Report No.: GAO/OCG-93-18TR Date: December 1992
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Author: United States General Accounting Office
Office of the Comptroller General
Addressee: Transition Series
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CONTENTS
Education Issues
Enhancing Federal Efforts to Meet National Education Goals
- Promoting Readiness for School
- Leading School Reform Efforts
- Helping Schools Adjust to Demographic Changes
- Helping Students in the Transition From School
to Work
Reducing the Cost and Preserving the Integrity of the Student Loan Program
- Implementing Direct Loans Successfully Rests on Achieving Improvements
Strengthening Departmental Management
Related GAO Products
Transition Series
- Economics
- Management
- Program Areas
Office of the Comptroller General
Washington, DC 20548
December 1992
The Speaker of the House of Representatives
The Majority Leader of the Senate
In response to your request, this transition series report discusses major
policy, management, and program issues facing the Congress and the new
administration in the area of education. The issues include the need to (1)
enhance federal efforts to meet the National Education Goals, (2) reduce the
cost and preserve the integrity of the student loan program, and (3)
strengthen departmental management.
As part of our high-risk series on program areas vulnerable to waste, fraud,
abuse, and mismanagement, we are issuing a related report, _Guaranteed Student
Loans_ (GAO/HR-93-2, Dec. 1992).
The GAO products upon which this transition series report is based are listed
at the end of the report.
We are also sending copies of this report to the President-elect, the
Republican leadership of the Congress, the appropriate congressional
committees, and the Secretaries-designate of Education, Health and Human
Services, and Labor.
Our educational system is not keeping pace with the demands of a changing
economy. International competition is transforming the American workplace,
increasing the demand for highly skilled workers across manufacturing and
service industries. Employers want employees who can solve problems, share
management responsibilities, and work in teams. Yet the nation's schools are
not educating many students to meet these demands.
In the United States, public elementary and secondary education is a $221
billion cooperative enterprise of local, state, and federal governments. This
enterprise faces great challenges. Only a small percentage of the nation's
students can perform tasks requiring complex reasoning and problem solving,
and their achievement in mathematics and science lags behind that of their
peers in other industrialized nations. We estimate that about one in three
youths aged 16 to 24 will not have the skills needed for even entry-level,
semiskilled, high-wage occupations. Over 1,900 teenagers drop out of school
every day. While the federal government contributes less than 6 percent of
what is spent on elementary and secondary education, the Department of
Education has a strong leadership role to play in working with states and
localities to improve the nation's education system as a whole and in ensuring
that all children will benefit from the improvements.
Among the challenges that the Department faces in school reform are helping
schools to adjust to a higher proportion of poor, minority, and immigrant
children; continuing to support the development of high national standards for
all children; and moving thoughtfully in backing the development of new forms
of student assessment. The Department will also need to consider how to use
existing categorical programs in the context of broad reform and how the
discrete services provided by its programs complement one another and those of
other agencies. For example, to help ensure that young children are ready for
and succeed in school, the Department should continue efforts to link its
programs with others, such as the Department of Health and Human Services'
Head Start program. The Department will also need to work closely with the
Department of Labor to develop an effective national strategy for our youth's
transition from school to work. Most importantly, the federal government will
need to determine how to maximize its resources to promote widespread school
reform efforts among states and localities.
However, the Department has long-standing managerial problems that may hamper
its taking a strong leadership role in reforming the nation's educational
system. In our 1988 transition report, we noted many deficiencies in the
Department's management, particularly in student assistance programs; loan
defaults cost the federal government $3.6 billion in 1991. The Congress has
enacted changes that could significantly improve the operation of these
programs, but serious problems remain in overall departmental management,
financial and management information systems, and human resource management.
If not addressed, these problems could undermine not only student loan reforms
but also reform of the nation's educational system.
ENHANCING FEDERAL EFFORTS TO MEET NATIONAL EDUCATION GOALS
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Concerns about the quality of our nation's education system have increased
dramatically in the decade since _A Nation at Risk_ documented the system's
inadequacies. [ Footnote 1: _A Nation at Risk: The Imperative of Educational
Reform_, National Commission on Excellence in Education (Washington, D.C.:
U.S. Government Printing Office, 1983). ] Even though changes were
implemented during the 1980s, many experts agree that major improvements are
still needed to prepare the nation's youth for the economic realities of the
next century. A critical component of our nation's competitiveness is the
capacity of the nation's students to meet the demands of a changing workplace.
