Cut in monitoring GI Bill raises threats of fraud, abuse and waste in Minnesota

A school for helicopter pilots in Superior, Wis., was ordered to stop describing itself as VA approved when it wasn't. For several years, a Christian college in Brooklyn Park took GI Bill money from students for programs it wasn't qualified to charge for. When irregularities were discovered in what courses veterans at Hennepin Technical College were taking and which ones they finished, the school was forced to review its enrollment of GI Bill students.

After a decade of war, thousands of veterans are transitioning into civilian life with one of the military's most generous benefits: tuition reimbursement. They're heavily recruited by a growing number of schools eager to tap into the full ride at public universities (or $18,000 a year for private schools) veterans get after three years of continuous service.

But as GI money flows into Minnesota schools — totaling $300 million since 2009 — fewer GI Bill programs are being monitored. In Minnesota, the state agency charged with overseeing programs that get GI Bill funding has been ordered by the federal Department of Veterans Affairs to cut back inspections by as much as 80 percent, raising concerns that many GI Bill programs can become subject to waste, fraud or abuse.

Meanwhile the number of programs approved for GI Bill funding continues to grow, jumping 30 percent in the past decade. Since 2009, more than 180 Minnesota schools have received funding.

"We were going out to the schools every year reviewing records, making sure they were certifying correctly," said Paula Plum, supervisor of the Minnesota State Approving Agency, which operates under the state Department of Veterans Affairs. "If they weren't, we had the authority to say, 'I'm going to pull your approval and you can't have VA students.' They took that away from us."

More than 200 institutions and almost 8,000 programs have been certified by the State Approving Agency in Minnesota.

Now, the agency's two inspectors — a third inspector retired and has not been replaced — have been given directives from the VA's regional office in St. Louis to limit their inspections to 40 a year, down from as many as 200. They are prohibited from visiting certain campuses.

"These schools are getting approved and they don't get nearly as much oversight as they used to," Plum said.

Congress established State Approving Agencies in 1945 to watch over the new GI Bill for World War II vets. While they monitored a federal program, they were state employees. The belief at the time was that states, not the federal government, should be responsible for education.

But in 2010, the federal VA quietly shifted the agencies' authority to do inspections and required them to do financial audits previously performed by federal auditors. The number of inspections fell by about 50 percent nationwide.

"The end result is less oversight and fewer problems being discovered," said Skip Gephart, legislative committee chairman of the National Association of State Approving Agencies, which is trying to convince Congress to restore oversight. "Our time is being used inappropriately and probably ineffectively."

The new rules quickly changed how thoroughly schools are monitored, even ones that have had problems in the past. A review of seven years of disciplinary files from the Minnesota approving agency, obtained through the state's data practices act, provides evidence of infractions previously uncovered.

Despite the admonition, the school continues to market itself as VA approved and to accept student veterans, even though it is not approved by the Department of Veterans Affairs and, in fact, has never even applied for approval.

Its homepage promotes up to 100 percent financing for flight training through GI Bill and VA benefits. Elsewhere on its website, the school does inform perspective students that it is not actually approved on its own for GI Bill funding and that it has a long-standing partnership with nearby Lake Superior College, which is VA approved.

Eric Monson, a manager at Lake Superior Helicopters, said the school has worked hard to coordinate its program with the college and to ensure that the GI Bill payments it receives comply with federal regulations. Monson said that when the infraction occurred, the company was new to seeking VA students and thought it was in compliance.

"Quite frankly, we just didn't know," Monson said.

In another case, Maranatha Bible College in Brooklyn Park accepted students enrolled under the GI Bill from January 2005 at least through March of 2006, for programs that did not qualify for GI Bill funding. It was also criticized for a policy that allowed the school to keep fees for veterans withdrawing from classes. In 2006, initial approval for the school to receive GI Bill students was rescinded because of significant violations. The school has since shuttered its doors.

Although it says there was no malfeasance, Hennepin Tech acknowledges that it found itself over its head in the complexity of administering GI Bill funding, and has since moved the program to another department. It later reimbursed affected student veterans.

A Hennepin Tech ­official said cutbacks at the State Approving Agency are making it more difficult to adhere to the volumes of paperwork required for GI Bill funding, which is much more complex than other federal student education programs. The hands-on inspections of the past would be welcomed, said Nathan Stratton, Hennepin Tech's dean of Enrollment Services.

"They help us catch when there is a problem," said Stratton.

Asked for comment, the federal VA regional office in St. Louis issued a statement: "The purpose of all these activities is to prevent deficiencies and violations, as well as to identify and correct them when they are found. The VA strives to ensure the accuracy and timeliness of educational institution certifications of veteran students."

The main oversight focus now is on for-profit colleges, which also have become a target of criticism for exploiting veterans through aggressive recruiting tactics and misleading graduation rates. Minnesota Attorney General Lori Swanson said earlier this year that her office is investigating the state's for-profit colleges.

What programs are approved and what are not can become quickly complicated. The Minnesota Horse Training Academy, which teaches weeks-long courses in how to train a horse, was told in 2010 to stop using the phrase "VA Approved." The Ogilvie, Minn., academy is not eligible for GI Bill funding.

But the Minnesota School of Horseshoeing is eligible.

Since August of 2009, the Ramsey school has received $67,000 for training Minnesota students. The school sees three to five GI Bill students a year.

"Horses are wonderful creatures. You're working with a live animal. It is relaxing. It is physical," said owner Nancy Duggan. "When they graduate from our school they are ready to go out and start working."