Contact: Lindsey Kozberg 202) 401-3026

Speaker Frequently Deviates from Prepared Text

I'm pleased to be joined today by Deputy Secretary Bill Hansen, and our newly confirmed Under Secretary Gene Hickok. In recent days, we also have seen the Senate confirm three assistant secretaries. I'd like to publicly thank Senator Gregg, Senator Kennedy, Senator Kyl and others who took steps to help us get these important confirmations done.

In April, I invited you all to this room for a news conference to discuss the longstanding management problems at the Department of Education. I told you at that time I was appointing a special management improvement team to go in and find and fix the problems that have caused this department to fail government audits in past years. I said I would be back here within 90 days to report to the public on our progress.

We have kept that promise. We're here today to give the public a report card on the efforts to improve the management of this federal agency.

I can report to you that in the past 90 days:

• We have taken action on more than 300 recommendations for improvement. That is almost half of the 661 recommendations we set out to address, and it includes 104 recommendations for management improvement that have been put into effect, and corrective action plans for another 205 recommendations that have been developed.
• All purchase card spending limits were reduced, some by more than 90 percent, and 30 government purchase credit cards have been taken away;· Third-party "checks" that were an easy target for abuse have been abolished;
• An additional $65 million in defaulted student loans has been recovered;
• We have begun planning to put top department officers on performance contracts so that we can require better results from our managers;
• The President has announced an appointment to the position of chief financial officer, a job that had been left vacant for years; and
• We have brought in the Council for Excellence in Government —an independent group of government performance experts—to review the improvements.

I am very proud of the work that has been do so far, and I want to commend the 13 members of the management improvement team, some of whom are here today, and everyone else who has worked so hard to achieve these things in just three months.

The Department of Education has been hurt in the past by mismanagement. Hundreds of millions of dollars have been mishandled. Public confidence in the department has eroded.

We cannot expect our schools to be accountable if we aren't accountable in Washington. This department owes it to the American people to do a better job of managing their money than has been done in the past. I'm here to get that done. And there will be no excuses.

All of you are familiar with the problems we are battling. Weaknesses in the department's management systems and past financial abuse and mismanagement have been identified by the department's auditors, the office of inspector general and the General Accounting Office. The department has not received a clean audit report from its auditors in the past three years. The department's Student Financial Assistance Programs have remained on the General Accounting Office's list of high-risk government programs for more than a decade.

Our goals are clear: we want a clean audit report in the next 15 months. We want the Student Financial Assistance Programs off the General Accounting Office high-risk list before the Higher Education Act is reauthorized. We want to modernize the way students get financial assistance. We want to reduce student loan default costs. And we want to make every department manager accountable for results.

Today I am happy to release the interim report from the management improvement team detailing the department's work over the past three months. The team will continue its work through the end of the fiscal year.

We have dedicated ourselves to the proposition that the Department of Education can be a well-run, well-respected government agency. Our team has done great work, and the many fine career employees of the department have rolled up their sleeves to help make this progress that we report here today.

We are working to establish a culture of accountability—an expectation for results right here in the department—just as we are urging schools to do with President Bush's 'No Child Left Behind' education reform plan. I have found the employees of the department ready and willing to make this change to a culture of accountability. This is a good group of people right here in the department, and I am proud to call them my colleagues.

Let me briefly give you some more of the highlights of the interim report.

In the area of financial management, we have completed work on 48 audit recommendations and developed action plans for 55 more audit recommendations. In addition to taking away some government purchase credit cards, reducing the spending limits on all other card and eliminating third-party drafts, we have interviewed line managers to identify management control problems. Monthly reconciliation of selected financial accounts and systems has begun, and the department has dramatically increased its use of electronic funds transfers as a way to reduce administrative errors.

In June I updated several Members of Congress on the department's efforts to recover $450 million that had been called into question. At that time, I reported that the department had recovered almost $350 million and had begun legal actions to recover the remaining $100 million.

In the area of Student Financial Assistance Programs, the department has wrapped up work on six audit recommendations and developed action plans for 40 more. Using a national database to find borrowers who have taken jobs and therefore should repay their loans, the department already has collected $65 million from defaulters. The department also will sponsor a "Default Aversion Day" to reach out to more than 800 school officials in order to help students avoid defaulting on their loans.

In the area of general management, we have developed a plan to train employees on internal controls. We will place top-level managers on performance contracts, which require success in reaching management goals.

I look forward to reporting on our progress again in October when we close this fiscal year. At that time, our No Child Left Behind plan should be taking root in public elementary and secondary schools. It is critical that the department get its financial and management problems in check so they will not distract us from our mission of providing every child in America with access to a quality education.

In summary, we've done a lot of hard work, but much remains. The challenges are substantial, but so are the talents of the good people you see here in this room who have dedicated themselves to getting the job done.

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