U.S. Department of Education 

Margaret Spellings 

Secretary 

Office of the Chief Financial Officer 

Thomas Skelly 

Delegated to Perform Functions of 

Chief Financial Officer 

The Department of Education's mission is to promote student 

achievement and preparation for global competitiveness by 

fostering educational excellence and ensuring equal access.

November 14, 2008 

This report is in the public domain. Authorization to reproduce it in whole or in part is 

granted. While permission to reprint this publication is not necessary, the citation should 

be: U.S. Department of Education, U.S. Department of Education Fiscal Year 2008 

Performance and Accountability Report, Washington D.C., 20202. 

About the Department of Education’s 

Fiscal Year 2008 Performance and Accountability Report 

The Department of Education’s publicly available Fiscal Year 2008 Performance and 

Accountability Report (PAR) will be available on the Department’s Web site at 

http://www.ed.gov/about/reports/annual/2008report/index.html. A print version, provided in 

limited distribution, contains the exact content provided in the online version. Additionally, a 

color print summary document containing a CD of the entire PAR will be available in 

January 2009. 

To request a copy of our Citizens’ Report in print, 

with CD of the full Performance and Accountability Report, 

contact 

http://www.edpubs.org/webstore/Content/search.asp 

To provide comments and suggestions on both the content 

and presentation of the report, 

contact PARcomments@ed.gov. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 
MESSAGE FROM THE SECRETARY

FY 2008 Performance and Accountability Report—U.S. Department of Education iii 

November 14, 2008 

It is my pleasure to present you with our Fiscal Year 2008 

Performance and Accountability Report—an annual report 

card of the U.S. Department of Education’s efforts and 

outcomes during the past fiscal year. In this year’s report, w

detail the goals and objectives of our new strategic plan and 

provide data based on measures from previous strategic 

plans to ensure continuity of reporting. 

e 

By testing students annually, disaggregating the data, and 

holding schools accountable for results, No Child Left Behind

(NCLB) has allowed us to target resources to help students 

who are falling behind. In the absence of reauthorization, 

this year I moved forward to make sensible changes to how 

the law is implemented. Responding to the need for added 

flexibility to help reformers target their efforts, in March, I 

invited states to join a differentiated accountability pilot 

program to develop more nuanced ways of evaluating underperforming schools. In 

October, I issued regulations to strengthen and improve NCLB by making it easier for 

eligible students to access free tutoring and school choice. These regulations also will 

require all states to use the same formula to calculate high school graduation rates. 

We have also made important progress in higher education, but work remains in making 

college more affordable, accessible, and accountable to students and families. In 

accordance with the renewed Higher Education Act and the recommendations of my 

Commission on the Future of Higher Education, in October I announced a plan to 

streamline the federal student aid application and provide earlier feedback to students 

about how much aid they can expect to receive. In addition, the Department released a 

four-part plan in May to ensure the continued availability of student loans in the 2008-09 

school year. 

Just as the Department is using data and accountability to track improvements in the 

performance of our schools, we are committed to assessing our own performances to 

determine whether we are achieving meaningful results in meeting identified needs. We 

continue to set high expectations for management practices, fiscal integrity, and a culture of 

high performance. 

Although our performance data are fundamentally complete and reliable, we continue to 

improve timeliness and accuracy as discussed in the Management’s Discussion and 

Analysis section of this report. I am pleased that for the seventh year in a row, the 

Department has earned a clean opinion from independent auditors on its financial 

statements. This report includes information and assurances about the Department’s 

financial management systems and management controls required by the Federal 

Managers’ Financial Integrity Act of 1982. These systems and controls provide reasonable 

assurance that the objectives of the Act are being met, except for one material weakness 

identified by management—Information Security. For further discussion, please see the 

Management’s Assurances section of the Management’s Discussion and Analysis on pages 

1-44 of this report. 
MESSAGE FROM THE SECRETARY

iv FY 2008 Performance and Accountability Report—U.S. Department of Education 

The quality of education our country delivers is a key determinant of the kind of future we 

can expect. The Department of Education remains committed to our mission to promote 

student achievement and preparation for global competitiveness by fostering educational 

excellence and ensuring equal access. 

Sincerely, 

//s//

Margaret Spellings 
Contents 

Message From the Secretary ............................................................................................................... iii 

Management’s Discussion and Analysis 

Our Mission and History ........................................................................................................................ 2 

Who We Are: Our Organization and Workforce ...................................................................................3 

Who We Serve: Our Public Benefit ...................................................................................................... 5 

Continuous Improvement: The Department Reports on a New Strategic Plan ................................... 6 

Our Accomplishments for FY 2008 and Ongoing Initiatives ............................................................... 10 

Civil Rights Enforcement ..................................................................................................................... 18 

Linking Taxpayer Dollars to Performance Results: Accountability Through the Integration of 

Results With Investment ............................................................................................................... 20 

How We Validate Our Data ................................................................................................................. 23 

Overview of Performance Results....................................................................................................... 26 

Financial Highlights ............................................................................................................................. 31 

Limitations of Financial Statements .................................................................................................... 34 

President’s Management Agenda: Scorecard Results ...................................................................... 35 

Inspector General’s Discussion of Management Challenges ............................................................. 36 

Management’s Assurances ................................................................................................................. 41 

Performance Details 

Performance Details Overview............................................................................................................ 46 

Goal 1: Improve Student Achievement, With a Focus on Bringing All Students to Grade Level in 

Reading and Mathematics by 2014 ..............................................................................................48 

Goal 2: Increase the Academic Achievement of All High School Students ....................................... 69 

Goal 3: Ensure the Accessibility, Affordability, and Accountability of Higher Education and Better 

Prepare Students and Adults for Employment and Future Learning. ........................................... 81 

Cross-Goal Strategy on Management............................................................................................... 103 

Discontinued Strategic Plan Measures From FY 2007..................................................................... 113 

Summary of Inspector General Audits and Government Accountability Office Reports by Goal ..... 117 

Summary of Performance Evaluations by Goal ................................................................................ 122

Financial Details 

Message From the Chief Financial Officer........................................................................................ 126 

Financial Summary............................................................................................................................ 127 

Principal Financial Statements.......................................................................................................... 128 

Notes to Principal Financial Statements ........................................................................................... 132 

Required Supplementary Information ............................................................................................... 170 

Required Supplementary Stewardship Information .......................................................................... 171 

Report of the Independent Auditors........................................................................................ 175 

Other Accompanying Information 

Improper Payments Information Act Reporting Details ..................................................................... 192 

Summary of Financial Statement Audit and Management Assurances............................................ 203

Glossary of Acronyms and Abbreviations ......................................................................................... 205 

Selected Department Web Links....................................................................................................... 209 

FY 2008 Performance and Accountability Report—U.S. Department of Education v 
TABLE OF CONTENTS

vi FY 2008 Performance and Accountability Report—U.S. Department of Education 

Figures 

Figure 1. Department of Education Workforce Composition by Race/Ethnicity .................................. 3 

Figure 2. Department of Education Coordinating Structure FY 2008 .................................................. 4 

Figure 3. Student Demographics (public school students by race and ethnicity and special 

populations, school year 2005–2006) .......................................................................................... 49 

Figure 4. NAEP Reading Achievement for 2006–2007 (Public School Students)............................. 50 

Figure 5. NAEP Math Achievement for 2006–2007 (Public School Students) .................................. 52 

Figures 6 and 7. Highly Qualified Teachers for 2006–2007 School Year.......................................... 55 

Figure 8. Options for Parents, School Year 2006–2007.................................................................... 59 

Figure 9. Preparing America’s Students for Success ........................................................................ 61

Figure 10. Percentage of 2008 High School Graduating Class Meeting ACT College Readiness 

Benchmark Scores ....................................................................................................................... 70 

Figure 11. The Class of 2007: Race/Ethnicity of AP Examinees vs. Graduating Seniors in 

U.S. Public Schools ...................................................................................................................... 73 

Figure 12. Average Scores of U.S. 15-year-old Students on Combined Science Literacy Scale, 

by Race/Ethnicity, 2006................................................................................................................ 75 

Figure 13. Percentage of 2008 College-Bound Seniors Taking Physics, Precalculus, and Calculus, 

by Race/Ethnicity .......................................................................................................................... 76 

Figure 14. Percentage of Upward Bound Participants Enrolling in College ...................................... 84 

Figure 15. Customer Service Level on the American Customer Satisfaction Index for the Free 

Application for Federal Student Aid on the Web .......................................................................... 90 

Figure 16. Percentage of Adults Served by the Adult Education State Grants Program With a High 

School Completion Goal Who Earn a High School Diploma or Recognized Equivalent.............. 94 

Figure 17. Percentage of Adults Served by the Adult Education State Grants Program With a Goal 

To Enter Postsecondary Education or Training Who Enroll in a Postsecondary Education or 

Training Program .......................................................................................................................... 95 

Figure 18. Percentage of Adults Served by the Adult Education State Grants Program With an 

Employment Goal Who Obtain a Job by the End of the First Quarter After Their Program Exit 

Quarter .......................................................................................................................................... 96 
FY 2008 Performance and Accountability Report—U.S. Department of Education 

Management’s Discussion and Analysis

Management’s

Discussion 

and 

Analysis 
MANAGEMENT’S DISCUSSION AND ANALYSIS

2 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Our Mission and History 

Mission. The U.S Department of Education’s mission is to promote student achievement 

and preparation for global competitiveness by fostering educational excellence and 

ensuring equal access. Adopted in May 2007, it retains the Department’s historic role of 

―providing equal access to a high-quality education,‖ and affirms the need to provide access 

to a high-quality education and to improve the academic performance of all learners. 

To succeed in a highly competitive global economy, our nation must have world-class 

higher education and continuous learning options that derive from a secondary education 

system that graduates high school students with advanced mathematics and science skills. 

Students with these skills are the product of rigorous mathematics and science programs in 

elementary and middle schools that focus on inclusion of all students in challenging and 

comprehensive instruction using best practices and research-based techniques. 

America has a great range of educational environments to meet the diverse needs of its 

students: public schools, public charter schools, specialized schools and nonpublic 

schools. This report discusses how the Department of Education (the Department) 

supports these initiatives and activities. 

History. The federal government recognized that furthering education is a national priority 

in 1867, when its initial role in education encompassed statistical data collection and 

reporting. For a summary of education legislation since that time, go to: 

http://nces.ed.gov/pubs2008/2008022_4.pdf

The Department is committed to giving students the skills they need. It recognizes the 

primary role of states and school districts in providing a high-quality education, employing 

highly qualified teachers and administrators, and establishing challenging content and 

achievement standards. The Department is also setting high expectations for its 

management by creating a crosscutting strategy on management practices, fiscal integrity 

and a culture of high performance. 

Improved Academic Achievement and Economic Competitiveness

Continuous National Improvement Through Education Elementary Reading & Mathematics Proficiency Increased Rigor in Mathematics & Science Improvement in High School Competitiveness More Students Accessing Postsecondary Education Increased Student and Parent Participation

Improved Teacher Quality
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 3

Management’s Discussion and Analysis

Who We Are: Our Organization and Workforce 

Workforce Overview 

The Department has the smallest workforce of any cabinet-level agency, with an 

approximate workforce for fiscal year (FY) 2008 of 4,400. 

Department of Education Workforce Makeup 

According to the U.S. Equal Employment Opportunity Commission, Federal Agency Annual 

EEO Program Status Report for the period covering October 1, 2006 to September 30, 

2007, achieving an ―accountability for results‖ culture and addressing human capital needs 

are two critical factors in attaining equal opportunity in the workforce. This includes 

promoting a fair, efficient, responsive and productive work environment for all employees, 

and recruiting and retaining a workforce that is skilled, diverse and committed to excellence. 

Figure 1. Department of Education Workforce Composition by Race/Ethnicity 

Note: The total does not equal 100 percent due to rounding. 

Source: U.S. Equal Employment Opportunity Commission, Federal Agency Annual EEO Program Status 

Report for the period covering October 1, 2006 to September 30, 2007. 

Organization 

The Department’s coordinating structure supports the Department’s continuing role of being 

responsive to the needs of states, districts, schools, teachers, students, institutions of 

higher education and other stakeholders in fostering academic achievement. This 

coordinating structure is displayed on the next page. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

4 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Figure 2. Department of Education Coordinating Structure FY 2008 

Office of the Secretary

Office of Management

Office of the Chief Financial Officer

Office for Civil Rights

Institute of Education Sciences

Office of Inspector General

Office of the General Counsel

Office of Communications and Outreach

Office of Legislation & Congressional Affairs

Office of Planning, Evaluation and Policy Development

Office of the Chief Information Officer

Risk Management Service

Office of the Under Secretary Federal Student Aid

Office of Vocational and Adult Education Office of Postsecondary Education WH Initiative on Historically Black Colls & Univs Staff WH Initiative on Tribal Colleges and Universities Staff

Chief Operating Officer Chief of Staff Center for Faith-Based and Community Initiatives

Budget Service

WH Initiative on Educational Excellence for Hispanic Americans

Office of Elementary and Secondary Education

Office of English Language Acquisition

Office of Special Education and Rehabilitative Services

Office of Innovation and Improvement

Office of Safe and Drug-Free Schools

Office of the Deputy Secretary

International Affairs Office
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 5

Management’s Discussion and Analysis

Who We Serve: Our Public Benefit 

Every American has a stake in the nation’s educational success. The Department’s Web 

site and non-electronic tools focus on our primary customers—students, teachers, parents 

and administrators. With the No Child Left Behind Act of 2001 (No Child Left Behind), the 

federal government strengthened its commitment to elementary and secondary students. 

Higher education assistance provides access to postsecondary education for a significant 

number of the nation’s undergraduates.

Elementary and Secondary Students 

According to the Department’s report, The Condition of Education 2008, in the 2008–09 

school year public school enrollment is expected to approach 50 million students. Total 

public school enrollment is projected to set new records each year from 2008 to 2017, at 

which time it is expected to reach 54.1 million. See more on Departmental services to 

students at http://www.ed.gov/students/landing.jhtml. 

Teachers 

According to National Center for Education Statistics projections, there are more than 3.2 

million teachers in U.S. public elementary and secondary schools in the 2008–09 school 

year. No Child Left Behind requires that all teachers be highly qualified in the core 

academic subjects they teach. See more details at 

http://www.ed.gov/teachers/landing.jhtml. 

Parents 

No Child Left Behind has made schools more accountable to parents and provided parents 

with information and options for their children’s education. If a school in need of 

improvement does not show progress for several years, parents of students in that school 

can transfer their children to another school in the district or request supplemental 

educational services, (e.g., free tutoring). See more details at 

http://www.ed.gov/parents/landing.jhtml. 

State and Local Educational Agencies 

The Department works with state educational agencies to provide local educational 

agencies with the tools they need. See more details at: 

http://www.ed.gov/about/contacts/state/index.html?src=gu

Administrators 

Principals, superintendents and other administrators are at the center of school reform and 

accountability efforts. See more details at http://www.ed.gov/admins/landing.jhtml. 

Postsecondary Students and Institutions 

More students are acquiring degrees in colleges. To assist students otherwise unable to 

afford postsecondary education, the Department provides assistance through programs 

such as the Federal Pell Grant Program, the Federal Family Education Loan Program, the 

Federal Direct Loan Program, the Federal Perkins Loan Program and the Federal WorkStudy Program, authorized under Title IV of the Higher Education Act of 1965. See more 

details at http://www.ed.gov/finaid/landing.jhtml?src=rt. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

6 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Continuous Improvement: The Department Reports on 

a New Strategic Plan 

Continuity and Change 

Since the Department published its first 5-year strategic plan under the Government 

Performance and Results Act of 1993, each successive plan has further refined the goals of 

improving student achievement, increasing access to higher education and implementing 

high-quality management standards within the Department. 

Departmental performance measures for management over the last 10 years have focused 

on student assessments with emphases on reading and mathematics, performance 

standards for schools and districts, teacher preparation, use of scientifically based research 

in the classroom, access to higher education and improved internal management. 

Performance measures also have focused on core indicators of continuous improvement, 

including: 

 Increasing percentages of all students who meet or exceed Proficient and Advanced

performance levels in national and state assessments of reading, mathematics and 

other core subjects. 

 Improving proficiency levels of students in high-poverty schools who show continuous 

improvement comparable to those for the nation as a whole. 

 Increasing high school attendance and graduation rates, particularly in high-poverty 

schools and among students with disabilities and others at risk of school failure. 

 Increasing numbers of high school students who successfully complete Advanced 

Placement courses each year, including students in high-poverty schools. 

 Providing access to students pursuing higher education or other successful transitions 

into employment, further education or the military. 

 Improving internal controls and addressing management challenges within the 

Department of Education. 

The current strategic plan continues to report on these key indicators of performance and 

adds several new measures of performance focused on high school improvement and 

human capital. 

As shown by the Strategic Plan Comparison on the following page, these core goals, 

objectives and measures have been the consistent focus of the Department’s strategic 

planning process. The comparison also shows continuity among goals and objectives 

between plans. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 7

Management’s Discussion and Analysis

STRATEGIC PLAN COMPARISON 

2007–2012 Strategic Plan 2002–2007 Strategic Plan

Mission: Promote student achievement and preparation for global 

competitiveness by fostering educational excellence and 

ensuring equal access 

Mission: Ensure equal access to education and to promote educational 

excellence throughout the nation

Goal 1: Improve student achievement, with a focus on bringing 

all students to grade level in reading and mathematics by 

2014

Goal 1: Create a Culture of Achievement

Goal 2: Improve Student Achievement

Goal 3: Develop Safe and Drug-Free Schools

Goal 4: Transform Education into an Evidence-Based Field

Obj. 1: Improve student achievement in reading

Obj. 2: Improve student achievement in mathematics

2.1: Ensure that all students read on grade level by the third grade

2.2: Improve mathematics and science achievement for all students

Obj. 3: Improve teacher quality 2.4: Improve teacher and principal quality 

Obj. 4: Promote safe, disciplined and drug-free learning 

environments

3.1: Ensure that our schools are safe and drug free

Obj. 5: Increase information and options for parents

Obj. 6: Increase high school completion rate

1.3: Increase information and options for parents

2.3 Improve the performance of all high school students

Obj. 7: Transform education into an evidence-based field 1.4: Encourage the use of scientifically based methods within federal 

education programs 

Goal 2: Increase the academic achievement of all high school 

students

Goal 1: Create a Culture of Achievement

Goal 2: Improve Student Achievement

Obj. 1: Increase the proportion of high school students taking a 

rigorous curriculum

1.3: Increase flexibility and local control

2.3: Improve the performance of all high school students

Obj. 2: Promote advanced proficiency in mathematics and science 

for all students

2.2: Improve mathematics and science achievement for all students

Obj. 3: Increase proficiency in critical foreign languages 2.5: Improve student knowledge of world languages 

Goal 3: Ensure the accessibility, affordability and accountability 

of higher education and better prepare students and 

adults for employment and future learning

Goal 5: Enhance the Quality of and Access to Postsecondary and 

Adult Education 

Obj. 1: Increase success in and completion of quality postsecondary 

education

5.1: Reduce the gaps in college access and completion among 

student populations differing by race/ethnicity, socioeconomic 

status and disability while increasing the educational attainment of 

all

5.2: Strengthen accountability of postsecondary education institutions

5.4: Strengthen Historically Black Colleges and Universities, HispanicServing Institutions and Tribal Colleges and Universities

5.6: Increase the capacity of U.S. postsecondary education institutions 

to teach world languages, area studies and international issues

Obj. 2: Deliver student financial aid to students and parents 

effectively and efficiently

5.3: Establish effective funding mechanisms for postsecondary 

education 

Obj. 3: Prepare adult learners and individuals with disabilities for 

higher education, employment and productive lives

5.1: Reduce the gaps in college access and completion among 

student populations differing by race/ethnicity, socioeconomic 

status and disability while increasing the educational attainment of 

all

5.5: Enhance literacy and employment skills of American adults

Management Goal: Cross-Goal Strategy on Management Goal 6: Establish Management Excellence

Obj. 1: Maintain and strengthen financial integrity and management 

and internal controls

6.1: Develop and maintain financial integrity and management and 

internal controls

6.3: Manage information technology resources, using e-gov, to 

improve services for our customers and partners

6.4: Modernize the Student Financial Assistance programs and reduce 

their high-risk status

Obj. 2: Improve the strategic management of the Department’s 

human capital

6.2: Improve the strategic management of the Department’s human 

capital strategies

Obj. 3: Achieve budget and performance integration to link funding 

decisions to results

6.5: Achieve budget and performance integration to link funding 

decisions to results
MANAGEMENT’S DISCUSSION AND ANALYSIS

8 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Strategic Plan 

The U.S. Department of Education’s Strategic Plan for Fiscal Years 2007–12 sets high 

expectations for America’s schools, students and for the Department. It streamlines 

Department goals and measures while stressing continuity. 









Goal 1: Improve student achievement and teacher quality and renew troubled schools 

so that every student can read and do math at grade level by 2014, as called for by No 

Child Left Behind. 

Goal 2: Encourage more rigorous and advanced coursework to improve the academic 

performance of our middle and high school students. 

Goal 3: Work with colleges and universities to improve access, affordability and 

accountability, to prepare students and adults for employment and future learning. 

Cross-Goal Strategy on Management: Strengthen strategic management controls, 

including human capital, and link funding to results. 

Discontinued Strategic Measures. A total of 54 measures in the Strategic Plan 2002–

2007 have been replaced by new measures in the Strategic Plan for Fiscal Years 2007–12. 

Of those measures, 10 measures exceeded the FY 2007 targets, 10 met their targets, 8 did 

not meet their targets and two have pending results. Remaining measures either had no 

data reported or programs did not collect data in FY 2007. Eleven measures continue as 

part of the current strategic plan. A list of discontinued measures is provided on page 113. 

The pillars of the strategic plan are the President’s Management Agenda (see page 35), the 

Organizational Assessment (see page 16), the Program Assessment Rating Tool (see page 

20) and employee performance evaluations, including Senior Executive Service. 

Performance/Planning Pyramid Strategic Plan (GPRA) Defines and communicates long-term objectives while identifying specific measures and targets as indicators of organizational progress

Program Assessment Rating Tool (PART) Promotes program effectiveness by focusing on improvement and driving results that support Dep’t objectives Organizational Assessment (OA) Facilitates performance management and evaluation at a component level, focusing on processes and programs that support strategic objectives SES and EDPAS Plans Facilitate performance management and evaluation at an employee level, focusing on individual contributions that support processes and strategic objectivesPresident’s Management Agenda (PMA) Promotes efficiency of key processes that support achievement of Department’s strategic objectives

Organizational mission and goals

Supported by processes and programs

Built on a foundation of people

End Means

Program office focus

Support office focus
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 9

Management’s Discussion and Analysis

Management Challenges Met Over Time 

The Department has met or shown significant progress on all seven management goals set 

by the Department 10 years ago: 















Auditors will issue an unqualified (clean) opinion on the Departmentwide annual 

financial statements every year. MET

Open audit recommendations related to financial statement audits will be addressed 

and closed. SIGNIFICANT PROGRESS (see Audit Report on page 175).

Internal controls will be improved and material weaknesses and system nonconformances will be reduced as described in the Department’s annual Federal 

Managers’ Financial Integrity Act report. MET 

The Department’s student financial aid programs will be removed from the Government 

Accountability Office’s (GAO) list of “High Risk” Programs. MET

The Department’s financial systems will be in substantial compliance with the Federal 

Financial Management Improvement Act of 1996 (FFMIA), which requires that financial 

management systems provide reliable, useful and timely information. MET

Findings in statewide single audits and program review reports will decrease as the 

number of Cooperative Audit Resolution and Oversight Initiative projects increases with 

the Department’s state partners. MET1

Debt management for Federal Student Aid will continue to improve: student loan 

defaults will decrease and recovery of defaulted student loans will increase. MET2

The Department has remained consistent in its central goals, continuously improving the 

quality of performance measures and the validation and verification of received data. 

Additionally, the Department has streamlined its annual reports and performance plans to 

increase transparency, better presenting the Department’s public benefits of the federal role 

in education. The Department continues to provide forward-looking national leadership in 

the promotion of educational excellence. 

 

1

 The last Cooperative Audit Resolution and Oversight Initiative audits were resolved in 2002 and 

2006 respectively. The overall number of audit findings was reduced in subsequent statewide 

audits. As a result of this process, the Department is now focusing on mitigating risk, reducing the 

potential for improper payments, and seeking to reduce the overall number of audit findings. In 

2006, the Department issued an audit findings “library” that provided information on audit findings by 

Department program to assist principal offices with their monitoring efforts. In 2007, the Department 

created the Risk Management Service to develop and coordinate a Departmentwide risk 

management strategy, and to coordinate and support consistent quality management of formula and 

competitive grants. 

2 Cohort default rates have steadily declined over the last decade from 9.9 percent in 1998 to 

5.1 percent in 2007; recoveries have steadily increased from 8 percent in 1999 to 10.8 percent in 

2005 (FSA-held portfolio and tracked under GPRA). Since 2005, the Department has tracked Direct 

Loan and Federal Family Education Loan program recoveries. The Department has steadily met 

and mostly exceeded the targets and is on track to exceed the targets this year.
MANAGEMENT’S DISCUSSION AND ANALYSIS

10 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Our Accomplishments for FY 2008 

and Ongoing Initiatives 

Protecting Student Access and Affordability in Higher Education 

As part of its continued commitment to ensure that all qualified students have access to 

federal student loans, the Department has developed a four-part Plan designed to improve 

the functioning of the student loan marketplace. The four components of the Plan are an 

offer to purchase Federal Family Education Loan program (FFEL) loans from lenders and to 

offer lenders access to short-term liquidity; a pledge to work with the student lending 

community on solutions to ensure the FFEL program and other student lending programs 

that serve the best interest of students and taxpayers; an enhanced Lender of Last Resort 

program to provide access to FFEL program loans for students who face difficulty obtaining 

conventional loans; and a Federal Direct Loan Program with increased capacity. 

The Plan includes a loan purchase commitment under which the Department agrees to 

purchase new FFEL loans for the 2008-09 academic year and to offer FFEL lenders access 

to short-term liquidity. The Plan also includes strengthening the FFEL Lender of Last Resort 

program to help ensure that students are able to obtain FFEL loans and increasing the 

Department’s capacity to make loans under the Federal Direct Student Loan program.

The Department has joined with the Department of the Treasury to analyze market 

conditions in light of the decision by some lenders to suspend participation in the FFEL. 

The Department is also committed to supporting the current FFEL program as a successful 

public/private partnership, while protecting taxpayer interests.

New Loan Purchase Programs Address Student Aid Needs 

During FY 2008, the Department of Education implemented a new statutory loan purchase 

authority to ensure that credit market disruptions did not cause eligible students and their 

parents to lose access to FFEL loans for the 2008-2009 academic year. The Department 

also revised agreements with FFEL guaranty agencies under the existing Lender of Last 

Resort (LLR) authority to provide further assurance that loans would be available for all 

eligible borrowers. 

Emergency Loan Purchase Authority. In FY 2008, Congress enacted the Ensuring 

Continued Access to Student Loans Act of 2008 (ECASLA) which authorizes the 

Department to buy loans from FFEL lenders when the Department determines that there is 

not sufficient loan capital to meet the demand for loans. This authority was recently 

extended to authorize loan purchases through July 1, 2010. 

Lenders may access capital under this authority in two ways: by selling eligible FFEL loans 

directly to the Department or by selling the Department participation interests in eligible 

FFEL loans. In FY 2008, the Department directly purchased over 20,000 loans valued at 

approximately $59 million. In FY 2008, the Department purchased more than $5 billion in 

participation interests in FFEL loans. 

Participating lenders represent to the Department that they will continue to participate in the 

FFEL program and that when funds become reasonably available from private sources on 

affordable terms, they will originate new loans or acquire existing loans made by other 

lenders. For additional information, please see http://federalstudentaid.ed.gov/ffelp/. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 11

Management’s Discussion and Analysis

Lender of Last Resort. The Higher Education Act of 1965, as amended, requires guaranty 

agencies (GAs) to make loans as a lender of last resort to those students who are unable to 

obtain FFEL loans from conventional FFEL lending sources. GAs may arrange for a 

conventional FFEL lender to make Lender of Last Resort loans or may make loans directly 

with their own resources. The Department may advance funds to a GA to make lender of 

last resort loans if that GA cannot arrange for such lending by another party and lacks other 

resources sufficient to make the needed loans. The Department will require that any 

federal advances be deposited in the GA’s Federal Fund and that loans made from those 

funds be assigned to the Department promptly after they are disbursed. The Department 

did not make federal advances for Lender of Last Resort loans in FY 2008 and none are 

currently anticipated for FY 2009. 

TEACH Grant Program. Authorized by the College Cost Reduction and Access Act of 

2007, this program offers grants of up to $4,000 to students agreeing to teach math, 

science or other specialized subjects in a high-poverty school for at least 4 years within 8 

years of their graduation. If students fail to fulfill the service requirements, grants turn into 

Unsubsidized Stafford Loans, with interest accrued from the time of the grant award. 

Because the grants turn into loans when the service obligations are not satisfied, budget 

and accounting treatment of the Teacher Education Assistance for College and Higher 

Education (TEACH) Grant Program is consistent with the Federal Credit Reform Act of 

1990. Subsidy costs reflecting the net present value of grant costs less expected future 

loan payments are recorded in the TEACH Grant Program Account. In FY 2008, the 

Department disbursed approximately 800 grants exceeding $1.4 million under TEACH. 

Information Resources for Students and Parents. The Department and the Federal 

Trade Commission have jointly released a consumer guide to help students and their 

families navigate the maze of offers they may face when seeking new student loans or 

consolidating existing student loans to pay for higher education. Student Loans: Avoiding 

Deceptive Offers provides advice to help consumers detect deceptive marketing offers from 

private companies seeking their student loan business. See more details at 

http://ombudsman.ed.gov/CRE43-studentloans3.pdf. 

Improving college access, affordability and accountability are key to giving more Americans 

a chance at higher education and keeping America economically competitive. Families 

need more information about students' federal aid eligibility so that they can plan ahead for 

college. The Department’s FAFSA4caster gives families an important tool they can use to 

make decisions about the future. The FAFSA4caster calculates a student's eligibility for 

federal student aid, reduces the time it will take to complete the Free Application for Federal 

Student Aid (FAFSA) and simplifies the financial aid process for students and families. For 

more details see http://www.federalstudentaid.ed.gov. 

The Reauthorization of the Higher Education Act

A college education continues to be the best path to the strengthening the future of our 

nation. The Higher Education Opportunity Act, the latest renewal of the Higher Education 

Act of 1965, continues the effort to make college more affordable and expands college 

access. The legislation encourages colleges to rein in price increases, improves integrity 

and accountability in student loan programs, simplifies the federal student aid application 

process, expands college access and support for low-income and minority students and 
MANAGEMENT’S DISCUSSION AND ANALYSIS

12 FY 2008 Performance and Accountability Report—U.S. Department of Education 

increases college aid for veterans and military families. The Act establishes measures to 

ensure equal college opportunities for students with disabilities, encourages colleges to 

adopt energy-efficient practices and strengthens our workforce and competitiveness. 

Indicators To Track the Nation’s Educational Progress

No Child Left Behind is providing parents, educators and the public with historic levels of 

data about how schools in the United States are performing. The five leading education 

indicators—achievement in reading and mathematics, the achievement gap, high school 

graduation, college readiness and college completion—complement No Child Left Behind

by providing a snapshot of national trends. These five were selected because they are 

national, reliable, results-based, and, in most cases, annual. Further, it is believed that they 

best capture the Department’s overarching goals in that they encompass metrics of the 

performance of the United States education system from elementary through 

postsecondary. The five indicators were averaged, with equal weighting, to produce a 

single summary (composite) indicator. For more information and technical notes on how 

the indicators are calculated, go to 

http://www.ed.gov/nclb/accountability/results/trends/index.html.

Education Indicator 2000 2007

Achievement: What percentage of 4th- and 

8th-graders are proficient or above in 

reading and mathematics?

25% 33%

Achievement Gap: What percentage of 

black and Hispanic 4th-and 8th-graders are 

proficient or above in reading and 

mathematics as compared to the same 

cohort of white students?

23% 35%

High School Graduation: What is the 

percentage of public high school students 

who earn a regular diploma in four years?

72% 74%

College Readiness: Of the high school 

students who take a college entrance exam, 

what percentage are ready for a college 

course?

42% 42%

College Completion: What percentage of 

our young labor force (25-34 years old) have 

at least a bachelor's degree?

29% 31%

Composite 38% 43%

Strengthening No Child Left Behind

This year, Secretary Spellings developed new regulations to strengthen and clarify No Child 

Left Behind. The regulations focus on improved accountability and transparency, uniform 

and disaggregated graduation rates and improved parental notification for supplemental 

educational services and public school choice. These new regulations outline the criteria 

that states must meet to incorporate individual student progress into their definitions of 

adequate yearly progress. Additionally, the regulations strengthen the provisions of the law 

on school restructuring by clarifying that restructuring interventions must generally be more 

rigorous than a school’s prior corrective actions and that interventions must address the 

reasons that the school is in restructuring. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 13

Management’s Discussion and Analysis

The Secretary has also created a National Technical Advisory Council, made up of experts 

in the fields of education standards, accountability systems, statistics and psychometrics, 

that is tasked with advising the Department on the implementation of standards, 

assessments and accountability systems. 

A Uniform Definition of Graduation Rate. The Department has established a uniform 

method for calculating high school graduation rates that identifies how many incoming 

freshmen in a high school graduate within four years with a regular high school diploma. All 

states must now use the same formula that follows a cohort of first-time ninth grade 

students and calculates how many of those students graduate with a regular high school 

diploma within four years. The formula adjusts the initial cohort to account for students who 

transfer into or out of the cohort. Each state is responsible for setting a graduation rate goal 

and annual key targets, and for disaggregating data by race, ethnicity, disability, limited 

English proficiency and income level to report graduation rates and to determine adequate 

yearly progress. 

Strengthening Public School Choice and Supplemental Educational Services. An 

interim report on state and local implementation of No Child Left Behind’s public school 

choice and supplemental educational services options found that the number of students 

participating in both options has increased substantially. However, in school year 2004-05 

only a small proportion of eligible students took advantage of the options available to them. 

See more details at 

http://www.ed.gov/rschstat/eval/choice/implementation/achievementanalysis.pdf. A parent 

survey found that only a small percentage of eligible parents knew they had been notified 

about the school choice option and only a slightly larger percentage knew that their child 

was eligible for supplemental services. The Department has proposed regulations to 

provide timely and clear notification to parents whose children attend Title I schools 

identified as in need of improvement and who are eligible for supplemental educational 

services. 

New Regulations for Title I Build On Accountability. The Department’s new regulations 

for Title I of the Elementary and Secondary Education Act of 1965 (ESEA), as amended by 

No Child Left Behind, build on the advancements of state assessments and accountability 

systems, as well as strengthening the public school choice and supplemental educational 

services provisions of No Child Left Behind. The new regulations require states to explain 

the states’ minimum group size to provide statistically reliable information, and report state 

National Assessment of Educational Progress (NAEP) reading and mathematics results on 

their state report cards. These regulations were published on October 28 and will become 

effective on November 28, 2008. See more details at 

http://www.ed.gov/policy/elsec/reg/title1/index.html. 

New Flexibilities Under No Child Left Behind

Growth Model Pilot. The Department continues to provide expanded flexibilities to states 

under No Child Left Behind, including the Growth Model Pilot, which allows states that 

adhere to the core principles of No Child Left Behind to include measures of individual 

students’ annual progress in the calculation of adequate yearly progress. This year, the 

Department opened the growth model pilot to all eligible states. 

Differentiated Accountability. In FY 2007, Secretary Spellings announced another 

important flexibility under No Child Left Behind. The new initiative, differentiated 
MANAGEMENT’S DISCUSSION AND ANALYSIS

14 FY 2008 Performance and Accountability Report—U.S. Department of Education 

accountability, allows eligible states to distinguish between those schools in improvement 

that are just missing the mark and those that need significant reform. Differentiated 

accountability allows states to vary the intensity and type of interventions to match the 

reasons that lead to a school’s identification for restructuring. 

In return for this flexibility, states participating in the program must commit to building their 

capacity for school reform, taking the most significant actions for the lowest-performing 

schools, addressing teacher effectiveness and using data to determine the types and 

categories of intervention. As part of a pilot program, states meeting four core principles 

(accountability, differentiation, interventions and restructuring) may propose a differentiated 

accountability model. In order to participate in the pilot, a state’s standards and 

assessment system must be fully approved, the state must have no significant monitoring 

findings, the state must have an approved highly qualified teacher plan and the state must 

provide timely adequate yearly progress information to the public. 

Additionally, the Secretary has created a pilot program for states participating in 

Supplemental Educational Services (SES) for students attending Title I schools in year one 

of school improvement status. This pilot allows school districts to offer tutoring ahead of 

schedule under No Child Left Behind. States approved for the SES pilot must meet the 

following criteria: timely notification of adequate yearly progress; a state SES evaluation in 

progress; and a state assessment system for which the Department has granted Full 

Approval with Recommendations. 

Progress in Reading, Mathematics and Science Achievement 

Every day, schools in the U.S. 

work to make progress toward the 

goal of having all students perform

National Reading Achievement

290

270

250

230

210

2002 2003 2005 2007

Grade 4 Grade 8

Exhibit represents NAEP reading achievement trend data from 

2002 to 2007.

Source: National Assessment of Educational Progress (NAEP) 

on grade level or better in reading 

and mathematics by 2014. 

Achievement of this goal depends 

on a continued commitment to 

high standards, annual 

assessments, accountability for 

results, a highly qualified teacher 

in every classroom and 

information and options for 

parents. The Department has 

been tracking progress and 

collecting data about the academic performance of students in order to chart current 

achievement and plan a course of action for future progress. See more details at 

http://www.ed.gov/nclb/accountability/results/progress/nation.html

States Report Gains in Reading Achievement. The Reading First Program is an 

academic cornerstone of No Child Left Behind. Reading First builds on a solid foundation 

of scientifically based research and provides struggling students in the highest-need 

schools with the necessary resources to make progress in reading achievement. Reading 

First is designed to help at-risk students in grades K-3, while Early Reading First helps 

preschool age children. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 15

Management’s Discussion and Analysis 

Actual student achievement data reported by states on their annual performance reports 

show that Reading First students from nearly every grade and subgroup have made 

impressive gains in reading proficiency. In Grade 1, 44 of 50 state educational agencies 

(SEAs) reported increases in the percentage of students proficient in reading 

comprehension. 

In Grade 2, 39 of 52 SEAs reported improvement and in Grade 3, 27 of 35 SEAs reported 

improvement.3

 For detailed Reading First state-by-state data, please visit 

www.ed.gov/programs/readingfirst/performance.html and 

http://www.ed.gov/programs/readingfirst/state-data/achievement-data.pdf

A recent report on Reading First, released by the Department’s Institute of Education 

Sciences, provided additional information about the Department’s efforts to improve reading 

achievement. This report found that Reading First had a positive, statistically significant 

impact on the total class time spent on the five essential components of reading instruction 

promoted by the program. However, while students at Reading First schools made notable 

gains and received significantly more reading instruction than those in non-Reading First 

schools, their improvements were not significantly different from those of students at nonReading First schools in the same district. It is important to note that the study measured 

Reading First schools against other schools in Reading First districts that may have 

implemented the same reforms. For the full report, see 

http://ies.ed.gov/ncee/pdf/20084016.pdf. 

Improved Proficiency in Mathematics and Science. Student achievement in 

mathematics and science continues to show gains since the implementation of No Child 

Left Behind. The latest results from the National Science Foundation’s Math and Science 

Partnership Program show improved proficiency among all elementary and middle school 

students who participated in the program. The results also show a narrowing of the 

achievement gaps between both African-American and Hispanic students and white 

students in elementary school math and between African-American and white students in 

elementary and middle school science. See more detail at 

http://www.nsf.gov/news/news_sum

m.jsp?cntn_id=111514. 

The 2007 National Assessment of 

Educational Progress scores for 

mathematics showed that the 

overall score for students in Grade 

4 in mathematics was higher than 

in any previous assessment. There 

was improvement across the board 

in mathematics performance for 

white, African-American, Hispanic 

 

3

 The SEAs implementing Reading First programs and providing data are the 50 states, the District 

of Columbia, the U.S. Virgin Islands, American Samoa, and the Bureau of Indian Affairs. SEA data 

are included in the calculations only if the state provided complete and reliable data for the first year 

of implementation through the 2006-07 school year on the same measure with the same proficiency 

benchmark. The number of SEAs reporting data varies because SEAs did not all provide complete 

and reliable data for every grade every year. Grade 3 data include only SEAs reporting on the same 

assessment used in Grades 1, 2 and 3. 

210

230

250

270

290

2000 2003 2005 2007

National Math Achievement

Grade 4 Grade 8

Source: National Assessment of Educational Progress (NAEP) 
MANAGEMENT’S DISCUSSION AND ANALYSIS

16 FY 2008 Performance and Accountability Report—U.S. Department of Education 

and Asian and Pacific Islander students. The average score for fourth-graders has 

increased 27 points over the past 17 years and the score for eighth-graders has increased 

19 points during the same period. The chart above represents trend data from 2000 to 

2007. See more detail at http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2007494. 

Global Competitiveness Is a Vital National Interest 

Foreign Languages Critical for National Security. With our expanding global economy 

and national security needs, it is crucial that large numbers of Americans be able to 

communicate in languages such as Arabic, Chinese, Russian, Korean, Hindi and Farsi. To 

help increase the number of Americans learning foreign languages critical to national 

security and commerce, the President’s National Security Language Initiative is intended to 

address the shortage of critical foreign language speakers by supporting new and 

expanded programs in grades K-12. The Initiative also helps educate teachers in those 

languages. Speaking another’s language promotes understanding, conveys respect, 

strengthens our ability to engage people from other nations and governments and provides 

others with an opportunity to learn more about America and its people. See more details at 

http://www.ed.gov/about/inits/ed/competitiveness/nsli/index.html 

The Department and the European Union Partner to Address Global Issues. The 

Department of Education and the European Union are jointly funding projects to advance 

international curriculum development and student exchanges. The projects fund 

collaborative efforts between colleges and universities in the United States and Europe to 

develop programs of study in a wide range of academic and professional disciplines. The 

projects will foster student exchanges and address crucial global issues. Each project 

consists of a consortium of U.S. and European institutions with funding provided by both the 

Department and the European Union. 

Ongoing Improvement Initiatives 

The Organizational Assessment. The Department’s Organizational Assessment (OA) is 

the Departmentwide performance management system, developed in response to the 

requirements of Executive Order 13450, Improving Government Program Performance, as 

well as the Office of Personnel Management’s requirement that each federal agency 

evaluate its principal offices on an annual basis. The OA operates at the principal office 

level and is designed to integrate and align all of the Department’s performance 

management elements, including the Strategic Plan, the Secretary’s annual priorities, the 

priorities of the principal offices and other requirements of law and of the President. The 

OA provides a framework for communicating goals and priorities to employees and for 

aligning employee performance plans with the objectives of Department and principal 

offices. The OA measures are incorporated into employee performance plans where 

appropriate. The OA focuses on activities that support the primary objectives of the 

principal office and of the Department as a whole. 

The Department’s G5 Initiative. The Department is currently replacing its legacy Grant 

Administration and Payment System with a new state-of-the-industry system called G5. 

This new system is being implemented by means of a three-phased approach, and will 

incorporate numerous enhancements for both grantees and Department staff. Phase 1 of 

the G5 implementation addressed the payments functionality of the grants process, while 

Phases 2 and 3 address the pre- and post-Award functionality, respectively. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 17

Management’s Discussion and Analysis

The G5 system is being implemented in consideration of the Department’s role as a Grants 

Management Line of Business lead in the consortium of federal agencies participating in 

this effort. The Department has established partnerships with two agencies, the 

Department of the Interior and the Department of Labor, and one agency office, the 

Department of Justice Office of Community Oriented Policing Services, to further this goal. 

The Department Creates the Risk Management Service. As part of implementing risk 

management, the Department has created the Risk Management Service. It is responsible 

for mitigating risks that may adversely affect the advancement of the Department's mission, 

in coordination with the Risk Management Coordinating Council and the Department's 

principal offices. The Risk Management Service is developing and coordinating a 

Departmentwide risk management strategy that supports consistent, quality management of 

formula and discretionary grants, and related program-funded activities across the 

Department. 

Renewed Focus on Program Monitoring. In addition to the activities underway in the 

Risk Management Service, program offices across the Department are enhancing their 

program monitoring activities. The Department encouraged offices to place a renewed 

focus on program monitoring by utilizing a risk-based approach to identify grantees in need 

of heightened monitoring. Corrective actions for audits of guaranty agencies, lenders and 

servicers, and schools were implemented and on-going efforts were focused on the 

monitoring of the Title I, Reading First and Migrant Education programs. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

18 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Civil Rights Enforcement 

The enforcement of civil rights laws drives student outcomes by ensuring that discrimination 

does not deny or limit student access to education programs and activities at any 

educational level. The Department of Education enforces five civil rights laws that protect 

students against discrimination on the basis of race, color, national origin, sex, disability 

and age primarily in educational institutions that receive federal funds from the Department. 

In addition, the Department enforces laws intended to ensure that the Boy Scouts of 

America and other designated youth groups have equal access to meet in elementary and 

secondary schools that receive funds through the Department.4

 These anti-discrimination 

laws protect more than 49.8 million students attending elementary and secondary schools5

and more than 18.2 million students attending colleges and universities.6

The Office for Civil Rights (OCR), a law enforcement agency within the Department, 

performs the Department’s civil rights enforcement responsibilities in a variety of ways, 

including: investigating complaints alleging discrimination, conducting compliance reviews 

in educational institutions to determine if they are in compliance with the laws and providing 

technical assistance to educational institutions on how to comply with the law and to 

parents and students on their rights under the law. The Department also issues regulations 

on civil rights laws, develops policy guidance interpreting the laws and distributes the 

information broadly. 

In FY 2008, the Department 

received 6,194 complaints 

of discrimination and 

resolved 5,943.7

 The goal 

of each investigation is to 

address the alleged 

discrimination promptly and 

to determine if civil rights 

laws and regulations have 

been violated. As shown in 

the chart, the majority of 

complaints received by the 

Department allege 

discrimination due to 

disability. 

 

4

 The Department enforces Title VI of the Civil Rights Act of 1964 (prohibiting discrimination based 

on race, color and national origin); Title IX of the Education Amendments of 1972 (prohibiting sex 

discrimination in education programs); Section 504 of the Rehabilitation Act of 1973 (prohibiting 

disability discrimination); the Age Discrimination Act of 1975 (prohibiting age discrimination); and 

Title II of the Americans with Disabilities Act of 1990 (prohibiting disability discrimination by public 

entities, whether or not they receive federal financial assistance). The Department also enforces the 

Boy Scouts of America Equal Access Act, enacted in 2002. This law addresses equal access for the 

Boy Scouts of America and other designated youth groups to meet in public schools receiving funds 

from the Department. 

5

 U.S. Department of Education, National Center for Education Statistics (2007). Projections of 

Education Statistics to 2015 (NCES-2008-060), Washington, D.C.: Table 1.

6

 Ibid, Table 10. 

7 Data source is the Office for Civil Rights’ Case Management System. 

Race/National 

Origin

16% (993)

Sex

5% (328)

Disability

51% (3,165)

Age

2% (96)

Multiple

15% (917)

Other*

11% (695)

FY 2008 Complaints by Jurisdiction

6,194 Receipts

* No 

jurisdiction
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 19

Management’s Discussion and Analysis

In addition to complaint investigations, the Department conducts compliance reviews that 

address specific civil rights issues of national concern. Forty-two compliance reviews 

initiated in FY 2008 ensured: 













physical access of students with disabilities to colleges and universities; 

access to educational services for limited English proficient students and effective 

communication with parents of limited English proficient students; 

national origin minority students are not inappropriately included in or excluded from 

special education services; 

nondiscrimination in athletics programs and activities on the basis of sex; 

schools have established and are implementing procedural safeguards required by laws 

prohibiting discrimination on the bases of sex, disability and age; and 

nondiscriminatory access to Advanced Placement and other high-level programs. 

The Department’s provision of technical assistance takes many forms from responding to 

ad hoc phone calls to delivering formal presentations. Through the Office for Civil Rights’ 

Internet site, http://www.ed.gov/about/offices/list/ocr/index.html?src=oc, the Department 

provides a wealth of civil rights information, including publications and policy guidance that 

can be used by educational institutions to assess their own compliance and by students 

and parents to understand their rights. In FY 2008, the Assistant Secretary for Civil Rights 

issued and posted to the Internet six Dear Colleague Letters addressing significant issues 

such as nondiscriminatory access by students with disabilities to high-level programs, e.g. 

Advanced Placement programs and how OCR determines which athletic activities can be 

counted under Title IX to ensure that male and female students are provided equal 

opportunities to participate in intercollegiate and interscholastic athletics programs. Another 

letter announced the ―Wounded Warrior Initiative,‖ which is intended to provide support to 

veterans with disabilities who may wish to begin or continue their postsecondary education 

following military service. The letters can be found at 

http://www.ed.gov/about/offices/list/ocr/whatsnew.html. The Office’s site also offers an 

online complaint form, http://www.ed.gov/about/offices/list/ocr/complaintintro.html, through 

which the Department now receives approximately 68 percent of its discrimination 

complaints. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

20 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Linking Taxpayer Dollars to Performance Results: 

Accountability Through the Integration of Results With 

Investment 

Our emphasis on sound financial practices, performance results and program accountability 

reflects a strong desire to use taxpayers’ dollars as effectively as possible. The Department 

strives to tie the performance of our programs with budget requests and to strengthen the 

link between financial investments and program quality. 

The Program Assessment Rating Tool. Since FY 2002, the Office of Management and 

Budget (OMB) has required federal agencies to assess the quality of government programs 

using the Program Assessment Rating Tool (PART). OMB uses this assessment across 

federal agencies to gauge the effectiveness of funded programs, ensure that programs 

meet statutory requirements and demonstrate accountability for the taxpayers’ investments 

in federal programs. A PART review helps identify a program’s strengths and weaknesses 

to inform funding and management decisions. 

The Department uses PART assessments to inform priorities for budget requests to 

Congress. Each program receives a score for program purpose and design, strategic 

planning, program management and program results. Once a program has undergone a 

PART review, the Department implements follow-up actions based on PART 

recommendations to improve program effectiveness. The PART helps the Department 

ensure that resources are targeted toward those programs and activities most likely to 

demonstrate the greatest public benefit. 

The Department has proposed investing in programs receiving a PART rating of Effective, 

Moderately Effective or Adequate, while proposing major reform or elimination of programs 

rated Ineffective. For programs rated Results Not Demonstrated, the Department has 

proposed continued funding if the programs are likely to demonstrate results in the future 

and do not duplicate the activities or purposes of similar programs. 

In FY 2008, the Department assessed a total of eight programs, seven of which were 

reassessments, bringing the total number of programs assessed under the PART since 

2002 to 93, including some that no longer receive funding. Programs accounting for about 

98 percent of the Department’s budget authority have now been assessed using the PART. 

To access PART evaluations of Department programs to date, go to: 

http://www.whitehouse.gov/omb/expectmore/agency/018.html

 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 21

Management’s Discussion and Analysis

Notes: Percentages of ratings by agency programs may not total 100 percent due to rounding. Total includes 

PART ratings for programs not currently funded. 

Linking Program Performance with Budget Submissions. To further the goal of 

aligning program performance with budget requests, the Department combines its annual 

performance plan and annual budget to create an annual performance budget. The 

Department has identified specific key measures that reflect the Department’s four major 

strategic goals that were identified in its new strategic plan. Last year’s strategic planning 

process, as required by the Government Performance and Results Act of 1993, offered an 

opportunity to re-examine our goals, program objectives and performance measures. The 

new strategic plan improves on previous efforts to ensure continued funding of the 

programs that have proven beneficial for the populations they serve. For more detail on the 

annual performance budget, see 

http://www.ed.gov/about/reports/annual/2009plan/fy09perfplan.pdf

Challenges Linking the Program Performance to Funding Expenditures. Linking 

performance results, expenditures, and budget for Department programs is complicated 

because more than 98 percent of the Department’s funding is disbursed through grants and 

loans in which only a portion of a given fiscal year’s appropriation is available to state, 

school, organization, or student recipients during the fiscal year in which the funds are 

FY 2002–2008 PART 

Program Ratings 

Effective 6

Moderately Effective 8

Adequate 31

Ineffective 4

Results Not Demonstrated 44

Total PARTs Completed 93

Ratings of Programs by FY 2008

Agency Spending

(Dollars in Millions)

Effective $1,337

Moderately Effective 28,405

Adequate 32,506

Ineffective 1,596

Results Not Demonstrated 5,923

Total PARTs Completed $69,767
MANAGEMENT’S DISCUSSION AND ANALYSIS

22 FY 2008 Performance and Accountability Report—U.S. Department of Education 

appropriated. The remainder is available at or near the end of the appropriation year or in a 

subsequent year. 

Funds for competitive grant programs are generally available when appropriations are 

passed by Congress. However, the processes required for conducting grant competitions 

often result in the award of grants near the end of the fiscal year with funding available to 

grantees for future fiscal years. 

The results presented in this report cannot be attributed solely to the actions taken related 

to FY 2008 funds but to a combination of funds from across several fiscal years. 

Furthermore, the results of some education programs may not be apparent for several 

years after the funds are expended. 

