By Libby Nelson

Federal auditors found that the U.S. Department of Education has made little progress in monitoring what happens to the hundreds of millions of dollars in federal grants given to minority-serving institutions and colleges that enroll a large proportion of low-income students.

A Government Accountability Office report issued Monday urged more-comprehensive oversight of how grant money is used, a recommendation the office had previously made in separate reports in 2004 and 2007. The programs the accountability office had suggested have not yet been put in place, according to the report, which also examined the demographic characteristics of institutions receiving the funds.

In the 2008 fiscal year, the federal government gave out $667-million in grants to institutions eligible for money under Titles III and V of the Higher Education Act. Those institutions include historically black colleges and universities, Hispanic-serving institutions, tribal colleges and universities, institutions serving Alaskan natives and native Hawaiians, and those enrolling a high proportion of low-income students.

The government has an electronic system to keep track of how the funds are used, the report says, but Education Department officials rarely visited institutions receiving money and have no plans to monitor the colleges' performance, which is no longer required.

The report gave several examples of misused funds, noting that a college in Maryland spent nearly a quarter of its money on "questionable" expenses. Those expenses included $79,975 on student trips to resorts and amusement parks, $4,578 for an airplane global-positioning system (the college did not own an airplane), and more than $6,000 for one desk and chair.

Three other institutions, of the seven the accountability office audited, had "questionable" expenses, but they were no more than 10 percent of the allotted grants.

The report also examined the characteristics of institutions eligible for the grant money. The accountability office found that those institutions had lower revenue from endowments and tuition and fees than colleges that are not eligible for the grants. Eligible institutions also had more students who were considered academically at risk and had lower retention rates and lower graduation rates than institutions not eligible for the grants.

In a representative sample of all institutions receiving grants, the largest proportion of grant funds—43 percent—went to improving academic quality. One Native-Hawaiian-serving institution renovated laboratories so old, the report notes, that they were used as a set for the television show Lost to represent a laboratory from the 1950s.

Thirty-four percent of the money went to improving student-support services like tutoring, remedial courses, and academic counseling. Twenty-eight percent went to institutional management. One Alaska Native-serving, two-year institution established four full-time financial-aid positions, the report says, after the college had previously used its bookstore manager as a financial-aid counselor. Only 6 percent of the money went to improving the institutions' fiscal stability, though nearly all grant recipients reported challenges in that area.

The report, "Low-Income and Minority Serving Institutions: Management Attention to Long-Standing Concerns Needed to Improve Education's Oversight of Grant Programs," is available on the accountability office's Web site.