ARCHIVED INFORMATION -- Financial Management Status Report & Five-Year Plan - October 1996
Strategic Vision #1 - Integrated Financial System
In 1998, the Department of Education has an integrated financial management system with the following characteristics:
- The system helps users at all levels throughout the Department to manage, provides for all Departmental and external financial reporting and security needs, and has a control function which includes early warning.
- Data needs for the system (e.g., performance measures, control elements) have been defined by ED managers.
- Report formats can be specified to suit individual needs.
- The system is an open systems design making it easy to adapt for new functions and responsibilities.
- The system provides special problem solving tools that respond to key facts/words by suggesting solutions.
The National Performance Review report states in part:
"Management isn't about guessing, it's about knowing. Those in positions of responsibility must have the information they need to make good decisions. Good managers have the right information at their fingertips. Poor managers don't."
There is agreement that the Department's core financial systems are in serious need of major integration efforts and technology upgrades. Current financial management systems are not able to provide accurate, timely, consistent, and accessible financial data to all levels of ED managers. Communication between the Department's individual financial systems is cumbersome. The current core, program and administrative financial systems depend heavily on outdated technologies.
Improvements in the departmental information systems will be conducted within the scope of the Information Resources Group (IRG) and the financial management strategic and tactical plans. These plans call for an open-systems architectural concept. This will allow the incremental development of systems that recognize standards of data sharing and accessibility. The value of program and financial data will be substantially increased when it is quickly and accurately retrievable for problem analysis and management decision making.
During FY '93, The Office of the Chief Financial Officer (OCFO) completed a detailed technical assessment of the existing core financial systems. Systems included in the analysis were the Payment Management System (EDPMS), the Primary Accounting System (PAS), and the Grants and Contracts Management System (GCMS). While not classified as financial systems, the Central Registry System (CRS) (the list of entities with which ED does business) and the Common Audit Resolution System (CARS) (tracks the resolution of financial audit findings including receivables) were included in the assessment because of the support they provide to the core financial systems.
Baseline: ED's Current Financial Systems
A schematic of the current financial systems is included in Appendix A. The diagram indicates the tape interfaces between the program financial feeder systems and the core financial systems. Several major subsystems among the program feeder systems send tapes directly to PAS or EDPMS. For example, the four Federal Family Education Loan (FFEL) subsystems interface directly with PAS and the program offices receive hardcopy reports from the current core financial systems.
The Department presently uses three interagency cross-servicing agreements. First, the Department of Interior provides payroll/personnel support with tape transfer being the mode of communications. Second, the US Department of Agriculture's National Finance Center (NFC) subsystems are being used for property management, purchase orders, travel, administrative/miscellaneous payments, and administrative billings and collections. All the NFC interfaces are electronic file transfer or on-line interactive through the Departmental WANG VS 100. ED also has an interagency agreement with the National Institutes of Health for services associated with operating EDPMS.
Current Core Financial Systems
Currently, the core financial management functions include budget execution, funds control, general ledger proprietary and budgetary accounting, central registry of entities, payment management, grants and contracts management, and receivables.
PAS is ED s general ledger and funds control system. PAS is used to maintain data on over 200 appropriations with approximately 10,000 general ledger accounts. It provides immediate on-line posting of accounting transactions, as well as batch updates of files, and report generation capabilities. In its current state, PAS cannot produce automated financial statements.
GCMS provides immediate on-line posting of commitments and obligations for discretionary, formula and block grants and contracts. It also assists the Department to oversee the award and administration of contracts, grants and cooperative agreements. PAS and GCMS are integrated and run on the Departmental Wang VS 8460. Software technologies being used by both of these systems are now considered outdated.
EDPMS is the Department s mechanism for distributing annually over $28 billion in Departmental funds to grantees through nearly 215,000 electronic fund transfer payments. It is the Department s grants and Direct Loans Program payment system. Recipients initiate payment requests through EDPMS by requesting cash advances as frequently as needed against their authorizations. EDPMS s payments to the grantees and Direct Loans Program participants are accomplished electronically by Automated Clearing House (ACH) and Automated FEDWIRE. The original EDPMS programs and database were developed by the former Department of Health, Education and Welfare (HEW) and later adapted for ED use in the early 1980s. Old software technology makes modifications difficult and enhancements expensive. Presently, EDPMS runs on an IBM 3090/300J at the National Institutes of Health (NIH) under an interagency agreement.
