U.S. Department of Education: Promoting Educational Excellence for all Americans
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FY 2007 Budget Summary
Summary of the 2007 Budget
Elementary and Secondary Education
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Fiscal Year 2007 Budget Summary — February 6, 2006

Archived  Information

Section IV. Departmental Management


(BA in millions)

  2005   2006   2007
Program Administration $419.3   $411.1   $426.0 1
Office for Civil Rights 89.4   90.6   92.9  
Office of the Inspector General 47.3   48.5   53.1  
Student Aid Administration 719.1 2,3 718.8 2,3,4 733.7  
Other5 13.1   13.4   13.2  

Full-time equivalent employment (FTE)6

  2005   2006   2007
Program Administration 2,245   2,207   2,212  
Office for Civil Rights 640   638   638  
Office of the Inspector General 299   296   298  
Student Aid Administration 1,114 2,7 1,159 2,7 1,159  
Other5 31   40   41  

   1Includes $4.6 million for the Building Modernization activity.
   2Adjusted for comparability. Includes $795 million in mandatory funds in 2005 and $820 million in 2006 for the Federal Direct Student Loans Program account under section 458 of the Higher Education Act.
   3Excludes $195 million in mandatory funds in 2005 and 2006 for payments to guaranty agencies, provided in the Federal Direct Student Loans Program account.
   4Excludes $25 million in 2006 for funds in object class 33, Investments.
   5Includes small Federal Credit Administration accounts and S&E activities in program accounts.
   6Actual FTE usage in 2005; maximum target for 2006 and 2007.
   7Adjusted for comparability. Includes 593 FTE in 2005 and 616 FTE in 2006 funded by the Federal Direct Student Loans Program account.

This pie chart shows that 47% of The Department of Education's FY 2007 S&E costs will be for contracts, 38% for personnel costs, 9% for other non-personnel costs, and 6% for overhead (rent and mail).

The 2007 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 and provide more than $82 billion in grants and loans each year to nearly 10 million postsecondary students.

The Department is requesting $1.32 billion for its discretionary S&E budget in 2007, an increase of $36 million over the 2006 level. This includes $506 million for payroll costs, which reflects the 2.2 percent proposed government-wide pay raise in 2007 as well as employee benefit increases. The proposed pay increase accounts for approximately $7.6 million of the total increase requested.

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 2007 is $812 million.

Department administrative costs continue to constitute a small fraction of the total education budget. For example, even with the increase requested for 2007, the discretionary administrative budget would be approximately 2 percent of the Department's total discretionary appropriation and less than 1 percent of all grants and loans made by the Department last year.

The 2007 budget request for salaries and expenses supports Department initiatives designed to improve government performance through the successful implementation of the No Child Left Behind Act and the goals outlined in the President's Management Agenda.

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;

  • 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 gone from 7,528 FTE to 4,348 FTE requested for 2007.

The 2007 staffing request of 4,348 FTE, a slight increase of 8 FTE from the planned 2006 level, is 42 percent below the level of 7,528 FTE when the Department was created in 1980. The increase includes 2 FTE in the Office of the Inspector General to conduct audits of Department programs and high-risk grantees, and 5 FTE in the Office of Elementary and Secondary Education to administer programs related to the No Child Left Behind Act and enhance grant monitoring.

Despite steadily reducing its workforce, 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 streamlines 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 Federal Direct Student Loan program.

As shown in the following chart, staff is divided among the Washington, D.C. headquarters, 10 regional offices, and 10 field offices. Approximately 75 percent of the employees are assigned to headquarters, and 25 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 $426 million, an increase of $14.9 million from the 2006 level, for the Program Administration account, which funds administrative support for most programs and offices in the Department. The request includes $262.9 million for payroll costs and $163 million for non-pay costs. The non-pay request includes $6.4 million to continue implementation of the EDFacts initiative, which will collect timely data from States and local school districts 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 2007 the Department of Education will administer over $82 billion in new Federal student aid grants and loans to nearly 10 million students and parents, and consolidate an estimated $33 billion in loans made in earlier years. 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 one of its highest administrative priorities. 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). The 2006 Reconciliation Act would eliminate mandatory administrative funding, necessitating an increase of $615 million in the discretionary request for Student Aid Administration comparable to the mandatory amounts from previous years. In total, the account would represent more than 55 percent of the Department's total administrative budget. The request would provide $733.7 million to administer student aid programs in 2007. The request is an increase of $14.9 million from the 2006 level, for an increase in funding for 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 2007 request for OCR is $92.9 million, an increase of $2.3 million over the 2006 level. About $69.3 million of the OCR budget is for staff pay and benefits for its 638 FTE; the remaining $23.6 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 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 2007 request for the OIG is $53.1 million, an increase of $3.7 million over the 2006 level. Approximately two-thirds of this amount, or $34.9 million, is for personnel compensation and benefits to support a staffing level of 298 FTE.

