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History and BackgroundCongress established the Department of Education as a Cabinet level agency in 1980. Today, the Department operates programs that touch on every area and level of education. The Department's elementary and secondary programs annually serve approximately 14,000 school districts and 60 million students attending more than 98,000 public schools and 29,000 private schools. Department programs also provide grant, loan, and work-study assistance to nearly 16 million postsecondary students.
In general, the Department of Education is responsible for administering education programs authorized by Congress and signed into law by the President. This responsibility involves developing regulations and policy guidance that determine exactly how programs are operated, determining how program funds are awarded to recipients, ensuring that programs are operated fairly and in conformance with both authorizing statutes and laws prohibiting discrimination in federally funded activities, collecting data and conducting research on education, and helping to focus attention on education issues of national importance.
Most Federal funds for education are distributed using one of three methods: a statutory formula based on certain eligibility requirements, such as the number of low-income students in a school district; a competitive process aimed at identifying the most promising proposals or projects targeting a particular educational purpose; or an assessment of financial need, such as the ability of a student or family to pay for college.
Key programs administered by the Department include Title I of ESEA, which under the President's 2012 request would deliver $14.8 billion to help 20 million students in high poverty schools make progress toward State college- and career-ready standards; Individuals with Disabilities Education Act Part B Grants to States, which would provide $11.7 billion to help States and school districts meet the special educational needs of students with disabilities; Federal Pell Grants, which would make available $36 billion in need-based grant assistance to students enrolled in postsecondary institutions; and the postsecondary student loan programs, which would help provide roughly $124 billion a year in low-interest, new direct loans to help students and families pay for college.
The Department's programs and responsibilities have grown substantially over the past decade. There have been fundamental education reforms such as the No Child Left Behind Act of 2001 and the Recovery Act, which authorized the Race to the Top and Investing in Innovation Funds. There also has been postsecondary student aid legislation, such as the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA), which ensured uninterrupted access by students to federal student loans throughout the recent financial crisis, and the Student Aid and Fiscal Responsibility Act (SAFRA), which ended Federal subsidies to private lenders and expanded overall postsecondary student aid opportunities.
Internal administration has also become more complex. Laws and Presidential directives such as Homeland Security Presidential Directive 12 and the Federal Information Security Management Act of 2002, have required significant resources to address physical and information security technology issues. There has been an enhanced focus from the Office of Management and Budget on prudent financial management through instruments such as OMB Circular A-123 on internal controls. Finally, the Department has needed to devote more resources to information technology management (e.g., OMB Exhibits A-53 on IT investment portfolio and A-300 on the management of capital assets). Contracts to perform routine tasks such as processing applications for student aid (FAFSA) and loan originations have increased with the demand for college student aid.
Despite the dramatic increase in its workload over the past decade, the Department has been able to hold its administrative expenses down by reducing headcount and improving its acquisition and financial management. The following chart compares the cumulative percentage increases, from 2000 to 2010, of the Department's discretionary budget, Direct Loan originations, and FAFSA applications, with the Department's total full-time equivalent (FTE) usage.
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Salaries and Expenses OverviewDepartmental Management
(BA in millions)
| 2010 | 2011 CR | 2012 Request |
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|---|---|---|---|---|---|---|
| Program Administration | $456.2 | 1 | $456.2 | 1 | $479.0 | 1 |
| Office for Civil Rights | 103.0 | 103.0 | 107.8 | |||
| Office of the Inspector General | 60.1 | 60.1 | 67.2 | |||
| Student Aid Administration | 806.4 | 2 | 870.4 | 2 | 1,095.4 | 2 |
| Other | 10.8 | 3 | 9.9 | 3 | 9.9 | 3 |
| Total | 1,436.5 |
1,499.6 |
1,759.3 |
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Full-time equivalent employment (FTE)
| 2010 | 2011 CR | 2012 Request |
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|---|---|---|---|---|---|---|
| Program Administration | 2,024 | 2,134 | 2,142 | |||
| Office for Civil Rights | 584 | 614 | 626 | |||
| Office of the Inspector General | 289 | 293 | 323 | |||
| Student Aid Administration | 1,113 | 1,291 | 1,311 | |||
| Other | 30 | 3 | 20 | 3 | 20 | 3 |
| Subtotal | 4,040 |
4,352 |
4,422 |
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| Recovery Act | 65 | 31 | 29 | |||
| Education Jobs Fund | — | 7 | — | |||
| Total | 4,105 |
4 | 4,390 |
4 | 4,451 |
4 |
1Includes $8.2 million in 2010, $8.2 million in 2011, and $2.7 million in 2012 for Building Modernization. 2Excludes $123.6 million in 2010, $208.9 million in 2011, and $246.8 million in 2012 in Mandatory funds. 3Includes small Federal Credit Administration accounts and S&E activities in program accounts. 4Actual FTE usage in 2010; target for 2011 and 2012. | ||||||
The 2012 budget request for Salaries and Expenses (S&E) will pay the costs of staff, overhead, contracts, and other activities needed to administer and monitor the Department's educational assistance programs. The Department of Education has the smallest staff of the 15 Cabinet agencies, but its program budget and administrative workload have grown in recent years. Its discretionary budget alone is the third largest, behind only the Department of Defense and the Department of Health and Human Services. In addition, the Department makes over $120 billion in new loans annually, so that only 1 percent of its yearly budget is used for administration. Yet, when adjusted for inflation, the Department of Education's S&E budget is not significantly higher than it was 10 years ago, and FTE has declined by 12 percent.
