The Results Act: Observations on the Department of Education's June 1997 Draft Strategic Plan

Published by the Government Accountability Office on 1997-07-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                     United States
GAO                  General Accounting Office
                     Washington, D.C. 20548

                     Health, Education, and
                     Human Services Division


                     July 18, 1997

                     The Honorable Richard K. Armey
                     Majority Leader
                     House of Representatives

                     The Honorable John R. Kasich
                     Chairman, Committee on the Budget
                     House of Representatives

                     The Honorable Dan Burton
                     Chairman, Committee on
                       Government Reform and Oversight
                     House of Representatives

                     The Honorable Bob Livingston
                     Chairman, Committee on Appropriations
                     House of Representatives

                     Subject: The Results Act: Observations on the Department of Education’s
                     June 1997 Draft Strategic Plan

                     On June 12, 1997, you asked us to review the draft strategic plans
                     submitted by the cabinet departments and selected major agencies for
                     consultation with the Congress as required by the Government
                     Performance and Results Act of 1993 (the Results Act). This letter is our
                     response to that request concerning the Department of Education.

                     Our overall objective was to review and evaluate the latest available
Objectives, Scope,   version of the Department’s draft strategic plan for fiscal years 1998-2002.
and Methodology      As you requested, we (1) reviewed the draft plan to determine whether it
                     complies with the Results Act’s requirements and assessed its strengths
                     and weaknesses; (2) described the Department’s key statutory authorities
                     and how they are related to the mission and goals in the strategic plan;
                     (3) identified the Department’s programs, activities, and functions that are
                     crosscutting in that they are similar to or related to goals, activities, or
                     functions of other agencies and the extent to which the plan reflects
                     interagency coordination; (4) discussed the extent to which the
                     Department addresses major management challenges in the plan; and
                     (5) discussed the Department’s capacity to provide reliable information
                     about performance.

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             We obtained the June 17, 1997, draft strategic plan that the Department
             provided the House of Representatives congressional staff team working
             with the agency. As agreed with your offices, our assessment of the
             Department’s draft plan was generally based on our knowledge of the
             Department’s operations and programs, our numerous reviews of the
             Department, and other existing information available at the time of our
             assessment. Specifically, the criterion we used to determine whether the
             Department’s draft strategic plan complies with the requirements of the
             Results Act was the Results Act itself, supplemented by the Office of
             Management and Budget’s (OMB) guidance on developing the plans
             (Circular A-11, part 2). To make judgments about the overall quality of the
             plan and its components, we used our May 1997 guidance for
             congressional review of the plans (GAO/GGD-10.1.16) as a tool. To determine
             whether the plan contains information on interagency coordination, and to
             address management problems we had previously identified, we relied on
             our general knowledge of the Department’s operations and programs and
             the results of our previous reports. A list of our major products related to
             Department operations and programs appears at the end of this letter.

             It is important to recognize that the Department’s final strategic plan is not
             due to the Congress and OMB until September 30, 1997. Furthermore, in
             passing the Results Act, the Congress anticipated that several planning
             cycles might be needed to perfect the process of developing a strategic
             plan and that the plan would continually be refined. Thus, our comments
             reflect a “snapshot” of the status of the plan at this time. We recognize that
             developing a strategic plan is a dynamic process and that the Department
             is continuing work to revise the draft with input from OMB, congressional
             staff, and other stakeholders.

             Created in 1980, the Department administers approximately 200 programs
Background   and supports activities that involve two major kinds of educational
             institutions: (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—in partnership with other federal,
             state, and local entities—manages the federal investment in education and
             leads the nation’s long-term effort to improve the quality of education.
             Specifically, the Department awards grants to education agencies and
             institutions to strengthen teaching and learning; makes student loans and
             grants available to students and their families to help pay the costs of
             postsecondary education; monitors and enforces civil rights to ensure that
             the nation’s education system is accessible and fair for all students;

             Page 2                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

                       supports education research, development, evaluation, and information
                       dissemination; and provides leadership in support of national educational

                       The Department prepared a strategic plan in 1994 and, on the basis of its
                       discussions with many internal and several external parties, has revised
                       this plan to reflect the requirements of the Results Act. The Results Act
                       requires agency strategic plans to include the following six key elements:

                   •   a comprehensive mission statement covering the major functions and
                       operations of the agency,
                   •   a description of general goals and objectives for the major functions and
                       operations of the agency,
                   •   a discussion of how these goals and objectives will be achieved and the
                       resources needed,
                   •   a description of the relationship between performance goals in the annual
                       performance plan and general goals and objectives in the strategic plan,
                   •   a discussion of key factors external to the agency that could affect
                       significantly the achievement of the general goals and objectives, and
                   •   a description of program evaluations used to develop the plan and a
                       schedule for future evaluations.

                       The Results Act is aimed at improving program performance. It requires
                       that federal agencies consult with the Congress and other stakeholders in
                       developing their strategic plans. It also requires that agencies establish
                       long-term strategic goals as well as annual goals that are linked to them.
                       These annual goals are to appear in a performance plan that the agencies
                       must prepare each year and submit to the Congress beginning in
                       February 1998. Agencies must then measure their performance against the
                       goals they have set and report publicly, in subsequent years, on how well
                       they are doing. In addition to ongoing performance monitoring, agencies
                       are expected to perform discrete evaluation studies of their programs and
                       to use information obtained from these evaluations to improve their

                       Overall, the Department’s draft plan is a useful document and includes
Results in Brief       almost all the elements required by the Results Act. The plan’s long-term
                       goals and objectives are succinct and logically linked to its mission
                       statement. Further, the quality of the goals and objectives reflects the
                       Department’s thoughtful deliberation in its efforts to comply with the
                       Results Act. Moreover, the Department’s draft strategic plan includes

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                       information that the agency will use to develop its annual performance
                       plan. Although this information was not required, it illustrates the
                       Department’s preliminary thinking on performance measures and targets.
                       In addition, the draft strategic plan addresses in some form all of the
                       Department’s major statutory responsibilities. (See encl. I.)

