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FY 2005 Budget Summary
• Summary of the 2005 Budget
• Elementary and Secondary Education
• Special Education and Rehabilitative Services
• Vocational and Adult Education
• Student Financial Assistance
• Higher Education Programs
• Institute of Education Sciences
• Programs Proposed for Elimination
Current Page Departmental Management
• Appendices

Fiscal Year 2005 Budget Summary — February 2, 2004

Archived  Information

Section IV. Departmental Management

Overview

(BA in millions)

  2003 2004 2005
Request
 
Program Administration $409.91 $420.4 $429.8
Office for Civil Rights 84.72 88.3 92.8
Office of the Inspector General 40.7 46.6 50.6
Student Aid Administration 704.73,4,5 716.74,5 739.65
Other6 11.3 13.9 13.6
Total
1,251.3
1,285.9
1,326.4

Full-time equivalent employment (FTE)7

  2003 2004 2005
Request
 
Program Administration 2,356 2,356 2,349
Office for Civil Rights 672 663 663
Office of the Inspector General 281 285 302
Student Aid Administration 1,1359 1,14010 1,140
Other6 35 43 41
Total
4,479
4,487
4,495
   1Adjusted for comparability. Excludes $13.749 million in 2003 transferred from the Student Aid Administration account to cover obligations made under the continuing resolutions in effect prior to enactment of the fiscal year 2003 appropriation on February 20, 2003.
   2Excludes $1.038 million in unobligated funds that would otherwise lapse on September 30, 2003, which were transferred to the Education for the Disadvantaged account pursuant to Section 3614 of the Emergency Supplemental Appropriations Act, 2003.
   3Adjusted for comparability. Includes $13.749 million transferred from the Student Aid Administration account to the Program Administration account and $11.825 million transferred from the Student Aid Administration account to the Federal Family Education Loans account to cover obligations made under the continuing resolutions in effect prior to enactment of the fiscal year 2003 appropriation on February 20, 2003.
   4Adjusted for comparability. Includes $795 million in mandatory funds in 2003 and 2004 for the Federal Direct Student Loans Program account.
   5Excludes $195 million in mandatory funds in 2003, 2004, and 2005 for payments to guaranty agencies, provided in the Federal Direct Student Loans Program account.
   6Includes small Federal Credit accounts and S&E activities in program accounts. The budget authority excludes Occupational and Employment Information grants. Excludes $1.05 million in 2003 for National Institute for Literacy grants.
   7Actual FTE usage in 2003; maximum target for 2004 and 2005.
   8Adjusted for comparability. Excludes 104 FTE funded by a transfer of Student Aid Administration account budget authority to cover obligations made under the continuing resolutions in effect prior to enactment of the fiscal year 2003 appropriations on February 20, 2003.
   9Adjusted for comparability. Includes 104 FTE funded by a transfer of budget authority to the Program Administration account and 129 FTE funded by a transfer of budget authority to the Federal Family Education Loans account to cover obligations made under the continuing resolutions in effect prior to enactment of the fiscal year 2003 appropriations on February 20, 2003. Also includes 589 FTE funded by the Federal Direct Student Loans account.
   10Adjusted for comparability. Includes 607 FTE funded by the Federal Direct Student Loans Program account.


This pie chart shows the percentage of FY 2005 salaries and expenses costs for the following categories: Contracts, 48%; Personnel Costs, 36%; Overhead (Rent and Mail), 7%; and Other Non-Personnel, 9%.

The 2005 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 $84 billion in grants and loans each year to nearly 10 million postsecondary students.

The Department is requesting $1.33 billion for its discretionary S&E budget in 2005, an increase of $40 million over the 2004 level. Included in the request is $473 million for payroll costs, which reflects the 1.5 percent proposed government-wide pay raise in 2005, and historically based increases for employee benefits.

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 2005 is $853 million.

Department administrative costs continue to constitute a small fraction of the total education budget. For example, even with the increase requested for 2005, the discretionary administrative budget would be approximately 2 percent of the Department's total discretionary budget.

The 2005 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 successfully implement the No Child Left Behind Act signed into law in January 2002.

To carry out the President's Management Agenda, the Department's S&E budget request places a heavy emphasis on the following high priority items:

  • Developing and maintaining financial integrity and management and internal controls;

  • Modernizing the student financial assistance programs and reducing their high-risk status;

  • Expanding strategies for using human capital;

  • Identifying opportunities for competitive sourcing;

  • Achieving an accountability of results culture, including the integration of program performance and budgeting; and

  • Leveraging the contributions of faith-based and community organizations.

