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Department of Education

Recommendations and Actions

ED05: Streamline and Improve the Department of Education's Grants Process

Background

Interviews with several Department of Education (ED) grant recipients have revealed frustration with the discretionary grant application process in the department. Grantees have complained about the lack of sufficient time between the notice of some grant programs and the date for filing applications, particularly in cases requiring collaboration among agencies or institutions. The department takes nearly three times as long to process and award grants than it gives applicants to develop proposals. Once applications are filed, ED further frustrates applicants' ability to plan for the following school year by awarding grants in the summer for school terms that may start as early as August.(1)

Grant functions in ED are separated between program offices and the Grants and Contracts Service (GCS). Program offices in ED handle substantive programmatic issues related to a grant and make funding recommendations to the assistant secretaries. The GCS deals with administrative issues, such as reviewing applications for compliance with law and regulation and financial reports for allowable costs. The first major step in the grants process is the development and publication of regulations and notices of funding priorities, which can take one year or longer. After publication of these, the approximate time frames for the major steps in the grant process are as follows:

1. Printing and mailing the application packages takes an average of two weeks.

2. ED allows applicants a minimum of 45 days for preparation of applications or proposals under existing programs and 60 days for new programs.

3. The Application Control Center, an office of the GCS, receives grant applications and logs pertinent data into the Grants and Contracts Management System. Since the postmark on an application package establishes whether the submission meets the closing date requirement, ED allows a minimum of three weeks between the postmark deadline and the start of panel reviews to be sure that all applications are received. For competitions expecting more than 500 applications, an additional one or two weeks is allowed.

4. The panel review process and preparation of an award slate takes a total of at least five weeks. This includes program office screening of applications for eligibility criteria (one to two weeks), peer reviewer reading and evaluation of proposals (one week), and program office administrative review of panel evaluations (three weeks).

5. Preparation of a funding recommendation memorandum for the assistant secretary's signature, including justification for funding any application out of rank order, takes one week.

6. Negotiation of the award with the grantee and production of the award document takes approximately six weeks to complete. This includes reviewing to ensure grant file completion, compliance with appropriate laws and regulations, independent cost analysis, negotiation of the final terms of the grant, submission of any revised material by the applicant, and review of the grantee's revised budget.(2)

The department estimates that the normal discretionary award process- -after ED publishes in the Federal Register the notice requesting application submissions--takes 26 weeks, of which only six to eight weeks are for the actual development of the application proposal.(3)

This lengthy process seriously affects ED's customers---the grant applicants and the beneficiaries of the programs, including students and teachers. The timing of the notice of grant programs often results in a grant award in the middle of the summer or as late as September, many months after the grantee has to begin planning for the school year in which the grant funds will be used. From the perception of some ED grant applicants, ED does not attempt to line up a review panel for some competitions until well after the application deadline.

The first major delay in the process occurs when ED must go through the rulemaking process before soliciting grant applications. This delay may reduce the time that applicants have to submit applications for new programs. Program regulations are published for newly authorized programs, and even reauthorized programs often require major revisions to existing regulations. Rulemaking is also necessary for establishing priority areas in which the Secretary wishes to focus the department's limited resources. The application packages themselves also go through a clearance process before publication in the Federal Register. The department estimates that the regulatory process--including clearance of application forms--takes nine to 12 months.

Some of the delays are caused by statutory provisions which place various unique restrictions on ED's rulemaking authority. According to the department, these provisions, contained in section 431 of the General Education Provisions Act, impede flexibility, constrain the setting of priorities, and delay the award of grants. The timing and logistical requirements placed on the department are incompatible with the timing constraints for running an efficient grants process and making grant awards on a timely basis. Examples of these unique provisions include requiring the department to:

1. Transmit regulations to Congress. The regulations will take effect 45 days (subject to the rules of adjournment) after transmission, unless Congress passes a resolution disapproving the regulation.(4) (Although this veto authority is considered unconstitutional in light of the Supreme Court's ruling in Immigration and Naturalization Service v. Chadha, the department still abides by the waiting period.(5))

2. Transmit a rulemaking schedule to Congress 60 days after enactment of each piece of legislation. Final regulations must be published within 180 days from the transmission of the schedule. Sometimes the department has to negotiate and transmit a new schedule to Congress.(6) This process has the effect of ordering certain regulations to be published ahead of others that may have higher priority.