The Department is requesting $1.759 billion for its S&E budget in 2012, an increase of $260 million over the 2011 Continuing Resolution level. This includes $622 million for payroll costs and $1.137 billion in non-payroll costs. The Department's S&E budget also includes $247 million in mandatory funding in 2012 to pay for Not-For-Profit servicing costs.
The requested $260 million increase is focused mainly on servicing and other student aid systems costs necessary to achieve approximately $67 billion in savings over the next ten years, according to CBO estimates, by transitioning all federal student loan originations to the Direct Loan Program. The Department is also requesting additional FTE to manage the increased Direct Loan volume and to increase its program oversight in response to OIG and GAO audit reports. In addition, the Department is requesting essential funding for fixed cost increases such as rent and guard services, improving its acquisition system , and providing technical assistance to States. The following chart provides a breakout of the requested increase showing that 63 percent of the administrative funding increase is related to student aid delivery and servicing.
The 2012 request includes funding for 4,422 FTE, a net increase of 70 FTE from the 2011 Continuing Resolution level of 4,352 FTE. In addition, 29 FTE will be funded by Recovery Act funds in 2012; the 2011 Continuing Resolution level includes 31 FTE funded by Recovery Act funds and 7 FTE funded by the Education Jobs Fund. The following chart shows that the Department has restrained its FTE increases despite significant increased programmatic responsibilities created by ECASLA and SAFRA. In the past 5 years, FAFSA applications have risen over 50 percent and the number of borrowers serviced has more than doubled while the Department's Student Aid Administration FTE has only risen 3 percent.
The 2012 request includes an additional 20 FTE for Federal Student Aid primarily due to additional oversight and compliance responsibilities of the additional servicing contracts.
In addition to the student aid increases, the Department is seeking eight new FTE to achieve other high priority performance goals. Efforts include providing technical assistance to States to help achieve education reform; enhancing and increasing the Department's program evaluations; and administering the new Workforce Innovation Fund, in conjunction with the Department of Labor.
The 2012 Budget also provides 12 FTE for the Office for Civil Rights to ensure successful management of OCR's enforcement programs, priorities and complaint resolution. In fiscal year 2010, OCR received 6,933 complaints, a 9 percent increase from fiscal year 2009—the largest number of complaints ever received by the agency.
The Department also is requesting 30 additional FTE for the Office of Inspector General. Additional auditors and investigators are needed to perform a larger number of audits and to conduct broader investigations as OIG's responsibilities grow to cover Recovery Act, Race to the Top, and Investing in Innovation programs, as well as increased oversight of guaranty agencies, Direct Loans, and distance education. The additional auditors and investigators, supported by additional Information Technology Audits and Computer Crime Investigations staff, will allow OIG to expand reviews of student loan programs.
As shown in the following chart, staff is divided among the Washington, D.C. headquarters, 11 regional offices, and 12 field offices. Most regional and field office staff are in Federal Student Aid (FSA), the Office of the Inspector General (OIG), and the Office for Civil Rights (OCR). The FSA regional office personnel conduct reviews of lenders, institutions, and guaranty agencies participating in the student financial aid programs, and perform debt collection activities on defaulted student loans. OIG staff conduct audits and investigations of Department programs and operations. OCR investigates civil rights complaints and conducts civil rights compliance reviews.
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The Program Administration account provides administrative support for most programs and offices in the Department. The 2012 request totals $479 million, an increase of $22.8 million from the 2011 CR level. The request includes $300.6 million for personnel compensation and benefits to support 2,142 FTE, an increase of $627,000 and 8 FTE from the 2011 CR level.
