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FY 2006 Budget Summary
Summary of the 2006 Budget
Elementary and Secondary Education
Special Education and Rehabilitative Services
Vocational and Adult Education
Student Financial Assistance
Higher Education Programs
Institute of Education Sciences
Programs Proposed for Elimination
Current Page Departmental Management

Fiscal Year 2006 Budget Summary — February 7, 2005

Archived  Information

Section IV. Departmental Management


(BA in millions)

  2004 2005 2006
Program Administration $420.4 $419.3 $419.0
Office for Civil Rights 88.3 89.4 91.5
Office of the Inspector General 46.6 47.3 49.4
Student Aid Administration 716.71,2 719.11,2 744.32
Other3 12.9 12.7 12.5



Full-time equivalent employment (FTE)4

  2004 2005 2006
Program Administration 2,262 2,313 2,242
Office for Civil Rights 655 656 638
Office of the Inspector General 268 302 285
Student Aid Administration 1,1415 1,1405 1,186
Other3 33 43 43



   1Adjusted for comparability. Includes $795 million in mandatory funds in 2004 and 2005 for the Federal Direct Student Loans Program account.
   2Excludes $195 million in mandatory funds in 2004, 2005, and 2006 for payments to guaranty agencies, provided in the Federal Direct Student Loans Program account.
   3Includes small Federal Credit accounts and S&E activities in program accounts. The budget authority excludes Occupational and Employment Information and National Institute for Literacy grants.
   4Actual FTE usage in 2004; maximum target for 2005 and 2006.
   5Adjusted for comparability. Includes 607 FTE funded by the Federal Direct Student Loans Program account in 2004 and 2005.

This pie chart shows that, of the FY 2006 Salaries and Expenses Costs, contract costs comprise 49 percent, personnel costs 37 percent, overhead costs 6 percent, and other non-personnel costs 8 percent.

The 2006 budget request for Salaries and Expenses (S&E) will pay the costs of the staff, overhead, contracts, and other activities needed to administer and monitor the Department's educational assistance programs and provide $111 billion in grants and loans each year to over 10 million postsecondary students.

The Department is requesting $1.32 billion for its discretionary S&E budget in 2005, an increase of $29 million over the 2005 level. Included in the request is $489 million for payroll costs, which reflects the 2.3 percent proposed government-wide pay raise in 2006 as well as employee benefit increases based on historical experience.

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 2006 is $828 million.

Department administrative costs continue to constitute a small fraction of the total education budget. For example, even with the increase requested for 2006, the discretionary administrative budget would be approximately 2 percent of the Department's total discretionary budget.

The 2006 budget request for salaries and expenses supports Department initiatives designed to improve government performance through the goals outlined in the President's Management Agenda and successfully implement the No Child Left Behind Act signed into law in January 2002.

To carry out the President's Management Agenda, the Department's S&E budget request places a heavy emphasis on the following high priority items:

  • Developing and maintaining financial integrity and management and internal controls;

  • Modernizing the student financial assistance programs and reducing their high-risk status;

  • Expanding strategies for using human capital;

  • Identifying opportunities for competitive sourcing;

  • Achieving an accountability of results culture, including the integration of program performance and budgeting; and

  • Leveraging the contributions of faith-based and community organizations.

Department Employment

This bar chart shows that since the Department was created in 1980, staffing levels have declined from 7,528 FTE to 4,394 FTE requested for 2006.

The 2006 staffing request of 4,394 FTE, a decrease 60 FTE from the planned 2005 level, is 42 percent below the level of 7,528 FTE when the Department was created in 1980. The 2006 decrease is primarily due to a net reduction of 66 FTE resulting from the consolidation of the regional office functions of the Rehabilitation Services Administration (RSA) into the central office and the reallocation of staff to reflect program workload. In addition to reducing FTE, these changes will result in improvements in the administration of the Vocational Rehabilitation program through greater program effectiveness, consistent program implementation, and integrated program planning.

