oversight

Department of Education: Challenges in Promoting Access and Excellence in Education

Published by the Government Accountability Office on 1997-03-20.

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

                           United States General Accounting Office

GAO                        Testimony
                           Before the Subcommittee on Human Resources,
                           Committee on Government Reform and Oversight, House
                           of Representatives


For Release on Delivery
Expected at 10 a.m.
Thursday, March 20, 1997
                           DEPARTMENT OF
                           EDUCATION

                           Challenges in Promoting
                           Access and Excellence in
                           Education
                           Statement of Cornelia M. Blanchette, Associate Director
                           Education and Employment Issues
                           Health, Education, and Human Services Division




GAO/T-HEHS-97-99
Department of Education: Challenges in
Promoting Access and Excellence in
Education
              Mr. Chairman and Members of the Subcommittee:

              We are pleased to be here today to discuss several challenges the
              Department of Education faces in carrying out its mission in a
              cost-efficient and effective manner.

              The Department was created in 1980 with a mission that involves two
              major kinds of institutions in which education is provided: (1) elementary
              and secondary schools and (2) postsecondary institutions. With a staff of
              about 4,600 in fiscal year 1997 and a budget of about $29 billion, the
              Department manages the federal investment in education and leads the
              nation’s long-term effort to improve the quality of education. Specifically,
              the Department promotes access and equity in education, provides
              financial aid to postsecondary students, and develops information and
              provides research on best practices to improve the quality of education.

              With the Department’s support, education is a state responsibility under
              local control. As shown in figure 1, the nation spends more than
              $500 billion a year on education, with state, local, and private expenditures
              accounting for about 91 percent of this spending.




              Page 1                                                       GAO/T-HEHS-97-99
                                   Department of Education: Challenges in
                                   Promoting Access and Excellence in
                                   Education




Figure 1: Total Expenditures for
Education in the United States,    Dollars in Billions
1995-96
                                                                                        All Other b
                                                                                        $163.4
                                                              8.9%
                                                                                        Federal a
                                                                                        $46.9

                                             30.9%
                                                                                        State
                                                                                        $179.4
                                                                     34.0%


                                                     26.2%




                                                                                        Local
                                                                                        $138.4


                                   a
                                       Includes expenditures of all federal agencies.
                                   b
                                    Federally supported student aid that goes to higher education institutions through students’
                                   tuition payments is shown under “All Other” rather than under “Federal.” Such payments would
                                   add substantial amounts and several percentage points to the federal share.

                                   Source: U.S. Department of Education.


                                   Although the cornerstone of our nation’s future is a sound educational
                                   system that meets the diverse needs of all Americans, some 2,000 students
                                   drop out of school each day, and large numbers of students graduate from
                                   school lacking the skills sought by employers. The strength of
                                   international competition has reinforced the link between education and
                                   employment, which is shown in figure 2.




                                   Page 2                                                                        GAO/T-HEHS-97-99
                                       Department of Education: Challenges in
                                       Promoting Access and Excellence in
                                       Education




Figure 2: Unemployment Rates of
People 25 Years of Age and Older by    By Highest Level of Education Attained: 1995
Highest Level of Education Attained,
1995                                   20      Percent Unemployed




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                                       Source: U.S. Department of Education.


                                       At the same time, the nation’s school-age population has become
                                       increasingly poor, racially and ethnically diverse, and at risk of school
                                       failure. In addition, the Department has had a history of management
                                       problems. We identified significant operational deficiencies in our 1993
                                       management review and our high-risk series1 that affect the Department’s
                                       ability to protect the financial interests of the government and to manage
                                       itself efficiently and effectively. The current environment places
                                       considerable pressure on the Department to correct these deficiencies.
                                       The public is demanding more accountability from government
                                       agencies—more assurance that tax dollars are not being wasted and that
                                       government is operated in accordance with sound management practices.

                                       Today, I would like to discuss two major challenges the Department faces
                                       in achieving its mission: first, ensuring access to postsecondary
                                       institutions, while at the same time protecting the financial interests of the
                                       government, and second, promoting access to and excellence in


                                       1
                                        High-Risk Series: Guaranteed Student Loans (GAO/HR-93-2, Dec. 1992); High-Risk Series: Student
                                       Financial Aid (GAO/HR-95-10, Feb. 1995); and High-Risk Series: Student Financial Aid (GAO/HR-97-11,
                                       Feb. 1997).



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Department of Education: Challenges in
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elementary, secondary, and adult education. In addition, I want to discuss
how the Department’s ability to meet these challenges could be enhanced
by the improved management that the Congress envisioned in passing
recent legislation. My discussion today is based on work we have done
over several years.2

Although the Department has made progress in ensuring access to
postsecondary education and in providing financial accountability,
challenges remain, especially in providing educational access to
low-income and minority students in an era of rising tuition costs and in
protecting the financial interests of the federal government. The student
aid programs make available billions of dollars in loans and grants to
promote access to education. But these programs continue to be
hampered by problems with process complexity, structure, and program
management. The student aid process is a complicated one—it has several
participants who play different roles as well as various processes for each
of the grant or loan programs. The federal government continues to bear a
major portion of the risk for loan losses. Moreover, management
shortcomings, especially inadequate management information systems
that contain unreliable data, contribute to the Department’s difficulties.

