Pete Hoekstra

Mr. HOEKSTRA

Mr. HOEKSTRA. If the gentleman will just yield, I think you are helping us get the language right. A lot of people in Washington are talking about this as a Washington surplus, meaning that this is Washington's money. I think the gentleman has been very careful to point out this is not a Washington surplus, but this is a tax surplus. We are collecting more in taxes than what we need to run the Federal Government, so this is an overtaxation. This is not just Washington's money.

Mr. HOEKSTRA. Mr. Speaker, reclaiming my time, we have been joined by the gentleman from Colorado (Mr. Schaffer). Put the chart back up that talks about the 6 cents in new spending that Governor Bush is talking about versus the 45 cents that the Vice President is talking about. The one thing that I think we have recognized, and the gentleman from Colorado served on the Subcommittee on Oversight and Investigations with me, we believe that there is tremendous leverage in the money that we are already spending, that there are ways to reform the way that we are spending the money. Again, as an example, the Department of Education could get much more of a bang for our buck. And maybe the gentleman from Colorado would care to comment on some of the reforms that we are proposing, besides just being able to audit the books. I would think that just by having a clean set of books and knowing where our money is going, we could leverage significantly. But also the programs and the plans that we have, Straight A's, Dollars to the Classroom, regulatory flexibility. I yield to the gentleman from Colorado.

Mr. HOEKSTRA. Mr. Speaker, I was going to mention, and neither one of my colleagues here today were here in 1993. I had the pleasure of serving my first year here in 1993, and other than that little blue sliver that is on the Gore plan of tax relief of 7 cents, the rest of it or the biggest chunk of it looks very much like the Clinton plan of 1993. If my colleagues remember, if they were watching Washington, one of the most sought-after committees in 1993 was Committee on Public Works and Transportation, because the President came in and said we are in an economic crisis here. We have got to what? We have got to raise taxes so that there is more money here in Washington, and then we have to spend it because we can spend is more wisely. I think there is a quote to that effect in Buffalo.

Mr. HOEKSTRA. Mr. Speaker, again reclaiming my time, I think my colleague from Colorado is going to talk a little bit about the difference in vision on education, which I think is very much the same thing. What we see here in front of us is one that is a Washington- based plan versus one that says we are going to take care of business here in Washington, which is paying down the debt. But other than that, we are going to give the money back to the American people who sent it here in the first place. We are going to trust them. I think it is very similar to the differences that we have here envisioned in where we are going to go with education. Mr. Speaker, I yield to the gentleman from Colorado.

