Required Supplementary

Stewardship Information
 Required Supplementary Stewardship Information

Investment in Human Capital Office of Elementary and Secondary Education

The U.S. Department of Education executes programs under the The Office of Elementary and Secondary Education provides
Education, Training, Employment, and Social Services function leadership, technical assistance, and financial support to state
established by the Congress in the Budget Act of 1974. This and local educational agencies for maintenance and
report presents Human Capital activity related to the execution of improvement of preschool, elementary, and secondary
the Department’s congressionally approved budget and programs. education. Programs administered by this office include the
The Department’s mission is to ensure equal access to education following:
and to promote educational excellence throughout the nation. To • Improving the Academic Achievement of the
carry out this mission, the Department works in partnership with Disadvantaged (Title I) Programs provide financial
states, schools, communities, institutions of higher education, and assistance to state and local educational agencies and other
institutions to support services for children in high-poverty
financial institutions—and through them, with students, teachers
schools, institutions for neglected and delinquent children,
and professors, families, administrators, and employers. Key homeless children, and certain Indian children.
functions of the partnership are as follows:
• The Impact Aid Program provides financial assistance for
• Leadership to address critical issues in American education. the maintenance and operations of school districts in which
• Grants to education agencies and institutions to strengthen the federal government has acquired substantial real
teaching and learning and to prepare students for property. It provides direct assistance to local educational
citizenship, employment in a changing economy, and agencies that educate substantial numbers of federally
lifelong learning. connected pupils (children who live on or whose parents
work on federal property).
• Student loans and grants to help pay for the costs of
postsecondary education. • Migrant Education Programs support high-quality
comprehensive educational programs for migratory children
• Grants for literacy, employment, and self-sufficiency
and youth to address disruptions in schooling and other
training for adults.
problems that result from repeated moves.
• Monitoring and enforcement of civil rights to ensure
nondiscrimination by recipients of federal education funds. • Improving Teacher Quality State Grants (Title II) provide
funds, on a formula basis, to increase the academic
• Support for statistics, research, development, evaluation, achievement of students by ensuring that all teachers are
and dissemination of information to improve educational highly qualified to teach.
quality and effectiveness.
Office of Safe and Drug-Free Schools
Human Capital Programs
The Office of Safe and Drug-Free Schools supports efforts to
Federal investment in Human Capital comprises those expenses
create safe schools, respond to crises, prevent drug and alcohol
for general public education and training programs that are
abuse, ensure the health and well-being of students, and teach
intended to increase or maintain national economic productive
students good citizenship and character. Programs administered
capacity. The Department of Education’s Human Capital
by this office include the following:
programs are administered by the following offices: Elementary
and Secondary Education, Safe and Drug-Free Schools, • Health, Mental Health, and Physical Education programs
Innovation and Improvement, Postsecondary Education, Federal promote the health and well-being of students and families
as outlined by Title IV, Safe and Drug-Free Schools and
Student Aid, Special Education and Rehabilitative Services,
Communities Act.
Institute of Education Sciences, English Language Acquisition,
• Drug and Violence Prevention—State and National
and Vocational and Adult Education. A list of key programs for
Programs are designed to develop and maintain safe,
each office is outlined below.
disciplined, and drug-free schools.

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 REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2004

