Veterans Health Care: VA Needs to Improve Its Allocation and Monitoring of Funding

VHA operates one of the largest health care systems in the nation with an estimate of $81 billion for providing care to over 6.9 million veterans in fiscal year 2019. Recently, VHA has repeatedly requested that Congress provide supplemental funding due to higher-than-expected needs for care.

GAO was asked to examine how VHA allocates funds and monitors use of these funds. This report examines (1) VHA's processes for allocating general purpose and specific purpose funds to its VISNs and medical centers and (2) the extent to which VHA monitors the use of these funds.

GAO reviewed VHA's processes for allocating funds, analyzed data on allocation levels for fiscal years 2015 through 2019, and reviewed documentation on VHA's processes for allocating funds and monitoring. GAO interviewed officials from VHA; all 18 VISNs; and a non-generalizable sample of five medical centers selected based on size, facility complexity, growth in funding, and geographic variation.

The Department of Veterans Affairs' (VA) Veterans Health Administration (VHA) has developed processes for allocating health care funds to its regional Veterans Integrated Service Networks (VISN) and medical centers. Each year, VHA allocates about two-thirds of funds for general patient care—known as general purpose funds—using two, main allocation models. The first model allocates general purpose funds to each VISN and a second model then allocates these funds to the medical centers that report to each VISN. These models are based on patient workload—that is, the number and type of veterans served and the complexity of care provided. VHA allocates its remaining one-third of funds—known as specific purpose funds—to program offices that manage various, specific programs, such as community care and prosthetics. Program offices, in turn, allocate these funds directly to medical centers using different methodologies, including a workload-based model for community care. GAO found the following weaknesses in VHA's processes for allocating funds:

VHA's allocation models do not use workload data from the most recently completed fiscal year. For example, the fiscal year 2019 allocation levels determined by the models were based on data from fiscal years 2013 through 2017 but did not include data from fiscal year 2018. The models do not use more recent data because officials believed that doing so would not significantly affect allocations. By not using the most recent data available when it makes final allocations, VHA's allocations may not accurately reflect medical centers' funding needs if they experience workload changes. For example, from fiscal years 2017 through 2018, 34 medical centers had patient workload growth of over 3 percent, and 9 experienced a decline of over 3 percent, which was not reflected in the fiscal year 2019 allocations.

VISNs are allowed to make adjustments to allocated funding levels determined by the models and must submit written explanations for doing so according to VHA guidance. However, VHA officials did not adequately review adjustments for fiscal year 2019 to ensure adjustments were documented. Specifically, VHA officials did not provide evidence they sought an explanation for adjustments made by two VISNs that provided no written explanation for their adjustments. Furthermore, GAO also found that VHA guidance does not require VISNs to explain how they determined adjustment amounts and why they made them. Without requiring this information, VHA cannot ensure that these adjustments lead to efficient use of funds.

Once VISNs have made adjustments to allocated funding levels and funds are distributed to VISNs and medical centers, VHA uses multiple mechanisms to monitor the balance of funds. Throughout the year, VHA redistributes funds across the VA health care system to address unfunded needs and surpluses that are identified. However, GAO found that VHA does not adequately monitor the redistribution of allocated funds between VISNs and medical centers. VHA does not require VISNs to provide explanations for redistributions and does not review the amount redistributed. As a result, VHA does not know the extent to which redistributions deviate from workload-based allocations and if VISNs and medical centers are operating efficiently.

GAO is making five recommendations including that VHA use workload data from the most recently completed fiscal year to allocate funds; take steps to review adjustments; revise existing guidance to require VISNs to provide information on adjustment amounts and the reasons for doing so; and require VISNs to provide explanations for redistributions of allocated funds between VISNs and medical centers and then review the amounts redistributed. VA concurred with four recommendations and concurred in principle with one recommendation.

The Department of Veterans Affairs’ (VA) Veterans Health Administration  (VHA) operates one of the nation’s largest health care delivery systems.  VA budget documents show an estimate of $81 billion for providing care  to over 6.9 million veterans in fiscal year 2019. VHA allocates its funds  by the beginning of each fiscal year. VHA allocates about two-thirds of its  funds for general patient care—known as general purpose funds—using  two main allocation models. VHA uses the first model to allocate general  purpose funds to each of the 18 regional Veterans Integrated Service  Networks (VISN). VHA uses a second model to allocate these funds to  medical centers within each VISN. VHA allocates the remaining one-third  of its funds for specific patient care—referred to as specific purpose  funds—outside of these models. Specific purpose funds are designated  for certain programs, including programs for community care (care  provided by non-VA providers but paid for by VHA), prosthetics, and  homelessness.

In fiscal year 2019, VHA allocated about $49 billion in general purpose  funds and about $23 billion in specific purpose funds. In recent years,  community care has accounted for the largest share of special purpose  funds. VHA, VISN, and medical center officials are responsible for  monitoring the use of allocated funds—including both general purpose  and specific purpose funds. This monitoring is largely to ensure that  medical centers operate within their allocated funding levels.

In recent years, VHA has repeatedly requested and received  supplemental appropriations from the Congress to address higher-than- expected costs and utilization of community care. As a result, you have  had questions about whether VHA allocates its funds in a way that  promotes efficiency. In light of these questions, you asked us to review  VHA’s processes for allocating funds and its monitoring of the use of  these funds. In this report, we examine  1.  VHA’s processes for allocating general purpose and specific purpose  funds to its VISNs and medical centers, and  2.  the extent to which VHA monitors the use of these funds.

To examine VHA’s processes for allocating general purpose and specific  purpose funds to its VISNs and medical centers, we reviewed VHA’s  models and methods for allocating funds and tracked the total allocation  levels for general purpose and specific purpose funds from fiscal years  2015 through 2019. Allocations made in fiscal year 2019 were the most  recent allocations available at the time of our review. For general purpose  funds, we examined VHA’s Office of Finance guidance regarding  allocation and specifically examined the allocation level for each VISN  and for each medical center for fiscal years 2018 and 2019. For specific  purpose funds, we examined the guidance and allocation methods used  by the five VHA program offices that each managed at least $1 billion of  these funds and collectively managed about 80 percent of specific  purpose funds in fiscal year 2019. We also interviewed officials from  VHA’s Office of Finance, the five VHA program offices, and the chief  financial officers from the 18 VISNs on the processes used to allocate  general purpose and specific purpose funds. We assessed VHA’s  allocation processes in the context of federal standards for internal control  related to information and monitoring activities. We also assessed these  processes in the context of VA’s strategic plan, which calls for the efficient  allocation of funds. Furthermore, we assessed the reliability of any data  we obtained by checking for missing values and outliers, and by  interviewing relevant VHA officials who are knowledgeable about the  data. As a result of these steps, we determined that the data were  sufficiently reliable for the purpose of our reporting objectives.

To examine the extent to which VHA monitors the use of general purpose  and specific purpose funds, we assessed the monitoring efforts of VHA— including the Office of Finance and the five program offices—and each of  the 18 VISNs. We reviewed VHA documents that outline VHA’s  requirements for monitoring the use of funds. We also interviewed  officials from VHA’s Office of Finance and VHA’s Deputy Under Secretary  for Health Operations and Management, the five VHA program offices,  and the chief financial officers from the 18 VISNs on the steps they take  to monitor the use of funds and examined documentation on their  monitoring activities. We assessed VHA’s monitoring in the context of  federal standards for internal control related to monitoring and control  activities.

For both objectives, we also interviewed officials at a non-generalizable  sample of five medical centers that we selected based on geographic  diversity, differences in facility complexity, size, and growth rate of  general purpose funds (including three medical centers that had  experienced significant growth in their general purpose funds—which we  defined as growth of more than 8 percent—in fiscal year 2019 and ones  that experienced growth of 2 percent or less in that year, which we  defined as minimal growth). We interviewed medical center officials about  their involvement with VHA’s allocation process, the data used for  allocating funds, and any challenges they experienced allocating funds.  We also asked them how they monitored the use of funds allocated to  them. The five medical centers we selected were located in El Paso,  Texas; Marion, Illinois; Minneapolis, Minnesota; New York, New York;  and Prescott, Arizona.

We conducted this performance audit from October 2018 to September  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform our work to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

In February of each year, the President submits the budget request for  VHA health care, which includes requested funding for the upcoming  fiscal year as well as an advance appropriation request to Congress.  VHA allocates funds by the beginning of each fiscal year—October 1—to  VISNs and medical centers based on the amount VA received in the  advance appropriation. Once appropriations are enacted for the  upcoming fiscal year, VHA updates the allocated funding levels for VISNs  and medical centers. For example, VHA’s appropriations for fiscal year  2018 included advance appropriations for fiscal year 2019. VHA allocated  funds by October 1, 2018 (the beginning of fiscal year 2019), based on  the advance appropriation for fiscal year 2019 and updated the funding  levels once appropriations for fiscal year 2019 were enacted.

VHA allocates general purpose funds to its 18 VISNs through the  Veterans Equitable Resource Allocation (VERA) model. It uses a  separate model, called the Medical Center Allocation System (MCAS), to  allocate each VISN’s general purpose funds—as determined by the  VERA model—to the medical centers within each network. VHA guidance  permits VISNs to make adjustments to the general purpose funding levels  determined by MCAS for each medical center.