Mr. HOEKSTRA. Mr. Speaker, today I want to talk about education. I want to talk about the Department of Education. I want to spend a little bit of time talking about our kids. And I want to spend a little bit of time talking about where we go from here. The fastest growing program on our college campuses today is not computers, it is not high tech, it is not science and math. It is not foreign language. It is not political science. The fastest growing program on college campuses today is remedial education. It means that our young people who are graduating from high school are entering college without the basic skills necessary to complete the work in their colleges. We have been embarked on a program where we have had the opportunity to go around the country and visit 20 States and talk to educational leaders. In some of these hearings, we have had the opportunity to listen to our college presidents and deans on our college campuses. They came in and they said, ``The most important thing you are doing for us, and make sure you don't decrease, as a matter of fact, make sure you increase funding for it, is increased funding for remedial education.'' After I heard this a few times, it is kind of like, you ask the question, you say what do you mean, what do you need remedial education dollars for on our college campuses? These are some of the best schools in America and you have got standards for the young people coming in. And they said, ``Yes, but we've got a lot of people who we are admitting who are not functionally literate at an eighth grade level in reading, writing or math.'' So the comment then became, we need the money to bring these kids up to the basic levels, and we forgot to ask the first question, which is, why are you not engaged with the people at the K-12 level to solve the problem at the K-12 level rather than accepting that as a condition and saying, ``We're now going to see this as an opportunity for growth, to grow our programs on college campuses.'' But it is a symptom that says, we are not doing a good enough job at the K-12 level. Another symptom is outlined in a document that has been prepared, it is called America's Education Recession. It outlines a couple of things that we need to be concerned about. It says that our young people not only as they enter college do a number of them need remediation, but it also says that when you test our kids at the 4th grade, 8th grade and 12th grade levels, they are not at grade proficiency, meaning they are not learning what we have expected them to learn by the time they are in the grade where we are testing them. In America's highest poverty schools, 68 percent of fourth graders could not read at basic level in 1998 as measured by the National Assessment of Educational Progress. Students scoring below the basic fourth grade level were unable to read a simple children's book. That is our fourth graders. The problem is that we see that in math as well as in reading. So we know that the fastest growing programs in our colleges are remediation. We know that our kids are not testing well when it comes to basic proficiencies. The question then comes up, how well do our kids perform when we compare them to international standards? Or how well do our kids measure up to kids in other industrialized countries? What we find is in study after study, our kids do not measure up. In the math and science area, the Third International Math and Science Study, we compared American students with other students in industrialized countries. In math and science, we score 18 out of 21. Who scores higher? The Netherlands, Sweden, Denmark, Switzerland, Iceland, Norway, France, New Zealand, Australia, Canada, Austria, Slovenia, Germany, Hungary, Italy, the Russian Federation, Lithuania, the Czech Republic, and then we have the United States. We are seeing enough symptoms that are saying we do have an education recession in America. An education recession does not say that all of our kids are doing poorly. What it does say is that we are leaving too many of our young people behind and we are leaving them behind in an area where we cannot afford to leave any child behind. We have to have every young person in America developed to their fullest potential. We cannot afford to leave any child behind. Not only can we not afford it, but more importantly it is not the right thing to do. The right thing to do is to make sure that every one of our young people has the opportunity to succeed through the learning process. As chairman of the Subcommittee on Oversight and Investigations for the Department of Education, we have had the opportunity to travel around the country to gather these statistics but also to take a look at educational programs that work and educational programs that do not. I will talk a little bit about those a little bit later, but going out into the grassroots and taking a look at our kids, our schools, our teachers and meeting with administrators and parents, we see lots of exciting things happening in education. But I am also tasked with taking a look at what is going on in the Department of Education, and is the Department of Education fostering innovation? Is the Department fostering excellence in our educational system? In some cases, it is a barrier. If we take a look at this chart right here, it does again give us some reason to be concerned. The title of the chart is ``Show me the money.'' The problem is that we in Congress allocate and appropriate money to the different agencies. One of those agencies is the Department of Education. The Department of Education, let me just scale it for you, is about a $40 billion agency. That is how much we give the Department roughly each and every year to help administer and to help our kids at a local level achieve their educational goals. In addition to that, they manage a loan portfolio of about $100 billion. So it is about a $140 billion agency. The disturbing thing is that for the last 2 years, this agency has not been able to get a clean audit from the independent auditors that come in and take a look at this agency, look at its numbers, look at its policies and procedures to determine whether how they report the money being spent is actually the way that the money is spent. They said, we looked at your books, we looked at what you said, we looked at your procedures, and, by taking a look at your procedures, we have reached the conclusion that we do not have a high degree of confidence that what you are reporting is actually the way that the money is being spent in the Department of Education. You have failed your audit. The disappointing thing is that the Department of Education is one of only nine significant organizations in the Executive Branch that has been unable to get a clean audit. Other departments include the Department of Treasury, the Department of Justice, the Department of Defense, the Department of Agriculture, EPA, HUD, OPM and AID. Nine agencies cannot get a clean audit. I came from the private sector, and I agree with something that the Vice President said in 1993, in a book that he prepared, he said creating a government that works better and costs less. It is a report of the National Performance Review, authored, or at least given credit to, by Vice President Gore. In this document he says, ``In other words, if a publicly traded corporation kept its books the way the Federal Government does, the Securities and Exchange Commission would close it down immediately.'' It would close it down immediately. Now, we are not going to do that with the Department of Education. We cannot do that with the Department of Education, and we do not want to do that with the Department of Education. But I do believe it is time for this Congress and I believe it is time for the American people to demand some accountability for the $40 billion, some of the most important money that we spend in Washington, to demand some accountability to the Department of Education and say where is that money going and how are you spending it? We do know that in an environment where the auditors say we cannot give you a clean audit, we do know that in the private sector, that sends off the red flags and sets off the alarm bells, and it says there is a reason to be concerned here, because if they do not have the proper procedures or they do not have the proper control mechanisms in place, what you have done is created an environment that is ripe for waste, fraud and abuse. So over the last year we have gone back, along with General Accounting Office and the Inspector General at the Department of Education, and said is there any waste or fraud within the Department of Education? Help us explore what is going on within the Department of Education, to let us know whether there are examples of waste, fraud and abuse. The disappointing thing is the answer has come back a resounding yes. Let me give you some examples. The first one is not a big example, except that it dramatically impacted the lives of 39 young people in America. Congratulations, you are not a winner. As taxpayers in America and as the Federal Government, we have decided we are going to reward young people who excel by giving them a Jacob Javits scholarship, which pays for 4 years of graduate school. It recognizes their achievement and it recognizes the achievement of their undergraduate schools in preparing them for graduate work. Earlier this year we notified 39 young people that they had won the Jacob Javits scholarship. Two days later, after these kids were excited, called home, called mom and dad and said, ``Hey, we won, isn't that great,'' I just dropped my daughter off at college this fall and I can tell you how excited I would be if I knew she had won a 4-year scholarship. Parents were excited, the undergraduate schools were excited because it recognized they had been successful and they were being recognized for their contributions and their success. The only problem was, 2 days later the Department of Education had to call them back and say, sorry, we called the wrong 39 young people. Failing proofreading. In September 1999, remember, this is an agency that has a $100 billion loan portfolio, they send their forms out where kids apply for additional financial aid. 3.5 million forms printed, 3.5 million forms printed incorrectly. The taxpayers in America, young people, lose $720,000. Dead and loving it. The Department of Education, when they give loans, they recognize if a young person becomes disabled or if they pass away, that it would be unrealistic for us to expect to collect on that loan. We forgave $77 million in student loans. That is good news for those young people. It is even better news when they recognize that they were not disabled and they had not died. A theft ring within the Department of Education. Because they did not have the proper controls in place, they had a purchasing agent who could order electronic equipment, including a 61-inch color TV, including Gateway computers, including VCRs, printers and the like, ordered $330,000 worth of equipment. She could certify that the materials had been received at the Department of Education, certify that they should be paid for. Only one problem, they were not delivered to the Department of Education, they were delivered around to individual homes around the Washington, D.C. area. All done through the phone guy. What was in it for the phone guy? The phone guy got paid $660,000 for overtime that he did not work. We provide one other program that says we are going to help school districts that have a big Federal installation that kind of eats up their tax base, we call it Impact Aid. Again, because we do not have the computer security in place, this summer, when a school district was supposed to receive its Impact Aid funds, we had someone, we are not quite sure because it is still under investigation, but what we do know is $1.9 million did not go to two schools on Indian reservations in South Dakota, but it went into personal accounts here in Washington, D.C., and in this case they were caught by the car guy. The car salesman caught this, because an individual went in to a Chevy dealer here in Maryland, and they wanted to buy a Corvette. The alarm bells went off for the car salesman, because he did a credit check on the person buying the Corvette. The credit check did not balance out. The guy called the FBI, and, rather than getting a Corvette, the person trying to buy the Corvette ended up with a date with the FBI. That is how we found out; not through the procedures at the Department of Education, but because the car guy called the FBI and said this does not check out. All of this is in a context today where we recognize we want to invest in our kids. I am glad to see my colleague from Wisconsin has joined us. Again, I am saying we do not want to not invest in our kids, but what we are saying is if we are going to invest in our kids, or if we are going to invest in other areas, whether it is in Treasury, Justice, Defense or Agriculture, let us make sure there is accountability. We need to make sure that when an American taxpayer sends their money to Washington, that we hold that money in trust for them and we spend the money wisely. I will yield to my colleague from Wisconsin to talk a little bit about where we are going with spending programs, and perhaps some areas where we have some concerns.

