DOD Schools: Limitations in DOD-Sponsored Study on Transfer	 
Alternatives Underscore Need for Additional Assessment		 
(26-APR-05, GAO-05-469).					 
                                                                 
The Department of Defense (DOD) operates 59 elementary and	 
secondary schools serving over a dozen military bases in the	 
continental United States Periodically, questions have been	 
raised concerning the continuing need for such schools. In 2002, 
DOD commissioned the Donahue Institute of the University of	 
Massachusetts to examine the potential for transferring these	 
schools to local education agencies (LEAs). GAO's assessment	 
focused on (1) the extent to which DOD has established a school  
closure policy and the effect such policies have on		 
quality-of-life issues for servicemembers and their dependents;  
and (2) the transfer study, including the clarity of the basis	 
for conclusions reached, the overall financial impact, and issues
identified but not resolved by the study. GAO's report also	 
identifies issues not addressed in the transfer study that could 
impact the future of DOD's domestic schools.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-469 					        
    ACCNO:   A22697						        
  TITLE:     DOD Schools: Limitations in DOD-Sponsored Study on       
Transfer Alternatives Underscore Need for Additional Assessment  
     DATE:   04/26/2005 
  SUBJECT:   Decision making					 
	     Department of Defense				 
	     Elementary schools 				 
	     Financial analysis 				 
	     Military bases					 
	     Military dependents				 
	     Military personnel 				 
	     Public schools					 
	     Quality of life					 
	     School districts					 
	     School management and organization 		 
	     Secondary schools					 
	     Students						 
	     Policies and procedures				 

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GAO-05-469

                 United States Government Accountability Office

                     GAO Report to Congressional Committees

April 2005

DOD SCHOOLS

Limitations in DOD-Sponsored Study on Transfer Alternatives Underscore Need for
                             Additional Assessment

                                       a

GAO-05-469

[IMG]

April 2005

DOD SCHOOLS

Limitations in DOD-Sponsored Study on Transfer Alternatives Underscore Need for
Additional Assessment

  What GAO Found

Officials in the DOD Education Activity, which administers the DOD school
program, said that neither DOD nor Department of Defense Education
Activity has specific policy guidance related to closing domestic
dependent elementary and secondary schools. While some expansion and
contraction of the number of domestic schools operated by DOD occurred
between the 1950s and early 1970s, relatively few have been closed or
transferred since then, and most of those have been related to base
closure activities. For affected military families, the retention of these
schools is seen as an important quality-of-life issue.

The basis for the expert panel recommendations to transfer selected DOD
schools to LEAs is difficult to ascertain. Specifically, it is often
unclear how various analytical factors examined led to recommendations
being made. For example, in one instance the panel recommended transfer of
educational responsibilities to the neighboring LEA even though the LEA's
per pupil costs were higher than DOD's and the LEA schools were cited as
mostly "underperforming." Moreover, the study data indicate that DOD could
incur an estimated $125 million to repair and upgrade existing schools.
Under the panel's recommendations, DOD would also have a continuing
obligation to maintain the schools even after program transfers to the
LEAs. Some longterm savings in operating costs could accrue to DOD, but
many of these costs would need to be absorbed by LEAs or other federal
programs. The transfer study also indicates that various legal
restrictions in some states would need to be resolved. Finally, ownership
of the schools DOD operates needs to be clarified in order to ensure that
it is properly reflected in property records.

There are other factors, most not present when the transfer study began,
that could further complicate school transfer decisions, including ongoing
DOD plans to relocate about 70,000 military personnel and approximately
100,000 family members currently stationed overseas to bases in the United
States within the next few years; Army efforts to reorganize its force
structure, with the potential for increased numbers of personnel assigned
to selected military bases in the United States; and the impact of the
2005 base realignment and closure round. Likewise, current DOD efforts to
privatize housing on its military bases could also impact future
requirements for schools serving military dependents. DOD has
appropriately said that it is postponing decision making on the results of
the transfer study until after base closure decisions are finalized later
this year. However, the impact of troop redeployments and other force
structure changes on schools has not yet been fully assessed. Given the
expected increase of school age military dependents on various stateside
military bases over the next few years, a clear decision on school
transfer issues should be made after the results of the base closure
process and overseas rebasing plans are known to ensure adequate planning
for facilities by DOD and LEAs.

United States Government Accountability Office

Contents

    Letter                                                                  1 
                                  Results in Brief                          4 
                                     Background                             7 
              DOD Does Not Have Specific Criteria for Closing Schools      11 

Expert Panel Recommends Program Transfers to LEAs in Most

Instances, but Basis for Decisions Are Not Always Clear, and

Many Issues Remain to be Addressed 14 Other Issues Could Impact Decision
Making 19 Conclusions 21 Recommendations for Executive Action 21 Agency
Comments and Our Evaluation 22

Appendixes

Appendix I:

Appendix II:

                                       Appendix III: Appendix IV: Appendix V:

Appendix VI:

Expert Panel Members 25

Department of Defense Elementary and Secondary (DDESS) Schools in the
Continental United States 26

Prior Studies on Transferring DDESS Schools to LEAs 27

Transfer Study Rules and Alternatives 29

Differing Perspectives on Selected DDESS and LEA Schools Contained in
Various Transfer Study Report Documents 31

Comments from the Department of Defense 36

Table Table 1: Expert Panel's Recommendations

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A

United States Government Accountability Office Washington, D.C. 20548

April 26, 2005

The Honorable John W. Warner Chairman The Honorable Carl Levin Ranking
Minority Member Committee on Armed Services United States Senate

The Honorable Duncan L. Hunter Chairman The Honorable Ike Skelton Ranking
Minority Member Committee on Armed Services House of Representatives

Historically, public elementary and secondary education has been a state
and local responsibility. However, for many years, the Department of
Defense (DOD) has also operated a number of such schools (currently 59)
serving over a dozen military bases in the continental United States.1
Periodically, questions have been raised within the Congress concerning
the continuing need for such schools, and various studies were
commissioned in the 1980s and early 1990s to study the potential for
transferring responsibility for educating students served by these schools
to local public school districts-otherwise referred to in this report as
local education agencies (LEAs). Prior studies identified multiple issues
that would have to be addressed if a transfer of responsibilities were to
be attempted, and such transfers were not considered feasible.
Furthermore, military members served by these schools and related support
groups have voiced strong support for retention of these DOD schools based
on qualityof-life considerations.

In 2002, the department's attention once again turned to studying the
potential for transferring DOD's domestic elementary and secondary
education program over to LEAs. Officials in the Department of Defense

1DOD also operates 165 elementary and secondary schools overseas.

Education Activity (DODEA),2 which administers this program, have
indicated that the new effort was the result of questions raised by the
then chairman of the House Appropriations Military Construction
Subcommittee regarding whether there was a need for continued operation of
these schools by DOD arising from a request for funding for a
schoolrelated project on a military base. Additionally, in 2002, as part
of its focus on improving management of the department, DOD's senior
leadership endorsed examining departmental functions to determine whether
they were core to the department's warfighting mission, with expectations
that needed products or services associated with non-core functions should
be obtained from other government agencies or the private sector. In
announcing that it would begin a new study of elementary and secondary
schools operated by DOD on 14 installation areas in seven states including
Alabama, Georgia, Kentucky, North Carolina, South Carolina, New York, and
Virginia, Department of Defense Domestic Dependent Elementary and
Secondary Schools' (DDESS) press release indicated that the study would
"focus largely on the ability and willingness of LEAs to assume
educational responsibility for the students currently enrolled in DOD's
domestic schools." The transfer study effort, apart from a facilities
analysis phase by Parkhill, Smith, and Cooper Inc., was completed under
contract by the Donahue Institute of the University of Massachusetts.3

The Donahue Institute retained an independent panel of education experts4
which developed recommendations based on the Institute's data and the
facility data obtained under the Corps of Engineers contract. The panel of
experts recommended transferring educational responsibilities at 10 of 14
installation areas studied from DDESS schools to LEAs. DOD does not plan
to make a decision regarding the recommendations until after decisions on
the upcoming base realignment and closure round are completed later this
year.

2DODEA, the umbrella agency created in 1994 to oversee the DOD school
systems, operates under the direction of the Deputy Under Secretary of
Defense, Military Community and Family Policy, and the Under Secretary of
Defense, Personnel and Readiness. Subordinate organizations within DODEA
are the Department of Defense Domestic Dependent Elementary and Secondary
Schools (DDESS) system, which operates schools in the continental United
States, Puerto Rico and Guam, and the Department of Defense Dependents
Schools (DODDS) system, which operates schools on military bases overseas.

3The Donahue Institute is the public service, outreach, and economic
development unit of the University of Massachusetts President's Office.