Members of the business community have been particularly alarmed about the
lack of skills among entry-level youth.
The Department of Education is in a unique position to provide leadership,
even though its financial contribution is small. For example, the federal
contribution to U.S. spending on elementary and secondary education has never
exceeded 10 percent; in fiscal year 1990, it was less than 6 percent. But the
federal role in education has been important in ways these figures do not
convey.
The Department and the Congress have traditionally developed programs to
address specific national needs. The cornerstones of federal efforts have been
programs to assist specific groups of students: disadvantaged students, those
with disabilities, and those whose proficiency in English is limited. New
concerns about the quality of education for all students, however, are
broadening the focus of the federal role in education.
Early in 1990, the President and the nation's governors agreed to National
Education Goals for the year 2000, which have become a framework for education
reform efforts. These goals address the need to ensure all children's
readiness for school and improved grasp of challenging subject matter, ensure
school environments conducive to learning, and enhance the knowledge and
skills of those entering and competing in the work force. Moving the nation
toward meeting these goals will be a key task of this administration and the
Congress.
As the nation moves toward higher standards for all children, it faces a
growing number of disadvantaged children who, as a whole, are becoming more
diverse and increasingly poor. The Department of Education faces dual
challenges: exercising leadership to improve the nation's education system as
a whole and ensuring that all children, especially those who have been less
successful in the nation's schools, will benefit from these improvements.
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PROMOTING READINESS FOR SCHOOL
Many children are unprepared for school. Of the 22.8 million children in the
United States under the age of 6 in 1991, over 5 million lived in poverty, an
increase of almost 50 percent from 1975. Many of these children experience
disadvantages, including problems with language development, nutritional
deficiencies, and health problems. Poor children have the lowest participation
rates in preschool programs, despite evidence that high-quality preschool
programs can substantially increase chances for success in school.
The Head Start program, operated by the Department of Health and Human
Services, is the largest federal effort to provide comprehensive early
childhood services to disadvantaged children, with a fiscal year 1992 budget
of $2.2 billion. The Department of Education, however, also supports services
for young children through
Chapter 1 of the Elementary and Secondary Education Act, Even Start, and parts
of the Individuals With Disabilities Education Act. These programs had
combined fiscal year 1992 budgets for young children totaling over $1 billion.
As the nation seeks to ensure that all children are prepared to enter school,
coordinated efforts from all levels of government will be needed to guarantee
access to quality preschool services and attention to the needs of young
children after they enter school. The Department of Education should continue
to work closely with other agencies to promote these efforts.
The Department of Education should consider how the discrete services provided
by each of its programs complement one another and those of other agencies. In
addition to examining relationships to federal preschool programs, such as
Head Start, the Department will need to consider how its programs relate to
those of states and localities that fund preschool programs. Furthermore, many
federal and state programs fund child care services that could complement
preschool programs. All of these programs form an unconnected patchwork of
services. In examining strategies to integrate services provided by different
agencies, we found that efforts linking clients to services--by using case
managers or developing agreements among service providers--are more successful
than state-led approaches that attempt to reorganize entire agencies or create
new services. Still, the incoming administration and the Congress will need to
identify the best ways to link together the many programs that serve young
children and their families.
In preparation for the reauthorization of Head Start, we are conducting
several studies that should also help to illuminate issues for the Department
of Education's early childhood efforts: an analysis of census data to
determine preschool participation rates among the nation's children, whatever
the funding source; an in-depth study in several states to identify the
federal, state, and local programs that deliver services to young children, as
well as how they relate to one another; and a study of the arrangements that
other nations have made to provide preschool services to young children.
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LEADING SCHOOL REFORM EFFORTS
Leadership by the Department and the Congress is needed in promoting
widespread school reform. This leadership must address a number of issues: how
to foster national efforts, without a prescriptive federal role, to develop
high standards related to the national education goals; how to use major
federal categorical programs in the context of broad reform; and how to
maximize the federal government's limited resources to promote state and local
school reform efforts.
