Federal Student Loan Repayment Program: OPM Could Build on Its
Efforts to Help Agencies Administer the Program and Measure
Results (22-JUL-05, GAO-05-762).
As federal workers retire in greater numbers, agencies will need
to recruit and retain a new wave of talented individuals.
Agencies need to determine if the federal student loan repayment
(SLR) program is one of the best ways to make maximum use of
available funds to attract and keep this key talent. GAO was
asked to identify (1) why agencies use or are not using the
program; (2) how agencies are implementing the SLR program; and
(3) what results and suggestions agency officials could provide
about the program and how they view the Office of Personnel
Management's (OPM) role in facilitating its use. Ten agencies
were selected to provide illustrative examples of why and how
agencies decided to use or chose not to use the program.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-762
ACCNO: A30859
TITLE: Federal Student Loan Repayment Program: OPM Could Build
on Its Efforts to Help Agencies Administer the Program and
Measure Results
DATE: 07/22/2005
SUBJECT: Federal aid programs
Federal employees
Federal law
Human capital
Human capital management
Human capital planning
Loan repayments
Program evaluation
Program management
Strategic planning
Student financial aid
Student loans
Interagency relations
Personnel recruiting
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GAO-05-762
United States Government Accountability Office
GAO Report to Congressional Requesters
July 2005
FEDERAL STUDENT LOAN REPAYMENT PROGRAM
OPM Could Build on Its Efforts to Help Agencies Administer the Program and
Measure Results
a
GAO-05-762
[IMG]
July 2005
FEDERAL STUDENT LOAN REPAYMENT PROGRAM
OPM Could Build on Its Efforts to Help Agencies Administer the Program and
Measure Results
What GAO Found
The largest users among GAO's 10 selected executive branch agencies
primarily employed their SLR programs as broad-based retention tools aimed
at keeping more recently hired employees with the knowledge and skills
critical to their agencies. Officials at these agencies said the program
also has an indirect positive effect on their recruitment efforts because
job candidates are aware of the benefit and find the incentive attractive.
Other agencies used the program as a recruitment and retention tool on a
case-bycase basis, offering repayments to highly qualified individuals in
occupations where the labor market is competitive. Agencies not using the
program reported no real need to do so at this time because they are not
facing significant recruitment and retention challenges.
Agencies have a large degree of discretion in structuring their SLR
programs, and they were tailoring program aspects to meet their unique
needs. Those using their programs as broad-based retention tools operated
them centrally, while those making loan repayments on a case-by-case basis
had decentralized programs operated by their component units. Agencies
also varied in the size of their loan repayments depending on the results
they were trying to achieve.
Although agencies believe it is a useful tool, officials described the
program as time consuming and cumbersome to operate. They suggested that
more automation and consolidation of program activities would make the
program more efficient and easier to operate. Officials also suggested
ways to make the program more effective. Since the SLR program is
relatively new, agencies did not yet have comprehensive data to assess the
program's impact, although they will need to establish a baseline of
measures now for future assessments of the program. Currently, anecdotal
evidence indicates that employees value the program, and agency officials
believe the incentive will become more attractive to agencies once
administrative problems are reduced.
OPM has taken a number of steps to provide agencies with information and
guidance on implementing the program. Human capital officials recognized
OPM's efforts, but felt they could use more assistance on the technical
aspects of operating the program, more coordination in sharing lessons
learned in implementing it, and help consolidating some of the program
processes. OPM and the CHCO Council have an important role in assisting
agencies with implementing their SLR programs. They may also be able to
help agencies assess their own program results as well as develop a common
set of metrics to provide information to Congress on the impact of the SLR
program governmentwide.
United States Government Accountability Office
Contents
Letter
Results in Brief
Background
Selected Agencies' Use of the SLR Program Largely Depended on
Their Unique Recruitment and Retention Needs
Agencies Tailored SLR Program Administration to Meet Their
Unique Needs
Agency Officials Suggested Ways to Make the SLR Program More
Efficient and Effective, but Agencies Do Not Yet Have Processes
to Assess the Long-term Impact of Their Programs
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation
1 3 7
11
15
18 26 27 28
Appendixes
Appendix I: Objectives, Scope, and Methodology 31
Appendix II: Background Information on the Case Study 33
Agencies
Appendix III: Comments from the Office of Personnel 38
Management
Appendix IV: Comments from the Department of State 40
Appendix V: Comments from the Department of Justice 42
Appendix VI: Comments from the Department of Energy 44
Appendix VII: GAO Contact and Staff Acknowledgments 46
Table Table 1: Summary of Selected Agencies' SLR Program Features
Figure Figure 1: Fiscal Year 2004 Benefits Provided by Users of the
Student Loan Repayment Program
Contents
Abbreviations
ASD alternative service delivery
CHCO Chief Human Capital Officers
CRS Congressional Research Service
DOD Department of Defense
DOE Department of Energy
DOJ Department of Justice
DOS Department of State
DOT Department of Transportation
EEOC Equal Employment Opportunity Commission
GSA General Services Administration
OPM Office of Personnel Management
SBA Small Business Administration
SEC Securities and Exchange Commission
SLR student loan repayment
SSA Social Security Administration
This is a work of the U.S. government and is not subject to copyright
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A
United States Government Accountability Office Washington, D.C. 20548
July 22, 2005
The Honorable George V. Voinovich
Chairman
The Honorable Daniel K. Akaka
Ranking Member
Subcommittee on Oversight of Government Management, the Federal Workforce,
and the District of Columbia Committee on Homeland Security and
Governmental Affairs United States Senate
The Honorable Richard J. Durbin
United States Senate
The Honorable Jon Porter
Chairman
Subcommittee on the Federal Workforce and Agency Organization
Committee on Government Reform
House of Representatives
At a time when rising educational debt has the potential to drive college
and professional school graduates away from public service and into higher
paid private sector jobs, student loan repayment is viewed as one tool the
federal government can use to attract and keep valuable talent. Congress
passed a law in 1990 authorizing agencies to repay, at their discretion,
their
employees' student loans as a means to recruit and retain a talented
workforce.1 In 2001, the Office of Personnel Management (OPM) issued
final regulations to implement the federal student loan repayment (SLR)
program. The regulations were subsequently changed in 2004 to reflect
legislative amendments that increased the ceiling on annual and total loan
repayments. The provisions of the federal SLR program legislation
initially
authorized student loan repayments of up to $6,000 per year to a total of
$40,000 per employee. These ceilings were later increased to a maximum
amount of $10,000 per calendar year and a total of $60,000. Income and
employment taxes are withheld from the repayment amount, and an
employee seeking student loan repayment must sign a written service
1The law was enacted in 1990 (Pub. L. No. 101-510, S: 1206(b) (Nov. 5,
1990)) and amended in 2000 (Pub. L. No. 106-398, S: 1122 (Oct. 30, 2000))
and 2003 (Pub. L. No. 108-123 (Nov. 11, 2003) and Pub. L. No. 108-136, S:
1123 (Nov. 24, 2003)). 5 U.S.C, S: 5379.
agreement to work for the agency for at least 3 years. The law requires
that agencies make the loan repayments directly to the lending
institutions.
After a slow start, agencies' use of the SLR program has increased
substantially since 2001. OPM reported that federal agencies increased the
number of employees receiving student loan repayments by 42 percent in
fiscal year 2004 compared to the previous fiscal year (from 2,077 to 2,945
employees) and increased their overall financial investment in the program
by 79 percent (from $9.18 million to $16.42 million). Most of these
repayments, approximately 81 percent, were made by five agencies,
including GAO. In making these investments, agencies were required to
address a range of issues, such as funding and criteria for participation,
to determine whether a SLR program was desirable or feasible for them.
Funding is particularly important given that the law providing authority
to establish the programs does not provide separate or additional funding
to implement them. Instead, agencies generally need to reallocate funds
from existing pay and benefits programs or other recruitment and retention
incentives to repay employees' student loans. Consequently, agencies must
determine whether to use the SLR program given available funds and other
tools to recruit and retain key talent.
To obtain a better understanding of agencies' use of the federal SLR
program, you asked us to identify (1) why selected executive branch
agencies are using or not using the program, (2) how agencies are
implementing the SLR program, and (3) what results and suggestions agency
officials could provide about the program and how they view OPM's role in
facilitating its use.