VHA uses other methods to allocate specific purpose funds to VHA  program offices that manage various health care programs, such as those  for community care, prosthetics, and homelessness.  The program  offices, in turn, typically allocate funds for these programs directly to  medical centers. (See fig. 1.)

Once funds are allocated and distributed to VISNs and medical centers,  these funds may be redistributed in accordance with law across VA’s  health care system. These redistributions can help address unfunded  needs or surpluses that may arise. For example, according to officials, a  medical center may need additional funds to provide care for veterans  when natural disasters occur.

VHA’s General Purpose and Specific Purpose Funding Levels

From fiscal year 2015 to fiscal year 2019, general purpose funds  increased by 33 percent- from $37 to $49 billion—while specific purpose  funds increased by 24 percent—from $19 to $23 billion. (See fig. 2.) In  fiscal year 2019, community care accounted for $10.5 billion—46  percent—of the $23 billion allocated in specific purpose funds. Patient  care services, homelessness programs, non-recurring maintenance, and  medical residency programs also accounted for large portions of specific  purpose funds.

VA’s Appropriation Accounts and Community Care

As of fiscal year 2017, VA primarily receives appropriated funds for all  health care it provides or purchases through four appropriation accounts.  The amount of funds in each appropriation account is determined by VA’s  annual appropriation. VHA allocates both general and specific purpose  funds from these appropriation accounts. These accounts include the  following:

Medical Services: health care services provided to eligible veterans  and other beneficiaries in VA facilities and non-VA facilities, among  other things.

Medical Community Care: health care services that VA authorizes for  veterans and other beneficiaries to receive from community  providers.

Medical Support and Compliance: the administration of the medical,  hospital, nursing home, domiciliary, supply, and research activities  authorized under VA’s health care system, among other things.

Medical Facilities: the operation and maintenance of VHA’s capital  infrastructure, such as the costs associated with nonrecurring  maintenance, leases, utilities, facility repair, laundry services, and  groundskeeping, among other things.

Separate from VA’s health care appropriation accounts, the Veterans  Access, Choice, and Accountability Act of 2014 established the Veterans  Choice Fund and provided $10 billion in funds for the Veterans Choice  Program (Choice Program), which was implemented in early fiscal year  2015 and authorized until funds were exhausted or through August 7,  2017, whichever occurred first. The Choice Program allowed veterans  to elect to receive care from community providers when the services  needed were not available at a VA medical center, were not available  within VHA’s wait-time goals, or when veterans did not reside near a VA  medical facility with a full-time primary care provider. Eligible veterans  could also elect to receive care in the community if they met other  eligibility criteria as well.

VA received additional authority and funds to maintain the Choice  Program through June 6, 2019, when it sunsetted, and the new Veterans  Community Care Program (VCCP) went into effect. The VCCP was  established by the VA MISSION Act and consolidated the Choice  Program along with several other community care programs. The VCCP  is primarily funded through specific purpose funds in the Medical  Community Care appropriation account. The VCCP is similar to the  former Choice Program in allowing veterans to elect to receive care from  community providers when certain eligibility criteria are met, including  criteria relating to the availability and accessibility of the services at  VHA. Under the VCCP, VHA adopted designated access standards for  VCCP eligibility determinations that are broader than the eligibility criteria  that existed under the Choice Program.

VHA Allocates Funds Based on Patient Workload but Does Not Use the Most Up- to-date Data and Certain Adjustments to Funding Levels May Lead to Inefficiencies

VHA Allocates General Purpose and Community Care Funds Based on Patient Workload

VHA’s VERA model uses a national, formula-driven approach that  considers the number and type of veterans served and the complexity of  care provided—collectively referred to as patient workload—as well as  certain geographic factors, such as local labor costs, to determine the  amount of general purpose funds each VISN should receive. VHA uses  VERA to establish funding levels for each VISN in the following areas:  patient care, equipment, education support, and research support, the  largest of which is patient care.

After determining the amount of funds VISNs should retain for VISN-level  initiatives, administrative purposes, and reserves, VHA uses its MCAS  model to distribute the remainder of each VISN’s general purpose funds  to medical centers within the VISN. MCAS is based on a workload  measure developed by VHA, called patient-weighted work (PWW) that  accounts for medical center-level factors such as patient volume, case- mix, and specialized services. According to VHA officials, PWW establishes an equitable measure of workload among medical centers  that vary significantly in their geographic location, and types and costs of  services provided. Furthermore, PWW lessens the impact of cost  differences between medical centers, by recognizing the varying costs  and levels of resource intensity associated with providing care for each  patient at each medical center. For example, PWW would result in more  funds being allocated to a medical center that provides more complex  care, such as open heart surgery, than a workload measure based solely  on a count of each individual patient, which would not account for the  additional costs associated with more complex care.

Similar to MCAS, VHA’s Office of Community Care uses a patient  workload-based model to allocate community care funds—which are  specific purpose funds—to medical centers, based on each medical  center’s community care patient workload in prior years. To determine the  community care funding needs for each medical center, VHA calculates  the PWW associated with community care. VHA determines the total  amount of funds available for community care based on the amounts  appropriated to the Medical Community Care appropriation account and  the amount available for community care in the Veterans Choice Fund.  VHA distributes the funds to each medical center in proportion to each  medical center’s PWW. VHA officials told us that VHA is considering  making changes to the methodology for allocating community care funds  under the new VCCP, but as of July 2019, updates to the methodology  had not been developed or implemented.

The other four program offices we reviewed developed other  methodologies for allocating other specific purpose funds. In general,  these methodologies involve coordination between VISNs and their  medical centers on needs for these funds and allocating available funds  based on identified needs. For example, the Office of Patient Care  Services which manages prosthetics and hepatitis C drugs allocates  available funds based on identified needs by each of the medical centers.  Appendix 1 provides an overview of the methodologies used by these  four program offices to allocate special purpose funds.

VHA’s Allocation Models for General Purpose and Community Care Funds Do Not Reflect the Most Up-To-Date Patient Workload Data Available

To allocate funds for an upcoming fiscal year, VHA’s allocation models  rely on actual patient workload data from prior fiscal years, but not the  most recently completed fiscal year.

VHA’s VERA model relies on actual patient workload data from two to  six years prior to the upcoming fiscal year, in addition to future  workload projections. For example, to allocate funds for fiscal year  2019, the VERA model relied on actual workload data from fiscal  years 2013 and 2017, in addition to some future projected workload,  but did not take into account actual workload data from fiscal year  2018.

VHA’s MCAS and community care models rely on actual patient  workload data from two years prior to the upcoming fiscal year. For  example, the 2019 MCAS and community care models were based on  actual workload data from fiscal year 2017, but did not take into  account actual workload data from fiscal year 2018.

According to VHA officials, patient workload data from the most recently  completed fiscal year are not yet available when VHA runs the preliminary  VERA, MCAS, and community care models for each fiscal year in August.  However, these officials told us that these data would be available in  December of each year and therefore could be incorporated into the final  model run after VHA receives its enacted appropriation amount for the  upcoming fiscal year. These officials told us that doing so would result in  little to no delay in when the final model run and the final distribution of  funds takes place, which occurs after the appropriation act is enacted.  Specifically, according to officials from VHA’s Office of Finance, if the full  fiscal year appropriation is enacted prior to the start of the fiscal year on  October 1, VHA will be able to perform the final model runs by mid- November. As a result, incorporating data from the most recent fiscal year  would result in a one month delay in the final model run. Should the  enactment of a full year appropriation be delayed, the timing of the final  model would not be impacted by using data from the most recently  completed fiscal year. (See fig. 3.)

A VHA Office of Finance official told us that VHA had not previously  considered using patient workload data from the most recently completed  fiscal year because VHA did not believe that using updated data would  have a significant impact on the model. However, the official told us that  the implementation of the VCCP in June 2019 may result in more  significant year-to-year workload changes due to veterans increasing their  use of VHA health care services. As a result, the official told us that using  more up to date information would be more useful in informing allocation  levels. Federal standards for internal control related to information calls  for management to use quality information to achieve the entity’s  objectives. Quality information is appropriate, current, complete, accurate,  accessible, and provided on a timely basis.

Because the VERA, MCAS, and community care models do not use the  most up-to-date patient workload data available, the models may not  reflect the most recent workload trends affecting medical centers. This  may result in funding levels determined by the models that may not be  commensurate with medical centers’ actual patient workload. For  example, VHA data we reviewed show that some medical centers  experienced workload changes in fiscal year 2018—changes that were  not captured by the models for fiscal year 2019 allocations. Specifically,  from fiscal years 2017 through 2018, while PWW for care provided by VA  medical centers grew over 1 percent VHA-wide, 34 medical centers  experienced growth of over 3 percent, and 9 experienced a decline of  over 3 percent. Similarly, the PWW for care in the community grew over 6  percent VHA-wide from fiscal year 2017 to fiscal year 2018, with 97  medical centers experiencing growth of over 3 percent and 25  experiencing a decline in community care of over 3 percent over this time  period.

Additionally, officials we interviewed at six VISNs told us that the models  have not accounted for recent workload growth their medical centers  were experiencing due to an increase in the number of veterans they  serve, the addition of new services, or changes in the medical centers’  reliance on community care. Two of these VISNs analyzed recent  workload trends at the medical centers within their VISN and allocated  additional funds to those medical centers with recent growth not  accounted for by MCAS. If VHA were to incorporate the most recent  available workload data into its allocation models, the need for such  funding changes would likely be reduced.

