Fiscal Year 2012 Budget Summary February 14, 2011
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 approximately 14,000 school
districts and 60 million students attending more than 98,000 public schools and 29,000 private
schools. Department programs also provide grant, loan, and work-study assistance to nearly 16
million postsecondary students.
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 one of 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 an assessment of financial need, such as the ability
of a student or family to pay for college.
Key programs administered by the Department include Title I of ESEA, which under the
President's 2012 request would deliver $14.8 billion to help 20 million students in high poverty
schools make progress toward State college- and career-ready standards; Individuals with
Disabilities Education Act Part B Grants to States, which would provide $11.7 billion to help
States and school districts meet the special educational needs of students with disabilities;
Federal Pell Grants, which would make available $36 billion in need-based grant assistance to
students enrolled in postsecondary institutions; and the postsecondary student loan programs,
which would help provide roughly $124 billion a year in low-interest, new direct loans to help
students and families pay for college.
The Department's programs and responsibilities have grown substantially over the past decade.
There have been fundamental education reforms such as the No Child Left Behind Act of 2001
and the Recovery Act, which authorized the Race to the Top and Investing in Innovation Funds.
There also has been postsecondary student aid legislation, such as the Ensuring Continued
Access to Student Loans Act of 2008 (ECASLA), which ensured uninterrupted access by
students to federal student loans throughout the recent financial crisis, and the Student Aid and
Fiscal Responsibility Act (SAFRA), which ended Federal subsidies to private lenders and
expanded overall postsecondary student aid opportunities.
Internal administration has also become more complex. Laws and Presidential directives such
as Homeland Security Presidential Directive 12 and the Federal Information Security
Management Act of 2002, have required significant resources to address physical and
information security technology issues. There has been an enhanced focus from the Office of
Management and Budget on prudent financial management through instruments such as OMB
Circular A-123 on internal controls. Finally, the Department has needed to devote more
resources to information technology management (e.g., OMB Exhibits A-53 on IT investment
portfolio and A-300 on the management of capital assets). Contracts to perform routine tasks
such as processing applications for student aid (FAFSA) and loan originations have increased
with the demand for college student aid.
Despite the dramatic increase in its workload over the past decade, the Department has been
able to hold its administrative expenses down by reducing headcount and improving its
acquisition and financial management. The following chart compares the cumulative percentage
increases, from 2000 to 2010, of the Department's discretionary budget, Direct Loan originations,
and FAFSA applications, with the Department's total full-time equivalent (FTE) usage.
Salaries and Expenses Overview
(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
|Education Jobs Fund
1Includes $8.2 million in 2010, $8.2 million in 2011, and $2.7 million in 2012 for Building Modernization.
2Excludes $123.6 million in 2010, $208.9 million in 2011, and $246.8 million in 2012 in Mandatory funds.
3Includes small Federal Credit Administration accounts and S&E activities in program accounts.
4Actual FTE usage in 2010; target for 2011 and 2012.
The 2012 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. The Department of Education has the smallest staff of the 15 Cabinet
agencies, but its program budget and administrative workload have grown in recent years. Its
discretionary budget alone is the third largest, behind only the Department of Defense and the
Department of Health and Human Services. In addition, the Department makes over
$120 billion in new loans annually, so that only 1 percent of its yearly budget is used for
administration. Yet, when adjusted for inflation, the Department of Education's S&E budget is
not significantly higher than it was 10 years ago, and FTE has declined by 12 percent.
The Department is requesting $1.759 billion for its S&E budget in 2012, an increase of
$260 million over the 2011 Continuing Resolution level. This includes $622 million for payroll
costs and $1.137 billion in non-payroll costs. The Department's S&E budget also includes
$247 million in mandatory funding in 2012 to pay for Not-For-Profit servicing costs.
The requested $260 million increase is focused mainly on servicing and other student aid
systems costs necessary to achieve approximately $67 billion in savings over the next ten years,
according to CBO estimates, by transitioning all federal student loan originations to the Direct
Loan Program. The Department is also requesting additional FTE to manage the increased
Direct Loan volume and to increase its program oversight in response to OIG and GAO audit
reports. In addition, the Department is requesting essential funding for fixed cost increases such
as rent and guard services, improving its acquisition system , and providing technical assistance
to States. The following chart provides a breakout of the requested increase showing that 63
percent of the administrative funding increase is related to student aid delivery and servicing.
The 2012 request includes funding for 4,422 FTE, a net increase of 70 FTE from the 2011
Continuing Resolution level of 4,352 FTE. In addition, 29 FTE will be funded by Recovery Act
funds in 2012; the 2011 Continuing Resolution level includes 31 FTE funded by Recovery Act
funds and 7 FTE funded by the Education Jobs Fund. The following chart shows that the
Department has restrained its FTE increases despite significant increased programmatic
responsibilities created by ECASLA and SAFRA. In the past 5 years, FAFSA applications
have risen over 50 percent and the number of borrowers serviced has more than doubled while
the Department's Student Aid Administration FTE has only risen 3 percent.
The 2012 request includes an additional 20 FTE for Federal Student Aid primarily due to
additional oversight and compliance responsibilities of the additional servicing contracts.
