Feb. 14, 2006 — A supplemental budget request of $10 million for the Education Department raised concerns for many senators at a Finance Committee meeting on St. Thomas Tuesday. Especially troubling was news that a third-party fiduciary arrangement for the department has still not been secured.
The request is part of a $57.2 million supplemental budget bill submitted to the Legislature last Friday by Gov. Charles W. Turnbull in light of the $69.8 million in excess revenues generated by the government during fiscal year 2005.
According to Education Commissioner Noreen Michael, the $10 million would be used to operate federally funded programs within the department. She said the federal government is currently withholding the funds until a third-party fiduciary system is in place.
Despite Michael's assurances that the $10 million would be reimbursed by the U.S. Department of Education once the third-party fiduciary is set up, senators said they were still hesitant to appropriate more money to the department since $12 million is still available for various school projects from the Public Finance Authority.
"In the Omnibus Bill, almost $17 million was allotted to Education from the PFA," Sen. Celestino A. White Sr. said to Michael. "Out of that amount, $12 million is left. That's a significant amount of money that could be used to improve conditions in schools like John H. Woodson on St. Croix, or the gymnasium at Charlotte Amalie High School on St. Thomas. You have to show me how you're going to spend that money first before I can even think about giving you more."
Sen. Craig W. Barshinger expressed further concerns regarding $2.1 million in unused federal funding that Education sent back to Washington last year. "These kind of resources need to be utilized," Barshinger said. "I would like there to be one time when I do not have to come in here and criticize you, but until you can show us that you can be bold and change the way you do business, I don't see how we could support a request like this."
Michael and Ira Mills, director of the Office of Management and Budget, were also asked why the services of a third-party fiduciary – which was supposed to have been put in place last September – have not yet been secured.
Mills said Education had previously sought to find a vendor who could provide both third-party fiduciary services and help with setting up the government's new financial management system.
"Since both those conditions were required in the compliance agreement between the local and federal Education departments, we thought we could find one company to provide both services," Mills explained.
"But, after we had gone through all the work to draft the request for proposal (RFP), the USDOE said they wanted a different vendor for each service, so we had to draft a whole new proposal. Then, we had to have the federal government's approval before we could send the projects out for bidding."
Mills further stated that a new RFP was recently issued, and a company has been selected by Education to provide fiduciary services. "All we're waiting on now is their references, and if those check out, we have to submit a proposal to the USDOE for review," Mills said.
Sen. Ronald E. Russell said Mills' response was "unacceptable," and asked why Education would choose to send out one RFP for two different services. Mills said that the USDOE did not initially specify that the same vendor could not provide both services.
Michael could not say when the third-party system would be in place, but she did tell senators that a $10 million matching grant request has already been approved by the federal government. "That's important," she said. "It means that they will reimburse us once we get the third-party fiduciary in place."
Funding for certain programs within the Human Services Department is also tied to the implementation of a third-party fiduciary, Human Services Commissioner Sedonie Halbert said. "Until this thing is in place, the withholding of federal monies from other government agencies that are tied to USDOE funds is considered an 'unnecessary consequence,'" she explained. "While we are not out of compliance with any federal standards, we will not receive funding until our local Education Department has met all conditions of their compliance agreement with the federal government."
Halbert urged senators to support Human Services supplemental budget request of $5.25 million, of which $816,659 would go toward funding programs covered by the USDOE.
The Senior Citizen Pharmaceutical Program would also be funded from the appropriation, along with a replacement fleet of buses for the Meals on Wheels program and additional monies for the Disabled Persons Fund.
Another $1.2 million will cover engineering and construction services for Phase II of the Knud Hansen projects and Anna's Retreat Senior Center on St. Thomas, along with the Aldersville Senior Citizens Center and Anna's Hope Complex on St. Croix.
Present at Tuesday's meeting were Sens. Barshinger, Liston Davis, Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Louis P. Hill, Neville James, Norman Jn Baptiste, Usie R. Richards, Russell, and White.
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