(The Center Square) – An audit of a now-closed eastern Ohio community college revealed millions in questionable federal taxpayer dollar spending on student financial aid.
State Auditor Keith Faber announced questions surrounding $17 million in spending at Eastern Gateway Community College. The money represents the entire student federal aid program at the school.
Faber also said “pervasive deficiencies in recordkeeping” and poor accounting and controls led to widespread financial mismanagement of public resources.
“This goes beyond sloppiness and honest mistakes,” Faber said. “The public should be outraged.”
The 56-year-old school, with campuses in Steubenville and Youngstown, closed Sept. 30.
In 2022, the U.S. Department of Education said Eastern Gateway – which launched a free college program in 2015 – had illegally charged students with Pell Grants more than those without the federal grant.
The free college program pushed enrollment from a little more than 3,000 students to more than 45,000 in 2021.
The program ended in 2023 after the Department of Education began requiring the school to pay costs up front and apply for reimbursement.
Faber said the state’s audit uncovered 44 findings, including questioned costs, material weaknesses and other issues from July 1, 2022, through June 30, 2023.
Faber said the investigation is ongoing and includes his office, the Jefferson County Sheriff’s Office, the Ohio State Highway Patrol’s Computer Crimes Unit, the U.S. Secret Service, the Columbus Division of Police’s Digital Forensics Unit and the Ohio Narcotics Intelligence Center.
A search warrant was executed in January 2024 as part of the investigation.
The audit showed weak program oversight and a lack of policies and financial controls, leading to unauthorized expenses and reporting errors.
“Collectively, these items contributed to the college’s cash flow crisis and eventual closure,” the audit said.
Some of the findings in the audit include:
• Documentation to support spending through federal financial aid, federal student outreach programs and adult education was incomplete and inconsistent.
• The former chief financial officer failed to get a certificate of estimated resources or certify to the county auditor the total funds from all sources available for expenditures, as required. The college’s former board of trustees also failed to adopt a formal appropriations measure, meaning “all expenses the college’s former chief finance officer and former controller made” were in violation of state law.
• The college failed to establish a records commission and meet other requirements under the state’s open records laws, and public records were improperly maintained.
• The former CEO apparently did not provide the college’s bond counsel or board of trustees with an accurate appraisal of a parking garage facility in Youngstown. As a result, college officials “authorized issuance of $13.6 million in bonded debt that was used, in part, for the acquisition of a parking garage for which the cost of demolition exceeded the estimated land value.”
• The lack of critical documentation and accounting issues led to $17 million-plus in questioned costs, 100% of federally funded financial aid for eligible students. “An institution’s recordkeeping practices are paramount to ensuring a proper administration of Title IV programs. The college failed to provide adequate source documentation … hindering a thorough review of the college’s distance education programs, including evidence that students commenced attendance,” the audit said.
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Faber said findings for recovery could come with later audits.
