oversight

Major Management Challenges and Program Risks: Department of Education

Published by the Government Accountability Office on 1999-01-01.

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

               United States General Accounting Office

GAO            Performance and Accountability
               Series




January 1999
               Major Management
               Challenges and Program
               Risks
               Department of Education




GAO/OCG-99-5
GAO   United States
      General Accounting Office
      Washington, D.C. 20548

      Comptroller General
      of the United States



      January 1999
      The President of the Senate
      The Speaker of the House of Representatives

      This report addresses the major performance and
      management challenges that have limited the
      effectiveness of the Department of Education in carrying
      out its mission. It also addresses corrective actions that
      Education has taken or initiated on these
      challenges—including a number of management
      initiatives to improve controls over the Department’s
      student financial aid programs—and further actions that
      are needed. For many years, we and others have reported
      significant management problems at Education. These
      problems are the result of serious deficiencies in
      information and financial management systems and the
      challenge of balancing two conflicting
      objectives—achieving federal program oversight while
      offering implemention flexibility to the state and local
      entities carrying out the programs.

      Education is making progress in addressing
      vulnerabilities in its financial management system. It has
      implemented a new core payment system, and it received
      an unqualified financial audit opinion on its fiscal year
      1997 financial statements. However, Education continues
      to lack the financial and programmatic information
      necessary to effectively budget for and manage its
      student financial aid programs and to accurately estimate
      the government’s liabilities. For example, Education
continues to lack accurate, reliable data on costs
associated with outstanding student loans. Therefore, GAO
continues to designate these programs as high risk.
Education has improved the management of its
elementary and secondary education programs by
developing sound performance plans containing key
strategies and performance measures. However, it needs
to improve coordination with other agencies that provide
educational services. In addition, it still faces challenges
in obtaining performance information for many of its
programs that are designed to give state and local entities
the opportunity to tailor programs to local circumstances.

This report is part of a special series entitled the
Performance and Accountability Series: Major
Management Challenges and Program Risks. The series
contains separate reports on 20 agencies—one on each of
the cabinet departments and on most major independent
agencies as well as the U.S. Postal Service. The series
also includes a governmentwide report that draws from
the agency-specific reports to identify the performance
and management challenges requiring attention across
the federal government. As a companion volume to this
series, GAO is issuing an update to those government
operations and programs that its work has identified as
“high risk” because of their greater vulnerabilities to
waste, fraud, abuse, and mismanagement. High-risk
government operations are also identified and discussed
in detail in the appropriate performance and
accountability series agency reports.




             Page 2            GAO/OCG-99-5 Education Challenges
The performance and accountability series was done at
the request of the Majority Leader of the House of
Representatives, Dick Armey; the Chairman of the House
Government Reform Committee, Dan Burton; the
Chairman of the House Budget Committee, John Kasich;
the Chairman of the Senate Committee on Governmental
Affairs, Fred Thompson; the Chairman of the Senate
Budget Committee, Pete Domenici; and Senator Larry
Craig. The series was subsequently cosponsored by the
Ranking Minority Member of the House Government
Reform Committee, Henry A. Waxman; the Ranking
Minority Member, Subcommittee on Government
Management, Information, and Technology, House
Government Reform Committee, Dennis J. Kucinich;
Senator Joseph I. Lieberman; and Senator Carl Levin.

Copies of this report series are being sent to the
President, the congressional leadership, all other
Members of the Congress, the Director of the Office of
Management and Budget, the Secretary of Education, and
the heads of other major departments and agencies.




David M. Walker
Comptroller General of
the United States



            Page 3          GAO/OCG-99-5 Education Challenges
Contents



Overview                                                  6

Major                                                    12
Performance and
Management
Issues
Related GAO                                              35
Products
Performance and                                          38
Accountability
Series




                  Page 4   GAO/OCG-99-5 Education Challenges
Page 5   GAO/OCG-99-5 Education Challenges
Overview



           The Department of Education is the primary
           agency responsible for overseeing the more
           than $73 billion annual federal investment in
           support of educational programs for
           Americans. The Department is also
           responsible for tracking approximately
           93 million student loans and 15 million
           grants as well as collecting more than
           $150 billion owed by students. While the
           federal government provides only a portion
           of the resources used for educational
           activities nationwide, education is seen by
           most Americans as a critical issue in which
           the federal government can play a part. In
           order to maximize the success of federal
           efforts to assist education, and therefore
           ultimately produce a more informed
           citizenry and improve the quality of
           American workers, the Department of
           Education must address several major
           performance and management challenges.