To address our objectives, we identified a set of federal agencies varying
in size and mission that had established SLR programs, were in the process
of establishing programs, or had chosen not to use them. We then selected
10 agencies to provide illustrative examples of why and how agencies
decided to use the program or chose not to use it. We selected the
Department of State (DOS), the Department of Justice (DOJ),2 and the
Securities and Exchange Commission (SEC) because they were among the
largest users of the program through fiscal year 2004, and the General
Services Administration (GSA) and the Department of Energy (DOE) because
they
2DOJ, in addition to the SLR programs administered by its units,
implemented the Attorney Student Loan Repayment Program in 2003 to address
both the recruitment and retention challenges the department faces in
managing its attorney workforce.
used their programs on a more case-by-case basis. We selected the
Department of Transportation (DOT) and the Department of Commerce
(Commerce) because they were initiating programs, and the Social Security
Administration (SSA), the Equal Employment Opportunity Commission (EEOC),
and the Small Business Administration (SBA) because they did not use the
program. Background information on the agencies appears in appendix II. We
reviewed available documentation, such as strategic workforce plans, SLR
implementation plans, and other documents associated with administering
the program. To obtain governmentwide data on agencies' use of the program
and to help identify our case study agencies, we reviewed and analyzed
OPM's annual reports to Congress on the SLR program.3 We interviewed
agency officials, such as human capital officers, SLR program managers,
and recruitment directors, from the selected agencies, as well as
officials from OPM and other relevant parties. We conducted our review in
Washington, D.C., in accordance with generally accepted government
auditing standards from July 2004 through June 2005. Detailed information
on our scope and methodology appears in appendix I.
Results in Brief The agencies' decisions to use the SLR program were
largely based on how well the program met each agency's unique recruitment
and retention needs. Six of our case study agencies were using the
program, one was just beginning to implement it, and three had chosen not
to implement it. DOS, DOJ, and SEC, the largest users among the case study
agencies, reported using the program primarily for broad-based retention
efforts aimed, in many cases, at retaining more recently hired employees
with knowledge and skills critical to the agencies. Officials at these
agencies said that the program had a strong indirect effect on their
recruitment efforts as well, because job candidates know the program
exists and find it attractive. Officials from three other agencies, GSA,
DOE, and DOT, said they offer student loan repayments in recruiting
specific individuals, such as Presidential Management Fellows, and in
occupations where the labor market is competitive, such as engineering. In
addition, they offer student loan repayments to employees with skills
critical to the agency that they need to retain. Officials at Commerce,
which recently offered its first
3U.S. Office of Personnel Management, Federal Student Loan Repayment
Program (Washington, D.C.: 2001), Federal Student Loan Repayment Program
(Washington, D.C.: 2002), Federal Student Loan Repayment Program
(Washington, D.C.: 2003), and Federal Student Loan Repayment Program
(Washington, D.C.: 2004).
repayment, said the department will also use the program on a case-by-case
basis for both recruitment and retention. SSA, EEOC, and SBA officials
reported having no real need to implement the program at this time,
because their agencies are not facing significant recruitment and
retention challenges. SSA officials, for example, said the agency's
recruitment needs generally do not require a focus on individuals with
highly technical or unique qualifications.
Likewise, agencies are implementing the SLR program to meet their unique
needs by tailoring various aspects of their programs. For example, the
agencies using the SLR program more extensively and primarily as a
broadbased retention tool operated their programs centrally, while the
agencies using student loan repayments on a case-by-case basis
decentralized operations to units within the agencies. DOS, for example,
centrally funds and administers the program for all units within the
department, such as the Bureau of Consular Affairs. DOE, on the other
hand, allows its units to implement their own programs, primarily because
they have diverse needs, including different geographic labor markets.
Agencies also varied the amount of recipients' loan repayments to achieve
particular results. The DOJ attorney program, for example, offers the
largest loan repayments to attorneys in the lowest salary positions to
attract a broader base of individuals who otherwise may not have been
interested in these positions. Agencies also varied the length of service
required before an employee can become eligible for the program. For
instance, SEC, an agency that reports little difficulty recruiting
candidates but has a relatively high attrition rate, requires employees to
serve at least 1 year before becoming eligible to participate in the
program. Because program participants sign a 3-year service agreement, the
agency is likely to retain these employees for a minimum of 4 years.
Agency officials provided suggestions for making the SLR program more
efficient and effective, but agencies using the SLR program did not yet
have comprehensive data on the extent to which it is aiding them in their
recruitment and retention efforts. For example, most officials agreed that
the program is cumbersome to administer and proposed that certain changes,
such as more automation of the application and loan repayment processes
and consolidation of other program activities, could make it more
efficient. In particular, an official at DOT indicated that alternative
approaches could be explored to increase the cost effectiveness of
administrative functions for agencies that use the program extensively.
For example, one approach may be to create shared services-similar to the
approach used to provide payroll services, wherein a small number of
agencies service multiple agencies. Officials also suggested changes to
the program they believed would increase its effectiveness by making the
program more attractive to candidates and employees, such as reducing the
3-year service agreement. As for determining program results, although the
program is still relatively new to most agencies, establishing now what
data and indicators they will track to determine the program's effects, as
well as a baseline to measure the changes over time, is important for
future assessments of the program. All agencies are tracking the number of
SLR recipients who do not fulfill their service agreements and stated that
few are leaving the agency before their agreements expire, indicating the
program is having at least a short-term positive impact on retention. As
for longer-term measures of effect, agency officials identified several
indicators they could track, such as participant attrition rates and
survey data measuring employee attitudes about the program. Officials
stated that they would need to track attrition rates of loan repayment
recipients for at least a 3-year cycle because recipients sign at least a
3-year service agreement and are less likely to leave during this time
frame. Nevertheless, agencies could establish the tracking systems now,
and could conduct the employee surveys on a periodic basis to gauge
program results.
Finally, agency officials' views were mixed on OPM's role in facilitating
their use of the SLR program. They suggested that more coordination among
agencies, which OPM could facilitate, would help with program
implementation and administration. OPM has taken a number of steps to
provide agencies with program information and guidance, including making
reference materials, such as questions and answers on administering
student loan repayments, available on its Web site, and sponsoring a forum
for program managers. Since a number of the changes in program
administration, such as more automation of the process or establishing
shared-service arrangements, would benefit all agencies using the program,
OPM, as the central human capital office, is well-positioned to help
implement these program improvements. In addition, continued OPM support,
such as the forums and training sessions on the program, could be helpful.
Some of this assistance could also include working with the agencies to
develop indicators and measures of program results, which in turn could
help OPM to assess and report on program results governmentwide.
Given the challenges cited in administering the program and its potential
to grow, simplifying and consolidating administrative tasks, sharing
lessons learned, and assessing results will help ensure agencies make
maximum use of funds to recruit and retain key talent, a critical goal in
an era of fiscal
constraints. In light of this, we recommend that the Director of OPM, in
conjunction with the Chief Human Capital Officers (CHCO) Council,4
continue to work with agencies using the program to determine the most
important program improvements to implement, especially those that would
have governmentwide benefits, such as shared service arrangements, and the
most cost-effective ways to implement them. OPM could also help agencies
identify possible data to collect, and indicators to use, to track
long-term program results, as well as possible governmentwide indicators
OPM could use to report overall program results to Congress. We are also
recommending to our selected agencies making extensive use of the SLR
program that they continue their efforts to measure the impact of their
programs.
We provided a draft of this report to the Director of OPM and to our 10
selected agencies for their review and comment. We received written
comments from OPM, DOS, DOJ, and DOE, which are included in appendixes
III, IV, V, and VI respectively. OPM and DOS concurred with our
recommendations. DOJ did not comment specifically on the recommendations
but stated that the department has already started to develop ways to
measure the impact of the attorney student loan repayment program on
retention. DOE offered two opinions on our recommendations to OPM. First,
DOE stated that the report did not fully describe OPM's efforts in
assessing program implementation as part of its annual reporting process
to Congress. We added language in the report to expand on what OPM
included in its most recent report. DOE also suggested that GAO recommend
that OPM assist agencies in measuring the effectiveness of specific
incentives such as student loan repayments by including questions about
them in the Federal Human Capital Survey. While this may be an effective
method to collect data on program results, we did not prescribe the
measures of effectiveness OPM should use but recommended that it work
jointly with agencies and the CHCO Council to design these measures. These
four agencies, as well as several of the remaining agencies, also provided
technical comments, which we have incorporated as appropriate.
4The CHCO Council, headed by the Director of OPM, is responsible for
advising and coordinating agencies' efforts concerning modernization of
their human resources systems, improvement of the quality of human
resources information, and legislation on human resources operations and
organizations.
Background In 1989, the National Commission on the Public Service found
that the federal government experienced difficulties in recruiting and
retaining a quality workforce.5 The commission recommended that a student
loan forgiveness program be established, and the SLR program was proposed
in response to that recommendation. The reasons underlying enactment of
the federal SLR program continue today and include the impending
retirements of large numbers of federal workers and the difficulty, at
times, in attracting the right individuals to public service to help fill
the gaps. Today's college graduates are entering the workforce with even
more substantial education loans than in 1989, and studies indicate that
educational debt prevents many graduates from choosing employers in which
they are interested but that provide lower salaries. A 2002 Congressional
Budget Office study concluded that federal employees in selected
professional and administrative occupations tend to hold jobs that paid
less than comparable jobs in the private sector. The report stated that
the jobs that show the greatest pay disadvantage for federal workers make
up an increasing share of federal employment.6
The provisions of the federal student loan repayment program legislation
authorize student loan repayments as recruitment or retention incentives
for highly qualified federal job candidates or current employees. In
retention situations, however, the SLR program may be used only when an
employee is likely to leave for employment outside the federal government,
not to another federal agency. As mentioned previously, agencies are
authorized to provide an employee with a maximum repayment amount of
$10,000 per calendar year up to a total of $60,000, with the payments
included in gross income for both income and employment tax purposes. An
employee who separates voluntarily from the agency, who does not maintain
an acceptable level of performance, or who violates any of the conditions
of the service agreement becomes ineligible to continue to receive the
benefit and must reimburse the agency for the total amount of any
repayment benefits received. Under the law, student loans made, insured,
or guaranteed under the Higher Education Act of 1965 or health education
assistance loans made or insured under the Public Health
5The National Commission on the Public Service, Leadership for America;
Rebuilding the
Public Service, Task Force Reports to the National Commission on the
Public Service
(Washington, D.C.: 1989).