A 1990 study by an independent contractor concluded that EDPMS is nearly unmaintainable and cumbersome to modify. OCFO has made three large modifications to EDPMS within the last year. EDPMS functions include a central registry activity that duplicates most of the Departmental CRS. All the systems use outdated software technologies. GCMS and PAS reside on a machine which is incompatible with the EDPMS and CRS machines.
General Ledger Software
ED has installed Platinum, a PC based software general ledger and financial statement package, to collect summary general ledger balances from the PAS. ED has developed a standard chart of accounts for its different types of funds. Files containing summary trial balances and the new detailed chart of accounts are downloaded from PAS into Platinum. ED then uses Platinum to record management and auditor adjustments to the financial statements and prepare program level and department-wide financial statements.
The Program Financial Feeder Systems
The Office of Postsecondary Education's Student Financial Assistance Programs operates four financial management systems: the Pell Grant System, FFEL System, Direct Loans System, Campus- Based System. The Office of Elementary and Secondary Education also operates a feeder system, the Impact Aid System. These independent systems interface with the Department's Primary Accounting System to provide financial management data.
The Pell Grant Recipient and Financial Management System (PGRFMS) receives and processes student payment data as the basis for obligations to institutions. It authorizes the distribution of over $6.4 billion to over 5,700 participating institutions to permit payment of grants to approximately 4 million students.
The FFELP System is composed of four major components: Interest Payment, Guaranty Agency Reinsurance, Federally Insured Student Loan, and Debt Collection. The interest payment component processes an estimated 122,000 transactions annually with approximately $2 billion in billings and fees. The guaranty agency reinsurance component processes payments to approximately 35 agencies throughout the Nation for defaulted student loans, death, disability and bankruptcy claims. The federally-insured student loan claims component processes claims for uncollectible principal and interest balances on student loans. The debt collections component processes nearly 15 million transactions annually in support of the collection of defaulted student loans.
The Direct Loan Program is a new way for students and parents to borrow money from the federal government to pay for education and related living expenses after high school. The system began operations on June 15, 1994. The Direct Loan System performs loan origination, funds drawdown through EDPMS, loan servicing, financial accounting, and reporting for Federal direct loans. The system also supports program administration, program evaluation, and customer service. By July 1, 1995, for the FY 1995-96 academic year, the Direct Loan Program added approximately 1,200 new institutions originating loans for an estimated 2.5 million borrowers. OCFO is working with an additional 400 schools identified for the third year (1996-97) beginning July 1, 1996.
The Campus-Based Programs System annually processes about 5,000 awards supporting the Federal Supplemental Educational Opportunity Grant Program, 3,500 Federal Work-Study awards, and 2,300 Perkins Loan awards.
The Impact Aid System processes payments through the Department's payment system to local education agencies in areas where tax revenue is reduced because of Federally owned land. Vouchers are then prepared and forwarded to the recipients. The system accounts for approximately $750 million per year and processes approximately 15,000 applications, obligations and payments annually, and services over 2,500 school districts.
The Administrative Feeder Systems
The administrative feeder systems consists of cross-service support agreements with the Department of Interior for payroll/personnel and with the NFC for property management, purchase orders, travel, administrative/miscellaneous payments, and administrative billings and collections.
Sharing data among all the core financial systems and their program feeder systems (Pell, Impact Aid, Campus-Based, Direct Loan Program and FFEL) is inefficient, time-consuming, expensive and technologically outdated. Sharing data among the core systems and their administrative feeder systems (Property Management, Payroll, and Administrative Payments) is in need of improvements. The users of these program and administrative feeder systems and the core financial systems have indicated the need for major improvements to the core systems such as daily automated reconciliation support, a capability to report grant and loan support to any entity and a complete audit trail. Many of the currently desired improvements stem from a need for increased sharing of information among the systems. Failure to address systems improvements could impede the Department s ability to develop and maintain a strong financial management structure.
Completed system/application inventory forms are attached as Appendix C (not included in this version).
Target:ED's Future Integrated Financial System
A schematic of the plans for ED s financial systems, Appendix B, illustrates the streamlining and simplification possible with the core financial and administrative systems and the improved interfaces with the program feeder systems. The second page depicts the status of EDCAPS implementation. Overall, EDCAPS will support the Department's core management information functions. Another major system enhancement effort is taking place within the area of Student Financial Assistance where five strategic planning goals are guiding the improvement process: (1) enhance student access to postsecondary education opportunities through appropriate technologies, (2) ensure more timely, responsive, and higher quality service to customers, (3) decrease burden to student and institutional customers, (4) strengthen accountability in SFA programs and (5) reduce ED administrative cost. Improvements to the SFA delivery systems will be achieved through implementing a number of key strategies such as systems contracting, student level accounting, just-in-time funding, data quality, applicant transactions, institutional information transactions, supporting policy initiatives, and enhanced institutional oversight.A major SFA initiative, Project Easy Access for Students and Institutions (EASI), will be the catalyst for reengineering the systems.
