SIC 9411

This category covers government establishments primarily engaged in central coordination, planning, supervision, and administration of funds, policies, intergovernmental activities, statistical reports and data collection, and centralized programs for educational administration. Government scholarship programs are classified here. Included are federal and state education departments, commissions, and similar educational organizations. Schools and local and state school boards operating schools are classified in educational services industries. Human resource training is classified in SIC 8331: Job Training and Vocational Rehabilitation Services, and administration of such programs is classified in SIC 9440: Administration of Social, Human Resource and Income Maintenance Programs.

NAICS Code(s)

923110 (Administration of Educational Programs)

Industry Snapshot

Virtually all of the functions conducted by the educational programs administration industry were connected in one way or another with the U.S. Department of Education, which administers more than 150 educational programs and guidelines for the nation's more than 119,000 schools. Despite carrying a legacy of controversy as old as the U.S. Constitution, the Department of Education grew from a meagerly funded agency charged with a single task—the gathering and dissemination of educational data—into a $56.2 billion federal program with widely varied responsibilities that changed with each presidency. In recent years, much of the debate about the Department's authority and goals has centered on the question of state versus federal rights. So widespread was past resistance to a powerful, centralized department of education, not until 1979 was the century-old office granted cabinet-level status. Even then its survival was far from secure, for in Ronald Reagan's 1980 presidential campaign, he threatened to abolish the Department, saddled as it was with charges of mismanagement and ineffectiveness.

From the early 1980s forward, the education debate was shaped by a national call for fundamental reform, particularly at the elementary and secondary levels, where approximately half of the Department's spending went. The Department of Education only contributed around 6 percent of revenues to schools across the country, whereas the remaining 94 percent was divided between local and state sources. The Department of Education served as both mediator and scapegoat for a debate that showed no signs of ending.

When, where, and how meaningful and widespread reform would take place—and what role the department would assume—were questions that would take years to answer. Private schools, small companies specializing in educational administration, and select public schools were paving the way. In doing so, they heightened public discussion of school choice, school vouchers, and a return to core curricula. President Bill Clinton's Goals 2000: the Educate America Act, criticized for its occasionally vague language, nevertheless gave clarity to the debate in 1994 and authorized the initial release of $647 million for experiments in reform. In 2001 President George W. Bush's No Child Left Behind Act resulted in what some considered to be the most dramatic reform to the educational system in many years. Effective in the 2002-03 school year, the legislation focused on improving student achievement standards and increasing accountability for states, school districts, and individual schools.

During the latter half of the 1990s, statistics from the National Center for Education (part of the National Assessment of Educational Progress) indicated that academic achievement in the nation's schools had steadily turned upward. However, during the early 2000s a host of challenges remained for educators. This was especially true in poverty-stricken schools, where as many as 66 percent of fourth graders did not have adequate reading skills. Schools in poorer districts also continued to struggle with funding inequities, in comparison to schools in more privileged districts. Given these circumstances, it was readily apparent that no single solution would or will continue to turn achievement levels around for all students.

Organization and Structure

The Department of Education includes: the Secretary (OS), Deputy Secretary (ODS), Under Secretary (OUS), Intergovernmental and Interagency Affairs (OIIA), Inspector General (OIG), General Counsel (OGC), Bilingual Education and Minority Languages Affairs (OBEMLA), Human Resources and Administration (OHRA), Legislation and Congressional Affairs (OLCA), Civil Rights (OCR), Elementary and Secondary Education (OBESE), Educational Research and Improvement (OERI), Vocational and Adult Education (OVAE), Special Education and Rehabilitative Services (OSERS), Postsecondary Education (OPE), Chief Financial Officer (CFO), and regional offices.

Although no overall plan or consistent philosophy for the federal government's education programs exists, they are divided into four general categories. The first is promoting equal educational opportunities for students. The Chapter 1 program under Title I of the Elementary and Secondary Education Act of 1965 (ESEA) was the largest federal program promoting equal educational opportunity. The 2002 Department of Education budget for Title I was $9.9 billion for disadvantaged students under the program. This number was expected to increase toward the mid-2000s, reaching $11.4 billion in 2003 and $12.4 billion in 2004. These included low-income children, migrant children with special needs, and children needing help with school readiness. Also included under the category of equal educational opportunity was funding for immigrant education, bilingual education, and Native American education grants.

