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The Auditor’s examination of the School Transit Subsidy program revealed significant weaknesses in internal controls and numerous program management deficiencies. These conditions resulted in inadequate and inefficient program administration and presented opportunities for abuse of the School Transit Subsidy program.
The Auditor found that DDOT’s Mass Transit Division and local schools lacked proper segregation of duties in critical areas of program administration. As a result, the School Transit Subsidy program may be vulnerable to improprieties and undetected errors.
Moreover, the Auditor found that inadequate budgeting practices used by DDOT and OCFO staff resulted in insufficient budgets for several fiscal years (FY). The Auditor noted that communication between DDOT Mass Transit Division staff and OCFO personnel regarding program performance and budget matters was poor and ineffective. As a result, School Transit Subsidy program budgets beginning in FY 2001 through FY 2004 did not adequately support increases in student trips taken on the Metrobus and Metrorail system. Insufficient program budgets led to the reprogramming of funds to address shortfalls of $703,000 in FY 2003 and $658,872 in FY 2004.
The Auditor also noted that DDOT and OCFO staff experienced difficulties in timely identifying potential budget shortfalls. The District’s School Transit Subsidy payments are based primarily on actual student trips taken on the Metrobus and Metrorail system as certified monthly by the Washington Metropolitan Area Transit Authority (“ WMATA”). Because WMATA submits monthly certifications two to three months after the end of a month, DDOT and OCFO staff cannot timely assess the adequacy of the budget based on actual certified data. This is especially problematic at fiscal year-end as the District closes its financial books because WMATA’s certifications are not received until the first quarter of the next fiscal year.
The Auditor found that the District has not executed a written subsidy agreement with WMATA since 1979. A written subsidy agreement or memorandum of understanding would protect the District against unanticipated changes, unplanned obligations, and other unforeseen circumstances. Moreover, without a written agreement, there are no guidelines or parameters for holding WMATA program managers, DDOT, and OCFO staff accountable for program performance and financial results.
In addition, the Auditor found that the DDOT Mass Transit Division did not have procedures and controls in place to ensure compliance with legally-mandated School Transit Subsidy program requirements. Pursuant to the School Transit Subsidy law, students are to use subsidized transportation for educational purposes only. Additionally, students are not allowed to share their farecards, Smart Student passes, or bus tokens with others. Although these requirements exist, the DDOT Mass Transit Division did not have sufficient compliance monitoring procedures in place to detect or otherwise prevent violations of these requirements.
Furthermore, the Auditor found that DDOT currently allows students to replace lost Student Travel cards once during an academic year. This policy gives students the opportunity to abuse program benefits by purchasing and sharing farecards and Smart Student passes with others. Because no controls were built into the Student Travel Cards to track their usage or to disable farecards and Smart Student passes obtained with Student Travel cards, such abuses could occur without detection.
The Auditor also determined that due to several automated system deficiencies and poor record retention practices, DDOT’s tracking of student information was inefficient. DDOT’s Student Application Database often “crashed” because too much data was entered into the system. The Auditor found numerous errors or discrepancies in student data contained in the Student Application Database, such as wrong academic years of school enrollment and grade levels of students that were inconsistent with the student’s age or the school of enrollment.
The Auditor identified significant weaknesses in system controls, including inadequate system security features and limited capability to effectively maintain the integrity of data.
In addition, DDOT’s records retention practices were inadequate and violated the District’s records retention law. The DDOT Mass Transit Division did not retain original or hard copies of student applications and supporting documents after student information was entered into the Student Application Database. Moreover, the DDOT Mass Transit Division periodically deleted electronic files of student information from the Student Application Database to address system capacity issues. These practices destroyed the audit trail and prevented DDOT from being able to substantiate students’ eligibility to participate in the School Transit Subsidy program.