ARCHIVED INFORMATION -- Annual Accountability Report Fiscal Year 1995

Financial Performance & Process Improvement Initiatives

The Department is committed to improving financial performance and has taken several significant steps to ensure that funds are spent effectively and efficiently. This section highlights improvement initiatives and actual performance to date. These activities include cash management efforts, the integration of financial systems, improved payment processing, grants reengineering and electronic commerce.

Education's Central Automated Processing System (EDCAPS)

The Department is investing in tighter, more efficient management of tax dollars by upgrading its financial management systems and automating manual procedures. This major investment in EDCAPS will replace three major financial systems and numerous supporting systems with a fully integrated financial management system. EDCAPS will contribute to the Department's ability to serve customers by (1) providing timely responses to customer inquiries, (2) empowering employees to make informed decision by increasing their access to data, and (3) increasing accountability through improved financial management. EDCAPS will implement three primary business processing modules, each with a similar look and feel, and all accessible under the same EDCAPS group of business process activities. All modules will manage information from a common relational database, and use state of the industry reporting tools for quick, easy access to information. The improved data integrity and reporting capabilities will be a breakthrough for the Department's recipients in their participation in Federal education programs and to the Department's managers who will have accurate information when they need it.

During fiscal year 1995, high-level requirements analyses were conducted to support EDCAPS functions and all contracts supporting individual module development have been awarded. Commercial Off-The-Shelf software was acquired for two modules to provide the most expedient and cost effective solutions available. A separate grants and payment module will be developed and integrated with the two other modules. EDCAPS is expected to be fully operational in Fiscal Year 1998.

Cash Management Improvement Activities

States are charged interest on excess Federal funds held in their private bank accounts. States also submit reimbursement claims for interest owed them because the Department was late in sending funds thereby requiring the States to use their own funds. For fiscal year 1995, the State's liabilities from interest earned on excess Education funds was $5.2 million while they claimed interest of only $2.5 million being owed by the Department. Hence, due to the Department's prompt delivery of funds to States, the Federal Treasury was entitled to receive over $2.7 million.

Government-wide Performance Measures
The Executive Office of the President's Office of Management and Budget has established 5 performance measures for Federal agencies' financial performance. The Department compares favorably with these measures.

Integration of financial managements systems - The Department will be in compliance with this measure and will fully implement the Standard General Ledger with EDCAPS implementation.

Timeliness of vendor payments by Federal agencies - The Department paid 95.6% of its vendor payments on time, or without penalties during fiscal year 1995.

Audited financial statements - This Annual Accountability Report presents the Department's first Department-wide audited financial statements, one year ahead of the legislative requirement.

Growth in debt collection tools - Department and guaranty agencies collected $2 billion in defaulted loans, a 25% increase from fiscal year 1994 collections of $1.6 billion. The Department continues to use debt collection tools including: administrative offset. litigation, Federal employee salary offset, private collection agencies, and tax refund offset.

Trends in receivables & delinquencies - The Deportment's total receivables increased to $6.9 billion in fiscal year 1995. This increase was compensated with increased collections for fiscal year 1995.

Grants Reengineering

A reengineering effort aimed at the discretionary grants process in fiscal year 1995 confirmed a business process laden with unnecessary layers of review and a cumbersome flow of documents that caused delays in processing and impaired communication. Streamlining the current process in fiscal year 1996 will reduce the number of process steps by 55%, saving time and resources. The new redesigned process will build on these accomplishments and proposes decentralizing many of the administrative grant functions to the various program offices. The initiative will enhance customer service by increasing efficiency and improving communications.

Electronic Commerce

The Department is committed to electronic commerce and other new technology advances. During the year, the Department teamed with the Department of Agriculture, developed, and implemented a system to electronically request and award contracts. As a result, this pilot phase of electronic commerce saved the Department $38,323 in August and September 1995. The use of electronic commerce will expand during fiscal year 1996.

Cooperative Audit Resolution and Oversight Initiative

The Department has reexamined its relationship with state and local education agencies and redefined its role in conducting audits. The product of these efforts is a new spirit of teamwork, an audit approach that treats each case individually, and an emphasis on resolving issues on a cooperative basis. The new process links technical assistance, monitoring and oversight to specific audit issues in a manner that promotes improved program performance. State and local education agencies, the Department, and most importantly, the nation's learners all benefit from this initiative.

Hammer Award - Improving Payment Processing
The Payment Management Team in the Office of the Chief Financial Officer received the prestigious Hammer Award in fiscal year 1995 for their improvements in customer service. The Hammer Award is given by the Office of the Vice President to teams that exemplify the principles of reinvention. The Payment Management Team initiated and implemented three technologically advanced solutions that address customers' needs:

Enhanced and implemented a new electronic filing of recipient cash expenditure reports eliminating the need to complete reports manually and transmit them by mail,

Installed a new interactive voice response system for recipients which allows callers to receive information about their accounts simply by placing a telephone call, and

Automated the intensely manual payment process.
These three reforms enabled the Department to provide its recipients with funds more efficiently, accurately, and expeditiously. The initiatives also shifted the responsibility and accountability for fund transactions into the hands of the recipients. The Department has automated the entire grants payment process from recipients requesting payment to funds delivery. For fiscal year 1995, $28 billion dollars was provided in grants payments through electronic funds transfers. This represents over 217,000 separate transactions. The automation has virtually eliminated manual processing and drastically reduced the incidence of errors. Staff previously burdened with manual payment processing are focused on better serving customers rather than reacting to payment problems.

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