Education Official Leaves Amid Conflict Allegations

A U.S. Education Department official accused of conflicts of interest when he worked with a $1 billion federal reading program will resign from his current position at the end of June.

The departure of Commissioner of Special Education Edward Kame'enui was expected because his two-year assignment ends in June and he will be returning to the University of Oregon, Mike Bowler, a department spokesman, said today.

Kame'enui was among four regional directors of the department's Reading First program cited in a report last week by U.S. Senator Edward Kennedy. The report went further than previous federal audits of the program in outlining conflicts of interest by listing payments that specific publishing houses made to the directors for consulting or royalties from products used in Reading First.

``The announcement of Edward Kame'enui's departure has come during a time when the Department's administration of the Reading First program has come under scrutiny,'' said Kennedy, a Massachusetts Democrat, in a statement today. ``The investigative report on Reading First that I released last week revealed that Dr. Kame'enui maintained close ties to multiple publishers while he was under subcontract with the Department.''

The Education Department also is facing allegations of conflicts of interest and oversight failures in the $85 billion-a-year student-loan industry.

`Credibility'

``Conflicts of interest, whether actual or in appearance, undermine the credibility of programs, no matter how important they are,'' said Cindy Brown, director of education policy at the research group Center for American Progress in Washington, in a telephone interview. ``It's very disappointing to see this'' in the Reading First program.

Kennedy, California Representative George Miller and New York Attorney General Andrew Cuomo are investigating the student loan industry. The probes have revealed gifts and payments to colleges and financial-aid officials from lenders in the form of revenue sharing, consultant payments and shares of stock.

The House passed legislation on May 9 to make the federal student-loan system more transparent and prevent conflicts of interest between lenders and colleges. Kennedy, chairman of the Senate Education Committee, has said there is agreement with Republicans in the Senate for a similar measure.

Kennedy also is proposing that all federal employees, contractors and subcontractors make a full disclosure of any financial ties to publishers and other groups that could benefit from education funds.

Education Secretary Margaret Spellings told Miller's committee on May 10 that the student-loan and Reading First programs have been successful and the department has taken appropriate action when issues came to light.

Kame'enui didn't immediately return a telephone call and e-mail requesting comment.

To contact the reporter on this story: Aliza Marcus in Washington at amarcus8@bloomberg.net.

To contact the editor responsible for this story: Robert Simison at rsimison@bloomberg.net.

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