United States General Accounting Office

GAO Testimony

Before the Subcommittee on Human Resources,

Committee on Government Reform and Oversight, House

of Representatives

For Release on Delivery

Expected at 10 a.m.

Thursday, March 20, 1997

DEPARTMENT OF

EDUCATION

Challenges in Promoting

Access and Excellence in

Education

Statement of Cornelia M. Blanchette, Associate Director

Education and Employment Issues

Health, Education, and Human Services Division

GAO/T-HEHS-97-99

Department of Education: Challenges in

Promoting Access and Excellence in

Education

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss several challenges the

Department of Education faces in carrying out its mission in a

cost-efficient and effective manner.

The Department was created in 1980 with a mission that involves two

major kinds of institutions in which education is provided: (1) elementary

and secondary schools and (2) postsecondary institutions. With a staff of

about 4,600 in fiscal year 1997 and a budget of about $29 billion, the

Department manages the federal investment in education and leads the

nation’s long-term effort to improve the quality of education. Specifically,

the Department promotes access and equity in education, provides

financial aid to postsecondary students, and develops information and

provides research on best practices to improve the quality of education.

With the Department’s support, education is a state responsibility under

local control. As shown in figure 1, the nation spends more than

$500 billion a year on education, with state, local, and private expenditures

accounting for about 91 percent of this spending.

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Department of Education: Challenges in

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Figure 1: Total Expenditures for

Education in the United States,

1995-96

Dollars in Billions

All Other b

$163.4


Federal a

$46.9


State


$179.4


Local


$138.4

30.9%

34.0%

8.9%

26.2%

aIncludes expenditures of all federal agencies.

bFederally supported student aid that goes to higher education institutions through students’

tuition payments is shown under “All Other” rather than under “Federal.” Such payments would

add substantial amounts and several percentage points to the federal share.

Source: U.S. Department of Education.

Although the cornerstone of our nation’s future is a sound educational

system that meets the diverse needs of all Americans, some 2,000 students

drop out of school each day, and large numbers of students graduate from

school lacking the skills sought by employers. The strength of

international competition has reinforced the link between education and

employment, which is shown in figure 2.

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Department of Education: Challenges in

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Education

Figure 2: Unemployment Rates of

People 25 Years of Age and Older by

Highest Level of Education Attained,

1995

By Highest Level of Education Attained: 1995

20

15

10

5

0

 Less Than 


 High School


 Graduate


 High School


 Graduate,


 No College


 Some College,


 No Degree


 Associate


 Degree

 Bachelor's or 


 Higher Degree


 All Levels

Percent Unemployed

9.0

4.8 4.3

3.3

2.4

4.3

Source: U.S. Department of Education.

At the same time, the nation’s school-age population has become

increasingly poor, racially and ethnically diverse, and at risk of school

failure. In addition, the Department has had a history of management

problems. We identified significant operational deficiencies in our 1993

management review and our high-risk series1

 that affect the Department’s

ability to protect the financial interests of the government and to manage

itself efficiently and effectively. The current environment places

considerable pressure on the Department to correct these deficiencies.

The public is demanding more accountability from government

agencies—more assurance that tax dollars are not being wasted and that

government is operated in accordance with sound management practices.

Today, I would like to discuss two major challenges the Department faces

in achieving its mission: first, ensuring access to postsecondary

institutions, while at the same time protecting the financial interests of the

government, and second, promoting access to and excellence in

1

High-Risk Series: Guaranteed Student Loans (GAO/HR-93-2, Dec. 1992); High-Risk Series: Student

Financial Aid (GAO/HR-95-10, Feb. 1995); and High-Risk Series: Student Financial Aid (GAO/HR-97-11,

Feb. 1997).

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Department of Education: Challenges in

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Education

elementary, secondary, and adult education. In addition, I want to discuss

how the Department’s ability to meet these challenges could be enhanced

by the improved management that the Congress envisioned in passing

recent legislation. My discussion today is based on work we have done

over several years.2

Although the Department has made progress in ensuring access to

postsecondary education and in providing financial accountability,

challenges remain, especially in providing educational access to

low-income and minority students in an era of rising tuition costs and in

protecting the financial interests of the federal government. The student

aid programs make available billions of dollars in loans and grants to

promote access to education. But these programs continue to be

hampered by problems with process complexity, structure, and program

management. The student aid process is a complicated one—it has several

participants who play different roles as well as various processes for each

of the grant or loan programs. The federal government continues to bear a

major portion of the risk for loan losses. Moreover, management

shortcomings, especially inadequate management information systems

that contain unreliable data, contribute to the Department’s difficulties.

The Department also faces challenges in promoting access to and

excellence in preschool, elementary, secondary, and adult education

programs. Through leadership and leverage, the Department works with

states and local education agencies to effect changes intended to improve

the nation’s educational system. Demonstrating accountability is

dependent on having clearly defined objectives, valid assessment

instruments, and accurate program data. However, in some instances, the

Department does not have these prerequisites. For example, in our work

on programs funded under the Adult Education Act, we found that the

Department had difficult ensuring accountability for results, primarily

because the programs did not have clearly defined objectives. In addition,

it is unclear whether the Department has the resources it needs to manage

its funds, including funds for the proposed Partnership to Rebuild

America’s Schools Act of 1997 and for helping schools integrate

technology into the curriculum to make students technologically literate.