Office of Innovation and Improvement Office of Federal Student Aid

The Office of Innovation and Improvement makes strategic The Office of Federal Student Aid administers need-based
investments in educational practices through grants to states, financial assistance programs for students pursuing
schools, and community and nonprofit organizations. The office postsecondary education. The Department makes available
leads the movement for greater parental options and federal grants, loans, and work-study funding to eligible
information in education. Programs administered by this office undergraduate and graduate students. The Department’s two
include the following: major loan programs are as follows:
• The Charter Schools Program supports the planning, • The Federal Family Education Loan Program operates
development, and initial implementation of charter schools. with state and private nonprofit Guaranty Agencies to
Charter schools provide enhanced parental choice and are provide loan guarantees and interest supplements through
exempt from many statutory and regulatory requirements. permanent budget authority on loans by private lenders to
In exchange for increased flexibility, charter schools are eligible students.
held accountable for improving student academic
• The William D. Ford Direct Student Loan Program is a
achievement.
direct lending program in which loan capital is provided to
• The Fund for the Improvement of Education provides students by the federal government through borrowings
authority for the Secretary to support nationally significant from the U.S. Treasury.
programs to improve the quality of elementary and
secondary education at the state and local levels and help Office of Special Education and
all students meet challenging state academic content Rehabilitative Services
standards and student achievement standards. Funds also
support “Programs of National Significance” through grants The Office of Special Education and Rehabilitative Services
to state and local educational agencies, nonprofit supports programs that assist in educating children with special
organizations, and other public and private entities that needs. It provides for the rehabilitation of youth and adults
have been identified by the Congress in appropriations with disabilities and supports research to improve the lives of
legislation.
individuals with disabilities. This office includes three
components:
Office of Postsecondary Education
• The Office of Special Education Programs administers
The Office of Postsecondary Education formulates policy and
programs and projects relating to the education of all
coordinates programs that assist postsecondary educational children, youth, and adults with disabilities from birth
institutions and students pursuing a postsecondary education. through age 21 by providing leadership and financial
This office administers the following programs: support to assist states and local districts. The largest
program is the Grants to States under the Individuals with
• The Fund for the Improvement of Postsecondary
Disabilities Education Act.
Education provides grants to colleges and universities to
promote reform, innovation, and improvement in • The Rehabilitation Services Administration oversees
postsecondary education. programs and projects related to vocational rehabilitation
and independent living of individuals with disabilities to
• Higher Education Programs (HEP) administer
increase their employment, independence, and integration
discretionary funds and provide support services that
into the community. The largest program is the
improve student access to postsecondary education and
Vocational Rehabilitation State Grants.
foster excellence in institutions of higher education. The
TRIO programs, under HEP, are outreach and support • The National Institute on Disability and Rehabilitation
programs targeted to help disadvantaged students progress Research provides leadership and support for a
from middle school to postbaccalaureate programs. comprehensive program of research related to the
rehabilitation of individuals with disabilities.

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 REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2004

Institute of Education Sciences Office of English Language Acquisition

The Institute of Education Sciences is the main research arm of The Office of English Language Acquisition administers
the Department. It compiles statistics; funds research, programs designed to enable students with limited English
evaluations, and dissemination; and provides research-based proficiency to become proficient in English and meet
guidance to further evidence-based policy and practice. Its challenging state academic content and student achievement
three operational divisions are as follows: standards. Programs from this office include the following:
• The National Center for Education Research (NCER) • The State Formula Grant Program is designed to improve
supports research that contributes to the solution of the education of limited English proficient children and
significant education problems in the United States. youths by helping them learn English and meet challenging
Through its research initiatives and the national research state academic content and student academic achievement
and development centers, NCER supports research standards. The program provides enhanced instructional
activities that examine the effectiveness of educational opportunities for immigrant children and youths.
programs, practices, and policies, including the application
• The National Professional Development Program
of technology to instruction and assessment. The goal of
provides grants to institutions of higher education in
its research programs is to provide scientific evidence of
partnership with local educational agencies or state
what works and for whom and under what conditions.
educational agencies to improve classroom instruction for
• The National Center for Education Evaluation and English language learners and to improve the qualifications
Regional Assistance is responsible for conducting of teachers of English language learners and other
evaluations of the impact of federal programs and educational personnel.
disseminating information from evaluation and research,
• The Foreign Language Assistance Program provides grants
and for providing technical assistance to improve student
to pay for the federal share of the cost of innovative model
achievement. The National Library of Education,
programs providing for the establishment, improvement, or
established within the center, is the largest federally funded
expansion of foreign language study for elementary and
library devoted entirely to education and provides services
secondary school students.
in three areas: reference and information services,
collection and technical services, and resource sharing and
Office of Vocational and Adult Education
cooperation.
The Office of Vocational and Adult Education provides funds
• The National Center for Education Statistics is
responsible for collecting, analyzing, and reporting for vocational-technical education for youth and adults. Most
education information and statistics on the condition and of the funds are awarded as grants to state educational agencies.
progress of education at the preschool, elementary, This office administers the following and other programs:
secondary, postsecondary, and adult levels, including data
• Perkins Vocational and Technology Education State
related to education in other nations. Among its data
Grants help state and local schools offer programs to
collection efforts is the National Assessment of Educational
develop the academic, vocational, and technical skills of
Progress.
students in high schools, community colleges, and regional
technical centers.

Stewardship Expenses
In the Department of Education, discretionary spending
constitutes approximately 87 percent of the budget and includes
nearly all programs, the major exceptions being student loans
and rehabilitative services. While spending for entitlement
programs is usually a function of the authorizing statutes creating

