A r c h i v e d  I n f o r m a t i o n

Speeches and Testimony

DEPARTMENT OF EDUCATION

Statement by
Marshall S. Smith
Acting Deputy Secretary
Before the
Subcommittee on Government Management, Information and Technology
of the
House Government Reform and Oversight Committee
on the
Department of Education's Year 2000 Efforts

June 10, 1998

Mr. Chairman and Members of the Committee:

Thank you for this opportunity to discuss the Department of Education's efforts to address the Year 2000 problem. I want to begin by emphasizing that we are taking very seriously the Year 2000 problem and the disruption it could create, both for the Department and for our many partners and customers throughout our education system. Achieving Year 2000 compliance is a big challenge for the Department, but we have put in place a comprehensive plan to meet this challenge and I am confident that we will get the job done.

THE DEPARTMENT'S YEAR 2000 PLAN

We are aware of the poor grade the Department's Year 2000 efforts have received from this Subcommittee, as well as placement on OMB's "watch list" for not meeting certain milestones toward Year 2000 compliance. In response, the Department has developed a comprehensive Year 2000 Project Management Plan that includes clearly defined organizational roles and responsibilities, reporting and monitoring processes, and budget plans. We are following the five-phase strategy recommended by the General Accounting Office: awareness, assessment, renovation, validation, and implementation. We have completed the awareness and assessment phases and are moving rapidly through the renovation and validation phases.

The awareness phase included the creation of a high-level Year 2000 Steering Committee, which I chair, and which includes the Chief Financial and Chief Information Officer, the Year 2000 Project Director, and other key managers. We also have established a Department-wide Year 2000 work group that brings together Principal Office Coordinators and is supported by the outside management consulting firm Booz-Allen & Hamilton. In addition, we regularly seek the advice of the Department's Inspector General on our Year 2000 strategy, particularly in the area of ensuring a sufficiently independent validation and verification process.

The assessment phase involved an agency-wide inventory -- using methodology developed by Booz-Allen & Hamilton -- that identified systems potentially affected by the Year 2000 problem and assigned them to risk categories. We identified 14 mission-critical systems that could cause the immediate failure of core Department business functions if not Year 2000 compliant. We have also classified 25 systems as mission-important and 137 systems as mission-supportive. Failure of any of our mission-important systems could cause mid- to long-term failure of Department business functions, while the lower-risk mission-supportive systems enhance the effectiveness or efficiency of day-to-day operations but are not essential to core business functions.

Of the 14 mission-critical systems, 11 are involved in the administration of the student financial assistance and student loan programs. These systems fully reflect the size and complexity of the Federal student aid enterprise, under which the Department of Education works with 6,000 postsecondary institutions, 4,800 lenders, 36 guaranty agencies, and State higher education agencies to deliver nearly $50 billion in financial assistance to 8.5 million postsecondary students. With such a large number of players and so much at stake for millions of students and their families, this is clearly a high-risk area. We are taking great care to prevent any disruption to these essential systems and the programs they support.

ON SCHEDULE TO ACHIEVE COMPLIANCE

We have established a careful and systematic schedule for the renovation and validation phases of our Year 2000 project, and we have contracts in place to support this work. The attached chart on the status of our mission-critical systems highlights our progress. One-half of our mission-critical systems are in the validation phase, and we will complete renovation of the remaining systems by the September 1998 OMB milestone.

The Department has hired Intermetrics and Booz-Allen & Hamilton to perform the crucial independent validation and verification tasks -- with oversight from the Inspector General -- for our mission-critical systems. We will complete validation and implementation for 13 of the 14 mission-critical systems by January 1999, ahead of the March 1999 OMB milestone and allowing nearly a full year to ensure that all renovated systems are running smoothly prior to January 1, 2000. The remaining mission-critical system -- the Federal Family Education Loan Program System -- is on schedule for completion by the March 1999 OMB deadline.

We also are making good progress on ensuring Year 2000 compliance for our remaining systems. The 25 mission-important systems and 137 mission-supportive systems are on or ahead of schedule to meet the OMB milestones.