3. Provide a cite of authority after every section of each regulation.(7) This adds to the length and complexity of the documents. Other agencies can provide a cite or list of cites of authority once at the beginning of each document.

4. Take public comments on any rule of general applicability, including priorities proposed for a one-year competition.(8)

To remove some of these delays, the department has initiated reforms in the rulemaking process. ED has begun using policy working groups to speed up the development of regulations. These groups consist of interested internal program and support staff members, and occasionally include a representative from the Office of Management and Budget (OMB). A few staff members draft the regulation, taking into account the concerns and ideas of the entire working group. Departmental nonparticipants in the working group relinquish the opportunity to comment on the regulation, and are not included in the departmental clearance process.

In addition, ED, along with several other agencies, has recently agreed to participate in an OMB pilot project begun in July 1993. Under this project, ED submits to OMB a monthly list of upcoming regulations requiring OMB clearance. OMB and ED jointly determine which regulations ED may publish without OMB review, and which regulations ED should submit to OMB for review.

The department has convened a quality improvement team to analyze and recommend further improvements to the regulatory process. The team's goals include determining whether appropriate ways exist for the department to: (1) avoid rulemaking for the first year of a new program; (2) simplify procedures for the preparation and clearance of funding criteria and priorities for these programs, including reduction or elimination of OMB review; and (3) better coordinate regulations and paperwork clearances to expedite these processes.(9)

The department is also using other methods to reduce delays and assist customers in planning. For some programs, the department prints in the Federal Register the program announcement and all forms necessary for submitting an application. (For other programs, potential applicants have to request an application package.) In addition, usually in September of the preceding fiscal year, the department prints in the Federal Register a combined application notice (CAN) which lists all programs that ED plans to compete in the upcoming fiscal year and gives the approximate date an announcement for each program will appear in the Federal Register. The department also prints a mini-CAN in April, updating the combined application notice with changes to competitions or information on new competitions.(10)

Further, to assist potential applicants in identifying programs and the availability of funds, the department recently instituted an on- line bulletin board (ED Board) with grant (and contract) information. The bulletin board has a limited database of program information which a potential applicant can search by program office, Federal Register announcement publishing date, or current availability of grant funds.

The department also notes a serious paperwork problem in many discretionary grant competitions. For example, applicants who may not have a realistic chance for funding often spend extraordinary time and effort preparing lengthy application packages. The department reviews all applications submitted. Some programs have initiated a pre-application process in which potential applicants submit a shortened application package. These pre-applications are then reviewed by the department. In the next round of competition, the department accepts applications only from those applicants who submitted the best pre-applications.

In addition to pointing out delays in processing, some customers have noted that the evaluation criteria used by ED for peer review often remain a mystery and a frustration. Peer reviewers, experts in their fields, bring specialized knowledge and expertise, which ED staff may not have, to the review of proposals. Although ED publishes evaluation criteria in the Federal Register and peer reviewers are supposed to review proposals objectively based on these criteria, some customers perceive that peer review panels look for specific ideas in a proposal, which are not printed in the Federal Register announcement and about which applicants are not adequately notified. After awards are announced, applicants sometimes cannot tell what differentiates a good proposal from a bad one. Awards made to middle- range applications appear to be made with no differentiating evaluation criteria. This raises the question of whether peer reviewers can effectively read and evaluate applications in accordance with the department's programmatic goals, or whether the department's criteria are written as clearly and objectively as necessary. Although the department is not bound to fund applications that peer reviewers rate highly, in most cases it does.

