Tag: GAO

Are Even Dems Getting Tired of Anti-Profit Crusade?

By
Neal McCluskey

File:Hand whit I'm bored.jpg

Yesterday, Sen. Tom Harkin (D-IA) held his fifth – and perhaps final – Health, Education, Labor, and Pensions committee show-hearing lambasting for-profit colleges. As usual, it was a decidedly one-sided affair, with no profit-defenders apparently invited to testify, and Republican committee members boycotting. Perhaps the only interesting thing that occurred was Sen. Al Franken (D-MN), who has never given any indication he doesn’t support Harkin’s obsessive whale hunt, saying the proceedings could have benefitted from more than one point of view. According to MarketWatch, Franken lamented that “it would have been nice to have someone here to represent the for-profit schools.” Now, he might have only wanted a for-profit rep there to receive the beating, but even that would have been preferable to no rep at all.

Could this indicate that even Senate Democrats are getting tired of Harkin’s tedious grandstanding against for-profit colleges, especially now that the Education Department has issued its “gainful employment” rules? Maybe, and there are lots of Dems in the House who have opposed the attack on for-profit schools for some time. But don’t expect this to be over quite yet: Harkin still gets a lot of negative media coverage for proprietary schools with each hearing, while the scandals surrounding people he’s had testify; the decrepit GAO “secret shopper” report that turned out to be hugely inaccurate; and potentially dirty dealings behind the gainful employment rules seem only to get real ink from Fox News and The Daily Caller. And Harkin keeps indicating that he will introduce legislation – doomed to failure though it may be – to curb for-profits even further.

Of course, what should be the biggest source of outrage in all of this is that while Harkin fixates on for-profit schools, Washington just keeps on enabling all of higher education to luxuriate in ever-pricier, taxpayer-funded opulence. Indeed, as a new Cato report due out next week will show, putatively nonprofit universities are likely making bigger profits on undergraduate students than are for-profit institutions. Of course, they don’t call them “profits” – nonprofits always spend excess funds, thus increasing their “costs” – but that’s probably just plain smart. Be honest about trying to make a buck, and Sen. Harkin has shown just what’s likely to befall you.

Topics: 
Education and Child Policy, General, Regulatory Studies

TSA: If You Object to Giving Up Your Rights, We Should Take a Closer Look at You

By
David Rittgers

TSA screeners and behavior detection officers may give you extra attention if you complain about security protocols (video at the jump). Former FBI agent Michael German sums up my feelings pretty well:

It’s circular reasoning where, you know, I’m going to ask someone to surrender their rights; if they refuse, that’s evidence that I need to take their rights away from them. And it’s simply inappropriate.

In related news, the GAO recently told Congress that the TSA’s Screening Passengers by Observation Technique (SPOT) is not scientifically grounded. The GAO testimony is available here.

More Cato work on TSA screening here, here and here.

Topics: 
Foreign Policy and National Security, Law and Civil Liberties

The Other For-Profit College Scandal

By
Neal McCluskey

Because the evidence of wrongdoing and evasion is so clear, and the effect has been so damaging, I have devoted a lot of pixels to the GAO’s horrendous ”secret shopper” report on for-profit colleges, as well as the stonewalling about what caused the initial report to be so biased. A potentially even bigger story, though, is what appears to be the machinations of an unholy alliance of Department of Education officials, Senate HELP Committee chairman Tom Harkin (D-IA), and Wall Street short-sellers hoping to make big bucks off the demise of for-profit schools. This Daily Caller article, and the connected video of Senator Tom Coburn (R-OK), are good places to start learning more about this, as is the website of Citizens for Responsibility and Ethics in Washington.

The problems with understanding scandals like this, of course, are trying to get the truth about things that have gone on almost entirely in real or virtual back rooms; knowing what is legal and what isn’t; and just figuring out who’s who. Such scandals also reveal little about whether for-profit schools are actually more or less effective than other higher ed sectors, arguably the main public policy concern.

What this sort of thing does start to reveal, though, is just how far out of public view policy is often made, as well as how people try to profit directly from government action. In other words, it’s a great case study in public-choice theory, and just how un-Schoolhouse Rock Washington really is.

