FY 2003 Budget Summary - February 4, 2002
G. Departmental Management
1 Adjusted for comparability. Excludes $57.634 million in 2001 and $58.648 million in 2002 used to administer student aid programs, which are consolidated with FFEL and FDSL Federal administration costs and requested in fiscal year 2003 under the proposed Student Aid Administration account.
2 Adjusted for comparability. Includes funds from the Program Administration and Federal Family Education Loans accounts used to administer student aid programs, which are consolidated with the FDSL Federal Administration costs and requested in fiscal year 2003 under the proposed Student Aid Administration account.
3 Excludes $195 million for payments to guaranty agencies.
4 Includes small Federal Credit accounts and S&E activities in program accounts. Excludes National Institute for Literacy and Occupational and Employment Information grants.
5 Excludes $170 million in 2001 and $180 million in 2002 for payments to guaranty agencies.
6 Actual FTE usage in 2001; maximum target for 2002 and 2003.
7 Adjusted for comparability. Excludes FTE to administer student aid programs, which are consolidated with FFEL and FDSL Federal administration FTE requested in fiscal year 2003 under the proposed Student Aid Administration account.
8 Adjusted for comparability. Includes FTE to administer student aid programs, which are consolidated with FFEL and FDSL Federal administration and Program Administration FTE requested in fiscal year 2003 under the proposed Student Aid Administration account.
The 2003 budget request for Salaries and Expenses (S&E) will pay the costs of the staff, overhead, contracts, and other activities needed to administer and monitor the Department's educational assistance programs and provide over $60 billion in grants and loans each year to more than 8 million postsecondary students.
The S&E budget proposes a new, discretionary Student Aid Administration account that would consolidate all student aid management costs previously funded through the discretionary Program Administration and Federal Family Education Loans Program (FFELP) accounts and the mandatory Federal Direct Student Loans Program (HEA Section 458) account. The request assumes enactment of the new account structure and displays information from previous years on a comparable basis.
The Department is requesting $1.307 billion for its discretionary S&E budget in 2003, an increase of $105 million over the 2002 level. Included in the request is $459 million for salaries and benefits, an increase of $30 million from 2002 that would primarily cover Government-wide pay raises of 4.6 percent in 2002 and 2.6 percent in 2003 as well as higher benefits costs. In addition, proposed legislation would require the Department to pay the full accruing costs of post-retirement health benefits of all current employees and retirees and the cost of retirement for current Civil Service Retirement System employees.
The non-personnel costs for the administrative accounts cover such items as travel, rent, mail, telephones, utilities, printing, information technology (IT), contractual services, equipment, supplies, and other Departmental services. The total request for non-personnel activities in 2003 is $848 million, an increase of $75 million over the 2002 level resulting primarily from increased investment in information technology.
Department administrative costs continue to constitute a small fraction of the total education budget. For example, even with the increase requested for 2003, the discretionary administrative budget would be only 2.5 percent of the Department's total discretionary budget.
The 2003 budget request for salaries and expenses supports Department initiatives designed to improve government performance through the goals outlined in the President's Management Agenda and the implementation of the No Child Left Behind Act signed into law in January 2002.
To carry out the President's Management Agenda, the Department has developed and is currently implementing its Blueprint for Management Excellence (Blueprint), which establishes a roadmap for management improvements related to accountability and performance that will make the Department an example of excellence for other government organizations. The 2003 S&E budget request places a heavy emphasis on the following five high priority items included in the Blueprint:
With a 2002 target of 4,710 FTE, staffing levels are nearly 40 percent below the level of 7,528 FTE when the Department was created in 1980. The 2003 staffing request for the Department is 4,631 FTE, a decrease of 79 FTE from 2002, primarily reflecting a decrease of 99 FTE in the Student Financial Aid (SFA) office. This large decrease is a result of a combination of outsourcing business functions that can be done more cost effectively and efficiently by the private sector, modernizing student aid systems, and flattening the hierarchy within SFA. The decrease is partially offset by small increases in a number of offices required to improve the management of the Department and to carry out the President's education reform agenda.