6Congressional Budget Office, Measuring Differences between Federal and
Private Pay (Washington, D.C.: November 2002).
Service Act are eligible for repayment. The SLR program legislation covers
executive and select legislative branch agencies and government
corporations such as the Pension Benefit Guaranty Corporation.7
Authorizing legislation also requires OPM to annually report to Congress
on agency program use. According to OPM, the Department of Health and
Human Services was the only agency to make a student loan repayment in
fiscal year 2001. More agencies began using the program in fiscal year
2002, with 16 of them reporting to OPM that they had repaid some
employees' student loans. Participation increased again in fiscal year
2003 with 24 agencies distributing more than $9.18 million among a total
of 2,077 recipients. During fiscal year 2004, 28 agencies provided 2,945
employees with a total of more than $16.42 million in student loan
repayments. Compared to fiscal year 2003, this represents a 42 percent
increase in the number of employees receiving the benefit and a 79 percent
increase in the agencies' overall financial investment in the program. As
figure 1 shows, five agencies invested the most funding on student loan
repayments in fiscal year 2004. These five agencies also made the greatest
number of loan repayments.
75 U.S.C. S: 5379(a)(1)(A).
Figure 1: Fiscal Year 2004 Benefits Provided by Users of the Student Loan
Repayment Program
Dollars in millions
4.0
3.611
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
DOS DOD SEC DOJ GAO All other Agency agencies
Source: OPM data.
As with other human capital flexibilities, Congress has directed that
agencies use the incentive strategically; therefore, some agencies may not
need to make large numbers of student loan repayments to use the program
effectively, or need to use the program at all to manage their workforces.
GAO is one of the top five agencies accounting for most of the student
loan repayments made in fiscal year 2004. GAO implemented its SLR program
in fiscal year 2002 for employees who indicated interest and were willing
to make a 3-year commitment to stay with the agency. The objective of the
program is to facilitate the recruitment and retention of highly qualified
employees by (1) providing an incentive for selected candidates to accept
a GAO position that may otherwise be difficult to fill and (2) retaining
highly competent employees with knowledge or skills critical to GAO. At
the current time, GAO's program is used mostly to retain top talent. The
goal is to retain employees longer than 3 years, after which they are more
likely to consider a longer-term career at GAO. The agency focuses on
retaining recently hired staff because of the considerable time and effort
expended on selecting these employees and the substantial amount of money
required to train new hires who will replace retiring employees. The
program's operating plan specifies groups or categories of employees who
will be considered for student loan repayment for retention purposes based
on job series. Analysts and financial auditors, for example, generally
received the same amount of loan repayment, $5,000 in fiscal year 2004.
Employees in often hard-to-fill job series-such as economists and
attorneys-are considered for GAO's maximum loan repayment, $6,000 in
fiscal year 2004, on a case-by-case basis. To help measure the
effectiveness of its program, GAO distributed a survey to program
recipients in 2004. More than 50 percent of respondents confirmed that the
program had some influence over their decision to stay with GAO.
Pending legislation in the House of Representatives and the Senate would
exclude student loan repayments from gross income for federal tax
purposes. The Generating Opportunity by Forgiving Educational Debt for
Service bill would, in effect, increase the amount of the student loan
repayment benefit by relieving federal employees of the obligation to pay
income tax on the repayments their federal agencies have provided them.8
Those in favor of eliminating the tax argue that, with the current
program, the federal government is taxing its own ability to recruit and
retain employees. They also note that loan repayments made by educational
institutions or nonprofit organizations to encourage public service are
not counted as taxable income for the recipient.
Legislation was also introduced but not passed in the last Congress to
authorize a separate SLR program for federal employees in national
security positions. The Homeland Security Federal Workforce Act would
grant authority to the heads of selected agencies to establish a pilot SLR
program to recruit or retain highly qualified professional personnel
employed by their agencies in national security positions.9 This pilot
program, which would remain in effect for 8 years, would be limited to
agencies with national security responsibilities, namely national security
positions in the Departments of Defense, Energy, Homeland Security,
Justice, State, and the Treasury; the Central Intelligence Agency; and the
National Security Agency. The proposed SLR program is similar to the
existing one except that the legislation will authorize the appropriation
of funding specifically for the loan repayments. However, actual funding
of the loan repayments may be at the discretion of Congress via annual
8H.R. 1765, introduced on April 21, 2005, Generating Opportunity by
Forgiving Educational Debt for Service Act of 2005. S. 1255, introduced on
June 16, 2005.
9S. 589, introduced on March 11, 2003, Homeland Security Federal Workforce
Act.
appropriations acts. The legislation also requires that, no later than 4
years after its enactment, the OPM Director report to the appropriate
congressional committees on the status of the programs established and the
success of such programs in recruiting and retaining employees for
national security positions.
Selected Agencies' Use of the SLR Program Largely Depended on Their Unique
Recruitment and Retention Needs
DOS, DOJ, and SEC used the SLR program more extensively and primarily as a
broad-based tool to retain more recently hired employees in specific
positions that require knowledge or skills critical to the agency. GSA,
DOE, and DOT, on the other hand, used it in on a case-by-case basis as an
incentive to either recruit selected highly qualified candidates or retain
employees with skills critical to the agency. Commerce recently started to
offer repayments, also on a case-by-case basis, for recruitment and
retention. At this time, SSA, EEOC, and SBA were satisfied with their
efforts using other recruitment and retention tools and have not needed to
use the program.
DOS, DOJ, and SEC Use the Program Primarily to Retain Employees
DOS heads the list of federal agencies in the number of employees
participating in, and funds expended on, student loan repayments. The
department began using the program in fiscal year 2002 and reported making
loan repayments for 734 employees in fiscal year 2004. Repayments totaled
approximately $3.6 million. Officials from DOS noted that many of their
recently hired employees have student loan debts. For example, most of the
Presidential Management Fellows entering the department have eligible
student debt, which automatically qualifies them for the benefit. DOS uses
its program primarily to recruit current employees for foreign service
hardship posts, and also to retain employees in civil service positions
that are difficult to fill. The department has determined that offering
the program to candidates who accept or remain in positions at the most
difficult posts, such as those experiencing hazardous political or
health-related conditions, helps attract candidates to seek these
assignments or encourages employees to remain in them. Employees, or
potential employees, in certain historically difficult-to-fill civil
service occupational series may also qualify for the program. These
positions range from those requiring historians with a Ph.D. in history to
passport and visa examiners working throughout the country. While DOS
primarily uses the program for retention, its recruiters also report that
the SLR program is of great interest on college campuses across the
country, thereby indirectly helping recruiting. The department noted that
student
loan repayments are only one of several incentives and benefits available
to those considering a State Department career, but that the repayments
are an important part of its overall benefits package.
While DOJ made only one student loan repayment in fiscal year 2002, it
began using the program extensively in fiscal year 2003. In fiscal year
2004, the department reported making 331 repayments totaling approximately
$1.9 million, with the majority of payments made on behalf of attorneys,
special agents, and intelligence analysts. DOJ's use of the SLR program is
unique in that there is a centrally administered departmentwide program
for attorneys, as well as unit-run programs for a variety of other
positions. According to the attorney SLR program officials, DOJ uses the
program mostly to retain experienced attorneys. About 10 percent of the
loan repayments is being used for recruitment, including qualifying new
attorneys entering the department under the Honors Program.10 An attorney
SLR program manager reported that DOJ advertises the program heavily to
law students because it perceives the program to be an effective indirect
recruiting tool.
In terms of DOJ's unit-run programs, 12 of its 16 components reported
using the SLR program in fiscal year 2004, according to a DOJ human
capital official. For example, the Bureau of Prisons found the program
helped to retain highly skilled and experienced employees who would
consider seeking employment in the private sector, as well as attract
candidates who normally would not be interested in working with the agency
due to the salary level.
SEC, which began using the SLR program in the last half of fiscal year
2003, reported making 384 student loan repayments totaling approximately
$3.3 million in fiscal year 2004. Most of these repayments were made on
behalf of attorneys. According to SEC officials, the agency generally does
not have trouble attracting job candidates, but it does have a relatively
high attrition rate. An official remarked that the agency has a highly
skilled workforce comprised largely of securities attorneys, accountants,
and examiners, many of whom are highly sought after by the private sector,
and it historically has been a challenge for SEC to retain them. SEC,
therefore, uses the program only for retention. SEC officials said that
thus far they have had only a few employees leave before the 3-year
service agreement
10The Attorney General's Honors Program is DOJ's recruitment program for
entry-level attorneys and is the only way DOJ hires graduating law
students.
was completed. In addition, they reported that a large percentage of
employees are reapplying for benefits, indicating their willingness to
stay with the agency long enough to reduce or pay off their student loan
debt. Although the program is used for retention, SEC advertises in its
recruitment efforts that the benefit is available after 1 year of service,
making it an indirect recruiting incentive. Officials noted that SEC also
uses other recruitment and retention incentives, but uses those incentives
on a strategic basis to recruit and retain highly qualified employees with
qualifications critical to SEC's mission.
