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Good morning Mr. Chairman and Members of the Subcommittee:
I am pleased to have this opportunity to discuss management issues with the Subcommittee, because I believe that we have a tremendous success story to tell here at the Department of Education. While we are proud of winning bipartisan Congressional support for much of President Clinton's education agenda, Secretary Riley knew from that beginning that the real challenge lay in making the management changes needed to successfully implement that agenda. Today I want to tell you how we are meeting that challenge.
One of the first steps in overcoming these longstanding management weaknesses was the development of the first-ever strategic plan for the Department. The four priorities of this plan have provided a focus for everything we do at the Department, driving the deployment of human and financial resources behind clear strategies for carrying out reform.
These priorities include helping States and communities to enable all students to reach challenging academic standards, creating comprehensive school-to-work systems in every State, ensuring access to postsecondary education and life-long learning, and transforming the Department into a high-performance organization.
The fourth priority reflected the simple fact that the agency we inherited was ill-prepared to support the first three priority goals. It was also our way of announcing, in a very public and accountable way, that things were going to change. And in just a few short years, they have changed a great deal.
This early effort on performance indicators laid the groundwork for developing the program performance measures that we will be submitting with our 1999 budget request. The Office of Management and Budget has now approved performance measures for 17 programs covering about 70 percent of our budget. These measures have been delivered to the staff of the Subcommittee, and we have held several meetings aimed at fulfilling the GPRA requirement for Congressional consultation.
We also have been collaborating with other agencies to develop meaningful performance measures. The best example of this is our cooperation with the Department of Labor to develop indicators and collect data for the School-to-Work Opportunities program. And we are working with the National Science Foundation to measure the impact of the Eisenhower Professional Development program.
The Department of Education has been an enthusiastic convert to this approach, and I would like to briefly share with you some of the ways the Department has been getting results for its customers at lower cost to taxpayers.
Cutting the Size of Government
Meeting the President's commitment to reduce the size of the Federal government was a special challenge for us, since the Department had already seen its workforce fall by nearly 40 percent since 1980 even as its budget and program responsibilities grew dramatically. The task was further complicated by the need to effectively manage major new initiatives such as Goals 2000 and the Direct Loan program.
Nevertheless, the Department is ahead of schedule in reaching the 12 percent staff reduction called for by President Clinton, thanks largely to a successful buyout incentive program. The President's plan called for a 636 FTE reduction by the year 2000 from the 1995 level of 5,131 FTE. By 1998 we will have cut 571 FTE from the 1995 ceiling level, or 90 percent of our goal.
In addition to staff cuts, we have reduced the number of programs we administer. In 1993, the National Performance Review identified 34 education programs that were no longer needed, and each of President Clinton's budgets has included substantial numbers of program eliminations, phase-outs, and consolidations. With the help of this Subcommittee, we have succeeded in eliminating 64 programs totaling roughly $625 million. New programs have been created during this period -- some at the request of the Administration and some by Congress -- but the total number administered by the Department has still fallen from more than 240 to just under 200.
Reducing Student Loan Default Costs
The student aid area -- with billions of dollars at risk and a history of costly management failures -- has been a major area of concern for the Department. With help from Congress, we moved decisively to address the longstanding student loan default problem. We have reduced the default rate from 22 percent to 10.7 percent, while more than doubling collections on defaulted loans from $1.0 billion to $2.2 billion. As a result, the net cost of defaults dropped by more than three-quarters, from $1.7 billion in 1992 to $400 million in 1996.
This success is due in part to getting tough on schools with high default rates. Since March 1996, for example, the Department removed 144 postsecondary institutions from participation in the student loan programs.
Reinventing the Discretionary Grants Process
A major point of customer contact for many Department programs is the discretionary grants process, which over time had become excessively bureaucratic and time-consuming for Department staff and applicants alike. We targeted this process for one of our major reinvention efforts, and the results have been dramatic.
