Berkeley City College officials are being investigated by the U.S. Department of Education and the Federal Bureau of Investigation after they allegedly misallocated $327,000 in financial aid in the 2005-06 school year.

According to an audit by the Peralta Community College District, which oversees Berkeley City College, officials did not appropriately collect financial aid from students who dropped out.

If a student withdraws from school before 60 percent of the semester is complete, the college must collect the aid the student was slated to use during the remaining 40 percent of the semester.

The college did not collect $327,000 worth of those funds and will return the money to the Department of Education in quarterly installments of $37,000, said Shirley Fogarino, spokesperson for the college.

The district had already paid back approximately $40,000 to the government, she said.

A spokesperson for the Department of Education said the investigation is in its "preliminary stages" and the department expects to conduct a thorough analysis of the overpayment of funds.

Several college administrators declined to comment.

The audit states that "the lack of proper internal controls and documentation of procedures resulted in the over and under awarding of student financial aid."

After finding errors in the financial aid report, administrators placed Robert Vergas, the former supervisor of the college's financial aid program, on leave while they investigated the records.

Vergas, 58, retired in April because he said he was worried he would be fired by administrators over the errors.

Vergas, who worked for the college for 15 years, denied any wrongdoing and said any errors in the distribution of financial aid may have resulted from his office being understaffed with temporary and "inexperienced employees."

The audit suggested that the college "incorporate the appropriate internal controls and procedures for the awarding and disbursing of federal student financial aid."

The college is making every effort to appropriately review the files of students currently seeking financial aid to ensure there are no discrepancies, Fogarino said.

"We are carefully examining every student and every file," she said. "Although I don't know which process was used to determine what and how this (overpayment) happened, we are ensuring that this never happens again."

Additionally, many students at the college have been unable to receive their financial aid because the district's new software program, which tracks financial aid given to students, was not functional for several weeks.

As a result, students said they have been unable to purchase books because they have not received their federal Pell Grants.

Fogarino said college officials were making every effort to send financial aid to students as soon as possible.

"We issued 20 checks yesterday, and will be sending out more today and tomorrow, but we want to make sure we comply with state and federal financial aid requirements," she said.

Tags: BERKELEY CITY COLLEGE, FINANCIAL AID