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Thank you for this opportunity to come before the Subcommittee to describe the management improvements we have made at the Department of Education. Strengthening the Department's management capacity has been uppermost for both Secretary Riley and me since we joined the Department three years ago.
We recognized from the start that effective and efficient management is central to our mission to help improve the quality of education for America's children. The promise of a better education can only be kept if we have the management capacity to fulfill it.
That is why we have worked hard to build a strong management team throughout the Department, working closely with both career and non-career employees, to articulate the Department's mission and to work day-by-day, step-by-step, to make the changes necessary to achieve it.
Looking back, I believe I do not exaggerate when I say that we have transformed the Department from a demoralized, fragmented, sometimes unfocused agency that was in a technology time-warp, into an effective, technology-literate organization that understands its mission and is well on the way to achieving it.
Not that our job is done. Effective management is a process of continuous improvement and retooling. And we have much more to do. But when we compare where we were three years ago to where we are today, the differences are dramatic.
The first wake-up call was made to the Secretary and me in the form of a GAO report completed shortly before our arrival, entitled "Long-Standing Management Problems Hamper Reforms."
The problems outlined in this GAO report reflected a rudderless and often ineffective agency. They included a weak commitment to effective management by previous administrations, the lack of a strategic planning process, the dearth of accurate data from the Department's financial management systems, poorly qualified staff in areas requiring technical expertise, and an agency culture that focused on short-term fixes to problems while ignoring the underlying changes needed to prevent problems from recurring.
Secretary Riley and I found little to quarrel with in this report, which echoed similar criticism over the years from Congress, the education community, and the Department's own Inspector General. This report became the blueprint for our efforts to transform the Department's management. Permit me to describe some of the positive results of this transformation for our many customers.
As for any business, the Strategic Plan provides the clear, long-term focus needed for effective management. Our Plan was the result of a lengthy process which had Department-wide input, and it is now used in our daily deliberations. For example, when debating tough budget and policy choices, the Strategic Plan becomes our reference point.
The plan has a further advantage: it is injecting discipline into the management process by requiring measurable performance indicators. The Strategic Plan includes performance indicators for measuring our progress toward objectives and strategies for each of four priorities: (1) helping all students reach challenging academic standards, (2) helping every State create a system facilitating the transition from school to work, (3) ensuring access to high-quality postsecondary education and lifelong learning, and (4) transforming the Department into a high-performance organization.
The fourth priority -- transforming the Department itself -- reflected both our commitment to making the Department work for its customers -- the American people -- and our belief that success in the other priority areas would not be possible without dramatic improvements in the agency's management and culture.
The emphasis on performance indicators in our Strategic Plan reflects the growing interest in measuring government programs by their results, both within the Clinton Administration and in the Congress. In 1993, Vice President Gore launched the National Performance Review (NPR), which brought the business world's customer- focused approach to the Federal Government and takes a results-oriented approach to make government work better and cost less. In the same year, Congress passed the Government Performance and Results Act (GPRA), which called on Federal agencies to combine strategic planning with performance indicators in order to move the government toward performance-based budgeting by the end of the decade.
I know that members of this Subcommittee have expressed interest in the Department's efforts to implement GPRA. The GPRA requirements are a substantial challenge, as is reflected in the timelines for implementation provided by the legislation. However, I believe we are making excellent progress at the Department of Education. For example, we completed our Strategic Plan roughly three years ahead of the GPRA timetable, which calls for all agencies to have a plan in place by September 30, 1997.
We also are moving forward on developing performance indicators for each of our major programs, as called for by GPRA. For example, program staff for the $7 billion Title I program are currently using 28 specific performance indicators grouped under the five broad goals outlined for the program in our Strategic Plan. These goals include improved student learning, restructuring curricula around high State standards, increasing the effectiveness of Federal and State support for local reform efforts, increasing parent and family involvement in Title I schools, and improving community support for education.