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Developing National Standards and Assessments
In 1992, the National Council on Education Standards and Testing issued
proposals to set high national standards for five core subjects--English,
mathematics, science, history, and geography--and to develop a system of
national assessments using those standards. A variety of groups--funded by the
Department of Education, other government entities, and foundations--have
begun to develop these national standards and new forms of assessments.
To meet the National Education Goals, the Congress and the Department will
need to work together to ensure that progress continues in developing high
standards for what students should know. The Congress and the Department also
need to proceed thoughtfully as new forms of student assessments are
developed. We are studying the role of assessments in national school reform
efforts, including the likely cost of a national assessment for the United
States and the experience of some Canadian provinces with student assessment.
The Department and the Congress will also need to consider how to avoid misuse
of these assessments, which could be used to deny opportunities to some
students. A key point of debate has been the fairness of assessing students,
especially when their schools have not afforded them adequate materials,
curricula, or instruction.
Federal leadership--using the knowledge of technical experts and educators--is
also necessary in developing indicators to track progress toward meeting all
of the goals. In measuring progress toward improving student competency in
challenging subjects, we found problems with the way performance standards
were set and how achievement tests, specifically for mathematics, were
interpreted.
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Changing Context for Categorical Programs
The context for federal categorical programs is changing. The Congress and the
Department will need to consider how categorical programs will help
disadvantaged students achieve the high standards implied by the National
Education Goals. Research and an expanding knowledge base--about how children
learn and the most effective teaching practices--have led to a greater focus
on higher order thinking skills and advanced skills instruction, rather than
an emphasis on basic skills and remediation. The Congress and the Department
need to consider different ways of serving children with special
needs--whether the children are disadvantaged because of poverty, have
disabilities, or lack proficiency in English. A key issue is how to ensure
that these students, who are the traditional targets of federal categorical
programs, also benefit from broader school reform efforts.
Our ongoing work will explore the operation of categorical programs in the
context of current reform efforts. In one study under way, we are examining
the accountability system established for the Chapter 1 categorical program
during its last reauthorization in 1988.
Federal leadership will be needed to promote extensive school reform. The
critical issue that has continually faced the Department is how to enable its
programs to play a role in widespread innovation. Efforts of various kinds are
under way at the state and local levels. Different reform models have been
adopted by individual schools, but these have not been used extensively. Some
experts believe that implementing reforms across an entire school district may
hold more promise for widespread school reform. We are studying how
school-based and districtwide reform models are identified, adopted, and
implemented at the district and school levels, and with what effects. We also
have studies under way to examine state and district efforts to (1) reform
school system regulations and (2) give schools more control over their
budgets.
Another issue the Department will need to consider is how to enhance, as part
of reform efforts, the training and preparation of teachers. Current programs
may be inadequate. For example, we found that the Eisenhower math and science
state grant program, while flexible and popular, funds mostly short-term
teacher training. Most experts believe that this training will not contribute
significantly to achieving the National Education Goal of making U.S. students
number one in the world in math and science achievement by the year 2000.
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HELPING SCHOOLS ADJUST TO DEMOGRAPHIC CHANGES
Growth in the number of poor children places greater demands on school
resources. In 1991, over 14 million children lived in families with incomes
below the poverty level, an increase of 40 percent from 1975. Given this
growth in child poverty, any public commitment to meeting the National
Education Goals will require examining the distribution of resources devoted
to education, new institutional strategies to improve educational services,
and ways to ensure equal educational opportunities.
School districts that have high proportions of poor children will face greater
challenges in providing educational services, especially those districts with
limited capabilities to finance those services. Better targeting of existing
federal resources to the nation's neediest schools could provide a partial
solution. For example, we found that the Chapter 1 formula, which allocates
federal funds for educational services for disadvantaged students, could be
revised to reflect the greater need of counties with high concentrations of
poor children and the reduced capability of some counties to fund needed
services. Currently, the Department collects little systematic data on
schools' physical condition and the relative need for resources. For example,
national data are unavailable to determine whether those schools with more
students at the poverty level also face greater burdens of inadequate
facilities.