Despite regular FTE reductions, the Department has maintained and even 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 almost 10 million college students. Already the smallest of the Cabinet agencies, the Department minimizes 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 Direct Student Loan program.

As shown in the following chart, staff is divided among the Washington, D.C. headquarters, 10 regional offices, and 11 field offices. Approximately 73 percent of the employees are assigned to headquarters, and 27 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.

This map of the U.S. shows the cities in which the regional and field offices of the Department are located.

Program Administration

The 2006 request includes $419 million, a slight decrease of $300,000 from the 2005 level, for the Program Administration account, which funds administrative support for most programs and offices in the Department. The request includes $254.2 million for the 2,242 FTE, and $164.8 million for non-pay costs. The non-pay request includes $4.1 million to continue implementation of the Performance Based Data Management Initiative, which will collect timely data on student achievement and educational outcomes. Other non-pay costs include rent, travel, data collection, evaluations, computer hardware and software support for the staff, and other administrative activities.

Student Aid Administration

In fiscal year 2006 the Department of Education will administer $111 billion in Federal student aid grants and loans to more than 10 million students and parents. In awarding this aid, the Department and its contractors will interact on a daily basis with over 6,000 schools; 3,300 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 its highest administrative priority. Primary responsibility for administering the Federal student financial assistance programs rests with the Office of Federal Student Aid and the Office of Postsecondary Education.

Funding for student aid management has been provided in previous years through 2 separate accounts: the discretionary Student Aid Administration account and the mandatory Federal Direct Student Loan Program (HEA Section 458). For 2006, the Administration is renewing its proposal to consolidate these separate funding streams into a discretionary Student Aid Administration account that would represent more than 56 percent of the Department's total administrative budget. The request would provide $744.3 million to administer student aid programs in 2006, an increase of $25.2 million over the 2005 level, primarily for information technology contracts.

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 2006 request for OCR is $91.5 million, an increase of $2.1 million over the 2005 level. About $65.2 million of the OCR budget is for staff pay and benefits for its 638 FTE; the remaining $26.3 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 collaboration with educational experts so that the results of scientifically based research in the areas of education and civil rights are incorporated into OCR's enforcement activities, and 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 2006 request for the OIG is $49.4 million, an increase of $2.1 million over the 2005 level. Approximately two-thirds of this amount, or $33 million, is for personnel compensation and benefits to support a staffing level of 285 FTE.

The non-personnel request of $16.4 million includes $2.6 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.

Management Improvement and Government Reform

To carry out the President's Management Agenda and to achieve its Strategic Plan goal of achieving management excellence, the Department is focusing on the following high priority items:

Priority: Financial Integrity/Management and Internal Controls
Goal Accomplishments

Financial integrity requires accurate and relevant reporting systems and processes in order to provide policy makers and managers with timely and accurate financial information. In addition, revenues and expenditures must be properly accounted for and reported on so that that reports and data produced by financial management systems will provide reliable information to managers making program and asset-related decisions.

Management and internal controls will be adopted and enhanced to reduce the risk of errors and permit effective monitoring of programs and processes. Management controls will ensure that programs achieve their intended results and are protected from waste, fraud, and mismanagement. Internal controls will help ensure effective and efficient Department operations as well as reliable financial reporting.

  • Achieved clean opinions on the audit of the Department's 2002, 2003, and 2004 financial statements.

  • Decreased the time needed to prepare, and increased the distribution of, the monthly "Executive Fast Fact Sheet" which assists offices in managing programs based on available financial data.

  • Initiated an enterprise-wide risk assessment management initiative to mitigate concentrations of risk, including improper payments, by focusing resources to achieve targeted results.

  • Began issuing monthly reports to program offices that enable offices to close out grant awards prior to funds reverting back to Treasury.

Priority: High-Risk Status of Student Aid Programs
Goal Accomplishments

The Department will improve its financial and management information systems to support the effective management of the student aid programs, following specific criteria provided by the Government Accountability Office for reducing student aid risk and removing the programs from the high-risk list. These improvements will ensure that relevant, timely information is available to manage day-to-day operations and provide accountability.