GSA, DOE, and DOT Target Repayments to Both Recruit and Retain Specific
Individuals for Certain Occupations; Commerce Also Intends to Use Its
Program for These Reasons
GSA units generally determine the use of incentive pay, including student
loan repayments, on a case-by-case basis. GSA guidance on the program
states that student loan repayments are not an entitlement, but rather a
recruitment and retention incentive that may be used optionally by a
manager who would not otherwise be able to recruit or retain a highly
qualified employee with qualifications critical to GSA missions. An
official noted that SLR authorizations are based on the particular
recruitment or retention situation, whether the position is a critical
need or difficult to fill, and the ability of the unit to fund the
repayments. In fiscal year 2004, GSA repaid 17 loans at a total cost of
approximately $93,000. The agency reported that it uses the SLR program
for both recruitment and retention, although most of the repayments in
fiscal year 2004 were for recruitment. GSA plans to increase its use of
the program only if the number of critical vacancies increases and the
number of available candidates decreases.
DOE uses the SLR program on a case-by-case basis determined by factors
such as labor market conditions that may affect recruiting efforts. Each
case must be justified by the recommending official, concurred with by the
respective financial and human capital staffs, and approved by a top
manager authorized to grant the incentive. DOE reported spending
approximately $87,000 on 36 repayments in fiscal year 2004 and using the
program almost equally for recruitment and retention. Student loan
repayments were offered to employees in a variety of different
occupations, such as engineering and financial analysis. According to a
DOE official, program use is expected to increase in incremental amounts
annually for recruiting entry-level engineers and scientists, but not for
retention purposes. Because DOE views the SLR program as more expensive
than other incentives, managers are asked to be selective about their SLR
offers. DOE has developed recruitment and retention worksheets to help
managers determine the cost of a loan repayment
compared to using other incentives, so they can evaluate the most
strategic use of resources.
DOT began using the program in fiscal year 2004 by making six loan
repayments totaling approximately $53,000. Three of these were made on
behalf of Presidential Management Fellows. The agency made the repayments
for both recruitment and retention purposes. DOT officials speculated that
the program will play a role in future hiring, as it appears to be a more
valuable tool for entry-level employees who are more likely to have
student loans. Agency officials also said that since DOT views the program
as an expensive benefit and because the agency is now operating with a
lower budget, they will use the program sparingly. Since repayment will be
a targeted benefit, a human capital official noted that it probably will
not be featured in the standard DOT recruitment materials or brochures.
Commerce is planning to use the program to recruit and retain specific
individuals in mission-critical occupations, such as statisticians. It
recently reported offering its first student loan repayment to an
applicant who turned it down because of the length of the service
agreement. Commerce intends to use the SLR program for both retention and
recruitment, depending on the needs of its units. For example, the
National Institute of Standards and Technology, which needs technical
staff, will most likely use it for recruitment, while the Office of
General Counsel, with a high turnover rate for attorneys, will likely use
it for retention.
SSA, EEOC, and SBA Reported They Have No Need to Implement the SLR Program
at This Time
According to SSA officials, the agency has not needed the SLR program to
recruit or retain staff. The agency meets its hiring needs through a
national recruiting program and generally does not focus its recruitment
efforts on individuals with highly technical or unique qualifications.
Therefore, SSA is able to meet its hiring targets without extensive use of
special incentives. When needed, officials said the agency has
successfully used recruitment bonuses, retention allowances, relocation
bonuses, and above-minimum salaries to recruit and retain highly qualified
individuals for hard-to-fill positions. The officials believed that these
other incentives provided recipients with greater flexibility to use their
bonuses or allowances to meet their own needs, whether to repay student
loans or for other reasons. The officials acknowledged, however, that if
SSA cannot continue to successfully recruit or retain employees through
its national recruiting program or the use of other flexibilities, they
would reconsider their decision not to use the SLR program.
According to agency officials, EEOC does not use the SLR program because
of fiscal constraints and because the organization has qualities that
attract and retain employees without the program. In addition, the agency
has not used other recruitment and retention incentives recently. An EEOC
human capital official noted that the agency has lost 350 employees in the
last 3 and a half years and will likely lose more employees in the near
future. Rather than having to use monetary recruitment or retention
incentives, agency officials remarked that individuals are drawn to work
at EEOC primarily because of the mission it pursues. On the basis of
anecdotal evidence, they also believe that employees stay with EEOC to a
large degree because of the positive work-life balance the agency offers
them.
According to SBA officials, the agency is doing very limited hiring and
rarely needs to offer recruitment and retention incentives. SBA officials
explained that the agency recruited 156 employees during fiscal year 2004
and was able to successfully recruit the desired talent without using the
incentive. The officials further stated they were not aware of candidates
not accepting a position at SBA because the agency lacked a SLR program.
As SBA becomes more targeted in its recruitment activities, agency
officials remarked that they will consider using the SLR program along
with other recruitment flexibilities.
Agencies Tailored SLR To address needs unique to their organizations,
agencies customized
aspects of their SLR programs. Table 1 illustrates some
implementationProgram differences among our selected agencies.
Administration to Meet
Their Unique Needs
Table 1: Summary of Selected Agencies' SLR Program Features
Agency Program features
U.S. Department of State o Centrally administered and centrally funded
o Participation criteria post or position based
o Self-nominating participation
o Annual loan repayments generally $4,700
o Multiple application periods annually
U.S. Department of Justice
o Centrally administered departmentwide attorney SLR program and separate
unit-run programs
o Self-nominating attorney program participation; manager-recommended
unit-run participation
o Attorney program requires $10,000 minimum loan debt
o Attorney program gives the most support to lowest salaried
participants-up to $6,000 annually
o Higher salaried attorneys receive only matching loan repayments
o Attorney program selections by administrative panel U.S. Securities and
Exchange o Centrally administered and centrally funded
Commission o Self-nominating or manager-recommended participation
o One-year qualifying length of service required for program
participation
o 75 percent of fiscal year 2004 repayments were $10,000
o Additional year of service required for each renewal
U.S. General Services o Decentralized administration and unit-based
funding
Administration o Manager-nominated participation on a case-by-case basis
o Fiscal year 2004 loan repayments were generally $6,000
U.S. Department of Energy
o Decentralized administration and unit-based funding
o Manager-nominated participation on a case-by-case basis
o Repayment amounts vary widely-maximum of approximately $6,000 annually
o Service agreements between units do not necessarily transfer
o Additional years of service not always required for renewals
o Current students also eligible to participate U.S. Department of o
Decentralized administration and unit-based funding
Transportation o Manager-nominated participation on a case-by-case basis
o Fiscal year 2004 repayments averaged $9,000
o Recipients can transfer between units without breaking the service
agreement
Source: GAO presentation.
Agencies Operated Their Programs Differently
Agencies centralized SLR program operations at the department level to
coordinate departmentwide needs or decentralized operations to their
individual units to offer them needed flexibility. The agencies operating
their programs centrally used the SLR program primarily as a broad-based
retention tool, while the agencies running decentralized programs used
student loan repayments on a case-by-case basis. DOS, for example, has a
centrally operated and funded SLR program that serves the specific
recruitment and retention needs of all units within the department, such
as those of the Bureau of Consular Affairs. In contrast, DOJ runs both
centralized and decentralized programs. For example, the DOJ attorney SLR
program is centrally administered, although as of fiscal year 2004, the
recipient's unit agency had to bear the costs of the repayments. Starting
in fiscal year 2005, almost 30 percent of the program costs are being paid
centrally with the balance coming from the individual DOJ units that
participate. DOJ units offering repayments to employees in a wide variety
of positions operate and fund these programs. GSA, DOE, and DOT have
decentralized programs. Managers in individual units nominate specific
candidates or employees for participation in the program, and the units
provide the funding for the loan repayments. DOE, for example, allows its
units to implement their own programs, primarily because they have diverse
needs, including different geographic labor markets. The National Nuclear
Security Administration, an agency within DOE, issues its own human
capital program requirements and guidelines, consistent with overall
departmental human capital policy, and administers its own SLR program at
its various sites and locations across the country.
Agencies also varied the amount of the loan repayment, depending on the
results they needed to achieve. For example, to make the benefit
meaningful to its employees, SEC has repaid the maximum amount allowable
of $10,000, unless the loan balance is less than that amount. DOJ, for its
attorney SLR program, offers a maximum amount of $6,000 annually to
attorneys with salaries below $74,000 to attract a broad base of
individuals who otherwise may seek employment in the private sector. For
attorneys with higher salaries, DOJ matches the recipient's own annual
repayment amount up to a maximum of $6,000. A DOS official said the
department's goal is to offer meaningful loan repayments to the largest
number of individuals possible, so DOS has repaid the same amount for all
eligible employees, which for the past 3 years has been $4,700. If a
recipient's outstanding loan balance is less, DOS repays the lower amount.
