University pays back $1 million to Department of Education

Four years after failing to return approximately $1 million of unearned financial aid money to the Department of Education, the federal government forced Portland State to pay it all back.

However, a recent yearly audit of the university’s finances shows the problem still isn’t resolved. This would be the fourth year in a row where PSU has failed to update student’s financial status and accurately manage financial aid funds.

University financial audits discovered PSU wasn’t properly managing financial aid money in 2015. After telling DOE officials that the problem would be addressed, repeat offenses were found in future audits. At least one head administrator of the office of student financial aid and scholarships has departed since these issues began.

Last year, the DOE forced PSU to pay back nearly $1 million in FA funds that were erroneously sent to students whose eligibility changed and were required to pay it back.

In many cases, the university never got the money back or returned it late. It is unclear how much money PSU was able to get back from those students and how much it had to pay back to the DOE from other funding sources.

Last summer, university communications prepared a document explaining the three main reasons why this issue occurred: inadequate staffing, inadequate internal checks on the fund returns process and “system setup and functionality issues that complicated determining the dates when some students withdrew.”

Interim Director of Financial Aid Amanda Bierbrauer, who replaced Mike Johnson in 2016, recently requested a single lump sum of money to fix the problem from the finance and administration department. External consultants have also been hired to evaluate how the university manages changes in enrollment and financial aid distribution.

On March 13, an audit of PSU’s financial aid office was presented by members of CliftonLarsonAllen, which conducts yearly audits of the university’s financial statements and compliance with federal regulations.

Jake Houlihan, one of the auditors with CliftonLarsonAllen LLP, said issues with returning financial aid money “is the most common finding we see over the student FA cluster, [but] typically it doesn’t get as bad as this.” He later clarified that these issues are usually resolved in one to two years.

Houlihan and Director of Internal Audit at PSU David Terry also noted the university was doing better than previous years but—due to the timing of the audit—couldn’t be completely cleared of the issue.

“My understanding with working with management is the majority of those issues have been addressed, but we’ll have to wait to see for next year’s single audit if we get a clean audit report for those items,” Terry said.

“We were preparing for the possibility of some pretty restrictive measures put in place by the Department of Education, and none of that happened,” said Cindy Starke, general counsel and secretary to the Board of Trustees. “I think we’re on a good path now.”

Such restrictive measures could have “heightened cash management,” which would have prevented PSU from doing “advanced draws.” This is when the university requests money from the DOE in advance of financial aid disbursement. With restrictions, the university would need to pay students out-of-pocket and then seek reimbursement.

Board Chair Gale Castillo added that she “hopes [the university] seriously takes [Bierbrauer’s requests for additional resources] into consideration so that she has the resources that she needs to correct this, because this is really not acceptable.”

Brierbrauer is currently both the interim director of student financial aid and scholarships and the director of student financial services and the financial wellness center.

“If I may, the other thing is…[Bierbrauer] is not alone; she is in finance and administration as a director of student financial services, which is a full time job too,” said Kevin Reynolds, vice president of finance and administration. “It is incumbent upon the university to find a new director of financial aid.”