Although program results cannot be directly linked to a particular fiscal year’s funding, for 

the purpose of this report, performance results during specific fiscal years will serve as 

proxies. 

Performance Evaluations Improve Accountability. To further demonstrate 

accountability for the taxpayers’ investment in education spending, each year the 

Department publishes evaluations of selected programs. These evaluations serve to 

identify both best practices and programs that cannot demonstrate success and to inform 

senior management about programs in need of additional support. The Department uses 

evaluations to help identify programs that may be eliminated from the budget or 

recommended for reduced funding. Several offices in the Department have the 

responsibility for designing and implementing evaluations of program and management 

activities and operations. Those include the Institute of Education Sciences, and the Office 

of Planning, Evaluation, and Policy Development. Additionally, the Department’s Office of 

Inspector General and the Government Accountability Office audits and reports provide 

guidance and feedback on improvements in management and program operations. Pages 

122-124 contain a summary of selected evaluations released in FY 2008. Additionally, the 

Department provides guidance to grant recipients on developing evaluations based on 

scientifically rigorous evidence. More detail is available at 

http://ies.ed.gov/ncee/pubs/evidence_based/evidence_based.asp.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 23

Management’s Discussion and Analysis

How We Validate Our Data 

Complete, accurate and reliable data are essential for effective decision-making. State and 

local educational agencies have historically provided education performance data that do 

not fully meet information quality standards. Given the requirements of No Child Left 

Behind, accuracy of state and local educational agency performance data is even more 

crucial, because funding decisions are made and management actions are taken on the 

basis of this performance information. 

The Department is committed to improving the completeness, accuracy and reliability of 

data for No Child Left Behind reporting, integrated performance-based budgeting and 

general program management. In addition to completeness, accuracy and reliability, the 

Department has improved the timeliness of data reporting to the public by several months. 

Data time lags have been cut from up to 24 months for some performance data in FY 2006 

to an average of 8.5 months in FY 2008. The implementation of EDFacts, an initiative 

designed to collect and use K–12 state performance data, will help to reduce the reporting 

burden on state and local educational agencies, resulting in further improvement in the 

timeliness of data submitted to the Department. 

Performance Data 

The Department is collaborating with state educational agencies and industry partners to 

provide a centralized tool for collection of, access to and use of timely and accurate 

performance data in support of No Child Left Behind and to minimize burden on state 

educational agencies. 

Department data validation and verification focuses on two goals: 





External quality—Data collection at the school, district and state levels will be 

conducted using well-organized and methodologically rigorous techniques. 

Internal validity—Data files submitted by state educational agencies will be validated 

using a Departmentwide matrix and through expert reviews. 

External Quality. Standardization of data collection by school districts—reported by local 

educational agencies to state educational agencies, aggregated by states and reported to 

the Department—is the first critical step in the collection and reporting of high-quality data. 





In 2008, the Department solicited applications for awards to fund the development or 

improvement of statewide longitudinal data systems, which are already under way in 

27 states. 

In school year 2008-2009, state educational agencies are required to fully report 

educational data through the Department’s EDFacts collection system. Transition 

agreements with the Department will ensure the smooth transitions to a single 

electronic system. 

The Department is working with internal and external partners to help state educational 

agencies implement, by 2009, high-quality longitudinal data systems that include a state 

data audit system assessing data quality, validity and reliability. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

24 FY 2008 Performance and Accountability Report—U.S. Department of Education 

The goal of the National Forum on Education Statistics, sponsored by the Department’s 

National Center for Education Statistics, is to improve the quality, comparability and 

usefulness of elementary and secondary education data while remaining sensitive to data 

burden concerns. The forum plans, recommends and implements strategies for building an 

education data system that will support local, state and national efforts to improve public 

and private education throughout the United States. See more details at 

http://nces.ed.gov/forum/data_quality.asp. 

Internal Validity. Verification and validation of performance data support the accuracy and 

reliability of performance information, reduce the risks of inaccurate performance data and 

provide a sufficient level of confidence to Congress and the public that performance data 

are credible. 

OMB Circular A-11, Part 6, section 230.5, Assessing the completeness and reliability of 

performance data, requires each agency to design a procedure for verifying and validating 

data that it makes public in its annual performance plans and reports. Additionally, the 

Government Performance and Results Act of 1993 describes the means to be used to 

verify and validate measured values. Finally, the Reports Consolidation Act of 2000

requires that the transmittal letter included in annual performance reports contains an 

assessment by the agency head of the completeness and reliability of the performance data 

included in the reports. 

In response, the Department has developed a matrix to guide principal offices responsible 

for reporting data in performance measures to address issues of data integrity and 

credibility. The matrix provides a framework for validating and verifying performance data 

before it is collected and reported and will be used to evaluate data prior to publication. 

The Department’s data validation criteria require that: 









The goal and measure are appropriate to the mission of the organization and measured 

performance has a direct relation to the goal. 

The goal and measure are realistic and measurable, achievable in the time frame 

established, and challenging in their targets. 

The goal and measure are understandable to the lay person, language is unambiguous, 

and terminology is adequately defined. 

The goal and measure are used in decision-making about the effectiveness of the 

program and its benefit to the public. 

For more information on the matrix and its implementation, go to 

http://www.ed.gov/about/reports/annual/data-verfication.doc. 

Data Management 

Management Excellence. The Department develops and uses data to strengthen internal 

controls. One of the most visible areas in which this occurs is the annual budget 

development process. The Department uses program performance data to inform the 

formulation and execution of the Department’s budget, fulfilling a governmentwide element 

of the President’s Management Agenda. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 25

Management’s Discussion and Analysis

Federal Student Aid. Federal Student Aid is improving information technology, data and 

management systems to yield reliable performance data with which to make informed 

budget and policy decisions. These systems will enhance the budget process and increase 

the accuracy and reliability of information received from outside sources. 

Internal Control Measures. The Department also produces financial data for official 

submission to Congress, OMB and other federal authorities as mandated in the 

Government Performance and Results Act of 1993.

The data quality processes for financial data are reflected in the Department’s audit report 

and in management’s assurance of internal control over financial reporting assessment. 

The financial statements, associated notes and auditor’s reports can be found on pages 

127–190. The required Limitations of the Financial Statements can be found on page 34. 

Management’s assurance of internal control can be found on page 41. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

26 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Overview of Performance Results 

In FY 2008, the key measures provided in this report represent those measures that 

provide an overall assessment of the Department’s progress in achieving improvements in 

the educational system, based on the Strategic Plan for Fiscal Years 2007–12.

The table below summarizes the Department’s performance results for FY 2008 key 

measures. There are 81 key performance measures that support the Department’s mission 

and strategic goals. Most data for FY 2008 will be available during FY 2009. 

For the most recent data available, FY 2007, the Department met or exceeded targets for 

28 key measures, showed improvement for 23, did not meet 12, and is awaiting data for 9 

measures. For 5 measures, baselines were established. The remaining 4 have no targets 

or data for FY 2007. 

Each year, the Department assesses key measures for that year’s performance plan and 

evaluates the utility and appropriateness of those measures. As a result, key measures are 

continued, replaced, or completely removed from the objective key measurement process. 

This assessment process provides a method for continued improvement in Department 

programs. The new Strategic Plan required the establishment of new key measures, 

though some key measures were previously in place as program performance measures 

and, therefore, have historical data. 

Shown below are the results for each key measure as of October 10, 2008. The table 

shows whether the result met or exceeded, did not meet but improved over the prior years 

or failed to meet the expected target. The shaded areas indicate that a measure was not in 

place or no data was available during this time period. In some cases, establishing a 

baseline is the target and the target is recognized as met if the data are available and the 

baseline has been established. For measures for which data are not currently available, 

the date the data are expected has been indicated.

Legend 

√ = Met or exceeded target

NA = No Measure for period

* = Baseline established

 = Target not met

—= Data not 

collected

+ = Target not met but improved over prior years

[xxxx]= Unique identifier in GPRA database

Performance Results for FY 2008 Key Measures 

Performance Results Summary FY 2008 FY 2007 FY 2006

Strategic Goal 1—Improve student achievement, with a focus on bringing all students to grade level in 

reading and mathematics by 2014

1.1. Improve student achievement in reading

A. Percentage of all students who achieve proficiency on state 

reading assessments [89a0pg]

Sept.

2009 + *

B. Percentage of low-income students who achieve proficiency on 

state reading assessments [89a0pj]

Sept.

2009 + *

C. Percentage of American Indian/Alaska Native students who 

achieve proficiency on state reading assessments [89a0pm]

Sept.

2009 + *

D. Percentage of African-American students who achieve 

proficiency on state reading assessments [89a0ps]

Sept.

2009 + *
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 27

Management’s Discussion and Analysis

Performance Results Summary FY 2008 FY 2007 FY 2006

E. Percentage of Hispanic students who achieve proficiency on 

state reading assessments [89a0pv]

Sept.

2009 + *

F. Percentage of students with disabilities who achieve proficiency 

on state reading assessments [89a0q3]

Sept.

2009 + *

G. Percentage of Limited English Proficient students who achieve 

proficiency on state reading assessments [89a0q4]

Sept.

2009  *

H. Percentage of career and technical education ―concentrators‖ 

who are proficient in reading [89a0q5]

May

2009 NA NA

1.2. Improve student achievement in mathematics 

A. Percentage of all students who achieve proficiency on state math 

assessments [89a0q9]

Sept.

2009 + *

B. Percentage of low-income students who achieve proficiency on 

state math assessments [89a0qa]

Sept.

2009 + *

C. Percentage of American Indian/Alaska Native students who 

achieve proficiency on state math assessments [89a0qb]

Sept.

2009 + *

D. Percentage of African-American students who achieve 

proficiency on state math assessments [89a0qd]

Sept.

2009 + *

E. Percentage of Hispanic students who achieve proficiency on 

state math assessments [89a0qe]

Sept.

2009 + *

F. Percentage of students with disabilities who achieve proficiency 

on state math assessments [89a0qg]

Sept.

2009 + *

G. Percentage of Limited English Proficient students who achieve 

proficiency on state math assessments [89a0qh]

Sept.

2009 + *

H. Percentage of career and technical education ―concentrators‖ 

who are proficient in mathematics [89a0qi]

May

2009 NA NA

1.3. Improve teacher quality

A. Percentage of total core academic classes taught by highly 

qualified teachers [89a0qk]

Mar.

2009 + *

B. Percentage of total core elementary classes taught by highly 

qualified teachers [1182]

Sept.

2009 + +

C. Percentage of core elementary classes in high-poverty schools 

taught by highly qualified teachers [899zv]

Sept.

2009 + *

D. Percentage of core elementary classes in low-poverty schools 

taught by highly qualified teachers [899zx]

Sept.

2009 + *

E. Percentage of total core secondary classes taught by highly 

qualified teachers [1183]

Sept.

2009 + +

F. Percentage of core secondary classes in high-poverty schools 

taught by highly qualified teachers [899zw]

Sept.

2009 + *

G. Percentage of core secondary classes in low-poverty schools 

taught by highly qualified teachers [899zy]

Sept.

2009 + *

1.4. Promote safe, disciplined and drug-free learning environments

A. Percentage of students in grades 9 through 12 who carried a 

weapon (such as a knife, gun, or club) on school property one or 

more times during the past 30 days [1467]

NA + NA

B. Percentage of students in grades 9 through 12 who missed one 

or more days of school during the past 30 days because they felt 

unsafe at school, or on their way to and from school [89a0qm]

NA + NA

C. Percentage of students in grades 9 through 12 who were offered, 

given, or sold an illegal drug by someone on school property in 

the past year [1463]

NA √ NA

1.5. Increase information and options for parents 

A. Percentage of eligible students exercising choice [89a0qo] Dec.

2008 *

NA

B. Percentage of eligible students participating in supplemental 

educational services [89a0qp]

Sept.

2009 + NA

C. Number of charter schools in operation [89a0qq] Dec.

2008 √ √
MANAGEMENT’S DISCUSSION AND ANALYSIS

28 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance Results Summary FY 2008 FY 2007 FY 2006

1.6. Increase high school completion rate

A. Percentage of total 18–24-year-olds who have completed high 

school [89a0qt]

Jul.

2010

Jul.

2009 √

B. Percentage of African-American 18–24-year-olds who have 

completed high school [89a0qu]

Jul.

2010

Jul.

2009 √

C. Percentage of Hispanic 18–24-year-olds who have completed 

high school [89a0qv]

Jul.

2010

Jul.

2009 √

D. Averaged freshman graduation rate [89a0qy] Jul.

2010

Jul.

2009 

1.7. Transform education into an evidence-based field

A. Number of Department-supported reading or writing programs 

and practices with evidence of efficacy using What Works 

Clearinghouse standards [89a0nu]

√ √ *

B. Number of Department-supported mathematics or science 

programs and practices with evidence of efficacy using What 

Works Clearinghouse standards [89a0nv]

√ √ *

C. Number of Department-supported teacher quality programs and 

practices with evidence of efficacy using What Works 

Clearinghouse standards [89a0nw]

√ √ *

D. Number of visits to the What Works Clearinghouse Web site 

[89a0r3] √ *

NA

Strategic Goal 2—Increase the academic achievement of all high school students

2.1. Increase the proportion of high school students taking a rigorous curriculum

A. The percentage of low-income students who qualify for Academic 

Competitiveness Grants [89a0r6]

Apr.

2009 *

NA

B. The number of Advanced Placement classes available 

nationwide [89a0r7] — — NA

C. The number of Advanced Placement tests taken by all public 

school students [89a0r8]

Jan.

2009 √ NA

D. The number of Advanced Placement tests taken by low-income 

public school students [1149]

Jan.

2009 √ √

E. The number of Advanced Placement tests taken by Minority 

(Black, Hispanic, Native American) public school students [1150]

Jan.

2009 √ √

F. The number of teachers trained through Advanced Placement 

Incentive grants to teach Advanced Placement classes [89a0r9] — — NA

2.2. Promote advanced proficiency in mathematics and science for all students

A. The number of Advanced Placement tests in mathematics and 

science taken nationwide by all public school students [89a0x2]

Jan.

2009 √

*

B. The number of Advanced Placement tests in mathematics and 

science taken nationwide by low-income public school students 

[89a0x3]

Jan.

2009 √

*

C. The number of Advanced Placement tests in mathematics and 

science taken nationwide by minority (Black, Hispanic, Native 

American) public school students [89a0x4]

Jan.

2009 √

*

D. The number of teachers trained through Advanced Placement 

Incentive grants to teach Advanced Placement classes in 

mathematics and science [89a0rc]

— — NA

2.3. Increase proficiency in critical foreign languages

A. Combined total number of Advanced Placement and 

International Baccalaureate tests in critical foreign languages 

passed by public school students [89a0re] 

Jan.

2009 * NA
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 29

Management’s Discussion and Analysis

Performance Results Summary FY 2008 FY 2007 FY 2006

Strategic Goal 3—Ensure the accessibility, affordability and accountability of higher education and 

better prepare students and adults for employment and future learning

3.1. Increase success in and completion of quality postsecondary education

A. Percentage of high school graduates aged 16–24 enrolling 

immediately in college [89a0ri]

Dec.

2008  *

B. Percentage of Upward Bound participants enrolling in college 

[1627]

Dec.

2010

Dec.

2009

Dec.

2008

C. Percentage of career and technical education students who have 

transitioned to postsecondary education or employment by 

December of the year of graduation [89a0rj]

May.

2009  

D. Percentage of full-time degree-seeking undergraduate students 

at Title IV institutions who were in their first year of 

postsecondary enrollment in the previous year and are enrolled 

in the current year at the same institution [89a0ry]

Dec.

2008  *

E. Percentage of full-time degree-seeking undergraduate students 

at Historically Black Colleges and Universities who were in their 

first year of postsecondary enrollment in the previous year and 

are enrolled in the current year at the same institution [1587]

Dec.

2008  

F. Percentage of full-time degree-seeking undergraduate students 

at Hispanic-Serving Institutions who were in their first year of 

postsecondary enrollment in the previous year and are enrolled 

in the current year at the same institution [1601]

May

2008  

G. Percentage of students enrolled at all Title IV institutions 

completing a four-year degree within six years of enrollment 

[89a0rz]

Jul.

2009

Jan.

2009 √

H. Percentage of freshmen participating in Student Support 

Services who complete an associate’s degree at original 

institution or transfer to a four-year institution within three years 

[1618]

Dec.

2009

Dec.

2008 +

I. Percentage of first-time full-time degree-seeking undergraduate 

students enrolled at 4-year Historically Black Colleges and 

Universities graduating within six years of enrollment [1589]

Dec.

2009

Dec.

2008 √

J. Percentage of students, enrolled at 4-year Hispanic-Serving 

Institutions graduating within six years of enrollment [1603]

Dec.

2009

Dec.

2008 √

K. Percentage of postsecondary career and technical education 

students who have completed a postsecondary degree or 

certification [89a0s0]

May

2008  √

3.2. Deliver student financial aid to students and parents effectively and efficiently

A. Direct administrative unit costs for origination and disbursement 

of student aid (total cost per transaction) [1919] √ √

*

B. Customer service level on the American Customer Satisfaction 

Index for the Free Application for Federal Student Aid (FAFSA) 

on the Web [2207]

√  

C. Pell Grant improper payments rate [89a0s2]   *

D. Direct Loan recovery rate [89a0s3] √ √ *

E. Federal Family Education Loan recovery rate [89a0s4] √ √ *

3.3. Prepare adult learners and individuals with disabilities for higher education, employment and productive 

lives

A. Percentage of state vocational rehabilitation agencies that meet 

the employment outcome standard for the Vocational 

Rehabilitation State Grants program [1681]

Apr.

2009 √ √

B. Percentage of adults served by the Adult Education State Grants 

program with a high school completion goal who earn a high 

school diploma or recognized equivalent [1386]

Dec.

2008

√ √
MANAGEMENT’S DISCUSSION AND ANALYSIS

30 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance Results Summary FY 2008 FY 2007 FY 2006

C. Percentage of adults served by the Adult Education State Grants 

program with a goal to enter postsecondary education or training 

who enroll in a postsecondary education or training program 

[1387]

Dec.

2008 √ √

D. Percentage of adults served by the Adult Education State Grants 

program with an employment goal who obtain a job by the end of 

the first quarter after their program exit quarter [1388]

Dec.

2008 √ √

Strategic Goal 4—Cross-Goal Strategy on Management

4.1. Maintain and strengthen financial integrity and management and internal controls

A. Maintain an unqualified (clean) audit opinion [2204] √ √ √

B. Achieve and maintain compliance with the Federal Information 

Security Management Act of 2002 [89a0s9]   *

C. Percentage of new discretionary grants awarded by June 30 

[89a0sa]  √

*

4.2. Improve the strategic management of the Department’s human capital

A. Percentage of employees believing that leaders generate high 

levels of motivation and commitment [89a0sr]

Dec.

2008 √ *

B. Percentage of employees believing that managers review and 

evaluate the organization’s progress towards meeting its goals 

and objectives [89a0ss]

Dec.

2008 √ *

C. Percentage of employees believing that steps are taken to deal 

with a poor performer who cannot or will not improve [89a0st]

Dec.

2008 √ *

D. Percentage of employees believing that department policies and 

programs promote diversity in the workplace [89a0sv]

Dec.

2008  *

E. Percentage of employees believing that they are held 

accountable for achieving results [89a0sy]

Dec.

2008 √ *

F. Percentage of employees believing that the workforce has the 

job-relevant knowledge and skills necessary to accomplish 

organizational goals [89a0sx]

Dec.

2008 √ *

G. Average number of days to hire is at or below the OPM 45-day 

hiring model for non-SES [89a0sm] √ √ *

H. Percentage of employees with performance standards in place 

within 30 days of start of current rating cycle [89a0sn] √  *

I. Percentage of employees who have ratings of record in the 

system within 30 days of close of rating cycle [89a0so]

Dec.

2008 √ *

4.3. Achieve budget and performance integration to link funding decisions to results

A. Percentage of Department program dollars in programs that 

demonstrate effectiveness in terms of outcomes, either on 

performance indicators or through rigorous evaluations [89a0sq]

√ √ √
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 31

Management’s Discussion and Analysis

Financial Highlights 

The Department consistently produces accurate and timely financial information that is 

used by management to inform decision-making and drive results in key areas of operation. 

For the seventh consecutive year, we achieved an unqualified (clean) opinion from 

independent auditors on the annual financial statements. Since FY 2003, the auditors have 

found no material weaknesses in the Department’s internal control over financial reporting. 

In accordance with the Office of Management and Budget’s Circular No. A-123, 

Management’s Responsibility for Internal Control, the Department continues to test and 

evaluate findings and risk determinations from management’s internal control assessment.

Sources of Funds 

The Department managed 

a budget in excess of 

$68 billion during FY 

2008, of which 54 percent 

supported elementary and 

secondary education grant 

programs. 

Postsecondary education 

grants and administration 

of student financial 

assistance accounted for 

42 percent, including loan 

program costs that helped 

more than 11 million 

students and their parents to better afford higher education during FY 2008. An additional 

2 percent went to programs and grants encompassing research and improvement, as well 

as vocational rehabilitation services. Administrative expenditures were 2 percent of the 

Department’s appropriations.

Nearly all of the Department’s non-administrative appropriations support three primary lines 

of business: grants, guaranteed loans and direct loans. The original principal balances of 

the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct 

Loan Program loans, which comprise a large share of federal student financial assistance, 

are funded by commercial bank guarantees and borrowings from the Treasury, 

respectively. 

The Department’s three largest grant programs are ESEA Title I grants for elementary and 

secondary education, Pell Grants for postsecondary financial aid and Special Education 

Grants to States under the Individuals with Disabilities Education Act. Each of these 

program’s FY 2008 appropriations exceeded $10 billion. In addition, the TEACH Grant 

Program was implemented this year. This program awards annual grants to students who 

agree to teach in a high-need subject area in a public or private elementary or secondary 

school that serves low-income students. 

The FFEL Program helps ensure that the loan capital for approximately 3,100 private 

lenders is available to students and their families. Through 35 active state and private 

nonprofit guaranty agencies, lenders and schools, the Department administers the FFEL 

Elementary 

and Secondary 

Grants

54%

Research, 

Improvement, 

and 

Rehabilitation 

Grants

2%

Postsecondary 

Grants and 

Loan 

Administration 

Program Costs

42%

Administrative 

Expenses

2%

FY 2008 Department of Education's Budget
MANAGEMENT’S DISCUSSION AND ANALYSIS

32 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Program to help students and families pay for postsecondary education by providing grants 

and low-rate loans. The Department is active in all phases of the loan life-cycle from 

determining borrower eligibility during the Free Application for Federal Student Aid process 

to processing guarantor claims for reinsurance. As of the end of September 2008, the total 

principal balance of outstanding guaranteed loans held by lenders was approximately 

$415 billion. The government’s estimated maximum exposure for defaulted loans was 

approximately $405 billion. 

The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) amended the 

FFEL Program to authorize the Secretary to buy FFEL loans for the 2008-2009 academic 

year. Within the existing FFEL Program, the Department has implemented two activities 

under this temporary loan purchase authority to purchase FFEL loans generally originated 

between July 1, 2008 and June 30, 2009. These two activities include: loan purchase 

commitments where the Department purchases loans directly from FFEL lenders, and loan 

participation purchases where the Department purchases participation interests in FFEL 

loans. 

On October 7, 2008, President Bush signed P.L. 110-350, which extended the Secretary of 

Education’s authority to purchase FFEL loans. This authority, originally enacted in the 

ECASLA, would have otherwise expired on September 30, 2009; P.L. 110-350 extended 

the authority through September 30, 2010. The Administration recently announced plans to 

replicate the 2008-2009 loan purchase and participation options for the 2009-2010 award 

year. Other approaches to purchase outstanding FFEL loans are also under consideration, 

but specific terms and conditions have yet to be determined. 

The William D. Ford Direct Loan Program, added to the Higher Education Act of 1965 

(HEA) in 1993 by the Student Loan Reform Act of 1993, enables the Department to make 

loans directly to eligible undergraduate and graduate students and their parents through 

participating schools. As of September 30, 2008, the value of the Department’s direct loan 

portfolio was $109.9 billion. 

Financial Position 

The Department’s financial statements are prepared in accordance with established federal 

accounting standards and are audited by the independent accounting firm of Ernst & 

Young, LLP. Financial statements and accompanying notes for FY 2008 appear on 

pages 128-169. An analysis of the principal financial statements follows. 

Balance Sheet. The Balance Sheet 

presents, as of a specific point in time, the 

recorded value of assets and liabilities 

retained or managed by the Department. 

The difference between assets and 

liabilities represents the net position of the 

Department. The Balance Sheet 

displayed on page 128 reflects total 

assets of $231.6 billion, an 8 percent 

increase over FY 2007. The change is 

primarily due to the increase in Credit 

Program Receivables. Credit Program 

Receivables increased by $18.8 billion, a 16 percent increase over FY 2007. The majority 

of this loan portfolio is principal and interest owed by students on direct loans. The 

$186.6

$143.7

$214.4

$167.6

$214.6

$165.1

$231.6

$188.2

$0

$50

$100

$150

$200

$250

Billions 

FY 2005 FY 2006 FY 2007 FY 2008

Total Assets vs Total Liabilities

Total Assets Total Liabilities
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 33

Management’s Discussion and Analysis

remaining balance is related to defaulted guaranteed loans purchased from lenders under 

terms of the FFEL Program and to loan purchase commitments and loan participation 

purchases under the FFEL Program. The net portfolio for direct loans increased by over 

$10.8 billion due to increased direct loan disbursements and borrower interest collections. 

FFEL Program loans increased by $7.9 billion during FY 2008, due primarily to loan volume 

and activity related to loan purchase commitments and loan participation purchases. Fund 

Balance with the Treasury decreased by 3 percent from FY 2007. 

Total Liabilities for the Department increased by 14 percent. This change is primarily due to 

an increase in borrowing during FY 2008. Borrowing increased for the Direct Loan Program 

and to provide funds for the loan purchase commitments and loan participation purchases 

activity under the FFEL Program. Liabilities for Loan Guarantees for the FFEL Program 

decreased $7.6 billion due primarily to FFEL defaulted claims payments and the subsidy reestimate. These liabilities present the estimated costs, on a present-value basis, of the net 

long-term cash outflows due to loan defaults net of offsetting fees. 

The Department’s Net Position as of September 30, 2008 was $43.3 billion, a $6.3 billion 

decrease versus the $49.6 billion Net Position as of September 30, 2007. 

Statement of Net Cost. The Statement of Net Cost 

presents the components of the Department’s net cost, 

which is the gross cost incurred less any revenues earned 

from the Department’s activities. The Department’s total 

program net costs, as reflected on the Statement of Net 

Cost, page 129, were $64.8 billion, a 1 percent increase 

from FY 2007. The increase largely occurred for programs 

in support of the Promote Academic Achievement in Elementary and Secondary Schools 

goal, the Special Education goal, and the Transformation of Education goal. 

The Statement of Net Cost is 

presented to be consistent with the 

Department’s strategic goals and the 

President’s Management Agenda. 

As required by the Government 

Performance and Results Act of 

1993, each of the Department’s 

reporting organizations has been 

aligned with the major goals 

presented in the Department’s 

Strategic Plan for Fiscal Years 

2007–12. 

In FY 2007, the Department 

streamlined its strategic goals to 

better serve its mission to promote 

student achievement and 

preparation for global 

competitiveness by fostering 

educational excellence and ensuring 

equal access to education. Strategic 

Goals 1, 2 and 3 are sharply defined 

Net Cost Program

Goal 

No. Strategic Goal

Ensure Accessibility, 

Affordability and 

Accountability of Higher 

Education and Career 

and Technical 

Advancement

3 Ensure the accessibility, 

affordability and 

accountability of higher 

education and better 

prepare students and 

adults for employment and 

future learning

Promote Academic 

Achievement in 

Elementary and 

Secondary Schools

1

2

Improve student 

achievement, with a focus 

on bringing all students to 

grade level in reading and 

mathematics by 2014

Increase the academic 

achievement of all high 

school students 

Transformation of 

Education

1 Improve student 

achievement, with a focus 

on bringing all students to 

grade level in reading and 

mathematics by 2014

Special Education Cuts across Strategic 

Goals 1, 2 and 3

$75.2

$96.8

$64.3 $64.8

$0

$25

$50

$75

$100

Billions

FY 2005 FY 2006 FY 2007 FY 2008

Total Net Cost of Operation
MANAGEMENT’S DISCUSSION AND ANALYSIS

34 FY 2008 Performance and Accountability Report—U.S. Department of Education 

directives that guide the Department’s reporting organizations to carry out the vision and 

programmatic mission, and the Net Cost programs can be specifically associated with these 

three strategic goals. The Department has a Cross-Goal Strategy on Management, which 

is considered a high-level premise on which the Department bases its foundation for the 

other three goals. As a result, we do not assign specific programs to this goal for 

presentation in the Statement of Net Cost. 

Statement of Budgetary Resources. This statement provides information about the 

provision of budgetary resources and their status as of the end of the reporting period. The 

statement displayed on page 131 shows that the Department had $193.9 billion in total 

budgetary resources for the year ended September 30, 2008. These budgetary resources 

were composed of $79.1 billion in appropriated budgetary resources and $114.8 billion in 

non-budgetary credit reform resources, which primarily consist of borrowing authority for the 

loan programs. Of the $31.2 billion that remained unobligated at year end, $29.2 billion 

represents funding provided in advance for activities in future periods that was not available 

at year end. These funds will become available during the next fiscal year or future fiscal 

years. 

Limitations of Financial Statements 

Management has prepared the accompanying financial statements to report the financial 

position and operational results for the U.S. Department of Education for FY 2008 and 

FY 2007 pursuant to the requirements of Title 31 of the United States Code, section 

3515(b). 

While these statements have been prepared from the books and records of the Department 

in accordance with generally accepted accounting principles for federal entities and the 

formats prescribed by OMB, these statements are in addition to the financial reports used to 

monitor and control budgetary resources, which are prepared from the same books and 

records. 

The statements should be read with the realization that they are a component of the U.S. 

Government, a sovereign entity. One implication of this is that the liabilities presented 

herein cannot be liquidated without the enactment of appropriations, and ongoing 

operations are subject to the enactment of future appropriations. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 35

Management’s Discussion and Analysis

President’s Management Agenda

Scorecard Results 

Under the President’s Management Agenda, the Executive Branch Management 

Scorecards track how well cabinet departments and major agencies are executing five 

governmentwide initiatives and other agency-specific program initiatives. 

Status. Scores for ―status‖ are based on the scorecard standards for success developed 

by the President’s Management Council and discussed with experts throughout government 

and academe, including the National Academy of Public Administration. The standards 

have subsequently been refined with continued experience implementing the President’s 

Management Agenda. Under each of these standards, an agency is Green or Yellow if it 

meets all of the standards for a given level of success identified and agreed upon by the 

agency and the Office of Management and Budget; it is Red if it has any one of a number of 

serious flaws identified for the agency. 

Progress. The Office of Management and Budget assesses ―progress‖ on a case-by-case 

basis against the agreed-upon deliverables and time lines established for the five initiatives 

as follows: Green represents that implementation is proceeding according to plan; Yellow

indicates there is some slippage or other issues requiring adjustment by the agency in order 

to achieve the initiative objectives on a timely basis; and Red indicates the initiative is in 

serious jeopardy and the agency is unlikely to realize objectives absent significant 

management intervention. 

Department of Education Results. During FY 2008 the Department received a Green

status in Financial Management for the fifth consecutive year. The Department maintained 

Green on progress for six out of eight target initiatives by making sufficient progress on its 

quarterly scorecard deliverables. Significantly, the current status of Improved Credit 

Management was upgraded from Red to Yellow based on improved communications 

between the Department and OMB regarding various issues affecting the loan programs. 

President’s Management Agenda

FY 2008 Scorecard

Q4-2008 Q4-2007

Target Area Status Progress Status Progress

Government-wide

Initiatives

Financial Performance G G G G

Commercial Services Management Y G G G

Human Capital Y G Y G

e-Government Y Y Y Y

Performance Improvement G G G G

Program

Initiatives

Faith-Based and Community Initiatives G G G G

Eliminating Improper Payments Y Y Y G

Improved Credit Management

(New Initiative in FY 2006) Y G R G

G = Green Y = Yellow R = Red NA = not applicable 
MANAGEMENT’S DISCUSSION AND ANALYSIS

36 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Inspector General’s Discussion of Management 

Challenges 

The Office of Inspector General (OIG) works to promote efficiency, effectiveness and 

integrity in the programs and operations of the U.S. Department of Education (Department). 

Through our audits, inspections, investigations and other reviews, we continue to identify 

areas of concern within the Department’s programs and operations and recommend actions 

the Department should take to address these weaknesses. 

The Reports Consolidation Act of 2000 requires OIG annually to identify and summarize the 

top management and performance challenges facing the Department, as well as to provide 

information on the Department’s progress in addressing those challenges. Based on our 

recent work and knowledge of the Department’s programs and operations, we have 

identified six specific challenge areas for the Department for 2009: (1) student financial 

assistance programs and operations; (2) information security and management; (3) grantee 

oversight and monitoring; (4) contract awards, performance and monitoring; (5) data 

integrity; and (6) human resources services. 

Recent OIG work has identified that the predominant challenge facing the Department 

within each of these areas is implementation and coordination of effective monitoring and 

oversight. While the Department is working to make progress in these areas, it is evident 

that additional focus, attention and emphasis are needed. Only by significantly improving 

its monitoring and oversight activities and capabilities will the Department be an effective 

steward of the billions of taxpayer dollars supporting its programs and operations. 

Challenge: Student Financial Assistance Programs and Operations 

The federal student financial assistance programs involve over 6,200 postsecondary 

institutions, more than 3,100 lenders, 35 guaranty agencies and many third party servicers. 

During FY 2008, Federal Student Aid (FSA), the Departmental office with responsibility for 

these programs, provided $96 billion in awards and oversaw an outstanding loan portfolio of 

over $500 billion. FSA must conduct effective monitoring and oversight to help protect 

higher education dollars from waste, fraud and abuse. Effective oversight of these 

programs has been a long-standing and significant challenge for FSA, as it has not hired 

personnel with the necessary skills and has not devoted the necessary resources to identify 

and implement effective oversight and monitoring of its programs or program participants. 

Furthermore, recent problems in the credit market could have an adverse impact on the 

loan programs, putting these dollars and programs at an even higher risk. Effective 

implementation of the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA), 

providing authority for the Department to purchase lender loans, the Lender of Last Resort 

program and expanding the capacity of the Direct Loan program will be crucial to protecting 

students and federal funds. 

The Department’s Progress: FSA has agreed to improve the management of its 

programs and to develop and implement consistent oversight procedures. FSA is in the 

process of restructuring and improving its Chief Compliance Officer organization for the 

oversight of the Federal Family Education Loan program. The Department is finalizing 

steps in response to our audit work on 9.5 percent special allowance payments (SAP) by 

requiring all lenders billing at the 9.5 percent SAP rate to be paid at the regular rate until the 

Department receives the results of acceptable audits to determine the eligibility of loans for 

payments at the 9.5 percent rate. The Department is also in the process of implementing 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 37

Management’s Discussion and Analysis

the authorities provided by ECASLA for the Loan Participation/Purchase programs, and 

establishing internal controls to provide for accountability and monitoring of compliance with 

the law and program agreements. 

Challenge: Information Security and Management 

The Federal Information Security Management Act (FISMA) requires each federal agency 

to develop, document and implement an agency-wide program to provide information 

security and develop a comprehensive framework to protect the government’s information, 

operations and assets. To ensure the adequacy and effectiveness of information security 

controls, Inspectors General conduct annual independent evaluations of the agencies’ 

information security programs and report the results to the Office of Management and 

Budget (OMB). 

In our information security audits to support our FISMA requirements, we have identified 

security weaknesses that the Department must address to protect its systems and to 

maintain its security certification and accreditation. These weaknesses include certain 

management, operational and technical security controls; the incident handling process and 

procedures; intrusion detection system deployments; and enterprise-wide technical 

configuration standards for all systems. 

With regard to information management, the Department’s anticipated information 

technology (IT) capital investment portfolio for FY 2009 is over $540 million, with many 

resource-intensive projects pending. It is critical that the Department have a sound IT 

investment management control process that can ensure that technology investments are 

appropriately evaluated, selected, justified and supported. This oversight and monitoring 

process must address IT investments as an agency-wide portfolio. It must also ensure that 

individual projects are appropriately managed so they meet their technical and functional 

goals on time and on budget. This is an area that continues to challenge the Department. 

In addition, work conducted since 2004 has revealed weaknesses in FSA’s management of 

its National Student Loan Data System (NSLDS) – the central database for Title IV 

information on loans, grants, students, borrowers, lenders, guaranty agencies, schools and 

servicers. These weaknesses involve a lack of effective internal control procedures for 

granting access to external users, security plans that did not comply with the Department’s 

IT security policy and contract employees working in NSLDS without appropriate security 

clearances, all of which increase the risk for inappropriate disclosure or unauthorized use of 

sensitive and personally identifiable information in NSLDS. 

The Department’s Progress: The Department continues its efforts to establish a mature 

computer security program as it relates to technical configuration standards for all of its 

systems, managing its outsourced contractors who operate its critical information systems, 

and improving its incident handling program and intrusion detection systems. In addition, 

the Department recently established plans to improve its controls relating to the protection 

of personally identifiable information in order to meet the standards and good practice 

requirements established by OMB. Management, budget and contracting constraints, 

however, have hampered the Department in moving forward with improving these controls. 

With regard to IT management, while the critical issue of independent assessment remains 

unaddressed, the Department has recently strengthened the IT capital investment program 

by expanding membership on two of its review groups, the Investment Review Board and 
MANAGEMENT’S DISCUSSION AND ANALYSIS

38 FY 2008 Performance and Accountability Report—U.S. Department of Education 

the Planning and Investment Review Working Group. The Department continues its efforts 

to strengthen individual business cases and to map proposed investments to an agencywide enterprise architecture strategy. 

Challenge: Grantee Oversight and Monitoring 

The success of an organization’s mission and the achievement of its goals depend on how 

well it manages its programs. Our recent audits, inspections and investigations continue to 

uncover problems with program control and oversight of Department grantees and program 

participants, placing billions of taxpayer dollars at risk of waste, fraud, abuse and noncompliance. The Department must ensure that all entities involved in its programs are 

adhering to statutory and regulatory requirements and that the offices responsible for 

administering these programs are providing adequate oversight of program participants. 

Without effective monitoring and oversight, the Department is not able to identify and 

manage the risks associated with its grant programs. Only by improving effective oversight 

of its operations and demanding accountability by its managers, staff, contractors and 

grantees can the Department be an effective steward of the billions of taxpayer dollars 

supporting its programs and operations. 

The Department’s Progress: The Department has initiated steps to improve its 

performance in this area. The Secretary established a new Grants Policy Team and a Risk 

Management Service (RMS) office that are reviewing all policies, including requirements for 

monitoring, with the objective of developing standards that would apply across all formula 

grant programs. During the past year, RMS has initiated several projects to address issues 

with some of the Department's high-risk grantees. For example, RMS is working closely 

with Puerto Rico and the Virgin Islands, including holding several on-site meetings with 

senior staff. RMS also invited representatives from multiple federal agencies to initiate a 

cross-cutting approach to address a variety of issues in American Samoa. As additional 

high-risk issues are identified by RMS the staff works with states and school districts to 

address the concerns. The Grants Policy Team also is completing the process of revising 

the Education Department General Administrative Regulations to incorporate performance 

management requirements for funded applicants. In addition, the Office of Elementary and 

Secondary Education continues to enhance its monitoring system and will continue to 

conduct Title I program reviews of all states at least once during a three-year monitoring 

cycle. 

The Department continues to implement an Enterprise Risk Management program 

throughout the Department. As part of this program, the Department is developing a risk 

management data analysis tool. Based on input from the Oak Ridge National Laboratory 

and other sources, the Department is in the process of identifying specific tool capabilities 

and the data and other indicators to be incorporated into the tool. 

Challenge: Contract Awards, Performance and Monitoring 

The Department contracts for many services that are critical to its operations, at a cost of 

over $1 billion a year. The Department must improve its procurement and contract 

management processes to ensure that it is receiving quality goods and services in 

accordance with contract terms. OIG audits, inspections and investigations uncovered 

problems in the area of contractor activities, including: inadequate oversight and monitoring 

of contractor performance; failure to identify and take corrective action to detect and 

prevent fraudulent activities by contractors; not ensuring that the procurement and contract 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 39

Management’s Discussion and Analysis

management processes provide assurance that the Department receives quality goods and 

services for its money; and inadequate attention to improper payments. 

The Department’s Progress: The Department and FSA have each hired consultants to 

review their acquisition processes and make recommendations for improvement. In 

addition, the Department recently revised its Contracting Officer’s Representative Training 

Program to incorporate more stringent certification, training and recordkeeping 

requirements. The Department is working with applicable principal offices to ensure all 

future performance-based contracts include appropriate contractor incentives and 

disincentives. 

Challenge: Data Integrity 

Data integrity is both a compliance issue and a performance issue. Recipients and subrecipients, as well as the Department, must have controls in place and effectively operating 

to ensure that accurate, reliable data are reported. Without valid and reliable data, the 

Department cannot make effective decisions on its programs or know if the funds it 

disburses are indeed reaching the intended recipients. States must annually collect and 

report various performance data to the Department in the consolidated state performance 

report, including the number of persistently dangerous schools, graduation and dropout 

rates, assessment results, and the number of schools identified as in need of improvement. 

In several nationwide reviews by our office, the Government Accountability Office and 

others, we collectively found issues of noncompliance with data collection and reporting 

requirements and lack of effective controls to ensure data quality. For example, in our 

reviews of the data that four states used to report graduation and dropout rates, we found 

that the data were not always accurate, consistent throughout the state, complete and 

verifiable. We found that in some states student enrollment status was incorrectly 

classified, a student group was not included in calculations, reportable dropouts were not 

reported, and inadequate or no documentation was available to verify data accuracy. We 

also questioned the validity of the data when calculations of the graduation or dropout rates 

did not meet required definitions, which resulted in the reviewed states reporting graduation 

or dropout rates that were overstated. 

The Department’s Progress: The Department recognized the need to improve its data 

quality and data reliability and launched the Performance-Based Data Management 

Initiative to streamline existing data collection efforts and information management 

processes. The resulting Education Data Exchange Network, now called EDFacts, 

provides state educational agencies (SEAs) and the federal government the capacity to 

transfer and analyze information about education programs. Through EDFacts, the 

Department instituted data validation and verification steps and required states to address 

their data issues before the Department will officially accept the data. 

To help ensure that SEAs will be ready to submit education data through EDFacts

exclusively by established deadlines, the Department requires each SEA to submit a State 

Submission Plan yearly with actual submission, to date, and planned submission dates. 

The Department monitors the progress of the states by comparing actual submissions to 

the plan to ensure that the states stay on schedule. Further, the Department is planning to 

give $80,000 to each SEA to assist with efforts in getting education data submitted to 

EDFacts in a more efficient and effective manner. 

To decrease the risk of inconsistent education data in consolidated state performance 

reports, certain parts of the report are pre-populated with EDFacts data. In addition, the 
MANAGEMENT’S DISCUSSION AND ANALYSIS

40 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Department is able to create ad hoc reports from EDFacts data to provide to entities such 

as Congress, without having to individually ask SEAs or program offices for the information. 

This provides for a more efficient use of time in preparing reports, and it decreases the risk 

of inconsistent reporting of education data. 

The Department has advised us that it is working in coordination with the Data Quality 

Campaign and the National Forum on Education Statistics to help SEAs implement, by FY 

2009, high-quality, longitudinal data systems that include a state data audit system 

assessing data quality, validity and reliability. The Department has also advised us that it 

worked with a task force of state, local and federal experts (organized through the National 

Center for Education Statistics) to develop a resource document for local educational 

agencies to use with their staff to ensure and improve data quality. 

Challenge: Human Resources Services 

Like most federal agencies, the Department will see a significant percentage of its 

workforce eligible for retirement in 2009. The Department is also continuing to experience 

a significant change in critical skill requirements for many of its staff. Identification and 

prompt implementation of needed action steps to adequately address these succession 

planning and workforce issues, including recruitment, hiring and retention, is critically 

important. 

The Department’s Progress: The Department stated that it is committed to improving the 

strategic management of human capital. In response to the results of a recent Federal 

Human Capital Survey, the Department took a three-pronged approach to address the 

performance culture concerns identified by the survey: (1) senior leadership involvement; 

(2) principal office action planning training, and (3) the Departmentwide Action Planning 

Team (APT). In November 2007, the APT’s planning efforts received recognition from the 

Office of Personnel Management for the most outstanding work completed by a planning 

team. 

The APT presented 50 long-term, mid-term, and short-term recommendations in the areas 

of rewards and recognition, managing a diverse workforce, and execution of performance 

management, 49 of which the Department agreed to implement. During FY 2008, 36 of the 

recommendations were implemented. The majority of the action items not completed are 

linked to the implementation of a new employee performance management system that is 

planned for FY 2010, pending negotiations with the American Federation of Government 

Employees Council 252, the union representing Department employees. 

In addition to implementing the APT recommendations, while the Department has made 

some progress in reducing the processing time in bringing new employees on board and 

has put metrics in place to monitor its performance in this area, it must continue to identify 

and adopt innovative ways to ensure that skilled, high-performing employees are available 

and deployed appropriately.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 41

Management’s Discussion and Analysis

Management’s Assurances

Federal Managers’ Financial Integrity Act

As required under the Federal Managers’ Financial Integrity Act of 1982 (FMFIA), the 

Department reviewed its management control system. The objectives of the management 

control system are to provide reasonable assurance that the following occur: 









Obligations and costs are in compliance with applicable laws. 

Assets are safeguarded against waste, loss, unauthorized use, or misappropriation. 

The revenues and expenditures applicable to agency operations are properly recorded 

and accounted for to permit the preparation of accounts and reliable financial and 

statistical reports and maintain accountability over assets. 

Programs are efficiently and effectively carried out in accordance with applicable laws 

and management policy. 

Managers throughout the Department are responsible for ensuring that effective controls 

are implemented in their areas of responsibility. Individual assurance statements from 

senior management serve as a primary basis for the Department’s assurance that 

management controls are adequate. The assurance statement provided on page 43 is the 

result of our annual assessment and is based upon each senior officer’s evaluation of 

controls. 

Department organizations that identify material deficiencies are required to submit plans for 

correcting the cited weaknesses. These corrective action plans, combined with the 

individual assurance statements, provide the framework for continual monitoring and 

improving of the Department’s management controls.

Material Weakness Reported in FY 2007 Resolved. Corrective actions have been 

implemented to resolve the ―Monitoring and Oversight of Guaranty Agencies, Lenders and 

Servicers‖ material weakness reported in the FY 2007 PAR. Federal Student Aid (FSA) 

implemented significant corrective actions in response to OIG and GAO audits regarding 

the monitoring and oversight of guaranty agencies, lenders and servicers. FSA also refined 

efforts to identify and implement changes needed in the approach to program management, 

including procedures for performing program reviews. These actions have led to a 

significant improvement in the internal controls related to the monitoring and oversight of 

guaranty agencies, lenders and servicers. 

Inherent Limitations on the Effectiveness of Controls. Department management does 

not expect that our disclosure on controls over financial reporting will prevent all errors and 

all fraud. A control system, no matter how well conceived and operated, can provide only 

reasonable, not absolute, assurance that the objectives of the control system are met. 

Further, the design of a control system must reflect the fact that there are resource 

constraints. The benefits of the controls must be considered relative to their associated 

cost. Because of the inherent limitations in a cost effective control system, misstatements 

due to error or fraud may occur and not be detected. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

42 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Federal Financial Management Improvement Act 

The Secretary has determined that the Department is in compliance with the Federal 

Financial Management Improvement Act of 1996 (FFMIA), although our auditor has 

identified instances in which the Department’s financial management systems did not 

substantially comply with the act. 

The Department is cognizant of our auditor’s concerns relating to instances of noncompliance with FFMIA as noted in the Compliance with Laws and Regulations Report 

located on pages 187–188 of this report. The Department continues to strengthen and 

improve our financial management systems. 

The FFMIA requires that agencies’ financial management systems provide reliable financial 

data in accordance with generally accepted accounting principles and standards. Under 

FFMIA, our financial management systems substantially comply with the three following 

requirements under FFMIA—federal financial management system requirements, 

applicable federal accounting standards and the use of the U.S. Government Standard 

General Ledger at the transaction level. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2008 Performance and Accountability Report—U.S. Department of Education 43

Management’s Discussion and Analysis

Federal Managers’ Financial Integrity Act

Management for the Department of Education is responsible for establishing 

and maintaining effective internal control and financial management systems 

that meet the intent and objectives of the Federal Managers’ Financial Integrity 

Act of 1982 (FMFIA). I am able to provide a qualified statement of assurance 

that the Department’s internal control structure and financial management 

systems meet the objectives of FMFIA, with the exception of one material 

weakness. The detail of this exception is provided on the next page in Exhibit 1. 

The Department conducted its assessment of internal control in compliance with 

applicable laws and regulations, and in accordance with the Office of 

Management and Budget’s Circular No. A-123, Management’s Responsibility for 

Internal Control. As a result of this assessment, the Department identified one 

material weakness in its internal control over the effectiveness and efficiency of 

operations, and compliance with applicable laws and regulations, as of 

September 30, 2008. Other than the exception noted in Exhibit 1, the internal 

controls were operating effectively, and no material weaknesses were found in 

the design or operation of the internal controls. The financial management 

systems meet the objectives of FMFIA. 

In addition, the Department conducted an assessment of the effectiveness of 

internal control over financial reporting, which includes safeguarding of assets 

and compliance with applicable laws and regulations, in accordance with the 

requirements of Appendix A of the Office of Management and Budget’s Circular 

No. A-123. In accordance with the results of this assessment, the Department 

of Education can provide reasonable assurance that its internal control over 

financial reporting as of June 30, 2008, was operating effectively and that no 

material weaknesses were found in the design or operation of the internal 

control over financial reporting. 

//s// 

Margaret Spellings 

November 14, 2008
MANAGEMENT’S DISCUSSION AND ANALYSIS

44 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Exhibit 1—FMFIA Material Weaknesses 

ID

Material 

Weakness Description Corrective Action 

Anticipated 

Correction 

Date

1 Information 

Technology 

(IT) Security 

Instances of inadequate security 

controls, including certification 

and accreditation; risk 

assessment; security awareness 

and training; contingency 

planning; configuration 

management; incident response 

and handling media protection 

controls; physical and 

environmental protection; 

personnel security controls; 

output handling and data 

retention; systems access 

controls; identification and 

authentication controls; and 

audit and accountability. 

The Office of the Chief Information 

Officer is implementing a number of 

mitigating actions to correct IT 

security deficiencies found in 

management, operational, and 

technical controls. 

September 30, 

2009

Implement the Managed Security 

Service Provider IV&V capabilities in 

the area of operational Intrusion 

Detection Monitoring and incident 

escalation, Situational Awareness, 

Vulnerability Management and Cyber 

Security Management.

Awarded August 

22, 2008, 

ongoing through 

September 30, 

2009

Mitigate weaknesses in password 

protection by implementing a twofactor authentication solution derived 

In accordance with NIST standards 

using Logical Access and certificate 

enabled tokens, and the ED PIV Card 

in conjunction with card readers.

September 28, 

2009





In coordination with the IT 

Provider, establish a Logical 

Access test lab to conduct 

proof of concept testing.

January 31, 

2009

Develop an integrated 

identity management plan 

that addresses full 

operational capability for 

logical access and twofactor identification.

Correct deficiencies found in 

protecting personally identifiable 

information (PII) by encrypting laptop 

computers and other mobile media 

instruments containing PII such as 

thumb drives or external hard drives.

April 30, 2009

• Begin the fielding of 

notebooks with an enterprise NISTapproved encryption technology. 

July 31, 2009

• Complete the project plan 

for deployment of encrypted laptops 

and other mobile media instruments 

containing PII, such as thumb drives 

and external hard drives

August 15, 2009
FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance 

Details 
PERFORMANCE DETAILS 

46 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance Details Overview 

The Department presents the key measures and results for each of the strategic goals. 

The presentation for each strategic goal is followed by a summary chart providing an 

overview of the results for the goal’s key measures along with any Program Assessment 

Rating Tool results. 

Key Measures 

For each strategic goal, the Department has selected key program measures centered on 

the desired outcomes. The chapter for each goal provides specific details about the 

performance progress for each key measure. 

How to Read This Report 

Each chapter presents a description of the goal and objectives. The discussion of each 

objective includes a table that describes the key measures, indicates the actual 

performance and summarizes the results. The following explanation describes the 

information that is presented for key measures. 

Explanation of Documentation for Key Measures 

Table. Provides trend data including the latest reported data. 

Source. Provides bibliographic information. 

Analysis of Progress. Provides insights into the Department’s progress, including 

explanations for unmet targets and actions being taken or planned. 

Data Quality and Timeliness. Incorporates information such as the universe included in 

the measure; definitions; the way data were collected, calculated and reviewed; data 

strengths and limitations; and plans for improved data quality. 

Target Context. Explains the rationale for targets, especially where anomalies exist. 

Additional Information. Provides relevant background or other pertinent information 

about a particular measure. 

Not all measures will include all data fields described above. 