Programs stimulating education reform are included in the second category of federal education programs. The Chapter 2 program of Title I of ESEA, blocking grants to state and local private and public educational authorities for improving schools, is included in this category. Also included are Safe and Drug-Free Schools and Communities grants, Eisenhower Mathematics and Science Education programs, and the Magnet Schools Assistance Program for desegregating schools.

The third category, general support, covers funding for school districts affected by federal activity, which limits the property tax revenues that go to schools in that area. In recent years, about 16 percent of the nation's school districts received the federally legislated Impact Aid, with funds targeted to districts enrolling children living on Indian lands and children of members of the uniformed services who live on government property. In 2002, the Department of Education devoted approximately $1.1 billion to Impact Aid. Spending was expected to remain about the same in 2003 and then decrease in 2004, falling to $1 billion.

The final category is promoting educational preparation for employment. The focal point in this area is the Carl D. Perkins Vocational and Applied Technology Education Act for programs of instruction in areas such as business math, instructional arts, electronics, and office management. The Adult Education Act supports programs for adults wanting to complete high school education, become literate, or enroll in employment-related training.

Background and Development

Colonial education was controlled by churches and the economically privileged. Consequently, education was viewed as a personal, rather than a public, concern. Children of factory workers, farmers, and other laborers received very limited education, just enough to allow them to fulfill their roles in society. After the colonies won their freedom from England, the primary goal of the Constitution's framers was to protect the personal and religious freedoms of the people from central authorities. Therefore, education, discerned as a personal choice, was left to the discretion of local and state agencies. However, several early American leaders still wished to promote education, including George Washington, who sought support for a national university following the Revolutionary War. In 1785, the Continental Congress passed the Survey Ordinance, which provided for sections of land to be set aside for schools in newly created townships. The intention of this law was further bolstered by the passage two years later of the Northwest Ordinance, which offered educational land grants and stated that "schools and the means of education shall forever be encouraged."

During the nineteenth century, the Industrial Revolution and huge advances in science began to change public attitudes toward education. The quality of schools, then under the jurisdiction of individual schoolmasters, was questioned, and the radical idea of taxing citizens to support the education of everyone, regardless of class or income, was being debated openly.

Henry Barnard, who would become the first United States Commissioner of Education, was an early supporter of "common schools," the development of a school system, and its funding through taxation. He also was a fervent supporter of the need for the government to gather and distribute data on education. Barnard had been influenced by his contemporary Horace Mann, who crusaded for public education in Massachusetts. As a Connecticut legislator, Barnard created a commission to obtain facts about the state's common schools. The commission found less than one-half of the state's school-age children were in school, three-fourths of its schools were unfit for use, and there were no standards for teachers. To make matters worse, Connecticut was considered to be one of the best states in terms of education. By 1840, Barnard convinced the U.S. Bureau of Census to include questions regarding the numbers of schools and colleges in the country and questions regarding the rate of illiteracy. He continued to promote the establishment of a federal agency to collect comprehensive education data.

The Civil War stymied the growing movement for a national education office except for one major piece of legislation. In July 1862, President Abraham Lincoln signed into law the Morrill Act. The legislation designated that money from the sale of federally owned lands should go to some of the nation's colleges and universities. This marked the true beginning of land-grant schools and was the first major step in legitimizing a role for the federal government in education.

After the Civil War, interest was high among educators to establish a federal office. Representative James A. Garfield, later President Garfield, introduced a bill into Congress to create such an office. After a year of contentious debate, the Department of Education was created through the Organic Act in March 1867. The Department's principal task was to gather and publish data on education with the intent to foster the growth and improvement of the nation's public schools. The Department also was to conduct related studies, two of which were mandated. The first was a federal land-grant study and was included in the original bill. The second followed the appropriation of funds and mandated a study of education in the District of Columbia.

From its earliest days, the Garfield-sponsored law was controversial. In fact, to pacify supporters of state rights, the Department of Education was downgraded to an office within the Department of Interior the year after it was formed and then renamed the Bureau of Education in 1870. In 1929, still within the Interior Department, the agency was renamed the Office of Education. In 1939, it became part of the Federal Security Agency, then, in 1953, it was assigned to the Department of Health, Education, and Welfare. All this movement was indicative of the ongoing debate about the role of the federal government in education. Overall, the first 75 years of the Department of Education were marked by lack of authority, lack of funding, and unpredictable support in Congress.

