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Mr. Chairman and Members of the Special Committee:
Thank you for this opportunity to testify on the Year 2000 problem and its potential impact on the education community. The Department of Education has been working for over two years to minimize any potential disruption of our education system by the Year 2000 problem. I am pleased to report that from an internal perspective, the Department and its computer-based systems are fully prepared for Year 2000. We are now focusing on the readiness of our partners in the education community--primarily elementary and secondary schools and postsecondary institutions. Major activities in this area include large-scale surveys designed to determine the Year 2000 status of those partners as well as the provision of opportunities for them to test their data exchanges with the Department. Based on current information, we are concerned that too many school districts and postsecondary institutions have not yet achieved Year 2000 compliance.
The Department completed its systems conversion effort on March 8 of this year, some three weeks before the March 31, 1999 deadline established by the Office of Management and Budget (OMB). As part of this process, the Department renovated, replaced, or retired 175 computer-based systems, including 14 mission-critical systems and 161 non-mission-critical systems. We also contracted with expert consultants for independent verification and validation of Year 2000 compliance for the 14 mission-critical systems, 13 of which support the postsecondary student aid programs. Year 2000 renovations included extensive testing of systems and business processes, including validation of data exchanges, or the ability of the Department to send and receive Year 2000 compliant data to and from systems outside the Department. In addition, the Department renovated or replaced all systems with embedded chips, such as fax machines, copiers, personal computers, and networking components.
The Department has received an "A" grade for the Year 2000 compliance of its internal systems and business processes from the House Subcommittee on Government Management, Information, and Technology, and OMB has placed the Department in its highest Year 2000 readiness tier.
To ensure that we maintain this state of readiness and to comply with guidance from OMB, the Department has established a limited moratorium on computer system changes from September 1999 through March 2000. When changes are absolutely necessary, such as routine updates of our student aid processing systems, they must be validated as Year 2000 compliant. We also have adopted a policy to postpone during this same six-month period any regulatory changes that would require system modifications by the Department or its external partners.
We recognized from the beginning that internal readiness was only part of meeting the Year 2000 challenge faced by the education sector. Our education system is highly decentralized, and Department programs and activities involve an extensive array of State and local partners, including all 50 States, 16,000 school districts, and 6,600 postsecondary institutions. Moreover, these partners face Year 2000 challenges far beyond ensuring the continued operation of Federal education programs after the new year. Schools and institutions must address Year 2000 readiness issues in such areas as buildings and infrastructure, safety, student records, and payroll. This is why we have worked hard, through a wide variety of media, to raise awareness of the Year 2000 problem and to make available technical assistance to our many partners.
The Department has published and widely distributed a Year 2000 Compliance Guide for Elementary/Secondary Schools and School Districts and a Year 2000 Readiness Kit for postsecondary institutions. These documents provide an explanation of the Year 2000 problem, sample readiness plans, tips on how to ensure compliance of suppliers through procurement and contract language, and other tools and resources. The Department has distributed over 19,000 copies of the Compliance Guide to school districts and more than 20,000 copies of the Readiness Kit to postsecondary institutions. We also have delivered over 25,000 copies of a Year 2000 brochure that highlights testing opportunities, contingency planning, and the availability of technical assistance materials.
All of these printed materials, as well as other tools and resources, are available on a special Year 2000 website established by the Department. This site received over 70,000 visitors during the most recent quarter.
The Department held a Y2K Teleconference on December 7, 1998, and followed up by distributing hundreds of videos of the teleconference to education associations, school administrators, elementary and secondary schools, school districts, postsecondary institutions, and State Year 2000 coordinators.
We also participated in numerous education community conferences and conducted 10 regional workshops for the elementary and secondary education community and 15 workshops for postsecondary institutions. These workshops have been attended by administrators from hundreds of schools and colleges. This year's postsecondary workshops have focused on institutions believed to face special challenges in achieving Year 2000 compliance, such as Historically Black Colleges and Universities, Hispanic Serving Institutions, and Tribally-controlled colleges.
A more extensive discussion of the Department's specific outreach efforts is contained in our most recent Year 2000 Quarterly Report to OMB, which I have submitted for the record.