                       Our review of the Department’s draft plan indicates, however, that the
                       plan could benefit from more information, clarity, and context in some of
                       its components. Specifically, the plan should include an explanation of the
                       relationship between its long-term goals and objectives and its annual
                       performance goals as well as a complete description and schedule of
                       program evaluations in accordance with the Results Act. The plan could
                       also better address the Department’s major statutory responsibilities. For
                       example, the plan’s long-term goals and objectives do not address the
                       Department’s responsibilities for enforcing and monitoring civil rights
                       related to education—an activity identified by the Department as a key
                       agency function. In addition, the narrative supporting the Department’s
                       mission statement does not address the Department’s major statutory
                       responsibilities for basic education for adults, vocational rehabilitation,
                       education of individuals with disabilities, or school-to-work opportunities.
                       The Department’s plan would be improved if it provided a context for
                       stakeholders by discussing in more detail the management challenges the
                       Department faces, since such problems could affect its ability to fulfill
                       certain goals. On the basis of our past work, we believe that the
                       Department does not have the data systems necessary to implement two
                       of its objectives related to ensuring sound information technology
                       investments and financial integrity.

                       Overall, the Department’s draft plan generally complies with the Results
The Department’s       Act. The plan includes all but one of the six elements required by the
Draft Strategic Plan   Results Act—it does not discuss how the agency’s long-term goals and
Contains Most          objectives will be related to its annual performance goals. Although the
                       plan presents a logical and fairly complete description of how the
Elements Required by   Department intends to achieve its mission, a few areas in the draft plan
the Results Act        could be improved.

                       The basic framework for the Department’s strategic plan is provided by its
                       mission, goals, and objectives as shown in figure 1. Following is our
                       analysis of each of the plan’s major components.

                       Page 4                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

Figure 1: U.S. Department of Education Framework for Strategic Plan Goals and Objectives as of June 17, 1997

                                          Page 5                             GAO/HEHS-97-176R Education’s Draft Strategic Plan

Mission Statement      According to OMB Circular A-11, the mission statement in a strategic plan
                       should be brief, defining the basic purpose of the agency, with particular
                       focus on its core programs and activities. We have found that high-quality
                       mission statements often explain why the agency exists, what it does, and
                       how it performs its work.

                       The Department’s stated mission in its strategic plan is “to ensure equal
                       access to education and to promote educational excellence throughout the
                       nation.” The Department’s mission statement clearly and briefly explains
                       why the agency exists and, in conjunction with supporting narrative,
                       explains what the agency does and how it performs its work. For example,
                       the plan states that the Department’s key functions include providing
                       education leadership, financing, and information as well as access to a fair
                       education system through the enforcement and monitoring of civil rights.
                       The supporting narrative also emphasizes the Department’s partnerships
                       with individuals and public and private entities to fulfill its mission.
                       However, the mission statement with its supporting narrative does not
                       address all of the Department’s major statutory responsibilities as required
                       by the Results Act. A more complete discussion of this issue appears later
                       in this letter.

Goals and Objectives   The Department’s draft strategic plan contains the following four goals:

                       1. Help all students reach challenging academic standards.

                       2. Build a solid foundation for learning.

                       3. Ensure access to postsecondary education and lifelong learning.

                       4. Make the Department a high-performance organization by focusing on
                       results, service quality, and customer satisfaction.

                       These four broad goals are a positive attempt to define results that the
                       Department expects to achieve from most of its major activities. The first
                       three goals generally address the Department’s mission-related functions,
                       the last one indicates a desire to institutionalize good management
                       practices, and all four appear to be logically related to the Department’s

                       Overall, the objectives developed to support the goals are generally linked
                       to the goals and are results oriented. Some of the objectives supporting

                       Page 6                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

                              these goals seem to be ambitious, given the Department’s limited sphere of
                              control in the education arena. However, the plan explains that through
                              leadership and leverage the Department works with a host of partners,
                              such as states, schools, and financial institutions, to carry out its mission
                              and effect changes intended to improve the nation’s educational system.
                              Thus, even though the Department has little direct control over the
                              conditions that would ensure attainment of its goals, it seems appropriate
                              for the Department to base its performance on achieving broad objectives,
                              such as the four listed below that relate to its first goal—“help all students
                              reach challenging academic standards”:

                              1.3 Schools are safe, disciplined, and drug-free.

                              1.4 A talented and dedicated teacher is in every classroom in America.

                              1.5 Families and communities are fully involved with schools and

                              1.7 Schools use advanced technology for all students and teachers to
                              improve education.

Strategies to Achieve Goals   Under the Results Act, the plan should include the strategies an agency
and Objectives                will use to achieve its goals and objectives. The strategies should briefly
                              describe the operational processes, staff skills, and technologies, as well
                              as the human, capital, information, and other resources needed. OMB
                              Circular A-11 states that this section of an agency’s strategic plan should
                              also outline the process for communicating goals and objectives
                              throughout the agency and assigning accountability to managers and staff
                              for the achievement of objectives.

                              Overall, the Department’s draft strategic plan outlines the various
                              strategies needed to achieve its goals and the links between goals and
                              objectives. In the core strategies section following the explanation of each
                              of the Department’s objectives, the Department explains how it plans to
                              achieve these objectives and at several points indicates resource needs as
                              required by the Results Act. For example, the Department’s draft strategic
                              plan lists five core strategies for ensuring access to postsecondary
                              education (goal 3) through information dissemination and support
                              services (objective 3.2). One of these strategies is providing information on
                              the benefits, academic requirements, and financial costs of higher
                              education to middle-school students, especially those from low-income

                              Page 7                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

    families. Another strategy involves the Department’s providing incentives
    and guidance for increased coordination between elementary and
    secondary schools and postsecondary institutions to ensure that students
    are ready for college.

