Archived Information

FY 2002 Budget Summary - April 2001

G. DEPARTMENTAL MANAGEMENT


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Discretionary Funds
(BA in millions)

  2000 2001 2002
Request
Program Administration
Office for Civil Rights
Office of the Inspector General
Federal Family Education Loans
Other 2
$382.81
71.2
34.0
48.0
11.5
$412.2
75.8
36.4
48.0
11.4
$424.2
79.9
38.7
49.6
10.1
Total, Discretionary S & E 547.5 583.8 602.5

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Mandatory Funds
(BA in millions)

  2000 2001 2002
Request
Student Loan Administration
HEA Section 458
Payments for Sercices by Guaranty Agencies
 
555.0
180.0
 
600.0
170.0
 
600.0
180.0
Total, Mandatory authority 735.0 770.0 780.0
Total, Federal Administration (excluding Guaranty Agency Payments) 1,102.5 1,83.8 1,202.5
 


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Full-time Equivalent Employment (FTE)3
(BA in millions)

  2000 2001 2002
Request
Program Administration
Office for Civil Rights
Office of the Inspector General
Federal Family Education Loans
Student Loan Administration
Other
2,656
712
262
372
554
37
2,753
724
285
368
571
46
2,753
724
285
368
571
40
Total 4,593 4,747 4,741
 

FY 2002 Salaries and Expenses Costs by Category

The 2002 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 over $60 billion in grants and loans each year to more than 8 million postsecondary students.

The Department is requesting $602.5 million for its discretionary S&E budget in 2002, an increase of $18.8 million over the 2001 level. Most of the increase is for the 2001 and 2002 government-wide pay raises.

Almost 50 percent of the Department's S&E budget is funded under a permanent mandatory appropriation that supports the operations of the student loan programs and other student financial aid management. Mandatory Federal administrative costs will remain at $600 million, no change from 2001. The mandatory funding has contributed to the decline in the default rate, improvements in collections, and better services to students and families seeking aid for college expenses.

The largest single expense under this appropriation is the cost of private sector contractors who originate and service Direct Student Loans. The 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.

Department administrative costs continue to constitute a small fraction of the total education budget. For example, even with the increase requested for 2002, the discretionary administrative budget would be less than 1.4 percent of the Department's total discretionary budget. Similarly, the Department's total administrative budget, including mandatory administrative funds, represents less than 1.3 percent of total program funds administered by the Department, including student loan volume and the mandatory appropriation for the Rehabilitative Services Administration.


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Department Employment
With a 2001 target of 4,747 FTE, staffing levels are nearly 40 percent below the 1980 level of 7,528 FTE when the Department was created. The 2002 staffing request for the Department is 4,741 FTE, a decrease of 6 FTE from 2001, reflecting the discontinuation of the Career Resource Network activity (see the Occupational and Employment Information program under Vocational Education) and the Web-Based Education Commission. The Department has held FTE levels for ongoing activities to their 2001 levels despite the new initiatives included in No Child Left Behind. Once enacted, these initiatives could reduce the need for staff working on individual programs, but there may be a short-term increase in workload during implementation. Within the Department's offices, staff will be reassigned to new priority areas as needed and will acquire new skills through training and developmental assignments.

FTE Usage/Ceiling

The Department has maintained operations in spite of reduced 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 more than 8 million college students. Already the smallest of the 14 Cabinet agencies, the Department minimizes administrative tasks and privatizes functions that can be handled more efficiently by outside contractors. A prime illustration is the use of contracts to operate the Direct Student Loan program.


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Program Administration
Administrative support for most programs and offices in the Department is funded by the Program Administration account. The 2002 request for this account is $424.2 million, an increase of $12 million over 2001, including $252 million for staff pay and benefits and $172.2 million for non-pay costs. The request would maintain the 2001 level of 2,753 FTE for 2002. The request for salaries and benefits, which is 59 percent of the total, reflects average employee pay raises of about 3.81 percent in January 2001 and another 3.6 percent estimated for 2002, covering both national and locality pay raises. The account also finances rent, travel, and computer support for the staff and some contract costs of the student aid programs.