Specific indicators for Title I include data from the National Assessment of Educational Progress, which will be used to measure academic achievement in high-poverty schools, and the proportion of States that develop and implement assessment tools based on their own high standards.
Similar efforts are underway for other Department programs, though not all have moved as far as Title I. Developing appropriate, meaningful performance indicators for the wide variety of programs administered by the Department is difficult, but I am confident that we will accomplish this task well ahead of the GPRA deadline.
We are also 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.
To prevent this from happening again, we established a new management structure designed to institutionalize Department-wide improvement efforts. There are two key elements of this new structure. The first is an Executive Management Committee, composed primarily of senior political appointees, which is charged with setting overall management policy and direction for the Department.
The second element is the Reinvention Coordinating Council (RCC), composed of senior political and career officials as well as Union officials, which identifies and carries out Department-wide strategies for management reform. The RCC has been most effective in creating high-level Department teams to develop and implement cross-cutting quality improvement initiatives.
For example, the RCC chartered a Discretionary Grants Reengineering Team (DGRT) to look at ways of streamlining the discretionary grantmaking process, which currently involves six program offices and the Grants and Contracts Service. The DGRT conducted focus groups in the field with over 100 applicants and grantees to help identify problems and weaknesses in the current system. The result is a redesigned, decentralized process that will consolidate program and grants staff, cut the number of steps involved in grantmaking by more than half, and shift the focus from "getting the grants out" to promoting successful project outcomes. Implementation of this new process is expected to be completed by the end of fiscal year 1997.
Another reinvention team developed a new General Performance Appraisal System (GPAS) that includes two major innovations aimed not just at measuring performance, but more importantly, at providing employees with the information they need to improve their performance. The first innovation is the use of a variety of sources -- in addition to the supervisor - - to conduct an evaluation. These sources include co-workers, subordinates, and customers. And second, we have developed and provided every employee with new software that helps them to coordinate an evaluation of their own performance and to participate in evaluating others.
Another initiative created Low-Hanging Apples teams, which brought career employees together to develop common sense recommendations which have helped to reduce bureaucracy and save money.
At present, we are hard at work with a Customer Communications team responsible for making the Department a world-class clearinghouse for education information. Working through Customer Service Representatives from every office within the Department, this team is developing World Wide Web sites for most offices, creating a one-stop shopping telephone information system, streamlining our publications system, reducing publication storage costs, working to cut mail costs, and making data available in customer-friendly formats.
What we have achieved through efforts like these is results. The changes we have made over the past three years have led to better customer service, less bureaucracy, greater flexibility for our customers, and internal improvements that help the Department work better and save taxpayer dollars.
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 and is expected to handle more than three million calls this year. The average wait time for callers to this line is just 11 seconds.
The Department also has moved aggressively to take advantage of the customer-service possibilities created by the expansion of the Internet and other online technologies. The Department's site on the World Wide Web -- located at http://www.ed.gov -- has received several awards, including top ratings from such publications as Government Executive, Internet World, and most recently Iway. For example, Iway described our site as "a great resource for teachers and school administrators."
These technologies allow us to provide the public for the first time with direct access to information on Federal education programs, grant competitions, education legislation, research, statistics, and even downloadable software making it possible for users to apply "online" for student financial aid.
Usage of the web site has grown dramatically, increasing from month to month, from a little over 300,000 hits in March 1995 to nearly 2 million hits last month. We truly are witnessing an information revolution, and I am proud to say that the Department of Education is very much a part of this revolution.
Another 2 million people went online last year to find answers to their education questions through the Educational Resources Information Center (ERIC). ERIC is managed by the Department's National Library of Education and maintains the world's largest and most frequently used education database. ERIC includes the award-winning AskERIC question-answering service and Virtual Library, the National Parent Information Network, and over 50 subject-oriented World Wide Web sites and gophers.
AskERIC (located at http://ericir.sunsite.syr.edu), which last year provided personalized responses to 15,000 educators, parents, students, and other individuals, was named winner of the Second Annual Best of the Net Awards by GNN, publisher of The Whole Internet Catalog.