Similarly, the Department only has selected information on the

implementation of the title 1 program, the largest single federal elementary

and secondary grant program, for which $7.7 billion was appropriated in

fiscal year 1997. Thus, the Department does not have the informational

basis to determine whether mid-course changes are necessary.

2

A list of related GAO products appears at the end of this testimony.

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In meeting these challenges, the Department will need to improve its

management. Major pieces of recent legislation provide powerful tools in

the form of a statutory framework for improving agency operations and

accountability. These laws include (1) the 1993 Government Performance

and Results Act (GPRA), which requires agencies to focus on results as they

define their missions and desired outcomes, measure performance, and

use that information to improve programs; (2) the expanded Chief

Financial Officers (CFO) Act, which requires agencies to prepare financial

statements that can pass the test of an independent audit; and (3) the 1995

Paperwork Reduction Act and the 1996 Clinger-Cohen Act, which are

intended to help agencies better manage their information resources and

make wiser investments in information technology. The Department has

made progress in implementing these laws, but work remains to be done

before the goal of improved management can be reached.

Background The Department of Education’s basic functions are to provide financial

resources, primarily through student loans and grants for higher

education; provide research and information on best practices in

education; and ensure that publicly funded schools and education

programs observe civil rights laws.3

 It administers a variety of grant and

contract programs that provide aid for disadvantaged children; aid for

children and adults with disabilities; student loans and grants for higher

education; vocational and adult education; and research and evaluation, as

well as a variety of smaller programs, such as the gifted and talented

education program.

According to its own data, the Department currently administers

approximately 180 programs, including the federal student financial aid

programs established under title IV of the Higher Education Act of 1965, as

amended (HEA). These programs—the Federal Family Education Loan

Program (FFELP), the Ford Direct Loan Program (FDLP), the Federal Pell

Grant Program, the Federal Perkins Loan Program, and several smaller

financial aid programs—fund approximately 75 percent of all

postsecondary student financial aid in the nation. The two largest

elementary/secondary programs are title I of the Elementary and

3

The Department, through its Office for Civil Rights, is responsible for enforcing the following civil

rights laws as they relate to schools at all levels: (1) title VI of the Civil Rights Act of 1964, which

prohibits discrimination on the basis of race, color, or national origin; (2) title IX of the Education

Amendments of 1972, which prohibits discrimination on the basis of sex in education programs and

activities; (3) section 504 of the Rehabilitation Act of 1973, which prohibits discrimination on the basis

of disability; (4) the Age Discrimination Act of 1975, which prohibits discrimination on the basis of age;

and (5) title II of the Americans With Disabilities Act of 1990, which prohibits public entities from

discriminating on the basis of disability.

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Education

Secondary Education Act, which helps support the education of over

6 million disadvantaged children in more than 50,000 schools

nationwide—about one-half of the nation’s public schools—and special

education programs that assist over 5 million children with disabilities

from birth through age 21 in meeting their educational and developmental

needs.

For fiscal year 1997, the Department has an estimated budget of

$29.4 billion and is authorized 4,613 full-time-equivalent (FTE) staff-years.

The administration’s fiscal year 1998 budget request is for $39.5 billion and

4,560 FTE staff. This represents an increase of about $10 billion, $5 billion

of which the administration wants to use to assist states in acquiring funds

for school construction.

The Department’s spending for education leverages well beyond its budget

authority. For example, the fiscal year 1998 budget request of $12.7 billion

for postsecondary student aid programs is expected to generate $47.2

billion for more than 8 million students. And $4 billion in federal

appropriations for special education is expected to leverage about

$29.5 billion in state and local funds.

Ensuring Access to

Postsecondary

Institutions While

Protecting Federal

Financial Interests

Through its student aid programs, the Department has enabled millions of

students to attend postsecondary educational institutions; however, the

current economic conditions make continuing to ensure such access

difficult. Rising tuition, coupled with the shift to providing loans instead of

grants, could result in fewer low-income and minority students’ staying in

college. At the same time the Department is concerned with access, its

ongoing challenge is to improve its processes to ensure financial

accountability in its postsecondary student aid programs, particularly

FFELP, FDLP, and the Pell Grant Program. In 1990, we designated the student

financial aid program one of 17 federal high-risk programs likely to cause

the loss of substantial amounts of federal money because of their

vulnerabilities to waste, fraud, abuse, and mismanagement. Although the

Department has acted to correct many problems and improve program

controls, significant vulnerabilities remain, and we have included the

student financial aid program in our 1997 list of 25 high-risk programs.

