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Education Commissioner Addresses 'Challenges' Over Federal Funds

July 11, 2008 — V.I. Education Commissioner La Verne Terry said the department is having some "challenges" with Alvarez and Marsal, the federally mandated third-party fiduciary controlling Education's federal funds, during Finance Committee budget hearings Thursday.
Alvarez and Marsal act as third-party fiduciaries for both Education and Human Services. In the case of Education, one of its principal responsibilities is to apply for and properly spend or obligate as much federal grant money as is feasible. In the past, millions of dollars in federal funds were not spent properly within federal time limits and millions had to be returned.
In response to questions from Sen. Liston A. Davis, Terry and Assistant Education Commissioner Donna Frett-Gregory said in some cases Alvarez and Marsal was performing well.
"In other cases we have had some disagreements," Terry said.
"Currently we don't have any funds going back," Frett-Gregory said. "But … we will have funds that will lapse and be returned as a result of our inability to obligate those funds because of issues with Alvarez and Marsal."
Seeking to clarify, Davis asked if this meant Education had problems with Alvarez and Marsal.
"I am not sure we have problems," Frett-Gregory said. "We have challenges."
Sen. Usie Richards asked what precisely was happening
"We are having trouble having payments process processed in a timely way, having our requisitions go through without being stopped by the third party," Terry said. "We have to go to U.S. DOE and they have to go back and investigate, and the entire process slows down. … Sometimes vendors do not get paid and progress stalls because of that."
The upshot is that about $6 million in federal funds for 2007 have not been obligated. But Terry and Frett-Gregory stressed there is still plenty of time to obligate the funds. They do not revert back to the federal government until 2012. The problem is more one of process and timeliness.
No one from Alvarez and Marsal was present at the budget hearing to respond.
One of the largest government agencies, Education, was at the hearing to defend its proposed General Fund budget of $188.6 million. This is a $7.2 million increase over its 2008 appropriation. A large portion of the increase is due to increased salaries as a result of labor contracts, as well as higher fuel costs.
Education also expects to receive $37.8 million in federal funds and $2.9 million in dedicated, non-appropriated local funding, for a grand total of $233.7 million.
The department has more than 3,000 employees, although Terry said the precise number changes almost daily.
The V.I. Board of Education defended its budget Thursday as well, requesting $2.7 million, a nominal increase of $36,000 over last year.
Certification of teachers, principals and Education administrators is a major function of the board. Board Chairwoman Debra Smith-Watlington told the committee 46 percent of Education's approximately 1,500 teachers and administrators are now certified.
"This represents a 20-percent increase over last year," she said.
Under the federal No Child Left Behind Act, the board and the Education Department have established an alternative, expedited certification mechanism for veteran teachers called the Highly Objective, Uniform, Standard State Evaluation (HOUSSE). Some 450 teachers and administrators are eligible for the HOUSSE, and 320 have begun that route to certification, Smith-Watlington said.
"As a result, hundreds of these veteran teachers will be certified," she said.
Many more are training for PRAXIS-certification exams, with the assistance of the Board of Education, she said.
For most of the hearing, only committee chairman Sen. Terrence "Positive" Nelson and either Davis or Sen. Neville James were present. At various times, Sens. Juan Figueroa-Serville, James Weber III and Ronald Russell came in, as well. Non-committee member Richards was present and Sen. Carlton "Ital" Dowe was absent but excused. No votes were taken.
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