Technology has helped here as well, particularly in the Department's efforts to greatly reduce the paperwork involved in Federal education programs. 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.
The Department has streamlined its discretionary grants program by eliminating the application previously required for non-competing continuation awards. This change has helped us to take two to three months off the time formerly required to notify grantees of their continuation awards.
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.
We have taken a two- pronged approach to the statutory and regulatory requirements governing Department programs: first, we ask if they're necessary, and if not, we get rid of them; and second, if they are needed in most cases but under certain circumstances stand in the way of effective teaching and learning, we'll waive them.
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 118 of those regulations -- 612 pages in all, or about 46 percent of our total regulations. As a result of these efforts, we are considered one of the "stars" of deregulation, if I may say so, by the Office of Management and Budget.
Programs that have been authorized or reauthorized since President Clinton took office didn't need this kind of review, because we have been careful from the start to regulate only when 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 8 will require regulatory guidance.
When we need to regulate, we are taking a performance-based approach to target rules only where they are needed. In the student aid area, for example, we have to ensure that schools have the resources available to make refunds to students who withdraw before completing their course of study. However, instead of requiring all 7,300 colleges and universities to set aside a reserve fund to cover refunds, we demanded a letter of credit only from the handful of schools with a history of refund problems.
The Department -- with the help of Congress -- also is offering its customers an escape from the "one-size-fits- all" regulatory approach by greatly expanding the use of waivers of statutory and regulatory requirements. If States and school districts find that such requirements present an obstacle to innovative reform efforts, they may seek waivers of the requirements from the Secretary. To assist States and communities with waiver requests, we have established a Waiver Hot Line (202-401-7801). To date, the Secretary has approved about 100 waivers.
For example, the school district in Clarkston, Washington was granted a waiver which allows it to implement a schoolwide program under Title I one year before the school will be eligible under the 50 percent poverty threshold.
The most far-reaching waiver approach is the new 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 began with six States and has just been expanded to 12, with the State of Maryland the first to join the original six: Oregon, Massachusetts, Kansas, Ohio, Texas, and Vermont. The Department is examining how ED-FLEX States are using this new flexibility through evaluations of State and local implementation of Federal programs.
In postsecondary education, the Department is now encouraging institutions to submit proposals to participate as "experimental sites," a vehicle authorized by the Higher Education Act for trying out experimental regulatory and management approaches. Once again, our strategy here is performance-based: institutions can seek waivers of regulatory and statutory requirements in exchange for demonstrating results that reflect the objectives of the provisions in question. So far, 144 institutions have received approval to establish experimental sites.
Common sense tells us that our effectiveness in administering Department programs depends in part on the success of our efforts to streamline the number of programs we administer. The National Performance Review called for the elimination of programs that duplicate other programs or that have achieved their purpose, and each of President Clinton's budgets has included substantial numbers of program eliminations, phase-outs, and consolidations.
Over the past three years we succeeded, with the help of this Subcommittee, in eliminating 64 programs, totaling roughly $625 million, of the more than 200 programs administered by the Department. President Clinton has asked Congress to terminate an additional 16 programs in our 1997 budget request.
These terminations will help the Department streamline its organization. I am pleased to tell you that we are ahead of schedule in reaching the 12 percent staff reduction called for by President Clinton, thanks largely to a successful buyout incentive program. In addition, we have eliminated layers of hierarchy and bureaucracy, moved to a team approach, put greater emphasis on front-line services, and reduced redundant jobs.
For example, the ratio of supervisors to employees has changed from 1:6 to 1:8. Our goal is to achieve a ratio of 1:12. The Department also is reducing the number of grade 14 and 15 employees by restricting hiring and promotion at these grades.
