MANAGEMENT’S DISCUSSION AND ANALYSIS

Future Initiatives and Management Challenges

The Department’s management challenges and will allow the Department to better analyze the
and future initiatives will involve the level of risk associated with its grantees.
enhancement of the Department’s governance
The Department will use risk analysis to make
process. This process will be based on
more timely and informed management decisions,
accountability with a central focus on risk
including actions needed to mitigate grantee risks,
management and compliance. Numerous
resulting in reduced audit findings and reduced
federal regulations have increased the
potential for misuse of Department funds. In
pressure on government entities to measure
addition, it will permit the Department to make
and mitigate risks involving financial loss, as
determinations regarding the most effective use of
well as damage to the entities’ reputations.
its resources, both staffing and funding, for
In order to continue the development and oversight and monitoring by targeting assistance to
implementation of risk management those grant programs and grantees that present the
throughout the Department, senior highest levels of risk.
management recently established the Risk
Management Service (RMS) in the Office of Grant Management
the Secretary. The RMS is responsible for
To improve grant processing through enhanced
identifying risks and taking effective actions
user communications, increased program

Management’s Discussion and Analysis

to manage and mitigate risks that may
performance monitoring, and the ability to link
adversely affect the advancement of the
grant dollars to results and to take advantage of the
Department's mission.
most current technology, the Department is
The RMS, in collaboration with the currently developing a new grant management tool
Department’s program offices and contractors called G5.
such as the Oak Ridge National Laboratory,
The potential value of such a tool has recently
will identify common risk factors that have
increased, as the Department has been selected to
the potential to affect grantee performance,
serve as one of three federal government-wide
and will develop a systemic, risk-based
Grants Management Line of Business Consortia
approach to monitoring grant compliance and
Leads. With this new responsibility comes the
performance.
need to enable a wide range of grant management
Responsibilities of the RMS include: functionalities and technical capabilities for a broad
spectrum of grantors.
Developing risk analysis strategies and
tools for use throughout the Department The new G5 solution is designed to provide such
and training Department staff to use these capabilities by addressing more than 1,200 specific
tools. functional requirements, developed by grant
program managers, Departmental staff and grant
Working with all components of the
award recipients.
Department to ensure that each office has
an effective risk identification and G5 will be implemented in three phases, with the
management strategy in place designed to first phase scheduled for implementation in the first
take effective action to manage and quarter of FY 2008. Phase 1 will address the
mitigate risk. payment functionality of the grant management
process, and encompass approximately 200 unique
Supporting grant-making offices in functional requirements.
developing annual grant monitoring plans
that incorporate a risk management The Department is closely managing individual
approach. functional requirements and actively
Implementation of these risk management communicating with its user base to ensure a
strategies and tools will improve the sharing successful implementation.
of risk information across Department offices

FY 2007 Performance and Accountability Report—U.S. Department of Education 21

MANAGEMENT’S DISCUSSION AND ANALYSIS

Credit Reform Management the next eight years to teach in our nation’s
classrooms.
President Bush signed the College Cost
Reduction and Access Act of 2007 (PL 110- The Promise Scholarship Program, new in the
84) into law on September 27, 2007. It President’s 2008 budget proposal, would offer
provides additional federal aid to college scholarships to low-income students in school that
students, reduces federal subsidies to private have consistently underperformed for five years.
loan companies, and increases Pell Grant
funding by $11.4 billion over five years.
Management Challenges Identified by the
The Act gradually reduces interest rates on
Inspector General
subsidized loans for low-income students, Other current and future management challenges
provides loan forgiveness for those who have include those identified by the Office of Inspector
served in public jobs for 10 years and caps General (OIG) in the annual report to improve
payments on federal loans at a certain Departmental efficiencies. These
percentage of a college graduate’s income. recommendations are provided in the Other
Accompanying Information section of this report
These measures may contribute to a further (see pages 165–184).
decline in the national student loan cohort
The recommendations include: improving
default rate, which declined to 4.6 percent for
oversight and management of programs by
the FY 2005 cohort from a rate of 5.1 percent
establishing and maintaining appropriate internal
from the previous year.
control accountability, strengthening management
of student financial assistance programs, improving
Getting Ready for the Global Economy performance monitoring of contracted services,
Under the American Competitiveness human capital planning, and managing data quality
Initiative, the President proposed $5.9 billion and information security.
in FY 2007 and more than $136 billion over
10 years to increase investments in research Department Response
and development, strengthen education, and
The Department continues to address the
encourage entrepreneurship and innovation.
challenges associated with management’s oversight
The National Math Panel brought together of internal controls related to programs, contracts,
experts in mathematics, cognitive science, and information systems.
and education to help evaluate and determine
Accountability. To improve accountability and
the most effective ways of teaching math and
operation, the Department:
sharing that knowledge with schools and
Mandated internal controls training for all
teachers around the country. The new Math
managers.
Now Program for elementary and middle
school students, pending in the FY 2008 Reduced improper payments.
President’s budget request, would promote Institutionalized risk management
research-based practices to provide the basics principles.
of a good math education and target
struggling students. In addition, the Department has addressed
weaknesses in two programs, Reading First and
The Advanced Placement/International Migrant Education programs.
Baccalaureate Program (AP/IB) would
expand the access of low-income students to For Reading First, the Secretary put new leadership
advanced coursework by training 70,000 high in place to coordinate the program, and worked
school teachers over the next five years to with the states to identify possible issues or
lead AP/IB math and science courses. The concerns the states may have had with the
proposed Adjunct Teacher Corps would implementation of the program.
provide 30,000 math and science
professionals with real-life experience over