Mr. HOEKSTRA

Mr. HOEKSTRA. Madam Speaker, I thank the gentleman for yielding, and I enjoy being down here and being part of this special order. Just a couple of other examples. The Education Department placed a half billion dollars in the wrong Treasury account, then disbursed the money without leaving an auditable paper trail. They also have something in the Department of Education, which I think in the private sector if you were a vendor with the Department of Education you would find fascinating. It is called duplicate payments. I cannot believe it happens. You provide a service to the Department of Education, you bill them, and they pay you, and they pay you again. You get paid twice. This year alone there have been $150 million of documented duplicate payments. There is no telling how much we do not know. These are the vendors that have contacted us and said, hey, you paid us twice. I wonder if there are any out there that we do not know about who maybe have been paid twice, closed shop and said, hey, this is a pretty good deal. I think the other thing that we really do have is we have got a phenomenal education strategy to improve schools at the local level, saying when you send a dollar to Washington, we want to get 95 cents back into a local classroom. Today that is about 60 cents. We know the local classroom is where we make a difference. We are saying get the money out of Washington, out of this failed bureaucracy, get it into a local classroom, get it to a teacher, get it to a teacher who knows our kids' names. We are saying get the money back to the local school district. Let them decide whether they need computers, teachers, teacher training, whether they need construction or whatever. But let local schools make the decisions as to how they are going to spend those dollars. We have 760 programs. You have to apply for each one of these programs. It is a huge paperwork bureaucracy, and we know the Department cannot handle it. Get the money back into the local school district; say we are going to make the investment, but let you decide how to spend it. Get rid of the Federal paperwork. We know we have been in 20 States. Governors will come in and say we get 6 to 7 percent of our money from Washington; 60 percent of the paperwork comes from Washington. Let us get rid of the red tape and bureaucracy and create an environment where schools get back to reading, writing and arithmetic, the three R's. Secretary Riley recently gave a speech and he has three new R's: Relationships, readiness, and resiliency. It is kind of like, I think we need our kids focusing on the basics. The only reason our kids need to be resilient today is because they are not scoring well enough on international test scores and we need them to bounce back. But we need to focus not on relationships and readiness and resiliencies, we need our kids learning the basics. We have got a great education program that does not depend on the failed bureaucracy, but puts power back where it needs to be, with local teachers and administrators and parents. I thank the majority leader for allowing me to participate and for the extra time.

Mr. HOEKSTRA. We have nine significant agencies.

Mr. HOEKSTRA. I am not sure they are all Cabinet, but we have nine significant agencies that cannot receive a clean audit.

Mr. HOEKSTRA. I thank the gentleman for yielding. I think this really builds off of the discussion that our colleague from Wisconsin was just leading in that when we take a look at the Vice President's plans to significantly increase spending, before we significantly increase spending anywhere, we ought to take a look at how we are spending the $1.7, $1.8 trillion that we currently collect and we hand over to the executive branch and say, ``How's it going?'' The majority leader is absolutely right. This is the publication that came out on September 7, 1993, it came from the Vice President, signed by Mr. Gore. The book is, From Red Tape to Results, Creating a Government that Works Better and Costs Less. It is the report of the National Performance Review, Vice President Al Gore. He was clearly mandated by the President to lead this effort. Where we are in the year 2000 is with this question, there are nine departments whose books cannot be audited. They can be audited but the auditors come back and say, ``We can't give you a clean audit.'' The first one is the Department of Treasury. Think about this. The national bank or whatever we want to call it, the Department of Treasury cannot get a clean audit.

