January 2006

It is an honor to serve America.

I am honored to have served four years as an appointee by President George W. Bush confirmed twice by the United States Senate in two major national assignments since starting in Washington, D.C. just prior to September 11, 2001.

As I now return to the private sector, it is insightful to share some results achieved on behalf of the American people.

For the past two years as the Under Secretary of Education and Chief Operating Officer of the United States Department of Education, my role has been to lead many of the programmatic and management functions of an enterprise that invests in excess of $140 billion annually through formula and discretionary grants, loans, and guarantees to promote educational excellence throughout America’s $1 trillion education industry. The Department of Education assists 92,000 schools, 3 million teachers, 50 million public elementary and secondary students, 16 million college students, and 6,600 post-secondary institutions in the United States.

Managing these massive investments astutely is a vital part of the transformation of education that is creating productive lives, improving our nation’s international competitiveness and creating billions of dollars of incremental value on behalf of students and taxpayers.

Valuable results have been achieved by executing innovative solutions and managing risks in many states, large urban school districts, with numerous grant recipients, in Federal Student Aid’s portfolio of $400 billion in loans and grants for 22 million customers, and on annual acquisition contracts of $1 billion.

The current operating effectiveness of the Department of Education has never been better as a result of leveraging human capital, information technology, and leadership processes, including a recent enterprise-wide restructuring. In short, the productivity of the capital invested by the Department of Education has been dramatically improved, resulting in much better public policy outcomes relative to the use of taxpayers’ cash.

Earlier, my first two years in Washington were focused on gaining operating control of the United States Department of Agriculture as its Chief Financial Officer. This enterprise provides $100 billion in direct loans, $30 billion in credit guarantees and $38 billion in reinsurance to support America’s farmers, promote global trade, protect America’s food and water, and conduct massive humanitarian nutrition programs.

Were it in the private sector, the Department of Agriculture would be one of the largest companies in the United States with over $70 billion in annual spending, 112,000 employees and $120 billion in assets. The Department of Agriculture is exceeded generally in size in the private sector by only four companies –Wal-Mart, Exxon, General Motors and Ford – so the Department of Agriculture is roughly the equivalent in size and diversity of lines of business to General Electric or Citigroup. It also operates the National Finance Center in New Orleans that alone processes $26 billion in payroll for 550,000 governmental employees and administers the retirement plan for 3 million Federal civilian and military employees with now over $150 billion in investment assets.

One breakthrough valuable result we achieved just over a year after I took office was to implement sufficient accountability and internal control to receive for the first time ever a “clean” financial external audit opinion for fiscal year 2002. In short, the Department of Agriculture had never produced timely financial statements free of significant errors or misstatements in its entire 140-year history!

Achieving this result required a lot of leadership and work, including:

• Massive revamping of business, financial management and accounting processes, and completing installation of a standard general accounting system involving 17 major conversions;

• Determining the program cost or present value cash flows of $100 billion in loans;

• Reconciling accurately and timely over $100 billion in annual cash receipts and disbursements in 393 United States Treasury accounts, half of which had never before been balanced;

• Correcting stewardship deficiencies on $10 billion of real and personal property throughout the United States;

• Reinforcing these breakthroughs with a financial management team of exceptionally effective leaders who sustained “clean” financial external audit opinions in each of the following three years – 2003, 2004, and 2005 –as well.

In addition, I had the opportunity along the way to testify about these results several times in Congress, assist other Federal departments, including projects involving Homeland Security, the President’s Management Council, and the National Aeronautics and Space Administration on whose Advisory Council I have agreed to continue to serve.

My wife Sally and I will now be based from our homes both in Dallas, Texas, and Gettysburg, Pennsylvania, where Sally is continuing her work with the Gettysburg Foundation. Over $80 million has been raised nationally to fund construction now underway for the new museum and visitors’ center opening in 2007. This impressive center of education for American history and character and the Civil War will be a significant legacy with lasting impact as a result of the efforts of Sally and her associates.

Now, returning to the private sector as a “free agent” available to serve clients through my firm InterSolve Group, I am considering the relationships and new challenges to which I will devote myself.

With best regards for a prosperous and enjoyable 2006,

Edward R. (Ted) McPherson, Chief Executive Officer, InterSolve Group