So I can’t tell you everything about who said what to whom. However, at the very least it is clear, for instance, that famed short seller Steve Eisman had a huge amount to gain by testifying that for-profits are bad and there is a “bubble” in proprietary higher ed about to burst. After all, were either the Education Department or Senator Harkin – or both – to use his testimony to attack for profits, as indeed they have, Eisman would have a highly profitable self-fulfilling prophecy on his hands.

No matter how you feel about for-profit colleges – and my feelings are decidedly mixed– learning about how policy is really made can be a very unsettling thing. In fact, it can make you feel more than just a little sick.

Topics: 
Education and Child Policy, Finance, Banking & Monetary Policy, General, Government and Politics, Regulatory Studies

Keep Moving, There’s Still Nothing to See Here

By
Neal McCluskey

In dribs and drabs the plot thickens in the quiet little saga surrounding the GAO’s brutal and broken August report on for-profit colleges. The latest development is the near-silent transformation of the GAO office that produced the knee-capping report that was later quietly reissued with lots of new, for-profit-exonerating material.

I say “near-silent transformation” because word about it somehow got to the Coalition for Educational Success, a career college advocacy group.  Yesterday, CES issued a press release on the matter, and this morning I contacted GAO’s public affairs office about it. To the GAO’s credit, their public affairs folks quickly sent me a copy of a memo announcing the end of the Forensic Audits and Special Investigations (FSI) team. Sadly, it was clear that there would be no public announcement of the change, which is utterly consistent with the behind-your-back way GAO has handled every development in this story. Well, every development save the very public release of the original, fatally flawed report.

Especially concerning is the following passage in the memo, which suggests that the for-profit college report provided the ultimate impetus for giving the FSI a new identity. This despite the FSI having done investigations in numerous other areas:

Since the Forensic Audits and Special Investigations team was formed in 2005 the team’s body of work has resulted in numerous accomplishments and benefits to the Congress and the public. To ensure good work continues and to bring greater management attention to the group and more seamlessly integrate its work with GAO’s program teams as well as the audit and investigative sides of the unit, today I am announcing several changes. These enhancements will also ensure greater attention to the issues that led to the need to produce the errata to the for-profit schools report and by the subsequent inspection.

So why does the group need “greater management attention”? And what exactly are “the issues that led to the need to produce the errata” to the August report?

As a member of the public it sure would be nice to know the answers to these questions, especially since these are the guys who are supposed to be holding the rest of the federal government ”accountable.” For proprietary schools’ employees and investors — the people who were most hurt by the dubious August report — these are thing they absolutely should know. But the GAO insists on telling us that nothing major went wrong while refusing to share information we’d need to confirm that. It’s not only totally unsatisfactory, it only makes you even more suspicious.

Topics: 
Education and Child Policy, Government and Politics, Regulatory Studies

Abolish Federal Job Training Programs

By
Tad DeHaven

A report from the Government Accountability Office finds that the federal government administers 47 different employment and job training programs at a cost to taxpayers of about $18 billion. The GAO excluded another 51 programs that could be considered as providing job training assistance, such as student loan subsidies.

The takeaway from the report is that there is a lot of duplication, and thus excess bureaucracy and inefficiencies. Moreover, the GAO says that “little is known about the effectiveness of most programs.” Nonetheless, Congress unflinchingly funds these programs even though the GAO has been issuing reports with similar findings since the 1990s.

Coinciding with the GAO report, Sen. Tom Coburn (R-OK) released a paper that singles out 25 particularly egregious examples of federal job training programs abusing taxpayer dollars. It’s the sort of thing that government apologists will dismiss as “anecdotal,” but when it comes to government programs, where there is smoke, there is usually fire. And if the anecdotes help undermine support for such unwarranted federal interventions, all the better.

One problem I have with Coburn’s paper is that it concludes with recommendations that amount to rearranging the deck chairs on the Titanic (e.g., consolidate programs, narrow program objectives, and better target funds). Coburn says that these programs need better “program metrics.” However, I was once responsible for program metrics as a budget official in the state of Indiana, and I can attest that politics render such endeavors a fool’s errand.

