The nation's largest and most expensive AmeriCorps program - the Teaching Fellows project at the City University of New York - doesn't meet  the essential AmeriCorps criterion of filling an "unmet" need and the federal government should halt the program and recover up to $75 million that has spent on the project over the past six years, a new audit report found.

But the Corporation for National and Community Services (CNCS) disagrees with the findings of its inspector general and says it won't ask for the money.

In two associated audits released late Thursday, Inspector General Gerald Walpin found that applicants to the Teaching Fellow program often didn't know it was an AmeriCorps program, that they weren't swayed to sign up because of the nearly $10,000 in educational funds they could receive, and that it was impossible to determine if the money was going to the fellows or directly into the school's coffers.

Citing President Barack Obama's admonition to "scour" federal budgets to determine if "taxpayers are getting their money's worth," Walpin, who was appointed by President George W. Bush, said in a strongly worded 17-page letter to the university and CNCS officials said that there was no "cause and effect" from the millions spent on the teaching fellows.

Walpin said in an interview this morning that his recommendation comes under the area of "ensuring that the funds are used properly" and for the best purpose.

In the case of the CUNY program, Walpin found that the AmeriCorps funding duplicated existing programs and that the money was actually helping to deprive some people of jobs, because New York City is under a hiring freeze but is still hiring the teaching fellows.

Usually, the educational grants are awarded to AmeriCorps members who complete 1,700 hours of services - doing things like cleaning out houses ruined by Hurricane Katrina or working in National Forests - so that they can pursue post-secondary education. Those AmeriCorps programs pay a subsistence stipend to participants; the education program pays only the education grants.

In the case of the fellow programs, the money played no role in attracting applicants to the program - which provides full tuition for a master's degree and a teaching job in a New York City School. And unlike other programs that foster lifetime volunteerism, Walpin's audit found that almost none of the teaching fellows pursued any volunteer activities. He said they were receiving "$9,450 [each] for doing nothing additional" than what was already spelled out in the fellows program. Participants received the  education grants for two years.

CUNY also received funds to administer the programs.

The program has about 3,000 fellows a year and is budgeted to have 3,600 as of now, according to CNCS records. The fellows program was founded in 2000 and received its first AmeriCorps grant in 2001. It is in the last year of a three-year grant awarded in 2007.

Conclusion Disputed

CNCS and CUNY are vehemently challenging Walpin's findings that funds to the program should be terminated and prior expenditures be repaid. Walpin said the amount of money to be recovered was about $40 million; the university said the amount could be as much as $75 million.  

In a letter to Walpin dated May 4, Nicola Goren, acting chief executive officer of CNCS, said "we believe [CUNY] was and is eligible for AmeriCorps funding" and that the corporation "will not act on your draft recommendations regarding the status" of the program. Sandy Scott, a spokesman for CNCS, did not return phone calls seeking comment. Requests for comment from the City University of New York were not answered.

In an 11-page rebuttal letter dated April 30, Matthew Goldstein, CUNY chancellor and board chairman of the Research Foundation of CUNY (RFCUNY), which administers all grants and contracts, questioned the authority of the inspector general to evaluate whether the teaching fellow program meets the statutory underpinnings of the AmeriCorps program. He argued that if CNCS had had any doubts about the fellows program "it would not have funded them in the first place or would have terminated them."   

"Chancellor Goldstein has not been properly informed, concerning ... the duties of the Inspector General as mandated by Congress," Walpin wrote in his report.

He continued: "An IG's jurisdiction is not limited to fraud: IGs are required to examine the use of federal funds ... to ensure that the federal funds ... are not wasted."

By law, the inspector general reports to Congress on whether corporation appropriations are being spent appropriately, but does not have the authority to terminate the program or recover the funds.

Walpin's findings about the inappropriateness of the Teaching Fellows Programs came in a separate audit begun after a routine audit turned up "pervasive problems with eligibility, timekeeping and documentation."

The audit found widespread noncompliance with various technical aspects of the grants, including a large number of late sign-ups (some as late as a full year); almost nonexistent timesheet procedures that permitted one person to fill in and sign the time sheets for all 3,000 program members; no orientation program and an unusual time for tuition payments (at the end of the year rather that at the beginning). Although tuition was supposed to free and covered by state contract, Walpin's letter states that participants in the June 2009 were told they would be charged $6,600 toward the cost of the degree, but there was no mention of the AmeriCorps education grant.

That routine audit was contracted out to Cotton & Company LLP, an Alexandra, Va.-based independent auditing firm that first questioned the educational payments to the teaching fellows, in the amount of $16.2 million.

According to the two audit reports, the Teaching Fellows program was founded in 2000 with a contract between the New York Board of Education and CUNY which covered the school's expenses for the fellows and their salaries for teaching. The view of Walpin and the independent auditor is that the Teaching Fellows program - which both praised for providing teachers to the most needy areas of New York City schools - was already meeting the need for more teachers and that it didn't need the educational grants from AmeriCorps to persuade candidates to apply.

To show the seriousness of the audit's findings, Walpin himself attended the conference in which all parties were informed of the findings of the routine audit. CUNY has agreed to modify its procedures to comply with various technical aspects, according to the audit, but has not accomplished all of them.

"The RFCUNY program doesn't work as a grantee of AmeriCorps funds because it adds no service to the community which is not already provided by the Fellows Program, without the AmeriCorps education awards which are at the heart of the corporation's grants to RFCUNY," Walpin concluded.

"Therefore, taxpayers are not getting their money's worth, and the corporation would accomplish its goals more effectively if the funds for these grants were used instead to provide service by AmeriCorps members in communities where the need exists, not the the RFCUNY, which has already filled the need."

"The evidence establishes that the RFCUNY Fellows Program successfully operated to place over 3,000 fellows annually in teaching positions in underserved New York City Schools without [emphasis in original]  the need for the corporations expenditure of millions of dollars for fees and education awards."