Agencies Shape Their Participation and Selection Criteria to Address Their
Unique Needs
Agencies varied the length of time employees were required to wait before
becoming eligible for the SLR program depending on results they were
trying to achieve. For example, the DOJ attorney SLR program has no
longevity requirements. Attorneys may apply during the first application
period following their employment. Officials are concerned that they could
miss opportunities to hire highly qualified law students with large
student loan debts, who may be unable to accept DOJ's entry-level
positions because of economic concerns. Officials said the application
process is self-nominating, and an attorney must have a qualifying student
loan debt base of at least $10,000 to be eligible for the program. SEC
officials said the agency has few problems attracting employees but
historically has had challenges retaining them, often because SEC
experience makes employees very marketable in the private sector. The
agency has tailored its program participation criteria to address this
need by requiring employees to complete at least 1 year of employment with
SEC before they are eligible for the program. With the 3-year service
agreement, SEC then has the potential to retain employees for at least 4
years, which also helps to ensure a greater return from recruitment and
training costs.
Agency Officials Suggested Ways to Make the SLR Program More Efficient and
Effective, but Agencies Do Not Yet Have Processes to Assess the Long-term
Impact of Their Programs
Officials from agencies using the program agreed that certain changes,
such as more automation of the application and loan repayment processes
and consolidation of some other program activities, would help to improve
the program's administration. Several officials also suggested ways they
believed would increase the program's effectiveness by making it more
attractive to candidates and employees, such as reducing the length of the
service agreement. As for assessing the results of their programs,
agencies did not yet have processes in place to gauge long-term effects on
their recruitment and retention efforts. Officials from agencies with SLR
programs did note several indicators they plan to use, and suggested that
anecdotal evidence indicates employees value the SLR program. They stated
that since the program is relatively new, they did not yet have enough
data to track long-range statistical trends that would help them measure
program results. Nevertheless, it will be important for these agencies to
establish, up front, goals for their programs, a recruitment and retention
baseline from which they can monitor changes that result from the program,
and the data they will collect to measure these changes in order to assess
long-term effects.
Most Agency Officials Agreed That the Program Is Cumbersome to Administer
and Suggested Ways It Could Be More Efficient
While the agencies using the program believe it is a useful tool,
officials characterized it as cumbersome to administer. Human capital
offices generally administer the program and are performing some tasks and
activities that are uncharacteristic of their function and unique to the
program. Program administrators, for example, must interact with a large
number of lending institutions, verify loans, and, at times, act as
collection agencies. An official from DOS remarked that, aside from the
Department of Education, which administers student loans, there are few
federal workers who have knowledge of the student loan business.
Therefore, agency staff must develop expertise and establish and modify
procedures to operate the program. The official noted that for the 734 DOS
employees who received the loan repayments in fiscal year 2004, the
department made almost 800 individual transactions to 55 different lending
institutions. The agencies were either not tracking administrative costs
associated with operating the program or were just starting to track them.
The agency officials said they were absorbing the time and costs
associated with the program into their regular operations.
Agency officials reported that processing loan repayments involves many
steps that can include time-consuming complications. SEC officials, for
example, said their entire administrative process, prior to actual payment
distribution to the various lenders, can take more than 3 months. This
process involves steps such as verifying that the employee has a loan
eligible for repayment, verifying the amount of the outstanding loan
balance, and eventually, ensuring that the loan repayment is applied to
the correct outstanding loan. SEC officials also noted that its payroll
provider cannot make electronic transfers of loan repayments, requiring
them to issue paper checks that are burdensome and sometimes applied to
the wrong account. Furthermore, the Department of Education, one of the
largest student loan lenders through its Direct Loan Program, is unable to
accept electronic transfers of funds from agencies for loan repayments.
According to an Education official, they are looking at ways to collect
direct loan repayments electronically. Other complications included
processing repayments for employees who have loans with multiple lenders,
distinguishing private loans that are not eligible for the program from
federally guaranteed student loans, and having recipients supply incorrect
addresses for their lenders. In addition, officials said that
administrative problems with the various payroll providers, who process
the loan payments, were a concern. A DOT official, for example, said they
were using a payroll system that was being phased out through OPM's
e-payroll initiative.11 The official remarked that it was costly for DOT
to incorporate the loan repayments into this outdated payroll system,
causing the agency to experience delays in implementing the program. An
official at DOE said its payroll provider had been unable to provide
biweekly loan repayment options until recently.
Officials from most of the agencies using the program suggested ways to
help administer the program more efficiently, primarily through more
automation and consolidation of activities.
o SEC human capital officials said that automation of SLR program
activities, such as the ability to make electronic fund transfers for all
repayments, would make the process far easier. They also suggested
implementing an electronic signature to help expedite the SLR application
process and recommended that some of the responsibility for making the
program operate more smoothly be shifted to SLR recipients. For example,
SEC requires recipients to provide verification to the human capital
office that their loan repayments were applied correctly. In addition, SEC
officials estimated that about 1 month of their processing time could
possibly be eliminated if each of the various lenders had one designated
representative to work with federal agencies on resolving loan repayment
problems.
o A program manager at DOS suggested creating a central database of
student loans and student loan lenders to assist with processing steps
such as verifying the correct names and mailing addresses.
o A human capital official at DOE said OPM should require payroll service
providers to use processes for student loan repayments similar to those
used for other incentives, such as recruitment bonuses.
o An official at DOT indicated that alternative approaches could be
explored to increase the cost effectiveness of administrative functions
for agencies that use the program extensively. For example, one approach
may be to create shared services, similar to the approach used
11The e-payroll initiative is one of OPM's five e-government initiatives
aimed at changing the way human capital functions and services are carried
out in the federal government. OPM is leading the effort to collapse the
operations of 22 executive branch agencies that currently run payroll
systems into what will eventually only be two systems.
to provide payroll services, wherein a small number of agencies service
multiple agencies.
o Finally, agency officials suggested that more sharing of best practices
with other federal agencies experiencing similar challenges would help
with implementing the SLR program. DOS and DOJ officials said they
consulted with each other about whether to centralize or decentralize
their programs and shared program document templates. This type of
collaboration could help agencies beginning to implement the program avoid
some of the growing pains experienced by the current user agencies.
DOJ's attorney SLR program, in particular, found a number of ways to
increase its program's efficiency. For example, DOJ maintains a Web page
that is updated regularly to make the SLR process transparent to
applicants and inform all eligible attorneys about the program. The
department credited the Web page with reducing the need to respond to
questions about the program. In addition, DOJ standardized the application
process for the attorney SLR benefit by posting request, validation, and
review forms on its Web site in form-fillable versions. The department
also credited a process that requires applicants to submit a valid, signed
service agreement at the time of application for expediting the repayment
process. The presigned service agreement includes a release authorizing
loan holders to discharge financial information to the department for loan
validation at the same time it eliminates the need for the department to
secure service agreements after selections are made.12 DOJ's attorney SLR
program also reported learning it could reduce administrative burdens by
only validating loan information for the attorneys actually selected to
receive SLR benefits.
While agency officials could suggest ways to improve the program's
administration, individual agencies may find it difficult to design some
of the program improvements for themselves, and some of these changes
could be more beneficial when implemented governmentwide. For example, it
may be more effective to automate portions of the repayment process for
all user agencies, rather than have each agency individually pursue this.
Likewise, the President's Management Agenda calls for the federal
government to "support projects that offer performance gains that
12The service agreement contains a clause stipulating that it is void if
the attorney does not receive the benefit.
transcend traditional agency boundaries." Sharing services across agencies
for specific SLR administrative activities may present an opportunity for
program managers to purchase human capital services from specialized
providers, such as they currently do for payroll services, thereby
reducing costs through economies of scale and freeing their staff to focus
on more strategic rather than administrative activities. In prior work, we
identified similar opportunities for agencies to use alternative service
delivery (ASD) for a range of human capital activities, and recommended
that OPM work with the CHCO Council to promote the innovative use of
ASD.13 OPM, in written comments, agreed with this role.
Agency Officials Also Suggested Ways to Make the Program More Effective
Agency officials identified several program characteristics they believe
impede the program. Likewise, OPM's fiscal year 2004 report to Congress on
the SLR program noted common impediments. Of the barriers agencies
reported to both GAO and OPM, the most frequently cited included
difficulty in funding the program, the tax liability associated with the
repayments, and the length of the required service agreement. A DOE human
capital official, for example, remarked that factors, such as detailing
its employees to Iraq, have created more competing budget needs within
units; in one case, a unit wanted to use the incentive but determined it
could not commit to SLR payments because of the cost of overtime premiums
for detailed employees. In addition, on the basis of comments they have
received from program recipients and candidates who decided not to
participate in the program, officials from several of the agencies we
reviewed remarked that eliminating the tax liability and reducing or
prorating the service agreement could make the program more attractive.