           Page 6            GAO/OCG-99-5 Education Challenges
                       Overview




The Challenges

Education’s            Education continues to experience
Administrative         challenges in its management of student
Effort Is Inadequate   financial aid programs, which we have
to Ensure Access to    designated as at high risk for fraud, waste,
Postsecondary          abuse, or mismanagement. These programs
Institutions While
Protecting Federal     are at risk because they provide grants and
Financial Interests    federally backed loans to a population that is
                       composed largely of low-income students
                       who are not creditworthy and would not
                       otherwise have access to the funds
                       necessary to enter the college or university
                       of their choice. Of most importance, the
                       Department lacks the financial and
                       programmatic information necessary to
                       effectively budget for and manage these
                       programs and to accurately estimate the
                       government’s liabilities. For example, in
                       fiscal year 1997, the federal government paid
                       out over $3.3 billion to make good its
                       guarantee on defaulted student loans. Yet
                       the Department lacks the integrated
                       financial systems to provide basic
                       information. For example, the current
                       system cannot always identify where a
                       student is enrolled, even after a student
                       grant or loan is awarded and thousands of
                       dollars in student aid have been disbursed.
                       As a result, ineligible students could be
                       receiving funds.
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                      Overview




Year 2000 Computer    Some of the Department’s mission-critical
Compliance Lacking    information systems are not yet Year 2000
                      compliant. Through its student aid programs,
                      Education has enabled millions of students
                      to attend postsecondary educational
                      institutions. Year 2000 issues threaten the
                      Department’s ability to continue making this
                      aid available to eligible students and parents.
                      Specifically, these problems could result in
                      (1) delays in disbursement, such that lenders
                      might not receive timely interest subsidy
                      payments if external data exchanges fail, and
                      (2) a reduction in the Department’s ability to
                      transfer payments, process applications for
                      program benefits, and monitor program
                      operations. These problems also pose risks
                      that student financial aid programs may not
                      function properly if they do not receive
                      critical data for originating loans and for
                      reporting payments and financing
                      information.


Balancing Oversight   Education also faces challenges in
of Programs and       administering elementary and secondary
Program Flexibility   education programs that are a joint
                      responsibility with state and local agencies.
                      Doing so requires striking a balance between
                      program flexibility and program controls.
                      Yet there is a lack of consensus nationally on
                      what the Department’s role should be in


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               Overview




               education. In this connection, the Congress
               has, over the past several years, eased some
               federal reporting requirements to reduce
               paperwork and regulatory burden as it
               increased state and local responsibilities for
               managing programs. As a result, the
               Department does not have enough
               information on program effectiveness to
               meet the information needs of the Congress
               and other decisionmakers. Furthermore,
               statutes often delegate oversight of
               compliance to state and local agencies. This,
               too, results in a lack of accountability
               information, particularly for elementary and
               secondary education programs. In fact, many
               of these programs have been converted into
               little more than funding streams, distributed
               through formula-driven funding mechanisms,
               thus further diminishing Education’s role in
               some programs. Our work has also shown
               that billions of federal education dollars are
               distributed through hundreds of programs
               and more than 30 agencies, which creates
               the possibility of overlap and duplication in
               federal education programs.


Progress and   The Department has been improving the
Next Steps     management of its programs by establishing
               goals, key strategies, and performance
               measures for each of its 22 strategic


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Overview




objectives and by developing 99
performance plans for individual programs.
Education reported these actions in its
strategic and annual plans as required under
the Government Performance and Results
Act, commonly known as the Results Act. In
these plans, the Department identified some
of its many programs and laid the
groundwork for developing needed
information about them. For the student
financial aid programs, for example, the
Department has increased its oversight and
management of the consolidation of student
loans and improved its process for
recertifying participating schools. Education
has also accelerated its efforts to become
Year 2000 compliant.

While Education has made progress in
improving program management and
providing information needed by the
Congress, our review of Education’s fiscal
year 1999 performance plan suggested the
need for additional action in several areas.
For example, the Department could better
describe the relationship between its
long-term strategic goals and objectives and
the short-term fiscal year 1999 performance
goals in individual program performance
plans. Education also needs to continue to
improve its coordination with the other


Page 10           GAO/OCG-99-5 Education Challenges
Overview




agencies that provide educational services
and engage in crosscutting efforts. For its
student financial aid programs, Education
needs to address the data limitations and
lack of financial information that hinder its
management of the programs and affect its
ability to award and track billions of dollars
in student financial aid. Further, the
Department must address the need for
adequately testing revisions to its financial
information systems, while developing
business continuity and contingency plans,
to provide reasonable assurance that new or
modified Year-2000-compliant systems will
not jeopardize the Department’s ability to
perform core operations.




