Friday, May 27 2022

The Guam Department of Education is preparing for an important visit by U.S. Department of Education officials.

The visit by federal officials is a crucial step in the reconsideration of GDOE’s ongoing high-risk designation and third-party fiduciary oversight of its finances.

GDOE was designated as high-risk in 2003 by the federal government. Alvarez & Marsal Holdings LLC, its third-party fiduciary agent, has been overseeing GDOE’s management of federal grant funds since 2009. Every year, GDOE pays up to $3 million to the third-party fiduciary.

Following USDOE officials conducting onsite monitoring in May, however, that could all change.

GDOE Superintendent Jon Fernandez and Guam Education Board Chairman Mark Mendiola recently met with Secretary of Education Miguel Cardona regarding the specific conditions the local department is to report.

“We had an opportunity to sit with him for about 15 minutes, basically highlighting our entire history of high-risk status designation. They are coming out, a high-level delegation is coming out. There’s going to be time for the board to meet with these folks,” Mendiola said.

GDOE developed a reevaluation plan to address removing the high-risk designation,

Mendiola said a presentation would be put together for local education officials before federal counterparts arrive, so that everyone is on the same page when it comes to the history behind the high-risk designation and the reevaluation plan.

“I want my colleagues to know that it really goes into the weeds of things. There’s an initial letter placing us on high-risk designation and then there was a plan developed with (USDOE) and how we are going to transition out of high-risk designation,” Mendiola said.

But first GDOE needs to ensure that no challenges pop up while federal education officials are visiting. One major concern is the audit.

“We have USDOE officials coming out in May. I am concerned because the audit is going to be a critical factor in the determination regarding the high-risk status and the third-party fiduciary,” he said.

Another member of the education board hopes the financial assessment will be completed before federal officials arrive.

“I don’t want any setbacks. Because we have the visit, then we produce an audit that has some issues that we can’t flush out while they’re here, if there are any issues,” said GEB member Mary Okada.

Fernandez reassured her that the audit is about a week or two out from being issued.

“We are leaning toward a week, but at the most two weeks and definitely before the U.S. ED visit,” Fernandez said.

Local commission

Another issue pertains to the Education Finance Supervisory Commission, which keeps tabs on GDOE’s financial health and in turn issues warnings or watches, which USDOE uses in consideration of GDOE’s high-risk designation.

During the recent GEB meeting held earlier this week, officials noted receipt of a letter from the commission which placed a watch on GDOE.

In turn, board resolution 22-05 was approved.

“Resolution 22-05, relative to approving the corrective financial recovery plan prepared in response to C-watch issued by the financial supervisory commission for the month of January 2022, fiscal year 2022,” Mendiola said.

But there are other issues to address as well, such as the review of the finances by the commission not current. It appears that GDOE created the conditions for the negative findings.

“I had an opportunity to speak to the acting deputy superintendent on this, based on the projections that we are providing, we are creating the shortfall,” Okada said. “If we adjust the projections based on some more reasonable calculations where we are not putting ourselves in these deficit categories – we need to relook at that because the projections should be in alignment with the budget already established by the board or approved by the board based on the adjustment budget that was presented.”

GDOE Deputy of Finance Frank Cooper-Nurse explained the situation further.

“Particular areas that get into a watch or warning takes further review from us,” he said. “What’s triggering the warning is the over-expenditure in those categories based on the projection. So basically as Dr. Okada said, there is a way to adjust the projections and utilize that tool to be more accurate. So what you’re seeing in those particular sections is where there is a projected over expenditure we need to take corrective action to ensure we stay within the budget baseline.”

The Guam Board of Education has been asked to pen a letter to the Education Finance Supervisory Commission, in the hope of getting more timely information.

“Is there any way possible we can ask them to update as much as possible, because they are putting the code C-watch on us. Perhaps, pen a letter from the board to the commission asking them to get a little bit closer to date, because we are looking at the financial projections,” Mendiola said.

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