4See appendix I for biographical information on the panel members.

Section 597 of the Ronald W. Reagan National Defense Authorization Act for
Fiscal Year 2005,5 which was signed into law on October 28, 2004, required
the Comptroller General to prepare a report containing:

(1) an assessment of the policy of the Department of Defense, and the
criteria utilized by the department, regarding the closure of Department
of Defense dependent elementary and secondary schools, including whether
or not such policy and criteria are consistent with department policies
and procedures on the preservation of the quality-of-life of members of
the Armed Forces and their dependents; and

(2) an assessment of any current or on-going studies or assessments of the
department with respect to any of the schools.

The legislation required that the report be submitted to the Senate and
House Armed Services committees not later than 180 days after the date of
the enactment of the legislation.

Our assessment focused on (1) the extent to which DOD has established a
school closure policy and the effect such a policy has on quality-of-life
issues for servicemembers and their dependents; and (2) the transfer study
conducted by the Donahue Institute, including the clarity of the basis for
conclusions reached, the overall financial impact, and issues identified
but not resolved by the study. While conducting this work, we also noted
other issues not addressed in the transfer study that could impact
decision making regarding the future of DOD's domestic elementary and
secondary schools.

In completing this engagement, we interviewed DODEA officials regarding
their policy guidance related to closing schools and reviewed the results
of the recent study dealing with the potential transfer of DDESS schools
to LEAs. We discussed the study design and methodology with officials of
DODEA, DDESS, the Donahue Institute and two of the three members of the
panel of experts employed by the institute to review its data and to
develop study recommendations. We examined the various study summary
documents to try to gauge the basis for the study's recommendations and
determine how clearly the recommendations were linked to the summary
information provided. We also reviewed summaries of interviews completed
by the institute with leaders in affected DDESS schools and

5Pub. L. No. 108-375.

local education agencies to confirm and better understand the range of
issues associated with the issue of potential transfer of the schools to
LEAs. Likewise, we also discussed relevant issues concerning federal
impact aid and experience in transferring federally owned schools to LEAs
with officials at the U.S. Department of Education. Given time
constraints, we did not attempt to validate data included in DOD's
transfer study, but we did review the steps taken by the Donahue Institute
to verify its data and analysis and to compare key data against other
available data sets to corroborate its relative accuracy. We obtained
other relevant statistical data concerning data about DDESS schools from
DODEA and made limited checks to assure ourselves that the data was
sufficiently accurate for the purposes of our review.

We conducted this review from January to April 2005 in accordance with
generally accepted government auditing standards. Further details about
our scope and methodology appear at the end of this report.

Results in Brief	While DOD has previously urged its components to examine
for potential divestiture or outsourcing to the private sector functions
not core to warfighting efforts, DODEA officials told us that neither DOD
nor DODEA has specific policy guidance related to closing dependent
elementary and secondary schools, the retention of which under DOD are
seen by some servicemembers and their dependents as important to their
quality of life. The officials noted the elimination of only three
domestic schools in the past few years; one in 2001 in Georgia as the
result of military housing privatization when the school transferred to an
LEA, and two others in 2004 as the result of a base closure in Puerto
Rico. Survey data from the recent and previous transfer studies clearly
indicate that for military families, whose dependents attend DDESS
schools, retention of those schools is an important quality-of-life issue.
While their children represent a very small percentage of the dependent
school-age population, affected servicemembers' views of the quality of
education and related services provided by the dependent schools makes the
retention of these schools very important to them. The importance of these
schools has been affirmed in departmental guidance concerning what
functions could be performed by the private sector. That guidance
currently permits principals and faculty at DOD Dependent Schools to be
exempted from outsourcing consideration recognizing these functions could
be performed by the private sector (but without the same effect-i.e.,
military performance of these activities carries special meaning for
military

personnel and their families).6 Nonetheless, the future of these schools
has been subject to some uncertainty in recent years due to congressional
concerns and as DOD began emphasizing the assessment of functions not core
to warfighting missions for potential outsourcing which resulted in the
initiation of the recent transfer study.

While the recent study sought to complete a more comprehensive assessment
of the transfer issue than prior studies, the basis for the panel of
experts recommendations is difficult to ascertain where transfers of
DDESS' educational responsibilities are recommended. In addition to costs
that would be incurred by DOD, legal and other issues could complicate the
implementation of the panel's recommended school transfers to LEAs. The
panel's recommendations report does not always provide a clear or concise
indication of the key factors supporting the transfer of educational
programs from DDESS to LEAs. Specifically, it is often unclear how the
panel of experts evaluated various analytical factors leading to its
recommendations based on information provided in the various study
documents. Two expert panel members we contacted acknowledged that the
panel's recommendations were subjective but based on all the members'
collective expertise and experiences. However, information provided in the
various study report documents sometimes raised more questions than it
answered. For example, the panel in two of three instances where there was
more than one affected LEA recommended transferring educational
responsibilities to one of the LEAs even though the local school district
was considered to be "underperforming" when another "overperforming" LEA
was available with lower per pupil costs. In addition, the panel
recommended a LEA over DDESS even though the LEA's per pupil costs were
higher and its schools were cited as mostly "underperforming."7 The study
data indicate that DOD could incur an estimated $125 million to repair and
upgrade existing DDESS schools. In addition, DOD would have a continuing
obligation to

6Enclosure 6, Manpower Mix Criteria Codes, Office of the Secretary of
Defense memo, "2003 Commercial and Inherently Governmental Activities
Inventory Data Call" (Dec. 16, 2003).

7The Donahue Institute used student performance on statewide/DDESS
system-wide academic tests to measure school performance. The institute
developed a performance index that took into account the socio-demographic
effect of the percentage of students receiving free or reduced price
lunches on a school's performance. It used a regression approach to
estimate this effect on schools in each state by subject and grade. The
institute was then able to categorize each school's performance as
"overperforming" or "underperforming" relative to the school's predicted
performance given its percentage of students receiving free or reduced
price lunches.

maintain the school facilities even after transfer of educational
responsibility to the LEAs, under the transfer alternative recommended by
the panel. Long-term savings in operating costs could accrue to DOD but
many of these costs would need to be absorbed by LEAs and would, to some
extent, create an additional burden for the U.S. Department of Education
as it distributes available resources to LEAs that become eligible for
increased impact aid as a result of educating more military-connected
students.8 At the same time, numerous other issues would arise if efforts
were made to implement the transfers, such as clarifying current ownership
of the schools between DOD and the U.S. Department of Education and
differences in their relative legislative authorities for transferring
federally owned schools to LEAs.9 Other legal restrictions in some states
would likely prohibit LEAs from readily taking possession of facilities
located on federal lands. The panel of experts recognized that any
transfers would need to be done on an individual, negotiated basis.

Apart from the issues identified in the transfer study, there are other
factors/issues not addressed in the study, most of which were not present
when the study began, that could impact DDESS and LEA schools, and further
complicate school transfer decisions. The study does not recognize such
ongoing DOD plans as:

o 	the restationing of about 70,000 military personnel and approximately
100,000 family members currently stationed overseas to bases in the United
States within the next few years;

o 	Army efforts to reorganize its force structure, with the potential for
increased numbers of personnel assigned to selected military bases in the
United States; and

o  the impact of the 2005 base realignment and closure round.

DOD has appropriately said that it is postponing decision making on the
results of the transfer study until after base closure decisions are
finalized

8LEAs receive federal payments to compensate for the loss in tax revenues
due to the presence of tax-exempt federal property and increased school
enrollments due to federal activities.

9Resolution of this issue is important toward ensuring proper accounting
for property in the appropriate agency's property records and limiting the
government's exposure to legal liabilities.

later this year. Likewise, current DOD efforts to privatize housing on its
military bases, combined with rebasing efforts noted previously could also
impact future requirements for on-base dependent schools. However, the
impact of these housing factors has not yet been fully assessed.
Nevertheless, given the expected increase of school age military
dependents on stateside military bases over the next few years, a clear
decision on school transfer issues made sooner rather than later would
help to ensure adequate planning for facilities by DOD and LEAs.

GAO recommends that the Secretary of Defense resolve continuing
uncertainty regarding the school transfer issue to foster appropriate
facility planning by DOD and/or LEAs.