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Major Performance and Management
Issues


            The Department of Education leads the
            nation’s long-term efforts to improve the
            quality of education. With a staff of about
            4,600 and a budget of about $34 billion in
            fiscal year 1999, the Department manages
            much of the over $73 billion federal
            investment in education. Specifically, the
            Department operates multiple programs to
            promote access to 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. In
            performing its mission, Education interacts
            with two major kinds of educational
            institutions—elementary and secondary
            schools and postsecondary institutions—as
            well as coordinates with other federal
            agencies that provide educational resources,
            assistance, or both.

            The Department of Education faces two
            major management challenges if it is going
            to effectively manage federal resources in
            support of education. First, the Department
            must fully protect federal financial interests
            while carrying out its role in ensuring
            student access to postsecondary institutions
            —which, to date, it has not accomplished.
            Student financial aid programs administered
            by the Department have a number of


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                     Issues




                     features that make them inherently
                     vulnerable to fraud, waste, abuse, and
                     mismanagement, and the Department’s
                     administration of these programs has not
                     been adequate to overcome that
                     vulnerability. Second, Education must
                     ensure that its mission-critical information
                     systems are Year 2000 compliant and has
                     recently accelerated its efforts to do so. In
                     addition, Education faces significant
                     challenges in providing the information on
                     preschool, elementary, and secondary
                     education programs that is needed by many
                     different decisionmakers.


Education’s          Through student financial aid programs
Administrative       administered by the Department of
Effort Is            Education, millions of students have been
Inadequate to        able to enroll in the postsecondary education
Ensure Access to     institutions of their choice. In fiscal year
                     1998, for example, more than 8.5 million
Postsecondary
                     students received over $48 billion in student
Institutions While   financial aid through Education-
Protecting           administered student financial aid programs.
Federal Financial    But these programs have a number of
Interests            features that make them inherently
                     vulnerable to fraud, waste, abuse, and
                     mismanagement. For example, they provide
                     grants and federally backed loans to a
                     high-risk population, composed largely of


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Major Performance and Management
Issues




low-income students who are not
creditworthy and would not otherwise have
access to the funds necessary to enter the
college or university of their choice.
Moreover, the programs operate
independently with different rules,
processes, and data systems, and many
participants are involved—including millions
of students; thousands of schools; and
thousands of lenders, guaranty agencies,
third-party servicers, and contractors. The
Federal Family Education Loan Program
(formerly known as the Guaranteed Student
Loan Program), for example, is particularly
vulnerable because of its size (it provided
$20 billion in loans in fiscal year 1998), large
number of participants, and the federal
guarantee under which the federal
government bears most of the risk when
students default on their loans. For example,
in fiscal year 1997, the federal government
paid out over $3.3 billion to make good its
guarantee on defaulted student loans.

The Department’s administration of these
programs has also contributed to federal
exposure to mismanagement and abuses.
Our audits and those of Education’s Office of
Inspector General (OIG) have found instances
in which students fraudulently obtained
grants and loans; schools were


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inappropriately recertified to continue
participating in federal student aid programs;
state-designated guaranty agencies misused
federal funds in their custody; and a
contractor failed to properly make, record,
and account for loans it consolidated on
Education’s behalf. This combination of
vulnerabilities, inherent in program design
and exacerbated by Department
administration, has led us since 1992 to
designate federal student financial aid
programs as an area at high risk of fraud,
waste, abuse, and mismanagement.

Progress has been made in addressing many
of the issues discussed in our series of
reports on this high-risk area. For example,
in the 1998 amendments to title IV of the
Higher Education Act of 1965, the Congress
instructed the Department and the Internal
Revenue Service to cooperate in verifying
students’ income to prevent fraud. The 1998
amendments also strengthened the controls
over guaranty agencies’ use of the federal
funds they hold in reserve. Moreover, the
Department has improved the process by
which it recertifies schools for participation
in student aid programs and has increased
its management and oversight of the
consolidation of student loans.



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                       Issues




                       We are encouraged by the actions taken by
                       the Congress and the Department to address
                       a number of program management and
                       oversight issues. But several weaknesses
                       continue to cause concern and have
                       contributed to our decision to maintain the
                       high-risk designation for the Department’s
                       administration of student financial aid
                       programs. First, the Department’s
                       nonintegrated information management
                       systems often lack the accurate, complete,
                       and timely data on program participants
                       needed to effectively manage and oversee
                       the programs. Second, the Department lacks
                       the financial information necessary to
                       effectively budget for and manage its student
                       aid programs and to accurately estimate the
                       government’s liabilities.


