G. DEPARTMENTAL MANAGEMENT
|Discretionary Salaries and Expenses (S&E)
(BA in millions)
|Program Administration 1||$328.9||$343.9||$362.0|
|Office for Civil Rights||54.9||61.5||68.0|
|Office of the Inspector General||29.9||30.2||31.2|
|Federal Family Education Loans||46.5||46.5||48.5|
|Total, Discretionary S&E||467.2||490.3||518.2|
|Permanent mandatory authority
(BA in millions)
|HEA Section 458||340.6||362.0||440.0|
|Payments for Services by Guaranty Agencies 3||150.4||170.0||170.0|
|Total, Permanent mandatory authority||491.0||532.04||610.0|
|Total Federal Administration (excluding Guaranty Agency Payments)||807.8||852.3||958.2|
|Full-time equivalent employment (FTE)|
|Office for Civil Rights||681||724||724|
|Office of the Inspector General||280||285||285|
|Federal Family Education Loans||357||368||368|
|HEA Section 458||506||520||550|
|1 In 1997 and 1998, the Program Administration account has been adjusted for comparability to include Indian Education Federal administrative costs, which were provided under the Indian Education account.|
|2 Includes small Federal credit accounts and S&E activities in program accounts. Excludes $2.2 million in 1997, $2.6 million in 1998, and $3.3 million in 1999 for the National Institute for Literacy.|
|3 For fiscal years 1997 and 1998, these payments reflect .85 percent of consummated loan volume guaranteed by each agency (with fiscal year 1998 capped at $170 million), as specified in the Balanced Budget Act of 1997. In fiscal year 1999, fees will be based on the President's guaranty agency restructuring proposal.|
|4 Includes $25 million transfer from Higher Education Assistance Foundation account at Treasury.|
The Department's 1999 budget request for Salaries and Expenses (S&E) will pay the Federal costs of the staff, overhead, contracts, and other activities and items needed to administer and monitor about 170 educational assistance programs and continue to improve management and service to schools and students.FY99 Salaries and Expenses Costs by Category (7,900 bytes)
The Department is requesting $518.2 million for its discretionary S&E budget in 1999, an increase of $27.9 million over the 1998 level, but still just 1.7 percent of the Department's total discretionary request. Mandatory Federal administrative costs--primarily associated with the postsecondary student loan programs--will increase by $78 million. The discretionary and mandatory increases are primarily for pay raises and benefits, technology improvements, and contracts--especially the data processing contracts required to provide over $50 billion in grants and loans to 9 million postsecondary students. The major cost categories in the budget are shown in the accompanying chart.
Over 45 percent of the Department's S&E budget in 1999 is provided under a permanent mandatory appropriation that supports the operations of the student loan programs and other student financial aid management, with the largest single expense being the cost of the contractors that originate and service Direct Student Loans. In addition to paying for these contracts and the staff who manage the Direct Loan program, the permanent mandatory account supports all student aid programs through a variety of other contracts, such as the National Student Loan Data System, as well as payments to 36 non-Federal guaranty agencies that help administer the Federal Family Education Loan (FFEL) program. Both Direct Loan servicing costs and FFEL guaranty agency payments fluctuate with loan volume. Because student loan volume has grown--and is projected to continue to grow--significantly, loan-driven administrative costs will continue to increase.
With a 1998 ceiling of 4,586 FTE, staffing levels are nearly 40 percent below the 1980 level of 7,528 FTE, when the Department was created. Staffing declined by 6 percent between 1992 and 1998. The Department's reinvention and restructuring efforts--combined with technology and financial management systems improvements, attrition, and retirements--have resulted in a Department that works better, costs less, and operates efficiently with a decreasing staff level. Retirements have been especially important, with over 200 employees taking advantage of the "buyout" program in fiscal years 1996 and 1997. Of total Department staff, 69 percent work in headquarters offices, with the remaining 31 percent in regional offices.