    The Department identifies some of its resource requirements throughout
    the plan. Narrative describing the core strategies for several different
    objectives indicates that, to implement some of its goals and objectives,
    the Department will need to

•   provide employees with the technology to respond effectively to customer
    requests for information and better manage agency programs,
•   redesign Department computer systems,
•   develop benchmarks and performance standards in certain program areas
    to measure performance, and
•   train staff in financial management and performance measurement.

    The Department’s draft strategic plan also does a good job of describing
    how plan goals will be communicated throughout the agency. At the end of
    the plan’s introduction, the Department states that the draft plan will be a
    discussion topic at an upcoming Labor/Management Partnership
    conference. In addition, the Acting Deputy Secretary and Acting Under
    Secretary will hold meetings with headquarters staff at each of the
    Department’s five buildings in Washington, D.C., and make special
    arrangements with regional staff to discuss the draft plan. This
    information and the narrative supporting objective 4.7—to become fully a
    performance-driven agency—further indicate that the Department intends
    to involve all levels of the agency (senior leadership, program managers,
    and line staff) in the development or achievement of plan goals and
    objectives, which will ensure that the goals and objectives are known and
    understood within the agency.

    In addition, the Department’s draft plan outlines the following three
    strategies for holding managers accountable for achieving objectives:
    (1) provide a report card on overall agency performance as well as on
    individual program offices, (2) redesign the agency’s performance
    appraisal system to align employee goals with the overall mission of the
    Department, and (3) assess whether the redesigned appraisal system is
    effective in promoting desired employee performance and development.

    Page 8                          GAO/HEHS-97-176R Education’s Draft Strategic Plan

Relating Long-Term Goals   The Results Act requires agencies to prepare performance plans each
and Objectives to Annual   fiscal year beginning with plans for the fiscal year 1999 budget.
Performance Goals          Performance goals and performance indicators in an annual performance
                           plan should be linked to the long-term goals and objectives in the agency’s
                           strategic plan. According to OMB Circular A-11, the strategic plan should
                           briefly outline (1) the type, nature, and scope of the performance goals in
                           the annual plan; (2) the relationship between the annual performance
                           goals and the strategic goals; and (3) the relevance and use of annual goals
                           in helping to determine the achievement of the strategic goals.

                           The Department did not discuss in its draft strategic plan the relationship
                           between its strategic plan goals and those to be included in its annual
                           performance plan but indicated in the draft that this section would be
                           completed once its annual plan has been prepared.

                           The Department did, however, provide a preview of its annual plan by
                           means of a matrix of performance indicators, data sources, and baseline
                           data for each strategic plan objective supporting its long-term strategic
                           goals. According to the Department, these indicators and data sources will
                           become the basis for its annual performance plan. Although this type of
                           information is not required, it is a positive step toward articulating how
                           the Department will measure its progress.

                           We recognize that the Department is in the process of developing its
                           annual plan and that the performance indicators listed in its current
                           strategic plan may change. However, we did identify several areas in
                           which we believe the Department could improve its conceptualization and
                           presentation of this information. First, what the Department described as
                           “indicators” were in some instances more like targets, performance
                           objectives, or strategies. For example, indicator 55 is stated in the draft
                           plan as follows:

                           “Bilingual education and special education resources focus on improving the skills of
                           school staff working with special populations.”

                           This indicator appears to be more a strategy than a performance measure.
                           Further refinement of the Department’s indicators could ensure that they
                           are understandable measures of progress toward specific performance
                           goals. Second, the set of indicators related to certain objectives does not
                           seem to fully address the objective, thus making achievement of an
                           objective difficult to determine. For example, to ensure that every state
                           has a school-to-work system that increases student achievement and

                           Page 9                                 GAO/HEHS-97-176R Education’s Draft Strategic Plan

                       broadens career opportunities (objective 1.2), the Department cited only
                       one results-oriented (rather than process-oriented) indicator. This
                       indicator—an increase each year in the percentage of students involved in
                       school-to-work programs who complete high school and begin
                       postsecondary education—does not encompass other desired outcomes,
                       such as employment for those not entering postsecondary education.

Key External Factors   In its draft strategic plan, the Department describes in general the factors
                       outside the agency’s program scope and responsibilities that could
                       negatively affect its ability to achieve its strategic goals as required by the
                       Results Act. Although these factors were not explicitly linked to a
                       particular goal in accordance with OMB Circular A-11, the draft plan does
                       describe how certain external factors could affect the various entities and
                       individuals involved in the nation’s education system which, in turn, could
                       affect the Department’s programs, activities, and resources. For example,
                       the Department’s efforts to improve the quality of teachers will, according
                       to its draft plan, depend on the willingness of school systems to invest in
                       staff professional development over the long term. Similarly, a decline in
                       state and local school tax revenue could affect the ability of local school
                       districts to serve growing school enrollments and implement needed
                       education reforms.

                       This section of the Department’s plan could be strengthened by including a
                       brief discussion of actions the Department could take to mitigate the
                       external factors that could possibly affect achievement of its agency goals.
                       For example, the Department could describe how it can use its leadership
                       to encourage employers to participate in school-to-work partnerships. It
                       could also outline any information campaigns or program incentives that
                       may help to change some of the attitudes and behaviors the plan cites as
                       external factors.

