College of Southern Nevada not alone in identifying financial aid errors

The College of Southern Nevada isn’t the state’s only higher education institution required to pay back money to the U.S. Department of Education because of financial aid errors, according to officials and records obtained by the Review-Journal.

However, none of the amounts other state colleges have had to reimburse was as significant as the $1.7 million CSN has to repay after miscalculating federal financial aid for thousands of students during the last two years.

“Systemwide, we process close to 100,000 files and there’s 30,000 at CSN,” Dan Klaich, chancellor of the Nevada System of Higher Education, said earlier this month. “While you don’t want to see any errors, I think seeing some errors is probably expected.”

But, Klaich added, “I don’t recall anything of this magnitude before.”

A financial aid audit of the Nevada System of Higher Education, prepared by independent auditing firm Grant Thornton for the 2011-2012 fiscal year, was submitted to the U.S. Department of Education and shows that financial aid departments at other state higher education institutions have erred on a smaller scale.

In a final audit determination letter sent last summer to system officials by the U.S. Department of Education, federal officials say the department has reviewed the corrective action plan and management’s response provided with the audit report.

The University of Nevada, Las Vegas had to return $9,109 to the federal government during the 2011-12 fiscal year because a student withdrew from courses and there was an error in how the last day of attendance was determined. The money involved a Pell Grant and federal loans.

In such cases, UNLV repays the U.S. Department of Education, and students then owe the school, said Afsha Bawany, UNLV spokeswoman.

Norm Bedford, director of financial aid and scholarships at UNLV, said the $9,109 is a small fraction of the financial aid money the university disburses.

UNLV typically distributes $240 million in financial aid, Bedford said. Of that, about $200 million is federal aid.

The U.S. Department of Education gets concerned when schools need to return more than 5 percent of the total funds they disburse, he added.

The University of Nevada, Reno also had to repay $4,239 during the 2011-12 fiscal year for an incorrect cost of attendance.

Tim Wolfe, UNR financial aid director, said there was an out-of-state student who was reclassified as an in-state student. However, the financial aid department kept the student’s status as out-of-state, he said.

Officials have changed the student notification process and they are now notified right away when a student’s residency status changes.

“Every time we have an audit, we see if there are things we can improve on,” Wolfe said.

Incomplete verification issues were found at CSN and UNLV, according to records.

The audit found that nine out of 58 CSN students reviewed had outdated information on their federal financial aid applications.

Those human errors are likely what prompted the deeper review by the U.S. Department of Education, officials have said. After that was completed, the college decided to also review the 2012-13 fiscal year.

The college now has to repay about $1.7 million to the U.S. Department of Education for overpaying students during those two years.

CSN also will reimburse students who were underpaid in 2011-12. The amount is $128,857. In 2012-13, the college will have to reimburse students who were shorted by $97,143. The federal government will reimburse CSN for those payouts.

At UNLV, for six of 71 students tested, the university did not properly update their federal financial aid application, according to records.

While incomplete verification issues were also found at UNLV, no funds had to be returned or adjusted, according to records and officials.

“Those ones were attributable to human error and that was something that concerned me,” Bedford said. “I would like to see zero in any audit findings. I think that’s always the goal.”

UNLV added four additional staff members to its financial aid and scholarship processing unit in early 2012 to “allow greater office administrative capability, training opportunities, and cross checking of work for accuracy to minimize future compliance concerns,” according to records.

“You want to have redundant systems in place when you are dealing with money,” Bedford said.

UNLV created a new position and hired an associate director of processing in December 2012, Bawany said. The annual salary for the job is $65,000, which doesn’t reflect a 2.5 percent reduction through six mandated, unpaid furlough days. The university hopes to hire one more employee to bring its financial aid staff up to 28.

Additional staff members may also be added at CSN.

The college will pay $36,000 to Evans Consulting Group, a financial aid firm, to take a look at its financial aid department. On Oct. 14, the firm will send four to five consultants to the campus for two weeks.

The firm will then prepare a report for college officials with recommendations for improvements. Those recommendations could include adding additional staff, more training, or policy changes, Klaich said.

“Those are the areas that led to this because these are human errors,” he said.

Why did it take two years to discover the human errors at CSN?

“I think we’ve asked ourselves that same question,” Klaich said. “If you look back at the audit reports, the independent auditors selected a random number of files to review. They cited a number of those files that had inaccuracies, and they tested those files specifically, and found that there was no financial impact from the files they tested.”

There were other minor findings at UNR, UNLV and CSN that didn’t result in any financial liability for the schools. For example, CSN and UNR failed to inform students of their right to cancel all or part of a loan.

Both institutions have made changes to address the problem, among other findings that were a result of software issues and staff using a new system and institutions not returning funds within the prescribed time.

“Regarding the other findings, most of them are very discrete,” Klaich said. “This one (at CSN) turned out to be significant.”

Klaich believes that historically audits only looked at the three largest institutions because that’s where 95 percent of the financial aid transactions occur.

Grant Thornton conducts the annual independent audits for the Nevada System of Higher Education in the summer. Those audits go to the Board of Regents’ audit committee, and are then forwarded to the U.S. Department of Education.

In December, the audit for the 2012-13 fiscal year will go to the Board of Regents, and after it’s been approved, it will go to the U.S. Department of Education. CSN expects more findings, President Michael Richards said last week, although most of the findings will probably be those already identified by the Pro-Education Solutions, the firm that conducted a review for each of the two years the college overpaid and underpaid thousands of students.

Reporter Yesenia Amaro can be reached at (702) 383-0440, or yamaro@reviewjournal.com.