As of 1991, over 25 percent of American children were black, Hispanic, or
members of other minority groups. Heavy immigration from Latin America and
Asia has contributed to this trend, swelling the number of children with
limited proficiency in English. Although our work exploring the implications
of these and other demographic trends is ongoing, other researchers have
already come to some conclusions. For example, because immigration from
non-English-speaking nations is rising, many urban school districts face
students speaking many different languages and having limited proficiency in
English. The concentration of these students in some school districts will
require new approaches to provide these children with a quality education. We
are examining the magnitude of this problem and are assessing district
strategies to provide services to students speaking many different languages.
To meet the needs of children from high-poverty and immigrant backgrounds,
schools may also have to house services that other agencies have traditionally
provided. We are examining various approaches to providing comprehensive
services, such as health or child care, at the school.
New strategies to meet the needs of growing numbers of poor and immigrant
children cannot ignore discrimination issues. In some districts, we found that
the use of ability grouping has resulted in disproportionate numbers of
minority students' being assigned to lower ability classes for all subjects.
These assignments are made without considering students' potentially greater
abilities in some subjects than in others. The Department needs to improve its
enforcement efforts related to discriminatory ability grouping and to revise
title VI regulations to identify practices that schools should use in
assigning students on the basis of ability.
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HELPING STUDENTS IN THE TRANSITION FROM SCHOOL
TO WORK
Only 30 percent of our graduates go on to a 4-year college. Those not heading
for college often are carried along in undemanding or poor-quality programs
that frequently do not give the students skills that employers need. We
estimate that about one in three youths aged 16 to 24 will not have the skills
needed to meet employers' requirements for entry-level, semiskilled, high-wage
occupations--5.5 million high school dropouts and 3.8 million graduates who
lack high school competencies.
Clearly, many of America's youth have been leaving high school poorly prepared
for the world of work. Given the profound changes taking place in workplaces
in the United States and abroad, these youth may be even less prepared for the
workplaces of the future. The challenge facing the Congress and the incoming
administration is how to adapt the nation's education and training systems to
more effectively prepare youth for the world of work.
We found that the United States does not have a coherent strategy for
preparing our youth for work, while other nations do. Our principal foreign
competitors emphasize that all youth be prepared for work and be ready to
adapt to workplace changes. We are studying key components of comprehensive
approaches for the transition from school to work; that study will help focus
efforts to ensure that youth are prepared for jobs of the 21st century.
While the Department of Education is responsible for elementary and secondary
education, it shares responsibility with the Department of Labor for secondary
and postsecondary skill training. (For a discussion of issues relating to the
Department of Labor, see our transition series report, _Labor Issues_,
GAO/OCG-93-19TR, Dec. 1992.) The magnitude of the problems facing youth in
transition from school to work requires strong federal leadership in many
areas, with an emphasis on combined efforts among the Education and Labor
Departments and the Congress.
_______________________________________________________________________________
Improving Work-Related and Academic Skills
The Carl D. Perkins Vocational and Applied Technology Education Act Amendments
of 1990 provide the framework for federal efforts geared to improving high
school graduates' occupational and academic skills through vocational
education. The amendments encourage expanded use of instructional approaches,
such as linking high school programs with community and technical college
programs, and integrating academic and vocational instruction so that students
can learn to apply academic skills in a work-related setting. In ensuring that
the amendments are fully implemented, the Department should consider how
vocational education reform can be an integral part of school reform and not
be seen as a separate effort for some students.
On the basis of our studies of foreign approaches for improving the
school-to-work transition, we have suggested general expansion of
school-employer linkages, particularly apprenticeship-type programs. Modifying
our nation's apprenticeship system to serve large numbers of youth could be
difficult, yet adding apprenticeship-type programs to our educational system
shows promise.
Our studies of apprenticeship-type programs, which have strong links to
employers, have identified three basic types of programs. For example,
high-quality cooperative education gives high school juniors and seniors work
experience and on-the-job training, together with job-related classroom
instruction. Students learn about the working world, acquire job skills, and
often are offered permanent employment with their co-op employer. Similarly,
school-to-apprenticeship programs offer high school seniors structured skill
training, but have the additional benefit of being tied into the formal
apprenticeship system. High school academy programs operate as
schools-within-schools and provide training in a series of occupations related
to a single industry. For example, the Academy of Applied Electrical Science,
housed in Philadelphia's Thomas Edison High School, trains youth for careers
in the electrical trades. Programs are developed with extensive input from
employers and often involve practical, hands-on experience.