For example, officials from four agencies felt that eliminating the tax
liability on loan repayments would make the program more attractive to
candidates and recipients, and therefore, more effective. Currently, after
withholding income and payroll taxes, the actual repayment amount applied
to the employee's loan is only about 62 percent of the total payment.
According to officials, this diminishes the program's value and makes it a
less attractive incentive. Additionally, because the repayment is taxable,
an official noted they can never completely pay off a recipient's loan. A
DOS official also remarked that many of the questions they answer about
the program concern the tax liability issue. As mentioned previously,
13GAO, Human Capital: Selected Agencies' Use of Alternative Service
Delivery Options for Human Capital Activities, GAO-04-679 (Washington,
D.C.: June 25, 2004).
legislation is pending in Congress that would exclude loan repayments from
gross income for federal tax purposes. In testimony on a previous draft of
this legislation, we stated that the legislation had merit, would help to
further leverage existing SLR program dollars, and would help agencies in
their efforts to attract and retain top talent.14 The loss of revenue from
this change, however, would need to be balanced against other pressing
federal budget needs.
Agency officials had varying views about the service agreements. For
example, DOE officials suggested that the service period should be
comparable to other recruitment and retention incentives. OPM regulations
state that recruitment bonuses, for instance, require a minimum service
period of 6 months. The DOE officials suggested that when the SLR benefit
is used for recruitment, a minimum of a 6-month commitment would also be
appropriate. Along the same lines, an SEC official remarked that employees
felt the repayment should be prorated if they left the agency before their
3-year commitment is fulfilled. On the other hand, a DOJ official not in
favor of reducing the length of the service agreement thought the 3-year
agreement retained employees for an appropriate time and that enough
flexibility in waiving the agreement was present to avoid situations that
might be unfair to some recipients.
Agency Officials Say They Plan to Assess the Program's Impact but Need More
Data to Determine Long-term Effects
Agencies using the program had not yet established processes to measure
the extent to which the SLR program was helping them to meet their
recruitment and retention needs. Agencies need such measurements to help
them determine if the program is worth the investment compared to other
available human capital incentives, such as recruitment and retention
bonuses. Agencies are tracking the extent to which employees comply with,
or do not complete, the terms of their service agreements. Several
officials remarked that almost all employees are completing their terms of
service, indicating the program is helping retention, at least in the
short term.
Agency officials did report that based on anecdotal evidence, they believe
the program helps to make their agency more attractive to potential job
candidates and helps them retain high quality employees. A GSA official
said that, although it has not surveyed employees formally, informal
14GAO, Human Capital: Building on the Current Momentum to Address
High-Risk Issues, GAO-03-637T (Washington, D.C.: Apr. 8, 2003).
feedback from them about the program is positive, and GSA managers using
the program report being able to fill their positions with candidates who
have the qualifications desired. An SEC official noted that the program
appears to be attractive to prospective hires because the agency receives
numerous inquiries about how the program works. DOS recruiters also report
that one of the questions frequently asked by those considering federal
service is the level of the department's assistance in paying off student
loans.
When asked about ways to measure the program's long-term effects,
officials from several agencies suggested tracking the attrition rates of
program recipients as one measure. However, the officials noted that to do
so, they would need to monitor attrition rates for at least 3 years, since
recipients sign a 3-year service agreement and relatively few leave during
this time. Monitoring the number of employees who resign after the agency
repaid their loans could indicate whether recipients were working for the
agency just long enough to have their student loans repaid. Fiscal year
2006 will be the first year a substantial cohort of federal employees
would have completed the minimum 3-year service requirement.15 In
addition, a DOJ official believed that reviewing the attrition rates and
career paths of its Honors Attorneys participating in the program would be
helpful, since these are generally highly sought-after individuals. Thus,
if DOJ's attrition rates decline, this could indicate that the SLR program
is having a positive impact. DOJ is also adding questions to its honors
program application about awareness of the attorney SLR program and
whether it influenced the applicant's decision to apply.
Recognizing that agencies in some cases will need multiyear data to
measure the SLR program's long-term effects, it is nevertheless important
that agencies using the program decide on and put in place program goals
and methods to track indicators of success when they implement the
program. This will help them to establish an initial data baseline they
can use to track changes as a result of the program, determine what data
they should collect over time, and begin to collect that data. In
addition, agencies would not have to wait to implement other options for
monitoring program effects. For example, several agency officials noted
that they will use employee survey data or responses from exit interviews
to gauge how
15An individual employee's cycle will vary depending on the number of
years the employee receives student loan repayments and the service
agreement attached to additional repayments.
much impact the SLR incentive had on employees' decisions to join or stay
with the agency. Agencies could conduct such surveys and collect these
data now or when initiating their programs, and periodically over time, as
an indicator of program results.
We recognize that gauging the program's direct effect on recruitment and
retention trends may be difficult because student loan repayments are not
likely to be the only major factor in an employee's decision to join or
stay with an agency, although the incentive may help to tip the scale in
the agency's favor. Other factors, such as labor market conditions, could
also affect these decisions. In prior work, we have described similar
difficulties federal managers face in developing useful, outcome-oriented
measures of performance and proposed that agencies collaborate more to
develop strategies to identify performance indicators and measure
contributions to specific outcomes.16 We also recognize that OPM and the
CHCO Council could help to facilitate this coordination.
OPM and the CHCO Council Have an Important Role in Assisting Agencies with
the SLR Program
As the President's agent and adviser for human capital activities, OPM's
overall goal is to aid federal agencies in adopting human resources
management systems that improve their ability to build successful,
highperforming organizations. Likewise, legislation creating the CHCO
Council highlighted the importance of agencies sharing information and
coordinating their human capital activities, and we have reported that the
CHCO Council could help facilitate such coordination. OPM has taken a
number of steps to provide agencies with information and guidance on the
SLR program. For example, OPM posts informational materials on its Web
site including a fact sheet, applicable laws and regulations, questions
and answers, sample agency plans, and OPM's annual reports to Congress
about the SLR program. In its fiscal year 2004 report to Congress, OPM
reported more extensively on agencies' experiences with implementing the
program than it had in previous years. For instance, the report included
information on the barriers agencies faced in implementing the program and
whether agencies were using specific metrics for measuring program
effectiveness. In September 2004, OPM held a focus group to explore
whether the agency is a good source of program information and what types
of problems agencies are typically encountering with the program.
According to OPM, the focus group included representatives from several
16See for example, GAO, Results-Oriented Government: GPRA Has Established
a Solid Foundation for Achieving Greater Results, GAO-04-38 (Washington,
D.C.: Mar. 10, 2004).
agencies using the SLR program. These representatives shared successes
with the SLR program, obstacles they faced in using it, and suggestions
for program improvements.
Agency officials' comments about OPM's assistance were mixed. DOS
officials said they consulted with OPM in the early stages of their
implementation process, but DOJ officials reported they had not requested
assistance from OPM. SEC officials noted that while their contact with OPM
had been limited, they would have liked more concrete answers to their
detailed questions involving program implementation. DOT officials see
themselves as having primarily a reporting relationship with OPM. A DOE
official commented that OPM has been a strong advocate of the SLR program,
providing the guidance the agency needed to implement it. Nevertheless, a
number of these officials suggested that more coordination across the
agencies using the program would be helpful, and OPM may be in the best
position to do this.
As we previously highlighted, agency officials pointed to the need to
partner with other agencies to find more efficient ways to implement their
SLR programs. They said some improvements would involve sharing
information more readily, such as ways to tailor the program to fit their
particular needs, as well as easing administrative burdens associated with
the program. Given the range and cumbersome nature of the activities
involved in operating the program, officials said they could use help in
identifying improvements to the program. For example, OPM, working with
the CHCO Council, could sponsor additional forums, an interagency working
group, or even training sessions, to encourage information sharing. One
topic for these forums and this collaboration could also be developing
measures of program effectiveness. OPM itself, in its most recent report
to Congress on the SLR program, stated that an agency challenge has been
to determine appropriate measures. By helping agencies address this
challenge, OPM could help to determine if there is a common subset of
measures or indicators that agencies could track and report to OPM to
assess the SLR program's impact governmentwide.
Conclusions Federal agencies have a large degree of discretion in
structuring SLR programs to meet their unique needs, and the SLR program
shows promise as an effective tool for attracting and retaining the talent
needed to sustain the federal workforce. The federal government faces
potential workforce problems now and in the years ahead, including the
fact that its employees are retiring in greater numbers. Therefore,
recruiting and retaining a new
wave of talented individuals, who view the federal government as an
employer of choice, is imperative. To address how best to meet this human
capital challenge, agencies will need to be able to identify and select
the recruitment and retention incentives that are most appropriate and
effective for achieving this goal. In addition, to make the most effective
use of monetary incentives such as the SLR program, streamlined and
efficient administrative processes for implementing such programs need to
be in place, and decision makers need concrete evidence that such programs
are achieving agency and overall federal workforce goals.
