Department of Education Loses $450 Million

Education Department Admits Wasting $450 Million

WASHINGTON (Reuters) - The U.S. Education Department lost an estimated $450 million to waste, fraud and mismanagement over the last three years, its inspector general said on Tuesday, drawing fire from lawmakers, who called for a crackdown on abuse.

``In many ways, it's beginning to look like we are dealing with a Third World republic,'' said Rep. Peter Hoekstra, a Michigan Republican and chairman of the House of Representatives' Select Education Subcommittee.

Testifying before the subcommittee, the Education Department's inspector general, Lorraine Lewis, estimated that at least $450 million was misused or lost as a result of errors and outright fraud. Some grants were issued twice. ``This is a very serious problem,'' Lewis said.

While Lewis reported that some of the funds had been recovered, she said that ``no one can say with certainty if there are other problems.''

Congressional auditors singled out the Education Department's check-writing and purchase card systems for blame.

According to the General Accounting Office, the check-writing system allowed 21 department employees to write more than 19,000 checks, totaling $23 million, without additional approval.

The office said the department's purchase card system allowed 141 cardholders to make more than $1 million in purchases without oversight.

The chairman of the House Education Committee, Ohio Republican John Boehner, expressed disappointment in the results but said he was confident new Education Secretary Rod Paige would combat fraud and address the agency's accounting problems.

``We look forward to working with the new administration and the secretary to turn things around,'' Boehner, Hoekstra and Vice Chairman Patrick Tiberi of the Select Education Subcommittee, an Ohio Republican, said in a joint statement.

The audit came as lawmakers prepared to debate President Bush's education reform plan.

Bush made school reform a cornerstone of his presidential campaign and promised in his budget to increase education spending in fiscal 2002 by $4.6 billion, or 11.5 percent, to $44.5 billion, the largest percentage increase of any department.

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Education Department Admits Wasting $450 Million