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Postsecondary Education Management
In 2002, the Department will oversee the provision of over $60 billion in Federal student aid grants and loans to 8.2 million students and parents, as well as $1.8 billion in additional grants and loans to higher education institutions. Administration of this postsecondary student aid is the responsibility of Student Financial Assistance (SFA), which in 1998 became the Federal government's first performance-based organization. In awarding this aid, the Department and its contractors will interact on a daily basis with over 6,000 schools, 4,100 lenders, 36 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 involving these numerous participants in the student financial aid programs-and safeguarding the interests of both students and the Federal taxpayer-is perennially the Department's greatest management challenge and its highest administrative priority.

Excluding $180 million in payments for services to FFEL guaranty agencies, the Department will spend $729.5 million in 2002 to administer the student aid programs, or more than 60 percent of the Department's total administrative budget. About 82 percent of this $729.5 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 an account supporting the administration of the FFEL program. This total does not include small discretionary appropriations that support the College Housing and Academic Facilities Loan and HBCU Capital Financing programs.

Major activities supported with these funds include:

System Modernization. This request includes $46.9 million to support continuing Department efforts to modernize SFA systems and processes. The success of these efforts to replace the costly and cumbersome stovepipe structure of 14 separate systems that process applications for, disburse, and account for Federal student financial aid are the key to the success of the performance-based organization. The goal of these efforts is an integrated, user-friendly system that ensures financial integrity; allows simplified access and use by students, schools, lenders, guaranty agencies, and other program participants; and is supportable under available funding levels.

Direct Loans. Origination and servicing costs for Direct Loans account for roughly a third of Department administrative spending on postsecondary education. Costs for these contracts will total $257.8 million, an increase by $32.6 million over the 2001 level. This increase reflects growth in the number of Direct Loans on the servicing system.

Student Aid Delivery. The Department expects to spend about $50.6 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 schools participating in the Federal student aid programs.

National Student Loan Data System. The budget includes $11.9 million in 2002 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. This system has already prevented more than $1 billion in grants and loans from being made to ineligible students.

Ensuring Program Integrity. The Department dedicates nearly 400 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.

Increasing Debt Collection. Collections on defaulted loans by the Federal Government and guaranty agencies totaled over $4 billion in FY 2000. The direct cost for Department data system contracts supporting these collection activities will total and estimated $18.6 million in 2002.


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Technology
A key focus of the Salaries and Expenses budget is to increase the use of information technology to improve the efficiency and effectiveness of the Department's operations. The 2002 request would support the following:

Internet and Intranet Development. The Department would spend $4.4 million for the continued expansion and operation of the Department's Internet and intranet sites, an increase of $2.7 million over 2001. The sites provide a critical communications link to both the Department's internal and external customers. Specifically, the Internet connects ED with grantees, educational institutions, government agencies, contractors, and others. The additional funds would be used to increase technical support for the sites and to help implement the Government Paperwork Elimination Act through expanded electronic dissemination information to the public and through increased electronic commerce.

Data Coordination Committee. The budget includes $852,000 for the Data Coordination Committee (DCC) project, which helps promote the efficient collection and use of education information among Federal agencies and throughout the Nation's education community. The focus is on improving data management, reducing data burden, encouraging data exchange within the Department, and increasing the overall usefulness of data collected by the Department.

Information Technology Architecture. The Department is requesting $900,000 in 2002 for the Information Technology (IT) Architecture project, which is developing a blueprint for information technology development and management throughout the Department. The final product will govern the IT investment management decisions made by the Department. The request, which is a decrease of $300,000 from the 2001 level, would pay for contractual assistance in developing the more detailed phases of the plan, such as preparing a schedule of implementation.

Network Operations and Software Licensing. The 2002 budget would provide $28.4 million for network maintenance, operations, and improvements, an increase of $2.4 million over the 2001 level. This project provides end-user support, as well as maintenance and operations for the local area network system, which includes headquarters and all of the regional offices. The increase would support enhanced back-up capability, greater network security, and software upgrades.

IT Investment Management. The Investment Management project consists of two initiatives: improving the selection, management, and evaluation of IT projects, and implementing and maintaining an IT capital planning management and information system. The budget includes $580,000 for these activities in 2002, the same as the 2001 level.

Asset Management System. The Asset Management project helps the Department to manage its information technology assets, limit the purchase of incompatible and unnecessary equipment, and control theft of government property. The request includes $931,000 for this project, an increase of $195,000, to expand the use of asset tracking software to inventory hardware and software related to the Department's local area network.

IT Security. This $1.9 million project is designed to strengthen key aspects of the Department's IT security, including Department-wide security awareness and training, security reviews and implementation of corrective action plans, development of disaster recovery plans, and electronic signature authority for Department information and services. The request is $152,000 higher than the 2001 level.