The following projects are moving us from baseline to target:
Direct Loan System Improvements
During FY 94, the Direct Loan System contract was awarded and implemented according to the project schedule. All required interfaces, including those with the existing PAS and EDPMS were completed on schedule. The Department began making direct loans to students right on schedule in June 1994.
Development of the Direct Loan Servicing System continued during FY 1995. Many enhancements were needed in the first year system to incorporate new regulatory requirements for a new type of loan origination, Loan Consolidation. Due to an anticipated increase in demand for loan consolidation, including in-School consolidation, additional changes to the baseline system are continuing. The baseline system was designed around a contractual projection of 10,000 consolidations per month and contains several manual operations that must be automated to enable the timely processing of consolidations that will number several times the expected amount. The new Consolidation system became operational in mid-September 1996, and will allow for growth in the volumes of consolidated loans to the contractual projections.
Also during FY 1996, the Department completed the first phase in implementing multiple loan servicer support to Direct Loans:
Phase I of the Central DataBase System (CDS) was implemented in August, 1996. Loan origination and loan consolidation functions were separated from loan servicing and accounting. CDS began routing origination data through CDS to the existing loan servicer. A "central" lockbox was established for processing Direct Loan payments.
Phase II of the CDS will separate the existing link between loan servicer and CDS. This will provide the capability for routing loan origination data to one of multiple loan servicers. This functionality will be available in December, 1996.
Also in FY 1996, the Multiple Servicer RFP was completed through BAFO. Awards will be made in the very near future. The Multiple Servicer RFP is intended to acquire adequate processing capabilities, across differing platforms, to service the Direct Loan servicing volumes through the year 2002.
EDCAPS-Education's Central Automated Processing System Project
ED began a redesign of its core financial systems (the Primary Accounting System, Payment Management System, Central Registry System, and the Grants and Contracts Management System) in October of 1992. The project began by ED rethinking and streamlining its financial management "business" operations and developing the corresponding business vision. The implementation of a new core financial system will be divided into smaller projects that are prioritized to allow a gradual phase-in of ED's business vision.
A Letter of Interest (LOI) to obtain financial management software was issued to the vendors on the GSA schedule in March of 1994. The original LOI was canceled and new approaches to the procurement were evaluated. In May of 1994, a project management team was developed to coordinate the implementation of the system. The team, consisting of eleven employees from user areas throughout the Department, is a self-directed work team sponsored by the Chief Financial Officer. The team is responsible for defining, developing, and managing the acquisition, implementation, and conversion of a seamlessly integrated financial management and information system to support the Department's core management information functions. The new name for the system and its effort is: Education's Central Automated Processing System, or EDCAPS.
EDCAPS will serve all the business processing modules through the use of a single database. This database will be shared among the seamlessly integrated business applications, greatly reducing the need for reconciliation, improving timeliness of data recovery, and providing for single-data input.
Currently, EDCAPS divides the development of the new core system into the following five separate procurements:
- Financial Management Systems Software (FMSS) - This package incorporates general ledger, financial statements, funds control and budget reporting, cost accounting, and accounts receivable/administrative accounts payable management functions. The application software will require the establishment of a new transaction account code structure that will support the level of functionality being provided. This module began phased implementation with the new fiscal year, October 1, 1996.
- Contract & Purchasing Support System (CPSS) - This piece will provide much of the functionality previously provided by the contracts side of the GCMS. It will provide full support for the procurement process and include such capabilities as electronic commerce and a contract document management system. The CPSS also began its phased implementation on October 1, 1996.
- Grants Administration and Payments System (GAPS) - This piece will provide much of the functionality previously provided by the Payment Management System (EDPMS) and functionality previously provided by the grants side of the Grants and Contracts Management System (GCMS). Phased implementation is currently scheduled to begin in July, 1997.
- Integration Support Services (ISS) - This piece serves as an umbrella to assure full integration of all the various functional pieces (FMSS, CPSS, GAPS) as well as seamless integration with ED's various internal and external feeder systems.
- Independent Verification and Validation (IV&V) - This final piece serves the function of independently evaluating the accuracy and quality of all development work performed for the EDCAPS project.
