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Highlights

In 2003, the Department of Education's Office of Federal Student Aid (FSA) managed about $60 billion in new financial aid. In 1998, the Congress designated FSA as a performance-based organization. In so doing, it specified purposes for the agency, such as to reduce program costs and increase accountability of its officials, and provided flexibilities such as allowing FSA to pay bonuses. Also FSA is required to annually prepare a performance plan and report and have performance agreements for its senior officials. Past reviews revealed serious problems and concerns about FSA's management. In January 2003, GAO reported that FSA had made progress but had not sufficiently addressed some key management issues. Also, GAO noted that FSA, like other agencies needed to address human capital issues. GAO assessed FSA's progress in (1) addressing key management issues and meeting requirements for planning and reporting, and (2) developing a human capital strategy and increasing the accountability of its officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Education To help FSA enhance its strategic planning and improve its human capital management planning, the Secretary of Education should direct FSA's Chief Operating Officer to issue clear guidance and detailed directions for teams to follow when performing comprehensive compliance reviews.
Closed - Implemented
On November 30, 2004, FSA issued comprehensive compliance review procedures to teams responsible for monitoring institutions participating in the FSA program to ensure compliance with federal legislation, regulations and policies. These procedures describe how comprehensive compliance reviews are performed as a part of FSA's case management process.
Department of Education To help FSA enhance its strategic planning and improve its human capital management planning, the Secretary of Education should direct FSA's Chief Operating Officer to develop 5-year performance plans with action steps that are linked to FSA's strategic objectives and with specific performance measures or targets for its objectives; and include measures or trend data in FSA's performance reports that clearly demonstrate whether the agency has made progress toward achieving its strategic objectives.
Closed - Implemented
FSA has included in its 5-year plan for 2006-2010, trend data and performance standards for measuring progress for each strategic objective. In addition, FSA's fiscal year 2006 annual performance report includes established targets and shows whether FSA has met its established targets for each strategic objective.
Department of Education To help FSA enhance its strategic planning and improve its human capital management planning, the Secretary of Education should direct FSA's Chief Operating Officer to revise the succession plan to include approaches that focus on the current and future capacity and needs as well as provide developmental projects or training for staff to prepare them to fulfill new duties.
Closed - Implemented
Building on its initial efforts in 2004, Federal Student Aid (FSA) in 2008 completed two initiatives to develop its succession management planning: Leadership Development Blueprint (Blueprint) and Foundations of Leadership Program (FLP). According to officials, these two elements, along with other components of FSA's leadership development and succession strategy, develop leaders at all levels of FSA. The FSA Blueprint describes leadership competencies, consistent with the Office of Personnel Management's Executive Core Qualifications, needed at all levels: non-supervisor, supervisor, manager and executive. The Blueprint also identifies training and development activities recommended for developing and improving competencies. The FLP is also designed to build leadership competencies appropriate to the level of the participants, increase participant knowledge about the business of FSA, and promote networking and the accomplishment of work across organizational boundaries. FLP participants complete assessments designed to provide feedback about their leadership styles and skills and create individual leadership development plans. FSA also administers a Leadership Development Fund to improve the skills of current and/or experienced supervisors, managers and executives. The fund is used to support participation in external management or leadership development programs offered by such recognized organizations as the Center for Creative Leadership, the Office of Personnel Management, USDA Graduate School and the Council for Excellence in Government. FSA has a robust Summer Intern Program, and recruits college students with the hope of eventually retaining them permanently. During 2008, FSA revitalized use of the Career Intern Program, and hired several, putting them on individualized development plans to ensure their growth and development and encourage high performance and retention. Additionally, FSA trained nearly all of its new supervisors through the Cornerstones of Supervision Program. This program runs for several months and allows new supervisors in FSA to build supervisory skills and to share and work through challenges they are facing in their new role.
Department of Education To help FSA enhance its strategic planning and improve its human capital management planning, the Secretary of Education should direct FSA's Chief Operating Officer to enhance systematic evaluation activities for its human capital initiatives such as the learning coupon.
Closed - Implemented
According to agency officials, Federal Student Aid's (FSA) human capital activities are now coordinated under the Department of Education's Human Capital Accountability Policy, ED Personnel Management Instruction 250-1. This policy is in conformance with Executive Order 13197 that required agencies to establish and maintain a system of accountability that contributes to agency performance by: 1) monitoring and evaluating the results of its human capital policies, programs and activities; 2) analyzing compliance with merit systems principles; and 3) identifying and monitoring necessary improvements. Federal Student Aid/Human Resources has clearly designated responsibilities for performing, monitoring, reviewing and evaluating human capital management activities, and for coordinating with the Department to report on these activities. In addition, FSA monitors and documents current fiscal year human capital initiatives through its Human Capital Implementation Plan Monthly Milestones Chart.
Department of Education To help FSA enhance its strategic planning and improve its human capital management planning, the Secretary of Education should direct FSA's Chief Operating Officer to establish and communicate clear criteria for awarding bonuses to senior staff.
Closed - Implemented
According to agency officials, the Department of Education has amended its Incentive Awards policy, Personnel Manual Instruction, (PMI) 451-1, effective January 28, 2008. Per this instruction, there is now one standard award program (e.g., spot cash, time off) in the Department. Principal Offices (POs) will no longer have separate award programs. In addition, Federal Student Aid (FSA) drafted a policy and procedures for excepted service appointments that includes criteria for awarding bonuses, which is currently being reviewed.

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