April 8, 2005 – Education Commissioner Noreen Michael told the Senate Education, Culture and Youth Committee on Thursday her department had documentation indicating it is in compliance with requirements from the U.S. Department of Education.
Committee members grilled Michael for a good part of the Senate hearing on St. Croix about a recent letter from the USDOE calling for immediate action from the V.I. government on a compliance agreement between the two entities. The agreement was entered into September 2002 because of the Education Department's failure to successfully manage its federal funds.
Michael told the committee that the Education Department is not the only department or government agency involved in the agreement, but her department has done its best to meet the requirements of the agreement. The Finance and Property and Procurement departments are also part of the compliance agreement.
According to a release from the V.I. Legislature, Michael informed the senators that Office of Management and Budget Director Ira Mills, who serves as chairman of the Compliance Agreement Task Force, is currently gathering information from the various departments and agencies as part of the first step of responding to the USDOE's letter.
Michael said she believes a letter of response would be sent "prior to the 15-days mandated respond time."
In his March 31 letter to Gov. Charles W. Turnbull, USDOE Under Secretary Edward McPherson said his agency was concerned about the "lack of progress" made by the local government in meeting the provisions and requirements of the compliance agreement.
McPherson gave the local government 15 days from the date of his letter to demonstrate why the federal government should not begin to take "immediate remedial action" and require certain corrective actions as stipulated in the compliance agreement.
The government, upon signing the three-year agreement, had agreed to develop systemic solutions to its problems of managing federal education funds and programs. The four problem areas to be addressed were: program planning, design and evaluation; financial management; human capital; and property management and procurement.
Of the four areas, the USDOE is only satisfied with the progress made in the human capital component. This involves the recruiting and hiring practices of the Education Department, among other things.
"While [the Education Department] and the V.I. government has made limited progress in certain areas, you are not on target to meet most of the agreement's goals by Sept. 23, 2005," McPherson wrote. Sept. 23 of this year is the agreement's expiration date.
McPherson stated that the government has only met nine of the 28 action steps that were to be completed during the first year of the agreement. He said the government failed to implement the "critical step" of developing a vision document for a credible, central Financial Management System, which was supposed to have been accomplished by Dec. 31, 2002, along with a plan for its implementation by March 31, 2003.
"As of this date, the needs assessment has still not been completed," McPherson wrote.
McPherson stated that the government's "continuous delay" has placed it in an "untenable position" with respects to its ability of meeting the terms of the agreement.
"With only six months before the end of the agreement, we find it difficult to conclude that the Virgin Islands will be able to meet the agreement's requirements based on results to date," McPherson wrote.
McPherson ordered the V.I. government to respond by April 15, showing proof of progress and providing good reason why the USDOE should not step in and take immediate action against it for its failure to meet the terms of the agreement.
If the local government fails to satisfy the USDOE's demands by the April deadline, the Education Department will not be able to draw down federal funds, including pending prior year grants, without a third-party fiduciary in place to manage those monies. McPherson said the third-party fiduciary would also have to be operating by July 1.
Senators asked Michael on Thursday whether she believed the departments' funding was in jeopardy. Michael said no, but she believes the funds will soon have to be managed by someone else.
On Friday, Philip Maestri, USDOE's deputy secretary, told the Source his agency felt it necessary to warn the department because, based on its review, the department was not making much progress.
"We're giving them an option of demonstrating why we should not take the remedial actions against them set forth in the compliance agreement," Maestri said.
Maestri said the problem facing the Education Department has been there for a long time now. He said Michael could be right with her statements that the Education Department has done all in its power to come in compliance.
"It's more than just the local Department of Education," Maestri said, adding that the problems stem from the local government's financial system. He said the territory needs a "credible financial management system" to account for the monies received by the federal government. This would help not only the Education Department, but all other departments, as well, he said.
Maestri said the V.I. government has contacted the USDOE since the letter was received.
"Our problem is not one of communication," Maestri said. "But of a credible accounting system."
Maestri said the Virgin Islands is not the only jurisdiction that USDOE is having problems with.
"There are a number of high-risk entities that we are working with currently," Maestri said. He added this does not negate the fact that the V.I. government needs to adhere to the requirements of the compliance agreements. Maestri said the USDOE would take the corrective measures as outlined in the compliance agreement if the local government's response was not forthcoming or satisfactory by the April 15 deadline.

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