitate the correction of
rejected transactions by rephrasing all error messages to make them
more understandable to users.
T. RHUM/STAFF discrepancy reports (account numbers, gross salary,
employee location)--To identify data discrepancies between Hacienda
Payroll system and PRDE Human Resources system. For example,
discrepancies in account number, employee location, employee salary,
etc.
U. Discrepancy management module--To support users in the process
of correcting discrepancies. For example, to keep track of all
discrepancies pending correction, all discrepancies already corrected,
etc. Discrepancies must be corrected on a periodic basis, as supported
by the resources available.
V. Missing employee reports (STAFF not RHUM, RHUM not STAFF)--To
identify employees in Hacienda's Payroll system that are not in PRDE's
Human Resources system, and vice-versa.
W. Item reconciliation (Payroll/RHUM)--To make sure all
transactions are properly accounted for by calculating and balancing
control totals. For example, transactions sent to Hacienda must be
equal to transactions
[[Page 60197]]
accepted plus transactions rejected. This balancing must be done for
each payroll run.
X. Limit test for salary (by category)--To reduce data entry errors
by establishing a limit test for salaries, both when entering salaries
for positions and for employees.
Y. Limit test for global payments--To reduce data entry errors by
establishing a limit test for global payments made to employees, and
Z. Pay period control.
Measurable Objective for Sub-Task 6.3:
By June 2005, to reduce the number of payroll errors, assure prompt
correction of any payroll errors, and bring the payroll system into
full compliance with Federal payroll accountability requirements.
Sub-Task 6.4: Interagency Process
Goal: Ensure productive coordination with other PR agencies, such
as Hacienda, to ensure PRDE procurement process runs smoothly and
according to established PRDE procedures that conform to applicable
Federal procurement law and standards.
PRDE will prepare an Action Plan addressing this initiative and
will submit it to the Department by February 15, 2005, in accordance
with PRDE Special Conditions currently in effect.
Measurable Objective for Sub-Task 6.4:
PRDE will develop an Action Plan to address issues of improved
interagency coordination in Puerto Rico, and will submit it to the
Department by February 15, 2005, the due date established in the PRDE
Special Conditions currently in effect.
Sub-Task 6.5: Draw Downs of Federal Funds
Goal: Ensure Federal funds are properly drawn down by PRDE from the
appropriate Federal account and ensure that Federal funds are properly
obligated and liquidated in accordance with Federal cash management
regulations.
Measurable Objective for Sub-Task 6.5:
In accordance with PRDE Special Conditions currently in effect,
PRDE will prepare an Action Plan addressing this sub-task and submit it
to the Department by February 15, 2005.
Task 7.0: Procurement and Equipment Inventory
Overall Task Description
It is critical to successfully meeting the terms of this Agreement
that Puerto Rico and PRDE use the next three years to develop adequate
controls over its procurement and equipment inventory systems. PRDE
must finalize its revised contracting and procurement procedures
ensuring compliance with all applicable Federal requirements. Once PRDE
has developed contracting and procurement procedures that comply with
all applicable Federal requirements, PRDE must adopt and begin
implementing those procedures so that all contracts are awarded, and
all equipment and supplies are procured, through PRDE's revised
procedures, with the exception of those cases that meet specific
limited exceptions. To fully comply with this Agreement, PRDE must also
ensure that any non-competitive procurement transactions it undertakes
comply with all applicable Federal requirements and cost principles,
that any sole source contracts awarded by PRDE are only awarded in
accordance with Federal requirements pertaining to sole source
contracts, that procurement is undertaken and contracts awarded without
conflict of interest, and that all required documentation as to every
transaction and contract is properly maintained by PRDE.
Through this Compliance Agreement, Puerto Rico and PRDE's manner of
managing equipment inventory will be such that items purchased with
Federal program funds can be tracked, distributed in a timely manner,
allocable to the Federal program to which they were charged, and used
for the benefit of Puerto Rico's students. The equipment inventory
system will comply with Federal regulations, to include tagging and
tracking of inventory and prompt delivery of property purchased with
Federal funds to the appropriate location, so that items may be used
for the purposes of the program under which they were purchased. Puerto
Rico and PRDE's inventory policy will include an established procedure
for replacement or payback of any items in the inventory that cannot be
located, consistent with Federal regulations. Ultimately, PRDE's
inventory management system will reflect when items are ordered, when
ordered items arrive, when items are logged into the system, and when
they are delivered to the intended location. In addition, Puerto Rico
and PRDE will ensure that inappropriate use of equipment (for example,
vehicles or computers) is penalized and that the Department programs
are reimbursed, when appropriate.
Sub-Task 7.1: Vendor and Selection Process
Goal: Ensure contracts supported with Federal funds are awarded
competitively in a manner consistent with applicable Federal
requirements and Puerto Rico law.