The Department also faces challenges in promoting access to and
excellence in preschool, elementary, secondary, and adult education
programs. Through leadership and leverage, the Department works with
states and local education agencies to effect changes intended to improve
the nation’s educational system. Demonstrating accountability is
dependent on having clearly defined objectives, valid assessment
instruments, and accurate program data. However, in some instances, the
Department does not have these prerequisites. For example, in our work
on programs funded under the Adult Education Act, we found that the
Department had difficult ensuring accountability for results, primarily
because the programs did not have clearly defined objectives. In addition,
it is unclear whether the Department has the resources it needs to manage
its funds, including funds for the proposed Partnership to Rebuild
America’s Schools Act of 1997 and for helping schools integrate
technology into the curriculum to make students technologically literate.
Similarly, the Department only has selected information on the
implementation of the title 1 program, the largest single federal elementary
and secondary grant program, for which $7.7 billion was appropriated in
fiscal year 1997. Thus, the Department does not have the informational
basis to determine whether mid-course changes are necessary.

2
 A list of related GAO products appears at the end of this testimony.



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             In meeting these challenges, the Department will need to improve its
             management. Major pieces of recent legislation provide powerful tools in
             the form of a statutory framework for improving agency operations and
             accountability. These laws include (1) the 1993 Government Performance
             and Results Act (GPRA), which requires agencies to focus on results as they
             define their missions and desired outcomes, measure performance, and
             use that information to improve programs; (2) the expanded Chief
             Financial Officers (CFO) Act, which requires agencies to prepare financial
             statements that can pass the test of an independent audit; and (3) the 1995
             Paperwork Reduction Act and the 1996 Clinger-Cohen Act, which are
             intended to help agencies better manage their information resources and
             make wiser investments in information technology. The Department has
             made progress in implementing these laws, but work remains to be done
             before the goal of improved management can be reached.


             The Department of Education’s basic functions are to provide financial
Background   resources, primarily through student loans and grants for higher
             education; provide research and information on best practices in
             education; and ensure that publicly funded schools and education
             programs observe civil rights laws.3 It administers a variety of grant and
             contract programs that provide aid for disadvantaged children; aid for
             children and adults with disabilities; student loans and grants for higher
             education; vocational and adult education; and research and evaluation, as
             well as a variety of smaller programs, such as the gifted and talented
             education program.

             According to its own data, the Department currently administers
             approximately 180 programs, including the federal student financial aid
             programs established under title IV of the Higher Education Act of 1965, as
             amended (HEA). These programs—the Federal Family Education Loan
             Program (FFELP), the Ford Direct Loan Program (FDLP), the Federal Pell
             Grant Program, the Federal Perkins Loan Program, and several smaller
             financial aid programs—fund approximately 75 percent of all
             postsecondary student financial aid in the nation. The two largest
             elementary/secondary programs are title I of the Elementary and

             3
              The Department, through its Office for Civil Rights, is responsible for enforcing the following civil
             rights laws as they relate to schools at all levels: (1) title VI of the Civil Rights Act of 1964, which
             prohibits discrimination on the basis of race, color, or national origin; (2) title IX of the Education
             Amendments of 1972, which prohibits discrimination on the basis of sex in education programs and
             activities; (3) section 504 of the Rehabilitation Act of 1973, which prohibits discrimination on the basis
             of disability; (4) the Age Discrimination Act of 1975, which prohibits discrimination on the basis of age;
             and (5) title II of the Americans With Disabilities Act of 1990, which prohibits public entities from
             discriminating on the basis of disability.



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                           Secondary Education Act, which helps support the education of over
                           6 million disadvantaged children in more than 50,000 schools
                           nationwide—about one-half of the nation’s public schools—and special
                           education programs that assist over 5 million children with disabilities
                           from birth through age 21 in meeting their educational and developmental
                           needs.

                           For fiscal year 1997, the Department has an estimated budget of
                           $29.4 billion and is authorized 4,613 full-time-equivalent (FTE) staff-years.
                           The administration’s fiscal year 1998 budget request is for $39.5 billion and
                           4,560 FTE staff. This represents an increase of about $10 billion, $5 billion
                           of which the administration wants to use to assist states in acquiring funds
                           for school construction.

                           The Department’s spending for education leverages well beyond its budget
                           authority. For example, the fiscal year 1998 budget request of $12.7 billion
                           for postsecondary student aid programs is expected to generate $47.2
                           billion for more than 8 million students. And $4 billion in federal
                           appropriations for special education is expected to leverage about
                           $29.5 billion in state and local funds.


                           Through its student aid programs, the Department has enabled millions of
Ensuring Access to         students to attend postsecondary educational institutions; however, the
Postsecondary              current economic conditions make continuing to ensure such access
Institutions While         difficult. Rising tuition, coupled with the shift to providing loans instead of
                           grants, could result in fewer low-income and minority students’ staying in
Protecting Federal         college. At the same time the Department is concerned with access, its
Financial Interests        ongoing challenge is to improve its processes to ensure financial
                           accountability in its postsecondary student aid programs, particularly
                           FFELP, FDLP, and the Pell Grant Program. In 1990, we designated the student
                           financial aid program one of 17 federal high-risk programs likely to cause
                           the loss of substantial amounts of federal money because of their
                           vulnerabilities to waste, fraud, abuse, and mismanagement. Although the
                           Department has acted to correct many problems and improve program
                           controls, significant vulnerabilities remain, and we have included the
                           student financial aid program in our 1997 list of 25 high-risk programs.