The Department has maintained operations in spite of reduced staffing levels in part by relying heavily on automation and private contractors to handle such functions as awarding grants, processing student aid applications, and providing grants and loans to more than 8 million college students. Already the smallest of the 14 Cabinet agencies, the Department minimizes administrative tasks and privatizes functions that can be handled more efficiently by outside contractors. A prime illustration is the use of contracts to operate the Direct Student Loan program.
As shown in the following chart, staff is divided among the Washington, D.C., headquarters, 10 regional offices, and 11 field offices. Approximately 71 percent of the employees are assigned to headquarters, and 29 percent are assigned to the regional and field offices. Most regional and field office employees are in the Student Financial Assistance office, the Office of the Inspector General, and the Office for Civil Rights. Activities include review of lenders, institutions, and guaranty agencies participating in the student financial aid programs, as well as collections on defaulted student loans; audits and investigations of Department programs and operations; and civil rights complaint investigations and compliance reviews.
The 2003 request includes $423.3 million, an increase of $58.5 million, for the Program Administration account, which funds administrative support for most programs and offices in the Department. The increase would provide $22.2 million for staff pay and benefits, including an additional 27 FTE for a total of 2,474 FTE, and $36.3 million for non-pay costs. The non-pay increase includes $12.8 million for renovating the Department's Mary E. Switzer building in Washington, D.C., and $10 million to implement the Data Management Initiative for Elementary and Secondary Programs, which will collect timely data on student achievement and educational outcomes. Other non-pay costs include rent, travel, data collection, evaluations, computer hardware and software support for the staff, and other administrative activities.
In fiscal year 2003 the Department of Education will provide over $67 billion in Federal student aid grants and loans to over 8 million students and parents. In awarding this aid, the Department and its contractors will interact on a daily basis with over 6,000 schools; 3,500 lenders; 36 guaranty agencies; and dozens of accrediting agencies, participants in the secondary market for student loans, and other organizations. Ensuring the smooth operation of the complex array of financial transactions involving these numerous participants in the student financial aid programs—and safeguarding the interests of both students and Federal taxpayers—is perennially the Department's greatest management challenge and its highest administrative priority. Primary responsibility for administering the Federal student financial assistance programs rests with the Office of Student Financial Assistance (SFA) and the Office of Postsecondary Education (OPE).
As noted earlier, funding for student aid management has been provided in previous years through 3 separate accounts: the discretionary Program Administration and Federal Family Education Loan Program (FFEL) accounts and the mandatory Federal Direct Student Loan Program (HEA Section 458). For 2003, the Administration is proposing to consolidate these separate funding streams into a new discretionary Student Aid Administration account that would represent more than 55 percent of the Department's total administrative budget. The request would provide $741.4 million to administer student aid programs in 2003, an increase of $34 million over the comparable 2002 level.
The 2003 Salaries and Expenses request would help implement management improvements and government-wide reforms proposed by the Administration, as reflected in the Department's Blueprint for Management Excellence. The following section describes how individual items in the S&E request support the five priorities in the Blueprint. The major goals and benchmarks for measuring progress in priority areas are shown in text boxes accompanying the description of each priority.
Financial integrity requires accurate and relevant financial reporting systems and processes in order to provide policy makers and managers with timely and accurate financial information. In addition, revenues and expenditures must be properly accounted for and reported on so that reports and data produced by financial management systems will provide reliable information to managers making program and asset-related decisions
Management and internal controls will be adopted and enhanced to reduce the risk of errors and permit effective monitoring of programs and processes. Management controls will ensure that programs achieve their intended results and are protected from waste, fraud, and mismanagement. Internal controls will help ensure effective and efficient Department operations as well as reliable financial reporting.