Mr. HOEKSTRA. We actually had testimony from the accounting and the investment field. We asked them if they knew of any $1.8 trillion or even a $1 billion company publicly held in the last year, the last 2 years that had failed their audit to the extent that the Department of Education had, where they have not had a clean audit for 2 years and do not expect a clean audit for 3 more years and they said, ``We can't think of one.'' Because what would happen if you were in the private sector and the auditors failed your audit, most likely the value of the stock would drop significantly immediately. The other thing that would happen is most likely the Securities and Exchange Commission would suspend the trading of your stock, because you could not with any reasonable certainty go to your shareholders and indicate that what you represent in your financial statements in any way reflects the real world. Let us take a look. The Treasury Department, Justice cannot get a clean audit, Education, Defense, Ag, the EPA, HUD, OPM, AID. None of these can receive a clean audit. I chair the Subcommittee on Oversight for the Committee on Education and the Workforce. We miss the majority leader on the committee. But he knows the work that we have done at that committee in taking a look at exactly what is going on in the Education Department. In 1993, here is what the Vice President said: ``The Department of Education has suffered from mistrust and management neglect almost from the beginning. To overcome this legacy and to lead the way in national educational reform, Ed must refashion and revitalize its programs, management and systems.'' That is directly out of this book. In 2000, here is what the General Accounting Office said: ``Serious internal control and financial management system weaknesses continue to plague the agency.'' In 1993, the Vice President said: ``The Department is redesigning its core financial management systems to ensure that data from accounting, grants, contracts, payments and other systems are integrated into a single system.'' In 2000, here is what GAO said: ``Pervasive weaknesses in the design and operation of Education's financial management systems, accounting procedures, documentation, record keeping and internal controls including computer security controls prevented Education from reliably reporting on the results of its operations for fiscal year 1998.'' That is also true for fiscal year 1999, and we are expecting that they will again fail their audit for the year 2000. Now, in the private sector when the auditors say you cannot keep your books, we know that there are real consequences. Here are just some of the examples of what is going on in our Department of Education. Most of these are examples not from us in Congress but they are from the General Accounting Office, they are from their own Inspector General, and so these are well documented. Congratulations, You're Not a Winner. In February, the Department of Education notified 39 young people in America that they won the prestigious Jacob Javits scholarship. My daughter just went to school this fall, went to college, my first one in college, and a Jacob Javits scholarship awards kids 4 years of graduate school at government expense. Paying undergraduate bills, I can imagine how excited the kids were and how excited the parents were. These kids were thrilled. Two days later, they got a call back saying, ``Sorry, you're not the winners.'' Poor management, real results, real impact. In September of 1999, they printed 3.5 million financial aid forms. This is what kids use to apply. They printed them incorrectly. A cost of $720,000.

Mr. HOEKSTRA. 3.5 million forms containing errors, incorrect line references to the IRS tax form were printed, 100,000 of them were distributed, had to be recalled, the other ones all had to be destroyed. A cost of $720,000. Dead and Loving It. The Department of Education improperly discharged almost $77 million in student loans for borrowers who claimed to be either permanently disabled or deceased. This was a double good news for these people. The good news, number one, is that their loans were forgiven because they were disabled or dead. The second bit of good news is they were neither disabled nor dead. But the Education Department had identified them as such and had forgiven their loans. Most recently a theft ring, and this is what happens when you do not have proper controls. They had a purchasing agent within the Department of Education who could order materials, certify that they came in, certify that they should be paid for and certify that other individuals, independent contractors, should receive overtime. They ordered over $330,000 of electronic equipment, authorized the payment, the $330,000 of equipment was shipped around to various employees' and friends' homes around the Nation's capital. This was all done through the phone guy. What was in it for the phone guy? The phone guy got $660,000 of overtime that he had not worked. More recently, we had a hearing on this last week. Another theft ring. Impact Aid funds. This is dollars that we send to needy school districts or districts that have a lot of Federal facilities in them. In this case, two school districts in South Dakota, actually I believe on Indian reservations. The Department of Education wired them the money, found out a couple of days later because a local car dealer had somebody coming in and wanted to buy a Corvette, came in and were ready to pay cash or a cashier's check to pay for the Corvette. The dealership did a credit check on this individual and found out that it did not check out. They called the FBI. They found out that this group had bought a Lincoln Navigator, a Cadillac Escalade and they were looking at buying a Corvette. They also bought a home, $135,000. So somebody was checking this to see where did this money come from. Somebody had gone into the computer systems at the Department of Ed, and this is one of their other problems, they do not have computer security, and had changed the routing, so instead of sending this money to an account into the school districts in South Dakota, the money went into these individuals' accounts in Washington to the tune of $1.9 million.

Mr. HOEKSTRA

Mr. HOEKSTRA. Mr. Speaker, I thank the gentleman for yielding me this time. I also congratulate him on bringing forward this motion tonight. Over the last 3 years, many on the Committee on Education and the Workforce have had the opportunity to travel around the country at the lead of the Subcommittee on Oversight and Investigations in cooperation with the gentleman from Pennsylvania (Mr. Goodling). We have had the opportunity to have a number of hearings, both in Washington and around the country. We have visited over 20 States. And we have had the opportunity to learn what works in education and what does not work. We have learned that parental involvement, safe classrooms, basic academics, and focusing dollars into the classrooms are the things that work. One of the things we found as we went around the country is we had the opportunity consistently to hear success stories about our public schools, our private schools, parochial schools; but also in many of the instances we had the opportunity to hear firsthand about the successes of home schoolers. We have to recognize that in today's environment people want to make choices about education. What this resolution does, it recognizes the contribution that those who choose home schooling make to educational excellence in America today. The chairman of the full committee highlighted some of those results. We know that for many of those parents who choose home schooling as the way to educate their children, the system works, the results are excellent; and we are getting kids who will make a difference in America for the future. What we need to do is we need to recognize that as we form an educational system in the United States, that we need to allow and permit and in some cases encourage the development of home schooling for those who want to make that choice. This resolution recognizes the importance of home schooling along with the other choices that parents in America have today. I congratulate my colleague on bringing forward this resolution and perhaps most importantly I congratulate all those who have chosen the option of home schooling and the impact that they have made in the lives of their children. I also want to thank the chairman of the full committee in providing my subcommittee with the opportunity to travel around the country to get a sense of the excitement and the enthusiasm of what is happening in education in America today. We presented those findings in Education at a Crossroads, and since that time we again have been able to go around the country and visit more innovative excellent programs, programs that are having a positive impact. Mr. Speaker, I thank the gentleman for that opportunity as well.