Non-personnel costs cover such items as travel, rent, mail, telephones, utilities, printing, information technology, contractual services, equipment, supplies, and other services. The total request for non-personnel activities in 2012 is $178.4 million, an increase of $22.2 million from the 2011 CR level. The increase is primarily for technical assistance to States, rental payments, increased spending for physical security for buildings and IT security, continuing operations and enhancements of EDCAPS, the Department's core financial system, and continuing operations of EDUCATE, the Department's centralized information technology network and telecommunications projects.
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The Student Aid Administration account provides funds to administer the Federal student financial assistance programs authorized under Title IV of the Higher Education Act (HEA) of 1965, as amended. The Title IV programs, which provide funds to help students and families pay for the cost of education beyond high school, collectively represent the Nation's largest source of financial aid for postsecondary students. This account administers a range of functions across the student aid lifecycle, including: education for students and families about the process for obtaining aid; processing millions of student financial aid applications; disbursing billions of dollars in aid; insuring billings of dollars in existing loans; and servicing tens of millions of loans.
Ensuring the smooth operation of the complex array of financial transactions and participants involved in the student financial aid programs—and safeguarding the interests of both students and Federal taxpayers—is one of the Department's greatest management challenges and one of its highest administrative priorities. Primary responsibility for administering the Federal student financial assistance programs rests with Federal Student Aid (FSA) and the Office of Postsecondary Education (OPE).
During the 2009-2010 award year, Federal Student Aid delivered or supported the delivery of approximately $142 billion in grant, work-study, and loan assistance to almost 12.8 million postsecondary students and their families. These students attended approximately 6,200 active institutions of postsecondary education accredited by dozens of agencies. Students received loans from approximately 2,900 lenders with 33 agencies.
The enactment of SAFRA ended the origination of new loans under the FFEL program and required all new loans to be originated through the Direct Loan (DL) program and serviced by the Department of Education effective July 1, 2010. Although all new lending will be through the DL program, lenders and guaranty agencies continue to service and collect outstanding loans from the FFEL portfolio. In addition, SAFRA authorized mandatory budget authority to support loan servicing performed by Not-For-Profit servicers. The Department has contracted with both For- Profit and Not-For-Profit servicers. In 2012, FSA also will continue to focus on meeting the growing demands of originating and servicing Direct Loans and loans purchased under ECASLA.
The Student Aid Administration account represents 62 percent of the Department's total discretionary administrative budget. The 2012 request would provide $1.1 billion to administer student aid programs, an increase of $225 million from the 2011 CR level, to fund increased student aid delivery and servicing costs.
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The Department's Office for Civil Rights (OCR) investigates discrimination complaints, conducts compliance reviews, monitors corrective action plans, and provides technical assistance on civil rights issues. The 2012 request for OCR is $107.8 million, an increase of $4.7 million over the 2011 CR level. About $81 million of the OCR budget is for staff pay and benefits for its 626 FTE; the remaining $27 million covers overhead costs as well as computer equipment, data analysis and reporting activities, travel, staff training, and other contractual services. The number of civil rights complaints received by the Department has increased from 5,894 in 2007 to an estimated 7,000 in 2011.
The requested funds will ensure essential program support to resolve complaints of discrimination filed by the public and to ensure that institutions receiving Federal financial assistance are in compliance with the civil rights laws enforced by OCR. The request also will provide resources for technical assistance to recipients, parents, and students to informally address civil rights concerns and to prevent problems from arising in the future. OCR provides extensive information on its Internet site, including self-assessment materials for recipients, data on school characteristics, brochures, and other information for the public.
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Office of the Inspector General
The Office of the Inspector General (OIG) conducts audits and investigations of the Department's programs and activities to help ensure accountability for taxpayer-provided funds and to identify management improvements. The 2012 request for the OIG is $67.2 million, an increase of $7.1 million over the 2011 CR level. Approximately 68 percent of this amount, or $46 million, is for personnel compensation and benefits to support a staffing level of 323 FTE.
The non-personnel request of $21.2 million includes $2.1 million to contract for the mandated annual audit of the Department's financial statements. The scope of the audit will include the examination and analysis of account balances, review of applicable financial systems, and evaluation of internal controls and compliance with significant laws and regulations. Additionally, the non-personnel request includes $1.5 million to support planned oversight of a representative sample of the Department's information technology systems; focus additional investigative effort on intrusions and unauthorized use of Department systems; and continue to develop the ability to perform predictive analytics, which will be used to identify whether potential anomalies are fraudulent activity.
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Programs Proposed for Consolidation or Elimination 
Appendices
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For further information contact the ED Budget Service.
This page last modified—February 14, 2011 (mjj).