The peer review process costs ED considerable money and in some cases may not significantly contribute to the decisionmaking process. Senior staff frequently perform logistical tasks, such as photocopying proposals and booking hotel rooms, to run the panel reviews. In fiscal year 1992, ED spent $4.3 million on peer review compensation and travel. ED estimates it will spend $4.9 million for fiscal year 1993.(11)

Even though grants specialists use an automated, standardized negotiation instrument, customers complain that the negotiation process is inconsistent. Often differences in the process depend on the particular grants specialist working with the customer or even the time of year. Grants awarded toward the end of the fiscal year tend to be awarded with little or no negotiation. This is sometimes caused by Congress' passing an appropriations bill after the fiscal year begins, the length of the application process, and the necessity to award all grants before funds expire at midnight of September 30.

The department reviews all eligible applications that are submitted on time, whether or not the application exceeds the dollar estimate. For example, the Federal Register announcement may say that the department expects to award 10 grants in the amount of $200,000 to $300,000. If an applicant submits a proposal with a budget of $500,000, the department will still review the $500,000 proposal. Thus, proposals based on a budget that exceeds the upper level of the department's award range compete alongside applications within the department's announced award range. It is questionable whether a proposal would score as high in the rankings if that proposal were based on a smaller budget.

Some grantees view funding levels as arbitrary.(12) Once ED cuts a grantee's proposed budget and requests revisions to the proposal to accommodate these cuts, the proposal may no longer look like the one the panel reviewed. Also, grantees noted that they are usually given only 24 hours to respond to negotiation requests, which frequently does not give them sufficient time to produce quality revisions or to get the required authorizing signatures within the applicant's organization.

Some grants are negotiated by personnel who may not have a full appreciation of the work proposed in the application. This is because the program officials who authorized the grant award usually are not involved in the negotiation. The grants specialist conducting the negotiation is well-versed in what may represent fair and reasonable costs for certain line-items but may not be able to suggest substantive program areas that should be cut out of the application to satisfy funding requirements.

Applicants and the department identified delays in notifying applicants of whether a proposal was selected for funding, especially if the applicant was unsuccessful. Current department practice is to delay informing unsuccessful grant applicants until grant awards are made. This practice appears to be driven by a concern that disclosure to an unsuccessful applicant before the funds have been obligated may invite congressional pressure to alter the funding slate. This practice, however, is harmful to the applicants and the students they serve. Delays in making this information available early impede good planning and decisionmaking by the applicant who needs to learn as early as possible whether it can expect to be funded.

At the end of each budget period during a grant (except for the final year of the grant), the grantee must submit to the department an application to continue funding for the next budget period. Through this process, known as the continuation application process, the department is supposed to review a grantee's performance to date and decide whether to award funds for continuation of the project for another one-year budget period. According to the Education Department General Administrative Regulations (EDGAR), projects may be funded for up to 60 months, but usually are approved with a budget period of not more than 12 months.

Everyone involved in the grant process agrees that the continuation application process has serious flaws. Frequently, grantees must submit continuation applications after only a few months of operation. This does not allow the grantee time to collect useful data to help inform ED in making continuation funding decisions. The department recently convened a quality improvement team to study the shortcomings and possible changes to the continuation application process.

Grants management extends to overseeing grantee operations during the project. The department monitors a grantee to ensure that it is achieving its goals and adhering to all applicable rules. Traditionally, monitoring of grantee performance has consisted of federal staff visits to grantee program sites. In some cases, Congress requires in a program's authorizing legislation that the department visit a certain number or percentage of grantee project sites each fiscal year. This requirement limits the department's ability to prioritize its visits to grantees based on relevant risk factors. For example, the department may have to visit low-risk grantees under a program with a congressionally mandated monitoring requirement, while higher-risk grantees funded under programs without a congressional monitoring requirement may go without a site visit.

The department's fiscal year 1992 report to the President and Congress under the Federal Managers' Financial Integrity Act (FMFIA) cites the monitoring of all of its grants as a high-risk area needing significant improvement.(13) The department has taken a number of steps to address this problem. In the FMFIA report, ED notes that a Monitoring and Performance Measures Team (MPMT) was established "to ensure a unified and coordinated approach to developing a comprehensive system of monitoring standards and performance measures, which should improve accountability for the department's discretionary and formula grants."(14)