Nonintegrated          Federal student financial aid programs
Information Systems    remain vulnerable to losses because the
Fail to Consistently   Department, guaranty agencies, schools, and
Provide Managers       lenders often do not have the accurate,
Accurate and Timely
                       complete, and timely information on
Data on Program
Participants           program participants needed to effectively
                       and efficiently operate and manage the
                       programs. These difficulties stem from the
                       lack of a fully functional integrated database
                       covering all Department-administered
                       financial aid programs. Our work has shown


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Major Performance and Management
Issues




that the Department does not have a sound,
integrated information technology strategy
to manage its portfolio of information
systems.

Many of Education’s student financial aid
systems were developed independently over
time by multiple contractors in response to
new functions, programs, and mandates,
rather than as part of a long-range system
design strategy. As a consequence, a highly
heterogeneous environment has evolved that
relies heavily on various contractors to
develop and maintain computerized systems
of critical student financial aid information.
These contractors operate the systems in
their own disparate hardware and software
environments. The fiscal year 1998 budget to
develop, operate, and maintain these
systems was $311 million, and spending is
expected to increase in fiscal year 1999.

To address long-standing challenges
associated with the student loan programs’
nonintegrated, heterogeneous systems
environment, and to improve the availability
and quality of data on title IV program
participants, the Higher Education
Amendments of 1992 required that the
Department integrate its databases
containing information on student financial


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    Issues




    aid program participants. The amendments
    also required the Department to do the
    following:

•   Establish common identifiers so that codes
    that are used to identify institutions and
    students are consistent across the different
    title IV programs, making it easier for
    managers and others to track students
    across programs. Without such identifiers,
    the Department could assign an institution
    different identification numbers for each
    title IV program in which its students
    participate, making the identification of
    institutions problematic. While the
    Department is working on establishing these
    identifiers, it has not completed this work.
•   Standardize data reporting formats to permit
    the direct comparison of data. For example,
    the Department permits each title IV
    program to use its own data dictionary for its
    system; thus, data elements may have
    different meanings across programs. The
    lack of data standards also contributes to
    concerns about data quality and reliability,
    which the Department has long recognized
    as a significant problem with its title IV data.
    The Department began to address data
    quality through a major project in
    December 1996 aimed at reconciling data
    stored in the National Student Loan Data


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Issues




System (NSLDS)—the Department’s principal
student grant and loan database—with data
in program-specific databases. Although the
Department has reconciled parts of its NSLDS
data, it has only partially standardized its
data reporting formats.

In July 1997, we recommended that the
Secretary of Education direct the
Department’s chief information officer to
(1) develop and enforce a departmentwide
systems architecture that includes a
high-level description of the organization’s
mission, functional requirements, systems,
and information flows among systems and
(2) ensure that the developed systems
architecture addresses the title IV systems
integration, common identifiers, and data
standards deficiencies. We also
recommended that the Department’s
information technology investments
conform to the developed architecture and
that funding for all projects be predicated on
such conformance.

Although the Department has made
improvements in its student aid data systems
that address many of these concerns,
additional enhancements are still needed.
For example, the Department is developing a
major reengineering project, Easy Access for


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                    Issues




                    Students and Institutions (commonly
                    referred to as Project EASI), to redesign the
                    entire student aid program delivery system
                    to integrate the management and control
                    functions, but this project is a long-term
                    undertaking.

                    The Congress recently authorized the
                    Department to operate student financial aid
                    programs under a performance-based
                    organization (PBO)—the first such
                    organization in the federal sector. PBOs
                    normally adhere to more flexible rules but
                    operate under tougher accountability
                    standards. Many functions, such as
                    developing and enforcing departmentwide
                    management systems, will fall within the
                    responsibility of Education’s PBO. The PBO
                    will have an opportunity to address these
                    issues as it begins taking over functions now
                    operated by the Department’s Office of
                    Postsecondary Education.


Lack of Adequate    Education’s chronic data systems challenges
Financial Data      have hampered its ability to prepare
Hinders             financial statements that fairly present the
Management of       actual financial condition of its student
Student Financial
                    financial aid programs. Each year from 1992
Aid Programs
                    through 1996, data reliability concerns have
                    precluded our auditors, Education’s OIG, and


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Major Performance and Management
Issues




independent public accountants from
rendering an opinion on Education’s
financial statements. The primary challenge
has been that the Department has not been
able to obtain complete and accurate student
loan data from its systems. Without accurate
information, the Department cannot be
certain of the extent of the government’s
liability for the student loans it has
guaranteed.