Ensuring Equal Access Is

Becoming More Difficult

The Department’s success in meeting one of its major

challenges—ensuring access to postsecondary institutions—is critical to

the economic well-being of the nation’s citizens. As shown in figure 2, level

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Education

of education is closely linked to unemployment. In addition, level of

education is a strong determinant of wage earnings. For example, college

graduates earn much more than those with only a high school education,

and the differential has been increasing. According to Department data, in

1985 the median annual income of full-time male workers 25 years and

over was $41,892 for college graduates and $26,609 for those with high

school diplomas only, a difference of $15,283. By 1994, the difference

between these two groups had grown to $21,191. Low-income and

minority students have traditionally been underrepresented among college

students, and access is becoming more and more problematic as the cost

of attending college increases. For example, as we reported to the

Congress in August 1996,4

 a public college education has become less

affordable in the last 15 years as tuition has risen nearly three times as fast

as household income. The average tuition for full-time in-state students

increased from $804 per year to $2,689, or 234 percent, and median

household income, from $17,710 to $32,264, or 82 percent. Students and

their families have responded to this “affordability gap” by drawing more

heavily on their own financial resources and increasing their borrowing.

For example, the annual average student loan at 4-year public schools rose

from $518 per full-time student in fiscal year 1980 to $2,417 in fiscal year

1995, an increase of 367 percent, which is almost five times the 74-percent

increase in the cost of living—as measured by the consumer price

index—for the same period. If this trend continues, rising tuition levels

may deter many students from attending college.

The Department’s primary mechanism for ensuring access to

postsecondary institutions is the federal student financial aid

programs—principally FFELP, FDLP, and the Pell Grant Program. While

federal student financial aid has been substantial in the past, recent trends

may inhibit broader college access. A growing proportion of federal aid

has taken the form of loans rather than grants since the 1970s. For

example, from 1977 to 1980, grant aid exceeded loan aid; since 1985,

however, loan aid has been about twice the amount of grant aid. With

federal grant aid declining in relative terms, students and their families

have had to shoulder a greater share of college expenses. Many

policymakers have expressed concern that this trend in college costs and

in financial aid patterns, which increases students’ net costs for higher

education, has diminished college access—both entry and attendance

through graduation—for low-income students.

4

Higher Education: Tuition Increasing Faster Than Household Income and Public Colleges’ Costs

(GAO/HEHS-96-154, Aug. 15, 1996).

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Our work supports this belief with respect to attendance through

graduation.5

 We concluded from our work that financial aid packages with

relatively high grant levels may improve low-income students’ access to

higher education more than packages that rely more on loans. In addition,

our analysis indicated that the sooner low-income students receive grant

assistance, the more likely they are to stay in college. We found that grants

were most effective in reducing low-income students’ dropout

probabilities in the first year. For these students, an additional $1,000 grant

reduced the dropout probability by 23 percent. In the second year, the

additional grant reduced dropout probability by 8 percent, while in the

third year it had no statistically discernable effect. Therefore, we believe

that restructuring federal grant programs to feature frontloading6

 could

improve low-income students’ dropout rates with little or no change in

each student’s overall 4-year allocation of grants and loans. We suggested

that, if the Congress was interested in increasing the number of

low-income students who stay in college, it could direct the Department to

conduct a pilot program for frontloading federal grants. The Congress has

yet to act on this suggestion.

Recurring Problems

Hamper the Department’s

Ability to Protect Federal

Financial Interests

Although major federal student aid programs, such as FFELP, FDLP, and the

Pell Grant Program, have succeeded in providing students access to

billions of dollars for postsecondary education, our work has shown that

the Department has been less successful in protecting the financial

interests of U.S. taxpayers.7

 For example, in fiscal year 1996, while the

Department made more than $40 billion available in student aid, the

federal government paid out over $2.5 billion to make good its guarantee

on defaulted student loans.

The Congress addressed many of the student aid deficiencies that we, the

Department’s Office of Inspector General (OIG), and others had identified

in the past through the 1992 and 1993 amendments to HEA. For example,

the amendments required that financial and compliance audits of guaranty

5

Higher Education: Restructuring Student Aid Could Reduce Low-Income Student Dropout Rate

(GAO/HEHS-95-48, Mar. 23, 1995).

6

Frontloading grants entails giving students mostly grant aid in the first year and increasingly

substituting loan aid in subsequent years, culminating in an aid package consisting mostly of loans in

the final school year.

7

GAO/HR-97-11, Feb. 1997; Financial Audit: Federal Family Education Loan Program’s Financial

Statements for Fiscal Years 1994 and 1993 (GAO/AIMD-96-22, Feb. 26, 1996); Student Financial Aid:

Data Not Fully Utilized to Identify Inappropriately Awarded Loans and Grants (GAO/HEHS-95-89,

July 11, 1995); and Financial Management: Education’s Student Loan Program Controls Over Lenders

Need Improvement (GAO/AIMD-93-33, Sept. 9, 1993).

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agencies be conducted annually rather than every 2 years. The Department

also has planned and taken a number of actions to correct its financial

accountability problems, such as reorganizing the Office of Postsecondary

Education to permit it to better administer and oversee federal student aid

programs and developing several new information systems to provide

more accurate and timely information. Many of the Department’s actions

are likely to have played a major role in reducing the amount of student

loan defaults from $2.7 billion in fiscal year 1992 to $2.5 billion in fiscal

year 1996 and in increasing collections on defaulted student loans from

$1 billion in fiscal year 1992 to $2.1 billion in fiscal year 1996. However, the

Department’s actions have not completely resolved many of the underlying

problems, and, therefore, vulnerabilities remain.