Applications to be Eliminated by EDCAPS
EDCAPS will eliminate the duplication of systems between CRS and EDPMS. Functions currently met by PC-PRCH and PC-TRVL will be integrated into EDCAPS, and these PC applications will no longer be used.
EDPMS Remote Access Project
Implementation of EDPMS Remote Access is complete. Anyone with a EDPMS user ID (ED employees) now has the capability to access EDPMS Inquiry Screen. The inquiry screen allows the user to access payment history and account balances of recipients. ED users access EDPMS by using a personal computer equipped with a modem and communications software. ED users may also access this information via the Internet. Training for remote access has been completed. At this point in time, there are approximately 100 users of the remote access.
Document Management System (DMS) Project
In FY '93 OCFO contracted for an electronic document imaging requirements study, alternative analysis and design for off-the-shelf DMS capabilities. In FY 1994, a DMS was implemented which involved the imaging and data capture of information from the 18,000 SF 272 expense reports received quarterly from recipients. In FY '95, OCFO began analyses of two new applications: check imaging and reimbursement payment processing. These new processes will also provide OPE with the ability to send requests for processing to OCFO staff through DMS. These new processes were successfully implemented in April 1996. The new process was further revised to enable OPE regional offices to electronically transmit payment requests to OCFO. The elimination of the paper processing has reduced the payment processing time by two weeks.
Regional Interface Project
There is an ongoing effort to provide regional offices access to financial management systems and training. These efforts will benefit by the Department's expansion of its computer network capabilities. It is anticipated the regional offices will have complete access to real time financial data with the implementation of EDCAPS.
FY 1996 enhancements to the FFEL include the following:
- Modification of the FFEL System to provide the capability of garnishment of wages of defaulted student borrows in accordance with section 488A of the Higher Education Act, 20 U.S.C. 1059A.
- Implementation of a subsidiary ledger for Debt Collections.
- Enhancement of the Debt Collection System to handle additional accounts resulting from Guarantee Agency closures and defaults from the Direct Loan Program.
- Implementation of Electronic File Transfer.
Planned enhancements for FY 1997 include the following:
- Selection of COTS software as OPE's subsidiary ledger for all Title IV programs. The subsidiary ledger will interface with EDCAPS to provide summary level subsidiary accounting data to assure consistency and standardization among Departmental accounting systems.
- Continued development of client server/distributed database technology for various applications on the FFEL System.
- Implementation of electronic commerce technology on the FFEL System.
- Implementation of enhancements to Debt Collection System to provide information service to student debtors and increase collections.
The National Student Loan Data System (NSLDS)
NSLDS was implemented in November 1994. It serves as the central database for loan and grant level information on recipients of Title IV aid. NSLDS includes loan-level data on the Federal Family Education Loan Programs (FFELP), Direct Loan Program, and the Federal Perkins Loan Program. NSLDS also includes data on Pell Grant recipients and overpayment statuses for both Pell and Federal Supplemental Education Opportunity Grants (FSEOG).
NSLDS is currently used to prescreen applications for Title IV aid to reduce the potential default exposure of the Department of Education. The prescreening process is designed to keep applicants in default on previously awarded aid from receiving further loan or grant assistance. Information is also provided to the Central Processing System (CPS) on the loan history of the applicant which assists in the prevention of awarding aid to applicants who have reached the loan limit maximums for selected loan programs.
In addition to the prescreening, NSLDS supports a variety of operation functions aimed at improving program administration and delivery of student aid, and improving the efficiency of some aspects of the Title IV aid delivery system through the application of automation and standardization.
Various system functions and the statuses of each are as follows:
- Annual default rates for schools, lenders, and guaranty agencies were produced for cohort year 1993. Final rates for cohort year 1994 will be calculated November 2, 1996. 1995 default rates will be calculated early in calendar year 1997. Those rates will include Direct Loans for the first time.
- An automated Student Status Confirmation Report (SSCR) was designed to assist schools and lenders in the verification of the enrollment status of their FFEL and Direct Loan Program borrowers. SSCRs are now being received for FFEL and Direct Loan Programs. Full implementation is scheduled for February 1997.
- An automated Financial Aid Transcript (FAT) was designed to provide a summary of all Title IV aid the student has received from previously attended schools and, if applicable, the school the student is currently attending. FATs are now being used by the school community. In conjunction with the CPS, expanded FAT information now appears on the NSLDS page of the SAR/ISIR. Providing the information, electronically for most applications, has served to reduce significantly the burden on schools in accessing FAT information for each borrower.