Program Assessment Rating Tool Analysis 

The Program Assessment Rating Tool (PART) was developed and implemented by the 

Office of Management and Budget as a standardized process for determining program 

effectiveness in a consistent way across government agencies. Programs are assessed 

and receive scores on a scale of 0 to 100 in each of four weighted sections: program 

purpose and design (weighted 20 percent), strategic planning (10 percent), program 

management (20 percent) and program results and accountability (50 percent). Weighted 

scores are combined and translated into one of four ratings: Effective, Moderately 

Effective, Adequate and Ineffective. A rating of Results Not Demonstrated is given if the 

program does not have agreed-upon performance measures or lacks performance data 

against an established target. For detailed information about the results of the 
PERFORMANCE DETAILS

OVERVIEW

FY 2008 Performance and Accountability Report—U.S. Department of Education 47

Department's PARTed programs, please visit 

http://www.whitehouse.gov/omb/expectmore/agency/018.html. 

Programs 

Each program that has measures under the Government Performance and Results Act of 

1993 supports at least one of our strategic goals. In applicable goal chapters, a table 

provides a summary of each program’s performance results over four years and FY 2008 

budget and expenditures. 

Methodology for Program Performance Summary 

In keeping with the Government Performance and Results Act of 1993, the Department has 

established program-specific annual plans with measures and targets for the majority of the 

grant and loan programs, and has provided the corresponding program performance 

reports in conjunction with the publication of the annual Performance and Accountability 

Report. Since 2002, program performance plans and reports have been published on the 

Department’s Web site at http://www.ed.gov/about/reports/annual/index.html?src=pn. 

In the Program Performance Summary tables that are part of each goal chapter of this 

FY 2008 Performance and Accountability Report, we provide an overview of the 

performance results on the program measures for each of the past four years from FY 2005 

through FY 2008. For each year, the Department assesses performance on the measures 

that were established for that year in a program’s published plan, and provides the 

percentage of measures whose targets were Met or Exceeded, the percentage of targets 

Not Met but showing improvement over prior years, the percentage whose measure targets 

were Not Met and the percentage of measures that lack data. 

The percentages with no data may include measures for which the Department was unable 

to collect data and/or measures with pending data. In some cases, the target was defined 

as the establishment of a baseline. In the case of these measures, if data were collected 

and a baseline established, then that measure was considered Met. If the Department was 

unable to collect the data to establish the baseline, that measure was counted as having No 

Data. 

The tables also identify, by shading, those programs that did not have a performance plan 

for a particular year from FY 2005 through FY 2008. The table includes the PART 

assessment rating for each program. 

The full individual program performance reports for FY 2008 are available at 

http://www.whitehouse.gov/omb/part/index.html. 
PERFORMANCE DETAILS

48 FY 2008 Performance and Accountability Report—U.S. Department of Education 

GOAL 1: Improve Student Achievement, With a Focus 

on Bringing All Students to Grade Level in Reading and 

Mathematics by 2014 

Overview 

Strategic Objectives: 















Improve student achievement in reading 

Improve student achievement in 

mathematics 

Improve teacher quality 

Promote safe, disciplined and drug-free 

learning environments 

Increase information and options for 

parents 

Increase high school completion rate 

Transform education into an evidencebased field 

 

Note: Each year the Department analyzes 

the percentage of program performance 

targets that were met or exceeded, not met 

but improved over time, not met, or for 

which data are not yet available. Since the 

Department has a lag in the time data are 

received for the established targets, the FY 

2007 target results are presented here. 

For more information on PART Ratings by 

Programs and Percent of Targets Met and 

Not Met, see Program Performance 

Summary at the end of this goal. 

Goal 1 Resources

($ in thousands)

$37,446,638 $36,876,345

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

FY 2009 FY 2008

(Requested)

Goal 1 PART Ratings by Program

Effective

9% Moderately 

Effective

7%

Adequate

29%

Ineffective

2%

Results Not 

Demonstrated

53%

Met/Exceeded

42%

Not Met

24%

Without Data

34%

Goal 1 FY 2007 Percent of Targets 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 49

Key Measures 

Improving student proficiency and closing the achievement gap are the cornerstones of the 

Department’s work. In FY 2008, the Department identified 37 key measures to report our 

progress. Results on these key measures are shown below. See page 46 for an 

explanation of the documentation fields for the key measures. To provide context for data 

presented in Goal 1, student demographic are provided. 

Figure 3. Student Demographics (public school students by race and ethnicity and 

special populations, school year 2005-2006)

Student Demographics

White

55.9%

Black

16.9%

Asian/

Pacific Islander

4.5%

American Indian/

Alaska Native

1.2.4%

Hispanic

20.5%

United States

Total Students 49,676,964

Low-Income Students 40.9%

Limited English Proficient 8.5%

Students with Disabilities 13.6%

* Demographic breakdowns do not add to 100 percent due to rounding 

Source: National Center for Education Statistics (NCES), Common Core 

of Data, 2005–06 School Year 

Strategic Goal 1, Objective 1: Improve student achievement in reading 

Research shows that students who fail to read well by the fourth grade have a greater 

likelihood of dropping out of school and encountering diminished life opportunities 

compared with other students. Providing consistent support for reading success from the 

earliest age has critically important benefits. The largest national reading initiative, Reading 

First, supports local efforts by providing formula grants to states, which then award 

competitive grants to high-need districts. 

These grants are designed to enhance the reading skills of children in grades K-3 through 

the use of instructional materials, diagnostic assessments and professional development 

based on scientifically-based reading research. Under the Early Reading First program, 

funds are awarded through competitive grants to districts to provide early childhood literacy 

instruction based on scientifically-based reading research. Additional federal support for 

reading instruction goes to states through the large formula grants for disadvantaged 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

50 FY 2008 Performance and Accountability Report—U.S. Department of Education 

students (Title I Grants to Local Educational Agencies) and for special education (Special 

Education Grants to States). Additional support is provided by career and technical 

education (Career and Technical Education State Grants) and programs under Title III. 

Figure 4. NAEP Reading Achievement for 2006–2007 (Public School Students) 

% of 4th 

Graders

Basic

% of 4th 

Graders

Proficient

% of 8th 

Graders

Basic

% of 8th 

Graders

Proficient

All 66% 32% 73% 29%

White 77% 42% 83% 38%

Black 46% 14% 54% 12%

Hispanic 49% 17% 57% 14%

Source: 2007 National Assessment of Educational Progress (NAEP) Data 

Measures for Objective 1

Percentage of students who 

achieve proficiency on state 

reading assessments:

2005 2006 2007 2008

Target Actual Target Actual Target Actual Target Actual

1.1.A. All students 

(89a0pg) * 68.3 72.3 70.2 76.2 Sept. 2009

1.1.B. Low-income 

students (89a0pj) * 55.3 60.9 57.4 66.5 Sept. 2009

Students from major racial 

and ethnic groups:

1.1.C. American 

Indian/Alaska Native 

(89a0pm)

* 60.1 65.1 62.4 70.1 Sept. 

2009

1.1.D. African-American 

(89a0ps) * 55.5 61.1 58.4 66.6 Sept. 2009

1.1.E. Hispanic (89a0pv) * 52.0 58.0 54.3 64.0 Sept. 

2009

1.1.F. Students with 

disabilities (89a0q3) * 38.7 51.8 41.5 50.0 Sept. 2009

1.1.G. Limited English 

proficient students (89a0q4) * 39.8 47.3 38.8 54.9 Sept. 2009

* New measure in 2007. 2006 actual data are reported as baseline for 2007 and 2008 targets 

Source: Consolidated State Performance Reports 

Analysis of Progress. For the measures in Objective 1, the targets were not met, but improved 

over prior years for FY 2007, except for a decline in actual result for measure 1.1.G. 

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually to the U.S. Department of Education to report on multiple No Child Left Behind programs. 

One purpose of this report is to integrate state, local and federal programs in planning and service 

delivery. Data for 2008 expected in September 2009. 

Target Context. The goal is for 100 percent of all students to achieve proficiency on state reading 

assessments by 2014. The baselines are the actual results in 2006. Starting in 2007 and ending in 

2014, there are eight years to close the gap between the 2006 baseline and the 2014 ultimate goal 

of 100 percent. Therefore, targets for 2007 and 2008 were calculated by: (1) subtracting the 

baseline percentage from 100 percent to determine the gap that must be closed; (2) then dividing 

that gap by 8 to determine the annual improvement that would be needed if the gap were to be 

closed in a linear fashion; and (3) adding that annual increment to the 2006 baseline to arrive at the 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 51

2007 target; and (4) increasing the 2007 target by another annual incremental improvement to arrive 

at the 2008 target. 

Measures for Objective 1

2005 2006 2007 2008

Target Actual Target Actual Target Actual Target Actual

1.1.H. Percentage of 

career and technical 

education ―concentrators‖ 

who are proficient in reading 

(89a0q5)

* N/A 61** May 

2009

* New measure in 2007 ** Targets based on performance targets the Department has negotiated with states. 

N/A = Not Available 

Source: Career and Technical Education Annual Performance Report (state program) 

Analysis of Progress. Unable to assess. 

Data Quality and Timeliness. Data for 2008 are expected in May 2009. 

Target Context. This measure replaces a former measure related to the percentage of vocational 

concentrators meeting state-established academic standards. Carl D. Perkins Career and Technical 

Education Act of 2006 (Perkins IV) guidance prescribes the measures that a state must use to 

measure career and technical education students' attainment of challenging academic content 

standards and student achievement standards. Perkins IV requires a state to use its academic 

assessments (i.e., the state's reading/language arts tests) implemented under section 1111(b)(3) of 

the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left 

Behind Act to measure career and technical education students’ attainment of the state standards. 

Moreover, a state must report the number or percent of career and technical education students who 

score at the proficient level or above on the state’s assessments in reading/language arts 

administered under the ESEA to measure the academic proficiency of secondary career and 

technical education students against the ESEA standards. 

Report Explanation. New measure established in 2007 for the Carl D. Perkins Career and 

Technical Education Act of 2006 (CTE). A career and technical ―concentrator‖ is a secondary 

student who has earned three (3) or more credits in a single CTE program area (e.g., health care or 

business services), or two (2) credits in a single CTE program area, but only in those program areas 

where two credit sequences at the secondary level are recognized by the state and/or its local 

eligible recipients. 

Strategic Goal 1, Objective 2: Improve student achievement in 

mathematics 

American students’ performance on international mathematics assessments provides a 

compelling rationale for intensive, targeted initiatives designed to strengthen the 

mathematics skills of our students. Results from the 2003 Program for International 

Student Assessment suggest that American high school students continue to lag behind 

students in other countries in mathematics. The gap in mathematics learning between 

American students and students in other countries is widening. A second survey will be 

conducted in 2012. 

To raise the number of highly qualified teachers in mathematics and science, and to 

increase the number of students reaching proficiency in these subjects, school districts use 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

52 FY 2008 Performance and Accountability Report—U.S. Department of Education 

federal resources from the Mathematics and Science Partnership program. The program 

connects science, technology, engineering and mathematics university faculty with 

educators from high-need school districts to improve science and mathematics learning. 

The results from a descriptive analysis of successful applications to the program indicate 

that this partnership program is on track in meeting its goals. 

Highlights of the FY 2005 descriptive analysis show that almost 98 percent of the 

partnership projects focus on developing math and science content knowledge in teachers. 

Over 56,000 teachers across the country worked with over 3,000 higher education faculty 

members in intensive professional development opportunities affecting almost 1.2 million 

students. 

Sixty-five percent of these projects offered intensive summer institutes, most with significant 

follow-up during the school year, totaling on average 123 hours of professional 

development per teacher in a year. Another 34 percent of the projects offered intensive 

professional development in formats other than summer institutes, and with these individual 

teachers received on average 83 hours of professional development in a year. In 

mathematics, 71 percent of teachers made significant gains in their content knowledge as 

measured on pre- and post-test assessments. 

Among projects with student achievement data, there was on average a 7 percent increase 

in achievement scores from one year to the next in classrooms with teachers who 

participated in the Mathematics and Science Partnership professional development. The 

preliminary evaluation pointed to one potential problem area for many of the projects: the 

quality of project evaluation plans. In response to this finding, the Department enlisted the 

Coalition for Evidence-Based Policy to produce ―How to Solicit Rigorous Evaluations of 

Mathematics and Science Partnerships Projects‖ for state coordinators of the programs.

Figure 5. NAEP Math Achievement for 2006–2007 (Public School Students) 

% of 4th 

Graders

Basic

% of 4th 

Graders

Proficient

% of 8th 

Graders

Basic

% of 8th 

Graders

Proficient

All 81% 39% 66% 32%

White 91% 51% 77% 42%

Black 63% 15% 46% 14%

Hispanic 69% 22% 49% 17%

Source: 2007 National Assessment of Educational Progress (NAEP) Data 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 53

Measures for Objective 2

Percentage of students who 

achieve proficiency on state 

math assessments:

2005 2006 2007 2008

Target Actual Target Actual Target Actual Target Actual

1.2.A. All students 

(89a0q9)

* 65.0 69.4 68.0 73.8 Sept. 

2009

1.2.B. Low-income 

students (89a0qa) * 52.3 58.3 55.9 64.2 Sept. 2009

Students from major racial 

and ethnic groups:

1.2.C. American Indian/

Alaskan Native (89a0qb) * 53.2 59.1 56.8 64.9 Sept. 2009

1.2.D. African-American 

(89a0qd) * 48.8 55.2 52.9 61.6 Sept. 2009

1.2.E. Hispanic (89a0qe) * 51.8 57.8 54.8 63.9 Sept. 

2009

1.2.F. Students with 

disabilities (89a0qg) * 37.8 52.2 41.9 53.4 Sept. 2009

1.2.G. Limited English 

proficient students (89a0qh) * 43.3 50.4 44.7 57.5 Sept. 2009

* New measure in 2007. 2006 actual data are reported as baseline for 2007 and 2008 targets 

Source: Consolidated State Performance Reports 

Analysis of Progress. For the measures in Objective 2, the targets were not met, but improved 

over prior years for FY 2007.

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually to the U.S. Department of Education to report on multiple No Child Left Behind programs. 

One purpose of this report is to encourage the integration of state, local and federal programs in 

planning and service delivery. Measures were not in place for 2006; data for 2008 are expected in 

September 2009. 

Target Context. The goal is for 100 percent of all students to achieve proficiency on state 

mathematics assessments by 2014. The baselines are the actual results in 2006. Starting 2007 and 

ending in 2014, there are eight years to close the gap between the 2006 baseline and the 2014 

ultimate goal of 100 percent. Therefore, targets for 2007 and 2008 were calculated by: (1) 

subtracting the baseline percentage from 100 percent to determine the gap that must be closed; (2) 

then dividing that gap by 8 to determine the annual improvement that would be needed if the gap 

were to be closed in a straight-line fashion; (3) adding that annual increment to the 2006 baseline to 

arrive at the 2007 target; and (4) increasing the 2007 target by another annual incremental 

improvement to arrive at the 2008 target. 

Measures for Objective 2

2005 2006 2007 2008

Target Actual Target Actual Target Actual Target Actual

1.2.H. Percentage of 

career and technical 

education ―concentrators‖ 

who are proficient in 

mathematics (89a0qi)

* N/A 54** May 

2009

* New measure in 2007. ** Targets based on performance targets the Department has negotiated with states 

N/A = Not Available 

Source: Career and Technical Education Annual Performance Report (state program) 

Analysis of Progress. Unable to assess. 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

54 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Data Quality and Timeliness. Data for 2008 are expected in May 2009. 

Target Context. This measure replaces a former measure related to the percentage of vocational 

concentrators meeting state-established academic standards. Carl D. Perkins Career and Technical 

Education Act of 2006 (Perkins IV) guidance prescribes the measures that a state must use to 

measure career and technical education students' attainment of challenging academic content 

standards and student achievement standards. Perkins IV requires a state to use its academic 

assessments (i.e., the state's mathematics tests) implemented under section 1111(b)(3) of the 

Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left Behind 

Act to measure career and technical education students’ attainment of the state standards. 

Moreover, a state must report the number or percent of career and technical education students who 

score at the proficient level or above on the state’s assessments in mathematics administered under 

the ESEA to measure the academic proficiency of secondary career and technical education 

students against the ESEA standards. 

Report Explanation. New measure established in 2007 for the Carl D. Perkins Career and 

Technical Education Act of 2006 (CTE). A career and technical ―concentrator‖ is a secondary 

student who has earned three or more credits in a single CTE program area (e.g., health care or 

business services), or two credits in a single CTE program area, but only in those program areas 

where two credit sequences at the secondary level are recognized by the state and/or its local 

eligible recipients. 

Strategic Goal 1, Objective 3: Improve teacher quality 

No Child Left Behind requires that all core academic subject classes be taught by a teacher 

who is highly qualified. In order to be highly qualified, a teacher must have a bachelor’s 

degree, have a valid state license or a certificate and have demonstrated competence in 

each subject he or she teaches. Special education teachers who provide instruction in core 

content areas must demonstrate subject competence, hold a bachelor’s degree and hold a 

valid state certification in special education. The Individuals with Disabilities Education Act

also requires all special educators to hold a bachelor’s degree and meet full state 

certification in special education. Resources provided to states to meet highly qualified 

teacher requirements include some $3 billion from the Improving Teacher Quality State 

Grants program. 

The Department continues to work with states and school districts to ensure that all 

teachers are highly qualified in core academic subjects and to ensure that poor and minority 

children are not taught more often than other students by unqualified or inexperienced 

teachers. While no states were able to meet the goal of having all core academic subject 

classes taught by a highly qualified teacher by the end of the 2006–07 school year, all 

states now have plans in place detailing their efforts in reaching this goal. Many local 

educational agencies continue to have difficulty recruiting and retaining highly qualified 

special education teachers and highly qualified secondary mathematics and science 

teachers. Some rural school districts also have difficulty attracting sufficient numbers of 

highly qualified teachers to staff their schools, particularly at the secondary level where 

many rural teachers must be prepared to teach multiple subjects.
PERFORMANCE DETAILS

55

Figures 6 and 7. Highly Qualified Teachers for 2006-2007 School Year 

96.6% 93.5%

0%

20%

40%

60%

80%

100%

Low-Poverty 

Schools

High-Poverty 

Schools

Core Elementary Classes Taught 

by Highly Qualified Teachers

95.4% 88.7%

0%

20%

40%

60%

80%

100%

Low-Poverty 

Schools

High-Poverty 

Schools

Core Secondary Classes Taught 

by Highly Qualified Teachers

Source: Consolidated State Performance Reports, 2006–07 

2005 2006 2007 2008 

Measures for Objective 3

Percentage of class type 

taught by highly qualified 

teachers:

Target Actual Target Actual Target 

** Actual Target ** Actual 

1.3.A. Total core 

academic classes (89a0qk) * 91.0 * 92.0 100 94.0 100 March 

2009 

1.3.B. Total core 

elementary classes (1182) 90.0 93.0 95.0 94.0 100 95.9 100 Sept. 2009 

1.3.C. Core elementary 

classes in high-poverty 

schools (899zv) 

* 89.5 * 90.4 100 93.5 100 Sept. 

2009 

1.3.D. Core elem

classes in low-pove

schools (899zx)

entary 

rty * 95.0 * 95.8 100 96.6 100 Sept. 

2009 

1.3.E. Total core 

secondary classes (1183) 85.0 89.0 92.0 90.9 100 93.0 100 Sept. 2009 

1.3.F. Core secondary 

classes in high-poverty 

schools (899zw)

* 84.4 * 85.7 100 88.7 100 Sept. 

2009 

1.3.G. Core seco

classes in low-pove

schools (899zy)

ndary 

rty * 91.8 * 93.8 100 95.4 100 Sept. 

2009 

* New measure in 2006. ** Targets set in 2007-2012 strategic plan 

Source: Consolidated State Performance Reports 

Analysis of Progress. Target not met but improved over prior years.

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually to the U.S. Department of Education to report on multiple No Child Left Behind programs. 

One purpose of this report is to encourage the integration of state, local and federal programs in 

planning and service delivery. For 1.3.A: Data for 2008 are expected in March 2009; 1.3.B-G: Data 

for 2008 are expected in September 2009. 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

56 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Strategic Goal 1, Objective 4: Promote safe, disciplined and drug-free 

learning environments 

For FY 2008, the Department designated three key measures to track performance for this 

objective. The data for these measures provide information from a nationally representative 

sample of students in grades 9-12 on three important topics related to safe, disciplined and 

drug-free learning environments – possession of weapons at school, perception of school 

safety and availability of illegal drugs at school or on school property. 

Drug use, violence and crime remain serious problems for school-age youth. Students 

cannot learn to the high standards required by No Child Left Behind in schools when they 

feel unsafe or are engaged in drug use. Generally, rates of marijuana and alcohol use by 

high school students have declined since 1999. While students experience fewer violent 

incidents at school than in their communities, national indicators of school safety have 

steadied in recent years after showing improvement between the early 1990s and 2003. 

Despite these generally positive trends, the year was marred by some significant instances 

of violence on our nation’s college campuses and elementary and secondary schools, 

including the shooting deaths of six and injuries to 18 others at Northern Illinois University. 

In response to this incident, and the tragedy at Virginia Polytechnic Institute and State 

University in 2007, for the first time the Department awarded grants to higher education 

institutions in 2008 to help them plan for, respond to, and recover from traumatic events 

that disrupt the campus learning environment. The FY 2008 cohort of grantees includes 17 

institutions in 13 States. The Department also sought and received authority to expand its 

successful Project School Emergency Response to Violence (Project SERV) initiative to 

include institutions of higher education (IHEs) as potential beneficiaries, and awarded a 

Project SERV grant to Northern Illinois University to support efforts to restore its learning 

environment following the February 2008 shootings. The Department awarded seven 

Project SERV grants to local educational agencies in FY 2008 to help schools restore the 

learning environment following school shootings, school bus accidents and student 

homicides, and awarded a Project SERV grant to Montgomery County Public Schools in 

Virginia to help address the needs of the K-12 student community following the shootings at 

Virginia Tech. 

Additionally, the Department is modifying its publication Practical Information on Crisis 

Planning: A Guide for Schools and Communities to address the unique challenges that 

colleges and universities face in preparing for and responding to crises. The Department 

will be working with the United States Secret Service and the Federal Bureau of 

Investigation under a memorandum of understanding to examine instances of targeted 

violence on college campuses to determine how threat assessment and other procedures 

recommended for elementary and secondary schools may be applied, with modifications as 

needed, to address the needs of IHEs. 

The Department and the Secret Service disseminated a recently completed study on 

―bystanders.‖ The study provides insight into why persons who know about school 

shootings do not come forward with that information. For details, go to: 

www.secretservice.gov/ntac/bystander_study.pdf
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 57

The Department also provided grants to promote safe, disciplined and drug-free schools 

using a range of strategies and approaches. About 700 new and continuation grant awards 

were made under the Safe Schools/Healthy Students Initiative, Mentoring Programs, 

Elementary and Secondary School Counseling Program, Grants to Reduce Alcohol Abuse, 

Partnerships in Character Education, Grants to Integrate Schools and Mental Health 

Systems and Student Drug Testing grants. 

Measures for Objective 4 2001 2003 2005 2007

Percentage of students in 

grades 9 through 12 who: Target Actual Target Actual Target Actual Target Actual

1.4.A. Carried a weapon 

(such as a knife, gun, or 

club) on school property one 

or more times during the 

past 30 days (1467)

N/A 6.0 5.0 7.0 5.0 5.9

1.4.B. Missed one or 

more days of school during 

the past 30 days because 

they felt unsafe at school, or 

on their way to and from 

school (89a0qm)

6.0 6.0 5.0 5.5

1.4.C. Were offered, 

given, or sold an illegal drug 

by someone on school 

property in the past year 

(1463)

N/A 29.0 28.0 25.4 27.0 22.3

N/A = Not Available 

Source: Youth Risk Behavior Surveillance System, supported by the Centers for Disease Control and 

Prevention, part of the U.S. Department of Health and Human Services 

Analysis of Progress. For FY 2007, target not met but improved over prior years for measures 

1.4.a and 1.4.b. Target exceeded for 1.4.c.

Data Quality and Timeliness. Data are from the Youth Risk Behavior Surveillance System 

(YRBSS), a data collection supported by the Centers for Disease Control and Prevention, U.S. 

Department of Health and Human Services. The survey monitors six categories of priority health risk 

behaviors among youth, including violence and alcohol and other drug use. Data reported for these 

measures come from the YRBSS National Survey; data for this survey are collected in odd years 

and reported in the following even year. Details about the methods used to select the sample and 

other issues are available at: http://www.cdc.gov/HealthyYouth/yrbs/pdf/yrbss07_mmwr.pdf. 

Target Context. Lower percentages indicate improvement on these measures. Based on a biennial 

survey; data gathered only in odd-numbered years. 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

58 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Strategic Goal 1, Objective 5: Increase information and options for 

parents 

Parents of public school children who attend a Title I school that has been determined by 

the state to be in need of improvement have choices under the provisions of No Child Left 

Behind. They may send their child to another public school in the district and, if the 

school’s status remains ―in need of improvement‖ for more than one year, low-income 

families whose children remain in the school may enroll their children in supplemental 

educational services (e.g., free tutoring). Parents’ options within the public school system 

have also increased with the growing numbers of charter schools that create alternatives to 

the traditional public school. 

New evidence shows that more families are choosing charter schools to meet the 

educational needs of their children. According to data gathered by the National Alliance of 

Public Charter Schools, more families are making choices about what school to attend. 

More than 1.26 million students nationwide were enrolled in charter schools as of May 

2008.

Department data collected from the Center for Education Reform indicate that the number 

of charter schools in operation around the nation increased from 3,997 in September 2006 

to 4,128 in April 2008. To help inform parents and charter school developers, the 

Department created a listserv so interested individuals can automatically receive notification 

of relevant charter school information at: http://www.ed.gov/programs/charter/csplist.html. 

In addition, in FY 2008, the Charter School Program gave competitive preference to states 

that include projects supporting activities and interventions aimed at improving the 

academic achievement of secondary school students who are at greatest risk of not 

meeting challenging state academic standards and not completing high school. 

Regarding supplemental educational services, the number of students nationwide receiving 

services grew from 245,267 in school year 2003–04 to 529,627 by school year 2006–07, 

resulting in a participation rate of 14.5 percent of eligible students. As of September 2008, 

state lists posted online included 3,264 approved supplemental educational services 

providers. 

In a study conducted on behalf of the Department by the RAND Corporation, in five out of 

the seven large urban districts in which there were sufficient numbers of students to 

analyze the effects, students participating in supplemental educational services showed 

statistically significant positive effects in both reading and mathematics achievement. 

To increase participation in supplemental educational services, the Secretary, in a 2006 

letter to all chief state school officers, directed states to help their districts become fully 

compliant with supplemental educational services through monitoring and the provision of 

technical assistance. The Secretary has granted certain states and districts flexibility in 

implementing supplemental educational services through pilot projects. 

Additionally, the Department has assigned to the Comprehensive Center on Innovation and 

Improvement the task of providing technical assistance to regional centers and states for 

supplemental educational services, including assistance to states with approval, monitoring 

and evaluation of providers, and to improve state and district outreach to parents. 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 59

Figure 8. Options for Parents, School Year 2006-2007

# of Eligible 

Students

Nationally 

# of Eligible 

Students 

Participating

Nationally

% of Eligible 

Students 

Participating 

Nationally

Supplemental 

Educational 

Services

3,645,665 529,627 14.5%

Public School 

Choice 5,450,081 119,988 2.2%

Source: Consolidated State Performance Reports, 2006-07

2005 2006 2007 2008

Measures for Objective 5 Target Actual Target Actual Target Actual Target Actual

1.5.A. Percentage of 

eligible students exercising 

choice (89a0qo) 

* 1.2 * 2.2 2.4 Dec. 

2008

* New measure in 2006. Target set for FY 2008. 

Source: Consolidated State Performance Reports 

Analysis of Progress. Target set based on FY 2007 actual. 

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually by each state to the U.S. Department of Education to report on multiple No Child Left 

Behind programs. One purpose of this report is to encourage the integration of state, local and 

federal programs in planning and service delivery. Data for 2008 are expected in December 2008. 

Target Context. The 2006 actual serves as the baseline. The 2008 target is baseline times two. 

2005 2006 2007 2008

Measures for Objective 5 Target Actual Target Actual Target Actual Target Actual

1.5.B. Percentage of 

eligible students 

participating in supplemental 

educational services 

N/A 14 15.4* 14.5 16.8 Sept. 

2009

(89a0qp)

*The 2007 target set by the Strategic Plan. N/A = Not Available. 

Source: Consolidated State Performance Reports 

Analysis of Progress. Target not met but improved over prior years.

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually by each state to the U.S. Department of Education to report on multiple No Child Left 

Behind programs. One purpose of this report is to encourage the integration of state, local and 

federal programs in planning and service delivery. Data for 2008 are expected in September 2009. 

Target Context. The 2006 actual serves as the baseline. The target for 2007 is the baseline times 

1.1 (1.1 x 2006 actual). The target for 2008 is the baseline times 1.2 (1.2 x 2006 actual).
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

60 FY 2008 Performance and Accountability Report—U.S. Department of Education 

2005 2006 2007 2008

Measures for Objective 5 Target Actual Target Actual Target Actual Target Actual

1.5.C. Number of charter 

schools in operation Dec. 

2008 3,300 3,344 3,600 3,997 3,900 4,046 4,290

(89a0qq)

Source: Consolidated State Performance Reports 

Analysis of Progress. Target exceeded. 

Data Quality and Timeliness. The Consolidated State Performance Report (CSPR) is submitted 

annually by each state to the U.S. Department of Education to report on multiple No Child Left 

Behind programs. One purpose of this report is to encourage the integration of state, local and 

federal programs in planning and service delivery. Data for 2008 are expected in December 2008. 

Strategic Goal 1, Objective 6: Increase high school completion rate 

There is a consensus on the need for high school reform among governors, business 

leaders, for-profit and nonprofit leaders and the Department. This reform must start with an 

honest calculation of graduation rates. Accurate graduation rates are crucial to meeting the 

requirements of No Child Left Behind. States are required to use high school graduation 

rate as one indicator for measuring a high school’s progress. 

One of the major impediments to accurately calculating high school graduation rates is the 

lack of a comprehensive data collection system that tracks students over time. Until states 

have the capacity to collect these data, the Department has committed to publishing two 

sets of state graduation rates: state-reported rates and standardized rates prepared by the 

Department. 

Additional effort to reform our nation’s high schools is evident in the Department’s initiative 

to support formula grants to state educational agencies that reserve a portion of the funds 

for the development of additional reading/language arts and mathematics assessments as 

part of their state assessment systems. Funds also were granted competitively to local 

educational agencies to implement targeted interventions in high-need secondary schools 

to increase student achievement and narrow achievement gaps.
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 61

Figure 9. Preparing America’s Students for Success 

75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Averaged Freshman 

Graduation Rate 2004

The Averaged 

Freshman 

Graduation 

Rate (AFGR) 

is a reliable 

definition for 

comparing 

across the 

states the 

percentage of 

students who 

graduate on 

time. 

71%

52%

56%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Graduation Rate (2002)

All Students Hispanic Black White

Source: National Center for Education Statistics (NCES) Source: Manhattan Institute, Jay Greene, 2005 

2005 2006 2007 2008 

Measures for Objective 6

Percentage of 

18–24-year-olds who have 

completed high school:

Target Actual Target Actual Target Actual Target Actual 

1.6.A. Total (89a0qt) 86.8 87.6 87.6 87.8 87.3 July 

2009 87.4 July 

2010 

1.6.B. African-American 

(89a0qu) 83.4 85.9 83.4 84.8 85.3 July 2009 85.5 July 2010 

1.6.C. Hispanics 

(89a0qv) 69.8 70.2 70.2 70.9 70.1 July 2009 70.3 July 2010 

Source: U.S. Department of Commerce, Bureau of the Census, Current Population Survey

Analysis of Progress. Exceeded target in FY 2006. FY 2007 unable to assess. 

Data Quality and Timeliness. The Strategic Plan for Fiscal Years 2007-2012 included measures 

developed in 2006. Targets for 2004/2005 (2005) were based on school year 2003-2004 data. The 

2005-2006 (2006) data were released in July 2008. Data for the 2006-2007 school year (column 

“2007” in this table) are not expected to be available for release until July 2009; data for the 2007-

2008 school year (column “2008” in the table) are not expected for release until July 2010. 

Target Context. As of July 2005, 12 states used a graduation rate definition referred to as the 

cohort definition, which tracks students from when they enter high school to when they leave. Other 

states used measures based on annually reported aggregate data that did not follow the progress of 

individual students over time. Thirty-two of these states estimated graduation rates by dividing the 

number of graduates in a given year by the number of graduates plus estimates of dropouts over the 

preceding 4 years. This rate has been referred to as the leaver rate. The remaining states used 

other measures to fulfill this reporting requirement. Because of the lack of comparability in the 

different approaches taken to reporting on-time graduation rates, and because of limitations in the 

leaver rate for measuring on-time graduation, the Department publishes a rate designed to estimate 

on-time graduation for all states using a common data source, the Common Core of Data, produced 

by the National Center for Education Statistics. That rate, technically referred to as the Averaged 

Freshman Graduation Rate, uses aggregate data to estimate the number of first-time 9th graders in
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

62 FY 2008 Performance and Accountability Report—U.S. Department of Education 

the fall 4 years prior to the graduation year being reported and divides that into the number of 

diplomas awarded in the reporting year. 

2005 2006 2007 2008

Measures for Objective 6 Target Actual Target Actual Target Actual Target Actual

1.6.D. Averaged 

freshman graduation rate 

(89a0qy)

74.3 74.4 74.3 73.4 75.2 July 

2009 76.6 July 2010

Source: U.S. Department of Education, National Center for Education Statistics, Common Core of Data, 

State Non-fiscal Survey of Public Elementary/Secondary Education 

Analysis of Progress. For FY 2007, unable to assess. Target not met for FY 2006. 

Data Quality and Timeliness. The Strategic Plan for Fiscal Years 2007-2012, published in May 

2007, included measures developed in 2006. Targets for 2004-2005 (2005) were based on school 

year 2003-2004 data. The 2005-2006 (2006) data were released in July 2008. Data for the 2006-

2007 school year (column ―2007‖ in this table) are not expected to be available for release until July 

2009; data for the 2007-2008 school year (column ―2008‖ in the table) are not expected for release 

until July 2010. 

Strategic Goal 1, Objective 7: Transform education into an evidencebased field 

In 1999, the National Research Council concluded that, ―the complex world of education—

unlike defense, health care, or industrial production—does not rest on a strong research 

base. In no other field are personal experience and ideology so frequently relied on to 

make policy choices, and in no other field is the research base so inadequate and little 

used‖ (Improving Student Learning: A Strategic Plan for Education Research and Its 

Utilization, 1999). The passage of No Child Left Behind, with its many references to 

scientifically based research, and the Education Sciences Reform Act of 2002, which 

established a new agency within the U.S. Department of Education to conduct and support 

scientifically valid research, signaled a commitment to transform education into an 

evidence-based field. 

That new research agency, the Institute of Education Sciences (IES), has the primary 

responsibility for generating scientifically valid research on education and encouraging its 

use. It has established the What Works Clearinghouse as a principal mechanism for 

advancing evidence-based education. The Clearinghouse develops quality standards for 

research that purports to demonstrate that education programs are effective, and it applies 

those standards in disseminating findings from research to policymakers and practitioners. 
PERFORMANCE DETAILS

GOAL 1: IMPROVE STUDENT ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 63

Measures for Objective 7 

Number of Departmentsupported programs and 

practices with evidence of 

efficacy using WWC** 

standards:

2005 2006 2007 2008

Target Actual Target Actual Target Actual Target Actual 

1.7.A. Reading or writing 

(89a0nu) * 3 6 6 11 11

1.7.B. Mathematics or 

science (89a0nv) * 1 3 4 7 8 

1.7.C. Teacher quality 

(89a0nw) * 1 3 3 5 5 

* New measure in 2006. **What Works Clearinghouse. The 2006 actual serves as the baseline. 

Source: U.S. Department of Education, Institute of Education Sciences 

Analysis of Progress. In FY 2008 1.7.a Target met, 1.7.b exceeded, 1.7.c met and in FY 2007,

1.7.a Target met, 1.7.b exceeded, 1.7.c met 

Data Quality and Timeliness. Data self-reported by IES. 

Target Context. The Department’s measures for evaluating progress towards the goal of 

transforming education into an evidence-based field are tied to the Clearinghouse. The measures 

assess the productivity of IES’s investments in producing scientifically valid research on teaching 

and instruction with respect to the core academic competencies of reading/writing and mathematics 

or science. The measure that is tracked is the number of programs and practices on these topics 

that have been developed with IES funding and that have been shown to be effective in raising 

student achievement under the research quality standards of the Clearinghouse. As shown by 

Clearinghouse reviews of existing research on program effectiveness in reading/writing and 

mathematics, few older studies meet the Clearinghouse quality standards. Thus the targets under 

this measure are ambitious and will, if met, result in a doubling, or more, of the existing base of 

research-proven programs and practices. 

2005 2006 2007 2008

Measures for Objective 7 Target Actual Target Actual Target Actual Target Actual 

1.7.D. Number of visits to

the WWC** Web site 

(89a0r3) 

* 482,000 530,000 531,162 

* New measure in 2007. The 2007 actual serves as the baseline. **WWC = What Works Clearinghouse. 

Source: U.S. Department of Education, Grantee reports and materials, WWC reviews of those materials and 

contractor reports on IES Web site statistics 

Analysis of Progress. FY 2008 target exceeded. FY 2007 target of setting baseline is met. 

Data Quality and Timeliness. Data self-reported by IES. 

Target Context. This measure is of utilization. It addresses the degree to which work that the 

Clearinghouse has identified as effective is being accessed. The Clearinghouse Web site is already 

heavily visited. The target calls for an annual 10 percent increase in visitors. Targets are based on 

the number of grants awarded in the subject areas and the maturation of the grants. The numbers 

are cumulative. 
PERFORMANCE 

DETAILS

GOAL 1: IMPROVE 

STUDENT 

ACHIEVEMENT

64 FY 2008 Performance and Accountability Report—U.S. Department of Education

Goal 1: Improve Student Achievement 

Program Performance Summary 

Eighty two of our grant programs most directly support Goal 1. These programs are listed below. In the table, an overview is 

provided for the results of each program on its program performance measures. (See page 46 for the methodology of calculating the 

percentage of targets met, not met and without data.) Individual program performance reports are available at 

http://www.whitehouse.gov/omb/part/index.html. Appropriation and expenditure data for FY 2008 are included for each of these 

programs. 

Program Name PART 

Rating

Appropriations†

Expenditures‡

Program Performance Results: Percent of Targets

Met/Exceeded, *Not Met But Improved Over Prior Years, Not Met, Without Data

FY

2008

($ in 

mil.)

FY

2008

($ in 

mil.)

FY 2008 FY 2007 FY 2006 FY 2005

%

Met/

Exc.

%

Not 

Met 

But 

Improved

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

21st Century Community Learning 

Centers (ESEA) A 1,081 586 0 0 0 100 11 78 11 44 50 6 0 100 0

Academies for American History and 

Civics (ESEA) NA 2 2 0 0 0 100 0 50 50

Advanced Credentialing (ESEA) NA 10 12 0 0 0 100 100 0 0 100 0 0 100 0 0

Alaska Native Education Equity (ESEA) NA 33 35 0 0 0 100 0 100 0 33 67 0 100 0 0

Alcohol Abuse Reduction (ESEA) NA 32 33 50 0 0 50 50 0 50 0 0 100

American Printing House for the Blind 

(APEB) RND 22 20 67 0 0 33 82 18 0 86 14 0 100 0 0

Arts in Education (ESEA) NA 36 36 0 0 0 100 0 0 100 100 0 0 100 0 0

Character Education (ESEA) NA 23 25 0 0 0 100

Charter Schools Grants (ESEA) A 211 233 12 0 0 88 25 0 75 33 0 67 50 50 0

Civic Education: Cooperative Education 

Exchange (ESEA) NA 11 12

Civic Education: We the People (ESEA) NA 20 19 100 0 0 0 0 0 100 100 0 0

Comprehensive Centers (ESRA) RND 57 61 25 0 0 75 100 0 0 25 0 75 Funded but no 

data yet

Comprehensive School Reform (ESEA) A 2 39 0 0 0 100 0 0 100 0 0 100 0 67 33

Credit Enhancement for Charter School 

Facilities (ESEA) NA 0 30 0 0 0 100 100 0 0 100 0 0 100 0 0

Dropout Prevention Programs (ESEA) NA 0 3
PERFORMANCE 

DETAILS

GOAL 1: IMPROVE 

STUDENT 

ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 65

Program Name PART 

Rating

Appropriations†

Expenditures‡

Program Performance Results: Percent of Targets

Met/Exceeded, *Not Met But Improved Over Prior Years, Not Met, Without Data

FY

2008

($ in 

mil.)

FY

2008

($ in 

mil.)

FY 2008 FY 2007 FY 2006 FY 2005

%

Met/

Exc.

%

Not 

Met 

But 

Improved

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

Early Childhood Educator Professional 

Development (ESEA) NA 0 11 0 0 0 100 67 33 0 100 0 0 0 100 0

Early Reading First (ESEA) ME 112 104 0 0 0 100 75 25 0 100 0 0 100 0 0

Education for Homeless Children and 

Youths (MVHAA) A 64 66 0 0 0 100 40 60 0 100 0 0 100 0 0

Education for Native Hawaiians (ESEA) NA 33 37 0 0 0 100 0 100 0 33 67 0 100 0 0

Educational Technology State Grants 

(ESEA) RND 267 299 0 20 0 80 20 0 80 33 0 67 0 100 0

Elementary & Secondary School 

Counseling (ESEA) NA 48 34 25 0 0 75 50 0 50 0 0 100

English Language Acquisition (ESEA) RND 700 616 8 0 0 92 29 71 0 71 29 0 100 0 0

Even Start (ESEA) I 66 102 0 0 0 100 40 60 0 60 40 0 25 75 0

Exchanges with Historic Whaling & 

Trading Partners (ESEA) NA 9 8 0 0 0 100 0 0 100 60 40 0 80 20 0

Foreign Language Assistance (ESEA) NA 25 8 0 0 14 86

Foundations for Learning (ESEA) NA 1 1

Fund for the Improvement of Education 

Programs of National Significance 

(ESEA)

NA 121 45

Impact Aid Basic Support/Payments for 

Children with Disabilities (ESEA) A 1,154 1,173 0 100 0 0 100 0 0 50 50 0

Impact Aid Construction (ESEA) A 18 9 33 33 0 34 67 0 33 0 100 0 0 100 0

Impact Aid Facilities Maintenance (ESEA) NA 5 4

Impact Aid Payments for Federal 

Property (ESEA) RND 64 61 50 0 0 50 0 100 0 0 100 0

Improving Teacher Quality State Grants 

(ESEA) ME 2,935 3,041 0 0 0 100 0 86 14 33 67 0 100 0 0

Indian Education Grants to Local 

Educational Agencies (ESEA) A 97 92 0 0 0 100 11 33 56 20 60 20 29 71 0

Indian Education National Activities 

(ESEA) NA 4 3 0 0 100 0 0 100

Javits Gifted and Talented (ESEA) NA 7 11 0 0 0 100 67 33 0 33 0 67 100 0 0

Literacy through School Libraries (ESEA) NA 19 19 0 0 0 100 0 0 100 100 0 0 0 50 50
PERFORMANCE 

DETAILS

GOAL 1: IMPROVE 

STUDENT 

ACHIEVEMENT

66 FY 2008 Performance and Accountability Report—U.S. Department of Education

Program Name PART 

Rating

Appropriations†

Expenditures‡

Program Performance Results: Percent of Targets

Met/Exceeded, *Not Met But Improved Over Prior Years, Not Met, Without Data

FY

2008

($ in 

mil.)

FY

2008

($ in 

mil.)

FY 2008 FY 2007 FY 2006 FY 2005

%

Met/

Exc.

%

Not 

Met 

But 

Improved

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

Literacy Programs for Prisoners (NLA) NA 0 3

Magnet Schools Assistance (ESEA) A 105 93 0 0 0 100 0 0 100 0 0 100 0 0 100

Mental Health Integration in Schools 

(ESEA) NA 5 5

Mentoring Program (ESEA) RND 49 48 0 0 0 100 0 67 33 100 0 0

Migrant State Agency Program (ESEA) A 380 378 0 0 0 100 62 8 30 92 8 0 92 8 0

National Assessment (ESRA) E 98 89 0 0 0 100 100 0 0

(Off year for 

collection) 100 0 0

National Assessment Governing Board NA 6 4

National Writing Project (ESEA) RND 24 21 0 0 0 100 0 0 100 0 0 100 0 0 100

Neglected and Delinquent State Agency 

Program (ESEA) A 49 49 0 0 0 100 25 75 0 100 0 0 100 0 0

Parental Information and Resource 

Centers (ESEA) RND 39 43 0 0 0 100

Physical Education Program (ESEA) RND 76 78 0 0 0 100 0 0 100 100 0 0

Reading First State Grants (ESEA) E 393 1,004 0 0 0 100 88 0 12 100 0 0

Ready-to-Learn Television (ESEA) RND 24 29 100 0 0 0

Ready to Teach (ESEA) NA 11 12 100 0 0 0

Regional Educational Laboratories 

(ESRA) NA 66 63 0 0 100

Research in Special Education (ESRA) RND 71 53 33 0 33 34 75 25 0 100 0 0

Research, Development and 

Dissemination (ESRA) E 160 236 100 0 0 0 45 33 22 71 29 0 80 20 0

Reading Is Fundamental/Inexpensive 

Book Distribution (ESEA) NA 25 26 0 0 0 100 0 0 100 100 0 0 0 100 0

Rural Education (ESEA) RND 172 169 12 0 0 88 12 0 88 0 100 0 67 33 0

Safe & Drug-Free Schools & 

Communities National Activities (ESEA) NA 138 101 10 0 0 90 0 23 77 62 0 38 80 20 0

Safe & Drug-Free Schools & 

Communities State Grants (ESEA) RND 295 386 100 0 0 0 45 33 22 0 0 100 71 29 0

School Improvement Grants (ESEA) NA 491 9 0 0 100 33 67 0

School Leadership (ESEA) NA 15 14 0 0 0 100 100 0 0 100 0 0
PERFORMANCE 

DETAILS

GOAL 1: IMPROVE 

STUDENT 

ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 67

Program Name PART 

Rating

Appropriations†

Expenditures‡

Program Performance Results: Percent of Targets

Met/Exceeded, *Not Met But Improved Over Prior Years, Not Met, Without Data

FY

2008

($ in 

mil.)

FY

2008

($ in 

mil.)

FY 2008 FY 2007 FY 2006 FY 2005

%

Met/

Exc.

%

Not 

Met 

But 

Improved

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

Special Education Grants for Infants and 

Families (IDEA) RND 436 472 33 0 33 34 40 40 20 33 67 0 33 67 0

Special Education Grants to States 

(IDEA) RND 10,948 11,164 0 0 0 100 33 58 9 75 0 25 60 40 0

Special Education Parent Information 

Centers (IDEA) RND 27 26 0 0 0 100 100 0 0 100 0 0

Special Education Personnel Preparation 

(IDEA) RND 88 90 12 0 0 88 75 12 13 67 33 0 100 0 0

Special Education Preschool Grants 

(IDEA) RND 374 387 8 8 0 84 33 67 0 50 50 0 0 100 0

Special Education State Personnel 

Grants (IDEA) NA 23 48 0 0 0 100 100 0 0 100 0 0 /// (not funded)

Special Education Technical Assistance 

and Dissemination (IDEA) RND 48 51 17 0 0 83 33 33 34 33 0 67

Special Education Technology and Media 

Services (IDEA) RND 39 31 0 0 0 100 80 20 0 67 0 33 50 50 0

Special Education Studies and 

Evaluation NA 9 8

Special Olympics Education Programs NA 12 1

Special Programs for Indian Children 

(ESEA) NA 19 19 0 0 0 100 0 0 100 29 0 71 0 0 100

Star Schools Program (ESEA) NA 0 12 0 100 0 0 100 0 0

State Assessments (ESEA) A 409 424 0 0 0 100 0 0 100 100 0 0 67 33 0

State Grants for Incarcerated Youth 

Offenders (HEA) NA 22 68 0 0 0 100 100 0 0 100 0 0 0 100 0

State Grants for Innovative Programs 

(ESEA) RND 0 101 17 17 0 66 67 0 33 50 50 0 75 25 0

Statewide Data Systems (ESRA) NA 48 28 /// (not funded)

Statistics (ESRA) E 88 85 0 0 0 100 60 40 0 33 67 0 0 0 0

Striving Readers (ESEA) NA 35 31 0 0 0 100 100 0 0

Supplemental Education Grants (CFAA) NA 18 14 /// (not funded)

Teacher Incentive Fund (ESEA) NA 97 63 0 0 0 100

Teacher Quality Enhancement (HEA) RND 34 64 0 0 0 100 33 67 0 100 0 0 100 0 0
PERFORMANCE 

DETAILS

GOAL 1: IMPROVE 

STUDENT 

ACHIEVEMENT

68 FY 2008 Performance and Accountability Report—U.S. Department of Education

Program Name PART 

Rating

Appropriations†

Expenditures‡

Program Performance Results: Percent of Targets

Met/Exceeded, *Not Met But Improved Over Prior Years, Not Met, Without Data

FY

2008

($ in 

mil.)

FY

2008

($ in 

mil.)

FY 2008 FY 2007 FY 2006 FY 2005

%

Met/

Exc.

%

Not 

Met 

But 

Improved

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

%

Met/

Exc.

%

Not 

Met

%

No 

Data

Aid for Elementary and Secondary 

Education (Hurricane Relief)

Teaching American History (ESEA)

NA

RND

0

118

160

79 0 0 0 100

Title I Evaluation (ESEA) NA 9 13

Title I Grants to Local Educational 

Agencies (ESEA) ME 13,899 12,990 0 0 7 93 0 73 27 71 0 29

Training and Advisory Services (CRA) A 7 7 80 0 20 0 80 20 0 100 0 0

Transition to Teaching (ESEA) A 44 47 0 0 0 100 75 25 0 100 0 0 75 25 0

Troops-to-Teachers (ESEA) A 15 15 0 0 0 100 33 33 34 67 33 0 100 0 0

Voluntary Public School Choice (ESEA) NA 25 21 0 0 0 100 0 0 100 100 0 0 100 0 0

Women's Educational Equity (ESEA) NA 2 2 0 0 0 100 100 0 0 100 0 0 0 0 100

TOTAL 36,876 ^36,324

† Budget for each program represents program budget authority.

‡ Expenditures occur when recipients draw down funds to cover actual outlays. FY 2008 expenditures may include funds from prior years’ appropriations.

* The ―Not Met But Improved Over Prior Years‖ column is new for FY 2008.

Shaded cell denotes that the program did not have targets for the specified year. 

^Estimated accruals in the amount of $721 million are excluded from the FY 2008 expenditure.

APEB: Act to Promote the Education of the Blind

CFAA: Compact of Free Association Amendments Act of 

2003

CRA: Civil Rights Act of 1964

ESEA: Elementary and Secondary Education Act of 1965 

ESRA: Education Sciences Reform Act of 2002

HEA: Higher Education Act of 1965 

IDEA: Individuals with Disabilities Education Act 

NLA National Literacy Act of 1991

MVHAA: McKinney-Vento Homeless Assistance Act

PART Rating

E = Effective 

ME = Moderately Effective 

A = Adequate 

I = Ineffective 

RND = Results Not Demonstrated 

NA = Program has not been assessed 
PERFORMANCE DETAILS

GOAL 2: Increase the Academic Achievement of All High 

School Students 

Overview 

Goal 2 Resources 

Strategic Objectives: ($ in thousands) 

$566,978

$1,972,709

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

FY 2009 FY 2008

(Requested)

• Increase the proportion of high school 

students taking a rigorous curriculum 

• Promote advanced proficiency in 

mathematics and science for all students 

• Increase proficiency in critical foreign 

languages 

Note: The apparent drop in resources from 

FY 2007 to FY 2008, as shown by the Goal 2 

resources chart, reflects the fact that program 

participation in the ACG/SMART grant 

program during the first 2 years has been 

significantly below initial estimates, resulting 

in large funding balances brought forward for 

possible use in future years. As part of the 

FY 2008 appropriation, Congress rescinded 

$525 million of this unused balance. 

Estimates indicate future funding will 

substantially exceed the amounts needed to 

support anticipated grant awards. 

Accordingly, as part of the FY 2009 budget 

the Administration proposed to permanently 

cancel $652 million in unneeded 

ACG/SMART grant balances in FY 2009. 

This would not affect the amount of grants 

awarded, but would eliminate funding that 

current estimates indicate will not be needed. 

Goal 2 PART Ratings by Program 

Effective

0% Moderately 

Effective

20%

Adequate

0%

Ineffective

20%

Results Not 

Demonstrated

60%

 

FY 2008 Performance and Accountability Report—U.S. Department of Education 69

et 

Note: Each year the Department 

analyzes the percentage of program 

performance targets that were met or 

exceeded, not met but improved over 

time, not met, or for which data are not y

available. Since the Department has a lag

in the time data are received for the 

established targets, the FY 2007 target 

results are presented here. For more 

information on PART Ratings by 

Programs and Percent of Targets Met and 

Not Met, see Program Performance 

Summary at the end of this goal. 

Met/

Exceeded

25%

Not Met

33%

Without Data

42%

Goal 2 FY 2007 Percent of Targets
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

Key Measures 

To better equip our students to compete in the global economy, the Department 

encourages states to adopt high school course work and programs of study that prepare all 

students for a postsecondary credential and facilitate a seamless transition from high 

school to college or the workforce. 