Coburn’s paper is at its best when he cites James Bovard’s observation that the government doesn’t need to be involved in job training:

As aptly considered by scholar James Bovard, the government has taken on a role more appropriately filled by the private sector. Bovard writes, “The fallacy underlying all job training programs is that the private sector lacks the incentive to train people for jobs. This is like assuming that farmers don‘t have an incentive to buy seed, or that auto manufacturers lack incentive to seek out parts suppliers. Businessmen naturally prefer that all the factors of production – including labor – be readily available. But where there is a shortage of skills and demands for services, there will be an incentive to train.”

The American Society for Training and Develop estimates that “U.S. organizations spent $125.9 billion on employee learning and development in 2009.” In addition, there are untold private options for job seekers: headhunters, counselors, recruiters, temporary work agencies, career fairs, internet resources, charities, and various civic organizations.

As Coburn correctly puts it:

The federal government could best help displaced workers by opening foreign markets to U.S. goods and services and creating an atmosphere that attracts and retains investment and productivity in the U.S. This can be accomplished in part by reducing unnecessary regulatory burdens on small businesses and employers, and ensuring stable and predictable government policies so employers can make short- and long-term investment and management decisions.

Topics: 
Tax and Budget Policy

Dear Defamed: Trust Us, We’re the Government

By
Neal McCluskey

With the release of a new report analyzing a quietly amended Government Accountability Office study that’s been used to club for-profit colleges, fear of GAO bias has reached a fever pitch. Sadly, the GAO’s response to the report does anything but assuage that fear.

To get a decent sense for the government abuse both surrounding, and possibly perpetrated by, the GAO study in question, it’s worth a quick rehash of events.

Basically, the study was requested by Sen. Tom Harkin (D-IA), the chairman of the Senate Health, Education, Labor, and Pensions Committee who has been waging war against for-profit colleges on the suspicion that the sector is rife with fraud, waste, and abuse. To get data to support his suspicion, Harkin asked the GAO to conduct “secret shopper” research in which investigators pretending to be prospective students visit schools to discover fraudulent admissions and financial aid practices.

In August 2010 the GAO released selected findings in testimony to Harkin’s committee and an accompanying report. The GAO said that it found abuses in all the schools it visited, which Harkin and others suspicious of profit-seekers seized on to assert that the sector is, indeed, teeming with fraud.  That the GAO’s report explicitly noted that the sample of schools it visited was non-random and, therefore, its results impossible to apply to all of for-profit higher education was no matter: the rhetoric of those with a bias against for-profit schools was off and running.

In November, while for-profit schools sought unsuccessfully to get all the recorded and other material needed to substantiate the GAO’s findings, the GAO silently slipped a revised version of the report out, one that featured numerous changes, all of which redounded to for-profits’ favor. And it wasn’t just correcting minor oversights: There was lots of recorded dialogue that had been missing from the original report, material that the GAO must have known about before issuing it’s initial, very damaging report.

Which brings us to the present day, and the new report that tears apart the amended version of the GAO study. Using available audio recordings of the shoppers’ visits – and many recordings and other evidence is not available, being held by the GAO and U.S. Department of Education – investigators from the firm of Norton/Norris, Inc., commissioned by the Coalition for Educational Success, report that only a quarter of the GAO’s findings can be substantiated after factoring out missing recordings. In other words, an already crumbling report seems to be utterly collapsing.

So is the GAO apologizing for this, or at least saying they’ll make all their material available? No way, as their statement to Inside Higher Ed makes clear:

“The consultants hired by the Coalition to discredit the report never contacted GAO for explanations and failed to take into account many factors, including the fact that not all information in the report can be found on the audio tapes posted to the Internet,” Chuck Young, GAO’s managing director for public affairs, said in an e-mailed statement. “For example, GAO turned over some videotapes to the inspector general at the Department of Education due to evidence of serious wrongdoing uncovered by investigators. Audio from those visits was not able to be posted. There were also written materials that were examined as part of the work and are not on the tapes. We are reviewing the tapes to see if there were any segments that were not provided to the committee.

“But the bottom line remains that a GAO review team independent from the investigators who did this work examined the report and found no material flaws in the evidentiary support for the overall message of the testimony and consequently our findings did not change. We did issue the errata at their suggestion to clarify our work and provide more precise language. We continue to stand by the overall message of this report.”