Background	Notwithstanding that public elementary and secondary education
historically has been a state and local responsibility, DOD has also
operated such schools at selected U.S. and overseas locations to educate
military dependents residing on military bases. Collectively, the domestic
and overseas programs operate over 200 dependent schools in the United
States, U.S. territories, and overseas,10 with 59 schools operated in the
continental United States. (See appendix II for a listing of these DDESS
school locations.) Approximately 105,000 students are enrolled in these
combined programs, with approximately 24,000 students attending the 59
schools in the continental United States. DDESS schools mostly serve
elementary school-aged students in the United States, with older students
attending public schools off the installations. The overseas DODDS system
has approximately 12,000 employees while the DDESS system has
approximately 5,700 employees. The combined operating budget for both
systems and headquarters in fiscal year 2005 is about $1.49 billion of
which approximately $367 million is for operating DDESS schools.11

As we have previously reported, the federal government's operation of
elementary schools in the continental United States to educate military
dependents residing on military bases traces its history back many years
and to locations where a suitable free public education was not
available.12

10Overseas schools were added following World War II when the military
established schools for the children of its servicemembers stationed in
Europe and the Pacific.

11These are operations and maintenance funds, and do not include
procurement and military construction funding.

There were a variety of reasons for establishing schools on military
bases, including military installations that were located in sparsely
populated areas and efforts to avoid racial segregation at the neighboring
school districts.

From 1951 to 1981, funding responsibility for the domestic schools resided
with the Department of Health, Education, and Welfare, and subsequently
with the Department of Education. The Omnibus Budget Reconciliation Act of
1981 (Public Law 97-35) transferred funding responsibility to DOD. Today,
DODEA, the umbrella agency created in 1994 to administer the overseas
(DODDS) and domestic (DDESS) systems, operates under the direction of the
Deputy Under Secretary of Defense, Military Community and Family Policy,
and the Under Secretary of Defense, Personnel and Readiness.

The DDESS model is but one of several approaches to providing elementary
and secondary education to dependents of military personnel residing on
military bases in the United States. There are 33 Department of
Education-owned schools located on military bases but operated by LEAs,
providing education for military dependents residing on those bases. The
Department of Education has been gradually transferring these schools to
LEAs as funds are available to upgrade the condition of the schools to
encourage acceptance of the schools by LEAs.13 In other instances, LEAs
own and operate schools located on military bases. Finally, in a limited
number of instances, DOD directly funds LEAs to educate military
dependents at schools operated on military bases.

Periodically, questions have arisen within the Congress concerning the
continuing need for such schools within the continental United States, and
various studies were commissioned in the 1980s and early 1990s to evaluate
the potential for transferring the schools to LEAs.14 In December 1986 we
examined three methods to educate military dependents, then in selected
use, which were viewed as alternatives to the DOD-funded and operated

12See GAO, DOD Schools: Funding and Operating Alternatives for Education
of Dependents, GAO/HRD-87-16 (Washington, D.C.: Dec. 10, 1986).

13This represents some reduction in such schools from an available listing
of such schools contained in a previous transfer study conducted 10 years
ago. Some reductions occurred because of base closure, demolition, or
transfers to LEAs.

14Appendix III provides a list and summary of relevant previous reports
that examined the potential for transferring schools from DOD to LEAs.

schools. They included: (1) operation by local school districts, with
funding from federal, state, and local governments; (2) DOD contracting
with local school districts for educational services; and (3) coterminous
operation, whereby dependents' schools operated as local school districts
whose boundaries were the same as the military installations' boundaries,
and where funding for those districts was shared by the Department of
Education (through the federal impact aid program) and the responsible
state government. We reported in December 1986 that creation of school
districts coterminous with military installations appeared to be the best
of the three alternatives, in part because such an approach would likely
minimize the transfer of students from existing schools and eliminate
costs to DOD. However, according to a DODEA official, most states have
since passed laws that prohibit the creation of new school districts,
which eliminates the coterminous option from consideration. We also
reported that jurisdictional, legal, and other issues could impede
consideration of all three alternatives. Subsequent studies by others
offered varying degrees of insights regarding these alternatives and
difficulties likely to be encountered in trying to implement them, and
often identified multiple issues that would have to be addressed-including
legal and financial issues, and strong opposition from affected military
families-if a transfer of responsibilities were to be attempted. As a
result, school transfers were not considered feasible. (See app. III for a
synopsis of each of the prior studies.)

In 2002, DOD's attention again turned to studying the potential for
transferring DOD's domestic elementary and secondary education program
over to LEAs. DODEA officials have indicated that the new effort was the
result of questions raised by the then chairman of the House
Appropriations Military Construction Subcommittee regarding whether there
was a continuing need for DOD to operate these schools triggered by a
request for funding for a school-related project on a military base. We
also note that in 2002, as part of its focus on improving management of
the department, DOD's Senior Executive Council15 endorsed a core
competency-based approach for DOD sourcing decisions-that is, the decision
to use a public or private sector source to perform a necessary

15 The Senior Executive Council, a high-level management committee, was
established in 2001 to (1) help guide efforts across the department to
transform and improve the department's business practices, and (2) to
function as a board of directors for DOD. The Council, chaired by the
Secretary of Defense, also included the Deputy Secretary of Defense, the
service secretaries, and the Under Secretary of Defense for Acquisition,
Technology and Logistics.

agency function or activity was based on whether the function or activity
was core to the agency's mission. The Senior Executive Council believed
that the department should focus its energies and talents on those
functions that were core or directly linked to its warfighting mission.
These core functions must be performed by the agency, with the expectation
that necessary products or services associated with non-core functions
should be obtained from other government agencies or the private sector.16

A DDESS press release, announcing the planned transfer study in 2002,
indicated that the study would "focus largely on the ability and
willingness of LEAs to assume educational responsibility for the students
currently enrolled in DOD's domestic schools." This transfer study was
performed in multiple phases that included:

o 	A facility condition assessment performed by Parkhill, Smith, and
Cooper, Inc., and contracted through the Army Corps of Engineers. Field
observer site visits were made to document the current physical condition
of each school, estimate probable costs for remediation, and assess
whether renovation or replacement was needed. This assessment identified
about $125 million in remediation costs for all 58 DDESS schools surveyed
and about $33 million to replace 4 of the schools.17

o 	A data collection and analysis phase conducted by the Donahue Institute
of the University of Massachusetts to examine the feasibility of
transferring 5818 DDESS schools operating in the continental United States
to local school districts. A set of transfer alternatives was developed
and analyzed for each of the DDESS schools.

o 	Use of a three-person expert panel, approved by DOD and contracted by
the Donahue Institute to independently assess the Institute's data and
analysis and make recommendations regarding transfer alternatives.

16See GAO,, Defense Management: DOD Faces Challenges Implementing Its Core
Competency Approach and A-76 Competitions, GAO-03-818 (Washington, D.C.:
July 15, 2003).

17DOD's Fiscal Year 2006 budget request is for $34.7 million in military
construction for a new DDESS elementary school at Fort Stewart, Ga., and a
new elementary/junior high school addition at Fort Bragg, N.C.

18While DDESS currently operates 59 domestic elementary and secondary
schools in the United States, only 58 were in operation at the time of the
study.

o 	A quality-of-life assessment, based on an October 2003 meeting in
Peachtree City, Georgia, with representatives of the domestic DDESS
schools and installations where their views were solicited and documented.
Participants included installation commanders, students, parents, union
leaders, and special interest groups.

The recommendations of the panel of experts were submitted to DODEA in
December 2003, but remained closely held without widespread dissemination
inside the department and without public dissemination until February
2005. At the time we completed our work, DOD had not made a decision
regarding adoption of the panel's recommendations, postponing such a
decision until later this year after decisions related to the 2005 base
realignment and closure round are completed.

DOD Does Not Have Specific Criteria for Closing Schools

While DOD has previously urged its components to examine for potential
divestiture or outsourcing of functions not core to warfighting efforts to
the private sector, neither DODEA nor DOD has policy guidance related to
closing the dependent elementary and secondary schools operated by the
department. While expansion and contraction of the number of domestic
schools operated by DOD occurred between the 1950s and early 1970s,
relatively few have been closed or transferred since then, and most of
these have been related to base closure activities. For affected military
families, the retention of these schools is seen as a quality-of-life
issue, but there are varying perspectives on this issue within DOD.

DOD Has Eliminated Few Domestic Schools in Recent Years

DODEA officials told us they had eliminated only three domestic schools in
the past few years; one in 2001 in Georgia as the result of military
housing privatization initiative, and two others in 2004 as the result of
a base closure in Puerto Rico.19 This contrasts with an earlier period
between the 1950s and 1970s when there was a more robust expansion and
contraction in such schools.