VHA Does Not Adequately Monitor Adjustments Made to Medical Centers’ Allocated Funding Levels, and Certain Adjustments May Lead to Inefficiencies

As part of the allocation process, VISNs may make adjustments to the  amounts of general purpose funds calculated by MCAS and allocated to  medical centers. VHA guidance requires VISNs to provide a written  explanation to VHA for any adjustments. However, we found that VHA  does not adequately monitor these adjustments and that some of these  adjustments may lead to inefficiencies.

VHA Does Not Adequately Monitor Allocation Adjustments

We found that VHA Office of Finance officials did not adequately review  the fiscal year 2019 MCAS adjustments to ensure that adjustments were  documented and fully explained. Specifically, VHA did not provide  evidence that they sought an explanation for MCAS adjustments made by  2 VISNs that provided no written explanation for their adjustments, even  though these explanations are required by VHA guidance. VHA Office of  Finance officials said they use informal methods via email to learn about  the adjustments and follow-up as needed, but could not provide  documentation that follow-up and review had occurred. Additionally, VISN  officials we interviewed from all 18 VISNs stated that they had not  received questions or other feedback from the VHA Office of Finance on  the adjustments they made, even if they had not documented and  explained the adjustments.

Furthermore, even if VISNs follow the requirement and submit written  explanations for the adjustments, they may not provide the type of  information VHA needs to adequately monitor the adjustments. This is  because VHA guidance does not require VISNs to provide information on  how they determined how much and for what reasons they are making  the adjustments. For example, we found that 6 VISNs provided limited  explanations for their fiscal year 2019 MCAS adjustments, such as stating  that they had decided to reallocate funds among medical centers to  ensure “continuity of operations,” which is insufficient information to allow  VHA to determine if the adjustments were appropriate.

Federal standards for internal control related to monitoring state that  management should establish and operate monitoring activities to monitor  the internal control system and evaluate the results. These monitoring  activities could include establishing a formal process to document VHA’s  review of VISN adjustments to medical center allocations. Additionally,  monitoring activities could include requiring VISNs to provide information  on how they determined how much and for what reasons they are making  the adjustments and then reviewing such information. As VHA evaluates  the adjustments, documenting the results of its monitoring and having the  information needed to help determine the appropriateness of the  adjustments will help VHA identify areas for improvement in the allocation  process. Without adequate monitoring, VHA cannot reasonably ensure  these adjustments are justified and align with VA’s strategic plan, which  calls for the efficient allocation of funds.

Certain Adjustments May Lead to Inefficiencies

Based on interviews with VISN officials, we found that, in fiscal year 2019,  seven VISNs adjusted the allocations determined by MCAS to ensure that  every medical center within their VISN received either the same level of  funding or a minimum funding increase of up to 2 percent relative to the  prior year. According to VISN officials, funds were often shifted from  medical centers that had received relatively large increases in funds due  to growing workload to medical centers that had received a decrease or  relatively flat funds compared to the prior year due to either declining or  relatively flat workload. According to VISN officials, declining workload  may be the result of medical centers serving fewer patients or patients  obtaining care from community providers rather than VA providers. When  asked about these adjustments, officials at the seven VISNs stated that  they were necessary to ensure that affected medical centers could  continue to cover the costs for the services they offer and the staff they  employ, including providing federally mandated annual salary increases  for those staff. Officials from four of these VISNs stated that it is difficult  for medical centers to absorb a funding cut or only a small increase in  funding from one year to the next due to rising costs they face.

While VISNs are allowed to make adjustments to medical centers’  allocated general purpose funds, these adjustments may lead to  inefficiencies because medical centers are not required to improve  efficiency—such as, adjust the level of services they offer—to account for  their decreases in workload. Additionally, officials from VHA’s Allocation  Resource Center within the Office of Finance, which is responsible for  developing and executing VHA’s allocation models, told us that because  allocations made through MCAS are based on medical center workload,  VISNs should avoid reallocating funds so that all medical centers receive  a minimal increase. These officials said that doing so results in medical  centers failing to adjust the level of services to meet workload needs.  However, we found that for medical centers with declining workload, VHA  guidance on allocation of funds does not require VISNs—in conjunction  with these medical centers—to develop and submit approaches to  improve the efficiency of medical center operations. Such improvements  in efficiency would help lower overall costs.

As we have previously stated, VHA’s strategic plan calls for the efficient  allocation of funds. In addition, federal internal control standards related  to control activities state that management should design control activities  to achieve agency objectives. Such an activity could include having  guidance on the allocation and adjustment of funds that promotes the  efficient use of funds for delivering health care services to veterans.  Without requiring VISNs—in conjunction with medical centers—to  develop and submit an approach to change how medical centers with  decreasing workload should operate, VHA increases the risk that these  adjustments will not align with VA’s strategic plan.

VHA Monitors the Use of Allocated Funds, but Does Not Adequately Monitor Redistribution of Funds

VHA Monitors the Use of Allocated General Purpose and Specific Purpose Funds Using Multiple Mechanisms

Once funds are allocated and distributed to VISNs and medical centers,  VHA uses multiple mechanisms to monitor the balance of general  purpose and specific purpose funds. VA uses these mechanisms to  ensure that VISNs and medical centers operate within their allocated  funding levels and are in compliance with the Anti-Deficiency Act. VHA’s  primary monitoring mechanism is through VA’s financial management  system, which is used to track obligations and prevent VISNs and medical  centers from obligating amounts that are greater than the funds they have  available. VHA also employs additional mechanisms to monitor the use  of general and specific purpose funds. These additional mechanisms are  described below.

VHA’s Office of Finance requires each VISN to prepare an annual  operating plan after the initial allocation of general purpose funds for each  fiscal year that reflects the total planned obligations for the medical  centers they oversee. These operating plans describe the planned  obligation of funds throughout the fiscal year for various budget  categories, such as personnel, equipment, transportation, and supplies  and materials. VHA requires planned obligations reported in operating  plans to align with the funding levels available to each VISN, which  include allocated funds as well as anticipated collections,  reimbursements, and funds carried over from previous years. VISNs are  required to revise their operating plans during the fiscal year if major  changes are made to their available funding levels, due to, for example,  the enactment of a final appropriation bill, which results in final  allocations.

To monitor VISNs’ use of general purpose funds, VHA uses the operating  plans to compare each VISN’s planned obligations with actual obligations  on a monthly basis. VHA does not compare planned obligations with  actual obligations for each medical center individually; instead, each of  the 18 VISNs as well as the five medical centers we reviewed developed  their own tools to monitor the use of funds. According to VHA officials,  VHA requires each VISN to provide an explanation to VHA’s Office of  Finance on a monthly basis about any variances of 5 percent or more  above or below the amount between planned obligations in their  operating plans and actual obligations.

Based on VHA documents we reviewed, all 18 VISNs provided  explanations for situations in which their actual obligations were equal to,  higher, or lower than 5 percent from their planned obligations in fiscal  years 2018 and 2019 and in some cases, also explained the actions they  were planning to take to address the variance. VISNs reported several  reasons for the variances. For example, some VISNs reported that their  actual obligations exceeded planned obligations in some months because  contracts or equipment purchases were executed earlier than anticipated  in the year. Conversely, some VISNs reported that contracting delays led  to actual obligations lagging behind planned obligations reported in their  operating plans. An official from the VHA Office of Finance told us that  they may contact VISN leadership—including the Director and Chief  Financial Officer—if the variations are significant and additional actions  needed to be taken. VHA Office of Finance officials also told us that they  may review other reports if they become aware of an issue of significant interest to VHA leadership regarding a VISN’s or medical center’s  obligations.

Based on our review of VHA documents and interviews with program  office officials, VHA program offices use various monitoring processes  developed by each program office to monitor the use of specific purpose  funds. Specifically, officials from the Office of Community Care told us  that they monitor the use of community care funds by comparing actual  obligations to planned obligations based on authorized community care.  According to VHA officials, as of February 2019, VHA was in the process  of developing an updated process to monitor the use of community care  funds, which—starting in fiscal year 2019—were obligated at the time of  claim payment rather than when care in the community was authorized.  The other four VHA program offices we reviewed monitor the use of the  funds they manage by generating a monthly or quarterly budget status  report that compares each medical center’s actual obligations against  their planned obligations. For example, officials from the Office of Patient  Care Services told us that to monitor the use of funds for prosthetics, they  conduct monthly reviews of obligations and ask the VISNs and medical  centers to explain deviations between the actual and planned  expenditures and provide an action plan.

VHA Does Not Adequately Monitor the Redistribution of Funds Throughout the VA Health Care System, Which May Promote Inefficiencies

After funds are allocated and distributed to VISNs and medical centers,  VHA can redistribute funds across the VA health care system in  accordance with law. VHA officials told us these redistributions are done  to address unfunded needs and surpluses as they are identified and  occur throughout the year. However, we found that VHA does not  adequately monitor redistributions. We identified the following instances  in which allocated funds are redistributed:

VHA officials told us that VHA’s Office of Finance redistributes any  surplus general purpose and specific purpose funds to medical  centers based on VHA priorities and to address needs identified by  VISNs. These officials said that these redistributions typically occur  after the middle of the fiscal year. As of June 2019, according to VHA  officials, one VISN had identified unfunded needs to VHA, but the  VISN was working on addressing the funding needs using its own  internal resources. Officials from another VISN told us that the VISN  anticipated unfunded needs, but had not made a request to VHA for  additional funds as of the end of May 2019.

