Fiscal Year 2009 Budget Summary February 4, 2008
Section IV. Departmental Management
History and Background
Congress established the Department of Education as a Cabinet level agency in 1980.
Today, the Department operates programs that touch on every area and level of
education. The Department's elementary and secondary programs annually serve more
than 14,000 school districts and some 56 million students attending more than 97,000
public schools and 28,000 private schools. Department programs also provide grant,
loan, and work-study assistance to about 11 million postsecondary students.
Despite its broad reach, the Department's role remains a limited one, reflecting both the
history and structure of the American education system, in which education is primarily a
State and local responsibility. It is States and communities, as well as public and private
organizations of all kinds, that establish schools and colleges, develop curricula, and
determine requirements for enrollment and graduation. The structure of education
finance in America reflects this predominant State and local role. Of the
estimated $1 trillion spent annually on education at all levels, the large majoritynearly 91 percent at the elementary and secondary levelcomes from State, local,
and private sources.
Moreover, in creating the Department of Education, Congress reinforced this limited role
by prohibiting the new agency from exercising "any direction, supervision, or control over
the curriculum program of instruction, administration, or personnel of any educational
institution, school, or school system."
In general, the Department of Education is responsible for administering education
programs authorized by Congress and signed into law by the President. This
responsibility involves developing regulations and policy guidance that determine exactly
how programs are operated, determining how program funds are awarded to recipients,
ensuring that programs are operated fairly and in conformance with both authorizing
statutes and laws prohibiting discrimination in federally funded activities, collecting data
and conducting research on education, and helping to focus attention on education
issues of national importance.
Most federal funds for education are distributed using three methods: a statutory
formula based on certain eligibility requirements, such as the number of low-income
students in a school district; a competitive process aimed at identifying the most
promising proposals or projects targeting a particular educational purpose; or financial
need, such as the ability of a student or family to pay for college.
Key programs administered by the Department include Title I Grants to Local
Educational Agencies, which in fiscal year 2008 will deliver almost $14 billion to help
20 million students in high poverty schools meet State proficiency standards; Individuals
with Disabilities Education Act Part B Grants to States, which will provide nearly
$11 billion to help States and school districts meet the special educational needs of
students of all ages with disabilities; Federal Pell Grants, which will make available
almost $16 billion in grant assistance to poor students enrolled in postsecondary
institutions; and the postsecondary student loan programs, which will support over
$70 billion a year in new low-interest loans to help students and families pay for college.
While the Department's programs and responsibilities have grown substantially over the
years, the agency itself has not. In fact, with a planned fiscal year 2008 level of 4,169
full-time equivalent employees, the Department's staff is nearly 45 percent below the
7,528 employees who administered Federal education programs in several different
agencies prior to the creation of the Department in 1980. As a result, the Department has
the smallest staff of any Cabinet agency, yet administers the third-largest discretionary
budget. This small, efficient staff, along with many management improvements over the
years, helps limit administrative costs to approximately 2 percent of the Department's
budget, ensuring that the agency delivers about 98 cents on the dollar in education
assistance to States, school districts, postsecondary institutions, and students.
The 2009 request for administration, described in detail below, would help the
Department continue this record of effective and efficient management of Federal
(BA in millions)
|Office for Civil Rights
|Office of the Inspector General
|Student Aid Administration
Full-time equivalent employment (FTE)
|Office for Civil Rights
|Office of the Inspector General
|Student Aid Administration
1Includes $2.1 million in 2007, $2.1 million in 2008, and $7.9 million in 2009 for the Building Modernization activity.
2Includes a transfer of $1,464,060 from Student Aid Administration, as authorized by Section 104 of the Continuing Appropriations Resolution 2007.
3Reflects enactment of the Higher Education Reconciliation Act of 2005 (Title V-IIIA of the Deficit Reduction Act of 2005), which reauthorizes HEA section 458 and requires the Congress, beginning in fiscal year 2007, to appropriate discretionary funds for Federal student aid administrative costs, which were formerly available as mandatory funds.
4Reflects a rescission of $500,000, enacted in Section 6608 of P.L. 110-28, the U.S. Troops Readiness, Veterans' Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007, enacted May 25, 2007, and transfer of $1,464,060 to the Office of the Inspector General, as authorized by Section 104 of the Continuing Appropriations Resolution, 2007.
5Includes small Federal Credit Administration accounts and S&E activities in program accounts.
6Actual FTE usage in 2007; target for 2008 and 2009.
Salaries and Expenses Overview
The 2009 budget request for Salaries and Expenses (S&E) will pay the costs of staff,
overhead, contracts, and other activities needed to administer and monitor the
Department's educational assistance programs and provide almost $95 billion in grants
and loans to more than 11 million postsecondary students and parents.