The following steps will help achieve the goal:
A. Contracts for Goods and Nonprofessional Services:
1. Complete revision of Puerto Rico and PRDE's procedures for
procurement of goods and nonprofessional services, ensuring that such
procedures are consistent with Federal law and procurement standards
including 34 CFR 80.36, and with Puerto Rico law,
2. Provide the Department with an English version of PRDE's final
procurement procedures (English translation of draft procedures has
already been provided),
3. Complete training of appropriate staff on revised approved
procedures, applicable Federal requirements, and internal controls,
4. Monitor procurement process, to ensure that all contracts are
awarded in accordance with PRDE's approved revised procedures, and
5. Ensure staffing is at appropriate levels to manage the
procurement process, in accordance with revised approved procedures.
B. Contracts for Professional Services:
1. Complete new guidance for the procurement of professional
services with Federal program funds, based on models such as ``best
practices'' from other States, the Federal Acquisition Regulations
(FAR),
2. Ensure compliance with applicable Federal law, including the
standards contained in 34 CFR 80.36, and Puerto Rico law,
3. Ensure that its procurement procedures conform to the new
guidance, as required by Federal regulations and Puerto Rico law,
4. Complete training of appropriate staff on new guidance, Federal
requirements and internal controls,
5. Monitor procurement process to ensure all Federally-funded
contracts are awarded in a manner consistent with PRDE's new final
procedures, and
6. Ensure staffing is at appropriate levels to manage the
procurement process.
C. Implement plan for increasing the number of vendors available to
do business with PRDE:
1. Develop a ``How To Do Business with PRDE'' section of the PRDE
Web site. The instructions will be posted in English and Spanish and
will explain how vendors can register with Puerto
[[Page 60198]]
Rico or PRDE, what documents they need to provide, and how the
procurement process works, and
2. Complete revision of the existing PRDE vendor registry to
determine areas where too few vendors are registered. Complete
development of an outreach to vendors to encourage vendors in those
areas to register.
Measurable Objectives for Sub-Task 7.1:
By February 2005, PRDE will have final revised procurement
procedures that are in compliance with applicable Federal law and
standards, including those in 34 CFR 80.36, and with Puerto Rico law,
By February 2005, PRDE will provide the Department with an
official English translation of its final revised procurement
procedures, and
By February 2006, 100% of all contracts supported with
Federal funds will be awarded in accordance with final revised
procedures developed by PRDE to ensure compliance with Federal
procurement law and standards.
Sub-Task 7.2: The Contracting Process
Goal: Ensure the process of selecting a vendor, entering into a
contract and issuing a purchase order permits: (1) the timely
obligation of Federal funds, (2) the timely delivery of goods and
services purchased with Federal funds, and (3) the timely payment of a
vendor with Federal funds.
The following steps will help achieve the goal:
A. Short-Term Improvements:
1. Streamline the current contracting process,
2. Ensure that staff has the necessary expertise to process
requisitions, confirm budget resources, select a vendor and issue a
purchase order, and
3. Develop a process to ensure retention and safeguarding of all
documentation supporting each transaction with Federal funds in a
specific location, and ensure that such documentation can be made
available for review.
B. Long-Term Improvements:
1. Ensure that staff has the necessary capacity to process
requisitions, confirm budget resources, select a vendor and issue a
purchase order, and
2. Further streamline the contracting process.
Measurable Objectives for Sub-Task 7.2:
Short-term--By July 2005, 50% of all contracts are
processed through the streamlined process whereby goods and services
are timely delivered once a need is identified, and
Long-term--By January 2006, 100% of all contracts are
processed through the streamlined process.
Sub-Task 7.3: Contract Execution and Management Process
Goal: To ensure the timely and appropriate delivery of goods and
services.
The following steps will help achieve the goal:
A. Short-Term Improvements:
1. Streamline the current contracting process,
2. Ensure that staff has the necessary expertise to track payments,
determine if goods and services have been delivered, and follow up with
vendors, and
3. Develop a process to ensure retention and safeguarding of all
documentation relating to each contract supported with Federal funds in
a central location, and ensure that such documentation can be made
available for review.
B. Mid-Term Improvements:
1. Ensure staff has all necessary capacity to track payments,
determine if goods or services have been delivered and follow-up with
vendors, and
2. Further streamline the contracting process.
C. Long-Term Improvements:
Implement technological improvements and capabilities to automate
the contract management process (which relates to the inventory
management initiative below).
Measurable Objectives for Sub-Task 7.3:
For offices using PRIFAS:
Short-Term--Identify 50% of goods and services not delivered and
take appropriate action within 10 days of the agreed-upon delivery
date, and
Long-Term--Identify 100% of failed delivery and take appropriate
action within 10 days of agreed-upon delivery date.