Program Evaluations    To comply with the Results Act, agencies are required to include in their
                       strategic plans a description of the program evaluations used to establish
                       or revise their long-term goals and objectives and a schedule for future
                       evaluations. The Department’s plan did not completely address this
                       element. The Department states in the plan that it will provide detailed
                       descriptions of supporting evaluations once it has consulted with the
                       Congress, completed the strategic plan, and agreed on performance

                       Page 10                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

                          The draft plan indicates the Department’s commitment to using
                          evaluations as a basis for its results-based activities. The draft lists
                          evaluations and strategies that the Department intends to use to develop
                          sound performance measures, such as the National Evaluation of the
                          School-to-Work Program and customer surveys supporting an evaluation
                          of one of the federal student loan programs. According to the draft, the
                          Department’s Planning and Evaluation Service is coordinating agency
                          evaluation activities, and the Office of the Inspector General (OIG) plans to
                          conduct reviews of the quality and reliability of the Department’s
                          performance measures. All this information will be useful to the
                          stakeholders and congressional teams who will review the Department’s
                          plan. However, the Department’s strategic plan does not describe the
                          evaluations. To fulfill the Results Act requirements for this element, OMB
                          Circular A-11 requires the plan to (1) identify specifically evaluations and
                          studies that are ongoing and those that are being planned, (2) describe
                          each evaluation used to develop the plan, and (3) provide a schedule for
                          future program evaluations.

                          The Department’s strategic plan addresses in some way all of its major
The Department            statutory responsibilities and is consistent with the relevant statutes. The
Addresses All of Its      Department’s civil rights enforcement and monitoring are reflected in the
Major Statutory           mission statement but not in the long-term goals or objectives; several
                          other major functions are reflected in the objectives supporting the goals
Responsibilities in Its   but are not clearly outlined in the mission statement. Three of the four
Draft Strategic Plan      goals in the draft strategic plan reflect specific statutory responsibilities of
                          the Department, and the fourth goal reflects one of the purposes of the
                          Results Act.

                          We identified the following areas of major statutory responsibility for the
                          Department: (1) strengthening and improvement of elementary and
                          secondary schools; (2) national education reform; (3) school-to-work
                          opportunities; (4) basic education for adults; (5) higher education
                          resources and student assistance; (6) vocational education; (7) vocational
                          rehabilitation and other rehabilitation services; (8) education of
                          individuals with disabilities; (9) education research and improvement;
                          (10) education statistics; and (11) monitoring and enforcing civil rights. (A
                          list of the statutes that authorize the Department’s major responsibilities is
                          included in encl. I.)

                          The Results Act requires that a strategic plan indicate an agency’s major
                          functions in the mission statement and include goals and objectives for the

                          Page 11                           GAO/HEHS-97-176R Education’s Draft Strategic Plan

major functions of the agency. Although the Department’s mission
statement includes “monitoring and enforcement of civil rights to ensure
that the U.S. education system is accessible and fair for all students” as a
major function, none of the goals or objectives included in the draft plan
focuses on this function, and the Department does not elaborate on it
further in any other part of the plan.

The mission statement (including its supporting narrative) does not
include several major functions that are addressed in the Department’s
long-term goals and objectives. The Department’s statutory responsibilities
related to basic education for adults, vocational rehabilitation, education
of individuals with disabilities, and school-to-work opportunities are
addressed in the Department’s long-term strategic goals and objectives but
are not included in the mission statement.

The Department should address specifically its civil rights responsibility in
the plan’s goals and objectives and include the omitted key functions with
its mission statement. This should help stakeholders better understand the
full scope of the Department’s mission and its performance goals and

Three of the four goals in the Department’s strategic plan reflect statutory
responsibilities. Goal 1—to “help all students reach challenging academic
standards”—reflects a declared goal of the Goals 2000: Educate America
Act (20 U.S.C. § 5812(3)(A)). Goals 2 and 3—to “build a solid foundation
for learning” and “ensure access to postsecondary education and lifelong
learning”—reflect the overall purpose of several of the Department’s major
statutory authorities. The fourth goal—to “make (the Department) a
high-performance organization”—is not based on a specific statutory
responsibility of the Department but, rather, reflects one of the purposes
of the Results Act itself.

Page 12                          GAO/HEHS-97-176R Education’s Draft Strategic Plan

                         Although the Department has the primary responsibility for implementing
The Department’s         federal education policy and programs, several other federal agencies also
Draft Strategic Plan     provide education-related programs and services. For example, the
Identifies Key           Departments of Labor and Veterans’ Affairs administer employment
                         training programs and award student aid to finance postsecondary study,
Interagency Activities   respectively. We have identified in our past work opportunities for
Except Those             consolidating programs in certain areas, such as job training and early
                         childhood education, to eliminate inappropriate duplication.1 Specifically,
Affecting                we identified 90 early childhood programs being administered by 11
Postsecondary            federal agencies and 20 offices in fiscal years 1992 and 1993. In addition,
Programs                 we found that the federal government administered 163 employment
                         training programs, spread over 15 agencies, in fiscal year 1995. However,
                         until such programs are consolidated, coordination will be key to ensure
                         that similar programs administered by different agencies work in tandem
                         to provide needed services.

                         The Department’s draft strategic plan has done a good job of identifying
                         crosscutting program activities in elementary and secondary programs.
                         For example, it clearly identifies the need to work with (1) the
                         Departments of Health and Human Services (HHS), Housing and Urban
                         Development, Justice, and Transportation; the President’s Crime
                         Prevention Council; and the Office of National Drug Control Policy for the
                         Safe and Drug-Free Schools program; (2) the Department of Labor for the
                         School-to-Work program; and (3) the Department of Agriculture and HHS
                         for preschool programs.

                         However, the plan does not identify or discuss activities for postsecondary
                         programs that require coordination. The Higher Education Act (HEA) of
                         1965, as amended, requires the Department to coordinate with the Social
                         Security Administration to verify the social security numbers of students
                         who apply for federal student aid (20 U.S.C. 1091(p)). The act also requires
                         or authorizes a number of activities that call for the Department to
                         coordinate with several other federal entities for specific purposes (see
                         table 1).

