U. S.

Department of Education

Fiscal Year 2006

Performance and
Accountability Report
 U.S. Department of Education
Margaret Spellings
Secretary

Office of the Chief Financial Officer

Lawrence Warder
Chief Financial Officer

November 15, 2006

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. While
permission to reprint this publication is not necessary, the citation should be: U.S. Department of Education,
U.S. Department of Education Fiscal Year 2006 Performance and Accountability Report, Washington D.C.,
2006.

About the Department of Education’s

Fiscal Year 2006 Performance and Accountability Report

The Department of Education’s publicly available Fiscal Year 2006 Performance and Accountability Report
(PAR) will be available on the Department’s Web site at
http://www.ed.gov/about/reports/annual2006report/index.html. This print version, provided in limited
distribution, contains the exact content provided in the online version.
Additionally, a color print highlights document containing a CD of the entire PAR will be available in January
2007.

To request a copy of our Highlights Report in print,

with CD of the full Performance and Accountability Report,
contact [email protected].

To provide comments and suggestions on both the content and

presentation of the report,
contact [email protected].

FY 2006 Performance and Accountability Report—U.S. Department of Education

 MESSAGE FROM THE SECRETARY

It is my pleasure to present to you our Fiscal Year 2006 Performance and

Accountability Report—a report card of the U.S. Department of Education’s efforts
and the resulting outcomes during the past fiscal year.
This year, there is a new look and feel to our Performance and Accountability Report.
The new approach reflects our efforts to streamline the report, be more transparent,
and communicate our goals, objectives and outcomes in plain language for our
readers. The report provides program performance results and financial information
so that all Americans can assess how we are meeting our goals and objectives. This
report also emphasizes our achievements and challenges in meeting the President's and
America's vision that no child will be left behind.
It has been almost five years since President Bush and the Congress led our nation in a historic commitment to
a quality education for every child—regardless of race, income, or special need. We now have the data to see
what’s working in our schools and where we need to reconsider. Now, we must build on the successful
foundation of No Child Left Behind. This past year, we have focused attention on accountability in our high
schools, with the goal of ensuring that a high school diploma becomes a record of achievement, not just
attendance.
We are heading in the right direction thanks to No Child Left Behind. However, we need to continue to focus
on grade-level proficiency in math and reading, to increase rigor in math and science, to improve American
competitiveness by increasing accountability in high schools, and to continue to ensure equal access to higher
education through our student financial aid and postsecondary education programs.
Although our performance data are fundamentally complete and reliable, we continue to work to improve
timeliness and accuracy as discussed in the Management’s Discussion and Analysis section of this report. We
have partnered with state educational agencies, colleges and universities, and financial institutions to streamline
our reporting systems and to create common definitions for performance data.
Along with performance data, the report presents financial data about the Department’s operations. I am
pleased to announce that for the fifth year in a row, the Department has earned a “clean” opinion from
independent auditors on our financial statements. The report also includes the information and assurances
about the Department’s financial management systems and management controls required by the Federal
Managers’ Financial Integrity Act. The Department’s financial management systems and management
controls, taken as a whole, provide reasonable assurance that the objectives of the act are being met, except for
two material weaknesses identified by management. The two material weaknesses identified are related to
Information Security and Program Management Controls. For further discussion, please see the Management’s
Assurances section of Management’s Discussion and Analysis on pages 23-25 of this report.
We are a nation where education touches everyone. There is not one person in America who is not affected by
the success of our educational systems. The Department of Education is committed to meeting the highest
standards of accountability as we carry out our mission.

/s/

Margaret Spellings
November 15, 2006

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 TABLE OF CONTENTS

Contents
Message From the Secretary.................................................................................................................................. iii
Management’s Discussion and Analysis
Our Mission ............................................................................................................................................................ 3
History and Organization ....................................................................................................................................... 4
Our Customers........................................................................................................................................................ 6
Performance Results and Highlights ...................................................................................................................... 7
Data Quality.......................................................................................................................................................... 13
Financial Highlights ............................................................................................................................................. 15
President’s Management Agenda - Scorecard Results ......................................................................................... 18
Management Challenges and Future Initiatives ................................................................................................... 19
Integration of Performance and Financial Information ........................................................................................ 22
Management’s Assurances ................................................................................................................................... 23
Improper Payments Overview .............................................................................................................................. 26
Performance Details
Performance Details Overview............................................................................................................................. 30
Goal 1: Create a Culture of Achievement............................................................................................................. 32
Goal 2: Improve Student Achievement ................................................................................................................ 40
Goal 3: Develop Safe and Drug-Free Schools...................................................................................................... 53
Goal 4: Transform Education Into an Evidence-Based Field ............................................................................... 58
Goal 5: Enhance the Quality of and Access to Postsecondary and Adult Education ........................................... 62
Goal 6: Establish Management Excellence .......................................................................................................... 80
Summary of Inspector General and Government Accountability Office Reports................................................ 86
Financial Details
Message From the Chief Financial Officer .......................................................................................................... 92
Financial Summary .............................................................................................................................................. 93
Limitations of Financial Statements ..................................................................................................................... 93
Principal Financial Statements ............................................................................................................................. 95
Notes to Principal Financial Statements ............................................................................................................. 101
Required Supplementary Information ................................................................................................................ 129
Required Supplementary Stewardship Information............................................................................................ 133
Report of the Independent Auditors ................................................................................................................... 139
Other Accompanying Information
Improper Payments Information Act Reporting Details..................................................................................... 158
Report to Congress on Audit Follow-up............................................................................................................. 172
Credit Management and Debt Collection Improvement Act .............................................................................. 173
Management Challenges for Fiscal Year 2007................................................................................................... 175
Glossary
Glossary of Acronyms and Abbreviations.......................................................................................................... 181

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