Per the 2004 defense appropriations act, the Roosevelt Roads Naval Station
in Puerto Rico was closed in 2004 and, as part of that closure, the DDESS

19A few additional schools were closed during prior base closure rounds
because of domestic base closure rounds conducted from 1988 through 1995.
Any additional dependent school closures related to the 2005 base closure
process will not be known until later this year when base closure
decisions will be finalized.

schools on that base also closed. The only other instance of a DDESS
school being eliminated in recent years occurred in 2001 as a result of
the department's housing privatization efforts. In that instance, land
associated with on-base housing at Warner Robins Air Force Base, Georgia,
was transferred to a contractor and the land transferred included one of
the base's two schools. As a result, the school was subsequently
transferred to the LEA, which became responsible for educating students at
that school. DOD housing privatization officials indicated they do not
currently anticipate similar transfers of schools in the future.

Earlier transfer studies point to expansion and contraction of DOD
operated schools on military bases between 1950 and 1970. Schools were
added to the DDESS system as a result of the racial integration of the
military during the time when the schools in the neighboring LEAs remained
segregated. At one point, about 100 military installations reportedly had
schools that belonged to what is now the DDESS system. Various studies
report a subsequent contraction in the number of these schools due to a
variety of factors including successful implementation of integration
policies in many instances that allowed base schools to rejoin their
former LEAs, pressure from the U.S. Department of Education on states and
localities to acknowledge responsibility for the education of military
dependents, and commercial and residential development adjacent to some
bases that enabled the LEA to provide a viable educational program.

Retention of Domestic Dependent Schools Is Seen as a Quality-of-Life Issue

Survey and other data from the current and earlier studies on transfer
issues clearly indicate that affected military families, whose dependents
attend DDESS schools, view their retention as a quality-of-life issue.
While their children represent a very small percentage of the dependent
schoolaged population, affected servicemembers' views of the quality of
education and related services provided by the dependent schools makes
clear that the retention of these schools is very important to them. An
October 1997 Defense Manpower Data Center study noted that "the loss of
the DDESS schools would undoubtedly be viewed as another loss of a
military quality-of-life benefit. But unlike many other benefit cuts...
that affect all or most military servicemembers, the loss of this benefit
would affect a small proportion of military servicemembers."

The Defense Manpower Data Center report also indicated that DDESS students
comprised only three percent of all school-aged children of activeduty
servicemembers. DODEA provided us with data that indicate that

figure remains current today. Moreover, only 23 percent of all school-aged
dependents of military members assigned to the installations served by
DOD's domestic dependent schools in the continental United States attend
the schools. This can be attributed to the fact that many military
families reside in local communities-that is, not on the base-and thus are
not eligible to attend DDESS schools, and the fact that relatively few
DDESS schools provide education for high school students.

DOD's guidance for deciding what functions the department performs that
could be considered commercial in nature and readily available in the
private sector, has exempted DOD schools from outsourcing consideration.
DOD's guidance stipulates that principals and faculty at DOD dependent
schools perform functions that could be performed by the private sector
"but without the same effect-i.e., military performance of these
activities carries special meaning for military personnel, and their
families." The guidance also notes that principals and faculty at DOD
Dependent Schools demonstrate family support, promote quality-of-life and
foster camaraderie for recruitment and retention purposes. Accordingly,
DOD dependent schools were exempt from private sector performance
comparisons. In addition, in recent years, DOD has sought a more
aggressive look at whether various functions are core to the department's
warfighting mission, and to increase the number of functions that might be
performed by the private sector. Dependent schools are one such function
that has sometimes been questioned regarding its connection to DOD's core
mission.

Conversely, in July 2002, DOD published A New Social Compact: A Reciprocal
Partnership Between The Department of Defense, Servicemembers and
Families. The document was issued under the auspices of the Deputy
Assistant Secretary of Defense (Military Community and Family Policy). It
noted that in 2001, the President had issued a National Security
Presidential Directive requiring the Secretary of Defense to undertake a
review of measures for improving the quality of life for military
personnel and provide recommendations for their implementation. While the
new compact did not specifically address the issue of whether DOD
dependent schools should be retained or transferred to LEAs, it did
include a section devoted to enhancing educational opportunities provided
through DODEA worldwide.

Expert Panel Recommends Program Transfers to LEAs in Most Instances, but
Basis for Decisions Are Not Always Clear, and Many Issues Remain to be
Addressed

The panel of experts recommended transferring most educational
responsibilities from DDESS schools to LEAs at 10 of 14 installation areas
studied. The institute sought to contrast DDESS and LEA schools to guide
the panel's analysis and process for making recommendations. Nonetheless,
the basis for these recommendations is difficult to ascertain based on
study report documents. The study indicates that DOD could incur
significant costs, as well as face legal and other issues related to the
transfer of schools to LEAs. Finally, the panel recognizes that such
transfers would have to be done on an individual, negotiated basis.

Transfer Study Contrasts DDESS and LEA Schools to Guide Expert Panel's
Recommendations

The Donahue Institute study built on the work of prior studies, examining
many transfer alternatives previously considered in earlier studies
ranging from the status quo to the transfer of educational programs to
LEAs. While various issues addressed in the study were similar to those
previously studied-such as facility conditions and remediation costs and
identifying transfer options and impediments to their use-it sought to
make a comparative assessment of DDESS and surrounding LEA schools to
provide the basis for informed decision making. The report noted that the
expert panel established the following guiding principles to guide its
recommendations:

o 	All students transferred from DDESS to local public schools must be
provided comparable educational programs, services and facilities.

o  School communities gain from diversity.

o 	Cost effectiveness of government. Any transfer alternative must be
costeffective not only to DODEA, but to the state and local entities
involved.

o 	Deference to the needs of younger students. It is rarely advisable to
transfer or otherwise disrupt the educational process of very young
students.

o 	Any transfer of DDESS will include just and reasonable compensation to
the LEA for operational and facilities costs.

o  Each installation/LEA will be considered separately.

The report noted that the experts stressed that while each one was
important, no single principle or criterion would necessarily rule in or
out a transfer alternative. Rather, the totality of all financial and
non-financial factors was carefully considered, evaluated, and factored
into each recommendation. The panel also developed feasibility rules
associated with any transfer decisions to help assure basic equity and
fairness for the students, families, and communities that might be
affected by the study. Appendix IV includes summary information on the
rules and alternatives considered.

The expert panel recommended that the educational responsibility for most
schools in 10 of the 14 installation areas be transferred to the LEAs, and
with use of DDESS operated facilities in most instances, as noted in table
1.

                    Table 1: Expert Panel's Recommendations

State(s)  Principal        Number      Affected Local      
             Installation(s)    of           Education        
Affected       Served      Schools         Agency               Study      
                                                              Recommendation  
    Alabama    Fort Rucker          2 Daleville City Schools    Status quo    
                                      Enterprise City Schools 
                                        Ozark City Schools    
    Alabama    Maxwell Air          1 Montgomery County         Status quo    
                Force Base            Schools                 
                                                              Transfer        
                                    7                         responsibility  
    Georgia    Fort Benning           Muscogee County Schools for schooling   
                                      Chattahoochee County        to LEA      
                                      Schools                 
             Robins Air Force                                 Transfer        
                   Base             1                         responsibility  
    Georgia                           Houston County Schools  for schooling   
                                                                  to LEA      
                                                              Transfer        
               Fort Stewart         2                         responsibility  
    Georgia                           Liberty County Schools  for schooling   
                                                                  to LEA      
                                                              Transfer        
                                    8 Clarksville-Montgomery  responsibility  
Kentucky/  Fort Campbell           County                  for schooling   

Tennessee

                        Christian County Schools to LEA

      Kentucky      Fort Knox   8   Hardin County     Transfer responsibility 
                                       Schools                  for schooling 
                                    Meade County             to LEA           
                                       Schools      
      New York    U.S. Military 2 Highland Falls      Transfer responsibility 
                    Academy,      Central School                for schooling 
                   West Point         District               to LEA           
North Carolina               9 Cumberland County   Transfer responsibility 
                   Fort Bragg     Schools                       for schooling 
                                                             to LEA           
South Carolina Fort Jackson  3 Richland County 2                           
                                       School              Status quo
                                      District      
North Carolina               8   Onslow County     Transfer responsibility 
                  Camp Lejeune         Schools                  for schooling 
                                                             to LEA           

(Continued From Previous Page)

             Principal                   Affected   
State(s)  Installation(s)  Number of    Local    
                                         Education  
Affected       Served        Schools   Agency      Study Recommendation    
     South                               Beaufort                             
Carolina  Marine Corps Air        2a   County    Status quo for Pre-K - 3  
             Station                      Schools            grade;
    (Laurel   Parris Island                            transfer grade 4-6     
     Bay)                                           
              Naval Hospital                        
                                        King George                           
             Dahlgren Naval           1 County      
Virginia  Surface                    Schools            Status quo
              Warfare Center                        
                                        Prince                                
                                      4 William                               
             Quantico Marine            County       Status quo Pre-K - grade
Virginia       Corps                 Schools                   3; transfer
                   Base                                grades 4-12 to LEA     
     Total                           58             

Source: Expert panel's recommendations report.

a A third DDESS school, not included in the transfer study, has
subsequently become operational, increasing the total DDESS domestic
schools to 59.

