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History Lessons Offer Caution on Stimulus Spending

The Education Department's Office of Inspector General offers an interesting history lesson today that seeks to foreshadow just how states and school districts will misspend their stimulus dollars.

And if history is any lesson, there will be stimulus-related waste and fraud.

The OIG has audited its audits, looking for patterns in 41 investigations from 2002 until the present that found pervasive problems either in the spending or financial internal controls. These audits found $1.6 billion in either questioned costs or funds at risk of fraud because of internal-control weaknesses. In addition, another 13 audits ended in criminal prosecutions. That amounts to a little less than 1 percent of the total amount of money (or $193.7 billion) that the Education Department administered in the federal programs that were the subject of these audits. Of dourse, these were the fraud and spending problems that auditors were able to find, document, and prove. The amount of waste and fraud is probably much higher.

There were common problems that auditors uncovered in states' and school districts' handling of federal money that don't bode well for the spending of some $100 billion in stimulus. These problems included unallowable or undocumented expenses, supplanting and not supplementing funds, and problems with inventory control.

The OIG made recommendations to the Education Department for helping states and local school districts better track stimulus money, and most of it centered on better training.

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