The Department has made progress in
addressing vulnerabilities in its financial
management systems. For example, in fiscal
year 1998 it received an unqualified audit
opinion on its fiscal year 1997 consolidated
financial statements—the first year it
received such an opinion. The Department
has also implemented its new core financial
management system and undertaken efforts
to improve NSLDS. The Department also
intends to improve data accuracy by
obtaining individual student loan data
directly from lenders rather than through
guaranty agencies and by expanding efforts
to verify the data reported to NSLDS.

Other aspects of its financial management
activities, however, continue to require the
Department’s attention and contribute to
concerns about the risk exposure to the


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Issues




federal government. For example, although
the Department received an unqualified
audit opinion on its fiscal year 1997
consolidated financial statements, it
continues to lack accurate, reliable data on
costs associated with outstanding student
loans. Because Education did not have
reliable data from its own systems to
develop the estimates of outstanding loans,
it obtained data from 10 of the larger
guaranty agencies and used these data to
compute loan estimates for preparing its
1997 statements. Because of this effort,
Education did not meet the annual March 1
deadline for completing the audit as required
by the Results Act. Education’s OIG issued its
audit report on the fiscal year 1997 financial
statements on May 29, 1998. Although the
data provided by the guaranty agencies were
suitable to support the loan estimates
included with this audit report, Education’s
ability to continue to prepare auditable loan
estimates and meet the Results Act audit
time frame depends on its establishing a
reliable source of up-to-date historical loan
data.

Although the Department relies mainly on
independent public accountant audits to
ensure the accuracy of information about
monies it is owed, it has not focused on


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Issues




receiving reports on audits and performing
quality control reviews on these audits.
Education also does not know if required
annual financial and compliance audits of
schools participating in federal student
financial aid programs are being performed.
Although Education has two systems for
audit report tracking and monitoring, neither
system is used to identify late or missing
financial audit reports. The Department has
not followed up on audit findings in a timely
manner.

The Department has also experienced
difficulties in implementing and operating its
new core financial management system. As a
result, the preparation of the fiscal year 1998
financial statements and the related audit are
being delayed until the Department
completes reconciling general ledger data
and resolves significant differences between
the general ledger and other related
information. The Department has hired
contractors to assist with the reconciliation
process. The Department’s OIG has agreed to
delay the audit of the fiscal year 1998
financial statements until February 1999
because of these issues. Consequently, the
Department will not meet the March 1, 1999,
deadline for completing the fiscal year 1998
audit.


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               Issues




               Education recognizes the need to improve
               oversight over guaranty agencies, and
               several corrective actions are under way. In
               addition to these actions, Education has
               started to use NSLDS to track individual loan
               activity and loan balances. We believe that
               Education can take steps to eliminate major
               internal control weaknesses and fully
               implement its new core financial
               management system. Because the
               Department has begun corrective actions
               and has demonstrated a commitment to
               resolving its financial management
               challenges, we believe it is making progress.
               The unqualified audit opinion on its 1997
               financial statements was a significant
               improvement over the disclaimers of opinion
               that the Department received in past audits.
               However, a sustained effort will be critical if
               the Department is to have sound financial
               management and reliable financial
               information.


Key Contacts   Carlotta C. Joyner, Director
               Education and Employment Issues
               Health, Education, and Human Services
                 Division
               (202) 512-7014
               joynerc.hehs@gao.gov



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             Major Performance and Management
             Issues




             Gloria L. Jarmon, Director
             Health, Education, and Human Services
                Accounting and Financial Management
             Accounting and Information Management
                Division
             (202) 512-4476
             jarmong.aimd@gao.gov


Year 2000    The Department of Education faces major
Computer     risks that Year 2000 failures could seriously
Compliance   disrupt the student financial aid delivery
Lacking      process. Because student financial aid
             systems are interdependent, repercussions
             from Year-2000-related shortcomings could
             be felt throughout the student financial aid
             community. The Department has been very
             slow in implementing a comprehensive Year
             2000 program to address these risks.
             Education is now accelerating its program,
             but with the slow start, the Department
             remains in a position of playing catch-up.
             Accordingly, the Department has major
             challenges ahead and limited time remaining
             to adequately deal with them.

             According to Education’s own assessments
             of the severity of possible Year 2000 failures,
             the student financial aid delivery process
             could experience major problems unless all



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    Major Performance and Management
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    systems are compliant in time. These
    problems include

•   delays in disbursements, such that lenders
    might not receive timely interest subsidy
    payments if external data exchanges fail;
•   reduction in the Department’s ability to
    transfer payments, process applications for
    program benefits, and monitor program
    operations;
•   risks that student financial aid programs
    might not function properly if they do not
    receive critical data for originating loans and
    for reporting payments and financial
    information; and
•   risks that postsecondary education students
    might lack the ability to verify the current
    status of their loans or grants.

