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Jan. 23, 2004 – Education officials issued responses on Friday to the Source report that the Virgin Islands, by not using available grant funds, saw the reversion of $2 million-plus to the U.S. Treasury at the end of fiscal year 2003, and that $32.9 million in federal school funds allocated to the territory in 2000, 2001 and 2002 had gone unused as of Jan. 6.
Separate responses came from the Board of Education, which issued a release on Friday afternoon, and the Education Department, which sent one out Friday night.
But the responses shed little light on either circumstance. The Board of Education essentially called on Education Commissioner Noreen Michael explain the situation and what the Education Department is doing about it. And the Education Department issued a statement from Michael saying that the department had gone to the U.S. Department of Education looking for answers.
The Source, in a Wednesday night posting, further reported that the $2,038,531, on a per-student basis, made the Virgin Islands No. 1 in the nation in the reversion of unused federal education grant money to Washington. And as of Jan. 6, the territory's $32.9 million represented the highest percentage of federal school funds allocated but not yet used from 2000, 2001 and 2002 by any state or territory. (See "V.I. leads in losing, failing to use school funds".)
In the Board of Education release, Harry Daniel, board chair, said of the $32.9 million that "these funds are still available to the department, so long as it has already acted to make valid obligations. So really, the relevant question that has to be asked and answered is whether the department has acted to obligate these funds which were awarded for fiscal years 2000, 2001 and 2002."
Tregenza Roach, the board's executive director, explained that each federal grant "has an obligation period and a liquidation period. These grants have all passed the obligation period, so that the department must have already acted to obligate."
Roach, a lawyer who was the Education Department's legal counsel for several years before becoming the board's executive director in December, said: "I have been informed that the department is now researching its records to report on its obligations. Federal officials are looking at the fact that money has not been encumbered. They may not have in their hands all documents showing valid obligations against these grants."
While the $32.9 million hasn't been spent, Roach said, it may be that the department "has encumbered the funds, but the money has not changed hands."
By law, Roach said, the school board is empowered to "provide for the proper administration of funds which may be appropriated by Congress and apportioned to the Virgin Islands for any and all educational purposes." He said the board and the department have "locked horns on the issue numerous times, but this situation illustrated the need for the checks and balances which we have long advocated."
Roach also said he was struck in the news account "by the fact that the issue of timely obligation and liquidation of federal funds seems to be a problem to all of the territories. The question is why."
The Source reported that in the percentage of federal education grant funds available but so far unused, ranking after the No. 1 Virgin Islands (39.4 percent) were the Federated States of Micronesia (38.7 percent), the Republic of Palau (37.6 percent), the Marshall Islands (35.2 percent) and Puerto Rico (21.3 percent). Guam (16.1 percent) ranked below Ohio, the highest-ranked state (16.1 percent).
The Source tried without success over the course of three business days last week to get a statement from Education Department officials on both the grant funds reverted and those allocated but thus far not used, awaiting three more days this week for a response to telephone calls, e-mail messages and a fax to the commissioner transmitting the federal tabulations.
The release faxed to the media on Friday night by the Education Department consisted in its entirety of the following statement from Michael:
"The Department of Education upon receiving a request for information following the circulation of news releases of unspent federal funds and the reversion of federal funding by the Virgin Islands Department of Education has been aggressively attempting to facilitate discussions with representatives of the U.S. Department of Education (USDOE). The intent of those discussions was to ascertain exactly what monies were being referred to as having reverted back to the U.S. Treasury in December of 2003. We thought it prudent to obtain as much background as possible prior to making a statement that would further complicate this very delicate situation. Discussions were finally held last [Thursday] evening with USDOE officials.
"As a result of the discussions, the review of internal documentation, and documents transmitted by USDOE, we have found that the $2 million in funding referenced was awarded to the department for obligation during the period of October 1996 through September 1999. The standard liquidation period for grant funds [is] 90 days beyond the obligation period. If, however, all valid obligations have not been liquidated during this period, the USDOE may grant extensions up to three years beyond the initial liquidation period. Though requests were made, USDOE did not grant all requested extensions, despite the existence of valid obligations.
"Of the $2 million reverted, $508,989 was never received by the V.I. Department of Education. Communication with USDOE in May of 2001 regarding the non-receipt was in part one of several factors that led to the Compliance Agreement between the V.I. government and USDOE. USDOE felt at that time the department did not track awarded monies properly. (Awards were drawn by telephone as the department did not have electronic access to verify the availability of funds.) Three grants totaling $325,365.66 lapsed and were subsequently returned as a result of the USDOE's failure to act on a request for an extension for liquidation. USDOE neither approved nor denied the request. The remaining monies include approximately $1.1 [million] of funds that the department did not obligate within the grant period and $43,312 awarded to other government entities.
"In the very near future, the department will provide information to the public on the status of the unexpected balances for federal funds for the 2000-2002 period."

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