CONTINGENCY PLANS -- JUST IN CASE

In addition, the Department is developing contingency plans for all 14 mission-critical systems, and for any mission-important systems that are determined to be at risk of non-compliance, as a precaution against system failures that may occur despite the best efforts of the Department and its contractors. We will complete our review of draft contingency plans this month. Some of these plans may require the temporary waiver of regulatory or statutory requirements -- such as those covering data matching agreements that help determine eligibility for Federal education funds -- to ensure continued flow of financial assistance to States, schools, and students. The Secretary already has considerable discretion to grant such waivers under the Elementary and Secondary Education Act, and we are seeking authority to delay implementation of systems-related changes under the pending reauthorization of the Higher Education Act until the Department and its partners are Year 2000 compliant.

REACHING OUT TO OUR PARTNERS AND CUSTOMERS

The Department is actively reaching out to its many partners -- including 6,000 postsecondary institutions and 4,800 lenders that provide student loans, 15,000 local educational agencies, and State education agencies -- to raise their awareness of Year 2000 issues. For example, last January I joined the Executive Director of the Council of Chief State School Officers in sending a Dear Colleague Letter to the Chief and Deputy Chief State School Officers in all 50 States, the District of Columbia, and the territories.

We also have coordinated a joint letter with the National School Boards Association that will go out to some 15,000 school districts nationwide. In addition, the Department has distributed over 20,000 copies of a brochure on the Year 2000 problem, established a Year 2000 web site (which received 15,000 hits over the past two months), and opened Year 2000 mailboxes to answer questions.

In the student financial aid area, we have contacted all major organizations about the Year 2000 problem. We sent out Year 2000 technical specifications to all higher education institutions in November 1997, and we will provide Year 2000 compliant student financial assistance software to all postsecondary institutions by January 1999. In addition, Department training sessions for student financial aid professionals -- which will reach up to 6,000 participants -- now include a Year 2000 module. Department officials also will discuss Year 2000 compliance at 39 regional and national conferences of the National Association of Student Financial Aid Administrators, which includes representatives from about 3,300 postsecondary institutions.

We now have a complete inventory of data exchanges, the most critical of which involve the Department's core financial management system -- the Education Central Automated Processing System, or EDCAPS -- and the student financial aid programs. For example, the Department's Pell Recipients Financial Management System tells EDCAPS how much money individual postsecondary institutions should receive to cover Pell Grants for eligible students.

Most EDCAPS data exchanges, including those with other Federal agencies, are already Year 2000 compliant; those that are not will be repaired within the OMB milestones. We also are working with the General Services Administration to make sure that centrally provided services like telephones and elevators are Year 2000 compliant.

Finally, as part of the President's Council on Year 2000 Conversion, we have joined with a number of other Federal agencies to coordinate outreach to key sectors of the Nation. For example, the Department is chairing a work group of Federal agencies that are targeting the education sector. We also are involved in two other White House work groups: one focused on Year 2000 preparations in the financial sector and another looking at ways to meet the demand for skilled professionals to work on the Year 2000 problem.

In spite of this wide range of outreach efforts, Mr. Chairman, we remain concerned about the Year 2000 readiness of many of our partners at the elementary, secondary, and postsecondary levels. This is why I encourage you and the Members of this Subcommittee, along with your colleagues in the House and Senate, to raise the Year 2000 issue whenever you visit school districts and postsecondary institutions back home. We know from data that we have gathered as part of our outreach efforts that many districts and institutions are at risk of major disruption when January 1, 2000 arrives. It is critical to raise awareness of the Year 2000 problem across the Nation, and Members of Congress can do much to help in that effort.

This Subcommittee can also help by supporting the appropriations needed to ensure the success of the Department's Year 2000 project. We are requesting $12 million in fiscal year 1999 to pay Year 2000-related costs.

CONCLUSION

Much work remains, but I believe the Department is on track. We are implementing a comprehensive plan for ensuring that our systems are Year 2000 compliant within the milestones established by OMB, we are developing contingency plans on the outside chance that something goes wrong despite our best efforts, and we are working to make sure our partners and customers are as prepared as we are for the arrival of the next century.

Thank you and I will be happy to answer any questions you may have.

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Last Updated -- June 11, 1998, (mjj)