Feds say Chicago’s stimulus spending needs more oversight

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A recent federal audit of stimulus spending in Illinois schools calls for improvement in state oversight, noting that two of the three districts examined by auditors—including Chicago—did not track any spending of so-called State Fiscal Stabilization Funds.

Moreover, the districts had yet to spend any of their Title 1 and IDEA (Individuals with Disabilities Education Act) dollars allotted under the American Recovery and Reinvestment Act. The slow start in spending has left auditors unclear as to whether good accounting procedures are in place.

At least one CPS budget watchdog, noting the promise for unprecedented transparency in stimulus spending, thinks not.

A recent federal audit of stimulus spending in Illinois schools calls for improvement in state oversight, noting that two of the three districts examined by auditors—including Chicago—did not track any spending of so-called State Fiscal Stabilization Funds.

Moreover, the districts had yet to spend any of their Title 1 and IDEA (Individuals with Disabilities Education Act) dollars allotted under the American Recovery and Reinvestment Act. The slow start in spending has left auditors unclear as to whether good accounting procedures are in place.

At least one CPS budget watchdog, noting the promise for unprecedented transparency in stimulus spending, thinks not.

“It seems CPS did not establish clear accounting procedures for the millions of ARRA special education dollars it has received and [the Illinois State Board of Education] really took little or no action to require that such clear procedures be in place. Given the amount of money involved, I find that rather disturbing,” says Rod Estvan, a special education advocate with Access Living, who has closely tracked Chicago spending.

The federal government has strict procedures in place to ensure stimulus funds doled out under Title 1 and IDEA are spent on disadvantaged students and meet “maintenance of effort” requirements, which keep federal dollars from displacing local funds for low-income and special needs students. That is an issue raised by Access Living in a November report on Chicago’s IDEA budget.

Meanwhile, stabilization funds, meant to prop up sagging state budgets, were given with far fewer strings attached. However, the federal government is aiming to track all stimulus expenditures.

Chicago and Hinsdale did not track spending at all because the money (including nearly $450 million for Chicago), was rolled into general state aid payments that typically do not require spending reports. An employee in Chicago’s budget office says districts were surprised to have the money suddenly rolled into aid payments at the end of the year and most districts were caught off guard on reporting requirements.

Cash-strapped school administrators have generally relished stimulus funds, but many have quietly complained that the funding came with overly complicated and ever-changing tracking and reporting requirements. CPS later produced an expenditure and jobs report for the stabilization spending in 2009. More reports are due in April for another round of general state aid payments that contain stimulus dollars.

Part of the record-keeping has focused on timely spending, for two reasons: to ensure the money has the desired effect of quickly stimulating the economy and to make sure that the federal government keeps its coffers full—and earning interest—until schools need the cash. When schools receive stimulus dollars but do not immediately spend them, they must reimburse the federal government for any interest earned on the unspent funds.

In general, however, the audit credited the state for taking several “proactive” steps to track stimulus spending transparently, including the establishment of two stimulus oversight bodies and a public website to serve as a clearinghouse for data and reports. They also noted that ISBE had modified its computer system to capture all required Title 1, IDEA and stabilization fund activity.