Ensuring Equal Access Is   The Department’s success in meeting one of its major
Becoming More Difficult    challenges—ensuring access to postsecondary institutions—is critical to
                           the economic well-being of the nation’s citizens. As shown in figure 2, level



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Department of Education: Challenges in
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Education




of education is closely linked to unemployment. In addition, level of
education is a strong determinant of wage earnings. For example, college
graduates earn much more than those with only a high school education,
and the differential has been increasing. According to Department data, in
1985 the median annual income of full-time male workers 25 years and
over was $41,892 for college graduates and $26,609 for those with high
school diplomas only, a difference of $15,283. By 1994, the difference
between these two groups had grown to $21,191. Low-income and
minority students have traditionally been underrepresented among college
students, and access is becoming more and more problematic as the cost
of attending college increases. For example, as we reported to the
Congress in August 1996,4 a public college education has become less
affordable in the last 15 years as tuition has risen nearly three times as fast
as household income. The average tuition for full-time in-state students
increased from $804 per year to $2,689, or 234 percent, and median
household income, from $17,710 to $32,264, or 82 percent. Students and
their families have responded to this “affordability gap” by drawing more
heavily on their own financial resources and increasing their borrowing.
For example, the annual average student loan at 4-year public schools rose
from $518 per full-time student in fiscal year 1980 to $2,417 in fiscal year
1995, an increase of 367 percent, which is almost five times the 74-percent
increase in the cost of living—as measured by the consumer price
index—for the same period. If this trend continues, rising tuition levels
may deter many students from attending college.

The Department’s primary mechanism for ensuring access to
postsecondary institutions is the federal student financial aid
programs—principally FFELP, FDLP, and the Pell Grant Program. While
federal student financial aid has been substantial in the past, recent trends
may inhibit broader college access. A growing proportion of federal aid
has taken the form of loans rather than grants since the 1970s. For
example, from 1977 to 1980, grant aid exceeded loan aid; since 1985,
however, loan aid has been about twice the amount of grant aid. With
federal grant aid declining in relative terms, students and their families
have had to shoulder a greater share of college expenses. Many
policymakers have expressed concern that this trend in college costs and
in financial aid patterns, which increases students’ net costs for higher
education, has diminished college access—both entry and attendance
through graduation—for low-income students.



4
 Higher Education: Tuition Increasing Faster Than Household Income and Public Colleges’ Costs
(GAO/HEHS-96-154, Aug. 15, 1996).



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                             Department of Education: Challenges in
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                             Our work supports this belief with respect to attendance through
                             graduation.5 We concluded from our work that financial aid packages with
                             relatively high grant levels may improve low-income students’ access to
                             higher education more than packages that rely more on loans. In addition,
                             our analysis indicated that the sooner low-income students receive grant
                             assistance, the more likely they are to stay in college. We found that grants
                             were most effective in reducing low-income students’ dropout
                             probabilities in the first year. For these students, an additional $1,000 grant
                             reduced the dropout probability by 23 percent. In the second year, the
                             additional grant reduced dropout probability by 8 percent, while in the
                             third year it had no statistically discernable effect. Therefore, we believe
                             that restructuring federal grant programs to feature frontloading6 could
                             improve low-income students’ dropout rates with little or no change in
                             each student’s overall 4-year allocation of grants and loans. We suggested
                             that, if the Congress was interested in increasing the number of
                             low-income students who stay in college, it could direct the Department to
                             conduct a pilot program for frontloading federal grants. The Congress has
                             yet to act on this suggestion.


Recurring Problems           Although major federal student aid programs, such as FFELP, FDLP, and the
Hamper the Department’s      Pell Grant Program, have succeeded in providing students access to
Ability to Protect Federal   billions of dollars for postsecondary education, our work has shown that
                             the Department has been less successful in protecting the financial
Financial Interests          interests of U.S. taxpayers.7 For example, in fiscal year 1996, while the
                             Department made more than $40 billion available in student aid, the
                             federal government paid out over $2.5 billion to make good its guarantee
                             on defaulted student loans.

                             The Congress addressed many of the student aid deficiencies that we, the
                             Department’s Office of Inspector General (OIG), and others had identified
                             in the past through the 1992 and 1993 amendments to HEA. For example,
                             the amendments required that financial and compliance audits of guaranty


                             5
                              Higher Education: Restructuring Student Aid Could Reduce Low-Income Student Dropout Rate
                             (GAO/HEHS-95-48, Mar. 23, 1995).
                             6
                              Frontloading grants entails giving students mostly grant aid in the first year and increasingly
                             substituting loan aid in subsequent years, culminating in an aid package consisting mostly of loans in
                             the final school year.
                             7
                              GAO/HR-97-11, Feb. 1997; Financial Audit: Federal Family Education Loan Program’s Financial
                             Statements for Fiscal Years 1994 and 1993 (GAO/AIMD-96-22, Feb. 26, 1996); Student Financial Aid:
                             Data Not Fully Utilized to Identify Inappropriately Awarded Loans and Grants (GAO/HEHS-95-89,
                             July 11, 1995); and Financial Management: Education’s Student Loan Program Controls Over Lenders
                             Need Improvement (GAO/AIMD-93-33, Sept. 9, 1993).