At the core of the Department’s financial accountability difficulties are

persistent problems with the individual student aid programs’ processes,

structure, and management. These problems include (1) overly complex

processes, (2) inadequate financial risk to lenders or state guaranty

agencies for defaulted loans, and (3) management shortcomings.8

Our work has shown that the student aid programs have many participants

and involve complicated, cumbersome processes. Three principal

participants—students, schools, and the Department of Education—are

involved in all the financial aid programs; two additional

participants—lenders and guaranty agencies—also have roles in FFELP. In

general, each student aid program has its own processes, which include

procedures for student applications, school verifications of eligibility, and

lenders or other servicing organizations that collect payments. Further, the

introduction of FDLP, originally viewed as a potential replacement for

FFELP, has added a new dimension of complexity. Rather than replacing

FFELP as initially planned, FDLP now operates along side it. Essentially, this

means that the Department has two programs that are similar in purpose

but that operate differently.

The structure of the student aid programs makes protecting the financial

interests of the government difficult for the Department for two reasons.

First, because HEA placed nearly all the financial risk for defaults on the

federal government, it continues to bear a major portion of the risk for

FFELP and FDLP loan losses. And, although the 1992 and 1993 amendments

to HEA established slightly more risk sharing, the current structure still

makes protecting the taxpayers’ financial interests difficult. Protecting the

financial interests of the government is also difficult because the loan

8

GAO/HR-97-11, Feb. 1997.

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programs now serve more students from low-income families and those

attending proprietary schools than in the past. As the number of these

higher-risk borrowers has increased, so has the number of defaults. Both

of these conditions enhance access for low-income students, yet a tension

exists because they jeopardize financial accountability.

Management shortcomings also continue as a major problem and

contribute to the Department’s financial accountability difficulties. In the

past, congressional hearings and investigations, reports by the

Department’s OIG, our reports, and other studies and evaluations have

shown that the Department (1) did not adequately oversee schools that

participated in the programs; (2) managed each title IV program through a

separate administrative structure, with poor or little communication

among programs; (3) used inadequate management information systems

that contained unreliable data; and (4) did not have sufficient and reliable

student loan data to determine the Department’s liability for outstanding

loan guarantees. These problems cannot be quickly or easily fixed. The

Department has taken many actions, such as improving gatekeeping

procedures for determining which schools may participate, to address

these problems. However, the Department’s management problems, such

as administrative inefficiencies resulting from the separate administrative

structures used to manage each title IV program, have not yet been

resolved.

Improved Gatekeeping Has

Somewhat Enhanced

Protection of Federal

Financial Interests

We testified before this Subcommittee last June on issues related to

“gatekeeping”—the process for ensuring that students are receiving title IV

aid to attend only schools that provide quality education and training.9

 At

that time, we noted the history of concern about the integrity of title IV

programs stemming from our work, that of the Department’s OIG, and the

Congress—work that led to the conclusion that extensive abuse and

mismanagement existed in these programs. For example, some schools

received Pell grant funds for students who never applied for the grants or

enrolled in or attended the schools. In one instance, a chain of proprietary

schools falsified student records and misrepresented the quality of its

educational programs to increase its revenues from students receiving Pell

grants.

In recent years, the Congress has enacted legislation to improve oversight

of participating schools by such means as setting maximum default rates

9

Higher Education: Ensuring Quality Education From Proprietary Institutions (GAO/T-HEHS-96-158,

June 6, 1996).

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that schools cannot exceed and still participate in the title IV programs.

Legislation also has strengthened the role of the Department, states, and

accrediting agencies—referred to as “the triad”—in determining school

eligibility. HEA recognizes the triad as having shared responsibility for

gatekeeping. As part of this triad, the Department (1) verifies schools’

eligibility and certifies their financial and administrative capacity and

(2) grants recognition to accrediting agencies.10 The Department has

improved the gatekeeping process by such actions as requiring all schools

to have annual financial and compliance audits, increasing the number of

program reviews, hiring additional staff to conduct the reviews, and

beginning to develop a new database of school information to help

Department staff monitor schools’ performance.

Nevertheless, as we reported in our recent high-risk report,11 several

weaknesses continue to cause concern. For example, the Department’s OIG

identified problems with the recertification process that could increase the

likelihood that schools not in compliance with eligibility requirements are

able to continue to participate in title IV programs. A review of a sample of

Department recertification actions showed that 27 percent of schools

sampled had violations such as unpaid debts or failures to meet financial

responsibility requirements.12 The Department acknowledged that some

recertifications should not have been made and stated that it was taking

action to make current financial data available for future recertification

reviews.

The Department is also implementing a gatekeeping initiative designed to

focus resources on high-risk schools: the Institutional Participation and

Oversight Service (IPOS) Challenge. Under the IPOS Challenge, the

Department plans to use a computer model to identify schools for review

on the basis of their risk of noncompliance. Because this initiative has only

recently been undertaken, it is too soon to assess its effectiveness.