The 2003 President's budget includes the following requests to support the management improvement priority on financial integrity and management and internal controls:
Education Central Automated Processing System - EDCAPS: The request includes $19.2 million, an increase of $1.9 million over the 2002 level, for the continuing operations and enhancement of the EDCAPS core financial system. This level would support integration of the new Oracle general ledger system with other financial systems; data reconciliation, audit, and preparation of financial statements; and the development of a data mart/warehousing module designed to enhance financial reporting.
Electronic Travel System: The budget provides $654,000 to maintain and enhance the new GELCO web-based travel management system, which in 2002 will replace a travel system residing at the National Finance Center in New Orleans. The new, independently operated system will provide more timely and efficient processing of travel documents. Enhancements for 2003 would include on-line booking and wireless technology capabilities.
Financial Advisor's Contract: The budget includes $3.7 million, the same as the 2002 level, for outside assistance—primarily from Cotton and Company—in the preparation of financial statements, data reconciliation, development of policies and procedures, and other financial management activities.
Grants management Improvement Activities: A $485,000 request would improve the grant-making process through such initiatives as the Grants & Contracts Information website (http://www.ed.gov/offices/OCFO/gcsindex.html), which provides information such as grant award opportunities and grant application forms to the public, and the E-Reader project, which supports off-site grant reviews by allowing field readers to enter evaluations and scores via the internet.
Audit of Financial Statements: The OIG request includes $2.2 million, an increase of $360,000 over the 2002 level, for the mandated audit of the Department's financial statements, which is currently contracted through Ernst and Young. The additional funds would help OIG auditors meet the requirements of the new Financial Audit Manual and support the implementation of the new general ledger system scheduled to come online in 2002.
The Department will improve its financial and management information systems to support the effective management of the student aid programs, following specific criteria provided by the General Accounting Office for reducing student aid risk and removing the programs from the high-risk list. These improvements will ensure that relevant, timely information is available to manage day-to-day operations and provide accountability.
The 2003 budget would fund the following activities in support of the student aid priority:
Creation of Unified Student Aid Administration Account: The Administration proposes to centralize its request for $936.4 million to administer the Federal student aid programs within a unified new discretionary Student Aid Administration (SAA) account. The current student aid administration budget structure—split among multiple mandatory, discretionary, and subsidy accounts—hinders the increased accountability for reducing costs that is at the foundation of the establishment of a performance-based organization to run program operations.
Develop an Activity-Based Budget Formulation System: The Department is developing an activity-based budget formulation process for the unified SAA account. This process will allocate the Department's student aid management expenses to specific business processes to more accurately determine the cost of individual activities or programs, budget administrative funds to each business process, set cost reduction targets, and easily compare actual performance to budget targets.
Common Origination and Disbursement System (SAA Account): This initiative, initially implemented in 2002 and expected to cost $42 million in 2003, allows institutions to access Pell Grant and Direct Loan program funds through a single system, thus simplifying operations, eliminating duplication, and enhancing record-keeping and financial management reporting for both schools and the Department.
Financial Management Systems (SAA account): The budget includes $8.3 million to operate a consolidated Financial Management System for the student aid programs that allows the Department to report financial information and statistics across programs, consolidate redundant processes, and manage cash and funding activities. The new system also will provide Congress and other outside organizations summary and detailed accounting on student aid grant, loan, and operational activities.
National Student Loan Data System Redesign (SAA account): The request provides $7 million to improve performance and reduce operations costs for the National Student Loan Data System (NSLDS), a student-level system centralizing student aid data obtained from schools and guaranty agencies. Upgrading this system, which is used to verify student eligibility and calculate institutional cohort default rates, is a key component of the Department's financial management and program integrity efforts.
Student Aid Data Warehouse (SAA account): This $4 million initiative will integrate standalone student aid data marts into a single data warehouse and standardize data formats, eliminating unnecessary duplication and complex reconciliation requirements.
