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The GAO selected 100 Fiscal Year (FY) 1973 applications to review at the LEA level. The applications were selected primarily to test the accuracy and validity of claims made by LEA's and to determine the manner in which the USOE administered the program.

The 100 LEA's reviewed by GAO to determine the validity of claims were not scientifically selected. These LEA's were judgmentally selected based on (1) the number of eligible children in the LEA, (2) the percent of LEA's which had received total payments, (3) the percent of eligible children to total number of children in the LEA, and (4) a reasonable geographic distribut ion of the LEA's. All of the LEA's selected were applicants under sections 2, 3(a) and 3(b) of PL 81-874 and were selected from 17 different States.

In their review of the 100 LEA's, GAO found that 93 of them hade errors in their claims. The amount overclaimed by the 100 LEA's was $578, 224 or .93 of 1 percent of the total amount claimed by the LEA's reviewed. This amount of overclaim was further reduced to $212, 133 or .34 of 1 percent by USOE administrative reviews which were conducted prior to the GAO review. The amount of error was not considered significant by GAO and was not given further attention in their comments or recommendations,

Additional research shows that the field staff for the program has been reduced from 45 in 1967 to 24 members currently. Prior to 1967, each application was reviewed. Due to a limited staff, an application currently is scheduled for review every three years. This schedule has not been met for several years due to the limited regional staff assigned to perform this function and the assignment of other duties to this staff by regional USOE officials.

A. Pupil Eligibility

The GAO found three areas of concern in the review of data substantiating children's Federal connection. The claiming of children who did not reside with a Federally connected civilian parent was one concern and one of the more common errors found when reviewing the data. The change in the regulation by USOE which no longer required that the military parent and child reside together was a second concern. The third area of concern was the counting of children for entitlement whose parents were working on Federal property part-time or temporarily.


Children Claimed for Civilian Parent

In their review, GAO found that a considerable number of applicant LEA's did not properly document the child's residence with the Federally connected parent. It was recommended that USOE require adequate documentation of the residence requirenent.

The Division of School Assistance in Federally Affected Areas (DSAFA), the group charged with the administration of the Impact Aid Program, does not have the nanpower resources to comply with this recommendation.

At the time of the review, the GAO staff was aware of the manpower limitations, but did not recommend more staff to correct the situation. This point was discussed with GAO officials who stated that a recon mendation for more staff was considered, but was not made because the percent of error was so small compared to other USOE programs.

Children Claimed for Military Parent

Sections 3(a) and 3(b) of PL 81-874 contain the following enabling clause for federally connected children: "... or had a parent who was on active duty in the uniformed services.

Prior to May 1975, the USOE interpretation of sections 3(a) and 3(b) required that the child reside in the parent's household. Since the statutory language does not require that the child reside with the parent, eligibility is now determined through parental relationship which does not require co-residence of the child with the parent on active duty.

GAO, in their report, takes the position that the legislative history of the Act suggests that to be eligible the child should be a dependent of the uniformed services parent. In their comments to the GAO, USOE states that "No requirement of dependency is expressed in the statute . GAO takes exception to this position and recommends that adequate documentation of dependency be required to determine the child's eligibility for a uniformed services parent.

PL 83-11 modified PL 81-874 to count children whose parents were employed outside the State in which the applicant school district was located if the property on which the parent was employed was within reasonable commuting distance of the applicant district. This modification applied only to parents employed by the Department of Defense, but excluded parents residing in the District of Columbia who commuted to Virginia and Maryland.


Pl 83-248 removed the PL 83-11 modification and amended section 3(a) of PL 81-874 to include the phrase "or (2) had a parent who was on active duty in the uniformed services."

Since the child could be counted under section 3(a) for a military parent whether or not the parent was stationed on Federal property in the same State or within commuting distance of the school district if the property was located within another State, a similar provision to section 3(b) was added by PL 84-382. Under this amendment, according to House Report 2357, 84th Congress, the child continued to be eligible providing the parent's residence in the community commenced when he or she was assigned to employment on Federal property in or near the applicant school district and when the parent continued on active duty with the Armed Forces while assigned overseas or elsewhere.

The eligibility of the "armed forces" category child was difficult to establish and created administrative problems. As a result, section 3(b) of PL 81-874 was amended by PL 89-750 to remove the "armed forces" category and add the "uniformed services" category. The following is an excerpt from the House Report 1814, 89th Congress, which discusses this change:

"We recommend that both PL 815 and 874 be amended to permit the counting of a child in the school district where such child resides when a parent is on active duty in the military service regardless of where the parent is stationed. This is in keeping with the general relaxation of eligibility requirements to further insure that the Federal payment, when added to the tax contribution of Federally connected families, more nearly equals the contribution of non-federal families.

