Related Resources Press Release

When I arrived at the Department of Education back in January 2001, I had a big surprise waiting for me that I really had not counted on: There were serious - and I mean serious - problems.

• One million dollars in false overtime had been charged to the Department
• A theft ring inside the Department used hundreds of thousands of the taxpayers' dollars to buy and then steal all manner of electronic equipment - things like computers, cell phones, digital cameras, CD players, and even a 61-inch color TV.
• The Inspector General's Office and the GAO had identified hundreds of problems that needed immediate attention.
• Millions of dollars of grant money could not be accounted for.
• $1.9 million in Impact Aid funds that should have gone to schools in South Dakota had been diverted to buy real estate, a Lincoln Navigator and a Cadillac Escalade.

Not only had the Department not had a clean audit in years, there wasn't even the expectation of one. I turned on the TV one night and there was Tom Brokaw doing a segment on the Fleecing of America - and he was talking about the Department of Education.

Here, have a look.

(Video)

This problem didn't happen on this administration's watch. But I promised then that it was something that was going to stop on our watch. And I'm proud to say that we have kept that promise.

• Four people have been arrested and indicted on federal charges for stealing the money intended for the South Dakota schools to buy the luxury cars and the real estate. These were the same persons who tried to buy the red Corvette that you saw in the video. That was the beginning of their undoing because the car dealer tipped off the FBI. One of the four has pled guilty and three are awaiting trial to begin in June.
• Nineteen other people have either pled guilty to federal charges or were convicted after a federal trial for their involvement in the massive theft ring:
  • Thirteen of the nineteen have been sentenced to date.
  • Verizon Federal Systems entered into a $2 million civil settlement with the Department of Education and Department of Justice on February 7, 2003, to settle federal claims on false overtime charges and improper electronic equipment purchases caused by their employees in conspiracy with Department of Education employees.
  • The former Department employee and acknowledged ring leader of this group of 19 people is scheduled to be sentenced on March 28, 2003, along with her husband - an employee of EPA - son, and two others.

President Bush and I believe that we should apply the same high standards we expect of others to ourselves, as well. His goal is to change the culture of federal government by insisting that agencies like the Department of Education:

• Demonstrate good stewardship of the taxpayers' hard-earned money.
• Align authority with responsibility so goals are met and workers are doing what they were hired to do.
• Ensure competition in the federal contract bidding process.
• Expand the use of technology to increase efficiency and improve performance.
• Show results for our efforts and use of tax dollars.

Today I am proud to announce that the Department of Education has received its first clean audit in many years and only the second in the history of the Department.

I am also proud to report that the Office of Management and Budget has given the Department its seal of approval as well - with a perfect scorecard for progress in improving management. This is especially rewarding since we had to work our way up from the bottom to earn these kudos.

These are critical steps forward in our efforts to inject accountability into everything we do here at the Department of Education. And I'm proud of the people standing behind me, as well as all the good people at the Department whom you don't see here who have worked with dedication and diligence to ensure that that the taxpayers' hard-earned dollars are spent wisely and the children in our nation's schools are served nobly.

So how did we reach this point?

Our first task was triage.

The first thing I did was assemble a Management Improvement Team. The president says he believes in surrounding himself with the smartest and most capable people and then freeing them to do what they do best.

I took the same approach. I asked 12 of the most respected career managers in the Department to put their jobs aside for six months and join me in working to make a good agency better.

The Management Improvement Team, or MIT, dove into the project and began tackling each problem, one by one - starting with the most critical.

By fall 2001, we had completed a Blueprint for Management Excellence, a detailed action plan to permanently fix the problems identified by the IG and GAO.

With the bleeding stopped - if you will - we moved to the next step: Outlining the Department's strategic direction and getting on with serving the American people.

And I want to thank:

Deputy Secretary Bill Hansen - who has led with a great grasp of all the moving parts; Bill Leidinger - first Assistant Secretary for Management in over five years at ED, provided leadership and insight for improving ED's culture of accountability; Jack Martin - first Chief Financial Officer in over three years at ED, provided the necessary leadership to the team responsible for preparing the financial statements and addressing financial management challenges; and Terri Shaw - Chief Operating Officer of FSA, provided the leadership needed to ensure that FSA's financial data was provided timely and efficiently

Also joining us today are Tom Pestka and members of the outstanding MIT team, along with members of our incredible Audit team. Phil Maestri couldn't be here today, but I want to thank him for his continuing leadership of the MIT team.

They all provided the leadership to identify and resolve the management challenges and to produce timely and accurate financial statements. Hats off to them and their staffs as well.

The number one priority for the Department of Education is educating children. Pure and simple.

Thanks to all these people, we have got our house in order and we can now focus on the president's number one goal for our nation's schools - closing the achievement gap so every child is educated and no child is left behind.

Now I'm going to turn it over to these folks who will speak in more detail about what all this means.

Top