  • In January 2005, GAO removed the high-risk designation from ED's Student Aid programs due to improvements in financial management.

  • Initiated the Front-End Business Integration initiative, designed to enhance and improve the front-end customer experience of Federal student aid.

  • Achieved clean opinions on the audit of ED's 2002, 2003, and 2004 financial statements.

  • Outlined a plan to develop an Enterprise Risk Management organization to identify, assess, and manage risk associated with student aid programs.

  • Began to implement unit cost framework assessing cost-effectiveness of changes to management, systems, and data.

Priority: Using Human Capital
Goal Accomplishments

The Department's human capital strategy will transform the agency by streamlining operations in order to bring work closer to its customers: States, school districts, schools, institutions of higher education, and citizens. This will be accomplished by increasing competitive sourcing and improving decision-making.

  • Finalized the Department's revised Human Capital Strategic Plan.

  • Implemented a hiring tracking system and began work to reduce the hiring cycle time.

  • Revised the SES Performance Appraisal System.

  • Revised general schedule employee performance appraisal plans.

  • Developed plans for a new system to maintain workforce data, develop workforce profiles and decrease response time needed to respond to inquiries about the workforce composition.

Priority: Competitive Sourcing
Goal Accomplishments

The Department will identify new opportunities for competitive sourcing in order to augment its capabilities. To do so, the Department developed its "One ED" plan, which is the Department's blueprint for finding the best ways to perform work.

  • Submitted competition plan to OMB that identifies competitive sourcing opportunities in grant making functions and information technology.

  • Awarded the Payment Processing and Human Resources competitions to the employee teams.

  • Initiated review of the Institute of Education Sciences' discretionary grant award process to determine if competition can be used to improve performance.

  • Completed in-house reengineering of the Office of the Chief Financial Officer Internal Audit/Post Audit Review function.

Priority: E-Government
Goal Accomplishments

To expand electronic government, the Department will improve the management of its IT investments, protect the integrity and confidentiality of data, improve data management, and increase the use of technology in serving customers.

  • Successfully processed grant applications using the system interface and identified 50 programs to participate in in 2005.

  • Drafted comprehensive plans for the E-Loans initiative.

  • Managed the increasing security threats to the Department's IT infrastructure.

  • Submitted a revised Certification and Accreditation (C&A) Plan to OMB to address concerns related to the Department's (C&A) process.

Priority: Integration of Program Performance and Budgeting
Goal Accomplishments

The Department will seek funding for programs that work, and will seek to reform or eliminate programs that do not. The administrative allocations will be linked to the Department's Strategic Plan to ensure that high priority activities are funded. The Department will have standard, integrated budgeting, performance, and accounting information systems at the program level that will provide timely feedback for management.

  • Completed the Program Assessment Rating Tool (PART) for 33 programs for fiscal years 2004 and 2005 and for 23 programs for 2006.

  • Selected 22 programs for 2007 and 23 programs for 2008 PART cycles focusing on programs above $40 million.

  • Implemented an Annual Grant Investment Portfolio process that ensures development, communication and evaluation of grant-level performance measures.

  • Developed and implemented a PART tracking process as a feature of the 2006 budget formulation process.

  • Worked with Congress to ensure that recent IDEA, and prospective HEA reauthorizations will improve accountability.

  • Worked with OMB to develop efficiency measures for 39 programs that went through the PART process.

Priority: Faith-Based and Community Initiative
Goal Accomplishments

The Department will leverage the contributions of community- and faith-based organizations to increase the effectiveness of its programs.

  • Met with State and local leaders of community- and faith-based organizations to encourage collaboration with the Department.

  • Rewrote the Initiative's evaluation plan to be more outcome-oriented, and hired a contractor for the evaluation.

  • Published final regulations on community- and faith-based participation.Published final regulations on community- and faith-based participation.

Programs Proposed for Elimination  Table of contents  Appendices

For further information contact the ED Budget Service.

This page last modified—February 7, 2005 (mjj).