Report: Education Dept. Official Received Secret Bonuses Despite Losing Billions to Fraud, Corruption

Agency sources say Obama appointee got $432,885 in off-the-books bonuses

June 2, 2017

A senior Education Department official who abruptly resigned last month after a dispute with Secretary Betsy DeVos received hundreds of thousands of dollars in off-the-books bonuses over a seven-year period, according to a new report.

James Runcie, an Obama administration appointee who served as chief operating officer of the Federal Student Aid office, received secret, five-figure bonuses each year while his office gave out billions in improper payments, Judicial Watch reported, citing sources inside the Education Department.

While Runcie ran the FSA, the government's $1.4 trillion financial aid program, the office made improper payments for the federal Pell Grant program, which ballooned from $562 million in 2015 to $2.21 billion in 2016, and for the Federal Direct Loan program, which increased from $1.28 billion in 2015 to $3.86 billion in 2016.

"These are disbursements that either shouldn't have been made, went to the wrong recipient, were for an incorrect amount, or were not properly documented," Judicial Watch reported, adding that "under Runcie's leadership there was pervasive fraud and corruption at the FSA."

A government source told Judicial Watch, a conservative watchdog group, that Runcie's personnel file showed a total of $432,885 in bonuses over a seven-year period, culminating in a $76,000 bonus in 2016. The bonuses do not appear on Runcie's official government salaries.

Runcie resigned last month after DeVos asked him to testify before Congress on the rising rate of improper payments in student aid, BuzzFeed reported. The resignation came the day before DeVos was set to testify about President Trump's proposed federal budget.

"I cannot in good conscience continue to be accountable as chief operating officer given the risk associated with the current environment at the [Education] Department," Runcie wrote in his resignation memo.