We will continue to aggressively spread the word about the Year 2000 problem to our education partners across the Nation. In the end, however, what really counts are their efforts to meet this challenge. To better gauge these efforts, the Department this year conducted separate, large-scale surveys of school districts and postsecondary institutions. Both surveys showed that many of the Nation's schools and postsecondary institutions have a long way to go in achieving Y2K compliance.
Large Majority of School Districts Report They Are Not Yet Compliant
Last spring, the Department and the National School Boards Association jointly invited the Nation's school districts to participate in a survey of Y2K readiness in our elementary and secondary schools. Of more than 16,000 districts surveyed, we received about 3,500 responses representing 38 percent of the Nation's students. As of June 4, the closing date of the survey, only 28 percent of school districts reported their mission-critical systems as currently Year 2000 compliant. The story was even worse at large districts--those enrolling over 25,000 students--with only 16 percent reporting that their mission-critical systems were compliant. Since these districts enroll about one-third of all elementary and secondary education students--some 17 million children--and because of their size are most likely to rely on technology for critical management functions--the data from our June survey suggest the very real possibility that Y2K-related disruptions that could affect millions of students.
We are also concerned by the fact that a large majority of districts planned to complete their compliance activities during the final quarter of the year, a schedule that leaves little room for the delays that often occur in renovating complex computer-based systems.
From the Department's perspective, we have good reason to be confident that Federal dollars will continue to flow to elementary and secondary schools after the new year. This is because we deliver funds primarily through States and private financial institutions, or banks. State educational agencies have assured us that they are prepared for Year 2000, and reports from the banking sector suggest that most bank systems are already or will shortly be Year 2000 compliant. As for the flow of paperwork that necessarily accompanies Federal funds, we are working with the elementary and secondary education community on contingency plans to ensure the integrity of our business processes in the event of system failures. In most cases, this simply means using the U.S. mail instead of the Internet to transmit documents.
Nevertheless, we must be concerned about the disruptions that could occur in many school districts across the Nation. We have shared the results of the school district survey with elementary and secondary school associations, and we are working with them to urge faster action at the local level.
The Department also will conduct a second live, interactive Y2K teleconference for the elementary and secondary education community on September 30. The teleconference will focus on issues such as how to test a school's systems, contingency planning, and coordination of State and local efforts to ensure Year 2000 readiness.
Most Postsecondary Institutions Not Yet Ready
In the case of the Nation's postsecondary institutions, the Department has long believed that there is real risk of Y2K-related problems in our student aid programs because the Department must work directly with so many data exchange partners to ensure timely delivery of student aid to almost 9 million college students and their families. Both OMB and the Department's Inspector General have identified Federal student aid programs as a high-risk area in their assessments of the threat from the Year 2000 bug.
Our survey of postsecondary institutions, as well as the postsecondary community's response to opportunities to test their data exchanges with the Department's systems, suggest that we have much to be concerned about.
Less Than One-Third of Institutions Report Compliance
The Department surveyed 6,600 postsecondary institutions from May 17 to July 9. Only 30 percent of responding institutions reported their mission-critical systems as Year 2000 compliant. As with the elementary/secondary sector, about 40 percent did not expect to complete renovation of their mission-critical systems until the final quarter of 1999, leaving little time for slippage in repair schedules.
Secretary Riley followed up this survey by sending a letter in early August to the presidents and chancellors of all U.S. colleges and universities. In his letter, the Secretary expressed his concern about the lack of Year 2000 readiness implied by survey results, reminded postsecondary officials of the Year 2000 resources available at the Department, and emphasized the importance of live testing of data exchanges for reliable student aid delivery.
Testing is Key Issue for Postsecondary Institutions
The Secretary's emphasis on testing highlights another reason we are concerned about the Year 2000 readiness of postsecondary institutions. As I indicated earlier, the Department's own student aid systems are fully Y2K compliant, and we have made compliant student aid processing software available to all program participants. However, the only way to ensure that the data exchanges with our partners are Year 2000 compliant is through live testing.