162 FY 2004 Performance and Accountability Report - U.S. Department of Education

 REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2004

the programs and is not generally affected by appropriations 7.9 percent of total education expenditures and about 2.9
laws, spending for discretionary programs is decided in the percent of the federal government’s $2.3 trillion budget in fiscal
annual appropriations process. Most Department programs are year 2004.
discretionary, for example, Impact Aid, Vocational Education,
The Department currently administers programs affecting every
Special Education, Pell Grants, Research, and Statistics.
area and level of education. The Department’s elementary and
secondary programs annually serve 14,000 school districts and
Program Outputs
more than 54 million students attending over 93,000 public
Education, in the United States, is primarily a state and local schools and more than 27,000 private schools. Department
responsibility. States and communities, as well as public and programs also provide grant, loan, and work-study assistance to
private organizations, establish schools and colleges, develop more than 9.5 million postsecondary students.
curricula, and determine requirements for enrollment and
graduation. The structure of education finance in America While the Department’s programs and responsibilities have
reflects this predominantly state and local role. Of the grown substantially over the years, the Department itself has
estimated $852 billion being spent nationwide on education at not. In fact, the Department’s staff of approximately 4,400 is
all levels for the school year 2003–04, about 90 percent comes nearly 40 percent below the 7,528 employees who administered
from state, local, and private sources. The federal contribution federal education programs in 1980, when the Department was
to national education expenditures is about $85 billion. The created. These staff reductions, along with a wide range of
federal contribution includes education expenditures not only management improvements, have helped limit administrative
from the Department, but also from other federal agencies such costs to less than two percent of the Department’s budget. This
as the Department of Health and Human Services’ Head Start means that the Department delivers about 98 cents on the
Program and the Department of Agriculture’s School Lunch dollar in education assistance to states, school districts,
Program. The Department’s $67.0 billion appropriation is about postsecondary institutions, and students.

Summary of Human Capital Expenses

(Dollars in Millions) 2004 2003 2002 2001 2000

Federal Student Aid Expense
Direct Loan Subsidy $ (543) $ 4,716 $ 877 $ 1,307 $ (3,933)
Guaranteed Loan Subsidy 8,516 2,509 3,988 (314) 295
Grant Programs 14,943 13,836 12,256 10,812 8,929
Salaries & Administrative 186 179 207 249 450
Subtotal 23,102 21,240 17,328 12,054 5,741
Other Departmental
Elementary and Secondary Education 21,188 19,493 16,127 13,851 13,768
Special Education & Rehabilitative Services 12,687 11,529 9,906 8,590 8,065
Other Departmental Programs 5,160 4,828 4,531 3,893 3,962
Salaries & Administrative 448 395 472 341 293
Subtotal 39,483 36,245 31,036 26,675 26,088
Grand Total $62,585 $57,485 $48,364 $38,729 $31,829

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 REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2004

Program Outcomes
U N E M P L O Y M E N T R AT E B Y E D U C AT I O N A L L E V E L
Education is the stepping-stone to higher living standards for
American citizens. Education is key to national economic
12 No High School Degree
growth. But education’s contribution is more than increased
High School Degree
productivity and incomes. Education improves health, 10 College Degree
promotes social change, and opens doors to a better future for
children and adults. 8

Percentage
Economic outcomes, such as wage and salary levels, historically 6
have been determined by the educational attainment of
4
individuals and the skills employers expect of those entering the
labor force. Recently, both individuals and society as a whole 2
have placed increased emphasis on educational attainment as
the workplace has become increasingly technological and 0

93

94

95
96
97

98
99

00
01
02

03
04
employers now seek employees with the highest level of skills.

19

19

19
19
19

19
19

20
20
20

20
20
For prospective employees, the focus on higher-level skills
means investing in learning or developing skills through Annual Income. For 2004, the median annual income for
education. Like all investments, developing higher-level skills adults (25 years and over) varied considerably by education level.
involves costs and benefits. Men with a high school diploma earned $32,968, compared
Returns, or benefits, of investing in education come in many with $59,072 for men with a college degree. Women with a
forms. While some returns accrue for the individual, others high school diploma earned $25,532 compared with $44,668
benefit society and the nation in general. Returns related to the for women with a college degree. Men and women with
individual include higher earnings, better job opportunities, and college degrees earned 71 percent more than men and women
jobs that are less sensitive to general economic conditions. with high school diplomas. Earnings for women with college
Returns related to the economy and society include reduced degrees have increased by 43 percent since 1979, while those of
reliance on welfare subsidies, increased participation in civic male college graduates have risen 26 percent. These returns of
activities, and greater productivity. investing in education directly translate into the advancement of
the American economy as a whole.
Over time, the returns of developing skills through education
have become evident. Statistics illustrate the rewards of
completing high school and investing in postsecondary
education.

Unemployment rate. Persons with lower levels of educational

attainment were more likely to be unemployed than those who
had higher levels of educational attainment. The 2004
unemployment rate for adults (25 years old and over) who had
not completed high school was 8.8 percent compared with
4.8 percent of those with four years of high school and
2.6 percent for those with a bachelor’s degree or higher.
Younger people with high school diplomas tended to have
higher unemployment rates than persons 25 and over with
similar levels of education.

164 FY 2004 Performance and Accountability Report - U.S. Department of Education