The 2008 ACT College Readiness Report presented results of the 2008 ACT scores. The 

Department uses ACT data to measure students’ readiness for postsecondary education. 

The ACT is a national college admission and placement examination that assesses high 

school students’ general educational development and their ability to complete college-level 

work. The ACT score results demonstrate the importance of taking challenging courses in 

preparation for success after high school. For the high school graduating class of 2008, in 

mathematics only about 43 percent of tested students overall were identified as ready for 

college level work and in science only 28 percent were ready for college-level work. 

According to the 2008 ACT report, only 1 percent of graduating seniors were planning to 

take a major college course of study in mathematics and only 5 percent were planning to 

major in biological and physical sciences. 

Figure 10. Percentage of 2008 High School Graduating Class Meeting ACT College 

Readiness Benchmark Scores* 

43%

11%

25%

49%

26%

63%

28%

5%

16%

33%

13%

38%

0%

10%

20%

30%

40%

50%

60%

All Students African 

American/ 

Black

American 

Indian/Alaska 

Native

Caucasian 

American/ 

White

Hispanic Asian 

American/ 

Pacific 

Islander

Mathematics Science

70%

* Benchmark scores for mathematics and science were 22 and 24, respectively. A benchmark score is the 

minimum score needed on an ACT subject-area test to indicate a 50% chance of obtaining a grade of B or 

higher or about a 75% chance of obtaining a C or higher in the college course. 

SOURCE: ACT, 2008 (http://www.act.org/news/data/08/benchmarks.html) 

The Department funds the training of additional instructors of Advanced Placement (AP) 

and International Baccalaureate (IB) classes in mathematics, science, and critical-need 

foreign languages. The Department continues to support achievement in mathematics, 

70 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 71

science, and critical-need foreign languages through incentives for teachers to teach 

advanced courses. Currently, 25 percent of first-time, full-time Pell Grant recipients 

nationally receive an Academic Competitiveness Grant. The Department has set a goal to 

double the number of students receiving Academic Competitiveness and National Science 

and Mathematics Access to Retain Talent (SMART) Grants by 2010-11. 

With a strong emphasis on preparing high school students for success in postsecondary 

education and in the global economy, the Department has selected this goal to emphasize 

in its Strategic Plan. Goal 2 encompasses 11 key performance measures and includes 

programs in academic competitiveness and innovation and improvement through Advanced 

Placement and International Baccalaureate programs. Other programs represented under 

this goal include Mathematics and Science Partnerships and the Adjunct Teacher Corps. 

See page 46 for an explanation of the documentation fields for the key measures. 

Strategic Goal 2, Objective 1: Increase the proportion of high school 

students taking a rigorous curriculum 

The American Competitiveness Initiative is a comprehensive strategy to keep our nation the 

most innovative in the world. Its goal is to strengthen high schools and prepare students for 

college or the workforce. The Department is committed to expanding Advanced Placement 

(AP) and International Baccalaureate (IB) programs to increase teacher training in 

mathematics, science, and critical foreign languages; to increase the number of students 

taking AP and IB mathematics, science, and critical foreign language exams; and to triple 

the number of students passing AP-IB tests. Academic Competitiveness grants continue to 

provide financial incentives for students to take a rigorous course of study in high school 

and college. To qualify for Academic Competitiveness grants, students must complete 

rigorous coursework, maintain good grades, be U.S. citizens, be full time students, and be 

eligible for Federal Pell Grants. 

Measures for Objective 1

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

2.1.A. Percentage of low-income 

students who qualify for Academic 

Competitiveness Grants (89a0r6) 

* 35 42 April 

2009 

* New measure in 2007. The 2007 actual serves as the baseline. 

Source: National Student Loan Data System via Common Origination and Disbursement system data. 

Data Quality and Timeliness. Data for 2008 are expected in April 2009.

Target Context. We met our FY 2007 target of setting the baseline. FY 2007 was the first year of 

the Academic Competitiveness Grants (ACG) program. Targets were developed as follows: the 

numerator was determined through a review of Financial Student Aid records; the denominator was 

developed from high school graduation records for the 2004-05 and 2005-06 school years, with the 

estimates narrowed for low-income students by use of the 2003-04 National Postsecondary Student 

Aid Study (NPSAS) and state estimates of the proportion of students taking rigorous curricula. The 

target is a challenging goal for the program – a 20 percent increase in the proportion of qualified 

students given ACG grants. 

Report Explanation. The definition of low income is the definition that has been established for Pell 

Grant recipients. Eligibility for ACG was limited to 2 high school graduating classes. This permitted 

the Department to isolate the eligible group against which to calculate the actual. However, going 

forward, the number of eligible high school graduating classes increases by 1 each year making a 

valid analysis impossible to calculate without data that will permit a more elaborate analysis of 

program data or from a survey such as NPSAS. NPSAS data will be available in early 2009 with 

program data available soon after. The target was set last year and again this year on a path to 

double recipients of ACG by 2011. 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

Additional Information. Academic Competitiveness Grants were funded through FY 2011.

2005 2006 2007 2008 Measures for Objective 1

72 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Target Actual Target Actual Target Actual Target Actual 

2.1.B. Number of Advanced 

Placement classes available 

nationwide (89a0r7) 

* Not 

collected 

BL 

+10% 

Not 

collected

* New measure in 2007, so no target. The 2007 actual will serve as the baseline. 

BL = Baseline 

Source: The College Board, Ledger of Authorized Advanced Placement Courses 

Data Quality and Timeliness. Data for 2007 were not collected on this measure. The Ledger of 

Authorized Advanced Placement Courses was only initiated in 2007 and no data base has been 

developed from which to extract the data. 

For the public school graduating class of 2007, there were approximately 2.8 million high 

school graduates. Those graduates who took an AP exam at some point in high school 

numbered 698,182 or 24.9 percent – up 18.1 percent from 2002. The total number of AP 

exams taken by the class of 2007 across their entire high school years numbered 

1,957,424. In 2007, 15,505 secondary schools located in the 50 states and the District of 

Columbia participated in the AP program. Of those, 12,241 were public schools, an 

increase of 204 schools over the previous year. See more detail at: 

(http://professionals.collegeboard.com/data-reports-research/ap/nation) 

High schools serving students from low-income families tend to offer few, if any, Advanced 

Placement courses. The Department continues to support efforts to make AP courses 

available to students who now have limited access to these courses. Because low-income 

and minority students are underrepresented in AP classrooms, the Department targets 

Advanced Placement Incentive (API) grants to high-poverty high schools and works with 

states to promote the use of federal aid for AP exam fees by low-income and minority 

students. The Department is working to identify and disseminate information on promising 

practices for expanding the successful participation of low-income and minority students in 

AP courses. 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

Figure 11. The Class of 2007: Race/Ethnicity of AP Examinees vs. Graduating 

Seniors in U.S. Public Schools 

61.7%

0.6%

14.0%

7.4% 10.4%

64.0%

1.1%

14.6%

5.5%

14.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Black or

African

American

Asian, Asian

American, or

Pacific

Islander

Hispanic or

Latino

American

Indian or

Alaska Native

White

AP Examinee Population* Overall Student Population**

* These examinees include all public school students in the class of 2007 who took an AP Exam at any point in 

high school. Note: Because some AP Exam takers identify themselves as “Other” for ethnicity or do not 

provide ethnicity, the “AP Examinee Population” in this figure only represents 94.1 percent of the AP population. 

** Knocking at the College Door (2003), Western Interstate Commission for Higher Education 

Source: The College Board, 2008 

Measures for 2005 2006 2007 2008 

Objective 1

FY 2008 Performance and Accountability Report—U.S. Department of Education 73

Number of 

Advanced 

Placement tests 

taken by public 

school students:

Target Actual Target Actual Target Actual Target Actual 

2.1.C. Total 

(89a0r8) 

Jan 

2009 * 1,759,299 N/A 1,943,565 1,953,000 2,133,594 2,168,000

2.1.D. Lowincome (1149) 

Jan 

2009 * 223,263 209,411 267,286 230,352 286,028 253,387 

2.1.E. Minorities 

(Black, Hispanic, 

Native American) 

(1150) 

Jan 

2009 * 315,203 336,000 359,372 376,000 413,847 421,000 

* New measure in 2005, so no target. The 2005 actual serves as the baseline. 

N/A = Not Available 

Source: The College Board, Freeze File Report 

Analysis of Progress. No target was established in FY 2006 for the total number of Advanced 

Placement tests taken by public school students as this was a new measure under the Department’s 

new Strategic Plan. Targets for low-income and minority students were previously established by 

the program office. We exceeded our targets for FY 2007 for all three measures. The Department 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

continues to see growth in the overall numbers of Advanced Placement courses and tests taken by 

public school students. 

Data Quality and Timeliness. Data are reported annually. Data are analyzed by the College Board 

and by the U.S. Department of Education. 

Target Context. 

2.1.C: This measure was not in place as a key strategic measure prior to 2005. We met our 2005 

target of setting the baseline. Baseline data were used to set future targets. We exceeded our 2007 

target. Data for 2008 are expected in January 2009. No target was set for 2006 as the 

Department’s new Strategic Plan was only in force beginning in FY 2007. 

2.1.D: This measure was not in place as a key strategic measure prior to 2005. We used the 2005 

data to establish the baseline on which to base future targets. We exceeded both our 2006 and 

2007 targets. 

2.1.E: This measure was not in place as a key strategic measure prior to 2005. We used the 2005 

actual data to establish the baseline on which to base future targets. We exceeded both our 2006 

and 2007 targets. 

74 FY 2008 Performance and Accountability Report—U.S. Department of Education 

To expand access to advanced course work for low-income and minority students, the 

Department is promoting efforts to increase the number of teachers qualified to teach AP 

and IB classes in high-need schools. Working with Congress, the Department will seek to 

expand support for API grants to provide assistance to state educational agencies and local 

educational agencies to prepare additional teachers to deliver instruction in AP and IB 

courses. 

Based on a proven model of results backed by credible data, the Advanced Placement 

Incentive Program provides grants to increase the participation of low-income students in 

AP courses and tests. Grants provide support for the development or expansion of AP 

courses, professional development for teachers, curriculum development, the purchase of 

books and supplies, and pre-Advanced Placement courses to prepare students for 

academic achievement in Advanced Placement classes. For more detail, see: 

(http://www.ed.gov/programs/apincent/index.html) 

(http://www.ed.gov/programs/apfee/index.html) 

2005 2006 2007 2008 

Measures for Objective 1 Target Actual Target Actual Target Actual Target Actual 

2.1.F. Number of teachers 

trained through Advanced 

Placement Incentive grants to 

teach Advanced Placement 

classes (89a0r9) 

* Not 

collected 

BL 

+5% 

Not 

collected

* New key measure in 2007, so no target. The 2007 actual will serve as the baseline. 

Source: U.S. Department of Education, Advanced Placement Incentive Program, Annual Performance Reports 

Data Quality and Timeliness. These data were not collected because of a delay in proposed 

rulemaking. Funds were not appropriated for the Advanced Placement Incentive program as 

authorized by the America COMPETES Act.
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

Strategic Goal 2, Objective 2: Promote advanced proficiency in 

mathematics and science for all students 

Strengthening mathematics and science achievement is an economic imperative for the 

nation. As prospective employers increase their reliance on advanced mathematics and 

science skills, high schools must provide more rigorous instruction in these subjects. 

According to the Program for International Student Assessment (PISA), a system of 

international assessments that measures the performance of 15-year-olds in reading 

literacy, mathematics literacy, and science literacy every three years against the 30 

member countries of the Organization for Economic Cooperation and Development 

(OECD), fifteen-year-old students in the United States had an average score of 489 on the 

combined science literacy scale in 2006, lower than the OECD average score of 500. U.S. 

students scored lower on science literacy than their peers in 16 of the other 29 OECD 

countries. In 2006, the average score in mathematics literacy was 474, lower than the 

OECD average of 498. Twenty-three OECD jurisdictions scored higher than the United 

States in mathematics literacy in 2006. For more detail, see: 

(http://nces.ed.gov//pubs2008/2008016.pdf). 

Figure 12. Average Scores of U.S. 15-year-old Students on Combined Science 

Literacy Scale, by Race/Ethnicity, 2006 

FY 2008 Performance and Accountability Report—U.S. Department of Education 75

483 501 500

436*

499

439*

523*

409*

0

200

400

600

800

White Black Hispanic Asian American

Indian/Alaska

Native

Native

Hawaiian/Other

Pacific Islander

More than one

race

OECD average

1,000

Average Score

* p< .05. Significantly different from the OECD average at the .05 level of statistical significance. 

NOTE: Black includes African-American, and Hispanic includes Latino. Students who identified themselves as 

being of Hispanic origin were classified as Hispanic, regardless of their race. The Organization for Economic 

Cooperation and Development (OECD) average is the average of the national averages of the OECD member 

jurisdictions. Because of an error in printing the test booklets, the United States mean performance may be 

wrongly estimated by approximately 1 score point. The impact is below one standard error. 

SOURCE: Organization for Economic Cooperation and Development (OECD), Program for International 

Student Assessment (PISA), 2006 

According to the latest Scholastic Achievement Test (SAT) data from the College Board, 

between 1998 and 2008, the percentage of college-bound seniors taking precalculus 

increased from 42 percent to 51 percent. Over the same ten-year period, the percentage of 

college bound seniors taking calculus increased from only 25 percent to 27 percent, and the 

percentage taking physics increased from 50 to 52 percent. For more detail, see: 

http://professionals.collegeboard.com/profdownload/cbs-08-Page-1-Table-1.pdf
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

Figure 13. Percentage of 2008 College-Bound Seniors Taking Physics, Precalculus, 

and Calculus, by Race/Ethnicity 

52

46

65

43

48 45 47

53 55

51

44

67

35

50

38

45

53 50

27

20

45

14

21

15

19

28 28

0

20

40

60

80

100

All Students American 

Indian

Asian Black Mexican 

American

Puerto 

Rican

Other 

Hispanic

W hite Other

Physics Precalculus Calculus

Source: The College Board, 2008 http://professionals.collegeboard.com/profdownload/cbs-08-Page-9-Graph8.pdf 

The Department encourages increased access to and participation in Advanced Placement 

or International Baccalaureate classes by low-income and minority students. To offer 

challenging courses, schools must have qualified teachers. The Department promotes 

efforts to increase the number of teachers who have the academic content knowledge 

needed to teach advanced classes in mathematics and science, especially in schools 

where access to rigorous course work is limited. The Department encourages state 

educational agencies and local educational agencies to offer incentives, such as salary 

increments or bonuses, to teachers to become qualified to teach AP and IB courses. 

Measures for Objective 2

76 FY 2008 Performance and Accountability Report—U.S. Department of Education 

2005 2006 2007 2008 

Number of Advanced 

Placement tests in 

mathematics and science 

taken nationwide by public 

school students: 

Target Actual Target Actual Target Actual Target Actual 

2.2.A. Total * 589,701 631,000 644,550 681,000 Jan 

2009 

2.2.B. Low-income Jan 

2009 * 60,692 65,000 66,337 70,000 

2.2.C. Minorities (Black, 

Hispanic, Native American) 

Jan 

2009 * 74,762 80,000 86,061 86,000 

* New measure in 2006. The 2006 actual served as the baseline. 

Source. The College Board, Freeze File Report 

Analysis of Progress. We exceeded our 2007 targets for all three measures. The number of 

advanced placement tests in mathematics and science taken nationwide continues to increase. 

Data Quality and Timeliness. Data are reported annually. Data for 2008 are expected in January 

2009. 

Target Context. We met our 2006 target of setting the baseline. We established future targets 

based on the 2006 actual data. 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

2005 2006 2007 2008 

Measures for Objective 2

FY 2008 Performance and Accountability Report—U.S. Department of Education 77

Target Actual Target Actual Target Actual Target Actual 

2.2.D. Number of teachers 

trained through Advanced 

Placement Incentive grants to 

teach advanced placement 

classes in mathematics and 

science (89a0rc) 

* Not 

collected 

BL+ 

5% 

Not 

collected

* New measure in 2007, so no target. The 2007 actual serves as the baseline. 

Source: U.S. Department of Education, Advanced Placement Incentive Program, Annual Performance Reports

Data Quality and Timeliness. These data were not collected because of a delay in proposed 

rulemaking. Data for this measure were not collected because there were no appropriated funds for 

the Advanced Placement Incentive program authorized under the America COMPETES Act. 

Strategic Goal 2, Objective 3: Increase proficiency in critical foreign 

languages 

American students must master critical need foreign language skills for our nation to remain 

globally competitive and to ensure national security. These languages include Arabic, 

Farsi, Chinese, Japanese, Korean, and Russian. According to the Center for Applied 

Linguistics, in 1997, only about 24 percent of public elementary schools reported teaching 

foreign languages, and most of those schools focus on giving students introductory 

exposure to a language rather than achieving overall proficiency. For additional 

information, go to http://www.cal.org/resources/pubs/flinstruct.html. According to the 2002 

Digest of Education Statistics, only about 44 percent of American high school students are 

enrolled in foreign language classes. Of those, most were enrolled in Spanish or French. 

The President’s National Security Language Initiative will increase the number of 

Americans mastering critical need languages and at a younger age; increase the number of 

advanced-level speakers of critical-need foreign languages; and increase the number of 

teachers of critical need languages. The Department will focus resources toward educating 

students and teachers in critical-need foreign languages and increasing the number of 

advanced-level speakers in those languages. 

The Department of Education has set a goal to double the number of the number of 

students receiving American Competitiveness and SMART grants by 2010-11. 

2005 2006 2007 2008 

Measures for Objective 3 Target Actual Target Actual Target Actual Target Actual 

2.3.A. Combined total of 

Advanced Placement and 

International Baccalaureate 

tests in critical foreign 

languages passed by public 

school students (89a0re) 

* 3,557 4,093 Jan 

2009 

*New measure in 2007. The 2007 actual served as the baseline. 

Source: The College Board Freeze File Report and International Baccalaureate North America, Examination 

Review and Data Summary. 

Analysis of Progress. In 2007 and 2008, the College Board tested in AP for critical languages for 

Chinese and Japanese. Results for 2008 are not yet available. In 2007 and 2008, International 

Baccalaureate of North America tested the critical languages of Arabic, Chinese, Japanese, Korean, 

and Russian. 
PERFORMANCE DETAILS

GOAL 2: INCREASE ACADEMIC ACHIEVEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 

Data Quality and Timeliness. Data are reported annually by the International Baccalaureate of 

North America and the College Board. 

Target Context. We met our FY 2007 target to establish a baseline. Targets are based on a total of 

all tests passed, regardless of score received. 

Report Explanation. The total number of exams in critical foreign languages for the College Board 

in 2007 was 3,253. In 2007, the total number of exams in the IB program in critical foreign 

languages was 304. For the College Board, in 2007, the total number of exams taken in critical 

foreign languages receiving a score of “3” or above was 2,810. For the International Baccalaureate 

tests, the total number of tests for 2007 receiving a score of “4” and above was 247. For 2008, the 

total number of IB tests receiving a score of “4” and above was 225. 

78 
FY 2008 Performance and Accountability Report—U.S. Department of Education 79 Goal 2: Increase the Academic Achievement of All High Schoo

Program Performance Sum

mary: Nine of our grant programs most directly support Goal 2. These 

below. In the table, an overview is provided for the results of each program on its program performance m

46 for the methodology of calculating the percentage of targets met, not met, and without data.) Appropriexpenditure data for FY 2008 are included for each of these programs. Individual program performance rehttp://www.ed.gov/about/reports/annual/2008report/program.html. Appropriation and expenditure data foincluded for each of these programs. 

Appropriations† Expen- Program Performance Results: Percent of 

ditures‡ Met/Exceeded, *Not Met But Improved Over Prior Years, 

FY 2008 FY 2007 FY 2006 

% 

Not 

Met 

But 

Impro

-ved 

FY 

2008 

($ in mil.) 

FY 

2008 

($ in mil.) 

% 

Met/

% 

Met/

% 

Met/

%

Not 

Met

% 

No 

Data 

% 

Not 

Met 

%

No 

Data

% 

Not 

Met 

D

PART 

Program Name Rating Exc. Exc. Exc. 

Academic Competitiveness and SMART Grants (HEA) NA 395 515 New Program Advanced Placement (ESEA) ME 44 36 0 0 0 100 33 33 34 80 20 Career and Technical Education National Programs (CTEA) NA 8 10 0 0 0 100 0 100 0 0 100 Career and Technical Education State Grants (CTEA) I 1,161 1,121 0 0 0 100 33 67 0 44 56 Close Up Fellowships (ESEA) NA 2 1 0 0 0 100 0 0 100 100 0 Excellence in Economic Education (ESEA) NA 1 1 0 0 0 100 0 0 100 0 0 Mathematics and Science Partnerships (ESEA) RND 179 188 0 0 0 100 100 0 0 100 0 Smaller Learning Communities (ESEA) A 80 99 0 0 0 100 0 0 100 56 44 Tech Prep State Grants (CTEA) RND 103 102 0 0 0 100 33 67 0 67 33 

TOTAL 1,973 ^2,073 

† Budget for each program represents program budget authority. ‡ Expenditures occur when recipients draw down funds to cover actual outlays. FY 2008 expenditures may include funds from prior yea* The “Not Met But Improved Over Prior Years” column is new for FY 2008. 

A shaded cell denotes that the program did not have targets for the specified year. 

^Estimated accruals in the amount of $39 million are excluded from the FY 2008 expenditure. 
80 FY 2008 Performance and Accountability Report—U.S. Department of Education CTEA: Carl D. Perkins Career and Technical Education Act PART Rating ESEA: Elementary and Secondary Education Act of 1965 ME = Moderately Effective HEA: Higher Education Act of 1965 I = Ineffective RND = Results Not Demonstrated NA = Program has not been assessed
PERFORMANCE DETAILS

GOAL 3: Ensure the Accessibility, Affordability, and 

Accountability of Higher Education and Better Prepare 

Students and Adults for Employment and Future 

Learning 

Overview 

Strategic Objectives: Goal 3 Resources 

($ in thousands) 

• Increase success in and completion of 

quality postsecondary education 

$26,268,750

$29,173,803

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

FY 2009 FY 2008

(Requested)

• Deliver student financial aid to 

students and parents effectively and 

efficiently 

• Prepare adult learners and individuals 

with disabilities for higher education, 

employment, and productive lives 

Goal 3 PART Ratings by 

Program* 

Effective

2% Moderately 

Effective

7%

Adequate

39%

Ineffective

5%

Results Not 

Demonstrated

46%

* Detail may not total to 100% due to rounding. 

Met/Exceeded

23%

Not Met

28%

Without Data

49%

Note: Each year the Department analyzes Goal 3 FY 2007 Percent of Targets 

the percentage of program performance 

targets that were met or exceeded, not met 

but improved over time, not met, or for 

which data are not yet available. Since the 

Department has a lag in the time data are 

received for the established targets, the FY 

2007 target results are presented here. For 

more information on PART Ratings by 

Programs and Percent of Targets Met and 

Not Met, see Program Performance 

Summary at the end of this goal.

FY 2008 Performance and Accountability Report—U.S. Department of Education 81
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

Key Measures 

During FY 2008, the Department monitored progress on the new measures and goals 

established in 2007, which are aligned with the recommendations of the Commission on 

Higher Education, the Academic Competitiveness Council and the Secretary’s Action Plan 

for Higher Education. These strategies focus on ensuring the accessibility, affordability and 

accountability of higher education institutions, and better preparing students for 

employment and future learning. In order to remain competitive in the dynamic global 

economy, and to meet America’s current and future needs, higher education must continue 

to be innovative, use technology effectively, measure student outcomes, and conduct 

rigorous evaluations of its own performance. 

The data presented here show the progress that the Department has made to date and 

provide the starting point for forward movement to meet the challenges faced by adult 

learners, postsecondary students, their families and institutions of higher education. 

According to data from the Bureau of the Census, only 36 percent of Americans over the 

age of 25 have an associate’s degree or higher. As a nation, more individuals must enroll in 

and complete a postsecondary education program. Institutions of higher education must 

become more transparent in providing relevant information to the public and more attuned 

to trends in global economic development. 

See page 46 for an explanation of the documentation fields for key measures. 

Strategic Goal 3, Objective 1: Increase success in and completion of 

quality postsecondary education 

Affordability is fundamental for promoting access to higher education, and academic 

preparation is also fundamental for access and critical for success once students are 

enrolled. Grants and loans are the largest source of federal financial support to 

postsecondary students. In FY 2008, the Department delivered or supported the delivery of 

approximately $96 billion in grant, work-study and loan assistance federal aid to almost 11 

million postsecondary students and their families throughout America. These students 

attend approximately 6,200 institutions of higher education accredited by dozens of 

accrediting agencies. Many of these students receive loans from approximately 3,100 

lenders with 35 guaranty agencies guaranteeing those loans. 

In September 2007 President Bush signed the College Cost Reduction and Access Act

(CCRAA), providing the largest increase in student aid funding in a generation. This 

landmark legislation, which was to an extent based on proposals advanced in the 2008 

President's Budget, invested over $15 billion in new mandatory funds over 5 years to raise 

the maximum Federal Pell Grant to $5,400 by award year 2012-2013. 

The federal TRIO programs continue to help low-income, first generation students, who are 

traditionally underrepresented in higher education, prepare for, enroll in and succeed in 

college. TRIO Upward Bound and Talent Search programs help low-income, first 

generation students prepare for college. TRIO Educational Opportunity Centers (EOC) 

help adults enroll in college. Student Support Services fosters retention and graduation 

support to students who are enrolled in postsecondary schools and the McNair PostBaccalaureate Achievement prepares undergraduate students who are underrepresented in 

graduate education for doctoral study. With a focus on student outcomes, the Department 

measured TRIO program performance by assessing the percentage of Upward Bound, 

EOC and Talent Search students enrolling in college and college completion rates for 

82 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 83

Student Support Services students and the percentage of McNair participants enrolling and 

persisting in graduate school. 

The Academic Competitiveness Grant Program, which first awarded grants to nearly 

300,000 students during the 2006-07 academic year, encourages students to take more 

challenging courses in high school. 

The National SMART Grant Program, which awarded the first grants to nearly 61,000 

students during the 2006-07 academic year, encourages students to pursue college majors 

in high demand in the global economy, such as science, mathematics, technology, 

engineering, and critical foreign languages. 

In addition, the Department will design criteria for identifying successful community 

colleges. Possible indicators of success include dual enrollment/early college programs; 

meaningful partnerships with four-year institutions or industry; developmental education 

programs that work for students; high transfer rates to four-year institutions; career 

pathways that are well-articulated and meaningful for high school-to-college and adult 

education-to-career; and the use of data to drive institutional decision-making. The 

Department will broadly disseminate innovative practices and program details and will fund 

colleges to replicate successful programs and initiatives in other locations. 

Measures for Objective 1 2005 2006 2007 2008 

Postsecondary Enrollment Target Actual Target Actual Target Actual Target Actual 

3.1.A. Percentage of high school 

graduates aged 16–24 enrolling 

immediately in college (89a0ri) 

* 68.6 68 66 68 Dec. 

2008 

* New measure in 2006, so no target. The 2006 actual served as the baseline. 

Source: U.S. Department of Commerce, Bureau of the Census, Current Population Survey. 

Analysis of Progress. The enrollment rate declined slightly from 2006 to 2007.

Data Quality and Timeliness. The Strategic Plan for Fiscal Years 2007-2012, published in May 

2007 included measures developed in 2006. Data for the 2007-2008 school year (column “2008” in 

the table) are expected for release December 2008. 

Target Context. We did not meet our 2007 target of 68 percent. 

Report Explanation. Although overall enrollment declined from 2006 to 2007, the gap between 

enrollment of white and Hispanic students narrowed dramatically from 19.2 to 10.6 percent and the 

gap between white and black students narrowed from 17.5 to 13.0 percent. Since 2002, the 

percentage of high school graduates enrolling immediately in college has fluctuated between 64 and 

69 percent. 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

Figure 14. Percentage of Upward Bound Participants Enrolling in College 

65 65 65 65 65

69.3 74.2 70

78.4

0

10

20

30

40

50

60

70

80

90

2003 2004 2005 2006 2007 2008

Target Actual

Source: U.S. Department of Education, Office of Postsecondary Education, Upward Bound Program Annual 

Performance Report. 

Measures for Objective 1 2005 2006 2007 2008 

Postsecondary Enrollment Target Actual Target Actual Target Actual Target Actual 

3.1.B. Percentage of Upward 

Bound participants enrolling in 

college (1627) 

65 78.4 65 Dec. 

2008 

Dec. 

2009 

Dec. 

2010 65 70 

Source: U.S. Department of Education, Office of Postsecondary Education; Upward Bound Program Annual 

Performance Report.

Analysis of Progress. Based on actual data significantly increasing over recent years, targets 

beyond 2008 have been increased. 

Data Quality and Timeliness. The annual performance report comprises self-reported data; a 

variety of data quality checks are used to assess the completeness and reasonableness of the data 

submitted. 

Target Context. Based on consecutive years of performance exceeding targets, the targets were 

increased to 70 percent for 2008 and 75 percent for 2009. The target for FY 2008 was increased to 

70 percent as part of the fall 2006 PART update and to 75 percent for 2009 in the spring 2007 PART 

update. 

Report Explanation. The percentage is the percent of “college ready” participants who enroll in a 

postsecondary institution. 

Note: The 78.3 percent enrollment rate previously reported for FY 2006 was reported in error. 

Additional Information. The Upward Bound Program Web site may be accessed at: 

http://www.ed.gov/programs/trioupbound/index.html

84 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 85

Measures for Objective 1 2005 2006 2007 2008 

Postsecondary Enrollment Target Actual Target Actual Target Actual Target Actual 

3.1.C. Percentage of career 

and technical education students 

who have transitioned to 

postsecondary education or 

employment by December of the 

year of graduation (89a0rj) 

* 87 88 87 89 86 90 May 

2009 

* New measure in 2005. The 2005 actual served as the baseline. 

Source. Career and Technical Education Annual Performance Report and Grantee Performance Reports.

Analysis of Progress. 

Data Quality and Timeliness. Actual data are entered through FY 2007. Data for 2008 are 

expected in May 2009, and a new baseline will be established under Carl D. Perkins Career and 

Technical Education Act of 2006 (Perkins IV) guidance. States submit their reports to the 

Department each year through an electronic system. At that time, each grant recipient must attest to 

the accuracy and completeness of their submission by entering an Electronic Personal Identification 

Number that is supplied to them by the Department. The Office of Vocational and Adult Education 

staff then completes a check on the accuracy and completeness of the data and follows up with 

states as necessary. 

Target Context. We met our 2005 target of setting the baseline. The 2008 and 2009 targets are 

based on state-adjusted performance levels that were negotiated with and approved by the 

Department. 

Report Explanation. The Secretary used the transition authority in section 4 of Perkins IV to allow 

states to develop and put in place new measurement approaches for the Perkins IV indicators. As a 

result, states are not required to report data on this indicator until 2009. 

Measures for Objective 1

Postsecondary Persistence 

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.1.D. Percentage of full-time 

degree-seeking undergraduate 

students at Title IV institutions 

who were in their first year of 

postsecondary enrollment in the 

previous year and are enrolled in 

the current year at the same 

institution (89a0ry) 

* 70 71 70 71 Dec. 

2008 

3.1.E. Percentage of first time 

full-time degree-seeking 

undergraduate students at 

Historically Black Colleges and 

Universities who were in their first 

year of postsecondary enrollment 

in the previous year and are 

enrolled in the current year at the 

same institution (1587) 

N/A 65 65 64 66 62 66 Dec. 

2008 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

Measures for Objective 1 2005 2006 2007 2008 

Postsecondary Persistence Target Actual Target Actual Target Actual Target Actual 

3.1.F. Percentage of first time 

full-time degree-seeking 

undergraduate students at 

Hispanic-Serving Institutions who 

were in their first year of 

postsecondary enrollment in the 

previous year and are enrolled in 

the current year at the same 

institution (1601) 

N/A 66 67 64 68 63.5 68 May 

2008 

* New measure in 2006. The 2006 actual served as the baseline. 

Source: U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary 

Education Data System (IPEDS). Web site: http://nces.ed.gov/ipedspas. 

Analysis of Progress. For 3.1.E and 3.1.F the rates declined slightly between FY 2006 and FY 

2007. 

Data Quality and Timeliness. Data are provided by institutions and are subject to a rigorous review 

process by NCES. Beginning with FY 2008, persistence will be reported for the first time along with 

the numerator and denominator generating the percentage. Therefore, the rate established for any 

program can be aggregated as a mean instead of a median rate – increasing the accuracy of the 

measurement. 

Target Context. 

3.1.D: We met our 2006 target of setting the baseline. We did not meet the 2007 national target of 

71 percent. 

3.1.E: Institutions report a persistence rate, not the numerator and denominator. As a result, the 

persistence rate for the HBCU program is calculated as a median. The target is derived by 

applying the difference between regression-based predicted values from Title IV institutions 

and actual grantee values for school year 2003-04, which was 3.6 percent. The reason for 

decline in persistence is unknown. The Department is beginning to analyze grantee 

performance for this program which may provide some insight into factors behind this 

decline. 

3.1.F: The HBCU program actual persistence rate of 64 percent in FY 2004 was multiplied by 

1.0363 to generate the long-term target (for 2009) of 66 percent. Annual increases are 

estimated to be 0.6 percent each year through 2009 and 0.3 percent beginning in 2010. 

Report Explanation. 

3.1.D: Persistence measures the percentage of full-time degree-seeking undergraduate students at 

Title IV institutions who were in their first year of postsecondary enrollment in the previous 

year and are enrolled in the current year at the same institution. 

3.1.F: Institutions report a persistence rate, not the numerator and denominator. As a result, the 

persistence rate for the HSI program is calculated as a median. The target is derived by 

applying the difference between regression-based predicted values from Title IV institutions 

and actual grantee values for school year 2003-04 which was 1.12 percent. Therefore, the 

HSI program actual persistence rate of 66.5 percent in FY 2004 was multiplied by 1.0112 to 

generate the long-term target (for 2009) of 68 percent. Annual increases are estimated to be 

0.2 percent each year through 2009 and 0.1 percent beginning in 2010. 

86 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

Additional Information. The Historically Black Colleges and Universities Program Web site may be 

accessed at http://www.ed.gov/programs/iduestitle3b/index.html. The Hispanic-Serving Institutions 

Program Web site may be accessed at http://www.ed.gov/programs/idueshsi/index.html. 

Measures for Objective 1 2005 2006 2007 2008 

Postsecondary Completion Target Actual Target Actual Target Actual Target Actual 

3.1.G. Percentage of students 

enrolled at all Title IV institutions 

completing a four-year degree 

within six years of enrollment 

(89a0rz) 

* 57.1 56 57.5 57 Jan. 

2009 

Jul. 

2009 57 

3.1.H. Percentage of freshmen 

participating in Student Support 

Services who complete an 

associate’s degree at original 

institution or transfer to a four-year 

institution within three years 

(1618) 

* 24.5 27 24.6 27.5 Dec. 

2008 

Dec. 

2009 27.5 

3.1.I. Percentage of students 

enrolled at 4-year Historically 

Black Colleges and Universities 

graduating within six years of 

enrollment (1589) 

* 38 37 38 39 Dec. 

2008 

Dec. 

2009 39 

3.1.J. Percentage of students 

enrolled at 4-year HispanicServing Institutions graduating 

within six years of enrollment 

(1603) 

* 35 34 35 37 Dec. 

2008 

Dec. 

2009 37 

3.1.K. Percentage of 

postsecondary career and 

technical education students who 

have completed a postsecondary 

degree or certification (89a0s0) 

* 42 45 47 46 40 47 May 

2009 

* New measure in 2005. The 2005 actual served as the baseline. 

Source: 

3.1.G: U.S. Department of Education, NCES. Integrated Postsecondary Education Data System, 

Graduation Rate Survey 

3.1.H: U.S. Department of Education, TRIO Annual Performance Report

3.1.I: U.S. Department of Education, NCES. Integrated Postsecondary Education Data System, 

Graduation Rate Survey 

3.1.J: U.S. Department of Education, NCES. Integrated Postsecondary Education Data System, 

Graduation Rate Survey 

3.1.K: Career and Technical Education Annual Performance Report; Grantee Performance Reports

Analysis of Progress. 

3.1.G: Met our 2005 target of setting the baseline. We exceeded our 2006 target of 56 percent. 

The percentage of bachelor’s degree-seeking students completing a four-year degree within 

six years of enrollment also improved, increasing to 57.5 percent in FY 2006 from 57.1 

percent in FY 2005. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 87
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

3.1.H: Made progress from the prior year but did not meet our 2006 target of 27. The percentage 

of Student Support Service participants completing an Associates degree at original 

institution or transferring to a four-year institution increased slightly from 2005 to 2006, the 

first increase since 2003. 

3.1.I: Exceeded our 2006 target of 37. The percentage of students enrolled at four-year 

Historically Black Colleges and Universities graduating within six years of enrollment 

remained unchanged in 2006. 

3.1.J: Exceeded our 2006 target of 34. The percentage of students enrolled at four year HispanicServing Institutions graduating within six years of enrollment remained unchanged in 2006. 

3.1.K: We met our 2005 target of setting the baseline. We exceeded our 2006 target of 45 but did 

not meet our 2007 target of 46. 

Report Explanation. 

3.1.G: The data for FY 2005, 56.4 percent, was previously reported incorrectly. 

3.1.H: Data reporting has recently been improved to report completion of associate's and 

bachelor's degrees separately. 

3.1.I: The 2006 target for the four-year graduation rate was derived by applying the difference 

between regression-based predicted values from Title IV institutions and actual grantee 

values for a school year. Beginning with the FY 2007 target, values were established based 

on program experience. 

3.1.J: Data for FY 2003 were recalculated and are now more accurate than previously reported. 

The target for the four-year graduation rate is derived by applying the difference between 

regression-based predicted values from Title IV institutions and actual grantee values for 

school year 2002-03, which was 3.54 percent. Annual increases are estimated to be 0.6 

percent through 2009 and 0.3 percent beginning in 2010. The HSI program actual four-year 

graduation rate of 36 percent in FY 2004 was multiplied by 1.0354 (times 5/6) to generate 

the long-term target (for 2009) of 37 percent. 

3.1.K The 2009 target is substantially lower that the 2007 target as many of the states have moved 

to more rigorous student definitions and measurement approaches for the Perkins IV core 

indicators. The Secretary used the transition authority in section 4 of Perkins IV to allow 

states to develop and put into place new measurement approaches for the Perkins IV 

indicators. As a result, states are not required to report data on this indicator until 2009. 

Strategic Goal 3, Objective 2: Deliver student financial aid to students 

and parents effectively and efficiently 

Federal Student Aid, an office of the U.S. Department of Education, ensures that all eligible 

individuals can benefit from federally funded or federally guaranteed financial assistance for 

education beyond high school. 

The Federal Pell Grant Program helps ensure financial access to postsecondary education 

by providing grant aid to low- and middle-income undergraduate students. The most needbased of the Department’s student aid programs, Pell Grant awards vary according to the 

financial circumstances of students and their families. For the 2007–2008 award year, the 

Department disbursed $14.6 billion in Pell Grants averaging approximately $2,643 to 5.5 

million students. The maximum Pell Grant award was $4,310 for the 2007–2008 award 

year. The maximum Pell Grant award increased to $4,731 for the 2008-2009 award year. 

88 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 89

In FY 2008, Federal Student Aid directly managed or oversaw almost $556 billion in 

outstanding loans—representing almost 95 million student loans to more than 30 million 

borrowers. 

The Direct Loan Program lends funds directly to students and parents through participating 

schools. This program is funded by borrowings from the U.S. Department of the Treasury 

as well as an appropriation for subsidy costs. In FY 2008, the Department made 

$21.8 billion1

 in net loans to 2.9 million recipients. 

 

Under the Federal Family Education Loan (FFEL) Program, students and parents can 

obtain loans through private lenders. Loan guaranty agencies insure these funds, and they 

are, in turn, reinsured by the federal government. During FY 2008, Federal Student Aid 

supported the delivery of $52.9 billion2

 in net loans to 6.0 million FFEL recipients. 

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.2.A. Direct administrative unit 

costs for origination and 

disbursement of student aid (total 

cost per transaction) (1919) 

* $4.24 $4.25 $4.03 $4.15 $3.65 

Source: Federal Student Aid unit costs are derived from the Department’s Activity-Based Management 

program using direct administrative costs. 

Analysis of Progress. Federal Student Aid has made significant progress in its efforts to reduce 

the administrative unit costs. The actual unit cost for origination and disbursement is significantly 

lower than the baseline amount set in FY 2006. 

Data Quality and Timeliness. Actuals are the data reported as final in the current fiscal year. 

Because it takes some time after the closeout of the fiscal year to receive completed data and to 

validate results, the data lag by one year. 

Target Context. Targets for this measure will decline slightly in 2009 from the 2008 target and are 

expected to remain flat in subsequent years. 

1 Excludes consolidation loans of $5.8 billion.

2 Excludes consolidation loans of $9.3 billion.
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

90 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Figure 15. Customer Service Level on the American Customer Satisfaction Index for 

the Free Application for Federal Student Aid on the Web 

81 81 82 80 80

N/A N/A

86

83 83

86 83

0

10

20

30

40

50

60

70

80

90

100

2003 2004 2005 2006 2007 2008

Target Actual

Source: Based on annual American Customer Satisfaction Index scores obtained through the Claes Fornell 

International Group 

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.2.B. Customer service level on 

the American Customer Satisfaction 

Index for the Free Application for 

Federal Student Aid (FAFSA) on 

the Web (2207) 

86 81 83 80 82 80 83 83

Source: Annual American Customer Satisfaction Index scores obtained through the Claes Fornell International 

Group 

Analysis of Progress. The target was met for 2008. With an American Customer Satisfaction 

Index score of 83 (on a 1-100 scale), Free Application for Federal Student Aid on the Web scores in 

the "Excellent" range in comparison to other entities that appear in the index. This category includes 

such high-performing companies as UPS, Amazon and Mercedes. 

Data Quality and Timeliness. In 2008, the student aid applicants were asked through an electronic 

surveying capability their opinions about the experience directly after completing the online aid 

application. This new capability allowed us to obtain opinions directly after the experience rather 

than a month or more down the road and allowed us to expand the sample universe, yielding more 

accurate results. 

Target Context. Targets are based upon ACSI customer satisfaction scores and we expect to show 

slight improvement in the out years. 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 91

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.2.C. Pell Grant improper 

payments rate (89a0s2) * 3.48% 3.48% 4.11% 3.48% 3.69%**

* New measure in 2006. The 2006 actual served as the baseline. **FY 2008 data are draft based upon 

preliminary results. 

Source: Free Application Federal Student Aid/IRS Data Statistical Study 2006-2007 Award Cycle 

Baseline Analysis Report 

Analysis of Progress. We did not make our goal. The improper payment rate that results from the 

IRS study is based on a randomly selected group of applicants each year. As such, the rate is 

subject to arbitrary fluctuations that reflect the randomness of the sample for any given year. We 

continue to make refinements to the application process that, based on the results of the study, will 

ultimately lead to a lower level of improper payments. 

Data Quality and Timeliness. FY 2008 data will be finalized sometime during the early part of FY 

2009. 

Target Context. Target remains the same from 2006 to 2008. Targets projected between 2009 and 

2012 are predicted on a robust data match between IRS and the Department of Education. 

Currently the improper payment rate is based upon statistical averages. 

Related Information. These data for FY 2007 and FY 2008 are estimated from a sampling of 

records from the Department's aid applicant file compared against statistical averages from the IRS. 

The improper payment rate has two parts, an over-award and under-award component, which are 

added together to estimate the overall rate. These over- and under-award components are stated as 

a proportion of the overall Pell Grant program awards. 

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.2.D. Direct Loan recovery rate 

(89a0s3) * 19% 19.5% 20.8% 19.75% 21% 

* New measure in 2006. The 2006 actual served as the baseline. 

Source: Debt Management Collection System

Analysis of Progress. The FY08 target of 19.75% was exceeded by one-and-a-quarter percentage 

points. Translated into dollars, approximately $2.244 billion or 21% of the $10.688 billion 

outstanding in the Direct Loan Program default portfolio was collected in the current fiscal year. One 

of the primary reasons FSA greatly exceeded the target was the economic stimulus payments, which 

led to a significant increase in Treasury Program Offsets. 

Data Quality and Timeliness. Data are through the end of FY08. 

Target Context. The recovery rate equals the sum of collections on defaulted loans divided by the 

outstanding default portfolio at the end of the previous year. Targeted recoveries for the out years 

are expected to increase slightly. 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.2.E. Federal Family Education 

Loan recovery rate (89a0s4) * 19.3% 19.5% 19.6% 19.5% 23.6% 

* New measure in 2006. The 2006 actual served as the baseline. 

Source: Debt Management Collection System

Analysis of Progress. The FY 2008 target of 19.50% was exceeded by slightly more than four 

percentage points. Translated into dollars, approximately $6.250 billion or 23.6% of the 

$26.470 billion in the outstanding Federal Family Education Loan Program default portfolio was 

collected in the current fiscal year. One of the primary reasons FSA greatly exceeded the target was 

the economic stimulus payments, which led to a significant increase in Treasury Program Offsets. 

Data Quality and Timeliness. Data are through the end of FY08.

Target Context. The recovery rate equals the sum of collections on defaulted loans divided by the 

outstanding default portfolio at the end of the previous year. Targeted recoveries for the out years 

are expected to increase slightly. 

Strategic Goal 3, Objective 3: Prepare adult learners and individuals 

with disabilities for higher education, employment, and productive lives 

Bureau of Labor Statistics projections indicate that 90 percent of the fastest-growing jobs 

will require education beyond high school and 40 percent of all new jobs will require at least 

an associate’s degree. As new jobs require increasing levels of proficiency in reading and 

mathematics, problem solving, teamwork, and communication skills, more adults without a 

bachelor’s degree will need both access to basic education programs and admission to 

community college certificate and degree programs. The role of adult education as a bridge 

to further education and training is central to the Department's vision. As part of the 

Secretary's higher education initiatives, the Department will work to transform adult 

education programs to include transition services that enable graduates to prepare for, 

enter, and succeed in postsecondary education. This ongoing process will require new 

forms of instruction, improved services, and collaborative relationships with other agencies 

and organizations. 

Individuals with disabilities continue to experience high rates of unemployment and 

underemployment. Vocational rehabilitation plays a key role in helping these individuals 

prepare for, obtain, and maintain employment and lead productive lives. The Department 

will continue to support and monitor research leading to the development of interventions 

that support health and physical function, participation in and integration into the 

community, and employment of individuals with disabilities. The Department will work with 

states to identify practices that improve outcomes, to provide resources and technical 

assistance to enhance service effectiveness, and to increase the economic self-sufficiency 

of individuals with disabilities. Complementing the work of state vocational rehabilitation 

agencies, the Department will increase access to new and recycled assistive technology 

that gives students and employees with disabilities a greater competitive edge in a 

knowledge-based economy. Furthermore, the Department will work toward increasingly 

successful transitions of students with disabilities to employment and higher education. 

Adult education and vocational rehabilitation programs must provide increasingly effective 

services to improve the skills and employment prospects of those they serve. The 

Department’s vocational rehabilitation programs help individuals with physical or mental 

92 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

disabilities obtain employment and live more independently by providing grants that support 

job training and placement, medical and psychological services, and other individualized 

services. Annually, the Vocational Rehabilitation State Grants program helps more than 

200,000 individuals with disabilities obtain employment. 

The Department measures the progress of state vocational rehabilitation agencies by 

monitoring the percentage of individuals receiving services that achieve employment. The 

Department supports diploma equivalency and college readiness programs, rigorous 

academic and technical course work leading to an associate’s degree and certification 

programs, and expansion of the quality and timeliness of technical assistance in partnership 

with employers and other organizations. 

Measures for Objective 3

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.3.A. Percentage of state 

vocational rehabilitation agencies 

that meet the employment outcome 

standard for the Vocational 

Rehabilitation State Grants program 

(1681) 

75 71 70 82 71 82 76 April 

2009 

Source: State agency data submitted to the Department’s Rehabilitation Services Administration (RSA); Case 

Service Report (RSA-911). 

Analysis of Progress. In fiscal year 2006, the percentage of general and combined State 

Vocational Rehabilitation agencies that met the performance criterion increased significantly as 

compared to previous years. The percentage of general and combined vocational rehabilitation 

agencies that met the employment outcome standard in 2007 was the same as it was in 2006 at 82 

percent. Of the 46 agencies meeting the standard, three met the standard in 2007 that had not met 

it in 2006, and three did not meet the standard that had met it in 2006. 

Data Quality and Timeliness. State vocational rehabilitation agencies are required to submit their 

RSA-911 data by November 30 for the previous fiscal year. The data are considered very reliable 

because of the rigorous RSA editing process to which agency data are submitted. Data quality and 

timeliness have improved significantly in recent years. The RSA-911 database for fiscal years 2005 

and 2006 was complete within 5 months of the close of fiscal year. Completion of the 2007 database 

was delayed because of late data submissions. However, RSA is working to ensure that the 2008 

database is complete by February 2009 and available for timely analysis of performance data. 

Target Context. Performance targets for this measure were initially established based on 2001 

data. However, a change in program regulations and in labor market conditions led to declines in the 

percentage of individuals who achieved an employment outcome. As a result, the baseline was 

recalculated based on 2003 and 2004 data and targets for 2006 and 2007 were adjusted. The 

decline in employment outcomes stabilized in 2005 with improving economic conditions and 

performance targets for 2008 and future years were raised to reflect anticipated improvements in 

performance on this measure. 

Report Explanation. This indicator is derived from State Vocational Rehabilitation Services 

program performance standards and indicators defined in the program regulations. For each 

Vocational Rehabilitation agency, RSA examines the percentage of individuals who achieve an 

employment outcome compared to all individuals whose cases were closed after receiving services. 

To achieve an employment outcome under this program, an individual must be employed in an 

integrated setting as a result of receiving Vocational Rehabilitation services and have maintained 

employment for a period of at least 90 days. To pass this indicator, a general or combined agency 

must achieve a rate of 55.8 percent. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 93
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

94 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Figure 16. Percentage of Adults Served by the Adult Education State Grants 

Program With a High School Completion Goal Who Earn a High School Diploma or 

Recognized Equivalent 

41 42 46 46

52 53

44 45

51 49

59

0

10

20

30

40

50

60

70

2003 2004 2005 2006 2007 2008

Target Actual

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Measures for Objective 3

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.3.B. Percentage of adults 

served by the Adult Education State 

Grants program with a high school 

completion goal who earn a high 

school diploma or recognized 

equivalent (1386) 

46 51 46 49 52 59 53 Dec. 

2008 

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Analysis of Progress. The 2007 target was exceeded. Part of the explanation for the increase 

may stem from improved data collection methods used by the states to collect and report on this 

measure. 

Data Quality and Timeliness. As a third-tier recipient of this data, the Office of Vocational and 

Adult Education must rely on the states and local programs to collect and report data within 

published guidelines. The Office of Vocational and Adult Education has developed a data quality 

review process for states based on the Department's Standards for Evaluating Program 

Performance Data. 

Target Context. The Department negotiated approved targets with OMB for a 15-year period. 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 95

Figure 17. Percentage of Adults Served by the Adult Education State Grants 

Program With a Goal To Enter Postsecondary Education or Training Who Enroll in a 

Postsecondary Education or Training Program 

26 27

30

33 37

39

30 30

34 35

55

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008

Target Actual

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Measures for Objective 3

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.3.C. Percentage of adults 

served by the Adult Education State 

Grants program with a goal to enter 

postsecondary education or training 

who enroll in a postsecondary 

education or training program 

(1387) 

30 34 33 35 37 55 39 Dec. 

2008 

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Analysis of Progress. There was a spike in the 2007 actual data because of improved follow-up 

methodologies implemented by the states and training and technical assistance, provided by the 

Office of Vocational and Adult Education in transitioning adult students into postsecondary education 

and training opportunities. 

Data Quality and Timeliness. As a third-tier recipient of these data, the Office of Vocational and 

Adult Education must rely on the states and local programs to collect and report data within 

published guidelines. The Office of Vocational and Adult Education has developed a data quality 

review process for states based on the Department's Standards for Evaluating Program 

Performance Data. 

Target Context. The Department negotiated approved targets with OMB for a 15-year period. 
PERFORMANCE DETAILS

GOAL 3: ENSURE THE ACCESSIBILITY, AFFORDABILITY, AND ACCOUNTABILITY OF HIGHER EDUCATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 

Figure 18. Percentage of Adults Served by the Adult Education State Grants 

Program With an Employment Goal Who Obtain a Job by the End of the First Quarter 

After Their Program Exit Quarter 

37 38 40 40 41 41

37 36 37

48

61

0

10

20

30

40

50

60

70

2003 2004 2005 2006 2007 2008

Target Actual

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Measures for Objective 3

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

3.3.D. Percentage of adults 

served by the Adult Education State 

Grants program with an 

employment goal who obtain a job 

by the end of the first quarter after 

their program exit quarter (1388) 

40 37 40 48 41 61 41 Dec. 

2008 

96 

Source: U.S. Department of Education, Office of Vocational and Adult Education, Adult Education Annual 

Program Performance Report. 

Analysis of Progress. The program exceeded its 2007 target. Exceeding the performance target 

for 2007 resulted from improved follow-up methodologies implemented by the states to collect and 

report employment. Previously, the performance data reflected the percentage of adult learners with 

an employment goal who, upon exit from an adult education program, obtain a job. 