VISNs may also exchange funds with other VISNs. For example, if a  VISN has excess medical facilities funds but a shortage of medical  services funds, the VISN may exchange these funds with another  VISN that has excess medical services funds but a shortage of  medical facilities funds. According to VHA officials, VISNs must  inform VHA about these exchanges of funds, but are not required to  provide an explanation and do not require VHA approval for the  exchanges.

VHA officials told us that VISNs also have the flexibility to redistribute  funds throughout the year from medical centers within their VISN that  are experiencing a funding surplus to ones with unfunded needs.  However, VISNs are not required to inform VHA about these  redistributions and are not required to provide an explanation or get  approval from VHA. For example, officials at one medical center told  us that in recent years, its VISN redistributed an average of $15  million per year above allocated funding levels to this medical center  to address unfunded needs.

While the redistribution of funds throughout the year gives VHA flexibility  to move funds where they are needed, VHA’s Office of Finance does not  adequately monitor these redistributions. Specifically, VHA’s Office of  Finance does not require VISNs to identify the reasons why they  redistribute funds between VISNs and medical centers, and a VHA Office  of Finance official told us VHA does not examine the amount of funds that  are redistributed. For example, VHA’s Office of Finance could not provide  us the total amount of redistributions that occurred throughout fiscal year  2018. As a result, VHA’s Office of Finance does not know why VISNs  redistributed funds and the extent to which redistributions resulted in a  deviation from VHA’s workload-based allocation levels. Monitoring the  redistributions would provide VHA with information on the effectiveness of  the allocation models and how they might be improved.

VHA’s actions are inconsistent with federal internal control standards  related to monitoring, which state that management should establish and  operate monitoring activities to monitor the internal control system and  evaluate the results. Without requiring VISNs to provide this information  and without requiring VHA to document the results of its review of the  redistributions, VHA cannot ensure that these redistributions align with  VHA’s workload-based allocation of funds. As a result, VISNs and  medical centers may not be efficiently operating within available funding  levels, which include allocated funds, collections, reimbursements, and  carry over from previous years.

VA’s strategic plan calls for the efficient use of funds for delivering health  care services to veterans. Accordingly, it is critical that VHA closely  monitor and account for how its funds are allocated to VA medical centers  and redistributed throughout the year to help ensure the most efficient  use of funds. Especially as the number of veterans eligible to receive care  from a community provider potentially expands, it will be important for  VHA to ensure allocated funding levels accurately reflect individual  medical center funding needs.

However, VHA has opportunities to strengthen its processes for allocating  and monitoring funds distributed across its health care system. VHA could  improve how it allocates funds to its VISNs and medical centers if it were  to use the most up-to-date workload data available as part of its allocation  models. This would allow VHA to account for significant changes in  workload from year-to-year. VHA could also improve how it monitors  VISN adjustments to medical center allocation levels as well as  redistributions that may occur after medical centers receive their  allocations. While these adjustments and redistributions afford flexibility  and may be appropriate in certain circumstances, VHA does not have the  information it needs to monitor these changes to ensure that they are  appropriate and consistent with department goals. Specifically, VHA does  not require VISNs and medical centers to provide information on how they  determined the amount and reasons for adjustments, nor does VHA  require VISNs—in conjunction with medical centers— to develop and  submit an approach to improve efficiency at medical centers with  declining workload, such as adjusting the level of services offered.  Additionally, VHA does not require VISNs to identify the reasons why they  redistribute funds between VISNs and medical centers after allocations  have been made, and VHA does not document its review of these  redistributions. As a result, VHA lacks reasonable assurance that  adjustments and redistributions align with its strategic goals for efficient  use of funds to best serve the needs of veterans across its healthcare  system.

We are making the following five recommendations to VHA:

The VA Under Secretary of Health should use workload data from the  most recently completed fiscal year as part of the models that inform  VISNs’ and medical centers’ general purpose funding needs, when  doing so would not significantly delay the allocation of funds.  (Recommendation 1)

The VA Under Secretary of Health should establish a formal process  to document VHA’s review of VISNs’ adjustments to medical center  allocation levels. (Recommendation 2)

The VA Under Secretary of Health should revise VHA’s existing  guidance to require VISNs to provide information on how they  determined how much and for what reasons they made adjustments  to medical center allocation levels. (Recommendation 3)

The VA Under Secretary of Health should revise its existing guidance  to require VISNs—in conjunction with medical centers—to develop  and submit approaches to improve efficiency at medical centers with  declining workload that received adjusted funding levels. These  approaches could include adjusting the level of services offered.  (Recommendation 4)

The VA Under Secretary of Health should require VISNs to provide  explanations on the amount of funds redistributed between VISNs and  medical centers and VHA to document its review of these  redistributions. (Recommendation 5)

We provided a draft of this report to VA for review and comment. In its  written comments, reprinted in appendix II, VA concurred with four  recommendations and concurred in principle with one recommendation.

VA also described steps that it plans to take to implement the  recommendations. In addition, VA provided a technical comment, which  we incorporated as appropriate.

Specifically, VA concurred with the first recommendation, stating that it  will re-run the VERA model to allocate funds based on prior year  workload data if an enacted budget is passed after the start of the second  quarter of the current fiscal year. VA also concurred with the second and  third recommendations, stating that it will update guidance to establish a  formal process to document the review of VISN adjustments to medical  center allocation levels and will require VISNs to provide information on  how they determined adjustments prior to processing the adjustments. VA  concurred in principle with the fourth recommendation, stating that VHA is  conducting market assessments over a multi-year period to increase  access and quality of care to veterans. VA said that after completing the  market assessments and reviewing information from other VHA efforts, it  may consider adjusting the level of services along with other alternatives.  VA also concurred with the fifth recommendation, stating it will require  review of redistributions between VISNs to ensure adequate explanations  are included. According to VA, the department will also run a monthly  report identifying redistributions between medical centers in a VISN that  exceed 1.5 percent of the VISN’s funding allocation.

We are sending copies of this report to the Secretary of Veterans Affairs,  appropriate congressional committees, and other interested parties. This  report is also available at no charge on the GAO Web site at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or silass@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.

Appendix I: Methodologies Used by Four Selected Program Offices to Allocate Specific Purpose Funds

In addition to the Office of Community Care, which managed $10.5 billion,  or 46 percent, of specific purpose funds in fiscal year 2019, we contacted  four other Veterans Health Administration (VHA) program offices that  managed the largest amounts of specific purpose funds in fiscal year  2019—these included funds for patient care services, homelessness  programs, non-recurring maintenance, and medical residency programs.  These four program offices managed at least $1 billion of funds and  collectively managed about 36 percent of all specific purpose funds in  fiscal year 2019. The four program offices developed methodologies for  allocating specific purpose funds that involve coordinating with VISNs and  their medical centers on the purposes for which the funds would be used  and allocating available funds based on these needs. See table 1.

Appendix II: Comments from the Department of Veterans Affairs

In addition to the contact named above, Rashmi Agarwal (Assistant  Director), Michael Zose (Analyst-in-Charge), and Carmen Rivera-Lowitt  made key contributions to this report. Also contributing were Krister  Friday, Cathleen Hamann, Jacquelyn Hamilton, and Ethiene Salgado- Rodriguez.

VA Health Care: Estimating Resources Needed to Provide Community  Care. GAO-19-478. Washington, D.C.: June 12, 2019.

VA’s Health Care Budget: In Response to a Projected Funding Gap in  Fiscal Year 2015, VA Has Made Efforts to Better Manage Future  Budgets. GAO-16-584. Washington, D.C.: June 3, 2016.

Veterans’ Health Care Budget: Improvements Made, but Additional  Actions Needed to Address Problems Related to Estimates Supporting  President’s Request. GAO-13-715. Washington, D.C.: August 8, 2013.

Veterans’ Health Care: Improvements Needed to Ensure That Budget  Estimates Are Reliable and That Spending for Facility Maintenance Is  Consistent with Priorities. GAO-13-220. Washington, D.C.: February 22,  2013.

Veterans’ Health Care Budget: Better Labeling of Services and More  Detailed Information Could Improve the Congressional Budget  Justification. GAO-12-908. Washington, D.C.: September 18, 2012.

Veterans’ Health Care Budget: Transparency and Reliability of Some  Estimates Supporting President’s Request Could Be Improved.  GAO-12-689. Washington, D.C.: June 11, 2012.

VA Health Care: Estimates of Available Budget Resources Compared  with Actual Amounts. GAO-12-383R. Washington, D.C.: March 30, 2012.

VA Health Care: Methodology for Estimating and Process for Tracking  Savings Need Improvement. GAO-12-305. Washington, D.C.: February  27, 2012.

Veterans’ Health Care Budget Estimate: Changes Were Made in  Developing the President’s Budget Request for Fiscal Years 2012 and  2013. GAO-11-622. Washington, D.C.: June 14, 2011.

