THE MISSISSIPPI LEGISLATURE

Introduction

The Board of Trustees of Institutions of Higher Learning (IHL) administers programs which provide financial aid for post-secondary education. From FY 1993 to FY 1995, administrative expenditures for the state's Student Financial Aid program increased from $380,269 to $906,405, an increase of 138 percent. In response to a legislative request, the PEER Committee reviewed the administrative expenditures of IHL's Student Financial Aid Division and Post-secondary Education Financial Assistance Board.

Two of the recently authorized programs which the Post-secondary Education Financial Assistance Board and IHL staff implement are the Mississippi Resident Tuition Assistance Grant (MTAG) and the Mississippi Eminent Scholars Program (MESG). MTAG and MESG provide funds to students who have been state residents for the preceding four years. During the 1995 session, the Legislature appropriated nearly $20 million in general funds for the support and maintenance of MTAG and MESG, and 14,248 students received financial aid through these two programs for the fall 1995 semester. PEER reviewed the enforcement of these programs' residence requirements.

Overview

From FY 1993 to FY 1995, administrative expenditures for student financial aid programs increased 138%. What types of expenditures account for this increase? What are the primary reasons for the increase?

IHL's administrative expenditures for student financial aid programs increased primarily in the budget categories of salaries and benefits and contractual services. The primary reasons for the increase are:

• IHL privatized administration of part of its student financial aid program (the Guarantee Student Loan Agency) early in FY 1995 and redirected the flow of special funds revenue to the private company that assumed the work load. Instead of eliminating the positions associated with the privatized program, IHL retained the staff members, shifting them to other programs, and used general funds to pay their salaries. Subsequent creation of the MTAG and MESG programs may have warranted adding some positions, but IHL more than doubled Student Financial Aid Division salaries and benefits expenditures during FY 1995 without formally studying its staffing needs.
• IHL spent $157,011 in contractual funds for a computerized loan management system which IHL managers later decided not to use.

Have administrators of MTAG and MESG programs assured consistent compliance with four-year residence requirements?

No. Although PEER found no evidence of any widespread attempt by grant recipients to circumvent the residence requirements, MTAG and MESG program administrators have awarded grants without proof that students were actually four-year residents of Mississippi. The grant application form does not elicit specific four-year residence information; the Post-secondary Board has not developed specific residency verification procedures for institutions' use; and individual colleges and universities do not consistently require proof of four-year residence.

Recommendations

Concerning administrative expenditures of the Student Financial Aid Division, PEER recommended that IHL staff:

• study the work load and staffing of the Student Financial Aid Division;
• report all special funds and checking accounts in budget requests; and,
• establish policies for purchasing computer hardware and software.

PEER also recommended that the Legislature limit the amount which may be spent on administration of loan and scholarship programs to a percentage of the funds appropriated, and that the Attorney General and State Auditor consider whether IHL's former Commissioner should repay funds spent by IHL for a computerized loan management system which it has never used.

Concerning the MTAG and MESG grant programs, PEER recommended that:

• IHL staff develop clear policies outlining types of documentation to be reviewed and steps to be taken when determining four-year residence, distribute such policies to individual institutions, and revise the application form; and,
• the Post-secondary Board develop procedures for conducting annual compliance audits of grant recipient files at institutions.

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