Mr. HOEKSTRA

Mr. HOEKSTRA. Mr. Speaker, I rise today to recognize an outstanding individual from my community. His name is Christopher Gale, he is 18 years old, and I have had the opportunity to spend some time with him over the last few days. Christopher was in Washington as part of the Boys and Girls Club National Youth of the Year competition. Christopher was the winner of the Midwest region. He is an outstanding young person from my hometown. Mr. Speaker, he has been a member of the Boys and Girls Club of Holland, Michigan, for the last 9 years. Today, he attends Western Michigan University where he intends on getting his degree in education and returning to the Holland community to teach history in his high school. At high school, he has been active in football, wrestling, baseball; he is also the president of the marching band in his spare time. At home, he has been the role model for his younger brother and has also provided stability for his mother, who battles a physical disability. In his family, they have learned that love, compassion, and understanding are what has brought unity and strength to their family. While in Holland, Christopher has been very active in volunteering for his community. He was awarded the Mayor's Youth Recognition Award for volunteering, by demonstrating his commitment to his neighborhood and the greater community. He volunteers on Project Pride, which is a community-wide cleanup effort. He has also helped with Little League; he has also helped with the West Ottawa Migrant program. So in addition to tutoring at school, in addition to tutoring his younger brother, in the summer he also tutors migrant children whose parents are working in the fields and whose parents travel from state to state. He has shown a great love for the next generation. He is an active member of the Keystone Club, using his leadership skills again, what would you expect, to mentor young members of the Boys and Girls Club. Christopher has been an outstanding contributor to the Holland community, to the community of west Michigan, and I am glad to be able to rise today and give this tribute to him and to say thank you for all that you have done for the community of Holland, the community of west Michigan, and to say congratulations for being the Midwest region winner this year.

Mr. HOEKSTRA

Mr. HOEKSTRA. Madam Speaker, as my colleague earlier this evening talked about, today we had a hearing in the Subcommittee on Oversight and Investigations of the Committee on Education and the Workforce doing oversight hearings on the Department of Education. Let me just put this in context for my colleagues. In 1998 and 1999, the Department of Education failed its financial audit. That means that the independent auditors who came in and took a look at the financial records of the Department of Education indicated that the way the numbers were presented and the background, the records that the Department of Education has, the procedures that it has in place and the interim controls that it has in place, gave the auditors some reason of doubt that the way the numbers were actually presented in the financial statements perhaps did not accurately reflect the expenditures and the flow of revenue throughout the Department. Coming from the private sector, I know that when the financial auditors come in and put some disclaimers in or do not give an organization a clean bill of health, it sets off a number of alarm bells. Because, basically, what the auditors are saying is that in this environment, without the proper financial controls in place, an environment is created that is ripe for waste, fraud, and abuse. Over the last 18 months, as we have been taking a look at this problem within the Department of Education, we have come across a number of cases where the predictions from the auditors have actually been borne out, and it is very, very disappointing. Today, we talked about basically what some would characterize as an embezzlement scheme of roughly $1.9 million out of the Impact Aid funds that were diverted into individuals' or small companies' checking accounts. And, again, this was not caught by the internal controls within the Department of Education, this was caught by a car salesman who grew suspicious with somebody coming in and buying or attempting to buy a very expensive automobile. We know about the theft ring. Three people have pled guilty, another three have pleadings before the court, and there are a number of employees within the Department of Education that are suspended without pay. This is a $300,000 theft ring. The material products they brought in were anything from a 61-inch television to computers to VCRs to a whole series of other electronic equipment. It also includes up to $600,000 of false billable overtime, time that was billed, time that was paid, but time that was never worked. We also know of at least one other major theft ring within the Department of Education that we are not at liberty to talk about because there are not public documents that have been released at this point in time. We also know that within the Department of Education the Inspector General has estimated that improper Pell Grant payments amounted to $177 million in one recent year. We know that real decisions have real impact on real people. The $1.9 million embezzlement from the Impact Aid funds impacted directly two school districts in South Dakota. Another example. Thirty-nine students were recently awarded Jacob Javits scholarships. These are scholarships that are given to students who have excelled at the undergraduate level. The Education Department at the Federal level comes back and says that they have done such a good job, that the Federal Government is now going to fund 4 years of graduate school. That is great news for those young people; that is great news for their parents; and that is great news for the undergraduate university that has fostered an environment that has allowed these kids to excel. Just one problem: The Department of Education notified the wrong 39 students. Two days later they had to call back these young people and tell them, sorry, they were not the students that won. We know that the Department of Education has made $150 million in duplicate payments in this current fiscal year alone. A duplicate payment is a vendor supplying an invoice for products and services that they have provided the Department of Education. A duplicate payment means they get paid once and they get paid again. We have some serious problems at the Department of Education. At the same time that we have been looking at these kinds of problems within the Department of Education, we have also had the opportunity to travel around America and see what is working in education. We have been in roughly 21 different States, and what we have seen is some great education, reform and educational results happening at the local level. What the Federal Government needs to learn in this issue is where we are only providing 7 percent of the money, but in some States we estimate that we are providing 50 percent of the paperwork, it is time for the Federal Government to step back and let the people who know our children's names decide what is best for our schools and for our kids. It is time to step back and to make sure that we get 95 cents of every Federal dollar invested in education, that we get 95 cents of every dollar back into the classroom. It is time for us to remove the red tape which really restricts innovation at the local level. It is time for us to allow local school districts to decide whether they want to use money on technology, to hire teachers, to pay teachers more for teacher training or for investment in other projects. Allow people at the local level to make the decisions. There is a lot of good things happening in education in America today. The focus needs to be on the local level and not here in Washington.

