The second Office of Legislative Audits report released in as many days found the Maryland Higher Education Commission in effect lost track of “career-based financial aid service obligations” between April 2020 and November 2023.
The commission establishes policies for the state’s private and public colleges and universities. It also provides hundreds of millions of dollars in aid to institutions and students, the report says.
CAREER-BASED AID
This aid requires students who pursued certain degrees to work in their fields after graduation. In some programs, the requirement would be one full-time year or two part-time years for every academic year a student received aid, the report says. If a graduate doesn’t work in their promised field, they have to repay their aid awards unless forgiven.
In January 2024, over 1,800 students received $30.9 million in career-based financial aid, legislative auditor Brian Tanen wrote in a letter to state lawmakers attached to the report.
Initial or follow-up notices were sent between 31 and 391 days late, the report found. When former students don’t respond to their notices and follow-ups, they are supposed to begin repayments. Six of seven students auditors looked at hadn’t been slated for repayments 78 to 381 days late.
This has been an ongoing issue since 2010, the report says. Despite previous promises to meet audit recommendations, the commission said staffing issues prevented their implementation, according to the report. As of June 2023, 20 percent of the commission’s staff positions were vacant, which could have contributed to the findings, auditors wrote.
In response to the draft version of the audit, the agency said it has already implemented the auditors’ recommendations to ensure timely action. It also cleared a backlog of 1,000 cases from fiscal years 2020 through 2023. It believes its new procedures will prevent future backlogs.
RECORD DISCREPANCIES
Recordkeeping at the commission was also a challenge, according to the report. The commission didn’t independently review adjustments to its accounts receivable records, which can include closing accounts. Outstanding financial aid repayment amounts didn’t match up with accounts receivable records either, the report says.
The auditors’ tests of 10 adjustments and 10 repayment records showed they were proper.
The accounts receivables recordkeeping issues were also noted in the agency’s previous audit, when it promised reform by the end of September 2021. Management told auditors high employee turnover prevented those changes, the report says.
The commission also needed to reconcile its contributions to the state’s retirement and pension funds for teachers, the report found, something the agency has struggled with since 2001. In one instance, colleges and the higher education commission reported a $2.1 million difference in the agency’s dispersals to retirement funds in fiscal 2023, the report says.
Auditors discovered another $8 million discrepancy between the commission and schools’ records for financial aid awarded through the Maryland College Aid Processing System in fiscal year 2022. As of February 2024, the commission hasn’t investigated or resolved the difference, according to the audit.
At the same time, the agency didn’t independently review Student Loan Debt Relief Tax Credits. A test of 20 tax credit recipients found four didn’t have enough documentation to warrant granting them, the audit said.
“MHEC advised that although errors may occur, they rely on the Comptroller to ensure that all credits issued are proper. However, we continue to believe that MHEC should ensure reviews are completed properly and conclusions are supported,” auditors wrote.
Additionally, notices to delinquent accounts and referral to the state’s collections agency were late. For eight out of 10 accounts auditors looked at totaling over $250,000, notices were sent 37 to 766 days late, according to the report.
“As of November 2023, there were 344 recipient accounts with unpaid balances totaling approximately $3.8 million,” the audit said.
Auditors also found cybersecurity issues, but those findings were redacted from the public version of the report.
The commission promised more internal controls, monitoring and increased staffing to address many of the audit’s findings.
The Office of Legislative Audits also released an audit this week of the Maryland Vital Statistics Administration saying it failed to properly monitor a project management vendor, causing multimillion-dollar costs to build up and delays.
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