Description: Tags: Major

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

Contents
Overview 6
Major 12
Performance and
Management
Issues
Related GAO 35
Products
Performance and 38
Accountability
Series

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.

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.
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

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

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

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.

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

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

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

Issues
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.

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

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

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

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

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

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

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

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.

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
[email protected]

Issues
Gloria L. Jarmon, Director

Accounting and Financial Management
Accounting and Information Management
Division
(202) 512-4476
[email protected]
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

Issues
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

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

Issues
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.

Issues
Key Contact Joel C. Willemssen, Director

Civil Agencies Information Systems
Accounting and Information Management
Division
(202) 512-6408
[email protected]
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

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

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

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

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

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
Division
(202) 512-7014
[email protected]

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).

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).

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).

Performance and Accountability Series
Major Management Challenges and Program

Risks: A Governmentwide Perspective
(GAO/OCG-99-1)

Risks: Department of Agriculture
(GAO/OCG-99-2)

Risks: Department of Commerce
(GAO/OCG-99-3)

Risks: Department of Defense (GAO/OCG-99-4)

Risks: Department of Education
(GAO/OCG-99-5)

Risks: Department of Energy (GAO/OCG-99-6)

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

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


Risks: Department of the Interior
(GAO/OCG-99-9)

Risks: Department of Justice (GAO/OCG-99-10)

Risks: Department of Labor (GAO/OCG-99-11)

Risks: Department of State (GAO/OCG-99-12)

Risks: Department of Transportation
(GAO/OCG-99-13)

Risks: Department of the Treasury
(GAO/OCG-99-14)

Risks: Department of Veterans Affairs
(GAO/OCG-99-15)

Risks: Agency for International Development
(GAO/OCG-99-16)


Risks: Environmental Protection Agency
(GAO/OCG-99-17)

Risks: National Aeronautics and Space
Administration (GAO/OCG-99-18)

Risks: Nuclear Regulatory Commission
(GAO/OCG-99-19)

Risks: Social Security Administration
(GAO/OCG-99-20)

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.

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United States General Accounting Office

GAO Performance and Accountability

This report addresses the major performance and

Education is making progress in addressing

This report is part of a special series entitled the

Page 2 GAO/OCG-99-5 Education Challenges

Copies of this report series are being sent to the

Page 3 GAO/OCG-99-5 Education Challenges

Page 4 GAO/OCG-99-5 Education Challenges

The Department of Education is the primary

Page 6 GAO/OCG-99-5 Education Challenges

Education’s Education continues to experience

Year 2000 Computer Some of the Department’s mission-critical

Balancing Oversight Education also faces challenges in

Page 8 GAO/OCG-99-5 Education Challenges

education. In this connection, the Congress

Progress and The Department has been improving the

Page 9 GAO/OCG-99-5 Education Challenges

objectives and by developing 99

While Education has made progress in

Page 10 GAO/OCG-99-5 Education Challenges

agencies that provide educational services

Page 11 GAO/OCG-99-5 Education Challenges

The Department of Education leads the

The Department of Education faces two

Page 12 GAO/OCG-99-5 Education Challenges

features that make them inherently

Education’s Through student financial aid programs

Page 13 GAO/OCG-99-5 Education Challenges

low-income students who are not

The Department’s administration of these

Page 14 GAO/OCG-99-5 Education Challenges

inappropriately recertified to continue

Progress has been made in addressing many

Page 15 GAO/OCG-99-5 Education Challenges

We are encouraged by the actions taken by

Nonintegrated Federal student financial aid programs

Page 16 GAO/OCG-99-5 Education Challenges

that the Department does not have a sound,

Many of Education’s student financial aid

To address long-standing challenges

Page 17 GAO/OCG-99-5 Education Challenges

aid program participants. The amendments

• Establish common identifiers so that codes

Page 18 GAO/OCG-99-5 Education Challenges

System (NSLDS)—the Department’s principal

In July 1997, we recommended that the

Although the Department has made

Page 19 GAO/OCG-99-5 Education Challenges

Students and Institutions (commonly

The Congress recently authorized the

Lack of Adequate Education’s chronic data systems challenges

Page 20 GAO/OCG-99-5 Education Challenges

independent public accountants from

The Department has made progress in

Other aspects of its financial management

Page 21 GAO/OCG-99-5 Education Challenges

federal government. For example, although

Although the Department relies mainly on