In addition, the early collection of information was extremely difficult because of the size of the nation and the suspicion of state and local officials and the educators themselves. Still, by 1875, the agency had collected information on nearly all grades of school and later added statistics on private schools, school expenditures, the value of physical plants of schools, and other types of data. In 1923, the agency added a team of field statisticians who visited schools and collected detailed and accurate information. The statistical component of the Department of Education, the National Center for Education Statistics, made these comprehensive visits until 1963. After World War II, the office began an annual survey of college and university enrollment. In the mid-1960s, these education statistics were used for legislative purposes for the first time. Then, at the end of the decade, data on educational outcomes or achievement was collected for the first time. Statistics comparing the United States with international educational achievements were not added until the 1990s.

Federal involvement in education peaked at different times in U.S. history. The department's first significant responsibilities came following passage of the Smith-Hughes Act in 1917 and the Smith-Bankhead Act in 1920, both of which provided grants to states for vocational education. This function became even more prominent during the years of the Great Depression. But it was not until the 1950s that significant changes began to take place in the Department. The advent of the space race and the Cold War during this decade accelerated federal spending on education through the National Defense Education Act of 1958. In addition, the 1954 Brown v Board of Education Supreme Court desegregation case focused attention on both the equality of opportunity and the disparity among the nation's schools, followed by President Lyndon Johnson's Great Society programs of social reform and educational advancement during the 1960s. The Economic Opportunity Act of 1964, which created the Head Start program for preschool children, and the 1964 Civil Rights Act, which prohibited discrimination in the use of federal funds, included education funds. The Elementary and Secondary Education Act of 1965 (ESEA) was also passed to promote equality of education. All had an effect on the Department of Education, whose administrative budget grew from around $2 million in 1950 to more than $15 million by 1965; total money disbursements then moved up to more than $760 million.

In 1972, the Emergency School Aid Act was passed to assist desegregating schools. The Education for All Handicapped Children Act of 1975 mandated free and appropriate education for disabled children. The elementary and secondary education legislation passed in the 1960s and 1970s mainly dealt with specific needs of small groups of students. Critics said the needs of the majority of students were being ignored by federal education programs and the broad variety of programs lacked coordination.

When the Carter administration came to power, a study group was formed to develop proposals for upgrading the Office of Education, which was then a part of the Office of Health, Education, and Welfare. After failure to get action on an education bill in 1978, a new bill was offered to Congress the following year. The Department of Education Organization Act created a cabinetlevel department and authorized a budget of $14.2 billion for the 152 programs and 17,000 employees.

Opponents of the bill cited the loss of state and local control of education, the diminishment of civil rights protection, the increased influence of special interest groups, and a higher tax burden as major concerns. To address these issues, the legislation included the protection of state and local rights regarding education policy, programs, and administration; an Office of Civil Rights within the department; and an Intergovernmental Advisory Council on Education, including state and local officials, public and private school representatives, and parents and students.

Combined public and private spending on education in the United States represented not only a mammoth industry but a huge national investment amounting to 7.3 percent of the nation's gross domestic product. Only Canada spent more of its national gross domestic product on education than the United States. The 1990 Census found that 6.3 million school children (ages 5 to 17) speak a language other than English at home. The same year, the Department of Education stated that 5 percent of the 41 million elementary and secondary students in the United States have "limited English proficiency." Of those students speaking English as a second language, 37.8 percent speak English less than very well. But as William Dunn reported in April 1993, there was a steadily growing group of poor and uneducated immigrants in the United States, and students coming from these families were experiencing difficulty in the American educational system, despite English as a Second Language (ESL) programs.

Guaranteed Student Loans. An October 1992 Financial World article claimed that the Department of Education's biggest financial problem was the student loan program. In 1992, loans totaling $11 billion were made; that same year, $3.6 billion in previously made loans fell into default. To address the problem, the Department started to make some changes, including eliminating financing for schools with the largest student loan default rates. They also started monitoring loans to students already in default and collaborating with the Internal Revenue Service (IRS) to collect payments from defaulters' tax refunds. Finally, the Department sought to upgrade its financial controls both for the student loan program and the Department in general.