VA Health Care: Need for More Transparency in New Resource  Allocation Process and for Written Policies on Monitoring Resources.  GAO-11-426. Washington, D.C.: April 29, 2011.

Veterans’ Health Care: VA Uses a Projection Model to Develop Most of  Its Health Care Budget Estimate to Inform the President’s Budget  Request. GAO-11-205. Washington, D.C.: January 31, 2011.

VA Health Care: Challenges in Budget Formulation and Issues  Surrounding the Proposal for Advance Appropriations. GAO-09-664T.  Washington, D.C.: April 29, 2009.

VA Health Care: Challenges in Budget Formulation and Execution.  GAO-09-459T. Washington, D.C.: March 12, 2009.

VA Health Care: Long-Term Care Strategic Planning and Budgeting Need  Improvement. GAO-09-145. Washington, D.C.: January 23, 2009.

The Veterans Health Administration will spend about $81 billion on care for about 6.9 million patients this year. Higher-than-expected needs have prompted it to repeatedly request supplemental funds.

We reviewed how VHA allocated and monitored use of these funds.

When VHA allocated funds to regional networks and medical centers, it did not use the most recent data on workloads

VHA did not adequately monitor how regional networks changed the allocations to the medical centers in their areas

We made 5 recommendations, including that VHA use the most recent workload data and require regional networks to explain allocation changes.


Special Education: IDEA Dispute Resolution Activity in Selected States Varied Based on School Districts' Characteristics

Almost 7 million children aged 3 to 21 received special education services under Part B of the Individuals with Disabilities Education Act (IDEA) in school year 2016-17. IDEA contains options parents and school districts may use to address disputes that arise related to the education of a student with a disability. These options include mediation and due process complaints, which can be used by parents and school districts; and state complaints, which can be used by any organization or individual, including the child's parent, alleging an IDEA violation.

GAO was asked to review parents' use of IDEA dispute resolution options. This report examines (1) how often IDEA dispute resolution options are used, and whether use in selected states varies across school district-level socioeconomic or demographic characteristics; and (2) what challenges parents face in using IDEA dispute resolution options and how Education and selected states help facilitate parents' use of these options.

GAO reviewed publicly available data on dispute resolution at the state level and collected data at the school district level from five states—Massachusetts, Michigan, New Jersey, Ohio, and Pennsylvania—selected based on the number of disputes initiated and school district characteristics, among other factors. GAO also reviewed relevant federal laws, regulations, and Education and state documents; and interviewed Education officials, state officials, staff from organizations providing technical assistance in these five states, and other national advocacy organizations.

In school year 2016-17, 35,142 special education disputes were filed nationwide, and in five selected states GAO reviewed, dispute resolution options varied across school districts with different socioeconomic and demographic characteristics. The Individuals with Disabilities Education Act (IDEA) provides parents several ways to file and resolve disputes about plans and services that school districts provide to students with disabilities. A greater proportion of very high-income school districts had dispute resolution activity as well as higher rates of dispute activity than very low-income districts in most of the five states GAO reviewed. GAO also found that in most of these states, a smaller proportion of predominately Black and/or Hispanic districts had dispute resolution activity compared to districts with fewer minority students; however, predominately Black and/or Hispanic districts generally had higher rates of such activity. Technical assistance providers and others told GAO that parents used dispute resolution most often for issues related to school decisions about evaluations, placement, services and supports, and discipline of their children.

Note: “Very high-income” districts are those in which 10 percent or fewer of students are eligible for free or reduced-price school lunch (FRPL). In “Very low-income” districts, 90 percent or more of students are eligible for FRPL.

Parents may face a variety of challenges in using IDEA dispute resolution, and the Department of Education and states provide several kinds of support that, in part, may address some of these challenges. Stakeholders cited challenges such as paying for attorneys and expert witnesses at a due process hearing, parents' reluctance to initiate disputes because they feel disadvantaged by the school district's knowledge and financial resources, and parents' lack of time off from work to attend due process hearings. Education and state agencies provide technical assistance to support parents' understanding of their rights under IDEA and to facilitate their use of dispute resolution options, for example, by providing informational documents and phone help lines to parents.

During school year 2016-17, almost 7 million children aged 3 to 21  received special education services under Part B of the Individuals with  Disabilities Education Act (IDEA), the primary federal special education  law. Under IDEA, states must ensure that school districts make a free  appropriate public education (FAPE) available to all children with  disabilities who qualify for special education services. At times, parents  and school districts disagree over whether the school district is meeting  this obligation. IDEA requires states to make several dispute resolution  options available through which districts and parents may resolve any  disputes that arise about a child’s eligibility for or receipt of special  education services. These options include mediation, due process  complaints, and state complaints filed with the state educational agency  (SEA).

There is a well-established link between racial and ethnic minorities and  poverty, and studies have noted concerns about this segment of the  population that falls at the intersection of poverty and minority status in  schools and how this affects their access to quality education. Our prior  work has also discussed the association between poverty and race or  ethnicity. We have found that high schools with a relatively large  proportion of students in poverty also tend to have a higher proportion of  minority students, students with disabilities, and English learners. In part  based on these issues, you asked us to review parents’ use of IDEA  dispute resolution options. This report examines (1) how often IDEA  dispute resolution options are used, and whether use in selected states  varies across school district-level socioeconomic or demographic  characteristics; and (2) what challenges parents face in using IDEA  dispute resolution options and how Education and selected states help  facilitate parents’ use of these options.

To address our first objective, we obtained publicly available dispute  resolution data at the national and state levels. To address how often  dispute resolution options are used, we reviewed data from the Center for  Appropriate Dispute Resolution in Special Education (CADRE). We  found CADRE’s data to be reliable for the purposes of this report. In  addition, to understand the reasons parents filed disputes, we interviewed  staff from Education’s Parent Training and Information Centers (PTI),  Protection and Advocacy (P&A) agency staff, and SEA officials in each of  our five selected states. We also interviewed various national advocacy  organizations representing parents and school districts.

To determine whether the use of dispute resolution options varied across  school districts with different characteristics, we analyzed data on the  number and types of dispute resolution options used from selected states  at the school district level. We collected dispute data at the school district-  level from five states—Massachusetts, Michigan, New Jersey, Ohio, and  Pennsylvania. We selected these states based on a combination of  factors, including the level of dispute activity within the state (that is, the  number of mediations, due process complaints, and state complaints), the  number of school districts in the state with highly homogenous student  populations (to allow us to compare across school districts with different  student populations), and states’ ability to provide reliable school district-  level data on disputes. To compare these homogeneous student  populations we focused our analyses on school district income and  race/ethnicity. We describe districts as “very low-income” if at least 90  percent of students were eligible for free or reduced-price school lunch  and as “very high-income” if no more than 10 percent of students were  eligible for free or reduced-price school lunch. Similarly, we describe  districts as “very low-minority” if no more than 10 percent of students are  Black and/or Hispanic, and as “very high-minority” if at least 90 percent of  students are Black and/or Hispanic.

We then matched the districts’ dispute data to school district level  socioeconomic, race and ethnicity, and population density data from the  Department of Education’s (Education) Common Core of Data (CCD),  and analyzed whether the frequency of use or the types of dispute  resolution options used varied across school districts with different  characteristics. We determined that the dispute data from states and the  CCD data were reliable for the purposes of this report. The results from  our five states are not generalizable to all states.

For both research objectives, we reviewed relevant federal laws and  regulations and Education documents. We also reviewed PTI and other  Education funded technical assistance provider documents.

We interviewed Education officials, PTI, P&A, and advocacy organization  staff, and SEA officials from the five states from which we collected data  to understand the challenges parents face using dispute resolution  options and what Education and the states do to help facilitate parents’  use of these options. See appendix II for more information on our  objectives, scope, and methodology.

We conducted this performance audit from June 2018 to November 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Congress appropriated $12.8 billion in federal funds under Part B of IDEA  for fiscal year 2019. Under IDEA, Education awards funds to state  educational agencies (SEA), which provide these funds to local  educational agencies (LEA). SEAs also monitor Part B implementation by  the school districts. As a condition of receiving IDEA funds, states are  required to have policies and procedures in effect that are consistent with  IDEA requirements, including requirements related to procedural  safeguards and due process procedures. IDEA requires states to make  dispute resolution options available, which parents may use to resolve  disagreements regarding a school district’s decisions related to the  identification, evaluation, and educational placement of their child with a  disability, or the provision of a free appropriate public education (FAPE) to  the child. These options include:

Mediation. Mediation is a confidential, voluntary process in which a  trained, qualified, and impartial mediator, paid for by the SEA, works  with the parents and school district to try to reach an agreement about  the IDEA-related issue in dispute. Mediations can be initiated by either  the parent or the school district to resolve any dispute related to IDEA,  including matters that arise before filing of a due process complaint. If  agreement is reached through the mediation process, the parties must  execute a legally binding agreement.

Due process complaint. A due process complaint is a request for a  formal due process hearing. A due process hearing is conducted  before a qualified and impartial hearing officer and involves  presentation of evidence, sworn testimony, and cross-examination. It  often involves attorneys and expert witnesses, and thus may be more  costly than other dispute resolution options for all parties involved.  Because a due process hearing is a formal proceeding, it may be  more adversarial in nature than other dispute resolution options.  Either party can appeal a hearing officer’s decision by bringing a civil  action in any state court of competent jurisdiction or in a U.S. district  court. Not all due process complaints result in a due process  hearing. For example, some due process complaints may be  withdrawn by the parents or not meet the requirements for a filing a  complaint under IDEA regulations. In addition, in some cases, the  parents and school district may resolve the complaint through  alternative means, such as mediation.