"Under current law in order for a child not residing on Federal property to be counted as Federally connected, he or she must reside with a parent employed on Federal property which is located in the same State as the school he or she attends or within reasonable commuting distance. In some cases, the father of military dependent is stationed at a base at some distance from the place where the dependent resides; the child cannot be counted as Federally connected unless the parent's employment is within commuting distance of the child's residence. In other cases probleros arise because the father is aboard ship and not on Federal land.

"This amendment would resolve an avoidable inequity and greatly simplify the administration of the program, both for the Office of Education and for the applicant local school districts. Under this concept, the necessity for inquiry as to the type of living arrangements --the Federal or private status of the property at which Federally owned ships are headquartered, and whether or not the 'armed forces elsewhere' provision was operative in given situations--would all be eliminated."


Temporary Employment on Federal Property

In the case of the non-military parent, the law requires that the parent must be employed on Federal property. The interpretation of the term "employed on" has been the subject of numerous legal opinions and many discussions within USOE. The term also has been used synonymously with the term "working on." In their report, GAO states that they believe that there is a difference in the meaning of the two terms. And GAO appears to associate the term "working on" with the amount of time spent by a person on a job at a specific location. The report also infers that to be eligible, the child should reside with a parent employed by an employer who has a station or base of operation located on the Federal property. According to GAO, this concept appears to be more consistent with the intent of the law.

On page 10 of the report, GAO cited two instances where LEA's encouraged the claiming of children whose parents may have been working on Federal property only on the day of the pupil-parent survey. In one instance, instructions were given to teachers that children of a Coca-Cola route salesman should be counted if his route on the survey date passed through Federal property. In the other instance, the report stated that a memorandum had been sent to a music teacher suggesting that he arrange his schedule so that he would be working at the school located on Federal property on the survey date; hence, his children could be claimed for Impact Aid. Both of these situations were reviewed by USOE regional program officers.

In the case of the Coca-Cola parent, the school officials were contacted. They confirmed that the statement was in their instructions and had been included in them since October 1971. However, assurance was given that the statement would be deleted from instructions for future surveys. A Cursory review was made of the pupil records by the program officer and no ineligible pupils of the type discussed were found.

The officials of the LEA which involved the music teacher incident also were contacted. The officials contacted could not find the memorandum or its source suggesting that the parent arrange his schedule in order that his children be eligible under PL 81-874. The program officer advised LEA officials of the regular employment concept, i.e., for a pupil to be eligible, the parent must be employed for a major portion of his/her time on Federal property and that if a person happened to be on Federal property on the count date (not regularly employed on) they should not be included in the claim. The pupil records for FY 1973 were reviewed by the USOE official and no records were found for the children of the music teacher. records for FY 1974 and FY 1975 also were reviewed and some children were claimed for a school employee (janitor-bus driver) who did spend substantially all his working time on the Federal property claimed.


B. Computation of ADA

The computation of State, LEA, and Federally connected ADA were other frequent errors found during the GAO review of the 100 LEA's. These figures are interdependent on each other and they affect the rate of payment as well as the number of children for which payment is made.

Computation of State ADA

PL 81-874 provides that ADA shall be determined in accordance with State law, except that Federally connected ADA shall be determined by USOE regulation. In addition, LEA's must adjust their total ADA for tuition pupils.

The methods used by States to compute attendance figures for allocating State funds varies from State to State. Some States allocate funds based on membership figures taken one or two days during the year, while others use an average daily membership figure. Still others use different methods for computing ADA.

Computation of LEA ADA

GAO found that many LEA's did not make the necessary adjustment for tuition children in the total ADA reported. In other instances it was found that the basis for total ADA reported to USOE could not be reconciled with the total ADA reported to the State. They also found that the basis for computing ADA varied from State to State.

Approximately 35 percent of the LEA's reviewed encountered difficulty in reporting a correct total ADA.

The GAO report points out that USOE representatives corrected most of the errors prior to the GAO review.

Federally Connected ADA

The following formula is used to compute Federally connected ADA:


Total adjusted LEA ADA Total adjusted LEA membership on the pupilparent survey date

Federally connected
membership on the
pupil-parent survey

Federally connected ADA

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