    Education has reported to the Office of
    Management and Budget (OMB) that it has 14
    mission-critical systems, of which 11 are
    student financial aid systems. Complete and
    thorough testing of the Year 2000
    compliance of these mission-critical systems
    is essential to provide reasonable assurance
    that new or modified systems will process
    dates correctly and will not compromise
    core business operations after the turn of the
    century. It is also important to work early
    and continually with agencies’ and


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    Issues




    organizations’ data exchange partners so
    that testing can be effectively planned and
    executed. For Education, the tasks ahead
    require a cooperative, coordinated, and
    thorough testing process across the
    disparate systems in the student financial aid
    delivery network.

    Education must mitigate critical risks that
    affect its ability to award and track billions
    of dollars in student financial aid.
    Specifically, the Department must address
    the need for adequate testing, the renovation
    and testing of data exchanges, and the
    development of business continuity and
    contingency plans. Unless these issues are
    effectively addressed, the ability of the
    Department to deliver financial aid to
    students will be compromised. The
    Department’s efforts include the following.

•   Beyond the testing of individual
    mission-critical systems, Education plans to
    devote a significant amount of time to
    end-to-end testing of its mission-critical
    business processes and supporting systems,
    including those associated with student
    financial aid delivery. According to its
    documents, the Department plans to conduct
    such testing in the first half of 1999, after all



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    individual mission-critical systems have been
    certified as Year 2000 compliant.
•   Conflicting data exchange formats or data
    processed on noncompliant systems could
    introduce and propagate errors from one
    system to another. Education’s student
    financial aid data exchange environment is
    massive and complex. It includes about 7,500
    schools, 6,500 lenders, and 36 guaranty
    agencies, as well as other federal agencies.
    The Department plans to include testing of
    data exchanges in its end-to-end testing of
    mission-critical business processes.
•   Given the challenges Education faces in
    making sure that all of its mission-critical
    systems are adequately tested and in
    addressing the complexities of the massive
    number of data exchanges, it will be difficult
    for the Department to enter the new century
    without experiencing some challenges.
    Therefore, it is critical that Education
    develop realistic contingency plans to ensure
    continuity of core business processes in the
    event of Year-2000-induced failures.
    According to Department officials,
    Education is in the process of developing
    business continuity and contingency plans
    for each mission-critical business process
    and supporting system. The Department
    expects to complete these plans by
    March 1999.


    Page 28             GAO/OCG-99-5 Education Challenges
               Major Performance and Management
               Issues




Key Contact    Joel C. Willemssen, Director
               Civil Agencies Information Systems
               Accounting and Information Management
                 Division
               (202) 512-6408
               willemssenj.aimd@gao.gov


Balancing      In administering programs that are a joint
Oversight of   responsibility with state and local agencies,
Programs and   Education must continually balance program
Program        flexibility with maintaining program
Flexibility    controls. At the same time, there is a lack of
               consensus on the federal role in education.
               Over the past several years, the Congress has
               loosened federal requirements, thus
               increasing state and local responsibilities for
               managing programs and determining how
               funds best meet local needs. As a result, the
               Department has too little information on
               program effectiveness to meet the
               information needs of the Congress and other
               decisionmakers. But this absence of
               information often results not from
               Education’s lack of diligence in managing
               the programs but from the nature of the
               programs themselves. The challenge for the
               Department is to get the information it needs
               in the face of other issues that impede its
               data collection efforts, such as (1) priorities
               that compete with and restrict data


               Page 29             GAO/OCG-99-5 Education Challenges
Major Performance and Management
Issues




collection and evaluation activities, such as
the desire to reduce paperwork and
regulatory burden and promote flexibility in
program implementation; (2) the high cost of
data collection; (3) the secondary role the
federal Department of Education plays,
relative to local and state government
entities, in many programs; (4) the difficulty
of obtaining impact evaluation information;
(5) the problem in assessing overall effects
from federal efforts involving multiple
federal programs in multiple agencies; and
(6) until recently, a lack of focus on results
and accountability.

In some Education programs, oversight of
compliance is delegated to state and local
agencies, which results in a lack of
accountability information for the
elementary and secondary education
programs the Department manages. These
programs are sometimes designed, by
statute, to provide considerable flexibility
for states and local school districts. When
flexibility is provided in a program’s
implementation, the types of activities
carried out can vary from locality to locality.
This is often also true of program objectives,
information reporting, and measures of
outcome and success. As we have seen in
our review of the Safe and Drug-Free


Page 30             GAO/OCG-99-5 Education Challenges
Major Performance and Management
Issues




Schools and Communities Act, cobbling this
information together to form a national
picture can be difficult.