The Department's human capital strategy will transform the agency by streamlining operations in order to bring work closer to its customers: taxpayers, States, school districts, and schools. This will be accomplished by reducing the number of managers, delayering management levels, increasing competitive sourcing, and improving decision-making.
The request includes the following activities in support of the priority on human capital:
Training and management development: The request would provide $14.4 million for training of Department employees, an increase of $1.7 million over the 2002 level. Training will support management goals and focus on several key areas identified through a needs assessment, including financial management, grants management, leadership development, and advanced information technology training.
Organizational improvement and human capital investment: The budget includes $165,000, up from $105,000 in 2002, for contractual assistance to provide the Department with expertise in a variety of human capital areas, including recruiting and retention issues, business reengineering, and teambuilding efforts.
In order to meet the President's Management Agenda goals of an expanded electronic government, the Department will improve the management of its IT investments, protect the integrity and confidentiality of data, improve data management, and increase the use of technology in serving customers.
The following activities would support the IT management priority in 2003:
Internet and intranet development: The budget includes $4.2 million for the continued expansion and operation of the Department's Internet and intranet sites, an increase of $500,000 over the 2002 level. These sites provide a critical communications link to both the Department's internal and external customers, including grantees, students, educational institutions, government agencies, and contractors. The increase would support the integration of more than 200 Department-funded sites into a single customer-oriented portal.
Data standardization and coordination: A $2.1 million request, up by $257,000 from 2002, would support this effort to eliminate multiple data collection efforts that are a burden to the education community and replace them with a streamlined system for collecting and disseminating data. The new system will improve the quality of Department information and facilitate the sharing of information between the Department and States, localities, school districts, and individual schools—a key requirement for ensuring that decisionmakers have the data needed to hold schools accountable for results.
Information technology architecture: The budget would provide $936,000, an increase of $36,000 over the 2002 level, to continue support for the Information Technology Architecture project, which will develop a blueprint for information technology development and management that will guide selection and implementation of IT Department-wide. The IT architecture, which will govern IT investment decisions, is a key requirement of Federal technology statutes.
Network operations and software licensing: The request includes $31.7 million for network maintenance, operations, and improvements, an increase of $3.3 million over the 2002 level. This project provides end-user support, as well as maintenance and operations for the local area network system, which includes headquarters and all of the regional offices. Most of the increase would be used to improve customer support and enhance data back-up capabilities.
Web-based data collection system: The budget includes $2.4 million help the Office for Civil Rights develop a Web-based system to collect data for its Elementary and Secondary School Civil Rights Compliance Report, thereby reducing the data reporting burden on recipients.
Asset management system: A $1.5 million request, up $555,000 from 2002, would support the development of a centralized asset management process system. The Asset Management project—which will help the Department manage IT assets, prevent the purchase of incompatible and unnecessary equipment, and control theft of government property—will help improve accountability and customer service and support the Department's efforts to obtain clean audit opinions.
IT security: The request includes level funding of $1.9 million for efforts to strengthen key aspects of the Department's IT security, including Department-wide security awareness and training, security reviews and implementation of corrective action plans, development of disaster recovery plans, and electronic signature authority for Department information and services.
System security audits: The budget provides $300,000, the same as in 2002, to audit the Department's security controls for its critical information systems, as required by the Government Information Security Reform Act. Such audits are increasingly important as the Department increases the number of paperless transactions with its customers.
Continuity of Operations Project: A $3.3 million request, up $267,000 from the 2002 level, would support the development and implementation of a comprehensive plan to ensure the continuity of essential functions in the event of an emergency or disaster, as required by a Presidential directive. Funds would support the completion of a secondary data processing, or "Warmsite Support Center," in Atlanta, as well as other project maintenance.
Paperwork Elimination: The Government Paperwork Elimination Act (GPEA) requires the Department to transact business electronically whenever possible. The 2003 budget would provide $1.2 million, an increase of $865,000, to support efforts to comply with this law, which will require a significant reengineering of many business processes within the Department.