The 2004 IDEA reauthorization added the requirement for a resolution  meeting to the due process complaint process to try to resolve the issues  in a parent’s due process complaint collaboratively before the parties may  proceed to the formal and often costly due process complaint hearing  procedure. A resolution meeting must take place within 15 days of a  parent filing a due process complaint and before any due process hearing  involving a hearing officer, unless both parties agree in writing to waive  the meeting or agree to use the IDEA’s mediation process. Settlement  agreements reached through resolution meetings must be in writing and  are legally binding.

State complaint. An individual or an organization, including one from  another state, may file a complaint with the SEA alleging that a public  agency has violated a requirement of Part B of IDEA or its  implementing regulations. Once the SEA receives such a complaint,  it must engage in specified procedures to resolve the complaint,  including conducting an on-site investigation, if the SEA determines  that it is necessary. Generally, the SEA must issue a written  decision within 60 calendar days unless exceptional circumstances  warrant an extension or the parties agree to extend the timeline to  engage in an alternative dispute resolution procedure. The SEA’s  written decision must include findings of fact and conclusions and the  reasons for the SEA’s final decision. The state’s complaint procedures  must include steps for effective implementation of the SEA’s final  decision, including any corrective actions to achieve compliance, if  needed.

IDEA also requires school districts to provide parents with a procedural  safeguards notice, which explains all of the procedural safeguards  available to them under IDEA.

Education and State Responsibilities under IDEA

Education’s Office of Special Education Programs (OSEP) administers  IDEA, and is responsible for data collection and monitoring, among other  responsibilities.

Data collection. Under IDEA, SEAs are required to annually report to  Education data on the use of mediation and due process  procedures. Specifically, SEAs report data to OSEP, including the  total number of: mediation requests received, mediation agreements reached (related to a due process  complaint or not related to a due process complaint), due process complaints filed,  resolution meetings that result in a written settlement agreement,  and due process hearings conducted.

Each state also reports data on the timely resolution of state complaints  and timely adjudication of due process complaints. According to  Education officials, all dispute resolution data are aggregated at the state  level and Education does not collect dispute resolution data at the school  or district level. According to Education officials, Education’s collection of  state-level dispute resolution data is consistent with the manner in which  grant awards are made for Part B of IDEA. Because states are the  grantees, it is the states that report data to Education.

Education’s monitoring. IDEA requires Education to monitor SEAs to  ensure they meet program requirements. According to Education  officials, Education uses multiple methods to monitor states’  implementation of IDEA, including reviewing data submitted by the  states in their state performance plans and annual performance  reports, conducting on-site monitoring visits to some states each year,  and following up on concerns raised via customer calls and letters.  Based on its monitoring and review of state dispute resolution data,  among other information, Education is required under IDEA to  annually determine whether each state meets the IDEA requirements  or needs assistance or intervention.

Education’s technical assistance. In addition to providing technical  assistance to states, Education provides technical assistance to  parents and the general public through its Parent Training and  Information Centers (PTI) and CADRE. PTIs are designed to help  parents of children with disabilities participate effectively in their  children’s education. Education’s technical assistance covers a range  of topics, including IDEA dispute resolution options.

States’ responsibilities. While Education monitors states, IDEA  requires states to monitor and conduct enforcement activities in their  school districts. States are also responsible for investigating state  complaints and producing reports with the results of their  investigation, as well as providing mediators as needed to mediate  disputes between school districts and parents. States may also  provide other support and direct services such as training and  technical assistance among other activities.

Dispute Resolution Options Were Used About 35,000 Times Nationally and Use Varied Across School Districts with Different Characteristics

Due Process Complaints Were the Most Commonly Used Dispute Resolution Option, and Disputes Were Most Frequently Related to Evaluations, Placement, Services and Supports, and Discipline

For the 6.8 million students from ages 3 to 21 who were served under  IDEA Part B in school year 2016-17, there were a total of 35,142  mediation requests, due process complaints filed, and state complaints  filed nationwide. Over about the last decade, this total decreased by  about 2 percent, according to data from the Center for Appropriate  Dispute Resolution in Special Education (CADRE). In addition, the mix of  dispute resolution options used has changed. Since school year 2004-05,  the number of due process complaints declined, while the number of  mediation requests increased. However, due process complaints still  made up more than half the total number of dispute resolution options  used in school year 2016-17 (see fig. 1).

Due process complaints. While the overall number of due process  complaints has declined since school year 2004-05 (from 21,118 to  18,490) the percentage of fully adjudicated due process hearings (i.e.,  due process complaints that went all the way through the hearing  process and a hearing officer rendered a decision) has declined more  sharply. In school year 2004-05, about 35 percent of all due process  complaints were fully adjudicated; in school year 2016-17, 11 percent  were fully adjudicated.

Due process complaints may not be fully adjudicated for several reasons.  For example, complaints may be withdrawn by the filer, dismissed by the  hearing officer, or resolved through other means, such as a resolution  meeting or an agreement to try to resolve the dispute through mediation.  CADRE’s data show that resolution meetings were held less than half the  time due process complaints were filed in 6 of the 12 school years  between 2005-06, the first year resolution meetings were used, and 2016- 17. When resolution meetings did occur, they resulted in resolution  agreements less than 30 percent of the time in 10 of these 12 years.

Mediation. According to CADRE, mediation is viewed as less  adversarial than due process hearings, in part, because parties work  together to try to reach an agreement. CADRE also reports that  mediation is generally believed to be less costly than due process  hearings because it typically requires less time and may require less  involvement from attorneys and other experts. The number of  mediation requests increased from school year 2004-05 to 2016-17 as  Education and the states encouraged dispute resolution options that  stakeholders told us were less costly and confrontational. In school  year 2016-17, there were 11,413 mediations requested, the largest  number of requests from school year 2004-05 to 2016-17. In  addition, mediation requests resulted in mediation meetings at least  60 percent of the time in each of these school years. Those meetings  resulted in agreements at least two-thirds of the time in every year but  one (see fig. 2). Furthermore, more than half of the mediation  meetings held stemmed from due process complaints that had been  filed, which suggests that parties involved in the complaints may have  been using mediation meetings to try to avoid a due process hearing.

State complaints. State complaints were the least commonly used  dispute resolution option. There were 5,239 state complaints filed in  school year 2016-17, down from 6,201 in school year 2004-05 (see  fig. 3). On average, from school year 2004-05 to 2016-17,  approximately two-thirds of complaints filed resulted in the state  issuing a report, and about two-thirds of those reports included  findings of noncompliance with some aspect of IDEA on the part of  the school district. According to state officials we spoke with, a state  that receives a complaint will issue a report unless the filer withdraws  the complaint, the state determines that the complaint is not about an  issue covered under IDEA, or the complaint is resolved through other  means.

The rate at which all three dispute resolution options were used varied  widely across states. Some states and territories had much higher rates  of dispute resolution activity than others. In school year 2016-17, due  process complaints were generally used at a higher rate nationwide than  mediation requests and state complaints, according to CADRE data  (27.2, 16.8, and 7.7 per 10,000 IDEA students served, respectively).  However, the rate of due process complaints filed in states ranged from a  high of 252.1 in the District of Columbia to a low of fewer than 1 per  10,000 IDEA students served in Nebraska, respectively. Similarly, some  states had much higher rates of mediation requests and state complaints  filed than others.

Within states, the mix of dispute resolution options used also varied. In  some states, due process complaints were used much more frequently  than mediation requests and state complaints, while other states saw  mediation requests or state complaints used most frequently.

According to state officials, Parent Training and Information Center (PTI)  staff, Protection and Advocacy (P&A) agency staff, and other  stakeholders we interviewed, parents most commonly engage in IDEA  dispute resolution because of concerns they have about the evaluations,  placement, services and supports, and discipline related to the  educational services their child receives. For example, a dispute related  to placement may arise if a parent wants their child to spend more time in  a regular education classroom as opposed to a self-contained classroom  with only special education students. A parent might also object if a  school district wants to place their child in an alternative school. On the  other hand, some parents may seek an out-of-district placement for their  child if they feel that more services will be available. A dispute over  services may center on a parent asking for services for their child that the  school district refuses to provide, or a parent believing that the school  district is not providing services that are included in their child’s  individualized education program. Research we reviewed generally  supported what stakeholders told us were the main causes of disputes,  although discipline issues were not reported as frequently.

Other issues that led to disputes less frequently, according to those we  spoke with, included, lack of progress on the part of the student, parental  participation in decision making, transition services, and other  accommodations for students.

Dispute Resolution Activity Varied Based on the Income Level and Racial/Ethnic Characteristics of Districts in Selected States

When we analyzed five states’ dispute resolution data we found that  dispute resolution activity varied based on districts’ income levels. In  general, a greater proportion of very high-income districts had dispute  resolution activity, and these districts also had higher rates of dispute  resolution activity than very low-income districts (see fig. 4.)