Department Employment

This bar chart shows Department staffing levels (Full-time equivalent (FTE)) from 1980 through the 2005 President's Request. The 2005 staffing request of 4,495 FTE remains 40 percent below the level of 7,528 FTE when the Department was created in 1980.

The 2005 staffing request of 4,495 FTE, a modest increase of 8 FTE from the planned 2004 level, remains 40 percent below the level of 7,528 FTE when the Department was created in 1980. The increase reflects additional staff in the Office of the Inspector General and the Institute of Education Sciences, partially offset by decreases in the Office of Postsecondary Education, Office of Management, Office of the Chief Information Officer, and Office of the Chief Financial Officer. The decrease in the Office of Postsecondary Education is due to a decrease in the workload for the CHAFL program. The decreases in the latter three offices are the result of efficiencies realized through the Department's One-ED process.

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 almost 10 million college students. Already the smallest of the 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 72 percent of the employees are assigned to headquarters, and 28 percent are assigned to the regional and field offices. Most regional and field office employees are in the Federal Student Aid office, the Office of the Inspector General, and the Office for Civil Rights. Regional and field office 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.

This map shows the location of the Departments 10 regional offices and 11 field offices. Approximately 28 percent of the Department's staff are assigned to the regional and field offices, and 72 percent are assigned to headquarters.

Program Administration

The 2005 request includes $429.8 million, an increase of $9.4 million from the 2004 level, for the Program Administration account, which funds administrative support for most programs and offices in the Department. The request includes $253.3 million for the 2,349 FTE requested, and $176.5 million for non-pay costs. The non-pay request includes $10 million to continue implementation of the Performance Based Data Management Initiative, 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.

Student Aid Administration

In fiscal year 2005 the Department of Education will provide nearly $84 billion in Federal student aid grants and loans to 10 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 Federal Student Aid and the Office of Postsecondary Education.

Funding for student aid management has been provided in previous years through 2 separate accounts: the discretionary Student Aid Administration account and the mandatory Federal Direct Student Loan Program (HEA Section 458). For 2005, the Administration is renewing its proposal to consolidate these separate funding streams into a discretionary Student Aid Administration account that would represent more than 55 percent of the Department's total administrative budget. The request would provide $739.6 million to administer student aid programs in 2005, an increase of $22.9 million over the 2004 level.

Management Improvement and Government Reform

To carry out the President's Management Agenda and to achieve its Strategic Plan goal of achieving management excellence, the Department is focusing on the following high priority items:

Priority: Financial Integrity/Management and Internal Controls
Goal Accomplishments

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 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.

  • Achieved clean opinions on the audit of the Department's 2002 and 2003 financial statements.

  • Created a monthly "Executive Fast Fact Sheet" that assists offices in managing programs based on available financial data.

  • Met accelerated audit schedule one year ahead of schedule.

  • Began implementing an action plan to correct material weaknesses and reportable conditions.
Priority: High-Risk Status of Student Aid Programs
Goal Accomplishments

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.

  • Drafted an updated 5-year plan with improved system integration and default management strategies.

  • Received clean audit opinions on the financial statements for fiscal years 2002 and 2003.

  • Completed a high level design for common identifiers for schools and borrowers to be used by FSA and partners.

  • Awarded a Direct Loan servicing contract that reduces cost by approximately $1 billion over 10 years, compared to the legacy contracts.

  • Identified schools for program reviews through data-mining of verification information.

  • Played a key role in the introduction of legislation that would allow the Department to match data with the IRS and dramatically reduce fraud and error in the Pell Grant program.
Priority: Using Human Capital
Goal Accomplishments

The Department's human capital strategy will transform the agency by streamlining operations in order to bring work closer to its customers: States, school districts, schools, institutions of higher education, and citizens. This will be accomplished by increasing competitive sourcing and improving decision-making.

  • Progressed with Department-wide recruitment plan, by providing detailed workforce analyses throughout the agency and consulting with senior managers on workforce needs.

  • Introduced intranet-based training on employee development plans.

  • Accelerated hiring by expanding the capacity of EDHIRES for applicants outside the Department.

  • Developed a policy on redeployment of employees who could be displaced as a result of competitive sourcing activities.

  • Initiated grants reengineering effort.

  • Used fewer FTE's in 2003 than in any year over the last decade, while achieving significant management improvements (e.g. a clean audit opinion and the Blueprint for Management Excellence) and implementing the new authorities of the No Child Left Behind Act.
Priority: Competitive Sourcing
Goal Accomplishments

In line with the goals of the President's Management Agenda, the Department will identify new opportunities for competitive sourcing in order to augment its capabilities. To do so, the Department developed its "One ED" plan, which is the Department's blueprint for finding the best ways to perform work.