Many districts and schools are developing new instructional approaches that
foster school-employer linkages. The nation faces a significant challenge in
expanding promising approaches and developing others, so that all students can
be prepared for a changing world of work. The Department of Education is a
focal point for federal leadership to encourage this reform.
_______________________________________________________________________________
Developing Skill Standards and Assessments
As part of the move to national education standards and closer school-employer
linkages, education and business leaders are struggling to define what skills
graduates need to be prepared for work. Some of our foreign competitors,
notably Germany, maintain quality occupational training by using competency
testing and certifying that trainees meet national standards. Employers view
certificates as evidence that trainees have achieved particular skill levels.
In the United States, certificates often certify course completion and not
necessarily the attainment of skills. It is now recognized that the United
States needs to move toward the use of competency-based skill standards and
certification. The Departments of Education and Labor have started such
efforts.
We are studying the development and use of occupational skill standards and
certification systems. We are looking at what barriers existing systems have
had to overcome, how federal efforts could facilitate the development and
adoption of new systems, and how the two Departments are working together to
foster the development and use of skill standards. In the meantime, many
schools across the nation are developing and using their own competency-based
curricula. The Department of Education should determine how to ensure that
schools develop curricula that are consistent with the broader efforts under
way to define needed skills.
_______________________________________________________________________________
Developing Program Information
School officials across the nation are also working independently to develop
congressionally mandated performance measures for vocational-technical
programs, conduct yearly assessments, and improve programs as needed. But it
may be difficult to develop a national picture from these independent efforts.
The 1990 Perkins amendments require the Department of Education to develop a
national data system to help policymakers and educators assess vocational
education efforts. The Department should make development and implementation
of this system, which the act required to be in place by March 1991, a
priority.
Many students, their parents, and employers are unaware of the potential
benefits of alternative approaches to the transition to work. Because high
school cooperative education, like vocational education, has a reputation as a
dumping ground for academically weak students, parents, students, and teachers
often avoid these programs. Yet, we found high-quality programs in 15 sites in
eight states. The actual extent of high-quality programs is unknown, partly
because the Department of Education no longer collects information on them.
The challenge is to find ways to evaluate existing programs, disseminate
information on promising approaches, and, through technical assistance or
other means, facilitate their adoption.
REDUCING THE COST AND PRESERVING THE INTEGRITY OF THE STUDENT LOAN PROGRAM
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Guaranteed student loans have helped millions of students receive an education
they might not have received otherwise, and most borrowers have repaid or are
repaying their loan obligations. The Federal Family Education Loan Program
(formerly known as the Guaranteed Student Loan Program) provides access to a
postsecondary education for those who cannot otherwise afford it. The program
operates on the premise that once educated, the borrowers will earn income
sufficient to repay their loans. In 1991, the program generated about 4.8
million new loans, totaling over $13 billion for students attending over 7,500
schools. These loans were provided by 7,800 lenders and administered by 46
state or private nonprofit guaranty agencies.
Despite its success in providing federal assistance to an ever-increasing pool
of eligible students, the program has been plagued by many problems. It is
inordinately complex and cumbersome, lacks sufficient oversight, and places
most of the financial risk on the federal government; controls to minimize
that risk are inadequate. Loan defaults have skyrocketed--totaling $3.6
billion in 1991--as students assume debt burdens they are often unable or
unwilling to repay, especially when schools fail to provide a quality
education and thereby lessen the opportunity for gainful employment.
The Department's Office of Inspector General, the Office of Management and
Budget, and our own reports have documented accountability problems that have
contributed to defaults, fraud, and mismanagement. The Congress and the
Department, recognizing the need to strengthen program integrity, have made
substantial legislative and regulatory reforms to fix the existing program.
For example, the Congress established a direct loan demonstration project that
could ultimately save billions of dollars and simplify program administration.
In addition, the new administration favors changes that may provide students
with additional access to postsecondary education while also reducing their
debt burden. This would be accomplished by forgiving some or all loan
repayments through voluntary national service or by easing the burden through
income-contingent repayments.
