GAO replaces top official behind error-riddled report on for-profit colleges

The Government Accountability Office (GAO) is replacing the official behind an error-riddled report the agency released on for-profit colleges and is placing new constraints on the unit that produced the report.

Rick Hillman, a career-long GAO employee, is replacing Greg Kutz as head of a special investigations unit responsible for the agency’s undercover sting operations and “forensic auditing” investigations, according to an internal GAO memo obtained by The Daily Caller.

The GAO is the investigative arm of Congress. The agency’s normally unimpeachable reputation was stained in November when it made scores of corrections to a report that played a key role in the Education Department’s push to strictly regulate for-profit schools.

Top GOP oversight official Rep. Darrell Issa praised the GAO’s moves to reform the unit, saying the changes are “important and necessary.”

Beyond the change in leadership, the special investigations unit’s work will come under new scrutiny from top GAO officials. New “methodology experts” will pre-approve the unit’s reports. Investigators will undergo new training. External peer reviewers will periodically study the unit’s investigations. The unit is also being renamed.

Melanie Sloan, the director of Citizens for Responsibility and Ethics in Washington (CREW), a key watchdog non-profit group that has been eying the issue closely, said the extent of the changes showed the GAO recognized it had a “structural problem.”

“This wasn’t just a one time issue,” Sloan said about the corrected report, “they recognized they had some problems and they’re trying to fix them.”

The GAO’s study on for-profit colleges played a key role in a sometimes bitter debate over Education Department regulations of the sector.

In the fight, Wall Street short-sellers hoping to profit from the sector’s demise are aligned with the Obama administration and a slew of left wing interest groups in pushing for strict regulations, but the well-funded for-profit colleges have been pushing back fiercely.

Critics of the schools say they trick unprepared students into enrolling with false promises of high wages from the jobs they’ll get after graduation.

Industry representatives say the charges are overblown and warn the regulations will decimate the sector, rather than reform it.

The GAO waded into that debate with an Aug. 4 report based on an undercover sting operation in which investigators posed as prospective students.

The apparently devastating results of the sting were released just in time for a major congressional hearing on the matter held by Democratic Iowa Sen. Tom Harkin, who heads a key panel overseeing the matter.

However, the GAO issued scores of corrections to the report on Nov. 30. In one example, the investigation supposedly showed recruiters for a for-profit college telling prospective students a massage therapist could make up to $100 an hour – an hourly rate far above what massage therapists are actually paid.

In reality, the recruiter told prospective students the instructors and directors of the massage therapy school could make $150-200 an hour. “This may be possible,” the GAO said in the revised report.

Since the GAO’s reports are held in high esteem on Capitol Hill, the corrections provoked a series of oversight actions and document requests by congressional watchdogs like Issa.