10For their part, states license and use a variety of approaches to regulate schools in the normal course

of regulating commerce within their borders, and accrediting agencies provide nongovernmental, peer

evaluation of schools and programs to ensure a consistent level of quality.

11GAO/HR-97-11, Feb. 1997.

12OIG, Subsequent Review to Follow-Up Review on Selected Gatekeeping Operations, ACN: 11-60004

(Washington, D.C.: U.S. Department of Education, June 7, 1996).

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Challenges in

Promoting Access and

Excellence in

Elementary,

Secondary, and Adult

Education Programs

Excellence in education in America has become a major concern for the

public, and both the Congress and the Department have promoted

initiatives to improve the quality of American education. These efforts

include improving the quality of the physical environment in which

students learn, ensuring schools have the ability to use the technology

needed to provide children with an education appropriate for the 21st

century, creating and promoting national standards to shape curriculum

and guide test development in order to measure reading and math

achievement, supporting efforts to improve the quality of teachers and

teacher preparation programs, and ensuring equal access to education.

Major legislative efforts, such as Goals 2000: Educate America Act, the

Improving America’s School Act, and the School-to-Work Opportunities

Act, are examples of efforts focusing on improving the quality of America’s

public education.

Because the federal role in funding elementary and secondary education is

relatively small, and states and local governments have the primary

responsibility for and control of education programs, the Department

faces a significant challenge in ensuring access and promoting excellence.

Its tools are providing leadership, financial leverage, and technical

assistance and information. The Department exercises leadership by

shining a spotlight on important national education issues, facilitating

communication on quality issues, and fostering intergovernmental and

public/private partnerships. However, when one considers how it

leverages resources and provides technical assistance and information, the

extent to which Department funds are fostering excellence and are being

spent efficiently and effectively is unclear. Two questions arise: Does the

Department of Education know if its programs are working? And does the

Department have the resources to manage its funds and provide the

needed information and technical assistance?

More Information Is

Needed to Determine How

the Department’s Programs

Are Working

The Department is responsible for funding over $22 billion in elementary

and secondary programs, including title 1, special education, vocational

education, adult education, and Safe and Drug Free Schools. A major

challenge facing the Department is ensuring that these programs are

providing the intended outcomes. To do this the Department’s programs

must have clearly defined objectives and complete, accurate, and timely

program data.

Title 1 of the Elementary and Secondary Education Act is the largest

federal elementary and secondary education grant program, with about

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$7.7 billion appropriated in fiscal year 1997. Its purpose is to promote

access to and equity in education for low-income students. The Congress

modified the program in 1994, strengthening its accountability provisions

and encouraging the concentration of funds to serve more disadvantaged

children. At this time, the Department does not have the information it

needs to determine whether the funding is being targeted as intended.

Although the Department has asked for $10 million in its fiscal year 1998

budget request to evaluate the impact of title 1, it has only just begun a

small study of selected school districts to look at targeting so that

necessary mid-course modifications can be identified. The ultimate impact

of the 1994 program modifications could be diminished if the funding

changes are not being implemented as intended.

As another example, we found in our work on the programs funded under

the Adult Education Act13 that the State Grant Program, which funds local

programs intended to address the educational needs of millions of adults,

had difficulty ensuring that the programs met these needs. The lack of

clearly defined program objectives was one of the reasons for the

difficulty. The broad objectives of the State Grant Program give the states

flexibility to set their own priorities but, as some argue, they do not

provide states with sufficient direction for measuring results. Amendments

to the act required the Department to improve accountability by

developing model indicators that states could adopt and use to evaluate

local programs. However, experts disagree about whether developing

indicators will help states to define measurable program objectives,

evaluate local programs, and collect more accurate data.

13The Adult Education Act was designed, in part, to help states fund programs to help adults acquire

the basic skills needed for literate functioning, benefit from job training, and continue their education

at least through high school. Grants are made to states on the basis of the number of people in each

state who are at least 16 years of age, are not required to be in school, and lack a high school diploma.

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Additional Departmental

Resources May Be Needed

to Manage Funds and

Provide Information and

Technical Assistance

Recently, we have been examining two of the most basic elements of

education—the financing systems that undergird public education14 and

the buildings within which education takes place.15 For example, in our

school facilities series, we documented that officials estimated that a third

of our nation’s schools had serious facilities problems and that it would

take $112 billion to bring our schools into good overall condition. In

February, the administration used our reports as the basis for proposing

the Partnership to Rebuild America’s Schools Act, which, if enacted,

would be administered by the Department.

Several members of the Congress have raised issues associated with this

proposed solution to improve schools’ conditions, such as whether the

types of financial and information management problems that we

discussed earlier regarding postsecondary federal financial aid programs

would develop in the administration of this new program, whether the

Department has qualified staff to administer the program, and whether

information systems to monitor it and account for the funds are available

and operational.

The administration has also been promoting excellence and access by

supporting technology, both through the leadership role of the President

and the Office of the Secretary and through the technology programs the

Department oversees. In the 1998 budget, the administration has doubled

the amount of money requested for educational technology to help schools

integrate technology into the curriculum in order to increase students’

technological literacy and improve the quality of instruction in core

subjects. In our facilities work, we found that schools had large

technology infrastructure needs that the Department’s Technology

Literacy Challenge Grants would only start to address.16 Again, as in the

school construction situation, the Department is facing a large need with

relatively small amounts of funds.