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Department of Education: Challenges in
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agencies be conducted annually rather than every 2 years. The Department
also has planned and taken a number of actions to correct its financial
accountability problems, such as reorganizing the Office of Postsecondary
Education to permit it to better administer and oversee federal student aid
programs and developing several new information systems to provide
more accurate and timely information. Many of the Department’s actions
are likely to have played a major role in reducing the amount of student
loan defaults from $2.7 billion in fiscal year 1992 to $2.5 billion in fiscal
year 1996 and in increasing collections on defaulted student loans from
$1 billion in fiscal year 1992 to $2.1 billion in fiscal year 1996. However, the
Department’s actions have not completely resolved many of the underlying
problems, and, therefore, vulnerabilities remain.

At the core of the Department’s financial accountability difficulties are
persistent problems with the individual student aid programs’ processes,
structure, and management. These problems include (1) overly complex
processes, (2) inadequate financial risk to lenders or state guaranty
agencies for defaulted loans, and (3) management shortcomings.8

Our work has shown that the student aid programs have many participants
and involve complicated, cumbersome processes. Three principal
participants—students, schools, and the Department of Education—are
involved in all the financial aid programs; two additional
participants—lenders and guaranty agencies—also have roles in FFELP. In
general, each student aid program has its own processes, which include
procedures for student applications, school verifications of eligibility, and
lenders or other servicing organizations that collect payments. Further, the
introduction of FDLP, originally viewed as a potential replacement for
FFELP, has added a new dimension of complexity. Rather than replacing
FFELP as initially planned, FDLP now operates along side it. Essentially, this
means that the Department has two programs that are similar in purpose
but that operate differently.

The structure of the student aid programs makes protecting the financial
interests of the government difficult for the Department for two reasons.
First, because HEA placed nearly all the financial risk for defaults on the
federal government, it continues to bear a major portion of the risk for
FFELP and FDLP loan losses. And, although the 1992 and 1993 amendments
to HEA established slightly more risk sharing, the current structure still
makes protecting the taxpayers’ financial interests difficult. Protecting the
financial interests of the government is also difficult because the loan

8
 GAO/HR-97-11, Feb. 1997.



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                           programs now serve more students from low-income families and those
                           attending proprietary schools than in the past. As the number of these
                           higher-risk borrowers has increased, so has the number of defaults. Both
                           of these conditions enhance access for low-income students, yet a tension
                           exists because they jeopardize financial accountability.

                           Management shortcomings also continue as a major problem and
                           contribute to the Department’s financial accountability difficulties. In the
                           past, congressional hearings and investigations, reports by the
                           Department’s OIG, our reports, and other studies and evaluations have
                           shown that the Department (1) did not adequately oversee schools that
                           participated in the programs; (2) managed each title IV program through a
                           separate administrative structure, with poor or little communication
                           among programs; (3) used inadequate management information systems
                           that contained unreliable data; and (4) did not have sufficient and reliable
                           student loan data to determine the Department’s liability for outstanding
                           loan guarantees. These problems cannot be quickly or easily fixed. The
                           Department has taken many actions, such as improving gatekeeping
                           procedures for determining which schools may participate, to address
                           these problems. However, the Department’s management problems, such
                           as administrative inefficiencies resulting from the separate administrative
                           structures used to manage each title IV program, have not yet been
                           resolved.


Improved Gatekeeping Has   We testified before this Subcommittee last June on issues related to
Somewhat Enhanced          “gatekeeping”—the process for ensuring that students are receiving title IV
Protection of Federal      aid to attend only schools that provide quality education and training.9 At
                           that time, we noted the history of concern about the integrity of title IV
Financial Interests        programs stemming from our work, that of the Department’s OIG, and the
                           Congress—work that led to the conclusion that extensive abuse and
                           mismanagement existed in these programs. For example, some schools
                           received Pell grant funds for students who never applied for the grants or
                           enrolled in or attended the schools. In one instance, a chain of proprietary
                           schools falsified student records and misrepresented the quality of its
                           educational programs to increase its revenues from students receiving Pell
                           grants.

                           In recent years, the Congress has enacted legislation to improve oversight
                           of participating schools by such means as setting maximum default rates

                           9
                             Higher Education: Ensuring Quality Education From Proprietary Institutions (GAO/T-HEHS-96-158,
                           June 6, 1996).



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that schools cannot exceed and still participate in the title IV programs.
Legislation also has strengthened the role of the Department, states, and
accrediting agencies—referred to as “the triad”—in determining school
eligibility. HEA recognizes the triad as having shared responsibility for
gatekeeping. As part of this triad, the Department (1) verifies schools’
eligibility and certifies their financial and administrative capacity and
(2) grants recognition to accrediting agencies.10 The Department has
improved the gatekeeping process by such actions as requiring all schools
to have annual financial and compliance audits, increasing the number of
program reviews, hiring additional staff to conduct the reviews, and
beginning to develop a new database of school information to help
Department staff monitor schools’ performance.

Nevertheless, as we reported in our recent high-risk report,11 several
weaknesses continue to cause concern. For example, the Department’s OIG
identified problems with the recertification process that could increase the
likelihood that schools not in compliance with eligibility requirements are
able to continue to participate in title IV programs. A review of a sample of
Department recertification actions showed that 27 percent of schools
sampled had violations such as unpaid debts or failures to meet financial
responsibility requirements.12 The Department acknowledged that some
recertifications should not have been made and stated that it was taking
action to make current financial data available for future recertification
reviews.