Data Quality and Timeliness. As a third-tier recipient of these data, the Office of Vocational and 

Adult Education must rely on the states and local programs to collect and report data within 

published guidelines. The Office of Vocational and Adult Education has developed a data quality 

review process for states based on the Department's Standards for Evaluating Program 

Performance Data. 
FY 2008 Performance and Accountability Report—U.S. Department of Education 97 

Goal 3: Ensure the Accessibility, Affordability, and 

Accountability of Higher Education 

Program Performance Summary Eighty-four of our programs most directly support Goal 3. These programs are listed below. In the table, an overview is preach program on its program performance measures. (See page 46 for the methodology of calculating the percentage of t

and without data.) Individual program performance reports are available at http://www.ed.gov/about/reports/annual/2008re

Appropriation and expenditure data for FY 2008 are included for each of these programs. Program Name PART Rating Appro- pria- tions† Expen- ditures‡ Program Performance Results: Percent of T

Met/Exceeded, * Not Met But Improved Over Prior Years, N

FY 2008 ($ in mil.) FY 2008 ($ in mil.) FY 2008 FY 2007 FY 2006 

% Met / Exc. % Not Met But Impro- ved % Not Met % No Data % Met/ Exc. % Not Met % No Data % Met/ Exc. % Not Met % N

Da

Adult Basic and Literacy Education State Grants (AEFLA) E 554 476 0 0 0 100 67 33 0 50 50 Adult Education National Leadership Activities (AEFLA) NA 7 7 0 0 0 100 0 100 0 0 100 Assistive Technology Programs (ATA) NA 30 32 0 100 0 0 100 B.J. Stupak Olympic Scholarships (HEA) RND 1 1 0 0 0 100 0 100 0 33 67 

Byrd Honors Scholarships (HEA) RND 40 40 0 0 0 100 0 0 100 100 0 

Child Care Access Means Parents in School (HEA) A 16 15 17 33 0 50 33 33 34 

Client Assistance State Grants (RA) NA 12 11 0 0 0 100 100 0 0 100 0 

College Access Challenge Grant Program (HEA) NA 66 0 Not Funded Not Funded 

College Assistance Migrant Program (HEA) RND 15 15 0 0 0 100 50 50 0 100 0 

Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities (HEA) NA 7 6 0 0 0 100 0 0 100 100 0 Developing Hispanic-Serving Institutions (HEA) RND 93 95 0 0 0 100 0 25 75 50 50 
98 FY 2008 Performance and Accountability Report—U.S. Department of Education Appro- pria- Expen- Program Performance Results: Percent of T

tions† ditures‡ Met/Exceeded, * Not Met But Improved Over Prior Years, N

FY 2008 FY 2007 FY 2006 

% % Not FY FY Met Met 2008 2008 / But % % % % % % % % 

PART ($ in ($ in Exc Impro- Not No Met/ Not No Met/ Not N

Program Name Rating mil.) mil.) . ved Met Data Exc. Met Data Exc. Met Da

Developing Hispanic-Serving Institutions Science, Technology, Engineering, Mathematics and Articulation Programs (HEA) NA 100 0 Not Funded Not Funded 

Elimination of Tuition Sensitivity in AY 2007-2008 (HEA) NA 11 0 Not Funded Not Funded Federal Direct Student Loans (HEA) A 5,532 5,689 0 50 0 50 0 50 50 Federal Family Education Loan Program & Liquidating (HEA) A 3,918 (4,073) 0 50 0 50 0 50 50 Federal Pell Grants (HEA) A 16,245 14,182 0 0 0 100 100 0 0 100 0 

Federal Perkins Loans (HEA) I 64 68 0 50 0 50 0 50 50 Federal Supplemental Educational Opportunity Grants (HEA) RND 757 760 0 0 0 100 0 50 50 Federal Work Study (HEA) RND 980 955 0 0 0 100 0 50 50 Fund for the Improvement of Postsecondary Education (HEA) NA 120 45 0 0 0 100 100 0 0 100 0 

Gaining Early Awareness and Readiness for Undergraduate Programs (HEA) A 303 371 37 13 13 37 13 75 12 60 40 Gallaudet University (EDA) A 113 113 15 30 10 45 50 50 0 45 55 

Government Performance and Results Act Data/Higher Education Act Program Evaluation (HEA) NA 1 1 Graduate Assistance in Areas of National Need (HEA) A 30 31 0 0 0 100 57 43 0 50 50 Helen Keller National Center for Deaf-Blind Youths and Adults (HKNCA) NA 8 9 0 0 0 100 0 0 100 38 12 5

High School Equivalency Program (HEA) RND 18 19 0 0 0 100 0 100 0 50 50 
FY 2008 Performance and Accountability Report—U.S. Department of Education 99 

Appropria- Expen- Program Performance Results: Percent of T

tions† ditures‡ Met/Exceeded, * Not Met But Improved Over Prior Years, N

FY 2008 FY 2007 FY 2006 

% 

% Not 

FY FY Met Met 

2008 2008 / But % % % % % % % % 

PART ($ in ($ in Exc Impro- Not No Met/ Not No Met/ Not N

Program Name Rating mil.) mil.) . ved Met Data Exc. Met Data Exc. Met Da

Historically Black Colleges and Universities Capital Financing (FCRA) 

RND 18 12 

Howard Un iversity (USC) A 233 233 0 0 0 100 0 33 67 100 0 

Independent Living Services for Older Blind Individuals (RA) NA 32 33 0 0 0 100 0 0 100 0 0 1

Independent Living State Grants and Centers for Independent Living (RA) RND 96 95 0 0 0 100 0 0 100 60 0 4International Education—Domestic (HEA) RND 94 92 0 0 0 100 0 0 100 5 25 7

International Education—Institute for Public Policy (HEA) NA 2 2 0 0 0 100 0 0 100 0 0 1International Education—Overseas (MECEA) NA 13 12 0 0 0 100 0 0 100 9 0 9Javits Fellowships (HEA) A 10 9 0 0 0 100 67 33 0 67 33 

Leveraging Educational Assistance Partnership (HEA) RND 64 68 0 100 0 

Migrant and Seasonal Farmworkers 

(RA) RND 2 2 0 0 0 100 0 0 100 0 0 1Minority Science and Engineering Improvement (HEA) NA 9 8 0 0 0 100 0 0 100 0 0 1Preparing Tomorrow’s Teachers to use Technology NA 0 1 National Institute for Literacy (AEFLA) RND 6 (560) 0 25 0 75 0 67 33 0 100 

National Institute on Disability and Rehabilitation Research (RA) A 106 107 0 25 0 75 78 22 0 50 50 

National Technical Institute for the Deaf (EDA) A 60 58 69 6 0 25 67 33 0 67 33 Projects With Industry (RA) A 19 17 0 0 0 100 0 0 100 75 25 

Protection and Advocacy of Individual Rights (RA) NA 16 15 0 0 0 100 100 0 0 100 0 
100 FY 2008 Performance and Accountability Report—U.S. Department of Education Appro- pria- Expen- Program Performance Results: Percent of T

tions† ditures‡ Met/Exceeded, * Not Met But Improved Over Prior Years, N

FY 2008 FY 2007 FY 2006 

% % Not FY FY Met Met 2008 2008 / But % % % % % % % % 

PART ($ in ($ in Exc Impro- Not No Met/ Not No Met/ Not N

Program Name Rating mil.) mil.) . ved Met Data Exc. Met Data Exc. Met Da

RSA Fld Rdr & Min Outrch Prorate Across Account NA 0 3 Strengthening Alaska Native and Native Hawaiian-Serving Institutions (HEA) NA 27 11 0 0 0 100 0 25 75 67 0 3Strengthening Asian American and Native American Pacific Islander- Serving Institutions (HEA) NA 5 0 Not Funded Not Funded 

Strengthening Historically Black Colleges and Universities (HEA) RND 323 248 0 0 0 100 0 33 67 50 50 

Strengthening Historically Black Graduate Institutions (HEA) RND 57 69 0 0 0 100 0 0 100 50 50 Strengthening Institutions (HEA) RND 78 80 0 0 0 100 0 25 75 0 50 5

Strengthening Native American- Serving Non-Tribal Institutions (HEA) NA 5 0 Not Funded Not Funded 

Strengthening Predominantly Black Institutions (HEA) NA 15 0 Not Funded Not Funded Strengthening Triba Colleges and Univelly Controlled rsities (HEA) NA 53 27 0 0 0 100 25 0 75 67 33 

Student Aid Administration (HEA) A 696 711 0 0 0 100 0 100 0 100 0 

Supported Employment State Grants (RA) RND 29 28 0 0 0 100 100 0 0 100 0 

Teacher Education Assistance for College and Higher Education Grants (CCRAA) NA 7 1 Not Funded Not Funded Teachers for a Competitive Tomorrow—Baccalaureate (ACA) NA 1 0 Not Funded Not Funded Teachers for a Competitive Tomorrow—Masters (ACA) NA 1 0 Not Funded Not Funded Thurgood Marshall Legal Educational Opportunity Program (HEA) NA 3 3 Not Funded 
FY 2008 Performance and Accountability Report—U.S. Department of Education 101 

Appropria- Expen- Program Performance Results: Percent of T

tions† ditures‡ Met/Exceeded, * Not Met But Improved Over Prior Years, N

FY 2008 FY 2007 FY 2006 

% 

% Not 

FY FY Met Met 

2008 2008 / But % % % % % % % % 

PART ($ in ($ in Exc Impro- Not No Met/ Not No Met/ Not N

Program Name Rating mil.) mil.) . ved Met Data Exc. Met Data Exc. Met Da

Tribally Controlled Postsecondary Career and Technical Institutions (CTEA) 

RND 8 8 0 0 0 100 0 0 100 100 0 

TRIO** Educational Opportunity Centers (HEA) RND 47 47 0 0 0 100 0 0 100 100 0 

TRIO** McNair Postbaccalaureate Achievement (HEA) ME 44 42 0 0 0 100 0 0 100 100 0 TRIO** Student Support Services (HEA) ME 281 186 0 0 0 100 0 0 100 67 33 TRIO** Talent Search (HEA) ME 143 144 0 0 0 100 0 0 100 0 100 T UpRIO** ward Bound (HEA) I 360 335 0 0 0 100 0 0 100 0 50 5

Underground Railroad Program NA 2 1 0 0 0 100 0 0 100 100 0 

Aid for Institutions of Higher Education (HERA) NA 0 53 Vocational Rehabilitation Demonstration and Training Programs (RA) 

RND 10 10 0 0 0 100 0 0 100 67 33 

Vocational Rehabilitation Evaluation (RA) NA 1 2 

Vocational Rehabilitation Grants for Indians (RA) A 35 35 0 0 0 100 100 0 0 100 0 Vocational Rehabilitation Program Improvement (RA) NA 1 1 Vocational Rehabilitation Recreational Programs (RA) NA 2 2 0 0 0 100 100 0 0 0 100 Vocational Rehabilitation State Grants (RA) A 2,839 2,454 0 0 0 100 33 67 0 80 20 

Vocational Rehabilitation Training (RA) A 38 37 0 0 0 100 50 50 0 100 0 

Administrative and Support Programs for Goal 3 (5,766) (1) TOTAL 29,174 ^23,609 
102 FY 2008 Performance and Accountability Report—U.S. Department of Education † Budget for each program represents program budget authority. ‡ Expenditures occur when recipients draw down funds to cover actual outlays. FY 2008 expenditures may include funds from prior yea

* The “Not Met But Improved Over Prior Years” column is new for FY 2008. ** The TRIO name came from Upward Bound, Talent Search and Student Support Services forming a trio of federal programs designed educational opportunity and attainment. The number of TRIO programs has since expanded. A shaded cell denotes that the program did not have targets for the specified year. ^ Estimated accruals in the amount of $1,485 million are excluded from the FY 2008 expenditure.ACA: America COMPETES ActATA: Assistive Technology Act of 2004AEFLA: Adult Education and Family Literacy Act

CCRAA: College Cost Reduction and Access Act

CTEA: Carl D. Perkins Career and Technical Education ActEDA: Education of the Deaf ActFCRA: Fair Credit Reporting Act

HEA: Higher Education Act of 1965HERA: Hurricane Education Recovery ActHKNCA: Helen Keller National Center ActMECEA: Mutual Educational and Cultural Exchange Act of 1961RA: Rehabilitation Act of 1973

USC: United States Code

PART Rating

E = Effective ME = Moderately EffectiveA = Adequate I = Ineffective RND = Results Not Demonstrated NA = Program Has Not Been Assessed 
PERFORMANCE DETAILS

Cross-Goal Strategy on Management 

Overview 

Cross-Goal Resources 

($ in thousands) Strategic Objectives: 

• Maintain and strengthen financial integrity 

and management and internal controls $600,018

$551,735

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

FY 2009 FY 2008

(Requested)

• Improve the strategic management of the 

Department’s human capital 

• Achieve budget and performance 

integration to link funding decisions to 

results 

Note: Each year the Department 

analyzes the percentage of program 

performance targets that were met or

exceeded, not met but improved over 

time, not met, or for which data are not 

yet available. Since the Department has 

a lag in the time data are received for the 

established targets, the FY 2007 target 

results are presented here. For more 

information on PART Ratings by 

Programs and Percent of Targets Met 

and Not Met, see Program Performance 

Summary at the end of this goal. 

Met/Exceeded

100%

Not Met

0%

Without Data

0%

Cross-Goal Strategy on Management 

FY 2007 Percent of Targets 

FY 2008 Performance and Accountability Report—U.S. Department of Education 103
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

Key Measures 

The Department’s Strategic Plan for Fiscal Years 2007-2012 restructured internal 

management objectives as functions supporting the achievement of all three new programrelated goals. This does not relegate internal management to lesser importance; rather, 

management’s role in ensuring proper accounting of federal funds, developing a talented 

and motivated Department workforce, and improving program performance forms a strong 

internal backbone that should eventually lead to successful classroom outcomes. See 

more detail on pages 36–41 of the Strategic Plan at 

http://www.ed.gov/about/reports/strat/plan2007-12/2007-plan.pdf. 

The new management cross-goal objectives omit previous measures that have attained 

high levels of sustained success, such as electronic access to grant competitions and 

participation of faith-based and community organizations in grant applications. Other 

measures on customer service in federal student aid programs are moved into Strategic 

Goal 3 to align with postsecondary education objectives. In their place, new measures are 

included that focus on expediting the grant award process and strengthening critical human 

capital skills. These challenges must be surmounted to allow deployment of resources for 

high-quality program monitoring and improvement. Measures on financial accountability 

and program quality remain in place from the previous Strategic Plan.

While the new management cross-goal key measures appear to be less aligned with the 

components of the President’s Management Agenda than before, they are also more 

focused on actual outcomes of government efficiency and performance envisioned in that 

agenda. 

Strategic Cross-Goal, Objective 1: Maintain and strengthen financial 

integrity and management and internal controls 

The Department has maintained the highest (Green) status on the financial performance 

initiative of the President’s Management Agenda since December 2003, indicating that 

financial systems consistently produce accurate and timely information to support the 

Department’s operational, budgetary and policy decisions. The Department has also taken 

significant steps to award thousands of discretionary grants earlier in the fiscal year, 

enabling grantees to implement their projects in a more timely manner. These actions are 

accompanied by a commitment to linking financial information and program improvements; 

an active presence in federal lines-of-business consolidation activities; and the publication 

of the Financial and Performance Quarterly Update, a quarterly analysis of the 

Department’s financial position and accountability for performance results, and Fast Facts,

the monthly internal business intelligence executive summary for senior Department 

managers and staff. 

104 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

Measures for Objective 1

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

4.1.A. Maintain an unqualified 

(clean) audit opinion (2204) U U U U U U U U 

4.1.B. Achieve and maintain 

compliance with the Federal 

Information Security Management 

Act of 2002 (89a0s9) 

* NC * NC NC NC C NC 

4.1.C. Percentage of new 

discretionary grants awarded by 

June 30 (89a0sa) 

* 49 * 40 60 66 70 61 

* New measure in 2007. 

C = Compliant, NC = Non-compliant, U = Unqualified (clean) 

Sources: 

4.1.A. Independent Auditors’ financial statement and audit reports. 

4.1.B. U.S. Department of Education, Office of Inspector General, annual Federal Information Security 

Management Act audit. 

4.1.C. U.S. Department of Education, Office of the Chief Financial Officer, Grant Administration and Payment 

System. 

Analysis of Progress. 

4.1.A. The Department earned a seventh consecutive unqualified or “clean” audit opinion from 

independent auditors, thus meeting the FY 2008 target for this measure. 

4.1.B. The Department’s Office of Inspector General has determined the Department to be noncompliant in fulfilling the requirements of the Federal Information Security Management Act of 2002

each year since the first evaluation in FY 2003, and this determination for FY 2008 means that the 

Department did not meet its target. The Department is making progress in addressing OIG’s 

concerns, having resolved fully more than 70 percent of the audit recommendations from FY 2005 

through 2007. 

4.1.C. Concerted efforts by Department program managers to award new discretionary grants 

earlier in the fiscal year resulted in 66 percent of new FY 2007 awards being issued by June 30 of 

that fiscal year (three-fourths of the year complete). This exceeded the 60 percent FY 2007 target 

for this measure. In the previous four fiscal years, no more than 49 percent of new discretionary 

grants had been awarded by June 30. In FY 2008, the ambitious 70 percent target was not achieved 

by June 30, but the 61 percent award rate far exceeded the rates prior to FY 2007. 

Data Quality and Timeliness.

4.1.A. Independent auditors follow professional standards and conduct the audit under the 

oversight of the Department’s Office of Inspector General. There are no data limitations. 

4.1.B. Pursuant to 44 U.S.C. § 3545, the Department’s Office of Inspector General annually 

evaluates the effectiveness of the Department’s information security program and practices. The 

evaluation includes testing of the effectiveness of information security policies, procedures, and 

practices of a representative subset of the agency’s information systems, as well as an assessment 

of compliance with requirements of the Federal Information Security Management Act of 2002 and 

related information security policies based upon the testing performed. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 105
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

4.1.C. The Department’s Office of the Chief Financial Officer regularly collects data via the Grant 

Administration and Payment System from principal offices with responsibilities for directing 

discretionary grant programs. During the second half of the fiscal year, data are distributed 

frequently to senior Department officials to ensure that planned award deadlines are met 

successfully. 

Target Context.

4.1.A. An unqualified or “clean” opinion means that the Department’s financial statements present 

fairly, in all material respects, the financial position of the Department in conformity with accounting 

principles generally accepted in the United States. 

4.1.B. The 2006 actual data served as the baseline for this measure. The Department technically 

met its goal of non-compliance for FY 2007; however, non-compliance is the opposite of the 

measure’s intent, and therefore a “not met” indicator for this measure is included for FY 2007 in the 

key measures performance results chart that begins on page 26. 

4.1.C. The Department has made a concerted effort in the past two years to expedite the 

processing of new discretionary grant awards. The Department aims to streamline the process 

further in future years to enable program staff to spend more time on program monitoring and 

performance improvements. The 2006 actual data served as the baseline for this measure. 

Strategic Cross-Goal, Objective 2: Improve the strategic management 

of the Department’s human capital 

The Department made significant progress in improving human capital management and 

human resources services during FY 2008. In support of the President’s Management 

Agenda human capital criterion for the four quarters ending June 30, 2008, the Department 

maintained Yellow overall status and was able to achieve Green progress for all four 

scoring cycles. 

Human capital activities during FY 2008 sought to improve the Department’s performance 

culture; close leadership competency gaps in performance management, strategic 

leadership, and planning and accountability; reduce hiring cycle time; and close targeted 

competency gaps and staffing gaps in mission-critical occupations. These areas of focus 

helped to address the human capital challenges identified in the Department’s Human 

Capital Management Plan. Also, through the use of the human capital metrics established 

under the Organizational Assessment, the Department is able to determine the 

effectiveness of its human capital strategies both overall and at the principal office level. 

Tracking these metrics is crucial as the Department strategically invests in its employees 

and work environment. 

106 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

Measures for Objective 2

Percentage of employees 

believing that: 

2006 2007 2008 

Target Actual Target Actual Target Actual 

4.2.A. Leaders generate 

high levels of motivation and 

commitment (89a0sr) 

* 28 31 37 34 Dec. 2008 

4.2.B. Managers review 

and evaluate the 

organization’s progress 

towards meeting its goals and 

objectives (89a0ss) 

* 53 56 58 59 Dec. 2008 

4.2.C. Steps are taken to 

deal with a poor performer 

who cannot or will not improve 

(89a0st) 

* 25 28 29 31 Dec. 2008 

4.2.D. Department policies 

and programs promote 

diversity in the workplace 

(89a0sv) 

* 46 49 48 52 Dec. 2008 

4.2.E. They are held 

accountable for achieving 

results (89a0sy) 

* 81 82 82 83 Dec. 2008 

4.2.F. The workforce has 

the job-relevant knowledge 

and skills necessary to 

accomplish organizational 

goals (89a0sx) 

* 67 69 70 71 Dec. 2008 

* New measure in 2007. 

Source: U.S. Office of Personnel Management, Federal Human Capital Survey (even-numbered years); 

U.S. Department of Education, Office of Management, Annual Employee Survey (odd-numbered years). 

Analysis of Progress. Department employees indicated greater agreement with all six key 

measure statements in the 2007 Annual Employee Survey than they had in the 2006 Federal Human 

Capital Survey. Targets for 2007 were exceeded on measures 4.2.A, 4.2.B, 4.2.C and 4.2.F, and the 

target was met on measure 4.2.E. Progress was made on a narrowly missed target for measure 

4.2.D. Department employees indicated greater agreement in 2007 than in 2006 on 89 percent of 

the items included in both surveys, with an average improvement of four percentage points per 

question. 

Data Quality and Timeliness. The 84-item Federal Human Capital Survey is conducted in evennumbered years by the Office of Personnel Management; in 2006, the Department of Education had 

an 80 percent response rate. In odd-numbered years, the Department conducts the Annual 

Employee Survey with 56 items duplicated exactly from the biennial federal survey, plus 25 agencyspecific items; in 2007, the Department had a 71 percent response rate. The six survey items 

included among the key measures are present on both surveys and were selected by the 

Department in consultation with the Office of Personnel Management as major qualitative indicators 

of employee satisfaction. Data from the 2008 Federal Human Capital Survey are expected in 

December 2008. 

Target Context. The targets and data above reflect the percentage of favorable response (either 

“strongly agree” or “agree”) to the selected items on the employee surveys. The Department used 

2006 Federal Human Capital Survey data to establish baselines for the above measures. 

Report Explanation. The Department made multiple requests of employees to complete both the 

Federal Human Capital Survey and the Annual Employee Survey, which may increase the 

FY 2008 Performance and Accountability Report—U.S. Department of Education 107
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

participation rate compared to the absence of such requests. One small difference in the sampled 

population is that all Department employees may complete the Annual Employee Survey, but only 

permanent, full-time employees (91 percent of all Department employees as of May 2008) may 

complete the Federal Human Capital Survey. 

Related Information. See more detail on the 2008 Federal Human Capital Survey at 

http://www.fhcs2008.opm.gov/What/, and on the 2007 Annual Employee Survey at 

https://www.opm.gov/surveys/index.asp. 

Measures for Objective 2

2006 2007 2008 

Target Actual Target Actual Target Actual 

4.2.G. Average number of days to 

hire is at or below the OPM 45-day 

hiring model for non-SES (89a0sm) 

* NA A A A A 

*New measure in 2007. 

NA = Not Achieved; A= Achieved. 

Source: U.S. Department of Education, Office of Management. 

Analysis of Progress. The Department met the goal of the Office of Personnel Management hiring 

model in both 2007, with an average hiring time of 27 business days, and 2008, with an average 

hiring time of 24 business days. The Department restructured its human resources services office in 

2007, which enabled additional resources to focus on improving the staffing process. Improved 

interaction over time between human resources officers and Department managers is also credited 

with enabling process improvements. Furthermore, human resources officers track hiring cycles for 

each principal office in the Organizational Assessment and issue monthly progress reports to the 

principal offices. These actions provide continual incentives to shorten the hiring process. 

Data Quality and Timeliness. For this measure, the Department tracks progress against the Office 

of Personnel Management 45-day hiring model for positions other than the Senior Executive Service. 

The model tracks the hiring process from the closing date of the vacancy announcement to the date 

a job offer is extended. It is measured in business days, not calendar days, and is calculated 

quarterly based on an average process length of all hires completed within that quarter. 

Target Context. When the Department’s revised strategic plan was being developed, the median of 

the average hiring time for the four most recent quarters then known (July 2005 through June 2006) 

was 54 days. This data point was used to establish the 2006 baseline for this measure, which 

indicated that the Department had not achieved the standard. 

Related Information. See more detail on the Office of Personnel Management hiring model at 

https://www.opm.gov/hiringtoolkit/docs/45_Day_Hiring_Model.pdf. 

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

4.2.H. Percentage of 

employees with performance 

standards in place within 30 days 

of start of current rating cycle 

(89a0sn) 

* 79 * 65 85 59 90 93 

*New measure in 2007. 

Source: U.S. Department of Education, Office of Management, Education Department Performance Appraisal 

System. 

108 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

Analysis of Progress. After an unexpected decline in 2007 that fell well short of the target 

percentage, the Department rebounded to exceed an even higher target in 2008. The inclusion of 

this measure as a component in the Organizational Assessment rating for each principal office 

beginning in 2007, which first affected this measure for 2008, likely provided an incentive toward 

timely completion of performance standards. 

Data Quality and Timeliness. To be considered successful on this measure, a Department 

employee or his or her supervisor must establish performance standards that align with the strategic 

plan and are approved by the supervisor. These standards must be entered no more than 30 days 

into the fiscal year covered by the measure. Senior Executive Service employees are not included in 

this measure. Effective October 1, 2007, the 12-month period on which employee performance is 

assessed aligns with the federal fiscal year. 

Target Context. This measure was a component of measure 6.2.A from the previous Department 

strategic plan, which comprised an index of Department human capital activities and was measured 

in FY 2005 through FY 2007. The 2005 actual data served as the baseline for this measure. 

Report Explanation. The 2005 and 2006 data for this measure were based on the percentage of 

employees with performance standards in place prior to the start of that year’s EDPAS cycle. This 

component was changed for 2007 to link its time frame to that of measure 4.2.I, allowing for entry of 

the previous year’s ratings prior to the establishment and entry of a new year’s standards. 

Measures for Objective 2

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

4.2.I. Percentage of 

employees who have ratings of 

record in the system within 

30 days of close of rating cycle 

(89a0so) 

* 85 * 54 90 97 95 Dec. 

2008 

*New measure in 2007. 

Source: U.S. Department of the Interior, Federal Payroll/Personnel System, which provides personnel and 

payroll support to numerous federal agencies, including the Department of Education. 

Analysis of Progress. After an unexpected decline in 2006 that fell well short of expectations (see 

Target Context below), the Department rebounded to exceed the measure’s target in 2007. The 

inclusion of this measure as a component in the Organizational Assessment rating for each principal 

office beginning in 2007 likely provided an incentive toward timely completion of ratings. 

Data Quality and Timeliness. To be considered successful on this measure, an employee rating of 

the level of success achieved on established performance standards must be entered no more than 

30 days after the fiscal year covered by the measure. Senior Executive Service employees are not 

included in this measure. Effective October 1, 2007, the 12-month period on which employee 

performance is assessed aligns with the federal fiscal year. Data for 2008 are expected in 

December 2008. 

Target Context. This measure was a component of measure 6.2.A from the previous Department 

strategic plan, which comprised an index of Department human capital activities and was measured 

in FY 2005 through FY 2007. The 2005 actual data served as the baseline for this measure. 

Strategic Cross-Goal, Objective 3: Achieve budget and performance 

integration to link funding decisions to results 

Changes in the size of a federal education program’s budget should correlate with the 

program’s efficacy in improving student achievement. If a program works, more funding is 

FY 2008 Performance and Accountability Report—U.S. Department of Education 109
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

justified; if it doesn’t, the program should undergo corrective action or be eliminated. The 

Department’s work on the Performance Improvement initiative of the President’s 

Management Agenda reflects this focus and has resulted in the highest (Green) status 

score available for this criterion. 

The Office of Management and Budget and the Department have worked together to 

measure program effectiveness by means of the Program Assessment Rating Tool (PART). 

By analyzing a program’s purpose, strategic planning functions, management capability, 

and demonstrated results, this tool has identified the strengths and weaknesses of large 

and small Department programs. The Department has used the PART process to make 

significant changes to ineffective programs or, in some cases, to recommend their 

termination. The overriding goal is that Department-funded programs demonstrate proven 

effectiveness. 

Measures for Objective 3

2005 2006 2007 2008 

Target Actual Target Actual Target Actual Target Actual 

4.3.A. Percentage of 

Department program dollars in 

programs that demonstrate 

effectiveness in terms of 

outcomes, either on 

performance indicators or 

through rigorous evaluations 

(89a0sq) 

78 78 79 86 79 86 86 88 

Source: U.S. Department of Education, analysis of Program Assessment Rating Tool findings. 

Analysis of Progress. As of October 2008, 91 currently funded Department programs have 

undergone a PART review, representing 98 percent of the Department’s FY 2008 budget authority 

for programs subject to the PART. Although 45 currently funded programs constituting 88 percent of 

this budget authority have been rated Adequate or higher in their PART reviews, enabling the 

Department to exceed its target for FY 2008, four programs were rated Ineffective and 42 programs 

were rated Results Not Demonstrated. (Two additional programs that are not currently funded have 

been assessed and rated Results Not Demonstrated.) 

The National Institute for Literacy was assessed for the first time in FY 2008 but its results could not 

be demonstrated. Of the seven programs that were reassessed based on newly available evaluation 

or performance data in FY 2008, the Transition to Teaching program was rated Effective; the IDEA 

Special Education Grants to States program was found to be Moderately Effective; and the Student 

Aid Administration, Training and Advisory Services, Impact Aid Basic Support Payments and 

Payments for Children with Disabilities, and Smaller Learning Communities programs were found to 

be Adequate.

Data Quality and Timeliness. Calculation is based on dollars in Department programs with at least 

an Adequate PART rating in the given year divided by dollars in all Department programs rated 

through that year. The PART assessment cycle occurs during the spring and summer, and OMB 

makes scores public via http://www.expectmore.gov. OMB allows the Department to report 

aggregated results from a year’s assessments in time for publication in that year’s Performance and 

Accountability Report. 

Target Context. The Department determines measure effectiveness from the proportion of FY 2008 

PART-eligible program budget authority that supports programs with an Adequate or higher rating 

from the PART analysis. This standard is used because such programs produce evidence of 

effectiveness with data from performance measures and rigorous program evaluations, unlike 

programs that have insufficient performance or evaluation data or for which data indicate 

ineffectiveness. The rationale for the target remaining steady for FY 2008 compared with the two 

110 FY 2008 Performance and Accountability Report—U.S. Department of Education 
PERFORMANCE DETAILS

CROSS-GOAL STRATEGY ON MANAGEMENT

FY 2008 Performance and Accountability Report—U.S. Department of Education 111

previous years is that nearly all program dollars subject to PART have been rated, and subsequent 

changes will likely be incremental based upon selected program reassessments. 
112 FY 2008 Performance and Accountability Report—U.S. Department of Education Cross-Goal Strategy on Management Program Performance Summary The Department attributes the operations below to the Cross-Goal Strategy on Management. In the table, an ov

for the results of these operations on their performance measures. (See page 46 for the methodology of calculaof targets met, not met, and without data.) Individual program performance reports are available at http://www.ed.gov/about/reports/annual/2008report/program.html. Appropriation and expenditure data for 

for each of these programs. Program Name PART Rating Appro- pria- tions† Expen- ditures‡ Program Performance Results: Percent of Ta

Met/Exceeded, *Not Met But Improved Over Prior Years, No

FY 2008 ($ in mil.) FY 2008 ($ in mil.) FY 2008 FY 2007 FY 2006 

% Met/ Exc. % Not Met But Impro- ved 

%

Not 

Met

%

No 

Data 

% 

Met/ 

Exc. 

%

Not 

Met

% 

No 

Data

% 

Met/

Exc.

% 

Not 

Met 

%

No 

Dat

Office for Civil Rights ** 90 91 100 0 0 0 100 0 0 100 0 0 Office of Inspector General ** 51 51 67 0 33 0 100 0 0 100 0 0 Program Administration ** 411 424 # # # 

TOTAL $552 $566 

† Budget for each program represents program budget authority. ‡ Expenditures occur when recipients draw down funds to cover actual outlays. FY 2008 expenditures may include funds fappropriations. * The “Not Met But Improved Over Prior Years” column is new for FY 2008. 

A shaded cell denotes that the program did not have targets for the specified year. 

# The Department does not plan to develop performance measures for programs, activities, or budgetary line items that are nature or that serve to support other programs and their performance measures. PART Rating** Resources devoted to the Cross-Goal Strategy are drawn from the budgets for overhead functions that are not subject to 
PERFORMANCE DETAILS

FY 2008 Performance and Accountability Report—U.S. Department of Education 113

Discontinued Strategic Plan Measures From FY 2007 

Legend

NA = No measure for period √ = Met target + = Exceeded target

[] = Measure ID code used in VPS 

data system 

r = Less than target or prior 

year level

P = Pending

Performance Results Summary Cohort FY 2007 FY 2006 FY 2005

Strategic Goal 1 – Create a Culture of Achievement

1.1 – Link federal education funding to accountability for results 

A. The number of states that have science assessments that align with the state’s 

academic content standards for all students in grades three through eight and in high 

school. [1203] 

NA NA NA 

1.2 – Increase flexibility and local control 

A. Percentage of eligible school districts utilizing the Rural Education Achievement 

Program flexibility authority. [1473] r r r

B. Overall American Customer Satisfaction Index as scored by Department grantees. 

[2200] r r √

1.3 – Increase information and options for parents 

A. Number of charter schools in operation around the nation. [1146] Reported as 1.5.C in FY 2008 

B. Amount of funding program grantees’ leverage for the acquisition, construction or 

renovation of charter school facilities. [1208] + + +

1.4 – Encourage the use of scientifically based methods within federal education programs 

A. Proportion of school-adopted approaches that have strong evidence of effectiveness 

compared to programs and interventions without such evidence. [2201] r r NA 

Strategic Goal 2 – Improve Student Achievement

2.1 – Ensure that all students read on grade level by the third grade 

A. The percentage of fourth-grade students with disabilities scoring at or above Basic on 

the National Assessment of Educational Progress in reading. [1521] + NA r

B. The percentage of economically disadvantaged students in grades 3–8 scoring at the 

Proficient or Advanced levels on state reading assessments. [89a04b] + r r

C. The percentage of limited English proficient students receiving Title III services who 

have attained English language proficiency. [1830] + NA NA

2.2 – Improve mathematics and science achievement for all students 

A. The percentage of eighth-grade students with disabilities scoring at or above Basic on 

the National Assessment of Educational Progress in mathematics. [1523] √ NA r

B. The percentage of economically disadvantaged students in grades 3–8 scoring at the 

Proficient or Advanced levels on state math assessments. [89a04c] r r NA

2.3 – Improve the performance of all high school students 

A. Percentage of students with disabilities with individualized education plans who 

graduate from high school with a regular high school diploma. [1527] 

Dec. 

2008 + √

B. Percentage of students with disabilities who drop out of school. [1528] Dec. 

2008 + +

C. Number of Advanced Placement tests taken by low-income public school students 

nationally. [1149] Reported as 2.1.D in FY 2008 

2.4 – Improve teacher and principal quality 

A. Percentage of core academic classes in elementary schools taught by highly-qualified 

teachers. [1182] Reported as 1.3.B in FY 2008 

B. Percentage of core academic classes in secondary schools taught by highly-qualified 

teachers. [1183] Reported as 1.2.E in FY 2008 
PERFORMANCE DETAILS

DISCONTINUED MEASURES FROM FY 2007 

114 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance Results Summary Cohort FY 2007 FY 2006 FY 2005

Strategic Goal 3 – Develop Safe Schools and Strong Character

3.1 – Ensure that our nation’s schools are safe and drug free, and that students are free of 

alcohol, tobacco, and other drugs 

A. Percentage of Safe Schools/Healthy Students grant sites that experience a decrease in 

the number of violent incidents at schools during the three-year grant period (by cohort). 

[1825 & 2019] 

04 √ √ √

05 √ √ NA

06 NA NA NA 

B. Percentage of Safe Schools/Healthy Students grant sites that experience a decrease in 

substance abuse during the three-year grant period (by cohort). [1826, 2020, & 2103] 

04 √ √ √

05 √ √ NA

06 NA NA NA

C. Percentage of Safe Schools/Healthy Students grant sites that improve school 

attendance during the three-year grant period (by cohort). [1827 , 2021, & 2104] 

04 √ √ √

05 √ √ NA

06 NA NA NA

D. Percentage of Student Drug Testing grantees that experience a 5 percent annual 

reduction in the incidence of past-month drug use by students in the target population 

(by cohort). [1828 & 2105] 

03 √ √ √

05 P P NA

06 NA NA NA 

E. Percentage of Student Drug Testing grantees that experience a 5 percent annual 

reduction in the incidence of past-year drug use by students in the target population (by 

cohort). [1829 & 2106] 

03 √ √ √

05 P P NA

06 NA NA NA 

3.2 – Promote strong character and citizenship among our nation’s youth. 

Strategic Goal 4 – Transform Education into an Evidence-Based Field

4.1 – Raise the quality of research funded or conducted by the Department 

A. Percentage of new research proposals funded by the Department’s National Center for 

Education Research that receive an average score of Excellent or higher from an 

independent review panel of qualified scientists. [1022] 

r r √

B. Percentage of new research proposals funded by the Department’s National Center for 

Special Education Research that receive an average score of excellent or higher from 

an independent review panel of qualified scientists. [1940] 

+ √ NA

4.2 – Increase the relevance of our research in order to meet the needs of our customers 

A. Percentage of new research projects funded by the Department’s National Center for 

Education Research that are deemed to be of high relevance to education practices as 

determined by an independent review panel of qualified practitioners. [00000000028] 

NA NA NA

B. Percentage of new research projects funded by the Department’s National Center for 

Special Education Research that are deemed to be of high relevance by an 

independent panel of qualified practitioners. [1942] 

NA √ NA

Strategic Goal 5 – Enhance the Quality of and Access to Postsecondary and Adult Education

5.1 – Reduce the gaps in college access and completion among student populations differing 

by race or ethnicity, socioeconomic status, and disability while increasing the 

educational attainment of all 

A. Percentage of TRIO Educational Opportunity Centers participants enrolling in college. 

[1612] 

Dec. 

2008 + r

B. Percentage of TRIO Student Support Services participants persisting at the same 

institution. [1617] 

Dec. 

2008 + +
PERFORMANCE DETAILS

DISCONTINUED MEASURES FROM FY 2007 

FY 2008 Performance and Accountability Report—U.S. Department of Education 115

Performance Results Summary Cohort FY 2007 FY 2006 FY 2005

C. Percentage of TRIO Student Support Services participants completing an associate’s 

degree at the original institution or transferring to a four-year institution within three 

years. [1618] 

Reported as 3.1.H in FY 2008 

D. Percentage of TRIO Student Support Services first-year students completing a 

bachelor’s degree at the original institution within six years. [1619] 

Dec. 

2008 + r

E. Percentage of TRIO McNair participants enrolling in graduate school. [1614] Dec. 

2008 + +

F. Percentage of TRIO McNair participants persisting in graduate school. [1615] Dec. 

2008 + +

5.2 – Strengthen the accountability of postsecondary institutions 

5.3 – Establish funding mechanisms for postsecondary education 

5.4 – Strengthen Historically Black Colleges and Universities, Hispanic-Serving Institutions, 

and Tribal Colleges and Universities 

A. Percentage of full-time undergraduate students who were in their first year of 

postsecondary enrollment in the previous year and are enrolled in the current year at 

the same Historically Black College or University. [1587] 

Reported as 3.1.E in FY 2008 

B. Percentage of students enrolled at four-year Historically Black Colleges and Universities 

graduating within six years of enrollment. [1589] 

Dec. 

2008 + NA

C. Number of Ph.D., first professional, and master’s degrees awarded at Historically Black 

Graduate Institutions. [1595] 

Dec. 

2008 + NA

D. Percentage of full-time undergraduate students who were in their first year of 

postsecondary enrollment in the previous year and are enrolled in the current year at 

the same Tribally Controlled College or University. [1569] 

+ + NA

E. Percentage of students enrolled at four-year Tribally Controlled Colleges and 

Universities graduating within six years of enrollment. [1571] 

Dec. 

2008 + NA

F. Percentage of students enrolled at two-year Tribally Controlled Colleges and 

Universities who graduate within three years of enrollment. [1572] 

Dec. 

2008 r NA

G. Percentage of full-time undergraduate students who were in their first year of 

postsecondary enrollment in the previous year and are enrolled in the current year at 

the same Hispanic-Serving Institution. [1601] 

Reported as 3.1.F in FY 2008 

H. Percentage of students enrolled at four-year Hispanic-Serving Institutions graduating 

within six years of enrollment. [1603] Reported as 3.1.J in FY 2008 

I. Percentage of students enrolled at two-year Hispanic-Serving Institutions who graduate 

within three years of enrollment. [1604] 

Dec. 

2008 r NA

5.5 – Enhance the literacy and employment skills of American adults 

A. Percentage of general and combined state vocational rehabilitation agencies that assist 

at least 55.8 percent of individuals receiving services to achieve employment. [1681] Reported as 3.3.A in FY 2008

B. Percentage of adults with a high school completion goal who earn a high school 

diploma or recognized equivalent. [1386] Reported as 3.3.B in FY 2008 

C. Percentage of adults enrolled in English literacy programs who acquire the level of 

English language skills needed to complete the levels of instruction in which they 

enrolled. [1384] 

r r r

5.6 – Increase the capacity of U.S. postsecondary education institutions to teach world 

languages, area studies, and international issues 

A. Percentage of critical languages taught, as reflected by the list of critical languages 

referenced in the HEA, Title VI program statute. [1665] NA NA NA 

B. Percentage of National Resource Center Ph.D. graduates who find employment in 

higher education, government and national security. [1664] NA NA NA 

C. Average competency score of Foreign Language and Area Studies Fellowship Program 

recipients at the end of one full year of instruction minus the average score at the 

beginning of the year. [1671] 

Feb. 2009 √ √

Strategic Goal 6 – Establish Management Excellence 

6.1 – Develop and maintain financial integrity and management internal controls 

A. Achieve an unqualified opinion. [2204] Reported as 4.1.A in FY 2008 

6.2 – Improve the strategic management of the Department’s human capital 

A. Index of quality human capital performance management activities. [2205] r r √
PERFORMANCE DETAILS

DISCONTINUED MEASURES FROM FY 2007 

116 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Performance Results Summary Cohort FY 2007 FY 2006 FY 2005

6.3 – Manage information technology resources, using e-gov, to improve service for our 

customers and partners 

A. Percentage of grant programs providing online application capability. [2206] + √ +

6.4 – Modernize the Federal Student Assistance programs 

A. Customer service level for Free Application for Federal Student Assistance on the Web. 

[2207] r r r

B. Customer service level for Direct Loan Servicing. [2208] + + r

C. Customer service level for Common Origination and Disbursement. [2209] + + + 

D. Customer service level for Lender Reporting System. [2210] √ r r

6.5 – Achieve budget and performance integration to link funding decisions to results 

A. Percentage of Department program dollars associated with programs reviewed under 

the Program Assessment Rating Tool process that demonstrates Effectiveness. [2211] + + +

6.6 – Leverage the contributions of faith-based and community organizations to increase the 

effectiveness of Department programs 

A. Percentage of applications in competitions of amenable discretionary programs that are 

faith-based or community organizations. [2212] + √ NA
FY 2008 Performance and Accountability Report—U.S. Department of Education 117 Summary of Inspector General Audits and Government Accounta

Reports by Goal For all Department of Education Inspector General reports for FY 2008, please visit the Inspector General’s 

http://www.ed.gov/about/offices/list/oig/reports.html and, for additional Government Accountability Office re

FY 2008, please visit GAO’s Web site at http://www.gao.gov/docsearch/app_processform.php. Summary of Major FY 2008 OIG Audits and Reports Name of Report Goal Issue Findings and Recommendations Department’s Respon

Audit of the Department’s Process for Disbursing Academic Competitiveness Grants and National Science and Mathematics Access to Retain Talent Grants (ED- OIG/A19H0011) August 2008 2 The objectives of this audit were to identify and assess the adequacy of processes and controls established by Federal Student Aid (FSA) to ensure that students eligible for an Academic Competitiveness (ACG) Grant or National Science and Mathematics Access to Retain Talent (SMART) Grant are appropriately identified and notified; that only eligible students received grants under these programs; and that schools required to participate in the ACG or SMART Grant programs are doing so. The OIG found that FSA needs to improve its oversight of school compliance with the mandatory participation requirement and establish procedures for a rigorous outreach and assessment process. Additionally, FSA needs to establish a program of administrative action to include fines, suspensions, or termination from the Federal Pell Grant program for schools that enroll eligible students but do not participate in the ACG or SMART Grant programs. Federal Student Aid agreed w

both recommendations and hbegun a process for ensuring eligible schools are participathe two programs and will mareferrals for administrative acbefore the end of the 2008-2award year. 

Department Controls Over Travel Expenditures: Final Audit Report (ED- OIG/A19H0009) July 2008 4 The objective of this audit was to evaluate the effectiveness of Department controls over the appropriateness of travel expenditures. The Department requires that travel be authorized only when necessary, to accomplish the purpose of the Department’s mission in the most effective and economical manner. OIG found that individually billed accounts were not always used appropriately as there were instances where purchase cards were used for purchases that did not relate to official government travel or were used for ATM withdrawals that were excessive or outside the period of approved travel. OIG recommended that the Chief Financial Officer require existing cardholders to take refresher courses; ensure executive offices fulfill their monitoring responsibilities; develop policy to guide principal office staff in maintaining adequate documentation; and develop formal procedures for conducting quarterly travel audits. The Department concurred w

findings. Steps are in develoto implement all recommendnoted in the audit. AdditionaNovember 2008, the Departmwill transition to a new bank cvendor under GSA’s Master SmartPay 2 contract. JP MoChase will replace Bank of America. 
118 FY 2008 Performance and Accountability Report—U.S. Department of Education Name of Report Goal Issue Findings and Recommendations Department’s Response 

Audit of Selected Portions of the U.S. Department of Education’s Oversight of the Consolidated State Performance Reports (ED-OIG/A06H0001) April 2008 1 The purpose of this audit was to determine whether the Department provided sufficient oversight to ensure that graduation and dropout rates submitted by states in their Consolidated State Performance Reports were supported by reliable data. OIG found that the Department could have provided better oversight and that more emphasis is needed on data reliability and comparability across states. OIG also found that neither graduation rates nor dropout rates were supported by reliable data. OIG found that less than a quarter of the states surveyed were using a tracking system that complies with the requirements of No Child Left Behind. The Department generally agreed that states need to continue their efforts to improve the reliability of data for computing graduation and dropout rates, but stated that the audit focused on the early years of No Child Left Behind and that No Child Left Behind does not mandat

a definition that is comparable across states. In April, Secretary Spellings announced that the Department wi

take steps to ensure all states use the same formula to calculate how many students graduate from high school on time and how many drop out. This uniform graduation rate will show how many incoming freshman in a given high school graduate within four years. 

Inspection to Evaluate the Adequacy of the Department’s Procedures in Response to Section 306 of the Fiscal Year 2008 Appropriations Act – Maintenance of Integrity and Ethical Values Within the Department (ED- OIG/I13I0004) April 2008 4 The purpose of this inspection report was to evaluate the adequacy of the procedures developed by the Department to comply with the requirements of Section 306 of the Fiscal Year 2008 Appropriations Act which requires the Department to implement procedures to assess and disclose whether an individual or entity has a potential financial interest in, or impaired objectivity towards, a product or service involving Department funds. OIG found that the Department’s procedures, if fully implemented, are adequate to comply with the requirements of Section 306. However, the Department’s procedures requiring the certification from peer reviewers on impartiality could be misinterpreted as applying only to financial conflicts of interest. The Department agreed with the findings but expressed concern tha

using the terms “teaching methodologies” and “significant identification with pedagogical or philosophical viewpoints” would cause confusion and concern among peer reviewers. 
FY 2008 Performance and Accountability Report—U.S. Department of Education 119 Name of Report Goal Issue Findings and Recommendations Department’s Respon

Monitoring of the Title I, Part A Comparability of Services Requirement (ED-OIG/X05H0017) October 2007 1 The purpose of this review was to determine whether the Department could improve its monitoring of state educational agencies (SEAs) receiving ESEA Tiitle I, Part A Comparability of Services funding and enhance its non-regulatory guidance to provide additional clarity to the SEAs. OIG recommended that the Department revise its non- regulatory guidance to include monitoring suggestions for the SEA to complete with the local educational agency (LEA); language that prohibits LEAs from using inflated resources in its comparability calculations; a statement that LEAs maintain source documentation that supports data used in comparability calculations; and language that requires SEAs to establish deadlines for when LEAs must determine their comparability calculations. The Department will ensure t

current monitoring protocol foESEA Title I, Part A be reviseinclude expanded procedurerequire SEAs to demonstrate comparability data are validaall LEAs in the state. Guidance on comparability is already addressed in the curNon-Regulatory Guidance, TFiscal Issues but will be imprthrough enhanced monitoring protocols. 

Federal Student Aid’s Estimation of Improper Payments in the Federal Family Education Loan Program: Final Report (ED-OIG/A09H0015) September 2008 3 The Improper Payments Information Act of 2002 requires federal agencies to annually review improper payments in their programs and activities. The Act specifies the agencies must first identify those programs that are susceptible to improper payments. Then for each identified risk- susceptible program, the agencies must estimate the amount of improper payments exceeding a specified threshold and report on actions taken to reduce improper payments. Several factors affected the reliability of FSA’s estimated improper payment rates. OIG recommended, among others, that Federal Student Aid ensure that the design of improper payment estimating methodologies take into account improper payments identified in reviews other than audits and that Federal Student Aid implement a revised policy for identifying and reporting program outlays in the Performance and Accountability Report that provide consistent and comparable information on outlays and dollars. Federal Student Aid will desi

implement, in consultation wOMB, a methodology for estiimproper payments that meerequirements of Circular A-12Appendix C. Federal Studenupdating operational policy aprocedures to include the FeFamily Education Loan Progpayment universe definition, used to extract the payment universe for outlay reporting, queries to use for improper payment reporting to ensure consistency in the PerformanAccountability Report. 
120 FY 2008 Performance and Accountability Report—U.S. Department of Education Summary of Major FY 2008 GAO Reports Name of Report Goal Issue Findings and Recommendations Department’s Response 

Higher Education: Multiple Higher Education Tax Incentives Create Opportunities for Taxpayers to Make Costly Mistakes (GAO- 08-717T) May 2008 3 While both Title IV of the Higher Education Act and tax preferences help students meet expenses, tax preferences also assist students and families with saving for and repaying postsecondary costs. Some forms of Title IV aid provide assistance to those whose incomes are lower, on average, than is the case with tax preferences. However, tax preferences require more responsibility on the part of students and families as they must identify applicable tax preferences and correctly calculate and claim credits or deductions. GAO recommended in 2002 that the Department sponsor research into key aspects of effectiveness of the Title IV programs. Multiyear projects funded beginning in July 2007 do not appear to directly evaluate the role and effectiveness of Title IV programs and tax preferences on improving access, persistence, or completion. Congress should consider whether the federal government should consolidate postsecondary education tax provisions to make them easier for the public to use; how best to evaluate the effectiveness of postsecondary aid provided through the tax code; and whether tax preferences and Title IV programs be better coordinated to maximize their effectiveness. In 2002, the Department issued a Request for Applications to conduc

research on evaluating the efficacy of programs, practices, or policies that are intended to improve accesto, persistence in, or completion of postsecondary education. The Department is implementing a number of activities to make the financial aid programs more understandable and accessible to students and their families. 

Native Hawaiian Education Act: Greater Oversight Would Increase Accountability and Enable Targeting of Funds to Areas with Greatest Need (GAO-08- 422) March 2008 1 The Native Hawaiian Education Act (NHEA) seeks to develop innovative educational programs to assist Native Hawaiians. To inform reauthorization of this Act, GAO analyzed what is known about NHEA’s impact on Native Hawaiian education; the Department’s efforts to oversee NHEA grants; and the extent to which the Department and the Native Hawaiian councils have fulfilled their roles and responsibilities. GAO found that the Department has established three performance measures that are not applicable to most of the educational outcomes that result from the program’s many authorized activities. Additionally, the Department has not established a method to track grantee activities, such as how the funds have been distributed across activities or islands, and grantees have received little direction or guidance from the Department. The Department has not reported to Congress on NHEA as required by law. GAO recommendations included establishing additional or broader performance measures; developing a method to track how grant funds are allocated across islands and activities; working with the local Education Council to identify and coordinate services for each of the islands; and fulfilling the statutory responsibility to report to Congress. The Department concurred with most recommendations but questioned the feasibility of developing performance measures that would cover each allowable activity. The Department will work to help refine the performance measures and data collection practices. However, the Department disagreed with the recommendation to track how fund

are allocated, stating that it would be burdensome to the grantee and require a tracking system that otheprograms do not require. 
FY 2008 Performance and Accountability Report—U.S. Department of Education 121 Name of Report Goal Issue Findings and Recommendations Department’s Respons

No Child Left Behind Act: Education Actions Could Improve the Targeting of School Improvement Funds to Schools Most in Need of Assistance (GAO-08-380) February 2008 1 No Child Left Behind requires states to set aside 4 percent of their ESEA Title I funds to pay for school improvement efforts. GAO was asked to determine the extent to which states have set aside these funds and used other resources for school improvement; which schools received improvement funds and the extent to which funds are tracked; the activities states and schools have undertaken and how activities are assessed; and how the Department supports states’ improvement efforts. GAO recommended that the Department improve its monitoring processes to ensure that states comply with No Child Left Behind requirements for allocating school improvement funds for district-level activities and prioritizing funds to the lowest achieving schools, provide guidance on when and how states are to make information available about which schools receive improvement funds, and analyze the effects of removing a hold-harmless provision on those districts protected by it. The Department agreed with 

recommendations. The Department supports states wschool improvement through guidance, staff assistance, pletters, and information providnational conferences. In adddirect support, the Departmeprovides technical assistance research- related resources tassist in school improvement efforts. These include the Comprehensive Centers ProgRegional Education Laboratothe Center for ComprehensivSchool Reform and Improvemthe What Works Clearinghouand a new Doing What Worksite. The Doing What Works site was developed to improvstates’ ability to translate the research on the What Works Clearinghouse Web site into practical application at the classroom level. 