                          Early Childhood Programs: Multiple Programs and Overlapping Target Groups (GAO/HEHS-95-4FS,
                         Oct. 31, 1994); Multiple Teacher Training Programs: Information on Budgets, Services, and Target
                         Groups (GAO/HEHS-95-71FS, Feb. 22, 1995); Multiple Employment Training Programs: Information
                         Crosswalk on 163 Employment Training Programs (GAO/HEHS-95-85FS, Feb. 14, 1995); and
                         Department of Education: Information on Consolidation Opportunities and Student Aid
                         (GAO/T-HEHS-95-130, Apr. 6, 1995).

                         Page 13                                   GAO/HEHS-97-176R Education’s Draft Strategic Plan

Table 1: Selected Requirements in the
Higher Education Act of 1965, as                                       Higher Education Act of    Purpose for interagency
Amended, Providing for Interaction      Agency                         1965, as amended           coordination
Among Agencies                          Department of the Treasury     20 U.S.C. 1077a            To consult on setting
                                                                                                  student loan interest rates
                                        Internal Revenue Service       20 U.S.C. 1087e            To obtain adjusted gross
                                                                                                  income and other tax
                                                                                                  information on borrowers for
                                                                                                  repayment of federal direct
                                                                                                  student loans
                                        Immigration and                20 U.S.C. 1091(g)          To perform data matches
                                        Naturalization Service                                    verifying immigration status
                                                                                                  to help ensure student aid
                                                                                                  applicants are eligible for
                                                                                                  federal aid
                                        Selective Service              20 U.S.C. 1091(n)          To perform data matches
                                                                                                  that help ensure student aid
                                                                                                  applicants are registered
                                                                                                  for military service
                                        Advisory Committee on          20 U.S.C. 1098             To advise the Secretary of
                                        Student Financial Assistance                              Education on student
                                                                                                  financial aid matters

                                        By discussing these agencies and activities involved with the Department’s
                                        higher education programs in its strategic plan, the Department can
                                        provide the Congress a more complete picture of the scope of the agency’s
                                        coordination activities.

                                        In its discussion of core strategies for achieving its strategic goals and
The Department’s                        objectives and in appendix B of the strategic plan (which outlines
Draft Strategic Plan                    performance indicators, baseline data, and data sources), the Department
Identifies Several                      identifies several management challenges it will face in the coming years,
                                        but it provides little detail about these challenges and how it will meet
Management                              them. This type of information could help the Department and its
Challenges                              stakeholders identify major management problems that could impede the
                                        Department’s efforts to achieve its goals and objectives. Further,
                                        stakeholders could benefit from knowing what the Department has done,
                                        is doing, or plans to do to address such problems.

                                        These challenges generally fall into three categories: (1) ensuring that
                                        qualified staff and high-quality information systems are available to
                                        manage programs and provide information and technical assistance,
                                        (2) improving Department processes to ensure agencywide and

                                        Page 14                              GAO/HEHS-97-176R Education’s Draft Strategic Plan

                            program-specific financial accountability, and (3) improving oversight of
                            postsecondary institutions.

                            Over the past 5 years, we have reported on major management challenges
                            that the Department faces in carrying out its mission. In response to our
                            work and the work of others—including the Department’s OIG—the
                            Department has undertaken efforts to reorganize, reform, and reengineer
                            its overall mission-related management approach. The Department’s draft
                            strategic plan suggests, however, that more remains to be done.

Ensuring That Qualified     The Department’s draft strategic plan indicates that the agency views as a
Staff and High-Quality      significant challenge having the appropriate systems, processes, and staff
Information Systems Are     it needs to support managerial decision-making and assist its customers.
                            Objectives supporting goal 4—to make the Department a
Available to Manage         high-performance organization—relate to the agency’s emphasis on
Programs and Provide        addressing this challenge. In a 1993 report in which we examined
Information and Technical   management problems at the Department, we identified shortages of
Assistance                  technically qualified staff as a major problem with the agency that
                            contributed to management problems in the financial and information
                            areas.2 According to the Department’s draft strategic plan, some of these
                            problems still exist today. The draft plan indicates that Department
                            managers lack the necessary knowledge, skills, and abilities in financial
                            management and performance measure development that will allow the
                            agency to manage its finances appropriately and with a minimum amount
                            of waste identify clearly what it intends to accomplish. The plan states that
                            additional training is needed in these areas. The Department also cites
                            improvements needed in its internal research and audit resolution
                            dissemination processes that we believe will help the agency ensure that
                            taxpayer dollars appropriated to the Department are being managed and
                            spent responsibly.

                            According to the plan, the Department has already taken steps to improve
                            its systems and processes agencywide. For example, the strategic plan
                            states that the Department is developing a central automated processing
                            system known as EDCAPS to provide reliable and timely information to
                            agency managers about their programs. According to the plan, EDCAPS
                            should also better control program funds to prevent unlawful

                            Department of Education: Long-Standing Management Problems Hamper Reforms (GAO/HRD-93-47,
                            May 28, 1993).