The Department is also implementing a gatekeeping initiative designed to
focus resources on high-risk schools: the Institutional Participation and
Oversight Service (IPOS) Challenge. Under the IPOS Challenge, the
Department plans to use a computer model to identify schools for review
on the basis of their risk of noncompliance. Because this initiative has only
recently been undertaken, it is too soon to assess its effectiveness.




10
 For their part, states license and use a variety of approaches to regulate schools in the normal course
of regulating commerce within their borders, and accrediting agencies provide nongovernmental, peer
evaluation of schools and programs to ensure a consistent level of quality.
11
  GAO/HR-97-11, Feb. 1997.
12
 OIG, Subsequent Review to Follow-Up Review on Selected Gatekeeping Operations, ACN: 11-60004
(Washington, D.C.: U.S. Department of Education, June 7, 1996).



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                            Excellence in education in America has become a major concern for the
Challenges in               public, and both the Congress and the Department have promoted
Promoting Access and        initiatives to improve the quality of American education. These efforts
Excellence in               include improving the quality of the physical environment in which
                            students learn, ensuring schools have the ability to use the technology
Elementary,                 needed to provide children with an education appropriate for the 21st
Secondary, and Adult        century, creating and promoting national standards to shape curriculum
                            and guide test development in order to measure reading and math
Education Programs          achievement, supporting efforts to improve the quality of teachers and
                            teacher preparation programs, and ensuring equal access to education.
                            Major legislative efforts, such as Goals 2000: Educate America Act, the
                            Improving America’s School Act, and the School-to-Work Opportunities
                            Act, are examples of efforts focusing on improving the quality of America’s
                            public education.

                            Because the federal role in funding elementary and secondary education is
                            relatively small, and states and local governments have the primary
                            responsibility for and control of education programs, the Department
                            faces a significant challenge in ensuring access and promoting excellence.
                            Its tools are providing leadership, financial leverage, and technical
                            assistance and information. The Department exercises leadership by
                            shining a spotlight on important national education issues, facilitating
                            communication on quality issues, and fostering intergovernmental and
                            public/private partnerships. However, when one considers how it
                            leverages resources and provides technical assistance and information, the
                            extent to which Department funds are fostering excellence and are being
                            spent efficiently and effectively is unclear. Two questions arise: Does the
                            Department of Education know if its programs are working? And does the
                            Department have the resources to manage its funds and provide the
                            needed information and technical assistance?


More Information Is         The Department is responsible for funding over $22 billion in elementary
Needed to Determine How     and secondary programs, including title 1, special education, vocational
the Department’s Programs   education, adult education, and Safe and Drug Free Schools. A major
                            challenge facing the Department is ensuring that these programs are
Are Working                 providing the intended outcomes. To do this the Department’s programs
                            must have clearly defined objectives and complete, accurate, and timely
                            program data.

                            Title 1 of the Elementary and Secondary Education Act is the largest
                            federal elementary and secondary education grant program, with about



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$7.7 billion appropriated in fiscal year 1997. Its purpose is to promote
access to and equity in education for low-income students. The Congress
modified the program in 1994, strengthening its accountability provisions
and encouraging the concentration of funds to serve more disadvantaged
children. At this time, the Department does not have the information it
needs to determine whether the funding is being targeted as intended.
Although the Department has asked for $10 million in its fiscal year 1998
budget request to evaluate the impact of title 1, it has only just begun a
small study of selected school districts to look at targeting so that
necessary mid-course modifications can be identified. The ultimate impact
of the 1994 program modifications could be diminished if the funding
changes are not being implemented as intended.

As another example, we found in our work on the programs funded under
the Adult Education Act13 that the State Grant Program, which funds local
programs intended to address the educational needs of millions of adults,
had difficulty ensuring that the programs met these needs. The lack of
clearly defined program objectives was one of the reasons for the
difficulty. The broad objectives of the State Grant Program give the states
flexibility to set their own priorities but, as some argue, they do not
provide states with sufficient direction for measuring results. Amendments
to the act required the Department to improve accountability by
developing model indicators that states could adopt and use to evaluate
local programs. However, experts disagree about whether developing
indicators will help states to define measurable program objectives,
evaluate local programs, and collect more accurate data.




13
  The Adult Education Act was designed, in part, to help states fund programs to help adults acquire
the basic skills needed for literate functioning, benefit from job training, and continue their education
at least through high school. Grants are made to states on the basis of the number of people in each
state who are at least 16 years of age, are not required to be in school, and lack a high school diploma.



Page 13                                                                            GAO/T-HEHS-97-99
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                          Promoting Access and Excellence in
                          Education




Additional Departmental   Recently, we have been examining two of the most basic elements of
Resources May Be Needed   education—the financing systems that undergird public education14 and
to Manage Funds and       the buildings within which education takes place.15 For example, in our
                          school facilities series, we documented that officials estimated that a third
Provide Information and   of our nation’s schools had serious facilities problems and that it would
Technical Assistance      take $112 billion to bring our schools into good overall condition. In
                          February, the administration used our reports as the basis for proposing
                          the Partnership to Rebuild America’s Schools Act, which, if enacted,
                          would be administered by the Department.

                          Several members of the Congress have raised issues associated with this
                          proposed solution to improve schools’ conditions, such as whether the
                          types of financial and information management problems that we
                          discussed earlier regarding postsecondary federal financial aid programs
                          would develop in the administration of this new program, whether the
                          Department has qualified staff to administer the program, and whether
                          information systems to monitor it and account for the funds are available
                          and operational.