The expert panel recommended transferring most school programs to LEAs
with use of existing school facilities on the military installations, but
with DOD continuing to be responsible for funding maintenance, operations,
and improvements for most facilities. The panel of expert's recommendation
for continued DOD responsibility for the facilities was attributed to
legal difficulties the expert panel believed existed in some states that
could prohibit LEAs from expending funds for schools located on federal
lands, as well as the recognized need to provide reasonable assistance to
the LEAs. In total, LEAs were projected to use 45 DDESS operated schools,
but take title to only 1 of them.

The recommendations included just a few exceptions to the recommended
transfer approach wherein DOD would continue to maintain the school
facilities. For two South Carolina (Laurel Bay area) school programs
recommended for transfer, one school would be retained by DDESS to
continue educating Pre-K through grade 3 students, and one school would be
transferred to the LEA through a title transfer-the only title transfer
recommended. In another instance-involving Quantico, Virginia schools and
the Prince William County Schools-responsibility for educating about fifty
percent of the school children would be transferred, but without any of
the school facilities. The Prince William County LEA reportedly had
indicated an unwillingness to use the DDESS school facilities. At West
Point, New York, responsibility for educating all children would be
transferred to the LEA and it would use only one DDESS facility.

Notwithstanding the panel of expert recommendation that DOD continue to
fund maintenance and operation for most of the school facilities, we found
that clarification of ownership of DDESS-operated school facilities

between DOD and the U.S. Department of Education needs to be addressed. In
completing this review we found that despite DOD having assumed
responsibility for operating the current DDESS facilities from the U.S.
Department of Education many years ago, a majority of the 58 school
facilities had not been formally transferred to DOD. U.S. Department of
Education officials told us they were working to transfer the schools to
DOD. Resolution of this issue is important to ensure proper accounting for
property in the appropriate agency's property records. At the same time,
we also learned that any efforts by DOD to transfer schools to LEAs where
it has clear ownership of the property could be more difficult and time
consuming than for the Department of Education since the latter has
specific legislative authority authorizing such direct transfers.20

Lack Of Clarity for Selecting
LEAs Over Some
DDESS Schools And
Proposing Transfers of Most
Schools

While the methodology used by the Donahue Institute and its expert panel
reportedly guided data gathering, analysis, and development of
recommendations, the expert panel's summary comments and various binders
of data comprising the study report do not always make clear the basis for
the panel's recommendations. The report stated that the panel agreed that
no single factor would be the basis of a decision to accept or reject a
specific alternative. How the panel of experts evaluated the various
factors in order to come up with recommendations is not always clear based
on information provided in the various study documents. Two of the expert
panel members we contacted acknowledged that the recommendations were
subjective but based on all the members' collective expertise and
experiences.

Moreover, we found instances where data for selected quality measures such
as teacher to student ratios and teacher qualifications included in
various study report documents provide mixed pictures of comparative
quality factors between DDESS and LEA schools.21 For example, in a few
instances, the panel recommended transfers to LEA districts even though
the district schools were considered to be "underperforming" while another
adjacent LEA's schools were considered "overperforming" and

2020 U.S.C. S:7708. Absent specific transfer authority DOD property
disposal would be subject to the more lengthy procedures of the Federal
Property and Administrative Services Act, administered by the General
Services Administration.

21The expert panel's recommendations report, which included summary data
comparing and contrasting LEA and DDESS schools, did not always agree with
the comparative data included in various summary reports provided by the
Donahue Institute staff.

with lower per pupil costs; or a LEA was recommended over DDESS even
though the LEA's per pupil costs were higher and its schools were cited as
mostly "underperforming."22 Appendix V highlights examples of the
divergent information contained in various transfer study documents for
four installations.

DOD Would Achieve Savings, but Some Costs Would Be Shifted to Department
of Education and LEAs

In transferring the education responsibility to LEAs, DOD would achieve
savings in costs it currently incurs by operating schools, but many of
these costs would be shifted to others. 23 However, study data indicate
that DOD could incur costs of about $125 million to repair and upgrade
existing DDESS school facilities,.24 Moreover, DOD would also continue to
have ongoing costs to maintain the school facilities as the education
programs are operated by the LEAs under the alternative recommended by the
panel of experts. At the same time, given various pending changes in
basing arrangements that will likely increase the number of dependent
students at bases in the United States, we believe that the facility costs
contained in the study would be subject to change before any potential
decision to approve the study recommendations was implemented.

The study, based on data provided by the Department of Education, assumes
that many costs would be passed on to the state and local governments, and
that LEAs would be eligible for impact aid from the federal Department of
Education. 25 While the study makes various assumptions about likely
impact aid to LEAs, we are not able to affirm the reliability of those
estimates based on the data provided. Impact aid is a program that is
subject to annual appropriations and not an entitlement; and, based on our
discussions with Department of Education officials, the

22See footnote 7 on page 5.

23An area of savings from transferring educational responsibility to LEAs
would be in teacher salaries. The transfer study noted significant
differences in teacher salaries between DDESS and LEA schools.

24U.S. Department of Education officials told us that making such upgrades
had been necessary to encourage LEAs to accept transfer of school
facilities owned by the Department of Education even though the LEAs were
already educating dependents in these schools.

25LEAs receive federal payments to compensate for the loss in tax revenues
due to the presence of tax-exempt federal property and increased school
enrollments due to federal activities.

amount of impact aid to which an LEA would be entitled is formula based,
and not easily calculated in advance. Also, as we note elsewhere in this
report, various communities surrounding military bases in the United
States are expected to experience a significant influx of military
dependents over the next few years as DOD restations many military
personnel from bases overseas to ones in the continental United States.
This could place an increased burden on the Department of Education's
impact aid program as it distributes resources across more LEAs. In
addition, states and LEAs would bear an additional burden if impact aid
funds were not increased.

The recent study, as did prior studies, found unique circumstances that
could impact costs and would require resolution on a site-by-site basis,
should an effort be made to transfer educational responsibilities from
DDESS to LEAs. For example, Fort Campbell has a large DDESS student
population, with eight schools in two states, and agreements would have to
be worked out to permit the students to cross jurisdictional boundaries to
attend the LEA administered school. In a couple of other instances, DDESS
schools for an installation may fall within the jurisdiction of two
counties and special arrangements would be needed to enable students whose
onbase residency falls in one county to attend schools in the other
county. In other instances, the study report noted limitations or caps on
numbers of students eligible for special education in certain LEAs
compared with those in DDESS schools that would need to be addressed.
Thus, individual negotiations at each DDESS location and LEA would be
required to address these and other issues.

Other Issues Could Impact Decision Making

Apart from issues identified in the transfer study, there are other
factors/issues that were not present when the transfer study began that
could impact DDESS and LEA schools and further complicate school transfer
decisions. These factors relate to planned overseas basing changes, major
force structure changes planned by the Army, the domestic base closure
process, and DOD efforts to privatize housing.

The study did not consider ongoing DOD plans to realign U.S. bases
overseas and announced plans to restation about 70,000 military personnel
and approximately 100,000 family members currently stationed overseas to
bases in the United States. However, the details on where many of these
personnel and associated units are likely to be restationed will not be
known until the 2005 base realignment and closure decisions are made later
this year. Nevertheless, this rebasing effort could result in significant

increases in populations of various bases with many new students requiring
education by LEAs. To the extent DDESS programs are affected, this could
complicate any negotiations with LEAs regarding assumption of on-base
DDESS programs. Likewise, the extent to which DDESS installations will be
impacted by the base closure process will not be known until later this
year.

The study also does not reflect efforts under way by the Army to
reorganize its force structure, creating new units of action with the
potential for increased numbers of personnel assigned to selected military
bases in the United States. A recent Congressional Research Service report
summarized the magnitude of this effort.26 It noted that, "...in what the
Army describes as the `most significant Army restructuring in the past 50
years,' the Army intends to redesign its current 10 active duty division
force to a 43 or 48 brigade-level unit of action or UA force by FY 2007."
This conversion is expected to add over 2,000 personnel to many of these
former brigades at various installations. A few of these new units of
action tentatively have been identified for installations in the United
States where some DDESS schools operate.

DOD has appropriately said that it is postponing decision making on the
results of the transfer study until after base closure decisions are
finalized later this year. Importantly, the transfer study, in examining
educational expenditures, largely considered the cost impact on LEAs from
a potential transfer decision on an incremental cost basis. A large influx
of students into LEA or DDESS schools as a result of the above factors
could require a fuller assessment of funding and facility needs than
provided for in the existing study.