District of Columbia Opportunity Scholarship Program: Additional Policies and Procedures Would Improve Internal Controls and Program Operations (GAO-08-9) November 2007 1 The D.C. School Choice Incentive Act established the first K-12 school choice program supported by federal funds. GAO assessed the accountability mechanisms governing the use of funds supporting the Opportunity Scholarship Program; results of the grantee’s efforts to meet recruiting priorities; and eligibility requirements and information provided to parents regarding their choices. GAO recommended that the Department direct the Opportunity Scholarship Program grantee to improve internal controls, continue to improve its financial systems, improve monitoring, and provide accurate information to parents. The Department responded t

report does not present a comand balanced picture in a numkey areas and does not accureflect what occurred with the program during the period auespecially regarding students previously attended schools of improvement. 
122 FY 2008 Performance and Accountability Report—U.S. Department of Education Summary of Performance Evaluations by Goal Summary of Major FY 2008 Program Evaluations and Studies Name of Report Goal Issue Findings and Recommendations Department’s Response 

Evaluation of the DC Opportunity Scholarship Program: Impacts After Two Years (Institute of Education Sciences NCEE 2008-4024) June 2008 1 The purpose of the Opportunity Scholarship Program (OSP) is to provide low-income students, particularly those attending schools in need of improvement or corrective action under No Child Left Behind, with opportunities to attend higher-performing schools. The study evaluated the differences in test scores between students who received an OSP scholarship and those that did not. After two years, there were no statistically significant differences in test scores between students who were offered an OSP scholarship and students who were not. Both performed at comparable levels on reading and mathematics. While the program had a positive impact on overall parent satisfaction and parent perceptions of school safety, it did not have a similar impact on students’ perceptions of satisfaction and safety. The report submitted to Congress i

June of 2008. The report is also available on the Department’s Web site. 

Implementation Study of Smaller Learning Communities: Final Report (OPEPD/PPSS) May 2008 1 The purpose of this study was to evaluate the implementation of the federal education law that authorizes funding for the Smaller Learning Communities Program by describing the strategies and practices used by local educational agencies in implementing Smaller Learning Communities. Changes in schoolwide academic outcomes were neutral overall, with a good deal of variation between schools. Trend data appear to suggest increases in the percentage of graduating students planning to attend either two- or four-year colleges. There was a statistically significant positive trend in the percentage of 

9th grade students being promoted 

to 10th grade. 

The report has been published. 

Implementation of the Credit Enhancement for Charter School Facilities Program: Final Report (OPEPD/PPSS) April 2008 

1 The purposes of this study were to 

describe how grantees under the Credit Enhancement for Charter School Facilities Program implemented their activities and how the Program achieved its legislative purpose. 

According to commercial lenders, investment banks, and rating agency representatives, many of the assisted schools would otherwise not have received facility loans because lenders believed that they reflected a high level of risk. More than 23,000 students were enrolled in the 84 charter schools assisted under the Program during FY 2003 and FY 2005. These students were more likely to be lowincome and minority. Through FY 2006, the grant recipients assisted a total of 138 schools and leveraged over $407 million worth of financing for charter schools facilities improvement. 

The report is under review by the Department. 
FY 2008 Performance and Accountability Report—U.S. Department of Education 123 Name of Report Goal Issue Findings and Recommendations Department’s Respons

Reading First Impact Study: Interim Report (Institute of Education Sciences NCEE 2008- 4019) April 2008 1 This report presents findings from the interim Reading First Impact Study, a congressionally mandated evaluation of the No Child Left Behind initiative (Title I, Part B, Subpart 1) to help all children read at or above grade level by the end of the third grade. The report is the first of two and examines the impact of Reading First funding in 2004- 2005 and 2005-2006 in 17 school districts across 12 states and one statewide program. Across the 18 participating sites, impacts on student reading comprehension test scores were not statistically significant as compared to non-Reading First schools in Reading First school districts. The Program increased instructional time spent on the five components of reading instruction. The study sites that received their Reading First grants later in the federal funding process experienced positive and statistically significant impacts both on the time teachers spent on the five essential components of reading instruction and on first and second grade reading comprehension. Additional Consolidated State Performance Report data pro

by state educational agencieindicate that the Reading FirsProgram has increased readscores. The study in questioreflected schools in the same district, some of which were Reading First schools and sowhich were not. Reading Firmaterials and curricula may hbeen shared across schools the district. The study’s final to be released in 2009, will pan additional year of follow-uand will examine whether the magnitude of impacts on the scientifically based reading instruction is associated with improvements in reading comprehension. 

State and Local Implementation of the No Child Left Behind Act: Volume IV—Title I School Choice and Supplemental Educational Services: Interim Report (OPEPD/PPSS) April 2008 1 This report presents findings on the implementation of parental choice options from the first year of the National Longitudinal Study of No Child Left Behind (NLS-NCLB) and the Study of State Implementation of Accountability and Teacher Quality Under No Child Left Behind (SSI-NCLB) through school year 2004–05. In 2004–05, nearly 6.2 million students were eligible for Title I school choice and as many as 1.8 million were eligible for Title I supplemental educational services. Low participation rates in Title I school choice and supplemental educational services may be related to problems communicating with parents. Parents who took advantage of Title I school choice were very satisfied with the new schools, which had substantially higher average student achievement than did the previous schools. The report is under review by 

Department. 
124 FY 2008 Performance and Accountability Report—U.S. Department of Education Name of Report Goal Issue Findings and Recommendations Department’s Response 

The Enhanced Reading Opportunities Study: Early Impact and Implementation Findings (Institute of Education Sciences NCEE 2008- 4017) January 2008 1 This first of three reports focuses on the first of two cohorts of ninth- grade students and describes the impact that two interventions had on their reading comprehension skills through the end of their ninth- grade year. On average, across the 34 participating high schools, there was a statistically significant improvement in participating students’ reading comprehension test scores. The magnitudes of the impact estimates for each literacy intervention are the same as those for the full study sample. Impacts on reading comprehension are larger for the 15 schools where the intervention began within six weeks of the start of the school year and implementation was classified as well aligned with the program model. The Department will respond after the final report. National Assessment of Title I: Final Report (Institute of Education Sciences NCEE 2007- 4014) October 2007 1 In No Child Left Behind, Congress mandated a national assessment of Title I to evaluate the implementation and impact of the program. This mandate requires a scientifically based longitudinal study of Title I schools and includes studies of program implementation and of the effectiveness of specific interventions. The number of Title I participants has tripled over the past decade. The percentage of students achieving at or above the state’s Proficient level rose for most student subgroups. Three-quarters of all schools and districts met applicable adequate yearly progress targets. Student participation in school choice options and supplemental educational services has increased since the first year of the implementation of the choice provisions. The majority of teachers across the country have been designated as “highly qualified” under No Child Left Behind. The study is under review by the Department. Early Outcomes of the GEAR UP Program: Final Report (OPEPD/PPSS) August 2008 3 The GEAR UP program fosters increased preparation for postsecondary education among low-income students and their families. This report provides descriptive information on the implementation of the program and the association between program participation and student and parent outcomes. Attending a GEAR UP school was positively associated with both students’ and parents’ knowledge of the opportunities and benefits of postsecondary education. For African-American students, attendance at a GEAR UP school was positively associated with the number of rigorous or above-grade- level courses taken during middle school. The study is under review by the Department. 
Financial 

Details 

FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

Message From the Chief Financial Officer 

The Department of Education continued its high standard of financial management and reporting 

during fiscal year 2008. The Department’s excellence in financial management has been a joint 

effort of its managers, employees, and business partners. Highlights this year include: 

• Successfully implemented new loan access initiatives to ensure credit market disruptions do not 

deny eligible students and parents access to federal student loans; 

• Completed the implementation of the payment processing phase of an upgraded grants 

management system; 

• Received an unqualified opinion on the principal financial statements for the seventh consecutive 

year, demonstrating a clear pattern of financial accountability; 

• Continued to have no material weaknesses identified as part of our Report on Internal Control for 

the sixth consecutive year; 

• Received a “green” status in Financial Management on the President’s Management Scorecard 

for the fifth consecutive year; and 

• Continued to provide reasonable assurance of its internal controls over financial reporting. 

In FY 2008, the Department took steps to address three significant deficiencies identified in the 

FY 2007 “Report on Internal Controls.” Regarding credit reform, the Department improved student 

loan reporting and analysis, with a particular focus on expanding the use of cohort-level data to 

assess program balances and on-going activity. 

In the area of program monitoring, the Department encouraged offices to use a risk-based approach 

to identify grantees in need of heightened monitoring. Corrective actions for audits of guaranty 

agencies, lenders and servicers, and schools were implemented, and efforts to monitor Title I, 

Reading First, and Migrant Education were continued. 

On information system controls, the Department updated technical security configuration standards 

and required data centers to verify the security of configuration management procedures. A single 

vendor currently supports most Department applications and related infrastructure, facilitating the 

consistent implementation of Office of Management and Budget, National Institute for Standards and 

Technology and Department guidelines, processes and practices. 

During FY 2008, the Department assessed the effectiveness of its internal controls over financial 

reporting. This review was based upon the requirements of OMB Circular A-123 (Appendix A), 

Management’s Responsibility for Internal Control. We are pleased to report that the Department can 

give an unqualified statement of assurance on its internal control over financial reporting. This 

examination provided a valuable opportunity to review and improve internal controls and ensure 

integrity in financial management and reporting. 

We are very grateful to Larry Warder, who served as both Chief Financial Officer and Acting Chief 

Operating Officer of FSA through October 11, 2008. His dedicated service made many of these 

accomplishments possible. 

//s// 

Thomas P. Skelly 

Delegated to Perform Functions of Chief Financial Officer 

November 14, 2008

126 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

FINANCIAL SUMMARY

FY 2008 Performance and Accountability Report—U.S. Department of Education 127

% Change 

2008/2007 FY 2008 FY 2007 FY 2006 FY 2005

Fund Balance with Treasury -3% 94,899 $ $ 97,532 $ 107,053 $ 77,569

Credit Program Receivables +16% 134,725 115,904 106,728 107,937

Other +62% 1,949 1,202 640 1,061 

 Total Assets 231,573 214,638 214,421 186,567 

Debt +23% 128,668 104,287 105,677 104,597

Liabilities for Loan Guarantees -15% 43,322 50,874 52,453 30,611 

Other +64% 16,247 9,896 9,481 8,517 

Total Liabilities 188,237 165,057 167,611 143,725 

Unexpended Appropriations -5% 49,506 52,047 51,812 47,288 

Cumulative Results of Operations +150% (6,170) (2,466) (5,002) (4,446) 

Total Net Position 43,336 49,581 46,810 42,842 

Total Liabilities and Net Position $ 231,573 $ 214,638 214,421 $ 186,567 $ 

Financial Summary 

Dollars in Millions

Balance Sheet

$186.6

$143.7

$42.8

$214.4

$167.6

$46.8

$214.6

$165.1

$49.6

$231.6

$188.2

$43.3

$0

$50

$100

$150

$200

$250

Billions

FY 2005 FY 2006 FY 2007 FY 2008

Assets

Equity

Liabilities

% Change 

2008/2007 FY 2008 FY 2007 FY 2006 FY 2005

Gross Cost +2% 74,034 $ $ 72,316 104,699$ 82,204$ 

Earned Revenue +15% (9,217) (8,032) (7,870) (6,965) 

Total Net Cost of Operations $ 64,817 $ 64,284 96,829 $ 75,239 $ 

 Net Cost Based on the Department's Strategic Plan 2007-2012 FY 2008

Goal 1 $ 37,045

Goal 2 2,112

Goal 3 25,094

Cross-goal 566

Total Net Cost of Operations $ 64,817

 Net Cost Based on the Department's Strategic Plan 2002-2007 FY 2007 FY 2006 FY 2005

Goal 2 Improve Student Achievement $ 36,838 37,700$ $ 36,415

Goal 3 Develop Safe and Drug-Free Schools 740 849 877 

Goal 4 Transform Education into Evidence-Based Field 367 422 442 

Goal 5 Enhance Quality of and Access to Postsecondary and 

Adult Education 25,799 57,303 36,940 

Goal 6 Management Excellence 555 540 565 

Total Net Cost of Operations $ 64,284 96,829 $ 75,239 $ 

Increase the academic achievement of all high school students

Ensure the accessibility, affordability, and accountability of higher 

education, and better prepare students and adults for employment 

and future learning

Strategy on Management

Statement of Net Cost

Improve student achievement, with a focus on bringing all students to 

grade level in reading and mathematics by 2014 Goal 2

3%

Goal 1

57%

Goal 3

39%

Crossgoal 

1%
FINANCIAL DETAILS

PRINCIPAL FINANCIAL STATEMENTS

128 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Fiscal Year Fiscal Year

Assets: 

2008 2007

 Intragovernmental:

1001 Fund Balance with Treasury (Note 3) $ 94,899 $ 97,532

1003 Accounts Receivable (Note 4) 2 4

# Other Intragovernmental Assets 

Total Intragovernmental

95 0

94,996 97,536

2001Cash and Other Monetary Assets (Note 5) 1,663 1,103

2003Accounts Receivable, Net (Note 4) 100 49

2004Credit Program Receivables, Net (Note 6) 134,725 115,904

2006General Property, Plant and Equipment, Net (Note 7) 52 46

2007Other Assets 37 0

ToTotal Assets (Note 2)

Liabilities:

$ 231,573 $ 214,638

 Intragovernmental:

3001 Accounts Payable $ 8 ($0)

3002 Debt (Note 8) 128,668 $ 104,287

3003 Guaranty Agency Federal and Restricted Funds Due to Treasury (Note 5) 1,663 1,103

3004 Payable to Treasury (Note 6) 3,766 5,351

3005 Other Intragovernmental Liabilities (Note 9) 

Total Intragovernmental

7,124 292

141,229 111,033

4001Accounts Payable 1,296 913

4002Accrued Grant Liability (Note 10) 2,245 2,094

4003Liabilities for Loan Guarantees (Note 6) 43,322 50,874

4005Other Liabilities (Note 9) 

ToTotal Liabilities

145 143

$ 188,237 $ 165,057

Commitments and Contingencies (Note 18)

Net Position:

6001Unexpended Appropriations - Earmarked Funds (Note 17) ($0) ($0)

6001Unexpended Appropriations - Other Funds $ 49,506 $ 52,047

6002Cumulative Results of Operations - Earmarked Funds (Note 17) 17 39

6002Cumulative Results of Operations - Other Funds

Total Net Position (Note 11) 

Total Liabilities and Net Position

(6,187) (2,505)

$ 43,336 $ 49,581

$ 231,573 $ 214,638

0 0.00

The accompanying notes are an integral part of these statements.

0

United States Department of Education

Consolidated Balance Sheet

As of September 30, 2008 and 2007

(Dollars in Millions)
FINANCIAL DETAILS

PRINCIPAL FINANCIAL STATEMENTS

Fiscal Year Fiscal Year

Program Costs

Ensure Accessibility, Affordability, and Accountability of 

Higher Education and Career and Technical Advancement

2008 2007

# Gross Costs $ 33,090 $ 31,924

# Less: Earned Revenue 9,082 7,933

Net Program Costs 24,008 23,991

Total Program Costs

Promote Academic Achievement in Elementary and 

Secondary Schools

$ 24,008 $ 23,991

# Gross Costs $ 23,490 $ 23,368

# Less: Earned Revenue 86 78

Net Program Costs 23,404 23,290

Total Program Costs

Transformation of Education

$ 23,404 $ 23,290

# Gross Costs $ 1,569 $ 1,468

# Less: Earned Revenue 32 18

Net Program Costs 1,537 1,450

Total Program Costs

Special Education

$ 1,537 $ 1,450

# Gross Costs $ 15,885 $ 15,556

# Less: Earned Revenue 17 3

Net Program Costs 15,868 15,553

Total Program Costs

Grand Total Program Costs 

Net Cost of Operations (Notes 12 & 15) 

$ 15,868 $ 15,553

$ 64,817 $ 64,284

$ 64,817 $ 64,284

The accompanying notes are an integral part of these statements.

United States Department of Education

Consolidated Statement of Net Cost

For the Years Ended September 30, 2008 and 2007

(Dollars in Millions)

0

FY 2008 Performance and Accountability Report—U.S. Department of Education 129
FINANCIAL DETAILS

PRINCIPAL FINANCIAL STATEMENTS

Fiscal Year Fiscal Year

2008 2007

Cumulative 

Results of 

Operations

Cumulative 

Results of 

Operations

Unexpended 

Appropriations

Unexpended 

Appropriations

Beginning Balances

1 (a). Beginning Balances - Earmarked Funds $ 39 (0) $ 61 (0)

1 (b). Beginning Balances - All Other Funds

Budgetary Financing Sources:

$ (2,505) $ 52,047 $ (5,063) $ 51,812

4. Appropriations Received

4 (a). Appropriations Received - Earmarked Funds (0) (0) (0) (0)

4 (b). Appropriations Received - All Other Funds (0) $ 72,991 (0) $ 73,921

6. Other Adjustments (rescissions, etc) (0) (0)

6 (a). Other Adjustments (rescissions, etc) - Earmarked Funds (0) (0) (0) (0)

6 (b). Other Adjustments (rescissions, etc) - All Other Funds $ (6) (2,202) (1,090)

7. Appropriations Used (0) (0)

7 (a). Appropriations Used - Earmarked Funds (0) (0) (0) (0)

7 (b). Appropriations Used - All Other Funds 73,330 (73,330) $ 72,596 (72,596)

10Nonexpenditure Financing Sources - Transfers-Out (0) (0)

10 (a). Nonexpenditure Financing Sources - Transfers-Out - Earmarked Funds (0) (0) (0) (0)

10 (b). Nonexpenditure Financing Sources - Transfers-Out - All Other Funds

Other Financing Sources:

(208) (0) (27) (0)

(0)

14. Imputed Financing from Costs Absorbed by Others (0)

14 (a). Imputed Financing from Costs Absorbed by Others - Earmarked Funds (0) (0) (0) (0)

14 (b). Imputed Financing from Costs Absorbed by Others - All Other Funds $ 29 (0) $ 32 (0)

15. Others (0) (0)

15 (a). Others - Earmarked Funds (0) (0) (0) (0)

15 (b). Others - All Other Funds

Total Financing Sources

(12,032) (0) (5,781) (0)

16 (a). Total Financing Sources - Earmarked Funds (0) (0) (0) (0)

16 (b). Total Financing Sources - All Other Funds

Net Cost of Operations

$ 61,113 $ (2,541) $ 66,820 $ 235

(0)

17 (a). Net Cost of Operations - Earmarked Funds $ (22) (0) $ (22) (0)

17 (b). Net Cost of Operations - All Other Funds

Net Change

$ (64,795) (0) $ (64,262) (0)

18 (a). Net Change - Earmarked Funds $ (22) (0) $ (22) (0)

18 (b). Net Change - All Other Funds

19 (a). Ending Balances - Earmarked Funds (Note 11) 

$ (3,682) $ (2,541)

$ 17 (0)

$ 2,558 $ 235

$ 39 (0)

19 (b). Ending Balances - All Other Funds (Note 11) $ (6,187) $ 49,506 $ (2,505) $ 52,047

The accompanying notes are an integral part of these statements.

United States Department of Education

Consolidated Statement of Changes in Net Position

For the Years Ended September 30, 2008 and 2007

(Dollars in Millions)

0

130 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

PRINCIPAL FINANCIAL STATEMENTS

FY 2008 Performance and Accountability Report—U.S. Department of Education 

Fiscal Year Fiscal Year

2008 2007

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary Resources:

Budgetary Budgetary

1. Unobligated balance, brought forward, October 1: $ 5,272 $ 37,111 $ 5,221 $ 46,490

2. Recoveries of prior year Unpaid Obligations 2,097 3,115 1,968 3,043

3. Budgetary Authority:

3A. Appropriations 73,002 153 73,919 2

3B. Borrowing Authority (Note 14) 0 57,743 0 20,037

3D. Spending authority from offsetting collections (gross):

3D1. Earned

3D1a. Collected 1,751 33,570 1,816 37,373

3D1b. Change in Receivables from Federal Sources (1) 0 3 0

3D2. Change in unfilled customer orders

3D2a. Advance Received 4 0 (5) 0

3D2b. Without advance from Federal Sources

3E. Subtotal

0 0

$ 74,756 $ 91,466

(3) (30)

$ 75,730 $ 57,382

6. Permanently not available

7. Total Budgetary Resources(Note 14)

Status of Budgetary Resources:

(2,980) (16,844)

$ 79,145 $ 114,848

(2,119) (19,451)

$ 80,800 $ 87,464

8. Obligations incurred: (Note 14) 

8A. Direct $ 74,742 $ 88,001 $ 75,435 $ 50,353

8B. Reimbursable

8C. Subtotal

96 (0)

$ 74,838 $ 88,001

93 (0)

$ 75,528 $ 50,353

9. Unobligated Balances:

9A. Apportioned

9C. Subtotal

$ 1,540 $ 396

$ 1,540 $ 396

$ 3,093 $ 321

$ 3,093 $ 321

10. Unobligated Balance not available

11. Total Status of Budgetary Resources

Change in Obligated Balance:

2,767 26,451

$ 79,145 $ 114,848

2,179 36,790

$ 80,800 $ 87,464

12. Obligated balance, net

12A. Unpaid obligations, brought forward, October 1 $ 50,712 $ 14,734 $ 50,210 $ 12,953

12B. Uncollected customer payments from Federal Sources, 

 brought forward, October 1

12c. Total, unpaid obligated balance, brought forward, net

(3) (0)

$ 50,709 $ 14,734

(3) (30)

$ 50,207 $ 12,923

13. Obligation Incurred net (+/-) 74,838 88,001 75,528 50,353

14. Gross Outlays (73,578) (58,180) (73,058) (45,529)

16. Recoveries of prior year unpaid obligations, actual (2,097) (3,115) (1,968) (3,043)

17. Change in uncollected customer payments from 

 Federal Sources (+/-) 1 (0) (0) 30

18. Obligated Balance, net, end of period

18A. Unpaid Obligations $ 49,875 $ 41,440 $ 50,712 $ 14,734

18B. Uncollected customer payments from Federal Sources

18C. Total, unpaid obligated balance, net, end of period

(2) (0)

$ 49,873 $ 41,440

(3) (0)

$ 50,709 $ 14,734

Net Outlays

19. Net Outlays:

19A. Gross Outlays $ 73,578 $ 58,180 $ 73,058 $ 45,529

19B. Offsetting collections (1,755) (33,570) (1,811) (37,373)

19C. Distributed Offsetting receipts

20. Net Outlays (Note 14)

(103) (5,750)

$ 71,720 $ 18,860

(173) (4,700)

$ 71,074 $ 3,456

The accompanying notes are an integral part of these statements.

United States Department of Education

Combined Statement of Budgetary Resources

For the Years Ended September 30, 2008 and 2007

(Dollars in Millions)

131
FINANCIAL DETAILS

132 FY 2008 Performance and Accountability Report—U.S. Department of Education 

 

Notes to the Principal Financial Statements 

For the Years Ended September 30, 2008 and 2007 

Note 1. Summary of Significant Accounting Policies 

Reporting Entity 

The U.S. Department of Education (the Department), a Cabinet-level agency of the Executive 

Branch of the U.S. Government, was established by the Congress under the Department of 

Education Organization Act (Public Law 96-88), which became effective on May 4, 1980. The 

Department is responsible, through the execution of its congressionally enacted budget, for 

administering direct loans, guaranteed loans, and grant programs. 

The Department administers the William D. Ford Federal Direct Loan (Direct Loan) Program, 

the Federal Family Education Loan (FFEL) Program, the Federal Pell Grant (Pell Grant) 

Program, and the campus-based student aid programs to help students finance the costs of 

higher education. The Direct Loan Program, added to the Higher Education Act of 1965 (HEA) 

in 1993 by the Student Loan Reform Act of 1993, enables the Department to make loans 

directly to eligible undergraduate and graduate students and their parents through participating 

schools. The FFEL Program, initially authorized by the HEA, operates through state and private 

nonprofit guaranty agencies to provide loan guarantees and interest subsidies on loans made 

by private lenders to eligible students. Under these programs, the loans are made to individuals 

who meet statutorily set eligibility criteria and attend eligible institutions of higher education—

public or private two- and four-year institutions, graduate schools, and vocational training 

schools. Students and their parents, based on eligibility criteria, receive loans regardless of 

income or credit rating. Student borrowers who demonstrate financial need also receive federal 

interest subsidies. 

The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) amended the FFEL 

Program to authorize the Secretary to buy FFEL loans for the 2008-2009 academic year. Within 

the existing FFEL Program, the Department has implemented two activities under this 

temporary loan purchase authority to purchase FFEL loans generally originated between July 1, 

2008 and June 30, 2009. These two activities include: loan purchase commitments where the 

Department purchases loans directly from FFEL lenders, and loan participation purchases 

where the Department purchases participation interests in FFEL loans. 

The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program 

was implemented beginning July 1, 2008. This program, added to the HEA by the College Cost 

Reduction and Access Act (CCRAA), awards annual grants to students who agree to teach in a 

high-need subject area in a public or private elementary or secondary school that serves lowincome students. 

The Federal Pell Grant Program provides need-based grants to low-income undergraduate and 

certain post-baccalaureate students to promote access to postsecondary education. 

Additionally, the Department administers numerous other grant programs and facilities loan 

programs. Grant programs include grants to state and local entities for elementary and 

secondary education; special education and rehabilitative services; educational research and 

improvement; and grants for needs of the disadvantaged. Through the facilities loan programs, 

the Department administers low-interest loans to institutions of higher education for the 

construction and renovation of facilities. 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

FY 2008 Performance and Accountability Report—U.S. Department of Education 133

The Department is organized into 10 reporting organizations that administer the loan and grant 

programs. The financial reporting structure of the Department presents operations based on 

four major reporting groups. The reporting organizations and the major reporting groups are 

shown below. 

Reporting Organizations 

•

•

•

•

•

Federal Student Aid (FSA) 

Office of Elementary and Secondary 

Education (OESE) 

Office of Special Education and 

Rehabilitative Services (OSERS) 

Office of Vocational and Adult 

Education (OVAE) 

Office of Postsecondary Education 

(OPE) 

•

•

•

•

•

Institute of Education Sciences (IES) 

Office of English Language Acquisition 

(OELA) 

Office of Safe and Drug-Free Schools 

(OSDFS) 

Office of Innovation and Improvement 

(OII) 

Office of Management (OM)

Major Reporting Groups 

•

•

Federal Student Aid 

Office of Elementary and Secondary 

Education 

•

•

Office of Special Education and 

Rehabilitative Services 

 Other 

The major reporting group “Other” includes the OVAE, OPE, IES, OELA, OSDFS, OII, and OM 

reporting organizations and Hurricane Education Recovery (HR) activities. (See Notes 10, 12, 

and 17) 

Basis of Accounting and Presentation 

These financial statements have been prepared to report the financial position, net cost of 

operations, changes in net position, and budgetary resources of the U.S. Department of 

Education, as required by the Chief Financial Officers Act of 1990 and the Government 

Management Reform Act of 1994. The financial statements were prepared from the books and 

records of the Department, in accordance with accounting principles generally accepted in the 

United States of America for federal entities, issued by the Federal Accounting Standards 

Advisory Board (FASAB), and the Office of Management and Budget (OMB) Circular No. A-136, 

Financial Reporting Requirements, as revised June 2008. These financial statements are 

different from the financial reports prepared by the Department pursuant to OMB directives that 

are used to monitor and control the Department’s use of budgetary resources. 

The Department’s financial statements should be read with the realization that they are for a 

component of the U.S. Government, a sovereign entity. One implication of this is that the 

liabilities cannot be liquidated without legislation providing resources and legal authority to do 

so. 

The accounting structure of federal agencies is designed to reflect both accrual and budgetary 

accounting transactions. Under the accrual method of accounting, revenues are recognized 

when earned, and expenses are recognized when a liability is incurred, without regard to receipt 

or payment of cash. Budgetary accounting facilitates compliance with legal constraints and 

controls over the use of federal funds. 

Intradepartmental transactions and balances have been eliminated from the consolidated 

financial statements. 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Use of Estimates 

The preparation of the financial statements in accordance with accounting principles generally 

accepted in the United States of America requires management to make assumptions and 

estimates that directly affect the amounts reported in the financial statements. Actual results 

may differ from those estimates. 

The Federal Credit Reform Act of 1990 (Credit Reform Act) underlies the proprietary and 

budgetary accounting treatment of direct and guaranteed loans. The long-term cost to the 

government for direct loans or loan guarantees, other than for general administration of the 

programs, is referred to as “subsidy cost.” Under the Credit Reform Act, subsidy costs for loans 

obligated beginning in FY 1992 are estimated at the net present value of projected lifetime costs 

in the year the loan is obligated. Subsidy costs are revalued annually through the re-estimate 

process. 

Estimates for credit program receivables and liabilities contain assumptions that have a 

significant impact on the financial statements. The primary components of this assumption set 

include, but are not limited to, collections (including loan consolidations), repayments, default 

rates, prevailing interest rates and loan volume. Actual loan volume, interest rates, cash flows 

and other critical components used in the estimation process may differ significantly from the 

assumptions made at the time the financial statements are prepared. Minor adjustments to any 

of these components may create significant changes to the estimate. 

The Department estimates all future cash flows associated with the Direct Loan, FFEL, and 

TEACH Grant Programs. Projected cash flows are used to develop subsidy estimates. Subsidy 

cost can be positive or negative; negative subsidies occur when expected program inflows of 

cash (e.g., repayments and fees) exceed expected outflows. Subsidy cost is recorded as the 

initial amount of the loan guarantee liability when guarantees are made or as a valuation 

allowance to government-owned loans and interest receivable (i.e., direct and defaulted 

guaranteed loans). 

The Department uses a computerized cash flow projection Student Loan Model to calculate 

subsidy estimates for the Direct Loan, FFEL, and TEACH Grant Programs. Each year, the 

Department re-evaluates the estimation methods related to changing conditions. The 

Department uses a probabilistic technique to forecast interest rates based on different methods 

to establish the relationship between an event’s occurrence and the magnitude of its probability. 

The Department’s approach estimates interest rates under numerous scenarios and then bases 

interest rates on the average interest rates weighted by the assumed probability of each 

scenario occurring. Probabilistic methodology facilitates the modeling of the Department’s 

unique loan programs. 

For each program, cash flows are projected over the life of the loans, aggregated by loan type, 

cohort year, and risk category. The loan’s cohort year represents the year a direct loan was 

obligated or a loan was guaranteed, regardless of the timing of disbursements. Risk categories 

include two-year colleges, freshmen and sophomores at four-year colleges, juniors and seniors 

at four-year colleges, graduate schools, and proprietary (for-profit) schools. 

Estimates reflected in these statements were prepared using assumptions developed for the FY 

2009 Mid-Session Review, a government-wide exercise required annually by OMB. These 

estimates are based on the most current information available to the Department at the time the 

financial statements were prepared. Assumptions and their impact are updated after the MidSession Review to account for significant subsequent changes in activity. Department 

management has a process to review these estimates in the context of subsequent changes in 

activity and assumptions, and to reflect the impact of changes, as appropriate. 

134 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

The Department recognizes that cash flow projections and the sensitivity of changes in 

assumptions can have a significant impact on estimates. Management has attempted to 

mitigate fluctuations in the estimates by using trend analysis to project future cash flows. 

Changes in assumptions could significantly affect the amounts reflected in these statements. 

For example, a minimal change in the projected long-term interest rate charged to borrowers 

could change the current subsidy re-estimate by a significant amount. (See Note 6) 

Budget Authority 

Budget authority is the authorization provided by law for the Department to incur financial 

obligations that will result in outlays. The Department’s budgetary resources include (1) 

unobligated balances of resources from prior years, (2) recoveries of prior-year obligations, and 

(3) new resources, which include appropriations, authority to borrow from the U.S. Department 

of the Treasury (Treasury), and spending authority from collections. 

Unobligated balances associated with resources expiring at the end of the fiscal year remain 

available for five years after expiration only for upward adjustments of prior year obligations, 

after which they are canceled and may not be used. Unobligated balances of resources that 

have not expired at year-end are available for new obligations placed against them, as well as 

upward adjustments of prior year obligations. 

Authority to borrow from Treasury provides most of the funding for disbursements made under 

the Direct Loan Program, Loan Purchase Commitment Authority, Loan Participation Purchase 

Authority, and TEACH Grant Program. Subsidy and administrative costs of the programs are 

funded by appropriations. Budgetary resources from collections are used primarily to repay the 

Department’s debt to Treasury. Major sources of collections include (1) principal and interest 

collections from borrowers, (2) related fees, and (3) interest from Treasury on balances in 

certain credit financing accounts that make and administer loans and loan guarantees. 

Borrowing authority is an indefinite budgetary resource authorized under the Credit Reform Act. 

This resource, when realized, finances the unsubsidized portion of the Direct Loan Program, 

Loan Purchase Commitment Authority, Loan Participation Purchase Authority, and TEACH 

Grant Program. In addition, borrowing authority is requested in advance of expected collections 

to cover negative subsidy cost. Treasury prescribes the terms and conditions of borrowing 

authority and lends to the credit financing account amounts as appropriate. Amounts borrowed, 

but not yet disbursed, are included in uninvested funds and earn interest. Treasury uses the 

same weighted average interest rates for both the interest charged on borrowed funds and the 

interest earned on uninvested funds. The Department may carry forward borrowing authority to 

future fiscal years provided that cohorts are disbursing loans. All borrowings from Treasury are 

effective on October 1 of the current fiscal year, regardless of when the Department borrowed 

the funds, except for amounts borrowed to make annual interest payments. 

Assets 

Assets are classified as either entity or non-entity assets. Entity assets are those that the 

Department has authority to use for its operations. Non-entity assets are those held by the 

Department but not available for use in its operations. The Department combines its entity and 

non-entity assets on the face of the Balance Sheet and discloses its non-entity assets in the 

notes. (See Note 2) 

Fund Balance with Treasury 

The Fund Balance with Treasury includes general, revolving, trust, and other funds available to 

pay current liabilities and finance authorized purchases, as well as funds restricted until future 

FY 2008 Performance and Accountability Report—U.S. Department of Education 135
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

appropriations are received. Treasury processes cash receipts and cash disbursements for the 

Department. The Department’s records are reconciled with those of Treasury. 

A portion of the general funds is funded in advance by multi-year appropriations for obligations 

anticipated during the current and future fiscal years. Revolving funds conduct continuing 

cycles of business-like activity and do not require annual appropriations. Their fund balance is 

derived from borrowings, as well as collections from the public and other federal agencies. 

Trust funds generally consist of donations for the hurricane relief activities. Other funds, which 

are non-budgetary, primarily consist of deposit funds and clearing accounts. 

Available unobligated balances represent amounts that are apportioned for obligation in the 

current fiscal year. Unavailable unobligated balances represent amounts that are not 

apportioned for obligation during the current fiscal year and expired appropriations no longer 

available to incur new obligations. Obligated balances not yet disbursed include undelivered 

orders and unpaid expended authority. (See Note 3) 

Accounts Receivable 

Accounts Receivable are amounts due to the Department from the public and other federal 

agencies. Receivables from the public result from overpayments to recipients of grants and 

other financial assistance programs, and disputed costs resulting from audits of educational 

assistance programs. Amounts due from federal agencies result from reimbursable agreements 

entered into by the Department with other agencies for various goods and services. Accounts 

receivable are reduced to net realizable value by an allowance for uncollectible amounts. The 

estimate of an allowance for loss on uncollectible accounts is based on the Department’s 

experience in the collection of receivables and an analysis of the outstanding balances. (See 

Note 4) 

Cash and Other Monetary Assets 

Cash and Other Monetary Assets consist of guaranty agency reserves that represent the federal 

government’s interest in the net assets of state and nonprofit FFEL Program guaranty agencies. 

Guaranty agency reserves are classified as non-entity assets with the public (See Notes 2 and 

5) and are offset by a corresponding liability due to Treasury. Guaranty agency reserves 

include initial federal start-up funds, receipts of federal reinsurance payments, insurance 

premiums, guaranty agency share of collections on defaulted loans, investment income, 

administrative cost allowances, and other assets. 

Section 422A of the HEA required FFEL guaranty agencies to establish a Federal Student Loan 

Reserve Fund (Federal Fund) and an Operating Fund by December 6, 1998. The Federal Fund 

and the non-liquid assets developed or purchased by a guaranty agency, in whole or in part with 

federal funds, are the property of the United States and reflected in the Budget of the United 

States Government. However, such ownership by the federal government is independent of the 

actual control of the assets. Payments to the Department from guaranty agency Federal Funds, 

which increase Fund Balance with Treasury, are remitted to Treasury at fiscal year-end. 

The Department disburses funds to a guaranty agency; a guaranty agency, through its Federal 

Fund, pays lender claims and default aversion fees. The Operating Fund is the property of the 

guaranty agency except for amounts an agency borrows from the Federal Fund (as authorized 

under Section 422A of the HEA). The Operating Fund is used by the guaranty agency to fulfill 

responsibilities that include repaying money borrowed from the Federal Fund, and performing 

default aversion and collection activities. 

136 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Credit Program Receivables, Net and Liabilities for Loan Guarantees 

The financial statements reflect the Department’s estimate of the long-term cost of direct and 

guaranteed loans in accordance with the Credit Reform Act. Loans and interest receivable are 

valued at their gross amounts less an allowance for the present value of amounts not expected 

to be recovered and thus having to be subsidized—called “allowance for subsidy.” The 

difference is the present value of the cash flows to and from the Department that are expected 

from the receivables over their projected lives. Similarly, liabilities for loan guarantees are 

valued at the present value of the cash outflows from the Department less the present value of 

related inflows. The estimated present value of net long-term cash outflows of the Department 

for subsidized costs is net of recoveries, interest supplements, and offsetting fees. The 

Department records all credit program loans and loan guarantees at their present values. 

Credit program receivables for the Loan Purchase Commitment Authority and Loan Participation 

Purchase Authority include the present value of future cash flows related to the participation 

agreements or purchased loans. Subsidy is transferred, which may be prior to purchasing 

loans, and is recognized as subsidy expense in the Statement of Net Cost. The cash flows of 

these authorities also include inflows and outflows associated with the underlying or purchased 

loans and other related activities including any positive or negative subsidy transfers. 

Components of subsidy costs for loans and guarantees include defaults (net of recoveries), 

contractual payments to third-party private loan collectors who receive a set percentage of 

amounts collected, and, as an offset, origination and other fees collected. For direct loans, the 

difference between interest rates incurred by the Department on its borrowings from Treasury 

and interest rates charged to target groups is also subsidized (or may provide an offset to 

subsidy if the Department’s rate is less). The corresponding interest subsidy in loan guarantee 

programs is the payment of interest supplements to third-party lenders in order to pay down the 

interest rates on loans made by those lenders. Subsidy costs are recognized when direct loans 

or guaranteed loans are disbursed to borrowers and re-estimated each year. (See Note 6) 

General Property, Plant and Equipment 

The Department capitalizes single items of property and equipment with a cost of $50,000 or 

more that have an estimated useful life greater than two years. Additionally, the Department 

capitalizes bulk purchases of property and equipment with an aggregate cost of $500,000 or 

more. A bulk purchase is defined as the purchase of like items related to a specific project or 

the purchase of like items occurring within the same fiscal year that have an estimated useful 

life greater than two years. Property and equipment are depreciated over their estimated useful 

lives using the straight-line method of depreciation. Internal Use Software meeting the above 

cost and useful life criteria is also capitalized. Internal Use Software is either purchased off the 

shelf, internally developed, or contractor developed solely to meet the Department’s needs. 

(See Note 7) 

The Department adopted the following useful lives for its major classes of depreciable property 

and equipment: 

Depreciable Property and Equipment 

(In Years)

Major Class Useful Life 

Information Technology, Internal Use Software and Telecommunications Equipment 3 

Furniture and Fixtures 5 

FY 2008 Performance and Accountability Report—U.S. Department of Education 137
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Liabilities 

Liabilities represent actual and estimated amounts to be paid as a result of transactions or 

events that have already occurred. However, no liabilities can be paid by the Department 

without budget authority. Liabilities for which an appropriation has not been enacted are 

classified as liabilities not covered by budgetary resources, and there is no certainty the 

appropriation will be enacted. The government acting in its sovereign capacity can abrogate 

liabilities that arise from activities other than contracts. FFEL Program and Direct Loan Program 

liabilities are entitlements covered by permanent indefinite budget authority. (See Note 9) 

Debt 

The Department borrows to provide funding for the Direct Loan Program, Loan Purchase 

Commitment Authority, Loan Participation Purchase Authority, and TEACH Grant Program. The 

liability to Treasury from borrowings represents unpaid principal at year-end. The Department 

repays the principal based on available fund balances. Interest on the debt is calculated at 

fiscal year-end using rates set by Treasury, with such rates generally fixed based on the rate for 

10-year Treasury securities. In addition, the Federal Financing Bank (FFB) holds bonds issued 

by the Department on behalf of the Historically Black Colleges and Universities Capital 

Financing Program. The Department reports the corresponding liability for full payment of 

principal and accrued interest as a payable to the FFB. (See Note 8) 

Accrued Grant Liability 

Disbursements of grant funds are recognized as expenses at the time of disbursement. 

However, some grant recipients incur expenditures prior to initiating a request for disbursement 

based on the nature of the expenditures. A liability is accrued by the Department for 

expenditures incurred by grantees prior to their receiving grant funds to cover the expenditures. 

The amount is estimated using statistical sampling techniques. (See Note 10) 

Net Position 

Net position consists of unexpended appropriations and cumulative results of operations. 

Unexpended appropriations include undelivered orders and unobligated balances, except for 

federal credit financing and liquidating funds, and trust funds. Cumulative results of operations 

represent the net difference since inception between (1) expenses and (2) revenues and 

financing sources. (See Note 11) 

Earmarked Funds 

Earmarked funds are recorded as specially identified resources, often supplemented by other 

financing sources, which remain available over time. These funds are required by statute to be 

used for designated recipients. The Department’s earmarked funds are primarily related to the 

2005 Hurricane Relief efforts. (See Note 17) 

Personnel Compensation and Other Employee Benefits 

Annual, Sick and Other Leave. The liability for annual leave, compensatory time off, and other 

vested leave is accrued when earned and reduced when taken. Each year, the accrued annual 

leave account balance is adjusted to reflect current pay rates. Annual leave earned but not 

taken, within established limits, is funded from future financing sources. Sick leave and other 

types of non-vested leave are expensed as taken. 

138 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Retirement Plans and Other Retirement Benefits. Employees participate in either the Civil 

Service Retirement System (CSRS), a defined benefit plan, or in the Federal Employees 

Retirement System (FERS), a defined benefit and contribution plan. For CSRS employees, the 

Department contributes a fixed percentage of pay. 

FERS consists of Social Security, a basic annuity plan, and the Thrift Savings Plan. The 

Department and the employee contribute to Social Security and the basic annuity plan at rates 

prescribed by law. In addition, the Department is required to contribute to the Thrift Savings 

Plan a minimum of 1 percent per year of the basic pay of employees covered by this system 

and to match voluntary employee contributions up to 3 percent of the employee’s basic pay, and 

one-half of contributions between 3 percent and 5 percent of basic pay. For FERS employees, 

the Department also contributes the employer’s share of Medicare. 

Contributions for CSRS, FERS and other retirement benefits are insufficient to fully fund the 

programs, and are subsidized by the Office of Personnel Management (OPM). The Department 

imputes its share of the OPM subsidy, using cost factors provided by OPM, and reports the full 

cost of the programs related to its employees. 

Federal Employees’ Compensation Act. The Federal Employees’ Compensation Act (FECA) 

provides income and medical cost protection to covered federal civilian employees injured on 

the job, to employees who have incurred work-related occupational diseases, and to 

beneficiaries of employees whose deaths are attributable to job-related injuries or occupational 

diseases. The FECA Program is administered by the U.S. Department of Labor (DOL), which 

pays valid claims and subsequently seeks reimbursement from the Department for these paid 

claims. 

The FECA liability consists of two components. The first component is based on actual claims 

paid and recognized by the Department as a liability. Generally the Department reimburses 

DOL within two to three years once funds are appropriated. The second component is the 

estimated liability for future benefit payments based on unforeseen events such as death, 

disability, medical and miscellaneous costs. DOL determines this component annually, as of 

September 30, using a method that considers historical benefit payment patterns, wage inflation 

factors, medical inflation factors, and other variables. The projected annual benefit payments 

are discounted to present value using OMB economic assumptions for 10-year Treasury notes 

and bonds. To provide for the effects of inflation on the liability, wage inflation factors (i.e., costof-living adjustments) and medical inflation factors (i.e., consumer price index medical 

adjustments) are applied to the calculation of projected future benefit payments. These factors 

are also used to adjust historical benefit payments and to adjust future benefit payments to 

current-year constant dollars. A discounting formula is also used to recognize the timing of 

benefit payments as 13 payments per year instead of one lump sum payment per year. 

The estimated projections are evaluated by DOL to ensure that the resulting projections are 

reliable. The analysis is based on four tests: (1) a sensitivity analysis of the model to economic 

assumptions, (2) a comparison of the percentage change in the liability amount by agency to the 

percentage change in the actual incremental payments, (3) a comparison of the incremental 

paid losses per case (a measure of case-severity) in charge-back year 2008 to the average 

pattern observed during the most recent three charge-back years, and (4) a comparison of the 

estimated liability per case in the 2008 projection to the average pattern for the projections of 

the most recent three years. 

Intragovernmental Transactions 

The Department’s financial activities interact with and are dependent upon the financial activities 

of the centralized management functions of the federal government. Due to financial regulation 

FY 2008 Performance and Accountability Report—U.S. Department of Education 139
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

and management control by OMB and Treasury, operations may not be conducted and financial 

positions may not be reported as they would if the Department were a separate, unrelated 

entity. 

Allocation Transfers 

The Department is a party to allocation transfers with the Appalachian Regional Commission as 

a receiving (child) entity. Allocation transfers are legal delegations by one department of its 

authority to obligate budget authority and outlay funds to another department. Treasury 

provides a separate fund account as a subset of the parent fund account for tracking and 

reporting purposes. All allocation transfers of balances are credited to this account, and 

subsequent obligations and outlays incurred by the child are charged to this allocation account 

as the child executes the delegated activity on behalf of the parent entity. All financial activity 

related to these allocation transfers is reported in the financial statements of the Appalachian 

Regional Commission, from which the underlying legislative authority, appropriations, and 

budget apportionments are derived. During FY 2008, the Department returned all unused funds 

to the Appalachian Regional Commission. 

140 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 2. Non-Entity Assets 

As of September 30, 2008 and 2007, non-entity assets consisted of the following: 

Non-Entity Assets 

(Dollars in Millions) 

2008 2007

Non-Entity Assets 

Intragovernmental 

Fund Balance with Treasury $ 28 $ 33 

Total Intragovernmental 28 33 

 With the Public 

Cash and Other Monetary Assets 1,663 1,103 

Accounts Receivable, Net 20 12 

Credit Program Receivables, Net 186 188 

Total With the Public 1,869 1,303 

Total Non-Entity Assets 1,897 1,336 

Entity Assets 229,676 213,302 

Total Assets $ 231,573 $ 214,638 

Non-entity intragovernmental assets primarily consist of deposit fund balances. Non-entity 

assets with the public primarily consist of guaranty agency reserves and Perkins Program Loan 

Receivables. (See Notes 5 and 6)

Note 3. Fund Balance with Treasury

The Fund Balance with Treasury, by fund type, as of September 30, 2008 and 2007, consisted 

of the following:

Fund Balances 

(Dollars in Millions)

2008 2007 

General Funds $ 52,487 $ 54,836 

Revolving Funds 42,357 42,625 

Trust Funds 18 40 

Special Funds 9 - 

Other Funds 28 31 

Fund Balance with Treasury $ 94,899 $ 97,532 

FY 2008 Performance and Accountability Report—U.S. Department of Education 141
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

The Status of Fund Balance with Treasury, as of September 30, 2008 and 2007, consisted of 

the following: 

Status of Fund Balance with Treasury 

(Dollars in Millions)

2008 2007 

Unobligated Balance 

Available $ 1,936 $ 3,414 

Unavailable 27,555 37,866 

Obligated Balance, Not Yet Disbursed 65,380 56,221 

Non-Budgetary Fund Balance with Treasury 28 31 

Fund Balance with Treasury $ 94,899 $ 97,532 

Note 4. Accounts Receivable 

Accounts Receivable, as of September 30, 2008 and 2007, consisted of the following: 

Accounts Receivable 

(Dollars in Millions)

2008 

Gross 

Receivables Allowance Net Receivables 

Intragovernmental $ 2 $ - $ 2 

With the Public 278 (178) 100 

Accounts Receivable $ 280 $ (178) $ 102 

2007 

Gross 

Receivables Allowance Net Receivables 

Intragovernmental $ 4 $ - $ 4 

With the Public 215 (166) 49 

Accounts Receivable $ 219 $ (166) $ 53 

142 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 5. Cash and Other Monetary Assets 

Cash and Other Monetary Assets consist of reserves held in the FFEL Guaranty Agency 

Federal Funds. Changes in the valuation of the Federal Fund increase or decrease the 

Department’s Cash and Other Monetary Assets with a corresponding change in the Payable to 

Treasury. The table below presents Cash and Other Monetary Assets for the years ended 

September 30, 2008 and 2007. 

Cash and Other Monetary Assets 

(Dollars in Millions)

2008 2007 

Beginning Balance, Cash and Other Monetary Assets $ 1,103 $ 566 

Valuation Increase in Guaranty Agency Federal Funds 722 793 

Less: Collections from Guaranty Agency Federal Funds 

Statutory Recall Amounts Collected from GAs - 82 

Excess Collections 162 174

Collections Remitted to Treasury 162 256

Ending Balance, Cash and Other Monetary Assets $ 1,663 $ 1,103 

The $560 million net increase in the Federal Fund from FY 2007 to FY 2008 reflects the impact 

of guaranty agencies’ ongoing operations. During FY 2008, $162 million was remitted to the 

Department by a guaranty agency whose agreement with the Department requires the agency 

to remit funds in excess of agreed-upon working capital levels. Remitted funds were returned to 

Treasury. 

Note 6. Credit Programs for Higher Education

William D. Ford Federal Direct Loan Program. The federal government makes loans directly 

to students and parents through participating institutions of higher education under the William 

D. Ford Federal Direct Loan program, referred to as the Direct Loan Program. Direct loans are 

originated and serviced through contracts with private vendors. 

The Department disbursed approximately $21.1 billion in Direct Loans to eligible borrowers in 

FY 2008 and approximately $15.7 billion in FY 2007. Loans typically are disbursed in multiple 

installments over an academic period; as a result, loan disbursements for an origination cohort 

year often cross fiscal years. Half of all loan volume is obligated in the fourth quarter of a fiscal 

year. Loan cohorts disburse over two years. Regardless of the fiscal year in which they occur, 

disbursements are tracked by cohort as determined by the date of obligation rather than 

disbursement. 

Approximately 10 percent of Direct Loan obligations made in an individual fiscal year are never 

disbursed. Loan obligations are established at a summary level based on estimates of schools’ 

receipt of aid applications. The loan obligation may occur before a student has been accepted 

by a school or begins classes. For Direct Loans obligated in the 2008 cohort, an estimated $3.2 

billion will never be disbursed. Eligible schools may originate direct loans through a cash 

advance from the Department or by advancing their own funds in anticipation of reimbursement 

from the Department. 

The Department accrues interest receivable and records interest revenue on performing Direct 

Loans and, given the Department’s substantial collection rates, on defaulted Direct Loans. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 143
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Federal Family Education Loan Program. Prior to FY 2008, the FFEL Program included only 

private lender loans to students and parents insured against default by the federal government. 

Nonprofit guaranty agencies act as intermediaries in administering the guarantees. In FY 2008, 

the FFEL Program also includes approximately $5.1 billion in direct federal assets. 

Beginning with FFEL loans first disbursed on or after October 1, 1993, FFEL lender financial 

institutions became responsible for 2 percent of the cost of each default. Guaranty agencies 

also began paying a portion of the cost (in most cases, 5 percent) of each defaulted loan from 

federal reserves they hold in trust. FFEL lenders receive statutorily set federal interest and 

special allowance subsidies. Guaranty agencies receive fee payments as set by statute. In 

most cases, loan terms and conditions under the Direct Loan and FFEL programs are identical. 