                            Page 15                                GAO/HEHS-97-176R Education’s Draft Strategic Plan

Improving Department             To ensure that its programs and services are financially sound (objective
Processes and Systems to         4.6), the Department acknowledges in its draft plan a need to improve its
Ensure Agencywide and            financial systems and processes and describes strategies to achieve this
                                 objective. Several factors mentioned in the Department’s plan or discussed
Program-Specific Financial       in our past work or that of others will make the Department’s
Accountability                   improvement efforts in this area difficult.3

                             •   Significant financial management weaknesses. The Department’s strategic
                                 plan includes obtaining an unqualified audit opinion on its annual financial
                                 statement as a strategy for achieving financial integrity. To provide
                                 decisionmakers with reliable, consistent financial data on the operations
                                 of federal agencies, the Government Management Reform Act of 1994
                                 (GMRA) requires each department and major independent agency to submit
                                 to OMB an audited agencywide financial statement beginning with fiscal
                                 year 1996. Our work has shown that the Department faces significant
                                 challenges in meeting GMRA requirements. The Department’s own audit
                                 efforts have identified significant financial management weaknesses that
                                 agency management must address. According to the draft plan, poor data
                                 from the Federal Family Education Loan Program (FFELP) have prevented
                                 the Department from obtaining unqualified audit opinions on its annual
                                 financial statements for the past 4 years. These audits indicated that data
                                 underlying the Department’s $13 billion estimated liability for loan
                                 guarantees for FFELP were insufficient and unreliable. Also, because
                                 guaranty agencies and lenders play 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. In an effort to prepare auditable fiscal year
                                 1996 financial statements, the Department’s Chief Financial Officer
                                 requested data from the top 10 guaranty agencies to be used as a basis for
                                 computing the liability for loan guarantees. In addition, an independent
                                 auditor under contract with the Department has developed agreed upon
                                 procedures to be applied by the guaranty agencies’ independent auditors
                                 to test the reliability of the requested data. Although the draft plan
                                 expresses concerns regarding the integrity of the data supporting the loan
                                 guaranty liability, it does not specify how the Department intends to
                                 resolve the data integrity issues or accurately estimate the government’s
                                 liability. The plan does, however, include a strategy for improving the
                                 oversight of guaranty agencies and lenders.

                                  Financial Audit: Federal Family Education Loan Program’s Financial Statements for Fiscal Years 1993
                                 and 1992 (GAO/AIMD-94-131, June 30, 1994); Financial Audit: Guaranteed Student Loan Program’s
                                 Internal Controls and Structure Need Improvement (GAO/AFMD-93-20, Mar. 16, 1993); and Education
                                 Grants Management: Actions Initiated to Correct Material Weaknesses (GAO/HRD-91-72, June 26,

                                 Page 16                                    GAO/HEHS-97-176R Education’s Draft Strategic Plan

                             •   Ongoing problems with the management, structure, and processes related
                                 to the student financial aid programs. According to the Department’s draft
                                 plan, ensuring that taxpayer dollars are used effectively and are
                                 safeguarded against fraud, waste, and abuse will also help achieve the
                                 level of financial integrity the Department seeks. Our work has shown that
                                 persistent problems with the individual student aid programs’ processes,
                                 structure, and management are at the core of the Department’s financial
                                 accountability difficulties. These problems include (1) overly complex
                                 processes, (2) inadequate financial risk to lenders or state guaranty
                                 agencies for defaulted loans, and (3) management shortcomings.4
                                 Protecting the financial interests of the government will also be difficult
                                 because the student loan 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 increases, so does the
                                 potential for student loan defaults.

Improving the                    In its discussion of core strategies to achieve goal 3—to ensure access to
Department’s Oversight of        postsecondary education and lifelong learning—the Department indicates
Postsecondary Institutions       that it must improve its oversight of postsecondary institutions, agencies,
                                 and lenders.

                                 Our past 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 student financial assistance 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 the Ford Federal Direct Loan
                                 Program (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 alongside it. Essentially, this means
                                 that the Department has two programs that are similar in purpose but that
                                 operate differently.

                                 As we reported in one of our reports on high risk issues, several
                                 weaknesses in the Department’s oversight process continue to cause

                                  High-Risk Series: Student Financial Aid (GAO/HR-97-11, Feb. 1997); Higher Education: Ensuring
                                 Quality Education From Proprietary Institutions (GAO/T-HEHS-96-158, June 6, 1996); and Federal
                                 Family Education Loan Information System: Weak Computer Controls Increase Risk of Unauthorized
                                 Access to Sensitive Data (GAO/AIMD-95-117, June 12, 1995).

                                 Page 17                                  GAO/HEHS-97-176R Education’s Draft Strategic Plan

                          concern.5 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 federal student assistance programs.6 A review of a sample
                          of Department recertification actions showed that 27 percent of schools
                          sampled had violations of eligibility requirements such as unpaid debts or
                          failure to meet financial responsibility requirements.7 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. In its draft strategic plan the Department
                          states that it will address problems like this through improved targeting
                          and oversight. The Department also plans to implement a gatekeeping
                          initiative designed to focus resources on high-risk schools called the
                          Institutional Participation and Oversight Service (IPOS) Challenge. This
                          initiative uses a computer model to identify schools for review on the basis
                          of their risk of noncompliance and is listed as a data source in the
                          Department’s strategic plan for measuring agency progress toward
                          meeting goal 3.

                          Our work has shown that the Department generally lacks reliable data
The Department Does       sources and adequate accounting and information systems to achieve the
Not Have Adequate         following two objectives supporting goal 4:
Data Systems and
                      •   The Department’s information technology investments are sound and used
Information to            to improve impact and efficiency.
Achieve All Its       •   Management of Department programs and services ensures financial
Strategic Goals
                          In 1992, we identified information resource management problems at the
                          Department, and in recent testimony before the Subcommittee on Human
                          Resources, House Government Reform and Oversight Committee, we
                          reported that the Department does not have a sound integrated
                          information technology strategy to manage its portfolio of information

                           High-Risk Series: Student Financial Aid (GAO/HR-97-11, Feb. 1997) and Financial Management:
                          Education’s Student Loan Program Controls Over Lenders Need Improvement (GAO/AIMD-93-33, Sept.
                          9, 1993).
                           The Department periodically certifies the financial and administrative capacity of all schools that
                          participate in its student financial assistance programs. This certification process ensures, among
                          other things, that schools can pay their bills, are financially sound, and have the personnel resources to
                          administer the student financial assistance programs.
                          U.S. Department of Education, OIG, Subsequent Review to Follow-Up Review on Selected
                          Gatekeeping Operations, ACN: 11-60004 (Washington, D.C.: Department of Education, June 7, 1996).
                          Page 18                                      GAO/HEHS-97-176R Education’s Draft Strategic Plan

    systems.8 The Department recognizes in its draft strategic plan that
    improvements are needed in this area. The plan identifies several new
    agencywide initiatives as core strategies for improving the efficiency and
    effectiveness of operations through the use of information technology.