Regardless of the program's structure, there are serious problems in the
Department's financial and management systems. The Department lacks proper
systems and controls to adequately manage its multibillion-dollar student
assistance programs, and problems erupting from these programs could
eventually overwhelm any potential reform measures. For example, the
Department's student loan information systems contain data that are not always
useful, timely, or accurate, thereby limiting their use for compliance and
evaluation purposes. As a result, millions of dollars have been loaned to
borrowers for amounts exceeding statutory limits or to borrowers who are
already in default and, therefore, ineligible for additional loans.
The Department must continue to improve program management and reduce the
government's risk. Potential improvements are covered in greater detail in our
high-risk series report on guaranteed student loans. The Department must also
move cautiously toward implementing the direct student loan demonstration
program that could simplify program administration and save federal money.
===============================================================================
IMPLEMENTING DIRECT LOANS SUCCESSFULLY RESTS ON ACHIEVING IMPROVEMENTS
The Higher Education Amendments of 1992 authorized a direct loan demonstration
program to determine if the current guaranteed student loan delivery
structure--with lenders and guaranty agencies making and servicing
loans--could be simplified and program costs reduced. Under the demonstration,
the Department becomes the lender and schools are responsible for loan
origination.
We believe that a direct student loan demonstration has merit because of the
potential savings it could achieve. We estimate that switching from guaranteed
to direct student loans could save the federal government about $4.8
billion--in present value terms--within the first 5 years of implementation.
Direct lending would achieve these savings by (1) enabling the government to
partially offset program costs with borrowers' interest payments, (2) reducing
the cost of subsidizing students' interest charges, and (3) eliminating
interest subsidies to commercial lenders.
We found that schools have mixed views about their ability to administer a
direct loan program. But they share severe reservations concerning the
Department's ability to manage the program. For direct lending to succeed, the
Department needs to forge an effective partnership with postsecondary
educational institutions and others who may originate loans and to provide
strong program leadership. Poor management by the Department could trigger
more loan defaults, for example, which would substantially erode potential
cost savings.
Long-standing management problems and deficiencies could undermine the ability
of the Secretary to successfully implement education reforms. The Department
of Education has lacked a clear management vision and effective management
systems. Without well-defined management goals and the Secretary's focus on
management, the Department cannot effectively align its activities to support
major policy initiatives, carry out its programs, or correct identified
problems. Past Secretaries have not built an organization that could implement
major policy initiatives. Moreover, the Department's management problems have
erupted periodically, becoming the focus of congressional and media attention,
and diverting previous Secretaries from their goals. Significant changes to
the Department's management systems should be a top priority.
In our 1988 transition report, we recommended establishing a Secretarial-level
strategic management system. This has not been done. As a result, there are no
systematic, Department-wide processes for planning, organizing, or monitoring
for results and quality improvement. Although the outgoing Secretary and
Deputy Secretary took initial steps to improve operations, much more needs to
be accomplished.
The Department's management support systems need attention because they do not
provide key information to gauge the success of departmental programs. For
example, the Department cannot say whether and to what degree those with
disabilities receive federally funded rehabilitation services; nor can the
Department identify students who, after defaulting on loans, receive new ones.
Attempts to correct deficiencies in financial management--including those in
student financial assistance programs--have been short-lived. The Department
must have information and financial management systems that provide needed
data and protect the federal government's financial interests from waste,
fraud, and mismanagement. Corrective actions will require new systems and
revised regulations, or legislation, or both. Thus, these actions may extend
over several years.
The Department has a full slate of ongoing responsibilities and may not be
poised to implement new ones. Between 1981 and 1991, the Department's work
force declined by 33 percent; yet the number of programs that the Department
manages has increased from 150 to 220. Furthermore, the Department
inadequately recruits, trains, and manages its staff. It cannot ensure it has
the work force needed to implement Secretarial initiatives and to monitor
ongoing programs and policies. For example, the shortage of qualified staff
has contributed to problems in information and financial management, program
monitoring, and technical assistance. The ability of the Department to do its
job is diminished by its long-standing practice of filling key positions with
managers who lack technical qualifications.
The Department's effectiveness has been further weakened by overly centralized
decision-making and by excluding career employees from management problem
solving. The Department's 1:37 ratio of political appointees to career
employees is the highest among cabinet-level departments. Former
administrations' attempts to abolish the Department and reductions-in-force
have weakened the morale of many employees. Without adequate attention to
human resource problems, the Department will be unable to achieve its goals
effectively.