For office not using PRIFAS:
Short-Term--Identify 30% of goods and services not delivered and
take appropriate action within 10 days of the agreed-upon delivery
date, and
Long-Term--Identify 100% of failed delivery and take appropriate
action within a reasonable period of agreed-upon delivery date.
Sub-Task 7.4: Inventory Management
Goal: Ensure that all property acquired with Federal funds is
tracked, accounted for, and maintained in accordance with Federal and
Puerto Rico law.
The following steps will help achieve the goal:
A. Develop a system for tracking property that records the
following with regard to the property purchased: a description; a
serial or identification number; the source; the holder of title; the
acquisition date; the cost; the percentage of Federal participation in
the cost; the current location; the use and condition; and any
information regarding its disposal, including the disposal date or date
of sale,
B. Develop a plan for incorporating historical assets into the
asset management system, and
C. Develop an interim plan for accounting for assets.
Measurable Objectives for Sub-Task 7.4:
Short-Term--Record 60% of newly acquired property using
manual logs and 40% with asset management system.
Long-Term--Record 100% of newly acquired property using an
asset management system.
Sub-Task 7.5: Payment Process--Verifying invoices by matching purchase
orders, liquidating obligations, and recording payments
Goal: Ensure the process of paying a vendor permits: (1) the timely
liquidation of obligations; and (2) the timely delivery of goods and
services.
In accordance with PRDE Special Conditions currently in effect,
PRDE may expand this initiative to address additional areas of concern
and resubmit to the Department by February 15, 2005.
The following steps will help achieve the goal:
A. Short-Term Improvements to Payment Process:
1. Streamline the current process,
2. Ensure staff has the necessary expertise to process invoices and
issue checks, and
3. Develop a process to retain and safeguard all necessary
documentation in a specific location and make documentation accessible
for review.
B. Mid-Term Improvements:
1. Ensure staff has necessary capacity to process invoices and
issue checks, and
2. Further streamline the payment process.
C. Long-Term Improvements:
1. Implement technological improvements to automate the payment
process, and
2. Redesign the payment process by creating a cohesive ``work
unit'' to make more efficient use of PRDE resources.
D. Payment of currently due invoices:
1. Identify any invoices currently due, and
2. Complete processing of payments using pilot streamlined
procedures.
Measurable Objectives for Sub-Task 7.5:
[[Page 60199]]
Short-Term--By January 2005, 50% of all invoices are paid
through the streamlined process, and
Long-Term--By December 2006, 100% of all contracts are
paid through the streamlined process.
Sub-Task 7.6: Interagency Process
Goal: Ensure productive coordination with other Puerto Rico
agencies, such as Hacienda, to make certain procurement process runs
appropriately and according to established PRDE procedures.
The following step will help achieve the goal:
In accordance with the PRDE Special Conditions currently in effect,
PRDE will prepare an Action Plan addressing this initiative and will
submit that Action Plan to the Department by February 15, 2005.
Measurable Objective for Sub-Task 7.6:
Development and submission to the Department of comprehensive plan
to address the interagency process by February 15, 2005.
Sub-Task 7.7: Proper Draw Downs of Federal Funds
Goal: Ensure that Federal funds are properly drawn down from the
appropriate account to make certain that expenditures are properly
obligated, liquidated, and charged in accordance with applicable
Federal cash management statutes and regulations.
In accordance with the PRDE Special Conditions currently in effect,
PRDE will prepare an Action Plan addressing this initiative and will
submit that action plan to the Department by February 15, 2005.
Measurable Objectives for Sub-Task 7.7:
Development and submission to the Department of an Action Plan to
address the interagency process by February 15, 2005.
The parties to this Compliance Agreement, the U.S. Department of
Education, the Puerto Rico Department of Education, and the
Commonwealth of Puerto Rico, agree to faithfully carry out the terms of
this Agreement, as set forth above.
Effective Date and Modification of Agreement:
This Compliance Agreement will take effect upon execution by all
the parties and may be modified or amended only by mutual written
agreement of all the parties hereto.
For the Commonwealth of Puerto Rico:
Dated: October 25, 2004.
--------------/s/--------------
Sila Mar[iacute]a Calder[oacute]n
Governor
For the Puerto Rico Department of Education:
Dated: October 25, 2004.
--------------/s/--------------
C[eacute]sar Rey Hern[aacute]ndez
Puerto Rico Secretary of Education
For the U.S. Department of Education:
Dated: October 25, 2004.
--------------/s/--------------
Rod Paige
U.S. Secretary of Education
[FR Doc. E7-20842 Filed 10-22-07; 8:45 am]
BILLING CODE 4000-01-P