The first accomplishment was the elimination of the application previously required for non-competing continuation awards, a change that helped take two to three months off the time formerly required to notify grantees of their continuation awards. Next was a review of all the steps associated with discretionary grant-making, with the aim of eliminating duplicative or unnecessary steps. This review resulted in the streamlining of the existing discretionary grants process from 487 steps to 217 steps, a reduction of 270 steps or 55 percent from the previous process.
Finally, we redesigned the process by reassigning the centrally located grants staff to our program offices, where they work hand-in-hand with program staff on teams that are focused on serving our customers and promoting successful project outcomes, instead of on complying with administrative rules and procedures. We are implementing this new process during the current fiscal year.
Cutting Regulatory Burden
Because we also want our customers to focus on results -- in the form of higher educational achievement -- and not on compliance with unnecessarily bureaucratic rules and regulations, the Department has worked to significantly reduce the regulatory burden on recipients of Federal education funds. As part of President Clinton's regulatory reinvention initiative, we have reached out to talk with hundreds of customers and have reviewed every single Department regulation. We have eliminated 923 pages of regulations, or about 39 percent of our total regulations.
By the way, our review did not cover programs authorized or reauthorized since President Clinton took office, because we have been careful to write regulations only when they are absolutely necessary. For example, we are administering Goals 2000 and School-to-Work without issuing a single regulation. And of the 49 programs included in the Improving America's Schools Act, only 5 required regulatory guidance.
In addition to reducing the amount of regulations covering Department programs, we have greatly expanded waivers of statutory and regulatory requirements that present an obstacle to innovative reform efforts. States and schools seeking such waivers may call our Waiver Hot Line at 202-401-7801. To date, the Secretary has approved 155 waivers.
The most far-reaching waiver approach is the ED-FLEX demonstration, which allows the Department to give State-level officials broad authority to approve waivers of Federal statutory and regulatory requirements that stand in the way of effective reform. This pilot project offers such authority for up to 12 States, with 9 participating so far, including Colorado, Kansas, Maryland, Massachusetts, New Mexico, Ohio, Oregon, Texas, and Vermont.
Less Paperwork and Red Tape
Another way to help States and school districts concentrate on improving student performance is to reduce the attention they have to pay to the paperwork and red tape so often associated with government programs.
Technology is a big help here, as electronic data exchange and online communications greatly reduce the need for paperwork. For example, we are expanding the use of a computer-based system to provide notice of student aid eligibility to postsecondary institutions, a change that ultimately will eliminate 4 million paper forms that represent an unnecessary burden to students, parents, schools, and the Department alike.
We also have worked with Congress to simplify and reduce the paperwork involved in applying for Federal education funds. For example, nearly all States are now taking advantage of the new provision permitting a single consolidated application for all Elementary and Secondary Education Act programs. In addition to reducing paperwork, this change promotes the comprehensive planning that is so essential to effective education reform.
Reporting requirements also have been reduced. Most of the programs authorized by the Improving America's Schools Act require reporting once every two or three years instead of annually -- permitting States, schools, and teachers to focus on what really counts: educating students, not paperwork.
Improving Access to Information for Our Customers
Serving our customers means giving them the information they need when they need it. This has involved developing and publishing customer service standards and expanding the use of technology to improve and simplify customer access to information from the Department.
For example, the toll-free number 1-800-USA-LEARN connects customers to a "one-stop shopping" center for information about Department programs and initiatives. Callers receive materials directly or are referred to the appropriate office with the answers to their questions. We currently receive about 5,000 calls per week over this line. A similar number, 1-800-4FEDAID, provides up-to-date information on postsecondary student financial aid, with 3.8 million calls in 1996. The average wait time for callers to this line is just 11 seconds.
The Department also has moved aggressively to give the public direct access to information on its programs and activities through the Internet. Customers can find statistics on education, information about grant competitions, advice on applying for grants, and downloadable application forms at the Department's site on the World Wide Web, located at http://www.ed.gov. The site has received several awards, including top ratings from such publications as Government Executive, Internet World, and Iway, which described our site as "a great resource for teachers and school administrators."