•   Assess current and proposed major information systems. Recent
    information technology reform legislation, including the Paperwork
    Reduction Act of 1995 and the Clinger-Cohen Act of 1996, set forth
    requirements that promote more effective use of information technology
    in support of agencies’ missions and improved program performance.
    Under the information technology reform laws, agencies are required to
    better link their technology plans and utilization to their programs’
    missions and goals. In this regard, the Department’s strategic plan states
    that the agency will assess current and proposed major information
    systems, such as the agency’s financial systems, to ensure that they
    efficiently meet the needs and mission of the Department.
•   Utilize an Information Technology Board. Among its activities, the Board
    will review new information technology investment proposals and conduct
    periodic reviews of ongoing systems.
•   Develop a data warehouse. The Department intends to develop an
    agencywide information collection and dissemination system using a data
    warehouse to make Department data easily accessible internally and
    externally and to eliminate data duplication.
•   Model and develop an information architecture. The Department plans to
    begin a modeling project to develop an architectural framework and
    uniform operating standards for all Department data systems to eliminate
    duplication in collection and data storage.

    The Department has also taken the important step of including in its plans
    a major agencywide effort to address the “year 2000” date conversion
    problem arising from the decades-old practice of recording dates in
    computer programs using just the last two digits. As a result of this
    practice, systems or programs that use dates to perform calculations,
    comparisons, or sorting may generate incorrect results when working with
    years after 1999.

    We have identified the year 2000 problem as a high risk area in recognition
    of the critical challenge faced by agencies that have to address this issue.
    Though this problem is not technically challenging, it will be a massive and
    complex undertaking. For many agencies, the year 2000 conversion effort

     Department of Education: Management Commitment Needed to Improve Information Resources
    Management (GAO/IMTEC-92-17, Apr. 20, 1992) and Department of Education: Challenges in
    Promoting Access and Excellence in Education (GAO/T-HEHS-97-99, Mar. 20, 1997).

    Page 19                                GAO/HEHS-97-176R Education’s Draft Strategic Plan

                            will be the largest project ever to be managed and implemented by their
                            information resource management organizations. Thus, the Department
                            must ensure that its information systems are fully “year 2000 compliant”
                            before January 2000. In its draft strategic plan, the Department has
                            established December 31, 1999, as the deadline for converting seven
                            mission-critical systems as part of its year 2000 conversion effort. Experts
                            in the information technology industry, however, believe that all systems
                            should be converted by December 31, 1998, to allow a year or more for
                            validation and testing. Considering the magnitude of the task ahead, the
                            Department would be well advised to establish a target indicator date well
                            before the current target date of December 31, 1999, shown in its draft
                            strategic plan.

Improving Information       The Department faces a particularly difficult challenge in improving its
Systems Supporting          information systems for the student aid programs. The Department’s
Student Aid Programs        student financial aid database, known as the National Student Loan Data
                            System (NSLDS), enables schools, guaranty agencies, and others involved
Presents a Special          with administering student loans to transmit updated loan status data to
Challenge                   the Department. However, the Department has not yet integrated NSLDS
                            with the numerous separate data systems used to support individual
                            student aid programs, often because the various systems have
                            incompatible data in nonstandard formats. As a result, program managers
                            often lack accurate, complete, and timely data to manage and oversee
                            student aid programs.9

                            The lack of an integrated student financial aid system also creates several
                            other problems:

                        •   unnecessary manual effort on the part of users;
                        •   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;
                        •   lack of common identifiers for students and institutions, making tracking
                            students and institutions across programs and systems difficult (the 1992
                            HEA amendments required the Department to establish common identifiers
                            for students and institutions not later than July 1, 1993; the Department’s
                            draft strategic plan, however, does not address the development and
                            implementation of common identifiers);

                            Department of Education: Multiple, Nonintegrated Systems Hamper Management of Student Financial
                            Aid Programs (GAO/T-HEHS/AIMD-97-132, May 15, 1997) and Student Financial Aid: Data Not Fully
                            Utilized to Identify Inappropriately Awarded Loans and Grants (GAO/HEHS-95-89, July 11, 1995).

                            Page 20                                  GAO/HEHS-97-176R Education’s Draft Strategic Plan

                  •   inadequate program monitoring and data quality assurance. For example,
                      the current system cannot always identify where a student is enrolled,
                      even after an award has been made and thousands of dollars in student aid
                      have been disbursed.

                      Although the Department has improved its student aid data systems
                      somewhat since 1992 and has recognized the use and development of
                      technology systems in this area in its strategic plan, major improvements
                      are still needed. Both we and the Department’s OIG reported in 1996 that
                      the Department had not adequately tested the accuracy and validity of the
                      loan data in the NSLDS.10

                      During the past year, the Department has been developing a major
                      reengineering project, Easy Access for Students and Institutions (EASI), to
                      redesign the entire student assistance program delivery systems to
                      integrate the management and control functions for the student assistance
                      programs. EASI is an important part of the Department’s core strategy for
                      developing cost-effective major systems that deliver for its customers and
                      employees. Although activity on the EASI project, which had waned in
                      previous months, has recently been renewed, the project is expected to be
                      a long-term undertaking.