The Department began conducting live testing last spring, when on April 12 we opened the first test windows for the National Student Loan Data System and the Direct Loan Origination System. Additional test windows were made available during the summer for the Central Processing System (CPS), which handles the Free Application for Federal Student Aid (FAFSA), and the systems that process Pell Grants. We also posted a Year 2000 School and Trading Partner Test Plan on our web site to explain testing schedules, requirements, and procedures. For example, schools test their interface with the CPS by setting their system clocks to February 29, 2000, submitting FAFSA data, and receiving Institutional Student Information Records generated by the CPS from that data.
The early response to these test windows was not encouraging, with only a handful of postsecondary institutions taking advantage of the initial opportunity to test their systems. As recently as one month ago, just 46 institutions had successfully completed data exchange testing with the Department. As of last week, that number had grown nearly five-fold to a total of 227 institutions. If we can sustain that rate of increase over the next few months, we will be in fine shape, but obviously we need to do everything we can to encourage postsecondary institutions to test their data exchanges with the Department.
On a more positive note, all 36 guaranty agencies participating in the Federal Family Education Loan program have successfully tested their data exchanges with the Department. We also are encouraging third-party servicers, which provide services to hundreds of postsecondary institutions, to test with our systems.
The Department has announced additional test windows extending into November to afford postsecondary institutions maximum opportunity to test their data exchanges with us. If it becomes necessary, we will make student aid data exchange testing available through the end of the year. In addition, Greg Woods, the Chief Operating Officer of the Office of Student Financial Assistance, has sent letters to the community and posted notices on our website emphasizing the need for all schools to test, urging contingency planning, and offering technical assistance. Finally, all schools, guaranty agencies, and servicers that successfully complete data exchange testing with the Department earn a place on a Year 2000 "Honor Roll" at our web site.
The Department's survey results indicate that many of our partners at both the elementary/secondary and postsecondary levels will experience at least some Y2K-related system failures. While such failures would be unlikely to have an immediate impact on teaching and learning in the classroom, the potentially negative effects in such areas as building safety and infrastructure, student records, payroll, and student financial aid could disrupt the education of significant numbers of students.
The Department has pursued an aggressive contingency planning effort based on the Business Continuity and Contingency Planning (BCCP) approach recommended by the General Accounting Office. We established multidisciplinary teams for each core business process and related systems. We also hired experienced contractors--KPMG and Booz-Allen Hamilton--to assist our contingency planning teams. Each team developed detailed contingency plans and submitted them to OMB last March. The plans for mission-critical business processes also were posted on the Department's web site to encourage public comment. We are continuing to refine and update these plans in response to input from the public.
Many of our contingency plans rely on labor-intensive, manual processes to perform activities that are normally automated. For example, if the Impact Aid System does not function due to Y2K-related failures, the Department is prepared to make available the staff resources necessary to manually log and process Impact Aid applications. In the postsecondary area, a college might be unable to submit the school records required to draw down needed Pell Grant funds. The Department has developed a workaround that would increase the school's Pell Grant authorization level based on its historical funding, thereby making funds available for disbursement to eligible students.
The Department's postsecondary student aid programs are part of an OMB Local Assurances initiative for "high impact" Federal programs. OMB identified student aid as a "high impact" program area for which the Department is required to provide assurances to our customers and the general public that services will continue without interruption throughout 2000 and beyond. As part of this effort, the Department provides monthly updates to OMB concerning data exchange testing, outreach, and contingency planning activities. A major component of the Local Assurances initiative is a video news release aimed both at reassuring the public about the Y2K readiness of the student aid programs and at encouraging postsecondary institutions to conduct live data exchange testing with the Department. The Department will distribute this news release to local television stations later this month.
I want to conclude my testimony by emphasizing how concerned the Department is about the survey results from earlier this summer and the pace of postsecondary institutions in testing their student aid data exchanges. Despite extensive outreach over the past two years and substantial publicity regarding Year 2000 risks in the media, far too many school districts and postsecondary institutions are not yet ready for Year 2000. Unless there is rapid improvement over the next three months, our surveys suggest that Y2K-related failures could disrupt the education of a significant number of students attending our elementary and secondary schools and postsecondary institutions.
We are currently conducting follow-up surveys of both the elementary/secondary and postsecondary education communities. We expect the results of these new surveys by the end of October, and we will share them with the Congress as soon as possible. In the meantime, the Department will continue to do all it can to help districts and institutions prepare for Year 2000.
I will be happy to take any questions you may have.
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