The temporary loan purchase authority was added to the FFEL Program by ECASLA, effective 

July 1, 2008 through September 30, 2009. The Department has implemented two activities 

under this authority for loans originated in academic year 2008-2009: loan purchase 

commitments where the Department purchases loans directly from FFEL lenders, and loan 

participations where the Department purchases participation interests in FFEL loans. A credit 

program receivable is established for loans purchased directly or through a participation 

interest. 

In loan participation transactions, lenders transfer to a custodian title of FFEL loans on which at 

least one disbursement has been made. The custodian sells financial certificates to the 

Department at the par value of these loans and remits the proceeds to lenders. Certificates 

bear an interest rate of the 91-day commercial paper rate plus 50 basis points, reset quarterly, 

and must be redeemed by September 30, 2009. Funds to redeem certificates may be obtained 

by selling the underlying loans to the Department. 

The estimated FFEL liability for loan guarantees is reported as the present value of estimated 

net cash outflows. Defaulted FFEL loans are reported net of an allowance for subsidy 

computed using net present value methodology, including defaults, collections, and loan 

cancellations. The same methodology is used to estimate the allowance on Direct Loan 

receivables. 

As of September 30, 2008 and 2007, total principal balances outstanding of guaranteed loans 

held by lenders were approximately $415 billion and $363 billion, respectively. As of September 

30, 2008 and 2007, the estimated maximum government exposure on outstanding guaranteed 

loans held by lenders was approximately $405 billion and $359 billion, respectively. Of the 

insured amount, the Department would pay a smaller amount to the guaranty agencies, based 

on the appropriate reinsurance rates, which range from 100 to 95 percent. Any remaining 

insurance not paid as reinsurance would be paid to lenders by the guaranty agencies from their 

Federal Fund. Payments by guaranty agencies do not reduce government exposure because 

they are made from the Federal Fund administered by the agencies but owned by the federal 

government. 

Approximately 13 percent of guaranteed loan commitments made in an individual fiscal year are 

never disbursed due to the nature of the loan commitment process. For guaranteed loans 

committed in the 2008 cohort, an estimated $9.5 billion will never be disbursed. 

Guaranteed loans that default are initially turned over to guaranty agencies for collection, and 

interest receivable is accrued and recorded on the loans as the collection rate is substantial. 

After approximately four years, defaulted guaranteed loans not in repayment are turned over to 

the Department for collection. Accrued interest on the subrogated loan is calculated, but only 

realized upon collection. 

144 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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Federal Perkins Loan Program. The Federal Perkins Loan Program is a campus-based 

program providing financial assistance to eligible postsecondary school students. In some 

statutorily defined cases, funds are provided to reimburse schools for loan cancellations. For 

defaulted loans assigned to the Department, collections of principal, interest, and fees, net of 

amounts paid by the Department to cover contract collection costs, are transferred to Treasury 

annually. 

TEACH Grant Program. Beginning July 1, 2008, the TEACH Grant Program awards annual 

grants up to $4,000 to eligible undergraduate and graduate students agreeing to serve as fulltime mathematics, science, foreign language, bilingual education, special education, or reading 

teachers at high-need schools for four years within eight years of graduation. For students 

failing to fulfill the service requirement, grants are converted to Direct Unsubsidized Stafford 

Loans. Because grants could be converted to loans, for budget and accounting purposes the 

program is operated under the requirements of the Credit Reform Act. 

Facilities Loan Programs. The Department administers the College Housing and Academic 

Facilities Loan Program, the College Housing Loan Program, and the Higher Education 

Facilities Loan Program. From 1952 to 1993, these programs provided low-interest financing to 

institutions of higher education for the construction, reconstruction, and renovation of housing, 

academic, and other educational facilities. 

The Department also administers the Historically Black Colleges and Universities (HBCU) 

Capital Financing Program. Since 1992, this program has given HBCUs access to financing for 

the repair, renovation, and, in exceptional circumstances, the construction or acquisition of 

facilities, equipment, and infrastructure through federally insured bonds. The Department has 

authorized a designated bonding authority to make the loans to eligible institutions, charge 

interest, and collect principal and interest payments. In compliance with statute, the bonding 

authority maintains an escrow account to pay the principal and interest on bonds for loans in 

default. 

In FY 2006, Congress passed the Emergency Supplemental Appropriations Act for Defense, the 

Global War on Terror, and Hurricane Recovery (P.L. 109-234). Section 2601 of this Act created 

a new sub-program within the HBCU Capital Financing Program under the HEA that would 

provide loans on advantageous terms to HBCUs affected by Hurricanes Rita and Katrina. 

Under this sub-program, the interest rate charged on loans is capped at 1 percent, fees 

associated with the program are less than those associated with the rest of the program, and 

institutions are not required to participate in the program’s pooled escrow account. In addition, 

principal and interest payments on loans already made to affected HBCUs can be deferred for 

up to 3 years, with the Department making any payments that come due during this period. The 

statute gives the Department authority to make loans under the new sub-program in excess of 

the overall program loan caps. The Department has made four loans under the new subprogram and has assumed one default and no recoveries in making initial subsidy estimates. In 

light of these forecast assumptions and the expected cash flows for the new sub-program, 

OMB’s Credit Subsidy Calculator estimates the subsidy rate for the sub-program to be 76 

percent. The current subsidy estimate for the sub-program is $304 million on a loan volume of 

$400 million. 

Loan Consolidations 

Borrowers may prepay existing loans without penalty through a new consolidation loan. Under 

the Credit Reform Act and requirements provided by OMB Circular No. A-11, Preparation, 

Submission, and Execution of the Budget, the retirement of Direct Loans being consolidated is 

considered a receipt of principal and interest. This receipt is offset by the disbursement related 

to the newly created consolidation loan. Underlying direct or guaranteed loans, performing or 

FY 2008 Performance and Accountability Report—U.S. Department of Education 145
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NOTES TO PRINCIPAL FINANCIAL STATEMENTS

nonperforming, are paid off in their original cohort; new consolidation loans are originated in the 

cohort in which the activity occurs. Consolidation activity is taken into consideration in 

establishing subsidy rates for defaults and other cash flows. The cost of new consolidations is 

included in subsidy expense for the current-year cohort; the effect of prepayments on existing 

loans could contribute to re-estimates of prior cohort costs. The loan liability and net 

receivables include estimates of future prepayments of existing loans through consolidations; 

they do not reflect costs associated with anticipated future consolidation loans. 

Student loan consolidation disbursements for FY 2008 were $15 billion ($9 billion in FFEL and 

$6 billion in Direct Loans), a 70% reduction from FY 2007. This lower rate of consolidations is a 

continuation of the trend identified in FY 2007, which was 45% lower than FY 2006. This trend 

exists due to a number of technical, legislative and economic factors. In the student loan 

programs a borrower is generally limited to a one-time consolidation; the high level of 

consolidations between FY 2002 and FY 2006, $280 billion, significantly reduced the existing 

pool of loans eligible for consolidation to generally those students currently in school. Recent 

legislative changes, particularly the establishment of fixed interest rates on new loans and the 

reduction of guaranteed lender returns, have significantly reduced both borrowers’ financial 

benefits from consolidations and lenders’ willingness to market consolidations through lower 

interest rates or other financial incentives. In FY 2008, economic conditions restricted the 

availability of capital, further reducing consolidation activity. 

FY 2008 Modification 

The recorded subsidy cost of a loan is based on a set of assumed future cash flows. 

Government actions that change these assumed future cash flows change subsidy cost and are 

recorded as loan modifications. Loan modifications are recognized under the same accounting 

principle as subsidy re-estimates. Modification adjustment transfers are required to adjust for 

the difference between current discount rates used to calculate modification costs and the 

discount rates used to calculate cohort interest expense and revenue. Separate amounts are 

calculated for modification costs and modification adjustment transfers. 

The CCRAA included a number of provisions affecting the cost of existing loans. New incomebased repayment and public service loan forgiveness programs were created; income-based 

repayment is available to existing borrowers in both FFEL and Direct Loans, while public service 

loan forgiveness is available to existing Direct Loan borrowers. (Existing FFEL borrowers may 

consolidate into Direct Loans to obtain the benefit.) The Act also made retroactive changes to 

loan deferment provisions for certain military personnel. 

The Act also eliminated the provision under which FFEL lenders designated as “exceptional 

performers” received a higher insurance rate on defaulted loans, reduced FFEL guaranty 

agencies’ account maintenance fees, and lowered the percentage guaranty agencies may retain 

on collections of certain defaulted loans. 

Loan modification savings of $2.5 billion were recorded in the FFEL Program and $4.1 billion in 

modification costs were recorded in the Direct Loan Program. The FFEL Program also 

recognized a net modification adjustment transfer saving of $30 million and the Direct Loan 

Program recognized a net savings of $9 million. 

146 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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Credit Program Receivables

Credit Program Receivables as of September 30, 2008 and 2007, consisted of the following:

Credit Program Receivables

(Dollars in Millions)

2008 2007 

Direct Loan Program Loan Receivables, Net $ 109,850 $ 99,002 

FFEL Program 

FFEL Guaranteed Loan Program, Net (Pre-1992) 3,591 4,036 

FFEL Program (Post-1991): 

FFEL Guaranteed Loan Program, Net 15,624 12,526 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment, Net 64 - 

Loan Participation Purchase, Net 5,230 - 

Federal Perkins Program Loan Receivables, Net 186 188 

TEACH Grant Program Receivables, Net 1 - 

Facilities Loan Programs Loan Receivables, Net 179 152 

Credit Program Receivables, Net $ 134,725 $ 115,904 

William D. Ford Federal Direct Loan Program. The following schedule summarizes the 

principal and related interest receivables, net of the allowance for subsidy. 

Direct Loan Program Loan Receivables, Net 

(Dollars in Millions)

 2008 2007 

Principal Receivable $ 117,610 $ 102,440 

Interest Receivable 5,983 4,807 

Receivables 123,593 107,247 

Less: Allowance for Subsidy 13,743 8,245 

Direct Loan Program Loan Receivables, Net $ 109,850 $ 99,002 

Of the $123.6 billion in receivables as of September 30, 2008, $10.3 billion in loan principal 

were in default, compared to $9.3 billion a year earlier. Defaulted Direct Loans are held in the 

Department’s Borrower Services Collections Group. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 147
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148 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Federal Family Education Loan Program. The following schedule summarizes the principal 

and related interest receivables, net of the allowance for subsidy. 

FFEL Program Loan Receivables, Net 

(Dollars in Millions)

2008 2007 

FFEL Guaranteed Loan Program (Pre-1992)

Principal Receivable $ 7,587 $ 8,208 

Interest Receivable 182 224 

Receivables 7,769 8,432 

Less: Allowance for Subsidy 4,178 4,396 

FFEL Guaranteed Loan Program Receivables, Net (Pre-1992) $ 3,591 $ 4,036 

FFEL Program (Post-1991)

Principal Receivable 

FFEL Guaranteed Loan Program $ 17,641 $ 13,324 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment 59 - 

Loan Participation Purchase 5,036 - 

Interest Receivable 

FFEL Guaranteed Loan Program 2,143 1,957 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment - - 

Loan Participation Purchase 11 - 

Receivables 24,890 15,281 

Less: Allowance for Subsidy 

FFEL Guaranteed Loan Program 4,160 2,755 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment (5) - 

Loan Participation Purchase (183) - 

FFEL Guaranteed Loan Program, Net 15,624 12,526 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment, Net 64 - 

Loan Participation Purchase, Net 5,230 - 

FFEL Program Loan Receivables, Net $ 24,509 $ 16,562 

All loans under the temporary loan purchase authority are federal assets; the loan receivable 

represents all outstanding loans. Loan participation interests were first purchased by the 

Department in August 2008. No participation interests were redeemed in FY 2008. 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Federal Perkins Loan Program. At September 30, 2008 and 2007, loans receivable, net of an 

allowance for loss, were $186 million and $188 million, respectively. These loans are valued at 

historical cost.

TEACH Grant Program. At September 30, 2008, loans receivable, net of an allowance for 

loss, was $1 million. The TEACH Grant Program was established in FY 2008. 

Facilities Loan Programs 

Facilities Loan Programs Loan Receivables 

(Dollars in Millions)

2008 2007 

Principal Receivable $ 553 $ 553 

Interest Receivable 6 6 

Receivables 559 559 

Less: Allowance for Subsidy 380 407 

Facilities Loan Programs Loan Receivables, Net $ 179 $ 152 

FY 2008 Performance and Accountability Report—U.S. Department of Education 149
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Reconciliation of Allowance for Subsidy and Liability for Loan Guarantees 

William D. Ford Federal Direct Loan Program. The following schedule provides a 

reconciliation between the beginning and ending balances of the allowance for subsidy for the 

Direct Loan Program: 

Direct Loan Program Reconciliation of Allowance for Subsidy 

(Dollars in Millions) 

2008 2007 

Beginning Balance, Allowance for Subsidy $ 8,245 $ 8,405 

Components of Subsidy Transfers 

Interest Rate Differential (1,540) (846) 

Defaults, Net of Recoveries 454 422 

Fees (487) (398) 

Other 1,498 1,117 

Current Year Subsidy Transfers (75) 295 

Components of Subsidy Re-estimates 

Interest Rate Re-estimates1 222 (311) 

Technical and Default Re-estimates 946 (483) 

Subsidy Re-estimates 1,168 (794) 

Components of Loan Modifications 

Loan Modification Costs 4,143 - 

Modification Adjustment Transfers (9) - 

Loan Modifications 4,134 - 

Activity 

Fee Collections 482 448 

Loan Cancellations2 (240) (154) 

Subsidy Allowance Amortization 456 435 

Other (427) (390) 

Total Activity 271 339 

Ending Balance, Allowance for Subsidy $ 13,743 $ 8,245 

1

 The interest rate re-estimate relates to subsidy associated with establishing a fixed rate for the 

Department’s borrowing from Treasury. 

2

 Loan cancellations include write-offs of loans because the primary borrower died, became disabled, 

or declared bankruptcy. 

150 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Federal Family Education Loan Program. The following schedule provides a 

reconciliation between the beginning and ending balances of the liability for loan 

guarantee for the insurance portion of the FFEL Program:

FFEL Program Reconciliation of Liabilities for Loan Guarantees 

(Dollars in Millions)

2008 2007 

Beginning Balance, FFEL Financing Accounts Liability for 

Loan Guarantees $ 50,731 $ 52,350

Components of Subsidy Transfers 

Interest Supplement Costs 1,212 7,580 

Defaults, Net of Recoveries 43 885 

Fees (449) (5,052) 

Other1 436 2,967 

Current Year Subsidy Transfers 1,242 6,380 

Components of Subsidy Re-estimates 

Interest Rate Re-estimates (700) 1,286 

Technical and Default Re-estimates (760) (2,782) 

Subsidy Re-estimates (1,460) (1,496) 

Components of Loan Modifications 

Loan Modification Costs (2,464) - 

Modification Adjustment Transfers (30) - 

Loan Modifications (2,494) - 

Activity 

Interest Supplement Payments (8,744) (10,991) 

Claim Payments (8,029) (5,924) 

Fee Collections 4,107 4,036 

Interest on Liability Balance 1,372 1,616 

Other2 6,460 4,760 

Total Activity (4,834) (6,503) 

Ending Balance, FFEL Financing Account Liability for Loan 

Guarantees $ 43,185 $ 50,731 

FFEL Liquidating Account Liability for Loan Guarantees 137 143 

Liabilities for Loan Guarantees $ 43,322 $ 50,874 

1 Subsidy primarily associated with debt collections and loan cancellations due to death, disability, 

and bankruptcy. 

2

 Activity primarily associated with the transfer of subsidy for defaults; loan consolidation activity; and 

loan cancellations due to death, disability, and bankruptcy. 

Financing Account Interest Expense and Interest Revenue 

Financing accounts borrow from Treasury to fund the unsubsidized portion of lending activities. 

The Department calculates and pays Treasury interest at the end of each year. During the year, 

interest is earned on outstanding direct loans, outstanding FFEL loans purchased by the 

Department, participation interests, and the Fund Balance with Treasury. 

Subsidy amortization is calculated, as required in Statement of Federal Financial Accounting 

Standards No. 2, Accounting for Direct Loans and Loan Guarantees, as the difference between 

interest revenue and interest expense. The allowance for subsidy is adjusted with the offset to 

interest revenue. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 151
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

William D. Ford Federal Direct Loan Program. The following schedule summarize the Direct 

Loan financing account interest expense and interest revenue: 

Direct Loan Program 

(Dollars in Millions)

2008 2007 

Interest Expense on Treasury Borrowing $ 6,190 $ 5,675 

Interest Expense $ 6,190 $ 5,675 

Interest Revenue from the Public $ 5,277 $ 4,859 

Amortization of Subsidy (456) (435) 

Interest Revenue on Uninvested Funds 1,369 1,251 

Interest Revenue $ 6,190 $ 5,675 

Payable to Treasury 

Payable to Treasury for the years ended September 30, 2008 and 2007, consisted of the 

following: 

Payable to Treasury 

(Dollars in Millions)

2008 2007 

Future Liquidating Account Collections, Beginning Balance $ 4,108 $ 4,555 

Valuation of Pre-1992 Loan Liability and Allowance 250 288 

Capital Transfers to Treasury (592) (735) 

Future Liquidating Account Collections, Ending Balance $ 3,766 $ 4,108 

Collections on Guaranty Agency Federal Funds - 2 

Direct Loan Program Downward Subsidy Re-estimate - 498 

FFEL Program Downward Subsidy Re-estimate - 743 

Payable to Treasury $ 3,766 $ 5,351 

The liquidating account, based on available fund balance, periodically transfers Fund Balance to 

Treasury’s account. The FFEL and Direct Loan financing accounts pay the liability related to 

downward subsidy re-estimates upon budget execution. Effective FY 2008, Treasury guidance 

requires that the liability resulting from downward subsidy re-estimates be included in Other 

Intragovernmental Liabilities on the Balance Sheet (see Note 9). 

152 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Subsidy Expense 

William D. Ford Federal Direct Loan Program

Direct Loan Program Subsidy Expense 

(Dollars in Millions)

2008 2007 

Components of Current Year Subsidy Transfers 

Interest Rate Differential $ (1,540) $ (846) 

Defaults, Net of Recoveries 454 422 

Fees (487) (398) 

Other 1,498 1,117 

Current Year Subsidy Transfers (75) 295 

Subsidy Re-estimates 1,168 (794) 

Loan Modification Costs 4,143 - 

Direct Loan Subsidy Expense $ 5,236 $ (499) 

In the 2008 re-estimates, Direct Loan subsidy expense was increased by $1.2 billion. Changes 

in interest rates increased subsidy expense by $859 million, updated data on teacher loan 

forgiveness led to an additional increase of $481 million, and rising default rates increased 

subsidy expense by $194 million. These increases were partially offset by decreases due to 

reduced prepayments of $(606) million and changes in the rate at which loans enter repayment 

of $(261) million. The subsidy rate is sensitive to interest rate fluctuations. For example, a 1 

percent increase in projected borrower base rates would reduce projected Direct Loan subsidy 

expense by $465 million. 

In the 2007 re-estimates, Direct Loan subsidy expense was decreased by $794 million. 

Changes in the income-contingent repayment assumption increased subsidy expense by $1 

billion. This increase was more than offset by decreases in subsidy cost related to loan volume 

of $(924) million, statutory loan discharges of $(544) million, interest rates of $(348) million and 

other factors. The subsidy rate is sensitive to interest rate fluctuations. For example, a 1 

percent increase in projected borrower base rates would reduce projected Direct Loan costs by 

$955 million. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 153
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

154 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Federal Family Education Loan Program 

FFEL Program Subsidy Expense 

(Dollars in Millions)

2008 2007 

FFEL Guaranteed Loan Program

Components of Current Year Subsidy Transfers 

Interest Supplement Costs $ 1,212 $ 7,580 

Defaults, Net of Recoveries 43 885 

Fees (449) (5,052) 

Other 436 2,967 

Current Year Subsidy Transfers 1,242 6,380 

Subsidy Re-estimates (1,460) (1,496) 

Loan Modification Costs (2,464) - 

FFEL Guaranteed Loan Program Subsidy Expense $ (2,682) $ 4,884 

Temporary Loan Purchase Authority

Loan Purchase Commitment 

Components of Current Year Subsidy Transfers

Interest Supplement Costs $ (9) $ - 

Defaults, Net of Recoveries - - 

Fees 2 - 

Other 5 - 

Loan Purchase Commitment Subsidy Expense $ (2) $ - 

Loan Participation Purchase 

Components of Current Year Subsidy Transfers 

Interest Supplement Costs $ (292) $ - 

Defaults, Net of Recoveries 5 - 

Fees (476) - 

Other 595 - 

Loan Participation Purchase Subsidy Expense $ (168) $ - 

FFEL Program Subsidy Expense $ (2,852) $ 4,884 

In the 2008 re-estimates, FFEL subsidy expense was decreased by $1.5 billion. Changes in 

interest rate forecasts decreased subsidy expense by $8.7 billion. This decrease was partially 

offset by increases of $4.4 billion due to reduced prepayments, $2.5 billion due to changes in 

projected guaranty agency retention of collections on defaulted loans, and $1.3 billion due to 

greater use of teacher loan forgiveness benefits. The subsidy rate is sensitive to interest rate 

fluctuations. For example, a 1 percent increase in borrower interest rates and the guaranteed 

yield for lenders would increase projected FFEL costs by $16.3 billion. 

In the 2007 re-estimates, FFEL subsidy expense was decreased by $1.5 billion. Changes in the 

federal cost of loan deferments and forbearance increased subsidy expense by $2.3 billion. 

This increase was more than offset by changes in subsidy cost related to statutory loan 

discharges of $(1.4) billion, loan maturity and repayment rates of $(1.5) billion, loan volume of 

$(890) million and other factors. The subsidy rate is sensitive to interest rate fluctuations. For 

example, a 1 percent increase in borrower interest rates and the guaranteed yield for lenders 

would increase projected FFEL costs by $11.1 billion. 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

In FY 2007 the Department restated the eligibility requirements specified by the HEA for lenders 

to receive special allowance payments at the 9.5 percent minimum return rate on loans made or 

purchased with funds derived from tax-exempt obligations issued before October 1993, and 

implemented certain processes to validate eligibility. As a result of lenders’ business decisions 

and audits performed in FYs 2007 and 2008, nearly two-thirds of lenders previously requesting 

this special allowance payment have ceased requesting the payment in 2008. The Department 

decreased the FFEL subsidy by $269 million as a result. 

Subsidy Rates 

The subsidy rates applicable to the 2008 loan cohort year follow: 

Subsidy Rates—Cohort 2008 

Interest 

Differential/ 

Supplements Defaults Fees Other Total 

Direct Loan Program (7.28%) 1.58% (1.95%) 5.68% (1.97%) 

FFEL Program (Post-1991): 

FFEL Guaranteed Loan Program 0.88% 0.53% (3.57%) 2.15% (0.01%) 

Temporary Loan Purchase Authority: 

Loan Purchase Commitment (14.78%) 0.07% 2.66% 8.19% (3.86%) 

Loan Participation Purchase (3.53%) 0.06% (5.80%) 7.26% (2.01%) 

The subsidy rate represents the subsidy expense of the program in relation to the obligations or 

commitments made during the fiscal year. The subsidy expense for new direct or guaranteed 

loans reported in the current year relate to disbursements of loans from both current and prior 

years’ cohorts. Subsidy expense is recognized when the Department disburses direct loans or 

third-party lenders disburse guaranteed loans. The subsidy expense reported in the current 

year also includes modifications and re-estimates. The subsidy rates shown above, which 

reflect aggregate negative subsidy in the FY 2008 cohort, cannot be applied to direct or 

guaranteed loans disbursed during the current reporting year to yield the subsidy expense, nor 

are these rates applicable to the portfolio as a whole. 

The costs of the Department’s student loan programs, especially the Direct Loan Program, are 

highly sensitive to changes in actual and forecasted interest rates. The formulas for determining 

program interest rates are established by statute; the existing loan portfolio has a mixture of 

borrower and lender rate formulas. Interest rate projections are based on probabilistic interest 

rate scenario inputs developed and provided by OMB. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 155
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Administrative Expenses 

Administrative Expense for the years ended September 30, 2008 and 2007, consisted of the 

following: 

Administrative Expense 

(Dollars in Millions)

2008 2007

Direct Loan 

Program

 FFEL 

Program 

Direct Loan 

Program

 FFEL 

Program 

Operating Expense $ 343 $ 222 $ 397 $ 232 

Other Expense 14 9 16 9 

Administrative Expenses $ 357 $ 231 $ 413 $ 241 

Note 7. General Property, Plant and Equipment 

General Property, Plant and Equipment, as of September 30, 2008 and 2007, consisted of the 

following:

General Property, Plant and Equipment 

(Dollars in Millions)

2008 

Cost 

Accumulated 

Depreciation 

Net Asset 

Value 

Information Technology, Internal Use Software 

and Telecommunications Equipment $ 152 $ (100) $ 52 

Furniture and Fixtures 3 (3) - 

General Property, 

Plant and Equipment $ 155 $ (103) $ 52 

2007 

Cost 

Accumulated 

Depreciation 

Net Asset 

Value 

Information Technology, Internal Use Software 

and Telecommunications Equipment $ 129 $ (84) $ 45 

Furniture and Fixtures 3 (2) 1 

General Property, 

Plant and Equipment $ 132 $ (86) $ 46 

The majority of the asset costs relate to financial management systems and other information 

technology and communications improvements. 

156 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Leases

The Department leases information technology and telecommunications equipment as part of a 

contractor-owned contractor-operated services contract. Lease payments associated with the 

equipment are classified as operating leases and as such are expensed as incurred. The noncancelable lease term is one year, with the Department holding the right to extend the lease 

term by exercising additional one-year options.

The Department leases office space from the General Services Administration (GSA). The 

lease contracts with GSA for privately and publicly owned buildings are operating leases. 

Future lease payments are not accrued as liabilities, but expensed as incurred. Estimated 

future minimum lease payments for the privately owned buildings are presented below. 

Leases 

(Dollars in Millions)

2008 2007 

Fiscal Year Lease Payment Fiscal Year Lease Payment

2009 $ 47 2008 $ 47 

2010 50 2009 48 

2011 54 2010 52 

2012 61 2011 56 

2013 70 2012 63 

After 2013 72 After 2012 65 

Total $ 354 Total $ 331 

FY 2008 Performance and Accountability Report—U.S. Department of Education 157
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 8. Debt 

Debt as of September 30, 2008 and 2007, consisted of the following: 

Debt 

(Dollars in Millions) 

2008 

Beginning 

Balance New Borrowing Repayments 

Ending 

Balance 

Treasury Debt 

Direct Loan Program $ 103,893 $ 28,172 $ (14,646) $ 117,419 

FFEL Program 

Loan Purchase Commitment - 69 - 69 

Loan Participation Purchase - 10,754 - 10,754 

TEACH Grant Program - 26 (12) 14 

Facilities Loan Program 81 - (6) 75 

Total Treasury Debt $ 103,974 $ 39,021 $ (14,664) $ 128,331 

Other Debt 

FFB 313 28 (4) 337 

Total $ 104,287 $ 39,049 $ (14,668) $ 128,668 

2007 

Beginning 

Balance New Borrowing Repayments 

Ending 

Balance 

Treasury Debt 

Direct Loan Program $ 105,430 $ 17,892 $ (19,429) $ 103,893 

FFEL Program 

Loan Purchase Commitment - - - - 

Loan Participation Purchase - - - - 

TEACH Grant Program - - - - 

Facilities Loan Program 93 - (12) 81 

Total Treasury Debt $ 105,523 $ 17,892 $ (19,441) $ 103,974 

Other Debt 

FFB 154 170 (11) 313 

Total $ 105,677 $ 18,062 $ (19,452) $ 104,287 

The level of repayments on borrowings to Treasury is derived from many factors. For instance, 

beginning of the year cash balances, collections, and new borrowings have an impact on the 

cash available to repay Treasury. Cash is also held to cover future liabilities, such as contract 

collection costs and disbursements in transit. 

Note 9. Other Liabilities

Other liabilities include current and non-current liabilities. The non-current liabilities primarily 

relate to the student loan receivables of the Federal Perkins Loan Program, which when 

collected will be returned to the General Fund of Treasury. 

The current liabilities covered by budgetary resources primarily consist of downward subsidy reestimates, which when executed will be paid to Treasury. Effective FY 2008, Treasury guidance 

requires that the liability resulting from downward subsidy re-estimates be included in Other 

Intragovernmental Liabilities. In FY 2007 and prior, these amounts were included in Payable to 

Treasury. (See Note 6) 

158 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Other Liabilities as of September 30, 2008 and 2007 consisted of the following: 

Other Liabilities 

(Dollars in Millions)

2008 2007 

IntragovernmentalWith the 

Public 

Intragovernmental With the 

Public 

Liabilities Covered by Budgetary Resources 

Current

Advances From Others $ 91 $ - $ 87 $ -

Employer Contributions and Payroll Taxes 4 - 3 - 

Liability for Deposit Funds (7) 35 (1) 35 

Accrued Payroll and Benefits - 19 - 15 

Deferred Revenue - 42 - - 

Liabilities in Miscellaneous Receipt 

Accounts 6,847 - - - 

Contractual Services - - - 46 

Total Other Liabilities Covered by Budgetary 

Resources $ 6,935 $ 96 $ 89 $ 96

Liabilities Not Covered by Budgetary 

Resources 

Current 

Accrued Unfunded Annual Leave $ - $ 33 $ - $ 31 

Non-current 

Accrued Unfunded FECA Liability 3 - 3 - 

Liabilities in Miscellaneous Receipt 

Accounts 186 - 200 - 

Accrued FECA Actuarial Liability - 16 - 16 

Total Other Liabilities Not Covered by 

Budgetary Resources $ 189 $ 49 $ 203 $ 47

Other Liabilities $ 7,124 $ 145 $ 292 $ 143 

Liabilities Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources include liabilities for which congressional action is 

needed before budgetary resources can be provided. Although future appropriations to fund 

these liabilities are likely, it is not certain that appropriations will be enacted to fund these 

liabilities. Liabilities not covered by budgetary resources totaled $238 million and $250 million 

as of September 30, 2008 and 2007, respectively. 

As of September 30, 2008 and 2007, liabilities on the Balance Sheet totaled $188.2 billion and 

$165.1 billion respectively. Of this amount, liabilities covered by budgetary resources totaled 

$188.0 billion as of September 30, 2008, and $164.8 billion as of September 30, 2007. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 159
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 10. Accrued Grant Liability 

The accrued grant liability by major reporting groups as of September 30, 2008 and 2007, 

consisted of the following: 

Accrued Grant Liability 

(Dollars in Millions)

2008 2007

FSA $ 862 $ 1,030 

OESE 557 348 

OSERS 512 478 

Other 314 238 

Accrued Grant Liability $ 2,245 $ 2,094 

Note 11. Net Position 

Unexpended appropriations as of September 30, 2008 and 2007, consisted of the following:

Unexpended Appropriations 

(Dollars in Millions)

2008 2007 

Unobligated Balances 

Available $ 1,526 $ 3,084 

Not Available 815 892 

Undelivered Orders, end of period 47,165 48,071 

Unexpended Appropriations $ 49,506 $ 52,047 

The Cumulative Results of Operations - Earmarked Funds of $17 million as of September 30, 

2008, and $39 million as of September 30, 2007, represent donations from foreign 

governments, international entities and individuals to support Hurricane Katrina relief and 

recovery efforts that have not yet been used. (See Note 17) 

The Cumulative Results of Operations - Other Funds of $(6,187) million as of September 30, 

2008, and $(2,505) million as of September 30, 2007, consists mostly of unfunded upward 

subsidy re-estimates, other unfunded expenses, and net investments of capitalized assets. 

160 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 12. Intragovernmental Cost and Exchange Revenue by Program 

As required by the Government Performance and Results Act of 1993, each of the Department’s 

Reporting Organizations has been aligned with the major goals presented in the Department’s 

Strategic Plan 2007—2012. 

Net Cost Program 

Reporting 

Organizations Strategic Goal 

Ensure Accessibility, Affordability, and 

Accountability of Higher Education and Career 

and Technical Advancement 

FSA 

OPE 

OVAE 

3. Ensure the accessibility, affordability,

and accountability of higher education, 

and better prepare students and adults 

for employment and future learning 

Promote Academic Achievement in Elementary 

and Secondary Schools 

OESE 

OELA 

OSDFS 

1. Improve Student Achievement, with the 

focus on bringing all students to grade 

level in reading and mathematics by 

2014 

2. Increase the academic achievement of 

all high school students 

Transformation of Education IES 

OII 

1. Improve Student Achievement, with the 

focus on bringing all students to grade 

level in reading and mathematics by 

2014 

Special Education OSERS Cuts across Strategic Goals 1, 2, and 3 

In FY 2007, the Department streamlined its strategic goals to better serve its mission to promote 

student achievement and preparation for global competitiveness by fostering educational 

excellence and ensuring equal access to education. The Department has a Cross-Goal 

Strategy on Management, which is considered a high-level premise on which the Department 

establishes its foundation for the three goals. As a result, we do not assign specific programs to 

the Cross-Goal Strategy for presentation in the Statement of Net Cost. Strategic Goals 1, 2, 

and 3 are sharply defined directives that guide the Department’s reporting organizations to carry 

out the vision and programmatic mission, and the Net Cost programs can be specifically 

associated with these three strategic goals. 

The following table presents the gross cost and exchange revenue by program for the 

Department for FYs 2008 and 2007. Gross costs and earned revenue are classified as 

intragovernmental (exchange transactions between the Department and other entities within the 

federal government) or with the public (exchange transactions between the Department and 

non-federal entities). 

FY 2008 Performance and Accountability Report—U.S. Department of Education 161
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

162 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Gross Cost and Exchange Revenue by Program

Gross Cost and Exchange Revenue by Program, as of September 30, 2008 and 2007, 

consisted of the following: 

Gross Cost and Exchange Revenue by Program 

(Dollars in Millions) 

2008 

FSA OESE OSERS Other Total

Ensure Accessibility, Affordability, and 

Accountability of Higher Education and 

Career and Technical Advancement

Intragovernmental Gross Cost $ 6,903 $ - $ - $ 82 $ 6,985 

Gross Costs with the Public 21,885 - - 4,220 26,105

Total Program Costs 28,788 - - 4,302 33,090 

Less: Intragovernmental Earned Revenue 4,128 - - 19 4,147 

 Earned Revenue from the Public 4,901 - - 34 4,935

Total Program Revenue 9,029 - - 53 9,082 

Promote Academic Achievement in 

Elementary and Secondary Schools

Intragovernmental Gross Cost - 135 - 16 151 

Gross Costs with the Public - 21,659 - 1,680 23,339

Total Program Costs - 21,794 - 1,696 23,490 

Less: Intragovernmental Earned Revenue - - - 70 70 

 Earned Revenue from the Public - 12 - 4 16

Total Program Revenue - 12 - 74 86 

Transformation of Education 

Intragovernmental Gross Cost - - - 80 80 

Gross Costs with the Public - - - 1,489 1,489

Total Program Costs - - - 1,569 1,569 

Less: Intragovernmental Earned Revenue - - - 2 2 

 Earned Revenue from the Public - - - 30 30

Total Program Revenue - - - 32 32 

Special Education 

Intragovernmental Gross Cost - - 42 - 42 

Gross Costs with the Public - - 15,843 - 15,843

Total Program Costs - - 15,885 - 15,885 

Less: Intragovernmental Earned Revenue - - 2 - 2 

 Earned Revenue from the Public - - 15 - 15

Total Program Revenue - - 17 - 17 

Net Cost of Operations $19,759 $21,782 $15,868 $7,408 $64,817
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

FY 2008 Performance and Accountability Report—U.S. Department of Education 163

Gross Cost and Exchange Revenue by Program 

(Dollars in Millions) 

2007 

FSA OESE OSERS Other Total

Ensure Accessibility, Affordability, and 

Accountability of Higher Education and 

Career and Technical Advancement

Intragovernmental Gross Cost $ 5,561 $ - $ - $ 82 $ 5,643 

Gross Costs with the Public 21,858 - - 4,423 26,281

Total Program Costs 27,419 - - 4,505 31,924 

Less: Intragovernmental Earned Revenue 3,452 - - - 3,452 

 Earned Revenue from the Public 4,459 - - 22 4,481

Total Program Revenue 7,911 - - 22 7,933 

Promote Academic Achievement in 

Elementary and Secondary Schools

Intragovernmental Gross Cost - 142 - 17 159 

Gross Costs with the Public - 21,279 - 1,930 23,209

Total Program Costs - 21,421 - 1,947 23,368 

Less: Intragovernmental Earned Revenue - - - 78 78 

 Earned Revenue from the Public - - - - -

Total Program Revenue - - - 78 78 

Transformation of Education 

Intragovernmental Gross Cost - - - 76 76 

Gross Costs with the Public - - - 1,392 1,392

Total Program Costs - - - 1,468 1,468 

Less: Intragovernmental Earned Revenue - - - 4 4 

 Earned Revenue from the Public - - - 14 14

Total Program Revenue - - - 18 18 

Special Education 

Intragovernmental Gross Cost - - 82 - 82 

Gross Costs with the Public - - 15,474 - 15,474

Total Program Costs - - 15,556 - 15,556 

Less: Intragovernmental Earned Revenue - - 3 - 3 

 Earned Revenue from the Public - - - - -

Total Program Revenue - - 3 - 3

Net Cost of Operations $19,508 $21,421 $15,553 $7,802 $64,284
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 13. Interest Expense and Interest Revenue 

For FY 2008 and FY 2007, interest expense and interest revenue by program consisted of the 

following:

Interest Expense and Interest Revenue 

(Dollars in Millions)

2008

Expenses Revenue 

Federal Nonfederal Total Federal Nonfederal Total

Direct Loan Program $ 6,190 $ - $ 6,190 $ 1,369 $ 4,821 $ 6,190 

FFEL Program 

FFEL Guaranteed Loan Program - 1,372 1,372 1,372 - 1,372 

Loan Purchase Commitment 3 - 3 3 - 3 

Loan Participation Purchase 492 - 492 465 27 492 

TEACH Grant Program 1 - 1 1 - 1 

Other Programs 23 - 23 17 57 74 

Total $ 6,709 $ 1,372 $ 8,081 $ 3,227 $ 4,905 $ 8,132 

2007

Expenses Revenue 

Federal Nonfederal Total Federal Nonfederal Total

Direct Loan Program $ 5,675 $ - $ 5,675 $ 1,251 $ 4,424 $ 5,675 

FFEL Program 

FFEL Guaranteed Loan Program - 1,616 1,616 1,616 - 1,616 

Loan Purchase Commitment - - - - - - 

Loan Participation Purchase - - - - - - 

TEACH Grant Program - - - - - - 

Other Programs 15 - 15 - 24 24 

Total $ 5,690 $ 1,616 $ 7,306 $ 2,867 $ 4,448 $ 7,315 

Federal interest expense is recognized on the Department’s outstanding debt. Non-federal 

interest revenue is earned on the individual loans and participation interests in FFEL loans. 

Federal interest revenue is earned on the uninvested fund balance with Treasury.

Note 14. Statement of Budgetary Resources 

The Statement of Budgetary Resources (SBR) compares budgetary resources with the status of 

those resources. As of September 30, 2008, budgetary resources were $193,993 million and 

net outlays were $90,580 million. As of September 30, 2007, budgetary resources were 

$168,264 million and net outlays were $74,530 million. 

Permanent Indefinite Budget Authority 

The Direct Loan, FFEL, and TEACH Grant Programs have permanent indefinite budget 

authority through legislation. Part D of the William D. Ford Federal Direct Loan Program and 

Part B of the Federal Family Education Loan Program, pursuant to the HEA, pertain to the 

existence, purpose, and availability of this permanent indefinite budget authority. 

164 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Reauthorization of Legislation 

Funds for most Department programs are authorized, by statute, to be appropriated for a 

specified number of years, with an automatic one-year extension available under Section 422 of 

the General Education Provisions Act. Congress may continue to appropriate funds after the 

expiration of the statutory authorization period, effectively reauthorizing the program through the 

appropriations process. The current Budget of the United States Government presumes all 

programs continue per congressional budgeting rules. 

Obligations Incurred by Apportionment Type and Category 

Obligations incurred by apportionment type and category, as of September 30, 2008 and 2007, 

consisted of the following:

Obligations Incurred by Apportionment Type and Category 

(Dollars in Millions)

 2008 2007 

Direct: 

Category A $ 1,285 $ 1,303 

Category B 161,452 124,472 

Exempt from Apportionment 6 13 

$ 162,743 $ 125,788 

Reimbursable: 

Category A $ - $ - 

Category B - - 

Exempt from Apportionment 96 93 

$ 96 $ 93 

Obligations Incurred $ 162,839 $ 125,881 

Obligations incurred can be either direct or reimbursable. Reimbursable obligations are those 

financed by offsetting collections received in return for goods and services provided, while all 

other obligations are direct. Category A apportionments are those resources that can be 

obligated without restriction on the purpose of the obligation, other than to be in compliance with 

legislation underlying programs for which the resources were made available. Category B 

apportionments are restricted by purpose for which obligations can be incurred. In addition, 

some resources are available without apportionment by OMB. 

Unused Borrowing Authority 

Unused borrowing authority, as of September 30, 2008 and 2007, consisted of the following:

Unused Borrowing Authority 

(Dollars in Millions)

2008 2007 

Beginning Balance, Unused Borrowing Authority $ 9,223 $ 7,248 

Current Year Borrowing Authority 57,743 20,037 

Funds Drawn From Treasury (39,049) (18,062) 

Borrowing Authority Withdrawn (1,987) - 

Ending Balance, Unused Borrowing Authority $ 25,930 $ 9,223 

The Department is given authority to draw funds from Treasury to finance the Direct Loan, Loan 

Purchase Commitment Authority, Loan Participation Purchase Authority, and TEACH Grant 

Program. Unused Borrowing Authority is a budgetary resource and is available to support 

FY 2008 Performance and Accountability Report—U.S. Department of Education 165
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

obligations. The Department periodically reviews its borrowing authority balances in relation to 

its obligations and may cancel unused amounts. 

Undelivered Orders at the End of the Period 

Undelivered orders, as of September 30, 2008 and 2007, consisted of the following: 

Undelivered Orders

(Dollars in Millions) 

2008 2007

Budgetary $ 47,211 $ 48,235 

Non-Budgetary 40,621 14,217 

Undelivered Orders (Unpaid) $ 87,832 $ 62,452 

Undelivered orders at the end of the period, as presented above, will differ from the undelivered 

orders included in the Net Position, Unexpended Appropriations. Undelivered orders for trust 

funds, reimbursable agreements, and federal credit financing and liquidating funds are not 

funded through appropriations and are not included in Net Position. (See Note 11) 

Explanation of Differences Between the Statement of Budgetary Resources and the 

Budget of the United States Government

The FY 2010 Budget of the United States Government (President’s Budget) presenting the 

actual amounts for the year ended September 30, 2008, has not been published as of the issue 

date of these financial statements. The FY 2010 President’s Budget is scheduled for release in 

February 2009. A reconciliation of the FY 2007 SBR to FY 2009 President’s Budget (FY 2007 

actual amounts) for budgetary resources, obligations incurred, distributed offsetting receipts, 

and net outlays is presented below. 

SBR to Budget of the United States Government 

(Dollars in Millions)

Budgetary

Resources 

Obligations 

Incurred 

Distributed 

Offsetting 

Receipts 

Net 

Outlays 

Combined Statement of Budgetary 

Resources $ 168,264 $ 125,881 $ 4,873 $ 74,530 

Expired Funds (732) (354) - - 

Amounts included in the President’s 

Budget 7,967 7,967 - - 

Funds excluded from President’s 

Budget and Rounding (4) (3) (2) (2) 

Distributed Offsetting Receipts - - - 4,873 

Budget of the United States 

Government $ 175,495 $ 133,491 $ 4,871 $ 79,401 

The President’s Budget includes a public enterprise fund that reflects the gross obligations by 

the FFEL Program for the estimated activity of the consolidated Federal Funds of the guaranty 

agencies. Ownership by the federal government is independent of the actual control of the 

assets. Since the actual operation of the Federal Fund is independent from the Department’s 

direct control, budgetary resources and obligations are estimated and disclosed in the 

President’s Budget to approximate the gross activities of the combined Federal Funds. 

Amounts reported on the FY 2007 SBR for the Federal Fund are compiled through combining all 

guaranty agencies’ annual reports to determine a net valuation amount for the Federal Fund. 

166 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

Note 15. Reconciliation of Net Cost of Operations to Budget

The Reconciliation of Net Cost of Operations (proprietary) to Budget provides information on 

how budgetary resources obligated during the period relate to the net cost of operations. The 

schedule presented in this footnote reconciles budgetary resources with the net cost of 

operations by (1) removing resources that do not fund net cost of operations and (2) including 

components of net cost of operations that did not generate or use resources during the year. 

Components Requiring or Generating Resources in Future Periods primarily result from subsidy 

re-estimates that will be executed in future periods. The Reconciliation of Net Cost of 

Operations to Budget as of September 30, 2008 and 2007, are presented below: 

Reconciliation of Net Cost of Operations to Budget 

(Dollars in Millions)

Resources Used to Finance Activities 2008 2007 

Obligations Incurred $ (162,839) $ (125,881) 

Spending Authority from Offsetting Collections and Recoveries 40,536 44,165 

Offsetting Receipts 5,853 4,873 

Imputed Financing from Costs Absorbed by Others (29) (32) 

Total Resources Used to Finance Activities (116,479) (76,875) 

Resources Used to Finance Items Not Part of Net Cost of Operations 

Change in Budgetary Resources Obligated for Goods, Services and Benefits Ordered but Not 

Yet Provided (+/-) (25,553) (2,343) 

Resources that Fund Expenses Recognized in Prior Period (1,111) (3,345) 

Credit Program Collections which Increase/Decrease Liabilities for Loan Guarantees, or Credit 

Program Receivables, Net including Allowances for Subsidy 29,763 34,261 

Resources Used to Finance the Acquisition of Fixed Assets, or Increase/Decrease Liabilities for 

Loan Guarantees or Credit Program Receivables, Net in the Current or Prior Period (51,742) (39,979) 

Total Resources Used to Finance Items Not Part of the Net Cost of Operations (48,643) (11,406) 

Components Not Requiring or Generating Resources 

Depreciation and Amortization (456) (445) 

Other (+/-) 290 907 

Total Components of the Net Cost of Operations that Will Not Require or Generate 

Resources (166) 462 

Components Requiring or Generating Resources in Future Periods 

Increase in Annual Leave Liability (6) (31) 

Upward/Downward Re-estimates of Credit Subsidy Expense 513 (1,354) 

Increase in Exchange Revenue Receivable from the Public 2,607 2,302 

Other (+/-) 71 (194) 

Total Components of the Net Cost of Operations that Will Require or Generate Resources in 

Future Periods 3,185 723 

Net Cost of Operations $ (64,817) $ (64,284) 

Note 16. Incidental Custodial Collections 

The Department administers certain activities associated with the collection of non-exchange 

revenues. The Department collects these amounts in a custodial capacity and transfers the 

amounts collected to the General Fund of the Treasury at the end of each fiscal year. These 

collections primarily consist of interest and penalties on accounts receivable and are considered 

FY 2008 Performance and Accountability Report—U.S. Department of Education 167
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

incidental to the primary mission of the Department. During FYs 2008 and 2007, the 

Department collected $1.4 million and $5.4 million, respectively, in custodial revenues. 

Note 17. 2005 Hurricane Relief 

The Hurricane Education Recovery Act (P.L. 109-148, Division B, Title IV), enacted on 

December 30, 2005, and the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq 

Accountability Appropriations Act, 2007, appropriated funds to the Department to provide 

needed assistance to reopen schools and help educate the 370,000 students affected by 

Hurricanes Katrina and Rita. As of September 30, 2008, $1,945 million has been appropriated 

to the Department, of which $1,942 million has been obligated to assist local educational 

agencies and non-public schools, and $1,748 million has been expended. As of September 

30, 2007, $1,945 million has been appropriated to the Department, of which $1,943 million has 

been obligated to assist local educational agencies and non-public schools, and $1,557 million 

has been expended. 

Earmarked Funds Donated for Hurricane Relief 

In the aftermath of Hurricane Katrina, a number of foreign governments, international entities 

and individuals made donations of financial assistance to the U.S. Government to support 

Katrina relief and recovery efforts. These donations were received by the U.S. Department of 

State as an intermediary. Subsequently, $61 million was transferred to the Department to 

finance educational initiatives in Louisiana and Mississippi under a Memorandum of 

Understanding issued in March 2006. As of September 30, 2008, $61 million has been 

obligated from the earmarked funds to assist in the relief and recovery efforts and $44 million 

has been expended. As of September 30, 2007, $61 million has been obligated from the 

earmarked funds to assist in the relief and recovery efforts and $22 million has been expended. 

Note 18. Contingencies 

Guaranty Agencies 

The Department can assist guaranty agencies experiencing financial difficulties by various 

means. No provision has been made in the principal statements for potential liabilities related to 

financial difficulties of guaranty agencies because the likelihood of such occurrences cannot be 

estimated with sufficient reliability. 

Federal Perkins Loan Program Reserve Funds 

The Federal Perkins Loan Program is a campus-based program providing financial assistance 

to eligible postsecondary school students. In fiscal year 2008, the Department provided funding 

of 83.01 percent of the capital used to make loans to eligible students through participating 

schools at 5 percent interest. The schools provided the remaining 16.99 percent of program 

funding. For the latest academic year ended June 30, 2008, approximately 648 thousand loans 

were made, totaling approximately $1.4 billion at 1,625 institutions, averaging $2,121 per loan. 

The Department’s share of the Federal Perkins Loan Program was approximately $6.5 billion as 

of June 30, 2008. 

In FY 2007, the Department provided funding of 84.3 percent of the capital used to make loans 

to eligible students through participating schools at 5 percent interest. The schools provided the 

remaining 15.7 percent of program funding. For the academic year ended June 30, 2007, 

approximately 722 thousand loans were made, totaling approximately $1.6 billion at 1,636 

institutions, averaging $2,230 per loan. The Department’s share of the Federal Perkins Loan 

Program was approximately $6.5 billion as of June 30, 2007. 

168 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

NOTES TO PRINCIPAL FINANCIAL STATEMENTS

FY 2008 Performance and Accountability Report—U.S. Department of Education 169

Federal Perkins Loan Program borrowers who meet statutory eligibility requirements—such as 

service as a teacher in low-income areas, as a Peace Corps or VISTA volunteer, in the military 

or in law enforcement, in nursing, or in family services—may receive partial loan forgiveness for 

each year of qualifying service. In these circumstances, a contingency is deemed to exist. The 

Department may be required to compensate Federal Perkins Loan Program institutions for the 

cost of the partial loan forgiveness. 

Litigation and Other Claims

The Department is involved in various lawsuits incidental to its operations. In the opinion of 

management, the ultimate resolution of pending litigation will not have a material effect on the 

Department’s financial position.

Other Matters 

Some portion of the current-year financial assistance expenses (grants) may include funded 

recipient expenditures that are subsequently disallowed through program review or audit 

processes. In the opinion of management, the ultimate disposition of these matters will not 

have a material effect on the Department’s financial position. 

Note 19. Subsequent Events 

On October 7, 2008, President Bush signed P.L. 110-350, which extended the Secretary of 

Education’s authority to purchase FFEL loans. This authority, originally enacted in the 

ECASLA, would have otherwise expired on September 30, 2009; P.L. 110-350 extended the 

authority through September 30, 2010. The Administration recently announced plans to 

replicate the 2008-2009 loan purchase and participation options for the 2009-2010 award year. 

