EPA AWARDED A $16 MILLION LOAN TO THE CHICAGO PUBLIC SCHOOLS (CPS) IN 1993 FOR ASBESTOS ABATEMENT PROJECTS AT 20 CITY SCHOOLS UNDER THE ASBESTOS SCHOOL HAZARD ABATEMENT ACT (ASHAA). THIS AWARD, THE LARGEST SINGLE AWARD EVER MADE UNDER THE ASHAA PROGRAM, WAS GIVEN IN THE FINAL YEAR OF THIS FINANCIAL ASSISTANCE PROGRAM, AND ALL WORK WAS TO HAVE BEEN COMPLETED WITHIN TWO YEARS. AT THE TIME OF PROJECT COMPLE- TION, CPS WAS REQUIRED TO ACCOUNT FOR ITS EXPENSES, TO CERTIFY THAT ALL WORK WAS COMPLETE, AND THAT THE SCHOOL SYSTEM WAS IN FULL COMPLIANCE WITH EPA'S ASBESTOS-CONTAINING MATERIALS IN SCHOOLS RULE (THE AHERA REGULATION ). CPS WAS SIGNIFICANTLY DELAYED IN COMPLETING THE FINAL PHASE OF ITS ABATEMENT WORK (AT THE DUMAS SCHOOL), UNTIL AUGUST, 1999, AND WAS NOT ABLE TO SUBMIT IT'S FINAL ACCOUNTING OF PROJECT EXPENDITURES UNTIL JANUARY, 2000. AT THAT TIME, CPS DETER- MINED THAT IT HAD OVERDRAWN MORE FROM ITS LETTER-OF-CREDIT THAN IT COULD ACCOUNT FOR HAVING ACTUALLY SPENT FOR ABATE- MENT. IN ADDITION, CPS WAS UNABLE TO CERTIFY ITS FULL COMPLIANCE WITH THE AHERA STANDARDS BECAUSE OF RECORD-KEEP- ING DEFICIENCIES AND A GENERAL LACK OF PROJECT DOCUMENTATION THESE CIRCUMSTANCES HAVE PREVENTED A TIMELY AND SATIFACTORY CLOSEOUT OF THIS EXISTING LOAN. REGION 5 HAS BEEN WORKING CLOSELY WITH CPS TO BRING THESE ISSUES TO A TIMELY RESOLUTION. CPS HAS RECENTLY CORRECTED A VARIETY OF REGULATORY DEFICIENCIES I