To further the performance measurement effort, the department contracted with the National Academy of Public Administration (NAPA) for a pilot project to begin developing performance standards for some programs. The first program that NAPA focused on was a formula grant program, the Eisenhower Math and Science Program. The contractor's draft report, as noted by ED in the fiscal year 1992 FMFIA report, "indicates that it will be even more time consuming to develop program specific standards than originally estimated."(15) The department expanded the pilot project to four other programs or areas.(16) The department recently chartered a reinvention laboratory on performance measurement which will attempt to reach the following goals:

1. identify the major programs or administrative functions to be studied by the laboratory;

2. define the mission, goals, and objectives for each selected program and function;

3. establish performance indicators for the selected programs or functions;

4. develop strategies for measuring performance indicators;

5. report performance in a clear and readable format; and

6. propose action plans for putting the indicators to work in daily operations, including annual performance reports and planning for new funding priorities. This new effort will coordinate with the existing MPMT.

These efforts should allow the department to focus on the performance outcomes of its grantees, as well as its own internal offices. This new focus should allow the department to strike a balance between standard monitoring of grantees for compliance with procedural requirements and monitoring for programmatic performance.

The FMFIA report also cites a material weakness in grant (and contract) closeout, which is the final step in managing a grant. The report notes that in some cases "final products have not been received. These products could have been disseminated to further improve education." Without final reports, grants cannot be closed by the GCS staff. In addition, "without final reports [the department] cannot be sure that the terms of individual grants . . . are met."(17) This includes ensuring that federal funds were spent properly. Final program reports are not due from grantees until after the project period has ended.(18) GCS staff members, who are responsible for documenting the collection of the reports in official program files, cite a current difficulty in getting final reports from grantees who have already spent all of their funds. The only leverage the GCS staff has to get final reports from grantees is the authority to place the grantee on a list so that the grantee's noncompliance is taken into account when making future decisions about that grantee receiving federal funds under that specific program or when determining future eligibility for further funding from ED.(19)

Final reports are especially critical for demonstration projects. One type of report describes a grantee's activities, including how federal funds were expended and whether the original objectives of the project were met. Other reports examine the results of a project, such as whether the project effectively achieved the desired outcomes. If a federally funded demonstration project is to have any national impact, ED must have documentation of program outcomes and barriers to implementation of the original proposal and how these were overcome.

Actions

1. Legislation should be enacted to repeal Section 431 of the General Education Provisions Act.

Repeal of this section would leave the department's rulemaking process subject to Title 5, United States Code, sections 552 and 553, and put the department's rulemaking process on generally the same statutory footing as other federal agencies.

2. To shorten the grant application review process, the Department of Education should change the policy for receipt of applications to require that applications be received by the closing date (not postmarked by the closing date), while extending the time available for applicants to prepare application packages.

This policy is already used for responses to requests for proposals for contracts and would allow the department to be consistent in its dealings with customers. This requires a change to EDGAR and a change in the application packages so that grantees understand the new policy. Since three to five weeks are allowed for receipt of applications after the current closing date, this would eliminate a considerable portion of this time from the grants process. To avoid possible negative customer reaction that this will cut into the time to prepare proposals, the time between the publication of the program announcement and the closing date would be extended, especially in cases in which the project requires collaboration among agencies or institutions. The advantage to customers is that they should have a shorter wait between the time a proposal is submitted and when awards are announced.

3. The Department of Education should consider ways to reduce the unnecessary paperwork in applying for funding under some discretionary grant competitions.

The department should consider various reforms such as limiting the length of applications and returning to the applicant unread any application that exceeds the limit, or requiring pre-applications--as a number of programs already do--and only accepting applications from those who submitted the best pre-applications.

4. The Department of Education should give program offices the flexibility to eliminate the peer review panel process in cases where it adds little benefit to the grant award process.

The process places an incredible logistical burden and cost on the department. Program staff spend one week coordinating the panel review process and three weeks reviewing the work of panel reviewers to validate their work. Elimination in some programs will require legislative changes. Savings from the elimination of the panels could be used to offset the costs of contracting for services in Action 5.