In 1983, the National Commission on Education, a board appointed by Secretary of Education Terrel H. Bell, concluded that the American education system was in trouble and for younger Americans to compete internationally, reforms would need to take place. In response to the commission's influential A Nation at Risk report, a wave of school restructuring occurred. In 1989, the Bush administration's Education Summit, which included the nation's governors, developed six national education goals to be met by the year 2000. President Bush's proposed education reform legislation, called America 2000: Excellence in Education, failed to pass in Congress, however. Instead, Congress created the National Council on Education Standards and Testing (NCEST), which recommended voluntary participation by the states in an education program that would compare students by means of "world-class standards."

The Goals 2000 passed in Congress in March 1994. It authorized $647 million for school reforms nationwide, including $400 million in grants targeted for state and local school agencies. The Act also established the first national education goals and standards for education.

The eight national education goals for all students and schools included in Goals 2000 were: all children will start school ready to learn; at least 90 percent of students will finish high school; students will leave grades 4, 8, and 12 with demonstrated competence in English, math, science, foreign languages, civics and government, economics, arts, history, and geography; teachers will have access to programs for the continued improvement of their skills; the United States will be first in the world in math and science achievement; every adult will be literate and possess the skills to compete in a global economy; every school will be free of drugs and violence; and every school will promote involvement of parents in their children's education.

The act also established a 19-member National Education Standards and Improvement Council (NESIC) to develop voluntary national curriculum content, student performance tests, and opportunity-to-learn programs. Funding for combating violent crime in schools and for new research institutes within the Office of Education Research and Improvement was authorized as well. Detractors of the act said that it was too general to bring any significant change to American education and that making the measures voluntary was a concession to the powerful national teachers' associations. Moreover, such goals had been put forth by previous administrations to no noticeable effect.

By the end of the 1990s, states were aggressively forging ahead to make good on their promises. New York declared that by 2003, all students graduating from high school must pass a Regents Examination in mathematics, science, American history, and global history. For the 1998-99 school year, California's controversial "Proposition 227," which replaced bilingual education programs with those emphasizing English as the primary language, was too new to gauge its efficacy but appeared to be gaining ground.

In the last few months of 1999, Congress was completing work on fiscal 2000 legislation for the Department of Education, amid heavy lobbying by student loan providers and college lobbyists. President Clinton indicated that he would veto any budget that did not include funding for several of his proposed programs, including Americorps and the hiring of 100,000 new schoolteachers. Also contentious were efforts to remove certain fees attached to federal student direct-loan programs and raising the maximum Pell grant by $125, to $3,250.

The total 1999 budget for the Department of Education was $34.3 billion. This included $7.3 billion for the Office of Special Education and Rehabilitative Services, $1.3 billion for the Office of Vocational and Adult Education, and $386 million for the Office of Bilingual Education and Minority Language Affairs. (Its largest expenditure was for the Office of Postsecondary Education, at $14.1 billion.)

During its 1998-99 term, the U.S. Supreme Court delivered an important decision affecting public education. In November 1998, the Court declined to review, and thus let stand, the decision of the Wisconsin Supreme Court that upheld the constitutionality of the Milwaukee school voucher program ( Jackson v. Benson ). In such programs, individual credit vouchers are given to parents by local, state, or federal government entities to be used for sending their children to a school of the parents' choosing. Often, this has meant private, parochial (including religious) schools. Two basic challenges against these vouchers have thus been defeated, the first having to do with separation of church and state, and the second involving the reality that such vouchering draws students away from the public school system, thus affecting federal funds to public schools.

Current Conditions

By the early 2000s, the nation's educational administrators faced a number of serious challenges. One of the most daunting involved state budget shortfalls, brought on by weak economic conditions and decreasing tax bases. During the 1990s, when economic conditions were more favorable, many states chose to fund schools through income taxes instead of property taxes. Ultimately, this trend had a negative effect. According to the January 19, 2003, Chicago Tribune , "The lingering national economic downturn, which last year resulted in trims to administrative expenses and loss of extracurricular activities, now is forcing districts to make severe cuts that directly affect the classroom."

