The City of New York Office of the Comptroller
Bureau of Financial Audit

Audit Report on the Department of Education’s Compliance with Reading First Program Spending Guidelines

FK09-079A
October 26, 2009

AUDIT REPORT IN BRIEF

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The Reading First program (Reading First) was created under the federal No Child Left Behind Act (NCLB) of 2001. Reading First was established to ensure that every student could read at or above grade level by the end of the third grade and was intended to serve poorly-performing, low-income students. Under the program, states received formula grants from the federal government to apply to scientifically-based reading programs. Local educational agencies (LEAs) then applied for grants from states. The initial New York State grant covered the period 2003-2006 and the second grant covered the period 2006-2009.  

During Fiscal Year 2008, the New York City Department of Education (DOE) received $34.4 million in Reading First funds from New York State and expended these funds on 118 schools—64 public and 54 non-public. Federal and State guidelines stipulated that public elementary schools selected for Reading First should be among those with the highest percentages of students reading below grade level and the highest poverty levels, based on the most current available data, as well as on their neighboring non-public elementary schools. These guidelines also stipulated that funds were to be used for scientifically-based reading programs for students enrolled in kindergarten through third grade, professional development, and screening, diagnostic, and assessment tools. Additionally, NCLB Federal Teacher Quality Requirements, the New York State sub-grant application, and DOE required key Reading First program personnel to have teaching and reading licenses.

Reading First will end on June 30, 2010, since its federal statute was not renewed and Congress discontinued funding for the program.

Audit Findings and Conclusions

DOE did not comply with Reading First federal and State spending guidelines because it failed to systematically identify and fund public elementary schools with the highest percentages of students reading below grade level and the highest poverty levels, based on the most current available data, as well as on their neighboring non-public elementary schools. Therefore, Reading First expenditures were fundamentally flawed because for the most part they were not expended on the most deserving schools. Further, DOE did not provide us adequate supporting documentation—such as bills and invoices detailing amounts billed, descriptions, quantities, delivery locations, and recipients of goods and services—for $9.5 million of $14.9 million of Reading First OTPS expenses as follows:

• DOE did not provide us documentation demonstrating that goods and services were provided for Reading First schools only for expenses totaling $9.3 million although the documentation did show that the expenses were reasonable and appropriate.

• DOE did not provide us documentation demonstrating that goods and services were reasonable, appropriate, and for Reading First schools only for expenses totaling $164,433.

DOE also expended Reading First funds totaling $42,094 on goods and services that were not incurred during Fiscal Year 2008, not for Reading First schools and grades, and not related to Reading First.

Additionally, our examination of DOE’s OTPS expenditures revealed that DOE spent $3.9 million to support an Internet portal that was difficult or impossible for users to access because of connectivity issues. DOE shut down the portal on June 30, 2009, because of these issues and a lack of funding. Since DOE spent $3.9 million on the portal and supporting devices, software, and services during our audit period—and at least $34.4 million in total—DOE should have ensured that the portal was properly developed and implemented and ultimately, that the portal was in fact usable.

Also, Reading First program personnel were not properly qualified because they did not have reading licenses as required by NCLB Federal Teacher Quality Requirements, the New York State sub-grant application, and DOE.

Reading First was established to ensure that every student could read at or above grade level by the end of the third grade and was specifically intended to serve poorly-performing, low-income students. Therefore, DOE should have spent Reading First funds solely on the most deserving schools and ensured that Reading First program personnel were properly qualified to assist all students in achieving reading proficiency.

Audit Recommendations

Since the Reading First program is ending on June 30, 2010, DOE will not be selecting new schools and hiring new program personnel for Reading First. Further, DOE shut down the “iREAD first” Internet portal on June 30, 2009. Therefore, we do not make any program-specific recommendations. However, DOE generally should:

• Expend federal and State grant money only for its intended purpose and populations, and in accordance with federal and State guidelines.

• Monitor grant expenditures and ensure that they are reasonable, appropriate, and comply with federal and State guidelines.

• Maintain adequate supporting documentation—including bills, invoices, and receiving reports—for all federal and State grant expenditures.

• Require employees that authorize payments to compare receiving reports to invoices prior to rendering payments to vendors.  

• Ensure that Internet portals and Web sites are properly developed, implemented, and functional.

• Employ only properly qualified pedagogical employees.