You don’t have to suffer from tinfoil-hat paranoia to see real and potential government abuse all over this sorry episode. First, opportunist politicians and others misused the initial GAO report to smear the whole for-profit sector. Then, once the damage was done, the GAO made significant changes to their report without even so much as issuing a press release. And now, as even the amended report is being ripped to shreds, the GAO’s response is basically “you can’t have access to the evidence being used against you, and you don’t need it: We’ve already decided we’re right and you’re wrong.”

Now, are for-profit schools pure and blameless? Absolutely not: Norton/Norris confirmed several of the GAO’s findings, and some findings they questioned are probably accurate. Moreoever, as I’ve pointed out before, many for-profit schools are happy to take students carrying taxpayer dollars despite knowing there’s little chance that those students will ever finish their studies. Of course, that makes those institutions no different from many public and nonprofit private schools about which Sen. Harkin evinces no concern. 

Ultimately, though, much more important than the immediate effect of all of this on for-profit schools is the lesson it offers for all Americans: Run afoul of the sensibilities of the wrong politicians – especially if you make a deal with the devil and take government funds – and government can hobble you without ever worrying about due process, transparency, or just plain fairness. All it has to do is make accusations.

Topics: 
Education and Child Policy, Government and Politics

Head Start Fraud

By
Tad DeHaven

It’s been a tough week for the Department of Health and Human Services. As I discussed earlier, the Government Accountability Office reported on fraud problems with the Child Care and Development Fund program. Another new report from the GAO finds fraud problems with HHS’s Head Start program.

GAO investigators attempted to register children from fictitious families in Head Start programs in six states and the District of Columbia. The GAO created 13 fictitious families that earned too much income or possessed other characteristics that would disqualify the children from participating in Head Start. The result is embarrassing:

In 8 out of 13 eligibility tests, our families were told they were eligible for the program and instructed to attend class. In all 8 of these cases, Head Start employees actively encouraged our fictitious families to misrepresent their eligibility for the program. In at least 4 cases, documents we later retrieved from these centers show that our applications were doctored to exclude income information for which we provided documentation, which would have shown the family to be over-income. Employees at seven centers knowingly disregarded part of our families’ income to help make over-income families and their children appear to actually be under-income. This would have had the effect of filling slots reserved for under-income children with over-income children. At two centers, staff indicated on application forms that one parent was unemployed, even though we provided documentation of the parents’ income. A Head Start employee at one center even assured us that no one would verify that the income information submitted was accurate.

The GAO finding is not surprising given that previous reports show that HHS does a poor job administering the program.

In 2000, the GAO found that 76 percent of Head Start grantees reviewed were not in compliance with financial management standards. In a subsequent review, more than half remained out of compliance. In 2005, the GAO reported that HHS still couldn’t adequately identify financial management weaknesses of Head Start grantees. In 2008, the GAO reported that HHS still had not undertaken a comprehensive assessment of Head Start’s risks, and said that it had made “little progress” in ensuring that the data it collects from grantees are reliable.

But as a Cato essay on Head Start explains, the program’s biggest problem is that it isn’t effective in helping children from low-income families succeed later in life:

In 2010, HHS released a long-anticipated study of Head Start’s effectiveness, which is the most rigorous analysis to date. The program is supposed to give disadvantaged children a “head start” in life. However, the study found almost no advantages to children in kindergarten and grade one from having gone through Head Start, compared to children who had not.

Of the 112 measurements in the new HHS study—which covered areas such as academics, socio-emotional development, and health—only a handful showed any statistically significant benefit to participants of Head Start. In addition, most measured benefits disappeared once more rigorous statistical methods were applied. In other words, there was virtually no benefit to children of having attended Head Start.

After 45 years and $166 billion in spending, it’s apparent that this Great Society relic isn’t the best way to help disadvantaged children.

Opponents of federal welfare programs are often accused of being unconcerned about the needs of the poor. However, the burden of proof should be on the advocates who claim that federal bureaucracies and concomitant subsidies are the best option for assisting the less fortunate. Head Start, and other smoldering embers from the Great Society’s “War on Poverty,” continues to show otherwise.

Topics: 
Health Care, Tax and Budget Policy

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