14School Finance: State Efforts to Reduce Funding Gaps Between Poor and Wealthy Districts

(GAO/HEHS-97-31, Feb. 5, 1997); School Finance: Three States’ Experiences With Equity in School

Funding (GAO/HEHS-96-39, Dec. 19, 1995); School Finance: Trends in U.S. Education Spending

(GAO/HEHS-95-235, Sept. 15, 1995); and School Finance: Options for Improving Measures of Effort and

Equity in Title I (GAO/HEHS-96-142, Aug. 30, 1996).

15We documented the nature and extent of facilities’ problems in our series on school facilities: School

Facilities: Condition of America’s Schools (GAO/HEHS-95-61, Feb. 1, 1995); School Facilities:

America’s Schools Not Designed or Equipped for 21st Century (GAO/HEHS-95-95, Apr. 4, 1995); School

Facilities: Accessibility for the Disabled Still an Issue (GAO/HEHS-96-73, Dec. 29, 1995); School

Facilities: States’ Financial and Technical Support Varies (GAO/HEHS-96-27, Nov. 28, 1995); School

Facilities: America’s Schools Report Differing Conditions (GAO/HEHS-96-103, June 14, 1996); and

School Facilities: Profiles of School Condition by State (GAO/HEHS-96-148, June 24, 1996).

16GAO/HEHS-95-95, Apr. 4, 1995.

Page 14 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

Statutory Framework

for Improving the

Department’s

Management

Practices

Adopting improved management practices can help the Department

become more effective in achieving its mission of ensuring equal access to

education and promoting educational excellence. Recognizing that federal

agencies have not always brought the needed discipline to their

management activities, the Congress in recent legislation provided a

framework for addressing long-standing management challenges. The

centerpiece of this framework is GPRA; other elements are the 1990 CFO Act,

the 1995 Paperwork Reduction Act, and the 1996 Clinger-Cohen Act. These

laws each responded to a need for more accurate, reliable information for

executive branch and congressional decision-making. The Department has

begun to implement these laws, which, in combination, provide it with a

framework for developing (1) fully integrated information about the

Department’s mission and strategic priorities, (2) performance data to

evaluate progress toward the achievement of those goals, (3) the

relationship of information technology investments to the achievement of

performance goals, and (4) accurate and audited financial information

about the costs of achieving mission outcomes.

Efforts in Planning and

Resource Management

The Department has a history of management problems. In our 1993

review of the Department, we identified operational deficiencies such as

lack of management vision, lack of a formal planning process, poor human

resource management, and inadequate commitment to management issues

by the Department leadership.17 In addition, financial and information

management were serious problems throughout the Department, and not

confined to postsecondary programs. Further, recent legislation—Goals

2000: Educate America Act, the School-to-Work Opportunities Act, and the

Student Loan Reform Act—requires strong management improvements to

support sound implementation.

In response to our recommendations as well as to new legislative

responsibilities, the Department has taken steps to improve its

management approach. It has developed a strategic plan that describes its

mission, priorities, and performance indicators, using as its framework the

key elements of GPRA. Specifically, it has begun the process of working

with the Office of Management and Budget (OMB) to meet the GPRA

requirement that agencies prepare strategic plans that establish long-term

goals and develop annual performance plans linked to these long-term

goals. GPRA also requires that agencies consult with the Congress and other

stakeholders to clearly define their missions. Accordingly, the Department

17Department of Education: Long-Standing Management Problems Hamper Reforms (GAO/HRD-93-47,

May 28, 1993).

Page 15 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

has begun discussions with the Congress and others about the challenges

it faces and the kinds of support it needs to move forward in achieving its

goals.

According to OMB, the Department has developed a fairly broad plan. OMB

raised two issues during its review of the plan: (1) the lack of specificity in

program performance plans and (2) the extent to which the objectives and

indicators were beyond the agency’s span of control or influence. With

respect to the first concern, during the past few months the Department

has been developing specific performance plans for all programs.

Regarding the second concern, the Department responded to OMB by

describing the nature of its education goals and by recognizing that those

goals are shared by many entities. According to the Department, the plan’s

objectives and indicators recognize the multilevel, intergovernmental

nature of federal education support and the need for effective

performance partnerships to achieve jointly sought outcomes. At the same

time, the Department is updating the strategic plan and intends to

differentiate those objectives and indicators that are under the

Department’s full control more clearly from those that require action from

state education agencies, local districts, or postsecondary institutions for

effective results.