Program offices should assemble teams, with input from experts in the education field, to develop guidelines for determining where panel reviews add little value and to develop alternative, objective methods for reviewing proposals. Program offices should also identify ways to improve the peer review process, especially to (1) improve the quality of review criteria; (2) ensure that reviewers use the published criteria to objectively rate proposals; (3) improve methods of scoring; (4) reduce administrative costs, including travel and per diem expenses for reviewers; and (5) shorten the three-week period needed by program offices to review the work of the panels.

5. Where panel reviews continue to be used, the Department of Education should immediately contract out panel review logistics to a single contractor which would perform the function for all program offices, including photocopying of applications, booking hotel facilities, and other clerical functions.

This will reduce the burden of panel reviews on the program offices.

6. The Department of Education should develop materials to explain better to customers how the department reviews applications so that applicants have a better understanding of what happens to an application once it reaches the department.

This could be a separate pamphlet or an inclusion in the Federal Register program announcement.

7. The Department of Education should reduce the need for negotiation with grant recipients by publishing in the Federal Register program announcement the maximum amount of grant awards and return to the applicant, as disqualified from competition, any proposal which exceeds the maximum amount.

Since decisions about the amount of awards are made before negotiations occur, it makes no sense to negotiate the bottom line of an award after the decision to fund a project has been made. Awards will be granted on the merits of the proposal submitted.

This will also create fairer competitions because all proposals would be developed based on the same basic budget. This will no longer cause grantees to have to make major last-minute changes to their proposals to meet the department's demands. Grants and Contracts Service staff will still review budgets for allowable and reasonable costs and negotiate any changes necessary.

8. The Department of Education should initiate immediate steps to further standardize the negotiation process through staff training.

ED should review and standardize its negotiation procedures. It should then train all negotiators in the process with periodic refresher courses to ensure continued standardization of the process. This training could be included as part of the grant management training in Action 10.

9. The Department of Education should notify applicants of the status of their applications and funding as early as possible to help applicants plan and, if necessary, seek alternative funding.

10. The Department of Education should improve training for program and grants specialists so they can better serve their customers.

The department's Horace Mann Learning Center currently offers several grants management related courses which could serve as a starting point for this initiative.

11. Grants and Contracts Service (GCS) staff members should rotate to program offices and program office staff members should rotate to the GCS on detail periodically to remain in touch with, and gain a better understanding of, the work of the other part of the department.

These rotations could be short four-to six-week details every two years and occur simultaneously to ensure that neither office is left shorthanded.

12. The Department of Education should eliminate the continuation application process for budget years within the project period.

The current continuation process does not serve a meaningful programmatic or financial control purpose, but adds an administrative burden to program offices, GCS, and grantees. The process should be replaced by yearly program progress reports focusing on program outcomes and problems related to program implementation and service delivery, combined with the regular financial reporting as required by OMB Circular A-110. At the beginning of each new budget period within the project period, provided funds are appropriated by Congress, grantees should receive authorization to obligate funds for that budget period unless the grantee notifies the department of a need for revision which must be reviewed and approved by ED, or unless ED becomes aware of some deficiency through program reports, audits, or other means.

If Congress delays appropriating funds for the department, the department would be unable to authorize funds for the grantee's use until the appropriation is made. The department should reserve the right to require continuation applications from any grantee with a history of demonstrated financial or programmatic deficiencies or to terminate a grant for cause or if funds are not available. Elimination of this process may require changes to some program authorizing statutes.

13. The Department of Education should develop criteria for evaluating the quality of a grantee's final program progress report.

The department's current directive on Discretionary Grant Closeout focuses on the receipt of final reports and a review to determine "whether or not each grant recipient has achieved the objectives of the grant and satisfied the grant requirements." The standards developed for these reports should address such issues as whether the grantee reported on all of the original program objectives, which objectives were changed and why, what implementation problems were encountered, and how the grantee dealt with these problems. To successfully attain these goals, program staff members will require training in the provision of technical assistance to grantees for the writing of reports that meet the standards ED develops. Finally, ED staff should provide to grant recipients, at the start of a grant, information in regard to the expectations for submission of a high- quality final report that meets ED's standards.