Mr. HOEKSTRA

Mr. HOEKSTRA. But this is reinventing government from maybe the Vice President's perspective, I am assuming that this is the position of the administration, this is the longest serving Cabinet member; and this is how they have now reinvented government, moving from the Department of Education which should be saying our, I would think close to our only, our most important goal is academic excellence for each and every one of our children and we are not going to leave one behind and we are going to allow every child to achieve their full potential. What we are now going to have under these measurements is a bunch of children who are going to have great relationships, they are going to be able to get along well, they are going to be prepared for not being able to have the basics and they are going to be able to bounce back and be resilient. This is not brain surgery. The Department of Education should be striving for academic excellence in each and every school in this country.

Mr. HOEKSTRA. Mr. Speaker, I welcome the gentleman from Colorado (Mr. Schaffer) who is going to be joining me tonight as we talk about some of the issues that we have dealt with on my subcommittee. I chair a subcommittee dealing with the oversight issues dealing with the Education and Labor Departments. We are going to kind of take our colleagues through what we have found in our investigations, and some of the things are quite disappointing. On the other hand, there are some things that have been very, very exciting. Let us start where we should, since we have responsibility for this agency, taking a look at the Department of Education here in Washington. This is a Department that spends approximately $40 billion per year. It also manages a loan portfolio in the neighborhood of $80 billion to $100 billion. So this is an agency that, under its control, has about $120 billion to $140 billion. It is a pretty large corporation if it were in the private sector. Let us reflect back as to what we envisioned for an organization like this. In some ways, it matches what our Vice President Al Gore indicated early in the Clinton administration when he was talking about reinventing government, and that we saw these Federal agencies as representing the best in management practices, mirroring the best in management practices that one finds in the private sector. If these management practices are in the private sector, it would make a lot of sense for the Federal Government and the agencies within the Federal Government to learn from what is the best practices and incorporate those best practices. I think in many ways that was what the Vice President, Vice President Gore, intended with his assignment to reinvent government. In 3 weeks we will close another fiscal year. The disappointing thing is that, yes, the Education Department has been reinvented, but under this administration, it has been reinvented into something that none of us can feel very good about. Remember this is an agency that spends $40 billion on discretionary funds, manages the loan portfolio in the neighborhood of $80 billion to $100 billion. What do we know? We know that, for the year 2000, the Department of Education will again fail its audit. It has failed its audit in 1998. It failed its audit in 1999. With testimony that we have received in our oversight subcommittee, it is clear that, once again, in 2000, the Department of Education will not have the internal controls, the internal systems in place that will enable it to receive a clean audit. If that is what the Vice President means by reinventing government, then it is time that we take another look at exactly what this should mean. When we have got an agency that does not get a clean audit, what does that mean in the private sector? I worked in the private sector, and I worked for a publicly held company. If one is in the private sector and one's independent auditors come in and take a look at one's books, and they indicate to one's shareholders, one's customers and to Wall Street that one's books are not an accurate reflection of what is actually going on in one's business, typically what will happen is the value of the stock will plummet, perhaps even the trading of one's shares will be suspended on the market. One will begin looking for a new chief financial officer. One may also begin looking for a new chief executive officer. Of course one would begin looking for a new person who said we are going to reinvent this company and make it the way that we would like it to perform. That is the private sector. Why would that happen? This is why companies go through and get an audit. This is why we push to have Federal agencies become auditable. We know that when the books are not clean, and when the systems are not in place, what one is doing is one is putting in place a system of behavior that is ripe for waste, fraud and abuse. That is why it is so critical in the private sector. That is also why it is so critical in the government sector. Because now approaching its third year of failed audits, what else do we know? Do we see a Department of Education that has the negative with the failed audits but everything else is fine? No. What we find within the Department of Education is a system that is full of waste, fraud and abuse. Let us also define exactly what the Department of Education is. The Department of Education does not educate any of our kids. Basically what it does is it manages this $40 billion in discretionary spending. This is money that it sent around the country. It manages this loan portfolio. So basically what it is, it is a bank that distributes taxpayers' money. What we now know under the Vice President's definition of reinventing government it does not do it very well, because the auditors say there is no clear indication that the way that the Department of Education reports its spending actually reflects what happens. So it is a bank. It distributes funds; it manages loans. What it does not do is it does not educate our kids. What do we know about the failed audits? What do we see? What we do know is that it has a fairly elaborate process; that it has this $40 billion, and if a local school district would like to get some of that to reduce class size by hiring teachers, to maybe purchase technology, to get integrated into the Internet, it is about a 192-step discretionary grant process. The application and approval process is a very long and expensive process. Now, with that kind of process, one would think it is foolproof. We would think out of those 192 steps, and by the way, this process used to be a whole lot longer but it was reinvented by the Vice President to only 192 steps, yet it still takes 20 weeks to get it done; but one would think, well, it is a good thing it has gone through that process because at least we will get it right. What are some of the examples and the reason we now know that that is not what is