Results-oriented management may also involve reviewing programs that

have the same or similar goals and objectives, but continue to be

administered separately by one or more federal agencies, to see whether

opportunities exist to consolidate and improve efficiencies. When we

testified before this Subcommittee 2 years ago,18 we identified potential

education program consolidation opportunities. Program consolidation

could not only reduce administrative costs, but the Department could

better focus its management resources on evaluating and improving the

quality of its programs. For example, our review of federal programs that

serve at-risk or delinquent youth revealed that 131 programs served this

target group in fiscal year 1995, 10 of which were administered by the

Department of Education.19 This service delivery approach raises

questions concerning efficiency. Our work suggests that efficiencies might

be gained by having a smaller number of consolidated programs for at-risk

or delinquent youth. For example, it would probably be more efficient to

have one program covering a service/target-group combination,

18Department of Education: Information on Consolidation Opportunities and Student Aid

(GAO/T-HEHS-95-130, Apr. 6, 1995).

19At-Risk and Delinquent Youth: Multiple Federal Programs Raise Efficiency Questions

(GAO/HEHS-96-34, Mar. 6, 1996).

Page 16 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

administered by a single federal office, than several programs

administered by several different offices.

The Department is continuing its long-term efforts to streamline its

operations. In its fiscal year 1998 budget request, it has proposed the

elimination of 10 programs—representing more than $400 million in

funding—that it believes have achieved their purpose; that duplicate other

programs; or that are better supported by state, local, or private sources.

Our work suggests that the Department needs to continue its efforts to

eliminate duplicative or wasteful programs.

The CFO Act, as expanded, requires the Department of Education as well as

the 23 other major federal agencies to prepare and have audited annual

financial statements beginning with those for 1996. Fiscal year 1995 was

the first year the Department prepared agencywide financial statements

and had them audited. However, the independent auditor could not

determine whether the financial statements were fairly presented because

of the insufficient and unreliable FFELP student loan data underlying the

Department’s estimate of $13 billion for loan guarantees. Furthermore,

because guaranty agencies and lenders have a crucial role in the

implementation and ultimate cost of FFELP, the auditors stressed the need

for the Department to complete steps under way for improving oversight

of guaranty agencies and lenders. Until such problems are fully resolved,

the Department will continue to lack the financial information necessary

to effectively budget for and manage the program or to accurately estimate

the government’s liabilities.

In an effort to prepare auditable fiscal year 1996 financial statements, the

Department’s CFO has requested data from the top 10 guaranty agencies to

be used as a basis for computing the liability for loan guarantees. In

addition, the Department’s independent auditor has developed agreed

upon procedures to be applied by these agencies’ independent auditors to

test the reliability of the requested data. Uncertainty still exists as to

whether this new methodology will work; decisions on the effectiveness of

the approach will be made later this year once all the data are collected.

Improving Information

Resources Management

Critical to Data Quality and

Systems Integration

Our work has shown that the Department does not have a sound,

integrated information technology strategy to manage its portfolio of

information systems. It faces a particularly difficult challenge in improving

its information systems for the student aid programs. The Department’s

National Student Loan Data System (NSLDS), which became partially

Page 17 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

operational in November 1994, enables schools, lenders, and guaranty

agencies to transmit updated loan status data to the Department. However,

the Department has not yet integrated the numerous separate data systems

used to support individual student aid programs, often because the various

“stovepipe” systems have incompatible data in nonstandard formats. As a

result, program managers often lack accurate, complete, and timely data

to manage and oversee the student aid program.

The lack of an integrated system also results in unnecessary manual effort

on the part of users and redundant data being submitted and stored in

numerous databases, resulting in additional costs to the Department as

well as the chance for errors in the data. For example, a Department

consultant showed that a simple address change for a college financial aid

administrator would require a minimum of 19 manual and automated steps

performed by a series of Department contractors who would have to enter

the change in their respective systems from printed reports generated by

another system. Another problem with this multiple-system environment is

a lack of common identifiers for schools. Without these, tracking students

and institutions across systems is difficult. The 1992 HEA amendments

required the Department to establish common identifiers for students and

schools not later than July 1, 1993. The Department’s current plans,

however, do not call for developing and implementing common identifiers

for schools until academic year 1999.

Data integrity problems also exist. The lack of a fully functional and

integrated title IV-wide recipient database hinders program monitoring

and data quality assurance. For example, the current system cannot

always identify where a student is enrolled, even after an award is made

and thousands of dollars in student aid are disbursed.

Although the Department has improved its student aid data systems

somewhat, major improvements are still needed. Both we and OIG reported

in 199620 that the Department had not adequately tested the accuracy and

validity of the loan data in NSLDS. During the past year, the Department has

been developing a major reengineering project, Easy Access for Students

and Institutions, to redesign the entire title IV student aid program delivery

system to integrate the management and control functions for the title IV

programs. Although activity on this project, which had waned in previous

months, has recently been renewed, carrying out the project is expected to

be a long-term undertaking.

20Department of Education: Status of Actions to Improve the Management of Student Financial Aid

(GAO/HEHS-96-143, July 12, 1996).

Page 18 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

The Department also faces a challenge in improving its agencywide

information resources management, not just that related to the student aid

programs. The legislative framework, especially that provided by the

Clinger-Cohen Act, offers guidance for achieving goals in this area. The

Clinger-Cohen Act requires, among other things, that federal agencies

improve the efficiency and effectiveness of operations through the use of

information technology by (1) establishing goals to improve the delivery of

services to the public through the effective use of information technology;

(2) preparing an annual report on the progress in achieving goals as part of

its budget submission to the Congress; and (3) ensuring that performance

measures are prescribed for any information technology that agencies use

or acquire and that they measure how well the information technology

supports Department programs. The Department could benefit greatly

from fully implementing the law. Full implementation of the Clinger-Cohen

Act would provide another opportunity to correct many of the

Department’s student financial aid system weaknesses as well as to

improve other information systems that support the Department’s mission.