14. The Department of Education should revise the Education Department General Administrative Regulations (EDGAR) to allow the Secretary of Education to refuse future funding under any department program, excluding student aid, to a grantee that has failed to submit a final program progress report or has submitted a report of unacceptable quality.

This could begin as a pilot project within ED, which could then expand to other federal agencies with grant authority. It would add more authority to the department's ability to secure final reports from grant recipients, and to make grantees more accountable for performance. Failure to submit a final report will be considered at least as serious an issue of noncompliance as any misuse of or fraud involving federal funds.

15. The Department of Education should use identified risk factors to establish priorities in monitoring of grantees.

The department must stop trying to spread its resources thin in an attempt to visit as many grantees as possible. Prioritized monitoring with swift action and repercussions for violations, combined with performance outcome measures supported by evidence, should prevent waste, fraud, and abuse. Possible risk factors could include organizational experience with grants, size of grant awards, demonstrated programmatic or administrative deficiencies, or recorded public complaints. For some programs, this will require statutory changes as Congress often includes in program authorizing legislation a requirement for visiting a certain percentage or number of grantees per year. This increased flexibility will also give program office staff more time to assist grantees with substantive programmatic issues and technical matters.

16. The Department of Education should continue the efforts of the

Monitoring and Performance Measurement Team to improve monitoring and develop performance measures to:

(1) identify successful programs and practices; (2) aid in the dissemination of information to interested parties; (3) provide technical assistance to grantees, potential grantees, and other interested organizations; (4) assist grantees with substantive programmatic issues; and (5) ensure compliance with grant terms and conditions.

Fiscal Impact

Eliminating the peer review process for certain programs would save the Department of Education the costs of transporting reviewers to Washington, D.C., renting hotel facilities, and compensating them for their time. Some of these savings could be used to offset the increased costs of contracting out for the remaining panel review logistics as stated in Action 5 above. In addition, with reduction of the negotiation process, the Grants and Contracts Service staff should have reduced negotiation work loads, with the possibility of shifting some staff time to other priorities.

Endnotes

1. Teleconference with Kentucky institutions of higher education, Eastern Kentucky University, University of Kentucky, Georgetown College, University of Louisville, and Kentucky State University, May 14, 1993.

2. See memorandum from Diana Culp Bork, Deputy General Counsel for Regulations and Legislation, U.S. Department of Justice, to John Morrall et. al., June 19, 1992, attachment titled "Required Length of Time for Normal Discretionary Award Process--26 Weeks."

3. Ibid.

4. General Education Provisions Act (GEPA), Section 431(d)(1).

5. Immigration and Naturalization Service v. Chadha, 103 S.Ct. 2764 (1983).

6. GEPA, Section 431(g).

7. Ibid., Section 431(a)(2).

8. Ibid., Section 431(a)(1) and (b)(2)(A).

9. U.S. Department of Education (ED), "Discretionary Grants Regulations Quality Improvement Project: Project Charter," Washington, D.C., p. 1.

10. Interview with Steve Schatken, Regulations Management Division Assistant General Counsel, Office of General Counsel, U.S. Department of Education, Washington, D.C., June 28, 1993.

11. Interview with Sherlyn Taylor, Director, Discretionary Grants Divison, U.S. Department of Education Washington, D.C., July 16, 1993.

12. Teleconference with Kentucky institutions of higher education.

13. U.S. Department of Education, Federal Managers' Financial Integrity Act Report to the President and the Congress, Fiscal Year 1992 (Washington, D.C., 1992), p. B-12.

14. Ibid., p. 2.

15. Ibid., p. B-14.

16. The project has expanded to include: the accreditation, certification, and eligibility process for institutional participation in student financial aid programs (Office of Postsecondary Education (OPE)); the Perkins Loan Program (OPE); Special Alternative Instructional Program (Office of Bilingual Education and Minority Language Affairs); and the Basic State Grant Special Education Program--Part B (Office of Special Education and Rehabilitative Services).

17. ED, Federal Managers' Financial Integrity Act Report to the President and the Congress, Fiscal Year 1992, p. C-19.

18. 34 CFR 74.82(b).

19. 34 CFR 75.217(d)(3); C:GPA:1-13, VII. C.3, p. 11.

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