happening? ``Congratulations, you are not a winner.'' That is our Department of Education. The Jacob Javits scholarship. This is an opportunity where young people who are graduating from college have the opportunity to compete for and receive up to 4 years of graduate education from the Department, paid for by the American taxpayers. Linh Hua, a graduate student at the University of California, received a letter in February informing her that she had been selected to receive a Jacob Javits graduate fellowship. She was excited. If I were her parents or friend, I would be excited, because it means she is going to get $100,000 of education graduate school paid for. She immediately informed the director of graduate studies at her institution. He in turn trumpeted the good news to the entire English department in a news announcement. It is exactly what anyone else would do if someone in their own class, in their own department were being recognized by the Department of Education for their academic achievement and they are being rewarded. A few days later Linh received a message on her answering machine that she had received the letter in error. A mistake. The contractor working for the Department had erroneously sent award notification letters to 39 students informing them that they had won the awards. Thirty-nine students. Ms. Hua was crushed by the news. She describes her feelings in a letter to the chairman of the House Committee on Education and the Workforce: ``I think my heart snapped in half. News of the possible withdrawal was devastating to me, and I have not found words to break the news to my family and friends. How does one share such news and still hold her head up high? I continue to be visibly distracted from my work, family and friends, and will be in great emotional turmoil until I can trust that my fellowship will not be withdrawn. Surely you will agree that it is wrong for the United States Government to condone such treatment of its citizens.'' Members of the committee agreed. At their urging, and due to a provision lawmakers had the foresight to include, I guess we knew when the Vice President reinvented the Department of Education that these types of mistakes might happen, that due to a provision lawmakers had inserted into the Higher Education Act anticipating such a mistake, the education department eventually agreed to award fellowships to these 39 students. The cost for this mistake was $4 million. Reading, writing and robbery; a theft ring involving collaboration between outside contractors and education department employees operated for at least 3 years, stealing more than $300,000 worth of electronic equipment, including computers, cell phones, VCRs, and a 61-inch television set. It also netted from the agency, from the Department of Education, more than $600,000 in false overtime pay. Very simple scheme. The Department of Education employee in charge of purchasing filed all these purchasing agreements or purchasing contracts. There were no controls monitoring what this person did. This is why auditing companies say we are not sure that what they were actually doing, or reflecting on the books, actually reflected what they were doing. This individual ordered the materials and, rather than having it delivered to the Department of Education, they were delivered to these people's homes. What was in it for the phone guy? The phone guy was the one that was able to bill the Department for over $600,000 of false overtime pay. Who paid? The American taxpayer. Who lost? American students who were the ones intended to receive these benefits. The education department improperly discharged almost $77 million in student loans for borrowers who falsely claimed to be either permanently disabled or deceased. This did not come from our committee; this came from the inspector general's report. From July 1, 1994 through December 31, 1996, fully 23 percent of all individuals whose loans were discharged due to disability claims were actually holding jobs, some earning more than $50,000 a year. A total of $73 million in loans was improperly forgiven. During the same period, the good news is that 708 borrowers receiving death discharges actually were earning wages. They were still alive. But their loans had been written off for a total of $3.8 million, a total of $77 million. September: failing Proofreading 101. In September 1999 the education department printed 3.5 million financial aid forms containing incorrect line references to the IRS tax form. The forms were incorrect, had to be destroyed, and 100,000 of them that had been distributed to schools had to be recalled. The cost of the error was $720,000. The list goes on and on about this mismanagement within the Department of Education. The disappointing thing is the Department of Education still has not been, as the Vice President would have described it, reinvented to a standard that hundreds of thousands of companies around America have to meet each and every day. They have clean books, a clean set of standards. Imagine the IRS going into a company and contesting their tax bill and saying, wow, we think you owe us some money, and the owner of the company coming out and saying, well, we reinvented our company last year so our books are not quite clean; but we think that our books roughly approximate what actually happened within our company. So based on those rough estimates and our books, we think that the tax that we paid you roughly reflects what we actually think we owe you. I do not think the IRS would show the same kind of sympathy that we have shown to the Department of Education. It is time for this Department to clean up its act and become reinvented. Actually, it does not even need to be reinvented. What we would like it to do is just to actually meet the standards that are out there in the private sector each and every day. I see my colleague from Colorado has joined me. I do not know if he wants to add on to some of these examples or talk about others. My colleague from Colorado and I have taken a look at the Department of Education and found the bad news, the bad news on the education front in Washington, that we have a Department that has responsibility for $100 to $120 billion and cannot get a clean set of books and is ripe with waste, fraud, and abuse; but the good news is what my colleague and I have seen as we have gone to 21 States and seen the great things that are happening in education in America today when we empower parents, teachers, and administrators at the local level to focus on educating their kids. We have seen tremendous things in the Bronx, in Cleveland, Milwaukee, Little Rock, Arkansas, L.A., Muskegon, Michigan. We have seen some great things in education as we have gone around the country. That is the exciting thing. And it is a sharp contrast to what we see here in Washington. Mr. Speaker, I yield now to my colleague, the gentleman from Colorado (Mr. Schaffer).