Other approaches to purchase outstanding FFEL loans are also under consideration, but 

specific terms and conditions have yet to be determined. 
170 FY 2008 Performance and Accountability Report—U.S. Department of Education Combined Federal Student Aid Office of Elementary & Secondary Education Office of Special Education & Rehabilitative Services 

Non-Budgetary Non-Budgetary Non-Budgetary Non-Budgetary 

Credit Reform Credit Reform Credit Reform Credit Reform 

Financing Financing Financing Financing 

Budgetary Resources: Budgetary Accounts Budgetary Accounts Budgetary Accounts Budgetary Accounts Budgetar

1. Unobligated balance, brought forward, October 1: $ 5,272 $ 37,111 $ 4,449 $ 36,792 $ 445 0 $ 109 0 $ 

2. Recoveries of prior year Unpaid Obligations 2,097 3,115 1,447 3,115 535 0 44 0 

3. Budgetary Authority: 0 0 0 0 

3A. Appropriations 73,002 153 28,562 151 21,986 0 14,231 0 8,

3B. Borrowing Authority 0 57,743 0 57,743 0 0 0 0 

3D. Spending authority from offsetting collections (gross): 0 0 0 0 0 0 

3D1. Earned 0 0 0 0 0 0 

3D1a. Collected 1,751 33,570 1,638 33,510 0 0 4 0 

3D1b. Change in Receivables from Federal Sources (1) 0 0 0 0 0 (2) 0 

3D2. Change in unfilled customer orders 0.00 0.00 0.00 0.00 0.00 0.00 0

3D2a. Advance Received 3E. Subtotal $ 4 0 0 0 $ 30,200 $ 91,404 0 0 $ 21,986 $ 0 0 0 $ 14,233 $ 0 

74,756 $ 91,466 $ 8

6. Permanently not available 7. Total Budgetary Resources $ Status of Budgetary Resources: (2,980) (16,844) (2,058) (16,835) $ 34,038 $ 114,476 (498) 0 $ 22,468 $ 0 (226) 0 $ 14,160 $ 0 (

79,145 $ 114,848 $ 8,

8. Obligations incurred: 8A. Direct $ 74,742 $ 88,001 $ 30,418 $ 87,959 $ 22,102 (0) $ 14,102 (0) $ 8,

8B. Reimbursable 8C. Subtotal $ 96 (0) (0) (0) $ 30,418 $ 87,959 (0) (0) $ 22,102 $ (0) 2 (0) $ 14,104 $ (0) 

74,838 $ 88,001 $ 8,

9. Unobligated Balances: 9A. Apportioned $ 9C. Subtotal $ 1,540 $ 396 $ 1,166 $ 396 $ 1,166 $ 396 $ 223 (0) $ 223 $ (0) $ 12 (0) $ 12 $ (0) $ 

1,540 $ 396 $ 

10. Unobligated Balance not available 11. Total Status of Budgetary Resources $ Change in Obligated Balance: 2,767 26,451 2,454 26,121 $ 34,038 $ 114,476 143 (0) $ 22,468 $ (0) 44 (0) $ 14,160 $ (0) 

79,145 $ 114,848 $ 8,

12. Obligated balance, net 12A. Unpaid obligations, brought forward, October 1 $ 50,712 $ 14,734 $ 12,485 $ 14,425 $ 17,813 (0) $ 10,753 (0) $ 9,

12B. Uncollected customer payments from Federal Sources, brought forward, October 1 12c. Total, unpaid obligated balance, brought forward, net $ (3) (0) (0) (0) $ 12,485 $ 14,425 (0) (0) $ 17,813 $ (0) (3) (0) $ 10,750 $ (0) 

50,709 $ 14,734 $ 9,

13. Obligation Incurred net (+/-) 74,838 88,001 30,418 87,959 22,102 (0) 14,104 (0) 8,

14. Gross Outlays (73,578) (58,180) (28,529) (58,112) (21,601) 0 (15,718) 0 (7,

16. Recoveries of prior year unpaid obligations, actual (2,097) (3,115) (1,447) (3,115) (535) (0) (44) (0) 17. Change in uncollected customer payments from Federal Source 1 (0) (0) (0) (0) (0) 2 (0) 

18. Obligated Balance, net, end of period 18A. Unpaid Obligations $ 49,875 $ 41,440 $ 12,927 $ 41,157 $ 17,779 $ (0) $ 9,095 (0) $ 10,

18B. Uncollected customer payments from Federal Sources 18C. Total, unpaid obligated balance, net, end of period $ (2) (0) (0) (0) $ 12,927 $ 41,157 (0) (0) $ 17,779 $ (0) (1) (0) $ 9,094 $ (0) 

49,873 $ 41,440 $ 10,

Net Outlays 19. Net Outlays: 19A. Gross Outlays $ 73,578 $ 58,180 $ 28,529 $ 58,112 $ 21,601 $ (0) $ 15,718 (0) $ 7,

19B. Offsetting collections (1,755) (33,570) (1,638) (33,510) (0) (0) (4) (0) (

19C. Distributed Offsetting receipts 20. Net Outlays $

The accompanying notes are an integral part of these statements.

(103) (5,750) (28) (5,750)

$ 26,863 $ 18,852

0 0

$ 21,601 $ (0)

0 0

$ 15,714 $ (0)

71,720 $ 18,860 $ 7,

United States Department of Education

Combined Statement of Budgetary Resources

For the Year Ended September 30, 2008

(Dollars in Millions)
FINANCIAL DETAILS

Required Supplementary Stewardship Information 

Stewardship Expenses 

In the Department of Education, discretionary spending constitutes approximately 

86 percent of the budget and includes nearly all programs, the major exceptions being 

student loans and rehabilitative services. Although spending for entitlement programs is 

usually a function of the authorizing statutes creating the programs and is not generally 

affected by appropriations laws, spending for discretionary programs is decided in the 

annual appropriations process. Most Department programs are discretionary. 

Education in the United States is primarily a state and local responsibility. States, 

communities, and public and private organizations establish schools and colleges, develop 

curricula, and determine requirements for enrollment and graduation. The structure of 

education finance in America reflects this predominantly state and local role. It is estimated 

that roughly $1.1 trillion will be spent nationwide on education at all levels for the school 

year 2008-2009, with Department of Education expenditures, as well as loans and other aid 

made available as a result of the Department’s student financial aid programs. The 

Department’s FY 2008 appropriations of more than $68.6 billion represents about 

2.3 percent of the federal government’s $2.9 trillion FY 2008 budget. 

Investment in Human Capital 

Office of Federal Student Aid. The Office of Federal Student Aid administers need-based 

financial assistance programs for students pursuing postsecondary education and makes 

available federal grants, direct loans, guaranteed loans, and work-study funding to eligible 

undergraduate and graduate students. See more detail at: 

http://www.ed.gov/about/offices/list/fsa/index.html?src=oc

Office of Elementary and Secondary Education. The Office of Elementary and 

Secondary Education provides leadership, technical assistance, and financial support to 

state and local educational agencies for the maintenance and improvement of preschool, 

elementary, and secondary education. Financial assistance programs support services for 

children in high-poverty schools, institutions for neglected and delinquent children, 

homeless children, certain Native American children, children of migrant families, and 

children who live on or whose parents work on federal property. Funding is also provided to 

increase the academic achievement of students by ensuring that all teachers are highly 

qualified to teach. See more detail at: 

http://www.ed.gov/about/offices/list/oese/index.html?src=oc

Office of Special Education and Rehabilitative Services. The Office of Special 

Education and Rehabilitative Services supports state and local programs that assist in 

educating children, youth, and adults with special needs to increase their level of 

employment, productivity, independence, and integration into the community. Funding is 

also provided for research to improve the quality of their lives. See more detail at: 

http://www.ed.gov/about/offices/list/osers/index.html?src=oc

Office of Safe and Drug-Free Schools. The Office of Safe and Drug-Free Schools 

supports efforts to create safe and violence-free schools, respond to crises, prevent drug 

and alcohol abuse, ensure the health and well-being of students, and teach students good 

citizenship and character. Grants emphasize coordinated, collaborative responses to 

FY 2008 Performance and Accountability Report—U.S. Department of Education 171
FINANCIAL DETAILS

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

develop and maintain safe, disciplined, and drug-free learning environments. See more 

detail at: http://www.ed.gov/about/offices/list/osdfs/index.html?src=oc

Office of Innovation and Improvement. The Office of Innovation and Improvement 

makes strategic investments in educational practices through grants to states, schools, and 

community and nonprofit organizations. The office leads the movement for greater parental 

options such as charter schools. The office also supports special grants designed to raise 

student achievement by improving teachers’ knowledge and understanding of and 

appreciation for traditional U.S. history. See more detail at: 

http://www.ed.gov/about/offices/list/oii/index.html?src=oc

Institute of Education Sciences. Established by the Education Sciences Reform Act of 

2002, the Institute of Education Sciences is the research arm of the Department of 

Education. Its mission is to expand knowledge and provide information on the condition of 

education, practices that improve academic achievement, and the effectiveness of federal 

and other education programs. Its goal is the transformation of education into an evidencebased field in which decision makers routinely seek out the best available research and 

data before adopting programs or practices that will affect significant numbers of students. 

See more detail at: http://www.ed.gov/about/offices/list/ies/index.html?src=oc

Office of English Language Acquisition. The Office of English Language Acquisition 

directs programs designed to enable students with limited English proficiency to become 

proficient in English and meet state academic content and student achievement standards. 

Enhanced instructional opportunities are provided to children and youths of Native 

American, Alaska Native, Native Hawaiian, Pacific Islander, and immigrant backgrounds 

who are limited English proficient. Grants pay the federal share of the cost of model 

programs for the establishment, improvement, or expansion of foreign language study in 

elementary and secondary schools. See more detail at: 

http://www.ed.gov/about/offices/list/oela/index.html?src=oc

Office of Vocational and Adult Education. The Office of Vocational and Adult Education 

provides leadership, technical assistance, and funding for adult education and career and 

technical education to state and local agencies to help students improve their literacy skills 

and prepare them for postsecondary education and careers through strong high school 

programs and career and technical education. The office ensures the equal access of 

minorities, women, individuals with disabilities, and disadvantaged persons to career and 

technical education and adult education and ensures that career and technical education 

students are held to the same challenging academic content and academic achievement 

standards established by the state under the No Child Left Behind Act of 2001. Funding is 

also provided to promote identification and dissemination of effective practices in raising 

student achievement in high schools, community colleges and adult education programs, 

and support targeted research investments. See more detail at: 

http://www.ed.gov/about/offices/list/ovae/index.html?src=oc

Office of Postsecondary Education. The Office of Postsecondary Education provides 

grants to colleges and universities to: promote reform, innovation, and improvement in 

postsecondary education; increase access to and completion of postsecondary education 

by disadvantaged students; strengthen the capacity of colleges and universities that serve a 

high percentage of minority and disadvantaged students; and improve teacher and student 

development resources. The international programs promote international education and 

foreign language studies and research. The office administers the accrediting agency 

172 FY 2008 Performance and Accountability Report—U.S. Department of Education 
FINANCIAL DETAILS

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

recognition process and coordinates activities with states that affect institutional 

participation in federal financial assistance programs. See more detail at: 

http://www.ed.gov/about/offices/list/ope/index.html?src=oc

Program Inputs 

The Department currently administers programs affecting every area and level of education. 

While the Department’s programs and responsibilities have grown substantially over the 

years, the Department itself has not. Since the No Child Left Behind Act was signed into 

law in 2002, the Department’s current staff of approximately 4,400 has decreased 4 percent 

below the 4,566 employees who administered federal education programs in 2001. At the 

same time, the Department manages 40 percent more in funds in 2007 than it did in 2001 

when its human capital investment was only $38.7 billion. These staff reductions, along 

with a wide range of management improvements, have helped limit administrative costs to 

2 percent of the Department’s budget, ensuring that the Department delivers about 98 cents 

on the dollar in education assistance to states, school districts, postsecondary institutions, 

and students. 

Summary of Human Capital Expenses 

(Dollars in Millions) 2008 2007 2006 2005 2004 

Federal Student Aid Expense 

 Direct Loan Subsidy $ 5,236 $ (499) $ 6,655 $ 5,211 $ (543) 

 FFEL Program Subsidy (2,852) 4,884 28,062 9,863 8,516 

 Grant Programs 17,464 15,092 15,447 15,070 14,943 

 Salaries and Administrative 189 173 172 164 186 

 Subtotal 20,037 19,650 50,336 30,308 23,102 

Other Departmental 

 Elementary and Secondary Education 21,583 21,199 21,710 22,940 21,188 

 Special Education and Rehabilitative 

Services 15,730 15,402 15,215 13,995 12,687 

 Other Departmental Programs 4,911 5,109 5,353 6,067 5,160 

 Salaries and Administrative 491 467 467 486 448 

 Subtotal 42,715 42,177 42,745 43,488 39,483 

Grand Total $ 62,752 $ 61,827 $ 93,081 $ 73,796 $ 62,585 

Program Outcomes 

Education is the stepping stone to higher living standards for American citizens, and it is 

vital to national economic growth. But education’s contribution is more than increased 

productivity and incomes. Education improves health, promotes social change, and opens 

doors to a better future for children and adults. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 173
FINANCIAL DETAILS

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

FY 2008 Performance and Accountability Report—U.S. Department of Education 

Unemployment Rate by Educational Level

0%

2%

4%

6%

8%

10%

12%

2003 2004 2005 2006 2007 2008

No High

School

Degree

High School

Degree

College

Degree

a

b

a

s

e

i

h

e

Economic outcomes, such as wage 

nd salary levels, historically have 

een determined by the educational 

ttainment of individuals and the 

kills employers expect of those 

ntering the labor force. Both 

ndividuals and society as a whole 

ave placed increased emphasis on 

ducational attainment as the 

workplace has become increasingly 

technological, and employers now 

seek employees with the highest level of skills. For prospective employees, the focus on 

higher-level skills means investing in learning or developing skills through education. Like 

all investments, developing higher-level skills involves costs and benefits. 

Returns, or benefits, of investing in education come in many forms. While some returns 

accrue for the individual, others benefit society and the nation in general. Returns related 

to the individual include higher earnings, better job opportunities, and jobs that are less 

sensitive to general economic conditions. Returns related to the economy and society 

include reduced reliance on welfare subsidies, increased participation in civic activities, and 

greater productivity. 

Over time, the returns of developing skills through education have become evident. 

Statistics illustrate the rewards of completing high school and investing in postsecondary 

education. 

Unemployment Rate. Individuals with lower levels of educational attainment are more 

likely to be unemployed than those who had higher levels of educational attainment. The 

October 2008 unemployment rate for adults (25 years old and over) who had not completed 

high school was 10.3 percent, compared with 6.3 percent for those with four years of high 

school and 3.1 percent for those with a bachelor’s degree or higher. Younger people with 

only high school diplomas tended to have higher unemployment rates than adults 25 and 

over with similar levels of education. 

Annual Income. As of July 2008, the annualized median income for adults (25 years and 

over) varied considerably by education level. Men with a high school diploma earned 

$37,180, compared with $66,404 for men with a college degree. Women with a high school 

diploma earned $27,092, compared with $48,984 for women with a college degree. Men 

and women with college degrees earned 77 percent more than men and women with high 

school diplomas. Earnings for workers with college degrees have increased in the past 

year by 15.79 percent for women and 13.14 percent for men. These returns of investing in 

education directly translate into the advancement of the American economy as a whole. 

174 
Report of the 

Independent 

Auditors 

FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

AUDIT TRANSMITTAL

176 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

AUDIT OPINION

FY 2008 Performance and Accountability Report—U.S. Department of Education 177
REPORT OF THE INDEPENDENT AUDITORS

AUDIT OPINION

178 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

FY 2008 Performance and Accountability Report—U.S. Department of Education 179
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

180 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

FY 2008 Performance and Accountability Report—U.S. Department of Education 181
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

182 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

FY 2008 Performance and Accountability Report—U.S. Department of Education 183
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

184 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

FY 2008 Performance and Accountability Report—U.S. Department of Education 185
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON INTERNAL CONTROL

186 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS

FY 2008 Performance and Accountability Report—U.S. Department of Education 187
REPORT OF THE INDEPENDENT AUDITORS

REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS

188 FY 2008 Performance and Accountability Report—U.S. Department of Education 
REPORT OF THE INDEPENDENT AUDITORS

DEPARTMENT RESPONSE TO AUDIT REPORT

FY 2008 Performance and Accountability Report—U.S. Department of Education 189
REPORT OF THE INDEPENDENT AUDITORS

190 FY 2008 Performance and Accountability Report—U.S. Department of Education 
Other 

Accompanying 

Information 

FY 2008 Performance and Accountability Report—U.S. Department of Education 
OTHER ACCOMPANYING INFORMATION

Improper Payments Information Act Reporting Details 

The Improper Payments Information Act of 2002 (IPIA) (Public Law 107-300) and the Office 

of Management and Budget’s (OMB) Circular A-123, Appendix C, Requirements for 

Effective Measurement and Remediation of Improper Payments, define requirements to 

reduce improper/erroneous payments made by the federal government. OMB also has 

established specific reporting requirements for agencies with programs that possess a 

significant risk of erroneous payments and for reporting on the results of recovery auditing 

activities. Agencies are required to annually review and assess all programs and activities 

to identify those susceptible to significant improper payments. The guidance in OMB 

Circular A-123, Appendix C, defines a significant improper payment as those in any 

particular program that exceed both 2.5 percent of program payments and $10 million 

annually. For each program identified as susceptible and determined to be at risk, 

agencies are required to report to the President and the Congress the annual amount of 

estimated improper payments, along with steps taken and actions planned to reduce them. 

The Department reviews controls and systems under the Federal Managers’ Financial 

Integrity Act of 1982 to ensure that the agency has controls that can be relied on. 

To facilitate agency efforts to meet the reporting requirements of the IPIA, OMB announced 

a new President’s Management Agenda program initiative beginning in the first quarter of 

FY 2005 entitled Eliminating Improper Payments. Previously, OMB tracked the 

Department’s IPIA activities with other financial management activities through the 

Improving Financial Performance initiative. The establishment of a dedicated President’s 

Management Agenda initiative focused the Department’s improper payments elimination 

efforts. Under the new initiative, the Department’s status and progress are tracked and 

reported to OMB in quarterly scorecards. 

The Department has divided its improper payment activities into the following segments: 

Student Financial Assistance Programs, ESEA, Title I Program, Other Grant Programs, and 

Recovery Auditing. 

Student Financial Assistance Programs 

Risk Assessment 

As required by the IPIA, Federal Student Aid inventoried its programs during FY 2008 and 

reviewed program payments made during FY 2007 (the most recent complete fiscal year 

available) to assess the risk of improper payments. The review identified and then focused 

on the following key programs: Federal Family Education Loan Program, Federal Pell 

Grant Program, Federal Supplemental Educational Opportunity Grant and Federal WorkStudy Programs, and Federal Direct Loan Program. For more data on these programs, 

please refer to the Federal Student Aid Annual Report. 

In addition to the A-123 guidance, the criteria for determining susceptible risk within the 

programs were defined as follows: 

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FY 2008 Performance and Accountability Report—U.S. Department of Education 193

Programs with annual outlays that exceed $200 million or programs that were 

previously required to report improper payment information under OMB Circular 

A-11, Budget Submission, former Section 57.21

. 

Risk-Susceptible Programs 

The following Title IV programs were deemed to be potentially susceptible to the risk of 

significant improper payments based on OMB criteria described above. 

• Federal Family Education Loan Program 

• Federal Pell Grant Program 

• Federal Supplemental Educational Opportunity Grant and Federal Work-Study 

Programs 

• William D. Ford Federal Direct Loan Program (Direct Loans) 

As data become available, two new programs will be assessed, the Academic 

Competitiveness Grant (ACG) and the National Science and Mathematics Access to Retain 

Talent (SMART) Grant. 

In FY 2008, the lack of liquidity in financial markets impacted the ability of FFEL lenders 

and secondary markets to find cost-effective financing. As a result, Congress passed the 

Ensuring Continued Access to Student Loans Act of 2008 (ECASLA), which was signed by 

the President on May 8, 2008. This gave the Department authority to purchase FFEL loans 

from lenders to ensure liquidity in the FFEL Program. In addition, the Secretary required 

guaranty agencies to update lender-of-last-resort (LLR) rules and operating procedures and 

provided further guidance to ensure consistent borrower access to FFEL Program loans 

through the efficient and effective implementation of the LLR program. During the first 

quarter of FY 2009, FSA will do an assessment of the risk of the loan purchase process and 

the LLR program to determine the risk of improper payments and how best to estimate 

improper payments. 

A risk assessment was completed for the Direct Loan program in FY 2008. The overall 

improper payment rate, based on this risk analysis, was 0.022%. Since this rate is below 

the threshold for reporting on improper payments, no further information on Direct Loans is 

included herein. 

Statistical Sampling 

The size and complexity of the student aid programs make it difficult to consistently define 

“improper” payments. The legislation and OMB guidance use the broad definition: “Any 

payment that should not have been made or that was made in an incorrect amount under 

statutory, contractual, administrative, or other legally applicable requirement.” Federal 

Student Aid has a wide array of programs, each with unique objectives, eligibility 

 

1

 The four original programs identified in OMB Circular A–11, Section 57, were Student Financial Assistance 

(now Federal Student Aid), ESEA, Title I, Special Education Grants to States, and Vocational Rehabilitation 

Grants to States. Subsequently, after further review of the program risk, OMB removed Special Education 

Grants to States and Vocational Rehabilitation Grants to States from the list. OMB considers Section 57 

programs susceptible to significant improper payments regardless of the established thresholds. OMB Circular 

A-136 also applies. 
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requirements, and payment methods. Consequently, each program has its own universe 

(or multiple universes) of payments that must be identified, assessed for risk, and, if 

appropriate, statistically sampled to determine the extent of improper payments. 

Federal Family Education Loan Program. In FY 2008, Federal Student Aid contracted 

with Oak Ridge National Laboratory to develop a statistically valid methodology for 

estimating FFEL improper payments. Oak Ridge held data exploration sessions with 

Department staff and delivered a methodology that derived erroneous payments from the 

Schedule of Findings and Questioned Costs in the compliance audits of all guaranty 

agencies and loan servicers and a dollar-weighted sample of lender compliance audits. 

They then calculated an erroneous payment rate using the 2007 payments to lenders and 

guarantors in the Financial Partners Data Mart. Payments both to and from the Department 

were included, and total payments is the sum of the absolute values of the payments. 

Federal Pell Grant Program. Section 484(q) of the HEA authorizes the Department to 

confirm directly with the IRS the Adjusted Gross Income (AGI), taxes paid, filing status, and 

number of exemptions reported by students and parents on the Free Application for Federal 

Student Aid (FAFSA). Under the Internal Revenue Code of 1986, Federal Student Aid is 

not authorized to view the complete data without consent of the taxpayer, but the IRS does 

provide summary data. 

The Department began conducting studies with the IRS using FAFSA data for the 2000–01 

award year. Data provided by the IRS study were used to estimate improper payments for 

the Pell Grant Program for the 2006–07 award year. Federal Student Aid is working with 

the IRS to match FAFSA data collected for the 2007–08 award year with IRS data for the 

2006 income tax year. 

In the most recent completed study, which compared 2006–07 FAFSA data with 2005 IRS 

data, a sample file of 310,316 FAFSA applicant records was provided to the IRS along with 

a sampling program designed to allow the IRS to select the desired analysis sample from 

the larger file. This was done to preserve IRS confidentiality requirements. The final 

sample, generated by the IRS, contained 48,090 independent undergraduates and 51,649 

dependent undergraduates (for whom parental data were matched). 

The IRS matched the final sample to its main database, and when a match occurred, it 

extracted the fields for AGI, taxes paid, type of return filed, and earned income tax credit 

information for the tax filer and compared this information with similar information reported 

to the Department on the FAFSA. Using a computer program supplied by Federal Student 

Aid, the IRS calculated revised Expected Family Contribution and Pell Grant awards for 

matching records by substituting the IRS income information for the FAFSA income 

information. The improper payment rate listed in the table reflects the improper payment 

rate that has resulted from recalculating an applicant’s need based on the substitution of 

IRS information. The IRS provided aggregated statistical tables to the Department that 

presented the results of these comparisons. The results allowed the Department to 

estimate the following Pell Grant improper payment information: 

• Improper payment rate and amount—The average amount of over- and underreporting 

of FAFSA income data compared with the IRS income data and potential dollar amount 

of improper Pell Grant awards. 

• Assessment of measurement accuracy—the volume of applicants for whom a mismatch 

between FAFSA and IRS data may be legitimate. 

194 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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• Identification of further potential risks—Types of applicants who are more likely to 

misreport income on the FAFSA. 

• Analysis of existing edits—Validity of the current verification selection edits and 

information to further refine them. 

Corrective Actions 

Federal Family Education Loan Program. Federal Student Aid is working closely with 

OMB and other Department offices in the development of an action plan designed to (1) 

improve the accuracy of the FFEL improper payment estimate and (2) reduce the level of 

risk and amount of known improper payments in the FFEL Program. 

Federal Student Aid has a number of existing internal controls integrated into its systems 

and activities. Program reviews, independent audits and Inspector General audits of 

guaranty agencies, lenders, and servicers are some of its key management oversight 

controls. Other control mechanisms include the following: 

• System Edits—the system used by guaranty agencies, lenders, and servicers to submit 

bills and remit payments includes “hard” and “soft” edits to prevent erroneous 

information from being entered into the system and prevent potential erroneous 

payments. The hard edits require correction before proceeding with payment 

processing. The soft edits alert the user and Federal Student Aid to potential errors. 

Federal Student Aid reviews these warnings prior to approval of payment. 

• Reasonability Analysis—Data reported by guaranty agencies to the National Student 

Loan Data System are used to determine payment amounts for account maintenance 

and loan issuance processing fees. Federal Student Aid also performs trend analysis of 

previous payments to guaranty agencies and lenders as a means of evaluating 

reasonableness of changes in payment activity and payment levels. 

• Focused Monitoring and Analysis—Federal Student Aid targets specific areas of FFEL 

payment processing that are at an increased risk for improper payments as areas of 

focus for increased monitoring and oversight. 

These existing controls are re-evaluated on a regular basis to determine their effectiveness 

and allow Federal Student Aid to make necessary corrections. Federal Student Aid’s action 

plan also incorporates the development of additional internal controls designed to improve 

the accuracy of future FFEL payments to guaranty agencies and lenders. These internal 

controls include the following: 

• Special Allowance Payments—increased focus on and review of payments of fees to 

lenders and servicers associated with loans eligible for tax-exempt special allowance 

payments. 

• Guaranty Agencies—Enhanced review of the Guaranty Agency Financial Report (Form 

2000) to report collection activities, claims reimbursement, and loan portfolio status; 

under- and over-billings for account maintenance; and loan processing and issuance 

fees associated with incorrect National Student Loan Data System reporting. 

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Additional controls are continually considered for both cost efficiency and effectiveness in 

reducing FFEL payment errors. Updates to the corrective action plan are reported to OMB 

in the quarterly scorecard for Eliminating Improper Payments. 

Federal Pell Grant Program. Federal Student Aid has several initiatives under way 

designed to improve its ability to detect and reduce improper payments made through the 

Federal Pell Grant Program, including the statistical study described above. Working with 

OMB on quarterly action plan objectives designed to facilitate full implementation of the 

IPIA, Federal Student Aid has identified additional methods to determine the error rate and 

estimate the annual amount of improper payments. 

Preliminary Analysis. Eligibility for Title IV student aid is determined through applicant 

self-reported income, family size, number of dependents in college, and assets. These 

data are reported through the FAFSA, which applicants typically complete prior to the 

April 15 IRS income tax filing deadline. The FAFSA data are key drivers in the 

determination of student aid program eligibility and eligible amounts. Federal Student Aid 

performs routine analyses of the accuracy of income and other financial data submitted via 

the FAFSA. These analyses include a variety of methods and techniques designed to 

ensure payment accuracy, including the following: 

• Annual Analysis of System Data—Analysis of central processing system data for 

anomalies. 

• Focus Groups—Meetings with educational institutions to discuss improving the integrity 

of Federal Student Aid programs. 

• Quality Assurance—Enhanced program integrity processes. 

• Verification—A process by which institutions compare applicant data with IRS data for 

the same period. 

Federal Student Aid is also using the IRS statistical study in which financial data from a 

random sample of FAFSA submissions are compared with financial data reported to the 

IRS in annual income tax filings to identify new solutions for preventing improper payments. 

The analysis of the IRS statistical study indicates that failure to accurately report income, 

family size, number of dependents in college, and assets may be the primary cause of 

improper payments within the Pell Grant Program. It is expected that a decrease in 

financial reporting errors would have the greatest impact on the reduction of estimated 

improper payments. In an effort to achieve this reduction, Federal Student Aid is exploring 

with the IRS the possibility of developing a pilot program in which taxpayer consent is 

obtained for the matching of information reported on the annual student financial aid 

application with financial data reported to the IRS in annual income tax returns. The results 

of this pilot will be analyzed to determine the possibility of performing a 100 percent 

consent-based data match. 

Alternatives to Verifying Self-Reported AGI. In addition to the aforementioned pilot 

program, Federal Student Aid has been exploring alternatives to the 100 percent IRS match 

for verifying self-reported financial information reported on the FAFSA and assessing the 

strengths and weaknesses of those alternatives. Listed below are some of the alternative 

approaches that are being considered: 

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• Require actual tax returns prior to disbursement. 

• Require update to income data at tax filing deadline. 

• Expand verification beyond 30 percent. 

Federal Student Aid Summary 

The following table presents the improper payments outlook for the primary Federal Student 

Aid programs. Data for FY 2007 are included to present the revised numbers resulting from 

the improper payment methodology implemented in the fourth quarter of FY 2008. 

Federal Student Aid Improper Payment Reduction Outlook Fiscal Years 2007-2012 

($ in millions) 

Description FY 2007 Updated FY 2008 Estimated 

2009-2012 Estimated Per 

FY Year 

Program 

Actual 

Outlays CY IP % IP $ 

 Actual 

Outlays 

CY IP 

% IP $ 

Estimated 

Outlays 

CY IP 

% IP $

FFEL 

Program 22,835 (1) 1.68 (6) (7) 384 24,071(1) 1.68 (6) 404 18,427 (3) 1.68 310 

Pell Grant 

Program 14,927 (2) 4.11 (8) 613 17,081(2) 3.69 (4) 630 16,908 (5) 3.50(4) 592

The methodology for identifying FFEL outlays for this purpose was revised in FY 2008 in 

response to the OIG Audit Report on Federal Student Aid’s estimation of improper 

payments in the FFEL program (http://oigmis3.ed.gov/auditreports/a09h0015.pdf) and a 

continuing effort to improve the improper payment process. The revised outlay 

methodology is currently being analyzed and additional refinements may be implemented 

during FY 2009 as the definition of “outlay” is further explored. Following are refinements 

made for the improper payment outlay methodology for FFEL and/or Pell. 

(1) Source of FFEL actual outlays for FY 2007 and 2008 reflects total expenditures from the 

Financial Management Support System (FMSS) as of September 30. For FY 2008, an 

alternative approach was used that accurately reflects FY 2008 actual outlays for both 

guarantors and lenders. A query from the Financial Management System (FMS) was 

developed that specifically requested outlays for guarantor and lender limitations within FY 

2008. This methodology was used to derive revised data for FY 2007 to present in this 

year’s report as comparable data. The criteria used in prior year’s analyses were 

inconsistently applied due to differences in interpretation. The data source (FMS) is the 

same as in FY 2007; however, the approach in retrieving the data has been improved. 

Instead of looking at fiscal year activity, the approach is now focused on fiscal year outlays. 

The FMS query provides the detailed support by guarantor and lender. The FY 2008 

improper payment amount is considered an estimate because the FY 2007 FFEL improper 

payment rate is imputed onto FY 2008. 

Note that the annual Guaranty Agency Financial Report provides information on transfers 

from Federal Fund to Operating Fund for default aversion fees that are received in the 

winter of the current fiscal year for prior fiscal year activity. The amount of FY 2007 default 

aversion fees transferred from the Federal Fund was $148 million (non-cash transaction) 

and is not included in either the FY 2007 or the FY 2008 outlay number. The FY 2008 

FY 2008 Performance and Accountability Report—U.S. Department of Education 197
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default aversion fee will not be available until approximately the second quarter of the next 

fiscal year (FY 2009) and is not included in the FY 2008 outlays. 

(2) The source of FY 2008 Pell outlays reflects total expenditures from FMSS. In prior year 

Reduction Charts, the source of Pell Actual Outlays was the July COD Project Briefing data. 

Pell FY 2007 outlays have been updated using FMSS for this year’s comparison. These 

numbers are considered estimates because (1) the Pell rate is preliminary and (2) we are 

imputing the 2007 FFEL rate onto 2008. 

(3) The source of FFEL estimated outlays FY 2009–2012 is the FY 2009 Budget Appendix, 

pages 368, Line 87.00 and 370, line 86.97. Outlays were assumed to remain at the 

FY 2009 estimate for FY 2010-2012. Current year Actual and Estimated Outlays represent 

the sum of FFEL Financing and Liquidating Account Gross Outlays. 

(4) The chart above uses a preliminary Pell IP% for FY 2008. The FY 2008 IP % is 

scheduled to be finalized after issuance of the Department’s PAR. The 3.5 IP% used for 

2009-2012 is based on discussions held with OMB during FY 2007 and FY 2008. The 

3.5% rate is being used since it is a more current target than the targets previously 

identified in the Federal Student Aid 2006 – 2010 Five-Year Plan. 

(5) The source of Pell outlays above for FY 2009–12 is the FY 2009 Budget Appendix, page 

356, line 87.00, with detail support from Budget Service in file “Breakout of Student 

Financial Assistance Outlays by Program.” Outlays were assumed to remain at the 

FY 2009 estimate for FY 2010–12. 

(6) The FY 2008 FFEL IP error rate of 1.68% is the result of revised methodology prepared 

by Oak Ridge National Laboratory in late FY 2008. The revised methodology used in FY 

2008 is different from FY 2007 and is not comparable. Also, the methodology for FY 2009 

is expected to be revised from prior years’ methodologies in a continuing effort to improve 

the process. Discussions are under way with senior management and OMB on an 

improved alternative. 

(7) For FY 2007, the FFEL IP error rate was originally reported as 0.032%. The 0.032% 

was updated to 0.218% when the review/audit work was completed after issuance of the FY 

2007 PAR. The 0.032% FFEL error rate should have been footnoted as “preliminary” in the 

FY 2007 PAR. 

 

(8) The final Pell error rate for FY 2007 was 4.11%, up from the projected 3.54%. 

ESEA, Title I Program 

The Department performed a risk assessment of the Elementary and Secondary Education 

Act of 1965 Title I Program, Grants to Local Educational and Agencies, during FY 2008. 

The improper payments estimate for the most recent year measurable, FY 2006, is 0.32% 

or $40 million. This confirms previously reported data indicating that the risk of improper 

payments under current statutory requirements is very low. To validate the assessment 

data, the Department conducts on-site monitoring reviews on a three-year review cycle that 

encompass all states and territories receiving Title I funds. There were no findings in the 

monitoring reviews with questioned costs that contradicted the data in the risk assessment. 

198 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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The Department is continuing to review and monitor for data quality. A key element of the 

monitoring process involves the wide use of the number of children who qualify for free and 

reduced-price meals to determine an individual school’s Title I eligibility and allocation by 

local educational agencies. The Title I statute authorizes local educational agencies to use 

these data, provided under the U.S. Department of Agriculture’s national School Lunch 

Program, for this purpose. In many districts these data are the only indicator of poverty 

available at the individual school level. 

The U.S. Department of Agriculture is working with states and localities to improve program 

integrity, within the existing statutory and regulatory framework, through enhanced 

monitoring and auditing. The U.S. Department of Agriculture is also working with the 

Department and other federal agencies that have programs that make use of these data to 

explore long-term policy options. 

Risk Assessment for Other Grant Programs 

The Department’s approach to the risk assessment process for non-Federal Student Aid 

grant programs was to develop a methodology to produce statistically valid measures that 

could be applied uniformly across the Department’s programs. The intent was to use the 

same methodology across all non-Federal Student Aid grant programs to establish a level 

of quality control for all programs and, at the same time, produce a cost-effective measure. 

The Department deemed it cost effective to utilize the results of the thousands of single 

audits already being conducted by independent auditors on grant recipients. 

In FY 2007, the Department worked with the Department of Energy’s Oak Ridge National 

Laboratory to perform data mining on information available in the Federal Audit 

Clearinghouse’s Single Audit Database, the Department’s Grant Administration and 

Payment System, and the Department’s Audit Accountability and Resolution Tracking 

System to assess the risk of improper payments in its remaining grant programs. To 

conduct the risk assessment screening, Oak Ridge National Laboratory augmented the 

Audit Accountability and Resolution Tracking System database with imputed values for the 

likely questioned costs for grants that were not audited. The imputed and real questioned 

costs could then be tabulated to provide a reasonable upper-bound estimate of the rate of 

erroneous payments for each of the functional programs of interest. 

If the computed upper-bound percentage was below 2.5 percent, then the actual value 

would be lower than 2.5 percent. If the computed upper-bound percentage was greater 

than 2.5 percent, then the actual value may be greater or less than 2.5 percent, but the 

Department would need additional information to determine the appropriate estimate. 

The most striking result of the analysis was the generally low rate of questioned costs. The 

key finding of this analysis was that for the most recent year for which data were available 

(FY 2005), none of the functional programs exceed the threshold value of 2.5 percent. 

Consequently, none of the programs would be labeled as susceptible to significant 

erroneous payments. 

In accordance with OMB Circular A-123, Appendix C, programs deemed low risk only 

require a risk assessment every three years. Since the Oak Ridge National Laboratory risk 

assessments have not indicated any significant risk of improper payments, the Department 

did not task Oak Ridge National Laboratory to perform the risk assessment for FY 2008. 

However, the Department is taking the following actions to further improve its monitoring 

efforts. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 199
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Migrant Education Grants To States. Migrant Education Program (MEP) Formula Grants 

to States, authorized by Part C of Title I of the Elementary and Secondary Education Act of 

1965, support high-quality education programs for migratory children and help ensure that 

migratory children who move between school districts within a state or among the states 

are not penalized in any manner by disparities among states in curricula, graduation 

requirements, or state academic content and student academic achievement standards. 

Program funds also ensure that migratory children are provided with appropriate education 

services that address their special needs and receive full and appropriate opportunities to 

meet the same challenging state academic content and student academic achievement 

standards that all children are expected to meet. 

Questions about student eligibility for the program in several states were raised a few years 

ago based on a combination of state self-reporting, program monitoring by the Office of 

Migrant Education (OME), and audits by the Office of Inspector General (OIG). In 

response, OME took significant steps to improve eligibility verification of participating 

students, beginning with a voluntary re-interview initiative in which 46 of 48 states now 

receiving MEP grants reviewed eligibility determinations and calculated defect rates. OME 

hired a technical contractor to review state-reported defect rates in terms of their accuracy 

based on the underlying processes used by the states to derive the rates. 

During FY 2008, the Department also published a regulation establishing new, clearer 

definitions of eligibility; minimum quality control procedures, including annual prospective 

re-interviewing; mandatory retrospective re-interviewing by states that had technical errors 

in the voluntary effort or did not participate therein; and program authority to adjust FY 2006 

and subsequent-year state allocations based on accepted defect rates. Additionally, 

program staff resolved numerous findings from the OIG audits and worked with Department 

attorneys and the U.S. Department of Justice to recover millions of dollars from states that 

improperly received previous awards based upon false determinations of eligibility. 

These management activities have strengthened oversight in the program and improved 

the accuracy of program grant distributions across the participating states. Based upon the 

Oak Ridge methodology, the program remains well below the IPIA thresholds that would 

require more significant intervention. 

Risk Management Service. The Risk Management Service in the Office of the Secretary 

has been established to identify and take effective action to manage and mitigate risks in 

the area of grants management that may adversely affect the advancement of the 

Department’s mission. To achieve this objective, the Risk Management Service develops 

and coordinates a Departmentwide risk management strategy and coordinates and 

supports consistent, high-quality management of formula and discretionary grants 

Departmentwide. 

The office focuses on identifying potential high-risk grantees before problems begin to 

occur and providing assistance to those grantees regarding their financial management 

practices through the program offices and Risk Management Service staff members. In the 

case of grantees identified as high risk, resources are directed toward solving and 

managing issues of misuse, abuse, or waste of federal funds. The office also provides 

customer service in the form of training and responses to inquiries on policy interpretations 

to grantees, grant applicants, and program offices awarding and monitoring grants. 

200 FY 2008 Performance and Accountability Report—U.S. Department of Education 
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Managing Risk in Discretionary Grants. In FY 2008, the Department managed more 

than 10,000 discretionary grant awards. Due to the vast legislative differentiation and the 

complexity of the Department’s grant award programs, ensuring that program staff are fully 

aware of potentially detrimental issues relating to individual grantees is a significant 

challenge. Program offices designate specific grants as high risk in accordance with 

Departmental regulations. 

In an effort to reduce risk and promote efficiency, the Department has established the 

Grants High-Risk Module. This module is housed within the Department’s Grant 

Administration and Payment System, and program office staff are required to review and 

certify their awareness of the high-risk status of applicable grantees before making awards. 

Policies and procedures were developed to support the implementation of the module. 

System input to the module’s database is limited to specific grants policy staff who are fully 

trained in policy and system use. In addition to the module’s certification requirement, 

various reports are provided so that continual monitoring of grantee risk is made available 

to Department program administrators. 

Implementation of the module provides greater accountability and significantly reduces risk 

within the Department’s grant award process by ensuring program office awareness of 

potentially detrimental grantee issues prior to award determination. The Department 

anticipates that increased accessibility and communication across program offices will 

promote further monitoring of high-risk grantees, resulting in a reduction of the number of 

grantees so designated. 

Manager Accountability. The Department categorized OMB Circular A-133 single audit 

findings to provide feedback to program managers regarding the frequency and type of 

findings within their programs. This assists managers in tailoring their program monitoring 

efforts to the type of findings that most frequently occur. Additionally, post-audit follow-up 

courses have been developed to associate audit corrective actions with monitoring to 

minimize future risk and audit findings. 

Planned Corrective Actions. In addition to the actions previously outlined under the 

Student Financial Assistance Programs and ESEA, Title I Program sections, the 

Department will periodically update any corrective action plans based on the results of the 

initiatives outlined above. The Department will record and maintain corrective action plans 

as required, which will include due dates, process owners, and task completion dates. 

Information Systems and Infrastructure. The Department has submitted budget 

requests of $250,000 for FY 2009 and FY 2010 for information system infrastructure 

improvements. A portion of the funds will be used to continue the refinement of the Oak 

Ridge National Laboratory data mining effort. It is also anticipated that the Department will 

incur costs related to mitigation activities. 

Recovery Auditing Progress 

To effectively address the risk of improper administrative payments, the Department 

continued a recovery auditing initiative to review contract payments. The Department 

performed a review of payments based on a statistical sample of FY 2007 payment 

transactions. No improper payments were indicated in the review. The Department’s 

purchase and travel card programs remain subject to monthly reviews and reconciliations to 

identify potential misuse or abuse. 

FY 2008 Performance and Accountability Report—U.S. Department of Education 201
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202 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Summary 

The Department is continuing its efforts to comply with the IPIA. Although there are still 

challenges to overcome, the Department is committed to ensuring the integrity of its 

programs. 

The Department is focused on identifying and managing the risk of improper payments and 

mitigating the risk with adequate control activities. In FY 2009, we will continue to work with 

OMB and the Inspector General to explore additional opportunities for identifying and 

reducing potential improper payments and to ensure compliance with the IPIA. 
OTHER ACCOMPANYING INFORMATION

Summary of Financial Statement Audit and Management 

Assurances 

The following tables provide a summarized report on the Department’s financial statement 

audit and its management assurances. For more details the auditor’s report can be found 

on pages 175–190 and the Department’s Management assurances on pages 41–44. 

Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement No 

Material Weaknesses Beginning 

Balance New Resolved Consolidated Ending 

Balance 

Total Material Weaknesses 0 0 0 0 0 

Summary of Management Assurances 

Effectiveness of Internal Control over Financial Reporting - Federal Managers’ Financial Integrity Act 

(FMFIA) 2 

Statement of Assurance Unqualified 

Material Weaknesses Beginning 

Balance New Resolved Reassessed Ending Balance 

Total Material Weaknesses 0 0 0 0 0 

The Department had no material weaknesses in the design or operation of the internal control over financial 

reporting. 

Effectiveness of Internal Control over Operations - FMFIA 2 

Statement of Assurance Qualified 

Material Weaknesses Beginning 

Balance New Resolved Reassessed Ending Balance 

Information Technology 

Security 1 1

Monitoring and Oversight of 

Guaranty Agencies, Lenders 

and Servicers 

1 1

Total Material Weaknesses 2 0 1 0 1 

Conformance with Financial Management System Requirements - FMFIA 4 

Statement of Assurance The Department systems conform to financial management system 

requirements. 

Non-Conformance Beginning 

Balance New Resolved Reassessed Ending Balance 

Total Non-Conformance 0 0 0 0 0 

FY 2008 Performance and Accountability Report—U.S. Department of Education 203
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SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES

204 FY 2008 Performance and Accountability Report—U.S. Department of Education 

Compliance with Federal Financial Management Improvement Act 

Agency Auditor 

Overall Substantial Compliance Yes No 

1. System Requirements Yes No 

2. Federal Accounting Standards Yes Yes 

3. United States Standard General Ledger 

at Transaction Level Yes Yes 
OTHER ACCOMPANYING INFORMATION

Glossary of Acronyms and Abbreviations 

ACG Academic Competitiveness Grant 

ACT formerly American College Test, now ACT 

ACSI American Customer Satisfaction Index 

AEFLA Adult Education and Family Literacy Act 

AGI Adjusted Gross Income 

APEB Act to Promote the Education of the Blind 

AP Advanced Placement 

ATA Assistive Technology Act of 2004 

CAROI Cooperative Audit Resolution and Oversight Initiative 

CCRAA College Cost Reduction and Access Act 

CFAAA Compact of Free Association Amendments Act of 2003 

CFDA Catalog of Federal Domestic Assistance

CRA Civil Rights Act of 1964 

CSPR Consolidated State Performance Report 

CSRS Civil Service Retirement System 

CTEA Carl D. Perkins Career and Technical Education Act of 2006 

ECASLA Ensuring Continued Access to Student Loans Act of 2008 

EDA Education of the Deaf Act of 1986 

EDEN Education Data Exchange Network 

EFC Expected Family Contribution 

ESEA Elementary and Secondary Education Act of 1965 

ESRA Education Sciences Reform Act of 2002 

FAFSA Free Application for Federal Student Aid 

FASAB Federal Accounting Standards Advisory Board 

FECA Federal Employees’ Compensation Act 

FERS Federal Employees Retirement System 

FFB Federal Financing Bank 

FY 2008 Performance and Accountability Report—U.S. Department of Education 205
OTHER ACCOMPANYING INFORMATION

GLOSSARY OF ACRONYMS AND ABBREVIATIONS

FFEL Federal Family Education Loan 

FFMIA Federal Financial Management Improvement Act of 1996 

FISMA Federal Information Security Management Act of 2002 

FMFIA Federal Managers’ Financial Integrity Act of 1982 

FSA Federal Student Aid

FY Fiscal Year 

GAPS Grant Administration and Payment System 

GA Guaranty Agency 

GEAR UP Gaining Early Awareness and Readiness for Undergraduate Programs 

GPRA Government Performance and Results Act of 1993

GSA General Services Administration 

HBCUs Historically Black Colleges and Universities 

HEA Higher Education Act of 1965 

HKNCA Helen Keller National Center Act 

HR Human Resources 

IB International Baccalaureate Program

IDEA Individuals with Disabilities Education Act 

IES Institute of Education Sciences 

IP Improper Payments 

IPIA Improper Payments Information Act of 2002 

IRS Internal Revenue Service 

IT Information Technology 

IUS Internal Use Software 

IV&V Independent Verification and Validation 

LLR Lender of Last Resort 

MD&A Management’s Discussion and Analysis 

MECEA Mutual Educational and Cultural Exchange Act of 1961 

MVHAA McKinney-Vento Homeless Assistance Act 

206 FY 2008 Performance and Accountability Report—U.S. Department of Education 
OTHER ACCOMPANYING INFORMATION

GLOSSARY OF ACRONYMS AND ABBREVIATIONS

NAEP National Assessment of Educational Progress 

NCLB No Child Left Behind Act of 2001

NLA National Literacy Act of 1991 

OCR Office for Civil Rights

OELA Office of English Language Acquisition 

OESE Office of Elementary and Secondary Education 

OIG Office of Inspector General 

OII Office of Innovation and Improvement 

OM Office of Management 

OMB Office of Management and Budget 

OPE Office of Postsecondary Education 

OPM Office of Personnel Management 

OSDFS Office of Safe and Drug-Free Schools 

OSERS Office of Special Education and Rehabilitative Services 

OVAE Office of Vocational and Adult Education 

PAR Performance and Accountability Report

PART Program Assessment Rating Tool 

PII Personally Identifiable Information 

PMA President’s Management Agenda 

PLUS Parent Loans for Undergraduate Students 

RA Rehabilitation Act of 1973 

RMS Risk Management Service 

RMCC Risk Management Coordinating Council

SAP Special Allowance Payments 

SOF Statement of Financing 

SY School Year 

TASSIE Title I Accountability Systems and School Improvement Efforts 

TEACH Teacher Education Assistance for College and Higher Education 

FY 2008 Performance and Accountability Report—U.S. Department of Education 207
OTHER ACCOMPANYING INFORMATION

GLOSSARY OF ACRONYMS AND ABBREVIATIONS

208 FY 2008 Performance and Accountability Report—U.S. Department of Education 

TRIO Grant programs under HEA, originally three programs; not an acronym 

USC United States Code 

VPS Visual Performance Suite 

WWC What Works Clearinghouse

YRBSS Youth Risk Behavior Surveillance System
OTHER ACCOMPANYING INFORMATION

Selected Department Web Links 

Mapping America's Educational Progress 2008 

Data on how states are doing in student achievement in reading and math, high school 

graduation rates, schools making adequate yearly progress, highly qualified teachers, 

parents taking advantage of tutoring and choice options, state participation in flexibility 

options, and more. 

http://www.ed.gov/nclb/accountability/results/progress/index.html

Data on how the U.S. is doing in student achievement in reading and math, high school 

graduation rates, schools making adequate yearly progress, highly qualified teachers, 

parents taking advantage of tutoring and choice options, state participation in flexibility 

options, and more. 

http://www.ed.gov/nclb/accountability/results/progress/nation.html

Assessing Program Performance PART 

The Program Assessment Rating Tool (PART) was developed to assess and improve 

program performance so that the federal government can achieve better results. Because 

the PART includes a consistent series of analytical questions, it allows programs to show 

improvements over time, and allows comparisons between similar programs. 

http://www.whitehouse.gov/omb/part/index.html#2008

Discretionary Grant Programs for FY 2008 

This site lists Department grant competitions previously announced, as well as those 

planned for later announcement, for new awards organized according to the Department's 

principal program offices. 

http://www.ed.gov/fund/grant/find/edlite-forecast.html

Information Policy, E-Gov and Information Technology 

The Office of Management and Budget (OMB) assists the President in overseeing the 

federal budget, evaluates the effectiveness of agency programs, policies, and procedures, 

assesses competing funding demands among agencies, and sets funding priorities. OMB 

ensures that agency reports, rules, testimony, procurement, financial management, 

information, regulatory policies and proposed legislation are consistent with the President's 

Budget and with Administration policies. 

http://www.whitehouse.gov/omb/inforeg/infopoltech.html

FY 2008 Performance and Accountability Report—U.S. Department of Education 209
OTHER ACCOMPANYING INFORMATION

SELECTED DEPARTMENT WEB LINKS

210 FY 2008 Performance and Accountability Report—U.S. Department of Education 

National Mathematics Advisory Panel 

The National Mathematics Advisory Panel was created in April 2006 to advance the 

teaching and learning of mathematics. Expert panelists, including leading mathematicians, 

cognitive psychologists, and educators, reviewed numerous research studies. The panel's 

final report, issued in March 2008, contains 45 findings and recommendations on topics 

including instructional practices, materials, professional development, and assessments. 

http://www.ed.gov/about/bdscomm/list/mathpanel/index.html

Research and Statistics 

The Education Sciences Reform Act of 2002 established the Institute of Education 

Sciences (IES) within the Department to provide research, evaluation and statistics to our 

nation’s education system. 

http://ies.ed.gov/

National Assessment Governing Board 

The Governing Board is an independent, bipartisan group whose members include 

governors, state legislators, local and state school officials, educators, business 

representatives, and members of the general public. Congress created the 26-member 

Governing Board in 1988 to set policy for the National Assessment of Educational Progress 

(NAEP)—commonly known as the “The Nation's Report Card.” 

http://www.nagb.org/

National Assessment of Educational Progress 

The National Assessment of Educational Progress assesses samples of students in 

grades 4, 8, and 12 in various academic subjects. Results of the assessments are reported 

for the nation and states in terms of achievement levels—basic, proficient, and advanced. 

http://nationsreportcard.gov/

Office of Inspector General 

The OIG has four primary business functions: audit, investigation, cyber security, and 

evaluation and inspection. 

http://www.ed.gov/about/offices/list/oig/index.html

For a list of recent reports, go to: 

http://www.ed.gov/about/offices/list/oig/areports.html
The Citizens’ Report (previously called the Highlights Report) and a CD of the 

Department of Education 

Fiscal Year 2008 Performance and Accountability Report 

will be available in January 2009. For copies, contact ED Pubs, the Department’s 

Publication Center. 

ED Pubs 

U.S. Department of Education 

P.O. Box 1398 

Jessup, MD 20794-1398 

Telephone: (877) 4EDPUBS [(877)-433-7827] 

or: (800) USALEARN [(800)-872-5327] 

Fax: (301) 570-1244 

Web: http://www.edpubs.org/webstore/Content/search.asp

TDD/TYY: (877) 576-7734 

Web: http://www.ed.gov/about/reports/annual/2008report/index.html

The Department’s Strategic Plan is available on the Web at: 

http://www.ed.gov/about/reports/strat/index.html

Department annual plans and annual reports are available on the Web at: 

http://www.ed.gov/about/reports/annual/index.html

The Department welcomes all comments and suggestions on both the content and 

presentation of this report. Please forward them to: 

Office of the Chief Financial Officer

U.S. Department of Education 

Washington, D.C. 20202-0600 

E-mail: PARcomments@ed.gov

The following companies were contracted to assist in the preparation of the 

U.S. Department of Education Fiscal Year 2008 Performance and Accountability Report: 

For general layout and Web design: Macro International Inc. 

For database design: Plexus Corporation 

For accounting services: IBM Business Consulting Services 

 Cotton & Company, LLP 

 FMR Consulting, Inc.
OUR MISSION IS TO PROMOTE STUDENT ACHIEVEMENT AND PREPARATION FOR 

GLOBAL COMPETITIVENESS BY FOSTERING EDUCATIONAL EXCELLENCE AND 

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