                      On July 15, 1997, Department officials provided comments on a draft of
Agency Comments       this report (see encl. II). Department officials agree with our observations
                      about the Department’s draft strategic plan and intend to make several
                      revisions in response to our review. For example, the officials said that the
                      next version of the plan will better address all agency activities in its
                      mission statement and include an additional objective focusing specifically
                      on the management of postsecondary programs. In response to the
                      comments on the draft, we recognize that the Department’s statutory
                      responsibility for vocational rehabilitation is included in the draft strategic
                      plan; Department officials said, however, that the plan would be revised to
                      strengthen its discussion of this program.

                      As arranged with your offices, unless you publicly announce its contents
                      earlier, we plan no further distribution of this letter for 30 days. We will
                      then send copies to the Ranking Minority Members of your Committees
                      and to the Chairman and Ranking Minority Members of other committees

                       Department of Education: Status of Actions to Improve the Management of Student Financial Aid
                      (GAO/HEHS-96-143, July 12, 1996).

                      Page 21                                   GAO/HEHS-97-176R Education’s Draft Strategic Plan

that have jurisdiction over education activities, the Secretary of Education,
and the Director of the Office of Management and Budget. We will send
copies to others on request.

Please contact me at (202) 512-7014 if you or your staffs have any
questions concerning this letter. Major contributors to this
correspondence include Harriet Ganson, Assistant Director; Karen Whiten,
Evaluator-in-Charge; Adam Vodraska, Senior Attorney; and Cheryl
Driscoll, Senior Auditor.

Carlotta C. Joyner
Director, Education and
  Employment Issues

Enclosures - 2

Page 22                          GAO/HEHS-97-176R Education’s Draft Strategic Plan
Page 23   GAO/HEHS-97-176R Education’s Draft Strategic Plan
Enclosure I

Department of Education’s Major Statutory

              1. Strengthening and improvement of elementary and secondary
              schools—The Elementary and Secondary Education Act of 1965, as
              amended (20 U.S.C. 6301).

              2. National education reform—Goals 2000: Educate America Act (20 U.S.C.

              3. School-to-work opportunities—School-to-Work Opportunities Act (20
              U.S.C. 6101).

              4. Basic education for adults—Adult Education Act, as amended (20 U.S.C.

              5. Higher education resources and student assistance—Higher Education
              Act of 1965, as amended (20 U.S.C. 1001; 42 U.S.C. 2751).

              6. Vocational education—Carl D. Perkins Vocational and Applied
              Technology Education Act, as amended (20 U.S.C. 2301).

              7. Vocational rehabilitation and other rehabilitation
              services—Rehabilitation Act of 1973, as amended (29 U.S.C. 701).

              8. Education of individuals with disabilities—Individuals With Disabilities
              Education Act, as amended (20 U.S.C. 1400).

              9. Education research and improvement—Educational Research,
              Development, Dissemination and Improvement Act of 1994 (20 U.S.C.

              10. Education statistics—National Educational Statistics Act (20 U.S.C.

              11. Monitoring and enforcement of civil rights related to
              education—Department of Education Organization Act, as amended (20
              U.S.C. 3401, 3413). (The Department’s Office for Civil Rights enforces the
              antidiscrimination provisions of Title VI of the Civil Rights Act of 1964,
              Title IX of the Education Amendments of 1972, Section 504 of the
              Rehabilitation Act of 1973, and the Age Discrimination Act of 1975 and
              also has responsibilities relating to the Americans With Disabilities Act of

              Page 24                          GAO/HEHS-97-176R Education’s Draft Strategic Plan

Comments From the Department of

             Page 25     GAO/HEHS-97-176R Education’s Draft Strategic Plan
Comments From the Department of

Page 26                           GAO/HEHS-97-176R Education’s Draft Strategic Plan
Page 27   GAO/HEHS-97-176R Education’s Draft Strategic Plan
Related GAO Products

              The Government Performance and Results Act: 1997 Governmentwide
              Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997).

              Executive Guide: Effectively Implementing the Government Performance
              and Results Act (GAO/GGD-96-118, June 1996).

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

              Charter Schools: New Model for Public Schools Provides Opportunities
              and Challenges (GAO/HEHS-95-42, Jan. 18, 1995).

              Education Reform: School-Based Management Results in Changes in
              Instruction and Budgeting (GAO/HEHS-94-135, Aug. 23, 1994).

              Buyouts at the Department of Education (GAO/GGD-94-197R, Aug. 17, 1994).

              Regulatory Flexibility in Schools: What Happens When Schools Are
              Allowed to Change the Rules? (GAO/HEHS-94-102, Apr. 29, 1994).

              Special Education Reform: Districts Grapple With Inclusion Programs
              (GAO/T-HEHS-94-160, Apr. 28, 1994).

              Immigrant Education: Federal Funding Has Not Kept Pace With Student
              Increases (GAO/T-HEHS-94-146, Apr. 14, 1994).

              Transition From School to Work: States Are Developing New Strategies to
              Prepare Students for Jobs (GAO/HRD-93-139, Sept. 7, 1993).

              Vocational Rehabilitation: Evidence for Federal Program’s Effectiveness Is
              Mixed (GAO/PEMD-93-19, Aug. 27, 1993).

              Vocational Education: Status in 2-Year Colleges in 1990-91 and Early Signs
              of Change (GAO/HRD-93-89, Aug. 16, 1993).

              Transition Series: Education Issues (GAO/OCG-93-18TR, Dec. 1992).

              Vocational Rehabilitation: Clearer Guidance Could Help Focus Services on
              Those With Severe Disabilities (GAO/HRD-92-12, Nov. 26, 1991).

(104895)      Page 28                          GAO/HEHS-97-176R Education’s Draft Strategic Plan
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