The transfer study partly touched on current DOD efforts to privatize
housing on its military bases, but study officials recognize that the full
impact of that initiative was not available for consideration in their
report. Additionally, DOD housing officials told us that previous plans
for housing privatization may need to be adjusted as efforts are made to
ensure adequate housing for the thousands of military personnel scheduled
to be redeployed to the United States.

26Congressional Research Service, U.S. Army's Modular Redesign: Issues for
Congress, (Washington, D.C.: Jan. 6, 2005).

Conclusions	The transfer study has a number of limitations that present
less than a clear-cut answer to the feasibility and desirability of
transferring educational responsibilities from DDESS to LEAs. Moreover,
there are important issues not addressed in the study such as the
anticipated restationing of thousands of military personnel and their
dependents from overseas to U.S. bases, the Army's planned force
restructuring, and the domestic base closure process that could stress
existing educational capacities and require expanded capabilities at
affected bases. DOD has appropriately said that it is postponing decision
making on the results of the transfer study until after base closure
decisions are finalized later this year. Until DOD obtains a fuller
understanding of all these plans and time frames the likely financial
impact on DDESS and LEAs remains unknown. Without that assessment, the
financial assessment completed by the current transfer study is
incomplete. Fundamentally, a decision on whether to transfer educational
responsibilities from DDESS to LEAs is a policy decision that requires
balancing fiscal, educational, and other quality of life considerations.
Once the results of the domestic base closure process and overseas
rebasing plans are known, a decision on the school transfer issue should
be made sooner rather than later to ensure adequate planning, funding and
siting of new school facilities in the United States that may be needed to
support increasing populations of military dependent students. Regardless,
there needs to be proper accounting for the school facilities in federal
property records.

Recommendations for Executive Action

Should a decision be made to transfer some or all of DDESS domestic
schools to LEAs, we recommend that the Secretary of Defense, in
conjunction with the Under Secretary of Defense for Personnel and
Readiness require that such efforts be accompanied by a more complete
assessment of the impact of troop redeployments and other force structure
changes on educational facility requirements on affected installations and
surrounding communities to facilitate needed facility and operational
planning by DOD, the Department of Education and LEAs to meet changing
needs. Regardless of transfer decisions, we recommend that the Secretary
ensure DDESS school facilities are properly reflected in DOD's property
records and removed from the Department of Education records.

Agency Comments and 	In commenting on a draft of this report, the
Principal Deputy Under Secretary of Defense (Personnel and Readiness)
concurred with our

Our Evaluation recommendations. The department's response indicated that
any decision

to transfer educational responsibility to local educational authorities
would occur after the base closure process is complete and would involve
consultations with the military services and Congress, and that it is
working with the Department of Education to ensure school facilities are
properly recorded in real property records. However, the department took
exception with the title of our report because it believed we raised
issues that were related to events occurring after the study began such as
the formulation of the rebasing plan, which were outside the scope of the
transfer study. We believe, however, that the title correctly captures the
limitations of the DOD-sponsored study as both having to do with external
issues affecting the study that became known after the study began as well
as limitations with the study that made unclear the basis for the transfer
recommendations. Therefore, we did not change our title. The department
separately provided various technical comments which are incorporated
where appropriate. DOD's comments are included in appendix VI of this
report.

Scope and Methodology

To determine the extent to which DOD has established a school closure
policy and the effect such policies have on quality-of-life issues for
servicemembers and their dependents, we discussed the issue with cognizant
officials within DODEA and other departmental officials. We obtained and
reviewed data on DDESS school closures in prior years and the basis for
those closures, as well as similar information from the U.S. Department of
Education concerning schools owned by that department serving military
dependents. We also met with education officials to discuss administration
of federal impact aid and learn about their experience in transferring
federally owned schools to LEAs. To obtain DOD perspectives concerning the
issues of dependent schools as a quality of life issue, we obtained and
reviewed the Department's July 2002, publication entitled A New Social
Compact: A Reciprocal Partnership Between The Department of Defense,
Servicemembers and Families. The document was issued under the auspices of
the Deputy Assistant Secretary of Defense (Military Community and Family
Policy) providing departmental perspective on a range of quality of life
issues, including schools. We contrasted that with information obtained
from the Department's Housing and Privatization Office on criteria for
considering commercial activities performed by the department for
potential public/private competitions under OMB Circular A-76. Likewise,
we contrasted that information with other information regarding
departmental efforts to more rigorously assess what functions are
considered core to

warfighting efforts with policy direction to consider those not designated
for potential outsourcing.

To assess the transfer study completed for DODEA by the Donahue Institute,
including the clarity of the basis for conclusions reached, the overall
financial impact, and issues identified but not resolved by the study, we
first reviewed the various summary reports prepared by the Donahue
Institute, the results of the facility condition assessment performed by
Parkhill, Smith, and Cooper, Inc., and a summary of the phase 3
quality-oflife assessment. We discussed the transfer study design and
methodology with officials of DODEA, the Donahue Institute and two of the
three members of the panel of experts employed by the institute to review
its data and to develop study recommendations. Likewise, we also reviewed
the results of previous transfer studies to understand similarities and
differences between previous studies and the recent study effort. To
assess the basis for recommendations made by the expert panel, we examined
the data developed for the panel's use that was contained in the Donahue
Institute's various study summary documents to try to gauge the basis for
the recommendations and determine how clearly the recommendations were
linked to the summary information provided. Given time constraints, we did
not attempt to validate financial and other quantitative data included in
the study, but we did review the steps taken by the Donahue Institute to
verify its data and analysis and to compare some key data against other
available data sets to corroborate its relative accuracy. We also reviewed
summaries of interviews completed by the institute with leaders in
affected DDESS schools and local education agencies to confirm and better
understand the range of issues associated with the issue of potential
transfer of the schools to LEAs-as well as similar information contained
in prior studies. We obtained other relevant statistical data about DDESS
schools from DODEA and made limited checks to assure ourselves that the
data was sufficiently accurate for the purposes of our review.

To frame other issues not addressed in the transfer study that could
impact decision making regarding the future of DOD's domestic elementary
and secondary schools, we relied on insights gained from other ongoing GAO
assessments in the Defense area that had the potential to impact dependent
educational requirements on military bases and confirmed our assumptions
through discussions with cognizant Defense officials.

We conducted this review from January to April 2005 in accordance with
generally accepted government auditing standards.

We are sending copies of this report to the Chairmen and Ranking Minority
Members, Senate Committee on Appropriations, Subcommittees on Defense and
Military Construction and Veterans Affairs; Chairmen and Ranking Minority
Members, House Committee on Appropriations, Subcommittee on Quality of
Life; Secretaries of Defense, the Army, the Navy, and the Air Force; the
Commandant of the Marine Corps; the Secretary of Education; and the
Director, Office of Management and Budget. Copies will be made available
to others upon request. In addition, this report will be available at no
charge on our Web site at htt://www.gao.gov.

Please contact me at (202) 512-5581, or my Assistant Director, Michael
Kennedy, at (202) 512-8333 if you or your staff have any further questions
regarding this report. Major contributors to this report were Maewanda
MichaelJackson, Hilary Murrish, and R.K. Wild of GAO's Defense
Capabilities and Management team, Dr. Nagla'a D. El-Hodiri of GAO's
Education and Workforce team, and Julia Matta, Office of General Counsel.

Barry W. Holman, Director Defense Capabilities and Management

Appendix I

Expert Panel Members

The DDESS Transfer study completed by the Donahue Institute of the
University of Massachusetts indicated that the results of its data and
study component analysis were presented to a panel of three leading
national experts on educational administration and finance. The study
report provides the following information regarding the three experts:

o 	Kern Alexander, Ed.D. Dr. Alexander is a national expert in the field
of school finance. He is Chair of the Board of Editors for the Journal of
Education Finance. He served as director of the Institute for Educational
Finance at the University of Florida, and as Director of the National
Educational Finance Project while it conducted a nationwide study of
educational fiscal policy involving all 50 state education agencies. He
has published numerous books, book chapters and articles on school
finance. He is currently a professor at the University of Illinois at
Urbana-Champaign;

o 	Richard Salmon, Ed.D. Dr. Salmon is a nationally recognized expert in
the fields of school finance and Federal Impact Aid issues. He is a
professor at Virginia Tech and has authored numerous textbooks, book
chapters, and articles on public school finance. Dr. Salmon is a member of
the Board of Editors for The Journal of Education Finance. He also
consults for the U.S. Department of Education Bureau of Impact Aid and has
testified for the department in several federal trials. He served in the
United States Navy for more than 20 years, retiring as Commander from the
Naval Reserve; and

o 	Deborah A. Verstegen, Ph.D. Dr. Verstegen is a national expert in the
field of school finance. She is a professor of education at the University
of Virginia, where she teaches a number of courses including Educational
Finance Policy and Practice, School Finance, and Educational Policy
Analysis. She has authored many books, book chapters, and refereed journal
articles and monographs on education finance. She is past editor and
currently serves on the editorial staff of The Journal of Education
Finance. She has completed a study of all 50state school finance systems
for the Education Commission of the States, entitled "School Finance at a
Glance."