The 1999 staffing request for the Department is 4,623 FTE, an increase of 37 FTE from the 1998 level of 4,586 FTE. The increases are necessitated by the increasing responsibilities placed on the Department and the high priority currently being given to education. In addition to the overall increases, the Department plans to continue to shift current staff to high priority areas from activities where they are no longer needed due to ongoing streamlining efforts or the consolidation or elimination of programs. New staff are limited to a small number of high priority areas integral to the Department's Strategic Plan. The request includes:
The Department has maintained operations in spite of low 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 some 9 million college students. Already the smallest of the 14 Cabinet agencies, the Department continually seeks ways to minimize administrative tasks and privatize functions that can be handled more efficiently by private contractors. A prime illustration is the use of contracts to operate the Direct Student Loan program. Finally, Congress has helped improve the balance between staff and workload by acting on many of the Administration's recommendations to eliminate or consolidate categorical programs that are duplicative, have outlived their usefulness, or have a limited Federal role.
Administrative support for most programs and offices in the Department is provided by the Program Administration account. The 1999 request for this account is $362 million, an increase of $18.1 million over 1998, including $202 million for staff pay and benefits and $160 million for non-pay costs. Staffing paid for from this account would increase from 2,657 FTE in 1997 to 2,664 FTE in 1999. These figures have been adjusted for comparability for 1998, to include Indian Education Federal Administrative costs, which were provided under the Indian Education account.
The $202 million request for salaries and benefits, which is 56 percent of the total, reflects average employee pay raises of about 2.5 percent in January 1998 and another 3.1 percent estimated for 1999, covering both national and locality pay raises. Other funds would provide for: (1) technology improvements to upgrade current information systems in order to communicate better with customers and prepare for Year 2000 conversion; (2) administrative support for activities such as the America Reads Challenge and the Partnership for Family Involvement in Education; and (3) contract support for the "One Pubs" initiative, which will provide customers with a "one-stop-shopping" service for the Department's publications (1-800-USA-LEARN).
Postsecondary Education Management
The major focus of the Department's S&E budget continues to be improving management of student financial aid and other postsecondary education programs and continuing the successful implementation of Direct Loans. Excluding $170 million in payments for services to FFEL guaranty agencies, student aid administration spending will total nearly $568 million in 1999, almost 60 percent of the Department's total administrative budget. About 78 percent of this $568 million reflects mandatory funding authorized under Section 458 of the Higher Education Act; the remaining funds are provided under the discretionary Program Administration account and smaller accounts supporting the administration of the FFEL, College Housing and Academic Facilities Loans, and HBCU Capital Financing programs. Major activities supported with these funds include:
Direct Loans. Origination and servicing costs for Direct Loans account for roughly 40 percent of Department administrative spending on postsecondary education. The Direct Loan program grew from 7 percent of total loan volume in academic year 1994-95 to 35 percent in 1997-98, and is expected to remain at that level for the next few years. As large numbers of loans have begun to enter repayment, servicing costs will continue to increase as Department contractors distribute increasing numbers of statements and coupon books, respond to more requests for account information, and collect and process additional payments. As a result of these trends, costs for contracts to originate and service Direct Loans are expected to increase from $177 million in 1998 to $208 million in 1999.
Student Aid Delivery. The Department expects to provide nearly $51 billion in grants and loans to almost 9 million students in 1999. In awarding this aid, the Department expects to spend over $88 million on contracts with a number of private firms to process paper and electronic applications, determine student eligibility, and maintain information management systems required to transfer data and funds between the Department and the more than 6,000 schools participating in the Federal student aid programs.
National Student Loan Data System. The budget includes $27 million in 1999 for the National Student Loan Data System (NSLDS), a national database of loan-level account information. The system is used to screen financial aid applications to prevent loans to applicants who have defaulted on their student loans or who have reached maximum award levels, and to compute institutional default rates. Through the end of November 1997, the system had already prevented at least $982 million in grants and loans from being made to ineligible students.
System Modernization. The Department is increasingly focusing on streamlining and modernizing the multi-million dollar computer systems that underlie the delivery and management of Federal student financial aid. A task order to establish a central processing site for all student aid systems was recently awarded under the General Services Administration's Virtual Data Center contract with Computer Sciences Corporation. Processing activities associated with NSLDS, the first system to be shifted to the new contract, will be moved onto the Virtual Data Center in early 1998, and other systems will be moved over time once NSLDS has been successfully relocated. The Department is working closely with the higher education community on Project EASI (Easy Access for Students and Institutions), a major development effort intended to streamline and simplify the Federal student aid application and delivery system through sophisticated electronic links between the Department and participating schools, guaranty agencies, lenders, and students.