                          The administration has also been promoting excellence and access by
                          supporting technology, both through the leadership role of the President
                          and the Office of the Secretary and through the technology programs the
                          Department oversees. In the 1998 budget, the administration has doubled
                          the amount of money requested for educational technology to help schools
                          integrate technology into the curriculum in order to increase students’
                          technological literacy and improve the quality of instruction in core
                          subjects. In our facilities work, we found that schools had large
                          technology infrastructure needs that the Department’s Technology
                          Literacy Challenge Grants would only start to address.16 Again, as in the
                          school construction situation, the Department is facing a large need with
                          relatively small amounts of funds.

                          14
                           School Finance: State Efforts to Reduce Funding Gaps Between Poor and Wealthy Districts
                          (GAO/HEHS-97-31, Feb. 5, 1997); School Finance: Three States’ Experiences With Equity in School
                          Funding (GAO/HEHS-96-39, Dec. 19, 1995); School Finance: Trends in U.S. Education Spending
                          (GAO/HEHS-95-235, Sept. 15, 1995); and School Finance: Options for Improving Measures of Effort and
                          Equity in Title I (GAO/HEHS-96-142, Aug. 30, 1996).
                          15
                           We documented the nature and extent of facilities’ problems in our series on school facilities: School
                          Facilities: Condition of America’s Schools (GAO/HEHS-95-61, Feb. 1, 1995); School Facilities:
                          America’s Schools Not Designed or Equipped for 21st Century (GAO/HEHS-95-95, Apr. 4, 1995); School
                          Facilities: Accessibility for the Disabled Still an Issue (GAO/HEHS-96-73, Dec. 29, 1995); School
                          Facilities: States’ Financial and Technical Support Varies (GAO/HEHS-96-27, Nov. 28, 1995); School
                          Facilities: America’s Schools Report Differing Conditions (GAO/HEHS-96-103, June 14, 1996); and
                          School Facilities: Profiles of School Condition by State (GAO/HEHS-96-148, June 24, 1996).
                          16
                            GAO/HEHS-95-95, Apr. 4, 1995.



                          Page 14                                                                          GAO/T-HEHS-97-99
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                          Adopting improved management practices can help the Department
Statutory Framework       become more effective in achieving its mission of ensuring equal access to
for Improving the         education and promoting educational excellence. Recognizing that federal
Department’s              agencies have not always brought the needed discipline to their
                          management activities, the Congress in recent legislation provided a
Management                framework for addressing long-standing management challenges. The
Practices                 centerpiece of this framework is GPRA; other elements are the 1990 CFO Act,
                          the 1995 Paperwork Reduction Act, and the 1996 Clinger-Cohen Act. These
                          laws each responded to a need for more accurate, reliable information for
                          executive branch and congressional decision-making. The Department has
                          begun to implement these laws, which, in combination, provide it with a
                          framework for developing (1) fully integrated information about the
                          Department’s mission and strategic priorities, (2) performance data to
                          evaluate progress toward the achievement of those goals, (3) the
                          relationship of information technology investments to the achievement of
                          performance goals, and (4) accurate and audited financial information
                          about the costs of achieving mission outcomes.


Efforts in Planning and   The Department has a history of management problems. In our 1993
Resource Management       review of the Department, we identified operational deficiencies such as
                          lack of management vision, lack of a formal planning process, poor human
                          resource management, and inadequate commitment to management issues
                          by the Department leadership.17 In addition, financial and information
                          management were serious problems throughout the Department, and not
                          confined to postsecondary programs. Further, recent legislation—Goals
                          2000: Educate America Act, the School-to-Work Opportunities Act, and the
                          Student Loan Reform Act—requires strong management improvements to
                          support sound implementation.

                          In response to our recommendations as well as to new legislative
                          responsibilities, the Department has taken steps to improve its
                          management approach. It has developed a strategic plan that describes its
                          mission, priorities, and performance indicators, using as its framework the
                          key elements of GPRA. Specifically, it has begun the process of working
                          with the Office of Management and Budget (OMB) to meet the GPRA
                          requirement that agencies prepare strategic plans that establish long-term
                          goals and develop annual performance plans linked to these long-term
                          goals. GPRA also requires that agencies consult with the Congress and other
                          stakeholders to clearly define their missions. Accordingly, the Department

                          17
                           Department of Education: Long-Standing Management Problems Hamper Reforms (GAO/HRD-93-47,
                          May 28, 1993).



                          Page 15                                                                GAO/T-HEHS-97-99
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has begun discussions with the Congress and others about the challenges
it faces and the kinds of support it needs to move forward in achieving its
goals.

According to OMB, the Department has developed a fairly broad plan. OMB
raised two issues during its review of the plan: (1) the lack of specificity in
program performance plans and (2) the extent to which the objectives and
indicators were beyond the agency’s span of control or influence. With
respect to the first concern, during the past few months the Department
has been developing specific performance plans for all programs.
Regarding the second concern, the Department responded to OMB by
describing the nature of its education goals and by recognizing that those
goals are shared by many entities. According to the Department, the plan’s
objectives and indicators recognize the multilevel, intergovernmental
nature of federal education support and the need for effective
performance partnerships to achieve jointly sought outcomes. At the same
time, the Department is updating the strategic plan and intends to
differentiate those objectives and indicators that are under the
Department’s full control more clearly from those that require action from
state education agencies, local districts, or postsecondary institutions for
effective results.

