More than 300 audit recommendations tackled during first 90 days of department management initiative.

ED Management Improvement Team's Interim Report on Management Improvement

Faced with 661 audit recommendations from outside auditors, the General Accounting Office and the education department's office of inspector general, more than 300 of those recommendations have been addressed, government purchase card use has been restricted, and tight financial controls have been put in place as part of a sweeping reform of the U.S. Department of Education's management, Secretary of Education Rod Paige announced Tuesday.

Secretary Paige reported on the progress of a department-wide effort to find and fix management problems that have caused the department to fail government audits in past years at a news conference, announcing that in just 90 days the following have taken place at the department:

• 104 recommendations for management improvement have been put into effect, and corrective action plans for another 205 recommendations have been developed;
• All government 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 source of abuse have been abolished;
• An additional $65 million in defaulted student loans has been recovered using national employment data;
• Plans have started to put top department officers on performance contracts that require better results;
• The president announced an appointment to the position of chief financial officer, a job that had been vacant for years; and
• The Council for Excellence in Government, an independent group of government performance experts, was brought in to review the improvements.

At a news conference in April, Secretary Paige announced the formation of a management improvement team of top department management experts and asked that team to identify problems and find solutions to long-standing financial management issues. Secretary Paige pledged at that news conference that he would update the public within 90 days on the team's progress.

"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," Paige said at the news conference Tuesday. "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."

The Department of Education has not received a "clean" report from its auditors in the past three years, and the department's Student Financial Assistance Programs have remained on the General Accounting Office list of high-risk government programs for more than a decade. Weaknesses in the department's management systems and past financial abuse and mismanagement have been identified by the department's auditors, its office of inspector general and the General Accounting Office. Together, those groups have laid out 661 audit and management recommendations that Paige identified as the first task for the management team.

Secretary Paige said in April he wants the department to obtain a clean audit report by the end of the next fiscal year in 15 months, get its Student Financial Assistance Programs off the General Accounting Office high-risk list before the Higher Education Act is reauthorized by Congress, modernize the way students get financial assistance, reduce student loan default costs, and make every department manager accountable for results.

Tuesday, Paige released an interim report from the management team detailing the department's work over the past three months, and said the team will continue its work through the end of this 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," Paige said. "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. The employees of this department have already joined in the effort, and many of them are helping to lead this change to a culture of accountability."

In the area of financial management, the interim report explains that in the past 90 days the department has completed work on 48 audit recommendations and developed action plans for 55 audit recommendations. The improper use of travel cards has been addressed, the spending limits on credit cards reduced, third-party drafts eliminated, and line managers interviewed 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 Secretary Paige updated several members of Congress about the department's efforts to recover $450 million that had been called into question. At that time, the department had recovered almost $350 million and had begun legal actions to recover the remaining $100 million.

In the area of its 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. In addition, the department has won a permanent waiver to allow it to serve as the first Debt Collection Center outside the Treasury Department. The department also will sponsor a "Default Aversion Day" to reach out to more than 800 school officials and support efforts to help students avoid defaulting on their loans.

In the area of general management, the department will train employees on internal controls, and will enter into performance contracts with top-level managers that require them to successfully reach management goals.

"I look forward to reporting on our progress again in October when we close this fiscal year," Paige said. "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 gets 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."

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