Appendix II

Department of Defense Elementary and Secondary (DDESS) Schools in the
Continental United States

              Principal                   Number of                           
    State(s)  Installation(s)   Number of Students  Adjacent Local Education
                                          as of     
    Affected       Served        Schoolsa   January        Agency(ies)        
                                               2005 
    Alabama      Fort Rucker            2       821  Daleville City Schools   
                                                     Enterprise City Schools  
                                                       Ozark City Schools     
    Alabama   Maxwell Air Force         1       448 Montgomery County Schools 
                    Base                            
    Georgia     Fort Benning            7     2,472  Muscogee County Schools  
                                                      Chattahoochee County    
                                                             Schools          
    Georgia   Robins Air Force          1       398  Houston County Schools   
                    Base                            
    Georgia     Fort Stewart            2     1,440  Liberty County Schools   
                                        8            Clarksville-Montgomery   
Kentucky/    Fort Campbell                 4,240          County           
Tennessee                                        Christian County Schools  
    Kentucky      Fort Knox             8     2,784   Hardin County Schools   
                                                      Meade County Schools    
    New York    U.S. Military           2       772    Highland Falls Central 
                  Academy,                                    School District 
                 West Point                         
     North       Fort Bragg             9     4,352 Cumberland County Schools 
    Carolina                                        
     South      Fort Jackson            3       715  Richland County School   
    Carolina                                                District          
     North      Camp Lejeune            8     3,243   Onslow County Schools   
    Carolina                                        
     South    Marine Corps Air         3b       967                           
    Carolina       Station                           Beaufort County Schools
    (Laurel     Parris Island                       
      Bay)                                          
               Naval Hospital                       
               Dahlgren Naval           1       221    King George County     
    Virginia       Surface                                   Schools          
               Warfare Center                       
               Quantico Marine          4       791   Prince William County   
    Virginia        Corps                                    Schools          
                    Base                            
     Total                             59    23,664 

Source: DOD.

aThese consist of 47 elementary schools, 6 middle schools, 1 junior high
school, 1 combination elementary/middle school, 1 combination middle/high
school, and 3 separate high schools.

bTransfer study only covered 2 of the three schools; the third school
became operational after the study was begun.

Appendix III

Prior Studies on Transferring DDESS Schools to LEAs

o 	A December 1986 study entitled DOD Schools: Funding and Operating
Alternatives for Education of Dependents, by GAO. Congress, in enacting
the Military Construction Authorization Act, 1985 (Public Law 98-407),
expressed the view that the exclusive federal responsibility for funding
and operating the military dependents' schools might no longer be
necessary, and directed us to determine the most suitable alternative for
funding and operating these schools.

o 	A July 1988 study entitled The Transfer Of Section 6 Schools:1 A Case
by Case Analysis. The study was completed by Rand under the sponsorship of
the Assistant Secretary of Defense/Force Management and Personnel as the
result of Congress incorporating into the Military Construction
Authorization Act, 1986, a request to the Secretary of Defense to submit a
plan "which provides for the orderly transfer, not later than July 1990,
of all Section 6 schools to the appropriate local school districts of the
states in which such schools are located." DOD later reported to the
Congress, in December 1988, that based on the results of a detailed study
of the schools, it had decided to suspend efforts to transfer educational
responsibilities for the schools to LEAs.

o 	 A 1991 study entitled Section 6 Schools in Six States: Eleven Case
Studies of Transfer Issues. This study was also completed by Rand under
sponsorship of the Assistant Secretary of Defense (Force Management and
Personnel), as a supplement to the earlier Rand study.

o 	A March 1995 study entitled Construction, Repair, and Rehabilitation
Needs of Dependent School Facilities Located on Military Installations in
the United States. This study was jointly prepared by the DOD and the
Department of Education. According to the study, it was the result of
language contained in the House Committee on Appropriations Report on the
Fiscal Year 1993 DOD Appropriations Bill, Committee Report Number 102-627,
dated June 29, 1992, which requested DOD and the Department of Education
to conduct a study to assess: the condition of school facilities on
military installations in the United States; the requirements for remedial
maintenance to bring school facilities up to an acceptable condition,
including meeting applicable building codes; the feasibility and
desirability of transferring ownership of facilities to local school
districts that provide educational services at military

1Prior to 1981, DDESS schools were referred to as Section 6 schools, which
was a reference to their funding source at that time under Section 6 of
Public Law 81-874.

Appendix III Prior Studies on Transferring DDESS Schools to LEAs

installations; and a funding plan for correcting the maintenance backlog
over the next 5 years and the new construction backlog over the next 10
years. The study included existing on-base dependent school facilities
owned by DOD or the Department of Education and operated by DOD or LEAs.

o 	An October 1997 study entitled A Study of Schools Serving Military
Families in the U.S.: Education Quality, Federal Administration, and
Funding. The study was completed by the Survey & Program Evaluation
Division of the Defense Manpower Data Center. It was conducted in response
to a request contained in the Conference Report on the National Defense
Authorization Act for Fiscal Year 1995 (Public Law 103-337), asking the
Secretary of Defense to collect information concerning the possibility of
transferring DOD dependent schools to local education agencies. The study
included results of a survey of military parents on the quality of
education provided by DOD dependent schools and local education agencies
and their perspective on the transfer issue.

Appendix IV

                     Transfer Study Rules and Alternatives

The transfer study notes that "the deeper the study team got into the data
collection and site visit process, the more evident it became that a
limited set of universal principles or rules was needed to help all
parties achieve two important and complementary purposes. The first
purpose was to assure basic equity and fairness for the students, families
and communities that might be affected by the outcomes of particular
transfer alternatives; the second was to assure that the panel of national
experts ends up with a package of findings and analysis that was
sufficiently manageable so it could produce its recommendations. It noted
that while exceptions might be appropriate on a case-by-case basis,
applying the following rules to all installations helped achieve these
dual ends of equity and practicality:

o 	It would be unfair for some students at the same grade level to
transfer to the LEA district while other students in the same grade remain
on base. Therefore, at any installation, any decision affecting one DDESS
school shall apply to all DDESS schools with the same or overlapping grade
levels;

o 	To maintain continuity and effective education, it is not feasible to
transfer students at a particular grade and then return them to the DDESS
curriculum at a higher grade. Therefore, if a transfer is made at one
grade, all succeeding higher grades must transfer as well;

o 	If a DDESS elementary school with a pre-kindergarten (pre-K) program is
transferred to an LEA that does not offer a pre-K program, DDESS will
continue to offer pre-K services, using either on-site or off-site
resources; and

o 	It would be both inefficient and detrimental to educational consistency
to have some DDESS schools run under contract with the LEA while others on
the same installation do not. Therefore, if a contract or coterminous
alternative is chosen for any DDESS school, that alternative should apply
to all schools on the installation.

The study team developed a set of transfer alternatives for consideration
including:

o 	Maintaining the status quo, i.e. DDESS schools would continue to
operate as they have in the past.

o 	Transfer responsibilities for the educational program to the LEA along
with facilities being used by DDESS. The LEA would accept full

Appendix IV
Transfer Study Rules and Alternatives

responsibility for educating military children and for the future upkeep
of the facilities. It assumed the installation school facilities would be
brought up to LEA maintenance and building standards prior to LEA
occupancy.

o 	Transfer without facilities. DDESS students would transfer to the
neighboring LEA and integrated into the existing school facilities.

o 	Contract with the LEA to provide educational services on the
installation.

o 	Create a public school district within the installation, coterminous
with its existing boundaries (coterminous alternative). Under that
assumption, all DDESS schools on base would be included in the newly
created LEA. DOD would provide the LEA with title of DDESS facilities
(except where noted otherwise), and buildings and facilities would be
brought up to LEA standards before being transferred to the LEA.

These were similar to alternatives considered in some prior studies.