The Department will place a heavy emphasis on monitoring results and measuring progress as it performs its mission. The recipients of Department funds, Department employees, and Department contractors will be held responsible for their performance in relation to achieving the goals and objectives of the Department. The Department will work with grantees and contractors to develop performance standards that will yield results called for in the long-range strategic plan. Internally, measurement of employee performance will be linked to how well goals are being met.
The following activities would support the "Accountability for Results" priority in 2003:
Results-based data management: The request includes $10 million for the new Performance-Based Data Management Initiative, which will focus elementary and secondary education program management and reporting on student achievement. The initiative will support internet-based collection of timely data on student achievement and educational outcomes, reduction of existing reporting burdens on States and school districts, and expansion of the use of educational results to identify performance trends and inform management, budget, and policy decisions.
Higher education internet-based support and program performance reporting/information and communication system: Level funding of $725,000 would support the integration of databases to enable program managers and staff to collect and analyze Higher Education program data so that information can be reported and disseminated to internal and external customers in an efficient manner. Funds will also be used to develop and maintain a Web-based program performance system for Higher Education programs.
Achievement levels: An $800,000, up from $500,000 in 2002, would support studies on improving the way student performance standards are set and the ways in which achievement levels are reported, used, and interpreted.
The Department's Office for Civil Rights (OCR) investigates discrimination complaints, conducts compliance reviews, monitors corrective action plans, and provides technical assistance on civil rights issues. The 2003 request for OCR is $89.7 million, an increase of $9.8 million over the 2002 level. About $65.5 million of the OCR budget is for staff pay and benefits for its 714 FTE; the remaining $24.2 million covers overhead costs as well as computer equipment, data analysis and reporting activities, travel, staff training, and other contractual services. Over half of the requested increase, $5.4 million, is needed for pay raises and proposed legislation that requires agencies to pay for the full accruing costs of retirement for Civil Service Retirement System employees as well as health-care benefits for retirees. The remainder of the increase, $4.4 million, is primarily for the implementation of a web-based data collection system for OCR's Elementary and Secondary School Civil Rights Compliance surveys ($2.4 million) and GSA-mandated moves ($1.4 million).
OCR's current civil rights enforcement program, enhanced by increased information-sharing, exemplifies this Administration's belief that the "The federal role in education is…to serve children," and supports the President's No Child Left Behind initiative by seeking to strengthen elementary and secondary schools and to close the achievement gap. In 2003, OCR plans to build on the strengths of its strategic and collaborative civil rights enforcement program, which include timely and legally sufficient complaint resolution, effective compliance reviews, preventive policy and technical assistance, results-oriented monitoring, and reduction of the data reporting burden on recipients. In addition, OCR will continue to coordinate civil rights initiatives with ED program components and with internal and external Federal agencies.
The Office of the Inspector General (OIG) conducts audits and investigations of the Department's programs and activities to help ensure accountability for taxpayer-provided funds and to identify management improvements. The 2003 request for the OIG is $42.4 million, an increase of $3.6 million over 2002. Approximately 69 percent of this amount, or $29.3 million, is for personnel compensation and benefits to support a staffing level of 285 FTE. A little more than half of the remaining $13.1 million in non-personnel costs is for OIG's administrative and overhead services, such as rent, postage/fees, telecommunications, payroll processing, and information technology services contracts. Of the requested increase, $2.6 million is needed for pay raises and proposed legislation that requires agencies to pay for the full accruing costs of retirement for Civil Service Retirement System employees as well as health-care benefits for retirees. The remainder of the increase is for travel, audits of the Department's financial statements, and information technology services and equipment.
The requested budgetary resources will allow the OIG to engage in the types of activities that will enable the Office to reach these goals and at the same time provide support to the Department in its mission to ensure equal access to education and promote educational excellence throughout the Nation. The office continues to focus the majority of its efforts and resources on Student Financial Assistance programs.
This page was last updated 02/04/02 (smj)