YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

September 12, 2002

Report No. 2002-87

The following areas of concern were noted in our audit of the Department of Higher Education.

During the two years ended June 30, 2001, the Department of Higher Education (DHE) awarded approximately $83.5 million in student financial assistance to college students through eight programs.  The majority of this funding, approximately $82.2 million, was state monies.  During our review of the student financial assistance programs, we noted the following concerns:

• The DHE does not perform any monitoring regarding the validity of data provided by colleges and universities to support student eligibility determinations.
  
• The DHE did not adequately monitor available funding to ensure monies were sufficient to fund scholarships in the same fiscal year as the scholarship was awarded.

During the two years ended June 30, 2001, the DHE awarded approximately $5.8 million in student financial assistance through the Advantage Missouri program.  This program, established in 1999, utilizes state monies to provide loans to students in certain undergraduate programs.  Timely tracking and follow-up action on some outstanding loans has not taken place.  Additionally, at the time of our review, the computer program component to be used for tracking amounts of loan repayments, loans forgiven, and loan balances of the Advantage Missouri program was not operational.

The DHE has ten state-owned vehicles including five fleet vehicles, four permanently assigned vehicles, and one vehicle used for mail delivery.  A vehicle usage log was not maintained for one vehicle, which was permanently assigned to the Commissioner of Higher Education.  The lack of a vehicle usage log does not allow for the identification and proper reporting of commuting mileage, nor the identification of business mileage as a basis for determining whether the need for the permanent assignment for business purposes is justified.  The Commissioner's employment contract authorizes the use of a state car for official business; however, some commuting was noted.

The DHE paid $1,520 for dinners in February 2000 and April 2001 to recognize "Women in Public Service".  These two dinners where held at the Commissioner's home and were attended by women legislators and selected high-ranking female officials of other state agencies.  Of the approximately 40 individuals which attended only 5 were DHE employees.  These dinners cost approximately $18 - $20 per person.  No agenda was provided for either meeting and the compelling business purpose and necessity of these expenditures was not clear.  In addition,  the DHE does not have a formal written policy regarding food provided by the agency for conferences and meetings.  Expenditures for agency-provided food and food services totaled approximately $53,500 for the two years ended June 30, 2001.  Instances were noted where food was provided at meetings scheduled during or beginning at the lunch hour and at meetings where all or a majority of the attendees were DHE employees (many of whom were in their official domicile).

The DHE does not have a formal policy regarding meal expense allowances, has set no dollar limits on meal reimbursements, and has allowed employees to be reimbursed for meals within their official domicile.

The DHE has hired consultants to perform various professional services.  During our review of the consulting expenditures, we noted the DHE contracted with several different computer programming vendors between July 1999 and June 2002 to develop software to administer the Advantage Missouri Loan Program, as well as providing other programming services including the Missouri Student Assistance Resource Services integration project and the Automated Transfer of Money system.  While the DHE has contracted with three different vendors over this time, the actual computer programmer has been the same individual for all three vendors.  Between July 1999 and April 2002, the DHE has paid the three vendors over $240,000 for the services of this programmer.  The contracts for these services did not document the specific project assignments, tasks, and completion milestones to be used in monitoring the vendors' progress, nor did the DHE provide the vendors with clear written guidelines regarding these issues through subsequent written communications.

The DHE paid some consulting services invoices without obtaining adequate supporting documentation.  One consultant did not include adequate supporting documentation for consulting service fees, totaling $9,000, billed to the DHE.  While DHE personnel indicated the consultant was paid a daily rate, neither the contracts nor the invoices indicated the method of determining the compensation or any daily rate.  In addition, documentation to support reimbursable out-of pocket expenses claimed by another consultant was not adequate.

The DHE has not developed a written policy regarding appropriate cellular telephone usage and does not regularly review monthly cellular telephone bills for billing errors and personal telephone calls.   Some of the DHE's fourteen cellular telephones were not enrolled in the most cost-effective plan or may not have been necessary.

The DHE did not obtain bids, or maintain bid documentation, for several purchases.  We noted bids were not obtained for promotional items purchased for various conferences, including pens costing $3,821, zippered portfolios costing $5,023, and backpacks costing $3,594.  Bids were also not obtained for one consulting contract totaling $22,700.  In addition, while the DHE indicated bids were obtained for another consulting contract totaling $9,756, no documentation was maintained of the other bidders, the amounts of their bids, or of the justification for selecting the chosen vendor.

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