Tale of Two Visions

May 1999

Visions of Bureaucracy

AmeriCorps Fails Financial Audit
Source: Associated Press, May 1999
An internal audit of the Corporation for Nation Service, which runs the AmeriCorps program, has shown serious financial management problems, according to the agency's inspector general.
In testimony before the Oversight and Investigations Subcommittee of the House Education and the Workforce Committee, inspector general Luise Jordan cited eight areas of the corporation's financial operations which are "materially weak," including its financial management and reporting, financial systems and the management of millions of dollars in grants. In addition, Jordan pointed out that previous audits have identified six such areas and that until last year, the agency could not even produce financial statements suitable for auditing.
Although some progress has been made to improve the Corporation's financial records and operations, the problems are still overwhelming. In fact, the agency is without its chief financial officer and deputy financial officer, both of whom left last year, leading to even more financial mismanagement.

Legal Services Corp Overstates Cases to Congress
Source: Grand Rapids Press, April 1999

The Legal Services Corporation, which provides legal aid to the poor, overstated to Congress the number of cases it handled in 1997 by tens of thousands, according to audits and internal documents.
Legal Services reported serving 1.93 million clients in 1997. However, a review of just five of the agency's 269 regional programs revealed that officials had over counted their caseloads by 90,000. Further documentation and an internal audit showed problems at these five programs, including telephone calls from people who did not receive legal assistance or were ineligible for help that were counted as new cases, cases that were double-counted and outdated cases that were counted. The review concluded that about 70 percent of nearly 73,000 closed cases recorded by the five programs were not valid.
Although Legal Services stated that they were not intentionally misleading Congress, the overstated numbers were likely a factor in the agency's 1999 budget increase. Unfortunately, this is just another example of misuse of taxpayer funds at the corporation.

Report Shows Federal Lab May Have Cheated Inventor
Source: USA Today, April 1999

According to a Congressional investigation and report, a federal research laboratory may have stolen an idea from an inventor.
The invention, which is a new way to transmit and receive information across airwaves, was first patented by an Alabama scientist in 1987. In 1993, a federal lab began patenting its version of the technology, which it hailed as a "fundamental breakthrough," and sold development rights to dozens of companies for millions of dollars in royalties. The scientist charged that the lab stole his idea and according to a report developed by the House Science Committee, there is sufficient evidence that the lab "engaged in activities that do not live up to the high professional and ethical standards expected of a federally funded entity." The report went on to state that this behavior not only shows problems at the lab, but also may have lead to economic damages to many small businesses.
Although lab officials have committed to an internal review and state that they are taking the findings of the House report seriously, the lab has stonewalled and mislead in the past. "This is," in the words of one Congressman, "a perfect example of how government shouldn't work."

Financial Mismanagement Continues in Federal Government
Source: Associated Press, March 1999

According to a recent audit conducted by the General Accounting Office (GAO), the federal government does a terrible job of keeping its financial books.
The audit found that 24 major federal agencies don't properly account for a majority of the $466 billion in assets they hold, ranging from buildings to heavy equipment to ammunition. While this may mean that some of the assets are missing, it primarily shows that most government agencies do not have the basic financial controls in place that are common in private business.
The report found other problems as well, including inadequate data on loans and liabilities such as veterans benefits, poor computer security, numerous underestimates for costs such as environmental and nuclear cleanups and even lack of documentation to support the costs of many day to day government operations.
A separate Congressional "report card" recently released graded federal agencies in three financial categories: reliable information, effective internal controls and compliance with laws and regulations. Only two agencies received an "A", while 12 others either received an "F" or hadn't submitted their statements by the required deadline.
Surprisingly, the results of the audit were praised as good news because the accounting wasn't as bad in fiscal year 1998 as it was the year before. However, the federal government must be held accountable for the taxpayers' dollars they spend. Bad accounting and financial mismanagement should not be celebrated and the government needs to get its books in order.

Visions of Opportunity

Program Offers Hope to Welfare Recipients
Source: Associated Press, April 1999
Welfare reform legislation, which was passed in 1996, has proven to be a success in reducing welfare caseloads and moving recipients into work. Under the new laws, states have been given flexibility to use welfare funds for programs that work, including child care and health insurance for children in working poor families.
In Wisconsin, a program offered child care, health insurance and extra money if working full-time to former welfare recipients who were still unable to make ends meet. According to a recent report, the program cut in half the number of people who had never worked and increased the incomes of participants by 13 percent. At the same time, children were more likely to succeed in school and less likely to have behavior problems. The program, which was run by a nonprofit group and funded by city, state and federal grants, is now being duplicated in many states.
State flexibility in using welfare funds has helped millions of welfare recipients and their children. Perhaps this success could be duplicated in other areas, such as education, if states were given the opportunity to develop and implement programs that, unlike bureaucratic federal programs, really work.

Government Seeking Out Delinquent Loan Recipients
Source: Detroit Free Press, April 1999

In a final effort to collect on billions of dollars in defaulted student loans, some of which were handed out in the 1970s, the federal government is taking a record number of delinquent graduates into federal court.
In 1998, more than 14,000 federal student loan suits were filed in federal court, an increase of almost 55 percent from the previous year. The rise in cases are in part a result of tougher laws enacted by Congress, more effective collection methods and new incentives designed to encourage private collection agencies to pursue defaulters.
The federal government has also passed almost 80 percent of all delinquent student loans on to private collection agencies, which have the legal authority to garnish the wages of employed debtors, another factor leading to the dramatic increase in cases.
While the federal government has several programs to help graduates pay back student loans, some students still default. The federal government should do all that it can to get back the taxpayers' money spent on student loan programs and collect on delinquent loans.

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