Security Audits. The Department is requesting $300,000, an increase of $100,000, to audit the Department's security controls for its critical information systems. These audits are increasingly important as the Department implements paperless electronic commerce initiatives and will provide management with an independent assessment of the impact of any weaknesses on the information technology environment.

Continuity of Operations. The budget provides $2 million for the Continuity of Operations project, which responds to a Presidential Directive requiring each agency to develop and implement a comprehensive plan to ensure the continuity of essential functions in the event of an emergency or disaster. In 2002, the Department will continue implementation of its plan by creating a secondary data processing, or "Warmsite Support Center." Funds would cover equipment maintenance costs, contractor technical support, and the migration of Warmsite applications from current tape backup systems to more economical disk backup.

Electronic Records Management. The request includes $667,000 to develop and implement a system to archive, retrieve and dispose of electronic records in line with guidelines issued by the National Archives and Records Administration.

Emerging and Assistive Technology Center. The Department is proposing to spend $324,000 on the Emerging and Assistive Technology Project, which would continue to support Department staff with disabilities by providing state-of-the-art technology solutions designed to facilitate access to the data and information they need to successfully perform their duties.

Information Management. The request provides $312,000 for a project involving the wider education community that is intended to result in more effective and efficient use of Federal funds through the development of improved data collection strategies and instruments.


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Financial Management
The Department will focus its efforts on improving the financial management of its programs. The following initiatives are designed to provide accurate and timely financial data and increase financial integrity.

Education Central Automated Processing System (EDCAPS). The budget includes $18.5 million, an increase of $7.2 million, for both the continuing operations and enhancement of the EDCAPS system. Improvements would include the integration of the new general ledger system with other financial systems; greater support for data reconciliation, audits, and financial statement preparation; and development of a data mart/warehousing module designed to enhance financial reporting. The request also includes funds to implement the Department's Continuity of Operations Plan, which entails the development of a disaster recovery site to ensure continuity of EDCAPS operations in the event of a disaster.

General Ledger Improvements. The Department is seeking $1.1 million in 2002, a decrease of $8.8 million, to complete the General Ledger Improvement project, which is replacing the Financial Management System Software (FMSS) component of EDCAPS. The project will implement accounts receivable, general ledger, budget planning and execution, and administrative functions during 2001 and will decommission the old system in 2002.

Electronic Travel System. The request provides $600,000, down $766,000 from the 2001 level, for a new travel management system which will process travel documentation for all Department travelers. The new web-based system will replace the current system, which resides at the National Finance Center (NFC) in New Orleans, and will allow nationwide access to provide more timely and efficient processing of travel documents.

Financial Improvement. The $585,000 Financial Improvement project provides contractual support to the Department for assistance in preparation of financial statements, data reconciliation and other financial management activities. The project also will support the phase-out of the legacy financial management system.

Audit of Financial Statements. The request includes $2.3 million, an increase of $675,000 over the 2001 level, to conduct the legislatively mandated Office of the Inspector General audit of the Department's financial statements for fiscal year 2001. The additional funds are because of expanded audit responsibilities involving Student Financial Assistance and for additional technical support needed to obtain an unqualified audit in 2002 and future years.


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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 2002 request for OCR is $79.9 million, an increase of $4.1 million over the 2001 level. About $60.5 million of the OCR budget is for staff pay and benefits for its 724 FTE; the remaining $19.4 million covers overhead costs as well as computer equipment, data analysis and reporting activities, travel, staff training, and other contractual services.

About 88 percent of OCR staff are assigned to 12 enforcement offices in four regional enforcement divisions. OCR plans to manage its workload in 2002 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. Although over half of the complaints filed with OCR allege discrimination on the basis of disability, OCR continues to address all educational equity issues.


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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. In fiscal year 2000, the Department recovered over $1.5 million as a result of OIG's audit findings and investigations.

The 2002 request for the OIG is $38.7 million, and increase of $2.3 million over 2001. Nearly 65 percent of the budget increase is for built-in costs, including pay adjustments and Department overhead costs.

Three-quarters of OIG staff are assigned to 8 regional and 11 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 2002, OIG will focus a majority of its program and operations improvement efforts on Student Financial Assistance programs, Elementary and Secondary Education Act programs, Department systems audits and the audit of the Department's financial statements. Most compliance activities will continue to focus on the Student Financial Assistance programs.


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