Results-oriented management may also involve reviewing programs that
have the same or similar goals and objectives, but continue to be
administered separately by one or more federal agencies, to see whether
opportunities exist to consolidate and improve efficiencies. When we
testified before this Subcommittee 2 years ago,18 we identified potential
education program consolidation opportunities. Program consolidation
could not only reduce administrative costs, but the Department could
better focus its management resources on evaluating and improving the
quality of its programs. For example, our review of federal programs that
serve at-risk or delinquent youth revealed that 131 programs served this
target group in fiscal year 1995, 10 of which were administered by the
Department of Education.19 This service delivery approach raises
questions concerning efficiency. Our work suggests that efficiencies might
be gained by having a smaller number of consolidated programs for at-risk
or delinquent youth. For example, it would probably be more efficient to
have one program covering a service/target-group combination,

18
 Department of Education: Information on Consolidation Opportunities and Student Aid
(GAO/T-HEHS-95-130, Apr. 6, 1995).
19
 At-Risk and Delinquent Youth: Multiple Federal Programs Raise Efficiency Questions
(GAO/HEHS-96-34, Mar. 6, 1996).



Page 16                                                                       GAO/T-HEHS-97-99
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                               Education




                               administered by a single federal office, than several programs
                               administered by several different offices.

                               The Department is continuing its long-term efforts to streamline its
                               operations. In its fiscal year 1998 budget request, it has proposed the
                               elimination of 10 programs—representing more than $400 million in
                               funding—that it believes have achieved their purpose; that duplicate other
                               programs; or that are better supported by state, local, or private sources.
                               Our work suggests that the Department needs to continue its efforts to
                               eliminate duplicative or wasteful programs.

                               The CFO Act, as expanded, requires the Department of Education as well as
                               the 23 other major federal agencies to prepare and have audited annual
                               financial statements beginning with those for 1996. Fiscal year 1995 was
                               the first year the Department prepared agencywide financial statements
                               and had them audited. However, the independent auditor could not
                               determine whether the financial statements were fairly presented because
                               of the insufficient and unreliable FFELP student loan data underlying the
                               Department’s estimate of $13 billion for loan guarantees. Furthermore,
                               because guaranty agencies and lenders have a crucial role in the
                               implementation and ultimate cost of FFELP, the auditors stressed the need
                               for the Department to complete steps under way for improving oversight
                               of guaranty agencies and lenders. Until such problems are fully resolved,
                               the Department will continue to lack the financial information necessary
                               to effectively budget for and manage the program or to accurately estimate
                               the government’s liabilities.

                               In an effort to prepare auditable fiscal year 1996 financial statements, the
                               Department’s CFO has requested data from the top 10 guaranty agencies to
                               be used as a basis for computing the liability for loan guarantees. In
                               addition, the Department’s independent auditor has developed agreed
                               upon procedures to be applied by these agencies’ independent auditors to
                               test the reliability of the requested data. Uncertainty still exists as to
                               whether this new methodology will work; decisions on the effectiveness of
                               the approach will be made later this year once all the data are collected.


Improving Information          Our work has shown that the Department does not have a sound,
Resources Management           integrated information technology strategy to manage its portfolio of
Critical to Data Quality and   information systems. It faces a particularly difficult challenge in improving
                               its information systems for the student aid programs. The Department’s
Systems Integration            National Student Loan Data System (NSLDS), which became partially



                               Page 17                                                      GAO/T-HEHS-97-99
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Education




operational in November 1994, enables schools, lenders, and guaranty
agencies to transmit updated loan status data to the Department. However,
the Department has not yet integrated the numerous separate data systems
used to support individual student aid programs, often because the various
“stovepipe” systems have incompatible data in nonstandard formats. As a
result, program managers often lack accurate, complete, and timely data
to manage and oversee the student aid program.

The lack of an integrated system also results in unnecessary manual effort
on the part of users and redundant data being submitted and stored in
numerous databases, resulting in additional costs to the Department as
well as the chance for errors in the data. For example, a Department
consultant showed that a simple address change for a college financial aid
administrator would require a minimum of 19 manual and automated steps
performed by a series of Department contractors who would have to enter
the change in their respective systems from printed reports generated by
another system. Another problem with this multiple-system environment is
a lack of common identifiers for schools. Without these, tracking students
and institutions across systems is difficult. The 1992 HEA amendments
required the Department to establish common identifiers for students and
schools not later than July 1, 1993. The Department’s current plans,
however, do not call for developing and implementing common identifiers
for schools until academic year 1999.

Data integrity problems also exist. The lack of a fully functional and
integrated title IV-wide recipient database hinders program monitoring
and data quality assurance. For example, the current system cannot
always identify where a student is enrolled, even after an award is made
and thousands of dollars in student aid are disbursed.

Although the Department has improved its student aid data systems
somewhat, major improvements are still needed. Both we and OIG reported
in 199620 that the Department had not adequately tested the accuracy and
validity of the loan data in NSLDS. During the past year, the Department has
been developing a major reengineering project, Easy Access for Students
and Institutions, to redesign the entire title IV student aid program delivery
system to integrate the management and control functions for the title IV
programs. Although activity on this project, which had waned in previous
months, has recently been renewed, carrying out the project is expected to
be a long-term undertaking.

20
 Department of Education: Status of Actions to Improve the Management of Student Financial Aid
(GAO/HEHS-96-143, July 12, 1996).