In addition to the student aid increases, the Department is seeking eight new FTE to achieve other
high priority performance goals. Efforts include providing technical assistance to States to help
achieve education reform; enhancing and increasing the Department's program evaluations; and
administering the new Workforce Innovation Fund, in conjunction with the Department of Labor.
The 2012 Budget also provides 12 FTE for the Office for Civil Rights to ensure successful
management of OCR's enforcement programs, priorities and complaint resolution. In fiscal
year 2010, OCR received 6,933 complaints, a 9 percent increase from fiscal year 2009the
largest number of complaints ever received by the agency.
The Department also is requesting 30 additional FTE for the Office of Inspector General.
Additional auditors and investigators are needed to perform a larger number of audits and to
conduct broader investigations as OIG's responsibilities grow to cover Recovery Act, Race to
the Top, and Investing in Innovation programs, as well as increased oversight of guaranty
agencies, Direct Loans, and distance education. The additional auditors and investigators,
supported by additional Information Technology Audits and Computer Crime Investigations staff,
will allow OIG to expand reviews of student loan programs.
As shown in the following chart, staff is divided among the Washington, D.C. headquarters,
11 regional offices, and 12 field offices. Most regional and field office staff are in Federal
Student Aid (FSA), the Office of the Inspector General (OIG), and the Office for Civil Rights
(OCR). The FSA regional office personnel conduct reviews of lenders, institutions, and guaranty
agencies participating in the student financial aid programs, and perform debt collection activities
on defaulted student loans. OIG staff conduct audits and investigations of Department programs
and operations. OCR investigates civil rights complaints and conducts civil rights compliance
The Program Administration account provides administrative support for most programs and
offices in the Department. The 2012 request totals $479 million, an increase of $22.8 million
from the 2011 CR level. The request includes $300.6 million for personnel compensation and
benefits to support 2,142 FTE, an increase of $627,000 and 8 FTE from the 2011 CR level.
Non-personnel costs cover such items as travel, rent, mail, telephones, utilities, printing,
information technology, contractual services, equipment, supplies, and other services. The total
request for non-personnel activities in 2012 is $178.4 million, an increase of $22.2 million from
the 2011 CR level. The increase is primarily for technical assistance to States, rental payments,
increased spending for physical security for buildings and IT security, continuing operations and
enhancements of EDCAPS, the Department's core financial system, and continuing operations
of EDUCATE, the Department's centralized information technology network and
Student Aid Administration
The Student Aid Administration account provides funds to administer the Federal student
financial assistance programs authorized under Title IV of the Higher Education Act (HEA) of
1965, as amended. The Title IV programs, which provide funds to help students and families
pay for the cost of education beyond high school, collectively represent the Nation's largest
source of financial aid for postsecondary students. This account administers a range of functions
across the student aid lifecycle, including: education for students and families about the process
for obtaining aid; processing millions of student financial aid applications; disbursing billions of
dollars in aid; insuring billings of dollars in existing loans; and servicing tens of millions of loans.
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 one of the Department's greatest management challenges 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).
During the 2009-2010 award year, Federal Student Aid delivered or supported the delivery of
approximately $142 billion in grant, work-study, and loan assistance to almost 12.8 million
postsecondary students and their families. These students attended approximately 6,200 active
institutions of postsecondary education accredited by dozens of agencies. Students received
loans from approximately 2,900 lenders with 33 agencies.
The enactment of SAFRA ended the origination of new loans under the FFEL program and
required all new loans to be originated through the Direct Loan (DL) program and serviced by the
Department of Education effective July 1, 2010. Although all new lending will be through the DL
program, lenders and guaranty agencies continue to service and collect outstanding loans from
the FFEL portfolio. In addition, SAFRA authorized mandatory budget authority to support loan
servicing performed by Not-For-Profit servicers. The Department has contracted with both For-
Profit and Not-For-Profit servicers. In 2012, FSA also will continue to focus on meeting the
growing demands of originating and servicing Direct Loans and loans purchased under ECASLA.
The Student Aid Administration account represents 62 percent of the Department's total
discretionary administrative budget. The 2012 request would provide $1.1 billion to administer
student aid programs, an increase of $225 million from the 2011 CR level, to fund increased
student aid delivery and servicing costs.
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 2012 request for OCR is $107.8 million, an increase of $4.7 million over the
2011 CR level. About $81 million of the OCR budget is for staff pay and benefits for its 626
FTE; the remaining $27 million covers overhead costs as well as computer equipment, data
analysis and reporting activities, travel, staff training, and other contractual services. The
number of civil rights complaints received by the Department has increased from 5,894 in 2007
to an estimated 7,000 in 2011.
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 2012 request for the OIG is $67.2 million, an
increase of $7.1 million over the 2011 CR level. Approximately 68 percent of this amount, or
$46 million, is for personnel compensation and benefits to support a staffing level of 323 FTE.
The non-personnel request of $21.2 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. Additionally,
the non-personnel request includes $1.5 million to support planned oversight of a representative
sample of the Department's information technology systems; focus additional investigative effort
on intrusions and unauthorized use of Department systems; and continue to develop the ability to
perform predictive analytics, which will be used to identify whether potential anomalies are
Programs Proposed for Consolidation or Elimination
For further information contact the ED Budget Service.
This page last modifiedFebruary 14, 2011 (mjj).