Moreover, our work has also shown that
billions of federal education dollars are
distributed through hundreds of programs
and more than 30 agencies, which creates
the possibility of overlap and duplication in
federal education programs. Since the bulk
of federal education funds are distributed
through formula-driven funding mechanisms,
in recent years some of these programs have
been converted to little more than funding
streams. (The term “funding stream”
characterizes programs for which there are
federal fiscal objectives but whose activities
are primarily managed at the state or local
level.) In the words of state agency staff,
“these aren’t federal programs, they are state
programs that receive federal funds.” Thus,
Education’s role in some programs—such as
Goals 2000, which provides funds to states
and localities for systemwide education
reform efforts—may involve little more than
seeing that applications for funding are
properly submitted, compliance or audit
issues are resolved, and money is disbursed
in a timely fashion. As a result, little or no
performance information is available at the
federal level. Where grant-funded activities


Page 31             GAO/OCG-99-5 Education Challenges
Major Performance and Management
Issues




are primarily managed at the local level—as
in title VI Innovative Education and Safe and
Drug-Free Schools and Communities—the
state’s role may be similarly limited. Also,
once these funds are added to the overall
budget for a state or local activity, the
federal dollars lose their identity, and their
results cannot be separated
out—particularly when the federal share is
small. Thus, the only program outcome
measures available are likely to be for the
state or local service delivery program, not
the federal funding program.

The strategic planning process under the
Results Act, including its interagency
coordination component, provides an
opportunity to examine education programs
managed across the government so that
overlapping, duplicative, and ineffective
programs can be identified. Education’s
strategic and performance plans were
basically sound. They provided OMB and the
Congress with goals, key strategies, and
performance measures for each of
Education’s 22 strategic objectives and 99
performance plans for individual programs;
the plans also mapped the interagency
coordination for each program. The
Department has also required states or
localities to set performance objectives for


Page 32             GAO/OCG-99-5 Education Challenges
Major Performance and Management
Issues




the activities or projects they choose to
support with federal funds—and to report
the performance objectives to the federal
agency involved. For example, in its use of
waivers, the Department expects to gain
information on program outcomes in
exchange for granting temporary exemptions
from certain federal program requirements
(waivers) to states or school districts.
However, state reporting is uneven,
providing insufficient information.

While these activities provided a necessary
first step to lay the groundwork for
developing needed information, much
additional work needs to be done in
preschool, elementary, and secondary
education to (1) balance the competing
objectives of collecting uniform program
information to assess performance with
giving states and localities the flexibility to
implement their unique programs; (2) better
link Education’s long-term strategic goals
and annual performance plans in order to
demonstrate how the Department intends to
make progress toward achieving its strategic
goals; and (3) use the Results Act to identify
performance goals for Education’s
crosscutting efforts, laying out more details
regarding the activities that each agency will
take to assess the effectiveness of such


Page 33             GAO/OCG-99-5 Education Challenges
              Major Performance and Management
              Issues




              programs and eliminate the extent of overlap
              and duplication of similar education
              programs that are scattered among multiple
              agencies and departments.


Key Contact   Carlotta C. Joyner, Director
              Education and Employment Issues
              Health, Education, and Human Services
                Division
              (202) 512-7014
              joynerc.hehs@gao.gov




              Page 34             GAO/OCG-99-5 Education Challenges
Related GAO Products



Student Financial   Student Loans: Improvements in the Direct
Aid                 Loan Consolidation Process (GAO/HEHS-99-19R,
                    Nov. 10, 1998).

                    Direct Student Loans: Efforts to Resolve
                    Lenders’ Problems With Consolidations Are
                    Under Way (GAO/HEHS-98-103, Apr. 21, 1998).

                    Higher Education: Verification Helps Prevent
                    Student Aid Payments to Ineligible
                    Noncitizens (GAO/HEHS-97-153, Aug. 6, 1997).

                    Student Financial Aid Information: Systems
                    Architecture Needed to Improve Programs’
                    Efficiency (GAO/AIMD-97-122, July 29, 1997).

                    Department of Education: Multiple,
                    Nonintegrated Systems Hamper Management
                    of Student Financial Aid Programs
                    (GAO/T-HEHS/AIMD-97-132, May 15, 1997).


Year 2000           Year 2000 Computing Crisis: Updated Status
Compliance          of Department of Education’s Information
                    Systems (GAO/T-AIMD-99-8, Oct. 8, 1998).