22 FY 2007 Performance and Accountability Report—U.S. Department of Education

 MANAGEMENT’S DISCUSSION AND ANALYSIS

With the Migrant Education Program, the agency-wide program to provide information
Department proposed short-term steps to security including security for information and
immediately prevent and detect over-counting systems managed by another agencies or
of ineligible children, and long-term steps, contractors.
including options for Congress to consider, to
The Department continues its efforts in response to
ensure that only eligible migrant children are
security challenges. Among recent actions:
served by the program and that migrant
children are accurately counted for funding Acquisition of a security technology and
purposes. services contract that intends to provide
independent verification and validation of
Student Financial Assistance Programs security operations.
and Operations. Federal Student Aid (FSA)
has established controls over lender billings Development of an impartial scoring and
to ensure that only Federal Family Education evaluation process for investments.
Loan Program loans made and acquired with Establishment of an initial framework to
funds derived from tax-exempt financing codify, measure, and report specific actions
sources acquire eligibility for special project managers are accountable for
allowance payments at the 9.5 percent performing.
minimum return rate.
Expansion of membership in Department-level
In April 2007, Secretary Spellings convened a

Management’s Discussion and Analysis

decision-making entities, the Investment
task force to ensure that borrowers have more Review Board and the Planning and Investment
choice and that there is transparency Review Working Group, to include more
throughout the college application and stakeholders.
enrollment process.
Strengthening of individual business cases to
The task force recommended new regulations
make investments more transparent to and
to ensure every borrower has the right to clearly understood by decision-makers within
choose any lender, and to prohibit institutions
the Department and OMB, and to map
of higher education from favoring some
proposed investments to the agency-wide
lenders over others. enterprise architecture.
Proposed rules addressing inducements and
Human Capital. The Department reports
preferred lender lists were published and final
significant progress to address human capital
rules are scheduled to be issued before the
management and human resources services in FY
end of 2007. 2007, including:
In addition, the Secretary issued a Dear
In support of the President's Management
Colleague letter on August 9, 2007 urging
Agenda for Human Capital during Proud-To-
schools and lenders to begin to incorporate
Be IV year (July 1, 2006 - June 30, 2007), the
the principles of the new regulations into their
Department maintained yellow overall status,
institutional practices as soon as possible.
but was able to achieve ―green‖ progress in two
Grant and Contract Awards, Performance, of the four quarters of the scoring cycle.
and Monitoring. The Department has Ending the last Proud-to-Be cycle with ―green‖
initiated steps to improve its performance in progress was largely achieved by increased
this area as outlined on page 21. senior management focus on human capital
management.
Data Integrity. The Department recognizes
the need to improve its data quality and data The Department’s Organizational Assessment
reliability, as described on page 15. is the primary performance management
Information Security and Management. process affecting the principal offices. The
The Federal Information Security Organizational Assessment includes human
Management Act requires each federal agency capital metrics that relate to the effectiveness of
to develop, document, and implement an

FY 2007 Performance and Accountability Report—U.S. Department of Education 23

MANAGEMENT’S DISCUSSION AND ANALYSIS

the Department’s investment in Summary

employees and the work environment.
Promoting student achievement and preparation for
The human capital metrics help to ensure global competitiveness by fostering educational
positions are filled within the timeframe excellence and ensuring equal access is our
established for principal offices, that mission. Achieving management excellence is the
leadership development training is foundation on which we are able to accomplish this
attended to close competency gaps, and mission.
performance plans are established and
Department management made great strides in
performance appraisals completed in
improving the nation’s educational opportunities
accordance with the Department’s policy
through data collection and reporting strategies.
to support a results-oriented performance
culture. Producing accurate, timely, and reliable financial
reports and taking steps to strengthen the
The Department’s Succession information security program enables the
Management Plan and Human Capital Department to execute its mission effectively.
Accountability System increase
The Department acknowledges the challenges it
management focus on achieving quarterly
faces. By focusing on human capital management
human capital commitments and on
and further integrating performance and financial
obtaining the Office of Personnel
information the Department will continue to ensure
Management’s approval of the
access to and excellence in the nation’s educational
Department’s strategies to ensure there is
system.
a continuous pipeline of leaders in the
Department to address the Department’s
workforce and succession planning
issues.
The accountability system provides the
Department with a consistent means to
monitor and analyze all aspects of human
capital management policies, programs,
and activities in support of the mission.
The Department’s Human Capital Metric
Plan and FY 2008 Workforce Plan are
under review by the Office of Personnel
Management. The Human Capital Metric
Plan has been updated to align with the
Department’s 2007–2012 Strategic Plan
and the Workforce Plan, which identifies
FY 2008 human capital needs.
Both plans will be used as tools to drive
mission success by ensuring the
Department attracts, hires, and retains a
diverse, high-quality workforce that
demonstrates results. It is anticipated
both plans will be finalized in early FY
2008.

24 FY 2007 Performance and Accountability Report—U.S. Department of Education