OPM, working with the CHCO Council, may be in the best position to help
agencies work together to identify potential SLR program changes and then
determine the most cost-effective ways to implement them. If the program
continues to grow, making it easier to administer will help ensure
agencies make maximum use of available funds to recruit and retain key
talent, so critical in a time of fiscal constraints. Likewise, OPM and the
CHCO Council could build on efforts to date and continue to facilitate
coordination across agencies, in particular helping them to determine what
data to collect and assess as indicators of the program's results. In
addition, OPM may be able to better report to Congress on the impact of
the SLR program governmentwide if it works with the agencies to determine
if there is a subset of common indicators all agencies could annually
track and report to OPM.
Recommendations for Executive Action
Consistent with OPM's ongoing efforts in this regard, we recommend that
the Director of OPM, in conjunction with the CHCO Council, take the
following actions to help improve the SLR program's efficiency and ease of
administration, and to assess results:
o Working with the agencies, determine where program streamlining and
consolidation of agencies' administrative tasks are most feasible and
appropriate, and design ways to implement these program improvements,
especially those that could be implemented governmentwide and the most
cost-effective ways to implement them. Examples of program improvements
that could provide valuable help to agencies and ease the administrative
burden include creating a central database of student loan lender
information and establishing a shared service center arrangement for
student loan repayments.
o Continue and expand on its efforts to provide agencies assistance and
to help facilitate coordination and sharing of leading practices by, for
example, conducting additional forums, sponsoring training sessions, or
using other methods.
o Help agencies determine ways in which they can monitor long-term
program effects on their recruitment and retention needs, such as
determining data to collect and use as indicators of effects. This, in
turn, could provide a consistent set of governmentwide indicators that
would allow OPM to assess, and report to Congress on, the program's
overall results achieved.
In addition, with respect to the selected agencies using the SLR program
most extensively, we recommend the following actions:
o The Secretary of State: Build on current efforts to measure the impact
of DOS's SLR program by determining now what indicators DOS will use to
track program success, what baseline DOS will use to measure resulting
program changes over time, what data DOS needs to begin to collect, and
whether DOS could use periodic surveys to track employee attitudes about
the program as additional indicators of success.
o The United States Attorney General: Build on current efforts to measure
the impact of DOJ's Attorney Student Loan Repayment Program by determining
now what indicators the department will use to track program success, what
baseline DOJ will use to measure resulting program changes over time, what
data DOJ needs to begin to collect, and whether DOJ could use periodic
surveys to track employee attitudes about the program as additional
indicators of success.
o The Chairman of the Securities and Exchange Commission: Build on
current efforts to measure the impact of SEC's SLR program by determining
now what indicators SEC will use to track program success, what baseline
SEC will use to measure resulting program changes over time, what data SEC
needs to begin to collect, and whether SEC could use periodic surveys to
track employee attitudes about the program as additional indicators of
success.
Agency Comments and We provided a draft of this report to the Director of
OPM, the Secretary of State, the Attorney General, the Chairman of SEC,
the Administrator of
Our Evaluation GSA, the Secretary of Energy, the Secretary of
Transportation, the Secretary of Commerce, the Commissioner of SSA, the
Chair of EEOC, and the Administrator of SBA. OPM, DOS, DOJ, and DOE
provided written
comments on the draft report, which are included in appendixes III, IV, V,
and VI respectively. SBA provided a comment on the report via e-mail and
the Director of the Office of Human Resources Management stated, on behalf
of the Secretary of Commerce, that it concurred with the report. SEC, DOT,
SSA, and EEOC provided technical comments, and where appropriate, we have
made changes to the report to reflect all of the agencies' technical
comments. GSA reported that it had no comments on this report.
The following summarizes significant comments provided by the agencies.
o OPM generally agreed with the recommendations and stated that it will
continue its efforts to promote effective human capital strategies and, as
part of these efforts, will work with the CHCO Council to improve the
administration of the SLR program and facilitate the sharing of best
practices to improve program efficiency. OPM also stated that it would
assist the agencies in establishing data requirements for tracking the use
of student loan repayments and noted the agency anticipates a greatly
improved ability to track and measure the success of the SLR program.
o DOS fully supported the recommendations and stated that it looks
forward to working constructively with OPM to identify possible areas of
program consolidation and to share best practices. The department reported
that it is committed to establishing additional program indicators this
year and is aware of the need to measure and track the impact the SLR
program has had on both civil and foreign service recruitment and
retention efforts.
o DOJ did not express an opinion about the report or the recommendations
but stated that the department has already started to develop ways to
measure the impact of the attorney SLR program on attorney retention. DOJ
also emphasized that it will most likely take a number of years of data
collection before it accumulates sufficient data to provide meaningful
statistics.
o DOE stated that the report did not fully describe the efforts of OPM in
assessing program implementation as part of its annual reporting process
to Congress. We added language in the report to more comprehensively
characterize what OPM included in its most recent report. DOE also
suggested that GAO recommend that OPM assist agencies in measuring the
effectiveness of specific student loan repayment, recruitment, and
retention incentives by including questions
in the Federal Human Capital Survey. While this may be a feasible and
effective approach to collecting data on program results, we did not
prescribe the methods OPM should develop or use to measure the
effectiveness of the program, but instead recommended that OPM work
jointly with the agencies and the CHCO Council to devise these means.
o SBA said that the agency will periodically monitor the use of the
program in other agencies through the CHCO Council so that should the need
arise, SBA will be in a position to implement the best aspects of other
agencies' programs.
We are sending copies of this report to other interested congressional
parties, the Director of OPM, the Secretary of State, the Attorney
General, the Chairman of the SEC, and the heads of the other federal
agencies discussed in this report. In addition, we will make copies
available to other interested parties upon request. This report also will
be made available at no charge on GAO's Web site at http://www.gao.gov. If
you or your staff have any questions about this report, please contact me
at (202) 512-6806 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of the report. Other contributors are acknowledged in appendix VII.
Eileen Regen Larence Director, Strategic Issues
Appendix I
Objectives, Scope, and Methodology
The objectives of our review were to identify
o why selected executive branch agencies are using or not using the
student loan repayment (SLR) program,
o how agencies are implementing the SLR program, and
o what results and suggestions agency officials could provide about the
program and how they view the Office of Personnel Management's (OPM) role
in facilitating the program's use.
To address these objectives, we first reviewed and analyzed OPM's annual
reports to Congress on the SLR program1 to obtain governmentwide data on
agencies' use of the program and to help identify our case study agencies.
We also consulted with an official at the Congressional Research Service
(CRS) to discuss its research on the SLR program, and we reviewed CRS's
reports to Congress on student loan repayment for federal employees. We
interviewed officials from the Partnership for Public Service, an
organization with an objective of helping to recruit and retain excellence
in the federal workforce, to hear its views on the program's effectiveness
governmentwide, and officials from GAO's human capital office to get
background information on program implementation.
We then identified a set of federal agencies varying in size and mission
that had established SLR programs, were in the process of establishing
programs, or had chosen not to use them. We selected the Department of
State (DOS), the Department of Justice (DOJ), and the Securities and
Exchange Commission (SEC) as case study agencies because they were among
the largest users of the SLR program in fiscal years 2003 and 2004, while
the General Services Administration (GSA) and the Department of Energy
(DOE) are users of the program but give fewer loan repayments on a
case-by-case basis.
We selected the Department of Transportation (DOT) and the Department of
Commerce (Commerce) because they are large departments that were in
1U.S. Office of Personnel Management, Federal Student Loan Repayment
Program (Washington, D.C.: 2001), Federal Student Loan Repayment Program
(Washington, D.C.: 2002), Federal Student Loan Repayment Program
(Washington, D.C.: 2003), and Federal Student Loan Repayment Program
(Washington, D.C.: 2004).
Appendix I
Objectives, Scope, and Methodology
the process of implementing SLR programs. Since we started our review, DOT
has begun to make loan repayments. The Social Security Administration
(SSA), the Equal Employment Opportunity Commission (EEOC), and the Small
Business Administration (SBA) are among the larger agencies that have
chosen not to use the program. The agency selection process was not
designed to be representative of the use of the SLR program in the federal
government as a whole, but rather to provide illustrative examples of why
and how agencies decided to use the program or chose not to use it.
We interviewed agency officials, such as human capital officers, SLR
program managers, and recruitment directors, from the selected agencies,
and obtained available documentation, such as strategic workforce plans,
recruitment and retention worksheets, SLR implementation plans, and other
documents associated with administering the program. In addition, we met
with officials from OPM to gain a governmentwide perspective of agencies'
SLR programs and with officials from the Department of Education to
discuss the department's Direct Loan Program and its interaction with
agencies making student loan repayments. After reviewing and analyzing
agency responses, we used the supporting documents that some of the
agencies provided to further develop our analysis of their use of the
program. We did not observe or evaluate the operation of the agencies' SLR
programs. To assess the reliability of the number of employees receiving
student loan repayments and SLR repayment cost data, we compared the
OPM-reported data with data we received from the selected agencies. We
determined the data were sufficiently reliable for the purposes of the
report. Our review was conducted in accordance with generally accepted
government auditing standards from July 2004 through June 2005.