Ensuring Program Integrity. The Department dedicates almost 370 FTE to ensure that institutions participating in Federal student aid programs--including schools, accrediting associations, lenders, private service contractors, and guaranty agencies--meet statutory eligibility requirements and operate in accordance with all statutory and regulatory guidelines. In 1997 alone, over 3,300 institutional recertification actions were completed; roughly 74 percent of the schools reviewed were fully approved, 21 percent were provisionally certified, and 2 percent were denied eligibility. In addition, an increasing number of problem schools are being removed from the student aid programs. Over the past three years, over 800 schools have left or been removed from the Title IV programs.
Default Rates. Schools are excluded from participation if their "cohort default rate" exceeds 25 percent. For loans entering repayment at the end of 1995, 10.4 percent had defaulted by the end of 1996. This rate is down from 10.7 percent the previous year and from 22.4 percent for loans that entered repayment in 1990.Student Loan Cohort Default Rate (4,100 bytes)
Increasing Debt Collection. Collections on defaulted loans by the Federal Government and guaranty agencies more than doubled from $1 billion in 1992 to $2.2 billion in 1997, contributing to a steady decline in net default costs. The direct cost for Department data system contracts supporting these collection activities will total $30 million in 1998.
Improving Customer Service. The Department is also committed to increasing access to information on Federal student aid, both through printed materials such as the Student Guide--which is also available on the World Wide Web at www.ed.gov--and through enhanced capacity to respond to specific requests. Spending on the Department's contract to maintain a toll-free information line (1-800-4FED-AID) and to respond to written requests for information will increase from $11 million in 1998 to $17 million in 1999. This increase reflects expected growth in the volume of requests--including additional calls stemming from the President's HOPE Scholarship program and the reauthorization of the Higher Education Act, which is expected to be completed in 1998--as well as improvements in the timeliness and accuracy of the Department's responses.
Other Management Improvements
The Department continues to build on management improvement efforts to enhance overall customer service; to provide greater flexibility for States, communities, and institutions; and to focus on internal improvements that help the Department work better and save taxpayer dollars. Burdensome process-oriented structures have been replaced with results-oriented initiatives aimed at making the Department a streamlined, high-performance organization. A major example of this is a redesigned grants process implemented at the beginning of fiscal year 1997 which will continue the shift of resources to program areas and focus on successful project outcomes and customer service. The Department also eliminated nearly 40 percent of its regulations and reduced the paperwork burden for its customers by changing reporting requirements from an annual basis to every 2 or 3 years. In addition, we have greatly expanded waivers of regulatory and statutory requirements that stand in the way of innovative reforms, and through our ED-FLEX demonstration are giving State-level officials broad authority to waive Federal requirements that thwart innovation to improve student achievement. Special areas of emphasis in the budget include:
Information Technology for Improved Dissemination and Customer Service. The Department continues to improve both its management and customer service by expanding and making repairs to its computer network; upgrading and replacing its computers to handle new technology; and expanding its Internet and on-line services to teachers, parents and researchers. Of the total budget of $156.2 million for Department overhead services, $28.7 million is for centralized ADP services, including $22 million for operation of the Department's local area network and $6.7 million for related activities. These activities include (1) data conversion needed to comply with Year 2000 requirements; (2) Internet support which maintains the Department's Internet web site (www.ed.gov); and (3) software licensing which provides the appropriate licenses to Department staff for centrally purchased software. Another $6.7 million is requested for ADP equipment.
Financial Management. The Department is continuing efforts to redesign its core financial systems through the Education Department Central Automated Processing System (EDCAPS) project, which, with the exception of the Grants and Payments (GAPS) module, is expected to be fully operational in 1998. The project is designed to enable grant applicants to communicate electronically with the Department, provide recipients with access to electronic payment drawdowns, improve overall financial management of the Department by integrating all financial systems, and provide Congress and other external parties more timely financial reports on the Department's programs. The 1999 request for this project is $7.3 million, which will be used to complete the development of the GAPS module, integrate the various components of the entire system, and develop and incorporate enhancements to ensure that the system matches the needs of its users and the Department's customers.