Mr. HOEKSTRA. And they will have a clean audit.

Mr. HOEKSTRA. I think what we are also saying is that by empowering parents, that if in the local community you have got a school superintendent or a school that says, our model and our priorities, we are going to match what the Department of Education, what Secretary Riley is promoting, our school is going to focus on relationships, resiliency and readiness; and if you have got another school saying we are focused on the basics and when your children leave our school, they are going to be at class proficiency or grade proficiency in reading, writing and math and, as a matter of fact, our objective is to have your kids at one or two levels above grade proficiency in each of those areas, a parent at that point in time should have the option of saying, for what I really want for my kids, that is the school I want to go to. Maybe some will choose the Secretary's model, and they will have the opportunity to go to that type of school. But we should not have a top- down approach from Washington saying this is what every school district is going to focus on.

Mr. HOEKSTRA. Let us cut the Secretary a little bit of slack. We know exactly what he is talking about. Relationships. When you go into the workforce today, you recognize that many companies today are talking about participative management; they are talking about team concepts, being able to work in groups and those types of things and that is the relationship factor. But also coming out of a company that focused very heavily on teamwork, participative management and those types of things, you also knew that for somebody to get on the team, they had to have the basic skills to do the job and the assignment that they were given as part of that team. They did not get on the team because they could really relate well to you and because they were ready and because they were resilient. They were on the team first and foremost because they had the skills to do the job that was required, and the teamwork part came second. But the first criteria was do they have the skills to get the job done? And I think in some cases that is maybe where the Secretary is just moving off track here, is we have got to work with our kids to make sure they know the basics before we move on to some of these other issues.

Mr. HOEKSTRA. You get what you measure. If the Department of Education is now measuring relationships, resilience, and readiness, that is probably what we will get, at least from the programs and the emphasis, the programs that the Education Department funds. If that is reinventing government, I do not want it. I mean, I want my kids to know reading, writing and arithmetic. They need the basics. Under the Department's definition of the three Rs, if we focus on, I cannot believe these three, relationships, resilience, and readiness, when we focus on those three, we get the fourth R, which is what we have also seen as we go around the country, we get remediation. When you focus on relationships, resilience, and readiness, we are going to get remediation. What is remediation? What remediation is, and this is when we have gone to our colleges and we find that one of the fastest growing programs on college campuses today is remediation because kids entering college cannot read or write at a ninth or 10th grade level or an eighth, ninth or 10th grade level, which means when they get to college they have got to be remediated to get their learning up to that level. And if remediation is one of the fastest growing programs on campus today, then it is time for us to reevaluate as to whether relationships, resilience, and readiness are what we need to be focusing on.

Mr. HOEKSTRA. For our colleagues, the information is clear on international testing. The U.S. comes out somewhere between 17th to 19th out of 21 industrialized countries. That is not good enough. That is not good enough for my kids. That is not good enough for your kids. On this, this is something that I am very selfish about. It is time to reinvent education so that our kids score the best in the world, and I hope everybody else in the world is on the same level as what we are; but it is unacceptable to have the rest of the world 1, 2, 3, 4, 5 and it is kind of like, hey, where is the U.S.? we are down here 17th, 19th. It is not good enough, and it is unacceptable.

Mr. HOEKSTRA. Who for 8 years has been in charge now. I think he is the longest serving member of the President's cabinet and has been there since day 1 almost and in 3 weeks will deliver the third set of unauditable books, or a failed audit, to the auditors.

Mr. HOEKSTRA. Reading, writing, and arithmetic.

Mr. HOEKSTRA. Mr. Speaker, before my colleague goes there, yeah, the testimony that we had in Florida from that mother was awesome and a sharp contrast to the testimony that we received a couple of years earlier in New York City, where I believe a father came in and testified and said, 5 years ago I knew that the New York City schools were some of the worst schools in the country. But they had a 5-year plan to improve; and I had no choice, I had to send my child to the school that they told me she should go to. He said, it is now 5 years later and the schools are no better and, if anything, they may be worse, and they have got a new 5-year plan. I have no choice. But what if this 5-year plan does not work any better than the last one? Then I have had my child in a failing school for 10 years, and I am going to lose my child. And as excited and as close to tears as the woman was in Tampa because of the positive things that were happening, we saw the same thing in New York City on the other side, a father almost coming to tears saying, I have no choice. I know the schools are not any good, but have I got no choice and that is where my son or daughter is going to have to be. And what hope does my child have if they are going to be in a school that cannot teach them and that is where they spend the 10 or 11 years that are key and formulative in enabling them to get the basics? So it is about people. It is not about bureaucracies. It is about parents. It is about kids, and it is about parents wanting to have the best opportunities for their kids, whether it is in the Bronx, whether it is in Cleveland, or whether it is in Tampa or whether it is in Colorado or Michigan.

Mr. HOEKSTRA

Mr. HOEKSTRA. Mr. Speaker, I move that the House do now adjourn.