Appendix II
Background Information on the Case Study Agencies
This appendix provides background information on our 10 case study
agencies. These agencies varied in their mission and size. The agencies
also face unique recruitment and retention challenges and have different
strategies for addressing them.1
U.S. Department of State (DOS)
DOS is a cabinet-level federal agency responsible for U.S. foreign affairs
and diplomatic initiatives with a mission of creating a more secure,
democratic, and prosperous world for the benefit of the American people
and the international community. Headquartered in Washington, D.C., DOS
has 250 embassies and consulates worldwide with approximately 40,000
employees comprised of foreign service employees, civil service employees,
and foreign service national employees. DOS's recruitment goals include
outreach to a broader segment of the U.S. population by increasing its
presence at business and other professional schools. DOS also recruits top
quality candidates with management skills and language skills in Arabic,
Chinese, and other difficult languages.
U.S. Department of Justice (DOJ)
DOJ is a cabinet-level agency whose mission is to lead foreign and
domestic counterterrorism efforts, enforce federal laws, provide legal
advice to the President and to all other federal agencies, investigate
federal crimes and prosecute violators, operate the federal prison system,
and ensure the civil rights of all Americans. DOJ is headquartered in
Washington, D.C., and has 61 unit agencies nationwide. The department has
approximately 100,000 employees working in occupations such as security
and protection, legal, compliance and enforcement, and information
technology. Currently, DOJ's hiring challenges relate to combating
terrorism. The department places priority on hiring candidates with
foreign language and intelligence analysis expertise and Federal Bureau of
Investigation counterterrorism agents. DOJ is moving to develop and
implement a departmentwide recruitment strategy that focuses on leveraging
resources for common occupations, sharing "best practices" cases on the
Internet, establishing relationships with targeted universities, and
participating in job and career fairs.
1We gathered information on the agencies from our interviews with agency
officials, agency Web sites, and from a 2005 report, Where the Jobs Are:
The Continuing Growth of Federal Job Opportunities, by the Partnership for
Public Service and the National Academy of Public Administration.
Appendix II Background Information on the Case Study Agencies
U.S. Securities and Exchange Commission (SEC)
SEC's mission is to protect investors; maintain fair, orderly, and
efficient markets; and facilitate capital formation. The agency is
headquartered in Washington, D.C., and has 11 regional and district
offices. SEC has approximately 3,800 employees in occupations such as
securities attorneys, accountants, and examiners. The agency has developed
a formal, centralized recruiting program to coordinate its recruiting
efforts for these occupations. The agency also recently created the SEC
Business Associates Program to introduce business professionals to
regulation of the securities markets and the work of the commission.
Individuals with master's degrees in business or other related fields can
apply directly to the program. The program offers 2-year internships
designed to provide onthe-job training for talented individuals, with
eligibility for conversion to a permanent position.
U.S. General Services
Administration (GSA)
GSA's mission is to help federal agencies better serve the public by
offering, at best value, superior workplaces, expert solutions,
acquisition services, and management policies. Headquartered in
Washington, D.C., GSA has regional offices in 11 cities nationwide. The
agency has over 12,000 employees working in information technology,
accounting and budgeting, administrative and program management, and
business and industry. Currently, GSA's workforce is relatively stable,
with an average separation rate of 5 to 6 percent. The agency hires an
average of 900 employees annually. GSA seeks candidates who have strong
customer service, acquisition, information technology, realty, financial
management, and project management skills.
U.S. Department of Energy (DOE)
DOE is a cabinet-level agency whose mission is to advance the national,
economic, and energy security of the United States; promote scientific and
technological innovation in support of that mission; and ensure the
environmental cleanup of the national nuclear weapons complex.
Headquartered in Washington, D.C., DOE has regional power administrations,
laboratories, and technology centers nationwide. The department has
approximately 15,000 employees who work in engineering, physical sciences,
compliance and enforcement, and quality assurance. DOE's recruiting
efforts focus on information technology, foreign affairs, and
intelligence, as well as areas such as physical sciences and project
management. The department's outreach efforts include participation in job
and career fairs, partnerships with minority organizations, and
Appendix II Background Information on the Case Study Agencies
distribution of position vacancy announcements to a variety of minority
and advocacy organizations.
U.S. Department of Transportation (DOT)
DOT is a cabinet-level agency whose mission is to serve the United States
by ensuring a fast, safe, efficient, accessible, and convenient
transportation system that meets national interests and enhances the
quality of life of the American people, today and into the future. The
department is headquartered in Washington, D.C., and has offices
nationwide. DOT has approximately 56,000 employees who work in various
professional fields such as community planning and engineering. The
department is focused on sustaining its current workforce numbers. DOT's
top priority will be to recruit air traffic controllers because roughly
half of the number of current air traffic controllers could retire by
2012. In 2003, DOT created a Corporate Recruitment Workgroup that
coordinates participation at various recruitment conferences and career
fairs. The department has also addressed some of its entry-level hiring
needs by developing a Career Residency Program, a 2-year program with a
goal of broadening the search for talented transportation specialists,
engineers, and information technology professionals.
U.S. Department of Commerce (Commerce)
Commerce is a cabinet-level agency whose mission is to promote economic
growth and security through export growth, sustainable economic
development, and economic information and analysis. Headquartered in
Washington, D.C., Commerce's unit agencies, such as the National Oceanic
and Atmospheric Administration, the Bureau of the Census, and the
International Trade Administration, have offices nationwide. The
department has more than 36,900 employees in a variety of professional
fields. Commerce estimates it could lose one-fifth of its current
workforce to retirement by 2007, and the department plans to focus its
recruitment efforts on a variety of positions such as mathematical
statisticians, chemists, patent examiners, and trade specialists. Commerce
is developing comprehensive college outreach relations and partnerships to
recruit entry-level workers and coordinate and partner with trade
associations, professional societies, and alumni organizations to attract
experienced applicants.
Appendix II Background Information on the Case Study Agencies
U.S. Social Security Administration (SSA)
SSA's mission is to advance the economic security of the nation's people
through compassionate and vigilant leadership in shaping and managing
America's social security programs. Headquartered in Baltimore, Maryland,
SSA has regional and field offices nationwide. The agency has
approximately 65,000 employees in a variety of professional fields
including the social sciences and information technology. Over the past
several years, SSA has aggressively recruited between 3,000 to 4,000
employees, most at the entry level. SSA focuses recruiting efforts on
positions providing direct service to the public, such as claims
representatives as well as information technology professionals. SSA has
created a National Recruitment Coordinator position to develop an
agencywide recruitment strategy and marketing campaign that highlights the
work and impact of the agency. The agency's recruitment and marketing plan
coordinates nationwide and on-campus recruitment. SSA has also recently
launched a new campaign to attract veterans to the agency.
U.S. Equal Employment Opportunity Commission (EEOC)
EEOC's mission is to ensure equality of opportunity by vigorously
enforcing federal laws prohibiting employment discrimination through
investigation, conciliation, litigation, coordination, adjudication,
education, and technical assistance. The agency is headquartered in
Washington, D.C., and has 51 field offices nationwide. EEOC has
approximately 2,500 employees working in various positions such as
attorneys, mediators, and investigators. On the basis of historical
trends, EEOC will separate, due to expected retirements, at least 100
employees annually for the next few years. Depending on the amount of
separation savings, EEOC may have the opportunity to backfill selected
positions based on workload and other factors. In addition, EEOC recently
announced plans to reorganize the agency by reducing levels of management,
opening two new field offices, and strengthening the existing field
offices.
U.S. Small Business SBA's mission is to maintain and strengthen the
nation's economy by aiding, counseling, assisting, and protecting the
interests of small businesses, and
Administration (SBA) by helping families and businesses recover from
national disasters. Headquartered in Washington, D.C., SBA has regional
offices nationwide. The agency has approximately 3,000 employees working
in business analysis, contracting, and financial analysis. Currently, SBA
recruitment is limited to replacing those who leave the agency. The Office
of Human Resources centrally manages recruitment from headquarters and
uses its
Appendix II Background Information on the Case Study Agencies
recruitment Web site to communicate with prospective candidates. SBA
recruitment and outreach efforts also involve using on-line newspapers to
advertise work opportunities.
Appendix III
Comments from the Office of Personnel Management
Appendix III
Comments from the Office of Personnel
Management
Note: Page numbers in the draft report may differ from those in this
report.
Appendix IV
Comments from the Department of State
Appendix IV
Comments from the Department of State
Appendix V
Comments from the Department of Justice
Appendix V
Comments from the Department of Justice
Appendix VI
Comments from the Department of Energy
Note: Page numbers in the draft report may differ from those in this
report.
Appendix VI
Comments from the Department of Energy
Appendix VII
GAO Contact and Staff Acknowledgments
GAO Contact Eileen Larence, (202) 512-6806 or [email protected]
Acknowledgments Trina Lewis, Judith Kordahl, Kyle Adams, Jerome Brown,
Sarah Jaggar, Ashutosh Joshi, Jessica Kemp, Matthew Myatt, and Tara
Stephens also made key contributions to this report.
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