In addition, we are emphasizing the use of cross-cutting teams to carry out new responsibilities without adding staff. Our most dramatic success earned us a Hammer award in the Office for Civil Rights for the successful restructuring of a rigid, bureaucratic New York regional office with six layers of review into three self-directed work teams. This brought the supervisor-to-staff ratio down from 1:6 to 1:15 and greatly speeded up the complaint resolution process.
Another example is the Office of Elementary and Secondary Education (OESE), which recently completed a reorganization under which each program office provides cross-cutting budget and policy support to regional service teams that are responsible for grant administration, technical assistance, waiver requests, integrated program monitoring, and other services to OESE customers.
Working smarter also requires that we improve the skills of our staff, giving them the tools needed to improve job performance and customer service, as well as to take on new assignments and improve productivity as staff resources decline. The GAO report found the Department's investment in training lagged far behind other Federal agencies during the 1980s, and the proportion of our staff receiving training was below average as well.
To address this problem, we increased our investment in training to reach the private sector standard of 2 percent of salaries, from $1.5 million in 1992 to $5.4 million in 1996. These new resources are focused on training in customer service, teamwork, process improvement, and computer skills. The Department also is developing a financial management training program. The first two courses of this program, which provide an introduction to financial management and accounting, are currently available to all Department employees.
Giving our staff the tools they need to do the job also has meant expanding the use of technology to help improve productivity. Three years ago less than half of the Department's employees had computers; today all employees have computers on their desks. Similarly, when I joined the Department our local area network, or LAN, was used only to connect computers to centrally located printers. Today we have full e-mail capacity, including Internet mail, to facilitate communication both within the Department and with our customers. We also are providing full Internet access, including access to the World Wide Web, to employees who need it. For example, Department staff often access legislative documents through Thomas, the Library of Congress's legislative web site.
In addition, technology 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 had found that the Department's financial management system did not provide adequate financial controls and could not produce accurate and reliable information. As a result, the Department's programs were subject to increased risk from fraud, waste, and mismanagement.
In response, we have rebuilt our financial management system from the ground up. The core of this effort is the Education Department Central Automated Processing System project, or EDCAPS, an integrated administrative and financial management system. Once fully implemented, EDCAPS will enable the Department to produce more timely and accurate financial information for our program and financial managers, as well as for 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.
One measure of our success in carrying out necessary internal management changes has been the dramatic decline in the cost to taxpayers of student loan defaults. Net default costs in the student loan programs have declined from $1.7 billion in 1992 to $0.5 billion in 1995, as a result of reducing the default rate from 22 percent to 12 percent and increasing collections from $1.0 billion to $1.9 billion.
This progress reflects our strong emphasis on accountability in managing Department programs. I was especially pleased to read, in a recent New York Times article on the rising risks of Federal loan programs, that Comptroller General Charles Bowsher was quoted as saying that "one bright spot is the improved oversight of student loans by the Education Department." I would add that last year the Direct Loan program was the first government loan program to receive a "clean" audit under the new reporting requirements of the Chief Financial Officers' Act.
To continue making the changes needed to produce results like these, we are asking for $505.7 million in total discretionary budget authority for Federal administration in 1997. This request would restore funding for salaries and expenses to approximately the 1995 level, and represents just 2 percent of the total discretionary budget for the Department.
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, maintain support for staff training, and complete the renovation of the Department's government-owned headquarters building.
The total request for Federal administration, including discretionary and mandatory funds, would support 4,613 full-time-equivalent (FTE) employees in 1997, compared to 4,750 FTE in 1996 and 5,131 FTE in 1995. This reduction has been achieved by attrition and by retirements resulting from the "buyout" program, which will generate estimated savings in 1997 of over $3 million. 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.
Mr. Chairman, in addition to my written testimony, I would like to submit for the record a Department organization chart which was requested by the Subcommittee and a document that summarizes our reinvention efforts over the past three years.
Thank you for this opportunity to tell the Subcommittee about the dramatic progress we have made to improve management at the Department of Education. We are clearly well on the way to making the Department a first-class, highly efficient organization. I will be happy to answer any questions you may have.
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