- Twenty-five extracts and preplanned reports are now available for Department of Education users. Canned queries for schools and guaranty agencies are also available. On-line secured access for school and guaranty agency functions is now available.
- Student demographic data, captured by the CPS from student aid applications is being added to the NSLDS database.
- Loan level data has been loaded for Federal Family Education,Direct and the Federal Perkins Loan Programs. Over 80 million loans now reside in the NSLDS database.
- Pell Grant recipient data for 1993/94, 1994/95 and 1995/96 has been loaded into the NSLDS database.
- Preparations for developing overpayment status categories for Pell and SEOG are being analyzed.
The Postsecondary Education Participant System (PEPS)
PEPS is the successor to the OPE Institutional Data System. It will be the primary source of information and statistics on participating SFAP institutions. The PEPS supports the functions of institutional eligibility determination and certification, program review and audit resolution, default rate monitoring and administrative action.
Student Financial Aid Delivery System Improvements
There are currently two system improvement projects underway to improve the delivery of financial services to the student. A major improvement project that began in FY 1996 is Easy Access for Students and Institutions, referred to as Project EASI. The key concept behind the Project EASI system is a united student account, which makes it possible to readily view and use all information regarding a student's eligibility and participation in any SFA program. Project EASI will involve a comprehensive redesign of the Student Financial Aid Delivery System. To ensure that the delivery system redesign meets our customer needs, Project EASI is obtaining extensive input from all sectors of the student aid community. Emphasis will be placed on using recent advances in technology, such as the World Wide Web, to significantly improve the information available to students and simplify the application process and integrate all of the SFA program-based systems to improve integrity and efficiency.
The redesign will incorporate the following characteristics:
- There will be a permanent student account that will contain the student's complete award and payment transaction history. Students, institutions and other authorized parties will be able to access the account to obtain current information.
- A financial management/financial reporting system (including subledgers) will provide accounting for all Title IV funds and a single window for reporting all Title IV accounting transactions to the general ledger. This system will be an integral part of the overall SFAP delivery system.
- The system will provide flexible reporting, data sharing, and will readily accommodate new or modified data elements.
- Computer imaging of source documents will be used to the maximum extent feasible consistent with cost.
- All participating institutions will have electronic access to the SFAP Delivery System for reporting and inquiry.
- The platform will provide a central receiving point for data entry and the capability to route the data to the other systems.
- The SFA delivery systems shall accommodate multiple repayment methods for student receivables, including salary deductions, National Service, wage garnishment, and IRS offset.
Full integration of the redesigned delivery system will occur in a phased manner as budget and contract re-competitions permit.
Project EASI Accomplishments--FY 1996
- Vision Statement - A Project EASI vision statement was developed as a collaborative effort with major student aid participants and approved by the Project EASI Steering Committee. The vision statement has received wide endorsement by the student aid community.
- World Wide Web Site - A Project EASI web site was established in February 1996 to serve as a laboratory for assisting students and families in obtaining financial aid and to disseminate information about Project EASI.
- Private Sector Involvement - As part of its outreach efforts, an unprecedented information briefing was attended by over 150 corporations interested in assisting in the delivery of student aid. More than 17 major corporations responded with written responses on how ED should implement the Project EASI vision.
- Reengineered Business Processes - Project EASI originated several innovative student aid delivery concepts such as FAFSA on the World Wide Web, the integrated student aid account, multi-year promissory note and the common origination and payment process. Work is actively underway to incorporate these concepts into the student aid delivery system.
- Data Standardization - The Department of Education has endorsed the use of Electronic Data Interchange (EDI) standards. A student aid task group was established under the education subcommittee of the official ANSI X12 standards group.
Another SFA system improvement project is the Integrated Student Financial Aid Management System (ISAMS). ISAMS will allow institutions to interface with SFA delivery systems for reporting student data. The system will be implemented in phases, over a four to five year period. The first phase of implementation began for 1996-97 with the partial integration of the Pell payment software into the EDExpress software product. The Institution Quality Assurance Program software will also become a module of the EDExpress software for use in the 1996-97 award year in December, 1996. Both of these modules will be fully integrated into EDExpress in 1997-98, the award year in which the software will be organized at the student/recipient level. This step is important because it will pave the way for complete student-level reporting of expenditures, and integration of similar business processes among the Title IV programs. Implementation of ISAMS related initiatives for 1998-99 and beyond will be determined through consultation with institutions and ED staff.
[Strategic Vision #2 - Strong Internal Financial Management Partnerships]