This pattern was mostly consistent for all three types of dispute resolution  options. Specifically,

Mediation requests and due process complaints: In all five states, a  greater proportion of very high-income districts tended to have  mediation or due process activity than very low-income districts.  Similarly, very high-income districts generally had a higher rate of  such activity than very low-income districts. (See app. III for data on  the individual states.)

State complaints: A greater proportion of very high-income districts  had state complaint activity in four of the five states. In addition, very  high-income districts also had a higher rate of state complaints  compared to very low-income districts in three of the five states.  (See app. III for data on the individual states.)

When we looked at districts’ racial and/or ethnic characteristics in our five  states, we found that a smaller proportion of very high-minority districts  had dispute resolution activity than very low-minority districts, but  generally had higher rates of activity (see fig. 5, and app. III for data by  state).

We also analyzed the results of initiated disputes by districts’ income level  and racial and/or ethnic characteristics—meaning the percentage of  disputes that resulted in a meeting or an agreement for mediation  requests, adjudication for due process complaints, and a report with  findings for state complaints. As shown in tables 1-3, there was no  consistent pattern in the results of dispute activity for all three types of  disputes across districts with different income levels and racial/ethnic  characteristics.

Education and State Efforts Are Designed to Help Parents Who May Face Challenges

Parents May Face Challenges Using IDEA Dispute Resolution Options

Stakeholders we interviewed identified several types of challenges  parents may face in using IDEA dispute resolution options, such as the  cost of attorneys for due process hearings.

Cost and Availability of Attorneys and Expert Witnesses

While parents may hire an attorney to help with dispute resolution,  stakeholders consistently told us the cost of attorneys and expert  witnesses was a significant barrier to parents’ ability to use the due  process complaint option in particular—especially low-income parents.  Parents are not required to use an attorney at a due process hearing, but  stakeholders told us that prevailing is difficult without legal representation  and expert witnesses to testify on the parents’ behalf.

An Education official told us that school districts may provide a list of free  and low-cost attorneys to parents. According to stakeholders we  interviewed, in some cases, Protection and Advocacy agencies (P&A)— which are funded by the Department of Health and Human Services  (HHS)—provide legal services to parents at no cost, or refer clients to  other attorneys. In general, however, very few attorneys will work on a pro-bono basis to handle IDEA dispute cases, according to stakeholders.  Further, under IDEA, a court may award parents reasonable attorney’s  fees and costs if they prevail in a due process hearing; however, parents  cannot recoup expert witness costs regardless of the outcome. Also, if  parents do not prevail at a due process hearing, they may be responsible  for the school district’s legal costs in addition to their own, which can be a  disincentive to going through a hearing. Education regulations allow  parents to be accompanied and advised in due process hearings by  individuals with special knowledge about children with disabilities, and  according to IDEA regulations, whether those individuals can legally  represent them is determined by state law. According to Education  officials, bringing non-attorneys to support them may help reduce costs.  However, the school district is likely to still have legal representation.

The amount of direct legal services P&As provide varies across, and even  within, states. P&A staff we interviewed in one state told us that their  attorneys in one city spend most of their time assessing parents’ cases,  reviewing documentation, giving advice, answering questions, and  conducting training for parents, but little time participating in actual  hearings. In contrast, the P&A attorneys we spoke with in another city in  the same state said that 50 to 70 percent of their work is direct  representation at hearings. Staff at other P&As we spoke with work  primarily on cases that fall within their priority areas or cases they believe  will have wide-reaching or systemic effects.

The availability of attorneys can also be a challenge. According to  stakeholders we interviewed, some areas, particularly rural ones, may  have fewer available attorneys. However, Education officials told us that  school districts in rural or sparsely populated areas may be more likely to  have an incentive to resolve a dispute before it goes to a due process  hearing because smaller school districts are unlikely to have in-house  attorneys, and hiring an attorney is expensive.

Other Factors Affecting Parents’ Willingness and Ability to Initiate Dispute Resolution

According to stakeholders, many parents feel they are at a disadvantage  in a conflict with the school district due to an imbalance of power and so  may be reluctant to engage in dispute resolution and take on the  associated costs when they feel they are unlikely to prevail. Stakeholders  also said that some parents who live in less populated and more rural  areas may be reluctant to initiate dispute resolution out of concern for  their privacy and because, for example, in these communities they and  their children are more likely to see the teachers, principals, and district  officials at the grocery store or at church, which may be awkward.  Furthermore, these families may have no other educational options in the  area to turn to if the dispute becomes too contentious. In some cultures,  according to stakeholders, it is less common to challenge an authority  figure, such as a school district official or teacher. In addition, according  to stakeholders, parents may fear the school district will retaliate against  their children or them if the parents initiate a dispute, such as by  threatening to stop providing services. Stakeholders also told us that they  are aware of cases in which the school district has called the state’s child  protective services agency in what they believe was retaliation for parents  bringing a dispute against the district, and that parents who are  undocumented may fear that raising a dispute might result in unwanted  attention from immigration officials. Further, according to stakeholders,  some parents face other challenges, such as language barriers, difficulty  obtaining time off from work, transportation, or internet access that could  affect their use of IDEA dispute resolution and their ability to take  advantage of resources, such as IDEA dispute resolution training,  workshops, and online information.

Education Funds Technical Assistance Providers That Explain Dispute Resolution Processes to Parents

Education and SEAs provide technical assistance to support parents’  understanding of their rights under IDEA and to facilitate their use of  dispute resolution options. According to stakeholders we interviewed, the  area of special education in general and the federal law, IDEA, are  complicated, and parents often do not understand the IDEA dispute  resolution process.

Education supports several efforts to help parents understand and use  dispute resolution options afforded to them under IDEA.

Procedural safeguards notice. To receive IDEA funds, states must  ensure school districts notify parents of their rights under IDEA,  including the right to initiate dispute resolution about the educational  services provided to their child. School districts must provide a notice,  referred to as a procedural safeguards notice, to parents that explains  their rights under IDEA. According to Education officials, to help  states meet their IDEA requirements, the agency developed a model  notice, which states can, but are not required to, have school districts  use to notify parents of their rights under IDEA. States may also  develop their own procedural safeguards notice as long as it includes  all the information required under IDEA.

Technical assistance. Education established and funds different types  of technical assistance centers that provide information, training,  workshops, and advocate services, and collect and disseminate data  on dispute resolution, among other activities. Specifically, Education  officials reported that Education provided about $21 million to the  network of Parent Training and Information Centers (PTI), about $2.9  million to the network of Community Parent Resource Centers, and  $750,000 to CADRE in fiscal year 2019. In addition, Education’s  technical assistance centers collaborate with P&As in some cases.  Further, P&A staff we interviewed in some of our selected states told  us they conduct trainings for advocates to attend meetings with  parents, other attorneys working on special education issues,  community organizations and agencies, and parents. Education  officials told us that, in the past, the agency has facilitated meetings  between PTIs and P&As, to improve collaboration between these  organizations. According to Education officials, these meetings  resulted in informal agreements between PTIs and P&As.

In addition, Education’s Center for Parent Information and Resources, the  national technical assistance center to the PTIs, provides resources on its  website to help parents learn about their rights and the procedural  safeguards notice they receive from schools. For example, the center’s  website contains an explanation of the procedural safeguards notice and  online training on procedural safeguards, among other issues. The  website also provides contact information for the PTI(s) in each state.  Further, CADRE, part of Education’s technical assistance and  dissemination network, has developed concise, easy-to-read materials  that it distributes to parent centers and others to help them understand  the procedural safeguards and how to resolve disputes with school  districts.

Stakeholders we interviewed told us that parents often do not understand  IDEA dispute resolution procedures, but that PTI staff are available to  explain them, discuss the procedural safeguards notice, and offer other  assistance at no cost to the parents. According to stakeholders, the IDEA  procedural safeguards notice is usually a lengthy document that uses  complex, legal language and that parents say the notice is hard to  understand. Education officials told us their model notice is complex in  part because it must reflect all the applicable provisions of the IDEA  statute and regulations. To help parents understand the notice and their  dispute resolution options, the PTIs in our selected states offer a variety  of assistance, such as staffing telephone helplines, meeting with parents  in person, offering workshops and training for parents, and developing or  making available easy-to-read documents and other resources. PTI staff  can also attend mediation meetings with parents and help parents write  state complaints, including parents for whom English is not their first  language. In addition, PTI staff told us they try to help specific  populations, including parents who are not native English speakers,  understand and navigate the dispute process. In some cases, PTI staff  will attend mediation meetings with or provide interpreters for non-English  speaking parents. PTI staff are also available to help parents who have  lower levels of formal education or who have disabilities, which  stakeholders identified as other factors that could affect parents’ use of  dispute resolution options.

States Also Provide Technical Assistance and Training to Help Parents Use Dispute Resolution Options

Our five selected states provide technical assistance and training to help  parents understand and use dispute resolution options, including how to  file a state complaint. State officials in some of our selected states said  they make available plain language documents that can supplement the  legally required procedural safeguards notice. For example, all of the  states created a parents’ rights handbook and several have one- or two- page documents describing the IDEA dispute resolution processes that  they make available on the state’s public website (see fig. 6 for an  example of such a document). In addition, the states we contacted post  information about IDEA on their websites in multiple languages. For  example, one state’s parents’ rights handbook is available in English and  11 other languages. Regarding the cost of due process hearings  discussed earlier, one state we contacted provides information about free  and low-cost services along with the state’s parents’ rights booklet, and  several states include contact information for the PTIs and sometimes  P&As in their booklet.