Appendix V

Differing Perspectives on Selected DDESS and LEA Schools Contained in
Various Transfer Study Report Documents

The DDESS Transfer Study Report prepared by the Donahue Institute with its
supporting data is contained in multiple binders. The recommendations
report, prepared by the panel of experts, are contained in a binder
sometimes referred to as the "green book". Underpinning that were
additional binders prepared by the Donahue Institute staff. They included
a so-called book of narratives-referred to as the "white book"--providing
an overview of each domestic DDESS school and adjacent LEAs. Additional
information on individual DDESS schools and adjacent LEAS is contained in
multiple "blue binders" summarizing financial, performance, and data on
the educational quality of individual schools. Additional financial
information is then contained in multiple "yellow binders" labeled
appendixes.

Our examination of individual recommendations and supporting information
provided in individual study binders sometimes provided what appeared to
be divergent pictures of school performance, quality, and cost factors
that did not always fully comport with information contained in the
recommendations report. Below are key examples.

Fort Benning The Recommendations Report suggests transferring
responsibility for schools to Chattahoochee County vice Muscogee County
(five of seven DDESS schools are within Chattahoochee County). It noted
that installation officials had expressed concerns about quality of
Chattahoochee County Schools, but noted DDESS students would represent the
vast majority of student enrollment within the LEA. It expected that most
students would still be educated on base and most teachers still have
opportunity to teach. It said the pupil-teacher ratios and the per pupil
expenditures of the DDESS and Chattahoochee County are already comparable
(GAO note: data suggest less comparability in costs than stated here).

The White Book points out that salaries and benefits make up 90 percent,
86 percent, and 84 percent of the Fort Benning DDESS, Chattahoochee
County, and Muscogee County school budgets. The White Book indicates per
pupil expenditures of approximately $8,244, $7,345, and $5,956 for Fort
Benning DDESS, Chattahoochee County, and Muscogee County respectively.

The White Book points out that Fort Benning DDESS students test results
ranged from the 52nd to 65th percentile for grades 3, 5, and 8.
Chattahoochee County and Muscogee County test scores were mostly above
predicted scores for grades 3, 5, and 8.

Appendix V
Differing Perspectives on Selected DDESS
and LEA Schools Contained in Various
Transfer Study Report Documents

The Blue Book shows that four of the Benning DDESS schools were deemed
underperforming and three overperformed. It confirms Muscogee test scores
were mostly deemed over performing for 5th grade but some underperforming
for 8th grade, while Chattahoochee's were deemed underperforming for 8th
grade.

Fort Campbell The Recommendations Report suggests transferring
responsibility for schools to LEA, Christian County versus
Clarksville-Montgomery County. The report notes that considering all
factors, Christian County, Kentucky has higher quality measures than
Clarksville-Montgomery County, Tennessee.

The White Book notes salaries and benefits make up 88 percent, 64 percent
and 64 percent respectively of the Fort Campbell DDESS, and
Clarksville-Montgomery County and Christian County school budgets. Fort
Campbell's per pupil expenditure, which is projected to be about $7,962 in
fiscal year 04, has been rising in recent years due to increasing costs
and decreasing enrollment (reason for decreasing enrollment not
indicated). Clarksville-Montgomery's per pupil expenditure in fiscal year
2004 is $5,166 but will decline because of recent budget cuts. Christian
County's per pupil cost is about $ 6,589 in fiscal year 2004 but notes
escalating salary costs coupled with relatively stable enrollment will
likely lead to increased per pupil expenditure.

The White Book indicates that Fort Campbell DDESS students performed at or
above the 60th percentile for most subjects and grades. Performance of LEA
schools of both districts was mixed. Clarksville-Montgomery matched or
exceeded predicted scores in seven of nine instances cited. The Christian
County matched or exceeded in five of nine instances cited. However, the
White Book also notes that Fort Campbell schools have a lower
student-to-teacher ratio than either LEA and have a higher percentage of
DDESS teachers (82 percent) with advanced degrees than Christian County
(68 percent), or Clarksville (52 percent).

The Blue Book rates Fort Campbell schools as mixed in terms of over or
under performing. Same was true for Christian County schools. The Blue
Book rates Clarksville-Montgomery County schools as primarily
underperforming.

Fort Jackson The Recommendations Report suggests status quo notes
reductions in state funding of education over recent two years. It notes
that Richland County's schools are already over capacity, and the LEA has

Appendix V
Differing Perspectives on Selected DDESS
and LEA Schools Contained in Various
Transfer Study Report Documents

little physical room to expand its facilities. (GAO note: Why this is a
discriminating factor is unclear since most transfer recommendations are
based on use of DDESS schools.) The Green Book also notes that "a transfer
to the LEA could jeopardize the quality of education now received by
students at Fort Jackson, who, as mostly younger students, would face
substantial disruption of educational services in the event of a
transfer." (GAO note: report is not clear why younger students at Jackson
would face substantial disruption yet the same issue is not raised in most
other transfer recommendations.)

The White Book notes that because Fort Jackson does not track salaries and
benefits for each type of school employee, salaries and benefits were
allocated based on the teaching roster and an average salary and benefit
expenditure. School costs were not laid out comparably to those at other
installations. However, it projects approximately 90 percent, 73 percent
of Fort Jackson DDESS and LEA budgets respectively to be spent on salaries
and benefits. It indicated there was per pupil expenditures of $10,700 for
DDESS versus $6,165 for LEA.

The White Book shows Fort Jackson scores on Tera Nova tests scores
reported were lower than recorded for many other DDESS systems for grades
3 and 5. LEA schools were shown in the White Book as exceeding predicted
test scores for grades 3 and 5.

The Blue Book does not contain school level testing for Fort Jackson
schools so doesn't indicate whether they were viewed as over or under
performing. It shows LEA mixed in terms of over or under performing for
grade 6 but over performing for grade 8 (at one school).

Fort Knox The Recommendations Report recommends transferring
responsibility to adjacent LEA, Hardin County, versus LEA Meade County.
However, the report notes that while the level of education quality
indicators for the two LEAs is generally comparable, Hardin County's per
pupil expenditure exceeds that of Meade County in the instructional area.
This indicates Hardin County is larger and more capable than Meade County
to absorb DDESS students, and the executive leadership of Hardin County
appeared more receptive to a transfer of DDESS students. The White Book
indicates Hardin is geographically closer to installation housing and
because of this proximity, Hardin has a closer relationship with Fort
Knox.

Appendix V
Differing Perspectives on Selected DDESS
and LEA Schools Contained in Various
Transfer Study Report Documents

The White Book projects that 88 percent, 78 percent, and 75 percent of
Fort Knox DDESS, Meade County and Hardin County LEAs school budgets
respectively were spent on salaries and benefits. This indicated per pupil
expenditures of $8, 454 for DDESS versus $5,108 in Meade County, and
$5,493 in Hardin County.

The White Book shows Fort Knox students scored above the 50th percentile
for all subjects and grades in Terra Nova testing. At the same time, the
performance information provided indicated that many Hardin County grades
scored lower than predicted on testing, while Meade County grades nearly
always scored higher than predicted.

The Blue Book indicates that Fort Knox DDESS schools presented a mixed
picture in terms of over or under performing on performance tests. At the
same time, all Hardin County schools were cited as underperforming in
testing for grades 3 and 6 and over for one school with grade 9 scores; at
the same time, while Meade County schools were identified as over
performing for grades 6 and 9.

West Point The Recommendations Report suggests transferring responsibility
to LEA, Highland Falls Central School District, but grades PK-4 remain in
the current school. The report notes that in this case, the LEA had a
higher per pupil expenditure and a lower pupil-teacher-ratio than DDESS,
both of which are quality indicators. The report said the recommendation
for transfer was due, in part, to the fact that the middle school facility
needs to be replaced immediately.

The White Book projects that 84 percent and 76 percent of West Point DDESS
and Highland Falls school budgets respectively were spent on salaries and
benefits. However, it notes that the LEA's budget has seen 10 percent
growth, with costs for health and liability insurance and special
education and retirement system costs rising. It also indicated per pupil
expenditures of $10, 957 for West Point DDESS (among the highest of all
DDESS districts mainly due to salaries) and $11,196 for Highland Falls. It
notes that this is the only district where the per pupil expenditure is
greater than the corresponding DDESS per pupil expenditure.

The White Book shows West Point DDESS schools scored in the 70-80th
percentiles in Tera Nova testing. Conversely, Highland Falls Schools
indicated almost all (three of four) test scores were lower than
predicted.

Appendix V
Differing Perspectives on Selected DDESS
and LEA Schools Contained in Various
Transfer Study Report Documents

The Blue Book indicates that West Point DDESS schools over performed on
performance tests while Highland Falls schools were mostly cited as
underperforming.

                                  Appendix VI

                    Comments from the Department of Defense

Appendix VI
Comments from the Department of Defense

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