The Clinger-Cohen Act also requires that a qualified senior-level chief

information officer be appointed to guide all major information resource

management activities. The Department has recently appointed an Acting

Chief Information Officer and, according to OMB, is to be actively recruiting

an individual to fill this position on a permanent basis. This individual is

responsible for developing an information resources management plan

and overseeing information technology investments.

In addition, the Department has highlighted the use of information

technology for improved dissemination and customer service in its fiscal

year 1998 budget summary. New initiatives include (1) a data warehousing

effort that would simplify the internal use of databases, (2) a data

conversion effort needed to comply with year 2000 requirements,21 and

(3) a modeling project to develop an architectural framework and uniform

operating standards for all Department data systems to eliminate

duplication in collection and storage of data.

Conclusions In carrying out its mission, the Department has a careful balancing act to

perform. Education is a function reserved to the states, yet this federal

department is expected to provide leadership on national education

issues. For example, in fostering higher quality elementary and secondary

21This year GAO added the “year 2000” problem as a high-risk issue because of the complexities

involved in changing computer systems to accommodate dates beyond the year 1999.

Page 19 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

education, the Department can promote national standards for educational

performance and teacher training—but not impose them. It is expected to

provide state and local education agencies flexibility in using federal funds

and freedom from unnecessary regulatory burden, yet it must have enough

information about programs and how money is spent to be accountable to

American taxpayers for the federal funds administered at the state and

local levels. It is expected to monitor programs and provide technical

assistance, but its resources may not be sufficient to provide reasonable

coverage.

Although the Department has made progress in improving many

management functions, it still has a long way to go. Over the years, our

work has shown that the Department has not done a good job of

minimizing risks and managing the federal investment, especially in

postsecondary student aid programs. We also have concerns about

whether the Department knows how well new or newly modified

programs, like title 1, are being implemented; to what extent established

programs are working; or whether it has the resources to effectively and

efficiently provide needed information and technical assistance. Like other

departments, the Department of Education needs to focus more on the

results of its activities and on obtaining the information it needs for a more

focused, results-oriented management decision-making process. GPRA, the

CFO Act, and the Paperwork Reduction and Clinger-Cohen Acts give the

Department the statutory framework it needs to manage for results.

Mr. Chairman, this concludes my prepared statement. I will be happy to

answer any questions that you or members of the Subcommittee might

have.

Contributors For more information on this testimony, call Harriet Ganson, Assistant

Director, at (202) 512-9045; Jay Eglin, Assistant Director, at (202) 512-7009;

or Eleanor Johnson, Assistant Director, at (202) 512-7209. Joan Denomme

and Joel Marus also contributed to this statement.

Page 20 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

Page 21 GAO/T-HEHS-97-99
Department of Education: Challenges in

Promoting Access and Excellence in

Education

Page 22 GAO/T-HEHS-97-99
Page 23 GAO/T-HEHS-97-99
Related GAO Products

Managing for Results: Using GPRA to Assist Congressional and Executive

Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).

School Finance: State Efforts to Reduce Funding Gaps Between Poor and

Wealthy Districts (GAO/HEHS-97-31, Feb. 5, 1997).

High-Risk Series: Student Financial Aid (GAO/HR-97-11, Feb. 1997).

Information Technology Investment: Agencies Can Improve Performance,

Reduce Costs, and Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996).

Higher Education: Tuition Increasing Faster Than Household Income and

Public Colleges’ Costs (GAO/HEHS-96-154, Aug. 15, 1996).

Information Management Reform: Effective Implementation Is Essential

for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996).

Department of Education: Status of Actions to Improve the Management

of Student Financial Aid (GAO/HEHS-96-143, July 12, 1996).

School Facilities: America’s Schools Report Differing Conditions

(GAO/HEHS-96-103, June 14, 1996).

Financial Audit: Federal Family Education Loan Program’s Financial

Statements for Fiscal Years 1994 and 1996 (GAO/AIMD-96-22, Feb. 26, 1996).

School Finance: Trends in U.S. Education Spending (GAO/HEHS-95-235, Sept.

15, 1995).

Student Financial Aid: Data Not Fully Utilized to Identify Inappropriately

Awarded Loans and Grants (GAO/HEHS-95-89, July 11, 1995).

School Facilities: America’s Schools Not Designed or Equipped for 21st

Century (GAO/HEHS-95-95, Apr. 4, 1995).

Higher Education: Restructuring Student Aid Could Reduce Low-Income

Student Dropout Rate (GAO/HEHS-95-48, Mar. 23, 1995).

Department of Education: Long-Standing Management Problems Hamper

Reforms (GAO/HRD-93-47, May 28, 1993).

(104885) Page 24 GAO/T-HEHS-97-99
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