                    Year 2000 Computing Crisis: Significant
                    Risks Remain to Department of Education’s
                    Student Financial Aid Systems
                    (GAO/T-AIMD-98-302, Sept. 17, 1998).



                    Page 35           GAO/OCG-99-5 Education Challenges
                Related GAO Products




Balancing       Goals 2000: Flexible Funding Supports State
Oversight and   and Local Education Reform (GAO/HEHS-99-10,
Flexibility     Nov. 16, 1998).

                Elementary and Secondary Education:
                Flexibility Initiatives Do Not Address
                Districts’ Key Concerns About Federal
                Requirements (GAO/HEHS-98-232, Sept. 30,
                1998).

                Grant Programs: Design Features Shape
                Flexibility, Accountability, and Performance
                Information (GAO/GGD-98-137, June 22, 1998).

                Department of Education: Information
                Needs Are at the Core of Management
                Challenges Facing the Department
                (GAO/T-HEHS-98-124, Mar. 24, 1998).

                Federal Education Funding: Multiple
                Programs and Lack of Data Raise Efficiency
                and Effectiveness Concerns (GAO/HEHS-98-77R,
                Jan. 21, 1998, and GAO/T-HEHS-98-46, Nov. 6,
                1997).


Managing for    The Results Act: Observations on the
Results         Department of Education’s Fiscal Year 1999
                Annual Performance Plan (GAO/HEHS-98-172R,
                June 8, 1998).



                Page 36                GAO/OCG-99-5 Education Challenges
Related GAO Products




Managing for Results: Agencies’ Annual
Performance Plans Can Help Address
Strategic Planning Challenges (GAO/GGD-98-44,
Jan. 30, 1998).

Managing for Results: Using the Results Act
to Address Mission Fragmentation and
Program Overlap (GAO/AIMD-97-146, Aug. 29,
1997).

Managing for Results: Analytic Challenges in
Measuring Performance (GAO/HEHS/GGD-97-138,
May 30, 1997).




Page 37                GAO/OCG-99-5 Education Challenges
Performance and Accountability Series



             Major Management Challenges and Program
             Risks: A Governmentwide Perspective
             (GAO/OCG-99-1)

             Major Management Challenges and Program
             Risks: Department of Agriculture
             (GAO/OCG-99-2)

             Major Management Challenges and Program
             Risks: Department of Commerce
             (GAO/OCG-99-3)

             Major Management Challenges and Program
             Risks: Department of Defense (GAO/OCG-99-4)

             Major Management Challenges and Program
             Risks: Department of Education
             (GAO/OCG-99-5)

             Major Management Challenges and Program
             Risks: Department of Energy (GAO/OCG-99-6)

             Major Management Challenges and Program
             Risks: Department of Health and Human
             Services (GAO/OCG-99-7)

             Major Management Challenges and Program
             Risks: Department of Housing and Urban
             Development (GAO/OCG-99-8)




             Page 38          GAO/OCG-99-5 Education Challenges
Performance and Accountability Series




Major Management Challenges and Program
Risks: Department of the Interior
(GAO/OCG-99-9)

Major Management Challenges and Program
Risks: Department of Justice (GAO/OCG-99-10)

Major Management Challenges and Program
Risks: Department of Labor (GAO/OCG-99-11)

Major Management Challenges and Program
Risks: Department of State (GAO/OCG-99-12)

Major Management Challenges and Program
Risks: Department of Transportation
(GAO/OCG-99-13)

Major Management Challenges and Program
Risks: Department of the Treasury
(GAO/OCG-99-14)

Major Management Challenges and Program
Risks: Department of Veterans Affairs
(GAO/OCG-99-15)

Major Management Challenges and Program
Risks: Agency for International Development
(GAO/OCG-99-16)




Page 39               GAO/OCG-99-5 Education Challenges
Performance and Accountability Series




Major Management Challenges and Program
Risks: Environmental Protection Agency
(GAO/OCG-99-17)

Major Management Challenges and Program
Risks: National Aeronautics and Space
Administration (GAO/OCG-99-18)

Major Management Challenges and Program
Risks: Nuclear Regulatory Commission
(GAO/OCG-99-19)

Major Management Challenges and Program
Risks: Social Security Administration
(GAO/OCG-99-20)

Major Management Challenges and Program
Risks: U.S. Postal Service (GAO/OCG-99-21)

High-Risk Series: An Update (GAO/HR-99-1)




The entire series of 21 performance and
accountability reports and the high-risk
series update can be ordered by using
the order number GAO/OCG-99-22SET.




Page 40               GAO/OCG-99-5 Education Challenges
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