The Department is requesting $1.33 billion for its discretionary S&E budget in 2009, an
increase of $69 million over the 2008 level. This includes $535 million for payroll costs,
which would rise an estimated $18 million to pay for the proposed 2.9 percent
Governmentwide pay raise in 2009 as well as employee benefit increases.
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 2009 is $796 million.
More than two-thirds of the requested increase in 2009 is for three activities:
Pay raises--both the enacted 3.5 percent raise for 2008 and the proposed 2.9
percent 2009 pay raise;
The one-time effect of accelerating computer network and publication
dissemination contract costs; and
General Services Administration (GSA) mandated regional office moves as well
as inflationary increases in services provided by GSA and the Federal Protective
These increases in "fixed" costs for 2009 mean that funding below the request level
would require cuts elsewhere in the Department's budget, such as reduced staffing.
Other requested increases would support the administration of the National Assessment
of Educational Progress (NAEP), carrying out the statutorily required Civil Rights Data
Collection, and improving the Department's grant monitoring efforts.
Department administrative costs continue to constitute a small fraction of its total budget.
For example, even with the increase requested for 2009, the discretionary administrative
budget would be approximately 2 percent of the Department's total discretionary
appropriation and less than 1 percent of all grants and loans made by the Department last
The 2009 staffing request of 4,179 FTE, an increase of 10 FTE from the planned 2008
level, is 44 percent below the level of 7,528 FTE when the Department was created in
1980. The additional 10 FTE in 2008 are for the following activities in the Office of the
5 FTE in Audit Services to conduct oversight in determining whether Department
programs and operations are in compliance with applicable laws and regulations,
are operating efficiently, and are achieving program goals.
5 FTE in Investigation Services to conduct a program of compliance audits and
investigations focusing primarily on institutions (lenders, guaranty agencies,
servers, and schools) participating in the student financial assistance programs.
Despite steadily reducing its workforce, the Department has improved its operational
performance, 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 11 million college students. Already the smallest of the
Cabinet agencies, the Department streamlines administrative tasks and privatizes
functions that can be handled more efficiently by outside contractors. A prime example
of this management approach is the effective use of contracts to operate the Federal
Direct Student Loan program.
As shown in the following chart, staff is divided among the Washington, D.C.
headquarters, 10 regional offices, and 10 field offices. Approximately 76 percent of the
employees are assigned to headquarters, and 24 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.
The Program Administration account provides administrative support for most programs
and offices in the Department. The 2009 request totals $444.4 million, an increase of
$33.1 million from the 2008 level. The budget request includes $274.6 million for
personnel compensation and benefits to support 2,095 FTE, an increase of $7.9 million
from the 2008 level.
Non-personnel costs 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 2008 is $169.8
million, an increase of $25.2 million from 2008. The increase is primarily for rental
payments, the Department's centralized information technology network, dissemination
of print materials produced by the Department, increased monitoring of grantees,
relocation of Department employees in regional offices, and IT enhancements such as
developing a system designed to identify and monitor potential high-risk grantees.
Student Aid Administration
The Department will administer nearly $95 billion in new Federal student aid grants and
loans to more than 11 million students and parents in fiscal year 2009. In addition, the
Department will support the consolidation of an estimated $43 billion in loans made in
earlier years. In providing this essential financial assistance to postsecondary students
and their families, the Department and its contractors will interact on a daily basis with
approximately 6,200 schools; 3,100 lenders; 35 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 and participants involved 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 one of its highest administrative
priorities. Primary responsibility for administering the Federal student financial
assistance programs rests with Federal Student Aid (FSA) and the Office of
Postsecondary Education (OPE).
The Student Aid Administration account represents 54 percent of the Department's total
administrative budget. The request would provide $714 million to administer student aid
programs in 2009, an increase of $18.2 million from the 2008 level. Of the total request,
$143.6 million is for staff pay and benefits for 1,140 FTE and $464.0 million is for
information technology contracts, primarily for the processing of student aid grant and
loan applications; payments to students, schools, guaranty agencies, and lenders; and to
collect defaulted loans.
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 2009 request for OCR is $101 million, an increase
of $11.4 million over the 2008 level. About $75 million of the OCR budget is for staff
pay and benefits for its 629 FTE; the remaining $26 million covers overhead costs as well
as computer equipment, data analysis and reporting activities, travel, staff training, and
other contractual services.
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 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 2009 request for the OIG is
$54.5 million, an increase of $3.7 million over the 2008 level. Approximately 68 percent
of this amount, or $37.3 million, is for personnel compensation and benefits to support a
staffing level of 280 FTE.
The non-personnel request of $17.2 million includes $2.1 million to contract 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.
Programs Proposed for Elimination
For further information contact the ED Budget Service.
This page last modifiedFebruary 4, 2008 (mjj).