Improved Customer Service for Department Publications. The Department continues to improve customer access to its programs and materials. The toll-free number, 1-800-USA-LEARN, provides information and accurate referrals to approximately 5,500 callers each week. The Department plans to expand its customer service to include access to well over 20,000 publications that provide a wealth of information for teachers, administrators, policymakers, researchers, parents, students, and others with a stake in education. The budget request includes $6.4 million for the "One Pubs" contract, which in 1998 will begin to centralize the Department's publications process, as called for by the National Performance Review, and provide customers with "one-stop-shopping" for Department publications.
Examples of the publications available include Guide to the U.S. Department of Education Programs, Student Guide to Financial Aid, Teacher's Guide to the U.S. Department of Education, NCES statistical compilations, Strong Families, Strong Schools, the Helping Your Child series, The National Long-Range Technology Plan, and the Thinking College Early.
Documents will be available by calling an 800 number as the initial point of contact or, for those with access to the Internet, through the Department's World Wide Web home page (http://www.ed.gov). The contract will incorporate the planning, printing, mailing, distribution, and storage of all Department publications. Costs are anticipated to decrease over time due to elimination of duplicate contracts and mailing lists now in place.
Human Resources Management System. The request includes $373,000 for a new project designed to decrease hiring time, improve accountability in the hiring process, reduce the number of processing errors and improve other management activities such as performance appraisal, health and safety, security, EEO, and training, all of which depend on human resources data or interface with human resources activities. The system will also provide the Department's offices with automated access to human resources management information for report query purposes.
Departmental Overhead Services
The budget includes $105.8 million in discretionary, as well as $50.4 million in permanent authority, for centralized support and administrative services within the Department. These services include computer network operations and maintenance, interagency agreements and contracts for telecommunications, mail operations and delivery, postage, and rent. Approximately 37 percent of the total is for services provided through contracts with other Federal agencies such as payroll processing (Interior), health unit and counseling services (HHS), regional support services, security investigations, training (OPM), building alterations and telecommunications services provided by the General Services Administration (GSA), and rental of space from GSA for Department staff. Because of its small size, the Department does not use staff to perform these services. Handling these arrangements on a centralized, contractual basis achieves savings in both dollars and staff resources.
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 1999 request for OCR is $68 million, an increase of $6.5 million over the 1998 level. About $51 million of the OCR budget is for staff pay and benefits for its 724 FTE; the remaining $17 million covers overhead costs as well as computer equipment and services.
Almost 90 percent of OCR staff are assigned to 12 enforcement offices in four regional enforcement divisions. OCR plans to manage its increasing workload in 1999 by reliance on the redesigned complaint resolution process and Case Resolution Teams. OCR also will continue enforcement activities such as partnerships with State and local education agencies, empowerment of parents and educators through clarification and guidance in key civil rights areas, and increased staff training on civil rights issues. Over half of the complaints filed with OCR allege discrimination on the basis of disability, but OCR addresses all educational equity issues.
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 1999 request for the OIG is $31.2 million, an increase of $1 million over 1998. Approximately $23 million of the total OIG budget is for the pay and benefits of its 285 FTE; most of the remaining $8 million covers overhead costs and travel. Nearly 66 percent of the budget increase is for built-in costs, including pay adjustments and rental payments to GSA.
Three-quarters of OIG staff are assigned to 8 regional and 10 field offices (6 of which are flexiplace locations), where they investigate allegations of fraud on the part of recipients of program funds and conduct audits of the Department's programs and operations. In 1999, OIG will direct a majority of its efforts to program and operations improvement, with a focus on Student Financial Assistance (SFA) programs, Elementary and Secondary Education Act programs, and the audit of the Department's financial statements. Most compliance activities will continue to focus on the Student Financial Assistance programs.
[Educational Research and Improvement] [Appendix 1]
Direct any questions to Martha Jacobs, Budget Service