The non-personnel request of $18.2 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, 2004, and 2005 financial statements.

  • Generated the monthly "Executive Fast Fact Sheet," which assists offices in managing programs based on available financial data, by combining timely financial information with reporting on program performance.

  • Received the 2004 President's Quality Award for accomplishments in improved financial reporting.

  • Implemented new reporting capabilities in the financial management system to improve the accuracy and timeliness of reconciling and verifying all accounting balances.

Priority: Management of Student Aid Programs
Goal Accomplishments

The Department will improve its financial and management information to manage student aid programs effectively. The Department will continue to strengthen financial management and internal controls so that relevant and timely information is available to manage day-to-day operations and provide accountability.

  • Initiated the ADvance initiative, designed to consolidate front-end application business functions so that customer services, data quality, and overall program integrity are improved.

  • Received a clean audit opinion on the most recent (FY 2005) financial statements and exited the GAO High Risk list.

  • Utilized the "Federal Student Aid Executive Dashboard" to provide managers with current data on student aid applications, program disbursements, default collections, and system performance in order to track progress and determine if specific actions are required.

  • Continued to pursue legislation that would allow the Department to match FAFSA data with the Internal Revenue Service in order to reduce fraud and error in the Pell Grant program.

Priority: Using Human Capital
Goal Accomplishments

The Department's human capital strategy is designed to ensure that all human capital management activities are strategically aligned to support our critical mission and human capital challenges.

  • Completed an initial reorganization of the Department of Education in order to streamline functions and integrate policy development, program implementation and communication.

  • Improved the efficiency of the Department's Rehabilitation Services Administration in providing technical assistance and conducting performance and compliance reviews by closing its regional offices and consolidating manpower in the Department's headquarters.

  • Implemented the SES Performance Management System, which emphasizes the need for high performance, and revised the SES Performance Appraisal System.

  • Participated in the Partnership for Public Service's Extreme Hiring Makeover initiative and as a result, streamlined the hiring process in Federal Student Aid by nearly 50 percent.

Priority: Competitive Sourcing
Goal Accomplishments

The Department will identify new opportunities for competitive sourcing in order to augment its capabilities and promote innovation and greater efficiency.

  • Implemented the Payment Processing and Human Resources competitions resulting in improved operations while utilizing fewer employees in those functions.

  • Received a "Green" (highest) rating from OMB for implementing its competitive sourcing initiatives.

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.

  • Continued to process grant applications through increased usage of both the e-reader and the Grants.gov system.

  • Awarded a performance-based contract for network operations to Computer Sciences Corporation to achieve long-term savings.

  • Developed, under the Enterprise Architecture project, a new "Future State Vision and Sequencing Plan" to guide the Department's IT investments.

Priority: Integration of Program Performance and Budgeting
Goal Accomplishments

The Department will target funding requests to programs that work, and will seek to reform or eliminate programs that do not. 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 PART assessments of 18 programs and re-assessed 5 programs to move them out of the Results Not Demonstrated category.

  • Established efficiency measures with data strategies for 30 programs PARTed programs.

  • Began several evaluations of small programs and identified others to be initiated in 2006.

  • Created a new Office of Planning, Evaluation, and Policy Development headed by an Assistant Secretary, to better coordinate policy development and the application of data in decision-making.

  • Revised the contracts for the EDFacts/EDEN initiative to gather State and Local Education Agency data on school and student achievement.

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.

  • Held technical assistance workshops in Phoenix, Chicago, Los Angeles, New York, Atlantic City, Washington, D.C., and New Orleans with leaders of community- and faith-based organizations to encourage collaboration with the Department.

  • Completed a pilot evaluation interim report on the impact of student achievement through supplemental services provided by private schools.

  • Instituted compliance procedures to ensure consistent implementation by program offices.

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For further information contact the ED Budget Service.

This page last modified—February 6, 2006 (mjj).