State officials we interviewed also said their states offer telephone  helplines that parents can call with questions about their dispute  resolution options and the processes involved. Some state officials told us  they have staff available by phone to explain the dispute options to  parents, including to parents who do not speak English or have lower  levels of formal education. One state has a phone line that connects  parents to an early resolution specialist who will try to help parents  resolve the dispute before a formal complaint becomes necessary.  Officials in one state told us that the state has installed voice  interpretation technology for its helpline so that parents who need  assistance with hearing or speaking can communicate with staff. Some  states also employ staff who can serve as interpreters to better assist  non-English speaking parents. Officials in some states told us that staff  answering the helpline are available to answer questions about dispute  resolution documents for parents who have difficulty reading. In addition,  some of the states we contacted said they made requesting mediation  and/or filing state complaints easier by posting the required initiation  forms on their websites. According to staff from one state, after the state  posted its state complaint form online, the number of complaints doubled  in 5 years.

Further, some of our selected states provide training and technical  assistance to school districts, parent advocate groups, and parents  related to accessing IDEA dispute options. One of our selected states  uses 16 regional support teams to provide training and technical  assistance to school districts. Another state conducts parent training  jointly with the Education-funded PTI in the state. We have previously  reported on other efforts some states have taken to help parents  understand their dispute rights and reduce the need for parents to initiate  formal disputes. For example, some states have offered conflict resolution  skills training to school district staff and parents, and support facilitated  IEP meetings, among other initiatives.

We provided a draft of this product to the Department of Education for  review and comment. We received written comments from Education,  which are reproduced in appendix I. Education also provided technical  comments that we have incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Education, and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (617) 788-0580 or nowickij@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.

Appendix I: Comments from the Department of Education

Appendix II: Objectives, Scope, and Methodology

This report examines the use of dispute resolution options available under  the Individuals with Disabilities Education Act (IDEA). In particular, this  report examines (1) how often IDEA dispute resolution options are used,  and whether use in selected states varies across school district-level  socioeconomic or demographic characteristics; and (2) what challenges  parents face in using IDEA dispute resolution options and how Education  and selected states help facilitate parents’ use of these options.

To address our first objective, we obtained publicly available dispute  resolution data at the national and state levels and collected and  analyzed data on the number and types of dispute resolution options  used from selected states at the school district level. To address how  often dispute resolution options are used, we reviewed and analyzed  publicly available data from the Center for Appropriate Dispute Resolution  in Special Education (CADRE) from school years 2004-05 to 2016-17, the  most recent data available when we conducted our analysis. We  assessed the reliability of these data by interviewing knowledgeable  CADRE staff and comparing CADRE data to other publicly available data.  In addition, we interviewed staff at Parent Training and Information  Centers (PTI) funded by the Department of Education (Education) and  Protection and Advocacy (P&A) agencies funded by the Department of  Health and Human Services, as well as state educational agency (SEA)  officials in our five selected states to determine the reasons parents use  dispute resolution. We also interviewed various national organizations  that advocate for parents and local educational agencies (LEA) and  SEAs.

To determine whether the use of dispute resolution options varied by  socioeconomic or racial and/or ethnic characteristics, we analyzed  dispute resolution data we collected at the LEA level from five states for  school year 2017-18, the most recent data available at the time of our  analysis. We selected these states—Massachusetts, Michigan, New  Jersey, Ohio, and Pennsylvania—based on a combination of criteria  including the amount of dispute activity within the state (that is, the  number of mediations, due process complaints, and state complaints); the  large number of LEAs in the state with highly homogenous student  populations to allow us to compare across LEAs with different student  populations; the large number of IDEA-eligible students in the state; and  the states’ ability to provide reliable LEA level data on disputes. We used  Education’s Common Core of Data (CCD) to categorize each LEA in our  selected states based on (1) income level, as measured by the  percentage of students eligible for free or reduced-price school lunch; (2)  racial and/or ethnic makeup, as measured by the percentage of Black  and/or Hispanic students; and (3) population density, as categorized by  CCD. We used Education’s school year 2016-17 CCD data, which was  the most recent data available at the time of our analysis. In some cases,  states had not reported 2016-17 free or reduced-price school lunch data  to CCD so we used CCD data from a previous year. We assessed the  reliability of the CCD data by (1) reviewing existing information about the  data and the system that produced them and (2) reviewing data reliability  assessments of the data from other recent GAO reports. We assessed  the reliability of dispute resolution data provided by the states by (1)  performing electronic testing of required data elements, (2) conducting  interviews with knowledgeable agency officials and reviewing written  responses to data reliability questions, and (3) reviewing existing  information about the data and systems that produced them, where  available. We determined that the CCD and data collected from the states  were sufficiently reliable for the purposes of this report.

We matched the LEA-level dispute data provided by our states to the  LEA-level socioeconomic, race/ethnicity, and population density data from  CCD to determine whether the frequency of use of dispute resolution  options or the types of options used varied across LEAs with different  characteristics. Because our analyses are at the LEA level, and not the  individual student or family level, it is impossible to know with certainty  whether the families using the dispute resolution options in our school  districts match the categorization of the districts themselves. To address  this concern to the greatest extent possible, we report on LEAs that are  highly homogenous. These districts are those in which:

90 percent or more of the students were eligible for free or reduced- price school lunch (very low-income districts) compared to districts in  which 10 percent or fewer of the students were eligible (very high- income districts), and

90 percent or more of the students were Black and/or Hispanic (very  high-minority districts) compared to districts in which 10 percent or  fewer of the students were Black and/or Hispanic (very low-minority  districts).

We conducted two separate analyses on the combined data. We  analyzed and compared:  1.  the percentage of all the “very low” districts in our data that had  dispute resolution activity to the percentage of all the “very high”  districts in our data with dispute resolution activity, as measured by  whether the district had one or more mediation requests, due process  complaints, or state complaints. We also conducted this analysis to  compare the percentages of urban, suburban, and rural districts with  dispute resolution activity.  2.  the rate of dispute resolution activity in our “very low” districts and our  “very high” districts, as measured by the number of mediation  requests, due process complaints, and state complaints per 10,000  students served under IDEA. We also conducted this analysis for  urban, suburban, and rural districts.

This first analysis compared the percentages of school districts with  different income and racial and/or ethnic characteristics that had at least  one mediation request, due process complaint, or state complaint. In  essence, it shows the differences in whether there is any dispute  resolution activity in districts with different income and racial and/or ethnic  characteristics, in our selected states. Because our analysis counts  districts in which a single dispute resolution was initiated in the same  manner as those with more activity, it is not potentially skewed by  individual districts that may have unusually high or low levels of dispute  resolution activity. To supplement this analysis, our second analysis  compares the rate of dispute activity in these types of districts, which  shows the magnitude of the various types of dispute resolution activity.

Although we use this 90-10 threshold in the body of the report, we also  conducted these analyses for districts where 75 percent or more of  students were eligible for free or reduced-price lunch and 25 percent or  fewer were not eligible. Similarly, we conducted our race/ethnicity  analyses at this same level as well. These additional analyses can be  found in appendix III. The results from our five states are not  generalizable to all states.

To address both research objectives, we reviewed relevant federal laws  and regulations. We also reviewed Education documents, including its  model Notice of Procedural Safeguards, PTI and CADRE documents, and  relevant literature related to challenges parents face using dispute  resolution.

In addition, we interviewed Education officials about challenges families  face in using dispute resolution options and Education’s efforts to assist  families. We also interviewed PTI, P&A, and advocacy organization staff,  and SEA officials from the five states from which we collected data.

This appendix contains tables that show data based on analyses we  conducted using dispute resolution data collected from five states– Massachusetts, Michigan, New Jersey, Ohio, and Pennsylvania–for  school year 2017-18, and the Department of Education’s Common Core  of Data for school year 2016-17. In some cases, states did not report free  or reduced-price school lunch data for school year 2016-17. In those  cases, we used the most recent year for which the state reported those  data. The total number of local educational agencies and the total number  of students served in our income analysis and our race/ethnicity analysis  are slightly different.

Appendix IV: GAO Contact and Staff Acknowledgments

Jaqueline M. Nowicki, Director, (617) 788-0580 or nowickij@gao.gov.

In addition to the contact named above, Bill MacBlane (Assistant  Director), David Barish (Analyst-in-Charge), and Linda Siegel made key  contributions to this report. In addition, key support was provided by  James Bennett, Deborah Bland, Holly Dye, Sheila R. McCoy, Jean  McSween, John Mingus, Amy Moran Lowe, Moon Parks, James Rebbe,  Kelly Snow, Joy Solmonson, and Greg Whitney.

If parents and school districts disagree over special education services provided under the Individuals with Disabilities Education Act, either party has options to resolve the dispute, such as mediation or filing a due process complaint.

We found variations by income and race on the types of resolutions sought in 5 states. For example

Nearly half of high-income districts had at least 1 mediation request

High-minority districts generally had low dispute activity, except around due process complaints

Perceived hurdles, such as language barriers, retaliation fears, or legal costs may affect whether parents pursue dispute resolution services.