Usage of the web site has grown dramatically, increasing from a little over 300,000 hits in March 1995 to about 5 million hits a month so far this year.
A New Financial Management System
Technology also has been crucial to our efforts to improve financial management. The GAO, the Office of Management and Budget, and the Department's Inspector General all warned for years that inadequate financial controls and inaccurate data in our existing financial management systems increased the risk of fraud, waste, and mismanagement in Department programs.
In response, we have rebuilt these systems from the ground up. The core of this effort is the Education Department Central Automated Processing System project, or EDCAPS. This project will integrate our payments, grants and contracts, and accounting systems into a single administrative and financial management system. Once fully implemented in 1998, the Department will be able to process grant applications and conduct business with vendors electronically, improve procurement processes, and produce more timely and accurate financial information for its program managers, program recipients, and the Congress.
Other projects have included expanding and enhancing automation of payments, expenditures reporting, current account information, and travel management. These and other improvements have greatly increased the availability of information to Department managers and customers while substantially reducing the paperwork burden of sound financial management.
Better Audit Resolution
The Department believes that better oversight of Federal program dollars can improve education programs and student performance at the State and local levels. One improvement underway is the Cooperative Audit Resolution and Oversight Initiative, a new Federal-State partnership aimed at conducting audits and resolving audit findings in a cooperative, flexible, and productive fashion. The Department is currently testing this initiative in three States -- with positive reviews so far -- and hopes to expand to an additional 8-10 States in 1998.
Improving Employee Performance Assessment
We also have developed a new, multi-input General Performance Appraisal System, which adds input from peers, subordinates, and customers to the assessment by supervisors traditionally used to rate employee performance. Employees are encouraged to evaluate their own performance as well, and to compare it with the assessments of others. We are in the first year of implementing the new system, which received one of the Vice President's Hammer awards for innovative reinvention efforts, and we believe it is a key step toward focusing Department employees on serving their customers.
These funds would be used to improve management of the student financial aid programs, provide more effective and helpful program monitoring and technical assistance to grantees, enhance information technology used to improve customer service, upgrade accounting and financial management systems, and maintain support for staff training.
The 1998 request includes $3.1 million for the "One Pubs" initiative, which would provide "one-stop shopping" for customers seeking Department publications. One Pubs involves reinventing the way the Department plans, prints, mails, distributes, and stores its publications. By eliminating duplicate contracts and mailing lists now used for these purposes, the overall costs for this activity are expected to decrease over time.
The request also includes significant new resources for initiatives proposed by the recently established Chief Information Office (CIO), including $3 million to begin the modifications needed to make the Department Year 2000 compliant. Year 2000 modifications involve reformatting the date field in approximately 10 percent of the nearly 30 million lines of code in the Department's computing systems.
The second CIO initiative is Enterprise Modeling, which is aimed at creating uniformly defined operating standards for all current and future data systems. The budget includes $1.2 million for this proposal, which would reduce data collection and storage costs, help the Department take advantage of discounts for software licensing agreements, and lower the costs of technical assistance. Finally, $1.2 million would be used for a Data Warehousing project that would reduce data input and access burdens by collecting data in one location.
The total request for Federal administration, including discretionary and mandatory funds, would support 4,560 full-time-equivalent (FTE) employees in 1998, compared to 4,613 FTE in 1997. This reduction has been achieved by attrition and by retirements resulting from the "buyout" program. Partly as a result of this decline in staff, the Department's ratio of program obligations to employees is $6 million for each FTE -- the highest ratio of any Federal agency. We are coping with these staff losses through the use of improved technology, the reallocation of staff to high-priority areas, and staff training.
Nearly one-quarter of the Department's FTE and one-fifth of its discretionary budget request for management is devoted to the Office for Civil Rights, which enforces the Nation's education-related civil rights laws, and the Office of the Inspector General, which investigates fraud and abuse in education programs and helps protect the $40 billion annual Federal investment in postsecondary student financial aid.
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