Page 18                                                                      GAO/T-HEHS-97-99
              Department of Education: Challenges in
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              The Department also faces a challenge in improving its agencywide
              information resources management, not just that related to the student aid
              programs. The legislative framework, especially that provided by the
              Clinger-Cohen Act, offers guidance for achieving goals in this area. The
              Clinger-Cohen Act requires, among other things, that federal agencies
              improve the efficiency and effectiveness of operations through the use of
              information technology by (1) establishing goals to improve the delivery of
              services to the public through the effective use of information technology;
              (2) preparing an annual report on the progress in achieving goals as part of
              its budget submission to the Congress; and (3) ensuring that performance
              measures are prescribed for any information technology that agencies use
              or acquire and that they measure how well the information technology
              supports Department programs. The Department could benefit greatly
              from fully implementing the law. Full implementation of the Clinger-Cohen
              Act would provide another opportunity to correct many of the
              Department’s student financial aid system weaknesses as well as to
              improve other information systems that support the Department’s mission.

              The Clinger-Cohen Act also requires that a qualified senior-level chief
              information officer be appointed to guide all major information resource
              management activities. The Department has recently appointed an Acting
              Chief Information Officer and, according to OMB, is to be actively recruiting
              an individual to fill this position on a permanent basis. This individual is
              responsible for developing an information resources management plan
              and overseeing information technology investments.

              In addition, the Department has highlighted the use of information
              technology for improved dissemination and customer service in its fiscal
              year 1998 budget summary. New initiatives include (1) a data warehousing
              effort that would simplify the internal use of databases, (2) a data
              conversion effort needed to comply with year 2000 requirements,21 and
              (3) a modeling project to develop an architectural framework and uniform
              operating standards for all Department data systems to eliminate
              duplication in collection and storage of data.


              In carrying out its mission, the Department has a careful balancing act to
Conclusions   perform. Education is a function reserved to the states, yet this federal
              department is expected to provide leadership on national education
              issues. For example, in fostering higher quality elementary and secondary

              21
                This year GAO added the “year 2000” problem as a high-risk issue because of the complexities
              involved in changing computer systems to accommodate dates beyond the year 1999.



              Page 19                                                                         GAO/T-HEHS-97-99
               Department of Education: Challenges in
               Promoting Access and Excellence in
               Education




               education, the Department can promote national standards for educational
               performance and teacher training—but not impose them. It is expected to
               provide state and local education agencies flexibility in using federal funds
               and freedom from unnecessary regulatory burden, yet it must have enough
               information about programs and how money is spent to be accountable to
               American taxpayers for the federal funds administered at the state and
               local levels. It is expected to monitor programs and provide technical
               assistance, but its resources may not be sufficient to provide reasonable
               coverage.

               Although the Department has made progress in improving many
               management functions, it still has a long way to go. Over the years, our
               work has shown that the Department has not done a good job of
               minimizing risks and managing the federal investment, especially in
               postsecondary student aid programs. We also have concerns about
               whether the Department knows how well new or newly modified
               programs, like title 1, are being implemented; to what extent established
               programs are working; or whether it has the resources to effectively and
               efficiently provide needed information and technical assistance. Like other
               departments, the Department of Education needs to focus more on the
               results of its activities and on obtaining the information it needs for a more
               focused, results-oriented management decision-making process. GPRA, the
               CFO Act, and the Paperwork Reduction and Clinger-Cohen Acts give the
               Department the statutory framework it needs to manage for results.


               Mr. Chairman, this concludes my prepared statement. I will be happy to
               answer any questions that you or members of the Subcommittee might
               have.


               For more information on this testimony, call Harriet Ganson, Assistant
Contributors   Director, at (202) 512-9045; Jay Eglin, Assistant Director, at (202) 512-7009;
               or Eleanor Johnson, Assistant Director, at (202) 512-7209. Joan Denomme
               and Joel Marus also contributed to this statement.




               Page 20                                                      GAO/T-HEHS-97-99
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Page 21                                  GAO/T-HEHS-97-99
Department of Education: Challenges in
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Page 22                                  GAO/T-HEHS-97-99
Page 23   GAO/T-HEHS-97-99
Related GAO Products


              Managing for Results: Using GPRA to Assist Congressional and Executive
              Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).

              School Finance: State Efforts to Reduce Funding Gaps Between Poor and
              Wealthy Districts (GAO/HEHS-97-31, Feb. 5, 1997).

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

              Information Technology Investment: Agencies Can Improve Performance,
              Reduce Costs, and Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996).

              Higher Education: Tuition Increasing Faster Than Household Income and
              Public Colleges’ Costs (GAO/HEHS-96-154, Aug. 15, 1996).

              Information Management Reform: Effective Implementation Is Essential
              for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996).

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

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

              Financial Audit: Federal Family Education Loan Program’s Financial
              Statements for Fiscal Years 1994 and 1996 (GAO/AIMD-96-22, Feb. 26, 1996).

              School Finance: Trends in U.S. Education Spending (GAO/HEHS-95-235, Sept.
              15, 1995).

              Student Financial Aid: Data Not Fully Utilized to Identify Inappropriately
              Awarded Loans and Grants (GAO/HEHS-95-89, July 11, 1995).

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

              Higher Education: Restructuring Student Aid Could Reduce Low-Income
              Student Dropout Rate (GAO/HEHS-95-48, Mar. 23, 1995).

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




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