In the aforementioned Chicago Tribune article, the paper provided figures from the National Council of State Legislatures (NCSL) that revealed that U.S. school districts were short $49 billion at the start of the 2002-03 academic year. By January, the deficit had increased by another $18 billion. Despite these grave conditions, Education Daily reported that only 9 states ended up cutting budgets for primary and secondary education that year, whereas 12 made cuts at the postsecondary level. Looking ahead, the magazine cited figures from a NCSL survey that found states would face a combined shortfall of at least $69 billion by fiscal year 2004, impacting educational programs at the primary, secondary, and postsecondary levels.

Based on information from the National Association of Student Grant and Aid Programs (NASSGAP), state spending on postsecondary student financial aid was expected to increase 5 percent in 2002-03, according to Education Daily . Although this was a positive sign given the state of the economy, the rise was smaller than 2001-02's increase of 10 percent and the 12 percent increase achieved in 2000-01. That states continued to increase assistance levels despite budget shortfalls showed their continuing commitment to education. In fact, NASSGAP revealed that state spending on student aid has increased by 66 percent since the late 1990s.

Amidst these conditions, some school districts sought ways to reduce costs and maintain operations. In some states, including Oregon and New York, districts considered moving to shorter academic years by instituting four-day school weeks. However, prohibitive state laws hindered many districts from going in this direction, whereas other districts risked jeopardizing already falling levels of state funding. Other cost-cutting measures involved students and teachers cleaning their own classrooms. This was the case in Oklahoma, where custodial jobs were cut at one school district. In Hawaii, cutbacks caused a potential toilet paper shortage. This effectively caused schools to choose between basic essentials and much-needed educational resources like textbooks. Nationwide, schools also were looking to decrease energy costs in both new and existing facilities through improved operations and by designing better buildings and relying on more efficient technologies.

In January of 2002, President George W. Bush signed the No Child Left Behind Act of 2001 (NCLB). According to the Department of Education, "The Act is the most sweeping reform of the Elementary and Secondary Education Act (ESEA) since ESEA was enacted in 1965. It redefines the federal role in K-12 education and will help close the achievement gap between disadvantaged and minority students and their peers. It is based on four basic principles: stronger accountability for results, increased flexibility and local control, expanded options for parents, and an emphasis on teaching methods that have been proven to work." The act allows children in schools that fail to meet state academic standards to move to another public school without incurring excessive transportation costs. In the U.S. government's budget for fiscal year 2004, the Department of Education listed successful implementation of NCLB as one of its major challenges. In addition to improved accountability for student achievement, support was to come from an increase in grant funding. This included an increase in Title I grants to aid poverty-stricken schools at the local level.

The total 2002 budget for the Department of Education was $56.2 billion. This included $8.7 billion for the Office of Special Education and Rehabilitative Services, $6.2 billion for School Improvement Programs, and $1.9 billion for the Office of Vocational and Adult Education. (Its largest expenditure was for the Office of Postsecondary Education, at $12.3 billion.)

Further Reading

Cardman, Michael. "Analysis Finds Rampant School Funding Inequities." Education Daily, 9 August 2002.

Executive Office of the President of the United States, Office of Management and Budget. Budget of the United States Government, Fiscal Year 2004. Available from .

"Federal Government Budget by Agency," March 1999. Available from .

Haynes, V. Dion. "Schools Learn Harsh Lesson in Economics." Chicago Tribune. 19 January 2003.

Herbert, Bob. "Hijacking the Future." New York Times, 27 February 2003.

"House and Senate Negotiators Shape a Bill to Increase NIH Funds." The Chronicle of Higher Education, 29 October 1999.

Keynes, Alana. "State Funding for Student Aid Starting to Slow Down." Education Daily, 28 April 2003.

"Looking Back, Looking Ahead." The Phi Delta Kappan, April 1999.

"Public Opinion and Public Education." The Chronicle of Higher Education. April 1999.

Sinderbrand, Rebecca. "States of the Nation: Singing the Budget-Cut Blues." Newsweek, 3 March 2003.

Suttell, Robin. "Raising Their Energy Grades: In an Era of School Funding Concerns, Educational Facilities Look to Reduce Energy Costs." Buildings, March 2003.

U.S. Department of Education. "Inside Budget Summary and Background Information." 26 May 2003. Available from .

"U.S. Dominates Nobel Prizes in Science, but All Winners are Foreign Born." The Chronicle of Higher Education, 22 October 1999.

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