Auditor General releases third annual review of Florida scholarship program

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Step Up For Students, the state’s largest nonprofit scholarship organization, miscalculated the household income for 0.1 percent of students who applied for state-supported scholarships over a two-year period ending in 2017, according to a new Florida Auditor General report.

The report, released today, is the third operational audit under a law passed in 2014.

The Auditor General questioned the computation method Step Up used during those two years to establish monthly income under the Florida Tax Credit Scholarship, which is limited to students of lesser financial means. Step Up used four weekly or two bi-weekly paychecks to compute a month’s income, which the auditor said did not equal a full year’s pay.

As a result, the auditor wrote, between 2015 and 2017, Step Up overpaid 248 students a total of $419,760 in scholarship awards and underpaid 32 students for a total of $53,589.

The 280 students represented 0.1 percent of the 209,500 students who applied during that time period, according to Step Up. The over- and underpayments were out of a total of $913.1 million scholarships awarded. 

Step Up responded that it was following the explicit language of the U.S. Department of Agriculture’s written guidelines on income under the National School Lunch program but accepted the Auditor General’s interpretation. The nonprofit reported that it has already changed computation methods for new students. It has also taken steps to get reimbursement from overpaid scholarships and make whole the underpaid scholarships in 2016-17.

The income computation was one of three non-material findings in the 2016-17 Operational Audit. The auditor also said Step Up needed to develop clear investment policies for money held in the accounts of families with Gardiner Scholarships for students with special needs, and that it should require time sheets for salaried employees.

Step Up noted in the published response that the organization began investing idle Gardiner scholarship funds in November, 2017 with periodic interest payments to individual student accounts.

In addition to the annual operational audit, state law also requires Scholarship Funding Organizations, like Step Up, to complete annual financial audits conducted by an independent certified public accountant. The financial audit is reported to the Auditor General and the Department of Education, and copy of the 2016-17 audit is available here.

Step Up administers four state-authorized scholarship programs in Florida and co-hosts this blog.