Sept. 6, 2007 — True to her word, acting Education Commissioner Lynn Spampinato went to Washington, D.C. this week to try and salvage some of the federal education money the territory stands to lose if it is not earmarked for specific use by the end of this month.
When she was introduced by Gov. John deJongh Jr. in August, Spampinato said she would make the trip to Washington to unravel the saga of substantial financial hits taken by the Virgin Islands due to improper handling of federal funds.
Year after year, the territory tops the list of returned money — last year it was $2.4 million — because it seems no one can figure out what to do with the funds. (See "Territory Tops List for Unused Federal Education Funds, Yet Again").
In a statement Thursday from the V.I. Education Department, Spampinato said that in meetings with federal Department of Education officials, A major area of concern for the department is the redirection of approximately $4.4 million of FFY 2005 grant funding not currently obligated. Funds not obligated within the next 24 days will be forfeited to the U.S. Treasury, she said.
In 2002, the U.S DOE issued a compliance order giving the territory until 2005 to get its books in order. When the deadline came, DOE.determined the territory was not complying with their requirements and began holding back grants until a third-party fiduciary was called in to oversee accounting. The fiduciary, the firm of Alvarez and Marsal, was finally contracted in August 2006.
Meanwhile, the absence of federal funds caused a sudden cash shortfall. Over the past two budget cycles, the V.I. government has loaned Education tens of millions to help compensate for the losses, pending a positive resolution of the crisis.
But according to a Source story in March, the late start on spending the monies held back since 2005, and rapidly approaching deadlines for this year, meant there was little time to correctly allocate, spend and account for several years' worth of grants.
To date we have encumbered 19 percent of the money from 2005. Thats a far cry from where we need to be, Karen Marsal of Alvarez and Marsal said in March.
Spampinato said she and the other top Education officials on the trip presented the federal officials with their plans to conduct audits in several areas, while getting more information from DOE on what will and will not be funded with federal dollars.
"Programs must drive the dollars — not dollars driving the programs, Spampinato said. She said it was up to the V.I. government to drive the process. Meanwhile, the fiduciary will remain in place until the government "can demonstrate accountability and a hands-on role that is sustainable.
"The Fiduciary is responsible for maintaining the fiscal side of the house, while the programmatic issues must be addressed by the V.I. Education Department," Spampinato said.
Accompanying her on the trip were: Federal Grants Director Daisymae Millin, newly appointed St. Croix Superintendent of Schools Gary Molloy; Assistant Commissioner Donna Frett-Gregory; St. Thomas-St. John Superintendent Lisa Hassell-Forde; Human Resources Director Alscess Lewis-Brown; Education Chief of Staff Wynant Watty-Benjamin; Director of Planning, Research & Evaluation Randolph Thomas; and Luis Sylvester, policy advisor to the governor.
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