  • Made competitive sourcing decisions on "One ED" Phase I business process; initiated competitive sourcing for Human Resources and Payment Processing functions; and developed in-house solutions for re-engineering OCFO Internal Audit/Post Audit Review, OIG Audit, OPE Policy, OGC Legal Advice and Regulatory Review, and OCR Case Resolution functions.

  • Met with employees affected by competitions, and began to train employees responsible for developing employee proposals.
Priority: E-Government
Goal Accomplishments

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.

  • Established procedures for all IT investments to be reviewed internally.

  • Worked with other agencies to implement the E-Grant initiative, designed to streamline and simplify grants business processes.

  • Completed project manager training to ensure that staff can effectively manage IT cost and schedule issues.

  • Completed certification and accreditation of all high and medium risk systems.

  • Eliminated IT security issues as material weaknesses in the 2003 financial audit statement.

  • Developed a "to be" vision for its enterprise architecture that is consistent with Federal enterprise architecture principles.
Priority: Integration of Program Performance and Budgeting
Goal Accomplishments

The Department will seek funding for programs that work, and will seek to reform or eliminate programs that do not. The administrative allocations will be linked to the Department's Strategic Plan to ensure that high priority activities are funded. The Department will have standard, integrated budgeting, performance, and accounting information systems at the program level that will provide timely feedback for management.

  • Included in budget justifications the salaries and expenses costs associated with each program, and aligned budget authority to strategic goals and objectives.

  • Assisted States in completing No Child Left Behind Act accountability plans.

  • Began collecting data for the Performance-Based Data Management Initiative.

  • Used revised performance measures, Program Assessment Rating Tool (PART) analyses, and other available performance information in the 2005 budget formulation process.

  • Worked with Congress to ensure that upcoming Special Education and Adult Education reauthorizations will improve accountability.
Priority: Faith-Based and Community Initiative
Goal Accomplishments

The Department will leverage the contributions of community- and faith- based organizations to increase the effectiveness of its programs.

  • Coordinated conferences and workshops around the country in support of the Initiative.

  • Implemented the novice grantee project in all programs for which community- and faith-based organizations are eligible.

  • Equipped regional representatives of the Department with outreach tools for community- and faith-based organizations.

Office for Civil Rights

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 2005 request for OCR is $92.8 million, an increase of $4.5 million over the 2004 level. About $64.5 million of the OCR budget is for staff pay and benefits for its 663 FTE; the remaining $28.3 million covers overhead costs as well as computer equipment, data analysis and reporting activities, travel, staff training, and other contractual services. The non-personnel request is an increase of $3.5 million from 2004, primarily for increases for rent ($1.4 million), security upgrades ($700,000), and OCR's share of the Department's centralized IT network ($500,000).

The requested funds will ensure essential program support to resolve complaints of discrimination filed by the public and to ensure that institutions receiving Federal financial assistance are in compliance with the civil rights laws enforced by OCR. The request also will provide resources for collaboration with educational experts so that the results of scientifically based research in the areas of education and civil rights are incorporated into OCR's enforcement activities, and for technical assistance to recipients, parents and students to informally address civil rights concerns and to prevent problems from arising in the future. OCR provides extensive information on its Internet site, including self-assessment materials for recipients, data on school characteristics, brochures, and other information for the public.

Office of the Inspector General

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 2005 request for the OIG is $50.6 million, an increase of $4 million over the 2004 level. Approximately 66 percent of this amount, or $33.2 million, is for personnel compensation and benefits to support a staffing level of 302 FTE, an increase of 17 FTE above the 2004 level. The additional FTE are for the cyber security team, which concentrates on computer intrusions and identity theft; and for the establishment of a team to combat fraud and abuse within targeted areas of student financial assistance programs.

The request includes $2.2 million for the mandated annual audit of the Department's financial statements. The scope of the audit will include the examination and analysis of account balances, review of applicable financial systems, and evaluation of internal controls and compliance with significant laws and regulations. In addition, the budget would provide $1.7 million for a study to assess the quality of independent audits of grantees produced under the Single Audit Act. The study would statistically measure audit quality to determine whether Federal agencies can rely on single audits to support Federal program expenditures and identify erroneous payments.

Programs Proposed for Elimination  Table of contents  Appendices

For further information contact the ED Budget Service.

This page last modified—February 2, 2004 (mjj).